exv4w3





Exhibit
4.3

SECURITY AGREEMENT




     This SECURITY AGREEMENT (this “Agreement”) is made as of February 1, 2008, by the
Grantor listed on the signature pages hereof “Grantor”), and PRIVATE EQUITY MANAGEMENT
GROUP, INC., a Nevada corporation, in its capacity as administrative agent for the Lender Group
(together with its successors, “Agent”).



W I T N E S S E T H:




     WHEREAS, pursuant to that certain Second Lien Credit Agreement of even date herewith (as
amended, restated, supplemented or otherwise modified from time to time, including all schedules
thereto, the “Credit Agreement”) among BAKERS FOOTWEAR GROUP, INC., a Missouri corporation
(“Borrower”), the lenders party thereto as “Lenders” (“Lenders”), and Agent, the
Lender Group is willing to make available to Borrower a secured credit facility of $10,000,000 from
time to time pursuant to the terms and conditions thereof, and



     WHEREAS, Agent has agreed to act as agent for the benefit of the Lender Group in connection
with the transactions contemplated by this Agreement, and



     WHEREAS, in order to induce the Lender Group to enter into the Credit Agreement and the other
Loan Documents and to induce the Lender Group to make financial accommodations to Borrower as
provided for in the Credit Agreement, Grantor has agreed to grant a continuing security interest in
and to the Collateral in order to secure the prompt and complete payment, observance and
performance of, among other things, (a) the obligations of Grantor arising from this Agreement, the
Credit Agreement, and the other Loan Documents (excluding the Registration Rights Agreement and the
Warrants) and (b) all Obligations of Borrower (including, without limitation, any interest, fees or
expenses that accrue after the filing of an Insolvency Proceeding, regardless of whether allowed or
allowable in whole or in part as a claim in any Insolvency Proceeding), plus reasonable attorneys
fees and expenses if the obligations represented thereunder are collected by law, through an
attorney-at-law, or under advice therefrom (clauses (a) and (b) being hereinafter referred to as
the “Secured Obligations”), by the granting of the security interests contemplated by this
Agreement, and



     NOW, THEREFORE, for and in consideration of the recitals made above and other good and
valuable consideration, the receipt, sufficiency and adequacy of which are hereby acknowledged, the
parties hereto agree as follows:



     1. Defined Terms. All capitalized terms used herein (including, without limitation, in
the preamble and recitals hereof) without definition shall have the meanings ascribed thereto in
the Credit Agreement. Any terms used in this Agreement that are defined in the Code shall be
construed and defined as set forth in the Code unless otherwise defined herein or in the Credit
Agreement; provided, however, that to the extent that the Code is used to define
any term herein and such term is defined differently in different Articles of the Code, the
definition of such term contained in Article 9 of the Code shall govern. In addition to those
terms defined elsewhere in this Agreement, as used in this Agreement, the following terms shall
have the following meanings:



          (a) “Accounts” means accounts (as that term is defined in the Code).



          (b) “Code” means the California Uniform Commercial Code, as in effect from time to
time; provided, however, that in the event that, by reason of mandatory provisions of law, any or
all of the attachment, perfection, priority, or remedies with respect to Agent’s Lien on any
Collateral is governed by the Uniform Commercial Code as enacted and in effect in a jurisdiction
other than the State of California, the term “Code” shall mean the Uniform Commercial Code as
enacted and in effect in such other jurisdiction solely for purposes of the provisions thereof
relating to such attachment, perfection, priority, or remedies.



          (c) “Copyrights” means all right, title and interest in and to copyrights in works of
authorship of any kind, and all registration applications, registrations and recordings thereof in
the Office of the United States Register of Copyrights, Library of Congress, or in any similar
office or agency of any country or political



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subdivision thereof throughout the world, whether now owned or hereafter acquired, including,
but not limited to, those described in Schedule A to the Copyright Security Agreement
annexed hereto and made a part hereof, together with all extensions, renewals, reversionary
rights, and corrections thereof and all licenses thereof or pertaining thereto.



          (d) “Copyright Security Agreement” means each Copyright Security Agreement between
Grantor and Agent, for the benefit of the Lender Group, in substantially the form of Exhibit
B attached hereto, pursuant to which Grantor has granted to Agent, for the benefit of the
Lender Group, a security interest in all of its Copyrights.



          (e) “Deposit Account” means deposit account (as that term is defined in the Code).



          (f) “Equipment” means equipment (as that term is defined in the Code).



          (g) “General Intangibles” means general intangibles (as that term is defined in the
Code and, in any event, including, without limitation, payment intangibles, contract rights, rights
to payment, rights arising under common law, statutes, or regulations, choses or things in action,
goodwill (including the goodwill associated with any Trademark, Patent, or Copyright), Patents,
Trademarks, Copyrights, URLs and domain names, industrial designs, other industrial or intellectual
property or rights therein or applications therefor, whether under license or otherwise, programs,
programming materials, blueprints, drawings, purchase orders, customer lists, monies due or
recoverable from pension funds, route lists, rights to payment and other rights under any royalty
or licensing agreements, including intellectual property licenses, infringement claims, computer
programs, information contained on computer disks or tapes, software, literature, reports,
catalogs, pension plan refunds, pension plan refund claims, insurance premium rebates, tax refunds,
and tax refund claims, uncertificated securities, and any other personal property other than
commercial tort claims, money, Accounts, Chattel Paper, Deposit Accounts, goods, Investment Related
Property, Negotiable Collateral, and oil, gas, or other minerals before extraction).



          (h) “Intellectual Property Collateral” means the Copyrights, the Patents and the
Trademarks.



          (i) “Inventory” means inventory (as that term is defined in the Code).



          (j) “Investment Related Property” means (i) investment property (as that term is
defined in the Code), and (ii) all of the following regardless of whether classified as investment
property under the Code: all Pledged Interests, Pledged Operating Agreements, and Pledged
Partnership Agreements.



          (k) “Patents” means all right, title and interest in and to all inventions and letters
patent and registration applications therefor, and all registrations and recordings thereof,
including, without limitation, registration applications, registrations and recordings in the
United States Patent and Trademark Office or in any similar office or agency of the United States
or any state thereof, or in any similar office or agency of any country or political subdivision
thereof throughout the world, whether now owned or hereafter acquired, including, but not limited
to, those described in Schedule A to the Patent Security Agreement annexed hereto and made
a part hereof, together with all re-examinations, reissues, continuations, continuations-in-part,
divisions, improvements and extensions thereof and all licenses thereof or pertaining thereto and
all licenses of patent rights now in effect or hereafter entered into and the rights to make, use
and sell, and all other rights with respect to, the inventions disclosed or claimed therein, all
inventions, designs, proprietary or technical information, know-how, other data or information,
software, databases, all embodiments or fixations thereof and related documentation, all
information having value in connection with the business relating thereto and all other trade
secret rights not described above.



          (l) “Patent Security Agreement” means each Patent Security Agreement between Grantor
and Agent, for the benefit of the Lender Group, in substantially the form of Exhibit C
attached hereto, pursuant to which Grantor has granted to Agent, for the benefit of the Lender
Group, a security interest in all of its Patents.



          (m) “Pledged Companies” means, each Person listed on Schedule 1 hereto as a
“Pledged Company”, together with each other Person, all or a portion of whose Stock, is acquired or
otherwise owned by Grantor after the Closing Date.



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          (n) “Pledged Interests” means all of Grantor’s right, title and interest in and to all
of the Stock now or hereafter owned by Grantor, regardless of class or designation, including,
without limitation, in each of the Pledged Companies, and all substitutions therefor and
replacements thereof, all proceeds thereof and all rights relating thereto, including, without
limitation, any certificates representing the Stock, the right to request after the occurrence and
during the continuation of an Event of Default that such Stock be registered in the name of Agent
or any of its nominees, the right to receive any certificates representing any of the Stock and the
right to require that such certificates be delivered to Agent together with undated powers or
assignments of investment securities with respect thereto, duly endorsed in blank by Grantor, all
warrants, options, share appreciation rights and other rights, contractual or otherwise, in respect
thereof and of all dividends, distributions of income, profits, surplus, or other compensation by
way of income or liquidating distributions, in cash or in kind, and cash, instruments, and other
property from time to time received, receivable, or otherwise distributed in respect of or in
addition to, in substitution of, on account of, or in exchange for any or all of the foregoing.



          (o) “Pledged Interests Addendum” means a Pledged Interests Addendum substantially in
the form of Exhibit D to this Agreement.



          (p) “Pledged Operating Agreements” means all of Grantor’s rights, powers, and remedies
under the limited liability company operating agreements of the Pledged Companies that are limited
liability companies.



          (q) “Pledged Partnership Agreements” means all of Grantor’s rights, powers, and
remedies under the partnership agreements of each of the Pledged Companies that are partnerships.



          (r) “Records” means information that is inscribed on a tangible medium or which is
stored in an electronic or other medium and is retrievable in perceivable form.



          (s) “Securities Accounts” means securities accounts (as that term is defined in the
Code).



          (t) “Trademarks” means all right, title and interest in and to trademarks, trade
names, trade styles, service marks, logos, emblems, prints and labels, all elements of package or
trade dress of goods, and all general intangibles of like nature, now existing or hereafter adopted
or acquired, together with the goodwill of the business connected with the use thereof and
symbolized thereby, and all registration applications, registrations and recordings thereof,
including, without limitation, registration applications, registrations and recordings in the
United States Patent and Trademark Office or in any similar office or agency of the United States
or in any office of the Secretary of State (or equivalent) of any state thereof, or in any similar
office or agency of any country or political subdivision thereof throughout the world, whether now
owned or hereafter acquired, including, but not limited to, those described in Schedule A
to the Trademark Security Agreement and made a part hereof, together with all extensions, renewals
and corrections thereof and all licenses thereof or pertaining thereto.



          (u) “Trademark Security Agreement” means each Trademark Security Agreement between
Grantor and Agent, for the benefit of the Lender Group, in substantially the form of Exhibit
E attached hereto, pursuant to which Grantor has granted to Agent, for the benefit of the
Lender Group, a security interest in all of its Trademarks.



          (v) “URL” means “uniform recourse locator,” an internet web address.



     2. Grant of Security. Grantor hereby unconditionally grants, assigns and pledges to
Agent, for the benefit of the Lender Group, a continuing security interest in all personal property
of Grantor, whether now owned or hereafter acquired or arising and wherever located (hereinafter
referred to as the “Security Interest”), including, without limitation, Grantor’s right,
title, and interest in and to the following, whether now owned or hereafter acquired or arising and
wherever located (the “Collateral”):



          (a) all of Grantor’s Accounts;



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          (b) all of Grantor’s books and records (including all of its Records indicating, summarizing,
or evidencing its assets (including the Collateral) or liabilities, all of its Records relating to
its business operations or financial condition, and all of its goods or General Intangibles related
to such information) (“Books”);



          (c) all of Grantor’s chattel paper (as that term is defined in the Code) and, in any event,
including, without limitation, tangible chattel paper and electronic chattel paper (“Chattel
Paper”);



          (d) all of Grantor’s interest with respect to any Deposit Account;



          (e) all of Grantor’s Equipment and fixtures;



          (f) all of Grantor’s General Intangibles;



          (g) all of Grantor’s Intellectual Property Collateral;



          (h) all of Grantor’s Inventory;



          (i) all of Grantor’s Investment Related Property;



          (j) all of Grantor’s letters of credit, letter of credit rights, instruments, promissory
notes, drafts, and documents (as such terms may be defined in the Code) (“Negotiable
Collateral”);



          (k) all of Grantor’s rights in respect of supporting obligations (as such term is defined in
the Code), including letters of credit and guaranties issued in support of Accounts, Chattel Paper,
documents, General Intangibles, instruments, or Investment Related Property (“Supporting
Obligations”);



          (l) all of Grantor’s interest with respect to any commercial tort claims (as that term is
defined in the Code), including, without limitation those commercial tort claims listed on
Schedule 2 attached hereto (“Commercial Tort Claims”);



          (m) all of Grantor’s money, Cash Equivalents, or other assets of each Grantor that now or
hereafter come into the possession, custody, or control of Agent or any other member of the Lender
Group or the Bank Product Provider; and



          (n) all of the proceeds and products, whether tangible or intangible, of any of the foregoing,
including proceeds of insurance or commercial tort claims covering or relating to any or all of the
foregoing, and any and all Accounts, Books, Chattel Paper, Deposit Accounts, Equipment, General
Intangibles, Inventory, Investment Related Property, Negotiable Collateral, Supporting Obligations,
money, or other tangible or intangible property resulting from the sale, lease, license, exchange,
collection, or other disposition of any of the foregoing, the proceeds of any award in condemnation
with respect to any of the property of Grantor, any rebates or refunds, whether for taxes or
otherwise, and all proceeds of any such proceeds, or any portion thereof or interest therein, and
the proceeds thereof, and all proceeds of any loss of, damage to, or destruction of the above,
whether insured or not insured, and, to the extent not otherwise included, any indemnity, warranty,
or guaranty payable by reason of loss or damage to, or otherwise with respect to any of the
foregoing Collateral (the “Proceeds”). Without limiting the generality of the foregoing,
the term “Proceeds” includes whatever is receivable or received when Investment Related Property or
proceeds are sold, exchanged, collected, or otherwise disposed of, whether such disposition is
voluntary or involuntary, and includes, without limitation, proceeds of any indemnity or guaranty
payable to Grantor or Agent from time to time with respect to any of the Investment Related
Property.


Notwithstanding anything herein to the contrary, in no event shall the Collateral include or the
security interest granted under this Section 2 hereof attach to any lease, license, contract,
property rights or agreement to which Grantor is a party or any of its rights or interests
thereunder if and for so long as the grant of such security interest shall constitute or result in
(i) the abandonment, invalidation or unenforceability of any material right, title or interest of
Grantor therein or (ii) in a breach or termination pursuant to the terms of, or a default under,
any such lease, license, contract property rights or agreement (other than to the extent that any
such term would be rendered


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ineffective pursuant to Sections 9-406, 9-407, 9-408 or 9-409 of the Code (or any successor
provision or provisions) of any relevant jurisdiction or any other applicable law (including the
Bankruptcy Code) or principles of equity) (“Excluded Property”), provided, however
that the Collateral shall include and such security interest shall attach immediately (x) at such
time as the condition causing such abandonment, invalidation or unenforceability shall be remedied
and to the extent severable, shall attach immediately to any portion of such lease, license,
contract, property rights or agreement that does not result in any of the consequences specified in
(i) or (ii) above; and (y) to any proceeds of Excluded Property.




     3. Security for Secured Obligations. This Agreement and the Security Interest created
hereby secures the payment and performance of all the Secured Obligations, whether now existing or
arising hereafter. Without limiting the generality of the foregoing, this Agreement secures the
payment of all amounts which constitute part of the Obligations owed by Borrower to Agent, the
Lender Group or any of them.



     4. Grantor Remains Liable. Anything herein to the contrary notwithstanding, (a)
Grantor shall remain liable under the contracts and agreements included in the Collateral,
including, without limitation, the Pledged Operating Agreements and the Pledged Partnership
Agreements, to perform all of the duties and obligations thereunder to the same extent as if this
Agreement had not been executed, (b) the exercise by Agent or any other member of the Lender Group
of any of the rights hereunder shall not release Grantor from any of its duties or obligations
under such contracts and agreements included in the Collateral, and (c) none of the members of the
Lender Group shall have any obligation or liability under such contracts and agreements included in
the Collateral by reason of this Agreement, nor shall any of the members of the Lender Group be
obligated to perform any of the obligations or duties of Grantor thereunder or to take any action
to collect or enforce any claim for payment assigned hereunder. Until an Event of Default shall
occur and be continuing, except as otherwise provided in this Agreement, the Credit Agreement, or
other Loan Documents, Grantor shall have the right to possession and enjoyment of the Collateral
for the purpose of conducting the ordinary course of its business, subject to and upon the terms
hereof and of the Credit Agreement and the other Loan Documents. Without limiting the generality
of the foregoing, it is the intention of the parties hereto that record and beneficial ownership of
the Pledged Interests, including, without limitation, all voting, consensual, and dividend rights,
shall remain in Grantor until the occurrence of an Event of Default and until Agent shall notify
Grantor of Agent’s exercise of voting, consensual, and/or dividend rights with respect to the
Pledged Interests pursuant to Section 15 hereof.



     5. Representations and Warranties. Grantor hereby represents and warrants as follows,
which representations and warranties shall be continuing until the Secured Obligations are paid in
full and the Commitments terminated:



          (a) The exact legal name of Grantor is set forth on the signature pages of this Agreement or a
written notice provided to Agent pursuant to Section 6.5 of the Credit Agreement.



          (b) Schedule 3 attached hereto sets forth all Real Property owned by Grantor as of the
Closing Date.



          (c) As of the date hereof, Grantor has no Trademarks, Patents or Copyrights registered, or
which are the subject of any pending application, in the United States Patent and Trademark Office,
or any similar office of the United States or in any office of the Secretary of State (or
equivalent) of any state thereof, or the United States Register of Copyrights, or in any similar
office or agency of any country or political subdivision thereof throughout the world, other than
those identified in Schedule A to each of the Copyright Security Agreement, the Patent
Security Agreement and the Trademark Security Agreement. The registrations of the Trademarks are
valid and subsisting and in full force and effect. Grantor has not granted a license or otherwise
agreed to allow any third party to use any Trademark (except as disclosed to Agent in writing on or
prior to the date of this Agreement). The Patents are valid and subsisting and in full force and
effect and have not been adjudged or, to Grantor’s knowledge, claimed invalid or unenforceable in
whole or in part (except for Permitted Liens). Grantor has not granted a license or otherwise
agreed to allow any third party to use any Patent (except as disclosed to Agent in writing on or
prior to the date of this Agreement). None of the Patents has been abandoned or dedicated.



          (d) This Agreement creates a security interest in the Collateral of Grantor, to the extent a
security interest therein can be created under the Code, securing the payment of the Secured
Obligations. Upon: (i)



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the filing of financing statements listing Grantor, as a debtor, and Agent, as secured party,
in the jurisdictions listed next to such Grantor’s name on Schedule 4 attached hereto; and
(ii) the recording in the US Copyright Office and the US Patent and Trademark Office of a notice of
Agent’s security interest in pertinent Intellectual Property, Agent shall have a first priority
perfected security interest in the Collateral (subject only to Permitted Liens) of Grantor to the
extent such security interest can be perfected by the filing of a financing statement or
recordation in the US Copyright Office or the US Patent and Trademark Office.



          (e) Except for the Security Interest created hereby, Grantor is and will at all times be the
sole holder of record and the legal and beneficial owner, free and clear of all Liens other than
Permitted Liens, of the Pledged Interests indicated on Schedule 1 as being owned by Grantor
and, when acquired by Grantor, any Pledged Interests acquired after the Closing Date; (ii) all of
the Pledged Interests are duly authorized, validly issued, fully paid and nonassessable and the
Pledged Interests constitute or will constitute the percentage of the issued and outstanding equity
interests of the Pledged Companies of Grantor identified on Schedule 1 hereto as
supplemented or modified by any Pledged Interests Addendum or any Supplement to this Agreement;
(ii) Grantor has the right and requisite authority to pledge the Investment Related Property
pledged by Grantor to Agent as provided herein; (iii) all actions necessary or desirable to perfect
or establish the first priority of Agent’s Liens in the Investment Related Property (subject to
Permitted Liens), and the proceeds thereof, have been duly taken, (A) upon the execution and
delivery of this Agreement; (B) upon the taking of possession by Agent of any certificates
constituting the Pledged Interests, to the extent such Pledged Interests are represented by
certificates, together with undated powers endorsed in blank by Grantor; (C) upon the filing of
financing statements in the applicable jurisdiction set forth on Schedule 4 attached hereto
for Grantor with respect to the Pledged Interests of Grantor that are not represented by
certificates, and (D) with respect to any Securities Accounts, upon the delivery of Control
Agreements with respect thereto; and (iv) Grantor has delivered to and deposited with Agent (or,
with respect to any Pledged Interests created after the Closing Date, will deliver and deposit in
accordance with Sections 6 and 8 hereof) all certificates representing the Pledged
Interests owned by Grantor to the extent such Pledged Interests are represented by certificates,
and undated powers endorsed in blank with respect to such certificates.



          (f) Other than execution and delivery of the Subordination Agreements, the filing of financing
statements, Mortgages and the security agreements attached hereto as Exhibits B, C
and E and any requirement under applicable law to register Stock and the other consents and
filings identified on Schedule 4.9(c) to the Credit Agreement, to the best of Grantor’s
knowledge, no consent, approval, authorization, or other order or other action by, and no notice to
or filing with, any Governmental Authority or any other Person is required (i) for the grant of a
Security Interest by Grantor in and to the Collateral pursuant to this Agreement or for the
execution, delivery, or performance of this Agreement by Grantor, or (ii) for the exercise by Agent
of the voting or other rights provided for in this Agreement with respect to the Investment Related
Property or the remedies in respect of the Collateral pursuant to this Agreement, except (x) as may
be required in connection with such disposition of Investment Related Property by laws affecting
the offering and sale of securities generally; and (y) for consents and approvals that have been
obtained and that are still in force and effect.



     6. Covenants. Grantor covenants and agrees with Agent and the Lender Group that from
and after the date of this Agreement and until the date of termination of this Agreement in
accordance with Section 22 hereof:



          (a) Possession of Collateral. In the event that any Collateral, including proceeds,
is evidenced by or consists of Negotiable Collateral, Investment Related Property, or Chattel
Paper, and if and to the extent that perfection or priority of Agent’s Security Interest is
dependent on or enhanced by possession, Grantor, to the extent required by the Subordination
Agreements, promptly upon the request of Agent and in accordance with Section 8 hereof,
shall execute such other documents as shall be reasonably requested by Agent or, if applicable,
endorse and deliver physical possession of such Negotiable Collateral, Investment Related Property,
or Chattel Paper to Agent, together with such undated powers endorsed in blank as shall be
requested by Agent;



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          (b) Chattel Paper.



               (i) Upon the request of Agent, Grantor shall take all steps reasonably necessary to grant
Agent control of all electronic Chattel Paper in accordance with the Code and all “transferable
records” as that term is defined in Section 16 of the Uniform Electronic Transaction Act and
Section 201 of the federal Electronic Signatures in Global and National Commerce Act as in effect
in any relevant jurisdiction;



               (ii) If Grantor retains possession of any Chattel Paper or instruments (which retention of
possession shall be subject to the extent permitted hereby and by the Credit Agreement), promptly
upon the request of Agent, and to the extent the same is practicable, such Chattel Paper and
instruments shall be marked with the following legend: “This writing and the obligations evidenced
or secured hereby are subject to the Security Interest of Private Equity Management Group INC., as
Agent for the benefit of the Lender Group”;



          (c) Control Agreements.



               (i) To the extent required by the Credit Agreement and permitted by the Subordination
Agreements, Grantor shall obtain an authenticated Control Agreement, from each bank holding a
Deposit Account for Grantor;



               (ii) To the extent required by the Credit Agreement and permitted by the Subordination
Agreements, Grantor shall obtain authenticated Control Agreements, from each issuer of
uncertificated securities, securities intermediary, or commodities intermediary issuing or holding
any financial assets or commodities to or for Grantor;



          (d) Letter of Credit Rights. Subject to the rights of the Senior Lender, if Grantor
is or becomes the beneficiary of a letter of credit in excess of $100,000, Grantor shall promptly
(and in any event within 5 Business Days after becoming a beneficiary), notify Agent thereof and,
upon the request by Agent, use commercially reasonable efforts to enter into a tri-party agreement
with Agent and the issuer and/or confirmation bank with respect to letter-of-credit rights (as that
term is defined in the Code) assigning such letter-of-credit rights to Agent and directing all
payments thereunder to Agent’s Account, all in form and substance satisfactory to Agent;



          (e) Commercial Tort Claims. Grantor shall promptly (and in any event within 5
Business Days of receipt thereof), notify Agent in writing upon incurring or otherwise obtaining a
Commercial Tort Claim after the date hereof against any third party in an amount exceeding $100,000
and, upon request of Agent, promptly amend Schedule 2 to this Agreement, authorize the
filing of additional or amendments to existing financing statements and do such other acts or
things deemed reasonably necessary or desirable by Agent to give Agent a security interest in any
such Commercial Tort Claim;



          (f) Investment Related Property.



               (i) If Grantor shall receive or become entitled to receive any Pledged Interests after the
Closing Date, it shall promptly (and in any event within 5 Business Days of receipt thereof)
deliver to Agent a duly executed Pledged Interests Addendum identifying such Pledged Interests;



               (ii) Grantor agrees that it will cooperate with Agent in obtaining all necessary approvals and
making all necessary filings under federal, state, local, or foreign law in connection with the
Security Interest on the Investment Related Property or any sale or transfer thereof;



               (iii) As to all limited liability company or partnership interests issued under any Pledged
Operating Agreement or Pledged Partnership Agreement, Grantor hereby represents, warrants and
covenants that the Pledged Interests issued pursuant to such agreement (A) are not and shall not be
dealt in or traded on securities exchanges or in securities markets, (B) do not and will not
constitute investment company securities, and (C) are not and will not be held by such Pledgor in a
securities account. In addition, none of the Pledged Operating Agreements, the Pledged Partnership
Agreements, or any other agreements governing any of the Pledged Interests issued under any Pledged
Operating Agreement or Pledged Partnership Agreement, provide or shall



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provide that such Pledged Interests are securities governed by Article 8 of the Uniform
Commercial Code as in effect in any relevant jurisdiction;



          (g) Real Property; Fixtures. Grantor covenants and agrees that upon the acquisition
of any fee interest in Real Property it will promptly (and in any event within 10 Business Days of
acquisition) notify Agent of the acquisition of such Real Property and will grant to Agent, for the
benefit of the Lender Group, a Mortgage (subject to existing Liens) on each fee interest in Real
Property now or hereafter owned by Grantor and shall deliver such other documentation and opinions,
in form and substance reasonably satisfactory to Agent, in connection with the grant of such
Mortgage as Agent shall request in its Permitted Discretion, including, without limitation, title
insurance policies, financing statements, fixture filings and environmental audits and Grantor
shall pay all recording costs, intangible taxes and other fees and costs (including reasonable
attorneys fees and expenses) incurred in connection therewith. Grantor acknowledges and agrees
that, to the extent permitted by applicable law, all of the Collateral shall remain personal
property regardless of the manner of its attachment or affixation to real property.



          (h) Transfers and Other Liens. Grantor shall not (i) sell, assign (by operation of
law or otherwise) or otherwise dispose of, or grant any option with respect to, any of the
Collateral, except as expressly permitted by the Credit Agreement, or (ii) create or permit to
exist any Lien upon or with respect to the Collateral of Grantor, except for Permitted Liens. The
inclusion of Proceeds in the Collateral shall not be deemed to constitute Agent’s consent to any
sale or other disposition of any of the Collateral except as expressly permitted in this Agreement
or the other Loan Documents.



          (i) Other Actions as to Any and All Collateral. Grantor shall promptly (and in any
event within 5 Business Days of acquiring or obtaining such Collateral) notify Agent in writing
upon acquiring or otherwise obtaining any Collateral after the date hereof consisting of Investment
Related Property, Chattel Paper (electronic, tangible or otherwise), documents (as defined in the
Code), or instruments (as defined in the Code) and, upon the request of Agent and in accordance
with Section 8 hereof, promptly execute such other documents, or if applicable, deliver
such Chattel Paper, other documents or certificates evidencing any Investment Related Property in
accordance with Section 6 hereof and do such other acts or things deemed reasonably
necessary or desirable by Agent to protect Agent’s Security Interest therein.



          (j) Intellectual Property Collateral.



               (i) Grantor (either itself or through its licensees) will place appropriate notice of
Copyright on all copies embodying material copyrighted works covered by the Copyright which are
publicly distributed, and Grantor will not (and will not permit any licensee thereof to) do any act
or knowingly omit to do any act whereby any Copyright may become invalidated or dedicated to the
public domain. Grantor will continue to use standards of quality in the manufacture of products
sold under the Trademarks that are at least equal to those standards in effect as of the date of
this Agreement. Grantor (either itself or through its licensees) will continue to use the
Trademarks on its current lines of goods as reflected in its current catalogs, brochures and price
lists in order to maintain the Trademarks in full force and effect, in the ordinary course of
business, and Grantor will not (or will permit any licensee thereof to) do any act or knowingly
omit to do any act whereby any Trademark may become invalidated. Grantor will not do any act, or
omit to do any act, or permit any licensee thereof to do any act whereby any Patent may become
abandoned or dedicated.



               (ii) Grantor will promptly perform all acts and execute all documents, including, without
limitation, grants of security in forms acceptable to Agent and suitable for recording with (i) the
United States Patent and Trademark Office and the United States Register of Copyrights, and (ii)
the appropriate offices and agencies of foreign jurisdictions reasonably requested by Agent at any
time to evidence, perfect, maintain, record or enforce the Agent’s security interest in the
Intellectual Property Collateral or otherwise in furtherance of the provisions of this Agreement.
Grantor hereby authorizes Agent to execute and file one or more financing statements (and any
similar documents) or copies thereof or of this Agreement with respect to the Intellectual Property
Collateral (with a copy sent to Administrative Borrower).



               (iii) In the event that Grantor, either itself or through any subsidiary, affiliate, agent,
employee, licensee or designee, shall file an application for the issuance of any Patent or
registration of any Trademark with the United States Patent and Trademark Office, or any similar
office of the United States or in any



8









 







office of the Secretary of State (or equivalent) of any state thereof, or for the registration
of any Copyright with the United States Register of Copyrights, or for the registration of any
Patent, Trademark or Copyright in any similar office or agency of any country or political
subdivision thereof throughout the world, or shall obtain issuance of any Patent or registration of
any Trademark or Copyright previously applied for, or shall adopt, acquire or obtain rights to any
new trademark, patent application or work for which a copyright application has been or is expected
to be filed, or become entitled to the benefit of any patent application or any patent or any part
thereof for reissue, re-examination, continuation, continuation-in-part, division, improvement or
extension, Grantor shall (i) inform Agent of any such event or action in periodic reports which
Borrower shall deliver to Agent annually by each anniversary date of this Agreement, and (ii)
execute and deliver any and all assignments, agreements, instruments, documents and papers as are
necessary or appropriate or as Agent may reasonably request to evidence the Agent’s security
interest in such Trademark, Patent or Copyright and the goodwill and general intangibles of Grantor
relating thereto or represented thereby. Effective only upon the occurrence and during the
continuation of an Event of Default, Grantor hereby constitutes Agent, or Agent’s agent, its
attorney-in-fact to execute and file all such writings for the foregoing purposes, all acts of such
attorney being hereby ratified and confirmed; such power being coupled with an interest is
irrevocable until the Secured Obligations are indefeasibly paid in full and the Commitments
terminated. Grantor authorizes the amendment of the schedules hereto to include any future
Intellectual Property Collateral registrations or applications which may be acquired or made by
Grantor.



               (iv) Grantor has the authority, right and power to enter into this Agreement and to perform
its terms and to grant the security interest herein granted, and has not entered and will not enter
into any oral or written agreements which would prevent Grantor from complying with the terms
hereof, provided, however, Grantor may enter into or maintain in effect such non-exclusive license
agreements with respect to the Intellectual Property Collateral as Grantor believes in its
reasonable business judgment are in the best interest of Grantor’s business, so long as any such
license agreement does not prohibit the assignment thereof to Agent, for the benefit of the Lender
Group. The Intellectual Property Collateral is not now, and at all times will not be, subject to
any Liens (other than Permitted Liens); provided, however, Grantor may enter into
such non-exclusive license agreements with respect to the Intellectual Property Collateral as
Grantor believes in its reasonable business judgment are in the best interest of Grantor’s
business, so long as any such license agreement does not prohibit the assignment thereof to Agent,
for the benefit of the Lender Group. To the best knowledge of Grantor, none of the Intellectual
Property Collateral is subject to any claims of any other party.



               (v) Except for Permitted Liens, or to the extent that Agent upon prior written notice from
Grantor, shall consent in writing, Grantor will not assign, sell, mortgage, lease, transfer,
pledge, hypothecate, grant a security interest in or lien upon, grant an exclusive license, or
otherwise dispose of any of the Intellectual Property Collateral, and nothing in this Agreement
shall be deemed a consent by Agent to any such action except as expressly permitted herein.



               (vi) Grantor will take commercially reasonable steps in any proceeding before the United
States Patent and Trademark Office, United States Register of Copyrights or similar office or
agency of the United States or any office of the Secretary of State (or equivalent) of any state
thereof, or in any similar office or agency of any country or political subdivision thereof
throughout the world, to maintain each registration application and registration of the
Intellectual Property Collateral, including, without limitation, filing of renewals, extensions,
affidavits of use and incontestability, and opposition, interference and cancellation proceedings.
Grantor shall notify Agent promptly in writing if any registration application or registration
relating to any Intellectual Property Collateral may become abandoned or dedicated or subject to an
adverse final determination in any proceeding in the United States Patent and Trademark Office or
United States Register of Copyrights or in any similar office or agency of any country or political
subdivision thereof throughout the world or in any court regarding Grantor’s ownership of such
Intellectual Property Collateral, its right to register same, or to keep or maintain the validity
of same.



               (vii) In the event that Grantor acquires actual knowledge that any Trademark, Patent or
Copyright is infringed, misappropriated or diluted by a third party, Grantor shall promptly sue for
infringement, misappropriation and/or dilution and to obtain injunctive relief and recover damages
therefor, unless Grantor shall determine in its reasonable business judgment that such suit is not
in the best interest of Grantor’s business, and Grantor shall take such other actions reasonably
required to protect such Trademark, Patent or Copyright as Grantor shall deem appropriate in its
reasonable business judgment under the circumstances. Upon the occurrence and



9









 







during the continuation of an Event of Default, Agent shall have the right, but in no way
shall be obligated, to bring suit in its own name to enforce the Trademarks, Patents and Copyrights
and any licenses thereunder, in which event Grantor shall, at the request of Agent, do any and all
lawful acts requested by Agent and execute any and all documents required by Agent to aid such
enforcement, and Grantor shall, upon demand, promptly reimburse and indemnify Agent for all costs
and expenses incurred in such enforcement.



               (viii) Notwithstanding any provision of the Loan Documents to the contrary, Grantor shall not
be obligated to acquire, maintain, or protect any Intellectual Property Collateral in the event
Grantor determines, in its reasonable business judgment and notifies Agent in writing, that such
collateral is no longer necessary or desirable in the conduct of its business.



     7. Relation to Other Loan Documents. The provisions of this Agreement shall be read
and construed with the other Loan Documents referred to below in the manner so indicated. In the
event of any conflict between any provision in this Agreement and a provision in the Credit
Agreement, such provision of the Credit Agreement shall control.



     8. Further Assurances.



          (a) Grantor agrees that from time to time, at its own expense, Grantor will promptly execute
and deliver all further instruments and documents, and take all further action, that may be
reasonably necessary or that Agent may reasonably request, in order to perfect and protect any
Security Interest granted or purported to be granted hereby or to enable Agent to exercise and
enforce its rights and remedies hereunder with respect to any of the Collateral.



          (b) Grantor authorizes the filing of such financing or continuation statements, or amendments
thereto, and Grantor will execute and deliver to Agent such other instruments or notices, as may be
necessary or as Agent may reasonably request, in order to perfect and preserve the Security
Interest granted or purported to be granted hereby.



          (c) Grantor authorizes Agent to file, transmit, or communicate, as applicable, financing
statements and amendments describing the Collateral as “all personal property of debtor” or “all
assets of debtor” or words of similar effect, in order to perfect Agent’s security interest in the
Collateral without Grantor’s signature. Grantor also hereby ratifies its authorization for Agent
to have filed in any jurisdiction any financing statements filed prior to the date hereof.



          (d) Grantor acknowledges that it is not authorized to file any financing statement or
amendment or termination statement with respect to any financing statement filed in connection with
this Agreement without the prior written consent of Agent, subject to Grantor’s rights under
Section 9-509(d)(2) of the Code.



     9. Agent’s Right to Perform Contracts. Upon the occurrence and during the
continuation of an Event of Default, Agent (or its designee) may proceed to perform any and all of
the obligations of any Grantor contained in any contract, lease, or other agreement and exercise
any and all rights of Grantor therein contained as fully as Grantor itself could.



     10. Agent Appointed Attorney-in-Fact. Grantor hereby irrevocably appoints Agent its
attorney-in-fact, with full authority in the place and stead of Grantor and in the name of Grantor
or otherwise, to take any action and to execute any instrument which Agent may reasonably deem
necessary or advisable to accomplish the purposes of this Agreement, without notice to Grantor,
including, without limitation:



          (a) at such time as an Event of Default has occurred and is continuing under the Credit
Agreement, to ask, demand, collect, sue for, recover, compromise, receive and give acquittance and
receipts for moneys due and to become due under or in connection with the Accounts or any other
Collateral of Grantor;



10









 





          (b) at such time as an Event of Default has occurred and is continuing under the Credit
Agreement, to receive and open all mail addressed to such Grantor and to notify postal authorities
to change the address for the delivery of mail to Grantor to that of Agent;



          (c) at such time as an Event of Default has occurred and is continuing under the Credit
Agreement, to receive, indorse, and collect any drafts or other instruments, documents, Negotiable
Collateral or Chattel Paper;



          (d) at such time as an Event of Default has occurred and is continuing under the Credit
Agreement, to file any claims or take any action or institute any proceedings which Agent may deem
reasonably necessary or desirable for the collection of any of the Collateral of Grantor or
otherwise to enforce the rights of Agent with respect to any of the Collateral;



          (e) at such time as an Event of Default has occurred and is continuing under the Credit
Agreement, to repair, alter, or supply goods, if any, necessary to fulfill in whole or in part the
purchase order of any Person obligated to Grantor in respect of any Account of Grantor;



          (f) at such time as an Event of Default has occurred and is continuing under the Credit
Agreement, to use any labels, Patents, Trademarks, trade names, URLs, domain names, industrial
designs, Copyrights, advertising matter or other industrial or intellectual property rights, in
advertising for sale and selling Inventory and other Collateral and to collect any amounts due
under Accounts, contracts or Negotiable Collateral of Grantor; and



          (g) at such time as an Event of Default has occurred and is continuing under the Credit
Agreement, Agent on behalf of the Lender Group shall have the right, but shall not be obligated, to
bring suit in its own name to enforce the Trademarks, Patents, Copyrights and any intellectual
property licenses included within the Collateral and, if Agent shall commence any such suit,
Grantor shall, at the request of Agent, do any and all lawful acts and execute any and all proper
documents reasonably required by Agent in aid of such enforcement.


To the extent permitted by law, Grantor hereby ratifies all that such attorney-in-fact shall
lawfully do or cause to be done by virtue hereof. This power of attorney is coupled with an
interest and shall be irrevocable until this Agreement is terminated.




     11. Agent May Perform. If Grantor fails to perform any agreement contained herein,
Agent may, following the occurrence and during the continuation of an Event of Default, itself
perform, or cause performance of, such agreement, and the reasonable expenses of Agent incurred in
connection therewith shall be payable by Grantor.



     12. Agent’s Duties. The powers conferred on Agent hereunder are solely to protect
Agent’s interest in the Collateral, for the benefit of the Lender Group, and shall not impose any
duty upon Agent to exercise any such powers. Except for the safe custody of any Collateral in its
actual possession and the accounting for moneys actually received by it hereunder, Agent shall have
no duty as to any Collateral or as to the taking of any necessary steps to preserve rights against
prior parties or any other rights pertaining to any Collateral. Agent shall be deemed to have
exercised reasonable care in the custody and preservation of any Collateral in its actual
possession if such Collateral is accorded treatment substantially equal to that which Agent accords
its own property.



     13. Collection of Accounts, General Intangibles and Negotiable Collateral; Control
Agreements. At any time upon the occurrence and during the continuation of an Event of
Default, Agent or Agent’s designee may (a) notify Account Debtors of Grantor that the Accounts,
General Intangibles, Chattel Paper or Negotiable Collateral have been assigned to Agent, for the
benefit of the Lender Group, or that Agent has a security interest therein, and (b) collect the
Accounts, General Intangibles and Negotiable Collateral directly, and any collection costs and
expenses shall constitute part of Grantor’s Secured Obligations under the Loan Documents. With
respect to each Control Agreement delivered pursuant to Section 6(c), at any time upon the
occurrence and during the continuation of an Event of Default, Agent shall be entitled to give any
bank or securities intermediary holding the relevant deposit or securities account instructions as
to the withdrawal or disposition of funds or assets held therein, all



11









 







without further consent of Grantor; provided that Agent agrees it shall not give any bank or
securities intermediary such instructions unless an Event of Default has occurred and is
continuing.



     14. Disposition of Pledged Interests by Agent. None of the Pledged Interests existing
as of the date of this Agreement are, and none of the Pledged Interests hereafter acquired on the
date of acquisition thereof will be, registered or qualified under the various federal or state
securities laws of the United States and disposition thereof after an Event of Default may be
restricted to one or more private (instead of public) sales in view of the lack of such
registration. Grantor understands that in connection with such disposition, Agent may approach
only a restricted number of potential purchasers and further understands that a sale under such
circumstances may yield a lower price for the Pledged Interests than if the Pledged Interests were
registered and qualified pursuant to federal and state securities laws and sold on the open market.
Grantor, therefore, agrees that: (a) if Agent shall, pursuant to the terms of this Agreement,
sell or cause the Pledged Interests or any portion thereof to be sold at a private sale, Agent
shall have the right to rely upon the advice and opinion of any nationally recognized brokerage or
investment firm (but shall not be obligated to seek such advice and the failure to do so shall not
be considered in determining the commercial reasonableness of such action) as to the best manner in
which to offer the Pledged Interest for sale and as to the best price reasonably obtainable at the
private sale thereof; and (b) such reliance shall be conclusive evidence that Agent has handled the
disposition in a commercially reasonable manner.



     15. Voting Rights.



          (a) Upon the occurrence and during the continuation of an Event of Default, (i) Agent may, at
its option, and with 5 Business Days prior notice to Grantor, and in addition to all rights and
remedies available to Agent under any other agreement, at law, in equity, or otherwise, exercise
all voting rights, and all other ownership or consensual rights in respect of the Pledged Interests
owned by Grantor, but under no circumstances is Agent obligated by the terms of this Agreement to
exercise such rights, and (ii) if Agent duly exercises its right to vote any of such Pledged
Interests, Grantor hereby appoints Agent, Grantor’s true and lawful attorney-in-fact and
IRREVOCABLE PROXY to vote such Pledged Interests in any manner Agent deems advisable for or against
all matters submitted or which may be submitted to a vote of shareholders, partners or members, as
the case may be. The power-of-attorney granted hereby is coupled with an interest and shall be
irrevocable.



          (b) For so long as Grantor shall have the right to vote the Pledged Interests owned by it,
Grantor covenants and agrees that it will not, without the prior written consent of Agent, vote or
take any consensual action with respect to such Pledged Interests which would materially adversely
affect the rights of Agent and the other members of the Lender Group or the value of the Pledged
Interests.



     16. Remedies. Upon the occurrence and during the continuation of an Event of Default:



          (a) Agent may exercise in respect of the Collateral, in addition to other rights and remedies
provided for herein, in the other Loan Documents, or otherwise available to it, all the rights and
remedies of a secured party on default under the Code or any other applicable law. Without
limiting the generality of the foregoing, Grantor expressly agrees that, in any such event, Agent
without demand of performance or other demand, advertisement or notice of any kind (except a notice
specified below of time and place of public or private sale) to or upon Grantor or any other Person
(all and each of which demands, advertisements and notices are hereby expressly waived to the
maximum extent permitted by the Code or any other applicable law), may take immediate possession of
all or any portion of the Collateral and (i) require Grantor to, and Grantor hereby agrees that it
will at its own expense and upon request of Agent forthwith, assemble all or part of the Collateral
as directed by Agent and make it available to Agent at one or more locations which are reasonably
convenient to Grantor, and (ii) without notice except as specified below, sell the Collateral or
any part thereof in one or more parcels at public or private sale, at any of Agent’s offices or
elsewhere, for cash, on credit, and upon such other terms as Agent may deem commercially
reasonable. Grantor agrees that, to the extent notice of sale shall be required by law, at least
10 days notice to Grantor of the time and place of any public sale or the time after which any
private sale is to be made shall constitute reasonable notification and specifically such notice
shall constitute a reasonable “authenticated notification of disposition” within the meaning of
Section 9-611 of the Code. Agent shall not be obligated to make any sale of Collateral regardless
of notice of sale having been given. 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.



12









 





          (b) Agent is hereby granted a non-exclusive license or other right to use, without liability
for royalties or any other charge, Grantor’s labels, Patents, Copyrights, rights of use of any
name, trade secrets, trade names, Trademarks, service marks and advertising matter, URLs, domain
names, industrial designs, other industrial or intellectual property or any property of a similar
nature, whether owned by Grantor or with respect to which Grantor has rights under license,
sublicense, or other agreements, as it pertains to the Collateral, in preparing for sale,
advertising for sale and selling any Collateral, and Grantor’s rights under all licenses and all
franchise agreements shall inure to the benefit of Agent.



          (c) Any cash held by Agent as Collateral and all cash proceeds received by Agent in respect of
any sale of, collection from, or other realization upon all or any part of the Collateral shall be
applied against the Secured Obligations in the order set forth in the Credit Agreement. In the
event the proceeds of Collateral are insufficient to satisfy all of the Secured Obligations in
full, Grantor shall remain jointly and severally liable for any such deficiency.



          (d) Grantor hereby acknowledges that the Secured Obligations arose out of a commercial
transaction, and agrees that if an Event of Default shall occur and be continuing Agent shall have
the right to an immediate writ of possession without notice of a hearing. Agent shall have the
right to the appointment of a receiver for the properties and assets of Grantor, and Grantor hereby
consents to such rights and such appointment and hereby waives, to the fullest extent permitted by
law, any objection such Grantors may have thereto or the right to have a bond or other security
posted by Agent.



     17. Remedies Cumulative. (a) Each right, power, and remedy of Agent as provided for
in this Agreement or in the other Loan Documents or now or hereafter existing at law or in equity
or by statute or otherwise shall be cumulative and concurrent and shall be in addition to every
other right, power, or remedy provided for in this Agreement or in the other Loan Documents or now
or hereafter existing at law or in equity or by statute or otherwise (each a “Remedy” and
collectively, the “Remedies”), and the exercise or beginning of the exercise by Agent, of any one
or more of such rights, powers, or remedies shall not preclude the simultaneous or later exercise
by Agent of any or all such other rights, powers, or remedies, and (b) Agent’s exercise of any
Remedy in each and every instance is subject to the terms of the Subordination Agreements.



     18. Marshaling. Agent shall not be required to marshal any present or future
collateral security (including but not limited to the Collateral) for, or other assurances of
payment of, the Secured Obligations or any of them or to resort to such collateral security or
other assurances of payment in any particular order, and all of its rights and remedies hereunder
and in respect of such collateral security and other assurances of payment shall be cumulative and
in addition to all other rights and remedies, however existing or arising. To the extent that it
lawfully may, Grantor hereby agrees that it will not invoke any law relating to the marshaling of
collateral which might cause delay in or impede the enforcement of Agent’s rights and remedies
under this Agreement or under any other instrument creating or evidencing any of the Secured
Obligations or under which any of the Secured Obligations is outstanding or by which any of the
Secured Obligations is secured or payment thereof is otherwise assured, and, to the extent that it
lawfully may, Grantor hereby irrevocably waives the benefits of all such laws.



     19. Indemnity and Expenses.



          (a) Grantor agrees to indemnify Agent and the other members of the Lender Group from and
against all claims, lawsuits and liabilities (including reasonable attorneys fees) growing out of
or resulting from this Agreement (including, without limitation, enforcement of this Agreement) or
any other Loan Document to which Grantor is a party, except claims, losses or liabilities resulting
from the gross negligence or willful misconduct of the party seeking indemnification as determined
by a final non-appealable order of a court of competent jurisdiction. This provision shall survive
the termination of this Agreement and the Credit Agreement and the repayment of the Secured
Obligations.



          (b) Grantor, shall, upon demand, pay to Agent (or Agent, may charge to the Loan Account) all
the Lender Group Expenses which Agent may incur in connection with (i) the administration of this
Agreement, (ii) the custody, preservation, use or operation of, or, upon an Event of Default, the
sale of, collection from, or other realization upon, any of the Collateral in accordance with this
Agreement and the other Loan Documents, (iii) the



13









 







exercise or enforcement of any of the rights of Agent hereunder or (iv) the failure by Grantor
to perform or observe any of the provisions hereof.



     20. Merger, Amendments; Etc. THIS WRITTEN AGREEMENT, TOGETHER WITH THE OTHER LOAN
DOCUMENTS, REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY
EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO
UNWRITTEN AGREEMENTS BETWEEN THE PARTIES. No waiver of any provision of this Agreement, and no
consent to any departure by Grantor herefrom, shall in any event be effective unless the same shall
be in writing and signed by Agent, and then such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given. No amendment of any provision of
this Agreement shall be effective unless the same shall be in writing and signed by Agent and
Grantor to which such amendment applies.



     21. Addresses for Notices. All notices and other communications provided for
hereunder shall be given in the form and manner and delivered to Agent at its address specified in
the Credit Agreement, and to Grantor at its address specified in the Credit Agreement or, as to any
party, at such other address as shall be designated by such party in a written notice to the other
party.



     22. Continuing Security Interest: Assignments under Credit Agreement. This Agreement
shall create a continuing security interest in the Collateral and shall (a) remain in full force
and effect until the Obligations have been paid in full in cash in accordance with the provisions
of the Credit Agreement and the Commitments have expired or have been terminated, (b) be binding
upon Grantor and its successors and assigns, and (c) inure to the benefit of, and be enforceable
by, Agent, and its successors, transferees and assigns. Without limiting the generality of the
foregoing clause (c), any Lender may, in accordance with the provisions of the Credit Agreement,
assign or otherwise transfer all or any portion of its rights and obligations under the Credit
Agreement to any other Person, and such other Person shall thereupon become vested with all the
benefits in respect thereof granted to such Lender herein or otherwise. Upon payment in full in
cash of the Obligations in accordance with the provisions of the Credit Agreement and the
expiration or termination of the Commitments, the Security Interest granted hereby shall terminate
and all rights to the Collateral shall revert to Grantor or any other Person entitled thereto. At
such time, Agent will authorize the filing of appropriate termination statements to terminate such
Security Interests. No transfer or renewal, extension, assignment, or termination of this
Agreement or of the Credit Agreement, any other Loan Document, or any other instrument or document
executed and delivered by any Grantor to Agent nor any additional Loans made by any of the Lender
Group to Borrower, nor the taking of further security, nor the retaking or re-delivery of the
Collateral to Grantor, by Agent, nor any other act of the Lender Group, or any of them, shall
release Grantor from any obligation, except a release or discharge executed in writing by Agent in
accordance with the provisions of the Credit Agreement. Agent shall not by any act, delay,
omission or otherwise, be deemed to have waived any of its rights or remedies hereunder, unless
such waiver is in writing and signed by Agent and then only to the extent therein set forth. A
waiver by Agent of any right or remedy on any occasion shall not be construed as a bar to the
exercise of any such right or remedy which Agent would otherwise have had on any other occasion.



     23. Governing Law.



          (a) THE VALIDITY OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS (UNLESS EXPRESSLY PROVIDED TO
THE CONTRARY IN ANOTHER LOAN DOCUMENT IN RESPECT OF SUCH OTHER LOAN DOCUMENT), THE CONSTRUCTION,
INTERPRETATION, AND ENFORCEMENT HEREOF AND THEREOF, AND THE RIGHTS OF THE PARTIES HERETO AND
THERETO WITH RESPECT TO ALL MATTERS ARISING HEREUNDER OR THEREUNDER OR RELATED HERETO OR THERETO
SHALL BE DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
CALIFORNIA WITHOUT REGARD TO ITS CONFLICTS OF LAWS RULES.



          (b) TO THE MAXIMUM EXTENT PERMITTED BY LAW, THE PARTIES AGREE THAT ALL ACTIONS OR PROCEEDINGS
ARISING IN CONNECTION WITH THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS SHALL BE TRIED AND LITIGATED
ONLY IN THE STATE OF CALIFORNIA AND, TO THE EXTENT PERMITTED BY APPLICABLE LAW, FEDERAL COURTS
LOCATED IN THE COUNTY OF LOS ANGELES, STATE OF CALIFORNIA; PROVIDED, HOWEVER, THAT



14









 







ANY SUIT SEEKING ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT
AGENT’S OPTION, IN THE COURTS OF ANY JURISDICTION WHERE AGENT ELECTS TO BRING SUCH ACTION OR WHERE
SUCH COLLATERAL OR OTHER PROPERTY MAY BE FOUND. GRANTOR AND EACH MEMBER OF THE LENDER GROUP WAIVE,
TO THE EXTENT PERMITTED UNDER APPLICABLE LAW, ANY RIGHT EACH MAY HAVE TO ASSERT THE DOCTRINE OF
FORUM NON CONVENIENS OR TO OBJECT TO VENUE TO THE EXTENT ANY PROCEEDING IS
BROUGHT IN ACCORDANCE WITH THIS SECTION 23(b).



          (c) TO THE MAXIMUM EXTENT PERMITTED BY LAW, GRANTOR AND EACH MEMBER OF THE LENDER GROUP HEREBY
WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING
OUT OF ANY OF THE LOAN DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED THEREIN, INCLUDING
CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR STATUTORY CLAIMS.
GRANTOR AND EACH MEMBER OF THE LENDER GROUP REPRESENT THAT EACH HAS REVIEWED THIS WAIVER AND EACH
KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL.
IN THE EVENT OF LITIGATION, A COPY OF THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL
BY THE COURT.



          (d) Subsidiaries. Pursuant to Section 5.18 of the Credit Agreement, any new
direct or indirect Subsidiary (whether by acquisition or creation) of Parent is required to enter
into this Agreement by executing and delivering in favor of Agent an instrument in the form of
Annex 1 attached hereto. Upon the execution and delivery of Annex 1 by such new
Subsidiary, such Subsidiary shall become a Grantor hereunder with the same force and effect as if
originally named as a Grantor herein. The execution and delivery of any instrument adding an
additional Grantor as a party to this Agreement shall not require the consent of any Grantor
hereunder. The rights and obligations of each Grantor hereunder are joint and several and shall
remain in full force and effect notwithstanding the addition of any new Grantor hereunder.



     24. Agent. Each reference herein to any right granted to, benefit conferred upon or
power exercisable by the “Agent” shall be a reference to Agent, for the benefit of the Lender
Group.



     25. Miscellaneous.



          (a) This Agreement may be executed in any number of counterparts and by different parties on
separate counterparts, each of which, when executed and delivered, shall be deemed to be an
original, and all of which, when taken together, shall constitute but one and the same Agreement.
Delivery of an executed counterpart of this Agreement by telefacsimile or other electronic method
of transmission shall be equally as effective as delivery of an original executed counterpart of
this Agreement. Any party delivering an executed counterpart of this Agreement by telefacsimile or
other electronic method of transmission also shall deliver an original executed counterpart of this
Agreement but the failure to deliver an original executed counterpart shall not affect the
validity, enforceability, and binding effect of this Agreement. The foregoing shall apply to each
other Loan Document mutatis mutandis.



          (b) Any provision of this Agreement which is prohibited or unenforceable shall be ineffective
to the extent of such prohibition or unenforceability without invalidating the remaining provisions
hereof in that jurisdiction or affecting the validity or enforceability of such provision in any
other jurisdiction.



          (c) Headings used in this Agreement are for convenience only and shall not be used in
connection with the interpretation of any provision hereof.



          (d) The pronouns used herein shall include, when appropriate, either gender and both singular
and plural, and the grammatical construction of sentences shall conform thereto.



          (e) The representation, warranties and covenants of each Grantor hereunder are joint and
several.



15









 





          (f) All exhibits and schedules hereto are incorporated into this Agreement.



     26. Subordination Agreements. Notwithstanding anything set forth herein to the
contrary, all undertakings and obligations of Borrower hereunder, and all rights, privileges,
undertakings and obligations of the Agent and the Lender Group hereunder are subject to the terms,
conditions and covenants set forth in the Subordination Agreements.



16









 





          IN WITNESS WHEREOF, the undersigned parties hereto have executed this Agreement by and through
their duly authorized officers, as of the day and year first above written.



	 	 	 	 	 	 	 
	GRANTOR:	 	BAKERS FOOTWEAR GROUP, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Peter Edison
 

	 	 
	 

	 	Name:
	 	Peter A. Edison	 	 
	 

	 	Title:
	 	Chairman, CEO, President	 	 
	 
	 	 	 	 	 	 
	AGENT:	 	PRIVATE EQUITY MANAGEMENT GROUP, INC., as
Agent	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Danny Pang	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:
	 	Danny Pang	 	 
	 

	 	Title:
	 	Chairman, CEO	 	 






[Signature Page to the Security Agreement]














 








SCHEDULE 1




Pledged Companies




None.














 





SCHEDULE 2




Commercial Tort Claims




None.














 





SCHEDULE 3




Real Property




None.















 








SCHEDULE 4




Financing Statements




	 	 	 
	Grantor	 	Jurisdiction
	Bakers Footwear Group, Inc.

	 	Missouri
















 






ANNEX 1 TO SECURITY AGREEMENT

FORM OF SUPPLEMENT



Supplement No.  
                  
  (this “Supplement”) dated as of         
                 
               , 200
__, to the Security
Agreement of even date herewith (as amended, restated, supplemented or otherwise modified from time
to time, the “Security Agreement”) by each of the parties listed on the signature pages
thereto and those additional entities that thereafter become parties thereto (collectively, jointly
and severally, “Grantors” and each individually “Grantor”) and PRIVATE EQUITY MANAGEMENT
GROUP, INC., in its capacity as Agent for the Lender Group (together with the successors,
“Agent”).




W I T N E S S E T H:




     WHEREAS, pursuant to that certain Second Lien Credit Agreement dated as of February 1, 2008
(as amended, restated, supplemented or otherwise modified from time to time, including all
schedules thereto, the “Credit Agreement”) among Bakers Footwear Group, Inc., a Missouri
corporation (“Borrower”), the lenders party thereto as “Lenders” (“Lenders”), and
Agent, the Lender Group is willing to make certain financial accommodations available to Borrower
from time to time pursuant to the terms and conditions thereof; and



     WHEREAS, capitalized terms used herein and not otherwise defined herein shall have the
meanings assigned to such terms in the Security Agreement and/or the Credit Agreement; and



     WHEREAS, one or more Grantors has entered into the Security Agreement in order to induce the
Lender Group to make certain financial accommodations to Borrower; and



     WHEREAS, pursuant to Section 5.18 of the Credit Agreement, new direct or indirect
Subsidiaries of Borrower must execute and deliver certain Loan Documents, including the Security
Agreement, and the execution of the Security Agreement by the undersigned new Grantor or Grantors
(collectively, the “New Grantors”) may be accomplished by the execution of this Supplement
in favor of Agent, for the benefit of the Lender Group;



     NOW, THEREFORE, for and in consideration of the foregoing and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, each New Grantor
hereby agrees as follows:



     1. In accordance with Section 23(d) of the Security Agreement, each New Grantor, by
its signature below, becomes a “Grantor” under the Security Agreement with the same force and
effect as if originally named therein as a “Grantor” and each New Grantor hereby (a) agrees to all
of the terms and provisions of the Security Agreement applicable to it as a “Grantor” thereunder
and (b) represents and warrants that the representations and warranties made by it as a “Grantor”
thereunder are true and correct on and as of the date hereof. In furtherance of the foregoing,
each New Grantor, as security for the payment and performance in full of the Secured Obligations,
does hereby grant, assign, and pledge to Agent, for the benefit of the Lender Group, a security
interest in and to all assets of such New Grantor including, without limitation, all property of
the type described in Section 2 of the Security Agreement to secure the full and prompt
payment of the Secured Obligations, including, without limitation, any interest thereon, plus
reasonable attorneys’ fees and expenses if the Secured Obligations represented by the Security
Agreement are collected by law, through an attorney-at-law, or under advice therefrom. Each
reference to a “Grantor” in the Security Agreement shall be deemed to include each New Grantor.
The Security Agreement is incorporated herein by reference.



     2. Each New Grantor represents and warrants to Agent and the Lender Group that this Supplement
has been duly executed and delivered by such New Grantor and constitutes its legal, valid and
binding obligation, enforceable against it in accordance with its terms, except as enforceability
thereof may be limited by bankruptcy, insolvency, reorganization, fraudulent transfer, moratorium
or other similar laws affecting creditors’ rights generally and general principles of equity
(regardless of whether such enforceability is considered in a proceeding at law or in equity).













 





     3. This Supplement may be executed in multiple counterparts, each of which shall be deemed to
be an original, but all such separate counterparts shall together constitute but one and the same
instrument. Delivery of a counterpart hereof by facsimile transmission or by e-mail transmission
shall be as effective as delivery of a manually executed counterpart hereof.



     4. Except as expressly supplemented hereby, the Security Agreement shall remain in full force
and effect.



     5. This Supplement shall be construed in accordance with and governed by the laws of the State
of California without regard to its conflicts of laws rules.



[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]














 







IN WITNESS WHEREOF, each New Grantor and Agent have duly executed this Supplement to the Security
Agreement as of the day and year first above written.




	 	 	 	 	 	 	 
	NEW GRANTORS:	 	[Name of New Grantor]	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	Name:
	 	 	 	 
	 

	 	Title:	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	[Name of New Grantor]	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	Name:
	 	 	 	 
	 

	 	Title:	 	 	 	 
	 
	 	 	 	 	 	 
	AGENT:	 	PRIVATE EQUITY MANAGEMENT GROUP, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	Name:
	 	 	 	 
	 

	 	Title:	 	 	 	 






Schedule 4














 








EXHIBIT A




[INTENTIONALLY OMITTED]




Exhibit A














 








EXHIBIT B




COPYRIGHT SECURITY AGREEMENT




     Bakers Footwear Group, Inc., a Missouri corporation (“Grantor”), for good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, grants to Private
Equity Management Group, Inc., a Nevada corporation, as agent for and representative of (in such
capacity herein called “Secured Party”) the financial institutions (“Lenders”)
party to that certain Second Lien Credit Agreement, entered into by and among the Grantor, Agent,
and Lenders, dated as of February 1, 2008 ( the “Credit Agreement”), a continuing security
interest in the following property.




     (i) Each work of authorship of any kind, copyright, copyright registration and
recording, and copyright application listed on Schedule A hereto; and




     (ii) All proceeds of the foregoing, including without limitation any claim by Grantor
against third parties for damages (to the extent not effectively prohibited by an applicable
and legally enforceable license agreement) by reason of past, present or future infringement
of any copyright registration and recording listed in Schedule A hereto, together with the
right to sue for and collect said damages;


to secure performance of all Obligations of Grantor under the Credit Agreement and that certain
Security Agreement, dated as of February 1, 2008, by and between Grantor and Secured Party (the
“Agreement”).




     Grantor does hereby further acknowledge and affirm that the rights and remedies of Secured
Party with respect to the security interest in the works of authorship, copyrights, copyright
registrations and recordings, and copyright applications made and granted hereby are more fully set
forth in the Agreement, the terms and provisions of which are incorporated by reference herein as
if fully set forth herein.



     All terms defined in the Agreement, whether by reference or otherwise, when used herein, shall
have their respective meanings set forth therein, unless the context requires otherwise.



B-1









 





     IN WITNESS WHEREOF, Grantor has caused this Copyright Security Agreement to be duly executed
as of                      ___, 200___.



	 	 	 	 	 	 	 	 	 
	 	 	GRANTOR:
	 	 	 	 	 	 
	 	 	 
	 	 	 	 	 	 
	 	 	 	 	BAKERS FOOTWEAR GROUP, INC.	 	 
	 	 	 
	 	 	 	 	 	 
	 	 	 

	 	By:	 	 	 	 
	 	 	 

	 	Name:
	 	 	 	 
	 	 	 

	 	Title:	 	 	 	 
	 	 	 
	 	 	 	 	 	 
	 	 	 	 	ACCEPTED BY SECURED PARTY:	 	 
	 	 	 
	 	 	 	 	 	 
	 	 	 	 	PRIVATE EQUITY MANAGEMENT GROUP, INC.,

as Agent	 	 
	 	 	 
	 	 	 	 	 	 
	 	 	 

	 	By:	 	 	 	 
	 	 	 

	 	Name:
	 	 	 	 
	 	 	 

	 	Title:	 	 	 	 






[Signature Page to the Copyright Security Agreement]














 








Schedule A to




COPYRIGHT SECURITY AGREEMENT




Copyrights





B-3









 








EXHIBIT C




PATENT SECURITY AGREEMENT




     Bakers Footwear Group, Inc., a Missouri corporation (“Grantor”), for good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, grants to Private
Equity Management Group, Inc., a Nevada corporation, as agent for and representative of (in such
capacity herein called “Secured Party”) the financial institutions (“Lenders”)
party to that certain Second Lien Credit Agreement, entered into by and among the Grantor, Agent,
and Lenders, dated as of February 1, 2008 ( the “Credit Agreement”), a continuing security
interest in the following property:




(i) Each patent presently owned and listed on Schedule A hereto; and




(ii) All proceeds of the foregoing, including without limitation any claim by
Grantor against third parties for damages (to the extent not effectively prohibited
by an applicable and legally enforceable license agreement) by reason of past,
present or future infringement of any patent now owned or hereafter owned by
Grantor, in each case together with the right to sue for and collect said damages:


to secure performance of all Obligations of Grantor under the Creditor Agreement and as set out in
that certain Security Agreement dated as of February 1, 2008, by and between Grantor and Secured
Party (the “Agreement”).




     Grantor does hereby further acknowledge and affirm that the rights and remedies of Secured
Party with respect to the security interest in the works of authorship, patents, patent
registrations and recordings made and granted hereby are more fully set forth in the Agreement, the
terms and provisions of which are incorporated by reference herein as if fully set forth herein.



     All terms defined in the Agreement, whether by reference or otherwise, when used herein, shall
have their respective meanings set forth therein, unless the context requires otherwise.













 





     IN WITNESS WHEREOF, Grantor has caused this Patent Security Agreement to be duly executed as
of                      ___, 200___.



	 	 	 	 	 	 	 	 	 
	 	 	GRANTOR:
	 	 	 	 	 	 
	 	 	 
	 	 	 	 	 	 
	 	 	 	 	BAKERS FOOTWEAR GROUP, INC.	 	 
	 	 	 
	 	 	 	 	 	 
	 	 	 

	 	By:	 	 	 	 
	 	 	 

	 	Name:
	 	 	 	 
	 	 	 

	 	Title:	 	 	 	 
	 	 	 
	 	 	 	 	 	 
	 	 	 	 	ACCEPTED BY SECURED PARTY:	 	 
	 	 	 
	 	 	 	 	 	 
	 	 	 	 	PRIVATE EQUITY MANAGEMENT GROUP, INC.,

as Agent	 	 
	 	 	 
	 	 	 	 	 	 
	 	 	 

	 	By:	 	 	 	 
	 	 	 

	 	Name:
	 	 	 	 
	 	 	 

	 	Title:	 	 	 	 






[Signature Page to the Patent Security Agreement]














 








Schedule A to




PATENT SECURITY AGREEMENT




Patents














 





SPECIAL TYPES OF COLLATERAL




	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Patent Name - 5b.	 	 	Number	 	 	Date	 	 	If Foreign, What Country	 	 	Subsidiary	 	 	Inventor
	Accessory Wall Panel

	 	 	D556,789
	 	 	12/4/2007
	 	 	 	 	 	 	 	 	P Edison, J
VanderPluym, 

K Obata, R Buchanan
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Decorative Plate on Shoe Sole

	 	 	D557,483
	 	 	12/18/2007
	 	 	 	 	 	 	 	 	W Young, B Keely
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Display Table

	 	 	D539,564
	 	 	4/3/2007
	 	 	 	 	 	 	 	 	P Edison, J
VanderPluym, 

K Obata, R Buchanan
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Pedestal Display Table

	 	 	D549,012
	 	 	8/21/2007
	 	 	 	 	 	 	 	 	P Edison, J
VanderPluym, 

K Obata, R Buchanan
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Store Counter Display and
Backdrop Area

	 	 	D553,878
	 	 	10/30/2007
	 	 	 	 	 	 	 	 	P Edison, J
VanderPluym, 

K Obata, R Buchanan
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Store Wall Fixture (3 piece unit)

	 	 	D554,907
	 	 	11/13/2007
	 	 	 	 	 	 	 	 	P Edison, J
VanderPluym, 

K Obata, R Buchanan
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Store Wall Fixture (2 piece unit)

	 	 	D554,908
	 	 	11/13/2007
	 	 	 	 	 	 	 	 	P Edison, J
VanderPluym, 

K Obata, R Buchanan
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Store Window Display Fixture
with Stripe

	 	 	D543,383
	 	 	5/29/2007
	 	 	 	 	 	 	 	 	P Edison, J
VanderPluym, 

K Obata, R Buchanan

















 








EXHIBIT D




Annex 1 to Pledge and Security Agreement




PLEDGED INTERESTS ADDENDUM




     This Pledged Interests Addendum, dated as of                      ___, 20___, is delivered pursuant to
Section 6 of the Security Agreement referred to below. The undersigned hereby agrees that this
Pledged Interests Addendum may be attached to that certain Security Agreement, dated as of February
1, 2008 (as amended, restated, supplemented or otherwise modified from time to time, the
“Security Agreement”), made by the undersigned to Private Equity Management Group, Inc., as
Agent. Initially capitalized terms used but not defined herein shall have the meaning ascribed to
such terms in the Security Agreement and/or the Credit Agreement. The undersigned hereby agrees
that the additional interests listed on this Pledged Interests Addendum as set forth below shall be
and become part of the Pledged Interests pledged by the undersigned to the Agent in the Security
Agreement and any pledged company set forth on this Pledged Interests Addendum as set forth below
shall be and become a “Pledged Company” under the Security Agreement, each with the same force and
effect as if originally named therein.



     The undersigned hereby certifies that the representations and warranties set forth in
Section 5 of the Security Agreement of the undersigned are true and correct as to the
Pledged Interests listed herein on and as of the date hereof.



	 	 	 	 	 	 	 
	 	 	BAKERS FOOTWEAR GROUP, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 

	 	 
	 	 	 	 	 
	 

	 	Title	 	 	 	 
	 

	 	 	 	 

	 	 






	 	 	 	 	 	 	 	 	 	 	 
	 	 	Name of Pledged	 	Number of	 	Class of	 	Percentage of	 	Certificate
	Name of Pledgor	 	Company	 	Shares/Units	 	Interests	 	Class Owned	 	Nos.
	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 





D-1









 






EXHIBIT E




TRADEMARK SECURITY AGREEMENT




     Bakers Footwear Group, Inc., a Missouri corporation (“Grantor”), for good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, grants to Private
Equity Management Group, Inc., a Nevada corporation, as agent for and representative of (in such
capacity herein called “Secured Party”) the financial institutions (“Lenders”)
party to that certain Second Lien Credit Agreement, entered into by and among the Grantor, Agent,
and Lenders, dated as of February 1, 2008 ( the “Credit Agreement”), a continuing security
interest in the following property:




     (i) Each trademark, trademark registration and trademark application listed on Schedule
A hereto, and all of the goodwill of the business connected with the use of, and symbolized
by, each such trademark, trademark registration and trademark application; and




     (ii) All proceeds of the foregoing, including without limitation any claim by Grantor
against third parties for damages (to the extent not effectively prohibited by an applicable
and legally enforceable license agreement) by reason of past, present or future infringement
of any trademark or trademark registration listed in Schedule A hereto or by reason of
injury to the goodwill associated with any such trademark or trademark registration or
trademark license, in each case together with the right to sue for and collect said damages;


to secure performance of all Obligations of Grantor under the Credit Agreement and as set out in
that certain Security Agreement dated as of February 1, 2008 by and between Grantor and Secured
Party (the “Agreement”).




     Grantor does hereby further acknowledge and affirm that the rights and remedies of Secured
Party with respect to the security interest in the works of authorship, trademarks, trademark
registrations and recordings, and trademark applications made and granted hereby are more fully set
forth in the Agreement, the terms and provisions of which are incorporated by reference herein as
if fully set forth herein.



     All terms defined in the Agreement, whether by reference or otherwise, when used herein, shall
have their respective meanings set forth therein, unless the context requires otherwise.



E-1









 





     IN WITNESS WHEREOF, Grantor has caused this Trademark Security Agreement to be duly executed
as of                      ___, 200___.



	 	 	 	 	 	 	 	 	 
	 	 	GRANTOR:
	 	 	 	 	 	 
	 	 	 
	 	 	 	 	 	 
	 	 	 	 	BAKERS FOOTWEAR GROUP, INC.	 	 
	 	 	 
	 	 	 	 	 	 
	 	 	 

	 	By:	 	 	 	 
	 	 	 

	 	Name:
	 	 	 	 
	 	 	 

	 	Title:	 	 	 	 
	 	 	 
	 	 	 	 	 	 
	 	 	 	 	ACCEPTED BY SECURED PARTY:	 	 
	 	 	 
	 	 	 	 	 	 
	 	 	 	 	PRIVATE EQUITY MANAGEMENT GROUP, INC.,

as Agent	 	 
	 	 	 
	 	 	 	 	 	 
	 	 	 

	 	By:	 	 	 	 
	 	 	 

	 	Name:
	 	 	 	 
	 	 	 

	 	Title:	 	 	 	 






[Signature Page to the Trademark Security Agreement]














 








Schedule A to




TRADEMARK SECURITY AGREEMENT




Trademarks














 





SPECIAL TYPES OF COLLATERAL




	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Trademark - 5b.	 	 	Number	 	 	Date	 	 	If Foreign, What Country	 	 	Subsidiary	 	 	Application #
	B & Design
	 	 	3,107,432	 	 	2/15/2001	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Bakers
	 	 	Pending	 	 	 	 	 	 	 	 	 	 	 	75/449,163
	 
	 	 	Pending	 	 	 	 	 	 	 	 	 	 	 	78/115,991
	 
	 	 	Pending	 	 	 	 	 	 	 	 	 	 	 	75/979,308
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Baker’s
	 	 	655,552	 	 	12/20/2005	 	 	Canada	 	 	 	 	 	 
	 
	 	 	661,116	 	 	3/22/2006	 	 	Canada	 	 	 	 	 	 
	 
	 	 	719,778	 	 	8/8/1961	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Ciella
	 	 	3,321,308	 	 	10/23/2007	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Duck Design
	 	 	1,558,021	 	 	9/26/1989	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Leed’s
	 	 	719,777	 	 	8/8/1961	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	No Parking
	 	 	1,943,049	 	 	12/19/1995	 	 	 	 	 	 	 	 	 
	 
	 	 	Pending	 	 	 	 	 	 	 	 	 	 	 	78/879,783
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	QualiCraft (Stylized)
	 	 	430,591	 	 	6/17/1947	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Riverstone
	 	 	Pending	 	 	 	 	 	 	 	 	 	 	 	78/879,754
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Sole Project
	 	 	Proposed	 	 	 	 	 	 	 	 	 	 	 	No App. # Available
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Stomp
	 	 	2,273,024	 	 	8/24/1999	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Swing & Design
	 	 	1,504,057	 	 	9/13/1988	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	The Legworks
	 	 	986,497	 	 	6/18/1974	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	The Wild Pair
	 	 	TMA249,138	 	 	8/8/1980	 	 	Canada	 	 	 	 	 	 
	 
	 	 	977,532	 	 	1/22/1974	 	 	 	 	 	 	 	 	 
	 
	 	 	955,819	 	 	3/20/1973	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	The Wild Pair & Design
	 	 	1,495,801	 	 	7/12/1988	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Wild Pair
	 	 	Pending	 	 	 	 	 	 	 	 	 	 	 	78/115,938
	 
	 	 	1,198,008	 	 	6/15/1982	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Wild Pair (Stylized)
	 	 	2,681,306	 	 	1/28/2003	 	 	 	 	 	 	 	 	 
	 
	 	 	Pending	 	 	 	 	 	 	 	 	 	 	 	78/115,979
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	TOZ
	 	 	2,849,107	 	 	10/12/2000	 	 	 	 	 	 	 	 	 
	 
	 	 	2,745,441	 	 	10/12/2000