Exhibit 10.3

 

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SECURITY AGREEMENT

 

by

 

FOOT LOCKER, INC.

as Borrower

 

and

 

THE GUARANTORS PARTY HERETO

FROM TIME TO TIME

 

and

 

BANK OF AMERICA, N.A.,

as Collateral Agent

 

Dated as of March 20, 2009

 

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TABLE OF CONTENTS

 

 

 

 

 

 

 

 

 

 

Page

 

 

 

 

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PREAMBLE

 

 

 

1

 

 

 

 

 

 

 

RECITALS

 

 

 

1

 

 

 

 

 

 

 

AGREEMENT

 

 

 

2

 

 

 

 

 

 

 

ARTICLE I

 

 

 

 

 

 

DEFINITIONS AND INTERPRETATION

 

 

 

 

 

 

SECTION 1.1.

 

Definitions

 

2

 

SECTION 1.2.

 

Interpretation

 

7

 

SECTION 1.3.

 

Due Diligence Certificate

 

7

 

 

 

 

 

 

 

ARTICLE II

 

 

 

 

 

 

GRANT OF SECURITY AND SECURED OBLIGATIONS

 

 

 

 

 

 

SECTION 2.1.

 

Pledge

 

7

 

SECTION 2.2.

 

Secured Obligations

 

8

 

SECTION 2.3.

 

Security Interest

 

8

 

 

 

 

 

 

 

ARTICLE III

 

 

 

 

 

 

PERFECTION; SUPPLEMENTS; FURTHER ASSURANCES;

USE OF PLEDGED COLLATERAL

 

 

 

 

 

 

SECTION 3.1.

 

Delivery of Pledged Securities and Intercompany Notes

 

9

 

SECTION 3.2.

 

Perfection of Uncertificated Securities Collateral

 

9

 

SECTION 3.3.

 

Financing Statements and Other Filings; Maintenance of Perfected Security
Interest

 

10

 

SECTION 3.4.

 

Other Actions

 

10

 

SECTION 3.5.

 

Joinder of Additional Borrowers or Guarantors

 

13

 

SECTION 3.6.

 

Supplements; Further Assurances

 

14

 

 

 

 

 

 

 

ARTICLE IV

 

 

 

 

 

 

REPRESENTATIONS, WARRANTIES AND COVENANTS

 

SECTION 4.1.

 

Title

 

14

 

-i-

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Page

 

 

 

 

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SECTION 4.2.

 

Limitation on Liens; Defense of Claims; Transferability of Pledged Collateral

 

14

 

SECTION 4.3.

 

Chief Executive Office; Change of Name; Jurisdiction of Organization

 

15

 

SECTION 4.4.

 

Due Authorization and Issuance

 

15

 

SECTION 4.5.

 

No Conflicts, Consents, etc.

 

15

 

SECTION 4.6.

 

Pledged Collateral

 

16

 

 

 

 

 

 

 

ARTICLE V

 

 

 

 

 

 

CERTAIN PROVISIONS CONCERNING SECURITIES COLLATERAL

 

 

 

 

 

 

SECTION 5.1.

 

Pledge of Additional Securities Collateral

 

16

 

SECTION 5.2.

 

Voting Rights; Distributions; Etc.

 

16

 

SECTION 5.3.

 

Defaults, Etc.

 

18

 

SECTION 5.4.

 

Certain Agreements of Pledgors As Issuers and Holders of Equity Interests

 

18

 

 

 

 

 

 

 

ARTICLE VI

 

 

 

 

 

 

CERTAIN PROVISIONS CONCERNING

INTELLECTUAL PROPERTY

 

 

 

 

 

 

SECTION 6.1.

 

Grant of License

 

19

 

SECTION 6.2.

 

No Violations

 

19

 

 

 

 

 

 

 

ARTICLE VII

 

 

 

 

 

 

CERTAIN PROVISIONS CONCERNING ACCOUNTS

 

 

 

 

 

 

SECTION 7.1.

 

Special Representations and Warranties

 

19

 

SECTION 7.2.

 

Maintenance of Records

 

19

 

SECTION 7.3.

 

Legend

 

20

 

SECTION 7.4.

 

Modification of Terms, Etc.

 

20

 

SECTION 7.5.

 

Collection

 

20

 

 

 

 

 

 

 

ARTICLE VIII

 

 

 

 

 

 

REMEDIES

 

 

 

 

 

 

SECTION 8.1.

 

Remedies

 

20

 

SECTION 8.2.

 

Notice of Sale

 

22

 

SECTION 8.3.

 

Waiver of Notice and Claims

 

22

 

-ii-

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Page

 

 

 

 

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SECTION 8.4.

 

Certain Sales of Pledged Collateral

 

23

 

SECTION 8.5.

 

No Waiver; Cumulative Remedies

 

24

 

SECTION 8.6.

 

Application of Proceeds

 

24

 

 

 

 

 

 

 

ARTICLE IX

 

 

 

 

 

 

MISCELLANEOUS

 

 

 

 

 

 

SECTION 9.1.

 

Concerning Collateral Agent

 

25

 

SECTION 9.2.

 

Collateral Agent May Perform; Collateral Agent Appointed Attorney-in-Fact

 

26

 

SECTION 9.3.

 

Continuing Security Interest; Assignment

 

26

 

SECTION 9.4.

 

Termination; Release

 

27

 

SECTION 9.5.

 

Modification in Writing

 

28

 

SECTION 9.6.

 

Notices

 

28

 

SECTION 9.7.

 

GOVERNING LAW

 

28

 

SECTION 9.8.

 

CONSENT TO JURISDICTION; SERVICE OF PROCESS; WAIVER OF JURY TRIAL

 

28

 

SECTION 9.9.

 

Severability

 

29

 

SECTION 9.10.

 

Execution in Counterparts

 

30

 

SECTION 9.11.

 

No Credit for Payment of Taxes or Imposition

 

30

 

SECTION 9.12.

 

No Claims Against Collateral Agent

 

30

 

SECTION 9.13.

 

No Release

 

30

 

SECTION 9.14.

 

Obligations Absolute

 

30

 

 

 

 

 

 

 

SIGNATURES

 

 

 

 

 

 

 

 

 

 

 

SCHEDULE I

 

Intercompany Notes

 

 

 

SCHEDULE II

 

Filings, Registrations and Recordings

 

 

 

SCHEDULE III

 

Initial Pledged Interests and Initial Pledged Shares

 

 

 

SCHEDULE IV

 

Instruments and Tangible Chattel Paper

 

 

 

 

 

 

 

 

 

EXHIBIT 1

 

Form of Securities Pledge Amendment

 

 

 

-iii-

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SECURITY AGREEMENT

                    SECURITY AGREEMENT dated as of March 20, 2009 (as amended,
restated, amended and restated, supplemented or otherwise modified and in effect
from time to time, this “Agreement”) made by (i) FOOT LOCKER, INC., a New York
corporation (the “Borrower”), (ii) THE GUARANTORS LISTED ON THE SIGNATURE PAGES
HERETO (the “Original Guarantors”) OR FROM TIME TO TIME PARTY HERETO BY
EXECUTION OF A JOINDER AGREEMENT (the “Additional Guarantors,” and together with
the Original Guarantors, the “Guarantors”) (the Borrower, together with the
Guarantors, and together with any successors, the “Pledgors,” and each, a
“Pledgor”), in favor of BANK OF AMERICA, N.A., having an office at 100 Federal
Street, 9th Floor, Boston, Massachusetts 02110, in its capacity as collateral
agent for the Credit Parties (as defined in the Credit Agreement defined below)
pursuant to the Credit Agreement (as hereinafter defined) (in such capacity and
together with any successors in such capacity, the “Collateral Agent”).

RECITALS:

                    A. The Pledgors, the Collateral Agent, Bank of America,
N.A., as Administrative Agent, the Lenders party thereto, and Bank of America,
N.A., as L/C Issuer and as Swing Line Lender, among others, have, in connection
with the execution and delivery of this Agreement, entered into that certain
Credit Agreement dated as of the date hereof (as amended, restated, amended and
restated supplemented or otherwise modified and in effect from time to time, the
“Credit Agreement”).

                    B. Each Original Guarantor has, pursuant to that certain
Guaranty dated as of the date hereof (as amended, restated, amended and
restated, supplemented or otherwise modified from time to time, the “Guaranty”),
among other things, unconditionally guaranteed the obligations of the Borrower
under the Credit Agreement and the other Loan Documents (as defined in the
Credit Agreement) (the “Guaranteed Obligations”).

                    C. The Borrower and each Original Guarantor will receive
substantial benefits from the execution, delivery and performance of the
obligations under the Credit Agreement, the Guaranty and the other Loan
Documents and each is, therefore, willing to enter into this Agreement.

                    D. Each Pledgor is or, as to Pledged Collateral (as
hereinafter defined) acquired by such Pledgor after the date hereof, will be the
legal and/or beneficial owner of the Pledged Collateral pledged by it hereunder.

                    F. This Agreement is given by each Pledgor in favor of the
Collateral Agent for the benefit of the Credit Parties to secure the payment and
performance of all of the Secured Obligations (as hereinafter defined).

                    G. It is a condition to the obligations of the Lenders to
make the Loans under the Credit Agreement and a condition to the L/C Issuer
issuing Letters of Credit (as such term is

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defined in the Credit Agreement) under the Credit Agreement that each Pledgor
execute and deliver the applicable Loan Documents, including this Agreement.

AGREEMENT:

                    NOW THEREFORE, in consideration of the foregoing premises
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, each Pledgor and the Collateral Agent hereby agree as
follows:

ARTICLE I

DEFINITIONS AND INTERPRETATION

                    SECTION 1.1. Definitions.

                    (a) Unless otherwise defined herein or in the Credit
Agreement, capitalized terms used herein that are defined in the UCC shall have
the meanings assigned to them in the UCC.

                    (b) Capitalized terms used but not otherwise defined herein
that are defined in the Credit Agreement shall have the meanings given to them
in the Credit Agreement.

                    (c) The following terms shall have the following meanings:

                    “Additional Guarantors” shall have the meaning assigned to
such term in the Preamble hereof.

                    “Additional Pledged Interests” shall mean, collectively,
with respect to each Pledgor, (i) all Equity Interests of whatever class of any
issuer of Initial Pledged Interests or any interest in any such issuer, together
with all rights, privileges, authority and powers of such Pledgor relating to
such Equity Interests in each such issuer or under the Organization Documents of
any such issuer, and the certificates, instruments and agreements representing
such Equity Interests and any and all interest of such Pledgor in the entries on
the books of any securities intermediary pertaining to such Equity Interests
from time to time acquired by such Pledgor in any manner and (ii) all Equity
Interests, as applicable, of each Unrestricted Subsidiary (to the extent such
Unrestricted Subsidiary is not a corporation) hereafter acquired or formed by
such Pledgor and all Equity Interests of whatever class of such Unrestricted
Subsidiary, together with all rights, privileges, authority and powers of such
Pledgor relating to such interests or under the Organization Documents of any
such Unrestricted Subsidiary, and the certificates, instruments and agreements
representing such Equity Interests and any and all interest of such Pledgor in
the entries on the books of any securities intermediary pertaining to such
Equity Interests, from time to time acquired by such Pledgor in any manner.
Notwithstanding anything

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to the contrary contained herein, the term “Additional Pledged Interests” shall
not include any Excluded Property.

                    “Additional Pledged Shares” shall mean, collectively, with
respect to each Pledgor, (i) all options, warrants, rights, agreements,
additional shares of capital stock of whatever class of any issuer of the
Initial Pledged Shares or any other Equity Interest in any such issuer, together
with all rights, privileges, authority and powers of such Pledgor relating to
such Equity Interests issued by any such issuer under the Organization Documents
of any such issuer, and the certificates, instruments and agreements
representing such Equity Interests and any and all interest of such Pledgor in
the entries on the books of any securities intermediary pertaining to such
Equity Interests, from time to time acquired by such Pledgor in any manner and
(ii) all the issued and outstanding shares of capital stock of each Unrestricted
Subsidiary (to the extent such Unrestricted Subsidiary is a corporation)
hereafter acquired or formed by such Pledgor and all options, warrants, rights,
agreements or additional shares of capital stock of whatever class of such
Unrestricted Subsidiary, together with all rights, privileges, authority and
powers of such Pledgor relating to such shares or under the Organization
Documents of such Unrestricted Subsidiary, and the certificates, instruments and
agreements representing such shares and any and all interest of such Pledgor in
the entries on the books of any securities intermediary pertaining to such
shares, from time to time acquired by such Pledgor in any manner.
Notwithstanding anything to the contrary contained herein, the term “Additional
Pledged Shares” shall not include any Excluded Property.

                    “Agreement” shall have the meaning assigned to such term in
the Preamble hereof.

                    “Borrower” shall have the meaning assigned to such term in
the Preamble hereof.

                    “Claims” shall mean any and all property taxes and other
taxes, assessments and special assessments, levies, fees and all governmental
charges imposed upon or assessed against, and all claims (including, without
limitation, landlords’, carriers’, mechanics’, workmen’s, repairmen’s,
laborers’, materialmen’s, suppliers’ and warehousemen’s Liens and other claims
arising by operation of law) against, all or any portion of the Pledged
Collateral.

                    “Collateral Agent” shall have the meaning assigned to such
term in the Preamble hereof.

                    “Contracts” shall mean, collectively, with respect to each
Pledgor, all sale, service, performance, equipment or property lease contracts,
agreements and grants and all other contracts, agreements or grants (in each
case, whether written or oral, or third party or intercompany), between such
Pledgor and third parties, and all assignments, amendments, restatements,
supplements, extensions, renewals, replacements or modifications thereof.

                    “Control Agreement” shall mean, with respect to a Securities
Account or Commodities Account established by a Pledgor, an agreement, in form
and substance reasonably

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satisfactory to the Collateral Agent, establishing Control of such Securities
Account or Commodities Account by the Collateral Agent.

                    “Credit Agreement” shall have the meaning assigned to such
term in Recital A hereof.

                    “Distributions” shall mean, collectively, with respect to
each Pledgor, all dividends, cash, options, warrants, rights, instruments,
distributions, returns of capital or principal, income, interest, profits and
other property, interests (debt or equity) or proceeds, including as a result of
a split, revision, reclassification or other like change of the Pledged
Securities, from time to time received, receivable or otherwise distributed to
such Pledgor in respect of or in exchange for any or all of the Pledged
Securities or Intercompany Notes.

                    “Due Diligence Certificate” shall mean that certain due
diligence certificate dated as of the date hereof, executed and delivered by the
Borrower in favor of the Collateral Agent for the benefit of the Credit Parties,
and each other Due Diligence Certificate (which shall be substantially in the
form of such due diligence certificate dated the date hereof or otherwise in
form and substance reasonably acceptable to the Collateral Agent) executed and
delivered by the applicable Guarantor in favor of the Collateral Agent for the
benefit of the Credit Parties contemporaneously with the execution and delivery
of each Joinder Agreement executed in accordance with Section 6.12 of the Credit
Agreement, in each case, as the same may be amended, restated, supplemented or
otherwise modified from time to time in accordance with the Credit Agreement.

                    “Excluded Property” shall mean, with respect to any Pledgor,
(i) any lease, contract or agreement to which such Pledgor is a party, any of
its rights or interests thereunder or any assets subject thereto or any property
rights of such Pledgor of any nature if the grant of such security interest
shall constitute or result in (A) the abandonment, invalidation or
unenforceability of any right, title or interest of such Pledgor therein or
result in such Pledgor’s loss of use of such asset or (B) in a breach or
termination pursuant to the terms of, or a default under, any such lease,
contract, property rights or agreement (other than to the extent that any such
term would be rendered ineffective pursuant to Sections 9-406, 9-407, 9-408 or
9-409 of the UCC (or any successor provision or provisions) of any relevant
jurisdiction or any other applicable law (including the Bankruptcy Code) or
principles of equity); (ii) any lease, contract, property rights or agreement to
which such Pledgor is a party, any of its rights or interests thereunder or any
assets subject thereto to the extent that any applicable law prohibits the
creation of a security interest thereon (other than to the extent that any such
term would be rendered ineffective pursuant to Sections 9-406, 9-407, 9-408 or
9-409 of the UCC (or any successor provision or provisions) of any relevant
jurisdiction or any other applicable Law or principles of equity); (iii) any
voting Equity Interests of a Subsidiary that is a CFC in excess of 65% of the
voting Equity Interests of such Subsidiary; (iv) any of Pledgor’s right, title,
and interest in Intellectual Property and rights to sue for past, present or
future infringements thereof; and (v) any Equity Interests of any Restricted
Subsidiary (as such term is defined in the Indenture); provided that in each
case described in clauses (i), (ii), and (v) of this definition, such

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property shall constitute “Excluded Property” only to the extent and for so long
as such lease, contract, property right or other agreement or applicable Law or
Organization Document validly prohibits the creation of a Lien on such property
in favor of the Collateral Agent (or, in the case of the property described in
clause (v) of this definition, so long as any such Person is a Restricted
Subsidiary (as such term is defined in the Indenture)) and, upon the termination
of such prohibition (howsoever occurring) (or, in the case of the property
described in clause (v) of this definition, upon such Person’s ceasing to be a
Restricted Subsidiary (as such term is defined in the Indenture)), such property
shall cease to constitute “Excluded Property” and provided further that all
Proceeds, substitutions or replacements of any Excluded Property described in
clauses (i) through (v) (unless such Proceeds, substitutions or replacements
would constitute Excluded Property) shall constitute Pledged Collateral
hereunder.

                    “General Intangibles” shall mean, collectively, with respect
to each Pledgor, all “general intangibles,” as such term is defined in the UCC,
of such Pledgor and, in any event, shall include, without limitation, (i) all of
such Pledgor’s rights, title and interest in, to and under all insurance
policies and Contracts, (ii) all know-how and warranties relating to any of the
Pledged Collateral, (iii) any and all other rights, claims, choses-in-action and
causes of action of such Pledgor against any other Person and the benefits of
any and all collateral or other security given by any other Person in connection
therewith, (iv) all guarantees, endorsements and indemnifications on, or of, any
of the Pledged Collateral, (v) all lists, books, records, correspondence,
ledgers, print-outs, files (whether in printed form or stored electronically),
tapes and other papers or materials containing information relating to any of
the Pledged Collateral, including, without limitation, all customer or tenant
lists, identification of suppliers, data, plans, blueprints, specifications,
designs, drawings, appraisals, recorded knowledge, surveys, studies, engineering
reports, test reports, manuals, standards, processing standards, performance
standards, catalogs, research data, computer and automatic machinery software
and programs and the like, field repair data, accounting information pertaining
to such Pledgor’s operations or any of the Pledged Collateral and all media in
which or on which any of the information or knowledge or data or records may be
recorded or stored and all computer programs used for the compilation or
printout of such information, knowledge, records or data, (vi) all licenses,
consents, permits, variances, certifications, authorizations and approvals,
however characterized, of any Governmental Authority (or any Person acting on
behalf of a Governmental Authority) now or hereafter acquired or held by such
Pledgor pertaining to operations now or hereafter conducted by such Pledgor or
any of the Pledged Collateral including, without limitation, building permits,
certificates of occupancy, environmental certificates, industrial permits or
licenses and certificates of operation and (vii) all rights to reserves,
deferred payments, deposits, refunds, indemnification of claims to the extent
the foregoing relate to any Pledged Collateral and claims for tax or other
refunds against any Governmental Authority relating to any Pledged Collateral.

                    “Guarantors” shall have the meaning assigned to such term in
the Preamble hereof.

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                    “Initial Pledged Interests” shall mean, with respect to each
Pledgor, all Equity Interests (other than in a corporation), as applicable, of
each issuer which is an Unrestricted Subsidiary and described in Schedule III
hereof, together with all rights, privileges, authority and powers of such
Pledgor in and to each such issuer or under the Organization Documents of each
such issuer, and the certificates, instruments and agreements representing such
Equity Interests and any and all interest of such Pledgor in the entries on the
books of any securities intermediary pertaining to any of the foregoing.
Notwithstanding anything to the contrary contained herein, the term “Initial
Pledged Interests” shall not include any Excluded Property.

                    “Initial Pledged Shares” shall mean, collectively, with
respect to each Pledgor, the issued and outstanding shares of capital stock of
each issuer which is an Unrestricted Subsidiary and described in Schedule III
hereof, together with all rights, privileges, authority and powers of such
Pledgor relating to such interests in each such issuer or under the Organization
Documents of each such issuer, and the certificates, instruments and agreements
representing such shares of capital stock and any and all interest of such
Pledgor in the entries on the books of any securities intermediary pertaining to
the Initial Pledged Shares. Notwithstanding anything to the contrary contained
herein, the term “Initial Pledged Shares” shall not include any Excluded
Property.

                    “Instruments” shall mean, collectively, with respect to each
Pledgor, all “instruments,” as such term is defined in Article 9 of the UCC, and
shall include, without limitation, all promissory notes, drafts, bills of
exchange or acceptances.

                    “Intercompany Notes” shall mean, with respect to each
Pledgor, all intercompany notes described on Schedule I hereto and all
promissory notes hereafter acquired by such Pledgor evidencing loans made by
such Pledgor to any other Pledgor or any Subsidiary of any Pledgor, all
certificates or instruments evidencing such intercompany notes, and all
amendments, restatements, supplements, extensions, renewals, replacements or
modifications thereof to the extent not prohibited by the terms of the Credit
Agreement, in each case to the extent not constituting Excluded Property.

                    “Letter of Credit” shall mean “Letter of Credit” as defined
in Section 5-102(a)(10) of the UCC.

                    “Pledged Collateral” shall have the meaning assigned to such
term in SECTION 2.1 hereof.

                    “Pledged Interests” shall mean, collectively, the Initial
Pledged Interests and the Additional Pledged Interests.

                    “Pledged Securities” shall mean, collectively, the Pledged
Interests and the Pledged Shares.

                    “Pledged Shares” shall mean, collectively, the Initial
Pledged Shares and the Additional Pledged Shares.

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                    “Pledgor” shall have the meaning assigned to such term in
the Preamble hereof.

                    “Secured Obligations” shall mean the Obligations (as defined
in the Credit Agreement), the Other Liabilities (as defined in the Credit
Agreement) and the Guaranteed Obligations; provided, however, that (x) Other
Liabilities shall be Secured Obligations solely to the extent that there is
sufficient Pledged Collateral following satisfaction of the Obligations, and (y)
Other Liabilities shall be Secured Obligations solely to the extent that, and
for so long as, the Obligations are secured and guaranteed.

                    “Securities Collateral” shall mean, collectively, the
Pledged Securities, the Intercompany Notes and the Distributions.

                    “Unrestricted Subsidiary” shall mean any Subsidiary that is
not a Restricted Subsidiary (as such term is defined in the Indenture).

                    SECTION 1.2. Interpretation. The rules of interpretation
specified in the Credit Agreement shall be applicable to this Agreement.

                    SECTION 1.3. Due Diligence Certificate. The Collateral Agent
and each Pledgor agree that the Due Diligence Certificate and all descriptions
of Pledged Collateral, schedules, amendments and supplements thereto are and
shall at all times remain a part of this Agreement.

ARTICLE II

GRANT OF SECURITY AND SECURED OBLIGATIONS

                    SECTION 2.1. Pledge. As collateral security for the payment
and performance in full of all the Secured Obligations, each Pledgor hereby
pledges and grants to the Collateral Agent for its benefit and for the benefit
of the other Credit Parties, a lien on and security interest in and to all of
the right, title and interest of such Pledgor in, to and under the following
personal property and interests in property, wherever located, and whether now
existing or hereafter arising or acquired from time to time (collectively, the
“Pledged Collateral”):

 

 

 

 

(i)

all Accounts;

 

 

 

 

(ii)

all Equipment, Goods, Inventory and Fixtures;

 

 

 

 

(iii)

all Documents, Instruments and Chattel Paper;

 

 

 

 

(iv)

all Letters of Credit and Letter-of-Credit Rights;

 

 

 

 

(v)

all Securities Collateral;

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(vi)

all Investment Property;

 

 

 

 

(vii)

the Commercial Tort Claims described in Section V of the Due Diligence
Certificate;

 

 

 

 

(viii)

all General Intangibles;

 

 

 

 

(ix)

all Deposit Accounts;

 

 

 

 

(x)

all Supporting Obligations;

 

 

 

 

(xi)

all books and records relating to any of the Pledged Collateral; and

 

 

 

 

(xii)

to the extent not covered by clauses (i) through (xi) of this sentence, all
other personal property of such Pledgor, whether tangible or intangible and all
Proceeds and products of each of the foregoing and all accessions to,
substitutions and replacements for, and rents, profits and products of, each of
the foregoing, any and all proceeds of any insurance, indemnity, warranty or
guaranty payable to such Pledgor from time to time with respect to any of the
foregoing.

                    Notwithstanding anything to the contrary contained in
clauses (i) through (xii) above, the security interest created by this Agreement
shall not extend to, and the term “Pledged Collateral” shall not include, any
Excluded Property.

                    The Pledgors shall from time to time, at the reasonable
request of the Collateral Agent after the occurrence of an Event of Default give
written notice to the Collateral Agent identifying in reasonable detail the
Excluded Property and shall provide to the Collateral Agent such other
information regarding the Excluded Property as the Collateral Agent may
reasonably request.

                    SECTION 2.2. Secured Obligations. This Agreement secures,
and the Pledged Collateral is collateral security for, the payment and
performance in full when due of the Secured Obligations.

                    SECTION 2.3. Security Interest. (a) Each Pledgor hereby
irrevocably authorizes the Collateral Agent at any time and from time to time to
authenticate and file in any relevant jurisdiction any initial financing
statements (including fixture filings) and amendments thereto that contain the
information required by Article 9 of the Uniform Commercial Code of each
applicable jurisdiction for the filing of any financing statement or amendment
relating to the Pledged Collateral, including, without limitation, (i) whether
such Pledgor is an organization, the type of organization and any organizational
identification number issued to such Pledgor, (ii) any financing or continuation
statements or other documents without the signature of such Pledgor where
permitted by law, including, without limitation, the filing of a financing
statement describing the Pledged Collateral as “all assets of the debtor,
wherever located, whether now

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owned or hereafter acquired or arising,” or words of similar import, and (iii)
in the case of a financing statement filed as a fixture filing or covering
Pledged Collateral constituting minerals or the like to be extracted or timber
to be cut, a sufficient description of the real property to which such Pledged
Collateral relates. Each Pledgor agrees to provide all information described in
clause (i) or (iii) of the immediately preceding sentence to the Collateral
Agent promptly upon request.

                    (b) Each Pledgor hereby ratifies its authorization for the
Collateral Agent to file in any relevant jurisdiction any initial financing
statements or amendments thereto relating to the Pledged Collateral if filed
prior to the date hereof.

ARTICLE III

PERFECTION; SUPPLEMENTS; FURTHER ASSURANCES;
USE OF PLEDGED COLLATERAL

                    SECTION 3.1. Delivery of Pledged Securities and Intercompany
Notes. Each Pledgor represents and warrants that all certificates or instruments
representing or evidencing Pledged Securities or Intercompany Notes in existence
on the date hereof have been delivered to the Collateral Agent in suitable form
for transfer by delivery or accompanied by duly executed instruments of transfer
or assignment in blank and that the Collateral Agent has a perfected first
priority security interest therein. Each Pledgor hereby agrees that all
certificates or instruments representing or evidencing Pledged Securities or
Intercompany Notes acquired by such Pledgor after the date hereof, shall, in the
manner required by Section 6.12 of the Credit Agreement, be delivered to and
held by or on behalf of the Collateral Agent pursuant hereto. All certificated
Securities Collateral shall be in suitable form for transfer by delivery or
shall be accompanied by duly executed instruments of transfer or assignment in
blank, all in form and substance reasonably satisfactory to the Collateral
Agent. The Collateral Agent shall have the right, at any time upon the
occurrence and during the continuance of any Event of Default, to endorse,
assign or otherwise transfer to or to register in the name of the Collateral
Agent or any of its nominees or endorse for negotiation any or all of the
Pledged Securities and Intercompany Notes, without any indication that such
Pledged Securities and Intercompany Notes are subject to the security interest
hereunder. In addition, the Collateral Agent shall have the right with written
notice to exchange certificates representing or evidencing Pledged Securities or
Intercompany Notes for certificates of smaller or larger denominations.

                    SECTION 3.2. Perfection of Uncertificated Securities
Collateral. Each Pledgor represents and warrants that the Collateral Agent has a
perfected first priority security interest in all uncertificated Pledged
Securities pledged by it hereunder that is in existence on the date hereof and
that the applicable Organization Documents do not require the consent of the
other shareholders, members, partners or other Person to permit the Collateral
Agent or its designee to be substituted for the applicable Pledgor as a
shareholder, member, partner or other equity

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owner, as applicable, thereto. Each Pledgor hereby agrees that if any of the
Pledged Securities are at any time not evidenced by certificates of ownership,
then each applicable Pledgor shall, to the extent permitted by applicable Law
and upon the request of the Collateral Agent, cause such pledge to be recorded
on the equityholder register or the books of the issuer, execute customary
pledge forms or other documents necessary or reasonably requested to complete
the pledge and give the Collateral Agent the right to transfer such Pledged
Securities under the terms hereof.

                    SECTION 3.3. Financing Statements and Other Filings;
Maintenance of Perfected Security Interest. Each Pledgor represents and warrants
that the only filings, registrations and recordings necessary and appropriate to
create, preserve, protect, publish notice of and perfect the security interest
granted by each Pledgor to the Collateral Agent (for the benefit of the Credit
Parties) pursuant to this Agreement in respect of the Pledged 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 are listed on Schedule II hereto. Each Pledgor
represents and warrants that all such filings, registrations and recordings have
been delivered to the Collateral Agent in completed and, to the extent necessary
or appropriate, duly executed form for filing in each governmental, municipal or
other office specified in Schedule II. Each Pledgor agrees that at the sole cost
and expense of the Pledgors, (i) to the extent required by this Agreement or the
Credit Agreement, such Pledgor will maintain the security interest created by
this Agreement in the Pledged Collateral as a perfected first priority (subject
only to Permitted Encumbrances having priority under applicable Law) security
interest and shall defend such security interest against the claims and demands
of all Persons (other than with respect to Permitted Encumbrances), and (ii) to
the extent required by this Agreement or the Credit Agreement, at any time and
from time to time, upon the written request of the Collateral Agent, such
Pledgor shall promptly and duly execute and deliver, and file and have recorded,
such further instruments and documents and take such further action as the
Collateral Agent may reasonably deem necessary for the purpose of obtaining or
preserving the full benefits of this Agreement and the rights and powers herein
granted, including the filing of any financing statements, continuation
statements and other documents (including this Agreement) under the UCC (or
other applicable Laws) in effect in any jurisdiction with respect to the
security interest created hereby and the execution and delivery of Blocked
Account Agreements, all in form reasonably satisfactory to the Collateral Agent
and in such offices wherever required by applicable Law to perfect, continue and
maintain a valid, enforceable, first priority (subject only to Permitted
Encumbrances having priority under applicable Law) security interest in the
Pledged Collateral as provided herein and to preserve the other rights and
interests granted to the Collateral Agent hereunder, as against third parties
(other than with respect to Permitted Encumbrances), with respect to the Pledged
Collateral.

                    SECTION 3.4. Other Actions. In order to further insure the
attachment, perfection and priority of, and the ability of the Collateral Agent
to enforce, the Collateral Agent’s security interest in the Pledged Collateral,
each Pledgor represents, warrants and agrees, in each case at such Pledgor’s own
expense, with respect to the following Pledged Collateral that:

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          (a) Instruments and Tangible Chattel Paper. As of the date hereof (i)
no amount payable under or in connection with any of the Pledged Collateral is
evidenced by any Instrument or Tangible Chattel Paper other than such
Instruments and Tangible Chattel Paper listed in Schedule IV hereof and (ii)
each Instrument and each item of Tangible Chattel Paper listed in Schedule IV
hereof, to the extent requested by the Collateral Agent, has been properly
endorsed, assigned and delivered to the Collateral Agent, accompanied by
instruments of transfer or assignment duly executed in blank. If any amount
payable under or in connection with any of the Pledged Collateral shall be
evidenced by any Instrument or Tangible Chattel Paper, the Pledgor acquiring
such Instrument or Tangible Chattel Paper 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
reasonably request from time to time.

 

 

 

          (b) Deposit Accounts. As of the date hereof (i) it does not maintain
any Deposit Accounts other than the accounts listed in Schedule 5.21(a) of the
Credit Agreement or Section III.C of the Due Diligence Certificate and (ii) the
Collateral Agent has a perfected first priority security interest in each
Blocked Account. No Pledgor shall grant Control of any Deposit Account or any
Blocked Account to any Person other than the Collateral Agent. The Pledgors
shall at all times comply with the cash receipt provisions set forth in Section
6.13 of the Credit Agreement.

 

 

 

          (c) Investment Property. (i) As of the date hereof (1) it has no
Securities Accounts or Commodity Accounts other than those listed in Section III
of the Due Diligence Certificate, (2) it does not directly (A) hold, (B) own or
(C) have any interest in any certificated securities or uncertificated
securities other than those constituting Pledged Securities and those maintained
in Securities Accounts listed in Section III.B of the Due Diligence Certificate,
except for (x) Equity Interests of Restricted Subsidiaries (as such term is
defined in the Indenture, (y) any Equity Interests held by it which constitute
Permitted Investments, and (z) Equity Interests of Foot Locker Spain S.L. On or
before January 31, 2010 (or such later date as the Collateral Agent may agree),
the Borrower shall (A) transfer the Equity Interests of Foot Locker Spain S.L.
to a Subsidiary of the Borrower which is not a Loan Party or (B) cause such
Equity Interests of Foot Locker Spain S.L. to become Pledged Securities
hereunder in accordance with the terms of this Agreement.

 

 

 

                    (ii) If any Pledgor shall at any time hold or acquire any
certificated securities constituting Investment Property, other than any
securities of Subsidiaries not required to be pledged hereunder, such Pledgor
shall promptly endorse, assign and deliver the same to the Collateral Agent,
accompanied by such instruments of transfer or assignment duly executed in
blank, all in form and substance reasonably satisfactory to the Collateral
Agent. If any securities now or hereafter acquired by any Pledgor constituting
Investment Property, other than any securities of Subsidiaries not required to
be pledged hereunder, are uncertificated and are issued to such Pledgor or its
nominee directly by the issuer thereof, such Pledgor shall promptly notify the
Collateral Agent

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thereof and pursuant to an agreement in form and substance reasonably
satisfactory to the Collateral Agent, cause the issuer to agree to comply with
instructions from the Collateral Agent as to such securities, without further
consent of any Pledgor or such nominee, or (b) arrange for the Collateral Agent
to become the registered owner of the securities. If at any time any Revolving
Credit Loans are outstanding, the applicable Pledgors shall, within sixty (60)
days following the making of any such Revolving Credit Loan (or such longer
period as to which the Collateral Agent may agree, but in any event not to
exceed ninety (90) days following the making of any such Revolving Credit Loan),
duly execute and deliver a Control Agreement with respect to each Securities
Account or Commodity Account with any Securities Intermediary or Commodity
Intermediary, as the case may be. Each Pledgor shall accept any cash and
Investment Property which are proceeds of the Pledged Interests in trust for the
benefit of the Collateral Agent and within five (5) Business Days of actual
receipt thereof, deposit any cash or Investment Property and any new securities,
instruments, documents or other property by reason of ownership of the
Investment Property received by it into an account in which the Collateral Agent
has Control. The Collateral Agent agrees with each Pledgor that the Collateral
Agent shall not give any instructions or directions to any issuer of
uncertificated securities, Securities Intermediary or Commodities Intermediary
and shall not withhold its consent to the exercise of any withdrawal or dealing
rights by such Pledgor, unless a Triggering Event has occurred and is
continuing. No Pledgor shall grant Control over any Investment Property to any
Person other than the Collateral Agent.

 

 

 

                    (iii) As between the Collateral Agent and the Pledgors, the
Pledgors shall bear the investment risk with respect to the Investment Property
and Pledged Securities, and the risk of loss of, damage to, or the destruction
of the Investment Property and Pledged Securities, whether in the possession of,
or subject to the control of, the Collateral Agent, any Pledgor or any other
Person. Each Pledgor shall promptly pay all Claims and fees of whatever kind or
nature with respect to the Investment Property and Pledged Securities pledged by
it under this Agreement. In the event any Pledgor shall fail to make such
payment contemplated in the immediately preceding sentence, the Collateral Agent
may do so for the account of such Pledgor and the Pledgors shall promptly
reimburse and indemnify the Collateral Agent for all costs and expenses incurred
by the Collateral Agent under this SECTION 3.4(c).

 

 

 

          (d) Electronic Chattel Paper and Transferable Records. As of the date
hereof no amount payable under or in connection with any of the Pledged
Collateral is evidenced by any Electronic Chattel Paper or any “transferable
record” (as that term is defined in Section 201 of the Federal Electronic
Signatures in Global and National Commerce Act, or in Section 16 of the Uniform
Electronic Transactions Act as in effect in any relevant jurisdiction). If any
amount payable under or in connection with any of the Pledged Collateral shall
be evidenced by any Electronic Chattel Paper or any transferable record with a
face value in excess of $2,000,000 individually, the Pledgor acquiring such
Electronic Chattel Paper or transferable record shall promptly notify the
Collateral Agent thereof and shall take such action as the Collateral Agent may

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reasonably request to vest in the Collateral Agent control under UCC Section
9-105 of such Electronic Chattel Paper or control under Section 201 of the
Federal Electronic Signatures in Global and National Commerce Act or, as the
case may be, Section 16 of the Uniform Electronic Transactions Act, as so in
effect in such jurisdiction, of such transferable record. The Collateral Agent
agrees with such Pledgor that the Collateral Agent will arrange, pursuant to
procedures reasonably satisfactory to the Collateral Agent and so long as such
procedures will not result in the Collateral Agent’s loss of control, for such
Pledgor to make alterations to the Electronic Chattel Paper or transferable
record permitted under UCC Section 9-105 or, as the case may be, Section 201 of
the Federal Electronic Signatures in Global and National Commerce Act of Section
16 of the Uniform Electronic Transactions Act for a party in control to allow
without loss of control, unless an Event of Default has occurred and is
continuing or would occur after taking into account any action by such Pledgor
with respect to such Electronic Chattel Paper or transferable record.

 

 

 

          (e) Letter-of-Credit Rights. If such Pledgor is at any time a
beneficiary under a Letter of Credit with a face value in excess of $1,000,000
individually now or hereafter issued in favor of such Pledgor, other than a
Letter of Credit issued pursuant to the Credit Agreement, such Pledgor shall
promptly notify the Collateral Agent thereof and such Pledgor shall, at the
request of the Collateral Agent, pursuant to an agreement in form and substance
reasonably satisfactory to the Collateral Agent, either (i) arrange for the
issuer and any confirmer of such Letter of Credit to consent to an assignment to
the Collateral Agent of the proceeds of any drawing under the Letter of Credit
or (ii) arrange for the Collateral Agent to become the transferee beneficiary of
such Letter of Credit, with the Collateral Agent agreeing, in each case, that
the proceeds of any drawing under the Letter of Credit are to be applied as
provided in the Credit Agreement.

 

 

 

          (f) Commercial Tort Claims. As of the date hereof it holds no
Commercial Tort Claims other than those listed in Section V of the Due Diligence
Certificate. If any Pledgor shall at any time hold or acquire a Commercial Tort
Claim with a value in excess of $2,000,000 individually, such Pledgor shall
promptly notify the Collateral Agent in writing signed by such Pledgor of the
brief details thereof and grant to the Collateral Agent in such writing a
security interest therein and in the Proceeds thereof, all upon the terms of
this Agreement, with such writing to be in form and substance reasonably
satisfactory to the Collateral Agent.

                      SECTION 3.5. Joinder of Additional Borrowers or
Guarantors. The Pledgors shall cause each direct or indirect Subsidiary of the
Borrower from time to time, after the date hereof to the extent required under
Section 6.12 of the Credit Agreement to become a Loan Party thereunder, to
execute and deliver to the Collateral Agent a Due Diligence Certificate and such
other documents and agreements as are required under Section 6.12 of the Credit
Agreement, in each case, within thirty (30) days (or such longer period as the
Administrative Agent shall agree) of the date on which it was acquired or
created, and upon such execution and delivery, such

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Subsidiary shall constitute a “Pledgor” for all purposes hereunder with the same
force and effect as if originally named as a Pledgor herein.

                    SECTION 3.6. Supplements; Further Assurances. Each Pledgor
shall take such further actions, and execute and deliver to the Collateral Agent
such additional assignments, agreements, supplements, powers and instruments, as
the Collateral Agent may in its reasonable judgment deem necessary or
appropriate, wherever required by law, in order to perfect, preserve and protect
the security interest in the Pledged Collateral and to the extent required and
as provided herein and the rights and interests granted to the Collateral Agent
hereunder, to carry into effect the purposes hereof or better to assure and
confirm unto the Collateral Agent or permit the Collateral Agent to exercise and
enforce its rights, powers and remedies hereunder with respect to any Pledged
Collateral. If an Event of Default has occurred and is continuing, the
Collateral Agent may institute and maintain, in its own name or in the name of
any Pledgor, such suits and proceedings as the Collateral Agent may be advised
by counsel shall be necessary or expedient to prevent any impairment of the
security interest in or the perfection thereof in the Pledged Collateral. All of
the foregoing shall be at the sole cost and expense of the Pledgors. The
Pledgors and the Collateral Agent acknowledge that this Agreement is intended to
grant to the Collateral Agent for the benefit of the Credit Parties a security
interest in and Lien upon the Pledged Collateral and shall not constitute or
create a present assignment of any of the Pledged Collateral.

ARTICLE IV

REPRESENTATIONS, WARRANTIES AND COVENANTS

                    Each Pledgor represents, warrants and covenants as follows:

                    SECTION 4.1. Title. No valid financing statement or other
public notice indicating the existence of a valid Lien on all or any part of the
Pledged Collateral is on file or of record in any public office, except such as
have been filed in favor of the Collateral Agent pursuant to this Agreement or
as are permitted by the Credit Agreement. No Person other than the Collateral
Agent has Control or possession of all or any part of the Pledged Collateral
consisting of Instruments, Securities Collateral, Investment Property, and
Deposit Accounts, except as permitted by the Credit Agreement.

                    SECTION 4.2. Limitation on Liens; Defense of Claims;
Transferability of Pledged Collateral. Each Pledgor is as of the date hereof,
and, as to Pledged Collateral acquired by it from time to time after the date
hereof, such Pledgor will be, the sole direct and beneficial owner of all
Pledged Collateral pledged by it hereunder free from any Lien or other right,
title or interest of any Person other than the Liens and security interest
created by this Agreement and Permitted Encumbrances. Each Pledgor shall, at its
own cost and expense, defend title to the Pledged Collateral pledged by it
hereunder and the security interest therein and Lien thereon

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granted to the Collateral Agent and the priority thereof against all claims and
demands of all Persons, at its own cost and expense, at any time claiming any
interest therein adverse to the Collateral Agent or any other Credit Party other
than Permitted Encumbrances. There is no agreement, and no Pledgor shall enter
into any agreement or take any other action, that would restrict the
transferability of any of the Pledged Collateral or otherwise impair or conflict
with such Pledgors’ obligations or the rights of the Collateral Agent hereunder.

                    SECTION 4.3. Chief Executive Office; Change of Name;
Jurisdiction of Organization. (a) The exact legal name, type of organization,
jurisdiction of organization, federal taxpayer identification number,
organizational identification number (if any) and chief executive office of such
Pledgor is indicated next to its name in Sections I.A and I.B of the Due
Diligence Certificate.

                    (b) The Collateral Agent may rely on opinions of counsel as
to whether any or all UCC financing statements of the Pledgors need to be
amended as a result of any of the changes described in Section 6.14 of the
Credit Agreement. If any Pledgor fails to provide information to the Collateral
Agent about such changes on a timely basis, the Collateral Agent shall not be
liable or responsible to any party for any failure to maintain a perfected
security interest in such Pledgor’s property constituting Pledged Collateral,
for which the Collateral Agent needed to have information relating to such
changes. The Collateral Agent shall have no duty to inquire about such changes
if any Pledgor does not inform the Collateral Agent of such changes, the parties
acknowledging and agreeing that it would not be feasible or practical for the
Collateral Agent to search for information on such changes if such information
is not provided by any Pledgor.

                    SECTION 4.4. Due Authorization and Issuance. All of the
Initial Pledged Shares have been, and to the extent any Pledged Shares are
hereafter issued, such shares will be, upon such issuance, duly authorized,
validly issued and, to the extent applicable, fully paid and non-assessable. All
of the Initial Pledged Interests have been fully paid for, and there is no
amount or other obligation owing by any Pledgor to any issuer of the Initial
Pledged Interests in exchange for or in connection with the issuance of the
Initial Pledged Interests or any Pledgor’s status as a partner or a member of
any issuer of the Initial Pledged Interests.

                    SECTION 4.5. No Conflicts, Consents, etc. No consent of any
party (including, without limitation, equity holders or creditors of such
Pledgor) and no consent, authorization, approval, license or other action by,
and no notice to or filing with, any Governmental Authority or regulatory body
or other Person is required (A) for the pledge by such Pledgor of the Pledged
Collateral pledged by it pursuant to this Agreement or for the execution,
delivery or performance hereof by such Pledgor, (B) for the exercise by the
Collateral Agent of the voting or other rights provided for in this Agreement or
(C) subject to Section 6.1 hereof, for the exercise by the Collateral Agent of
the remedies in respect of the Pledged Collateral pursuant to this Agreement.
Following the occurrence and during the continuation of an Event of Default, if
the Collateral Agent desires to exercise any remedies, voting or consensual
rights or attorney-in-fact powers set forth in this Agreement and determines it

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necessary to obtain any approvals or consents of any Governmental Authority or
any other Person therefor, then, upon the reasonable request of the Collateral
Agent, such Pledgor agrees to use commercially reasonable efforts to assist and
aid the Collateral Agent to obtain as soon as commercially practicable any
necessary approvals or consents for the exercise of any such remedies, rights
and powers.

                    SECTION 4.6. Pledged Collateral. All information set forth
herein, including the schedules annexed hereto, and all information contained in
any documents, schedules and lists heretofore delivered to any Credit Party in
connection with this Agreement, in each case, relating to the Pledged
Collateral, is accurate and complete as of the date hereof (or, if such
information is required to be accurate as of a certain date, then as of such
date) in all material respects. The Pledged Collateral described on the
schedules annexed hereto constitutes all of the property of such type of Pledged
Collateral (other than Excluded Property) owned or held by the Pledgors.

ARTICLE V

CERTAIN PROVISIONS CONCERNING SECURITIES COLLATERAL

                    SECTION 5.1. Pledge of Additional Securities Collateral.
Each Pledgor shall, upon obtaining any Pledged Securities or Intercompany Notes
of any Person required to be pledged hereunder, accept the same in trust for the
benefit of the Collateral Agent and forthwith deliver to the Collateral Agent a
pledge amendment, duly executed by such Pledgor, in substantially the form of
Exhibit 1 annexed hereto (each, a “Pledge Amendment”), and the certificates and
other documents required under SECTION 3.1 and SECTION 3.2 hereof in respect of
the additional Pledged Securities or Intercompany Notes which are to be pledged
pursuant to this Agreement, and confirming the attachment of the Lien hereby
created on and in respect of such additional Pledged Securities or Intercompany
Notes. Each Pledgor hereby authorizes the Collateral Agent to attach each Pledge
Amendment to this Agreement and agrees that all Pledged Securities or
Intercompany Notes listed on any Pledge Amendment delivered to the Collateral
Agent shall for all purposes hereunder be considered Pledged Collateral.

                    SECTION 5.2. Voting Rights; Distributions; Etc.

                    (i) So long as no Triggering Event shall have occurred and
be continuing, each Pledgor shall be entitled to receive and retain, and to
utilize free and clear of the Lien hereof, any and all Distributions, but only
if and to the extent made in accordance with the provisions of the Credit
Agreement; provided, however, that any and all such Distributions consisting of
rights or interests in the form of securities shall be forthwith delivered to
the Collateral Agent to hold as Pledged Collateral and shall, if received by any
Pledgor, be received in trust for the benefit of the Collateral Agent, be
segregated from the other property or funds of such Pledgor and be forthwith
delivered to the Collateral Agent as Pledged Collateral in the same

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form as so received (with any necessary endorsement). The Collateral Agent shall
be deemed without further action or formality to have granted to each Pledgor
all necessary consents relating to voting rights and shall, if necessary, upon
written request of any Pledgor and at the sole cost and expense of the Pledgors,
from time to time execute and deliver (or cause to be executed and delivered) to
such Pledgor all such instruments as such Pledgor may reasonably request in
order to permit such Pledgor to receive the Distributions which it is authorized
to receive and retain pursuant to this SECTION 5.2(i).

                    (ii) So long as no Event of Default shall have occurred and
be continuing, each Pledgor shall be entitled to exercise any and all voting and
other consensual rights pertaining to the Securities Collateral or any part
thereof for any purpose not inconsistent with the terms or purposes hereof, the
Credit Agreement or any other document evidencing the Secured Obligations. The
Collateral Agent shall be deemed without further action or formality to have
granted to each Pledgor all necessary consents relating to voting rights and
shall, if necessary, upon written request of any Pledgor and at the sole cost
and expense of the Pledgors, from time to time execute and deliver (or cause to
be executed and delivered) to such Pledgor all such instruments as such Pledgor
may reasonably request in order to permit such Pledgor to exercise the voting
and other rights which it is entitled to exercise pursuant to this SECTION
5.2(ii).

                    (iii) Upon the occurrence and during the continuance of any
Triggering Event, all rights of each Pledgor to receive Distributions which it
would otherwise be authorized to receive and retain pursuant to SECTION 5.2(i)
hereof shall cease and all such rights shall thereupon become vested in the
Collateral Agent, which shall thereupon have the sole right to receive and hold
as Pledged Collateral such Distributions. After such Triggering Event has been
cured, each Pledgor shall have the right to receive the payments, proceeds,
dividends, distributions, monies, compensation, property, assets, instruments or
rights which it would be authorized to receive and retain pursuant to SECTION
5.2(i) hereof.

                    (iv) Upon the occurrence and during the continuance of any
Event of Default, all rights of each Pledgor to exercise the voting and other
consensual rights it would otherwise be entitled to exercise pursuant to SECTION
5.2(ii) hereof without any action, other than, in the case of any Securities
Collateral, or the giving of any notice shall immediately cease, and all such
rights shall thereupon become vested in the Collateral Agent, which shall
thereupon have the sole right to exercise such voting and other consensual
rights; provided that the Collateral Agent shall have the right, in its sole
discretion, from time to time following the occurrence and continuance of an
Event of Default to permit such Pledgor to exercise such rights under SECTION
5.2(ii). If no Event of Default exists, each Pledgor shall have the right to
exercise the voting, managerial and other consensual rights and powers that it
would otherwise be entitled to pursuant to SECTION 5.2(ii).

                    (v) Each Pledgor shall, at its sole cost and expense, from
time to time execute and deliver to the Collateral Agent appropriate instruments
as the Collateral Agent may reasonably request in order to permit the Collateral
Agent to receive all Distributions which it

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may be entitled to receive under SECTION 5.2(i) hereof and to exercise the
voting and other rights which it may be entitled to exercise pursuant to SECTION
5.2(ii) hereof.

                    (vi) All Distributions which are received by any Pledgor
contrary to the provisions of SECTION 5.2(i) hereof shall be received in trust
for the benefit of the Collateral Agent, shall be segregated from other funds of
such Pledgor and shall promptly be paid over to the Collateral Agent as Pledged
Collateral in the same form as so received (with any necessary endorsement).

                    SECTION 5.3. Defaults, Etc. Such Pledgor is not in default
in the payment of any portion of any mandatory capital contribution, if any,
required to be made under any agreement to which such Pledgor is a party
relating to the Pledged Securities pledged by it, and such Pledgor is not in
violation of any other provisions of any such agreement to which such Pledgor is
a party, or otherwise in default or violation thereunder. No Securities
Collateral pledged by such Pledgor is subject to any defense, offset or
counterclaim, nor have any of the foregoing been asserted or alleged against
such Pledgor by any Person with respect thereto, and as of the date hereof,
there are no certificates, instruments, documents or other writings (other than
the Organization Documents and certificates, if any, delivered to the Collateral
Agent) which evidence any Pledged Securities of such Pledgor.

                    SECTION 5.4. Certain Agreements of Pledgors As Issuers and
Holders of Equity Interests.

                    (i) In the case of each Pledgor which is an issuer of
Securities Collateral, such Pledgor agrees to be bound by the terms of this
Agreement relating to the Securities Collateral issued by it and will comply
with such terms insofar as such terms are applicable to it.

                    (ii) In the case of each Pledgor which is a partner in a
partnership, limited liability company or other entity that is an issuer of
Equity Interests pledged hereunder, such Pledgor hereby consents to the extent
required by the applicable Organization Document of such issuer to the pledge by
each other Pledgor, pursuant to the terms hereof, of the Pledged Interests in
such partnership, limited liability company or other entity and, upon the
occurrence and during the continuance of an Event of Default, to the transfer of
such Pledged Interests to the Collateral Agent or its nominee and to the
substitution of the Collateral Agent or its nominee as a substituted partner or
member in such partnership, limited liability company or other entity with all
the rights, powers and duties of a general partner or a limited partner or
member, as the case may be.

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ARTICLE VI

CERTAIN PROVISIONS CONCERNING
INTELLECTUAL PROPERTY

                    SECTION 6.1. Grant of License. For the purpose of enabling
the Collateral Agent, during the continuance of an Event of Default, to exercise
rights and remedies under Article VIII hereof at such time as the Collateral
Agent shall be lawfully entitled to exercise such rights and remedies, and for
no other purpose, each Pledgor hereby grants to the Collateral Agent, to the
extent sublicenseable with respect to Intellectual Property licensed to such
Pledgor (and to the extent permitted under the terms of the applicable license),
an irrevocable, non-exclusive license (exercisable without payment of royalty or
other compensation to such Pledgor) to use, license or sublicense any of the
Intellectual Property now owned or hereafter acquired by such Pledgor, wherever
the same may be located, including in such license access to all media in which
any of the licensed Intellectual Property may be recorded or stored and to all
computer programs used for the compilation or printout hereof, and subject in
the case of licenses of trademarks and service marks, to rights of quality
control and inspection in favor of such Pledgor solely to the extent necessary
to avoid risk of invalidation of such licenses of such trademarks and service
marks.

                    SECTION 6.2. No Violations. No Pledgor shall knowingly use
any Intellectual Property in a manner that violates the Intellectual Property
rights of any other Person with respect to such Intellectual Property except, in
each case, as could not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect.

ARTICLE VII

CERTAIN PROVISIONS CONCERNING ACCOUNTS

                    SECTION 7.1. Special Representations and Warranties. As of
the time when each of its Accounts is included in the Borrowing Base as an
Eligible Credit Card Receivable, each Pledgor shall be deemed to have
represented and warranted that such Account and all records, papers and
documents relating thereto (i) are genuine and correct and in all material
respects what they purport to be, (ii) represent the legal, valid and binding
obligation of the account debtor, except as such enforceability may be limited
by bankruptcy, insolvency, reorganization, moratorium or similar laws relating
to or limiting creditors’ rights generally or by equitable principles relating
to enforceability, evidencing obligations unpaid and owed by such account
debtor, arising out of the performance of labor or services or the sale, lease,
license, assignment or other disposition and delivery of the goods or other
property listed therein or out of an advance or a loan, (iii) are in all
material respects in compliance and conform with all applicable material
federal, state and local laws and applicable Laws of any relevant foreign
jurisdiction.

                    SECTION 7.2. Maintenance of Records. Each Pledgor shall keep
and maintain at its own cost and expense materially complete records of each
Account, in a manner consistent with prudent business practice, including,
without limitation, records of all payments received, all credits granted
thereon, all merchandise returned and all other documentation relating thereto.

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Each Pledgor shall, at such Pledgor’s sole cost and expense, upon the Collateral
Agent’s written demand made at any time after the occurrence and during the
continuance of any Event of Default, deliver all tangible evidence of Accounts
in its possession or control, including, without limitation, all documents
evidencing Accounts and any books and records relating thereto to the Collateral
Agent or to its representatives (copies of which evidence and books and records
may be retained by such Pledgor).

                    SECTION 7.3. Legend. Each Pledgor shall legend, at the
request of the Collateral Agent made at any time after the occurrence and during
the continuance of any Event of Default and in form and manner reasonably
satisfactory to the Collateral Agent, the Instruments, Documents and Chattel
Paper of such Pledgor with an appropriate reference to the fact that such
Pledged Collateral have been assigned to the Collateral Agent for the benefit of
the Credit Parties and that the Collateral Agent has a security interest
therein.

                    SECTION 7.4. Modification of Terms, Etc. No Pledgor shall
rescind or cancel any indebtedness evidenced by any Account or modify any term
thereof or make any adjustment with respect thereto except in the ordinary
course of business consistent with prudent business practice, or extend or renew
any such indebtedness except in the ordinary course of business consistent with
prudent business practice or compromise or settle any dispute, claim, suit or
legal proceeding relating thereto or sell any Account or interest therein except
in the ordinary course of business consistent with prudent business practice, in
each case without the prior written consent of the Collateral Agent.

                    SECTION 7.5. Collection. Each Pledgor shall use commercially
reasonable efforts to cause to be collected from the account debtor of each of
the Accounts, as and when due in the ordinary course of business consistent with
prudent business practice (including, without limitation, Accounts that are
delinquent, such Accounts to be collected in accordance with generally accepted
commercial collection procedures), any and all amounts owing under or on account
of such Account, and apply forthwith upon receipt thereof all such amounts as
are so collected to the outstanding balance of such Account. The costs and
expenses (including, without limitation, reasonable attorneys’ fees) of
collection, in any case, whether incurred by any Pledgor or the Collateral Agent
or any other Credit Party, shall be paid by the Pledgors, in accordance with the
terms of the Loan Documents.

ARTICLE VIII

REMEDIES

                    SECTION 8.1. Remedies. Upon the occurrence and during the
continuance of any Event of Default the Collateral Agent may from time to time
in respect of the Pledged Collateral, in addition to the other rights and
remedies provided for herein or otherwise available to it:

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                    (i) Personally, or by agents or attorneys, immediately take
possession of the Pledged Collateral or any part thereof, from any Pledgor or
any other Person who then has possession of any part thereof with or without
notice or process of law, and for that purpose may enter upon any Pledgor’s
premises where any of the Pledged Collateral is located, remove such Pledged
Collateral, remain present at such premises to receive copies of all
communications and remittances relating to the Pledged Collateral and use in
connection with such removal and possession any and all services, supplies, aids
and other facilities of any Pledgor;

                    (ii) Demand, sue for, collect or receive any money or
property at any time payable or receivable in respect of the Pledged Collateral
including, without limitation, instructing the obligor or obligors on any
agreement, instrument or other obligation constituting part of the Pledged
Collateral to make any payment required by the terms of such agreement,
instrument or other obligation directly to the Collateral Agent, and in
connection with any of the foregoing, compromise, settle, extend the time for
payment and make other modifications with respect thereto; provided, however,
that in the event that any such payments are made directly to any Pledgor, prior
to receipt by any such obligor of such instruction, such Pledgor shall segregate
all amounts received pursuant thereto in trust for the benefit of the Collateral
Agent and shall promptly pay such amounts to the Collateral Agent;

                    (iii) Sell, assign, lease or otherwise liquidate, or direct
any Pledgor to sell, assign, lease or otherwise liquidate, any and all
investments made in whole or in part with the Pledged Collateral or any part
thereof, and take possession of the proceeds of any such sale, assignment, lease
or liquidation;

                    (iv) Take possession of the Pledged Collateral or any part
thereof, by directing any Pledgor in writing to deliver the same to the
Collateral Agent at any place or places so designated by the Collateral Agent,
in which event such Pledgor shall at its own expense: (A) forthwith cause the
same to be moved to the place or places designated by the Collateral Agent and
therewith delivered to the Collateral Agent, (B) store and keep any Pledged
Collateral so delivered to the Collateral Agent at such place or places pending
further action by the Collateral Agent and (C) while the Pledged Collateral
shall be so stored and kept, provide such security and maintenance services as
shall be necessary to protect the same and to preserve and maintain them in good
condition. Each Pledgor’s obligation to deliver the Pledged Collateral as
contemplated in this SECTION 8.1(iv) is of the essence hereof. Upon application
to a court of equity having jurisdiction, the Collateral Agent shall be entitled
to a decree requiring specific performance by any Pledgor of such obligation;

                    (v) Withdraw all moneys, instruments, securities and other
property in any bank, financial securities, deposit or other account of any
Pledgor constituting Pledged Collateral for application to the Secured
Obligations as provided in SECTION 8.6 hereof;

                    (vi) Retain and apply the Distributions to the Secured
Obligations as provided in SECTION 8.6 hereof;

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                    (vii) Exercise any and all rights as beneficial and legal
owner of the Pledged Collateral, including, without limitation, perfecting
assignment of and exercising any and all voting, consensual and other rights and
powers with respect to any Pledged Collateral; and

                    (viii) Exercise all the rights and remedies of a secured
party under the UCC, and the Collateral Agent may also in its sole discretion,
without notice except as specified in SECTION 8.2 hereof, sell, assign or lease
the Pledged Collateral or any part thereof in one or more parcels at public or
private sale, at any exchange, broker’s board or at any of the Collateral
Agent’s offices or elsewhere, for cash, on credit or for future delivery, and at
such price or prices and upon such other terms as the Collateral Agent may deem
commercially reasonable. The Collateral Agent or any other Credit Party or any
of their respective Affiliates may be the purchaser, lessee, assignee or
recipient of any or all of the Pledged Collateral at any such sale and shall be
entitled, for the purpose of bidding and making settlement or payment of the
purchase price for all or any portion of the Pledged Collateral sold, assigned
or leased at such sale, to use and apply any of the Secured Obligations owed to
such Person as a credit on account of the purchase price of any Pledged
Collateral payable by such Person at such sale. Each purchaser, assignee, lessee
or recipient at any such sale shall acquire the property sold, assigned or
leased absolutely free from any claim or right on the part of any Pledgor, and
each Pledgor hereby waives, to the fullest extent permitted by law, all rights
of redemption, stay and/or appraisal which it now has or may at any time in the
future have under any rule of law or statute now existing or hereafter enacted.
The Collateral Agent shall not be obligated to make any sale of Pledged
Collateral regardless of notice of sale having been given. The Collateral Agent
may adjourn any public or private sale from time to time by announcement at the
time and place fixed therefor, and such sale may, without further notice, be
made at the time and place to which it was so adjourned. Each Pledgor hereby
waives, to the fullest extent permitted by law, any claims against the
Collateral Agent arising by reason of the fact that the price at which any
Pledged Collateral may have been sold, assigned or leased at such a private sale
was less than the price which might have been obtained at a public sale, even if
the Collateral Agent accepts the first offer received and does not offer such
Pledged Collateral to more than one offeree.

                    SECTION 8.2. Notice of Sale. Each Pledgor acknowledges and
agrees that, to the extent notice of sale or other disposition of Pledged
Collateral shall be required by applicable Law and unless the Pledged 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 such Pledgor such advance notice as may be practicable under the
circumstances), ten (10) days’ prior notice to such Pledgor of the time and
place of any public sale or of the time after which any private sale or other
intended disposition is to take place shall be commercially reasonable
notification of such matters. No notification need be given to any Pledgor if it
has signed, after the occurrence and during the continuance of an Event of
Default, a statement renouncing or modifying (as permitted under law) any right
to notification of sale or other intended disposition.

                    SECTION 8.3. Waiver of Notice and Claims. Each Pledgor
hereby waives, to the fullest extent permitted by applicable Law, notice or
judicial hearing in connection with the

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Collateral Agent’s taking possession or the Collateral Agent’s disposition of
any of the Pledged Collateral pursuant to this Agreement or the Credit
Agreement, including, without limitation, any and all prior notice and hearing
for any prejudgment remedy or remedies and any such right which such Pledgor
would otherwise have under law, and each Pledgor hereby further waives, to the
fullest extent permitted by applicable Law: (i) all damages occasioned by such
taking of possession, (ii) all other requirements as to the time, place and
terms of sale or other requirements with respect to the enforcement of the
Collateral Agent’s rights hereunder and (iii) all rights of redemption,
appraisal, valuation, stay, extension or moratorium now or hereafter in force
under any applicable Law. The Collateral Agent shall not be liable for any
incorrect or improper payment made pursuant to this Article VIII in the absence
of gross negligence or willful misconduct. Any sale of, or the grant of options
to purchase, or any other realization upon, any Pledged Collateral shall operate
to divest all right, title, interest, claim and demand, either at law or in
equity, of the applicable Pledgor therein and thereto, and shall be a perpetual
bar both at law and in equity against such Pledgor and against any and all
Persons claiming or attempting to claim the Pledged Collateral so sold, optioned
or realized upon, or any part thereof, from, through or under such Pledgor.

                    SECTION 8.4. Certain Sales of Pledged Collateral.

                    (i) Each Pledgor recognizes that, by reason of certain
prohibitions contained in law, rules, regulations or orders of any Governmental
Authority, the Collateral Agent may be compelled, with respect to any sale of
all or any part of the Pledged Collateral, to limit purchasers to those who meet
the requirements of such Governmental Authority. Each Pledgor acknowledges that
any such sales may be at prices and on terms less favorable to the Collateral
Agent than those obtainable through a public sale without such restrictions,
and, notwithstanding such circumstances, agrees that any such restricted sale
shall be deemed to have been made in a commercially reasonable manner and that,
except as may be required by applicable Law, the Collateral Agent shall have no
obligation to engage in public sales.

                    (ii) Each Pledgor recognizes that, by reason of certain
prohibitions contained in the Securities Act, and applicable state securities
laws, the Collateral Agent may be compelled, with respect to any sale of all or
any part of the Securities Collateral and Investment Property, to limit
purchasers to Persons who will agree, among other things, to acquire such
Securities Collateral or Investment Property for their own account, for
investment and not with a view to the distribution or resale thereof. Each
Pledgor acknowledges that any such private sales may be at prices and on terms
less favorable to the Collateral Agent than those obtainable through a public
sale without such restrictions (including, without limitation, a public offering
made pursuant to a registration statement under the Securities Act), and,
notwithstanding such circumstances, agrees that any such private sale shall be
deemed to have been made in a commercially reasonable manner and that the
Collateral Agent shall have no obligation to engage in public sales and no
obligation to delay the sale of any Securities Collateral or Investment Property
for the period of time necessary to permit the issuer thereof to register it for
a form of public sale requiring registration under the Securities Act or under
applicable state securities laws, even if such issuer would agree to do so.

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                    (iii) If the Collateral Agent determines to exercise its
right to sell any or all of the Securities Collateral or Investment Property,
upon written request, the applicable Pledgor shall from time to time furnish to
the Collateral Agent all such information as the Collateral Agent may reasonably
request in order to determine the number of securities included in the
Securities Collateral or Investment Property which may be sold by the Collateral
Agent as exempt transactions under the Securities Act and the rules of the
Securities and Exchange Commission thereunder, as the same are from time to time
in effect.

                    (iv) Each Pledgor further agrees that a breach of any of the
covenants contained in this SECTION 8.4 will cause irreparable injury to the
Collateral Agent and other Credit Parties, that the Collateral Agent and the
other Credit Parties have no adequate remedy at law in respect of such breach
and, as a consequence, that each and every covenant contained in this SECTION
8.4 shall be specifically enforceable against such Pledgor, and such Pledgor
hereby waives and agrees not to assert any defenses against an action for
specific performance of such covenants except for a defense that no Event of
Default has occurred and is continuing.

                    SECTION 8.5. No Waiver; Cumulative Remedies.

                    (i) No failure on the part of the Collateral Agent to
exercise, no course of dealing with respect to, and no delay on the part of the
Collateral Agent in exercising, any right, power or remedy hereunder shall
operate as a waiver thereof; nor shall any single or partial exercise of any
such right, power or remedy hereunder preclude any other or further exercise
thereof or the exercise of any other right, power or remedy; nor shall the
Collateral Agent be required to look first to, enforce or exhaust any other
security, collateral or guaranties. The remedies herein provided are cumulative
and are not exclusive of any remedies provided by law.

                    (ii) In the event that the Collateral Agent shall have
instituted any proceeding to enforce any right, power or remedy under this
Agreement by foreclosure, sale, entry or otherwise, and such proceeding shall
have been discontinued or abandoned for any reason or shall have been determined
adversely to the Collateral Agent, then and in every such case, the Pledgors,
the Collateral Agent and each other Credit Party shall be restored to their
respective former positions and rights hereunder with respect to the Pledged
Collateral, and all rights, remedies and powers of the Collateral Agent and the
other Credit Parties shall continue as if no such proceeding had been
instituted.

                    SECTION 8.6. Application of Proceeds. The proceeds received
by the Collateral Agent in respect of any sale of, collection from or other
realization upon all or any part of the Pledged Collateral pursuant to the
exercise by the Collateral Agent of its remedies shall be applied, together with
any other sums then held by the Collateral Agent pursuant to this Agreement, in
accordance with and as set forth in Section 8.03 of the Credit Agreement.

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ARTICLE IX

MISCELLANEOUS

                    SECTION 9.1. Concerning Collateral Agent.

                    (i) The Collateral Agent has been appointed as collateral
agent pursuant to the Credit Agreement. The actions of the Collateral Agent
hereunder are subject to the provisions of the Credit Agreement. The Collateral
Agent shall have the right hereunder to make demands, to give notices, to
exercise or refrain from exercising any rights, and to take or refrain from
taking action (including, without limitation, the release or substitution of the
Pledged Collateral), in accordance with this Agreement and the Credit Agreement.
The Collateral Agent may employ agents and attorneys-in-fact in connection
herewith and shall not be liable for the negligence or misconduct of any such
agents or attorneys-in-fact selected by it in good faith. The Collateral Agent
may resign and a successor Collateral Agent may be appointed in the manner
provided in the Credit Agreement. Upon the acceptance of any appointment as the
Collateral Agent by a successor Collateral Agent, that successor Collateral
Agent shall thereupon succeed to and become vested with all the rights, powers,
privileges and duties of the retiring Collateral Agent under this Agreement, and
the retiring Collateral Agent shall thereupon be discharged from its duties and
obligations under this Agreement. After any retiring Collateral Agent’s
resignation, the provisions hereof shall inure to its benefit as to any actions
taken or omitted to be taken by it under this Agreement while it was the
Collateral Agent.

                    (ii) The Collateral Agent shall be deemed to have exercised
reasonable care in the custody and preservation of the Pledged Collateral in its
possession if such Pledged Collateral is accorded treatment substantially
equivalent to that which the Collateral Agent, in its individual capacity,
accords its own property consisting of similar instruments or interests, it
being understood that neither the Collateral Agent nor any of the other Credit
Parties shall have responsibility for (i) ascertaining or taking action with
respect to calls, conversions, exchanges, maturities, tenders or other matters
relating to any Securities Collateral, whether or not the Collateral Agent or
any other Credit Party has or is deemed to have knowledge of such matters or
(ii) taking any necessary steps to preserve rights against any Person with
respect to any Pledged Collateral.

                    (iii) The Collateral Agent shall be entitled to rely upon
any written notice, statement, certificate, order or other document or any
telephone message believed by it to be genuine and correct and to have been
signed, sent or made by the proper Person, and, with respect to all matters
pertaining to this Agreement and its duties hereunder, upon advice of counsel
selected by it.

                    (iv) If any item of Pledged Collateral also constitutes
collateral granted to Collateral Agent under any Mortgage or other deed of
trust, mortgage, security agreement, pledge or instrument of any type, in the
event of any conflict between the provisions hereof and

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the provisions of such other deed of trust, mortgage, security agreement, pledge
or instrument of any type in respect of such collateral (other than the Credit
Agreement), Collateral Agent, in its reasonable discretion, shall select which
provision or provisions shall control.

                    SECTION 9.2. Collateral Agent May Perform; Collateral Agent
Appointed Attorney-in-Fact. If any Pledgor shall fail to perform any covenants
contained in this Agreement or in the Credit Agreement after written notice from
the Collateral Agent (including, without limitation, such Pledgor’s covenants to
(i) pay the premiums in respect of all required insurance policies hereunder,
(ii) pay Claims, (iii) make repairs, (iv) discharge Liens or (v) pay or perform
any obligations of such Pledgor under any Pledged Collateral) or if any warranty
on the part of any Pledgor contained herein shall be breached after written
notice from the Collateral Agent, the Collateral Agent may (but shall not be
obligated to) do the same or cause it to be done or remedy any such breach, and
may expend funds for failure to perform such covenant; provided, however, that
Collateral Agent shall in no event be bound to inquire into the validity of any
tax, lien, imposition or other obligation which such Pledgor fails to pay or
perform as and when required hereby and which such Pledgor does not contest in
accordance with the provisions of the Credit Agreement. Any and all amounts so
expended by the Collateral Agent shall be paid by the Pledgors in accordance
with the provisions of Section 10.04 of the Credit Agreement. Neither the
provisions of this SECTION 9.2 nor any action taken by Collateral Agent pursuant
to the provisions of this SECTION 9.2 shall prevent any such failure to observe
any covenant contained in this Agreement nor any breach of warranty form
constituting an Event of Default. Each Pledgor hereby appoints the Collateral
Agent its attorney-in-fact, with full authority in the place and stead of such
Pledgor and in the name of such Pledgor, or otherwise, from time to time after
the occurrence and during the continuation of an Event of Default in the
Collateral Agent’s discretion to take any action and to execute any instrument
consistent with the terms of the Credit Agreement and the other Security
Documents which the Collateral Agent may deem necessary to accomplish the
purposes hereof. The foregoing grant of authority is a power of attorney coupled
with an interest and such appointment shall be irrevocable for the term hereof.
Each Pledgor hereby ratifies all that such attorney shall lawfully do or cause
to be done by virtue hereof.

                    SECTION 9.3. Continuing Security Interest; Assignment. This
Agreement shall create a continuing security interest in the Pledged Collateral
and shall (i) be binding upon the Pledgors, their respective successors and
assigns and (ii) inure, together with the rights and remedies of the Collateral
Agent hereunder, to the benefit of the Collateral Agent and the other Credit
Parties and each of their permitted respective successors, transferees and
assigns. No other Persons (including, without limitation, any other creditor of
any Pledgor) shall have any interest herein or any right or benefit with respect
hereto. Without limiting the generality of the foregoing clause (ii), any Credit
Party may assign or otherwise transfer any indebtedness held by it secured by
this Agreement to any other Person, and such other Person shall thereupon become
vested with all the benefits in respect thereof granted to such Credit Party,
herein or otherwise, subject however, to the provisions of the Credit Agreement.

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                    SECTION 9.4. Termination; Release.

                    (a) This Agreement, the Lien in favor of the Collateral
Agent (for the benefit of itself and the other Credit Parties) and all other
security interests granted hereby shall terminate with respect to all Secured
Obligations when (i) the Commitments shall have expired or been terminated, (ii)
the principal of and interest on each Loan and all fees and other Secured
Obligations (other than the Other Liabilities) shall have been indefeasibly paid
in full in cash, (iii) all Letters of Credit (as such term is defined in the
Credit Agreement) shall have (A) expired or terminated and have been reduced to
zero, (B) been Cash Collateralized in accordance with the Credit Agreement, or
(C) been supported by another letter of credit in a manner satisfactory to the
L/C Issuer and the Administrative Agent, and (iv) all Unreimbursed Amounts shall
have been paid in full, provided, however, that in connection with the
termination of this Agreement, the Collateral Agent may require such indemnities
as it shall reasonably deem necessary or appropriate to protect the Credit
Parties against (x) loss on account of credits previously applied to the Secured
Obligations that may subsequently be reversed or revoked, and (y) any
obligations that may thereafter arise with respect to the Other Liabilities to
the extent not provided for thereunder.

                    (b) A Pledgor shall automatically be released from its
obligations hereunder and the Lien in favor of the Collateral Agent (for the
benefit of itself and the other Credit Parties) on the Pledged Collateral of
such Pledgor shall be automatically released upon the consummation of any
transaction not prohibited by the Credit Agreement as a result of which such
Pledgor ceases to be a Subsidiary; provided that each Lender shall have
consented to such transaction (if and to the extent required by the Credit
Agreement) and the terms of such consent did not provide otherwise; provided
further that any release of Pledged Collateral or any Pledgor in the manner
permitted by this Agreement and the Credit Agreement shall not require the
consent of holders of Other Liabilities under such transactions.

                    (c) Upon any Permitted Disposition by any Pledgor of any
Pledged Collateral, or upon the effectiveness of any written consent to the
release of the security interest granted hereby in any Pledged Collateral
pursuant to Section 10.01 of the Credit Agreement, the security interest in such
Pledged Collateral shall be automatically released.

                    (d) The Pledged Collateral shall be released from the Lien
of this Agreement in accordance with the provisions of this Agreement and the
Credit Agreement. Upon termination hereof or any release of Pledged Collateral
in accordance with this SECTION 9.4, the Collateral Agent shall, upon the
request and at the sole cost and expense of the Pledgors, assign, transfer and
deliver to the Pledgors, against receipt and without recourse to or warranty by
the Collateral Agent except as to the fact that the Collateral Agent has not
encumbered the released assets, such of the Pledged Collateral to be released
(in the case of a release) or all of the Pledged Collateral (in the case of
termination of this Agreement) as may be in possession of the Collateral Agent
and as shall not have been sold or otherwise applied pursuant to the terms
hereof, and, with respect to any other Pledged Collateral, proper documents and
instruments (including UCC-3 termination statements or releases) acknowledging
the termination hereof or the release of such Pledged Collateral, as the case
may be.

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                    (e) The Collateral Agent shall have no liability whatsoever
to any Credit Party as the result of any release of Pledged Collateral by it as
permitted (or which the Collateral Agent in good faith believes to be permitted)
by this SECTION 9.4.

                    SECTION 9.5. Modification in Writing. No amendment,
modification, supplement, termination or waiver of or to any provision hereof,
nor consent to any departure by any Pledgor therefrom, shall be effective unless
the same shall be made in accordance with the terms of the Credit Agreement. Any
amendment, modification or supplement of or to any provision hereof, any waiver
of any provision hereof and any consent to any departure by any Pledgor from the
terms of any provision hereof shall be effective only in the specific instance
and for the specific purpose for which made or given. Except where notice is
specifically required by this Agreement or any other document evidencing the
Secured Obligations, no notice to or demand on any Pledgor in any case shall
entitle any Pledgor to any other or further notice or demand in similar or other
circumstances.

                    SECTION 9.6. Notices. Unless otherwise provided herein or in
the Credit Agreement, any notice or other communication herein required or
permitted to be given shall be given in the manner and become effective as set
forth in the Credit Agreement, as to any Pledgor, addressed to it at the address
of the Borrower set forth in the Credit Agreement and as to the Collateral
Agent, addressed to it at the address set forth in the Credit Agreement, or in
each case at such other address as shall be designated by such party in a
written notice to the other parties hereto complying as to delivery with the
terms of this SECTION 9.6.

                    SECTION 9.7. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK (EXCEPT
FOR THE CONFLICT OF LAWS RULES THEREOF, BUT INCLUDING GENERAL OBLIGATIONS LAW
SECTIONS 5-1401 AND 5-1402).

                    SECTION 9.8. CONSENT TO JURISDICTION; SERVICE OF PROCESS;
WAIVER OF JURY TRIAL.

                    (a) EACH PLEDGOR IRREVOCABLY AND UNCONDITIONALLY SUBMITS,
FOR ITSELF AND ITS PROPERTY, TO THE NONEXCLUSIVE JURISDICTION OF THE COURTS OF
THE STATE OF NEW YORK SITTING IN NEW YORK COUNTY AND OF THE UNITED STATES
DISTRICT COURT OF THE SOUTHERN DISTRICT OF NEW YORK, AND ANY APPELLATE COURT
FROM ANY THEREOF, IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR FOR RECOGNITION OR ENFORCEMENT OF ANY
JUDGMENT, AND EACH PLEDGOR IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL
CLAIMS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED
IN SUCH NEW YORK STATE COURT OR, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE
LAW, IN SUCH FEDERAL COURT. EACH OF THE PARTIES HERETO AGREES THAT A FINAL
JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE

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ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER
PROVIDED BY LAW. NOTHING IN THIS AGREEMENT OR IN ANY OTHER LOAN DOCUMENT SHALL
AFFECT ANY RIGHT THAT THE COLLATERAL AGENT OR ANY OTHER CREDIT PARTY MAY
OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR
ANY OTHER LOAN DOCUMENT AGAINST ANY PLEDGOR OR ITS PROPERTIES IN THE COURTS OF
ANY JURISDICTION.

                    (b) EACH PLEDGOR IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO
THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION THAT IT MAY NOW OR
HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY ACTION OR PROCEEDING ARISING OUT OF
OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT IN ANY COURT REFERRED
TO IN PARAGRAPH (A) OF THIS SECTION. EACH PLEDGOR HEREBY IRREVOCABLY WAIVES, TO
THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE DEFENSE OF AN INCONVENIENT
FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH COURT.

                    (c) EACH PLEDGOR IRREVOCABLY CONSENTS TO SERVICE OF PROCESS
IN THE MANNER PROVIDED FOR NOTICES IN SECTION 9.6. NOTHING IN THIS AGREEMENT
WILL AFFECT THE RIGHT OF ANY PARTY HERETO TO SERVE PROCESS IN ANY OTHER MANNER
PERMITTED BY APPLICABLE LAW.

                    (d) EACH PARTY HERETO HEREBY IRREVOCABLY 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 OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY AND
WHETHER INITIATED BY OR AGAINST ANY SUCH PERSON OR IN WHICH ANY SUCH PERSON IS
JOINED AS A PARTY LITIGANT). EACH PARTY HERETO (A) CERTIFIES THAT NO
REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY
OR OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK
TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER
PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS
SECTION.

                    SECTION 9.9. Severability. If any provision of this
Agreement or the other Loan Documents is held to be illegal, invalid or
unenforceable, (a) the legality, validity and enforceability of the remaining
provisions of this Agreement and the other Loan Documents shall not be affected
or impaired thereby and (b) the parties shall endeavor in good faith
negotiations to replace the illegal, invalid or unenforceable provisions with
valid provisions the

29

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economic effect of which comes as close as possible to that of the illegal,
invalid or unenforceable provisions. The invalidity of a provision in a
particular jurisdiction shall not invalidate or render unenforceable such
provision in any other jurisdiction.

                    SECTION 9.10. Execution in Counterparts. This Agreement and
any amendments, waivers, consents or supplements hereto may be executed in any
number of counterparts and by different parties hereto in 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 or other
electronic image scan transmission (e.g., “pdf” or “tiff” via email) shall be as
effective as delivery of a manually executed counterpart of this Agreement.

                    SECTION 9.11. No Credit for Payment of Taxes or Imposition.
No Pledgor shall be entitled to any credit against the principal, premium, if
any, or interest payable under the Credit Agreement, and no Pledgor shall be
entitled to any credit against any other sums which may become payable under the
terms thereof or hereof, by reason of the payment of any Tax on the Pledged
Collateral or any part thereof.

                    SECTION 9.12. No Claims Against Collateral Agent. Nothing
contained in this Agreement shall constitute any consent or request by the
Collateral Agent, express or implied, for the performance of any labor or
services or the furnishing of any materials or other property in respect of the
Pledged Collateral or any part thereof, nor as giving any Pledgor any right,
power or authority to contract for or permit the performance of any labor or
services or the furnishing of any materials or other property in such fashion as
would permit the making of any claim against the Collateral Agent in respect
thereof or any claim that any Lien based on the performance of such labor or
services or the furnishing of any such materials or other property is prior to
the Lien hereof.

                    SECTION 9.13. No Release. Nothing set forth in this
Agreement shall relieve any Pledgor from the performance of any term, covenant,
condition or agreement on such Pledgor’s part to be performed or observed under
or in respect of any of the Pledged Collateral or from any liability to any
Person under or in respect of any of the Pledged Collateral or shall impose any
obligation on the Collateral Agent or any other Credit Party to perform or
observe any such term, covenant, condition or agreement on such Pledgor’s part
to be so performed or observed or shall impose any liability on the Collateral
Agent or any other Credit Party for any act or omission on the part of such
Pledgor relating thereto or for any breach of any representation or warranty on
the part of such Pledgor contained in this Agreement, the Credit Agreement or
the other Loan Documents, or under or in respect of the Pledged Collateral or
made in connection herewith or therewith. The obligations of each Pledgor
contained in this SECTION 9.13 shall survive the termination hereof and the
discharge of such Pledgor’s other obligations under this Agreement, the Credit
Agreement and the other Loan Documents.

                    SECTION 9.14. Obligations Absolute. All obligations of each
Pledgor hereunder shall be absolute and unconditional irrespective of:

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          (i) any bankruptcy, insolvency, reorganization, arrangement,
readjustment, composition, liquidation or the like of any Pledgor;

 

 

 

          (ii) any lack of validity or enforceability of the Credit Agreement or
any other Loan Document, or any other agreement or instrument relating thereto;

 

 

 

          (iii) any change in the time, manner or place of payment of, or in any
other term of, all or any of the Secured Obligations, or any other amendment or
waiver of or any consent to any departure from the Credit Agreement or any other
Loan Document or any other agreement or instrument relating thereto;

 

 

 

          (iv) any pledge, exchange, release or non-perfection of any other
collateral, or any release or amendment or waiver of or consent to any departure
from any guarantee, for all or any of the Secured Obligations;

 

 

 

          (v) any exercise, non-exercise or waiver of any right, remedy, power
or privilege under or in respect hereof, the Credit Agreement or any other Loan
Document except as specifically set forth in a waiver granted pursuant to the
provisions of SECTION 9.5 hereof; or

 

 

 

          (vi) any other circumstances which might otherwise constitute a
defense available to, or a discharge of, any Pledgor (other than indefeasible
payment in full in cash of Secured Obligations).

[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]

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                    IN WITNESS WHEREOF, the Pledgors and the Collateral Agent
have caused this Agreement to be duly executed and delivered by their duly
authorized officers as of the date first above written.

 

 

PLEDGORS:

FOOT LOCKER, INC.

 

FOOT LOCKER RETAIL, INC.

 

TEAM EDITION APPAREL, INC.

 

FOOT LOCKER STORES, INC.

 

FOOT LOCKER SPECIALTY, INC.

 

ROBBY’S SPORTING GOODS, INC.

 

FOOT LOCKER CORPORATE SERVICES, INC.

 

FOOT LOCKER HOLDINGS, INC.

 

FOOT LOCKER SOURCING, INC.

 

FOOT LOCKER OPERATIONS, LLC

 

FL RETAIL OPERATIONS LLC

 

FL SPECIALTY OPERATIONS LLC

 

FL EUROPE HOLDINGS, INC.

 

FL CANADA HOLDINGS, INC.

 

FOOT LOCKER ASIA, INC.

 

FL CORPORATE NY, LLC

 

FL RETAIL NY, LLC

 

FL SPECIALTY NY, LLC

 

FOOT LOCKER CARD SERVICES LLC

 

as to each of the foregoing

 

 

 

 

By:

/s/ John A. Maurer

 

 

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Name: 

John A. Maurer

 

Title: 

Vice President and Treasurer

Signature Page to Security Agreement

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COLLATERAL AGENT:

BANK OF AMERICA, N.A.

 

 

 

 

By:

/s/ Christine Hutchinson

 

 

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

 

Name: 

Christine Hutchinson

 

Title:

Principal

Signature Page to Security Agreement

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EXHIBIT 1

[Form of]

SECURITIES PLEDGE AMENDMENT

                    This Securities Pledge Amendment, dated as of _________, is
delivered pursuant to SECTION 5.1 of that certain security agreement (as
amended, amended and restated, restated, supplemented or otherwise modified from
time to time, the “Security Agreement;” capitalized terms used but not otherwise
defined herein shall have the meanings assigned to such terms in the Security
Agreement), dated as of March 20, 2009, made by (i) FOOT LOCKER, INC., a New
York corporation (the “Borrower”), (ii) THE GUARANTORS party thereto from time
to time (the “Guarantors”) (the Borrower, together with the Guarantors, and
together with any successors, the “Pledgors,” and each, a “Pledgor”), in favor
of BANK OF AMERICA, N.A., having an office at 100 Federal Street, 9th Floor,
Boston, Massachusetts 02110, in its capacity as collateral agent for the Credit
Parties (as defined in the Credit Agreement) (in such capacity and together with
any successors in such capacity, the “Collateral Agent”). The undersigned hereby
agrees that this Securities Pledge Amendment may be attached to the Security
Agreement and that the Pledged Securities and/or Intercompany Notes listed on
this Securities Pledge Amendment shall be deemed to be and shall become part of
the Pledged Collateral and shall secure all Secured Obligations.

Signature Page to Security Agreement

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PLEDGED SECURITIES

 

PLEDGOR

 

ISSUER

 

CLASS
OF STOCK
OR
INTERESTS

 

PAR
VALUE

 

CERTIFICATE
NO(S).

 

NUMBER OF
SHARES
OR
INTERESTS

 

PERCENTAGE OF
ALL ISSUED CAPITAL
OR OTHER EQUITY
INTERESTS OF ISSUER

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Exhibit 1 to Security Agreement

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INTERCOMPANY NOTES

 

 

 

 

 

 

 

 

 

 

 

PLEDGOR

 

ISSUER

 

PRINCIPAL AMOUNT

 

DATE OF ISSUANCE

 

INTEREST
RATE

 

MATURITY
DATE

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[_________________________________________],

 

 

as Pledgor

 

 

 

 

 

 

By:  

 

 

 

 

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

 

 

 

Name:

 

 

 

Title:

 

AGREED TO AND ACCEPTED:

BANK OF AMERICA, N.A., as Collateral Agent

 

 

By:  

 

 

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Name:

 

Title:

Exhibit 1 to Security Agreement

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