Document:

Module and Segment Reference

    

     

     

     

     

    GUARANTY
      AND SECURITY AGREEMENT

     

    Dated
      as
      of June 4, 2007

     

     

    among

     

     

    THE
      BOMBAY COMPANY, INC.

     

     

    BBA
      HOLDINGS, LLC

     

     

    BOMBAY
      INTERNATIONAL, INC.

     

     

    THE
      BOMBAY FURNITURE COMPANY, INC.

     

     

    

     

     

    and

     

     

    

     

     

    Each
      Other Grantor

     

     

    From
      Time
      to Time Party Hereto

     

     

    and

     

     

    GB
      MERCHANT PARTNERS, LLC, 

     

     

    as
      Administrative Agent and Collateral Agent

     

     

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

      
        	
                ARTICLE I

              	
                DEFINED
                  TERMS

              	
                1

              
	
                    Section 1.1

              	
                Definitions

              	
                1

              
	
                    Section 1.2

              	
                Certain
                  Other Terms

              	
                3

              
	
                ARTICLE II

              	
                GUARANTY

              	
                3

              
	
                    Section 2.1

              	
                Guaranty

              	
                3

              
	
                    Section 2.2

              	
                Limitation
                  of Guaranty

              	
                3

              
	
                    Section 2.3

              	
                Contribution

              	
                3

              
	
                    Section 2.4

              	
                Authorization;
                  Other Agreements

              	
                4

              
	
                    Section 2.5

              	
                Guaranty
                  Absolute and Unconditional

              	
                4

              
	
                    Section 2.6

              	
                Waivers

              	
                5

              
	
                    Section 2.7

              	
                Reliance

              	
                5

              
	
                ARTICLE III

              	
                GRANT
                  OF SECURITY INTEREST

              	
                6

              
	
                    Section 3.1

              	
                Collateral

              	
                6

              
	
                    Section 3.2

              	
                Grant
                  of Security Interest in Collateral

              	
                7

              
	
                ARTICLE IV

              	
                REPRESENTATIONS
                  AND WARRANTIES

              	
                7

              
	
                    Section 4.1

              	
                Title;
                  No Other Liens

              	
                7

              
	
                    Section 4.2

              	
                Perfection
                  and Priority

              	
                7

              
	
                    Section 4.3

              	
                Reserved

              	
                8

              
	
                    Section 4.4

              	
                Pledged
                  Debt Instruments

              	
                8

              
	
                    Section 4.5

              	
                Instruments
                  and Tangible Chattel Paper Formerly Accounts

              	
                8

              
	
                    Section 4.6

              	
                Commercial
                  Tort Claims

              	
                8

              
	
                    Section 4.7

              	
                Enforcement

              	
                8

              
	
                    Section 4.8

              	
                Representations
                  and Warranties of the Loan Agreement

              	
                8

              
	
                ARTICLE V

              	
                COVENANTS

              	
                8

              
	
                    Section 5.1

              	
                Maintenance
                  of Perfected Security Interest; Further Documentation and
                  Consents

              	
                8

              
	
                    Section 5.2

              	
                Pledged
                  Debt Instruments

              	
                9

              
	
                    Section 5.3

              	
                Accounts

              	
                9

              
	
                    Section 5.4

              	
                Delivery
                  of Instruments and Tangible Chattel Paper and Control of Investment
                  Property, Letter-of-Credit Rights and Electronic Chattel
                  Paper

              	
                10

              
	
                    Section 5.5

              	
                Notices

              	
                10

              
	
                    Section 5.6

              	
                Notice
                  of Commercial Tort Claims

              	
                10

              
	
                    Section 5.7

              	
                Compliance
                  with Loan Agreement

              	
                10

              
	
                ARTICLE VI

              	
                REMEDIAL
                  PROVISIONS

              	
                11

              
	
                    Section 6.1

              	
                UCC
                  and Other Remedies

              	
                11

              
	
                    Section 6.2

              	
                Accounts
                  and Payments in Respect of General Intangibles

              	
                13

              
	
                    Section 6.3

              	
                Pledged
                  Debt Instrument

              	
                14

              
	
                    Section 6.4

              	
                Proceeds
                  to be Turned over to and Held by Administrative Agent

              	
                14

              
	
                    Section 6.5

              	
                Reserved

              	
                15

              
	
                    Section 6.6

              	
                Deficiency

              	
                15

              
	
                ARTICLE VII

              	
                THE
                  ADMINISTRATIVE AGENT

              	
                15

              
	
                    Section 7.1

              	
                Administrative
                  Agent’s Appointment as Attorney-in-Fact

              	
                15

              
	 	 	 

      

    

     

    
      
        
        

      

      
        i

        
          

        

      

      
        
        

      

    

    

      
        	
                    Section 7.2

              	
                Authorization
                  to File Financing Statements

              	
                16

              
	
                    Section 7.3

              	
                Authority
                  of Administrative Agent

              	
                17

              
	
                    Section 7.4

              	
                Duty;
                  Obligations and Liabilities

              	
                17

              
	
                ARTICLE
                  VIII      

              	
                MISCELLANEOUS

              	
                17

              
	
                    Section 8.1

              	
                Reinstatement

              	
                17

              
	
                    Section 8.2

              	
                Release
                  of Collateral

              	
                18

              
	
                    Section 8.3

              	
                Independent
                  Obligations

              	
                18

              
	
                    Section 8.4

              	
                No
                  Waiver by Course of Conduct

              	
                18

              
	
                    Section 8.5

              	
                Amendments
                  in Writing

              	
                19

              
	
                    Section 8.6

              	
                Additional
                  Grantors; Joinder Agreements

              	
                19

              
	
                    Section 8.7

              	
                Notices

              	
                19

              
	
                    Section 8.8

              	
                Successors
                  and Assigns

              	
                19

              
	
                    Section 8.9

              	
                Counterparts

              	
                19

              
	
                    Section 8.10

              	
                Severability

              	
                19

              
	
                    Section 8.11

              	
                Governing
                  Law

              	
                19

              
	
                    Section 8.12

              	
                Waiver
                  of Jury Trial

              	
                19

              

      

    

    
 

    
      
        
        

      

      
        ii

        
          

        

      

      
        
        

      

    

     

    TABLE
      OF
      CONTENTS

     

    ANNEX

     

    Annex 1            Form
      of
      Joinder Agreement

    

     

    

    

    
      
        
        

      

      
        iii

        
          

        

      

      
        
        

      

    

    

    NOTWITHSTANDING
      ANYTHING HEREIN TO THE CONTRARY, THE LIEN AND SECURITY INTEREST GRANTED TO
      THE
      ADMINISTRATIVE AGENT PURSUANT TO THIS AGREEMENT
      AND THE EXERCISE OF ANY RIGHT OR REMEDY BY THE ADMINISTRATIVE
      AGENT
      HEREUNDER ARE SUBJECT TO THE PROVISIONS OF THE INTERCREDITOR AGREEMENT, DATED
      AS
      OF EVEN DATE HEREWITH (AS AMENDED, RESTATED, SUPPLEMENTED OR OTHERWISE MODIFIED
      FROM TIME TO TIME, THE “INTERCREDITOR
      AGREEMENT”),
      BETWEEN GENERAL ELECTRIC CAPITAL CORPORATION, AS FIRST LIEN AGENT, AND THE
      ADMINISTRATIVE AGENT, AS SECOND LIEN AGENT AND CERTAIN OTHER PERSONS PARTY
      OR
      THAT MAY BECOME PARTY THERETO FROM TIME TO TIME. IN THE EVENT OF ANY CONFLICT
      BETWEEN THE TERMS OF THE INTERCREDITOR AGREEMENT AND THIS AGREEMENT, INCLUDING
      WITHOUT LIMITATION, THE RIGHTS OF THE ADMINISTRATIVE AGENT UNDER THIS AGREEMENT
      WITH THOSE OF THE FIRST LIEN AGENT UNDER THE INTERCREDITOR AGREEMENT, THE TERMS
      OF THE INTERCREDITOR AGREEMENT SHALL GOVERN AND CONTROL. WITHOUT
      LIMITING THE GENERALITY OF THE FOREGOING, UNTIL THE PAYMENT-IN-FULL (AS DEFINED
      IN THE INTERCREDITOR AGREEMENT) OF THE OBLIGATIONS UNDER THE FIRST LIEN LOAN
      AGREEMENT, (A) ANY ASSIGNMENT OR TRANSFER OF COLLATERAL HEREUNDER TO THE
      ADMINISTRATIVE AGENT SHALL BE SUBORDINATED TO THE LIEN OF THE FIRST LIEN AGENT
      IN ACCORDANCE WITH THE TERMS OF THE INTERCREDITOR AGREEMENT, (B) ANY DELIVERY
      OF
      ANY COLLATERAL OR ANY OTHER ITEM TO THE ADMINISTRATIVE AGENT REQUIRED HEREUNDER
      SHALL BE TO THE FIRST LIEN AGENT, (C) ANY RIGHT OF THE ADMINISTRATIVE AGENT
      TO
      REQUIRE A GRANTOR TO CAUSE THE ADMINISTRATIVE AGENT TO OBTAIN EXCLUSIVE CONTROL
      OF ANY INVESTMENT PROPERTY, CONTROL OVER LETTER-OF-CREDIT RIGHTS, CONTROL OVER
      ELECTRONIC CHATTEL PAPER, CONTROL OVER ANY DEPOSIT ACCOUNT, OR AN ASSIGNMENT
      OF
      PROCEEDS WITH RESPECT TO A LETTER OF CREDIT, SHALL BE VESTED IN THE FIRST LIEN
      AGENT (BUT SUBJECT TO THE RIGHT OF THE ADMINISTRATIVE AGENT TO ALSO HAVE CONTROL
      OVER ANY DEPOSIT ACCOUNT, SUBJECT IN EACH SUCH CASE TO THE INTERCREDITOR
      AGREEMENT) AND (D) ANY RIGHT OF THE ADMINISTRATIVE AGENT TO ASSERT ANY CLAIMS
      ON
      BEHALF OF A GRANTOR, SOLELY TO THE EXTENT PROVIDED IN THE INTERCREDITOR
      AGREEMENT, SHALL BE VESTED IN THE ADMINISTRATIVE AGENT.

     

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    GUARANTY
      AND SECURITY AGREEMENT, dated
      as
      of May __, 2007, by The Bombay Company, Inc. (the “Parent”)
      and
      each of the other entities listed on the signature pages hereof or that becomes
      a party hereto pursuant to Section 8.6
      (together with the Parent, the “Grantors”),
      in
      favor of GB Merchant Partners, LLC, as administrative agent and collateral
      agent
      (in such capacity, together with its successors and permitted assigns, the
      “Administrative
      Agent”)
      for
      the Lenders and each other Secured Party (each as defined in the Loan Agreement
      referred to below).

     

    W
      I T N E
      S S E T H:

     

    WHEREAS,
      pursuant to the Second Lien Term Loan Agreement dated as of May 4, 2007 (as
      the
      same may be amended, restated, amended and restated, supplemented, replaced
      or
      otherwise modified from time to time, the “Loan
      Agreement”)
      among
      the Borrowers, the Lenders and the Administrative Agent, the Lenders have
      severally agreed to make the Term Loan to the Borrowers upon the terms and
      subject to the conditions set forth therein; 

     

    WHEREAS,
      each
      Grantor (only in its individual capacity as Guarantor, and not in its capacity
      as a Borrower) has agreed to guaranty the Obligations (as defined in the Loan
      Agreement) of the Borrowers;

     

    WHEREAS,
      each Grantor will derive substantial direct and indirect benefits from the
      making of the Term Loan pursuant to the Loan Agreement; and

     

    WHEREAS,
      it is a
      condition precedent to the obligation of the Lenders making the Term Loan
      pursuant to the Loan Agreement that the Grantors shall have executed and
      delivered this Agreement to the Administrative Agent;

     

    NOW,
      THEREFORE,
      in
      consideration of the premises and to induce the Lenders, the Administrative
      Agent to enter into the Loan Agreement and to induce the Lenders to make the
      Term Loan contemplated therein to the Borrowers thereunder, each Grantor hereby
      agrees with the Administrative Agent as follows:

     

    ARTICLE I  

     

    

     

    DEFINED
      TERMS

     

    Section 1.1  Definitions.
      (a)
      Capital
      terms used herein without definition are used as defined in the Loan
      Agreement.

     

    (b)  The
      following terms have the meanings given to them in the UCC and terms used herein
      without definition that are defined in the UCC have the meanings given to them
      in the UCC (such meanings to be equally applicable to both the singular and
      plural forms of the terms defined): “account”,
      “account
      debtor”,
      “chattel
      paper”,
      “commercial
      tort claim”,
      “documents”,
      “deposit
      account”,
      “electronic
      chattel paper”,
      “equipment”,
      “fixtures”
      “general
      intangible”,
      “goods”,
      “instruments”,
      “inventory”,
      “investment
      property”,
      “letter-of-credit
      right”,
      “proceeds”,
      “record”,
      “securities
      account”,
      “security”,
      “software”,
      “supporting
      obligation”
and
      “tangible
      chattel paper”.

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

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

     

    “Agreement”
means
      this Guaranty and Security Agreement.

     

    “Collateral”
has
      the
      meaning specified in Section 3.1.

     

    “Excluded
      Deposit Account”
means
      deposit accounts containing payroll obligations, tax liabilities and third
      party
      funds and not funds related to the Collateral.

     

    “Excluded
      Property”
means
      any Permit, license, contract, instrument or other agreement held by any Grantor
      that prohibits or requires the consent of any Person other than the Borrowers
      and their Affiliates as a condition to the creation by such Grantor of a Lien
      thereon, or any Permit, lease, license contract or other agreement held by
      any
      Grantor to the extent that any Requirement of Law applicable thereto prohibits
      the creation of a Lien thereon, but only to the extent, and for so long as,
      such
      prohibition is not terminated or rendered unenforceable or otherwise deemed
      ineffective by the UCC or any other Requirement of Law; provided,
      however,
      “Excluded
      Property”
shall
      not include any Lease or Leasehold or any proceeds, substitutions or
      replacements of any Lease or Leasehold or Excluded Property (unless such
      proceeds, substitutions or replacements would constitute Excluded
      Property).

     

    “First
      Lien Agent”
has
      the
      meaning set forth in the Intercreditor Agreement.

     

    “Guaranteed
      Obligations”
has
      the
      meaning set forth in Section 2.1.

     

    “Guarantor”
means
      each Grantor only in their capacity as Guarantors and not in their capacities
      as
      Borrowers.

     

    “Guaranty”
means
      the guaranty of the Guaranteed Obligations made by the Guarantors as set forth
      in this Agreement.

     

    “Intercreditor
      Agreement”
has
      the
      meaning set forth in the first page of this Agreement.

     

    “Lease”
means
      any lease or other agreement, no matter how styled or structured, pursuant
      to
      which any Borrower is entitled to the use or occupancy of any
      space.

     

    “Leasehold”
means
      any lease, leasehold estate or interest of any Borrower in each of the
      properties at or upon which any such Borrower conducts business, offers any
      inventory for sale, or maintains any of the Collateral, whether or not for
      retail sale, together with the Borrower’s interest in any of the improvements
      and fixtures located upon or appurtenant to each such estate or interest,
      including, without limitation, any rights of any such Borrower to payment,
      proceeds or value of any kind or nature realized upon the sale, transfer or
      assignment of any such estate or interest, whether or not such sale, assignment
      or transfer occurs during any case commenced under the Bankruptcy
      Code.

     

    “Permit”
means,
      with respect to any Person, any permit, approval, authorization, license,
      registration, certificate, concession, grant, franchise, variance or permission
      from, and any other Contractual Obligations with, any Governmental Authority,
      in
      each case whether or not having the force of law and applicable to or binding
      upon such Person or any of its property or to which such Person or any of its
      property is subject. 

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    “Pledged
      Debt Instruments”
means
      all right, title and interest of any Grantor in instruments or promissory notes
      constituting Collateral and evidencing any Indebtedness owed to such Grantor
      or
      other obligations, and any distribution of property made on, in respect of
      or in
      exchange for the foregoing from time to time, exceeding $100,000 in the
      aggregate including all Indebtedness described on Schedule I
      of the
      Perfection Certificate issued by the obligors named therein. 

     

    “Security
      Cash Collateral Account”
means
      a
      Cash Collateral Account.

     

    “Subsidiary
      Guarantor”
means
      any Guarantor that is a Subsidiary of the Parent.

     

    “UCC”
means
      the Uniform Commercial Code as from time to time in effect in the State of
      New
      York; provided,
      however,
      that,
      in the event that, by reason of mandatory provisions of any applicable
      Requirement of Law, any of the attachment, perfection or priority of the
      Administrative Agent’s or any other Secured Party’s security interest in any
      Collateral is governed by the Uniform Commercial Code of a jurisdiction other
      than the State of New York, “UCC”
shall
      mean the Uniform Commercial Code as in effect in such other jurisdiction for
      purposes of the provisions hereof relating to such attachment, perfection or
      priority and for purposes of the definitions related to or otherwise used in
      such provisions.

     

    Section 1.2  Certain
      Other Terms.
      (a)
      The
      meanings given to terms defined herein shall be equally applicable to both
      the
      singular and plural forms of such terms. The terms “herein”,
      “hereof”
and
      similar terms refer to this Agreement as a whole and not to any particular
      Article, Section or clause in this Agreement.
      References herein to an Annex, Article, Section or clause refer to the
      appropriate Annex to, or Article, Section or clause in this
      Agreement.
      Where
      the context requires, provisions relating to any Collateral when used in
      relation to a Grantor shall refer to such Grantor’s Collateral or any relevant
      part thereof.

     

    (b)  Section
      1.5
      (Interpretation)
      of the
      Loan Agreement is applicable to this Agreement as and to the extent set forth
      therein.

     

    ARTICLE II  

     

     

    GUARANTY

     

    Section 2.1  Guaranty.
      To
      induce the Lenders to make the Loans, each Guarantor hereby, jointly and
      severally, absolutely, unconditionally and irrevocably guarantees, as primary
      obligor and not merely as surety, the full and punctual payment when due,
      whether at stated maturity or earlier, by reason of acceleration, mandatory
      prepayment or otherwise in accordance with any Loan Document, of all the
      Obligations of the Borrowers (including Bombay Canada) whether existing on
      the
      date hereof or hereinafter incurred or created (other than, in the case of
      the
      Guarantors that are Borrowers, the Obligations owing by it in its capacity
      as a
      Borrower) (the “Guaranteed
      Obligations”).
      This
      Guaranty by each Guarantor hereunder constitutes a guaranty of payment and
      not
      of collection.

     

    Section 2.2  Limitation
      of Guaranty.
      Any
      term or provision of this Guaranty or any other Loan Document to the contrary
      notwithstanding, the maximum aggregate amount for which any Subsidiary Guarantor
      shall be liable hereunder shall not exceed the maximum amount for which such
      Subsidiary Guarantor can be liable without rendering this Guaranty or any other
      Loan Document, as it relates to such Subsidiary Guarantor, subject to avoidance
      under applicable Requirements of Law relating to fraudulent conveyance or
      fraudulent 

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        
transfer
        (including the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent
        Transfer Act and Section 548 of title 11 of the United States Code or any
        applicable provisions of comparable Requirements of Law) (collectively,
“Fraudulent
        Transfer Laws”). Any
        analysis
        of the
        provisions of this Guaranty for purposes of Fraudulent Transfer Laws
        shall
        take
        into account the right of contribution established in Section 2.3
        and, for
        purposes of such analysis, give effect to any discharge of intercompany debt
        as
        a result of any payment made under the Guaranty.

    

     

    Section 2.3  Contribution.
      To the
      extent that any Subsidiary Guarantor shall be required hereunder to pay any
      portion of any Guaranteed Obligation exceeding the greater of (a) the
      amount of the economic benefit actually received by such Subsidiary Guarantor
      from the Term Loan and other Obligations and (b) the amount such Subsidiary
      Guarantor would otherwise have paid if such Subsidiary Guarantor had paid the
      aggregate amount of the Guaranteed Obligations (excluding the amount thereof
      repaid by the Borrowers) in the same proportion as such Subsidiary Guarantor’s
      net worth on the date enforcement is sought hereunder bears to the aggregate
      net
      worth of all the Subsidiary Guarantors on such date, then such Subsidiary
      Guarantor shall be reimbursed by such other Subsidiary Guarantors for the amount
      of such excess, pro rata, based on the respective net worth of such other
      Subsidiary Guarantors on such date.

     

    Section 2.4  Authorization;
      Other Agreements.
      The
      Secured Parties are hereby authorized, without notice to or demand upon any
      Guarantor and without discharging or otherwise affecting the obligations of
      any
      Guarantor hereunder and without incurring any liability hereunder, from time
      to
      time, to do each of the following:

     

    (a)  (i)
      modify, amend, supplement or otherwise change, (ii) accelerate or otherwise
      change the time of payment or (iii) waive or otherwise consent to noncompliance
      with, any Guaranteed Obligation or any Loan Document;

     

    (b)  apply
      to
      the Guaranteed Obligations any sums by whomever paid or however realized to
      any
      Guaranteed Obligation in such order as provided in the Loan
      Documents;

     

    (c)  refund
      at
      any time any payment received by any Secured Party in respect of any Guaranteed
      Obligation;

     

    (d)  (i)
      Sell,
      exchange, enforce, waive, substitute, liquidate, terminate, release, abandon,
      fail to perfect, subordinate, accept, surrender, affect, impair or otherwise
      alter or release any Collateral for any Guaranteed Obligation or any other
      guaranty therefor in any manner, (ii) receive, take and hold additional
      Collateral to secure any Guaranteed Obligation, (iii) add, release or substitute
      any one or more other Guarantors, makers or endorsers of any Guaranteed
      Obligation or any part thereof and (iv) otherwise deal in any manner with the
      Borrowers and any other Guarantor, maker or endorser of any Guaranteed
      Obligation or any part thereof; and

     

    (e)  settle,
      release, compromise, collect or otherwise liquidate the Guaranteed
      Obligations.

     

    Section 2.5  Guaranty
      Absolute and Unconditional.
      Each
      Guarantor hereby waives and agrees not to assert any defense, whether arising
      in
      connection with or in respect of any of the following or otherwise, and hereby
      agrees that its obligations under this Guaranty are irrevocable, absolute and
      unconditional and shall not be discharged as a result of or 

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        
otherwise
        affected by any of the following (which may not be pleaded and evidence of
        which
        may not be introduced in any proceeding with respect to this Guaranty, in
        each
        case except as otherwise agreed in writing by the Administrative
        Agent):

    

     

    (a)  the
      invalidity or unenforceability of any obligation of the Borrowers or any other
      Guarantor under any Loan Document or any other agreement or instrument relating
      thereto (including any amendment, consent or waiver thereto), or any security
      for, or other guaranty of, any Guaranteed Obligation or any part thereof, or
      the
      lack of perfection or continuing perfection or failure of priority of any
      security for the Guaranteed Obligations or any part thereof;

     

    (b)  the
      absence of (i) any attempt to collect any Guaranteed Obligation or any part
      thereof from the Borrowers or any other Guarantor or other action to enforce
      the
      same or (ii) any action to enforce any Loan Document or any Lien
      thereunder;

     

    (c)  the
      failure by any Person to take any steps to perfect and maintain any Lien on,
      or
      to preserve any rights with respect to, any Collateral;

     

    (d)  any
      workout, insolvency, bankruptcy proceeding, reorganization, arrangement,
      liquidation or dissolution by or against the Borrowers, any other Guarantor
      or
      any of the Borrowers’ other Subsidiaries or any procedure, agreement, order,
      stipulation, election, action or omission thereunder, including any discharge
      or
      disallowance of, or bar or stay against collecting, any Guaranteed Obligation
      (or any interest thereon) in or as a result of any such proceeding;

     

    (e)  any
      foreclosure, whether or not through judicial sale, and any other Sale of any
      Collateral or any election following the occurrence of an Event of Default
      by
      any Secured Party to proceed separately against any Collateral in accordance
      with such Secured Party’s rights under any applicable Requirement of Law;
      or

     

    (f)  any
      other
      defense, setoff, counterclaim or any other circumstance that might otherwise
      constitute a legal or equitable discharge of the Borrowers, any other Guarantor
      or any of the Borrowers’ other Subsidiaries, in each case other than the payment
      in full of the Guaranteed Obligations.

     

    Section 2.6  Waivers.
      Each
      Guarantor hereby unconditionally and irrevocably waives and agrees not to assert
      any claim, defense, setoff or counterclaim based on diligence, promptness,
      presentment, requirements for any demand or notice hereunder including any
      of the following: (a) any demand for payment or performance and protest and
      notice of protest, (b) any notice of acceptance, (c) any presentment, demand,
      protest or further notice or other requirements of any kind with respect to
      any
      Guaranteed Obligation (including any accrued but unpaid interest thereon)
      becoming immediately due and payable and (d) any other notice in respect of
      any
      Guaranteed Obligation or any part thereof, and any defense arising by reason
      of
      any disability or other defense of the Borrowers or any other Guarantor. Each
      Guarantor further unconditionally and irrevocably agrees not to (x) enforce
      or
      otherwise exercise any right of subrogation or any right of reimbursement or
      contribution or similar right against the Borrowers or any other Guarantor
      by
      reason of any Loan Document or any payment made thereunder or (y) assert any
      claim, defense, setoff or counterclaim it may have against any other Loan Party
      or set off any of its obligations to such other Loan Party against obligations
      of such Loan Party to such Guarantor. No obligation of any Guarantor hereunder
      shall be discharged other than by complete performance.

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

    Section 2.7  Reliance.
      Each
      Guarantor hereby assumes responsibility for keeping itself informed of the
      financial condition of the Borrowers, each other Guarantor and any other
      guarantor, maker or endorser of any Guaranteed Obligation or any part thereof,
      and of all other circumstances bearing upon the risk of nonpayment of any
      Guaranteed Obligation or any part thereof that diligent inquiry would reveal,
      and each Guarantor hereby agrees that no Secured Party shall have any duty
      to
      advise any Guarantor of information known to it regarding such condition or
      any
      such circumstances. In the event any Secured Party, in its sole discretion,
      undertakes at any time or from time to time to provide any such information
      to
      any Guarantor, such Secured Party shall be under no obligation to
      (a) undertake any investigation not a part of its regular business routine,
      (b) disclose any information that such Secured Party, pursuant to accepted
      or reasonable commercial finance or banking practices, wishes to maintain
      confidential or (c) make any future disclosures of such information or any
      other information to any Guarantor.

     

    ARTICLE III  

     

    GRANT
      OF
      SECURITY INTEREST

     

    Section 3.1  Collateral.
      For the
      purposes of this Agreement, all personal property, tangible and intangible,
      now
      owned or at any time hereafter acquired by a Grantor or in which a Grantor
      now
      has or at any time in the future may acquire any right, title or interests
      is
      collectively referred to as the “Collateral”,
      which
      term shall include, without limitation, all of the following:

     

    (a)  all
      accounts;

     

    (b)  all
      inventory, equipment and other goods; 

     

    (c)  all
      fixtures;

     

    (d)  all
      documents;

     

    (e)  all
      general intangibles;

     

    (f)  all
      securities accounts and deposit accounts (other than Excluded Deposit Accounts),
      including Store Accounts, Concentration Accounts, the Cash Collateral Account
      and all deposits and credits therein;

     

    (g)  all
      investment property;

     

    (h)  all
      software;

     

    (i)  all
      letters of credit, letter-of-credit rights, instruments, promissory notes,
      drafts and chattel paper (including electronic chattel paper and tangible
      chattel paper);

     

    (j)  all
      supporting obligations with respect to any of the foregoing;

     

    (k)  all
      books, records, and information relating to any of the foregoing and/or to
      the
      operation of any Grantor’s business, and all rights of access to such books,

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        
records,
        and information, and all property in which such books, records, and information
        are stored, recorded and maintained;

    

     

    (l)  all
      commercial tort claims;

     

    (m)  all
      money
      or other assets of such Grantor, including without limitation all money and
      assets of such Grantor held by any Secured Party or by the First Lien Agent
      for
      the benefit of the Secured Parties, including all property of every description,
      in the custody of or in transit to such Secured Party for any purpose, including
      safekeeping, collection or pledge, for the account of such Grantor or as to
      which such Grantor may have any right or power, including but not limited to
      cash; 

     

    (n)  all
      Leases and Leaseholds; and

     

    (o)  to
      the
      extent not otherwise included, all proceeds of the foregoing including the
      proceeds of insurance, all property or money resulting from the Sale of any
      of
      the foregoing and all other rights to payment not included in the
      foregoing;

     

    provided, however, that
      “Collateral”
shall
      not include any Excluded Property; and provided,
      further,
      that if
      and when any property shall cease to be Excluded Property, such property shall
      be deemed at all times from and after the date hereof to constitute
      Collateral.

     

    Section 3.2  Grant
      of Security Interest in Collateral.
      Each
      Grantor, as collateral security for the prompt and complete payment and
      performance when due (whether at stated maturity, by acceleration or otherwise)
      of the Obligations of such Grantor (the “Secured
      Obligations”),
      hereby mortgages, pledges and hypothecates to the Administrative Agent for
      the
      benefit of the Secured Parties, and grants to the Administrative Agent for
      the
      benefit of the Secured Parties a Lien on and security interest in, all of its
      right, title and interest in, to and under the Collateral of such Grantor;
      provided,
      however,
      that,
      if and when any property that at any time constituted Excluded Property becomes
      Collateral, the Administrative Agent shall have, and at all times from and
      after
      the date hereof be deemed to have had, a security interest in such
      property.

     

    ARTICLE IV  

     

     

    REPRESENTATIONS
      AND WARRANTIES

     

    To
      induce
      the Lenders and the Administrative Agent to enter into the Loan Documents,
      each
      Grantor hereby represents and warrants, in all material respects, to each of
      the
      following to the Administrative Agent, the Lenders and the other Secured
      Parties:

     

    Section 4.1  Title;
      No Other Liens.
      Such
      Grantor (a) is the record and beneficial owner of the Collateral pledged by
      it
      hereunder constituting instruments and investment property and (b) has rights
      in
      or the power to transfer each other item of Collateral in which a Lien is
      granted by it hereunder, free and clear of any other Lien (except for Permitted
      Liens).

     

    Section 4.2  Perfection
      and Priority.
      The
      security interest granted pursuant to this Agreement constitutes a valid and
      continuing perfected security interest in favor of the Administrative Agent
      in
      all Collateral subject, for the following Collateral, to the occurrence of
      the
      following: (i) in the case of all Collateral in which a security interest may
      be
      perfected by filing a financing statement under the UCC, the completion of
      the
      filings and other actions specified in Section
      12
      of the
      Perfection Certificate (which, in the case of all filings and 

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        
other
        documents referred to on such Perfection Certificate, have been delivered
        to the
        Administrative Agent in completed and duly authorized form), (ii) with respect
        to any deposit account, the execution of Control Agreements, (iii)  in the
        case of electronic chattel paper, the completion of all steps necessary to
        grant
        control to the Administrative Agent over such electronic chattel paper, and
        (iv)
        in the case of Leases and Leaseholds compliance with applicable state law
        for
        the perfection of such Lien. Such security interest shall be prior to all
        other
        Liens on the Collateral except for Permitted Liens (as defined in the Loan
        Agreement) having priority over the Administrative Agent’s Lien by operation of
        law or unless otherwise permitted by any Loan Document upon (i) in the case
        of
        all Pledged Debt Instruments, the delivery thereof to the Administrative
        Agent
        of such Pledged Debt Instruments consisting of instruments, properly endorsed
        for transfer to the Administrative Agent or in blank, (ii) in the case of
        all
        other instruments and tangible chattel paper that are not Pledged Debt
        Instruments, the delivery thereof to the Administrative Agent of such
        instruments and tangible chattel paper.
        Except
        as set forth in this Section 4.2,
        all
        actions by each Grantor necessary or desirable to protect and perfect the
        Lien
        granted hereunder on the Collateral have been duly taken; it being understood
        that Administrative Agent will not seek to perfect its Lien in Leases and
        Leaseholds absent the occurrence of an Event of Default and, following the
        occurrence and during the continuance of an Event of Default, and ________
        requested by the Administrative Agent, Borrowers shall endeavor to take such
        action as may reasonably be necessary to perfect the Administrative Agent’s Lien
        in Leases and Leaseholds.

    

     

    Section 4.3  Reserved.

     

    Section 4.4  Pledged
      Debt Instruments.
      As
      of the
      Closing Date, all Pledged Debt Instruments, if any, to the extent they exceed
      $100,000 in the aggregate, have been delivered to the Agent.

     

    Section 4.5  Instruments
      and Tangible Chattel Paper Formerly Accounts.
      No
      amount payable to such Grantor under or in connection with any account is
      evidenced by any instrument or tangible chattel paper that has not been
      delivered to the First Lien Agent], properly endorsed for transfer, to the
      extent delivery is required by Section 5.4(a).

     

    Section 4.6  Commercial
      Tort Claims.
      The
      only commercial tort claims of any Grantor existing on the date hereof and
      constituting Collateral (regardless of whether the amount, defendant or other
      material facts can be determined and regardless of whether such commercial
      tort
      claim has been asserted, threatened or has otherwise been made known to the
      obligee thereof or whether litigation has been commenced for such claims) are
      those listed on the Perfection Certificate, which sets forth such information
      separately for each Grantor.

     

    Section 4.7  Enforcement.
      No
      Permit, notice to or filing with any Governmental Authority or any other Person
      or any consent from any Person is required for the exercise by the
      Administrative Agent of its rights provided for in this Agreement or the
      enforcement of remedies in respect of the Collateral pursuant to this Agreement,
      including the transfer of any Collateral, except any approvals that may be
      required to be obtained from any bailees or landlords to collect the
      Collateral.

     

    Section 4.8  Representations
      and Warranties of the Loan Agreement.
      The
      representations and warranties as to such Grantor and its Subsidiaries made
      by
      the Borrowers in 

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        
Article
        IV
        of the
        Loan Agreement are true and correct in all material respects on each date
        as
        required by Section
        3.2(b)
        of the
        Loan Agreement.

    

     

     
      ARTICLE V  

     

    

    COVENANTS

     

    Each
      Grantor agrees with the Administrative Agent to the following, as long as any
      Obligation remains outstanding and, in each case, unless the Required Lenders
      otherwise consent in writing:

     

    Section 5.1  Maintenance
      of Perfected Security Interest; Further Documentation and
      Consents.
      (a) Generally.
      Such
      Grantor shall (i) not use or permit any Collateral to be used unlawfully or
      in
      violation of any provision of any Loan Document, any material Requirement of
      Law
      or any policy of insurance covering the Collateral and (ii) not enter into
      any
      Contractual Obligation or undertaking restricting the right or ability of such
      Grantor or the Administrative Agent to Sell any Collateral (except for those
      set
      forth in the Loan Documents and the First Lien Loan Documents).

     

    (b)  Such
      Grantor shall maintain the security interest created by this Agreement as a
      perfected security interest having at least the priority described in
Section 4.2
      and
      shall defend such security interest and such priority against the claims and
      demands of all Persons.

     

    (c)  At
      any
      time and from time to time, upon the written request of the Administrative
      Agent, such Grantor shall, for the purpose of obtaining or preserving the full
      benefits of this Agreement and of the rights and powers herein granted, (i)
      promptly and duly execute and deliver, and have recorded, such further
      documents, including an authorization to file (or, as applicable, the filing)
      of
      any financing statement or amendment under the UCC (or other filings under
      similar Requirements of Law) in effect in any jurisdiction with respect to
      the
      security interest created hereby and (ii) take such further action as the
      Administrative Agent may reasonably request, including (A) using its reasonable
      commercial efforts to secure all approvals necessary or appropriate for the
      assignment to or for the benefit of the Administrative Agent of any Contractual
      Obligation, held by such Grantor and to enforce the security interests granted
      hereunder and (B) executing and delivering any Control Agreements in form and
      substance acceptable to the Administrative Agent with respect to deposit
      accounts and securities accounts required by the Loan Agreement.

     

    (d) Such
      Grantor shall not authorize or permit any assignment, pledge, Lien, security
      interest, encumbrance, restriction or any hypothecation of any Lease or
      Leasehold, except as shall be permitted under the Loan Agreement.

     

    Section 5.2  Pledged
      Debt
      Instruments.
      (a) Delivery
      of Pledged Debt Instruments.
      Such
      Grantor shall deliver to the Administrative Agent, in suitable form for transfer
      and in form and substance satisfactory to the Administrative Agent, all Pledged
      Debt Instruments to the extent they exceed $100,000 in the
      aggregate.

     

    (b)  Event
      of Default.
      During
      the continuance of an Event of Default, the Administrative Agent shall have
      the
      right, at any time in its discretion and without notice  

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        
to
        the
        Grantor, to exchange any Pledged Debt Instrument for instruments of smaller
        or
        larger denominations.

    

     

    (c)  Cash
      Distributions with respect to Pledged Debt Instrument.
      Except
      as provided in Article VI,
      such
      Grantor shall be entitled to receive all cash distributions paid in respect
      of
      the Pledged Debt Instruments.

     

    Section 5.3  Accounts.
      (a)
      Such
      Grantor shall not, other than in the ordinary course of business, (i) grant
      any
      extension of the time of payment of any account, (ii) compromise or settle
      any
      account for less than the full amount thereof, (iii) release, wholly or
      partially, any Person liable for the payment of any account, (iv) allow any
      credit or discount on any account or (v) amend, supplement or modify any account
      in any manner that could adversely affect the value thereof.

     

    (b)  The
      Administrative Agent shall have the right to make test verifications of the
      Accounts in any manner and through any medium that it reasonably considers
      advisable, and such Grantor shall furnish all such assistance and information
      as
      the Administrative Agent may reasonably require in connection therewith. At
      any
      time and from time to time, upon the Administrative Agent’s request, such
      Grantor shall cause independent public accountants or others satisfactory to
      the
      Administrative Agent to furnish to the Administrative Agent reports showing
      reconciliations, aging and test verifications of, and trial balances for, the
      accounts; provided,
      however,
      that
      unless a Default shall be continuing, the Administrative Agent shall request
      no
      more than two such reports during any calendar year.

     

    Section 5.4  Delivery
      of Instruments and Tangible Chattel Paper and Control of Investment Property,
      Letter-of-Credit Rights and Electronic Chattel Paper.
      (a)
      If any
      amount in excess of $100,000 payable under or in connection with any Collateral
      owned by such Grantor shall be or become evidenced by an instrument or tangible
      chattel paper other than such instrument delivered in accordance with
Section 5.2(a)
      and in
      the possession of the Administrative Agent, such Grantor shall mark all such
      instruments and tangible chattel paper with the following legend: “This writing
      and the obligations evidenced or secured hereby are subject to the security
      interest of GB Merchant Partners, LLC, as Administrative Agent” and, at the
      request of the Administrative Agent, shall immediately deliver such instrument
      or tangible chattel paper to the Administrative Agent, duly indorsed in a manner
      satisfactory to the Administrative Agent.

     

    (b)  Such
      Grantor shall not grant “control” (within the meaning of such term under Article
      9-106 of the UCC) over any investment property or deposit account to any Person
      other than the Administrative Agent, except as otherwise contemplated by the
      Intercreditor Agreement.

     

    (c)  If
      any
      amount in excess of $100,000 payable under or in connection with any Collateral
      owned by such Grantor shall be or become evidenced by electronic chattel paper,
      such Grantor shall take all steps necessary to grant the Administrative Agent
      control of all such electronic chattel paper for the purposes of Section 9-105
      of the UCC (or any similar section under any equivalent UCC) and all
      "transferable records" as defined in each of the Uniform Electronic Transactions
      Act and the Electronic Signatures in Global and National Commerce
      Act.

     

    Section 5.5  Notices.
      Such
      Grantor shall promptly notify the Administrative Agent in writing of its
      acquisition of any interest hereafter in property constituting Collateral

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        
that
        is
        of a type where a security interest or lien must be or may be registered,
        recorded or filed under, or notice thereof given under, any federal statute
        or
        regulation.

    

     

    Section 5.6  Notice
      of Commercial Tort Claims.
      Such
      Grantor agrees that, if it shall acquire any interest in any commercial tort
      claim that constitutes Collateral (whether from another Person or because such
      commercial tort claim shall have come into existence constituting Collateral),
      (i) such Grantor shall, immediately upon such acquisition, deliver to the
      Administrative Agent, in each case in form and substance satisfactory to the
      Administrative Agent, a notice of the existence and nature of such commercial
      tort claim and a supplement to Schedule 9
      of the
      Perfection Certificate containing a specific description of such commercial
      tort
      claim, (ii) Section 3.1
      shall
      apply to such commercial tort claim and (iii) such Grantor shall execute and
      deliver to the Administrative Agent, in each case in form and substance
      satisfactory to the Administrative Agent, any document, and take all other
      action, deemed by the Administrative Agent to be reasonably necessary or
      appropriate for the Administrative Agent to obtain, on behalf of the Lenders,
      a
      perfected security interest having at least the priority set forth in
Section 4.2
      in all
      such commercial tort claims. Any supplement to Schedule 9
      of the
      Perfection Certificate delivered pursuant to this Section 5.6
      shall,
      after the receipt thereof by the Administrative Agent, become part of the
      Perfection Certificate for all purposes hereunder other than in respect of
      representations and warranties made prior to the date of such
      receipt.

     

    Section 5.7  Compliance
      with Loan Agreement.
      Such
      Grantor agrees to comply with all covenants and other provisions applicable
      to
      it under the Loan Agreement, including Sections
      2.17,
      10.3
      and
10.4
      of the
      Loan Agreement and agrees to the same submission to jurisdiction as that agreed
      to by the Borrowers in the Loan Agreement.

     

    ARTICLE VI  

     

    

     

    REMEDIAL
      PROVISIONS

     

    Section 6.1  UCC
      and Other Remedies. (a) UCC
      Remedies.
      During
      the continuance of an Event of Default, the Administrative Agent may exercise,
      in addition to all other rights and remedies granted to it in this Agreement
      and
      in any other instrument or agreement securing, evidencing or relating to any
      Secured Obligation, all rights and remedies of a secured party under the UCC
      or
      any other applicable law.

     

    (b)  Disposition
      of Collateral.
      Without
      limiting the generality of the foregoing, the Administrative Agent may, without
      demand of performance or other demand, presentment, protest, advertisement
      or
      notice of any kind (except any notice required by law referred to below) to
      or
      upon any Grantor or any other Person (all and each of which demands, defenses,
      advertisements and notices are hereby waived), during the continuance of any
      Event of Default (personally or through its agents or attorneys), (i) enter
      upon
      the premises where any Collateral is located, without any obligation to pay
      rent, through self-help, without judicial process, without first obtaining
      a
      final judgment or giving any Grantor or any other Person notice or opportunity
      for a hearing on the Administrative Agent's claim or action, (ii) collect,
      receive, appropriate and realize upon any Collateral and (iii) Sell, grant
      option or options to purchase and deliver any Collateral (enter into Contractual
      Obligations to do any of the foregoing), in one or more parcels at public or
      private sale or sales, at any exchange, broker’s board or office of any Secured
      Party or elsewhere upon such terms and conditions as it may deem advisable
      and
      at such prices as it may deem best, for cash or on 

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        
credit
        or
        for future delivery without assumption of any credit risk. The Administrative
        Agent shall have the right, upon any such public sale or sales and, to the
        extent permitted by the UCC and other applicable Requirements of Law, upon
        any
        such private sale, to purchase the whole or any part of the Collateral so
        sold,
        free of any right or equity of redemption of any Grantor, which right or
        equity
        is hereby waived and released.

    

     

    (c)  Management
      of the Collateral.
      Each
      Grantor further agrees, that, during the continuance of any Event of Default,
      (i) at the Administrative Agent’s request, it shall assemble the Collateral and
      make it available to the Administrative Agent at places that the Administrative
      Agent shall reasonably select, whether at such Grantor’s premises or elsewhere,
      (ii) without limiting the foregoing, the Administrative Agent also has the
      right
      to require that each Grantor store and keep any Collateral pending further
      action by the Administrative Agent and, while any such Collateral is so stored
      or kept, provide such guards and maintenance services as shall be necessary
      to
      protect the same and to preserve and maintain such Collateral in good condition,
      (iii) until the Administrative Agent is able to Sell any Collateral, the
      Administrative Agent shall have the right to hold or use such Collateral to
      the
      extent that it deems appropriate for the purpose of preserving the Collateral
      or
      its value or for any other purpose deemed appropriate by the Administrative
      Agent and (iv) the Administrative Agent may, if it so elects, seek the
      appointment of a receiver or keeper to take possession of any Collateral and
      to
      enforce any of the Administrative Agent's remedies (for the benefit of the
      Secured Parties), with respect to such appointment without prior notice or
      hearing as to such appointment. The Administrative Agent shall not have any
      obligation to any Grantor to maintain or preserve the rights of any Grantor
      as
      against third parties with respect to any Collateral while such Collateral
      is in
      the possession of the Administrative Agent.

     

    (d)  Application
      of Proceeds.
      The
      Administrative Agent shall apply the cash proceeds of any action taken by it
      pursuant to this Section 6.1,
      after
      deducting all reasonable costs and expenses of every kind incurred in connection
      therewith or incidental to the care or safekeeping of any Collateral or in
      any
      way relating to the Collateral or the rights of the Administrative Agent and
      any
      other Secured Party hereunder, including reasonable attorneys’ fees and
      disbursements, to the payment in whole or in part of the Secured Obligations,
      as
      set forth in the Loan Agreement, and only after such application and after
      the
      payment by the Administrative Agent of any other amount required by any
      Requirement of Law, need the Administrative Agent account for the surplus,
      if
      any, to any Grantor.

     

    (e)  Direct
      Obligation.
      Neither
      the Administrative Agent nor any other Secured Party shall be required to make
      any demand upon, or pursue or exhaust any right or remedy against, any Grantor,
      any other Loan Party or any other Person with respect to the payment of the
      Obligations or to pursue or exhaust any right or remedy with respect to any
      Collateral therefor or any direct or indirect guaranty thereof. All of the
      rights and remedies of the Administrative Agent and any other Secured Party
      under any Loan Document shall be cumulative, may be exercised individually
      or
      concurrently and not exclusive of any other rights or remedies provided by
      any
      Requirement of Law. To the extent it may lawfully do so, each Grantor absolutely
      and irrevocably waives and relinquishes the benefit and advantage of, and
      covenants not to assert against the Administrative Agent or any Lender, any
      valuation, stay, appraisement, extension, redemption or similar laws and any
      and
      all rights or defenses it may have as a surety, now or hereafter existing,
      arising out of the exercise by them of any rights hereunder. If any notice
      of a
      proposed sale or other disposition of any Collateral shall be required by law,
      such notice shall be deemed reasonable and proper if given at least 10 days
      before such sale or other disposition.

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

                  

      (f)  Commercially
        Reasonable.
        To the
        extent that applicable Requirements of Law impose duties on the Administrative
        Agent to exercise remedies in a commercially reasonable manner, each Grantor
        acknowledges and agrees that it is not commercially unreasonable for the
        Administrative Agent to do any of the following:

       

    

    (i)  fail
      to
      incur significant costs, expenses or other Liabilities reasonably deemed as
      such
      by the Administrative Agent to prepare any Collateral for disposition or
      otherwise to complete raw material or work in process into finished goods or
      other finished products for disposition;

     

    (ii)  fail
      to
      obtain Permits, or other consents, for access to any Collateral to Sell or
      for
      the collection or Sale of any Collateral, or, if not required by other
      Requirements of Law, fail to obtain Permits or other consents for the collection
      or disposition of any Collateral;

     

    (iii)  fail
      to
      exercise remedies against account debtors or other Persons obligated on any
      Collateral or to remove Liens on any Collateral or to remove any adverse claims
      against any Collateral;

     

    (iv)  advertise
      dispositions of any Collateral through publications or media of general
      circulation, whether or not such Collateral is of a specialized nature or to
      contact other Persons, whether or not in the same business as any Grantor,
      for
      expressions of interest in acquiring any such Collateral;

     

    (v)  exercise
      collection remedies against account debtors and other Persons obligated on
      any
      Collateral, directly or through the use of collection agencies or other
      collection specialists, hire one or more professional auctioneers to assist
      in
      the disposition of any Collateral, whether or not such Collateral is of a
      specialized nature or, to the extent deemed appropriate by the Administrative
      Agent, obtain the services of other brokers, investment bankers, consultants
      and
      other professionals to assist the Administrative Agent in the collection or
      disposition of any Collateral, or utilize Internet sites that provide for the
      auction of assets of the types included in the Collateral or that have the
      reasonable capacity of doing so, or that match buyers and sellers of assets
      to
      dispose of any Collateral;

     

    (vi)  dispose
      of assets in wholesale rather than retail markets;

     

    (vii)  disclaim
      disposition warranties, such as title, possession or quiet enjoyment;
      or

     

    (viii)  purchase
      insurance or credit enhancements to insure the Administrative Agent against
      risks of loss, collection or disposition of any Collateral or to provide to
      the
      Administrative Agent a guaranteed return from the collection or disposition
      of
      any Collateral.

     

    Each
      Grantor acknowledges that the purpose of this Section 6.1
      is to
      provide a non-exhaustive list of actions or omissions that are commercially
      reasonable when exercising remedies against any Collateral and that other
      actions or omissions by the Secured Parties shall not be deemed commercially
      unreasonable solely on account of not being indicated in this 

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

    Section 6.1.
      Without
      limitation upon the foregoing, nothing contained in this Section 6.1
      shall be
      construed to grant any rights to any Grantor or to impose any duties on the
      Administrative Agent that would not have been granted or imposed by this
      Agreement or by applicable Requirements of Law in the absence of this
Section 6.1.

     

    Section 6.2  Accounts
      and Payments in Respect of General Intangibles.
      (a)
      In
      addition to, and not in substitution for, any similar requirement in the Loan
      Agreement, if required by the Administrative Agent at any time during the
      continuance of an Event of Default, any payment of accounts or payment in
      respect of general intangibles constituting Collateral, when collected by any
      Grantor, shall be promptly (and, in any event, within 2 Business Days) deposited
      by such Grantor in the exact form received, duly indorsed by such Grantor to
      the
      Administrative Agent, in a Security Cash Collateral Account, subject to
      withdrawal by the Administrative Agent as provided in Section 6.4.
      Until
      so turned over, such payment shall be held by such Grantor in trust for the
      Administrative Agent, segregated from other funds of such Grantor. Each such
      deposit of proceeds of accounts and payments in respect of general intangibles
      shall be accompanied by a report identifying in reasonable detail the nature
      and
      source of the payments included in the deposit.

     

    (b)  At
      any
      time during the continuance of an Event of Default:

     

    (i)  each
      Grantor shall, upon the Administrative Agent’s request, deliver to the
      Administrative Agent all original and other documents evidencing, and relating
      to, the Contractual Obligations and transactions that gave rise to any account
      or any payment in respect of general intangibles, including all original orders,
      invoices and shipping receipts and notify account debtors that the accounts
      or
      general intangibles have been collaterally assigned to the Administrative Agent
      and that payments in respect thereof shall be made directly to the
      Administrative Agent;

     

    (ii)  the
      Administrative Agent may, without notice, at any time during the continuance
      of
      an Event of Default, limit or terminate the authority of a Grantor to collect
      its accounts or amounts due under general intangibles or any thereof and, in
      its
      own name or in the name of others, communicate with account debtors to verify
      with them to the Administrative Agent’s satisfaction the existence, amount and
      terms of any account or amounts due under any general intangible. In addition,
      the Administrative Agent may at any time enforce such Grantor’s rights against
      such account debtors and obligors of general intangibles; and

     

    (iii)  each
      Grantor shall take all actions, deliver all documents and provide all
      information necessary or reasonably requested by the Administrative Agent to
      ensure any Internet Domain Name is registered.

     

    (c)  Anything
      herein to the contrary notwithstanding, each Grantor shall remain liable under
      each account and each payment in respect of general intangibles to observe
      and
      perform all the conditions and obligations to be observed and performed by
      it
      thereunder, all in accordance with the terms of any agreement giving rise
      thereto. No Secured Party shall have any obligation or liability under any
      agreement giving rise to an account or a payment in respect of a general
      intangible by reason of or arising out of any Loan Document or the receipt
      by
      any Secured Party of any payment relating thereto, nor shall any Secured Party
      be obligated in any manner to perform any obligation of any Grantor under or
      pursuant to any agreement giving rise to an account or a payment in respect
      of a
      general intangible, to make any payment, to make any inquiry as to the nature
      or
      the sufficiency of 

     

    
      
        
        

      

      
        14

        
          

        

      

      
        
        
any
        payment received by it or as to the sufficiency of any performance by any
        party
        thereunder, to present or file any claim, to take any action to enforce any
        performance or to collect the payment of any amounts that may have been assigned
        to it or to which it may be entitled at any time or times.

    

     

    Section 6.3  Pledged
      Debt
      Instrument.
      Each
      Grantor hereby expressly irrevocably authorizes and instructs, without any
      further instructions from such Grantor, each issuer of any Pledged Debt
      Instrument pledged hereunder by such Grantor to (i) comply with any instruction
      received by it from the Administrative Agent in writing that states that an
      Event of Default is continuing and is otherwise in accordance with the terms
      of
      this Agreement and each Grantor agrees that such issuer shall be fully protected
      from Liabilities to such Grantor in so complying and (ii) unless otherwise
      expressly permitted hereby, make any payment with respect to the Pledged Debt
      Instrument directly to the Administrative Agent.

     

    Section 6.4  Proceeds
      to be Turned over to and Held by Administrative Agent.
      Unless
      otherwise expressly provided in the Loan Agreement or this Security Agreement,
      upon an Event of Default all proceeds of any Collateral received by any Grantor
      hereunder in cash or Cash Equivalents shall be held by such Grantor in trust
      for
      the Administrative Agent and the other Secured Parties, segregated from other
      funds of such Grantor, and shall, promptly upon receipt by any Grantor, be
      turned over to the Administrative Agent in the exact form received (with any
      necessary endorsement). All such proceeds of Collateral and any other proceeds
      of any Collateral received by the Administrative Agent in cash or Cash
      Equivalents shall be held by the Administrative Agent in a Security Cash
      Collateral Account. All proceeds being held by the Administrative Agent in
      a
      Security Cash Collateral Account (or by such Grantor in trust for the
      Administrative Agent) shall continue to be held as collateral security for
      the
      Secured Obligations and shall not constitute payment thereof until applied
      as
      provided in the Loan Agreement.
      The
      proceeding provisions of this Section are subject to the Intercreditor
      Agreement, and in the event of any conflict the provisions of the Intercreditor
      Agreement shall control.

     

    Section 6.5  Reserved

     

    Section 6.6  Deficiency.
      Each
      Grantor shall remain liable for any deficiency if the proceeds of any sale
      or
      other disposition of any Collateral are insufficient to pay the Secured
      Obligations and the fees and disbursements of any attorney employed by the
      Administrative Agent or any other Secured Party to collect such
      deficiency.

     

    ARTICLE VII  

     

    

     

    THE
      ADMINISTRATIVE AGENT

     

    Section 7.1  Administrative
      Agent’s Appointment as Attorney-in-Fact.
      (a)
      Each
      Grantor hereby irrevocably constitutes and appoints the Administrative Agent
      and
      any Related Person thereof, with full power of substitution, as its true and
      lawful attorney-in-fact with full irrevocable power and authority in the place
      and stead of such Grantor and in the name of such Grantor or in its own name,
      for the purpose of carrying out the terms of the Loan Documents, to, during
      the
      continuance of an Event of Default, take any appropriate action and to execute
      any document or instrument that may be necessary or desirable to accomplish
      the
      purposes of the Loan Documents, and, without limiting the generality of the
      foregoing, each Grantor hereby gives the Administrative Agent and its Related
      Persons the power and right, on behalf of such Grantor, without notice to or
      assent by such Grantor, to do any of the following when an Event of Default
      shall be continuing:

     

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

    (i)  in
      the
      name of such Grantor, in its own name or otherwise, take possession of and
      indorse and collect any check, draft, note, acceptance or other instrument
      for
      the payment of moneys due under any account or general intangible or with
      respect to any other Collateral and file any claim or take any other action
      or
      proceeding in any court of law or equity or otherwise deemed appropriate by
      the
      Administrative Agent for the purpose of collecting any such moneys due under
      any
      account or general intangible or with respect to any other Collateral whenever
      payable;

     

    (ii)  in
      the
      case of any Intellectual Property owned by or licensed to the Grantors, execute,
      deliver and have recorded any document that the Administrative Agent may request
      to evidence, effect, publicize or record the Administrative Agent’s license or
      security interest in such Intellectual Property and the goodwill and general
      intangibles of such Grantor relating thereto or represented
      thereby;

     

    (iii)  pay
      or
      discharge taxes and Liens levied or placed on or threatened against any
      Collateral, effect any repair or pay any insurance called for by the terms
      of
      the Loan Agreement (including all or any part of the premiums therefor and
      the
      costs thereof);

     

    (iv)  execute,
      in connection with any Sale provided for in Section 6.1
      or
Section 6.5,
      any
      document to effect or otherwise necessary or appropriate to evidence the Sale
      of
      any Collateral; or

     

    (v)  (A)
      direct any party liable for any payment under any Collateral to make payment
      of
      any moneys due or to become due thereunder directly to the Administrative Agent
      or as the Administrative Agent shall direct, (B) ask or demand for, and collect
      and receive payment of and receipt for, any moneys, claims and other amounts
      due
      or to become due at any time in respect of or arising out of any Collateral,
      (C)
      sign and indorse any invoice, freight or express bill, bill of lading, storage
      or warehouse receipt, draft against debtors, assignment, verification, notice
      and other document in connection with any Collateral, (D) commence and prosecute
      any suit, action or proceeding at law or in equity in any court of competent
      jurisdiction to collect any Collateral and to enforce any other right in respect
      of any Collateral, (E) defend any actions, suits, proceedings, audits, claims,
      demands, orders or disputes brought against such Grantor with respect to any
      Collateral, (F) settle, compromise or adjust any such actions, suits,
      proceedings, audits, claims, demands, orders or disputes and, in connection
      therewith, give such discharges or releases as the Administrative Agent may
      deem
      appropriate, (G) sub-license any Intellectual Property owned by the Grantors
      or
      any IP Licenses of the Grantors throughout the world on such terms and
      conditions set forth in Section
      6.21
      of the
      Loan Agreement and in such manner as the Administrative Agent shall in its
      sole
      discretion determine, including the execution and filing of any document
      necessary to effectuate or record such license and (H) generally, Sell,
      grant a Lien on, make any Contractual Obligation with respect to and otherwise
      deal with, any Collateral as fully and completely as though the Administrative
      Agent were the absolute owner thereof for all purposes and do, at the
      Administrative Agent’s option, at any time or from time to time, all acts and
      things that the Administrative Agent deems necessary to protect, preserve or
      realize upon any Collateral and the Secured Parties’ security interests therein
      and to effect the intent of the Loan Documents, all as fully and effectively
      as
      such Grantor might do.

     

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

    (b)  If
      any
      Grantor fails to perform or comply with any Contractual Obligation contained
      herein, the Administrative Agent, at its option, but without any obligation
      so
      to do, may perform or comply, or otherwise cause performance or compliance,
      with
      such Contractual Obligation.

     

    (c)  The
      expenses of the Administrative Agent incurred in connection with actions
      undertaken as provided in this Section 7.1,
      together with interest thereon at a rate set forth in Section
      2.6
      of the
      Loan Agreement, from the date of payment by the Administrative Agent to the
      date
      reimbursed by the relevant Grantor, shall be payable by such Grantor to the
      Administrative Agent on demand.

     

    (d)  Each
      Grantor hereby ratifies all that said attorneys shall lawfully do or cause
      to be
      done by virtue of this Section 7.1.
      All
      powers, authorizations and agencies contained in this Agreement are coupled
      with
      an interest and are irrevocable until this Agreement is terminated and the
      security interests created hereby are released.

     

    Section 7.2  Authorization
      to File Financing Statements.
      Each
      Grantor authorizes the Administrative Agent and its Related Persons, at any
      time
      and from time to time, to file or record financing statements, amendments
      thereto, and other filing or recording documents or instruments with respect
      to
      any Collateral in such form and in such offices as the Administrative Agent
      reasonably determines appropriate to perfect the security interests of the
      Administrative Agent under this Agreement. A photographic or other reproduction
      of this Agreement shall be sufficient as a financing statement or other filing
      or recording document or instrument for filing or recording in any jurisdiction.
      Such Grantor also hereby ratifies its authorization for the Administrative
      Agent
      to have filed any initial financing statement or amendment thereto under the
      UCC
      (or other similar laws) in effect in any jurisdiction if filed prior to the
      date
      hereof.

     

    Section 7.3  Authority
      of Administrative Agent.
      Each
      Grantor acknowledges that the rights and responsibilities of the Administrative
      Agent under this Agreement with respect to any action taken by the
      Administrative Agent or the exercise or non-exercise by the Administrative
      Agent
      of any option, voting right, request, judgment or other right or remedy provided
      for herein or resulting or arising out of this Agreement shall, as between
      the
      Administrative Agent and the other Secured Parties, be governed by the Loan
      Agreement and by such other agreements with respect thereto as may exist from
      time to time among them, but, as between the Administrative Agent and the
      Grantors, the Administrative Agent shall be conclusively presumed to be acting
      as agent for the Secured Parties with full and valid authority so to act or
      refrain from acting, and no Grantor shall be under any obligation or entitlement
      to make any inquiry respecting such authority.

     

    Section 7.4  Duty;
      Obligations and Liabilities.
      (a) Duty
      of Administrative Agent.
      The
      Administrative Agent’s sole duty with respect to the custody, safekeeping and
      physical preservation of the Collateral in its possession shall be to deal
      with
      it in the same manner as the Administrative Agent deals with similar property
      for its own account. The powers conferred on the Administrative Agent hereunder
      are solely to protect the Administrative Agent’s interest in the Collateral and
      shall not impose any duty upon the Administrative Agent to exercise any such
      powers. The Administrative Agent shall be accountable only for amounts that
      it
      receives as a result of the exercise of such powers, and neither it nor any
      of
      its Related Persons shall be responsible to any Grantor for any act or failure
      to act hereunder, except for their own gross negligence or willful misconduct
      as
      finally 

     

    
      
        
        

      

      
        17

        
          

        

      

      
        
        
determined
        by a court of competent jurisdiction. In addition, the Administrative Agent
        shall not be liable or responsible for any loss or damage to any Collateral,
        or
        for any diminution in the value thereof, by reason of the act or omission
        of any
        warehousemen, carrier, forwarding agency, consignee or other bailee if such
        Person has been selected by the Administrative Agent in good
        faith.

    

     

    (b)  Obligations
      and Liabilities with respect to Collateral.
      No
      Secured Party and no Related Person thereof shall be liable for failure to
      demand, collect or realize upon any Collateral or for any delay in doing so
      or
      shall be under any obligation to sell or otherwise dispose of any Collateral
      upon the request of any Grantor or any other Person or to take any other action
      whatsoever with regard to any Collateral. The powers conferred on the
      Administrative Agent hereunder shall not impose any duty upon any other Secured
      Party to exercise any such powers. The other Secured Parties shall be
      accountable only for amounts that they actually receive as a result of the
      exercise of such powers, and neither they nor any of their respective officers,
      directors, employees or agents shall be responsible to any Grantor for any
      act
      or failure to act hereunder, except for their own gross negligence or willful
      misconduct as finally determined by a court of competent
      jurisdiction.

     

    ARTICLE VIII  

     

    

     

    MISCELLANEOUS

     

    Section 8.1  Reinstatement.
      Each
      Grantor agrees that, if any payment made by any Loan Party or other Person
      and
      applied to the Secured Obligations is at any time annulled, avoided, set aside,
      rescinded, invalidated, declared to be fraudulent or preferential or otherwise
      required to be refunded or repaid, or the proceeds of any Collateral are
      required to be returned by any Secured Party to such Loan Party, its estate,
      trustee, receiver or any other party, including any Grantor, under any
      bankruptcy law, state or federal law, common law or equitable cause, then,
      to
      the extent of such payment or repayment, any Lien or other Collateral securing
      such liability shall be and remain in full force and effect, as fully as if
      such
      payment had never been made. If, prior to any of the foregoing, (a) any Lien
      or
      other Collateral securing such Grantor’s liability hereunder shall have been
      released or terminated by virtue of the foregoing or (b) any provision of the
      Guaranty hereunder shall have been terminated, cancelled or surrendered, such
      Lien, other Collateral or provision shall be reinstated in full force and effect
      and such prior release, termination, cancellation or surrender shall not
      diminish, release, discharge, impair or otherwise affect the obligations of
      any
      such Grantor in respect of any Lien or other Collateral securing such obligation
      or the amount of such payment.

     

    Section 8.2  Release
      of Collateral.
      (a)
      At the
      time provided in clause (b)(ii)
      of
Section 9.10
      of the
      Loan Agreement, the Collateral shall be released from the Lien created hereby
      and this Agreement and all obligations (other than those expressly stated to
      survive such termination) of the Administrative Agent and each Grantor hereunder
      shall terminate, all without delivery of any instrument or performance of any
      act by any party, and all rights to the Collateral shall revert to the Grantors.
      Each Grantor is hereby authorized to file UCC amendments at such time evidencing
      the termination of the Liens so released. At the request of any Grantor
      following any such termination, the Administrative Agent shall deliver to such
      Grantor any Collateral of such Grantor held by the Administrative Agent
      hereunder and execute and deliver to such Grantor such documents as such Grantor
      shall reasonably request to evidence such termination.

     

    (b)  If
      the
      Administrative Agent shall be directed or permitted pursuant to clause
      (i)
      or
(ii) of
      Section 9.10(b)
      of the
      Loan Agreement to release any Lien or any Collateral, such Collateral shall
      be
      released from the Lien created hereby to the extent provided under, and subject
      to the terms and conditions set forth in, such clauses
      (i)
      and
(ii).
      In

     

    
      
        
        

      

      
        18

        
          

        

      

      
        
        
connection
        therewith, the Administrative Agent, at the request of any Grantor, shall
        execute and deliver to such Grantor such documents as such Grantor shall
        reasonably request to evidence such release.

    

     

    (c)  At
      the
      time provided in Section
      9.10(a)
      of the
      Loan Agreement and at the request of the Borrower, a Grantor shall be released
      from its obligations hereunder in the event that all the Securities of such
      Grantor shall be Sold to any Person that is not an Affiliate of any Borrower
      and
      the Subsidiaries of any Borrower in a transaction permitted by the Loan
      Documents.

     

    Section 8.3  Independent
      Obligations.
      The
      obligations of each Grantor hereunder are independent of and separate from
      the
      Secured Obligations and the Guaranteed Obligations of the other Grantors. If
      any
      Secured Obligation or Guaranteed Obligation is not paid when due, or upon any
      Event of Default, the Administrative Agent may, at its sole election, proceed
      directly and at once, without notice, against any Grantor and any Collateral
      to
      collect and recover the full amount of any Secured Obligation or Guaranteed
      Obligation then due, without first proceeding against any other Grantor, any
      other Loan Party or any other Collateral and without first joining any other
      Grantor or any other Loan Party in any proceeding.

     

    Section 8.4  No
      Waiver by Course of Conduct.
      No
      Secured Party shall by any act (except by a written instrument pursuant to
      Section 8.5),
      delay,
      indulgence, omission or otherwise be deemed to have waived any right or remedy
      hereunder or to have acquiesced in any Default or Event of Default. No failure
      to exercise, nor any delay in exercising, on the part of any Secured Party,
      any
      right, power or privilege hereunder shall operate as a waiver thereof. No single
      or partial exercise of any right, power or privilege hereunder shall preclude
      any other or further exercise thereof or the exercise of any other right, power
      or privilege. A waiver by any Secured Party of any right or remedy hereunder
      on
      any one occasion shall not be construed as a bar to any right or remedy that
      such Secured Party would otherwise have on any future occasion.

     

    Section 8.5  Amendments
      in Writing.
      None of
      the terms or provisions of this Agreement may be waived, amended, supplemented
      or otherwise modified except in accordance with Section 10.1
      of the
      Loan Agreement; provided,
      however,
      that
      the annex to this Agreement may be supplemented (but no existing provisions
      may
      be modified and no Collateral may be released) through Joinder Agreements,
      in
      substantially the form of Annex 1,
      duly
      executed by the Administrative Agent and each Grantor directly affected
      thereby.

     

    Section 8.6  Additional
      Grantors;
      Joinder Agreements.
      If, at
      the option of any Borrower or as required pursuant to Section 6.11
      of the
      Loan Agreement, such Borrower shall cause a Subsidiary that is not a Grantor
      to
      become a Grantor hereunder, such Subsidiary shall execute and deliver to the
      Administrative Agent a Joinder Agreement substantially in the form of
Annex 1
      and
      shall thereafter for all purposes be a party hereto and have the same rights,
      benefits and obligations as a Grantor party hereto on the Closing
      Date.

     

    Section 8.7  Notices.
      All
      notices, requests and demands to or upon the Administrative Agent or any Grantor
      hereunder shall be effected in the manner provided for in Section 10.11
      of the
      Loan Agreement; provided,
      however,
      that
      any such notice, request or demand to or upon any Grantor shall be addressed
      to
      the Borrower’s notice address set forth in such Section
      10.11.

     

    
      
        
        

      

      
        19

        
          

        

      

      
        
        

      

    

    Section 8.8  Successors
      and Assigns.
      This
      Agreement shall be binding upon the successors and assigns of each Grantor
      and
      shall inure to the benefit of each Secured Party and their successors and
      assigns; provided,
      however,
      that no
      Grantor may assign, transfer or delegate any of its rights or obligations under
      this Agreement without the prior written consent of the Administrative
      Agent.

     

    Section 8.9  Counterparts.
      This
      Agreement may be executed in any number of counterparts and by different parties
      in separate 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. Signature pages may be detached from multiple separate counterparts
      and attached to a single counterpart. Delivery of an executed signature page
      of
      this Agreement by facsimile transmission or by Electronic Transmission shall
      be
      as effective as delivery of a manually executed counterpart hereof.

     

    Section 8.10  Severability.
      Any
      provision of this Agreement being held illegal, invalid or unenforceable in
      any
      jurisdiction shall not affect any part of such provision not held illegal,
      invalid or unenforceable, any other provision of this Agreement or any part
      of
      such provision in any other jurisdiction.

     

    Section 8.11  Governing
      Law.
      This
      Agreement and the rights and obligations of the parties hereto shall be governed
      by, and construed and interpreted in accordance with, the law of the State
      of
      New York.

     

    Section 8.12  WAIVER
      OF JURY TRIAL.  EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES TRIAL BY
      JURY IN ANY SUIT, ACTION OR PROCEEDING WITH RESPECT TO, OR DIRECTLY OR
      INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH, ANY LOAN DOCUMENT OR
      THE
      TRANSACTIONS CONTEMPLATED THEREIN OR RELATED THERETO (WHETHER FOUNDED IN
      CONTRACT, TORT OR ANY OTHER THEORY).  EACH PARTY HERETO (A) CERTIFIES THAT
      NO OTHER PARTY AND NO RELATED PERSON OF ANY OTHER PARTY HAS REPRESENTED,
      EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF
      LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT
      IT
      AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT
      BY
      THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION
      8.12 

     

    SIGNATURE
      PAGES FOLLOW

     

    

     

    
      
        
        

      

      
        20

        
          

        

      

      
        
        

      

    

    IN
      WITNESS WHEREOF,
      each of
      the undersigned has caused this Guaranty and Security Agreement to be duly
      executed and delivered as of the date first above written.

     

                        THE
      BOMBAY COMPANY,
      INC.

     

                        as
      Grantor

     

    
      	 	
                                  By:

            	 ____________________________	 

    

                                           
Name:

                                           
Title:

     

                        BBA
      HOLDINGS,
      LLC

     

                        as
      Grantor

     

    
      	 	
                                  By:

            	 ____________________________	 

    

                                           
Name:

                                           
Title:

     

                        BOMBAY
      INTERNATIONAL,
      INC.

     

                        as
      Grantor

     

    
      	 	
                                  By:

            	 _____________________________	 

    

                                                        Name:

                                                        Title:

     

                        THE
      BOMBAY FURNITURE
      COMPANY, INC.

     

                        as
      Grantor

     

    
      	 	
                                  By:

            	 _____________________________	 

    

                                                         Name:

                                                        Title:

     

    

     

    ACCEPTED
      AND AGREED

     

    as
      of the
      date first above written:

     

    GB
      MERCHANT PARTNERS, LLC

     

    as
      Administrative Agent and Collateral Agent

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      	
              By:

            	 ____________________________________	 

    

    Name:

    Title:

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
ANNEX
      1

    TO

    GUARANTY
      AND SECURITY AGREEMENT

    

 

    FORM
      OF
      JOINDER AGREEMENT

     

    This
      JOINDER
      AGREEMENT,
      dated
      as of ______________ __, 20__, is delivered pursuant to Section 8.6
      of the
      Guaranty and Security Agreement, dated as of May ___, 2007, by The Bombay
      Company, Inc. (the “Parent”)
      and
      the Affiliates of the Parent from time to time party thereto as Grantors in
      favor of GB Merchant Partners, LLC as administrative agent and collateral agent
      for the Secured Parties referred to therein (the “Guaranty
      and Security Agreement”).
      Capitalized terms used herein without definition are used as defined in the
      Guaranty and Security Agreement.

     

    By
      executing and delivering this Joinder Agreement, the undersigned, as provided
      in
Section 8.6
      of the
      Guaranty and Security Agreement, hereby becomes a party to the Guaranty and
      Security Agreement as a Grantor thereunder with the same force and effect as
      if
      originally named as a Grantor therein and, without limiting the generality
      of
      the foregoing, as collateral security for the prompt and complete payment and
      performance when due (whether at stated maturity, by acceleration or otherwise)
      of the Secured Obligations of the undersigned, hereby mortgages, pledges and
      hypothecates to the Administrative Agent for the benefit of the Secured Parties,
      and grants to the Administrative Agent for the benefit of the Secured Parties
      a
      lien on and security interest in, all of its right, title and interest in,
      to
      and under the Collateral of the undersigned and expressly assumes all
      obligations and liabilities of a Grantor thereunder. The undersigned hereby
      agrees to be bound as a Grantor for the purposes of the Guaranty and Security
      Agreement.

     

    The
      information set forth in Annex 1-A
      is
      hereby added to the information set forth in the Perfection Certificate. By
      acknowledging and agreeing to this Joinder Agreement, the undersigned hereby
      agrees that this Joinder Agreement may be attached to the Guaranty and Security
      Agreement and represents that the information set forth in Annex
      1-A
      is true,
      correct and complete.

     

    The
      undersigned hereby represents and warrants that each of the representations
      and
      warranties contained in Article IV
      of the
      Guaranty and Security Agreement applicable to it is true and correct in all
      material respects on and as the date hereof as if made on and as of such
      date.

     

    IN
      WITNESS WHEREOF,
      the
      undersigned has caused this Joinder Agreement to be duly executed and delivered
      as of the date first above written.

     

                        [ADDITIONAL
      GRANTOR]

     

    
      	 	
                                  By:
                

            	 ______________________________	 

    

     

                        Name:

     

                        Title:

     

    
      
        
        

      

      
        A1-1

        
          

        

      

      
        
        

      

    

    ACKNOWLEDGED
      AND AGREED

     

    as
      of the
      date first above written:

     

    EACH
      GRANTOR PLEDGING 

     

    [ADDITIONAL
      COLLATERAL]

     

    By:____________________________ 

    Name:

    Title:

     

    GB
      MERCHANT PARTNERS, LLC

     

    as
      Administrative Agent and Collateral Agent

     

    By:____________________________  

    Name:

    Title:

     

    

    
      
        
        

      

      
        A1-2

        
          

        

      

      
        
        

      

    

    ANNEX
      1-A

     

    PERFECTION
      CERTIFICATE UPDATE

     

    [Perfection
      Certificate for each additional Grantor]

     

     

    
      
        
        

      

      
        A1-3Pledge Agreement

    

      PLEDGE
        AGREEMENT

       

      THIS
        PLEDGE AGREEMENT (this “Agreement”),
        dated
        as of June 4, 2007, is by and between The Bombay Company, Inc., a Delaware
        corporation (the “Pledgor”)
        and GB
        Merchant Partners, LLC, in its capacity as Administrative Agent (as hereinafter
        defined) (in such capacity, the “Pledgee”),
        as
        agent for the benefit of the “Lenders”
(as
        such term is hereinafter defined).

       

      W
        I T N E
        S S E T H:

       

      WHEREAS,
        Pledgor legally and beneficially owns the issued and outstanding equity
        interests as described on Exhibit
        A
        hereto;
        and

       

      WHEREAS,
        the Borrower, together with the other borrowers signatory thereto, is entering
        into that certain Second Lien Term Loan Agreement of even date herewith (the
        same, as it may be amended, restated, supplemented or otherwise modified
        and in
        effect from time to time, the “Term
        Loan Agreement”)
        with
        the lenders signatory thereto (the “Lenders”)
        and
        Pledgee, as administrative agent for the Lenders (“Administrative
        Agent”),
        providing for the Pledgee and the Lenders to make available to the Borrower
        a
        certain term loan (the “Term
        Loan”)
        on the
        terms and conditions set forth therein (the Term Loan, together with all
        other
“Obligations” as such term is defined in the Term Loan Agreement, are
        collectively referred to herein as the “Obligations”);
        and

       

      WHEREAS,
        Pledgor will derive substantial benefit and advantage from the Term Loan
        and
        other financial accommodations as set forth in the Term Loan Agreement;
        and

       

      WHEREAS,
        to induce the Pledgee and the Lenders to enter into the Term Loan Agreement
        and
        make the Term Loan thereunder, in order to secure the payment and performance
        by
        each Pledgor of the Liabilities (as hereinafter defined), Pledgor has agreed
        to
        pledge to Pledgee, for the benefit of the Pledgee and the Lenders, all of
        such
        Pledgor’s equity interests in BBA Holdings, LLC, a Delaware limited liability
        company, Bombay International, Inc., a Delaware corporation, The Bombay
        Furniture Company of Canada, Inc, an Ontario corporation, and The Bombay
        Furniture Company, Inc., a Delaware corporation (collectively, the “Pledged
        Entities”),
        now
        or hereafter owned or acquired by Pledgor as security for the
        Liabilities;

       

      NOW,
        THEREFORE, in consideration of the premises and in order to induce the Pledgee
        and the Lenders to enter into the Term Loan Agreement and to make the Term
        Loan
        and other financial accommodations to each Pledgor under the Term Loan
        Agreement, each Pledgor hereby agrees with Pledgee, for benefit of Pledgee
        and
        the Lenders, as follows:

       

      Section
        1.   Defined
        Terms.
        Unless
        otherwise defined herein, all capitalized terms used herein shall have the
        respective meanings ascribed thereto in the Term Loan Agreement. Terms defined
        in the Uniform Commercial Code, as in effect in the State of New York from
        time
        to time (the “UCC”),
        which
        are not otherwise defined in this Agreement or in the Term Loan Agreement
        are
        used in this Agreement as defined in the UCC as in effect on the date hereof.
        For purposes hereof, “equity interest” of or in any issuer shall include,
        without limitation, all limited liability company membership interests and
        units, together with all options, warrants and other rights or instruments
        exercisable or exchangeable for, or convertible into, such interests or
        units.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      Section
        2.   Pledge.
        Each
        Pledgor hereby pledges, assigns, hypothecates, transfers, delivers and grants
        to
        Pledgee, for the ratable benefit of the Pledgee and the Lenders, a security
        interest in the following assets, properties and items ((i) whether now existing
        or hereafter existing, and (ii) whether consisting of investment property,
        accounts, payment intangibles or other general intangibles, or proceeds of
        any
        Pledged Collateral as hereafter defined (collectively the “Pledged
        Collateral”)):
        (i)
        all of such Pledgor’s equity interests in each Pledged Entity, now owned or
        hereafter acquired by such Pledgor, including, without limitation, such
        Pledgor’s (A) interests in the profits and losses of each such issuer, (B)
        rights and interests to receive distributions of each such issuer’s assets and
        properties and (C) rights and interests, if any, to participate in the
        management of each such issuer related to such equity interests (collectively,
        the “Pledged
        Interests”),
        (ii)
        all rights, privileges, authority and powers of such Pledgor as an owner
        or
        holder of the limited liability company or membership interests or units
        of such
        issuers/Pledgors as owners of such issuers, (iii) all other property hereafter
        delivered to, or in the possession or in the custody of, Pledgee in substitution
        for or in addition to the Pledged Interests, (iv) any other property of such
        Pledgor in connection with the Pledged Interests, as described in Section
        4
        below,
        now or hereafter delivered to, or in the possession or custody of Pledgor,
        and
        (v) all proceeds of the Pledged Collateral, as collateral security
        for:

       

      (a)  the
        prompt and complete payment when due in accordance with the terms of the
        Loan
        Documents (whether at the stated maturity, by acceleration or otherwise)
        of all
        the Obligations owed by any Loan Party, and

       

      (b)  the
        due
        and punctual payment and performance by each Pledgor of its obligations and
        liabilities under, arising out of or in connection with this
        Agreement

       

      (all
        of
        the foregoing being referred to hereinafter collectively as the “Liabilities”).

       

      Section
        3.   Representations
        and Warranties of Pledgor.
        As of
        the date hereof, and with respect to any Person who joins this Agreement
        following such date, each Pledgor represents and warrants to Pledgee and
        each
        Lender, and covenants with Pledgee and each Lender, that:

       

      (a)  Such
        Pledgor is the record and beneficial owner of, and has legal title to, the
        Pledged Interests listed on Exhibit
        A,
        and
        after giving effect to the Related Transactions and the transactions
        contemplated to occur on the Closing Date of the Term Loan Agreement, such
        Pledged Interests are and will remain and all other equity interests
        constituting Pledged Collateral will be, free and clear of all pledges, Liens,
        security interests and other encumbrances and restrictions whatsoever, except
        the Liens and security interests created by this Agreement and the Liens
        permitted by Section
        7.2
        of the
        Term Loan Agreement, to the extent applicable to the Pledged
        Interests;

       

      (b)  Each
        Pledgor has full power and authority to execute and deliver this Agreement
        and
        to pledge the Pledged Interests and Pledged Collateral to Pledgee, for the
        ratable benefit of the Pledgee and the Lenders;

       

      (c)  this
        Agreement has been duly authorized, executed and delivered by each Pledgor
        and
        constitutes a legal, valid and binding obligation of Pledgor enforceable
        against
        Pledgor in accordance with its terms, except as such enforceability may be
        limited by applicable bankruptcy, moratorium, reorganization and other similar
        laws affecting the enforcement of creditors’ rights generally;

       

      
        
          
          

        

        
          2

          
            

          

        

        
          
          
    

      

      
        (d)  there
          are
          no outstanding options, warrants or other similar agreements with respect
          to the
          Pledged Interests;

         

        (e)  the
          Pledged Interests have been, and the Pledged Collateral constituting equity
          interests will be, duly and validly authorized and issued, and are or will
          be
          fully paid and non-assessable. The Pledged Interests listed on Exhibit
          A
          constitute all of the issued and outstanding equity interests which are
          held by
          each Pledgor on the date of this Agreement. Unless specifically provided
          otherwise in the Intercreditor Agreement, each Pledgor shall cause all
          of their
          respective Pledged Interests which are certificated securities, including,
          without limitation, certificates representing limited liability company
          membership interests, to be delivered as of the date hereof to Pledgee,
          for the
          benefit of Pledgee and the Lenders, with undated assignments or transfers
          separate from such certificates, duly executed in blank by each Pledgor,
          each in
          form and substance reasonably satisfactory to Pledgee. Unless specifically
          provided otherwise in the Intercreditor Agreement, Pledgee, on behalf of
          the
          Lenders, shall maintain possession and custody of the certificates representing
          the Pledged Interests and Pledged Collateral.

         

        (f)  no
          consent, approval or authorization of or designation or filing with any
          Governmental Authority on the part of any Pledgor is required in connection
          with
          the pledge and security interest granted under this Agreement, or, as of
          the
          date hereof, the exercise by Pledgee of the voting and other rights provided
          for
          in this Agreement, except for the filing of Uniform Commercial Code financing
          statements;

         

        (g)  the
          execution, delivery and performance of this Agreement by each Pledgor will
          not
          violate any law or regulation or any order, judgment, writ, award or decree
          of
          any court, arbitrator or Governmental Authority or of the certificate of
          organization, incorporation, or formation, as applicable, by-laws or operating
          agreement of such Pledgor or of any such issuer listed on Exhibit
          A,
          or of
          any securities issued by any such issuer, or, after giving effect to the
          Term
          Loan Agreement and the transactions contemplated by the other Loan Documents
          (collectively, the “Transactions”),
          any
          mortgage, indenture, lease, contract, or other agreement, instrument or
          undertaking to which such Pledgor is a party or which purports to be binding
          upon such Pledgor or upon any of its assets, and, after giving effect to
          the
          Transactions contemplated to occur on the Closing Date of the Term Loan
          Agreement, will not result in the creation or imposition of any Lien, charge
          or
          encumbrance on or security interest in any of the assets of such Pledgor
          or any
          issuer of Pledged Interests except as contemplated by this Agreement and
          the
          other Loan Documents; and

        

          (h)  as
            of the
            Closing Date, the pledge, assignment and delivery to Pledgee of the Pledged
            Interests pursuant to this Agreement creates a valid perfected security
            interest
            in the Pledged Interests and the proceeds thereof in favor of Pledgee
            (subject
            to the filing of Uniform Commercial Code financing statement with respect
            to
            equity interests that are not securities), for the benefit of Pledgee
            and the
            Lenders, subject to no prior pledge, Lien, mortgage, hypothecation, security
            interest, charge, option or encumbrance, except the Liens listed in Section
            7.2
            of the
            Term Loan Agreement, to the extent applicable to the Pledged Interests,
            or to
            any agreement purporting to grant to any third party a security interest
            in the
            property or assets of Pledgor which would include the Pledged Interests.
            Each
            Pledgor covenants and agrees that it shall use its best efforts to defend
            Pledgee’s right, title and security interest in and to the Pledged Interests
            and
            the proceeds thereof against the claims and demands of all Persons
            whomsoever.

           

        

      

      
        
          
          

        

        
          3

          
            

          

        

        
          
          

        

      

      Section
        4.   Dividends,
        Distributions, etc.
        If,
        while this Agreement is in effect, any Pledgor shall become entitled to receive
        or shall receive any certificate (including, without limitation, any certificate
        representing an equity dividend or an equity distribution in connection with
        any
        reclassification, increase or reduction of capital, or issued in connection
        with
        any reorganization, merger or consolidation), or any options or rights, whether
        as an addition to, in substitution for, or in exchange for any of the Pledged
        Interests, or otherwise, such Pledgor agrees to accept the same as Pledgee’s
        agent and to hold the same in trust for Pledgee, and, except as otherwise
        provided in the Intercreditor Agreement, to deliver the same forthwith to
        Pledgee in the exact form received, with the endorsement of such Pledgor,
        when
        necessary and/or appropriate, undated assignments separate from certificate
        duly
        executed in blank, to be held by Pledgee, for the benefit of Pledgee and
        the
        Lenders, subject to the terms hereof, as additional Pledged Collateral. Except
        as provided in subsection
        5(a)(ii)
        below,
        in case any distribution of capital shall be made on or in respect of the
        Pledged Interests or any property shall be distributed upon or with respect
        to
        the Pledged Interests pursuant to the recapitalization or reclassification
        of
        the capital of the issuer thereof or pursuant to the reorganization thereof,
        the
        property so distributed shall, except as otherwise provided in the Intercreditor
        Agreement, be delivered to Pledgee to be held by it as additional Pledged
        Collateral. Except as provided in subsection
        5(a)(ii)
        below,
        all sums of money and property so paid or distributed in respect of the Pledged
        Interests which are received by a Pledgor shall, until paid or delivered
        to
        Pledgee, be held by such Pledgor in trust as additional Pledged
        Collateral.

       

      Section
        5.   Administration
        of Security.
        The
        following provisions shall govern the administration of the Pledged
        Interests:

       

      (a)  So
        long
        as no Event of Default has occurred and is continuing, each Pledgor shall
        be
        entitled (subject to the other provisions hereof, including, without limitation,
        Section
        8
        below):

       

      (i)  to
        vote
        or consent with respect to its respective Pledged Interests in any manner
        permitted or not inconsistent with this Agreement, the Term Loan Agreement
        and
        the other “Loan Documents” referred to therein; and

       

      (ii)  to
        receive and retain cash distributions in the ordinary course made in respect
        of
        the Pledged Interests, to the extent permitted to be paid or otherwise not
        prohibited pursuant to the Term Loan Agreement.

       

      Subject
        to the Intercreditor Agreement, each Pledgor hereby grants to Pledgee or
        its
        nominee, on behalf of Pledgee and Lenders, an irrevocable proxy to exercise
        all
        voting and membership rights relating to the Pledged Interests in any instance,
        including, without limitation, to approve any merger involving any Subsidiary
        as
        a constituent company (“Voting
        and Membership Rights”),
        which
        proxy shall only be exercisable upon the occurrence and during the continuance
        of an Event of Default in respect of which Pledgee 

       

      
        
          
          

        

        
          4

          
            

          

        

        
          
          

        

      

      has
        provided each Pledgor with three (3) Business Days notice of its intention
        to
        exercise its Voting and Membership Rights. After the occurrence and during
        the
        continuance of an Event of Default, in respect of which Pledgee has provided
        a
        Pledgor with three (3) Business Days notice of its intention to exercise
        its
        Voting and Membership Rights, and upon the request of Pledgee, subject to
        the
        Intercreditor Agreement, such Pledgor agrees to deliver to Pledgee, on behalf
        of
        Pledgee and Lenders, such further evidence of such irrevocable proxy or such
        further irrevocable proxies to vote the Pledged Interests as Pledgee may
        request.

       

      (b)  Upon
        the
        occurrence and during the continuance of an Event of Default, in the event
        that
        a Pledgor, as record and beneficial owner of the Pledged Interests, shall
        have
        received or shall have become entitled to receive, any cash dividends or
        other
        distributions in the ordinary course, such Pledgor, subject to the Intercreditor
        Agreement, shall deliver to Pledgee, for the benefit of Pledgee and the Lenders,
        and Pledgee, for its own benefit and the benefit of the Lenders, shall be
        entitled to receive and retain, all such cash or other distributions as
        additional Pledged Collateral.

       

      (c)  Subject
        to any sale or other disposition by Pledgee, on behalf of the Pledgee and
        Lenders, of the Pledged Interests or other property pursuant to this Agreement,
        the Pledged Interests and any other Pledged Collateral shall be delivered
        to
        Pledgor upon satisfaction of all of the Obligations.

       

      Section
        6.   Rights
        of Pledgee.
        Neither
        Pledgee nor any of the Lenders shall be liable for failure to collect or
        realize
        upon the Obligations or any collateral security or guaranty therefor, or
        any
        part thereof, or for any delay in so doing, nor shall Pledgee or any of the
        Lenders be under any obligation to take any action whatsoever with regard
        thereto. Subject to the Intercreditor Agreement, any or all of the Pledged
        Interests held by Pledgee hereunder may, if an Event of Default has occurred
        and
        is continuing, in respect of which Pledgee has provided Pledgor with three
        (3)
        Business Days notice of its intention to exercise its rights hereunder, be
        registered in the name of Pledgee or its nominee (if held in registered form)
        and Pledgee or its nominee may thereafter without notice exercise all voting
        and
        membership rights at any meeting with respect to any issuer of Pledged Interests
        and exercise any and all rights of conversion, exchange, subscription or
        any
        other rights, privileges or options pertaining to any of the Pledged Interests
        as if it were the absolute owner thereof, including, without limitation,
        the
        right to vote in favor of, and to exchange at its discretion any and all
        of the
        Pledged Interests upon, the merger, consolidation, reorganization,
        recapitalization or other readjustment with respect to any issuer of Pledged
        Interests or upon the exercise by Pledgor or Pledgee of any right, privilege
        or
        option pertaining to any of the Pledged Interests, and in connection therewith,
        to deposit and deliver any and all of the Pledged Interests with any committee,
        depository, transfer agent, registrar or other designated agency upon such
        terms
        and conditions as Pledgee may reasonably determine, all without liability
        except
        to account for property actually received by Pledgee, but Pledgee shall have
        no
        duty to exercise any of the aforesaid rights, privileges or options and shall
        not be responsible for any failure to do so or delay in so doing.

       

      
        
          
          

        

        
          5

          
            

          

        

        
          
          

        

      

      Section
        7.   Remedies.
        Upon
        the occurrence and during the continuance of an Event of Default, Pledgee,
        upon
        the notice specified below of time and place of public or private sale, but
        otherwise without demand of performance or other demand, advertisement or
        notice
        of any kind to or upon each Pledgor or any other Person (all and each of
        which
        demands, advertisements and/or notices are hereby expressly waived, except
        such
        notices as required by applicable law and cannot be waived), may forthwith
        collect, receive, appropriate and realize upon the Pledged Collateral, or
        any
        part thereof, and/or may forthwith sell, assign, give an option or options
        to
        purchase, contract to sell or otherwise dispose of (including the disposition
        by
        merger) and deliver said Pledged Collateral, or any part thereof, in one
        or more
        portions at public or private sale or sales or transactions, at any exchange,
        broker’s board or at any of Pledgee’s offices or elsewhere upon such terms and
        conditions as Pledgee may deem advisable and at such prices as it may deem
        best,
        for any combination of cash and/or securities or other property or on credit
        or
        for future delivery without assumption of any credit risk, with the right
        to
        Pledgee upon any such sale or sales, public or private, to purchase the whole
        or
        any part of said Pledged Collateral so sold, free of any right or equity
        of
        redemption in Pledgor, which right or equity is hereby expressly waived or
        released, unless, in each case otherwise required by applicable law. Pledgee,
        for its own benefit and the ratable benefit of the Lenders, shall apply the
        net
        proceeds of any such collection, recovery, receipt, appropriation, realization,
        sale or disposition, after deducting all reasonable costs and expenses of
        every
        kind incurred therein or incidental to the safekeeping of any and all of
        the
        Pledged Collateral or in any way relating to the rights of Pledgee or any
        of the
        Lenders hereunder, including reasonable attorneys’ fees and legal expenses, to
        the payment, in whole or in part, of the Liabilities in accordance with the
        Term
        Loan Agreement. After so paying over such net proceeds and after the payment
        by
        Pledgee of any other amount required by any provision of law, including,
        without
        limitation, Section 9-608 of the UCC, Pledgee shall, on behalf of the Lenders,
        account for the surplus, if any, to each Pledgor. Each Pledgor shall not
        remain
        liable for any deficiency remaining unpaid after such application. Each Pledgor
        agrees that Pledgee shall give not less than ten (10) Business Days notice
        of
        the time and place of any public sale or of the time after which a private
        sale
        or other intended disposition is to take place and that such notice is
        reasonable notification of such matters. No notification need be given to
        any
        Pledgor, if such Pledgor has signed, after the occurrence and during the
        continuance of an Event of Default, a statement renouncing or modifying any
        right to notification of sale or other intended disposition. In addition
        to the
        rights and remedies granted to Pledgee for the benefit of the Lenders in
        this
        Agreement and in any other instrument or agreement securing, evidencing or
        relating to any of the Liabilities, Pledgee and the Lenders shall have all
        the
        rights and remedies of a secured party under the UCC and under any other
        applicable law. 

       

      Section
        8.   No
        Disposition, etc.
        Without
        the prior written consent of Pledgee, except as expressly permitted under
        the
        terms and conditions of the Term Loan Agreement, each Pledgor agrees that
        Pledgor will not sell, assign, transfer, exchange, or otherwise dispose of,
        or
        grant any option with respect to, the Pledged Interests or any other Pledged
        Collateral, nor will Pledgor create, incur or permit to exist any pledge,
        Lien,
        mortgage, hypothecation, security interest, charge, option or any other
        encumbrance with respect to any of the Pledged Interests, any other Pledged
        Collateral or any interest therein, or any proceeds thereof, except for the
        Lien
        and security interest provided for by this Agreement and the Liens permitted
        pursuant to Section
        7.2
        of the
        Term Loan Agreement, to the extent applicable to the Pledged Interests. Except
        as expressly permitted by the Term Loan Agreement, 

       

      
        
          
          

        

        
          6

          
            

          

        

        
          
          
without
          the prior written consent of Pledgee (which consent shall not be unreasonably
          withheld, so long as no Event of Default has occurred and is continuing
          or would
          result therefrom), each Pledgor agrees that it will not vote to enable,
          and will
          not otherwise permit, any issuer of Pledged Interests to (a) issue any
          equity
          interests or other securities of any nature in addition to or in exchange
          or
          substitution for the Pledged Interests or (b) dissolve, liquidate, retire
          any of
          its capital stock, reduce its capital or merge or consolidate with any
          other
          Person.

      

       

      Section
        9.   Sale
        of Pledged Interests.

       

      (a)  Each
        Pledgor recognizes that Pledgee, for its own benefit and on behalf of Lenders,
        may be unable to effect a public sale or disposition (including, without
        limitation, any disposition in connection with a merger of any issuer of
        Pledged
        Interests) of any or all the Pledged Collateral by reason of certain
        prohibitions contained in the Securities Act of 1933, as amended (the
“Act”),
        and
        applicable state securities laws, but may be compelled to resort to one or
        more
        private sales or dispositions thereof to a restricted group of purchasers
        who
        will be obliged to agree, among other things, to acquire such securities
        for
        their own account for investment and not with a view to the distribution
        or
        resale thereof. Pledgor acknowledges and agrees that any such private sale
        or
        disposition may result in prices and other terms (including the terms of
        any
        securities or other property received in connection therewith) less favorable
        to
        the seller than if such sale or disposition were a public sale or disposition
        and, notwithstanding such circumstances, agrees that any such private sale
        or
        disposition shall be deemed to be reasonable and effected in a commercially
        reasonable manner. Pledgee shall be under no obligation to delay a sale or
        disposition of any of the Pledged Collateral in order to permit Pledgor or
        any
        issuer of Pledged Interests to register such securities for public sale under
        the Act, or under applicable state securities laws, even if Pledgor or any
        issuer of Pledged Interests would agree to do so.

       

      (b)  Each
        Pledgor further agrees to do or cause to be done all such other acts and
        things
        as may be reasonably necessary to make such sale or sales or dispositions
        of any
        portion or all of the Pledged Collateral valid and binding and in compliance
        with any and all applicable laws, regulations, orders, writs, injunctions,
        decrees or awards of any and all courts, arbitrators or governmental
        instrumentalities, domestic or foreign, having jurisdiction over any such
        sale
        or sales or dispositions, all at Pledgor’s expense. Pledgor further agrees that
        a breach of any of the covenants contained in Sections
        2, 4, 5(b), 8 or 9
        hereof
        will cause irreparable injury to Pledgee and the Lenders, that Pledgee and
        the
        Lenders have no adequate remedy at law in respect of such breach and, as
        a
        consequence, agrees, without limiting the right of Pledgee to seek and obtain
        specific performance of other obligations of Pledgor contained in this
        Agreement, that each and every covenant referenced above shall be specifically
        enforceable against each Pledgor, and each Pledgor hereby waives and agrees
        not
        to assert any defenses against an action for specific performance of such
        covenants except for a defense that no Event of Default has occurred and
        is
        continuing.

       

      (c)  Each
        Pledgor further agrees to indemnify and hold harmless Pledgee and the Lenders,
        each of their respective successors and assigns, officers, directors, employees,
        agents and attorneys, and any Person in control of any thereof, from and
        against
        any loss, liability, damage and expense, including, without limitation,
        reasonable counsel fees 

       

      
        
          
          

        

        
          7

          
            

          

        

        
          
          
(collectively
          called the “Indemnified
          Liabilities”),
          under
          federal and state securities laws or otherwise insofar as such loss, liability,
          damage or expense:

      

       

      (i)  arises
        out of or is based upon any untrue statement of a material fact by such Pledgor
        or any of its Affiliates, officers, directors, employees, agents or attorneys,
        or any Person in control of any thereof, contained in any registration
        statement, prospectus or offering memorandum or in any preliminary prospectus
        or
        preliminary offering memorandum or in any amendment or supplement to any
        of the
        foregoing or in any other writing prepared by Pledgor or any of its Affiliates,
        officers, directors, employees, agents or attorneys or any Person in control
        of
        any thereof, in connection with the offer, sale or resale of all or any portion
        of the Pledged Collateral unless such untrue statement of material fact was
        provided by Pledgee specifically for inclusion therein; or

       

      (ii)  arises
        out of or is based upon any omission to state therein a material fact required
        to be stated or necessary to make the statements therein not
        misleading;

       

      such
        indemnification to remain operative regardless of any investigation made
        by or
        on behalf of Pledgee or any successor thereof, or any Person in control of
        any
        thereof. In connection with a public sale or other distribution, each Pledgor
        will provide customary indemnification to any underwriters, their respective
        successors and assigns, their respective officers and directors and each
        Person
        who controls any such underwriter (within the meaning of the Act). If and
        to the
        extent that the foregoing undertakings in this Section
        9(c)
        may be
        unenforceable for any reason, each Pledgor agrees to make the maximum
        contribution to the payment and satisfaction of each of the Indemnified
        Liabilities which is permissible under applicable law. The obligations of
        each
        Pledgor under this Section
        9(c)
        shall
        survive any termination of this Agreement. Notwithstanding the foregoing,
        each
        Pledgor shall have no obligations hereunder with respect to Indemnified
        Liabilities to the extent such Indemnified Liabilities are caused by the
        gross
        negligence or willful misconduct of Pledgee as determined by a final
        non-appealable judgment by a court of competent jurisdiction.

       

      (d)  Each
        Pledgor further agrees that it hereby waives any and all rights of subrogation,
        reimbursement, exoneration, contribution and similar rights it may have against
        any issuer of Pledged Interests, upon the sale or sales or dispositions of
        any
        portion or all of the Pledged Collateral by Pledgee.

       

      Section
        10.   Further
        Assurances.
        Each
        Pledgor agrees that at any time and from time to time, upon the written request
        of Pledgee, each Pledgor will execute and deliver all assignments separate
        from
        certificate, financing statements and such further documents and do such
        further
        acts and things as Pledgee may reasonably request consistent with the provisions
        hereof in order to effect the purposes of this Agreement.

       

      Section
        11.   Severability.
        Any
        provision of this Agreement which is prohibited or unenforceable in any
        jurisdiction shall, as to such jurisdiction, be ineffective to the extent
        of
        such prohibition or unenforceability, and any such prohibition or
        unenforceability in any jurisdiction shall not invalidate or render
        unenforceable such provision in any other jurisdiction.

       

      
        
          
          

        

        
          8

          
            

          

        

        
          
          

        

      

      Section
        12.   No
        Waiver; Cumulative Remedies.
        Neither
        Pledgee nor any of the Lenders shall by any act, delay, omission or otherwise
        be
        deemed to have waived any of its remedies hereunder, and no waiver by Pledgee
        or
        any Lender shall be valid unless in writing and signed by Pledgee or such
        Lender
        and then only to the extent therein set forth. A waiver by Pledgee, or any
        Lender, of any right or remedy hereunder on any one occasion shall not be
        construed as a bar to any right or remedy which Pledgee, or such Lender,
        would
        otherwise have on any further occasion. No course of dealing between any
        Pledgor
        and Pledgee or any Lender and no failure to exercise, nor any delay in
        exercising on the part of Pledgee or any Lender of any right, power or privilege
        hereunder or under the Loan Documents shall impair such right or remedy or
        operate as a waiver thereof; nor shall any single or partial exercise of
        any
        right, power or privilege hereunder preclude any other or further exercise
        thereof or the exercise of any other right, power or privilege. The rights
        and
        remedies herein provided are cumulative and may be exercised singly or
        concurrently, and are not exclusive of any rights or remedies provided by
        law.

       

      Section
        13.   Successors.
        This
        Agreement and all obligations of each Pledgor hereunder shall be binding
        upon
        the successors and assigns of such Pledgor, and shall, together with the
        rights
        and remedies of Pledgee and the Lenders hereunder, inure to the benefit of
        Pledgee and the Lenders and their successors and assigns, except that such
        Pledgor shall not have any right to assign its obligations under this Agreement
        or any interest herein without the prior written consent of
        Pledgee.

       

      Section
        14.   Termination.
        This
        Agreement and the Liens and security interests granted hereunder shall terminate
        upon indefeasible full and complete performance and satisfaction of the
        Liabilities (other than contingent indemnification obligations), and promptly
        upon the Termination Date, Pledgee shall surrender the certificates evidencing
        the Pledged Interests to each Pledgor.

       

      Section
        15.   Possession
        of Pledged Collateral.
        Beyond
        the exercise of reasonable care to assure the safe custody of the Pledged
        Collateral in the physical possession of Pledgee pursuant hereto, neither
        Pledgee nor any nominee of Pledgee shall have any duty or liability to collect
        any sums due in respect thereof or to protect, preserve or exercise any rights
        pertaining thereto, and shall be relieved of all responsibility for the Pledged
        Collateral upon surrendering them to Pledgor.

       

      Section
        16.   Survival
        of Representations.
        All
        representations and warranties of Pledgor contained in this Agreement shall
        survive the execution and delivery of this Agreement.

       

      Section
        17.   Taxes
        and Expenses.
        Each
        Pledgor will upon demand pay to Pledgee all reasonable expenses, including
        the
        reasonable fees and expenses of counsel for Pledgee and of any experts and
        agents that Pledgee may incur in connection with:

       

      (a)  the
        custody or preservation of, or the sale of, collection from, or other
        realization upon, any of the Pledged Collateral;

       

      (b)  the
        administration of this Agreement;

       

      (c)  the
        exercise or enforcement of any of the rights of Pledgee hereunder;
        or

       

      
        
          
          

        

        
          9

          
            

          

        

        
          
          

        

      

      (d)  the
        failure of a Pledgor to perform or observe any of the provisions
        hereof.

       

      Section
        18.   Pledgee
        Appointed Attorney-In-Fact.
        Each
        Pledgor hereby irrevocably appoints Pledgee as such Pledgor’s attorney-in-fact,
        effective upon the occurrence and during the continuance of an Event of Default,
        subject to the notice provisions contained herein and in the Loan Documents
        with
        respect to certain actions, with full authority in the place and stead of
        Pledgor and in the name of Pledgor or otherwise, from time to time in Pledgee’s
        discretion, to take any action and to execute any instrument that Pledgee
        deems
        reasonably necessary or advisable to accomplish the purposes of this Agreement,
        including, without limitation, to receive, endorse and collect all instruments
        made payable to Pledgor representing any dividend, interest payment or other
        distribution in respect of the Pledged Collateral or any part thereof and
        to
        give full discharge for the same, when and to the extent permitted by this
        Agreement.

       

      Section
        19.   Notices.
        All
        notices, approvals, requests, demands and other communications hereunder
        shall
        be made pursuant to, and in accordance with, and to the contact information
        provided in, Section
        10.11
        of the
        Term Loan Agreement or to such other address or addresses or facsimile number
        or
        numbers as any party hereto may most recently have designated in writing
        to the
        other party by such notice. All such communications shall be deemed to have
        been
        given or made (i) if delivered in person, when delivered, (ii) if delivered
        by
        facsimile, on the date of transmission if transmitted on a Business Day before
        5:00 p.m. Massachusetts time, otherwise on the next Business Day, (iii) if
        delivered by overnight courier, one (1) Business Day after delivery to the
        courier properly addressed and (iv) if mailed, three (3) Business Days after
        deposited in the United States
        mail,
        certified or registered.

       

      Section
        20.   GOVERNING
        LAW. 
        THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HERETO SHALL
        BE
        GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF
        THE
        STATE OF NEW YORK.

       

      Section
        21.  WAIVER
        OF JURY TRIAL.
        EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES TRIAL BY JURY IN ANY SUIT, ACTION
        OR
        PROCEEDING WITH RESPECT TO, OR DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER
        OR
        IN CONNECTION WITH THIS AGREEMENT, ANY OF THE LOAN DOCUMENTS, OR THE
        TRANSACTIONS CONTEMPLATED HEREIN OR RELATED HERETO (WHETHER FOUNDED IN CONTRACT,
        TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO OTHER
        PARTY
        AND NO RELATED PERSON OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR
        OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK
        TO
        ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER
        PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT, AS APPLICABLE,
        BY
        THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS
        SECTION 21.

       

      Section
        22.   Changes
        in Writing.
        No
        amendment, modification, termination or waiver of any provision of this
        Agreement or consent to any departure by any Pledgor thereof from, shall
        in any
        event be effective without the written agreement of Pledgee and such Pledgor,
        and then only to the extent specifically set forth in such writing.

       

      
        
          
          

        

        
          10

          
            

          

        

        
          
          

        

      

      Section
        23.   Headings.
        Section
        and subsection headings in this Agreement are included herein for convenience
        of
        reference only and shall not constitute a part of this Agreement for any
        other
        purpose or be given any substantive effect.

       

      Section
        24.   Counterparts.
        This
        Agreement may be executed in any number of counterparts, all of which taken
        together shall constitute one and the same instrument and any of the parties
        hereto may execute this Agreement by signing any such counterpart. This
        Agreement may be authenticated by manual signature, facsimile or, if approved
        in
        writing by the Pledgee, electronic means, all of which shall be equally
        valid.

       

      Section
        25.   Entire
        Agreement.
        This
        Agreement embodies the entire agreement and understanding between each Pledgor
        and Pledgee with respect to the subject matter hereof and supersedes all
        prior
        oral and written agreements and understandings between each Pledgor and Pledgee
        relating to the subject matter hereof.

       

      [Remainder
        of Page Intentionally Left Blank; Signature Page Follows.]

       

      
        
          
          

        

        
          11

          
            

          

        

        
          
          

        

      

      

       

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

       

                          PLEDGOR:

       

                          THE
        BOMBAY COMPANY,
        INC.,
        a
        Delaware corporation

       

                          By:______________________________________

                          Name:____________________________________

                          Title:_____________________________________

      

       

                          PLEDGEE:

       

                          GB
        MERCHANT PARTNERS,
        LLC

       

                          By:______________________________________

                          Name:____________________________________ 

                          Title:_____________________________________

       

      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      ACKNOWLEDGMENT

       

      The
        undersigned each hereby (a) acknowledge receipt of a copy of the foregoing
        Pledge Agreement, (b) waive any rights or requirement at any time hereafter
        to
        receive a copy of such Pledge Agreement in connection with the registration
        of
        any Pledged Interests or any other Pledged Collateral (as such terms are
        defined
        therein) in the name of Pledgee or its nominee or the exercise of voting
        rights
        by Pledgee, and (c) agree promptly to note on its books and records the granting
        of the security interest in the equity interests of the undersigned as provided
        in such Pledge Agreement, including the following legend:

       

      PURSUANT
        TO THAT CERTAIN PLEDGE AGREEMENT DATED AS OF MAY __, 2007 (AS FROM TIME TO
        TIME
        AMENDED, RESTATED, SUPPLEMENTED OR OTHERWISE MODIFIED), THE BOMBAY COMPANY,
        INC., HAS UNDER THE CIRCUMSTANCES SPECIFIED IN SUCH PLEDGE AGREEMENT, EMPOWERED
        GB MERCHANT PARTNERS, LLC, AS ADMINISTRATIVE AGENT FOR CERTAIN LENDERS, TO
        VOTE
        THE INTERESTS REPRESENTED BY THIS CERTIFICATE PURSUANT TO SUCH PLEDGE
        AGREEMENT.

       

      Dated:
        June 4, 2007 

      

      

      BBA
        HOLDINGS, LLC,
        a
        Delaware limited liability company

       

      By:______________________________________

      Name:______________________________

      Title:______________________________

       

      BOMBAY
        INTERNATIONAL, INC.,
        a
        Delaware corporation 

       

      By:______________________________________

      Name:______________________________

      Title:______________________________

       

      THE
        BOMBAY FURNITURE COMPANY OF CANADA, INC., an
        Ontario corporation 

       

      By:______________________________________

      Name:______________________________

      Title:______________________________

       

      THE
        BOMBAY FURNITURE COMPANY, INC., a
        Delaware corporation 

       

      By:______________________________________

      Name:______________________________

      Title:______________________________

       

      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      

      Exhibit
        A

       

      to
        Pledge
        Agreement

       

      

       

      

       

      PLEDGOR:
        THE BOMBAY COMPANY, INC.

       

                          Certificate                              Date         Percentage
        of

                  Issuer                                                                 
        No.                                    
        Issued                       
        Class
        Interests

       

          BBA
        Holdings,
        LLC                                                                                                                                                       
100%

       

          Bombay
        International,
        Inc.                                                                                                                                           
100%

       

          The
        Bombay
        Furniture 

          Company
        of
        Canada,
        Inc.                                                                                                                                              
100%

       

          The
        Bombay
        Furniture 

          Company,
        Inc.                                                                                                                                                                 
100%

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