Exhibit 10.2

GUARANTY AND SECURITY AGREEMENT

This GUARANTY AND SECURITY AGREEMENT (this "Agreement"), dated as of May 22,
2012, among the Persons listed on the signature pages hereof as "Grantors" and
those additional entities that hereafter become parties hereto by executing the
form of Joinder attached hereto as Annex 1 (each, a "Grantor" and collectively,
the "Grantors"), and WELLS FARGO CAPITAL FINANCE, LLC, a Delaware limited
liability company ("WFCF"), in its capacity as administrative agent for the
Lender Group and the Bank Product Providers (in such capacity, together with its
successors and assigns in such capacity, "Agent").

W I T N E S S E T H:

WHEREAS, pursuant to that certain Credit Agreement of even date herewith (as
amended, restated, supplemented, or otherwise modified from time to time, the
"Credit Agreement") by and among School Specialty, Inc., a Wisconsin corporation
("Parent"), ClassromDirect.com, LLC, a Delaware limited liability company
("ClassroomDirect"), Sportime, LLC, a Delaware limited liability company
 ("Sportime"), Delta Education, LLC, a Delaware limited liability company
("Delta Education"), Premier Agendas, Inc., a Washington corporation ("Premier
Agendas"), Childcraft Education Corp., a New York corporation ("Childcraft"),
Bird-in-Hand Woodworks, Inc., a New Jersey corporation ("Bird-in-Hand"),
Califone International, Inc., a Delaware corporation ("Califone"; together with
Parent, ClassroomDirect, Sportime, Delta Education, Premier Agendas, Childcraft
and Bird-in-Hand, the "Borrowers" and each a "Borrower"), the lenders party
thereto as "Lenders" (each of such Lenders, together with its successors and
permitted assigns, is referred to hereinafter as a "Lender"), Agent, WFCF and
General Electric Capital Corporation, a Delaware corporation, as co-collateral
agents (the "Co-Collateral Agents" and each a "Co-Collateral Agent"), and WFCF
and GE Capital Markets, Inc., as co-lead arrangers and joint book runners, the
Lender Group has agreed to make certain financial accommodations available to
Borrowers from time to time pursuant to the terms and conditions thereof; and

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

WHEREAS, in order to induce the Lender Group to enter into the Credit Agreement
and the other Loan Documents, to induce the Bank Product Providers to enter into
the Bank Product Agreements, and to induce the Lender Group and the Bank Product
Providers to make financial accommodations to Borrowers as provided for in the
Credit Agreement, the other Loan Documents and the Bank Product Agreements,
(a) each Grantor (other than Borrowers) has agreed to guaranty the Guarantied
Obligations, and (b) each Grantor has agreed to grant to Agent, for the benefit
of the Lender Group and the Bank Product Providers, a continuing security
interest in and to the Collateral in order to secure the prompt and complete
payment, observance and performance of, among other things, the Secured
Obligations; and

WHEREAS, each Grantor (other than Borrowers) is an Affiliate of Borrowers and,
as such, will benefit by virtue of the financial accommodations extended to
Borrowers by the Lender Group.

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

1.

Definitions; Construction.

(a)

All initially capitalized terms used herein (including in the preamble and
recitals hereof) without definition shall have the meanings ascribed thereto in
the Credit Agreement (including Schedule 1.1 thereto).  Any terms (whether
capitalized or lower case) used in this Agreement that are defined in the Code
shall be construed and defined as set forth in the Code unless otherwise defined
herein or in the Credit Agreement; provided that to the extent that the Code is
used to define any term used herein and if such term is defined differently in
different Articles of the Code, the definition of such term contained in Article
9 of the Code shall govern.  In addition to those terms defined elsewhere in
this Agreement, as used in this Agreement, the following terms shall have the
following meanings:

(i)

"Account" means an account (as that term is defined in Article 9 of the Code).

(ii)

"Account Debtor" means an account debtor (as that term is defined in the Code).

(iii)

"Activation Instruction" has the meaning specified therefor in Section 7(k).

(iv)

"Agent" has the meaning specified therefor in the preamble to this Agreement.

(v)

"Agent's Lien" has the meaning specified therefor in the Credit Agreement.

(vi)

"Agreement" has the meaning specified therefor in the preamble to this
Agreement.

(vii)

"Bank Product Obligations" has the meaning specified therefor in the Credit
Agreement.

(viii)

"Bank Product Provider" has the meaning specified therefor in the Credit
Agreement.

(ix)

"Books" means books and records (including each Grantor's Records indicating,
summarizing, or evidencing such Grantor's assets (including the Collateral) or
liabilities, each Grantor's Records relating to such Grantor's business
operations or financial condition, and each Grantor's goods or General
Intangibles related to such information).

(x)

"Borrower" has the meaning specified therefor in the recitals to this Agreement.

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(xi)

"Cash Equivalents" has the meaning specified therefor in the Credit Agreement.

(xii)

"Chattel Paper" means chattel paper (as that term is defined in the Code), and
includes tangible chattel paper and electronic chattel paper.

(xiii)

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

(xiv)

"Collateral" has the meaning specified therefor in Section 3.

(xv)

"Collections" has the meaning specified therefor in the Credit Agreement.

(xvi)

"Commercial Tort Claims" means commercial tort claims (as that term is defined
in the Code), and includes those commercial tort claims listed on Schedule 1.

(xvii)

"Control Agreement" has the meaning specified therefor in the Credit Agreement.

(xviii)

"Controlled Account" has the meaning specified therefor in Section 7(k).

(xix)

"Controlled Account Agreements" means those certain cash management agreements,
in form and substance reasonably satisfactory to Agent, each of which is
executed and delivered by a Grantor, Agent, and one of the Controlled Account
Banks.

(xx)

"Controlled Account Bank" has the meaning specified therefor in Section 7(k).

(xxi)

"Copyrights" means any and all rights in any works of authorship, including
(A) copyrights and moral rights, (B) copyright registrations and recordings
thereof and all applications in connection therewith including those listed on
Schedule 2, (C) income, license fees, royalties, damages, and payments now and
hereafter due or payable under and with respect thereto, including payments
under all licenses entered into in connection therewith and damages and payments
for past, present, or future infringements thereof, (D) the right to sue for
past, present, and future infringements thereof, and (E) all of each Grantor's
rights corresponding thereto throughout the world.

(xxii)

"Copyright Security Agreement" means each Copyright Security Agreement executed
and delivered by Grantors, or any of them, and Agent, in substantially the form
of Exhibit A.

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(xxiii)

"Credit Agreement" has the meaning specified therefor in the recitals to this
Agreement.

(xxiv)

"Deposit Account" means a deposit account (as that term is defined in the Code).

(xxv)

"Equipment" means equipment (as that term is defined in the Code).

(xxvi)

"Equity Interests" has the meaning specified therefor in the Credit Agreement.

(xxvii)

"Event of Default" has the meaning specified therefor in the Credit Agreement.

(xxviii)

"Farm Products" means farm products (as that term is defined in the Code).

(xxix)

"Fixtures" means fixtures (as that term is defined in the Code).

(xxx)

"Foreclosed Grantor" has the meaning specified therefor in Section 2(i)(iii).

(xxxi)

"General Intangibles" means general intangibles (as that term is defined in the
Code) and Intangibles (as that term is defined in the PPSA), and includes
payment intangibles, software, contract rights, rights to payment, rights under
Hedge Agreements (including the right to receive payment on account of the
termination (voluntarily or involuntarily) of such Hedge Agreements), rights
arising under common law, statutes, or regulations, choses or things in action,
goodwill, Intellectual Property, Intellectual Property Licenses, purchase
orders, customer lists, monies due or recoverable from pension funds, route
lists, rights to payment and other rights under any royalty or licensing
agreements, including Intellectual Property Licenses, infringement claims,
pension plan refunds, pension plan refund claims, insurance premium rebates, tax
refunds, and tax refund claims, interests in a partnership or limited liability
company which do not constitute a security under Article 8 of the Code, and any
other personal property other than Commercial Tort Claims, money, Accounts,
Chattel Paper, Deposit Accounts, goods, Investment Property, Negotiable
Collateral, and oil, gas, or other minerals before extraction.

(xxxii)

"Grantor" and "Grantors" have the respective meanings specified therefor in the
preamble to this Agreement.

(xxxiii)

"Guarantied Obligations" means all of the Obligations (including any Bank
Product Obligations) now or hereafter existing, whether for principal, interest
(including any interest that accrues after the commencement of an Insolvency
Proceeding, regardless of whether allowed or allowable in whole or in part as a
claim in any such Insolvency Proceeding), fees (including the fees provided for
in the Fee Letter), Lender Group Expenses (including any fees or expenses that
accrue after the commencement of an Insolvency Proceeding, regardless of whether
allowed or allowable in whole or in part as a claim in any such Insolvency
Proceeding), or otherwise, and any and all expenses (including reasonable
counsel

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fees and expenses) incurred by Agent, any other member of the Lender Group, or
any Bank Product Provider (or any of them) in enforcing any rights under the any
of the Loan Documents.  Without limiting the generality of the foregoing,
Guarantied Obligations shall include all amounts that constitute part of the
Guarantied Obligations and would be owed by Borrowers to Agent, any other member
of the Lender Group, or any Bank Product Provider but for the fact that they are
unenforceable or not allowable, including due to the existence of a bankruptcy,
reorganization, other Insolvency Proceeding or similar proceeding involving any
Borrower or any guarantor.

(xxxiv)

"Guarantor" means each Grantor other than Borrowers.

(xxxv)

"Guaranty" means the guaranty set forth in Section 2 hereof.

(xxxvi)

"Insolvency Proceeding" has the meaning specified therefor in the Credit
Agreement.

(xxxvii)

"Intellectual Property" means any and all Patents, Copyrights, Trademarks, trade
secrets, know-how, inventions (whether or not patentable), algorithms, software
programs (including source code and object code), processes, product designs,
industrial designs, blueprints, drawings, data, customer lists, URLs and domain
names, specifications, documentations, reports, catalogs, literature, and any
other forms of technology or proprietary information of any kind, including all
rights therein and all applications for registration or registrations thereof.

(xxxviii)

"Intellectual Property Licenses" means, with respect to any Person (the
"Specified Party"), (A) any licenses or other similar rights provided to the
Specified Party in or with respect to Intellectual Property owned or controlled
by any other Person, and (B) any licenses or other similar rights provided to
any other Person in or with respect to Intellectual Property owned or controlled
by the Specified Party, in each case, including (x) any software license
agreements (other than license agreements for commercially available
off-the-shelf software that is generally available to the public which have been
licensed to a Grantor pursuant to end-user licenses), (y) the license agreements
listed on Schedule 3, and (z) the right to use any of the licenses or other
similar rights described in this definition in connection with the enforcement
of the Lender Group's rights under the Loan Documents.

(xxxix)

"Inventory" means inventory (as that term is defined in the Code).

(xl)

"Investment Property" means (A) any and all investment property (as that term is
defined in the Code), and (B) any and all of the following (regardless of
whether classified as investment property under the Code):  all Pledged
Interests, Pledged Operating Agreements, and Pledged Partnership Agreements.

(xli)

"Joinder" means each Joinder to this Agreement executed and delivered by Agent
and each of the other parties listed on the signature pages thereto, in
substantially the form of Annex 1.

(xlii)

"Lender Group" has the meaning specified therefor in the Credit Agreement.

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(xliii)

"Lender" and "Lenders" have the respective meanings specified therefor in the
recitals to this Agreement.

(xliv)

"Loan Document" has the meaning specified therefor in the Credit Agreement.

(xlv)

"Negotiable Collateral" means letters of credit, letter-of-credit rights,
instruments, promissory notes, drafts and documents (as each such term is
defined in the Code).

(xlvi)

"Obligations" has the meaning specified therefor in the Credit Agreement.

(xlvii)

"Parent" has the meaning specified therefor in the recitals to this Agreement.

(xlviii)

"Patents" means patents and patent applications, including (A) the patents and
patent applications listed on Schedule 4, (B) all continuations, divisionals,
continuations-in-part, re-examinations, reissues, and renewals thereof and
improvements thereon, (C) all income, royalties, damages and payments now and
hereafter due or payable under and with respect thereto, including payments
under all licenses entered into in connection therewith and damages and payments
for past, present, or future infringements thereof, (D) the right to sue for
past, present, and future infringements thereof, and (E) all of each Grantor's
rights corresponding thereto throughout the world.

(xlix)

"Patent Security Agreement" means each Patent Security Agreement executed and
delivered by Grantors, or any of them, and Agent, in substantially the form of
Exhibit B.

(l)

"Permitted Investments" has the meaning specified therefor in the Credit
Agreement.

(li)

"Permitted Liens" has the meaning specified therefor in the Credit Agreement.

(lii)

"Person" has the meaning specified therefor in the Credit Agreement.

(liii)

"Pledged Companies" means each Person listed on Schedule 5 as a "Pledged
Company", together with each other Person, all or a portion of whose Equity
Interests are acquired or otherwise owned by a Grantor after the Closing Date.

(liv)

"Pledged Interests" means all of each Grantor's right, title and interest in and
to all of the Equity Interests now owned or hereafter acquired by such Grantor,
regardless of class or designation, including in each of the Pledged Companies,
and all substitutions therefor and replacements thereof, all proceeds thereof
and all rights relating thereto, also including any certificates representing
the Equity Interests, the right to receive any certificates representing any of
the Equity Interests, all warrants, options, share appreciation rights and other
rights, contractual or otherwise, in respect thereof and the right to receive
all dividends, distributions of income, profits, surplus, or other compensation
by way of income or

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liquidating distributions, in cash or in kind, and all cash, instruments, and
other property from time to time received, receivable, or otherwise distributed
in respect of or in addition to, in substitution of, on account of, or in
exchange for any or all of the foregoing.

(lv)

"Pledged Interests Addendum" means a Pledged Interests Addendum substantially in
the form of Exhibit C.

(lvi)

"Pledged Notes" has the meaning specified therefor in Section 6(i).

(lvii)

"Pledged Operating Agreements" means all of each Grantor's rights, powers, and
remedies under the limited liability company operating agreements of each of the
Pledged Companies that are limited liability companies.

(lviii)

"Pledged Partnership Agreements" means all of each Grantor's rights, powers, and
remedies under the partnership agreements of each of the Pledged Companies that
are partnerships.

(lix)

"PPSA" means the Personal Property Security Act (Nova Scotia) as such
legislation may be amended, renamed or replaced from time to time, and the
regulations thereunder as in effect from time to time.

(lx)

"Proceeds" has the meaning specified therefor in Section 3.

(lxi)

"PTO" means the United States Patent and Trademark Office.

(lxii)

"Real Property" means any estates or interests in real property now owned or
hereafter acquired by any Grantor or any Subsidiary of any Grantor and the
improvements thereto.

(lxiii)

"Record" means information that is inscribed on a tangible medium or which is
stored in an electronic or other medium and is retrievable in perceivable form.

(lxiv)

"Rescission" has the meaning specified therefor in Section 7(k).

(lxv)

"Secured Obligations" means each and all of the following:  (A) all of the
present and future obligations of each of the Grantors arising from, or owing
under or pursuant to, this Agreement (including the Guaranty), the Credit
Agreement, or any of the other Loan Documents, (B) all Bank Product Obligations,
and (C) all other Obligations of Borrowers and all other Guarantied Obligations
of each Guarantor (including, in the case of each of clauses (A), (B) and (C),
reasonable attorneys' fees and expenses and any interest, fees, or expenses that
accrue after the filing of an Insolvency Proceeding, regardless of whether
allowed or allowable in whole or in part as a claim in any Insolvency
Proceeding).

(lxvi)

"Securities Account" means a securities account (as that term is defined in the
Code).

(lxvii)

"Security Interest" has the meaning specified therefor in Section 3.

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(lxviii)

"Select Agendas" means  Select Agendas, Corp., a Nova Scotia unlimited liability
company.

(lxix)

"STA" means the Securities Transfer Act (Nova Scotia) as such legislation may be
amended, renamed or replaced from time to time, and the regulations thereunder
as in effect from time to time.

(lxx)

"Supporting Obligations" means supporting obligations (as such term is defined
in the Code), and includes letters of credit and guaranties issued in support of
Accounts, Chattel Paper, documents, General Intangibles, instruments or
Investment Property.

(lxxi)

"Trademarks" means any and all trademarks, trade names, registered trademarks,
trademark applications, service marks, registered service marks and service mark
applications, including (A) the trade names, registered trademarks, trademark
applications, registered service marks and service mark applications listed on
Schedule 6, (B) all renewals thereof, (C) all income, royalties, damages and
payments now and hereafter due or payable under and with respect thereto,
including payments under all licenses entered into in connection therewith and
damages and payments for past or future infringements or dilutions thereof,
(D) the right to sue for past, present and future infringements and dilutions
thereof, (E) the goodwill of each Grantor's business symbolized by the foregoing
or connected therewith, and (F) all of each Grantor's rights corresponding
thereto throughout the world.

(lxxii)

"Trademark Security Agreement" means each Trademark Security Agreement executed
and delivered by Grantors, or any of them, and Agent, in substantially the form
of Exhibit D.

(lxxiii)

"Term Loan Agent" has the meaning specified therefor in the Split Lien
Intercreditor Agreement

(lxxiv)

"Triggering Event" means, as of any date of determination, that (A) an Event of
Default has occurred as of such date, or (B) Borrowers have failed to maintain
the Minimum Excess Availability Amount.

(lxxv)

" ULC " means a Pledged Company that is an unlimited company, unlimited
liability company or unlimited liability corporation under any ULC Laws.

(lxxvi)

" ULC Laws " means the Companies Act (Nova Scotia), the Business Corporations
Act (Alberta), the Business Corporations Act (British Columbia) and any other
present or future laws governing ULCs.

(lxxvii)

" ULC Shares " means shares, partnership interests or other Equity Interests in
the capital stock of a ULC.

(lxxviii)

"URL" means "uniform resource locator," an internet web address.

(lxxix)

"VIN" has the meaning specified therefor in Section 6(l).

(b)

Unless the context of this Agreement clearly requires otherwise, references to
the plural include the singular, references to the singular include the plural,
the

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terms "includes" and  "including" are not limiting, and the term "or" has,
except where otherwise indicated, the inclusive meaning represented by the
phrase "and/or."  The words "hereof," "herein," "hereby," "hereunder," and
similar terms in this Agreement refer to this Agreement as a whole and not to
any particular provision of this Agreement.  Section, subsection, clause,
schedule, and exhibit references herein are to this Agreement unless otherwise
specified.  Any reference in this Agreement to any agreement, instrument, or
document shall include all alterations, amendments, changes, extensions,
modifications, renewals, replacements, substitutions, joinders, and supplements,
thereto and thereof, as applicable (subject to any restrictions on such
alterations, amendments, changes, extensions, modifications, renewals,
replacements, substitutions, joinders, and supplements set forth herein or in
the Credit Agreement).  The words "asset" and "property" shall be construed to
have the same meaning and effect and to refer to any and all tangible and
intangible assets and properties.  Any reference herein to the satisfaction,
repayment, or payment in full of the Secured Obligations or the Guarantied
Obligations shall mean (i) the payment or repayment in full in immediately
available funds of (A) the principal amount of, and interest accrued with
respect to, all outstanding Loans, together with the payment of any premium
applicable to the repayment of the Loans, (B) all Lender Group Expenses that
have accrued regardless of whether demand has been made therefor, (C) all fees
or charges that have accrued hereunder or under any other Loan Document
(including the Letter of Credit Fee and the Unused Line Fee), (ii) in the case
of contingent reimbursement obligations with respect to Letters of Credit,
providing Letter of Credit Collateralization, (iii) in the case of obligations
with respect to Bank Products (other than Hedge Obligations), providing Bank
Product Collateralization, (iv) the receipt by Agent of cash collateral in order
to secure any other contingent Secured Obligations or Guarantied Obligations for
which a claim or demand for payment has been made at such time or in respect of
matters or circumstances known to Agent or a Lender at the time that are
reasonably expected to result in any loss, cost, damage or expense (including
attorneys' fees and legal expenses), such cash collateral to be in such amount
as Agent reasonably determines is appropriate to secure such contingent Secured
Obligations or Guarantied Obligations, (v) the payment or repayment in full in
immediately available funds of all other Secured Obligations or Guarantied
Obligations (as the case may be) (including the payment of any termination
amount then applicable (or which would or could become applicable as a result of
the repayment of the other Obligations) under Hedge Agreements provided by Hedge
Providers) other than (A) unasserted contingent indemnification obligations,
(B) any Bank Product Obligations (other than Hedge Obligations) that, at such
time, are allowed by the applicable Bank Product Provider to remain outstanding
without being required to be repaid or cash collateralized, and (C) any Hedge
Obligations that, at such time, are allowed by the applicable Hedge Provider to
remain outstanding without being required to be repaid, and (vi) the termination
of all of the Commitments of the Lenders.  Any reference herein to any Person
shall be construed to include such Person's successors and assigns.  Any
requirement of a writing contained herein shall be satisfied by the transmission
of a Record.

(c)

All of the schedules and exhibits attached to this Agreement shall be deemed
incorporated herein by reference.

2.

Guaranty.

(a)

In recognition of the direct and indirect benefits to be received by Guarantors
from the proceeds of the Revolving Loans, the issuance of the Letters of Credit,
and

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the entering into of the Bank Product Agreements and by virtue of the financial
accommodations to be made to Borrowers, each of the Guarantors, jointly and
severally, hereby unconditionally and irrevocably guarantees as a primary
obligor and not merely as a surety the full and prompt payment when due, whether
upon maturity, acceleration, or otherwise, of all of the Guarantied Obligations.
 If any or all of the Obligations becomes due and payable, each of the
Guarantors, unconditionally and irrevocably, and without the need for demand,
protest, or any other notice or formality, promises to pay such indebtedness to
Agent, for the benefit of the Lender Group and the Bank Product Providers,
together with any and all reasonable expenses (including Lender Group Expenses)
that may be incurred by Agent or any other member of the Lender Group or any
Bank Product Provider in demanding, enforcing, or collecting any of the
Guarantied Obligations (including the enforcement of any collateral for such
Obligations or any collateral for the obligations of the Guarantors under this
Guaranty).  If claim is ever made upon Agent or any other member of the Lender
Group or any Bank Product Provider for repayment or recovery of any amount or
amounts received in payment of or on account of any or all of the Obligations
and any of Agent or any other member of the Lender Group or any Bank Product
Provider repays all or part of said amount by reason of (i) any judgment,
decree, or order of any court or administrative body having jurisdiction over
such payee or any of its property, or (ii) any reasonable settlement or
compromise of any such claim effected by such payee with any such claimant
(including any Borrower or any Guarantor), then and in each such event, each of
the Guarantors agrees that any such judgment, decree, order, settlement, or
compromise shall be binding upon the Guarantors, notwithstanding any revocation
(or purported revocation) of this Guaranty or other instrument evidencing any
liability of any Grantor, and the Guarantors shall be and remain liable to the
aforesaid payees hereunder for the amount so repaid or recovered to the same
extent as if such amount had never originally been received by any such payee.

(b)

Additionally, each of the Guarantors unconditionally and irrevocably guarantees
the payment of any and all of the Obligations to Agent, for the benefit of the
Lender Group and the Bank Product Providers, whether or not due or payable by
any Loan Party upon the occurrence of any of the events specified in Section 8.4
or 8.5 of the Credit Agreement, and irrevocably and unconditionally promises to
pay such indebtedness to Agent, for the benefit of the Lender Group and the Bank
Product Providers, without the requirement of demand, protest, or any other
notice or other formality, in lawful money of the United States.

(c)

The liability of each of the Guarantors hereunder is primary, absolute, and
unconditional, and is independent of any security for or other guaranty of the
Obligations, whether executed by any other Guarantor or by any other Person, and
the liability of each of the Guarantors hereunder shall not be affected or
impaired by (i) any payment on, or in reduction of, any such other guaranty or
undertaking, (ii) any dissolution, termination, or increase, decrease, or change
in personnel by any Grantor, (iii) any payment made to Agent, any other member
of the Lender Group, or any Bank Product Provider on account of the Obligations
which Agent, such other member of the Lender Group, or such Bank Product
Provider repays to any Grantor pursuant to court order in any bankruptcy,
reorganization, arrangement, moratorium or other debtor relief proceeding (or
any settlement or compromise of any claim made in such a proceeding relating to
such payment), and each of the Guarantors waives any right to the deferral or
modification of its obligations hereunder by reason of any such proceeding, or
(iv) any action or inaction by Agent, any other member of the Lender Group, or
any Bank Product Provider, or

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(v) any invalidity, irregularity, avoidability, or unenforceability of all or
any part of the Obligations or of any security therefor.

(d)

This Guaranty includes all present and future Guarantied Obligations including
any under transactions continuing, compromising, extending, increasing,
modifying, releasing, or renewing the Guarantied Obligations, changing the
interest rate, payment terms, or other terms and conditions thereof, or creating
new or additional Guarantied Obligations after prior Guarantied Obligations have
been satisfied in whole or in part.  To the maximum extent permitted by law,
each Guarantor hereby waives any right to revoke this Guaranty as to future
Guarantied Obligations.  If such a revocation is effective notwithstanding the
foregoing waiver, each Guarantor acknowledges and agrees that (i) no such
revocation shall be effective until written notice thereof has been received by
Agent, (ii) no such revocation shall apply to any Guarantied Obligations in
existence on the date of receipt by Agent of such written notice (including any
subsequent continuation, extension, or renewal thereof, or change in the
interest rate, payment terms, or other terms and conditions thereof), (iii) no
such revocation shall apply to any Guarantied Obligations made or created after
such date to the extent made or created pursuant to a legally binding commitment
of any member of the Lender Group or any Bank Product Provider in existence on
the date of such revocation, (iv) no payment by any Guarantor, any Borrower, or
from any other source, prior to the date of Agent's receipt of written notice of
such revocation shall reduce the maximum obligation of such Guarantor hereunder,
and (v) any payment by any Borrower or from any source other than such Guarantor
subsequent to the date of such revocation shall first be applied to that portion
of the Guarantied Obligations as to which the revocation is effective and which
are not, therefore, guarantied hereunder, and to the extent so applied shall not
reduce the maximum obligation of such Guarantor hereunder.  This Guaranty shall
be binding upon each Guarantor, its successors and assigns and inure to the
benefit of and be enforceable by Agent (for the benefit of the Lender Group and
the Bank Product Providers) and its successors, transferees, or assigns.

(e)

The guaranty by each of the Guarantors hereunder is a guaranty of payment and
not of collection.  The obligations of each of the Guarantors hereunder are
independent of the obligations of any other Guarantor or Grantor or any other
Person and a separate action or actions may be brought and prosecuted against
one or more of the Guarantors whether or not action is brought against any other
Guarantor or Grantor or any other Person and whether or not any other Guarantor
or Grantor or any other Person be joined in any such action or actions.  Each of
the Guarantors waives, to the fullest extent permitted by law, the benefit of
any statute of limitations affecting its liability hereunder or the enforcement
hereof.  Any payment by any Grantor or other circumstance which operates to toll
any statute of limitations as to any Grantor shall operate to toll the statute
of limitations as to each of the Guarantors.

(f)

Each of the Guarantors authorizes Agent, the other members of the Lender Group,
and the Bank Product Providers without notice or demand, and without affecting
or impairing its liability hereunder, from time to time to:

(i)

change the manner, place, or terms of payment of, or change or extend the time
of payment of, renew, increase, accelerate, or alter:  (A) any of the
Obligations (including any increase or decrease in the principal amount thereof
or the rate of interest or fees thereon); or (B) any security therefor or any
liability incurred directly or indirectly in respect

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thereof, and this Guaranty shall apply to the Obligations as so changed,
extended, renewed, or altered;

(ii)

take and hold security for the payment of the Obligations and sell, exchange,
release, impair, surrender, realize upon, collect, settle, or otherwise deal
with in any manner and in any order any property at any time pledged or
mortgaged to secure the Obligations or any of the Guarantied Obligations
(including any of the obligations of all or any of the Guarantors under this
Guaranty) incurred directly or indirectly in respect thereof or hereof, or any
offset on account thereof;

(iii)

exercise or refrain from exercising any rights against any Grantor;

(iv)

release or substitute any one or more endorsers, guarantors, any Grantor, or
other obligors;

(v)

settle or compromise any of the Obligations, any security therefor, or any
liability (including any of those of any of the Guarantors under this Guaranty)
incurred directly or indirectly in respect thereof or hereof, and may
subordinate the payment of all or any part thereof to the payment of any
liability (whether due or not) of any Grantor to its creditors;

(vi)

apply any sums by whomever paid or however realized to any liability or
liabilities of any Grantor to Agent, any other member of the Lender Group, or
any Bank Product Provider regardless of what liability or liabilities of such
Grantor remain unpaid;

(vii)

consent to or waive any breach of, or any act, omission, or default under, this
Agreement, any other Loan Document, any Bank Product Agreement, or any of the
instruments or agreements referred to herein or therein, or otherwise amend,
modify, or supplement this Agreement, any other Loan Document, any Bank Product
Agreement, or any of such other instruments or agreements; or

(viii)

take any other action that could, under otherwise applicable principles of law,
give rise to a legal or equitable discharge of one or more of the Guarantors
from all or part of its liabilities under this Guaranty.

(g)

It is not necessary for Agent, any other member of the Lender Group, or any Bank
Product Provider to inquire into the capacity or powers of any of the Guarantors
or the officers, directors, partners or agents acting or purporting to act on
their behalf, and any Obligations made or created in reliance upon the professed
exercise of such powers shall be Guaranteed hereunder.

(h)

Each Guarantor jointly and severally guarantees that the Guarantied Obligations
will be paid strictly in accordance with the terms of the Loan Documents,
regardless of any law, regulation, or order now or hereafter in effect in any
jurisdiction affecting any of such terms or the rights of any member of the
Lender Group or any Bank Product Provider with respect thereto.  The obligations
of each Guarantor under this Guaranty are independent of the Guarantied
Obligations, and a separate action or actions may be brought and prosecuted
against each Guarantor to enforce such obligations, irrespective of whether any
action is brought against any other Guarantor or whether any other Guarantor is
joined in any such action or actions.  The

-12-

liability of each Guarantor under this Guaranty shall be absolute and
unconditional irrespective of, and each Guarantor hereby irrevocably waives any
defense it may now or hereafter have in any way relating to, any or all of the
following:

(i)

any lack of validity or enforceability of any Loan Document or any agreement or
instrument relating thereto;

(ii)

any change in the time, manner, or place of payment of, or in any other term of,
all or any of the Guarantied Obligations, or any other amendment or waiver of or
any consent to departure from any Loan Document, including any increase in the
Guarantied Obligations resulting from the extension of additional credit;

(iii)

any taking, exchange, release, or non-perfection of any Lien in and to any
Collateral, or any taking, release, amendment, waiver of, or consent to
departure from any other guaranty, for all or any of the Guarantied Obligations;

(iv)

the existence of any claim, set-off, defense, or other right that any Guarantor
may have at any time against any Person, including Agent, any other member of
the Lender Group, or any Bank Product Provider;

(v)

any defense, set-off, counterclaim, or claim, of any kind or nature, arising
directly or indirectly from the present or future lack of perfection,
sufficiency, validity, or enforceability of the Guarantied Obligations or any
security therefor;

(vi)

any right or defense arising by reason of any claim or defense based upon an
election of remedies by any member of the Lender Group or any Bank Product
Provider including any defense based upon an impairment or elimination of such
Guarantor's rights of subrogation, reimbursement, contribution, or indemnity of
such Guarantor against any other Grantor or any guarantors or sureties;

(vii)

any change, restructuring, or termination of the corporate, limited liability
company, or partnership structure or existence of any Grantor; or

(viii)

any other circumstance that might otherwise constitute a defense available to,
or a discharge of, any Grantor or any other guarantor or surety.

(i)

Waivers:

(i)

Each of the Guarantors waives any right (except as shall be required by
applicable statute and cannot be waived) to require Agent, any other member of
the Lender Group, or any Bank Product Provider to (i) proceed against any other
Grantor or any other Person, (ii) proceed against or exhaust any security held
from any other Grantor or any other Person, or (iii) protect, secure, perfect,
or insure any security interest or Lien on any property subject thereto or
exhaust any right to take any action against any other Grantor, any other
Person, or any collateral, or (iv) pursue any other remedy in any member of the
Lender Group's or any Bank Product Provider's power whatsoever.  Each of the
Guarantors waives any defense based on or arising out of any defense of any
Grantor or any other Person, other than payment of the Obligations to the extent
of such payment, based on or arising out of the disability of any

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Grantor or any other Person, or the validity, legality, or unenforceability of
the Obligations or any part thereof from any cause, or the cessation from any
cause of the liability of any Grantor other than payment of the Obligations to
the extent of such payment.  Agent may, at the election of the Required Lenders,
foreclose upon any Collateral held by Agent by one or more judicial or
nonjudicial sales or other dispositions, whether or not every aspect of any such
sale is commercially reasonable or otherwise fails to comply with applicable law
or may exercise any other right or remedy Agent, any other member of the Lender
Group, or any Bank Product Provider may have against any Grantor or any other
Person, or any security, in each case, without affecting or impairing in any way
the liability of any of the Guarantors hereunder except to the extent the
Obligations have been paid.

(ii)

Each of the Guarantors waives all presentments, demands for performance,
protests and notices, including notices of nonperformance, notices of protest,
notices of dishonor, notices of acceptance of this Guaranty, and notices of the
existence, creation, or incurring of new or additional Obligations or other
financial accommodations.  Each of the Guarantors waives notice of any Default
or Event of Default under any of the Loan Documents.  Each of the Guarantors
assumes all responsibility for being and keeping itself informed of each
Grantor's financial condition and assets and of all other circumstances bearing
upon the risk of nonpayment of the Obligations and the nature, scope, and extent
of the risks which each of the Guarantors assumes and incurs hereunder, and
agrees that neither Agent nor any of the other members of the Lender Group nor
any Bank Product Provider shall have any duty to advise any of the Guarantors of
information known to them regarding such circumstances or risks.

(iii)

To the fullest extent permitted by applicable law, each Guarantor hereby waives:
 (A) any right to assert against any member of the Lender Group or any Bank
Product Provider, any defense (legal or equitable), set-off, counterclaim, or
claim which each Guarantor may now or at any time hereafter have against any
Borrower or any other party liable to any member of the Lender Group or any Bank
Product Provider; (B) any defense, set-off, counterclaim, or claim, of any kind
or nature, arising directly or indirectly from the present or future lack of
perfection, sufficiency, validity, or enforceability of the Guarantied
Obligations or any security therefor; (C) any right or defense arising by reason
of any claim or defense based upon an election of remedies by any member of the
Lender Group or any Bank Product Provider including any defense based upon an
impairment or elimination of such Guarantor's rights of subrogation,
reimbursement, contribution, or indemnity of such Guarantor against any Borrower
or other guarantors or sureties; and (D) the benefit of any statute of
limitations affecting such Guarantor's liability hereunder or the enforcement
thereof, and any act which shall defer or delay the operation of any statute of
limitations applicable to the Guarantied Obligations shall similarly operate to
defer or delay the operation of such statute of limitations applicable to such
Guarantor's liability hereunder.

(iv)

No Guarantor will exercise any rights that it may now or hereafter acquire
against any Grantor or any other guarantor that arise from the existence,
payment, performance or enforcement of such Guarantor's obligations under this
Guaranty, including any right of subrogation, reimbursement, exoneration,
contribution or indemnification and any right to participate in any claim or
remedy of Agent, any other member of the Lender Group, or any Bank Product
Provider against any Grantor or any other guarantor or any Collateral, whether
or not such claim, remedy or right arises in equity or under contract, statute
or common law,

-14-

including the right to take or receive from any Grantor or any other guarantor,
directly or indirectly, in cash or other property or by set-off or in any other
manner, payment or security solely on account of such claim, remedy or right,
unless and until all of the Guarantied Obligations and all other amounts payable
under this Guaranty shall have been paid in full in cash and all of the
Commitments have been terminated.  If any amount shall be paid to any Guarantor
in violation of the immediately preceding sentence, such amount shall be held in
trust for the benefit of Agent, for the benefit of the Lender Group and the Bank
Product Providers, and shall forthwith be paid to Agent to be credited and
applied to the Guarantied Obligations and all other amounts payable under this
Guaranty, whether matured or unmatured, in accordance with the terms of the
Credit Agreement, or to be held as Collateral for any Guarantied Obligations or
other amounts payable under this Guaranty thereafter arising.  Notwithstanding
anything to the contrary contained in this Guaranty, no Guarantor may exercise
any rights of subrogation, contribution, indemnity, reimbursement or other
similar rights against, and may not proceed or seek recourse against or with
respect to any property or asset of, any other Grantor (the "Foreclosed
Grantor"), including after payment in full of the Obligations, if all or any
portion of the Obligations have been satisfied in connection with an exercise of
remedies in respect of the Equity Interests of such Foreclosed Grantor whether
pursuant to this Agreement or otherwise.

(v)

Each of the Guarantors hereby acknowledges and affirms that it understands that
to the extent the Obligations are secured by Real Property located in
California, Guarantors shall be liable for the full amount of the liability
hereunder notwithstanding the foreclosure on such Real Property by trustee sale
or any other reason impairing such Guarantor's right to proceed against any Loan
Party.  In accordance with Section 2856 of the California Code of Civil
Procedure or any similar laws of any other applicable jurisdiction, each of the
Guarantors hereby waives until such time as the Obligations have been paid in
full:

(1)

all rights of subrogation, reimbursement, indemnification, and contribution and
any other rights and defenses that are or may become available to the Guarantors
by reason of Sections 2787 to 2855, inclusive, 2899, and 3433 of the California
Code of Civil Procedure or any similar laws of any other applicable
jurisdiction;

(2)

all rights and defenses that the Guarantors may have because the Obligations are
secured by Real Property located in California, meaning, among other things,
that:  (A) Agent, the other members of the Lender Group, and the Bank Product
Providers may collect from the Guarantors without first foreclosing on any real
or personal property collateral pledged by any Borrower or any other Grantor,
and (B) if Agent, on behalf of the Lender Group, forecloses on any Real Property
collateral pledged by any Borrower or any other Grantor, (1) the amount of the
Obligations may be reduced only by the price for which that collateral is sold
at the foreclosure sale, even if the collateral is worth more than the sale
price, and (2) the Lender Group may collect from the Guarantors even if, by
foreclosing on the Real Property collateral, Agent or the other members of the
Lender Group have destroyed or impaired any right the Guarantors may have to
collect from any other Grantor, it being understood that this is an
unconditional and irrevocable waiver of any rights and defenses the Guarantors
may have because the Obligations are secured by Real Property (including,
without limitation, any rights or defenses based upon Sections 580a, 580d, or
726 of the California Code of Civil Procedure or any similar laws of any other
applicable jurisdiction); and

-15-

(3)

all rights and defenses arising out of an election of remedies by Agent, the
other members of the Lender Group, and the Bank Product Providers, even though
that election of remedies, such as a nonjudicial foreclosure with respect to
security for the Obligations, has destroyed Guarantors' rights of subrogation
and reimbursement against any Grantor by the operation of Section 580d of the
California Code of Civil Procedure or any similar laws of any other applicable
jurisdiction or otherwise.

(vi)

Each of the Guarantors represents, warrants, and agrees that each of the waivers
set forth above is made with full knowledge of its significance and consequences
and that if any of such waivers are determined to be contrary to any applicable
law or public policy, such waivers shall be effective to the maximum extent
permitted by law.

(vii)

Each of the Guarantors acknowledges and agrees that it is a guarantor, not a
surety, under this Agreement and hereby waives, to the maximum extent permitted
by law, all rights and defenses of a guarantor or surety under the Illinois
Sureties Act (740 ILCS 155/1) or any similar statute or rule of law.

(viii)

The provisions in this Section 2 which refer to certain sections of the
California Civil Code are included in this Guaranty solely out of an abundance
of caution and shall not be construed to mean that any of the above-referenced
provisions of California law are in any way applicable to this Guaranty.

3.

Grant of Security.  Each Grantor hereby unconditionally grants, assigns (except
in the case of ULC Shares), and pledges to Agent, for the benefit of each member
of the Lender Group and each of the Bank Product Providers, to secure the
Secured Obligations, a continuing security interest (hereinafter referred to as
the "Security Interest") in all of such Grantor's right, title, and interest in
and to all of such Grantor's present and after-acquired personal property,
including, without limitation, the following, whether now owned or hereafter
acquired or arising and wherever located (the "Collateral"):

(a)

all of such Grantor's Accounts;

(b)

all of such Grantor's Books;

(c)

all of such Grantor's Chattel Paper;

(d)

all of such Grantor's Commercial Tort Claims;

(e)

all of such Grantor's Deposit Accounts;

(f)

all of such Grantor's Equipment;

(g)

all of such Grantor's Farm Products;

(h)

all of such Grantor's Fixtures;

(i)

all of such Grantor's General Intangibles;

(j)

all of such Grantor's Inventory;

-16-

(k)

all of such Grantor's Investment Property;

(l)

all of such Grantor's Intellectual Property and Intellectual Property Licenses;

(m)

all of such Grantor's Negotiable Collateral (including all of such Grantor's
Pledged Notes);

(n)

all of such Grantor's Pledged Interests (including all of such Grantor's Pledged
Operating Agreements and Pledged Partnership Agreements);

(o)

all of such Grantor's Securities Accounts;

(p)

all of such Grantor's Supporting Obligations;

(q)

all of such Grantor's money, Cash Equivalents, or other assets of such Grantor
that now or hereafter come into the possession, custody, or control of Agent (or
its agent or designee) or any other member of the Lender Group; and

(r)

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

Notwithstanding anything contained in this Agreement to the contrary, the term
"Collateral" shall not include:  (i) voting Equity Interests of any CFC, solely
to the extent that (y) such Equity Interests represent more than 65% of the
outstanding voting Equity Interests of such CFC, and (z) pledging or
hypothecating more than 65% of the total outstanding voting Equity Interests of
such CFC would result in adverse tax consequences or the costs to the Grantors
of providing such pledge are unreasonably excessive (as determined by Agent in
consultation with Administrative Borrower) in relation to the benefits to Agent,
the other members of the Lender Group, and the Bank Product Providers of the
security afforded thereby (which pledge, if reasonably requested by Agent, shall
be governed by the laws of the jurisdiction of such Subsidiary); or (ii) any
rights or interest in any contract, lease, permit,

-17-

license, or license agreement covering real or personal property of any Grantor
if under the terms of such contract, lease, permit, license, or license
agreement, or applicable law with respect thereto, the grant of a security
interest or lien therein is prohibited as a matter of law or under the terms of
such contract, lease, permit, license, or license agreement and such prohibition
or restriction has not been waived or the consent of the other party to such
contract, lease, permit, license, or license agreement has not been obtained
(provided, that, (A) the foregoing exclusions of this clause (ii) shall in no
way be construed (1) to apply to the extent that any described prohibition or
restriction is ineffective under Section 9-406, 9-407, 9-408, or 9-409 of the
Code or other applicable law, or (2) to apply to the extent that any consent or
waiver has been obtained that would permit Agent's security interest or lien to
attach notwithstanding the prohibition or restriction on the pledge of such
contract, lease, permit, license, or license agreement and (B) the foregoing
exclusions of clauses (i) and (ii) shall in no way be construed to limit,
impair, or otherwise affect any of Agent's, any other member of the Lender
Group's or any Bank Product Provider's continuing security interests in and
liens upon any rights or interests of any Grantor in or to (1) monies due or to
become due under or in connection with any described contract, lease, permit,
license, license agreement, or Equity Interests (including any Accounts or
Equity Interests), or (2) any proceeds from the sale, license, lease, or other
dispositions of any such contract, lease, permit, license, license agreement, or
Equity Interests); (iii) any United States intent-to-use trademark applications
to the extent that, and solely during the period in which, the grant of a
security interest therein would impair the validity or enforceability of such
intent-to-use trademark applications under applicable federal law, provided that
upon submission and acceptance by the PTO of an amendment to allege use pursuant
to 15 U.S.C. Section 1060(a) (or any successor provision), such intent-to-use
trademark application shall be considered Collateral; (iv) any consumer goods
(as defined in the PPSA) of Select Agendas; or (v) the last day of any real
property lease, or any agreement to lease to which Select Agendas is now or
becomes a party as lessee, provided that any such last day shall be held in
trust by Select Agendas for Agent and, on the exercise by Agent of its rights
and remedies hereunder, shall be assigned by Select Agendas as directed by
Agent.  Notwithstanding the foregoing, Agent shall only have a security in, and
not a present assignment of, any Canadian trademarks or ULC Shares forming part
of the Collateral .

4.

Security for Secured Obligations.  The Security Interest created hereby secures
the payment and performance of the Secured Obligations, whether now existing or
arising hereafter.  Without limiting the generality of the foregoing, this
Agreement secures the payment of all amounts which constitute part of the
Secured Obligations and would be owed by Grantors, or any of them, to Agent, the
Lender Group, the Bank Product Providers or any of them, but for the fact that
they are unenforceable or not allowable (in whole or in part) as a claim in an
Insolvency Proceeding involving any Grantor due to the existence of such
Insolvency Proceeding. Each Grantor confirms that value has been given by the
Lender Group or the Bank Product Providers or any of them to such Grantor, that
such Grantor has rights in its Collateral existing at the date of this Agreement
and that such Grantor and the Agent have not agreed to postpone the time for
attachment to the Security Interest in any of the Collateral of such Grantor.

5.

Grantors Remain Liable.  Anything herein to the contrary notwithstanding,
(a) each of the Grantors shall remain liable under the contracts and agreements
included in the Collateral, including the Pledged Operating Agreements and the
Pledged Partnership Agreements, to perform all of the duties and obligations
thereunder to the same extent as if this

-18-

Agreement had not been executed, (b) the exercise by Agent or any other member
of the Lender Group of any of the rights hereunder shall not release any Grantor
from any of its duties or obligations under such contracts and agreements
included in the Collateral, and (c) none of the members of the Lender Group
shall have any obligation or liability under such contracts and agreements
included in the Collateral by reason of this Agreement, nor shall any of the
members of the Lender Group be obligated to perform any of the obligations or
duties of any Grantors thereunder or to take any action to collect or enforce
any claim for payment assigned hereunder.  Until an Event of Default shall occur
and be continuing, except as otherwise provided in this Agreement, the Credit
Agreement, or any other Loan Document, Grantors shall have the right to
possession and enjoyment of the Collateral for the purpose of conducting the
ordinary course of their respective businesses, subject to and upon the terms
hereof and of the Credit Agreement and the other Loan Documents.  Without
limiting the generality of the foregoing, it is the intention of the parties
hereto that record and beneficial ownership of the Pledged Interests, including
all voting, consensual, dividend, and distribution rights, shall remain in the
applicable Grantor until (i) the occurrence and continuance of an Event of
Default (or, in the case of pledged ULC Shares, the ULC Shares are no longer
registered in the name of the applicable Grantor) and (ii) Agent has notified
the applicable Grantor of Agent's election to exercise such rights with respect
to the Pledged Interests pursuant to Section 16, except that in the case of ULC
Shares, the applicable Grantor shall have the right to vote such shares and to
retain for its own account any dividends or other distributions on such shares
(other than to the extent same consists of certificated Pledged Interests which
shall be delivered to Agent to be held in accordance with the terms hereof)
until such shares are effectively transferred in to the name of a person other
than such Grantor.

6.

Representations and Warranties.  In order to induce Agent to enter into this
Agreement for the benefit of the Lender Group and the Bank Product Providers,
each Grantor makes the following representations and warranties to the Lender
Group which shall be true, correct, and complete, in all material respects
(except that such materiality qualifier shall not be applicable to any
representations and warranties that already are qualified or modified by
materiality in the text thereof), as of the Closing Date, and shall be true,
correct, and complete, in all material respects (except that such materiality
qualifier shall not be applicable to any representations and warranties that
already are qualified or modified by materiality in the text thereof), as of the
date of the making of each Revolving Loan (or other extension of credit) made
thereafter, as though made on and as of the date of such Revolving Loan (or
other extension of credit) (except to the extent that such representations and
warranties relate solely to an earlier date, in which case such representations
and warranties shall be true and correct in all material respects (except that
such materiality qualifier shall not be applicable to any representations and
warranties that already are qualified or modified by materiality in the text
thereof) as of such earlier date) and such representations and warranties shall
survive the execution and delivery of this Agreement:

(a)

The name (within the meaning of Section 9-503 of the Code), including any French
or combined form of name, and jurisdiction of organization of each Grantor and
each of its Subsidiaries is set forth on Schedule 7 (as such Schedule may be
updated from time to time to reflect changes resulting from transactions
permitted under the Loan Documents).

-19-

(b)

The chief executive office of each Grantor and each of its Subsidiaries is
located at the address indicated on Schedule 7 (as such Schedule may be updated
from time to time to reflect changes resulting from transactions permitted under
the Loan Documents).

(c)

Each Grantor's and each of its Subsidiaries' tax identification numbers and
organizational identification numbers, if any, are identified on Schedule 7 (as
such Schedule may be updated from time to time to reflect changes resulting from
transactions permitted under the Loan Documents).

(d)

As of the Closing Date, no Grantor and no Subsidiary of a Grantor holds any
commercial tort claims that exceed $250,000 in amount, except as set forth on
Schedule 1.

(e)

Set forth on Schedule 9 (as such Schedule may be updated from time to time
subject to Section 7(k)(iii) with respect to Controlled Accounts and provided
that Grantors comply with Section 7(c) hereof) is a listing of all of Grantors'
and their Subsidiaries' Deposit Accounts and Securities Accounts, including,
with respect to each bank or securities intermediary (a) the name and address of
such Person, and (b) the account numbers of the Deposit Accounts or Securities
Accounts maintained with such Person.

(f)

Schedule 8 sets forth all Real Property owned by any of the Grantors as of the
Closing Date.

(g)

As of the Closing Date:  (i) Schedule 2 provides a complete and correct list of
all registered Copyrights owned by any Grantor, all applications for
registration of Copyrights owned by any Grantor; (ii) Schedule 3 provides a
complete and correct list of all Intellectual Property Licenses entered into by
any Grantor pursuant to which (A) any Grantor has provided any license or other
rights in Intellectual Property owned or controlled by such Grantor to any other
Person (other than non-exclusive software licenses granted in the ordinary
course of business) or (B) any Person has granted to any Grantor any license or
other rights material to the business of such Grantor in Intellectual Property
owned or controlled by such Person that is material to the business of such
Grantor, including any Intellectual Property that is incorporated in any
Inventory, software, or other product marketed, sold, licensed, or distributed
by such Grantor; (iii) Schedule 4 provides a complete and correct list of all
Patents owned by any Grantor and all applications for Patents owned by any
Grantor; and (iv) Schedule 6 provides a complete and correct list of all
registered Trademarks owned by any Grantor and all applications for registration
of Trademarks owned by any Grantor.

(h)

i) (A) each Grantor owns exclusively or holds licenses in all Intellectual
Property that is necessary in or material to the conduct of its business, and
(B) all employees and contractors of each Grantor who were involved in the
creation or development of any Intellectual Property for such Grantor that is
necessary in or material to the business of such Grantor have signed agreements
containing assignment of Intellectual Property rights to such Grantor and
obligations of confidentiality;

(ii)

to each Grantor's knowledge after reasonable inquiry, no Person has infringed or
misappropriated or is currently infringing or misappropriating any Intellectual
Property rights owned by such Grantor, in each case, that either individually or
in the aggregate could reasonably be expected to result in a Material Adverse
Effect;

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(iii)

(A) to each Grantor's knowledge after reasonable inquiry, (1) such Grantor has
never infringed or misappropriated and is not currently infringing or
misappropriating any Intellectual Property rights of any Person, and (2) no
product manufactured, used, distributed, licensed, or sold by or service
provided by such Grantor has ever infringed or misappropriated or is currently
infringing or misappropriating any Intellectual Property rights of any Person,
in each case, except where such infringement either individually or in the
aggregate could not reasonably be expected to result in a Material Adverse
Effect, and (B) there are no infringement or misappropriation claims or
proceedings pending, or to any Grantor's knowledge after reasonable inquiry,
threatened in writing against any Grantor, and no Grantor has received any
written notice or other communication of any actual or alleged infringement or
misappropriation of any Intellectual Property rights of any Person, in each
case, except where such infringement either individually or in the aggregate
could not reasonably be expected to result in a Material Adverse Effect;

(iv)

to each Grantor's knowledge after reasonable inquiry, all registered Copyrights,
registered Trademarks, and issued Patents that are owned by such Grantor and
necessary in or material to the conduct of its business are valid, subsisting
and enforceable and in compliance with all legal requirements, filings, and
payments and other actions that are required to maintain such Intellectual
Property in full force and effect, and

(v)

each Grantor has taken reasonable steps to maintain the confidentiality of and
otherwise protect and enforce its rights in all trade secrets owned by such
Grantor that are necessary in or material to the conduct of the business of such
Grantor.

(i)

This Agreement creates a valid security interest in the Collateral of each
Grantor, to the extent a security interest therein can be created under the
Code, securing the payment of the Secured Obligations.  Except to the extent a
security interest in the Collateral cannot be perfected by the filing of a
financing statement under the Code, all filings and other actions necessary or
desirable to perfect and protect such security interest have been duly taken or
will have been taken upon the filing of financing statements listing each
applicable Grantor, as a debtor, and Agent, as secured party, in the
jurisdictions listed next to such Grantor's name on Schedule 11.  Upon the
making of such filings, Agent shall have (i) a first priority perfected security
interest in the ABL Priority Collateral of each Grantor and (ii) a second
priority security interest in the Split Lien Priority Collateral, subject only
to the security interest granted to the Term Loan Agent to the extent permitted
under the Split Lien Intercreditor Agreement, in each case to the extent such
security interest can be perfected by the filing of a financing statement.  Upon
filing of any Copyright Security Agreement with the United States Copyright
Office, filing of any Patent Security Agreement and any Trademark Security
Agreement with the PTO, and the filing of appropriate financing statements in
the jurisdictions listed on Schedule 11, all action necessary or desirable to
protect and perfect the Security Interest in and on each Grantor's Patents,
Trademarks, or Copyrights has been taken and such perfected Security Interest is
enforceable as such as against any and all creditors of and purchasers from any
Grantor (subject only to the security interest granted to Term Loan Agent to the
extent permitted under the Split Lien Credit Agreement).  All action by any
Grantor necessary to protect and perfect such security interest on each item of
Collateral has been duly taken.

(j)

(i) Except for the Security Interest created hereby, each Grantor is and will at
all times be the sole holder of record and the legal and beneficial owner, free
and clear of all

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Liens other than Permitted Liens, of the Pledged Interests indicated on Schedule
5 as being owned by such Grantor and, when acquired by such Grantor, any Pledged
Interests acquired after the Closing Date; (ii) all of the Pledged Interests are
duly authorized, validly issued, fully paid and nonassessable (subject to the
general assessability of shares of a ULC) and the Pledged Interests constitute
or will constitute the percentage of the issued and outstanding Equity Interests
of the Pledged Companies of such Grantor identified on Schedule 5 as
supplemented or modified by any Pledged Interests Addendum or any Joinder to
this Agreement; (iii) such Grantor has the right and requisite authority to
pledge, the Investment Property pledged by such Grantor to Agent as provided
herein; (iv) all actions necessary or desirable to perfect and establish the
priority (subject only to the Liens of Term Loan Agent to the extent permitted
pursuant to the Split Lien Intercreditor Agreement) of, or otherwise protect,
Agent's Liens in the Investment Property, and the proceeds thereof, have been
duly taken, upon (A) the execution and delivery of this Agreement; (B) the
taking of possession by Agent (or its agent or designee) of any certificates
representing the Pledged Interests, together with undated powers (or other
documents of transfer acceptable to Agent) endorsed in blank by the applicable
Grantor; (C) the filing of financing statements in the applicable jurisdiction
set forth on Schedule 11 for such Grantor with respect to the Pledged Interests
of such Grantor that are not represented by certificates, and (D) with respect
to any Securities Accounts, the delivery of Control Agreements with respect
thereto; and (v) each Grantor has delivered to and deposited with Agent all
certificates representing the Pledged Interests owned by such Grantor to the
extent such Pledged Interests are represented by certificates, and undated
powers (or other documents of transfer acceptable to Agent) endorsed in blank
with respect to such certificates. None of the Pledged Interests owned or held
by such Grantor has been issued or transferred in violation of any securities
registration, securities disclosure, or similar laws of any jurisdiction to
which such issuance or transfer may be subject.

(k)

Except as described on Schedule 6(k), no consent, approval, authorization, or
other order or other action by, and no notice to or filing with, any
Governmental Authority or any other Person (other than the consents of directors
which may be required in connection with the transfer of ULC Shares) is required
(i) for the grant of a Security Interest by such Grantor in and to the
Collateral pursuant to this Agreement or for the execution, delivery, or
performance of this Agreement by such Grantor, or (ii) for the exercise by Agent
of the voting or other rights provided for in this Agreement with respect to the
Investment Property or the remedies in respect of the Collateral pursuant to
this Agreement, except as may be required in connection with such disposition of
Investment Property by laws affecting the offering and sale of securities
generally and except for consents, approvals, authorizations, or other orders or
actions that have been obtained or given (as applicable) and that are still in
force.  Except as described on Schedule 6(k), no Intellectual Property License
of any Grantor that is necessary in or material to the conduct of such Grantor's
business requires any consent of any other Person that has not been obtained in
order for such Grantor to grant the security interest granted hereunder in such
Grantor's right, title or interest in or to such Intellectual Property License.

(l)

Schedule 12 sets forth all motor vehicles owned by Grantors as of the Closing
Date, by model, model year, and vehicle identification number ("VIN").

(m)

Except as described on Schedule 6(m), there is no default, breach, violation, or
event of acceleration existing under any promissory note (as defined in the
Code)

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constituting Collateral and pledged hereunder (each a "Pledged Note") and no
event has occurred or circumstance exists which, with the passage of time or the
giving of notice, or both, would constitute a default, breach, violation, or
event of acceleration under any Pledged Note.  No Grantor that is an obligee
under a Pledged Note has waived any default, breach, violation, or event of
acceleration under such Pledged Note.

(n)

As to all limited liability company or partnership interests, issued under any
Pledged Operating Agreement or Pledged Partnership Agreement, each Grantor
hereby represents and warrants that the Pledged Interests issued pursuant to
such agreement (A) are not dealt in or traded on securities exchanges or in
securities markets, (B) do not constitute investment company securities, and
(C) are not held by such Grantor in a Securities Account.  In addition, none of
the Pledged Operating Agreements, the Pledged Partnership Agreements, or any
other agreements governing any of the Pledged Interests issued under any Pledged
Operating Agreement or Pledged Partnership Agreement, provide that such Pledged
Interests are securities governed by Article 8 of the Uniform Commercial Code as
in effect in any relevant jurisdiction; provided however, that in the case of
any Grantor that is organized under the laws of Canada or a province or
territory thereof, such Grantor represents and warrants that all interests in
partnerships or limited liability companies are a "security" for the purposes of
the STA (if applicable); provided however, that in the case of any Grantor that
is organized under the laws of Canada or a province or territory thereof, such
Grantor represents and warrants that all interests in partnerships or limited
liability companies are a "security" for the purposes of the STA (if applicable)
.

7.

Covenants.  Each Grantor, jointly and severally, covenants and agrees with Agent
that from and after the date of this Agreement and until the date of termination
of this Agreement in accordance with Section 23:

(a)

Possession of Collateral.  In the event that any Collateral, including Proceeds,
is evidenced by or consists of Negotiable Collateral, Investment Property, or
Chattel Paper having an aggregate value or face amount of $250,000 or more for
all such Negotiable Collateral, Investment Property, or Chattel Paper, the
Grantors shall promptly (and in any event within five (5) Business Days after
acquisition thereof), notify Agent thereof, and if and to the extent that
perfection or priority of Agent's Security Interest is dependent on or enhanced
by possession, the applicable Grantor, promptly (and in any event within five
(5) Business Days) after request by Agent, shall execute such other documents
and instruments as shall be requested by Agent or, if applicable, endorse and
deliver physical possession of such Negotiable Collateral, Investment Property,
or Chattel Paper to Agent, together with such undated powers (or other relevant
document of transfer acceptable to Agent) endorsed in blank as shall be
requested by Agent, and shall do such other acts or things deemed necessary or
desirable by Agent to protect Agent's Security Interest therein;

(b)

Chattel Paper.

(i)

Promptly (and in any event within five (5) Business Days) after request by
Agent, each Grantor shall take all steps reasonably necessary to grant Agent
control of all electronic Chattel Paper in accordance with the Code and all
"transferable records" as that term is defined in Section 16 of the Uniform
Electronic Transaction Act and Section 201 of the federal Electronic Signatures
in Global and National Commerce Act as in effect in any relevant

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jurisdiction, to the extent that the aggregate value or face amount of such
electronic Chattel Paper equals or exceeds $250,000;

(ii)

If any Grantor retains possession of any Chattel Paper or instruments (which
retention of possession shall be subject to the extent permitted hereby and by
the Credit Agreement), promptly upon the request of Agent, such Chattel Paper
and instruments shall be marked with the following legend:  "This writing and
the obligations evidenced or secured hereby are subject to the Security Interest
of Wells Fargo Capital Finance, LLC, as Agent for the benefit of the Lender
Group and the Bank Product Providers";

(c)

Control Agreements.

(i)

Except to the extent otherwise excused by Section 7(k)(iv), each Grantor shall
obtain an authenticated Control Agreement (which may include a Controlled
Account Agreement), from each bank maintaining a Deposit Account or Securities
Account for such Grantor;

(ii)

Except to the extent otherwise excused by Section 7(k)(iv), each Grantor shall
obtain an authenticated Control Agreement, from each issuer of uncertificated
securities, securities intermediary, or commodities intermediary issuing or
holding any financial assets or commodities to or for any Grantor, or
maintaining a Securities Account for such Grantor; and

(iii)

Except to the extent otherwise excused by Section 7(k)(iv), each Grantor shall
obtain an authenticated Control Agreement with respect to all of such Grantor's
investment property;

(d)

Letter-of-Credit Rights.  If the Grantors (or any of them) are or become the
beneficiary of letters of credit having a face amount or value of $250,000 or
more in the aggregate, then the applicable Grantor or Grantors shall promptly
(and in any event within five (5) Business Days after becoming a beneficiary),
notify Co-Collateral Agents thereof and, promptly (and in any event within five
(5) Business Days) after request by either Co-Collateral Agent, enter into a
tri-party agreement with Agent and the issuer or confirming bank with respect to
letter-of-credit rights assigning such letter-of-credit rights to Agent and
directing all payments thereunder to Agent's Account, all in form and substance
reasonably satisfactory to Co-Collateral Agents;

(e)

Commercial Tort Claims.  If the Grantors (or any of them) obtain Commercial Tort
Claims having a value, or involving an asserted claim, in the amount of $250,000
or more in the aggregate for all Commercial Tort Claims, then the  applicable
Grantor or Grantors shall promptly (and in any event within five (5) Business
Days of obtaining such Commercial Tort Claim), notify Agent upon incurring or
otherwise obtaining such Commercial Tort Claims and, promptly (and in any event
within five (5) Business Days) after request by Agent, amend Schedule 1 to
describe such Commercial Tort Claims in a manner that reasonably identifies such
Commercial Tort Claims and which is otherwise reasonably satisfactory to Agent,
and hereby authorizes the filing of additional financing statements or
amendments to existing financing statements describing such Commercial Tort
Claims, and agrees to do such other acts

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or things deemed necessary or desirable by Agent to give Agent a first priority,
perfected security interest in any such Commercial Tort Claim;

(f)

Government Contracts.  Other than Accounts and Chattel Paper that either (a)
have an aggregate value of which does not at any one time exceed $500,000 or (b)
which are based upon purchase orders which are fully satisfied within sixty (60)
days of acceptance of the same by any Grantor, if any Account or Chattel Paper
arises out of a contract or contracts with the United States of America or
Canada or any department, agency, or instrumentality thereof, Grantors shall
promptly (and in any event within five (5) Business Days of the creation
thereof) notify Co-Collateral Agents thereof and, promptly (and in any event
within five (5) Business Days) after request by either Co-Collateral Agent,
execute any instruments or take any steps reasonably required by either
Co-Collateral Agent in order that all moneys due or to become due under such
contract or contracts shall be assigned to Agent, for the benefit of the Lender
Group and the Bank Product Providers, and shall provide written notice thereof
under the Assignment of Claims Act or other applicable law;

(g)

Intellectual Property.

(i)

Upon the request of Agent, in order to facilitate filings with the PTO and the
United States Copyright Office, each Grantor shall execute and deliver to Agent
one or more Copyright Security Agreements, Trademark Security Agreements, or
Patent Security Agreements to further evidence Agent's Lien on such Grantor's
Patents, Trademarks, or Copyrights, and the General Intangibles of such Grantor
relating thereto or represented thereby;

(ii)

Each Grantor shall have the duty, with respect to Intellectual Property that is
individually necessary in or material to the conduct of such Grantor's business,
to protect and diligently enforce and defend at such Grantor's expense its
Intellectual Property, including (A) to diligently enforce and defend, including
promptly suing for infringement, misappropriation, or dilution and to recover
any and all damages for such infringement, misappropriation, or dilution, and
filing for opposition, interference, and cancellation against conflicting
Intellectual Property rights of any Person, (B) to prosecute diligently any
trademark application or service mark application that is part of the Trademarks
pending as of the date hereof or hereafter until the termination of this
Agreement, (C) to prosecute diligently any patent application that is part of
the Patents pending as of the date hereof or hereafter until the termination of
this Agreement, (D) to take all reasonable and necessary action to preserve and
maintain all of such Grantor's Trademarks, Patents, Copyrights, Intellectual
Property Licenses, and its rights therein, including paying all maintenance fees
and filing of applications for renewal, affidavits of use, and affidavits of
noncontestability, and (E) to require all employees, consultants, and
contractors of each Grantor who were involved in the creation or development of
such Intellectual Property to sign agreements containing assignment of
Intellectual Property rights and obligations of confidentiality.  Each Grantor
further agrees not to abandon any Intellectual Property or Intellectual Property
License that is necessary in or material to the conduct of such Grantor's
business.  Each Grantor hereby agrees to take the steps described in this
Section 7(g)(ii) with respect to all new or acquired Intellectual Property to
which it or any of its Subsidiaries is now or later becomes entitled that is
necessary in or material to the conduct of such Grantor's business;

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(iii)

Grantors acknowledge and agree that the Lender Group shall have no duties with
respect to any Intellectual Property or Intellectual Property Licenses of any
Grantor.  Without limiting the generality of this Section 7(g)(iii), Grantors
acknowledge and agree that no member of the Lender Group shall be under any
obligation to take any steps necessary to preserve rights in the Collateral
consisting of Intellectual Property or Intellectual Property Licenses against
any other Person, but any member of the Lender Group may do so at its option
from and after the occurrence and during the continuance of an Event of Default,
and all expenses incurred in connection therewith (including reasonable fees and
expenses of attorneys and other professionals) shall be for the sole account of
Borrowers and shall be chargeable to the Loan Account;

(iv)

[Reserved.]

(v)

No later than the last date of each fiscal quarter of Grantor (or, if an Event
of Default has occurred and is continuing, more frequently if requested by
Agent), each Grantor shall provide Agent with a written report of all new
Patents, Trademarks or Copyrights that are registered or the subject of pending
applications for registrations, and of all Intellectual Property Licenses that
are material to the conduct of such Grantor's business, in each case, which were
acquired, registered, or for which applications for registration were filed by
any Grantor during the prior period.  In the case of such registrations or
applications therefor, which were acquired or otherwise owned by any Grantor,
each such Grantor shall file the necessary documents with the appropriate
Governmental Authority identifying the applicable Grantor as the owner (or as a
co-owner thereof, if such is the case) of such Intellectual Property.  In each
of the foregoing cases, the applicable Grantor shall promptly cause to be
prepared, executed, and delivered to Agent supplemental schedules to the
applicable Loan Documents to identify such Patent, Trademark and Copyright
registrations and applications therefor  and Intellectual Property Licenses as
being subject to the security interests created thereunder;

(vi)

Anything to the contrary in this Agreement notwithstanding, in no event shall
any Grantor, either itself or through any agent, employee, licensee, or
designee, file an application for the registration of any Copyright with the
United States Copyright Office or any similar office or agency in another
country without complying with Section 7(g)(i). Upon receipt from the United
States Copyright Office of notice of registration of any Copyright, each Grantor
shall promptly (but in no event later than the end of the calendar month
following such receipt) notify (but without duplication of any notice required
by Section 7(g)(v)) Agent of such registration by delivering, or causing to be
delivered, to Agent, documentation sufficient for Agent to perfect Agent's Liens
on such Copyright.  If any Grantor acquires from any Person any Copyright
registered with the United States Copyright Office or an application to register
any Copyright with the United States Copyright Office, such Grantor shall
promptly (but in no event later than the end of the calendar month following
such acquisition) notify Agent of such acquisition and deliver, or cause to be
delivered, to Agent, documentation sufficient for Agent to perfect Agent's Liens
on such Copyright.  In the case of such Copyright registrations or applications
therefor which were acquired by any Grantor, each such Grantor shall promptly
(but in no event later than the end of the calendar month following such
acquisition) file the necessary documents with the appropriate Governmental
Authority identifying the applicable Grantor as the owner (or as a co-owner
thereof, if such is the case) of such Copyrights;

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(vii)

Each Grantor shall take reasonable steps to maintain the confidentiality of, and
otherwise protect and enforce its rights in, the Intellectual Property that is
necessary in or material to the conduct of such Grantor's business, including,
as applicable (A) protecting the secrecy and confidentiality of its confidential
information and trade secrets by having and enforcing a policy requiring all
current employees, consultants, licensees, vendors and contractors with access
to such information to execute appropriate confidentiality agreements;
(B) taking actions reasonably necessary to ensure that no trade secret falls
into the public domain; and (C) protecting the secrecy and confidentiality of
the source code of all software programs and applications of which it is the
owner or licensee by having and enforcing a policy requiring any licensees (or
sublicensees) of such source code to enter into license agreements with
commercially reasonable use and non-disclosure restrictions; and

(viii)

After the Closing Date, no Grantor shall enter into any Intellectual Property
License material to the conduct of the business to receive any license or rights
in any Intellectual Property of any other Person unless such Grantor has used
commercially reasonable efforts to permit the assignment of or grant of a
security interest in such Intellectual Property License (and all rights of
Grantor thereunder) to Agent (and any transferees of Agent).

(h)

Investment Property.

(i)

If any Grantor shall acquire, obtain, receive or become entitled to receive any
Pledged Interests after the Closing Date, it shall promptly (and in any event
within five (5) Business Days of acquiring or obtaining such Collateral) deliver
to Agent a duly executed Pledged Interests Addendum identifying such Pledged
Interests (notwithstanding the foregoing or any other provision of this Section
7(h) the limitations regarding the pledging of equity interests of CFCs as
described in the Credit Agreement shall be in full force and effect);

(ii)

Except with respect to ULC Shares, upon the occurrence and during the
continuance of an Event of Default, following the request of either
Co-Collateral Agent, all sums of money and property paid or distributed in
respect of the Investment Property that are received by any Grantor shall be
held by the Grantors in trust for the benefit of Agent segregated from such
Grantor's other property, and such Grantor shall deliver it forthwith to Agent
in the exact form received;

(iii)

Each Grantor shall promptly deliver to Agent a copy of each material notice or
other material communication received by it in respect of any Pledged Interests;

(iv)

No Grantor shall make or consent to any amendment or other modification or
waiver with respect to any Pledged Interests, Pledged Operating Agreement, or
Pledged Partnership Agreement, or enter into any agreement or permit to exist
any restriction with respect to any Pledged Interests if the same is prohibited
pursuant to the Loan Documents;

(v)

Each Grantor agrees that it will cooperate with Agent in obtaining all necessary
approvals and making all necessary filings under federal, state, provincial,
local, or foreign law to effect the perfection of the Security Interest on the
Investment Property or to effect any sale or transfer thereof;

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(vi)

As to all limited liability company or partnership interests, issued under any
Pledged Operating Agreement or Pledged Partnership Agreement, each Grantor
hereby covenants that the Pledged Interests issued pursuant to such agreement
(A) are not and shall not be dealt in or traded on securities exchanges or in
securities markets, (B) do not and will not constitute investment company
securities, and (C) are not and will not be held by such Grantor in a securities
account. As of the Closing Date, each limited liability company agreement
governing the Pledged Interests shall expressly provide that such Pledged
Interests are securities governed by Article 8 of the UCC; provided however, in
connection with any Grantor organized under the laws of Canada or a province or
territory thereof, such Grantor covenants that all interest in partnerships and
limited liability companies shall be a “security” for the purposes of the STA
(if applicable) .

(i)

Real Property; Fixtures.  Each Grantor covenants and agrees that upon the
acquisition of any fee interest in Real Property having a fair market value in
excess of $250,000 it will promptly (and in any event within two (2) Business
Days of acquisition) notify Agent of the acquisition of such Real Property and
will grant to Agent, for the benefit of the Lender Group and the Bank Product
Providers, a second priority Mortgage (subject only to the first priority
Mortgage granted in favor of the Term Loan Agent to the extent permitted under
the Split Lien Intercreditor Agreement) on each fee interest in Real Property
now or hereafter owned by such Grantor and shall deliver such other
documentation and opinions, in form and substance satisfactory to Agent, in
connection with the grant of such Mortgage as Agent shall request in its
Permitted Discretion, including title insurance policies, financing statements,
fixture filings and environmental audits and such Grantor shall pay all
recording costs, intangible taxes and other fees and costs (including reasonable
attorneys' fees and expenses) incurred in connection therewith.  Each Grantor
acknowledges and agrees that, to the extent permitted by applicable law, all of
the Collateral shall remain personal property regardless of the manner of its
attachment or affixation to real property;

(j)

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

(k)

Controlled Accounts; Controlled Investments.

(i)

Each Grantor shall (A) establish and maintain cash management services of a type
and on terms reasonably satisfactory to Co-Collateral Agents at one or more of
the banks set forth on Schedule 11 (each a "Controlled Account Bank"), and shall
take reasonable steps to ensure that all of its and its Subsidiaries' Account
Debtors forward payment of the amounts owed by them directly to such Controlled
Account Bank, and (B) deposit or cause to be deposited promptly, and in any
event no later than the first Business Day after the date of receipt thereof,
all of their Collections (including those sent directly by their Account Debtors
to a Grantor) into a bank account of such Grantor (each, a "Controlled Account")
at one of the Controlled Account Banks.

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(ii)

Each Grantor shall establish and maintain Controlled Account Agreements with
Agent and the applicable Controlled Account Bank, in form and substance
reasonably acceptable to Co-Collateral Agents.  Each such Controlled Account
Agreement shall provide, among other things, that (A) the Controlled Account
Bank will comply with any instructions originated by Agent directing the
disposition of the funds in such Controlled Account without further consent by
the applicable Grantor, (B) the Controlled Account Bank waives, subordinates, or
agrees not to exercise any rights of setoff or recoupment or any other claim
against the applicable Controlled Account other than for payment of its service
fees and other charges directly related to the administration of such Controlled
Account and for returned checks or other items of payment, and (C)  upon the
instruction of Agent (an "Activation Instruction"), the Controlled Account Bank
will forward by daily sweep all amounts in the applicable Controlled Account to
the Agent's Account.  Agent agrees not to issue an Activation Instruction with
respect to the Controlled Accounts unless a Triggering Event has occurred and is
continuing at the time such Activation Instruction is issued.  Agent shall issue
an Activation Instruction for the Controlled Accounts subject to Controlled
Account Agreements promptly (but not more than five (5) Business Days) after
receiving written notice from Borrowers or having actual knowledge of the
occurrence and continuance of a Triggering Event and Agent agrees to use
commercially reasonable efforts to rescind an Activation Instruction (the
"Rescission") if:  (1) the Triggering Event upon which such Activation
Instruction was issued has been waived in writing in accordance with the terms
of the Credit Agreement, and (2) no additional Triggering Event has occurred and
is continuing prior to the date of the Rescission or is reasonably expected to
occur on or immediately after the date of the Rescission.

(iii)

So long as no Default or Event of Default has occurred and is continuing,
Borrowers may amend Schedule 11 to add or replace a Controlled Account Bank or
Controlled Account and shall upon such addition or replacement provide to Agent
an amended Schedule 11; provided, however, that (A) such prospective Controlled
Account Bank shall be reasonably satisfactory to Co-Collateral Agents, and (B)
prior to the time of the opening of such Controlled Account, the applicable
Grantor and such prospective Controlled Account Bank shall have executed and
delivered to Co-Collateral Agents a Controlled Account Agreement.  Each Grantor
shall close any of its Controlled Accounts (and establish replacement Controlled
Account accounts in accordance with the foregoing sentence) as promptly as
practicable and in any event within forty-five (45) days after notice from Agent
that the operating performance, funds transfer, or availability procedures or
performance of the Controlled Account Bank with respect to Controlled Account
Accounts or Agent's liability under any Controlled Account Agreement with such
Controlled Account Bank is no longer acceptable in Co-Collateral Agents'
reasonable judgment.

(iv)

Other than (i) an aggregate amount of not more than $100,000 at any one time, in
the case of Grantors and their Subsidiaries (other than those Subsidiaries that
are CFCs), (ii) amounts deposited into Deposit Accounts specially and
exclusively used for payroll, payroll taxes and other employee wage and benefit
payments to or for any Grantor's or its Subsidiaries' employees, and (iii) an
aggregate amount of not more than $100,000 (calculated at current exchange
rates) at any one time, in the case of Subsidiaries of Grantors that are CFCs,
no Grantor will, and no Grantor will permit its Subsidiaries to, make, acquire,
or permit to exist Permitted Investments consisting of cash, Cash Equivalents,
or amounts credited to Deposit Accounts or Securities Accounts unless Grantor or
its Subsidiary, as applicable, and the

-29-

applicable bank or securities intermediary have entered into Control Agreements
with Agent governing such Permitted Investments in order to perfect (and further
establish) Agent's Liens in such Permitted Investments.

(l)

Name, Etc.  No Grantor will, nor will any Grantor permit any of its Subsidiaries
to, change its name, adopt a French or combined name, organizational
identification number, jurisdiction of organization or organizational identity;
provided, that Grantor or any of its Subsidiaries may change its name upon at
least 30 days prior written notice to Agent of such change.

(m)

Motor Vehicles.  Promptly (and in any event within five (5) Business Days) after
request by Agent, with respect to all goods covered by a certificate of title
owned by any Grantor, such Grantor shall deliver to Agent or Agent's designee,
the certificates of title for all such goods and promptly (and in any event
within five (5) Business Days) after request by Agent, such Grantor shall take
all actions necessary to cause such certificates to be filed (with the Agent's
Lien noted thereon) in the appropriate state motor vehicle filing office.

(n)

Pledged Notes.   Grantors (i) without the prior written consent of Agent, will
not (A) waive or release any obligation of any Person that is obligated under
any of the Pledged Notes, (B) take or omit to take any action or knowingly
suffer or permit any action to be omitted or taken, the taking or omission of
which would result in any right of offset against sums payable under the Pledged
Notes, or (C) other than Permitted Dispositions, assign or surrender their
rights and interests under any of the Pledged Notes or terminate, cancel,
modify, change, supplement or amend the Pledged Notes, and (ii) shall provide to
Agent copies of all material written notices (including notices of default)
given or received with respect to the Pledged Notes promptly after giving or
receiving such notice.

8.

Relation to Other Security Documents.  The provisions of this Agreement shall be
read and construed with the other Loan Documents referred to below in the manner
so indicated.

(a)

Credit Agreement. In the event of any conflict between any provision in this
Agreement and a provision in the Credit Agreement, such provision of the Credit
Agreement shall control.

(b)

Patent, Trademark, Copyright Security Agreements.  The provisions of the
Copyright Security Agreements, Trademark Security Agreements, and Patent
Security Agreements are supplemental to the provisions of this Agreement, and
nothing contained in the Copyright Security Agreements, Trademark Security
Agreements, or the Patent Security Agreements shall limit any of the rights or
remedies of Agent hereunder.  In the event of any conflict between any provision
in this Agreement and a provision in a Copyright Security Agreement, Trademark
Security Agreement or Patent Security Agreement, such provision of this
Agreement shall control.

9.

Further Assurances.

(a)

Each Grantor agrees that from time to time, at its own expense, such Grantor
will promptly execute and deliver all further instruments and documents, and
take all further action, that Agent may reasonably request, in order to perfect
and protect the Security

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Interest granted hereby, to create, perfect or protect the Security Interest
purported to be granted hereby or to enable Agent to exercise and enforce its
rights and remedies hereunder with respect to any of the Collateral.

(b)

Each Grantor authorizes the filing by Agent of financing or continuation
statements, or amendments thereto, and such Grantor will execute and deliver to
Agent such other instruments or notices, as Agent may reasonably request, in
order to perfect and preserve the Security Interest granted or purported to be
granted hereby. Each Grantor hereby waives, to the greatest extent permitted
under applicable law, notice or receipt of copies of any such statements or
amendments or any verification statements in respect thereof.

(c)

Each Grantor authorizes Agent at any time and from time to time to file,
transmit, or communicate, as applicable, financing statements and amendments
(i) describing the Collateral as "all personal property of debtor", "all
personal and after-acquired personal property of debtor" or "all assets of
debtor" or words of similar effect, (ii) describing the Collateral as being of
equal or lesser scope or with greater detail, or (iii) that contain any
information required by part 5 of Article 9 of the Code for the sufficiency or
filing office acceptance.  Each Grantor also hereby ratifies any and all
financing statements or amendments previously filed by Agent in any
jurisdiction.

(d)

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

10.

Agent's Right to Perform Contracts, Exercise Rights, etc.  Upon the occurrence
and during the continuance of an Event of Default, Agent (or its designee),
subject to the terms of then existing leases, contracts and other agreements,
(a) may proceed to perform any and all of the obligations of any Grantor
contained in any contract, lease, or other agreement and exercise any and all
rights of any Grantor therein contained as fully as such Grantor itself could,
(b) shall have the right to use any Grantor's rights under Intellectual Property
Licenses in connection with the enforcement of Agent's rights hereunder,
including the right to prepare for sale and sell any and all Inventory and
Equipment now or hereafter owned by any Grantor and now or hereafter covered by
such licenses, and (c) except with respect to ULC Shares, shall have the right
to request that any Equity Interests that are pledged hereunder be registered in
the name of Agent or any of its nominees.

11.

Agent Appointed Attorney-in-Fact.  Each Grantor hereby irrevocably appoints
Agent its attorney-in-fact, with full authority in the place and stead of such
Grantor and in the name of such Grantor or otherwise, at such time as an Event
of Default has occurred and is continuing under the Credit Agreement, subject to
the terms of then existing leases, contracts and other agreements, to take any
action and to execute any instrument which Agent may reasonably deem necessary
or advisable to accomplish the purposes of this Agreement, including:

(a)

to ask, demand, collect, sue for, recover, compromise, receive and give
acquittance and receipts for moneys due and to become due under or in connection
with the Accounts or any other Collateral of such Grantor;

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(b)

to receive and open all mail addressed to such Grantor and to notify postal
authorities to change the address for the delivery of mail to such Grantor to
that of Agent;

(c)

to receive, indorse, and collect any drafts or other instruments, documents,
Negotiable Collateral or Chattel Paper;

(d)

to file any claims or take any action or institute any proceedings which Agent
may deem necessary or desirable for the collection of any of the Collateral of
such Grantor or otherwise to enforce the rights of Agent with respect to any of
the Collateral;

(e)

to repair, alter, or supply goods, if any, necessary to fulfill in whole or in
part the purchase order of any Person obligated to such Grantor in respect of
any Account of such Grantor;

(f)

to use any Intellectual Property or Intellectual Property Licenses of such
Grantor, including but not limited to any labels, Patents, Trademarks, trade
names, URLs, domain names, industrial designs, Copyrights, or advertising
matter, in preparing for sale, advertising for sale, or selling Inventory or
other Collateral and to collect any amounts due under Accounts, contracts or
Negotiable Collateral of such Grantor; and

(g)

Agent, on behalf of the Lender Group or the Bank Product Providers, shall have
the right, but shall not be obligated, to bring suit in its own name to enforce
the Intellectual Property and Intellectual Property Licenses and, if Agent shall
commence any such suit, the appropriate Grantor shall, at the request of Agent,
do any and all lawful acts and execute any and all proper documents reasonably
required by Agent in aid of such enforcement.

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

12.

Agent May Perform.  If any Grantor fails to perform any agreement contained
herein, Agent may itself perform, or cause performance of, such agreement, and
the reasonable expenses of Agent incurred in connection therewith shall be
payable, jointly and severally, by Grantors.

13.

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

14.

Collection of Accounts, General Intangibles and Negotiable Collateral.  At any
time upon the occurrence and during the continuance of an Event of Default,
Agent or Agent's designee may (a) notify Account Debtors of any Grantor that the
Accounts, General Intangibles,

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Chattel Paper or Negotiable Collateral of such Grantor have been assigned to
Agent, for the benefit of the Lender Group and the Bank Product Providers, or
that Agent has a security interest therein, and (b) collect the Accounts,
General Intangibles and Negotiable Collateral of any Grantor directly, and any
collection costs and expenses shall constitute part of such Grantor's Secured
Obligations under the Loan Documents.

15.

Disposition of Pledged Interests by Agent.  None of the Pledged Interests
existing as of the date of this Agreement are, and none of the Pledged Interests
hereafter acquired on the date of acquisition thereof will be, registered or
qualified under the various federal or state securities laws of the United
States and disposition thereof after an Event of Default may be restricted to
one or more private (instead of public) sales in view of the lack of such
registration.  Each Grantor understands that in connection with such
disposition, Agent may approach only a restricted number of potential purchasers
and further understands that a sale under such circumstances may yield a lower
price for the Pledged Interests than if the Pledged Interests were registered
and qualified pursuant to federal and state securities laws and sold on the open
market.  Each Grantor, therefore, agrees that:  (a) if Agent shall, pursuant to
the terms of this Agreement, sell or cause the Pledged Interests or any portion
thereof to be sold at a private sale, Agent shall have the right to rely upon
the advice and opinion of any nationally recognized brokerage or investment firm
(but shall not be obligated to seek such advice and the failure to do so shall
not be considered in determining the commercial reasonableness of such action)
as to the best manner in which to offer the Pledged Interest or any portion
thereof for sale and as to the best price reasonably obtainable at the private
sale thereof; and (b) such reliance shall be conclusive evidence that Agent has
handled the disposition in a commercially reasonable manner. For greater
certainty, the foregoing provision shall apply to ULC Shares only after a
realization and re-registration contemplated by Section 5 and Section 16(c)
hereof.

16.

Voting and Other Rights in Respect of Pledged Interests.

(a)

Except with respect to the ULC Shares, upon the occurrence and during the
continuation of an Event of Default, (i) Agent may, at its option, and without
prior notice to any Grantor, and in addition to all rights and remedies
available to Agent under any other agreement, at law, in equity, or otherwise,
exercise all voting rights, or any other ownership or consensual rights
(including any dividend or distribution rights) in respect of the Pledged
Interests owned by such Grantor, but under no circumstances is Agent obligated
by the terms of this Agreement to exercise such rights, and (ii) if Agent duly
exercises its right to vote any of such Pledged Interests, each Grantor hereby
appoints Agent, such Grantor's true and lawful ATTORNEY-IN-FACT and IRREVOCABLE
PROXY to vote such Pledged Interests in any manner Agent deems advisable for or
against all matters submitted or which may be submitted to a vote of
shareholders, partners or members, as the case may be.  The power-of-attorney
and proxy granted hereby is coupled with an interest and shall be irrevocable
until the Secured Obligations have been paid in full.

(b)

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

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(c)

Each Grantor acknowledges that certain of the Collateral of such Grantor may now
or in the future consist of ULC Shares, and that it is the intention of Agent
and each Grantor that neither Agent nor any member of the Lender Group or the
Bank Product Providers should under any circumstances prior to realization
thereon be held to be a "member" or a “shareholder”, as applicable, of a ULC for
the purposes of any ULC Laws.  Therefore, notwithstanding any provisions to the
contrary contained in this Agreement, the Credit Agreement or any other Loan
Document, where a Grantor is the registered and beneficial owner of ULC Shares
which are Collateral of such Grantor, such Grantor will remain the sole
registered and beneficial owner of such ULC Shares until such time as such ULC
Shares are effectively transferred into the name of the Agent, any other member
of the Lender Group or the Bank Product Providers, or any other Person on the
books and records of the applicable ULC.  Accordingly, each Grantor shall be
entitled to receive and retain for its own account any dividend on or other
distribution, if any, in respect of such ULC Shares (except for any dividend or
distribution comprised of any certificates representing the Pledged Interests of
such Grantor, which shall be delivered to Agent to hold hereunder) and shall
have the right to vote such ULC Shares and to control the direction, management
and policies of the applicable ULC to the same extent as such Grantor would if
such ULC Shares were not pledged to Agent pursuant hereto.  Nothing in this
Agreement, the Credit Agreement or any other Loan Document is intended to, and
nothing in this Agreement, the Credit Agreement or any other Loan Document
shall, constitute Agent, any member of the Lender Group or the Bank Product
Providers, or any other Person other than the applicable Grantor, a member or
shareholder of a ULC for the purposes of any ULC Laws (whether listed or
unlisted, registered or beneficial), until such time as notice is given to such
Grantor and further steps are taken pursuant hereto or thereto so as to register
the Agent, any member of the Lender Group or the Bank Product Providers, or such
other Person, as specified in such notice, as the holder of the ULC Shares.  To
the extent any provision hereof or the Credit Agreement or any other Loan
Document would have the effect of constituting Agent or member of the Lender
Group or the Bank Product Providers, as applicable, a member or shareholder of
any ULC prior to such time, such provision shall be severed herefrom or
therefrom and shall be ineffective with respect to ULC Shares which are
Collateral of any Grantor without otherwise invalidating or rendering
unenforceable this Agreement or invalidating or rendering unenforceable such
provision insofar as it relates to Collateral of any Grantor which is not ULC
Shares.  Except upon the exercise of rights of Agent to sell, transfer or
otherwise dispose of ULC Shares in accordance with this Agreement, the Credit
Agreement or the other Loan Documents, each Grantor shall not cause or permit,
or enable a Pledged Company that is a ULC to cause or permit, Agent or member of
the Lender Group or the Bank Product Providers to: (a) be registered as a
shareholder or member of such Pledged Company; (b) have any notation entered in
their favour in the share register of such Pledged Company; (c) be held out as
shareholders or members of such Pledged Company; (d) receive, directly or
indirectly, any dividends, property or other distributions from such Pledged
Company by reason of Agent holding the Security Interests over the ULC Shares;
or (e) act as a shareholder or member of such Pledged Company, or exercise any
rights of a shareholder or member including the right to attend a meeting of
shareholders or members of such Pledged Company or to vote its ULC Shares.

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17.

Remedies.  Upon the occurrence and during the continuance of an Event of Default
(provided that the exercise of any such right in the case of ULC Shares is
subject to the limitations of Section 16(c) above):

(a)

Agent may, and, at the instruction of the Required Lenders, shall exercise in
respect of the Collateral, in addition to other rights and remedies provided for
herein, in the other Loan Documents, or otherwise available to it, all the
rights and remedies of a secured party on default under the Code or any other
applicable law.  Without limiting the generality of the foregoing, each Grantor
expressly agrees that, in any such event, Agent without demand of performance or
other demand, advertisement or notice of any kind (except a notice specified
below of time and place of public or private sale) to or upon any Grantor or any
other Person (all and each of which demands, advertisements and notices are
hereby expressly waived to the maximum extent permitted by the Code or any other
applicable law), may take immediate possession of all or any portion of the
Collateral and (i) require Grantors to, and each Grantor hereby agrees that it
will at its own expense and upon request of Agent forthwith, assemble all or
part of the Collateral as directed by Agent and make it available to Agent at
one or more locations where such Grantor regularly maintains Inventory, and
(ii) without notice except as specified below, sell the Collateral or any part
thereof in one or more parcels at public or private sale, at any of Agent's
offices or elsewhere, for cash, on credit, and upon such other terms as Agent
may deem commercially reasonable.  Each Grantor agrees that, to the extent
notification of sale shall be required by law, at least ten (10) days
notification by mail to the applicable Grantor of the time and place of any
public sale or the time after which any private sale is to be made shall
constitute reasonable notification and specifically such notification shall
constitute a reasonable "authenticated notification of disposition" within the
meaning of Section 9-611 of the Code.  Agent shall not be obligated to make any
sale of Collateral regardless of notification of sale having been given.  Agent
may adjourn any public sale from time to time by announcement at the time and
place fixed therefor, and such sale may, without further notice, be made at the
time and place to which it was so adjourned.  Each Grantor agrees that (A) the
internet shall constitute a "place" for purposes of Section 9-610(b) of the Code
and (B) to the extent notification of sale shall be required by law,
notification by mail of the URL where a sale will occur and the time when a sale
will commence at least ten (10) days prior to the sale shall constitute a
reasonable notification for purposes of Section 9-611(b) of the Code.  Each
Grantor agrees that any sale of Collateral to a licensor pursuant to the terms
of a license agreement between such licensor and a Grantor is sufficient to
constitute a commercially reasonable sale (including as to method, terms,
manner, and time) within the meaning of Section 9-610 of the Code.

(b)

Subject to the terms of the existing applicable agreements and contracts, Agent
is hereby granted a license or other right to use, without liability for
royalties or any other charge, each Grantor's Intellectual Property, including
but not limited to, any labels, Patents, Trademarks, trade names, URLs, domain
names, industrial designs, Copyrights, and advertising matter, whether owned by
any Grantor or with respect to which any Grantor has rights under license,
sublicense, or other agreements (including any Intellectual Property License),
as it pertains to the Collateral, in preparing for sale, advertising for sale
and selling any Collateral, and each Grantor's rights under all licenses and all
franchise agreements shall inure to the benefit of Agent.

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(c)

Agent may, in addition to other rights and remedies provided for herein, in the
other Loan Documents, or otherwise available to it under applicable law and
without the requirement of notice to or upon any Grantor or any other Person
(which notice is hereby expressly waived to the maximum extent permitted by the
Code or any other applicable law), (i) with respect to any Grantor's Deposit
Accounts in which Agent's Liens are perfected by control under Section 9-104 of
the Code or in Canada by registering a financing statement, instruct the bank
maintaining such Deposit Account for the applicable Grantor to pay the balance
of such Deposit Account to or for the benefit of Agent, and (ii) with respect to
any Grantor's Securities Accounts in which Agent's Liens are perfected by
control under Section 9-106 of the Code, instruct the securities intermediary
maintaining such Securities Account for the applicable Grantor to (A) transfer
any cash in such Securities Account to or for the benefit of Agent, or
(B) liquidate any financial assets in such Securities Account that are
customarily sold on a recognized market and transfer the cash proceeds thereof
to or for the benefit of Agent.

(d)

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

(e)

Each Grantor hereby acknowledges that the Secured Obligations arise out of a
commercial transaction, and agrees that if an Event of Default shall occur and
be continuing Agent shall have the right to an immediate writ of possession
without notice of a hearing.  Agent shall have the right to the appointment of a
receiver, receiver-manager, manager or receiver and manager (each a "Receiver")
for the properties and assets of each Grantor, and each Grantor hereby consents
to such rights and such appointment and hereby waives any objection such Grantor
may have thereto or the right to have a bond or other security posted by Agent.
To the extent permitted by applicable law, any Receiver appointed by Agent shall
(for purposes relating to responsibility for the Receiver’s acts or omissions)
be considered to be the agent of such Grantor.  Agent may from time to time fix
the Receiver’s remuneration and such Grantor shall pay the amount of such
remuneration to Agent.  Agent shall not be liable to any Grantor or any other
person in connection with appointing or not appointing a Receiver or in
connection with the Receiver’s actions or omissions.

18.

Remedies Cumulative.  Each right, power, and remedy of Agent, any other member
of the Lender Group, or any Bank Product Provider as provided for in this
Agreement, the other Loan Documents or any Bank Product Agreement now or
hereafter existing at law or in equity or by statute or otherwise shall be
cumulative and concurrent and shall be in addition to every other right, power,
or remedy provided for in this Agreement, the other Loan Documents and the Bank
Product Agreements or now or hereafter existing at law or in equity or by
statute or otherwise, and the exercise or beginning of the exercise by Agent,
any other member of the Lender Group, or any Bank Product Provider, of any one
or more of such rights, powers, or remedies shall not preclude the simultaneous
or later exercise by Agent, such other member of the Lender Group or such Bank
Product Provider of any or all such other rights, powers, or remedies.

19.

Marshaling. Agent  shall not be required to marshal any present or future
collateral security (including but not limited to the Collateral) for, or other
assurances of

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

20.

Indemnity and Expenses.

(a)

Each Grantor agrees to indemnify Agent and the other members of the Lender Group
from and against all claims, lawsuits and liabilities (including reasonable
attorneys' fees) growing out of or resulting from this Agreement (including
enforcement of this Agreement) or any other Loan Document to which such Grantor
is a party, except claims, losses or liabilities resulting from the gross
negligence or willful misconduct of the party seeking indemnification as
determined by a final non-appealable order of a court of competent jurisdiction.
 This provision shall survive the termination of this Agreement and the Credit
Agreement and the repayment of the Secured Obligations.

(b)

Grantors, jointly and severally, shall, upon demand, pay to Agent (or Agent, may
charge to the Loan Account) all the Lender Group Expenses which Agent may incur
in connection with (i) the administration of this Agreement, (ii) the custody,
preservation, use or operation of, or, upon an Event of Default, the sale of,
collection from, or other realization upon, any of the Collateral in accordance
with this Agreement and the other Loan Documents, (iii) the exercise or
enforcement of any of the rights of Agent hereunder or (iv) the failure by any
Grantor to perform or observe any of the provisions hereof.

21.

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

22.

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

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23.

Continuing Security Interest: Assignments under Credit Agreement.

(a)

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

(b)

Each Grantor agrees that, if any payment made by any Grantor 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 Agent or any other member of the Lender Group to such
Grantor, 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, (i) any Lien or other Collateral securing such Grantor's liability
hereunder shall have been released or terminated by virtue of the foregoing
clause (a), or (ii) 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.

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24.

Survival.  All representations and warranties made by the Grantors in this
Agreement and in the certificates or other instru­ments delivered in connection
with or pursuant to this Agreement shall be considered to have been relied upon
by the other parties hereto and shall survive the execution and delivery of this
Agreement and the making of any loans and issuance of any Letters of Credit,
regardless of any investigation made by any such other party or on its behalf
and notwithstanding that Agent, Issuing Lender, or any Lender may have had
notice or knowledge of any Default or Event of Default or incorrect
representation or warranty at the time any credit is extended hereunder, and
shall continue in full force and effect as long as the principal of or any
accrued interest on any loan or any fee or any other amount payable under the
Credit Agreement is outstanding and unpaid or any Letter of Credit is
outstanding and so long as the Commitments have not expired or terminated.

25.

CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER; JUDICIAL REFERENCE PROVISION.

(a)

THE VALIDITY OF THIS AGREEMENT, THE CONSTRUCTION, INTERPRETATION, AND
ENFORCEMENT HEREOF, THE RIGHTS OF THE PARTIES HERETO WITH RESPECT TO ALL MATTERS
ARISING HEREUNDER OR RELATED HERETO, AND ANY CLAIMS, CONTROVERSIES OR DISPUTES
ARISING HEREUNDER OR RELATED HERETO SHALL BE DETERMINED UNDER, GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

(b)

THE PARTIES AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING IN CONNECTION WITH
THIS AGREEMENT SHALL BE TRIED AND LITIGATED ONLY IN THE STATE AND, TO THE EXTENT
PERMITTED BY APPLICABLE LAW, FEDERAL COURTS LOCATED IN THE COUNTY OF NEW YORK,
STATE OF NEW YORK; PROVIDED, THAT ANY SUIT SEEKING ENFORCEMENT AGAINST ANY
COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT AGENT'S OPTION, IN THE COURTS OF
ANY JURISDICTION WHERE AGENT ELECTS TO BRING SUCH ACTION OR WHERE SUCH
COLLATERAL OR OTHER PROPERTY MAY BE FOUND.  EACH GRANTOR AND AGENT WAIVE, TO THE
EXTENT PERMITTED UNDER APPLICABLE LAW, ANY RIGHT EACH MAY HAVE TO ASSERT THE
DOCTRINE OF FORUM NON CONVENIENS OR TO OBJECT TO VENUE TO THE EXTENT ANY
PROCEEDING IS BROUGHT IN ACCORDANCE WITH THIS SECTION 25(b).

(c)

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

-39-

(d)

EACH GRANTOR HEREBY IRREVOCABLY AND UNCONDITIONALLY SUBMITS TO THE EXCLUSIVE
JURISDICTION OF THE STATE AND FEDERAL COURTS  LOCATED IN THE COUNTY OF NEW YORK
AND THE STATE OF NEW YORK, IN ANY ACTION OR PROCEEDING ARISING OUT OF OR
RELATING TO THIS AGREEMENT, OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT.
 EACH OF THE PARTIES HERETO AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR
PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY
SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW.  NOTHING IN THIS
AGREEMENT SHALL AFFECT ANY RIGHT THAT AGENT MAY OTHERWISE HAVE TO BRING ANY
ACTION OR PROCEEDING RELATING TO THIS AGREEMENT AGAINST ANY GRANTOR OR ITS
PROPERTIES IN THE COURTS OF ANY JURISDICTION.

(e)

NO CLAIM MAY BE MADE BY ANY GRANTOR AGAINST THE AGENT, ANY CO-COLLATERAL AGENT,
THE SWING LENDER, ANY OTHER LENDER, ISSUING LENDER, OR THE UNDERLYING ISSUER, OR
ANY AFFILIATE, DIRECTOR, OFFICER, EMPLOYEE, COUNSEL, REPRESENTATIVE, AGENT, OR
ATTORNEY-IN-FACT OF ANY OF THEM FOR ANY SPECIAL, INDIRECT, CONSEQUENTIAL, OR
PUNITIVE DAMAGES IN RESPECT OF ANY CLAIM FOR BREACH OF CONTRACT OR ANY OTHER
THEORY OF LIABILITY ARISING OUT OF OR RELATED TO THE TRANSACTIONS CONTEMPLATED
BY THIS AGREEMENT, OR ANY ACT, OMISSION, OR EVENT OCCURRING IN CONNECTION
HEREWITH, AND EACH GRANTOR HEREBY WAIVES, RELEASES, AND AGREES NOT TO SUE UPON
ANY CLAIM FOR SUCH DAMAGES, WHETHER OR NOT ACCRUED AND WHETHER OR NOT KNOWN OR
SUSPECTED TO EXIST IN ITS FAVOR.

(f)

IN THE EVENT ANY LEGAL PROCEEDING IS FILED IN A COURT OF THE STATE OF CALIFORNIA
(THE "COURT") BY OR AGAINST ANY PARTY HERETO IN CONNECTION WITH ANY CLAIM AND
THE WAIVER SET FORTH IN SECTION 25(c) ABOVE IS NOT ENFORCEABLE IN SUCH
PROCEEDING, THE PARTIES HERETO AGREE AS FOLLOWS:

(i)

WITH THE EXCEPTION OF THE MATTERS SPECIFIED IN SUBCLAUSE (ii) BELOW, ANY CLAIM
SHALL BE DETERMINED BY A GENERAL REFERENCE PROCEEDING IN ACCORDANCE WITH THE
PROVISIONS OF CALIFORNIA CODE OF CIVIL PROCEDURE SECTIONS 638 THROUGH 645.1.
 THE PARTIES INTEND THIS GENERAL REFERENCE AGREEMENT TO BE SPECIFICALLY
ENFORCEABLE.  VENUE FOR THE REFERENCE PROCEEDING SHALL BE IN THE COUNTY OF LOS
ANGELES, CALIFORNIA.

(ii)

THE FOLLOWING MATTERS SHALL NOT BE SUBJECT TO A GENERAL REFERENCE PROCEEDING:
(A) NON-JUDICIAL FORECLOSURE OF ANY SECURITY INTERESTS IN REAL OR PERSONAL
PROPERTY, (B) EXERCISE OF SELF-HELP REMEDIES (INCLUDING SET-OFF OR RECOUPMENT),
(C) APPOINTMENT OF A RECEIVER, AND (D) TEMPORARY, PROVISIONAL, OR ANCILLARY
REMEDIES (INCLUDING WRITS OF ATTACHMENT, WRITS OF POSSESSION, TEMPORARY
RESTRAINING ORDERS, OR PRELIMINARY INJUNCTIONS).  THIS AGREEMENT DOES NOT LIMIT
THE RIGHT OF ANY PARTY TO EXERCISE OR OPPOSE ANY OF

-40-

THE RIGHTS AND REMEDIES DESCRIBED IN CLAUSES (A) - (D) AND ANY SUCH EXERCISE OR
OPPOSITION DOES NOT WAIVE THE RIGHT OF ANY PARTY TO PARTICIPATE IN A REFERENCE
PROCEEDING PURSUANT TO THIS AGREEMENT WITH RESPECT TO ANY OTHER MATTER.

(iii)

UPON THE WRITTEN REQUEST OF ANY PARTY, THE PARTIES SHALL SELECT A SINGLE
REFEREE, WHO SHALL BE A RETIRED JUDGE OR JUSTICE.  IF THE PARTIES DO NOT AGREE
UPON A REFEREE WITHIN 10 DAYS OF SUCH WRITTEN REQUEST, THEN, ANY PARTY SHALL
HAVE THE RIGHT TO REQUEST THE COURT TO APPOINT A REFEREE PURSUANT TO CALIFORNIA
CODE OF CIVIL PROCEDURE SECTION 640(B).  THE REFEREE SHALL BE APPOINTED TO SIT
WITH ALL OF THE POWERS PROVIDED BY LAW.  PENDING APPOINTMENT OF THE REFEREE, THE
COURT SHALL HAVE THE POWER TO ISSUE TEMPORARY OR PROVISIONAL REMEDIES.

(iv)

EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, THE REFEREE SHALL DETERMINE THE
MANNER IN WHICH THE REFERENCE PROCEEDING IS CONDUCTED INCLUDING THE TIME AND
PLACE OF HEARINGS, THE ORDER OF PRESENTATION OF EVIDENCE, AND ALL OTHER
QUESTIONS THAT ARISE WITH RESPECT TO THE COURSE OF THE REFERENCE PROCEEDING.
 ALL PROCEEDINGS AND HEARINGS CONDUCTED BEFORE THE REFEREE, EXCEPT FOR TRIAL,
SHALL BE CONDUCTED WITHOUT A COURT REPORTER, EXCEPT WHEN ANY PARTY SO REQUESTS A
COURT REPORTER AND A TRANSCRIPT IS ORDERED, A COURT REPORTER SHALL BE USED AND
THE REFEREE SHALL BE PROVIDED A COURTESY COPY OF THE TRANSCRIPT.  THE PARTY
MAKING SUCH REQUEST SHALL HAVE THE OBLIGATION TO ARRANGE FOR AND PAY THE COSTS
OF THE COURT REPORTER, PROVIDED THAT SUCH COSTS, ALONG WITH THE REFEREE'S FEES,
SHALL ULTIMATELY BE BORNE BY THE PARTY WHO DOES NOT PREVAIL, AS DETERMINED BY
THE REFEREE.

(v)

THE REFEREE MAY REQUIRE ONE OR MORE PREHEARING CONFERENCES.  THE PARTIES HERETO
SHALL BE ENTITLED TO DISCOVERY, AND THE REFEREE SHALL OVERSEE DISCOVERY IN
ACCORDANCE WITH THE RULES OF DISCOVERY, AND SHALL ENFORCE ALL DISCOVERY ORDERS
IN THE SAME MANNER AS ANY TRIAL COURT JUDGE IN PROCEEDINGS AT LAW IN THE STATE
OF CALIFORNIA.

(vi)

THE REFEREE SHALL APPLY THE RULES OF EVIDENCE APPLICABLE TO PROCEEDINGS AT LAW
IN THE STATE OF CALIFORNIA AND SHALL DETERMINE ALL ISSUES IN ACCORDANCE WITH
CALIFORNIA SUBSTANTIVE AND PROCEDURAL LAW.  THE REFEREE SHALL BE EMPOWERED TO
ENTER EQUITABLE AS WELL AS LEGAL RELIEF AND RULE ON ANY MOTION WHICH WOULD BE
AUTHORIZED IN A TRIAL, INCLUDING MOTIONS FOR DEFAULT JUDGMENT OR SUMMARY
JUDGMENT.  THE REFEREE SHALL REPORT HIS OR HER DECISION, WHICH REPORT SHALL ALSO
INCLUDE FINDINGS OF FACT AND CONCLUSIONS OF LAW.  THE REFEREE SHALL ISSUE A
DECISION AND PURSUANT TO CALIFORNIA CODE OF CIVIL PROCEDURE, SECTION 644, THE
REFEREE'S DECISION SHALL BE ENTERED BY THE COURT AS A JUDGMENT IN THE SAME

-41-

MANNER AS IF THE ACTION HAD BEEN TRIED BY THE COURT.  THE FINAL JUDGMENT OR
ORDER FROM ANY APPEALABLE DECISION OR ORDER ENTERED BY THE REFEREE SHALL BE
FULLY APPEALABLE AS IF IT HAS BEEN ENTERED BY THE COURT.

(vii)

THE PARTIES RECOGNIZE AND AGREE THAT ALL CLAIMS RESOLVED IN A GENERAL REFERENCE
PROCEEDING PURSUANT HERETO WILL BE DECIDED BY A REFEREE AND NOT BY A JURY.
 AFTER CONSULTING (OR HAVING HAD THE OPPORTUNITY TO CONSULT) WITH COUNSEL OF
THEIR OWN CHOICE, EACH PARTY HERETO KNOWINGLY AND VOLUNTARILY AND FOR THEIR
MUTUAL BENEFIT AGREES THAT THIS REFERENCE PROVISION SHALL APPLY TO ANY DISPUTE
BETWEEN THEM THAT ARISES OUT OF OR IS RELATED TO THIS AGREEMENT.

26.

New Subsidiaries.  Pursuant to Section 5.11 of the Credit Agreement, certain
Subsidiaries (whether by acquisition or creation) of any Grantor are required to
enter into this Agreement by executing and delivering in favor of Agent a
Joinder to this Agreement in substantially the form of Annex 1.  Upon the
execution and delivery of Annex 1 by any such new Subsidiary, such Subsidiary
shall become a Guarantor and Grantor hereunder with the same force and effect as
if originally named as a Guarantor and Grantor herein.  The execution and
delivery of any instrument adding an additional Guarantor or Grantor as a party
to this Agreement shall not require the consent of any Guarantor or Grantor
hereunder.  The rights and obligations of each Guarantor and Grantor hereunder
shall remain in full force and effect notwithstanding the addition of any new
Guarantor or Grantor hereunder.

27.

Agent.  Each reference herein to any right granted to, benefit conferred upon or
power exercisable by the "Agent" shall be a reference to Agent, for the benefit
of each member of the Lender Group and each of the Bank Product Providers.

28.

Miscellaneous.

(a)

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

(b)

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

-42-

every other provision of this Agreement for the purpose of determining the legal
enforceability of any specific provision.

(c)

Headings and numbers have been set forth herein for convenience only.  Unless
the contrary is compelled by the context, everything contained in each Section
applies equally to this entire Agreement.

(d)

Neither this Agreement nor any uncertainty or ambiguity herein shall be
construed against any member of the Lender Group or any Grantor, whether under
any rule of construction or otherwise.  This Agreement has been reviewed by all
parties and shall be construed and interpreted according to the ordinary meaning
of the words used so as to accomplish fairly the purposes and intentions of all
parties hereto.

(e)

Each Grantor:

(i)

acknowledges receipt of a true copy of this Agreement; and

(ii)

acknowledges receipt of a copy of all financing statements registered under the
Code evidencing the Security Interests.

29.

Split Lien Intercreditor Agreement.

(a)

Notwithstanding anything herein to the contrary, in the event of any conflict
between any provision in this Agreement and any provision in the Split Lien
Intercreditor Agreement, such provision in the Split Lien Intercreditor
Agreement shall control.

(b)

Without limiting the generality of the foregoing, and notwithstanding anything
herein to the contrary, any obligation of any Grantor hereunder with respect to
the delivery or control of any Collateral that constitutes Split Lien Collateral
shall be deemed to be satisfied if such Grantor delivers or provides control of
such Split Lien Collateral to the Term Loan Agent in accordance with the
requirements of the corresponding provision of the applicable Split Lien
Document.

30.

Canadian Interpretation . Where the context so requires (i) all terms defined in
this Agreement by reference to the “Code” or the “Uniform Commercial Code” shall
also have any extended, alternative or analogous meaning given to such term in
applicable Canadian personal property security and other laws (including,
without limitation, the PPSA, the STA, the Bills of Exchange Act (Canada) and
the Depository Bills and Notes Act (Canada)), in all cases for the extension,
preservation or betterment of the security and rights of Agent, (ii) all
references in this Agreement to “Article 8 of the Code” or “Article 8 of the
Uniform Commercial Code” shall be deemed to refer also to applicable Canadian
securities transfer laws (including, without limitation, the STA), (iii) all
references in this Agreement to a financing statement, continuation statement,
amendment or termination statement shall be deemed to refer also to the
analogous documents used under applicable Canadian personal property security
laws, (iv) all references to federal or state securities law of the United
States shall be deemed to refer also to analogous federal and provincial
securities laws in Canada; (v) all references to the United States of America,
or to any subdivision, department or agency or instrumentality thereof shall be
deemed to refer also to Canada, or to any subdivision, department, agency or
instrumentality thereof; (vi)

-43-

all reference in the Agreement to the United States Copyright Office or the
United States Patent and Trademark Office shall be deemed to refer also to the
Canadian Intellectual Property Office; and (vii) all references to “Insolvency
Proceeding” shall be deemed to refer also to any insolvency proceeding occurring
in Canada or under Canadian law.

[signature pages follow]

-44-

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

GRANTORS:

SCHOOL SPECIALTY, INC.

By:

/s/ David N. Vander Ploeg

Name:

  David N. Vander Ploeg

Title:

   Chief Financial Officer

CLASSROOMDIRECT.COM, LLC

By:

/s/ David N. Vander Ploeg

Name:

   David N. Vander Ploeg

Title:

   Treasurer

SPORTIME, LLC

By:

/s/ David N. Vander Ploeg

Name:

   David N. Vander Ploeg

Title:

   Treasurer

DELTA EDUCATION, LLC

By:

/s/ David N. Vander Ploeg

Name:

   David N. Vander Ploeg

Title:

   Treasurer

PREMIER AGENDAS, INC.

By:

/s/ David N. Vander Ploeg

Name:

   David N. Vander Ploeg

Title:

   Treasurer

[SIGNATURE PAGE TO SECURITY AGREEMENT]

3

CHILDCRAFT EDUCATION CORP.

By:

/s/ David N. Vander Ploeg

Name:

   David N. Vander Ploeg

Title:

   Treasurer

BIRD-IN-HAND WOODWORKS, INC.

By:

/s/ David N. Vander Ploeg

Name:

   David N. Vander Ploeg

Title:

   Treasurer

CALIFONE INTERNATIONAL, INC.

By:

/s/ David N. Vander Ploeg

Name:

   David N. Vander Ploeg

Title:

   Treasurer

FREY SCIENTIFIC, INC.

By:

/s/ David N. Vander Ploeg

Name:

   David N. Vander Ploeg

Title:

   Treasurer

SAX ARTS & CRAFTS, INC.

By:

/s/ David N. Vander Ploeg

Name:

   David N. Vander Ploeg

Title:

   Treasurer

SELECT AGENDAS, CORP.

By:

/s/ David N. Vander Ploeg

Name:

   David N. Vander Ploeg

Title:

   Treasurer

[SIGNATURE PAGE TO SECURITY AGREEMENT]

AGENT:

WELLS FARGO CAPITAL FINANCE, LLC, a

Delaware limited liability company

By:

/s/ Chris Heckman

Name:

   Chris Heckman

Title:

   Vice President

[SIGNATURE PAGE TO SECURITY AGREEMENT]

SCHEDULE 1

COMMERCIAL TORT CLAIMS

[include specific case caption or descriptions per Official Code Comment 5 to
Section 9-108 of the Code]

SCHEDULE 2

COPYRIGHTS

SCHEDULE 3

INTELLECTUAL PROPERTY LICENSES

SCHEDULE 4

PATENTS

SCHEDULE 5

PLEDGED COMPANIES

Name of Grantor

Name of Pledged Company

Number of Shares/Units

Class of Interests

Percentage of Class Owned

Percentage of Class Pledged

Certificate Nos.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

SCHEDULE 6

TRADEMARKS

SCHEDULE 7

NAME; CHIEF EXECUTIVE OFFICE; TAX IDENTIFICATION NUMBERS AND ORGANIZATIONAL
NUMBERS

SCHEDULE 8

OWNED REAL PROPERTY

SCHEDULE 9

DEPOSIT ACCOUNTS AND SECURITIES ACCOUNTS

SCHEDULE 10

CONTROLLED ACCOUNT BANKS

SCHEDULE 11

LIST OF UNIFORM COMMERCIAL CODE FILING JURISDICTIONS

Grantor

Jurisdictions

 

 

SCHEDULE 12

MOTOR VEHICLES

ANNEX 1 TO GUARANTY AND SECURITY AGREEMENT
FORM OF JOINDER

Joinder No. ____ (this "Joinder"), dated as of ____________ 20___, to the
Guaranty and Security Agreement, dated as of May __, 2012 (as amended, restated,
supplemented, or otherwise modified from time to time, the "Guaranty and
Security Agreement"), by and among each of the parties listed on the signature
pages thereto and those additional entities that thereafter become parties
thereto (collectively, jointly and severally, "Grantors" and each, individually,
a "Grantor") and WELLS FARGO CAPITAL FINANCE, LLC, a Delaware limited liability
company ("WFCF"), in its capacity as agent for the Lender Group and the Bank
Product Providers (in such capacity, together with its successors and assigns in
such capacity, "Agent").

W I T N E S S E T H:

WHEREAS, pursuant to that certain Credit Agreement dated as of May __, 2012 (as
amended, restated, supplemented, or otherwise modified from time to time, the
"Credit Agreement") by and among School Specialty, Inc., a Wisconsin corporation
("Parent"), ClassromDirect.com, LLC, a Delaware limited liability company
("ClassroomDirect"), Sportime, LLC, a Delaware limited liability company
 ("Sportime"), Delta Education, LLC, a Delaware limited liability company
("Delta Education"), Premier Agendas, Inc., a Washington corporation ("Premier
Agendas"), Childcraft Education Corp., a New York corporation ("Childcraft"),
Bird-in-Hand Woodworks, Inc., a New Jersey corporation ("Bird-in-Hand"),
Califone International, Inc., a Delaware corporation ("Califone"; together with
Parent, ClassroomDirect, Sportime, Delta Education, Premier Agendas, Childcraft
and Bird-in-Hand, the "Borrowers" and each a "Borrower"), the lenders party
thereto as "Lenders" (each of such Lenders, together with its successors and
permitted assigns, is referred to hereinafter as a "Lender"), Agent, WFCF and
General Electric Capital Corporation, a Delaware corporation, as co-collateral
agents (the "Co-Collateral Agents" and each a "Co-Collateral Agent") and WFCF
and GE Capital Markets, Inc., as co-lead arrangers and joint book runners, the
Lender Group has agreed to make certain financial accommodations available to
Borrowers from time to time pursuant to the terms and conditions thereof; and

WHEREAS, initially capitalized terms used herein and not otherwise defined
herein shall have the meanings assigned to such terms in the Guaranty and
Security Agreement or, if not defined therein, in the Credit Agreement, and this
Joinder shall be subject to the rules of construction set forth in Section 1(b)
of the Guaranty and Security Agreement, which rules of construction are
incorporated herein by this reference, mutatis mutandis; and

WHEREAS, Grantors have entered into the Guaranty and Security Agreement in order
to induce the Lender Group and the Bank Product Providers to make certain
financial accommodations to Borrowers as provided for in the Credit Agreement,
the other Loan Documents, and the Bank Product Agreements; and

WHEREAS, pursuant to Section 5.11 of the Credit Agreement and Section 26 of the
Guaranty and Security Agreement, certain Subsidiaries of the Loan Parties, must
execute and deliver certain Loan Documents, including the Guarantor and Security
Agreement, and the

Annex I - 1

joinder to the Guaranty and Security Agreement by the undersigned new Grantor or
Grantors (collectively, the "New Grantors") may be accomplished by the execution
of this Joinder in favor of Agent, for the benefit of the Lender Group and the
Bank Product Providers; and

WHEREAS, each New Grantor (a) is an Affiliate of Borrowers and, as such, will
benefit by virtue of the financial accommodations extended to Borrowers by the
Lender Group or the Bank Product Providers and (b) by becoming a Grantor will
benefit from certain rights granted to the Grantors pursuant to the terms of the
Loan Documents and the Bank Product Agreements;

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

1.

In accordance with Section 26 of the Guaranty and Security Agreement, each New
Grantor, by its signature below, becomes a "Grantor" and "Guarantor" under the
Guaranty and Security Agreement with the same force and effect as if originally
named therein as a "Grantor" and "Guarantor" and each New Grantor hereby
(a) agrees to all of the terms and provisions of the Guaranty and Security
Agreement applicable to it as a "Grantor" or "Guarantor" thereunder and
(b) represents and warrants that the representations and warranties made by it
as a "Grantor" or "Guarantor" thereunder are true and correct in all material
respects (except that such materiality qualifier shall not be applicable to any
representations and warranties that are already qualified or modified by
materiality in the text thereof) on and as of the date hereof.  In furtherance
of the foregoing, each New Grantor hereby (a) jointly and severally
unconditionally and irrevocably guarantees as a primary obligor and not merely
as a surety the full and prompt payment when due, whether upon maturity,
acceleration, or otherwise, of all of the Guarantied Obligations, and
(b) unconditionally grants, assigns, and pledges to Agent, for the benefit of
the Lender Group and the Bank Product Providers, to secure the Secured
Obligations, a continuing security interest in and to all of such New Grantor's
right, title and interest in and to the Collateral.  Each reference to a
"Grantor" or "Guarantor" in the Guaranty and Security Agreement shall be deemed
to include each New Grantor.  The Guaranty and Security Agreement is
incorporated herein by reference.

2.

Schedule 1, "Commercial Tort Claims", Schedule 2, "Copyrights", Schedule 3,
"Intellectual Property Licenses", Schedule 4, "Patents", Schedule 5, "Pledged
Companies", Schedule 6, "Trademarks", Schedule 7, Name; Chief Executive Office;
Tax Identification Numbers and Organizational Numbers, Schedule 8, "Owned Real
Property", Schedule 9, "Deposit Accounts and Securities Accounts", Schedule 10,
"Controlled Account Banks", Schedule 11, "List of Uniform Commercial Code Filing
Jurisdictions", and Schedule 12, "Motor Vehicles" attached hereto supplement
Schedule 1, Schedule 2, Schedule 3, Schedule 4, Schedule 5, Schedule 6, Schedule
7, Schedule 8, Schedule 9, Schedule 10, Schedule 11, and Schedule 12
respectively, to the Guaranty and Security Agreement and shall be deemed a part
thereof for all purposes of the Guaranty and Security Agreement.

3.

Each New Grantor authorizes Agent at any time and from time to time to file,
transmit, or communicate, as applicable, financing statements and amendments
thereto (i) describing the Collateral as "all personal property of debtor" or
"all assets of debtor" or words of similar effect, (ii) describing the
Collateral as being of equal or lesser scope or with greater detail, or
(iii) that contain any information required by part 5 of Article 9 of the Code
for the

Annex I - 2

sufficiency or filing office acceptance.  Each New Grantor also hereby ratifies
any and all financing statements or amendments previously filed by Agent in any
jurisdiction in connection with the Loan Documents.

4.

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

5.

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

6.

The Guaranty and Security Agreement, as supplemented hereby, shall remain in
full force and effect.

7.

THIS JOINDER SHALL BE SUBJECT TO THE PROVISIONS REGARDING CHOICE OF LAW AND
VENUE, JURY TRIAL WAIVER, AND JUDICIAL REFERENCE SET FORTH IN SECTION 25 OF THE
GUARANTY AND SECURITY AGREEMENT, AND SUCH PROVISIONS ARE INCORPORATED HEREIN BY
THIS REFERENCE, MUTATIS MUTANDIS.

[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]

Annex I - 3

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

NEW GRANTORS:

[NAME OF NEW GRANTOR]

By:

Name:

Title:

[NAME OF NEW GRANTOR]

By:

Name:

Title:

AGENT:

WELLS FARGO CAPITAL FINANCE, LLC, a Delaware limited liability company

By:

Name:

Title:

[SIGNATURE PAGE TO JOINDER NO. ___ TO SECURITY AGREEMENT]

EXHIBIT A

COPYRIGHT SECURITY AGREEMENT

This COPYRIGHT SECURITY AGREEMENT (this "Copyright Security Agreement") is made
this ___ day of ___________, 2012, by and among Grantors listed on the signature
pages hereof (collectively, jointly and severally, "Grantors" and each
individually "Grantor"), and WELLS FARGO CAPITAL FINANCE, LLC, a Delaware
limited liability company ("WFCF"), in its capacity as agent for the Lender
Group and the Bank Product Providers (in such capacity, together with its
successors and assigns in such capacity, "Agent").

W I T N E S S E T H:

WHEREAS, pursuant to that certain Credit Agreement of even date herewith (as
amended, restated, supplemented, or otherwise modified from time to time, the
"Credit Agreement") by and among School Specialty, Inc., a Wisconsin corporation
("Parent"), ClassromDirect.com, LLC, a Delaware limited liability company
("ClassroomDirect"), Sportime, LLC, a Delaware limited liability company
 ("Sportime"), Delta Education, LLC, a Delaware limited liability company
("Delta Education"), Premier Agendas, Inc., a Washington corporation ("Premier
Agendas"), Childcraft Education Corp., a New York corporation ("Childcraft"),
Bird-in-Hand Woodworks, Inc., a New Jersey corporation ("Bird-in-Hand"),
Califone International, Inc., a Delaware corporation ("Califone"; together with
Parent, ClassroomDirect, Sportime, Delta Education, Premier Agendas, Childcraft
and Bird-in-Hand, the "Borrowers" and each a "Borrower"), the lenders party
thereto as "Lenders" (each of such Lenders, together with its successors and
permitted assigns, is referred to hereinafter as a "Lender"), Agent, WFCF and
General Electric Capital Corporation, a Delaware corporation, as co-collateral
agents (the "Co-Collateral Agents" and each a "Co-Collateral Agent"), and WFCF
and GE Capital Markets, Inc., as co-lead arrangers and joint book runners, the
Lender Group has agreed to make certain financial accommodations available to
Borrowers from time to time pursuant to the terms and conditions thereof; and

WHEREAS, the members of the Lender Group and the Bank Product Providers are
willing to make the financial accommodations to Borrowers as provided for in the
Credit Agreement, the other Loan Documents, and the Bank Product Agreements, but
only upon the condition, among others, that Grantors shall have executed and
delivered to Agent, for the benefit of the Lender Group and the Bank Product
Providers, that certain Guaranty and Security Agreement, dated as of May __,
2012 (including all annexes, exhibits or schedules thereto, as from time to time
amended, restated, supplemented or otherwise modified, the "Guaranty and
Security Agreement"); and

WHEREAS, pursuant to the Guaranty and Security Agreement, Grantors are required
to execute and deliver to Agent, for the benefit of the Lender Group and the
Bank Product Providers, this Copyright Security Agreement;

NOW, THEREFORE, in consideration of the premises and mutual covenants herein
contained and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Grantors hereby agree as follows:

A-1

1.

DEFINED TERMS.  All initially capitalized terms used but not otherwise defined
herein have the meanings given to them in the Guaranty and Security Agreement
or, if not defined therein, in the Credit Agreement, and this Copyright Security
Agreement shall be subject to the rules of construction set forth in Section
1(b) of the Guaranty and Security Agreement, which rules of construction are
incorporated herein by this reference, mutatis mutandis.

2.

GRANT OF SECURITY INTEREST IN COPYRIGHT COLLATERAL.  Each Grantor hereby
unconditionally grants, assigns, and pledges to Agent, for the benefit each
member of the Lender Group and each of the Bank Product Providers, to secure the
Secured Obligations, a continuing security interest (referred to in this
Copyright Security Agreement as the "Security Interest") in all of such
Grantor's right, title and interest in and to the following, whether now owned
or hereafter acquired or arising (collectively, the "Copyright Collateral"):

(a)

all of such Grantor's Copyrights and Copyright Intellectual Property Licenses to
which it is a party including those referred to on Schedule I;

(b)

all renewals or extensions of the foregoing; and

(c)

all products and proceeds of the foregoing, including any claim by such Grantor
against third parties for past, present or future infringement of any Copyright
or any Copyright exclusively licensed under any Intellectual Property License,
including the right to receive damages, or the right to receive license fees,
royalties, and other compensation under any Copyright Intellectual Property
License.

3.

SECURITY FOR SECURED OBLIGATIONS.  This Copyright Security Agreement and the
Security Interest created hereby secures the payment and performance of the
Secured Obligations, whether now existing or arising hereafter.  Without
limiting the generality of the foregoing, this Copyright Security Agreement
secures the payment of all amounts which constitute part of the Secured
Obligations and would be owed by Grantors, or any of them, to Agent, the other
members of the Lender Group, the Bank Product Providers or any of them, whether
or not they are unenforceable or not allowable due to the existence of an
Insolvency Proceeding involving any Grantor.

4.

SECURITY AGREEMENT.  The Security Interest granted pursuant to this Copyright
Security Agreement is granted in conjunction with the security interests granted
to Agent, for the benefit of the Lender Group and the Bank Product Providers,
pursuant to the Guaranty and Security Agreement.  Each Grantor hereby
acknowledges and affirms that the rights and remedies of Agent with respect to
the Security Interest in the Copyright Collateral made and granted hereby are
more fully set forth in the Guaranty and Security Agreement, the terms and
provisions of which are incorporated by reference herein as if fully set forth
herein.  To the extent there is any inconsistency between this Copyright
Security Agreement and the Guaranty and Security Agreement, the Guaranty and
Security Agreement shall control.

5.

AUTHORIZATION TO SUPPLEMENT.  Grantors shall give Agent written notice at the
end of the calendar month after filing any additional application for
registration of any copyright and of any additional copyright registrations
granted therefor after the date hereof. Without limiting Grantors' obligations
under this Section, Grantors hereby authorize Agent unilaterally to modify this
Copyright Security Agreement by amending Schedule I to include any

A-2

future United States registered copyrights or applications therefor of each
Grantor.  Notwithstanding the foregoing, no failure to so modify this Copyright
Security Agreement or amend Schedule I shall in any way affect, invalidate or
detract from Agent's continuing security interest in all Collateral, whether or
not listed on Schedule I.

6.

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

7.

CHOICE OF LAW AND VENUE, JURY TRIAL WAIVER, AND JUDICIAL REFERENCE PROVISION.
 THIS COPYRIGHT SECURITY AGREEMENT SHALL BE SUBJECT TO THE PROVISIONS REGARDING
CHOICE OF LAW AND VENUE, JURY TRIAL WAIVER, AND JUDICIAL REFERENCE SET FORTH IN
SECTION 25 OF THE GUARANTY AND SECURITY AGREEMENT, AND SUCH PROVISIONS ARE
INCORPORATED HEREIN BY THIS REFERENCE, MUTATIS MUTANDIS.

[signature page follows]

A-3

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

GRANTORS:

By:

Name:

Title:

By:

Name:

Title:

 

ACCEPTED AND ACKNOWLEDGED BY:

AGENT:

WELLS FARGO CAPITAL FINANCE, LLC, a Delaware limited liability company

By:

Name:

Title:

[SIGNATURE PAGE TO COPYRIGHT SECURITY AGREEMENT]

SCHEDULE I
to
COPYRIGHT SECURITY AGREEMENT

Copyright Registrations

Grantor

Country

Copyright

Registration No.

Registration Date

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Copyright Licenses

EXHIBIT B

PATENT SECURITY AGREEMENT

This PATENT SECURITY AGREEMENT (this "Patent Security Agreement") is made this
___ day of ___________, 2012, by and among the Grantors listed on the signature
pages hereof (collectively, jointly and severally, "Grantors" and each
individually "Grantor"), and WELLS FARGO CAPITAL FINANCE, LLC, a Delaware
limited liability company ("WFCF"), in its capacity as agent for the Lender
Group and the Bank Product Providers (in such capacity, together with its
successors and assigns in such capacity,  "Agent").

W I T N E S S E T H:

WHEREAS, pursuant to that certain Credit Agreement of even date herewith (as
amended, restated, supplemented, or otherwise modified from time to time, the
"Credit Agreement") by and among School Specialty, Inc., a Wisconsin corporation
("Parent"), ClassromDirect.com, LLC, a Delaware limited liability company
("ClassroomDirect"), Sportime, LLC, a Delaware limited liability company
 ("Sportime"), Delta Education, LLC, a Delaware limited liability company
("Delta Education"), Premier Agendas, Inc., a Washington corporation ("Premier
Agendas"), Childcraft Education Corp., a New York corporation ("Childcraft"),
Bird-in-Hand Woodworks, Inc., a New Jersey corporation ("Bird-in-Hand"),
Califone International, Inc., a Delaware corporation ("Califone"; together with
Parent, ClassroomDirect, Sportime, Delta Education, Premier Agendas, Childcraft
and Bird-in-Hand, the "Borrowers" and each a "Borrower"), the lenders party
thereto as "Lenders" (each of such Lenders, together with its successors and
permitted assigns, is referred to hereinafter as a "Lender"), Agent, WFCF and
General Electric Capital Corporation, a Delaware corporation, as co-collateral
agents (the "Co-Collateral Agents" and each a "Co-Collateral Agent"), and WFCF
and GE Capital Markets, Inc., as co-lead arrangers and joint book runners, the
Lender Group has agreed to make certain financial accommodations available to
Borrowers from time to time pursuant to the terms and conditions thereof; and

WHEREAS, the members of Lender Group and the Bank Product Providers are willing
to make the financial accommodations to Borrowers as provided for in the Credit
Agreement, the other Loan Documents, and the Bank Product Agreements, but only
upon the condition, among others, that the Grantors shall have executed and
delivered to Agent, for the benefit of the Lender Group and the Bank Product
Providers, that certain Guaranty and Security Agreement, dated as of May __,
2012 (including all annexes, exhibits or schedules thereto, as from time to time
amended, restated, supplemented or otherwise modified, the "Guaranty and
Security Agreement"); and

WHEREAS, pursuant to the Guaranty and Security Agreement, Grantors are required
to execute and deliver to Agent, for the benefit of the Lender Group and the
Bank Product Providers, this Patent Security Agreement;

NOW, THEREFORE, in consideration of the premises and mutual covenants herein
contained and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, each Grantor hereby agrees as
follows:

B-1

1.

DEFINED TERMS.  All initially capitalized terms used but not otherwise defined
herein have the meanings given to them in the Guaranty and Security Agreement
or, if not defined therein, in the Credit Agreement, and this Patent Security
Agreement shall be subject to the rules of construction set forth in Section
1(b) of the Guaranty and Security Agreement, which rules of construction are
incorporated herein by this reference, mutatis mutandis.

2.

GRANT OF SECURITY INTEREST IN PATENT COLLATERAL. Each Grantor hereby
unconditionally grants, assigns, and pledges to Agent, for the benefit each
member of the Lender Group and each of the Bank Product Providers, to secure the
Secured Obligations, a continuing security interest (referred to in this Patent
Security Agreement as the "Security Interest") in all of such Grantor's right,
title and interest in and to the following, whether now owned or hereafter
acquired or arising (collectively, the "Patent Collateral"):

(a)

all of its Patents and Patent Intellectual Property Licenses to which it is a
party including those referred to on Schedule I;

(b)

all divisionals, continuations, continuations-in-part, reissues, reexaminations,
or extensions of the foregoing; and

(c)

all products and proceeds of the foregoing, including any claim by such Grantor
against third parties for past, present or future infringement of any Patent or
any Patent exclusively licensed under any Intellectual Property License,
including the right to receive damages, or right to receive license fees,
royalties, and other compensation under any Patent Intellectual Property
License.

3.

SECURITY FOR SECURED OBLIGATIONS.  This Patent Security Agreement and the
Security Interest created hereby secures the payment and performance of the
Secured Obligations, whether now existing or arising hereafter.  Without
limiting the generality of the foregoing, this Patent Security Agreement secures
the payment of all amounts which constitute part of the Secured Obligations and
would be owed by Grantors, or any of them, to Agent, the other members of the
Lender Group, the Bank Product Providers or any of them, whether or not they are
unenforceable or not allowable due to the existence of an Insolvency Proceeding
involving any Grantor.

4.

SECURITY AGREEMENT.  The Security Interest granted pursuant to this Patent
Security Agreement is granted in conjunction with the security interests granted
to Agent, for the benefit of the Lender Group and the Bank Product Providers,
pursuant to the Guaranty and Security Agreement.  Each Grantor hereby
acknowledges and affirms that the rights and remedies of Agent with respect to
the Security Interest in the Patent Collateral made and granted hereby are more
fully set forth in the Guaranty and Security Agreement, the terms and provisions
of which are incorporated by reference herein as if fully set forth herein.  To
the extent there is any inconsistency between this Patent Security Agreement and
the Guaranty and Security Agreement, the Guaranty and Security Agreement shall
control.

5.

AUTHORIZATION TO SUPPLEMENT.  If any Grantor shall obtain rights to any new
patent application or issued patent or become entitled to the benefit of any
patent application or patent for any divisional, continuation,
continuation-in-part, reissue, or reexamination of any existing patent or patent
application, the provisions of this Patent Security

B-2

Agreement shall automatically apply thereto. Grantors shall give prompt notice
in writing to Agent with respect to any such new patent rights.  Without
limiting Grantors' obligations under this Section, Grantors hereby authorize
Agent unilaterally to modify this Patent Security Agreement by amending Schedule
I to include any such new patent rights of each Grantor.  Notwithstanding the
foregoing, no failure to so modify this Patent Security Agreement or amend
Schedule I shall in any way affect, invalidate or detract from Agent's
continuing security interest in all Collateral, whether or not listed on
Schedule I.

6.

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

7.

CHOICE OF LAW AND VENUE, JURY TRIAL WAIVER, AND JUDICIAL REFERENCE PROVISION.
 THIS PATENT SECURITY AGREEMENT SHALL BE SUBJECT TO THE PROVISIONS REGARDING
CHOICE OF LAW AND VENUE, JURY TRIAL WAIVER, AND JUDICIAL REFERENCE SET FORTH IN
SECTION 25 OF THE GUARANTY AND SECURITY AGREEMENT, AND SUCH PROVISIONS ARE
INCORPORATED HEREIN BY THIS REFERENCE, MUTATIS MUTANDIS.

[signature page follows]

B-3

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

GRANTORS:

By:

Name:

Title:

By:

Name:

Title:

 

ACCEPTED AND ACKNOWLEDGED BY:

AGENT:

WELLS FARGO CAPITAL FINANCE, LLC, a Delaware limited liability company

By:

Name:

Title:

[SIGNATURE PAGE TO PATENT SECURITY AGREEMENT]

SCHEDULE I
to
PATENT SECURITY AGREEMENT

Patents

Grantor

Country

Patent

Application/
Patent No.

Filing Date

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Patent Licenses

EXHIBIT C

PLEDGED INTERESTS ADDENDUM

This Pledged Interests Addendum, dated as of _________ __, 20___ (this "Pledged
Interests Addendum"), is delivered pursuant to Section 7 of the Guaranty and
Security Agreement referred to below.  The undersigned hereby agrees that this
Pledged Interests Addendum may be attached to that certain Guaranty and Security
Agreement, dated as of May __, 2012, (as amended, restated, supplemented, or
otherwise modified from time to time, the "Guaranty and Security Agreement"),
made by the undersigned, together with the other Grantors named therein, to
WELLS FARGO CAPITAL FINANCE, LLC, a Delaware limited liability company, as
Agent.  Initially capitalized terms used but not defined herein shall have the
meaning ascribed to such terms in the Guaranty and Security Agreement or, if not
defined therein, in the Credit Agreement, and this Pledged Interests Addendum
shall be subject to the rules of construction set forth in Section 1(b) of the
Guaranty and Security Agreement, which rules of construction are incorporated
herein by this reference, mutatis mutandis.  The undersigned hereby agrees that
the additional interests listed on Schedule I shall be and become part of the
Pledged Interests pledged by the undersigned to Agent in the Guaranty and
Security Agreement and any pledged company set forth on Schedule I shall be and
become a "Pledged Company" under the Guaranty and Security Agreement, each with
the same force and effect as if originally named therein.

This Pledged interests Addendum is a Loan Document.  Delivery of an executed
counterpart of this Pledged Interests Addendum by telefacsimile or other
electronic method of transmission shall be equally as effective as delivery of
an original executed counterpart of this Pledged Interests Addendum.  If the
undersigned delivers an executed counterpart of this Pledged Interests Addendum
by telefacsimile or other electronic method of transmission, the undersigned
shall also deliver an original executed counterpart of this Pledged Interests
Addendum but the failure to deliver an original executed counterpart shall not
affect the validity, enforceability, and binding effect of this Pledged
Interests Addendum.

The undersigned hereby certifies that the representations and warranties set
forth in Section 6 of the Guaranty and Security Agreement of the undersigned are
true and correct as to the Pledged Interests listed herein on and as of the date
hereof.

THIS PLEDGED INTERESTS ADDENDUM SHALL BE SUBJECT TO THE PROVISIONS REGARDING
CHOICE OF LAW AND VENUE, JURY TRIAL WAIVER, AND JUDICIAL REFERENCE SET FORTH IN
SECTION 25 OF THE GUARANTY AND SECURITY AGREEMENT, AND SUCH PROVISIONS ARE
INCORPORATED HEREIN BY THIS REFERENCE, MUTATIS MUTANDIS.

[signature page follows]

C-1

IN WITNESS WHEREOF, the undersigned has caused this Pledged Interests Addendum
to be executed and delivered as of the day and year first above written.

______________________________

By:

Name:

Title:

[SIGNATURE PAGE TO PLEDGED INTERESTS ADDENDUM]

SCHEDULE I
to
PLEDGED INTERESTS ADDENDUM

Pledged Interests

Name of Grantor

Name of Pledged Company

Number of Shares/Units

Class of Interests

Percentage of Class Owned

Certificate Nos.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EXHIBIT D

TRADEMARK SECURITY AGREEMENT

This TRADEMARK SECURITY AGREEMENT (this "Trademark Security Agreement") is made
this ___ day of ___________, 20__, by and among Grantors listed on the signature
pages hereof (collectively, jointly and severally, "Grantors" and each
individually "Grantor"), and WELLS FARGO CAPITAL FINANCE, LLC, a Delaware
limited liability company ("WFCF"), in its capacity as agent for the Lender
Group and the Bank Product Providers (in such capacity, together with its
successors and assigns in such capacity, "Agent").

W I T N E S S E T H:

WHEREAS, pursuant to that certain Credit Agreement of even date herewith (as
amended, restated, supplemented, or otherwise modified from time to time, the
"Credit Agreement") by and among School Specialty, Inc., a Wisconsin corporation
("Parent"), ClassromDirect.com, LLC, a Delaware limited liability company
("ClassroomDirect"), Sportime, LLC, a Delaware limited liability company
 ("Sportime"), Delta Education, LLC, a Delaware limited liability company
("Delta Education"), Premier Agendas, Inc., a Washington corporation ("Premier
Agendas"), Childcraft Education Corp., a New York corporation ("Childcraft"),
Bird-in-Hand Woodworks, Inc., a New Jersey corporation ("Bird-in-Hand"),
Califone International, Inc., a Delaware corporation ("Califone"; together with
Parent, ClassroomDirect, Sportime, Delta Education, Premier Agendas, Childcraft
and Bird-in-Hand, the "Borrowers" and each a "Borrowers"), the lenders party
thereto as "Lenders" (each of such Lenders, together with its successors and
permitted assigns, is referred to hereinafter as a "Lender"), Agent, WFCF and
General Electric Capital Corporation, a Delaware corporation, as co-collateral
agents (the "Co-Collateral Agents" and each a "Co-Collateral Agent"), and WFCF
and GE Capital Markets, Inc., as joint lead arrangers and joint book runners,
the Lender Group has agreed to make certain financial accommodations available
to Borrowers from time to time pursuant to the terms and conditions thereof; and

WHEREAS, the members of the Lender Group and the Bank Product Providers are
willing to make the financial accommodations to Borrowers as provided for in the
Credit Agreement, the other Loan Documents, and the Bank Product Agreements, but
only upon the condition, among others, that Grantors shall have executed and
delivered to Agent, for the benefit of Lender Group and the Bank Product
Providers, that certain Guaranty and Security Agreement, dated as of May __,
2012 (including all annexes, exhibits or schedules thereto, as from time to time
amended, restated, supplemented or otherwise modified, the "Guaranty and
Security Agreement"); and

WHEREAS, pursuant to the Guaranty and Security Agreement, Grantors are required
to execute and deliver to Agent, for the benefit of Lender Group and the Bank
Product Providers, this Trademark Security Agreement;

NOW, THEREFORE, in consideration of the premises and mutual covenants herein
contained and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, each Grantor hereby agrees as
follows:

D-1

1.

DEFINED TERMS.  All initially capitalized terms used but not otherwise defined
herein have the meanings given to them in the Guaranty and Security Agreement
or, if not defined therein, in the Credit Agreement, and this Trademark Security
Agreement shall be subject to the rules of construction set forth in Section
1(b) of the Guaranty and Security Agreement, which rules of construction are
incorporated herein by this reference, mutatis mutandis.

2.

GRANT OF SECURITY INTEREST IN TRADEMARK COLLATERAL.  Each Grantor hereby
unconditionally grants, assigns, and pledges to Agent, for the benefit each
member of the Lender Group and each of the Bank Product Providers, to secure the
Secured Obligations, a continuing security interest (referred to in this
Trademark Security Agreement as the "Security Interest") in all of such
Grantor's right, title and interest in and to the following, whether now owned
or hereafter acquired or arising (collectively, the "Trademark Collateral"):

(a)

all of its Trademarks and Trademark Intellectual Property Licenses to which it
is a party including those referred to on Schedule I;

(b)

all goodwill of the business connected with the use of, and symbolized by, each
Trademark and each Trademark Intellectual Property License; and

(c)

all products and proceeds (as that term is defined in the Code) of the
foregoing, including any claim by such Grantor against third parties for past,
present or future (i) infringement or dilution of any Trademark or any
Trademarks exclusively licensed under any Intellectual Property License,
including right to receive any damages, (ii) injury to the goodwill associated
with any Trademark, or (iii) right to receive license fees, royalties, and other
compensation under any Trademark Intellectual Property License.

3.

SECURITY FOR SECURED OBLIGATIONS.  This Trademark Security Agreement and the
Security Interest created hereby secures the payment and performance of the
Secured Obligations, whether now existing or arising hereafter.  Without
limiting the generality of the foregoing, this Trademark Security Agreement
secures the payment of all amounts which constitute part of the Secured
Obligations and would be owed by Grantors, or any of them, to Agent, the other
members of the Lender Group, the Bank Product Providers or any of them, whether
or not they are unenforceable or not allowable due to the existence of an
Insolvency Proceeding involving any Grantor.

4.

SECURITY AGREEMENT.  The Security Interest granted pursuant to this Trademark
Security Agreement is granted in conjunction with the security interests granted
to Agent, for the benefit of the Lender Group and the Bank Product Providers,
pursuant to the Guaranty and Security Agreement.  Each Grantor hereby
acknowledges and affirms that the rights and remedies of Agent with respect to
the Security Interest in the Trademark Collateral made and granted hereby are
more fully set forth in the Guaranty and Security Agreement, the terms and
provisions of which are incorporated by reference herein as if fully set forth
herein.  To the extent there is any inconsistency between this Trademark
Security Agreement and the Guaranty and Security Agreement, the Guaranty and
Security Agreement shall control.

5.

AUTHORIZATION TO SUPPLEMENT.  If any Grantor shall obtain rights to any new
trademarks, the provisions of this Trademark Security Agreement shall
automatically

D-2

apply thereto. Grantors shall give prompt notice in writing to Agent with
respect to any such new trademarks or renewal or extension of any trademark
registration.   Without limiting Grantors' obligations under this Section,
Grantors hereby authorize Agent unilaterally to modify this Trademark Security
Agreement by amending Schedule I to include any such new trademark rights of
each Grantor.  Notwithstanding the foregoing, no failure to so modify this
Trademark Security Agreement or amend Schedule I shall in any way affect,
invalidate or detract from Agent's continuing security interest in all
Collateral, whether or not listed on Schedule I.

6.

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

7.

CHOICE OF LAW AND VENUE, JURY TRIAL WAIVER, AND JUDICIAL REFERENCE PROVISION.
 THIS TRADEMARK SECURITY AGREEMENT SHALL BE SUBJECT TO THE PROVISIONS REGARDING
CHOICE OF LAW AND VENUE, JURY TRIAL WAIVER, AND JUDICIAL REFERENCE SET FORTH IN
SECTION 25 OF THE GUARANTY AND SECURITY AGREEMENT, AND SUCH PROVISIONS ARE
INCORPORATED HEREIN BY THIS REFERENCE, MUTATIS MUTANDIS.

[signature page follows]

D-3

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

GRANTORS:

By:

Name:

Title:

By:

Name:

Title:

 

ACCEPTED AND ACKNOWLEDGED BY:

AGENT:

WELLS FARGO CAPITAL FINANCE, LLC, a Delaware limited liability company

By:

Name:

Title:

[SIGNATURE PAGE TO TRADEMARK SECURITY AGREEMENT]

SCHEDULE I
to
TRADEMARK SECURITY AGREEMENT

Trademark Registrations/Applications

Grantor

Country

Mark

Application/ Registration No.

App/Reg Date

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Trade Names

Common Law Trademarks

Trademarks Not Currently In Use

Trademark Licenses