<PAGE>
 
                                                                   EXHIBIT 10.42

                          GENERAL SECURITY AGREEMENT
                          --------------------------


     This General Security Agreement ("Agreement") dated December 15, 1997 is by
GLOBAL SPORTS, INC., formerly known as Ryka, Inc., a Delaware corporation
("Guarantor"), in favor of FOOTHILL CAPITAL CORPORATION, a California
corporation ("Lender").


                              W I T N E S S E T H
                              - - - - - - - - - -


     WHEREAS, Lender has entered or is about to enter into certain financing
arrangements with each of KPR Sports International, Inc., a Pennsylvania
corporation ("KPR"), as survivor of the merger of KPR Acquisitions, Inc., a
Pennsylvania corporation, with and into KPR, and Ryka Inc., a Pennsylvania
corporation ("Ryka", and together with KPR, collectively, "Borrowers" and each
individually a "Borrower") pursuant to which Lender may make loans and provide
other financial accommodations to each Borrower; and

     WHEREAS, Guarantor has executed and delivered or is about to execute and
deliver to Lender a Continuing Guaranty in favor of Lender pursuant to which
Guarantor absolutely and unconditionally guarantees to Lender the payment and
performance of all now existing and hereafter arising obligations, liabilities
and indebtedness of each Borrower to Lender; and

     NOW, THEREFORE, in consideration of the mutual conditions and agreements
set forth herein, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:

SECTION 1.   DEFINITIONS
             -----------

     All terms used herein which are defined in Article 1 or Article 9 of the
Uniform Commercial Code shall have the meanings given therein unless otherwise
defined in this Agreement.  All references to the plural herein shall also mean
the singular and to the singular shall also mean the plural unless the context
otherwise requires.  All references to Guarantor, each Guarantor and Lender
pursuant to the definitions set forth in the recitals hereto, or to any other
person herein, shall include their respective successors and assigns.  The words
"hereof", "herein", "hereunder", "this Agreement" and words of similar import
when used in this Agreement shall refer to this Agreement as a whole and not any
particular provision of this Agreement and as this Agreement now exists or may
hereafter be amended, modified, supplemented, extended, renewed, restated or
replaced.  The word "including" when used in this Agreement shall mean
"including, without limitation".  An Event of Default shall exist or continue or
be continuing until such Event of Default is waived in accordance with Section
7.3 or is cured in a manner satisfactory to Lender, if such Event of Default is
capable of being cured as determined by Lender.  Any accounting term used herein
unless otherwise defined in this Agreement shall have the meanings customarily
given to such term in accordance with GAAP.  For purposes of this Agreement, the
following terms shall have the respective meanings given to them below:

     1.1  "Accounts" means all currently existing and hereafter arising
accounts, contract rights, and all other forms of obligations owing to Guarantor
arising out of the sale or lease of goods or the rendition of services by
Guarantor, irrespective of whether earned by performance, and any and all credit
insurance, guaranties, or security therefor.
<PAGE>
 
     1.2  "Collateral" means each of the following:

               (a)  the Accounts,

               (b)  the Equipment,

               (c)  the General Intangibles,

               (d)  Guarantor's Books,

               (e)  the Inventory,

               (f)  the Negotiable Collateral,

               (g)  any money, or other assets of Guarantor that now or
hereafter come into the possession, custody, or control of Lender, and

               (h)  the proceeds and products, whether tangible or intangible,
of any of the foregoing, including proceeds of insurance covering any or all of
the Collateral, and any and all Accounts, Guarantor's Books, Equipment, General
Intangibles, Inventory, Negotiable Collateral, money, deposit accounts, or other
tangible or intangible property resulting from the sale, exchange, collection,
or other disposition of any of the foregoing, or any portion thereof or interest
therein, and the proceeds thereof.

     1.3  "Equipment" means all of Guarantor's present and hereafter acquired
machinery, machine tools, motors, equipment, furniture, furnishings, fixtures,
vehicles (including motor vehicles and trailers), tools, parts, goods (other
than consumer goods, farm products, or Inventory), wherever located, and all
attachments, accessories, accessions, replacements, substitutions, additions,
and improvements to any of the foregoing.

     1.4  "Event of Default" shall have the meaning set forth in Section 6.1
hereof.

     1.5  "GAAP" shall mean generally accepted accounting principles in the
United States of America as in effect from time to time as set forth in the
opinions and pronouncements of the Accounting Principles Board and the American
Institute of Certified Public Accountants and the statements and pronouncements
of the Financial Accounting Standards Board which are applicable to the
circumstances as of the date of determination consistently applied.

     1.6  "General Intangibles" means all of Guarantor's present and future
general intangibles and other personal property (including contract rights,
rights arising under common law, statutes, or regulations, choses or things in
action, goodwill, patents, trade names, trademarks, servicemarks, copyrights,
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, infringement claims, computer programs,
information contained on computer disks or tapes, literature, reports, catalogs,
deposit accounts, insurance premium rebates, tax refunds, and tax refund
claims), other than goods, Accounts, and Negotiable Collateral.

     1.7  "Guarantor's Books" means all of Guarantor's books and records
           -----------------                                            
including:  ledgers; records indicating, summarizing, or evidencing Guarantor's
properties or assets (including the Collateral) or liabilities; all information
relating to Guarantor's business operations or financial condition; and all
computer programs, disk or tape files, printouts, runs, or other computer
prepared information.

                                      -2-
<PAGE>
 
     1.8  "Inventory" means all present and future inventory in which Guarantor
has any interest, including goods held for sale or lease or to be furnished
under a contract of service and all of Guarantor's present and future raw
materials, work in process, finished goods, and packing and shipping materials,
wherever located.

     1.9  "Loan Agreement" shall mean the Amended and Restated Loan and Security
Agreement, dated December __, 1997, by and between Guarantors and Lender, as the
same now exists and may hereafter be amended, modified, supplemented, extended,
renewed, restated or replaced.

    1.10  "Loan Documents" shall mean, collectively, the Loan Agreement, this
Agreement and all notes, guarantees, security agreements and other agreements,
documents and instruments now or at any time hereafter executed and/or delivered
by Guarantors, Guarantor or any Obligor in connection with the Loan Agreement,
as the same now exist or may hereafter be amended, modified, supplemented,
extended, renewed, restated or replaced.

    1.11  "Negotiable Collateral" means all of Guarantor's present and future
letters of credit, notes, drafts, instruments, investment property, security
entitlements, securities (including the shares of stock of Subsidiaries of
Guarantor), documents, personal property leases (wherein Guarantor is the
lessor), chattel paper, and Guarantor's Books relating to any of the foregoing.

    1.12  "Obligations" shall mean the security interest, lien and other
interests granted to Lender pursuant to this Agreement shall secure the prompt
performance, observance and payment in full of any and all obligations,
indebtedness, or liabilities of any kind or character owed by Guarantor to
Lender including all such obligations, indebtedness, or liabilities, whether for
principal, interest (including any interest which, but for the application of
the provisions of the Bankruptcy Code, would have accrued on such amounts),
premium, reimbursement obligations, fees, costs, expenses (including, attorneys'
fees), or indemnity obligations, whether heretofore, now, or hereafter made,
incurred, or created, whether voluntarily or involuntarily made, incurred, or
created, whether secured or unsecured (and if secured, regardless of the nature
or extent of the security), whether absolute or contingent, liquidated or
unliquidated, determined or indeterminate, whether Guarantor is liable
individually or jointly with others, and whether recovery is or hereafter
becomes barred by any statute of limitations or otherwise becomes unenforceable
for any reason whatsoever, including any act or failure to act by Lender.

    1.13  "Obligor" shall mean any other guarantor, endorser, acceptor, surety
or other person liable on or with respect to the Obligations or who is the owner
of any property which is security for the Obligations, other than Guarantor.

    1.14  "Person" means and includes natural persons, corporations, limited
liability companies, limited partnerships, general partnerships, limited
liability partnerships, joint ventures, trusts, land trusts, business trusts, or
other organizations, irrespective of whether they are legal entities, and
governments and agencies and political subdivisions thereof.


SECTION 2.  GRANT OF SECURITY INTEREST
            --------------------------

     To secure payment and performance of all Obligations, Guarantor hereby
grants to Lender a continuing security interest in, a lien upon, and a right of
set off against all currently existing and hereafter acquired or arising
Collateral.

                                      -3-
<PAGE>
 
SECTION 3.  COLLATERAL COVENANTS
            --------------------

     3.1  Accounts Covenants.
          ------------------ 

          (a)  Lender shall have the right at any time or times, in Lender's
name or in the name of a nominee of Lender, to verify the validity, amount or
any other matter relating to any Account or other Collateral, by mail,
telephone, facsimile transmission or otherwise.

          (b)  Guarantor shall deliver or cause to be delivered to Lender, with
appropriate endorsement and assignment, with full recourse to Guarantor, all
chattel paper and instruments which Guarantor now owns or may at any time
acquire immediately upon Guarantor's receipt thereof, except as Lender may
otherwise agree.

          (c)  Lender may, at any time or times that an Event of Default exists
or has occurred and is continuing, (i) notify any or all account debtors that
the Accounts have been assigned to Lender and that Lender has a security
interest therein and Lender may direct any or all accounts debtors to make
payment of Accounts directly to Lender, (ii) extend the time of payment of,
compromise, settle or adjust for cash, credit, return of merchandise or
otherwise, and upon any terms or conditions, any and all Accounts or other
obligations included in the Collateral and thereby discharge or release the
account debtor or any other party or parties in any way liable for payment
thereof without affecting any of the Obligations, (iii) demand, collect or
enforce payment of any Accounts or such other obligations, but without any duty
to do so, and Lender shall not be liable for its failure to collect or enforce
the payment thereof nor for the negligence of its agents or attorneys with
respect thereto and (iv) take whatever other action Lender may deem necessary or
desirable for the protection of its interests.  At any time that an Event of
Default exists or has occurred and is continuing, at Lender's request, all
invoices and statements sent to any account debtor shall state that the Accounts
and such other obligations have been assigned to Lender and are payable directly
and only to Lender and Guarantor shall deliver to Lender such originals of
documents evidencing the sale and delivery of goods or the performance of
services giving rise to any Accounts as Lender may require.

     3.2  Inventory Covenants.  With respect to the Inventory: (a) Guarantor
          -------------------                                               
shall at all times maintain inventory records reasonably satisfactory to Lender,
keeping correct and accurate records itemizing and describing the kind, type,
quality and quantity of Inventory, Guarantor's cost therefor and daily
withdrawals therefrom and additions thereto; (b) Guarantor shall not remove any
Inventory from the locations set forth or permitted herein, without the prior
written consent of Lender, except for sales of Inventory in the ordinary course
of Guarantor's business and except to move Inventory directly from one location
set forth or permitted herein to another such location; (c) Guarantor shall
produce, use, store and maintain the Inventory, with all reasonable care and
caution and in accordance with applicable standards of any insurance and in
conformity with applicable laws (including the requirements of the Federal Fair
Labor Standards Act of 1938, as amended and all rules, regulations and orders
related thereto); (d) Guarantor assumes all responsibility and liability arising
from or relating to the production, use, sale or other disposition of the
Inventory; (e) Guarantor shall not sell Inventory to any customer on approval,
or any other basis which entitles the customer to return or may obligate
Guarantor to repurchase such Inventory; (f) Guarantor shall keep the Inventory
in good and marketable condition; and (g) Guarantor shall not, without prior
written notice to Lender, acquire or accept any Inventory on consignment or
approval.

     3.3  Equipment Covenants.  With respect to the Equipment: (a) Guarantor
          -------------------                                               
shall keep the Equipment in good order, repair, running and marketable condition
(ordinary wear and tear excepted); (b) Guarantor shall use the Equipment with
all reasonable care and caution and in accordance with applicable standards of
any insurance and in conformity with all applicable laws; (c) the Equipment is
and shall be used in Guarantor's business and not for personal, family,
household or farming use; (d) Guarantor shall not remove

                                      -4-
<PAGE>
 
any Equipment from the locations set forth or permitted herein, except to the
extent necessary to have any Equipment repaired or maintained in the ordinary
course of the business of Guarantor or to move Equipment directly from one
location set forth or permitted herein to another such location and except for
the movement of motor vehicles used by or for the benefit of Guarantor in the
ordinary course of business; (e) the Equipment is now and shall remain personal
property and Guarantor shall not permit any of the Equipment to be or become a
part of or affixed to real property; and (f) Guarantor assumes all
responsibility and liability arising from the use of the Equipment.

     3.4  Power of Attorney.  Guarantor hereby irrevocably designates and
          -----------------                                              
appoints Lender (and all persons designated by Lender) as Guarantor's true and
lawful attorney-in-fact, and authorizes Lender, in Guarantor's or Lender's name,
to: (a) at any time an Event of Default or event which with notice or passage of
time or both would constitute an Event of Default exists or has occurred and is
continuing (i) demand payment on Accounts or other proceeds of Inventory or
other Collateral, (ii) enforce payment of Accounts by legal proceedings or
otherwise, (iii) exercise all of Guarantor's rights and remedies to collect any
Account or other Collateral, (iv) sell or assign any Account upon such terms,
for such amount and at such time or times as the Lender deems advisable, (v)
settle, adjust, compromise, extend or renew an Account, (vi) discharge and
release any Account, (vii) prepare, file and sign Guarantor's name on any proof
of claim in bankruptcy or other similar document against an account debtor,
(viii) notify the post office authorities to change the address for delivery of
Guarantor's mail to an address designated by Lender, and open and dispose of all
mail addressed to Guarantor, and (ix) do all acts and things which are
necessary, in Lender's determination, to fulfill Guarantor's obligations under
this Agreement and the other Loan Documents and (b) at any time to (i) take
control in any manner of any item of payment or proceeds thereof, (ii) have
access to any lockbox or postal box into which Guarantor's mail is deposited,
(iii) endorse Guarantor's name upon any items of payment or proceeds thereof and
deposit the same in the Lender's account for application to the Obligations,
(iv) endorse Guarantor's name upon any chattel paper, document, instrument,
invoice, or similar document or agreement relating to any Account or any goods
pertaining thereto or any other Collateral, (v) sign Guarantor's name on any
verification of Accounts and notices thereof to account debtors and (vi) execute
in Guarantor's name and file any UCC financing statements or amendments thereto.
Guarantor hereby releases Lender and its officers, employees and designees from
any liabilities arising from any act or acts under this power of attorney and in
furtherance thereof, whether of omission or commission, except as a result of
Lender's own gross negligence or wilful misconduct as determined pursuant to a
final non-appealable order of a court of competent jurisdiction.

     3.5  Right to Cure.  Lender may, at its option, (a) cure any default by
          -------------                                                     
Guarantor under any agreement with a third party or pay or bond on appeal any
judgment entered against Guarantor, (b) discharge taxes, liens, security
interests or other encumbrances at any time levied on or existing with respect
to the Collateral and (c) pay any amount, incur any expense or perform any act
which, in Lender's judgment, is necessary or appropriate to preserve, protect,
insure or maintain the Collateral and the rights of Lender with respect thereto.
Lender may add any amounts so expended to the Obligations and charge Guarantor's
account therefor, such amounts to be repayable by Guarantor on demand.  Lender
shall be under no obligation to effect such cure, payment or bonding and shall
not, by doing so, be deemed to have assumed any obligation or liability of
Guarantor.  Any payment made or other action taken by Lender under this Section
shall be without prejudice to any right to assert an Event of Default hereunder
and to proceed accordingly.

     3.6  Access to Premises.  From time to time as requested by Lender, at the
          ------------------                                                   
cost and expense of Guarantor, (a) Lender or its designee shall have complete
access to all of Guarantor's premises during normal business hours and after
notice to Guarantor, or at any time and without notice to Guarantor if an
Event of Default exists or has occurred and is continuing, for the purposes of
inspecting, verifying and auditing the Collateral and all of Guarantor's books
and records, including the Records, and (b) Guarantor shall promptly 

                                      -5-
<PAGE>
 
furnish to Lender such copies of such books and records or extracts therefrom as
Lender may request, and (c) use during normal business hours such of Guarantor's
personnel, equipment, supplies and premises as may be reasonably necessary for
the foregoing and if an Event of Default exists or has occurred and is
continuing for the collection of Accounts and realization of other Collateral.


SECTION 4.  REPRESENTATIONS AND WARRANTIES
            ------------------------------

     Guarantor hereby represents and warrants to Lender the following (which
shall survive the execution and delivery of this Agreement):

     4.1  Corporate Existence, Power and Authority; Subsidiaries.  Guarantor is
          ------------------------------------------------------               
a corporation duly organized and in good standing under the laws of its state of
incorporation and is duly qualified as a foreign corporation and in good
standing in all states or other jurisdictions where the nature and extent of the
business transacted by it or the ownership of assets makes such qualification
necessary, except for those jurisdictions in which the failure to so qualify
would not have a material adverse effect on Guarantor's financial condition,
results of operation or business or the rights of Lender in or to any of the
Collateral.  The execution, delivery and performance of this Agreement, the
other Loan Documents and the transactions contemplated hereunder and thereunder
are all within Guarantor's corporate powers, have been duly authorized and are
not in contravention of law or the terms of Guarantor's certificate of
incorporation, by-laws, or other organizational documentation, or any indenture,
agreement or undertaking to which Guarantor is a party or by which Guarantor or
its property are bound.  This Agreement and the other Loan Documents constitute
legal, valid and binding obligations of Guarantor enforceable in accordance with
their respective terms.  Guarantor does not have any subsidiaries.

     4.2  Chief Executive Office; Collateral Locations.  The chief executive
          --------------------------------------------                      
office of Guarantor and Guarantor's Records concerning Accounts are located only
at the address set forth below and its only other places of business and the
only other locations of Collateral, if any, are the addresses set forth in
Schedule 4.2 hereto, subject to the right of Guarantor to establish new
locations in accordance with Section 5.2 below.

     4.3  Priority of Liens; Title to Properties.  The security interests and
          --------------------------------------                             
liens granted to Lender under this Agreement and the other Loan Documents
constitute valid and perfected first priority liens and security interests in
and upon the Collateral subject only to the liens indicated on Schedule 4.3
hereto and the other liens permitted under Section 5.8 hereof.  Guarantor has
good and marketable title to all of its properties and assets subject to no
liens, mortgages, pledges, security interests, encumbrances or charges of any
kind, except those granted to Lender and such others as are specifically listed
on Schedule 4.3 hereto or permitted under Section 5.8 hereof.

     4.4  Tax Returns.  Guarantor has filed, or caused to be filed, in a timely
          -----------                                                          
manner all tax returns, reports and declarations which are required to be filed
by it (without requests for extension except as previously disclosed in writing
to Lender).  All information in such tax returns, reports and declarations is
complete and accurate in all material respects.  Guarantor has paid or caused to
be paid all taxes due and payable or claimed due and payable in any assessment
received by it, except taxes the validity of which are being contested in good
faith by appropriate proceedings diligently pursued and available to Guarantor
and with respect to which adequate reserves have been set aside on its books.
Adequate provision has been made for the payment of all accrued and unpaid
Federal, State, county, local, foreign and other taxes whether or not yet due
and payable and whether or not disputed.

     4.5  Litigation.  There is no present investigation by any governmental
          ----------                                                        
agency pending, or to the best of Guarantor's knowledge threatened, against or
affecting Guarantor, its assets or business and there is 

                                      -6-
<PAGE>
 
no action, suit, proceeding or claim by any Person pending, or to the best of
Guarantor's knowledge threatened, against Guarantor or its assets or goodwill,
or against or affecting any transactions contemplated by this Agreement, which
if adversely determined against Guarantor would result in any material adverse
change in the assets, business or prospects of Guarantor or which would impair
the ability of Guarantor to perform its obligations hereunder or under any of
the other Loan Documents to which it is a party or of Lender to enforce the
Obligations or realize upon any Collateral.

     4.6  Compliance with Other Agreements and Applicable Laws.  Guarantor is
          ----------------------------------------------------               
not in default in any material respect under, or in violation in any material
respect of any of the terms of, any agreement, contract, instrument, lease or
other commitment to which it is a party or by which it or any of its assets are
bound and Guarantor is in compliance in all material respects with all
applicable provisions of laws, rules, regulations, licenses, permits, approvals
and orders of any foreign, Federal, State or local governmental authority.

     4.7  Accuracy and Completeness of Information.  All information furnished
          ----------------------------------------                            
by or on behalf of Guarantor in writing to Lender in connection with this
Agreement or any of the other Loan Documents or any transaction contemplated
hereby or thereby, is true and correct in all material respects on the date as
of which such information is dated or certified and does not omit any material
fact necessary in order to make such information not misleading.  No event or
circumstance has occurred which has had or could reasonably be expected to have
a material adverse affect on the business, assets or prospects of Guarantor,
which has not been fully and accurately disclosed to Lender in writing.

     4.8  Survival of Warranties; Cumulative.  All representations and
          ----------------------------------                          
warranties contained in this Agreement or any of the other Loan Documents shall
survive the execution and delivery of this Agreement and shall be deemed to have
been made again to Lender on the date of each additional borrowing or other
credit accommodation under the Loan Agreement and shall be conclusively presumed
to have been relied on by Lender regardless of any investigation made or
information possessed by Lender.  The representations and warranties set forth
herein shall be cumulative and in addition to any other representations or
warranties which Guarantor shall now or hereafter give, or cause to be given, to
Lender.


SECTION 5.  AFFIRMATIVE AND NEGATIVE COVENANTS
            ----------------------------------

     5.1  Maintenance of Existence.  Guarantor shall at all times preserve,
          ------------------------                                         
renew and keep in full, force and effect its corporate existence and rights and
franchises with respect thereto and maintain in full force and effect all
permits, licenses, trademarks, tradenames, approvals, authorizations, leases and
contracts necessary to carry on the business as presently or proposed to be
conducted.  Guarantor shall give Lender thirty (30) days prior written notice of
any proposed change in its corporate name, which notice shall set forth the new
name and Guarantor shall deliver to Lender a copy of the amendment to the
Certificate of Incorporation of Guarantor providing for the name change
certified by the Secretary of State of the jurisdiction of incorporation of
Guarantor as soon as it is available.

     5.2  New Collateral Locations.  Guarantor may open any new location within
          ------------------------                                             
the continental United States provided Guarantor (a) gives Lender thirty (30)
days prior written notice of the intended opening of any such new location and
(b) executes and delivers, or causes to be executed and delivered, to Lender
such agreements, documents, and instruments as Lender may deem reasonably
necessary or desirable to protect its interests in the Collateral at such
location, including UCC financing statements.

     5.3  Compliance with Laws, Regulations, Etc.  Guarantor shall, at all
          ---------------------------------------                         
times, comply in all material respects with all laws, rules, regulations,
licenses, permits, approvals and orders of any Federal, State or local
governmental authority applicable to it.

                                      -7-
<PAGE>
 
     5.4  Payment of Taxes and Claims.  Guarantor shall duly pay and discharge
          ---------------------------                                         
all taxes, assessments, contributions and governmental charges upon or against
it or its properties or assets, except for taxes the validity of which are being
contested in good faith by appropriate proceedings diligently pursued and
available to Guarantor and with respect to which adequate reserves have been set
aside on its books.  Guarantor shall be liable for any tax or penalties imposed
on Lender as a result of the financing arrangements provided for herein and
Guarantor agrees to indemnify and hold Lender harmless with respect to the
foregoing, and to repay to Lender on demand the amount thereof, and until paid
by Guarantor such amount shall be added and deemed part of the Loans, provided,
                                                                      -------- 
that, nothing contained herein shall be construed to require Guarantor to pay
----                                                                         
any income or franchise taxes attributable to the income of Lender from any
amounts charged or paid hereunder to Lender.  The foregoing indemnity shall
survive the payment of the Obligations, the termination of this Agreement and
the termination or non-renewal of the Loan Agreement.

     5.5  Insurance.  Guarantor shall, at all times, maintain with financially
          ---------                                                           
sound and reputable insurers insurance with respect to the Collateral against
loss or damage and all other insurance of the kinds and in the amounts
customarily insured against or carried by corporations of established reputation
engaged in the same or similar businesses and similarly situated.  Said policies
of insurance shall be satisfactory to Lender as to form, amount and insurer.
Guarantor shall furnish certificates, policies or endorsements to Lender as
Lender shall require as proof of such insurance, and, if Guarantor fails to do
so, Lender is authorized, but not required, to obtain such insurance at the
expense of Guarantor.  All policies shall provide for at least thirty (30) days
prior written notice to Lender of any cancellation or reduction of coverage and
that Lender may act as attorney for Guarantor in obtaining, and at any time an
Event of Default exists or has occurred and is continuing, adjusting, settling,
amending and canceling such insurance.  Guarantor shall cause Lender to be named
as a loss payee and an additional insured (but without any liability for any
premiums) under such insurance policies and Guarantor shall obtain non-
contributory lender's loss payable endorsements to all insurance policies in
form and substance satisfactory to Lender.  Such lender's loss payable
endorsements shall specify that the proceeds of such insurance shall be payable
to Lender as its interests may appear and further specify that Lender shall be
paid regardless of any act or omission by Guarantor or any of its affiliates.
At its option, Lender may apply any insurance proceeds received by Lender at any
time to the cost of repairs or replacement of Collateral and/or to payment of
the Obligations, whether or not then due, in any order and in such manner as
Lender may determine or hold such proceeds as cash collateral for the
Obligations.

     5.6  Financial Statements and Other Information.   Guarantor shall keep
          ------------------------------------------                        
proper books and records in which true and complete entries shall be made of all
dealings or transactions of or in relation to the Collateral and the business of
Guarantor and its subsidiaries (if any) in accordance with GAAP.  Guarantor
shall furnish or cause to be furnished to Lender (a) such financial statements
(including balance sheets, statements of income and loss, statements of cash
flow and statement of shareholders' equity) all in reasonable detail fairly
presenting the financial position and results of the operations of Guarantor as
of the end and through such period as Lender may from time to time reasonably
request and (b) such budgets, forecasts, projections and other information
respecting the Collateral and the business of Guarantor, as Lender may, from
time to time, reasonably request.  Lender is hereby authorized to deliver a copy
of any financial statement or any other information relating to the business of
Guarantor to any court or other government agency or to any participant or
assignee or prospective participant or assignee.  Guarantor hereby irrevocably
authorizes and directs all accountants or auditors to deliver to Lender, at
Guarantor's expense, copies of the financial statements of Guarantor and any
reports or management letters prepared by such accountants or auditors on behalf
of Guarantor and to disclose to Lender such information as they may have
regarding the business of Guarantor. Any documents, schedules, invoices or other
papers delivered to Lender may be destroyed or otherwise disposed of by Lender
one (1) year after the same are delivered to Lender, except as otherwise
designated by Guarantor to Lender in writing.

                                      -8-
<PAGE>
 
     5.7  Sale of Assets, Consolidation, Merger, Dissolution, Etc.  Guarantor
          --------------------------------------------------------           
shall not, directly or indirectly, (a) merge into or with or consolidate with
any other Person or permit any other Person to merge into or with or consolidate
with it, except for the merger permitted in the Loan Agreements or (b) sell,
assign, lease, transfer, abandon or otherwise dispose of any stock or
indebtedness to any other Person or any of its assets to any other Person or (c)
form or acquire any subsidiaries, or (d) wind up, liquidate or dissolve or (e)
agree to do any of the foregoing.

     5.8  Encumbrances.  Guarantor shall not create, incur, assume or suffer to
          ------------                                                         
exist any security interest, mortgage, pledge, lien, charge or other encumbrance
of any nature whatsoever on any of its assets or properties, including the
Collateral, except:  (a) liens and security interests of Lender and (b) the
            ------                                                         
liens and security interests set forth on Schedule 4.3 hereto.

     5.9  Costs and Expenses.  Guarantor shall pay to Lender on demand all
          ------------------                                              
costs, expenses, filing fees and taxes paid or payable in connection with the
preparation, negotiation, execution, delivery, recording, administration,
collection, liquidation, enforcement and defense of the Obligations, Lender's
rights in the Collateral, this Agreement, the other Loan Documents and all other
documents related hereto or thereto, including any amendments, supplements or
consents which may hereafter be contemplated (whether or not executed) or
entered into in respect hereof and thereof, including:  (a) all costs and
expenses of filing or recording (including Uniform Commercial Code financing
statement filing taxes and fees, documentary taxes, intangibles taxes and
mortgage recording taxes and fees, if applicable); (b) all insurance premiums,
appraisal fees and search fees; (c) costs and expenses of preserving and
protecting the Collateral; (d) costs and expenses paid or incurred in connection
with obtaining payment of the Obligations, enforcing the security interests and
liens of Lender, selling or otherwise realizing upon the Collateral, and
otherwise enforcing the provisions of this Agreement and the other Loan
Documents or defending any claims made or threatened against Lender arising out
of the transactions contemplated hereby and thereby (including preparations for
and consultations concerning any such matters); and (e) the fees and
disbursements of counsel (including legal assistants) to Lender in connection
with any of the foregoing.

     5.10 Further Assurances.  At the request of Lender at any time and from
          ------------------                                                
time to time, Guarantor shall, at its expense, at any time or times duly execute
and deliver, or cause to be duly executed and delivered, such further
agreements, documents and instruments, and do or cause to be done such further
acts as may be necessary or proper to evidence, perfect, maintain and enforce
the security interests and the priority thereof in the Collateral and to
otherwise effectuate the provisions or purposes of this Agreement or any of the
other Loan Documents.  Where permitted by law, Guarantor hereby authorizes
Lender to execute and file one or more UCC financing statements signed only by
Lender.


SECTION 6.  EVENTS OF DEFAULT AND REMEDIES
            ------------------------------

     6.1  Events of Default.  The occurrence or existence of any Event of
          -----------------                                              
Default under the Loan Agreement is referred to herein individually as an "Event
of Default", and collectively as "Events of Default".

     6.2  Remedies.
          -------- 

          (a)  At any time an Event of Default exists or has occurred and is
continuing, Lender shall have all rights and remedies provided in this
Agreement, the other Loan Documents, the Uniform Commercial Code and other
applicable law, all of which rights and remedies may be exercised without notice
to or consent by Guarantor or any Obligor, except as such notice or consent is
expressly provided for hereunder or required by applicable law.  All rights,
remedies and powers granted to Lender hereunder, under 

                                      -9-
<PAGE>
 
any of the other Loan Documents, the Uniform Commercial Code or other applicable
law, are cumulative, not exclusive and enforceable, in Lender's discretion,
alternatively, successively, or concurrently on any one or more occasions, and
shall include, without limitation, the right to apply to a court of equity for
an injunction to restrain a breach or threatened breach by Guarantor of this
Agreement or any of the other Loan Documents. Lender may, at any time or times,
proceed directly against Guarantor or any Obligor to collect the Obligations
without prior recourse to the Collateral.

          (b)  Without limiting the foregoing, at any time an Event of Default
exists or has occurred and is continuing, Lender may, in its discretion and
without limitation, (i) accelerate the payment of all Obligations and demand
immediate payment thereof to Lender, (ii) with or without judicial process or
the aid or assistance of others, enter upon any premises on or in which any of
the Collateral may be located and take possession of the Collateral or complete
processing, manufacturing and repair of all or any portion of the Collateral,
(iii) require Guarantor, at Guarantor's expense, to assemble and make available
to Lender any part or all of the Collateral at any place and time designated by
Lender, (iv) collect, foreclose, receive, appropriate, setoff and realize upon
any and all Collateral, (v) remove any or all of the Collateral from any
premises on or in which the same may be located for the purpose of effecting the
sale, foreclosure or other disposition thereof or for any other purpose, (vi)
sell, lease, transfer, assign, deliver or otherwise dispose of any and all
Collateral (including entering into contracts with respect thereto, public or
private sales at any exchange, broker's board, at any office of Lender or
elsewhere) at such prices or terms as Lender may deem reasonable, for cash, upon
credit or for future delivery, with the Lender having the right to purchase the
whole or any part of the Collateral at any such public sale, all of the
foregoing being free from any right or equity of redemption of Guarantor, which
right or equity of redemption is hereby expressly waived and released by
Guarantor.  If any of the Collateral is sold or leased by Lender upon credit
terms or for future delivery, the Obligations shall not be reduced as a result
thereof until payment therefor is finally collected by Lender.  If notice of
disposition of Collateral is required by law, five (5) days prior notice by
Lender to Guarantor designating the time and place of any public sale or the
time after which any private sale or other intended disposition of Collateral is
to be made, shall be deemed to be reasonable notice thereof and Guarantor waives
any other notice.  In the event Lender institutes an action to recover any
Collateral or seeks recovery of any Collateral by way of prejudgment remedy,
Guarantor waives the posting of any bond which might otherwise be required.

          (c)  Lender may apply the cash proceeds of Collateral actually
received by Lender from any sale, lease, foreclosure or other disposition of the
Collateral to payment of the Obligations, in whole or in part and in such order
as Lender may elect, whether or not then due.  Guarantor shall remain liable to
Lender for the payment of any deficiency with interest at the highest rate
provided for in the Loan Agreement and all costs and expenses of collection or
enforcement, including attorneys' fees and legal expenses.


SECTION 7.  JURY TRIAL WAIVER; OTHER WAIVERS AND CONSENTS; GOVERNING LAW
            ------------------------------------------------------------

     7.1  Governing Law; Choice of Forum; Service of Process; Jury Trial Waiver.
          --------------------------------------------------------------------- 

          (a)  The validity, interpretation and enforcement of this Agreement
and the other Loan Documents and any dispute arising out of the relationship
between the parties hereto, whether in contract, tort, equity or otherwise,
shall be governed by the internal laws of the State of New York (without giving
effect to principles of conflicts of law).

          (b)  Guarantor irrevocably consents and submits to the non-exclusive
jurisdiction of the Supreme Court of the State of New York in and for the County
of New York and the United States District 

                                      -10-
<PAGE>
 
Court for the Southern District of New York and waives any objection based on
venue or forum non conveniens with respect to any action instituted therein
         ----- --- ----------
arising under this Agreement or any of the other Loan Documents or in any way
connected or related or incidental to the dealings of Guarantor and Lender in
respect of this Agreement or the other Loan Documents or the transactions
related hereto or thereto, in each case whether now existing or hereafter
arising, and whether in contract, tort, equity or otherwise, and agrees that any
dispute with respect to any such matters shall be heard only in the courts
described above (except that Lender shall have the right to bring any action or
proceeding against Guarantor or its property in the courts of any other
jurisdiction which Lender deems necessary or appropriate in order to realize on
the Collateral or to otherwise enforce its rights against Guarantor or its
property).

          (c)  Guarantor hereby waives personal service of any and all process
upon it and consents that all such service of process may be made by certified
mail (return receipt requested) directed to its address set forth on the
signature pages hereof and service so made shall be deemed to be completed five
(5) days after the same shall have been so deposited in the U.S. mails, or, at
Lender's option, by service upon Guarantor in any other manner provided under
the rules of any such courts.   Within thirty (30) days after such service,
Guarantor shall appear in answer to such process, failing which Guarantor shall
be deemed in default and judgment may be entered by Lender against Guarantor for
the amount of the claim and other relief requested.

          (d)  GUARANTOR HEREBY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM,
DEMAND, ACTION OR CAUSE OF ACTION (i) ARISING UNDER THIS AGREEMENT OR ANY OF THE
OTHER LOAN DOCUMENTS OR (ii) IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL
TO THE DEALINGS OF GUARANTOR AND LENDER IN RESPECT OF THIS AGREEMENT OR ANY OF
THE OTHER LOAN DOCUMENTS OR THE TRANSACTIONS RELATED HERETO OR THERETO IN EACH
CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER IN CONTRACT, TORT,
EQUITY OR OTHERWISE.  GUARANTOR HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM,
DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY
AND THAT GUARANTOR OR LENDER MAY FILE AN ORIGINAL COUNTERPART OF A COPY OF THIS
AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF GUARANTOR AND
LENDER TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.

          (e)  Lender shall not have any liability to Guarantor (whether in
tort, contract, equity or otherwise) for losses suffered by Guarantor in
connection with, arising out of, or in any way related to the transactions or
relationships contemplated by this Agreement, or any act, omission or event
occurring in connection herewith, unless it is determined by a final and non-
appealable judgment or court order binding on Lender that the losses were the
result of acts or omissions constituting gross negligence or willful misconduct.
In any such litigation, Lender shall be entitled to the benefit of the
rebuttable presumption that it acted in good faith and with the exercise of
ordinary care in the performance by it of the terms of this Agreement and the
other Loan Documents.

     7.2  Waiver of Notices.  Guarantor hereby expressly waives demand,
          -----------------                                            
presentment, protest and notice of protest and notice of dishonor with respect
to any and all instruments and commercial paper, included in or evidencing any
of the Obligations or the Collateral, and any and all other demands and notices
of any kind or nature whatsoever with respect to the Obligations, the Collateral
and this Agreement, except such as are expressly provided for herein.  No notice
to or demand on Guarantor which Lender may elect to give shall entitle Guarantor
to any other or further notice or demand in the same, similar or other
circumstances.

     7.3  Amendments and Waivers.  Neither this Agreement nor any provision
          ----------------------                                           
hereof shall be amended, modified, waived or discharged orally or by course of
conduct, but only by a written agreement signed by 

                                      -11-
<PAGE>
 
an authorized officer of Lender, and as to amendments, as also signed by an
authorized officer of Guarantor. Lender shall not, by any act, delay, omission
or otherwise be deemed to have expressly or impliedly waived any of its rights,
powers and/or remedies unless such waiver shall be in writing and signed by an
authorized officer of Lender. Any such waiver shall be enforceable only to the
extent specifically set forth therein. A waiver by Lender of any right, power
and/or remedy on any one occasion shall not be construed as a bar to or waiver
of any such right, power and/or remedy which Lender would otherwise have on any
future occasion, whether similar in kind or otherwise.

     7.4  Waiver of Counterclaims.  Guarantor waives all rights to interpose any
          -----------------------                                               
claims, deductions, setoffs or counterclaims of any nature (other then
compulsory counterclaims) in any action or proceeding with respect to this
Agreement, the Obligations, the Collateral or any matter arising therefrom or
relating hereto or thereto.

     7.5  Indemnification.  Guarantor shall indemnify and hold Lender, and its
          ---------------                                                     
directors, agents, employees and counsel, harmless from and against any and all
losses, claims, damages, liabilities, costs or expenses imposed on, incurred by
or asserted against any of them in connection with any litigation,
investigation, claim or proceeding commenced or threatened related to the
negotiation, preparation, execution, delivery, enforcement, performance or
administration of this Agreement, any other Loan Documents, or any undertaking
or proceeding related to any of the transactions contemplated hereby or any act,
omission, event or transaction related or attendant thereto, including amounts
paid in settlement, court costs, and the fees and expenses of counsel.  To the
extent that the undertaking to indemnify, pay and hold harmless set forth in
this Section may be unenforceable because it violates any law or public policy,
Guarantor shall pay the maximum portion which it is permitted to pay under
applicable law to Lender in satisfaction of indemnified matters under this
Section.  The foregoing indemnity shall survive the payment of the Obligations,
the termination of this Agreement and the termination or non-renewal of the Loan
Agreement.


SECTION 8.  MISCELLANEOUS
            -------------

     8.1  Notices.  All notices, requests and demands hereunder shall be in
          -------                                                          
writing and (a) made to Lender at its address 60 State Street, Boston,
Massachusetts 02109, Attention:  Business/Financial Manager and to Guarantor at
its chief executive office set forth below, or to such other address as either
party may designate by written notice to the other in accordance with this
provision, and (b) deemed to have been given or made: if delivered in person,
immediately upon delivery; if by telex, telegram or facsimile transmission,
immediately upon sending and upon confirmation of receipt; if by nationally
recognized overnight courier service with instructions to deliver the next
business day, one (1) business day after sending; and if by certified mail,
return receipt requested, five (5) days after mailing.

     8.2  Partial Invalidity.  If any provision of this Agreement is held to be
          ------------------                                                   
invalid or unenforceable, such invalidity or unenforceability shall not
invalidate this Agreement as a whole, but this Agreement shall be construed as
though it did not contain the particular provision held to be invalid or
unenforceable and the rights and obligations of the parties shall be construed
and enforced only to such extent as shall be permitted by applicable law.

     8.3  Successors.  This Agreement, the other Loan Documents and any other
          ----------                                                         
document referred to herein or therein shall be binding upon Guarantor and its
successors and assigns and inure to the benefit of and be enforceable by Lender
and its successors and assigns, except that Guarantor may not assign its rights
under this Agreement, the other Loan Documents and any other document referred
to herein or therein without the prior written consent of Lender.

                                      -12-
<PAGE>
 
     8.4  Entire Agreement.  This Agreement, the other Loan Documents, any
          ----------------                                                
supplements hereto or thereto, and any instruments or documents delivered or to
be delivered in connection herewith or therewith represents the entire agreement
and understanding concerning the subject matter hereof and thereof between the
parties hereto, and supersede all other prior agreements, understandings,
negotiations and discussions, representations, warranties, commitments,
proposals, offers and contracts concerning the subject matter hereof, whether
oral or written.  In the event of any inconsistency between the terms of this
Agreement and any schedule or exhibit hereto, the terms of this Agreement shall
govern.

     IN WITNESS WHEREOF, Guarantor has caused these presents to be duly executed
as of the day and year first above written.


                                        GUARANTOR                            
                                        ---------                            
                                                                             
                                        GLOBAL SPORTS, INC.                  
                                                                             
                                        By: /s/ Michael G. Rubin
                                           --------------------------------  
                                                                             
                                        Title: President
                                              -----------------------------
                                                                             
                                        CHIEF EXECUTIVE OFFICE:              
                                        ----------------------               
                                                                             
                                        555 South Henderson Road             
                                        King of Prussia, Pennsylvania 19406   

                                      -13-
<PAGE>
 
                                 SCHEDULE 4.2

                            Chief Executive Office;
                             Collateral Locations
                             --------------------

                                      -14-
<PAGE>
 
                                 SCHEDULE 4.3


                                Permitted Liens
                                ---------------

                                      -15-