Document:

exv10w10

 

Exhibit 10.10

AMENDED AND RESTATED SECURITY AGREEMENT

     AMENDED AND RESTATED SECURITY AGREEMENT (this “Agreement”) dated as of
June 21, 2004 by and among each of:

     GAMESTOP CORP., a corporation organized under the laws of the State
of Delaware having a place of business at 2250 William D. Tate Avenue,
Grapevine, Texas; and

     GAMESTOP, INC., a corporation organized under the laws of the State
of Minnesota having a place of business at 2250 William D. Tate Avenue,
Grapevine, Texas; and

     GAMESTOP.COM, INC., a corporation organized under the laws of the
State of Delaware having a place of business at 2250 William D. Tate
Avenue, Grapevine, Texas; and

     BABBAGE’S ETC. LLC, a limited liability company organized under the
laws of the State of Delaware having a place of business at 2250 William
D. Tate Avenue, Grapevine, Texas; and

     SUNRISE PUBLICATIONS, INC., a corporation organized under the laws
of the State of Minnesota having a place of business at 2250 William D.
Tate Avenue, Grapevine, Texas; and

     MARKETING CONTROL SERVICES, INC., a corporation organized under the
laws of the Commonwealth of Virginia having a place of business at 2250
William D. Tate Avenue, Grapevine, Texas; and

     GAMESTOP BRANDS INC., a corporation organized under the laws of the
State of Delaware having a place of business at 2250 William D. Tate
Avenue, Grapevine, Texas; and

     GAMESTOP OF TEXAS (GP), LLC, a limited liability company organized
under the laws of the State of Delaware having a place of business at
2250 William D. Tate Avenue, Grapevine, Texas; and

     GAMESTOP (LP), LLC, a limited liability company organized under the
laws of the State of Delaware having a place of business at 2250 William
D. Tate Avenue, Grapevine, Texas; and

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     GAMESTOP
TEXAS LP, a limited partnership organized under the laws of
the State of Texas having a place of business at 2250 William D. Tate
Avenue, Grapevine, Texas; and (each such Person, individually, a
“Grantor” and collectively, the “Grantors”); and

     FLEET RETAIL GROUP, INC., a Delaware corporation, as collateral
agent (in such capacity, the “Collateral Agent” for the Secured Parties
(as defined herein), in consideration of the mutual covenants contained
herein and benefits to be derived herefrom.

WITNESSETH:

     WHEREAS, certain of the Grantors have entered into a loan arrangement
dated as of February 19, 2002, which loan arrangement is evidenced by, among
other things, (i) a certain Credit Agreement dated as of February 19, 2002 by
and among GameStop Corp. (in such capacity, the “Existing Borrower”), the
“Banks” as defined therein, Fleet National Bank as “Administrative Agent” as
defined therein, UBS Warburg LLC, as Documentation Agent, Fleet National Bank
as “Issuing Bank” as defined therein, and Fleet Securities, Inc., as Arranger
(as amended and in effect, the “Existing Credit Agreement”); (ii) a certain
Guaranty dated as of February 19, 2002 (as amended and in effect, the “Existing
Guaranty”) by GameStop, Inc., GameStop.com, Inc., Babbage’s Etc. LLC and
Sunrise Publications, Inc. (in such capacity, the “Existing Guarantors”) in
favor of Fleet National Bank of the payment of the obligations of the Existing
Borrower under the Existing Credit Agreement; and (iii) those certain Security
Agreements dated as of February 19, 2002 (as amended and in effect,
individually, an “Existing Security Agreement” and collectively, the “Existing
Security Agreements”) by each of the Existing Borrower and each Existing
Guarantor in favor of Fleet National Bank to secure the obligations of the
Existing Borrower under the Existing Credit Agreement and the Existing
Guarantors under the Existing Guaranty, as applicable (the Existing Credit
Agreement, the Existing Guaranty, the Existing Security Agreements, and all
other documents and instruments executed and delivered in connection therewith,
the “Existing Loan Documents”); and

     WHEREAS, Fleet National Bank is contemporaneously herewith resigning as
Agent under the Existing Loan Documents and Fleet Retail Group, Inc. is hereby
being appointed as successor Agent under the Existing Loan Documents; and

     WHEREAS, the Grantors have entered into a certain Amended and Restated
Credit Agreement dated as of even date herewith (as such may be amended,
modified, supplemented or restated hereafter, the “Credit Agreement”) by and
among (i) the Grantors, (ii) the Lenders named therein, (iii) Fleet Retail
Group, Inc., as Administrative Agent and Collateral Agent for the Lenders and
the Issuing Bank, and (iv) Fleet National Bank, as Issuing Bank, which Credit
Agreement amends and restates the Existing Credit Agreement, and pursuant to
which Credit Agreement the Lenders have agreed to make Loans to the Grantors,
and the Issuing Bank has agreed to issue Letters of Credit for the account of
the Grantors, upon the terms and subject to the conditions specified in, the
Credit Agreement; and

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     WHEREAS, the Grantors have entered into a certain Amended and Restated
Guaranty of even date herewith in favor of the Secured Parties (as such may be
amended, modified, supplemented or restated hereafter, the “Guaranty”), which
Guaranty amends and restates the Existing Guaranty, and pursuant to which
Guaranty each Grantor guarantees the Obligations of the other Grantors; and

     WHEREAS, the obligations of the Lenders to make Loans and of the Issuing
Bank to issue Letters of Credit are each conditioned upon, among other things,
the execution and delivery by the Grantors of an agreement in the form hereof
to secure the Obligations (as defined herein); and

     WHEREAS, the Grantors and the Collateral Agent desire to amend and restate
the Existing Security Agreements as provided herein.

     NOW, THEREFORE, in consideration of the mutual conditions and agreements
set forth in this Agreement, and for good and valuable consideration, the
receipt of which is hereby acknowledged, the Grantors and the Collateral Agent
on behalf of itself and each other Secured Party (and each of their respective
successors or assigns) hereby agree that the Existing Security Agreements shall
be combined into one agreement and shall be amended and restated in their
entirety to read as follows.

SECTION 1

Definitions

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

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

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

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

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

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

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

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

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

     “Collateral” shall mean all personal and fixture property (other than
fixture property pledged pursuant to a mortgage on any owned real property) of
each Grantor, including, without limitation: (a) Accounts, (b) Chattel Paper
(whether Tangible Chattel Paper or Electronic Chattel Paper), (c) Commercial
Tort Claims, (d) Deposit Accounts, (e) Documents, (f) Equipment, (g) Fixtures,
(h) General Intangibles (including Payment Intangibles), (i) Goods, (j)
Instruments, (k) Inventory, (l) Investment Property, (m) Letter-of-Credit
Rights, (n) Software, (o) Supporting Obligations, (p) all books, records, and
information relating to any of the foregoing and/or to the operation of any
Grantor’s business, and all rights of access to such books, records, and
information, and all property in which such books, records, and information are
stored, recorded and maintained, (q) all insurance proceeds, refunds, and
premium rebates, including, without limitation, proceeds of fire and credit
insurance, whether any of such proceeds, refunds, and premium rebates arise out
of any of the foregoing ((a) through (p)) or otherwise, (r) all liens,
guaranties, rights, remedies, and privileges pertaining to any of the foregoing
((a) through (q)), including the right of stoppage in transit, and (s) any of
the foregoing whether now owned or now due, or in which any Grantor has an
interest, or hereafter acquired, arising, or to become due, or in which any
Grantor obtains an interest, and all products, Proceeds, substitutions, and
Accessions of or to any of the foregoing. Notwithstanding the foregoing, in no
event shall the Collateral include, and no Grantor shall be deemed to have
granted a Security Interest in, any General Intangibles, other than Payment
Intangibles, if and only to the extent that in the case of any such General
Intangible, (x) any contract evidencing such General Intangible contains a
valid and effective contractual restriction or limitation which prohibits the
grant or creation of a security interest therein, or (y) a valid and effective
restriction or limitation imposed by applicable law, regulation, rule, order or
other directive of any governmental body, agency or authority, or the order of
any court of competent jurisdiction, prohibits the grant or creation of a
security interest in such General Intangible, provided that the Proceeds
realized from any of the foregoing shall not be deemed excluded from the
definition of Collateral but shall constitute

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Collateral, and provided further that to the extent such security interest
at any time hereafter shall no longer be prohibited by law, and/or immediately
upon such contractual restriction or limitation no longer being enforceable, as
the case may be, the Collateral shall automatically and without any further
action include, and the Grantors shall be deemed to have granted automatically
and without any further action a Security Interest in, such right as if such
law had never existed or such contractual restriction or limitation had never
been enforceable, as the case may be.

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

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

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

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

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

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

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

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

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

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

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

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

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

     “General Intangibles” shall have the meaning given that term in the UCC,
and shall also include, without limitation, all: Payment Intangibles; rights to
payment for credit extended; deposits; amounts due to any Grantor; credit
memoranda in favor of any Grantor; warranty claims; tax refunds and abatements;
insurance refunds and premium rebates; all means and

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vehicles of investment or hedging, including, without limitation, options,
warrants, and futures contracts; records; customer lists; telephone numbers;
goodwill; causes of action; judgments; payments under any settlement or other
agreement; literary rights; rights to performance; royalties; license and/or
franchise fees; rights of admission; licenses; franchises; license agreements,
including all rights of any Grantor to enforce same; permits, certificates of
convenience and necessity, and similar rights granted by any governmental
authority; internet addresses and domain names; developmental ideas and
concepts; proprietary processes; blueprints, drawings, designs, diagrams,
plans, reports, and charts; catalogs; technical data; computer software
programs (including the source and object codes therefor), computer records,
computer software, rights of access to computer record service bureaus, service
bureau computer contracts, and computer data; tapes, disks, semi-conductors
chips and printouts; user, technical reference, and other manuals and
materials; patents, patent applications and patents pending; trade secret
rights, copyrights, copyright applications, mask work rights and interests, and
derivative works and interests; trade names, trademarks, trademark
applications, service marks, and service mark applications, together with all
goodwill connected with and symbolized by any of the foregoing; all other
general intangible property of any Grantor in the nature of intellectual
property; proposals; cost estimates, and reproductions on paper, or otherwise,
of any and all concepts or ideas, and any matter related to, or connected with,
the design, development, manufacture, sale, marketing, leasing, or use of any
or all property produced, sold, or leased, by or credit extended or services
performed, by any Grantor, whether intended for an individual customer or the
general business of any Grantor, or used or useful in connection with research
by any Grantor.

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

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

     “Guaranty Obligations” shall mean the obligations and liabilities
guarantied by the Grantors pursuant to the Guaranty.

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

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

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

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

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     “IP Security Agreement” means the Amended and Restated Intellectual
Property Security Agreement dated as of the date hereof and executed and
delivered by the Grantors to the Collateral Agent for the ratable benefit of
the Secured Parties.

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

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

     “Obligations” shall mean “Obligations” as defined in the Credit Agreement
and the Guaranty Obligations.

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

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

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

     “Secured Parties” shall mean (a) the Lenders, (b) the Agents and their
Affiliates, (c) the Issuing Bank, (d) the beneficiaries of each indemnification
obligation undertaken by any Grantor under any Loan Document, (f) any other
Person to whom Obligations under the Credit Agreement and other Loan Documents
are owing, and (g) the successors and assigns of each of the foregoing.

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

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

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

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

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

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

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

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

     1.3 Rules of Interpretation. The rules of interpretation specified in
Section 1.02 of the Credit Agreement shall be applicable to this Agreement.

SECTION 2

Security Interest

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

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

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SECTION 3

Representations and Warranties

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

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

     3.2 Title and Authority. Each Grantor has good and valid rights in, or
title to, the Collateral with respect to which it has purported to grant a
Security Interest hereunder and has full power and authority to grant to the
Collateral Agent the Security Interest in such Collateral pursuant hereto and
to execute, deliver and perform its obligations in accordance with the terms of
this Agreement, without the consent or approval of any other Person other than
any consent or approval which has been obtained.

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

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

     3.5 Absence of Other Liens. The Collateral is owned by the Grantors free
and clear of any Lien, except for Liens expressly permitted pursuant to Section
6.2 of the Credit

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

     3.6 Bailees, Warehousemen, Etc. Except as otherwise disclosed in the
Perfection Certificate, no Inventory costing in excess of $1,000,000 held on a
temporary basis of any Grantor is in the care or custody of any one third party
or stored or entrusted with any one bailee or other third party and none shall
hereafter be placed under such care, custody, storage or entrustment unless a
waiver or other agreement reasonably satisfactory to the Collateral Agent is
delivered to the Collateral Agent by such third party or bailee.

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

SECTION 4

Covenants

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

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

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

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following such change to have a valid, legal and perfected first
priority security interest in all of the Collateral.

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

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

     4.4 Further Assurances. Each Grantor agrees, at its own expense, to
execute, acknowledge, deliver and cause to be duly filed all such further
instruments and documents and take all such actions as the Collateral Agent may
from time to time reasonably request to better assure, preserve, protect and
perfect the Security Interest and the rights and remedies created hereby,
including the payment of any fees and taxes required in connection with the
execution and delivery of this Agreement, the granting of the Security Interest
and the filing of any Financing Statements (including Fixture Filings) or other
documents in connection herewith or therewith. If any amount payable under or
in connection with any of the Collateral shall be or become evidenced by any
promissory note or other instrument, such note or instrument shall be promptly
pledged and delivered to the Collateral Agent, duly endorsed in a manner
satisfactory to the Collateral Agent.

     4.5 Inspection and Verification. Without limiting the terms and
conditions of Sections 5.9 of the Credit Agreement, the Collateral Agent and
such Persons as the Collateral Agent may reasonably designate shall have the
right, at the Grantors’ own cost and expense, on reasonable prior notice except
if an Event of Default then exists, to inspect the Collateral, all records
related thereto (and to make extracts and copies from such records) and the
premises upon which any of the Collateral is located, to discuss the Grantors’
affairs with the officers of the Grantors and their independent accountants and
to verify the validity, amount, quality, quantity, value, condition and status
of, or any other matter relating to, the Collateral, including, in the case of
Accounts or Collateral in the possession of any third Person, by contacting
Account Debtors or the third Person possessing such Collateral for the purpose
of making such a verification, provided that there may be only one appraisal
and one commercial finance examination in any twelve-month period following the
date hereof unless a Cash Dominion Event shall have occurred and be continuing
(in which event the Collateral Agent may undertake such additional appraisals
and commercial finance examinations as it deems appropriate). The

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Collateral Agent shall have the absolute right to share any information it
gains from such inspection or verification with any Secured Party.

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

     4.7 Assignment of Security Interest.

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

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

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of proceeds form, in favor of the Collateral Agent and satisfactory
to the Collateral Agent and such issuer or (as the case may be) such
Confirmer, requiring the proceeds of any drawing under such letter of
credit to be paid directly to the Collateral Agent.

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

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

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

     4.11 Insurance.

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

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

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

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

     4.14 General Intangibles. Each Grantor shall apply for, and diligently
pursue applications for, registration of its ownership of the General
Intangibles constituting Collateral for which registration is appropriate, and
which are material to its business, and will use such other reasonable measures
as are appropriate to preserve its rights in its other General Intangibles
constituting Collateral, except that such Grantor may abandon such rights as
could not reasonably be expected to have a Material Adverse Effect on the value
of such General Intangibles. Each Grantor will, at the request of the
Collateral Agent, retain current copies of all materials created by or
furnished to such Grantor on which is recorded then current information
relating to any computer programs or data bases that such Grantor has developed
or otherwise has the right to use from time to time. Such materials shall
include, without limitation, magnetic or other computer media on which object,
source or other code is recorded and documentation of those computer programs
or data bases, in the nature of listing printouts, narrative descriptions, flow
diagrams and similar items. Each Grantor will, at the reasonable request of
the Collateral

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Agent, deliver a set of such copies to the Collateral Agent for
safekeeping and retention or transfer in the event of the exercise of the
Collateral Agent’s Rights and Remedies.

     4.15 Investment Property.

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

     (b) The Collateral Agent agrees with each Grantor that, pursuant to
this Section 4.15, the Collateral Agent shall not give any such
Entitlement Orders or instructions or directions to any such Issuer,
Securities Intermediary or Commodity

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

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

     4.17 Tangible Chattel Paper, Notes and Other Instruments. If at any time
any amount payable to any Grantor under or in connection with any of the
Collateral is evidenced by any Tangible Chattel Paper, promissory note, trade
acceptances or other Instrument, such Grantor shall promptly deliver the same
to the Collateral Agent, accompanied by such instruments of transfer or
assignment duly executed in blank as the Collateral Agent may from time to time
reasonably request.

     4.18 Bailments, Etc. If any Collateral costing in excess of $1,000,000 is
at any time in the possession or control of any one warehouseman for more than
a temporary period of time

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(not to exceed five (5) Business Days), bailee or any Grantor’s agents,
such Grantor shall promptly notify the Collateral Agent thereof and, upon the
request of the Collateral Agent, (i) notify such warehouseman, bailee or agent
to hold all such Collateral for the Collateral Agent’s account subject to the
Collateral Agent’s instructions, (ii) obtain from such warehouseman, bailee or
agent a written acknowledgment in form reasonably satisfactory to the
Collateral Agent that such Person holds possession of the Collateral for the
Collateral Agent’s benefit and shall act upon the Collateral Agent’s
instructions with respect to such Collateral without the further consent of
such Grantor, (iii) deliver any negotiable warehouse receipt, bill of lading or
other document of title issued with regard to the Collateral to the Collateral
Agent appropriately endorsed to the Collateral Agent’s order, and/or (iv)
arrange for the issuance in the name of the Collateral Agent, in form
reasonably satisfactory to the Collateral Agent, any nonnegotiable document of
title covering such Collateral. The Collateral Agent agrees with each Grantor
that the Collateral Agent shall not give any such instructions unless an Event
of Default has occurred and in continuing or would occur after taking into
account any action by such Grantor with respect to such warehouseman, bailee or
agent.

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

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

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

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

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

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

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

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

SECTION 5

Collections

     5.1 Collections.

     (a) Each Grantor shall at all times comply with the Cash Receipts
provisions of Section 2.22 of the Credit Agreement including, without
limitation, after the occurrence and during the continuance of a Cash
Dominion Event, causing the sweep on each Business Day of all Cash
Receipts into the FRG Concentration Account or a Blocked Account, as
provided for in the Credit Agreement.

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

     5.2 Power of Attorney. Each Grantor irrevocably makes, constitutes and
appoints the Collateral Agent (and all officers, employees or agents designated
by the Collateral Agent) as such Grantor’s true and lawful agent and
attorney-in-fact, and in such capacity the Collateral Agent shall have the
right, with power of substitution for each Grantor and in each Grantor’s name
or otherwise, for the use and benefit of the Collateral Agent and the Secured
Parties, (a) at any time, whether or not a Default or Event of Default has
occurred, to take actions required to be taken by the Grantors under Section
2.1 of this Agreement, (b) upon the occurrence and during the continuance of a
Cash Dominion Event or as otherwise permitted under the Credit Agreement, (i)
to take actions required to be taken by the Grantors under Section 5.1 of this
Agreement, and (ii) to receive, endorse, assign and/or deliver any and all
notes, acceptances,

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

     5.3 No Obligation to Act. The Collateral Agent shall not be obligated to
do any of the acts or to exercise any of the powers authorized by Section 5.2,
but if the Collateral Agent elects to do any such act or to exercise any of
such powers, it shall not be accountable for more than it actually receives as
a result of such exercise of power, and shall not be responsible to any Grantor
for any act or omission to act except for any act or omission to act as to
which there is a final determination made in a judicial proceeding (in which
proceeding the Collateral Agent has had an opportunity to be heard) which
determination includes a specific finding that the subject act or omission to
act had been grossly negligent, willful misconduct or in actual bad faith. The
provisions of Section 5.2 shall in no event relieve any Grantor of any of its
obligations hereunder

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or under any other Loan Document with respect to the Collateral or any
part thereof or impose any obligation on the Collateral Agent or any other
Secured Party to proceed in any particular manner with respect to the
Collateral or any part thereof, or in any way limit the exercise by the
Collateral Agent or any other Secured Party of any other or further right which
it may have on the date of this Agreement or hereafter, whether hereunder,
under any other Loan Document, by law or otherwise.

SECTION 6

Remedies

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

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

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

     (c) With respect to any Collateral consisting of Investment
Property, the Collateral Agent may (i) exercise all rights of any Grantor
with respect thereto, including without limitation, the right to exercise
all voting and corporate rights at any meeting of the shareholders of the
Issuer of any Investment Property and to exercise any and all rights of
conversion, exchange, subscription or any other rights, privileges or
options

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pertaining to any Investment Property as if the Collateral Agent was
the absolute owner thereof, including the right to exchange, at its
discretion, any and all of any Investment Property upon the merger,
consolidation, reorganization, recapitalization or other readjustment of
the Issuer thereof, all without liability except to account for property
actually received as provided in Section 5.3 hereof; (ii) transfer such
Collateral at any time to itself, or to its nominee, and receive the
income thereon and hold the same as Collateral hereunder or apply it to
the Obligations; and (iii) demand, sue for, collect or make any
compromise or settlement it deems desirable. The Grantors recognize that
(a) the Collateral Agent may be unable to effect a public sale of all or
a part of the Investment Property by reason of certain prohibitions
contained in the Securities Act of 1933, 15 U.S.C. §77, (as amended and
in effect, the “Securities Act”) or the Securities laws of various states
(the “Blue Sky Laws”), but may be compelled to resort to one or more
private sales to a restricted group of purchasers who will be obliged to
agree, among other things, to acquire the Investment Property for their
own account, for investment and not with a view to the distribution or
resale thereof, (b) that private sales so made may be at prices and upon
other terms less favorable to the seller than if the Investment Property
were sold at public sales, (c) that neither the Collateral Agent nor any
Secured Party has any obligation to delay sale of any of the Investment
Property for the period of time necessary to permit the Investment
Property to be registered for public sale under the Securities Act or the
Blue Sky Laws, and (d) that private sales made under the foregoing
circumstances shall be deemed to have been made in a commercially
reasonable manner.

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

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

     (f) With or without legal process and with or without prior notice
or demand for performance, the Collateral Agent may enter upon, occupy,
and use any premises

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owned or occupied by each Grantor, and may exclude the Grantors from
such premises or portion thereof as may have been so entered upon,
occupied, or used by the Collateral Agent to the extent the Collateral
Agent deems such exclusion reasonably necessary to preserve and protect
the Collateral. The Collateral Agent shall not be required to remove any
of the Collateral from any such premises upon the Collateral Agent’s
taking possession thereof, and may render any Collateral unusable to the
Grantors. In no event shall the Collateral Agent be liable to any
Grantor for use or occupancy by the Collateral Agent of any premises
pursuant to this Section 6.1, nor for any charge (such as wages for the
Grantors’ employees and utilities) incurred in connection with the
Collateral Agent’s exercise of the Collateral Agent’s Rights and Remedies
(as defined herein) hereunder.

     (g) The Collateral Agent may require any Grantor to assemble the
Collateral and make it available to the Collateral Agent at the Grantor’s
sole risk and expense at a place or places which are reasonably
convenient to both the Collateral Agent and such Grantor.

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

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

     (j) Any public sale shall be held at such time or times within
ordinary business hours and at such place or places as the Collateral
Agent may fix and state in the notice of such sale. At any sale or other
disposition, the Collateral, or portion thereof, to be sold may be sold
in one lot as an entirety or in separate parcels, as the Collateral Agent

-22-

 

may (in its sole and absolute discretion) determine. If any of the
Collateral is sold, leased, or otherwise disposed of by the Collateral
Agent on credit, the Obligations shall not be deemed to have been reduced
as a result thereof unless and until payment is finally received thereon
by the Collateral Agent.

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

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

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

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

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

     FIRST, to the payment of all reasonable costs and expenses incurred
by the Agents in connection with such collection or sale or otherwise in
connection with this Agreement or any of the Obligations, including all
court costs and the reasonable fees and expenses of its agents and legal
counsel, the repayment of all advances made by the

-23-

 

Agents hereunder or under any other Loan Document on behalf of any
Grantor and any other reasonable costs or expenses incurred in connection
with the exercise of any right or remedy hereunder, under any other Loan
Document;

     SECOND, to the payment of accrued and unpaid interest and principal
on the Swingline Loans;

     THIRD, to the payment of accrued and unpaid interest on the
Revolving Loans;

     FOURTH, to the payment of outstanding principal on the Revolving
Loans;

     FIFTH, to the Cash Collateral Account as collateral for Letter of
Credit Outstandings up to 105% thereof;

     SIXTH, to the payment of all fees due to the Administrative Agent,
the Lenders and the Issuing Bank under the Loan Documents;

     SEVENTH, to the payment of all other Obligations of the Grantors
(including, without limitation, any obligations under any Hedging
Agreements); and

     EIGHTH, to the Grantors, their successors or assigns, or as a court
of competent jurisdiction may otherwise direct.

     Upon any sale or other disposition of the Collateral by the Collateral
Agent (including pursuant to a power of sale granted by statute or under a
judicial proceeding), the receipt of the purchase money by the Collateral Agent
or of the officer making the sale or other disposition shall be a sufficient
discharge to the purchaser or purchasers of the Collateral so sold or otherwise
disposed of and such purchaser or purchasers shall not be obligated to see to
the application of any part of the purchase money paid over to the Collateral
Agent or such officer or be answerable in any way for the misapplication
thereof.

SECTION 7

Perfection of Security Interest

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

-24-

 

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

SECTION 8

Miscellaneous

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

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

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

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

-25-

 

Agreement, and shall continue in full force and effect as long as the
Obligations are outstanding and unpaid or any Letter of Credit is outstanding
and so long as the Commitments have not expired or terminated.

     8.5 Binding Effect; Several Agreement; Assignments. Whenever in this
Agreement any of the parties hereto is referred to, such reference shall be
deemed to include the successors and assigns of such party, and all covenants,
promises and agreements by or on behalf of the Grantors that are contained in
this Agreement shall bind and inure to the benefit of each Grantor and its
respective successors and assigns. This Agreement shall be binding upon each
Grantor and the Collateral Agent and their respective successors and assigns,
and shall inure to the benefit of each Grantor, the Collateral Agent and the
other Secured Parties and their respective successors and assigns, except that
no Grantor shall have the right to assign or transfer its rights or obligations
hereunder or any interest herein or in the Collateral (and any such attempted
assignment or transfer shall be void) except as expressly permitted by this
Agreement or the Credit Agreement. This Agreement shall be construed as a
separate agreement with respect to each Grantor and may be amended, modified,
supplemented, waived or released with respect to any Grantor without the
approval of any other Grantor and without affecting the obligations of any
other Grantor hereunder.

     8.6 Collateral Agent’s Fees and Expenses; Indemnification.

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

     (b) Without limiting any of their indemnification obligations under
the Credit Agreement or the other Loan Documents, and without duplication
of any fees, expenses or indemnification provided for under the Credit
Agreement and the other Loan Documents, the Grantors shall jointly and
severally indemnify each Secured Party and each Related Party of any
Secured Party (each such Person being called an “Indemnitee”) against,
and hold each Indemnitee harmless from, any and all losses, claims,
damages, liabilities and related expenses, including the reasonable fees,
charges and disbursements of any counsel for any Indemnitee, incurred by
or asserted against any Indemnitee arising out of, in connection with, or
as a result of, (i) the execution or delivery or performance of this
Agreement or any other Loan Document, the performance by any Grantor of
its

-26-

 

obligations under this Agreement or any other Loan Document, or the
consummation of the transactions contemplated by the Loan Documents or
any other transactions contemplated hereby, or (ii) any actual or
prospective claim, litigation, investigation or proceeding relating to
any of the foregoing or to the Collateral, whether based on contract,
tort or any other theory and regardless of whether any Indemnitee is a
party thereto; provided that such indemnity shall not, as to any
Indemnitee, be available to the extent that such losses, claims, damages,
liabilities or related expenses resulted from the gross negligence, bad
faith or willful misconduct of any Indemnitee or any Affiliate of an
Indemnitee (or of any officer, director, employee, advisor or agent of
such Indemnitee or any such Indemnitee’s Affiliates). In connection with
any indemnified claim hereunder, the Indemnitee shall be entitled to
select its own counsel and the Grantors shall promptly pay the reasonable
fees and expenses of such counsel.

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

     8.7 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAW OF THE COMMONWEALTH OF MASSACHUSETTS.

     8.8 Waivers; Amendment.

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

-27-

 

effective only in the specific instance and for the purpose for
which given. No notice to or demand on any Grantor in any case shall
entitle such Grantor or any other Grantor to any other or further notice
or demand in similar or other circumstances.

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

     8.9 WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST
EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN
ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS
AGREEMENT, ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY
(WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A)
CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE
EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES
THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS
AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS SET
FORTH IN THIS SECTION 8.9.

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

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

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

     8.13 Jurisdiction; Consent to Service of Process.

     (a) The Grantors agree that any suit for the enforcement of this
Agreement or any other Loan Document may be brought in any Massachusetts
state or federal court

-28-

 

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

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

     8.14 Termination; Release of Collateral. Except for those provisions
which expressly survive the termination thereof, the Credit Agreement, this
Agreement and the Security Interest shall terminate when all the Obligations
have been paid in full, the Lenders have no further commitment to lend, the
Letter of Credit Outstandings have been reduced to zero or fully cash
collateralized in a manner satisfactory to the Issuing Bank and the
Administrative Agent, and the Issuing Bank has no further obligation to issue
Letters of Credit under the Credit Agreement, at which time the Collateral
Agent shall execute and deliver to the Grantors, at the Grantors’ expense, all
UCC termination statements and similar documents that the Grantors shall
reasonably request to evidence such termination.

[SIGNATURE PAGES FOLLOW]

-29-

 

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

	 	 	 	 	 
	GRANTORS:	 	GAMESTOP CORP.
	 
	 	 	 	 
	

	 	By:
	 	/s/ David W. Carlson
	

	 	 	 	
 
	 	 	Name: David W. Carlson
	 	 	Title: Executive Vice President and Chief
Financial Officer
	 
	 	 	 	 
	 	 	GAMESTOP, INC.
	 
	 	 	 	 
	

	 	By:
	 	/s/ David W. Carlson
	

	 	 	 	
 
	 	 	Name: David W. Carlson
	 	 	Title: Executive Vice President and Chief
Financial Officer
	 
	 	 	 	 
	 	 	GAMESTOP.COM, INC.
	 
	 	 	 	 
	

	 	By:
	 	/s/ Niall Lawler
	

	 	 	 	
 
	 	 	Name: Niall Lawler
	 	 	Title: President
	 
	 	 	 	 
	 	 	BABBAGE’S ETC. LLC
	 
	 	 	 	 
	

	 	By:
	 	/s/ David W. Carlson
	

	 	 	 	
 
	 	 	Name: David W. Carlson
	 	 	Title: Executive Vice President and Chief
Financial Officer
	 
	 	 	 	 
	 	 	SUNRISE PUBLICATIONS, INC.
	 
	 	 	 	 
	

	 	By:
	 	/s/ David W. Carlson
	

	 	 	 	
 
	 	 	Name: David W. Carlson
	 	 	Title: Executive Vice President and Chief
Financial Officer
	 
	 	 	 	 
	 	 	MARKETING CONTROL SERVICES, INC.
	 
	 	 	 	 
	

	 	By:
	 	/s/ Kevin Weimerskirch
	

	 	 	 	
 
	 	 	Name: Kevin Weimerskirch
	 	 	Title: President

-30-

 

	 	 	 	 	 
	 	 	GAMESTOP BRANDS, INC.
	 
	 	 	 	 
	

	 	By:
	 	/s/ Cathy Preston
	

	 	 	 	
 
	 	 	Name: Cathy Preston
	 	 	Title: President
	 
	 	 	 	 
	 	 	GAMESTOP OF TEXAS (GP), LLC
	 
	 	 	 	 
	 	 	By: GameStop, Inc.
	 
	 	 	 	 
	

	 	By:
	 	/s/ David W. Carlson
	

	 	 	 	
 
	 	 	Name: David W. Carlson
	 	 	Title: Executive Vice President and Chief
Financial Officer
	 
	 	 	 	 
	 	 	GAMESTOP (LP), LLC
	 
	 	 	 	 
	

	 	By:
	 	/s/ Cathy Preston
	

	 	 	 	
 
	 	 	Name:Cathy Preston
	 	 	Title: President
	 
	 	 	 	 
	 	 	GAMESTOP TEXAS LP
	 
	 	 	 	 
	

	 	By:
	 	GameStop of Texas (GP), LLC, its general partner
	 
	 	 	 	 
	

	 	By:
	 	GameStop, Inc.
	 
	 	 	 	 
	

	 	By:
	 	/s/ David W. Carlson
	

	 	 	 	
 
	 	 	Name: David W. Carlson
	 	 	Title: Executive Vice President and Chief
Financial Officer

-31-

 

	 	 	 	 	 
	COLLATERAL AGENT:	 	FLEET RETAIL GROUP, INC.
	 
	 	 	 	 
	

	 	By:
	 	/s/ Keith Vercauteren
	

	 	 	 	
 
	

	 	 	 	Keith Vercauteren
	

	 	 	 	Director

-32-exv10w11

 

Exhibit 10.11

AMENDED AND RESTATED SECURITIES COLLATERAL PLEDGE AGREEMENT

     AMENDED AND RESTATE SECURITIES COLLATERAL PLEDGE AGREEMENT (this
“Agreement”) dated as of June 21, 2004 by and among each of:

     GAMESTOP CORP., a corporation organized under the laws of the State
of Delaware having a place of business at 2250 William D. Tate Avenue,
Grapevine, Texas (hereinafter, the “Pledgor”); and

     FLEET RETAIL GROUP, INC., a Delaware corporation, as collateral
agent (in such capacity, the “Collateral Agent” for the Secured Parties
(as defined herein), in consideration of the mutual covenants contained
herein and benefits to be derived herefrom.

WITNESSETH:

     WHEREAS, the Pledgor is party to a loan arrangement dated as of February
19, 2002, which loan arrangement is evidenced by, among other things, (i) a
certain Credit Agreement dated as of February 19, 2002 by and among Pledgor, as
“Borrower”, the “Banks” as defined therein, Fleet National Bank as
“Administrative Agent” as defined therein, UBS Warburg LLC, as Documentation
Agent, Fleet National Bank as “Issuing Bank” as defined therein, and Fleet
Securities, Inc., as Arranger (as amended and in effect, the “Existing Credit
Agreement”); (ii) a certain Guaranty dated as of February 19, 2002 (as amended
and in effect, the “Existing Guaranty”) by GameStop, Inc., GameStop.Com, Inc.,
Babbage’s Etc. LLC and Sunrise Publications, Inc. (in such capacity,
collectively, the “Existing Guarantors”) in favor of Fleet National Bank of the
payment of the obligations of the Pledgor under the Existing Credit Agreement;
(iii) those certain Security Agreements dated as of February 19, 2002 (as
amended and in effect, individually, an “Existing Security Agreement” and
collectively, the “Existing Security Agreements”) by each of the Pledgor and
each Existing Guarantor in favor of Fleet National Bank to secure the
obligations of the Pledgor under the Existing Credit Agreement and each
Existing Guarantor under the Existing Guaranty, as applicable and (iv) that
certain Securities Collateral Pledge Agreement dated as of February 19, 2002
(as amended and in effect, the “Existing Pledge Agreement”) by Pledgor in favor
of Fleet National Bank to secure the obligations of the Pledgor under the
Existing Credit Agreement (the Existing Credit Agreement, the Existing
Guaranty, the Existing Security Agreements, and all other documents and
instruments executed and delivered in connection therewith, the “Existing Loan
Documents”);

     WHEREAS, Fleet National Bank is contemporaneously herewith resigning as
Agent under the Existing Loan Documents and Fleet Retail Group, Inc. is hereby
being appointed as successor Agent under the Existing Loan Documents; and

-1-

 

     WHEREAS, the Pledgor, among others, has entered into a certain Amended and
Restated Credit Agreement dated as of even date herewith (as such may be
amended, modified, supplemented or restated hereafter, the “Credit Agreement”)
by and among (i) the Pledgor and the other Borrowers named therein, (ii) the
Lenders named therein, (iii) Fleet Retail Group, Inc., as Administrative Agent
and Collateral Agent for the Lenders and the Issuing Bank, and (iv) Fleet
National Bank, as Issuing Bank, which Credit Agreement amends and restates the
Existing Credit Agreement, and pursuant to which Credit Agreement the Lenders
have agreed to make Loans to the Borrowers, and the Issuing Bank has agreed to
issue Letters of Credit for the account of the Borrowers, upon the terms and
subject to the conditions specified in, the Credit Agreement; and

     WHEREAS, the Pledgor, among others has entered into a certain Amended and
Restated Guaranty of even date herewith in favor of the Secured Parties (as
such may be amended, modified, supplemented or restated hereafter, the
“Guaranty”), which Guaranty amends and restates the Existing Guaranty, and
pursuant to which Guaranty the Pledgor guarantees the Obligations of the other
Borrowers; and

     WHEREAS, the obligations of the Lenders to make Loans and of the Issuing
Bank to issue Letters of Credit are each conditioned upon, among other things,
the execution and delivery by the Pledgor of an agreement in the form hereof to
secure the Obligations (as defined herein); and

     WHEREAS, the Pledgor and the Collateral Agent desire to amend and restate
the Existing Pledge Agreement as provided herein.

     NOW, THEREFORE, in consideration of the mutual conditions and agreements
set forth in this Agreement, and for good and valuable consideration, the
receipt of which is hereby acknowledged, the Pledgor and the Collateral Agent
hereby agree that the Existing Pledge Agreement shall be amended and restated
in its entirety to read as follows:

SECTION 1

Definitions

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

-2-

 

effect in such other jurisdiction for purposes of the provisions hereof
relating to such perfection or effect of perfection or non-perfection or
availability of such remedy, as the case may be.

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

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

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

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

     “Guaranty Obligations” shall mean the obligations and liabilities
guarantied by the Guarantors pursuant to the Guaranty.

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

     “Obligations” shall mean “Obligations” as defined in the Credit Agreement
and the Guaranty Obligations.

     “Pledged Collateral” shall have the meaning assigned to such term in
Section 2.5 of this Agreement.

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

     “Secured Parties” shall have the meaning assigned to such term in the
Security Agreement.

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

     “Security Agreement” shall mean that certain Amended and Restated Security
Agreement dated as of even date herewith executed and delivered by the Pledgor
and the other Grantors named therein to Fleet Retail Group, Inc., as Collateral
Agent for the benefit of the Secured Parties, as amended and in effect from
time to time.

     1.3 Rules of Interpretation. The rules of interpretation specified in
Section 1.02 of the Credit Agreement shall be applicable to this Agreement.

-3-

 

SECTION 2

Pledge

     As security for the payment and performance, as the case may be, in full
of the Obligations, the Pledgor hereby transfers, grants, bargains, sells,
conveys, hypothecates, pledges, sets over and delivers unto the Collateral
Agent, its successors and assigns, and hereby grants to the Collateral Agent,
its successors and assigns, for the ratable benefit of the Secured Parties, a
security interest in all of the Pledgor’s right, title and interest in, to and
under:

     2.1 the shares of capital stock owned by the Pledgor and listed on
Schedule I hereto, and any shares of capital stock or other equity interest of
any Subsidiary obtained in the future by the Pledgor, and the stock
certificates or other securities representing all such shares or equity
interests; provided that with respect to each Material Foreign Subsidiary whose
capital stock is pledged hereunder by the Pledgor, the Pledgor has pledged
stock representing 65% of the outstanding shares of Voting Stock of such
Material Foreign Subsidiary (or such lesser percentage as is owned by Pledgor)
(the “Pledged Securities”);

     2.2 all other Investment Property that may be delivered to, and held by,
the Collateral Agent pursuant to the terms hereof;

     2.3 subject to Section Section 6, all dividends, cash, instruments and
other property from time to time received, receivable or otherwise distributed
or distributable, in respect of, or in exchange for, the Pledged Securities
referred to in clauses 2.1 and 2.2 above;

     2.4 subject to Section Section 6, all rights and privileges of the Pledgor
with respect to the Pledged Securities and other Investment Property referred
to in clauses 2.1, 2.2, and 2.3 above; and

     2.5 all proceeds of any of the foregoing (the items referred to in clauses
2.1 through 2.5 being collectively referred to as the “Pledged Collateral”).

     TO HAVE AND TO HOLD the Pledged Collateral, together with all right,
title, interest, powers, privileges and preferences pertaining or incidental
thereto, unto the Collateral Agent, its successors and assigns, for the benefit
of the Secured Parties, until the Obligations have been paid in full in cash,
the Lenders have no further commitment to lend, the Letter of Credit
Outstandings have been reduced to zero or fully cash collateralized in a manner
satisfactory to the Issuing Bank and the Administrative Agent, and the Issuing
Bank has no further obligation to issue Letters of Credit under the Credit
Agreement; subject, however, to the terms, covenants and conditions hereinafter
set forth.

     Upon delivery to the Collateral Agent pursuant to Section 3 of this
Agreement, (a) all stock certificates or other securities now or hereafter
included in the Pledged Securities shall be accompanied by stock powers duly
executed in blank or other instruments of transfer satisfactory to the
Collateral Agent and by such other instruments and documents as the Collateral
Agent may reasonably request, and (b) all other Investment Property comprising
part of the Pledged

-4-

 

Collateral shall be accompanied by proper instruments of assignment duly
executed by the Pledgor and such other instruments or documents as the
Collateral Agent may reasonably request. Each delivery of Pledged Securities
shall be accompanied by a schedule describing the Pledged Securities
theretofore and then being pledged hereunder, which schedule shall be attached
hereto as Schedule I and made a part hereof. Each schedule so delivered shall
supersede any prior schedules so delivered.

SECTION 3

Delivery of the Pledged Collateral

     3.1 On or before the Closing Date, the Pledgor shall deliver or cause to
be delivered to the Collateral Agent any and all Pledged Securities, any and
all Investment Property, and any and all certificates or other instruments or
documents representing the Pledged Collateral as set forth in Section 4.15 of
the Security Agreement.

     3.2 The Pledgor hereby irrevocably authorizes the Collateral Agent at any
time and from time to time to sign (if required) and file in any appropriate
filing office, wherever located, any Financing Statement that contains any
information required by the UCC of the applicable jurisdiction for the
sufficiency or filing office acceptance of any Financing Statement. The
Pledgor also authorizes the Collateral Agent to file a copy of this Agreement
in lieu of a Financing Statement, and to take any and all actions required by
any earlier versions of the UCC or by any other Applicable Law. The Pledgor
shall provide the Collateral Agent with any information the Collateral Agent
shall reasonably request in connection with any of the foregoing.

SECTION 4

Representations, Warranties and Covenants

     The Pledgor hereby represents, warrants and covenants, as to itself and
the Pledged Collateral pledged by it hereunder, to and with the Collateral
Agent that:

     4.1 the Pledged Securities represent that percentage of the issued and
outstanding shares of each class of the capital stock or other equity interest
of the Issuer with respect thereto as set forth on Schedule I, provided that
with respect to each Material Foreign Subsidiary whose capital stock is pledged
hereunder by the Pledgor, the Pledgor has pledged stock representing 65% of the
outstanding shares of Voting Stock of such Material Foreign Subsidiary (or such
lesser percentage as is owned by Pledgor);

     4.2 except for the security interest granted hereunder, and except as
otherwise permitted in the Credit Agreement and the other Loan Documents, the
Pledgor (i) is and will at all times continue to be the direct owner,
beneficially and of record, of the Pledged Securities indicated on Schedule I,
(ii) holds the Pledged Collateral free and clear of all Liens, other than

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Permitted Encumbrances and Liens in favor of the Collateral Agent, (iii)
will make no assignment, pledge, hypothecation or transfer of, or create or
permit to exist any security interest in, or other Lien on, the Pledged
Collateral, other than pursuant hereto and other than Permitted Encumbrances,
and (iv) subject to Section 6, will cause any and all Pledged Collateral to be
forthwith deposited with the Collateral Agent and pledged or assigned
hereunder;

     4.3 except as expressly permitted under the Credit Agreement, the Pledgor
will not consent to or approve the issuance of (a) any additional shares of any
class of capital stock of any Issuer of the Pledged Securities, or the issuance
of any membership or other ownership interest in any such Person, (b) any
securities convertible voluntarily by the holder thereof or automatically upon
the occurrence or nonoccurrence of any event or condition into, or exchangeable
for, any such shares or interests, or (c) any warrants, options, rights, or
other commitments entitling any person to purchase or otherwise acquire any
such shares or interests except pursuant to an employee stock option plan of
such Person authorizing the grant of no more than 30% of such Peron’s shares or
interests;

     4.4 the Pledgor (i) has the power and authority to pledge the Pledged
Collateral in the manner hereby done or contemplated and (ii) will defend its
title or interest thereto or therein against any and all Liens (other than
Permitted Encumbrances and the Lien created by this Agreement or the other Loan
Documents), however arising, of all Persons whomsoever;

     4.5 no consent of any other Person (including stockholders or creditors of
the Pledgor), and no consent or approval of any Governmental Authority or any
securities exchange, was or is necessary to the validity of the pledge effected
hereby or to the disposition of the Pledged Collateral upon an Event of Default
in accordance with the terms of this Agreement and the Security Agreement;

     4.6 by virtue of the execution and delivery by the Pledgor of this
Agreement, and the delivery by the Pledgor to the Collateral Agent of the stock
certificates or other certificates or documents representing or evidencing the
Pledged Collateral in accordance with the terms of this Agreement, the
Collateral Agent will obtain a valid and perfected first lien upon, and
security interest in, the Pledged Collateral as security for the payment and
performance of the Obligations, to the extent such security interest may be
perfected by possession;

     4.7 the pledge effected hereby is effective to vest in the Collateral
Agent, on behalf of the Secured Parties, the rights of the Collateral Agent in
the Pledged Collateral as set forth herein;

     4.8 all the Pledged Securities have been duly authorized and validly
issued and are fully paid and nonassessable;

     4.9 all information set forth herein relating to the Pledged Collateral is
accurate and complete in all material respects as of the date hereof; and

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     4.10 none of the Pledged Securities constitutes margin stock, as defined
in Regulation U of the Board of Governors of the Federal Reserve System.

SECTION 5

Registration in Nominee Name; Copies of Notices

     Upon the occurrence and during the continuance of an Event of Default, the
Collateral Agent, on behalf of the Secured Parties, shall have the right (in
its reasonable discretion) to hold the Pledged Securities in its own names as
pledgee, the name of its nominee (as pledgee or as sub-agent) or the name of
the Pledgor, endorsed or assigned in blank or in favor of the Collateral Agent.
The Pledgor will promptly give to the Collateral Agent copies of any notices
or other communications received by it with respect to Pledged Securities
registered in the name of the Pledgor.

SECTION 6

Voting Rights; Dividends and Interest, Etc.

     6.1 Unless and until an Event of Default shall have occurred and be
continuing, the Pledgor shall be entitled to exercise any and all voting and/or
other consensual rights and powers inuring to an owner of the Pledged
Securities or any part thereof to the extent, and only to the extent, that such
rights are exercised for any purpose consistent with, and not otherwise in
violation of, the terms and conditions of this Agreement, the Credit Agreement,
the other Loan Documents and Applicable Law; provided, however, that the
Pledgor will not be entitled to exercise any such right if the result thereof
could materially and adversely affect the rights inuring to a holder of the
Pledged Securities or the rights and remedies of any of the Secured Parties
under this Agreement, the Credit Agreement or any other Loan Document or the
ability of the Secured Parties to exercise the same.

     6.2 Unless and until a Cash Dominion Event shall have occurred and be
continuing, the Pledgor shall be entitled to receive and retain any and all
cash dividends paid on the Pledged Collateral to the extent, and only to the
extent, that such cash dividends are permitted by, and otherwise paid in
accordance with, the terms and conditions of this Agreement, the Credit
Agreement, the other Loan Documents and Applicable Law. All noncash dividends,
and all dividends paid or payable in cash or otherwise in connection with a
partial or total liquidation or dissolution, return of capital, capital surplus
or paid-in surplus, and all other distributions (other than dividends and
distributions referred to in the preceding sentence) made on or in respect of
the Pledged Collateral, whether paid or payable in cash or otherwise, whether
resulting from a subdivision, combination or reclassification of the
outstanding capital stock or partnership interests of the issuer of any Pledged
Securities or received in exchange for Pledged Securities or any part thereof,
or in redemption thereof, or as a result of any merger, amalgamation,
arrangement, consolidation, acquisition or other exchange of assets to which
such issuer may be a party or otherwise, shall be and become part of the
Pledged Collateral, and, if received by the

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Pledgor, to the extent required to be paid to the Collateral Agent
pursuant to the terms of the Credit Agreement or the other Loan Documents,
shall not be commingled by the Pledgor with any of its other funds or property
but shall be held separate and apart therefrom, shall be held in trust for the
benefit of the Collateral Agent and shall be forthwith delivered to the
Collateral Agent in the same form as so received (with any necessary
endorsement).

     6.3 Upon the occurrence and during the continuance of an Cash Dominion
Event, all rights of the Pledgor to dividends that the Pledgor is authorized to
receive pursuant to Section 6.2 above shall cease, and all such rights shall
thereupon become vested in the Collateral Agent, which shall have the sole and
exclusive right and authority to receive and retain such dividends. All
dividends received by the Pledgor contrary to the provisions of this Section
6.3 shall be held in trust for the benefit of the Collateral Agent, shall be
segregated from other property or funds of the Pledgor and shall be forthwith
delivered to the FRG Concentration Account in accordance with the provisions of
Section 2.22 of the Credit Agreement in the same form as so received (with any
necessary endorsement). Any and all money and other property paid over to or
received by the Collateral Agent pursuant to the provisions of this Section 6.3
shall be applied in accordance with the provisions of Section 8.

     6.4 Upon the occurrence and during the continuance of an Event of Default,
all rights of the Pledgor to exercise the voting and consensual rights and
powers it is entitled to exercise pursuant to 6.1 shall cease, and all such
rights shall thereupon become vested in the Collateral Agent, which shall have
the sole and exclusive right and authority to exercise such voting and
consensual rights and powers; provided that the Collateral Agent shall have the
right from time to time following and during the continuance of an Event of
Default to permit the Pledgor to exercise such rights. After all Events of
Default have been cured or waived in writing by the Collateral Agent, the
Pledgor will have the right to exercise the voting and consensual rights and
powers that they would otherwise be entitled to exercise pursuant to the terms
of 6.1.

SECTION 7

Remedies upon Default

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

     7.1 The Collateral Agent may sell or otherwise dispose of all or any part
of the Pledged Collateral, at public or private sale or at any broker’s board
or on any securities exchange, for cash, upon credit or for future delivery as
the Collateral Agent shall deem appropriate. Each purchaser at any such sale
shall hold the property sold absolutely, free from any claim or right on the
part of the Pledgor.

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     7.2 The Collateral Agent shall give the Pledgor at least ten (10) days’
prior written notice, by authenticated record, of the Collateral Agent’s
intention to make any sale of the Pledged Collateral. Such notice, (i) in the
case of a public sale, shall state the date, time and place for such sale, (ii)
in the case of a sale at a broker’s board or on a securities exchange, shall
state the board or exchange at which such sale is to be made and the day on
which the Pledged Collateral, or portion thereof, will first be offered for
sale at such board or exchange, and (iii) in the case of a private sale, shall
state the date after which any private sale or other disposition of the Pledged
Collateral shall be made. The Pledgor agrees that such written notice shall
satisfy all requirements for notice to the Pledgor which are imposed under the
UCC with respect to the exercise of the Collateral Agent’s rights and remedies
upon default. The Collateral Agent shall not be obligated to make any sale or
other disposition of any Pledged Collateral if it shall determine not to do so,
regardless of the fact that notice of sale or other disposition of such
Collateral shall have been given. The Collateral Agent may, without notice or
publication, adjourn any public or private sale or cause the same to be
adjourned from time to time by announcement at the time and place fixed for
sale, and such sale may, without further notice, be made at the time and place
to which the same was so adjourned.

     7.3 Any public sale shall be held at such time or times within ordinary
business hours and at such place or places as the Collateral Agent may fix and
state in the notice of such sale.

     7.4 At any public (or, to the extent permitted by Applicable Law, private)
sale made pursuant to this Section 7, the Collateral Agent or any other Secured
Party may bid for or purchase, free (to the extent permitted by Applicable Law)
from any right of redemption, stay, valuation or appraisal on the part of the
Pledgor, the Pledged Collateral or any part thereof offered for sale and may
make payment on account thereof by using any claim then due and payable to the
Collateral Agent or such other Secured Party from the Pledgor on account of the
Obligations as a credit against the purchase price, and the Collateral Agent or
such other Secured Party may, upon compliance with the terms of sale, hold,
retain and dispose of such property without further accountability to the
Pledgor therefor.

     7.5 For purposes hereof, a written agreement to purchase the Pledged
Collateral or any portion thereof shall be treated as a sale thereof. The
Collateral Agent shall be free to carry out such sale pursuant to such
agreement and the Pledgor shall not be entitled to the return of the Pledged
Collateral or any portion thereof subject thereto, notwithstanding the fact
that after the Collateral Agent shall have entered into such an agreement all
Events of Default shall have been remedied and the Obligations paid in full.

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

-9-

 

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

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

SECTION 8

Application of Proceeds of Sale

     The proceeds of any sale of Pledged Collateral pursuant to Section 7, as
well as any Pledged Collateral consisting of cash, shall be applied by the
Collateral Agent as required pursuant to the terms of Section 6.2 of the
Security Agreement.

     The Collateral Agent shall have absolute discretion as to the time of
application of any such proceeds, moneys or balances in accordance with this
Agreement. Upon any sale or other disposition of the Pledged Collateral by the
Collateral Agent (including pursuant to a power of sale granted by statute or
under a judicial proceeding), the receipt of the purchase money by the
Collateral Agent or of the officer making the sale or other disposition shall
be a sufficient discharge to the purchaser or purchasers of the Pledged
Collateral so sold or otherwise disposed of and such purchaser or purchasers
shall not be obligated to see to the application of any part of the purchase
money paid over to the Collateral Agent or such officer or be answerable in any
way for the misapplication thereof.

SECTION 9

Registration, Etc.

     If the Collateral Agent reasonably determines that it is necessary to sell
any of the Pledged Securities at a public sale, the Pledgor agrees that, upon
the occurrence and during the continuance of an Event of Default hereunder, the
Pledgor will, at any time and from time to

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time, upon the written request of the Collateral Agent, use its best
efforts to take or to cause the Issuer of such Pledged Securities to take such
action and prepare, distribute and/or file such documents, as are required or
advisable in the reasonable opinion of counsel for the Collateral Agent to
permit the public sale of such Pledged Securities. Without limiting any of its
other indemnification obligations under the Loan Documents, the Pledgor agrees
to indemnify, defend and hold harmless the Collateral Agent, each other Secured
Party, any underwriter and their respective officers, directors, Affiliates and
controlling Persons from and against all loss, liability, expenses, costs of
counsel (including the reasonable fees and expenses of legal counsel to the
Collateral Agent), and claims (including the reasonable costs of investigation)
that any of them may incur insofar as such loss, liability, expense or claim
arises out of, or is based upon, any alleged untrue statement of a material
fact contained in any prospectus (or any amendment or supplement thereto) or in
any notification or offering circular, or arises out of or is based upon any
alleged omission to state a material fact required to be stated therein or
necessary to make the statements in any thereof not misleading, except insofar
as the same may have been caused by any untrue statement or omission based upon
information furnished in writing to the Pledgor or the Issuer of such Pledged
Securities by the Collateral Agent or any other Secured Party expressly for use
therein. The Pledgor further agrees, upon such written request referred to
above, to use its best efforts to qualify, file or register, or cause the
Issuer of such Pledged Securities to qualify, file or register, any of the
Pledged Securities under the Securities Act, Blue Sky Laws or other securities
laws of such states as may be requested by the Collateral Agent and keep
effective, or cause to be kept effective, all such qualifications, filings or
registrations. The Pledgor will bear all costs and expenses of carrying out
their obligations under this Section 9. The Pledgor acknowledges that there is
no adequate remedy at law for failure by them to comply with the provisions of
this Section 9 and that such failure would not be adequately compensable in
damages, and therefore agree that their agreements contained in this Section 9
may be specifically enforced.

SECTION 10

Further Assurances

     The Pledgor agrees to do such further acts and things, and to execute and
deliver such additional conveyances, assignments, agreements and instruments,
as the Collateral Agent may at any time reasonably request in connection with
the administration and enforcement of this Agreement or with respect to the
Pledged Collateral or any part thereof or in order better to assure and confirm
unto the Collateral Agent its rights and remedies hereunder.

SECTION 11

Intent

     This Agreement is being executed and delivered by the Pledgor for the
purpose of confirming the grant of the security interest of the Collateral
Agent in the Pledged Collateral. It is intended that the security interest
granted pursuant to this Agreement is granted as a

-11-

 

supplement to, and not in limitation of, the Security Interest granted to
the Collateral Agent, for the ratable benefit of the Secured Parties, under the
Security Agreement. All provisions of the Security Agreement shall apply to
the Pledged Collateral. The Collateral Agent shall have the same rights,
remedies, powers, privileges and discretions with respect to the security
interests created in the Pledged Collateral as in all other Collateral. In the
event of a conflict between this Agreement and the Security Agreement, the
terms of this Agreement shall control with respect to the Pledged Collateral
and the Security Agreement with respect to all other Collateral.

SECTION 12

Governing Law

     THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAW OF THE COMMONWEALTH OF MASSACHUSETTS.

[SIGNATURE PAGE FOLLOWS]

-12-

 

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

	 	 	 	 	 
	PLEDGOR:	 	GAMESTOP CORP.
	 
	 	 	 	 
	

	 	By:
	 	/s/ David W. Carlson
	

	 	 	 	
 
	 	 	Name: David W. Carlson
	 	 	Title: Executive Vice President and Chief
Financial Officer
	 
	 	 	 	 
	COLLATERAL AGENT:	 	FLEET RETAIL GROUP, INC., as Collateral Agent
	 
	 	 	 	 
	

	 	By:
	 	/s/ Keith Vercauteren
	

	 	 	 	
 
	

	 	 	 	Keith Vercauteren
	

	 	 	 	Director

-13-

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