Document:

exv4w3

Exhibit
4.3

SECURITY AGREEMENT

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

W I T N E S S E T H:

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

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

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

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

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

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

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

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

1

 

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

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

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

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

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

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

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

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

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

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

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

2

 

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

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

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

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

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

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

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

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

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

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

          (a) all of Grantor’s Accounts;

3

 

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

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

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

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

          (f) all of Grantor’s General Intangibles;

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

          (h) all of Grantor’s Inventory;

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

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

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

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

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

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

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

4

 

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

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

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

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

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

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

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

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

5

 

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

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

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

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

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

6

 

          (b) Chattel Paper.

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

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

          (c) Control Agreements.

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

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

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

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

          (f) Investment Related Property.

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

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

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

7

 

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

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

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

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

          (j) Intellectual Property Collateral.

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

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

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

8

 

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

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

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

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

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

9

 

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

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

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

     8. Further Assurances.

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

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

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

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

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

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

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

10

 

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

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

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

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

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

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

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

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

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

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

11

 

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

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

     15. Voting Rights.

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

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

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

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

12

 

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

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

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

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

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

     19. Indemnity and Expenses.

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

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

13

 

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

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

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

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

     23. Governing Law.

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

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

14

 

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

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

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

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

     25. Miscellaneous.

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

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

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

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

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

15

 

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

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

16

 

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

	 	 	 	 	 	 	 
	GRANTOR:	 	BAKERS FOOTWEAR GROUP, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Peter Edison
 

	 	 
	 

	 	Name:
	 	Peter A. Edison	 	 
	 

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

	 	By:
	 	/s/ Danny Pang	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:
	 	Danny Pang	 	 
	 

	 	Title:
	 	Chairman, CEO	 	 

[Signature Page to the Security Agreement]

 

SCHEDULE 1

Pledged Companies

None.

 

SCHEDULE 2

Commercial Tort Claims

None.

 

SCHEDULE 3

Real Property

None.

 

SCHEDULE 4

Financing Statements

	 	 	 
	Grantor	 	Jurisdiction
	Bakers Footwear Group, Inc.

	 	Missouri

 

ANNEX 1 TO SECURITY AGREEMENT

FORM OF SUPPLEMENT

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

W I T N E S S E T H:

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

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

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

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

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

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

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

 

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

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

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

[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]

 

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

	 	 	 	 	 	 	 
	NEW GRANTORS:	 	[Name of New Grantor]	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	Name:
	 	 	 	 
	 

	 	Title:	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	[Name of New Grantor]	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	Name:
	 	 	 	 
	 

	 	Title:	 	 	 	 
	 
	 	 	 	 	 	 
	AGENT:	 	PRIVATE EQUITY MANAGEMENT GROUP, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	Name:
	 	 	 	 
	 

	 	Title:	 	 	 	 

Schedule 4

 

EXHIBIT A

[INTENTIONALLY OMITTED]

Exhibit A

 

EXHIBIT B

COPYRIGHT SECURITY AGREEMENT

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

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

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

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

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

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

B-1

 

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

	 	 	 	 	 	 	 	 	 
	 	 	GRANTOR:
	 	 	 	 	 	 
	 	 	 
	 	 	 	 	 	 
	 	 	 	 	BAKERS FOOTWEAR GROUP, INC.	 	 
	 	 	 
	 	 	 	 	 	 
	 	 	 

	 	By:	 	 	 	 
	 	 	 

	 	Name:
	 	 	 	 
	 	 	 

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

as Agent	 	 
	 	 	 
	 	 	 	 	 	 
	 	 	 

	 	By:	 	 	 	 
	 	 	 

	 	Name:
	 	 	 	 
	 	 	 

	 	Title:	 	 	 	 

[Signature Page to the Copyright Security Agreement]

 

Schedule A to

COPYRIGHT SECURITY AGREEMENT

Copyrights

B-3

 

EXHIBIT C

PATENT SECURITY AGREEMENT

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

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

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

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

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

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

 

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

	 	 	 	 	 	 	 	 	 
	 	 	GRANTOR:
	 	 	 	 	 	 
	 	 	 
	 	 	 	 	 	 
	 	 	 	 	BAKERS FOOTWEAR GROUP, INC.	 	 
	 	 	 
	 	 	 	 	 	 
	 	 	 

	 	By:	 	 	 	 
	 	 	 

	 	Name:
	 	 	 	 
	 	 	 

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

as Agent	 	 
	 	 	 
	 	 	 	 	 	 
	 	 	 

	 	By:	 	 	 	 
	 	 	 

	 	Name:
	 	 	 	 
	 	 	 

	 	Title:	 	 	 	 

[Signature Page to the Patent Security Agreement]

 

Schedule A to

PATENT SECURITY AGREEMENT

Patents

 

SPECIAL TYPES OF COLLATERAL

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

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

K Obata, R Buchanan
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Decorative Plate on Shoe Sole

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

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

K Obata, R Buchanan
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Pedestal Display Table

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

K Obata, R Buchanan
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Store Counter Display and
Backdrop Area

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

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

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

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

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

K Obata, R Buchanan
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Store Window Display Fixture
with Stripe

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

K Obata, R Buchanan

 

EXHIBIT D

Annex 1 to Pledge and Security Agreement

PLEDGED INTERESTS ADDENDUM

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

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

	 	 	 	 	 	 	 
	 	 	BAKERS FOOTWEAR GROUP, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 

	 	 
	 	 	 	 	 
	 

	 	Title	 	 	 	 
	 

	 	 	 	 

	 	 

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

D-1

 

EXHIBIT E

TRADEMARK SECURITY AGREEMENT

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

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

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

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

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

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

E-1

 

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

	 	 	 	 	 	 	 	 	 
	 	 	GRANTOR:
	 	 	 	 	 	 
	 	 	 
	 	 	 	 	 	 
	 	 	 	 	BAKERS FOOTWEAR GROUP, INC.	 	 
	 	 	 
	 	 	 	 	 	 
	 	 	 

	 	By:	 	 	 	 
	 	 	 

	 	Name:
	 	 	 	 
	 	 	 

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

as Agent	 	 
	 	 	 
	 	 	 	 	 	 
	 	 	 

	 	By:	 	 	 	 
	 	 	 

	 	Name:
	 	 	 	 
	 	 	 

	 	Title:	 	 	 	 

[Signature Page to the Trademark Security Agreement]

 

Schedule A to

TRADEMARK SECURITY AGREEMENT

Trademarks

 

SPECIAL TYPES OF COLLATERAL

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Trademark - 5b.	 	 	Number	 	 	Date	 	 	If Foreign, What Country	 	 	Subsidiary	 	 	Application #
	B & Design
	 	 	3,107,432	 	 	2/15/2001	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Bakers
	 	 	Pending	 	 	 	 	 	 	 	 	 	 	 	75/449,163
	 
	 	 	Pending	 	 	 	 	 	 	 	 	 	 	 	78/115,991
	 
	 	 	Pending	 	 	 	 	 	 	 	 	 	 	 	75/979,308
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Baker’s
	 	 	655,552	 	 	12/20/2005	 	 	Canada	 	 	 	 	 	 
	 
	 	 	661,116	 	 	3/22/2006	 	 	Canada	 	 	 	 	 	 
	 
	 	 	719,778	 	 	8/8/1961	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Ciella
	 	 	3,321,308	 	 	10/23/2007	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Duck Design
	 	 	1,558,021	 	 	9/26/1989	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Leed’s
	 	 	719,777	 	 	8/8/1961	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	No Parking
	 	 	1,943,049	 	 	12/19/1995	 	 	 	 	 	 	 	 	 
	 
	 	 	Pending	 	 	 	 	 	 	 	 	 	 	 	78/879,783
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	QualiCraft (Stylized)
	 	 	430,591	 	 	6/17/1947	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Riverstone
	 	 	Pending	 	 	 	 	 	 	 	 	 	 	 	78/879,754
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Sole Project
	 	 	Proposed	 	 	 	 	 	 	 	 	 	 	 	No App. # Available
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Stomp
	 	 	2,273,024	 	 	8/24/1999	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Swing & Design
	 	 	1,504,057	 	 	9/13/1988	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	The Legworks
	 	 	986,497	 	 	6/18/1974	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	The Wild Pair
	 	 	TMA249,138	 	 	8/8/1980	 	 	Canada	 	 	 	 	 	 
	 
	 	 	977,532	 	 	1/22/1974	 	 	 	 	 	 	 	 	 
	 
	 	 	955,819	 	 	3/20/1973	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	The Wild Pair & Design
	 	 	1,495,801	 	 	7/12/1988	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Wild Pair
	 	 	Pending	 	 	 	 	 	 	 	 	 	 	 	78/115,938
	 
	 	 	1,198,008	 	 	6/15/1982	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Wild Pair (Stylized)
	 	 	2,681,306	 	 	1/28/2003	 	 	 	 	 	 	 	 	 
	 
	 	 	Pending	 	 	 	 	 	 	 	 	 	 	 	78/115,979
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	TOZ
	 	 	2,849,107	 	 	10/12/2000	 	 	 	 	 	 	 	 	 
	 
	 	 	2,745,441	 	 	10/12/2000exv4w6

Exhibit
4.6

REGISTRATION RIGHTS AGREEMENT

     THIS REGISTRATION RIGHTS AGREEMENT (this “Agreement”) is made and entered into as of the
1st day of February, 2008, by and among Bakers Footwear Group, Inc., a Missouri
corporation (the “Company”), and each of the holders of the Shares (as defined below) set forth on
Exhibit A hereto (each a “Securityholder” and, collectively, the “Securityholders”).

W I T N E S S E T H:

     WHEREAS, pursuant to that certain Second Lien Credit Agreement, dated as of February 1, 2008
(the “Credit Agreement”), by and among the Securityholders and the Company, the Securityholders
have been issued Subordinated Term Notes of the Company in the aggregate principal amount of
$7,500,000;

     WHEREAS, in connection with the transactions contemplated by the Credit Agreement, the
Securityholders or their designees have received an aggregate of 350,000 shares of the Company’s
Common Stock (the “Shares”); and

     WHEREAS, as a condition to closing the transactions contemplated by the Credit Agreement, the
parties agreed to execute and deliver this Agreement setting forth certain rights of the
Securityholders with respect to registration under the Securities Act of 1933, as amended, of the
shares of Common Stock issued to the Securityholders.

     NOW, THEREFORE, in consideration of these premises, the covenants and agreements herein
contained, and other good and valuable consideration, the receipt and sufficiency of which hereby
are acknowledged, the parties hereto agree as follows:

     The Company and the Securityholders hereby agree as follows:

     1. Definitions. As used in this Agreement, the following terms shall have the
following meanings:

          “Credit Agreement” is defined in the recitals to this Agreement.

          “Commission” means the U.S. Securities and Exchange Commission, or any other Federal agency
then administering the Securities Act.

          “Common Stock” means shares of the Company’s common stock, par value $0.0001 per share, and
any stock or securities issued with respect to such Common Stock by reason of a stock dividend,
stock split, combination of shares, recapitalization, reclassification, merger, consolidation,
corporate reorganization or otherwise.

          “Discontinuation Event” means (i) any request by the Commission or any other Federal or state
governmental authority for amendments or supplements to be made to such Registration Statement or
Prospectus; (ii) the issuance by the Commission of any stop order suspending the effectiveness of
such Registration Statement covering any or all of the Registrable Securities or the initiation of
any Proceedings for that purpose; (iii) the receipt by the Company of any notification with respect
to the suspension of the qualification or exemption from qualification of any of the Registrable
Securities for sale in any jurisdiction, or the initiation or threatening of any Proceeding

1

 

for such purpose; (iv) the occurrence of any event or passage of time that makes the financial
statements included in such Registration Statement ineligible for inclusion therein; (v) upon
discovery that, or upon the happening of an event or the passage of time as a result of which any
statement made in such Registration Statement or Prospectus or any document incorporated or deemed
to be incorporated therein by reference is untrue in any material respect or that requires any
revisions to such Registration Statement, Prospectus, Free Writing Prospectus or other documents so
that, in the case of such Registration Statement, Prospectus, or Free Writing Prospectus, as the
case may be, it will not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements therein, in light
of the circumstances under which they were made, not misleading; and/or (vi) the Company in good
faith determines that any such Registration Statement, Prospectus or Free Writing Prospectus, or
the use thereof, would materially and adversely affect any material corporate event as would
otherwise require disclosure of non-public information which the Company determines, in its
reasonable discretion, is not in the best interests of the Company at such time.

          “Effectiveness Date” means a date no later than one hundred twenty (120) days following the
date hereof.

          “Effectiveness Period” shall have the meaning set forth in Section 2(a).

          “Exchange Act” means the Securities Exchange Act of 1934, as amended, and any successor
statute, and the rules and regulations of the Commission issued thereunder.

          “Filing Date” means a date no later than the earlier of (i) ninety (90) days following the
date hereof and (ii) five business days after the Company files its Form 10-K for fiscal year 2007
with the Commission.

          “Free Writing Prospectus” shall have the meaning ascribed to such term in Rule 405 of the
Securities Act.

          “Holder” or “Holders” means (a) the Securityholder, (b) any employee, director, officer or
affiliate of the Securityholder to the extent that any of them hold Registrable Securities.

          “Person” means any individual, corporation, partnership, limited liability company, trust or
any other incorporated or unincorporated entity or organization of any kind.

          “Proceeding” means an action, claim, suit, investigation or proceeding (including, without
limitation, an investigation or partial proceeding, such as a deposition), whether commenced or
threatened.

          “Prospectus” means the prospectus included in the Registration Statement (including, without
limitation, a prospectus that includes any information previously omitted from a prospectus filed
as part of an effective registration statement in reliance upon Rule 430A promulgated under the
Securities Act), as amended or supplemented by any prospectus supplement, with respect to the terms
of the offering of any portion of the Registrable Securities covered by the Registration Statement,
and all other amendments and supplements to the Prospectus, including post-effective amendments,
and all material incorporated by reference or deemed to be incorporated by reference in such
Prospectus.

2

 

          “Registration Expenses” shall mean all reasonable and customary expenses of the Company
incident to performance of or compliance with this Agreement, including, without limitation:
(i) all Commission, stock exchange or registration and filing fees; (ii) filings pursuant to the
policy of the National Association of Securities Dealers, Inc. with respect to the review of
corporate financing; (iii) all fees and expenses incurred in connection with compliance with state
securities or “blue sky” laws (including reasonable fees and disbursements of counsel in connection
with “blue sky” qualification of any of the Registrable Securities and the preparation of a Blue
Sky Memorandum); (iv) all expenses of any Persons in preparing or assisting in preparing, word
processing, printing and distributing any Registration Statement, Prospectus, certificates and
other documents relating to the performance of and compliance with this Agreement; (v) all fees and
expenses incurred in connection with the listing, if any, of any of the Registrable Securities on
any securities exchange or exchanges or automated quotation system; and (vi) the fees and
disbursements of counsel for the Company, the independent public accountants of the Company and one
counsel for the Holders of the Registrable Securities included in such registration. Registration
Expenses shall specifically exclude underwriting discounts and commissions or fees of underwriters,
selling brokers, dealers, managers or similar securities industry professionals relating to the
sale or disposition of Registrable Securities by the Holders and transfer and income taxes, if any,
relating to the sale or disposition of Registrable Securities by the Holders.

          “Registrable Securities” means the Shares (and any securities issued with respect to the
Shares as a result of any stock splits, combinations, reorganization or recapitalization); provided
that a security shall cease to be a Registrable Security upon (i) a sale pursuant to a Registration
Statement or Rule 144 under the Securities Act, or similar rule, which results in the Shares sold
no longer being deemed “restricted securities” or (ii) such security becoming eligible for sale
under Rule 144 without volume limitation, manner of sale or current information requirements, but
only to the extent that the Company has caused (or offered to cause) the certificates representing
such shares of Common Stock to be reissued to the Holder without restrictive legend.

          “Registrable Securities Value” means the aggregate value of all then currently Registrable
Securities which shall be deemed to equal to $2.74 per share.

          “Registration Statement” means each registration statement required to be filed hereunder in
respect of the Registrable Securities, including the Prospectus, amendments and supplements to such
registration statement or Prospectus, including pre- and post-effective amendments, all exhibits
thereto, and all material incorporated by reference or deemed to be incorporated by reference in
such registration statement.

          “Required Holders” means the Holders then holding a majority in interest of the Registrable
Securities.

          “Rule 144” means Rule 144 promulgated by the Commission pursuant to the Securities Act, as
such Rule may be amended from time to time, or any similar rule or regulation hereafter adopted by
the Commission having substantially the same effect as such Rule.

          “Rule 415” means Rule 415 promulgated by the Commission pursuant to the Securities Act, as
such Rule may be amended from time to time, or any similar rule or regulation hereafter adopted by
the Commission having substantially the same effect as such Rule.

3

 

          “Rule 424” means Rule 424 promulgated by the Commission pursuant to the Securities Act, as
such Rule may be amended from time to time, or any similar rule or regulation hereafter adopted by
the Commission having substantially the same effect as such Rule.

          “Securities Act” means the Securities Act of 1933, as amended, or any successor statute, and
the rules and regulations of the Commission issued thereunder.

          “Trading Market” means any of the NASD OTC Bulletin Board, NASDAQ Capital Market, the NASDAQ
Global Market, The NASDAQ Global Select Market, the American Stock Exchange or the New York Stock
Exchange.

     2. Registration.

          (a) On or prior to the Filing Date the Company shall prepare and file with the Commission a
Registration Statement covering all Registrable Securities for an offering to be made on a
continuous basis pursuant to Rule 415. The Registration Statement shall be on Form S-3 (except if
the Company is not eligible to register for resale the Registrable Securities on Form S-3, in which
case such registration shall be on Form S-1 or such other appropriate form for which the Company
then qualifies or that counsel for the Company shall deem appropriate, which form shall be
available for the sale of the Registrable Securities in accordance with the methods of distribution
thereof intended by the Holders, which methods shall be communicated in writing as a plan of
distribution in advance to the Company and shall be subject to comments of the staff of the
Commission). Such Registration Statement may also include additional shares of Common Stock
pursuant to “piggyback” or similar registration rights previously granted by the Company, but only
to the extent that the Company in good faith determines that it is required by the terms of such
“piggy back” or similar rights to include additional shares in such Registration Statement.
Notwithstanding anything to the contrary contained herein, the Company shall not be required to
register any Registrable Securities, taking into account the nature of the securities and manner of
disposition proposed by such Holders, to the extent that the Commission or its staff advises the
Company in writing that the Registrable Securities may not be registered for sale as proposed, or
objects to such registration in writing, or to the extent that such registration is not allowed by
law or applicable regulation. If any Registrable Securities otherwise required to be registered
hereunder are not able to be registered pursuant to the prior sentence, then such securities shall
not be required to be registered until the later to occur of both(a) such securities becoming
registrable (taking into account the nature of securities and the method of distribution proposed)
under applicable law, regulation or Commission comment, as applicable, and (b) written notice to
the Company requesting such registration.

          The Company shall use reasonable best efforts to cause the Registration Statement to become
effective and remain effective as provided herein. The Company shall use its reasonable best
efforts to cause the Registration Statement to be declared effective under the Securities Act as
promptly as possible after the filing thereof, but in any event no later than the Effectiveness
Date. The Company shall use its reasonable best efforts to keep the Registration Statement
continuously effective under the Securities Act, except as provided herein, until the date which is
the earlier date of when (i) all Registrable Securities have been sold, (ii) the date on which all
of the Shares are no longer Registrable Securities, or (iii) two years from the date hereof (the
“Effectiveness Period”).

4

 

          (b) If: (i) the Registration Statement is not filed on or prior to the Filing Date; (ii) the
Registration Statement is not declared effective by the Commission by the Effectiveness Date; (iii)
after the Registration Statement is filed with and declared effective by the Commission, the
Registration Statement ceases to be effective (by suspension or otherwise) or cannot, by virtue of
the provisions of Section 9(d) hereof, be used by the Holders due to any Discontinuation Event, as
to all Registrable Securities to which it is required to relate at any time prior to the expiration
of the Effectiveness Period (without being succeeded immediately by an additional registration
statement filed and declared effective) for a period of time which shall exceed 60 days in the
aggregate per year or more than 30 consecutive calendar days (defined as a period of 365 days
commencing on the date the Registration Statement is declared effective); or (iv) the Common Stock
is not listed or quoted, or is suspended from trading on any Trading Market for a period of five
(5) consecutive Trading Days (provided the Company shall not have been able to cure such trading
suspension within 30 days of the notice thereof or list the Common Stock on another Trading
Market); (any such failure or breach being referred to as an “Event,” and for purposes of clause
(i) or (ii) the date on which such Event occurs, or for purposes of clause (iii) the date which
such 60 day or 30 consecutive day period (as the case may be) is exceeded or for purposes of clause
(iv) the date on which such five (5) Trading Day period is exceeded, being referred to as “Event
Date”), then:

               until the applicable Event is cured, the Company shall pay to each Holder an amount in cash,
as liquidated damages and not as a penalty, equal to two percent (2.0%) of the Registrable
Securities Value held by such Holder for each thirty (30) day period (prorated for partial periods
and computed on a daily basis; provided that if the Registration Statement is not filed on or prior
to the Filing Date, then for any liquidated damages with respect to such failure to file,
liquidated damages shall be calculated as if the Filing Date was sixty (60) days after the date
hereof. While such Event continues, such liquidated damages shall be paid not less often than each
thirty (30) days. Any unpaid liquidated damages as of the date when an Event has been cured by the
Company shall be paid within three (3) business days following the date on which such Event has
been cured by the Company.

          (c) Within five business days of the Effectiveness Date, the Company shall cause its counsel
to issue a blanket opinion, in such form as is reasonably requested by the Securityholders, to the
transfer agent stating that the applicable shares are subject to an effective registration
statement and can be reissued free of restrictive legend upon notice of a sale by the Holder and
confirmation by the Holder that it has complied with the prospectus delivery requirements, provided
that the Company has not advised the transfer agent orally or in writing that the opinion has been
withdrawn. Copies of the blanket opinion required by this Section 2(c) shall be delivered to the
Holder within the five business day time frame set forth above.

     3. Registration Procedures. If and whenever the Company is required by the provisions
hereof to effect the registration of any Registrable Securities under the Securities Act (including
the registration required to be filed before the Filing Date pursuant to Section 2 above), the
Company will, as soon as reasonably possible:

          (a) prepare and file with the Commission the Registration Statement with respect to such
Registrable Securities, respond as promptly as reasonably possible to any comments received from
the Commission, and use its reasonable best efforts to cause the Registration Statement to become
and remain effective for the Effectiveness Period with respect thereto, and

5

 

promptly provide to the Holders copies of all filings and Commission letters of comment relating
thereto;

          (b) prepare and file with the Commission such amendments and supplements to the Registration
Statement and the Prospectus used in connection therewith as may be reasonably necessary to comply
with the provisions of the Securities Act with respect to the disposition of all Registrable
Securities covered by the Registration Statement and to keep such Registration Statement effective
until the expiration of the Effectiveness Period;

          (c) furnish to the Holders such number of copies of the Registration Statement and the
Prospectus included therein (including each preliminary Prospectus) as each Holder reasonably may
request to facilitate the public sale or disposition of the Registrable Securities covered by the
Registration Statement;

          (d) use its reasonable best efforts to register or qualify for unsolicited purchase and sale
the Registrable Securities covered by the Registration Statement under the securities or “blue sky”
laws of such jurisdictions within the United States as any Holder may reasonably request, provided,
however, that the Company shall not for any such purpose be required to qualify generally to
transact business as a foreign corporation in any jurisdiction where it is not so qualified;

          (e) list the Registrable Securities covered by the Registration Statement with any Trading
Market on which the Common Stock of the Company is then listed;

          (f) immediately notify the Holders at any time when a Prospectus relating thereto is required
to be delivered under the Securities Act, of the happening of any event of which the Company has
knowledge as a result of which the Prospectus contained in such Registration Statement, as then in
effect, includes an untrue statement of a material fact or omits to state a material fact required
to be stated therein or necessary to make the statements therein not misleading in light of the
circumstances then existing;

          (g) make available for inspection by the Holders and any attorney, accountant or other agent
retained by the Holders or any agent for the Holders designated in the Credit Agreement, all
publicly available, non-confidential financial and other records, pertinent corporate documents and
properties of the Company, and cause the Company’s officers, directors and employees to supply all
publicly available, non-confidential information reasonably requested by the attorney, accountant
or agent of the Holders;

          (h) to the extent reasonably requested by the Holders, enter into an underwriting agreement in
customary form and participate in “road shows” and similar presentations reasonably requested by
any underwriters; and

          (i) cause the Company’s counsel and independent accountants to deliver to any underwriters
and/or the Holders opinions and comfort letters in customary form as reasonably requested by the
Holders or by any underwriting agreement entered into by the Holders and the Company.

     4. Registration Expenses. The Company shall be responsible for and shall promptly pay
all Registration Expenses relating to the Company’s compliance with Sections 2 and 3 of this
Agreement.

6

 

     5. Rule 144 Reporting. With a view toward making available to the Holders the
benefits of certain rules and regulations of the Commission that may permit the sale of the Common
Stock to the public without registration, the Company agrees to use its reasonable best efforts to:

          (a) make and keep current public information available, within the meaning of Rule 144 or any
similar or analogous rule promulgated under the Securities Act until the earlier of: (i) six months
after such date as all of the Registrable Securities may be resold pursuant to Rule 144 or any
other rule of similar effect without volume limitations or current information requirements, or
(ii) such date as all of the Registrable Securities shall have been resold;

          (b) file with the Commission, in a timely manner, all reports and other documents required of
the Company under the Securities Act and the Exchange Act; and

          (c) so long as any party hereto owns any Registrable Securities, furnish to such party
forthwith upon request, a written statement by the Company as to its compliance with the reporting
requirements of Rule 144, the Securities Act and the Exchange Act; a copy of the most recent annual
or quarterly report of the Company; and such other reports and documents as such party may
reasonably request in availing itself of any rule or regulation of the Commission allowing it to
sell any such securities without registration.

     6. Obligations of the Holders.

          (a) Each Holder shall furnish in writing to the Company such information regarding itself, the
Registrable Securities held by it and the intended method of disposition of the Registrable
Securities held by it, as shall be reasonably required to effect the registration of such
Registrable Securities and shall execute such documents in connection with such registration as the
Company may be reasonably required to effect such registration. At least seven (7) business days
prior to the first anticipated filing date of any Registration Statement, the Company shall notify
each Holder of the information the Company requires from such Holder if such Holder elects to have
any of the Registrable Securities included in the Registration Statement. Each Holder shall
provide such information to the Company at least two (2) business days prior to the first
anticipated filing date of such Registration Statement if such Holder elects to have any of the
Registrable Securities included in the Registration Statement. The Company shall not be required
to include the Registrable Securities of a Holder in a Registration Statement and shall not be
required to pay any liquidated damages or other damages under this Agreement to a Holder resulting
from any delay in registration caused by the failure of such Holder to furnish to the Company such
information at least two (2) business days prior to such filing date.

          (b) Each Holder, by its acceptance of the Registrable Securities, agrees to cooperate with the
Company as reasonably requested by the Company in connection with the preparation and filing of a
Registration Statement hereunder, unless such Holder has notified the Company in writing of its
election to exclude all of its Registrable Securities from such Registration Statement.

          (c) Each Holder agrees that, upon receipt of any notice (which may be oral as long as written
notice is provided by the next day) from the Company of the happening of a Discontinuation Event
(which notice shall contain an explanation of the nature of the Discontinuation Event without
providing material non-public information), such Holder will

7

 

immediately discontinue disposition of Registrable Securities pursuant to the Registration
Statement covering such Registrable Securities, until otherwise notified in writing by the Company
or until such Holder’s receipt of the copies of the supplemented or amended prospectus filed with
the SEC and until any related post-effective amendment is declared effective.

          (d) The Holder acknowledges and agrees that, as described in Schedule 6(d) hereto,
other security holders of the Company have the right to include such securities, in addition to the
Registrable Securities, in any Registration Statement filed or maintained by the Company pursuant
to this Agreement.

          (e) No Holder may use any confidential information received by it pursuant to this Agreement
in violation of the Exchange Act, or other applicable state or federal securities law or reproduce,
disclose, or disseminate such information to any other person (other than his or her attorneys,
agents and representatives having a need to know, and then only if they expressly agree to be bound
hereby), unless such information has been made available to the public generally (other than by
such recipient in violation hereof) or such recipient is required to disclose such information by a
governmental body or regulatory agency or by law in connection with a transaction that is not
otherwise prohibited hereby, and then only after reasonable notice to the Company and it has been
provided a reasonable opportunity to object to such disclosure, with the reasonable cooperation and
assistance of such Holder. Each Holder agrees to comply in all material respects with the
Securities Act and other applicable laws in connection with the offer or sale of any Registrable
Securities; provided, however, that any failure to comply that is due to any breach by the Company
of its obligations hereunder or under applicable securities laws (including any misstatements or
omission of material facts by the Company in its public disclosure documents) shall not constitute
a breach of this Section 6(e) by the Holder. The obligations in this Section 6(e) shall survive the
expiration or termination of this Agreement.

     Notwithstanding any of the foregoing, nothing herein shall obligate the Company to provide to
the Holders, or any advisors or representatives or underwriters any material nonpublic information.
The Company shall not disclose material nonpublic information to the Holders, or to advisors to or
representatives of the Holders, pursuant to this Agreement unless prior to disclosure of such
information the Company identifies such information as being material nonpublic information and
provides the Holders, such advisors and representatives with the opportunity to accept or refuse to
accept such material nonpublic information for review and any Holder wishing to obtain such
information enters into an appropriate confidentiality agreement with the Company with respect
thereto.

     7. Indemnification.

          (a) In connection with any registration or qualification of the Registrable Securities under
this Agreement, (i) the Company shall indemnify and hold harmless each of the Holders, including
but not limited to each Person, if any, who controls a Holder within the meaning of Section 15 of
the Securities Act, against all losses, claims, damages, liabilities and expenses (including but
not limited to reasonable expenses incurred in investigating, preparing and defending against any
claim) to which a Holder or such controlling person may become subject under the Securities Act,
the Exchange Act or otherwise, insofar as the same arise out of or are based upon or are caused by
any untrue statement or alleged untrue statement of a material fact contained in any Registration
Statement, Prospectus (as amended or supplemented if the Company shall have

8

 

furnished any amendments or supplements thereto) or Free Writing Prospectus furnished by the
Company pursuant to this Agreement or insofar as the same arise out of or are based upon or are
caused by any omission or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, except insofar as such losses,
claims, damages, liabilities or expenses are ultimately determined to have arisen out of or were
based upon or were caused by any untrue statement or alleged untrue statement or omission or
alleged omission made in conformity with written information furnished to the Company by or on
behalf of any Holder or such control person specifically for inclusion in any Registration
Statement, Prospectus (and any amendments or supplements thereto) or Free Writing Prospectus (it
being understood that the Holders have approved the plan of distribution included in the
Registration Statement for this purpose and shall be deemed to have been specifically furnished by
such Holders), or in the case of an occurrence of a Discontinuation Event, the use by such Holder
of an outdated or defective Prospectus after the Company has notified such Holder in writing that
the Prospectus is outdated or defective and prior to the receipt by such Holder of an amended or
supplemented Prospectus, but only if and to the extent that following the receipt of such amended
or supplemented Prospectus the misstatement or omission giving rise to such liability would have
been corrected, (ii) each Holder, severally and not jointly, shall indemnify the Company, its
affiliates, any person who signed any Registration Statement, and their respective officers,
directors and control persons against all such losses, claims, damages, liabilities and expenses
(including but not limited to reasonable expenses incurred in investigating, preparing and
defending against any claim) insofar as the same are ultimately determined to have arisen out of or
were based upon or were caused by any such untrue statement or alleged untrue statement or any such
omission or alleged omission based upon written information furnished to the Company by or on
behalf of such Holder or any such control person specifically for the inclusion in any Registration
Statement, Prospectus (and any amendments or supplements thereto) or Free Writing Prospectus, (it
being understood that the Holders have approved the plan of distribution included in the
Registration Statement for this purpose and shall be deemed to have been specifically furnished by
such Holders), or in the case of an occurrence of a Discontinuation Event, the use by such Holder
of an outdated or defective Prospectus after the Company has notified such Holder in writing that
the Prospectus is outdated or defective and prior to the receipt by such Holder of an amended or
supplemented Prospectus, but only if and to the extent that following the receipt of such amended
or supplemented Prospectus the misstatement or omission giving rise to such liability would have
been corrected.

          (b) Notice of, and Procedures for, Collecting Indemnification. Promptly upon receipt
by a party indemnified under this Agreement of notice of the commencement of any action against
such indemnified party in respect of which indemnity or reimbursement may be sought against any
indemnifying party under this Agreement, such indemnified party shall notify the indemnifying party
in writing of the commencement of such action, but the failure so to notify the indemnifying party
shall not relieve it of any liability which it may have to any indemnified party under this
Agreement unless such failure shall materially and adversely affect the defense of such action. In
case notice of commencement of any such action shall be given to the indemnifying party as above
provided, the indemnifying party shall be entitled to participate in and, to the extent it may
wish, jointly with any other indemnifying party similarly notified, to assume the defense of such
action at its own expense, with counsel chosen by it and reasonably satisfactory to such
indemnified party. The indemnified party shall have the right to employ separate counsel in any
such action and participate in the defense thereof, but the fees and expenses of such counsel
(other than reasonable expenses incurred in investigating, preparing and defending against any
claim) shall be paid by the indemnified party unless (i) the indemnifying party agrees to pay the
same, (ii) the indemnifying

9

 

party fails to assume the defense of such action with counsel reasonably satisfactory to the
indemnified party (in which case the indemnifying party shall not have the right to assume the
defense of such action on behalf of such indemnified party), or (iii) the named parties to any such
action (including any impleaded parties) have been advised by such counsel that representation of
such indemnified party and the indemnifying party by the same counsel would be inappropriate under
applicable standards of professional conduct (in which case the indemnifying party shall not have
the right to assume the defense of such action on behalf of such indemnified party). In the event
that either of the circumstances described in clauses (ii) and (iii) of the sentence immediately
preceding shall occur, the indemnified party shall have the right to select a separate counsel and
to assume such legal defense and otherwise to participate in the defense of any such action, with
the reasonable expenses and fees of such separate counsel and other reasonable expenses related to
such participation to be reimbursed by the indemnifying party as incurred. No indemnifying party
shall be liable for any settlement entered into without its consent, which consent shall not be
unreasonably withheld or delayed. Notwithstanding the provisions of this Section 7, no Holder
shall be required to indemnify any person or entity in excess of the amount of the aggregate net
proceeds received by such Holder in respect of Registrable Securities in connection with any such
registration under the Securities Act.

          (c) Contribution. If the indemnification provided for in this Section 7 is
unavailable to an indemnified party under paragraphs (a) and (b) hereof, other than as expressly
set forth above, in respect of any losses, claims, damages, liabilities or expenses referred to
therein, then an indemnifying party, in lieu of indemnifying such indemnified party, shall
contribute to the amount paid or payable by such indemnified party as a result of such losses,
claims or damages (i) in such proportion as is appropriate to reflect the relative benefits
received by the Company on the one hand and the Holder(s) on the other hand from the offering of
the Registrable Securities, and any other securities included in the Registration Statement which
gave rise to such losses, claims, damages, liabilities or expenses, or (ii) if the allocation
provided by clause (i) above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i) above but also the
relative fault of the Company on the one hand and the Holder(s) on the other in connection with the
statements or omissions that resulted in such losses, claims, damages, liabilities or expenses, as
well as any other relevant equitable considerations. The relative benefits received by the Company
on the one hand and the Holder(s) on the other shall be deemed to be in the same proportion as the
total net proceeds from the offering (before deducting expenses) received by the Company bears to
the total net proceeds from the offering (before deducting expenses) received by the Holders, in
each case as set forth in the table on the cover page of the prospectus. The relative fault of the
Company on the one hand and the Holder(s) on the other hand shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information supplied by the
Company or by the Holder(s) and the parties’ relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission

     8. Representations and Warranties. The Common Stock of the Company is registered
pursuant to Section 12(b) or 12(g) of the Exchange Act and the Company has filed all reports
required to be filed under the Exchange Act for the twelve months preceding the date hereof on a
timely basis or has timely filed a valid extension of such time of filing and has filed such
reports prior to the expiration of any such extension. The Company has filed (i) its Annual Report
on Form 10-K for its fiscal year ended February 3, 2007 and (ii) its Quarterly Reports on Form 10-Q
for each of its first three fiscal quarters after February 3, 2007 (collectively, the “SEC
Reports”). Each SEC

10

 

Report was, at the time of its filing, in substantial compliance with the requirements of its
respective form and none of the SEC Reports, nor the financial statements (and the notes thereto)
included in the SEC Reports, as of their respective filing dates, contained any untrue statement of
a material fact or omitted to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were made, not
misleading. The financial statements of the Company included in the SEC Reports comply as to form
in all material respects with applicable accounting requirements and the published rules and
regulations of the Commission or other applicable rules and regulations as in effect at the time of
filing. Such financial statements have been prepared in accordance with generally accepted
accounting principles (“GAAP”) applied on a consistent basis during the periods involved (except
(i) as may be otherwise indicated in such financial statements or the notes thereto or (ii) in the
case of unaudited interim statements, to the extent they may not include footnotes or may be
condensed) and fairly present in all material respects the financial condition, the results of
operations and the cash flows of the Company and its subsidiaries, on a consolidated basis, as of,
and for, the periods presented in each such SEC Report, subject, in the case of unaudited
statement, to normal, immaterial, year-end audit adjustments and the absence of complete footnotes.

     9. Miscellaneous.

          (a) Remedies. In the event of a breach by the Company or by a Holder, of any of their
respective obligations under this Agreement, each Holder or the Company, as the case may be, in
addition to being entitled to exercise all rights granted by law and under this Agreement,
including recovery of damages, will be entitled to specific performance of its rights under this
Agreement.

          (b) No Piggyback on Registrations. Except as and to the extent specified in
Schedule 6(d) hereto, neither the Company nor any of its security holders (other than the
Holders in such capacity pursuant hereto) may include securities of the Company in any Registration
Statement other than the Registrable Securities, and the Company shall not after the date hereof
enter into any agreement providing any such right for inclusion of shares in the Registration
Statement relating to the Registrable Securities to any of its security holders. Except as and to
the extent specified in Schedule 6(d) hereto, the Company has not previously entered into
any agreement granting any registration rights with respect to any of its securities to any Person
that have not been fully satisfied.

          (c) Compliance. Each Holder covenants and agrees that it will comply with the
prospectus delivery requirements of the Securities Act as applicable to it in connection with sales
of Registrable Securities pursuant to the Registration Statement.

          (d) Discontinued Disposition. Each Holder agrees by its acquisition of such
Registrable Securities that, upon receipt of a notice from the Company of the occurrence of a
Discontinuation Event, such Holder will forthwith discontinue disposition of such Registrable
Securities under the applicable Registration Statement until such Holder’s receipt of the copies of
the supplemented Prospectus and/or amended Registration Statement or until it is advised in writing
(the “Advice”) by the Company that the use of the applicable Prospectus may be resumed, and, in
either case, has received copies of any additional or supplemental filings that are incorporated or
deemed to be incorporated by reference in such Prospectus or Registration Statement. The Company
may provide appropriate stop orders to enforce the provisions of this paragraph. The Company
agrees to use its reasonable best efforts to immediately cure any such Discontinuation

11

 

Event and to use its reasonable best efforts to immediately provide copies of any such supplement
or amendment or use its reasonable best efforts to immediately deliver the Advice to each Holder.

          (e) Amendments and Waivers. The provisions of this Agreement, including the
provisions of this sentence, may not be amended, modified or supplemented, and waivers or consents
to departures from the provisions hereof may not be given, unless the same shall be in writing and
signed by the Company and the Required Holders. Notwithstanding the foregoing, a waiver or consent
to depart from the provisions hereof with respect to a matter that relates exclusively to the
rights of certain Holders and that does not directly or indirectly affect the rights of other
Holders may be given by Holders of at least a majority of the Registrable Securities to which such
waiver or consent relates; provided, however, that the provisions of this sentence may not be
amended, modified, or supplemented except in accordance with the provisions of the immediately
preceding sentence.

          (f) Notices. Any notice or request hereunder may be given to the Company or the
Securityholders at the respective addresses set forth below or as may hereafter be specified in a
notice designated as a change of address under this Section 9(f). Any notice or request hereunder
shall be given by registered or certified mail, return receipt requested, hand delivery, overnight
mail, Federal Express or other national overnight next day carrier (collectively, “Courier”) or
telecopy or electronic mail. Notices and requests shall be, in the case of those by hand delivery,
deemed to have been given when delivered to any party to whom it is addressed, in the case of those
by mail, deemed to have been given three (3) business days after the date when deposited in the
mail, in the case of a Courier, the next business day following timely delivery of the package with
the Courier, and, in the case of a telecopy or electronic mail, when confirmed. The address for
such notices and communications shall be as follows:

	 	 	 
	If to the Company:

	 	Bakers Footwear Group, Inc.
	 

	 	2815 Scott Avenue
	 

	 	St. Louis, MO 63103
	 

	 	Attention: Peter A. Edison, Chief
Executive Officer
	 

	 	Fax Number: (314) 641-0390
	 

	 	Email Address: pedison@bfgstl.com
	 
	 	 
	With a Copy to:

	 	Bryan Cave LLP
	 

	 	William L. Cole, Esq.
	 

	 	211 N. Broadway, Suite 3800
	 

	 	St. Louis, MO 63102
	 

	 	Fax Number: (314) 259-2020
	 

	 	Email Address: wlcole@bryancave.com
	 
	 	 
	If to a Securityholder:

	 	To the address set forth under such

Securityholder’s name on the signature
pages hereto.
	 
	 	 
	If to any other Person who is
then the registered Holder:

	 	To the address of such Holder as it
appears in the stock 
transfer books of the
Company

12

 

or such other address as may be designated in writing hereafter in accordance with this Section
9(f) by such Person.

          (g) Successors and Assigns.

                    (i) Assignments and Transfers by Holders. The provisions of this Agreement shall be
binding upon and inure to the benefit of the Holders and their respective successors and assigns.
Each Holder may transfer or assign, in whole or from time to time in part, to one or more persons,
which shall be (A) an “accredited investor” as defined in Rule 501(a) of Regulation D, as amended
under the Securities Act, (B) shall be an employee, director, officer or Affiliate of Private
Equity Management Group, LLC, (C) shall not be a direct competitor of the Company, and (D) which
shall agree in writing to be bound by the terms and conditions of this Agreement, an executed
counterpart of which shall be furnished to the Company, its rights hereunder in connection with the
transfer of Registrable Securities by Holder to such person, provided that the Holder complies with
all laws applicable thereto and provides written notice of assignment to the Company promptly after
such assignment is effected.

                    (ii) Assignments and Transfers by the Company. This Agreement may not be assigned by
the Company (whether by operation of law or otherwise) without the prior written consent of the
Required Holders, provided, however, that the Company may assign its rights and delegate its duties
hereunder to any surviving or successor corporation in connection with a merger or consolidation of
the Company with another corporation, or a sale, transfer or other disposition of all or
substantially all of the Company’s assets to another corporation, without the prior written consent
of the Required Holders, after notice duly given by the Company to each Holder.

          (h) Execution and Counterparts. This Agreement may be executed in any number of
counterparts, each of which when so executed shall be deemed to be an original and, all of which
taken together shall constitute one and the same Agreement. In the event that any signature is
delivered by facsimile transmission, such signature shall create a valid binding obligation of the
party executing (or on whose behalf such signature is executed) the same with the same force and
effect as if such facsimile signature were the original thereof.

          (i) Governing Law. All questions concerning the construction, validity, enforcement
and interpretation of this Agreement shall be governed by and construed and enforced in accordance
with the internal laws of the State of California, without regard to the principles of conflicts of
law thereof. Each party agrees that all Proceedings concerning the interpretations, enforcement and
defense of the transactions contemplated by this Agreement shall be commenced exclusively in the
state and federal courts sitting in Los Angeles, California. Each party hereto hereby irrevocably
submits to the exclusive jurisdiction of the state and federal courts sitting in Los Angeles,
California for the adjudication of any dispute hereunder or in connection herewith or with any
transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not
to assert in any Proceeding, any claim that it is not personally subject to the jurisdiction of any
such court, that such Proceeding is improper. Each party hereto hereby irrevocably waives personal
service of process and consents to process being served in any such Proceeding by mailing a copy
thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such
party at the address in effect for notices to it under this Agreement and agrees that such service
shall

13

 

constitute good and sufficient service of process and notice thereof. Nothing contained herein
shall be deemed to limit in any way any right to serve process in any manner permitted by law.

          (j) Cumulative Remedies. The remedies provided herein are cumulative and not
exclusive of any remedies provided by law.

          (k) Severability. If any term, provision, covenant or restriction of this Agreement
is held by a court of competent jurisdiction to be invalid, illegal, void or unenforceable, the
remainder of the terms, provisions, covenants and restrictions set forth herein shall remain in
full force and effect and shall in no way be affected, impaired or invalidated, and the parties
hereto shall use their reasonable efforts to find and employ an alternative means to achieve the
same or substantially the same result as that contemplated by such term, provision, covenant or
restriction. It is hereby stipulated and declared to be the intention of the parties that they
would have executed the remaining terms, provisions, covenants and restrictions without including
any of such that may be hereafter declared invalid, illegal, void or unenforceable.

          (l) Headings. The headings in this Agreement are for convenience of reference only
and shall not limit or otherwise affect the meaning hereof.

          (m) Entire Agreement. This Agreement is intended by the parties as a final expression
of their agreement and intended to be a complete and exclusive statement of the agreement and
understanding of the parties hereto in respect of the subject matter contained herein. This
Agreement supersedes all prior agreements and understandings between the parties with respect to
such subject matter.

*********

*

14

 

SIGNATURE PAGE

TO

REGISTRATION RIGHTS AGREEMENT

     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their duly
authorized representatives as of the day and year first above written.

	 	 	 	 	 	 	 
	 	 	BAKERS FOOTWEAR GROUP, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:

	 	/s/ Peter A. Edison
 

	 	 
	 

	 	Name:
	 	Peter A. Edison	 	 	 
	 

	 	Title:
	 	Chairman, Chief Executive Officer
and President	 	 
	 

	 	Address:
	 	2815 Scott Avenue	 	 
	 

	 	 	 	St. Louis, Missouri 63103	 	 
	 

	 	Fax Number:
	 	(314) 641-0390	 	 
	 

	 	Email Address:
	 	pedison@bfgstl.com	 	 

 

 

SIGNATURE PAGE

TO

REGISTRATION RIGHTS AGREEMENT

     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their duly
authorized representatives as of the day and year first above written.

	 	 	 	 	 	 	 
	 	 	SECURITYHOLDER:	 	 
	 
	 	 	 	 	 	 
	 	 	Private Equity Management Group, Inc.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:

	 	/s/ Danny Pang
 

	 	 
	 
	 	Name:	 	Danny Pang	 	 
	 

	 	Title:
	 	Chairman, CEO	 	 
	 
	 	 	 	 	 	 
	 

	 	Address:
	 	1 Park Plaza, Suite 550	 	 
	 

	 	 	 	Irvine, California 92614	 	 
	 
	 	 	 	 	 	 
	 

	 	Fax Number:
	 	949-757-0978	 	 
	 

	 	Email Address:
	 	dpang@pemgroup.com	 	 

 

 

EXHIBIT A

Securityholders

Private Equity Management Group, Inc.

1 Park Plaza, Suite 550

Irvine, California 92614

Attention: Peter Paul Mendel, Esq., General Counsel

Fax No.: (949) 757-0978

 

 

Schedule 6(d)

1. Registration rights granted to prior holders of the Company’s subordinated convertible
debentures (2004):

The Company granted certain demand and other registration rights to the prior holders of its
subordinated convertible debentures due 2007 under the terms and conditions of a certain Second
Registration Rights Agreement dated January 2, 2004 by and among the Company and the selling
shareholders (incorporated by reference to Exhibit 4.2.1 of Amendment No. 3 to the Company’s
Registration Statement on Form S-1 (File No. 333-86332), filed with the SEC on January 8, 2004)
(“Second Registration Rights Agreement”).

The Company registered 653,331 shares of common stock pursuant to this agreement. See
Post-Effective Amendment No. 5 on Form S-3 to Registration Statement on Form S-1 (File No.
333-112386) and prospectus dated May 9, 2005 (the “2005 Debenture Shares Registration Statement”).

2. Registration rights granted to representatives of the underwriters in connection with the
Company’s initial public offering:

The Company granted certain demand, piggy-back and other registration rights in connection with the
warrants issued in connection with our initial public offering pursuant to the terms of that
certain Representatives’ Warrant Agreement, dated February 10, 2004 by and among the Company, Ryan
Beck & Co., Inc. and BB&T Capital Markets, a Division of Scott & Stringfellow, Inc. (incorporated
by reference to Exhibit 4.3 to the Company’s Annual Report on Form 10-K for the fiscal year ended
January 3, 2004 filed on April 2, 2004 (File No. 000-50563)) (“Representatives’ Warrant
Agreement”). In connection with the Company’s initial public offering, the Company issued to the
representatives of the underwriters and their designees warrants to purchase up to 216,000 shares
of common stock, subject to anti-dilution adjustments, at an exercise price equal to $12.7875 per
share. Warrants to purchase up to 121,500 shares of common stock remain unexercised. The warrant
holders may exercise the warrants at any time during the four-year period commencing on February
10, 2005. The warrant holders are entitled to receive, at any time and from time to time, shares
of common stock under a cashless exercise provision based on the value of the warrants at the time
of exercise. The Company is obligated to register the shares underlying these warrants and has
other obligations to the representatives of the underwriters pursuant to the Representatives’
Warrant Agreement.

Under the terms of the Representatives’ Warrant Agreement, the Company is required for a period of
five years after February 10, 2004, (i) at the request of a majority of the warrant holders, to use
its best efforts to file one registration statement, at its expense, covering the sale of the
shares of common stock underlying the warrants and (ii) at the request of any holders of warrants,
to file additional registration statements covering the shares of common stock underlying the
warrants at the expense of those holders. The Company is required to maintain the effectiveness of
any demand registration statement for up to nine consecutive months. Except for the registration
rights that it granted to the prior holders of its previously outstanding subordinated convertible
debentures, the Company generally agreed not to make any registered offering of its securities,
with limited exceptions, or to include any other shares on any such demand registration statement,
at any time that the Company is required to maintain the effectiveness of a demand registration
statement under the agreement, without first obtaining the consent of a majority of the holders of
warrants

1

 

and warrant shares that are not then held by the public or by the Company or other excepted persons
who have a relationship with the Company and the Company’s affiliates. See Section 7.4(g) of the
Representatives’ Warrant Agreement. In connection with the Company’s April 8, 2005 private
placement, the majority-in-interest of the warrant holders waived certain of these rights.

In addition, the Company is required to include the shares of common stock underlying the warrants
in any appropriate registration statement that it files during the six years following the
consummation of the Company’s initial public offering. In connection with the April 2005 private
placement, in addition to the registration rights described above, the Company agreed to register
the shares underlying the warrants described above. The Company has registered for resale the
shares underlying these warrants in a registration statement which also relates to the common stock
and warrants issued in our April 8, 2005 private placement although the above described
registration rights still exist. See Amendment No. 1 to Registration Statement on Form S-3 (File
No. 333-124672) and prospectus dated May 25, 2005 and prospectus supplement thereto dated February
21, 2006 (the “2005 PIPE Registration Statement”).

The Company is required to provide 30 days prior written notice to the Holders under the
Representatives’ Warrant Agreement prior to filing any other registration statement and to afford
each of the Representatives and such Holders of the Warrants and/or Warrant Shares the opportunity
to have any such Warrant Shares registered under such registration statement.

3. Registration rights granted in connection with April 2005 private placement
transaction:

In connection with the Company’s private placement in April 2005, the Company issued, to the
investors and the placement agent in that offering, warrants to purchase 250,000 shares and 125,000
shares, respectively, of our common stock, subject to anti-dilution and other adjustments, at an
exercise price of $10.18 per share. The warrants issued in the private placement are generally
exercisable until April 8, 2010. We generally have the right to call the warrants issued in April
2005 to the investors, but not the placement agent, at a redemption price equal to $0.01 per share,
which will likely cause their exercise into shares of common stock, in the event that the closing
bid price of a share of our common stock equals or exceeds $25.00 per share for any 20 consecutive
trading days commencing after the registration statement relating to the shares is declared
effective.

Under the terms of the investor warrants, we are required to exercise such right within one
business day immediately following the end of any such 20 day trading period. The private placement
warrant holders are entitled to receive shares of our common stock under a cashless exercise
provision if the registration statement required by the applicable registration rights agreement
was not declared effective by April 8, 2006, or if sales of such shares cannot be made for any
reason, subject to limited exceptions. The cashless exercise provision of the warrants issued to
the placement agent is generally available to the placement agent and not subject to restrictions.

We were obligated to register the shares issued and underlying the warrants issued in the private
placement and have other obligations to the investors and the placement agent pursuant to the
Registration Rights Agreement dated April 8, 2005 by and among the Company, the Investors named
therein and Ryan Beck & Co., Inc. (incorporated by reference to Exhibit 4.2 to the Company’s
Current Report on Form 8-K (File No. 000-50563), filed on April 13, 2005) (the “2005 Registration
Rights Agreement”). Under the 2005 Registration Rights Agreement, the Company must file a
registration statement upon the written demand of any Investor (as defined therein).

2

 

Also pursuant to the 2005 Registration Rights Agreement, the Company filed, at its expense, a
registration statement with the SEC which was declared effective on May 25, 2005 and covers the
resale of the shares of common stock issued in the April 2005 private placement, the shares of
common stock underlying the warrants issued to the investors and the placement agent in the April
2005 private placement and the 216,000 shares of common stock underlying the warrants granted to
the representatives of the underwriters in connection with our initial public offering. Investor
warrants relating to up to 137,500 shares of our common stock and placement agent warrants relating
to up to 125,000 shares of our common stock are outstanding, respectively.

Although the Company has already registered the shares of common stock sold in connection with the
Company’s 2005 private placement, the warrants issued to the investors and the shares of common
stock issuable upon the exercise of the placement agent warrants, the above described registration
rights still exist.

4. Registration rights granted in connection with June 2007 issuance of the Company’s
subordinated convertible debentures:

Reference is made to that certain Registration Rights Agreement dated June 26, 2007 by and among
the Company and the securityholders named therein (incorporated by reference to Exhibit 4.5 of the
Company’s Current Report on Form 8-K filed with the SEC on July 2, 2007) (the “Debenture
Registration Rights Agreement”).

On June 26, 2007 the Company issued $4 million aggregate principal amount of subordinated
convertible debentures (the “Debentures”) in a private placement. The Debentures are convertible
into shares of the Borrower’s common stock at any time. The initial conversion price is $9.00 per
share, subject to the limitations and adjustments provided in the Debentures. Based on the initial
conversion price, the Debentures are convertible into an aggregate of 444,441 shares of the
Borrower’s common stock, after eliminating fractional shares. The Borrower generally has the
right, but not the obligation, to call the Debentures at any time prior to conversion if the
closing price of the Borrower’s common stock (as adjusted for stock dividends, subdivisions or
combinations) is equal to or above $16.00 per share for each of 20 consecutive trading days and
certain other equity conditions and other conditions are met.

The conversion price, and thus the number of shares into which the Debentures are convertible, is
subject to anti-dilution adjustments relating to stock dividends, or subdivisions or combination of
the Borrower’s capital stock.

In addition, the Debentures contain a weighted average conversion price adjustment generally for
future issuances, at prices less than the then current conversion price, of common stock or
securities convertible into, or options to purchase, shares of common stock, excluding generally
currently outstanding options, warrants or performance shares and any future issuances pursuant to
any properly authorized equity compensation plans. The conversion price of the Debentures will be
affected by the term loan transaction, although the exact impact will not be calculated until after
closing.

The Company also entered into the Debenture Registration Rights Agreement with the debenture
holders in respect of the shares of common stock underlying the Debentures. As described in more
detail below, the Debenture Registration Rights Agreement generally provides for certain demand

3

 

and “piggy-back” registration rights for a period of up to two years after all of the principal
amount of the Debentures cease to be outstanding. The Company also has certain other ongoing
obligations, including providing the debenture holders with specified notices and certain
information, making required SEC filings, indemnifying the Debenture holders for certain
liabilities and generally paying expenses of the Debenture holders. Under the Debenture
Registration Rights Agreement, the Company has the right to suspend use of the registration
statement for not more than 30 consecutive days or for a total of more than 60 days in any 12 month
period in certain circumstances.

Under the Registration Rights Agreement, the Company must file a registration statement upon the
written demand of the holders of a majority of the Registrable Securities (as defined therein)
until two years after all of the principal amount of the Debentures ceases to be outstanding.
Furthermore, the Debenture holders have piggy-back registration rights until two years after all of
the principal amount of the Debentures ceases to be outstanding. The Company is required to
provide 30 days prior written notice to the Debenture holders prior to filing any other
registration statement and to afford each of the securityholders the opportunity to have their
Registrable Securities registered under such registration statement.

4

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00162-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00162-of-00352.parquet"}]]