Exhibit 10.1

 

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CREDIT AGREEMENT

by and among

WELLS FARGO CAPITAL FINANCE, LLC

as Administrative Agent,

WELLS FARGO CAPITAL FINANCE, LLC and GENERAL ELECTRIC CAPITAL CORPORATION,

as Co-Collateral Agents,

WELLS FARGO CAPITAL FINANCE, LLC and GE CAPITAL MARKETS, INC.

as Co-Lead Arrangers and Joint Book Runners,

GENERAL ELECTRIC CAPITAL CORPORATION

as Syndication Agent,

THE LENDERS THAT ARE PARTIES HERETO

as the Lenders,

SCHOOL SPECIALTY, INC.
CLASSROOMDIRECT.COM, LLC
SPORTIME, LLC
DELTA EDUCATION, LLC
PREMIER AGENDAS, INC.
CHILDCRAFT EDUCATION CORP.
BIRD-IN-HAND WOODWORKS, INC.

and

CALIFONE INTERNATIONAL, INC.

as Borrowers

Dated as of May 22, 2012

 

TABLE OF CONTENTS

Page

1.

DEFINITIONS AND CONSTRUCTION.

1

 

 

 

1

 

1.1.

Definitions

1

 

1.2.

Accounting Terms

2

 

1.3.

Code

2

 

1.4.

Construction

3

 

1.5.

Time References

3

 

1.6.

Schedules and Exhibits

3

 

 

 

 

2.

LOANS AND TERMS OF PAYMENT

3

 

2.1.

Revolving Loans

3

 

2.2.

Intentionally Omitted

4

 

2.3.

Borrowing Procedures and Settlements.

4

 

2.4.

Payments; Reductions of Commitments; Prepayments.

12

 

2.5.

Promise to Pay

17

 

2.6.

Interest Rates and Letter of Credit Fee:  Rates, Payments, and Calculations

18

 

2.7.

Crediting Payments

19

 

2.8.

Designated Account

19

 

2.9.

Maintenance of Loan Account; Statements of Obligations

20

 

2.10.

Fees.

20

 

2.11.

Letters of Credit.

21

 

2.12.

LIBOR Option

27

 

2.13.

Capital Requirements.

30

 

2.14.

Joint and Several Liability of Borrowers.

31

 

 

 

 

3.

CONDITIONS; TERM OF AGREEMENT.

33

 

3.1.

Conditions Precedent to the Initial Extension of Credit

33

 

3.2.

Conditions Precedent to all Extensions of Credit

34

 

3.3.

Maturity

34

 

3.4.

Effect of Maturity

34

 

3.5.

Early Termination by Borrowers

34

 

3.6.

Conditions Subsequent

35

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Page

 

 

 

 

4.

REPRESENTATIONS AND WARRANTIES.

36

 

 

 

 

 

4.1.

Due Authorization and Qualification; Subsidiaries.

36

 

4.2.

Due Authorization; No Conflict.

37

 

4.3.

Governmental Consents

37

 

4.4.

Binding Obligations; Perfected Liens.

37

 

4.5.

Title to Assets; No Encumbrances

38

 

4.6.

Litigation

38

 

4.7.

Compliance with Laws

38

 

4.8.

No Material Adverse Effect

39

 

4.9.

Solvency.

39

 

4.10.

Employee Benefits

39

 

4.11.

Environmental Condition

39

 

4.12.

Complete Disclosure

39

 

4.13.

Patriot Act

40

 

4.14.

Indebtedness

40

 

4.15.

Payment of Taxes

40

 

4.16

Margin Stock

41

 

4.17.

Governmental Regulation

41

 

4.18.

OFAC

41

 

4.19.

Employee and Labor Matters

41

 

4.20.

Intentionally Omitted

41

 

4.21.

Leases

42

 

4.22.

Eligible Accounts

42

 

4.23.

Eligible Inventory

42

 

4.24.

Location of Inventory

42

 

4.25.

Inventory Records

42

 

4.26.

Other Documents

42

 

 

 

 

5.

AFFIRMATIVE COVENANTS.

42

 

5.1.

Financial Statements, Reports, Certificates

42

 

5.2.

Reporting

43

 

5.3.

Existence

43

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Page

 

5.4.

Maintenance of Properties

43

 

5.5.

Taxes

43

 

5.6.

Insurance

43

 

5.7.

Inspection.

44

 

5.8.

Compliance with Laws

44

 

5.9.

Environmental

44

 

5.10.

Disclosure Updates

45

 

5.11.

Formation of Subsidiaries

45

 

5.12.

Further Assurances

46

 

5.13.

Lender Meetings

46

 

5.14.

Location of Inventory

46

 

 

 

 

6.

NEGATIVE COVENANTS.

47

 

6.1.

Indebtedness

47

 

6.2.

Liens

47

 

6.3.

Restrictions on Fundamental Changes

47

 

6.4.

Disposal of Assets

48

 

6.5.

Nature of Business

48

 

6.6.

Prepayments and Amendments

48

 

6.7.

Restricted Payments

48

 

6.8.

Accounting Methods

49

 

6.9.

Investments

49

 

6.10.

Transactions with Affiliates

49

 

6.11.

Use of Proceeds

50

 

6.12.

Limitation on Issuance of Equity Interests

50

 

6.13.

Inventory at Bailees

50

 

 

 

 

7.

FINANCIAL COVENANTS.

50

 

 

 

 

8.

EVENTS OF DEFAULT.

54

 

8.1.

Payments

54

 

8.2.

Covenants

54

 

8.3.

Judgments

55

 

8.4.

Voluntary Bankruptcy, etc

55

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Page

 

8.5.

Involuntary Bankruptcy, etc

55

 

8.6.

Default Under Other Agreements

55

 

8.7.

Representations, etc

56

 

8.8.

Guaranty

56

 

8.9.

Security Documents

56

 

8.10.

Loan Documents

56

 

8.11.

Change in Control

56

 

 

 

 

9.

RIGHTS AND REMEDIES.

56

 

9.1.

Rights and Remedies

56

 

9.2.

Remedies Cumulative

57

 

 

 

 

10.

WAIVERS; INDEMNIFICATION.

57

 

10.1.

Demand; Protest; etc

57

 

10.2.

The Lender Group's Liability for Collateral

58

 

10.3.

Indemnification

58

 

 

 

 

11.

NOTICES.

59

 

 

 

 

12.

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

60

 

 

 

 

13.

ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS

62

 

13.1.

Assignments and Participations.

62

 

13.2.

Successors

66

 

 

 

 

14.

AMENDMENTS; WAIVERS.

66

 

14.1.

Amendments and Waivers.

66

 

14.2.

Replacement of Certain Lenders.

68

 

14.3.

No Waivers; Cumulative Remedies

69

 

 

 

 

15.

AGENT; THE LENDER GROUP.

69

 

15.1.

Appointment and Authorization of Agent

69

 

15.2.

Delegation of Duties

71

 

15.3.

Liability of Agent

71

 

15.4.

Reliance by Agents

71

 

15.5.

Notice of Default or Event of Default

72

 

15.6.

Credit Decision

72

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TABLE OF CONTENTS

Page

 

15.7.

Costs and Expenses; Indemnification

73

 

15.8.

Agent in Individual Capacity

73

 

15.9.

Successor Agent

74

 

15.10.

Lender in Individual Capacity

75

 

15.11.

Collateral Matters.

75

 

15.12.

Restrictions on Actions by Lenders; Sharing of Payments

77

 

15.13.

Agency for Perfection

77

 

15.14.

Payments by Agent to the Lenders

78

 

15.15.

Concerning the Collateral and Related Loan Documents

78

 

15.16.

Field Examination Reports; Confidentiality; Disclaimers by Lenders; Other
Reports and Information

78

 

15.17.

Several Obligations; No Liability

79

 

15.18.

Co-Lead Arrangers and Joint Book Runners

79

 

 

 

 

16.

WITHHOLDING TAXES.

80

 

16.1.

Payments

80

 

16.2.

Exemptions.

80

 

16.3.

Reductions.

82

 

16.4.

Refunds

82

 

16.5.

Tax Indemnity

83

 

 

 

 

17.

GENERAL PROVISIONS.

83

 

17.1.

Effectiveness

83

 

17.2.

Section Headings

83

 

17.3.

Interpretation

83

 

17.4.

Severability of Provisions

83

 

17.5.

Bank Product Providers

83

 

17.6.

Debtor-Creditor Relationship

84

 

17.7.

Counterparts; Electronic Execution

85

 

17.8.

Revival and Reinstatement of Obligations; Certain Waivers.

85

 

17.9.

Confidentiality

86

 

17.10.

Survival

87

 

17.11.

Patriot Act

87

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Page

 

17.12.

Integration

87

 

17.13.

Split Lien Intercreditor Agreement

87

 

17.14.

Parent as Agent for Borrowers

87

 

17.15.

Senior Debt

88

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EXHIBITS AND SCHEDULES

Exhibit A-1

Form of Assignment and Acceptance

Exhibit A-2

Accelerated Learning EBITDA

Exhibit B-1

Form of Borrowing Base Certificate

Exhibit B-2

Form of Bank Product Letter Agreement

Exhibit C-1

Form of Compliance Certificate

Exhibit L-1

Form of LIBOR Notice

Exhibit P-1

Form of Perfection Certificate

 

 

Schedule A-1

Agent's Account

Schedule A-2

Authorized Persons

Schedule C-1

Commitments

Schedule D-1

Designated Account

Schedule E-1

Eligible Inventory Locations

Schedule P-1

Permitted Investments

Schedule P-2

Permitted Liens

Schedule R-1

Real Property Collateral

Schedule 3.1

Conditions Precedent

Schedule 3.6

Conditions Subsequent

Schedule 4.1(b)

Capitalization of Parent

Schedule 4.1(c)

Capitalization of Parent's Subsidiaries

Schedule 4.6

Litigation

Schedule 4.11

Environmental Matters

Schedule 4.14

Permitted Indebtedness

Schedule 4.24

Location of Inventory

Schedule 5.1

Financial Statements, Reports, Certificates

Schedule 5.2

Collateral Reporting

Schedule 6.5

Nature of Business

 

 

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CREDIT AGREEMENT

THIS CREDIT AGREEMENT (this "Agreement"), is entered into as of May 22, 2012, by
and among the lenders identified on the signature pages hereof (each of such
lenders, together with its successors and permitted assigns, is referred to
hereinafter as a "Lender", as that term is hereinafter further defined), WELLS
FARGO CAPITAL FINANCE, LLC, a Delaware limited liability company, as
administrative agent for the Lenders (in such capacity, together with its
successors and assigns in such capacity, "Agent"), WELLS FARGO CAPITAL FINANCE,
LLC, a Delaware limited liability company, and GE CAPITAL MARKETS, INC., a
Delaware corporation, as co-lead arrangers (in such capacities,together with
their successors and assigns in such capacities, the "Co-Lead Arrangers"), WELLS
FARGO CAPITAL FINANCE, LLC, a Delaware limited liability company, and GE CAPITAL
MARKETS, INC., a Delaware corporation, as joint book runners (in such
capacities, together with their successors and assigns in such capacities, the
"Joint Book Runners"), GENERAL ELECTRIC CAPITAL CORPORATION, a Delaware
corporation, as syndication agent for the Lenders (in such capacity, together
with its successors and assigns in such capacity, "Syndication Agent"), WELLS
FARGO CAPITAL FINANCE, LLC, a Delaware limited liability company, and GENERAL
ELECTRIC CAPITAL CORPORATION, a Delaware corporation, in their respective
capacities as co-collateral agents for the Lenders (in such capacities, together
with their successors and assigns in such capacities, "Co-Collateral Agents"),
SCHOOL SPECIALTY, INC., a Wisconsin corporation ("Parent"), CLASSROOMDIRECT.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"), and CALIFONE INTERNATIONAL, INC., a Delaware
corporation ("Califone"; Parent, ClassroomDirect, Sportime, Delta Education,
Premier Agendas, Childcraft, Bird-In-Hand and Califone are collectively
"Borrowers" and each a "Borrower").

The parties agree as follows:

1.

DEFINITIONS AND CONSTRUCTION.

1.1.

Definitions.  Capitalized terms used in this Agreement shall have the meanings
specified therefor on Schedule 1.1.

1.2.

Accounting Terms.  All accounting terms not specifically defined herein shall be
construed in accordance with GAAP; provided, that if Administrative Borrower
notifies Agent that Borrowers request an amendment to any provision hereof to
eliminate the effect of any Accounting Change occurring after the Closing Date
or in the application thereof on the operation of such provision (or if Agent
notifies Administrative Borrower that the Required Lenders request an amendment
to any provision hereof for such purpose), regardless of whether any such notice
is given before or after such Accounting Change or in the application thereof,
then Agent and Borrowers agree that they will negotiate in good faith amendments
to the

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provisions of this Agreement that are directly affected by such Accounting
Change with the intent of having the respective positions of the Lenders and
Borrowers after such Accounting Change conform as nearly as possible to their
respective positions prior to such Accounting Change and, until any such
amendments have been agreed upon and agreed to by the Required Lenders, the
provisions in this Agreement shall be calculated as if no such Accounting Change
had occurred.  When used herein, the term "financial statements" shall include
the notes and schedules thereto.  Whenever the term "Parent" is used in respect
of a financial covenant or a related definition, it shall be understood to mean
Parent and its Subsidiaries on a consolidated basis, unless the context clearly
requires otherwise.  Notwithstanding anything to the contrary contained herein,
(a) all financial statements delivered hereunder shall be prepared, and all
financial covenants contained herein shall be calculated, without giving effect
to any election under the Statement of Financial Accounting Standards No. 159
 (or any similar accounting principle) permitting a Person to value its
financial liabilities or Indebtedness at the fair value thereof, and (b) the
term "unqualified opinion" as used herein to refer to opinions or reports
provided by accountants shall mean an opinion or report that is (i) unqualified,
and (ii) does not include any explanation, supplemental comment, or other
comment concerning the ability of the applicable Person to continue as a going
concern or concerning the scope of the audit.

1.3.

Code.  Any terms used in this Agreement that are defined in the Code shall be
construed and defined as set forth in the Code unless otherwise defined herein;
provided, that to the extent that the Code is used to define any term herein and
such term is defined differently in different Articles of the Code, the
definition of such term contained in Article 9 of the Code shall govern.

1.4.

Construction.  Unless the context of this Agreement or any other Loan Document
clearly requires otherwise, references to the plural include the singular,
references to the singular include the plural, the 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
or any other Loan Document refer to this Agreement or such other Loan Document,
as the case may be, as a whole and not to any particular provision of this
Agreement or such other Loan Document, as the case may be.  Section, subsection,
clause, schedule, and exhibit references herein are to this Agreement unless
otherwise specified.  Any reference in this Agreement or in any other Loan
Document 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).  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 or in
any other Loan Document to the satisfaction, repayment, or payment in full of
the Obligations shall mean (a) the payment or repayment in full in immediately
available funds of (i) the principal amount of, and interest accrued and unpaid
with respect to, all outstanding Loans, together with the payment of any premium
applicable to the repayment of the Loans, (ii) all Lender Group Expenses that
have accrued and are unpaid regardless of whether demand has been made therefor,
(iii) 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) and are
unpaid, (b) in the case of contingent reimbursement

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obligations with respect to Letters of Credit, providing Letter of Credit
Collateralization, (c) in the case of obligations with respect to Bank Products
(other than Hedge Obligations), providing Bank Product Collateralization,
(d) the receipt by Agent of cash collateral in order to secure any other
contingent Obligations for which a claim or demand for payment has been made on
or prior to such time or in respect of matters or circumstances known to Agent
or a Lender at such 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 Obligations, (e) the payment or repayment
in full in immediately available funds of all other outstanding Obligations
(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
(i) unasserted contingent indemnification Obligations, (ii) 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 (iii) any Hedge Obligations
that, at such time, are allowed by the applicable Hedge Provider to remain
outstanding without being required to be repaid, and (f) 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 or in any other Loan Document shall be satisfied by the
transmission of a Record.

1.5

Time References.  Unless the context of this Agreement or any other Loan
Document clearly requires otherwise, all references to time of day refer to
Central standard time or Central daylight saving time, as in effect in Chicago,
Illinois on such day.  For purposes of the computation of a period of time from
a specified date to a later specified date, the word "from" means "from and
including" and the words "to" and "until" each means "to and including";
provided that, with respect to a computation of fees or interest payable to
Agent or any Lender, such period shall in any event consist of at least one full
day.

1.6.

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

2.

LOANS AND TERMS OF PAYMENT.

2.1.

Revolving Loans.

(a)

Subject to the terms and conditions of this Agreement, and during the term of
this Agreement, each Revolving Lender agrees (severally, not jointly or jointly
and severally) to make revolving loans ("Revolving Loans") to Borrowers in an
amount at any one time outstanding not to exceed the lesser of:

(i)

such Lender's Revolver Commitment, and

(ii)

such Lender's Pro Rata Share of an amount equal to the lesser of:

(A)

the amount equal to (1) the Maximum Revolver Amount less (2) the sum of (y) the
Letter of Credit Usage at such time, plus (z) the principal amount of Swing
Loans outstanding at such time, and

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(B)

the amount equal to (1) the Borrowing Base as of such date (based upon the most
recent Borrowing Base Certificate delivered by Administrative Borrower to
Co-Collateral Agents) less the sum of (1) the Letter of Credit Usage at such
time, plus (2) the principal amount of Swing Loans outstanding at such time.

(b)

Amounts borrowed pursuant to this Section 2.1 may be repaid and, subject to the
terms and conditions of this Agreement, reborrowed at any time during the term
of this Agreement.  The outstanding principal amount of the Revolving Loans,
together with interest accrued and unpaid thereon, shall constitute Obligations
and shall be due and payable on the Maturity Date or, if earlier, on the date on
which they are declared due and payable pursuant to the terms of this Agreement.

(c)

Anything to the contrary in this Section 2.1 notwithstanding, Co-Collateral
Agents shall have the right (but not the obligation), in the exercise of their
Permitted Discretion, to establish and increase or decrease or eliminate
Receivable Reserves, Inventory Reserves, Bank Product Reserves, and other
Reserves against the Borrowing Base (or any component thereof) or the Maximum
Revolver Amount.  The amount of any Receivable Reserve, Inventory Reserve, Bank
Product Reserve, or other Reserve established by Co-Collateral Agents shall have
a reasonable relationship to the event, condition, other circumstance, or fact
that is the basis for such reserve and shall not be duplicative of any other
reserve established and currently maintained.

2.2.

Intentionally Omitted.

2.3.

Borrowing Procedures and Settlements.

(a)

Procedure for Borrowing Revolving Loans.  Each Borrowing shall be made by a
written request by an Authorized Person delivered to Agent and received by Agent
no later than 10:30 a.m. (i) on the Business Day that is the requested Funding
Date in the case of a request for a Swing Loan, and (ii) on the Business Day
that is 1 Business Day prior to the requested Funding Date in the case of all
other requests, specifying (A) the amount of such Borrowing, and (B) the
requested Funding Date (which shall be a Business Day); provided, that Agent
may, in its sole discretion, elect to accept as timely requests that are
received later than 10:30 a.m. on the applicable Business Day.  At Agent's
election, in lieu of delivering the above-described written request, any
Authorized Person may give Agent telephonic notice of such request by the
required time.  In such circumstances, Borrowers agree that any such telephonic
notice will be confirmed in writing within 24 hours of the giving of such
telephonic notice, but the failure to provide such written confirmation shall
not affect the validity of the request.

(b)

Making of Swing Loans.  In the case of a request for a Swing Loan and so long as
the aggregate amount of Swing Loans made since the last Settlement Date, minus
all payments or other amounts applied to Swing Loans since the last Settlement
Date, plus the amount of the requested Swing Loan does not exceed $20,000,000,
and Swing Lender, in its sole discretion, agrees to make a Swing Loan, Swing
Lender shall make a Revolving Loan (any such Revolving Loan made by Swing Lender
pursuant to this Section 2.3(b) being referred to as a "Swing Loan" and all such
Revolving Loans being referred to as "Swing Loans") available to Borrowers on
the Funding Date applicable thereto by transferring immediately available funds
in

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the amount of such requested Borrowing to the Designated Account.  Each Swing
Loan shall be deemed to be a Revolving Loan hereunder and shall be subject to
all the terms and conditions (including Section 3) applicable to other Revolving
Loans, except that all payments (including interest) on any Swing Loan shall be
payable to Swing Lender solely for its own account.  Subject to the provisions
of Section 2.3(d)(ii), Swing Lender shall not make and shall not be obligated to
make any Swing Loan if Swing Lender has actual knowledge that (i) one or more of
the applicable conditions precedent set forth in Section 3 will not be satisfied
on the requested Funding Date for the applicable Borrowing, or (ii) the
requested Borrowing would exceed the Availability on such Funding Date.  Swing
Lender shall not otherwise be required to determine whether the applicable
conditions precedent set forth in Section 3 have been satisfied on the Funding
Date applicable thereto prior to making any Swing Loan.  The Swing Loans shall
be secured by Agent's Liens, constitute Revolving Loans and Obligations, and
bear interest at the rate applicable from time to time to Revolving Loans that
are Base Rate Loans.

(c)

Making of Revolving Loans.

(i)

In the event that Swing Lender is not obligated to make a Swing Loan, then after
receipt of a request for a Borrowing pursuant to Section 2.3(a), Agent shall
notify the Lenders by telecopy, telephone, email, or other electronic form of
transmission, of the requested Borrowing; such notification to be sent on the
Business Day that is 1 Business Day prior to the requested Funding Date.  If
Agent has notified the Lenders of a requested Borrowing on the Business Day that
is 1 Business Day prior to the Funding Date, then each Lender shall make the
amount of such Lender's Pro Rata Share of the requested Borrowing available to
Agent in immediately available funds, to Agent's Account, not later than 10:00
a.m. on the Business Day that is the requested Funding Date.  After Agent's
receipt of the proceeds of such Revolving Loans from the Lenders, Agent shall
make the proceeds thereof available to Borrowers on the applicable Funding Date
by transferring immediately available funds equal to such proceeds received by
Agent to the Designated Account; provided, that, subject to the provisions of
Section 2.3(d)(ii), no Lender shall have an obligation to make any Revolving
Loan, if (1) one or more of the applicable conditions precedent set forth in
Section 3 will not be satisfied on the requested Funding Date for the applicable
Borrowing unless such condition has been waived, or (2) the requested Borrowing
would exceed the Availability on such Funding Date.

(ii)

Unless Agent receives notice from a Lender prior to 9:30 a.m. on the Business
Day that is the requested Funding Date relative to a requested Borrowing as to
which Agent has notified the Lenders of a requested Borrowing that such Lender
will not make available as and when required hereunder to Agent for the account
of Borrowers the amount of that Lender's Pro Rata Share of the Borrowing, Agent
may assume that each Lender has made or will make such amount available to Agent
in immediately available funds on the Funding Date and Agent may (but shall not
be so required), in reliance upon such assumption, make available to Borrowers a
corresponding amount.  If, on the requested Funding Date, any Lender shall not
have remitted the full amount that it is required to make available to Agent in
immediately available funds and if Agent has made available to Borrowers such
amount on the requested Funding Date, then such Lender shall make the amount of
such Lender's Pro Rata Share of the requested Borrowing available to Agent in
immediately available funds, to Agent's Account, no later than 10:00 a.m. on the
Business Day that is the first Business Day after the requested Funding Date (in
which case, the interest accrued on such Lender's portion of such Borrowing

-5-

for the Funding Date shall be for Agent's separate account).  If any Lender
shall not remit the full amount that it is required to make available to Agent
in immediately available funds as and when required hereby and if Agent has made
available to Borrowers such amount, then that Lender shall be obligated to
immediately remit such amount to Agent, together with interest at the Defaulting
Lender Rate for each day until the date on which such amount is so remitted.  A
notice submitted by Agent to any Lender with respect to amounts owing under this
Section 2.3(c)(ii) shall be conclusive, absent manifest error.  If the amount
that a Lender is required to remit is made available to Agent, then such payment
to Agent shall constitute such Lender's Revolving Loan for all purposes of this
Agreement.  If such amount is not made available to Agent on the Business Day
following the Funding Date, Agent will notify Administrative Borrower of such
failure to fund and, upon demand by Agent, Borrowers shall pay such amount to
Agent, together with interest thereon for each day elapsed since the date of
such Borrowing, for Agent's Account, at a rate per annum equal to the interest
rate applicable at the time to the Revolving Loans composing such Borrowing.

(d)

Protective Advances and Optional Overadvances.

(i)

Any contrary provision of this Agreement or any other Loan Document
notwithstanding, but subject to Section 2.3(d)(iii), at any time (A) after the
occurrence and during the continuance of a Default or an Event of Default, or
(B) that any of the other applicable conditions precedent set forth in Section 3
are not satisfied, Agent hereby is authorized by Borrowers and the Lenders, from
time to time (until such time as either Co-Collateral Agent shall revoke such
authority), in Agent's sole discretion, to make Revolving Loans to, or for the
benefit of, Borrowers, on behalf of the Revolving Lenders, that Agent, in its
Permitted Discretion, deems necessary or desirable (1) to preserve or protect
the Collateral, or any portion thereof, or (2) to enhance the likelihood of
repayment of the Obligations (other than the Bank Product Obligations) (the
Revolving Loans described in this Section 2.3(d)(i) shall be referred to as
"Protective Advances").  Notwithstanding the foregoing, unless Required Lenders
otherwise consent, the aggregate amount of all Protective Advances outstanding
at any one time shall not exceed $20,000,000.

(A)

Any contrary provision of this Agreement or any other Loan Document
notwithstanding, but subject to Section 2.3(d)(iii), the Lenders hereby
authorize Agent or Swing Lender, as applicable, and either Agent or Swing
Lender, as applicable, may, but is not obligated to (until such time as either
Co-Collateral Agent shall revoke such authority), knowingly and intentionally,
continue to make Revolving Loans (including Swing Loans) to Borrowers
notwithstanding that an Overadvance exists or would be created thereby, so long
as (A) after giving effect to such Revolving Loans, the outstanding Revolver
Usage does not, unless Required Lenders otherwise consent, exceed the Borrowing
Base by more than $20,000,000, and (B) after giving effect to such Revolving
Loans, the outstanding Revolver Usage (except for and excluding amounts charged
to the Loan Account for interest, fees, or Lender Group Expenses) does not
exceed the Maximum Revolver Amount.  In the event Agent obtains actual knowledge
that the Revolver Usage exceeds the amounts permitted by the immediately
foregoing provisions, regardless of the amount of, or reason for, such excess,
Agent shall notify the Lenders as soon as practicable (and prior to making any
(or any additional) intentional Overadvances (except for and excluding amounts
charged to the Loan Account for interest, fees, or Lender Group Expenses) unless
Agent determines that prior notice would result in imminent

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harm to the Collateral or its value, in which case Agent may make such
Overadvances and provide notice as promptly as practicable thereafter), and the
Lenders with Revolver Commitments thereupon shall, together with Agent and
Co-Collateral Agents, jointly determine the terms of arrangements that shall be
implemented with Borrowers intended to reduce, within a reasonable time, the
outstanding principal amount of the Revolving Loans to Borrowers to an amount
permitted by the preceding sentence.  In such circumstances, if any Lender with
a Revolver Commitment objects to the proposed terms of reduction or repayment of
any Overadvance, the terms of reduction or repayment thereof shall be
implemented according to the determination of the Required Lenders.  The
foregoing provisions are meant for the benefit of the Lenders, Co-Collateral
Agents and Agent and are not meant for the benefit of Borrowers, which shall
continue to be bound by the provisions of Section 2.4(e)(1).  Each Lender with a
Revolver Commitment shall be obligated to make Revolving Loans in accordance
with Section 2.3(c) in, or settle Overadvances made by Agent with Agent as
provided in Section 2.3(e) (or Section 2.3(g), as applicable) for, the amount of
such Lender's Pro Rata Share of any unintentional Overadvances by Agent reported
to such Lender, any intentional Overadvances made as permitted under this
Section 2.3(d)(ii), and any Overadvances resulting from the charging to the Loan
Account of interest, fees, or Lender Group Expenses.

(ii)

Each Protective Advance and each Overadvance (each, an "Extraordinary Advance")
shall be deemed to be a Revolving Loan hereunder, except that no Extraordinary
Advance shall be eligible to be a LIBOR Rate Loan and, prior to Settlement
therefor, all payments on the Extraordinary Advances, including interest
thereon, shall be payable to Agent solely for its own account.  The
Extraordinary Advances shall be repayable on demand, secured by Agent's Liens,
constitute Obligations hereunder, and bear interest at the rate applicable from
time to time to Revolving Loans that are Base Rate Loans.  The provisions of
this Section 2.3(d) are for the exclusive benefit of Agent, Co-Collateral
Agents, Swing Lender, and the Lenders and are not intended to benefit Borrowers
(or any other Loan Party) in any way.

(iii)

Notwithstanding anything contained in this Agreement or any other Loan Document
to the contrary:  (A) unless Required Lenders otherwise consent no Extraordinary
Advance may be made by Agent if such Extraordinary Advance would cause the
aggregate principal amount of Extraordinary Advances outstanding to exceed an
amount equal to 10% of the Maximum Revolver Amount; (B) no Protective Advance
shall be permitted that causes the aggregate Revolver Usage to exceed the
Maximum Revolver Amount; (C) no Lender shall be required to make any Revolving
Loan (including reimbursement to Agent of any Extraordinary Advances) in excess
of the amount of its Revolver Commitment; and (D) no Extraordinary Advance shall
be made that causes the aggregate ABL Debt (as defined in the Split Lien
Intercreditor Agreement) to exceed the ABL Cap (as defined in the Split Lien
Intercreditor Agreement), without the written consent of each Lender.

(e)

Settlement.  It is agreed that each Lender's funded portion of the Revolving
Loans is intended by the Lenders to equal, at all times, such Lender's Pro Rata
Share of the outstanding Revolving Loans.  Such agreement notwithstanding,
Agent, Swing Lender, and the other Lenders agree (which agreement shall not be
for the benefit of Borrowers) that in order to facilitate the administration of
this Agreement and the other Loan Documents, settlement among the Lenders as to
the Revolving Loans (including the Swing Loans and the

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Extraordinary Advances) shall take place on a periodic basis in accordance with
the following provisions:

(i)

Agent shall request settlement ("Settlement") with the Lenders on a weekly
basis, or on a more frequent basis if so determined by Agent in its sole
discretion (1) on behalf of Swing Lender, with respect to the outstanding Swing
Loans, (2) for itself, with respect to the outstanding Extraordinary Advances,
and (3) with respect to Loan Parties' payments or other amounts received, as to
each by notifying the Lenders by telecopy, telephone, or other similar form of
transmission, of such requested Settlement, no later than 2:00 p.m. on the
Business Day immediately prior to the date of such requested Settlement (the
date of such requested Settlement being the "Settlement Date").  Such notice of
a Settlement Date shall include a summary statement of the amount of outstanding
Swing Loans, Extraordinary Advances and other Revolving Loans for the period
since the prior Settlement Date.  Subject to the terms and conditions contained
herein (including Section 2.3(g)):  (y) if the amount of the Revolving Loans
(including Swing Loans, and Extraordinary Advances) made by a Lender that is not
a Defaulting Lender exceeds such Lender's Pro Rata Share of the Revolving Loans
(including Swing Loans, and Extraordinary Advances) as of a Settlement Date,
then Agent shall, by no later than 12:00 p.m. on the Settlement Date, transfer
in immediately available funds to a Deposit Account of such Lender (as such
Lender may designate), an amount such that each such Lender shall, upon receipt
of such amount, have as of the Settlement Date, its Pro Rata Share of the
Revolving Loans (including Swing Loans, and Extraordinary Advances), and (z) if
the amount of the Revolving Loans (including Swing Loans, and Extraordinary
Advances) made by a Lender is less than such Lender's Pro Rata Share of the
Revolving Loans (including Swing Loans, and Extraordinary Advances) as of a
Settlement Date, such Lender shall no later than 12:00 p.m. on the Settlement
Date transfer in immediately available funds to Agent's Account, an amount such
that each such Lender shall, upon transfer of such amount, have as of the
Settlement Date, its Pro Rata Share of the Revolving Loans (including Swing
Loans and Extraordinary Advances).  Such amounts made available to Agent under
clause (z) of the immediately preceding sentence shall be applied against the
amounts of the applicable Swing Loans or Extraordinary Advances, shall
constitute Revolving Loans of such Lenders.  If any such amount is not made
available to Agent by any Lender on the Settlement Date applicable thereto to
the extent required by the terms hereof, Agent shall be entitled to recover for
its account such amount on demand from such Lender together with interest
thereon at the Defaulting Lender Rate.

(ii)

In determining whether a Lender's balance of the Revolving Loans (including
Swing Loans and Extraordinary Advances) is less than, equal to, or greater than
such Lender's Pro Rata Share of the Revolving Loans as of a Settlement Date,
Agent shall, as part of the relevant Settlement, apply to such balance the
portion of payments actually received in good funds by Agent with respect to
principal, interest, fees payable by Borrowers and allocable to the Lenders
hereunder, and proceeds of Collateral.

(iii)

Between Settlement Dates, Agent, to the extent Extraordinary Advances for the
account of Agent or Swing Loans for the account of Swing Lender are outstanding,
may pay over to Agent or Swing Lender, as applicable, any payments or other
amounts received by Agent, that in accordance with the terms of this Agreement
would be applied to the reduction of the Revolving Loans, for application to the
Extraordinary Advances

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or Swing Loans.  Between Settlement Dates, Agent, to the extent no Extraordinary
Advances or Swing Loans are outstanding, may pay over to Swing Lender any
payments or other amounts received by Agent, that in accordance with the terms
of this Agreement would be applied to the reduction of the Revolving Loans, for
application to Swing Lender's Pro Rata Share of the Revolving Loans.  If, as of
any Settlement Date, payments or other amounts of Loan Parties received since
the then immediately preceding Settlement Date have been applied to Swing
Lender's Pro Rata Share of the Revolving Loans other than to Swing Loans, as
provided for in the previous sentence, Swing Lender shall pay to Agent for the
accounts of the Lenders, and Agent shall pay to the Lenders (other than a
Defaulting Lender if Agent has implemented the provisions of Section 2.3(g)), to
be applied to the outstanding Revolving Loans of such Lenders, an amount such
that each such Lender shall, upon receipt of such amount, have, as of such
Settlement Date, its Pro Rata Share of the Revolving Loans.  During the period
between Settlement Dates, Swing Lender with respect to Swing Loans, Agent with
respect to Extraordinary Advances, and each Lender with respect to the Revolving
Loans other than Swing Loans and Extraordinary Advances, shall be entitled to
interest at the applicable rate or rates payable under this Agreement on the
daily amount of funds employed by Swing Lender, Agent, or the Lenders, as
applicable.

(iv)

Anything in this Section 2.3(e) to the contrary notwithstanding, in the event
that a Lender is a Defaulting Lender, Agent shall be entitled to refrain from
remitting settlement amounts to the Defaulting Lender and, instead, shall be
entitled to elect to implement the provisions set forth in Section 2.3(g).

(f)

Notation.  Agent, as a non-fiduciary agent for Borrowers, shall maintain a
register showing the principal amount of the Revolving Loans, owing to each
Lender, including the Swing Loans owing to Swing Lender, and Extraordinary
Advances owing to Agent, and the interests therein of each Lender, from time to
time and such register shall, absent manifest error, conclusively be presumed to
be correct and accurate.

(g)

Defaulting Lenders.

(i)

Notwithstanding the provisions of Section 2.4(b)(ii), Agent shall not be
obligated to transfer to a Defaulting Lender any payments made by Borrowers to
Agent for the Defaulting Lender's benefit or any proceeds of Collateral that
would otherwise be remitted hereunder to the Defaulting Lender, and, in the
absence of such transfer to the Defaulting Lender, Agent shall transfer any such
payments (A) first, to Agent to the extent of any Extraordinary Advances that
were made by Agent and that were required to be, but were not, paid by
Defaulting Lender, (B) second, to Swing Lender to the extent of any Swing Loans
that were made by Swing Lender and that were required to be, but were not, paid
by the Defaulting Lender, (C) third, to Issuing Lender, to the extent of the
portion of a Letter of Credit Disbursement that was required to be, but was not,
paid by the Defaulting Lender, (D) fourth, to each Non-Defaulting Lender ratably
in accordance with their Commitments (but, in each case, only to the extent that
such Defaulting Lender's portion of a Revolving Loan (or other funding
obligation) was funded by such other Non-Defaulting Lender), (E) fifth, in
Agent's sole discretion, to a suspense account maintained by Agent, the proceeds
of which may be retained by Agent and may be made available to be re-advanced to
or for the benefit of Borrowers (upon the request of Administrative Borrower and
subject to the conditions set forth in Section 3.2) as if

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such Defaulting Lender had made its portion of Revolving Loans (or other funding
obligations) hereunder, and (F) sixth, from and after the date on which all
other Obligations have been paid in full, to such Defaulting Lender in
accordance with tier (L) of Section 2.4(b)(ii).  Subject to the foregoing, Agent
may hold and, in its discretion, prior to the occurrence and continuance of an
Application Event, re-lend to Borrowers for the account of such Defaulting
Lender the amount of all such payments received and retained by Agent for the
account of such Defaulting Lender.  Solely for the purposes of voting or
consenting to matters with respect to the Loan Documents (including the
calculation of Pro Rata Share in connection therewith) and for the purpose of
calculating the fee payable under Section 2.10(b), such Defaulting Lender shall
be deemed not to be a "Lender" and such Lender's Commitment shall be deemed to
be zero; provided, that the foregoing shall not apply to any of the matters
governed by Section 14.1(a)(i) through (iii).  The provisions of this Section
2.3(g) shall remain effective with respect to such Defaulting Lender until the
earlier of (y) the date on which all of the Non-Defaulting Lenders, Agent,
Issuing Lender, and Borrowers shall have waived, in writing, the application of
this Section 2.3(g) to such Defaulting Lender, or (z) the date on which such
Defaulting Lender makes payment of all amounts that it was obligated to fund
hereunder, pays to Agent all amounts owing by Defaulting Lender in respect of
the amounts that it was obligated to fund hereunder, and, if requested by Agent,
provides adequate assurance of its ability to perform its future obligations
hereunder (on which earlier date, so long as no Event of Default has occurred
and is continuing, any remaining cash collateral held by Agent pursuant to
Section 2.3(g)(ii) shall be released to Borrowers).  The operation of this
Section 2.3(g) shall not be construed to increase or otherwise affect the
Commitment of any Lender, to relieve or excuse the performance by such
Defaulting Lender or any other Lender of its duties and obligations hereunder,
or to relieve or excuse the performance by Borrowers of their duties and
obligations hereunder to Agent, Issuing Lender, or to the Lenders other than
such Defaulting Lender.  Any failure by a Defaulting Lender to fund amounts that
it was obligated to fund hereunder shall constitute a material breach by such
Defaulting Lender of this Agreement and shall entitle Borrowers, at their
option, upon written notice to Agent, to arrange for a substitute Lender to
assume the Commitment of such Defaulting Lender, such substitute Lender to be
reasonably acceptable to Agent.  In connection with the arrangement of such a
substitute Lender, the Defaulting Lender shall have no right to refuse to be
replaced hereunder, and agrees to execute and deliver a completed form of
Assignment and Acceptance in favor of the substitute Lender (and agrees that it
shall be deemed to have executed and delivered such document if it fails to do
so) subject only to being paid its share of the outstanding Obligations (other
than Bank Product Obligations, but including (1) all interest, fees, and other
amounts that may be due and payable in respect thereof, and (2) an assumption of
its Pro Rata Share of its participation in the Letters of Credit); provided,
that any such assumption of the Commitment of such Defaulting Lender shall not
be deemed to constitute a waiver of any of the Lender Groups' or Borrowers'
rights or remedies against any such Defaulting Lender arising out of or in
relation to such failure to fund.  In the event of a direct conflict between the
priority provisions of this Section 2.3(g) and any other provision contained in
this Agreement or any other Loan Document, it is the intention of the parties
hereto that such provisions be read together and construed, to the fullest
extent possible, to be in concert with each other.  In the event of any actual,
irreconcilable conflict that cannot be resolved as aforesaid, the terms and
provisions of this Section 2.3(g) shall control and govern.

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(ii)

If any Swing Loan or Letter of Credit is outstanding at the time that a Lender
becomes a Defaulting Lender then:

(A)

such Defaulting Lender's Swing Loan Exposure and Letter of Credit Exposure shall
be reallocated among the Non-Defaulting Lenders in accordance with their
respective Pro Rata Shares but only to the extent (x) the sum of all
Non-Defaulting Lenders' Revolving Loan Exposures plus such Defaulting Lender's
Swing Loan Exposure and Letter of Credit Exposure does not exceed the total of
all Non-Defaulting Lenders' Revolver Commitments, (y) the sum of each
Non-Defaulting Lenders' Revolving Loan Exposures plus its Pro Rata Share of such
Defaulting Lender's Swing Loan Exposure and Letter of Credit Exposure does not
exceed such Non-Defaulting Lenders' Revolver Commitments, and (z) the conditions
set forth in Section 3.2 are satisfied at such time;

(B)

if the reallocation described in clause (A) above cannot, or can only partially,
be effected, Borrowers shall within one Business Day following notice by the
Agent (x) first, prepay such Defaulting Lender's Swing Loan Exposure (after
giving effect to any partial reallocation pursuant to clause (A) above) and
(y) second, cash collateralize such Defaulting Lender's Letter of Credit
Exposure (after giving effect to any partial reallocation pursuant to clause (A)
above), pursuant to a cash collateral agreement to be entered into in form and
substance reasonably satisfactory to the Agent, for so long as such Letter of
Credit Exposure is outstanding; provided, that Borrowers shall not be obligated
to cash collateralize any Defaulting Lender's Letter of Credit Exposure if such
Defaulting Lender is also the Issuing Lender;

(C)

if Borrowers cash collateralizes any portion of such Defaulting Lender's Letter
of Credit Exposure pursuant to this Section 2.3(g)(ii), Borrowers shall not be
required to pay any Letter of Credit Fees to Agent for the account of such
Defaulting Lender pursuant to Section 2.6(b) with respect to such cash
collateralized portion of such Defaulting Lender's Letter of Credit Exposure
during the period such Letter of Credit Exposure is cash collateralized;

(D)

to the extent the Letter of Credit Exposure of the Non-Defaulting Lenders is
reallocated pursuant to this Section 2.3(g)(ii), then the Letter of Credit Fees
payable to the Non-Defaulting Lenders pursuant to Section 2.6(b) shall be
adjusted in accordance with such Non-Defaulting Lenders' Letter of Credit
Exposure;

(E)

to the extent any Defaulting Lender's Letter of Credit Exposure is neither cash
collateralized nor reallocated pursuant to this Section 2.3(g)(ii), then,
without prejudice to any rights or remedies of the Issuing Lender or any Lender
hereunder, all Letter of Credit Fees that would have otherwise been payable to
such Defaulting Lender under Section 2.6(b) with respect to such portion of such
Letter of Credit Exposure shall instead be payable to the Issuing Lender until
such portion of such Defaulting Lender's Letter of Credit Exposure is cash
collateralized or reallocated;

(F)

so long as any Lender is a Defaulting Lender, the Swing Lender shall not be
required to make any Swing Loan and the Issuing Lender shall not be required to
issue, amend, or increase any Letter of Credit, in each case, to the extent
(x) the

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Defaulting Lender's Pro Rata Share of such Swing Loans or Letter of Credit
cannot be reallocated pursuant to this Section 2.3(g)(ii) or (y) the Swing
Lender or Issuing Lender, as applicable, has not otherwise entered into
arrangements reasonably satisfactory to the Swing Lender or Issuing Lender, as
applicable, and Borrowers to eliminate the Swing Lender's or Issuing Lender's
risk with respect to the Defaulting Lender's participation in Swing Loans or
Letters of Credit; and

(G)

Agent may release any cash collateral provided by Borrowers pursuant to this
Section 2.3(g)(ii) to the Issuing Lender and the Issuing Lender may apply any
such cash collateral to the payment of such Defaulting Lender's Pro Rata Share
of any Letter of Credit Disbursement that is not reimbursed by Borrowers
pursuant to Section 2.11(a).

(h)

Independent Obligations.  All Revolving Loans (other than Swing Loans,
Protective Advances and, at Agent's election, Overadvances) shall be made by the
Lenders contemporaneously and in accordance with their Pro Rata Shares.  It is
understood that (i) no Lender shall be responsible for any failure by any other
Lender to perform its obligation to make any Revolving Loan (or other extension
of credit) hereunder, nor shall any Commitment of any Lender be increased or
decreased as a result of any failure by any other Lender to perform its
obligations hereunder, and (ii) no failure by any Lender to perform its
obligations hereunder shall excuse any other Lender from its obligations
hereunder.

2.4.

Payments; Reductions of Commitments; Prepayments.

(a)

Payments by Borrowers.

(i)

Except as otherwise expressly provided herein, all payments by Borrowers shall
be made to Agent's Account for the account of the Lender Group and shall be made
in immediately available funds, no later than 1:30 p.m. on the date specified
herein.  Any payment received by Agent later than 1:30 p.m. shall be deemed to
have been received (unless Agent, in its sole discretion, elects to credit it on
the date received) on the following Business Day and any applicable interest or
fee shall continue to accrue until such following Business Day.

(ii)

Unless Agent receives notice from Administrative Borrower prior to the date on
which any payment is due to the Lenders that Borrowers will not make such
payment in full as and when required, Agent may assume that Borrowers have made
(or will make) such payment in full to Agent on such date in immediately
available funds and Agent may (but shall not be so required), in reliance upon
such assumption, distribute to each Lender on such due date an amount equal to
the amount then due such Lender.  If and to the extent Borrowers do not make
such payment in full to Agent on the date when due, each Lender severally shall
repay to Agent on demand such amount distributed to such Lender, together with
interest thereon at the Defaulting Lender Rate for each day from the date such
amount is distributed to such Lender until the date repaid.

(b)

Apportionment and Application.

(i)

So long as no Application Event has occurred and is continuing and except as
otherwise provided herein with respect to Defaulting Lenders, all principal and

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interest payments received by Agent shall be apportioned ratably among the
Lenders (according to the unpaid principal balance of the Obligations to which
such payments relate held by each Lender) and all payments of fees and expenses
received by Agent (other than fees or expenses that are for Agent's separate
account or for the separate account of any Co-Collateral Agent or for the
separate account of Issuing Lender) shall be apportioned ratably among the
Lenders having a Pro Rata Share of the type of Commitment or Obligation to which
a particular fee or expense relates.  Subject to Section 2.4(b)(iv) and Section
2.4(e), all payments to be made hereunder by Borrowers shall be remitted to
Agent and all such payments, and all proceeds of Collateral received by Agent,
shall be applied, so long as no Application Event has occurred and is continuing
and except as otherwise provided herein with respect to Defaulting Lenders, to
reduce the balance of the Revolving Loans outstanding and, thereafter, to
Borrowers (to be wired to the Designated Account) or such other Person entitled
thereto under applicable law.

(ii)

At any time that an Application Event has occurred and is continuing and except
as otherwise provided herein with respect to Defaulting Lenders, all payments
remitted to Agent and all proceeds of Collateral received by Agent shall be
applied as follows:

(A)

first, to pay any Lender Group Expenses (including cost or expense
reimbursements) or indemnities then due to Agent and Co-Collateral Agents under
the Loan Documents, until paid in full,

(B)

second, to pay any fees or premiums then due to Agent and Co-Collateral Agents
under the Loan Documents until paid in full,

(C)

third, to pay interest due in respect of all Protective Advances until paid in
full,

(D)

fourth, to pay the principal of all Protective Advances until paid in full,

(E)

fifth, ratably, to pay any Lender Group Expenses (including cost or expense
reimbursements) or indemnities then due to any of the Lenders under the Loan
Documents, until paid in full,

(F)

sixth, ratably, to pay any fees or premiums then due to any of the Lenders under
the Loan Documents until paid in full,

(G)

seventh, to pay interest accrued in respect of the Swing Loans until paid in
full,

(H)

eighth, to pay the principal of all Swing Loans until paid in full,

(I)

ninth, ratably, to pay interest accrued in respect of the Revolving Loans until
paid in full,

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(J)

tenth, ratably

i.

to pay the principal of all Revolving Loans until paid in full,

ii.

to Agent, to be held by Agent, for the benefit of Issuing Lender (and for the
ratable benefit of each of the Lenders that have an obligation to pay to Agent,
for the account of Issuing Lender, a share of each Letter of Credit
Disbursement), as cash collateral in an amount up to 105% of the Letter of
Credit Usage (to the extent permitted by applicable law, such cash collateral
shall be applied to the reimbursement of any Letter of Credit Disbursement as
and when such disbursement occurs and, if a Letter of Credit expires undrawn,
the cash collateral held by Agent in respect of such Letter of Credit shall, to
the extent permitted by applicable law, be reapplied pursuant to this Section
2.4(b)(ii), beginning with tier (A) hereof),

iii.

ratably, up to the aggregate amount (after taking into account any amounts
previously paid pursuant to this clause iii. during the continuation of the
applicable Application Event) of the most recently established Bank Product
Reserve, which amount was established prior to the occurrence of, and not in
contemplation of, the subject Application Event, to Agent for the ratable
benefit of the Bank Product Providers (such ratable benefit to be determined
based on the ratio of the Bank Product Reserve established for each Bank Product
of a Bank Product Provider to the aggregate Bank Product Reserve established for
all Bank Products provided by all Bank Product Providers), to be either
(I) disbursed by Agent to the Bank Product Providers based upon amounts then
certified by the applicable Bank Product Provider to Agent (in form and
substance satisfactory to Agent) to be due and payable to such Bank Product
Providers on account of Bank Product Obligations or (II) held by Agent as cash
collateral (which cash collateral may be released by Agent to the applicable
Bank Product Provider and applied by such Bank Product Provider to the payment
or reimbursement of any amounts due and payable with respect to Bank Product
Obligations owed to the applicable Bank Product Provider as and when such
amounts first become due and payable and, if and at such time as all such Bank
Product Obligations are paid or otherwise satisfied in full, the cash collateral
held by Agent in respect of such Bank Product Obligations shall be reapplied
pursuant to this Section 2.4(b)(ii), beginning with tier (A) hereof,

(K)

eleventh, ratably, to pay any other Obligations other than Obligations owed to
Defaulting Lenders (including being paid, ratably, to the Bank Product Providers
on account of all amounts then due and payable in respect of Bank Product
Obligations, with any balance to be paid to Agent, to be held by Agent, for the
ratable benefit of the Bank Product Providers, as cash collateral (which cash
collateral may be released by Agent to the applicable Bank Product Provider and
applied by such Bank Product Provider to the payment or reimbursement of any
amounts due and payable with respect to Bank Product Obligations owed to the
applicable Bank Product Provider as and when such amounts first become due and
payable and, if and at such time as all such Bank Product Obligations are paid
or otherwise satisfied in full, the cash collateral held by Agent in respect of
such Bank Product Obligations shall be reapplied pursuant to this Section
2.4(b)(ii), beginning with tier (A) hereof),

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(L)

twelfth, ratably to pay any Obligations owed to Defaulting Lenders; and

(M)

thirteenth, to Borrowers (to be wired to the Designated Account) or such other
Person entitled thereto under applicable law.

(iii)

Agent promptly shall distribute to each Lender, pursuant to the applicable wire
instructions received from each Lender in writing, such funds as it may be
entitled to receive, subject to a Settlement delay as provided in Section
2.3(e).

(iv)

In each instance, so long as no Application Event has occurred and is
continuing, Section 2.4(b)(i) shall not apply to any payment made by Borrowers
to Agent and specified by Borrowers to be for the payment of specific
Obligations then due and payable (or prepayable) under any provision of this
Agreement or any other Loan Document.

(v)

For purposes of Section 2.4(b)(ii), "paid in full" of a type of Obligation means
payment in cash or immediately available funds of all amounts owing on account
of such type of Obligation, including interest accrued after the commencement of
any Insolvency Proceeding, default interest, interest on interest, and expense
reimbursements, irrespective of whether any of the foregoing would be or is
allowed or disallowed in whole or in part in any Insolvency Proceeding.

(vi)

In the event of a direct conflict between the priority provisions of this
Section 2.4 and any other provision contained in this Agreement or any other
Loan Document, it is the intention of the parties hereto that such provisions be
read together and construed, to the fullest extent possible, to be in concert
with each other.  In the event of any actual, irreconcilable conflict that
cannot be resolved as aforesaid, if the conflict relates to the provisions of
Section 2.3(g) and this Section 2.4, then the provisions of Section 2.3(g) shall
control and govern, and if otherwise, then the terms and provisions of this
Section 2.4 shall control and govern.

(c)

Reduction of Commitments.  The Revolver Commitments shall terminate on the
Maturity Date.  Borrowers may reduce the Revolver Commitments, without premium
or penalty, to an amount (which may be zero) not less than the sum of (A) the
Revolver Usage as of such date, plus (B) the principal amount of all Revolving
Loans not yet made as to which a request has been given by Borrowers under
Section 2.3(a), plus (C) the amount of all Letters of Credit not yet issued as
to which a request has been given by Borrowers pursuant to Section 2.11(a).
 Each such reduction shall be in an amount which is not less than $20,000,000
(unless the Revolver Commitments are being reduced to zero and the amount of the
Revolver Commitments in effect immediately prior to such reduction are less than
$20,000,000), shall be made by providing not less than 10 Business Days prior
written notice to Agent, and shall be irrevocable.  Once reduced, the Revolver
Commitments may not be increased.  Each such reduction of the Revolver
Commitments shall reduce the Revolver Commitments of each Lender proportionately
in accordance with its ratable share thereof.

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(d)

Optional Prepayments.  Borrowers may prepay the principal of any Revolving Loan
at any time in whole or in part, without premium or penalty but with any amounts
due under Section 2.12(b)(ii).

(e)

Mandatory Prepayments.

(i)

Borrowing Base.  If, at any time, (A) the Revolver Usage on such date exceeds
(B) the Borrowing Base reflected in the Borrowing Base Certificate most recently
delivered by Borrowers to Agent, then Borrowers shall immediately prepay the
Obligations in accordance with Section 2.4(f) in an aggregate amount equal to
the amount of such excess.

(ii)

Dispositions.  Within 1 Business Day of the date of receipt by any Loan Party of
the Net Cash Proceeds of any voluntary or involuntary sale or disposition by
such Loan Party of ABL Priority Collateral (or if the Indebtedness under the
Split Lien Documents has been paid in full, in accordance with the Split Lien
Intercreditor Agreement, the Collateral) (including casualty losses or
condemnations but excluding sales or dispositions which qualify as Permitted
Dispositions under clauses (a), (b), (c), (d), (e), (i), (j), (k), (l) or (m) of
the definition of Permitted Dispositions), Borrowers shall prepay the
outstanding principal amount of the Obligations in accordance with Section
2.4(f) in an amount equal to 100% of such Net Cash Proceeds (including
condemnation awards and payments in lieu thereof) received by such Person in
connection with such sales or dispositions; provided that, so long as (A) no
Default or Event of Default shall have occurred and is continuing or would
result therefrom, (B) Borrowers shall have given Agent prior written notice of
such Loan Party's intention to apply such monies to the costs of replacement of
the properties or assets that are the subject of such sale or disposition,
(C) the monies are held in a Deposit Account in which Agent has a perfected
first-priority security interest, and (D) such Loan Party completes such
replacement within 180 days after the initial receipt of such monies, then the
Loan Party whose assets were the subject of such disposition shall have the
option to apply such monies to the costs of replacement of the assets that are
the subject of such sale or disposition unless and to the extent that such
applicable period shall have expired without such replacement being made or
completed, in which case, any amounts remaining in the Deposit Account referred
to in clause (C) above shall be paid to Agent and applied in accordance with
Section 2.4(f).  Nothing contained in this Section 2.4(e)(ii) shall permit
Parent or any of its Subsidiaries to sell or otherwise dispose of any assets
other than in accordance with Section 6.4.

(iii)

Extraordinary Receipts.  Within 1 Business Day of the date of receipt by any
Loan Party of any Extraordinary Receipts constituting ABL Priority Collateral
(or if the Indebtedness under the Split Lien Documents has been paid in full, in
accordance with the Split Lien Intercreditor Agreement, the Collateral),
Borrowers shall prepay the outstanding principal amount of the Obligations in
accordance with Section 2.4(f) in an amount equal to 100% of such Extraordinary
Receipts, net of any reasonable expenses incurred in collecting such
Extraordinary Receipts.

(iv)

Indebtedness.  Within 1 Business Day of the date of incurrence by Parent or any
of its Subsidiaries of any Indebtedness (other than Permitted Indebtedness),
Borrowers shall prepay the outstanding principal amount of the Obligations in
accordance with Section 2.4(f) in an amount equal to 50% of the Net Cash
Proceeds received by such Person in

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connection with such incurrence.  The provisions of this Section 2.4(e)(iv)
shall not be deemed to be implied consent to any such incurrence otherwise
prohibited by the terms of this Agreement.

(v)

Equity.  Within 1 Business Day of the date of the issuance by Parent or any of
its Subsidiaries of any Equity Interests (other than (A) the issuance of Equity
Interest of Parent to finance a Permitted Convertible Note Refinance, and
(B) the issuance of Equity Interest by a Subsidiary of Parent to a Loan Party),
Borrowers shall prepay the outstanding principal amount of the Obligations in
accordance with Section 2.4(f) in an amount equal to 50% of the Net Cash
Proceeds received by such Person in connection with such issuance.  The
provisions of this Section 2.4(e)(v) shall not be deemed to be implied consent
to any such issuance otherwise prohibited by the terms of this Agreement.

(vi)

Business Interruption Insurance.  Within 1 Business Day of the date of the
receipt by Parent or any of its Subsidiaries of any proceeds of business
interruption insurance, Borrowers shall prepay the outstanding principal amount
of the Obligations in accordance with Section 2.4(f) in an amount equal to 50%
of the proceeds received by such Person in connection with such of business
interruption insurance.

(vii)

Pre-Approved Dispositions.  Within 1 Business Day of the date of receipt by any
Loan Party of the Net Cash Proceeds of the asset sales described in the
Pre-approved Disposition Letter (other than of the Designated Divestiture
Business Unit), Borrowers shall prepay the outstanding principal amount of the
Obligations in accordance with Section 2.4(f) in an amount equal to the lesser
of (1) $5,000,000 or (2) the Net Cash Proceeds of such sales that exceed the sum
of the Minimum Term Loan Amount plus the book value of the Accounts and
Inventory sold, transferred or otherwise disposed of pursuant to such asset
sale.  

(f)

Application of Payments.  Each prepayment pursuant to Section 2.4(e) shall,
(i) so long as no Application Event shall have occurred and be continuing, be
applied, first, to the outstanding principal amount of the Revolving Loans until
paid in full, and second, to cash collateralize the Letters of Credit in an
amount equal to 105% of the then outstanding Letter of Credit Usage, and (ii) if
an Application Event shall have occurred and be continuing, be applied in the
manner set forth in Section 2.4(b)(ii).  No prepayment under this Section 2.4(f)
shall result in a permanent reduction of the Maximum Revolver Amount or the
Revolver Commitments.

2.5.

Promise to Pay.  Borrowers agree to pay the Lender Group Expenses on the earlier
of (a) the first day of the calendar month following the date on which the
applicable Lender Group Expenses were first incurred or (b) the date on which
demand therefor is made by Agent (it being acknowledged and agreed that any
charging of such costs, expenses or Lender Group Expenses to the Loan Account
pursuant to the provisions of Section 2.6(d) shall be deemed to constitute a
demand for payment thereof for the purposes of this subclause (b)).  Borrowers
promise to pay all of the Obligations (including principal, interest, premiums,
if any, fees, costs, and expenses (including Lender Group Expenses)) in full on
the Maturity Date or, if earlier, on the date on which the Obligations (other
than the Bank Product Obligations) become due and payable pursuant to the terms
of this Agreement.  Borrowers agree that their obligations contained in the
first sentence of this Section 2.5 shall survive payment or satisfaction in full
of all other Obligations.

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2.6.

Interest Rates and Letter of Credit Fee:  Rates, Payments, and Calculations.

(a)

Interest Rates.  Except as provided in Section 2.6(c), all Revolving Loans and
all other Obligations (except for undrawn Letters of Credit) that have been
charged to the Loan Account pursuant to the terms hereof shall bear interest as
follows:

(i)

if the relevant Obligation is a LIBOR Rate Loan, at a per annum rate equal to
the LIBOR Rate plus the LIBOR Rate Margin, and

(ii)

otherwise, at a per annum rate equal to the Base Rate plus the Base Rate Margin.

(b)

Letter of Credit Fee.  Borrowers shall pay Agent (for the ratable benefit of the
Revolving Lenders), a Letter of Credit fee (the "Letter of Credit Fee") (which
fee shall be in addition to the fees, charges, commissions, and costs set forth
in Section 2.11(j)) that shall accrue at a per annum rate equal to the LIBOR
Rate Margin times the undrawn amount of all outstanding Letters of Credit.

(c)

Default Rate.  Upon the occurrence and during the continuation of an Event of
Default and at the election of Agent or the Required Lenders,

(i)

all Revolving Loans and all other Obligations (except for undrawn Letters of
Credit) that have been charged to the Loan Account pursuant to the terms hereof
shall bear interest at a per annum rate equal to 2 percentage points above the
per annum rate otherwise applicable thereunder, and

(ii)

the Letter of Credit Fee shall be increased to 2 percentage points above the per
annum rate otherwise applicable hereunder.

(d)

Payment.  Except to the extent provided to the contrary in Section 2.10 or
Section 2.12(a), (i) all interest, all Letter of Credit Fees, and all other fees
payable hereunder or under any of the other Loan Documents shall be due and
payable, in arrears, on the first day of each month, and (ii) all costs and
expenses payable hereunder or under any of the other Loan Documents, and all
Lender Group Expenses shall be due and payable on the earlier of (x) the first
day of the month following the date on which the applicable costs, expenses, or
Lender Group Expenses were first incurred or (y) the date on which demand
therefor is made by Agent (it being acknowledged and agreed that any charging of
such costs, expenses or Lender Group Expenses to the Loan Account pursuant to
the provisions of the following sentence shall be deemed to constitute a demand
for payment thereof for the purposes of this subclause (y)).  Borrowers hereby
authorize Agent, from time to time without prior notice to Borrowers, to charge
to the Loan Account (A) on the first day of each month, all interest accrued
during the prior month on the Revolving Loans hereunder, (B) on the first day of
each month, all Letter of Credit Fees accrued or chargeable hereunder during the
prior month, (C) on the first day of each month, the Unused Line Fee accrued
during the prior month pursuant to Section 2.10(b), (D) as and when incurred or
accrued, all audit, appraisal, valuation, or other charges or fees payable
hereunder, including pursuant to Section 2.10(a) and (c), (E) as and when due
and payable, all other fees payable hereunder or under any of the other Loan
Documents, (F) as and when

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incurred or accrued, all fees, charges, commissions, and costs provided for in
Section 2.11(j), (G) as and when incurred or accrued, all other Lender Group
Expenses, and (H) as and when due and payable all other payment obligations
payable under any Loan Document or any Bank Product Agreement (including any
amounts due and payable to the Bank Product Providers in respect of Bank
Products).  All amounts (including interest, fees, costs, expenses, Lender Group
Expenses, or other amounts payable hereunder or under any other Loan Document or
under any Bank Product Agreement) charged to the Loan Account shall thereupon
constitute Revolving Loans hereunder, shall constitute Obligations hereunder,
and shall initially accrue interest at the rate then applicable to Revolving
Loans that are Base Rate Loans (unless and until converted into LIBOR Rate Loans
in accordance with the terms of this Agreement).

(e)

Computation.  All interest and fees chargeable under the Loan Documents shall be
computed on the basis of a 360 day year, in each case, for the actual number of
days elapsed in the period during which the interest or fees accrue.  In the
event the Base Rate is changed from time to time hereafter, the rates of
interest hereunder based upon the Base Rate automatically and immediately shall
be increased or decreased by an amount equal to such change in the Base Rate.

(f)

Intent to Limit Charges to Maximum Lawful Rate.  In no event shall the interest
rate or rates payable under this Agreement, plus any other amounts paid in
connection herewith, exceed the highest rate permissible under any law that a
court of competent jurisdiction shall, in a final determination, deem
applicable.  Borrowers and the Lender Group, in executing and delivering this
Agreement, intend legally to agree upon the rate or rates of interest and manner
of payment stated within it; provided, that, anything contained herein to the
contrary notwithstanding, if such rate or rates of interest or manner of payment
exceeds the maximum allowable under applicable law, then, ipso facto, as of the
date of this Agreement, Borrowers are and shall be liable only for the payment
of such maximum amount as is allowed by law, and payment received from Borrowers
in excess of such legal maximum, whenever received, shall be applied to reduce
the principal balance of the Obligations to the extent of such excess.

2.7.

Crediting Payments.  The receipt of any payment item by Agent shall not be
required to be considered a payment on account unless such payment item is a
wire transfer of immediately available federal funds made to Agent's Account or
unless and until such payment item is honored when presented for payment.
 Should any payment item not be honored when presented for payment, then
Borrowers shall be deemed not to have made such payment and interest shall be
calculated accordingly.  Anything to the contrary contained herein
notwithstanding, any payment item shall be deemed received by Agent only if it
is received into Agent's Account on a Business Day on or before 1:30 p.m.  If
any payment item is received into Agent's Account on a non-Business Day or after
1:30 p.m. on a Business Day (unless Agent, in its sole discretion, elects to
credit it on the date received), it shall be deemed to have been received by
Agent as of the opening of business on the immediately following Business Day.

2.8.

Designated Account.  Agent is authorized to make the Revolving Loans, and
Issuing Lender is authorized to issue the Letters of Credit, under this
Agreement based upon telephonic or other instructions received from anyone
purporting to be an Authorized Person or, without instructions, if pursuant to
Section 2.6(d).  Borrowers agree to establish and maintain the Designated
Account with the Designated Account Bank for the purpose of receiving the

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proceeds of the Revolving Loans requested by Borrowers and made by Agent or the
Lenders hereunder.  Unless otherwise agreed by Agent and Borrowers, any
Revolving Loan requested by Borrowers and made by Agent, Swing Lender or the
Lenders hereunder shall be made to the Designated Account.

2.9.

Maintenance of Loan Account; Statements of Obligations.  Agent shall maintain an
account on its books in the name of Borrowers (the "Loan Account") on which
Borrowers will be charged with all Revolving Loans (including Extraordinary
Advances and Swing Loans) made by Agent, Swing Lender, or the Lenders to
Borrowers or for Borrowers' account, the Letters of Credit issued or arranged by
Issuing Lender for Borrowers' account, and with all other payment Obligations
hereunder or under the other Loan Documents, including, accrued interest, fees
and expenses, and Lender Group Expenses.  In accordance with Section 2.7, the
Loan Account will be credited with all payments received by Agent from Borrowers
or for Borrowers' account.  Agent shall make available to Borrowers monthly
statements regarding the Loan Account, including the principal amount the
Revolving Loans, interest accrued hereunder, fees accrued or charged hereunder
or under the other Loan Documents, and a summary itemization of all charges and
expenses constituting Lender Group Expenses accrued hereunder or under the other
Loan Documents, and each such statement, absent manifest error, shall be
conclusively presumed to be correct and accurate and constitute an account
stated between Borrowers and the Lender Group unless, within 30 days after Agent
first makes such a statement available to Borrowers, Borrowers shall deliver to
Agent written objection thereto describing the error or errors contained in such
statement.

2.10.

Fees.

(a)

Agent Fees.  Borrowers shall pay to Agent, for the account of Agent, as and when
due and payable under the terms of the Fee Letter, the fees set forth in the Fee
Letter.  Borrowers shall pay to GECC and GECM, each for its own account, the
fees agreed to in writing between Parent and GECC and GECM on or prior to the
Closing Date as and when due and payable under the terms thereof.

(b)

Unused Line Fee.  Borrowers shall pay to Agent, for the ratable account of the
Revolving Lenders, on the first day of each month from and after the Closing
Date up to the first day of the month prior to the date on which the Obligations
are paid in full and on the date on which the Obligations are paid in full, an
unused line fee (the "Unused Line Fee") in an amount equal to the Applicable
Unused Line Fee Percentage per annum times the result of (i) the aggregate
amount of the Revolver Commitments, less (ii) the average amount of the Revolver
Usage during the immediately preceding month (or portion thereof).

(c)

Field Examination and Other Fees.  Borrowers shall pay to Agent or either
Co-Collateral Agent, as applicable, field examination, appraisal, and valuation
fees and charges, as and when incurred or chargeable, as follows (i) a fee of
$1,000 (or the then prevailing rate) per day, per examiner, plus out-of-pocket
expenses (including travel, meals, and lodging) for each field examination of
Loan Parties performed by personnel employed by any Co-Collateral Agent, and
(ii) the fees or charges paid or incurred by any Co-Collateral Agent (but, in
any event, no less than a charge of $1,000 per day, per Person, plus
out-of-pocket expenses (including travel, meals, and lodging)) if it elects to
employ the services of one or more third

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Persons to perform field examinations of Parent or its Subsidiaries, to
establish electronic collateral reporting systems, to appraise the Collateral,
or any portion thereof, to perform financial audits or quality of earnings
analyses of Borrowers or their Subsidiaries, or to assess Parent's or its
Subsidiaries' business valuation; provided, that so long as no Event of Default
shall have occurred and be continuing, Borrowers shall not be obligated to
reimburse Co-Collateral Agents for more than 2 field examinations of Borrowers
and their Subsidiaries during any calendar year or more than 2 appraisals of the
Inventory during any calendar year.

2.11.

Letters of Credit.

(a)

Subject to the terms and conditions of this Agreement, upon the request of
Administrative Borrower made in accordance herewith, Issuing Lender agrees to
issue, or to cause an Underlying Issuer (including, as Issuing Lender's agent)
to issue, a requested Letter of Credit for the account of Borrowers.  If Issuing
Lender, at its option, elects to cause an Underlying Issuer to issue a requested
Letter of Credit, then Issuing Lender agrees that it will enter into
arrangements relative to the reimbursement of such Underlying Issuer (which may
include, among other means, by becoming an applicant with respect to such Letter
of Credit or entering into undertakings or other arrangements that provide for
reimbursement of such Underlying Issuer with respect to such drawings under
Letter of Credit; each such obligation or undertaking, irrespective of whether
in writing, a "Reimbursement Undertaking") with respect to Letters of Credit
issued by such Underlying Issuer for the account of Borrowers.  By submitting a
request to Issuing Lender for the issuance of a Letter of Credit, Borrowers
shall be deemed to have requested that (i) Issuing Lender issue or (ii) an
Underlying Issuer issue the requested Letter of Credit (and, in such case, to
have requested Issuing Lender to issue a Reimbursement Undertaking with respect
to such requested Letter of Credit).  Each Borrower acknowledges and agrees that
such Borrower is and shall be deemed to be an applicant (within the meaning of
Section 5-102(a)(2) of the Code) with respect to each Underlying Letter of
Credit.  Each request for the issuance of a Letter of Credit, or the amendment,
renewal, or extension of any outstanding Letter of Credit, shall be made in
writing by an Authorized Person and delivered to Issuing Lender via hand
delivery, telefacsimile, or other electronic method of transmission reasonably
in advance of the requested date of issuance, amendment, renewal, or extension.
 Each such request shall be in form and substance reasonably satisfactory to
Issuing Lender and (i) shall specify (A) the amount of such Letter of Credit,
(B) the date of issuance, amendment, renewal, or extension of such Letter of
Credit, (C) the proposed expiration date of such Letter of Credit, (D) the name
and address of the beneficiary of the Letter of Credit, and (E) such other
information (including, the conditions to drawing, and, in the case of an
amendment, renewal, or extension, identification of the Letter of Credit to be
so amended, renewed, or extended) as shall be necessary to prepare, amend,
renew, or extend such Letter of Credit, and (ii) shall be accompanied by such
Issuer Documents as Agent, Issuing Lender or Underlying Issuer may request or
require, to the extent that such requests or requirements are consistent with
the Issuer Documents that Issuing Lender or Underlying Issuer generally requests
for Letters of Credit in similar circumstances.  Anything contained herein to
the contrary notwithstanding, Issuing Lender may, but shall not be obligated to,
issue or cause the issuance of a Letter of Credit or to issue a Reimbursement
Undertaking in respect of an Underlying Letter of Credit, in either case, that
supports the obligations of Parent or its Subsidiaries in respect of (A) a lease
of real property to the extent that the face amount of such Letter of Credit or
the amount of such Reimbursement Undertaking exceeds the highest rent (including
all rent-like charges) payable under such lease

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for a period of one year, or (B) an employment contract to the extent that the
face amount of such Letter of Credit or the amount of such Reimbursement
Undertaking exceeds the highest compensation payable under such contract for a
period of one year.

(b)

Issuing Lender shall have no obligation to issue a Letter of Credit or a
Reimbursement Undertaking in respect of an Underlying Letter of Credit, in
either case, if any of the following would result after giving effect to the
requested issuance:

(i)

the Letter of Credit Usage would exceed $15,000,000, or

(ii)

the Letter of Credit Usage would exceed the Maximum Revolver Amount less the
outstanding amount of Revolving Loans (including Swing Loans), or

(iii)

the Letter of Credit Usage would exceed the Borrowing Base at such time less the
outstanding principal balance of the Revolving Loans (inclusive of Swing Loans)
at such time.

(c)

In the event there is a Defaulting Lender as of the date of any request for the
issuance of a Letter of Credit, the Issuing Lender shall not be required to
issue or arrange for such Letter of Credit to the extent (x) the Defaulting
Lender's Letter of Credit Exposure with respect to such Letter of Credit may not
be reallocated pursuant to Section 2.3(g)(ii) or (y) the Issuing Lender has not
otherwise entered into arrangements reasonably satisfactory to it and Borrowers
to eliminate the Issuing Lender's risk with respect to the participation in such
Letter of Credit of the Defaulting Lender, which arrangements may include
Borrowers cash collateralizing such Defaulting Lender's Letter of Credit
Exposure in accordance with Section 2.3(g)(ii).  Additionally, Issuing Lender
shall have no obligation to issue a Letter of Credit or a Reimbursement
Undertaking in respect of an Underlying Letter of Credit, in either case, if
(I) any order, judgment, or decree of any Governmental Authority or arbitrator
shall, by its terms, purport to enjoin or restrain Issuing Lender from issuing
such Letter of Credit or Reimbursement Undertaking or Underlying Issuer from
issuing such Letter of Credit, or any law applicable to Issuing Lender or
Underlying Issuer or any request or directive (whether or not having the force
of law) from any Governmental Authority with jurisdiction over Issuing Lender or
Underlying Issuer shall prohibit or request that Issuing Lender or Underlying
Issuer refrain from the issuance of letters of credit generally or such Letter
of Credit or Reimbursement Undertaking (as applicable) in particular, or
(II) the issuance of such Letter of Credit would violate one or more policies of
Issuing Lender or Underlying Issuer applicable to letters of credit generally.

(d)

Any Issuing Lender (other than Wells Fargo or any of its Affiliates) shall
notify Agent in writing no later than the Business Day immediately following the
Business Day on which such Issuing Lender issued any Letter of Credit; provided
that (y) until Agent advises any such Issuing Lender that the provisions of
Section 3.2 are not satisfied, or (z) the aggregate amount of the Letters of
Credit issued in any such week exceeds such amount as shall be agreed by Agent
and such Issuing Lender, such Issuing Lender shall be required to so notify
Agent in writing only once each week of the Letters of Credit issued by such
Issuing Lender during the immediately preceding week as well as the daily
amounts outstanding for the prior week, such notice to be furnished on such day
of the week as Agent and such Issuing Lender may agree.  

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Each Letter of Credit shall be in form and substance reasonably acceptable to
Issuing Lender, including the requirement that the amounts payable thereunder
must be payable in Dollars.  If Issuing Lender makes a payment under a Letter of
Credit or an Underlying Issuer makes a payment under an Underlying Letter of
Credit, Borrowers shall pay to Agent an amount equal to the applicable Letter of
Credit Disbursement on the date such Letter of Credit Disbursement is made and,
in the absence of such payment, the amount of the Letter of Credit Disbursement
immediately and automatically shall be deemed to be a Revolving Loan hereunder
(notwithstanding any failure to satisfy any condition precedent set forth in
Section 3) and, initially, shall bear interest at the rate then applicable to
Revolving Loans that are Base Rate Loans.  If a Letter of Credit Disbursement is
deemed to be a Revolving Loan hereunder, Borrowers' obligation to pay the amount
of such Letter of Credit Disbursement to Issuing Lender shall be automatically
converted into an obligation to pay the resulting Revolving Loan.  Promptly
following receipt by Agent of any payment from Borrowers pursuant to this
paragraph, Agent shall distribute such payment to Issuing Lender or, to the
extent that Lenders have made payments pursuant to Section 2.11(b) to reimburse
Issuing Lender, then to such Lenders and Issuing Lender as their interests may
appear.

(e)

Promptly following receipt of a notice of a Letter of Credit Disbursement
pursuant to Section 2.11(a), each Revolving Lender agrees to fund its Pro Rata
Share of any Revolving Loan deemed made pursuant to Section 2.11(a) on the same
terms and conditions as if Borrowers had requested the amount thereof as a
Revolving Loan and Agent shall promptly pay to Issuing Lender the amounts so
received by it from the Lenders.  By the issuance of a Letter of Credit or a
Reimbursement Undertaking (or an amendment, renewal, or extension of a Letter of
Credit or a Reimbursement Undertaking) and without any further action on the
part of Issuing Lender or the Revolving Lenders, Issuing Lender shall be deemed
to have granted to each Revolving Lender, and each Revolving Lender shall be
deemed to have purchased, a participation in each Letter of Credit issued by
Issuing Lender and each Reimbursement Undertaking, in an amount equal to its Pro
Rata Share of such Letter of Credit or Reimbursement Undertaking, and each such
Lender agrees to pay to Agent, for the account of Issuing Lender, such Lender's
Pro Rata Share of any Letter of Credit Disbursement made by Issuing Lender or an
Underlying Issuer under the applicable Letter of Credit.  In consideration and
in furtherance of the foregoing, each Revolving Lender hereby absolutely and
unconditionally agrees to pay to Agent, for the account of Issuing Lender, such
Lender's Pro Rata Share of each Letter of Credit Disbursement made by Issuing
Lender or an Underlying Issuer and not reimbursed by Borrowers on the date due
as provided in Section 2.11(a), or of any reimbursement payment this is required
to be refunded (or that Agent or Issuing Lender elects, based upon the advice of
counsel, to refund) to Borrowers for any reason.  Each Revolving Lender
acknowledges and agrees that its obligation to deliver to Agent, for the account
of Issuing Lender, an amount equal to its respective Pro Rata Share of each
Letter of Credit Disbursement pursuant to this Section 2.11(b) shall be absolute
and unconditional and such remittance shall be made notwithstanding the
occurrence or continuation of an Event of Default or Default or the failure to
satisfy any condition set forth in Section 3.  If any such Lender fails to make
available to Agent the amount of such Lender's Pro Rata Share of a Letter of
Credit Disbursement as provided in this Section, such Lender shall be deemed to
be a Defaulting Lender and Agent (for the account of Issuing Lender) shall be
entitled to recover such amount on demand from such Lender together with
interest thereon at the Defaulting Lender Rate until paid in full.

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(f)

Borrowers hereby agree to indemnify, save, defend, and hold the Lender Group and
each Underlying Issuer harmless from any damage, loss, cost, expense, or
liability (other than Taxes, which shall be governed by Section 16), and
reasonable and documented attorneys' fees and expenses incurred by Issuing
Lender, any other member of the Lender Group, or any Underlying Issuer arising
out of or in connection with any Reimbursement Undertaking or any Letter of
Credit; provided, that Borrowers shall not be obligated hereunder to indemnify
the Lender Group or any Underlying Issuer for any loss, cost, expense, or
liability that a court of competent jurisdiction finally determines to have
resulted from the gross negligence or willful misconduct of Issuing Lender, any
other member of the Lender Group, or any Underlying Issuer.  Borrowers agree to
be bound by the Underlying Issuer's regulations and interpretations of any
Letter of Credit or by Issuing Lender's interpretations of any Reimbursement
Undertaking even though this interpretation may be different from any Borrower's
own.  Borrowers understand that the Reimbursement Undertakings may require
Issuing Lender to indemnify the Underlying Issuer for certain costs or
liabilities arising out of claims by Borrowers against such Underlying Issuer.
 Borrowers hereby agree to indemnify, save, defend, and hold Issuing Lender and
the other members of the Lender Group harmless with respect to any loss, cost,
expense (including reasonable and documented attorneys' fees and expenses), or
liability (other than Taxes, which shall be governed by Section 16) incurred by
them as a result of Issuing Lender's indemnification of an Underlying Issuer;
provided, that Borrowers shall not be obligated hereunder to indemnify for any
such loss, cost, expense, or liability that a court of competent jurisdiction
finally determines to have resulted from the gross negligence or willful
misconduct of Issuing Lender or any other member of the Lender Group.

(g)

Each Lender and Borrowers agree that, in paying any drawing under a Letter of
Credit, neither Issuing Lender nor any Underlying Issuer (as applicable) shall
have any responsibility to obtain any document (other than any sight draft,
certificates and documents expressly required by the Letter of Credit or the
Underlying Letter of Credit (as applicable)) or to ascertain or inquire as to
the validity or accuracy of any such document or the authority of the Person
executing or delivering any such document.  None of Issuing Lender, any
Underlying Issuer, Agent, any of the Lender-Related Persons or Agent-Related
Persons, nor any correspondent, participant or assignee of Issuing Lender shall
be liable to any Lender or any Loan Party for (i) any action taken or omitted in
connection herewith at the request or with the approval of the Lenders or the
Required Lenders, as applicable; (ii) any action taken or omitted in the absence
of gross negligence or willful misconduct; (iii) any error, omission,
interruption, loss or delay in transmission or delivery of any draft, notice or
other communication under or relating to any Letter of Credit or any error in
interpretation of technical terms; or (iv) the due execution, effectiveness,
validity or enforceability of any document or instrument related to any Letter
of Credit or Issuer Document.  Each Borrower hereby assumes all risks of the
acts or omissions of any beneficiary or transferee with respect to its use of
any Letter of Credit; provided, that this assumption is not intended to, and
shall not, preclude Borrowers from pursuing such rights and remedies as it may
have against the beneficiary or transferee at law or under any other agreement.
 None of Issuing Lender, any Underlying Issuer, Agent, any of the Lender-Related
Persons or Agent-Related Persons, nor any correspondent, participant or assignee
of Issuing Lender or any Underlying Issuer shall be liable or responsible for
any of the matters described in clauses (i) through (vi) of Section 2.11(h) or
for any action, neglect or omission under or in connection with any Letter of
Credit or Issuer Document, including in connection with the issuance or any
amendment of any Letter of Credit, the failure to issue or

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amend any Letter of Credit, the honoring or dishonoring of any demand under any
Letter of Credit, or the following of any Borrower's instructions or those
contained in the Letter of Credit or any modifications, amendments, or
supplements thereto, and such action or neglect or omission will bind Borrowers.
 In furtherance and not in limitation of the foregoing, Issuing Lender and each
Underlying Issuer may accept documents that appear on their face to be in order,
without responsibility for further investigation, regardless of any notice or
information to the contrary (or Issuing Lender and any Underlying Issuer may
refuse to accept and make payment upon such documents if such documents are not
in strict compliance with the terms of such Letter of Credit and may disregard
any requirement in a Letter of Credit that notice of dishonor be given in a
particular manner and any requirement that presentation be made at a particular
place or by a particular time of day), and neither Issuing Lender nor any
Underlying Issuer shall be responsible for the validity or sufficiency of any
instrument transferring or assigning or purporting to transfer or assign a
Letter of Credit or the rights or benefits thereunder or proceeds thereof, in
whole or in part, which may prove to be invalid or ineffective for any reason.
 Neither Issuing Lender nor any Underlying Issuer shall be responsible for the
wording of any Letter of Credit (including any drawing conditions or any terms
or conditions that are ineffective, ambiguous, inconsistent, unduly complicated
or reasonably impossible to satisfy), notwithstanding any assistance Issuing
Lender or any Underlying Issuer may provide to Borrowers with drafting or
recommending text for any letter of credit application or with the structuring
of any transaction related to any Letter of Credit, and Borrowers hereby
acknowledge and agree that any such assistance will not constitute legal or
other advice by Issuing Lender or any Underlying Issuer or any representation or
warranty by Issuing Lender or any Underlying Issuer that any such wording or
such Letter of Credit will be effective.  Without limiting the foregoing,
Issuing Lender or any Underlying Issuer may, as it deems appropriate, use in any
Letter of Credit any portion of the language prepared by any Borrower and
contained in the letter of credit application relative to drawings under such
Letter of Credit.  Borrowers hereby acknowledge and agree that neither any
Underlying Issuer nor any member of the Lender Group shall be responsible for
delays, errors, or omissions resulting from the malfunction of equipment in
connection with any Letter of Credit.

(h)

The obligation of Borrowers to reimburse Issuing Lender for each drawing under
each Letter of Credit shall be absolute, unconditional and irrevocable, and
shall be paid strictly in accordance with the terms of this Agreement under all
circumstances, including the following:

(i)

any lack of validity or enforceability of such Letter of Credit, this Agreement,
or any other Loan Document,

(ii)

the existence of any claim, counterclaim, setoff, defense or other right that
Parent or any of its Subsidiaries may have at any time against any beneficiary
or any transferee of such Letter of Credit (or any Person for whom any such
beneficiary or any such transferee may be acting), Issuing Lender or any other
Person, whether in connection with this Agreement, the transactions contemplated
hereby or by such Letter of Credit or any agreement or instrument relating
thereto, or any unrelated transaction,

(iii)

any draft, demand, certificate or other document presented under such Letter of
Credit proving to be forged, fraudulent, invalid or insufficient in any respect
or

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any statement therein being untrue or inaccurate in any respect, or any loss or
delay in the transmission or otherwise of any document required in order to make
a drawing under such Letter of Credit,

(iv)

any payment by Issuing Lender under such Letter of Credit against presentation
of a draft or certificate that does not substantially or strictly comply with
the terms of such Letter of Credit (including, without limitation, any
requirement that presentation be made at a particular place or by a particular
time of day), or any payment made by Issuing Lender under such Letter of Credit
to any Person purporting to be a trustee in bankruptcy, debtor-in-possession,
assignee for the benefit of creditors, liquidator, receiver or other
representative of or successor to any beneficiary or any transferee of such
Letter of Credit,

(v)

any other circumstance or happening whatsoever, whether or not similar to any of
the foregoing, including any other circumstance that might otherwise constitute
a defense available to, or discharge of, Parent or any of its Subsidiaries, or

(vi)

the fact that any Default or Event of Default shall have occurred and be
continuing.

(i)

Borrowers hereby authorize and direct any Underlying Issuer to deliver to
Issuing Lender all instruments, documents, and other writings and property
received by such Underlying Issuer pursuant to such Underlying Letter of Credit
and to accept and rely upon Issuing Lender's instructions with respect to all
matters arising in connection with such Underlying Letter of Credit and the
related application.

(j)

Borrowers acknowledge and agree that any and all fees, charges, costs, or
commissions in effect from time to time, of Issuing Lender relating to Letters
of Credit or incurred by Issuing Lender relating to Underlying Letters of
Credit, upon the issuance of any Letter of Credit, upon the payment or
negotiation of any drawing under any Letter of Credit, or upon the occurrence of
any other activity with respect to any Letter of Credit (including the transfer,
amendment, or cancellation of any Letter of Credit), together with any and all
fronting fees in effect from time to time related to Letters of Credit, shall be
Lender Group Expenses for purposes of this Agreement and shall be reimbursable
immediately by Borrowers to Agent for the account of Issuing Lender; it being
acknowledged and agreed by Borrowers that, as of the Closing Date, Issuing
Lender is entitled to charge Borrowers a fronting fee of 0.25% per annum times
the undrawn amount of each Underlying Letter of Credit and that such fronting
fee may be changed by Issuing Lender from time to time without notice.

(k)

If by reason of (i) any change after the Closing Date in any applicable law,
treaty, rule, or regulation or any change in the interpretation or application
thereof by any Governmental Authority, or (ii) compliance by Issuing Lender, any
other member of the Lender Group, or Underlying Issuer with any direction,
request, or requirement (irrespective of whether having the force of law) of any
Governmental Authority or monetary authority including, Regulation D of the
Board of Governors as from time to time in effect (and any successor thereto):

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(i)

any reserve, deposit, or similar requirement is or shall be imposed or modified
in respect of any Letter of Credit issued or caused to be issued hereunder or
hereby, or

(ii)

there shall be imposed on Issuing Lender, any other member of the Lender Group,
or Underlying Issuer any other condition regarding any Letter of Credit or
Reimbursement Undertaking,

and the result of the foregoing is to increase, directly or indirectly, the cost
to Issuing Lender, any other member of the Lender Group, or an Underlying Issuer
of issuing, making, participating in, or maintaining any Reimbursement
Undertaking or Letter of Credit or to reduce the amount receivable in respect
thereof, then, and in any such case, Agent may, at any time within a reasonable
period after the additional cost is incurred or the amount received is reduced,
notify Administrative Borrower, and Borrowers shall pay within 30 days after
demand therefor, such amounts as Agent may specify to be necessary to compensate
Issuing Lender, any other member of the Lender Group, or an Underlying Issuer
for such additional cost or reduced receipt, together with interest on such
amount from the date of such demand until payment in full thereof at the rate
then applicable to Base Rate Loans hereunder; provided, that (A) Borrowers shall
not be required to provide any compensation pursuant to this Section 2.11(k) for
any such amounts incurred more than 180 days prior to the date on which the
demand for payment of such amounts is first made to Borrowers, and (B) if an
event or circumstance giving rise to such amounts is retroactive, then the
180-day period referred to above shall be extended to include the period of
retroactive effect thereof.  The determination by Agent of any amount due
pursuant to this Section 2.11(k), as set forth in a certificate setting forth
the calculation thereof in reasonable detail, shall, in the absence of manifest
or demonstrable error, be final and conclusive and binding on all of the parties
hereto.

(l)

Unless otherwise expressly agreed by Issuing Lender and Borrowers when a Letter
of Credit is issued, (i) the rules of the ISP and the UCP 600 shall apply to
each standby Letter of Credit, and (ii) the rules of the UCP 600 shall apply to
each commercial Letter of Credit.

(m)

In the event of a direct conflict between the provisions of this Section 2.11
and any provision contained in any Issuer Document, it is the intention of the
parties hereto that such provisions be read together and construed, to the
fullest extent possible, to be in concert with each other.  In the event of any
actual, irreconcilable conflict that cannot be resolved as aforesaid, the terms
and provisions of this Section 2.11 shall control and govern.

2.12.

LIBOR Option.

(a)

Interest and Interest Payment Dates.  In lieu of having interest charged at the
rate based upon the Base Rate, Borrowers shall have the option, subject to
Section 2.12(b) below (the "LIBOR Option") to have interest on all or a portion
of the Revolving Loans be charged (whether at the time when made (unless
otherwise provided herein), upon conversion from a Base Rate Loan to a LIBOR
Rate Loan, or upon continuation of a LIBOR Rate Loan as a LIBOR Rate Loan) at a
rate of interest based upon the LIBOR Rate.  Interest on LIBOR Rate Loans shall
be payable on the earliest of (i) the last day of the Interest Period applicable
thereto;

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provided, that, subject to the following clauses (ii) and (iii), in the case of
any Interest Period greater than 3 months in duration, interest shall be payable
at 3 month intervals after the commencement of the applicable Interest Period
and on the last day of such Interest Period), (ii) the date on which all or any
portion of the Obligations are accelerated pursuant to the terms hereof, or
(iii) the date on which this Agreement is terminated pursuant to the terms
hereof.  On the last day of each applicable Interest Period, unless Borrowers
properly have exercised the LIBOR Option with respect thereto, the interest rate
applicable to such LIBOR Rate Loan automatically shall convert to the rate of
interest then applicable to Base Rate Loans of the same type hereunder.  At any
time that an Event of Default has occurred and is continuing, at the written
election of the Required Lenders, Borrowers no longer shall have the option to
request that Revolving Loans bear interest at a rate based upon the LIBOR Rate.

(b)

LIBOR Election.

(i)

Borrowers may, at any time and from time to time, so long as Administrative
Borrower has not received a notice from Agent (which notice Agent may elect to
give or not give in its discretion unless Agent is directed to give such notice
by the Required Lenders, in which case, it shall give the notice to
Administrative Borrower), after the occurrence and during the continuance of an
Event of Default, to terminate the right of Borrowers to exercise the LIBOR
Option during the continuance of such Event of Default, elect to exercise the
LIBOR Option by notifying Agent prior to 11:00 a.m. at least 3 Business Days
prior to the commencement of the proposed Interest Period (the "LIBOR
Deadline").  Notice of Borrowers' election of the LIBOR Option for a permitted
portion of the Revolving Loans and an Interest Period pursuant to this Section
shall be made by delivery to Agent of a LIBOR Notice received by Agent before
the LIBOR Deadline, or by telephonic notice received by Agent before the LIBOR
Deadline (to be confirmed by delivery to Agent of a LIBOR Notice received by
Agent prior to 5:00 p.m. on the same day).  Promptly upon its receipt of each
such LIBOR Notice, Agent shall provide a copy thereof to each of the affected
Lenders.

(ii)

Each LIBOR Notice shall be irrevocable and binding on Borrowers.  In connection
with each LIBOR Rate Loan, Borrowers shall indemnify, defend, and hold Agent and
the Lenders harmless against any loss, cost, or expense actually incurred by
Agent or any Lender as a result of (A) the payment of any principal of any LIBOR
Rate Loan other than on the last day of an Interest Period applicable thereto
(including as a result of an Event of Default), (B) the conversion of any LIBOR
Rate Loan other than on the last day of the Interest Period applicable thereto,
or (C) the failure to borrow, convert, continue or prepay any LIBOR Rate Loan on
the date specified in any LIBOR Notice delivered pursuant hereto (such losses,
costs, or expenses, "Funding Losses").  A certificate of Agent or a Lender
delivered to Administrative Borrower setting forth in reasonable detail any
amount or amounts that Agent or such Lender is entitled to receive pursuant to
this Section 2.12 shall be conclusive absent manifest error.  Borrowers shall
pay such amount to Agent or the Lender, as applicable, within 30 days of the
date of its receipt of such certificate.  If a payment of a LIBOR Rate Loan on a
day other than the last day of the applicable Interest Period would result in a
Funding Loss, Agent may, in its sole discretion at the request of Administrative
Borrower, hold the amount of such payment as cash collateral in support of the
Obligations until the last day of such Interest Period and apply such amounts to
the payment of the applicable LIBOR Rate Loan on such last day, it being agreed
that Agent has no obligation to so defer the application of payments to any

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LIBOR Rate Loan and that, in the event that Agent does not defer such
application, Borrowers shall be obligated to pay any resulting Funding Losses.

(iii)

Unless Agent, in its sole discretion, agrees otherwise, Borrowers shall have not
more than 5 LIBOR Rate Loans in effect at any given time.  Borrowers only may
exercise the LIBOR Option for proposed LIBOR Rate Loans of at least $1,000,000.

(c)

Conversion.  Borrowers may convert LIBOR Rate Loans to Base Rate Loans at any
time; provided, that in the event that LIBOR Rate Loans are converted or prepaid
on any date that is not the last day of the Interest Period applicable thereto,
including as a result of any prepayment through the required application by
Agent of any payments or proceeds of Collateral in accordance with Section
2.4(b) or for any other reason, including early termination of the term of this
Agreement or acceleration of all or any portion of the Obligations pursuant to
the terms hereof, Borrowers shall indemnify, defend, and hold Agent and the
Lenders and their Participants harmless against any and all Funding Losses in
accordance with Section 2.12 (b)(ii).

(d)

Special Provisions Applicable to LIBOR Rate.

(i)

The LIBOR Rate may be adjusted by Agent with respect to any Lender on a
prospective basis to take into account any additional or increased costs to such
Lender of maintaining or obtaining any eurodollar deposits or increased costs,
in each case, due to changes in applicable law (other than changes in laws
relative to Taxes, which shall be governed by Section 16) occurring subsequent
to the commencement of the then applicable Interest Period, including changes in
tax laws (except changes of general applicability in corporate income tax laws)
and changes in the reserve requirements imposed by the Board of Governors, which
additional or increased costs would increase the cost of funding or maintaining
loans bearing interest at the LIBOR Rate.  In any such event, the affected
Lender shall give Administrative Borrower and Agent notice of such a
determination and adjustment and Agent promptly shall transmit the notice to
each other Lender and, upon its receipt of the notice from the affected Lender,
Borrowers may, by notice to such affected Lender (A) require such Lender to
furnish to Borrowers a statement setting forth in reasonable detail the basis
for adjusting such LIBOR Rate and the method for determining the amount of such
adjustment, or (B) repay the LIBOR Rate Loans of such Lender with respect to
which such adjustment is made (together with any amounts due under Section
2.12(b)(ii)).

(ii)

In the event that any change in market conditions or any law, regulation,
treaty, or directive, or any change therein or in the interpretation or
application thereof, shall at any time after the date hereof, in the reasonable
opinion of any Lender, make it unlawful or impractical for such Lender to fund
or maintain LIBOR Rate Loans or to continue such funding or maintaining, or to
determine or charge interest rates at the LIBOR Rate, such Lender shall give
notice of such changed circumstances to Agent and Administrative Borrower and
Agent promptly shall transmit the notice to each other Lender and (y) in the
case of any LIBOR Rate Loans of such Lender that are outstanding, the date
specified in such Lender's notice shall be deemed to be the last day of the
Interest Period of such LIBOR Rate Loans, and interest upon the LIBOR Rate Loans
of such Lender thereafter shall accrue interest at the rate then applicable to
Base Rate Loans, and (z) Borrowers shall not be entitled to elect the LIBOR
Option until such Lender determines that it would no longer be unlawful or
impractical to do so.

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(e)

No Requirement of Matched Funding.  Anything to the contrary contained herein
notwithstanding, neither Agent, nor any Lender, nor any of their Participants,
is required actually to acquire eurodollar deposits to fund or otherwise match
fund any Obligation as to which interest accrues at the LIBOR Rate.

2.13.

Capital Requirements.

(a)

If, after the date hereof, any Lender determines that (i) the adoption of or
change in any law, rule, regulation or guideline regarding capital or reserve
requirements for banks or bank holding companies, or any change in the
interpretation, implementation, or application thereof by any Governmental
Authority charged with the administration thereof, or (ii) compliance by such
Lender or its parent bank holding company with any guideline, request or
directive of any such entity regarding capital adequacy (whether or not having
the force of law), has the effect of reducing the return on such Lender's or
such holding company's capital as a consequence of such Lender's Commitments
hereunder to a level below that which such Lender or such holding company could
have achieved but for such adoption, change, or compliance (taking into
consideration such Lender's or such holding company's then existing policies
with respect to capital adequacy and assuming the full utilization of such
entity's capital) by any amount deemed by such Lender to be material, then such
Lender may notify Administrative Borrower and Agent thereof.  Following receipt
of such notice, Borrowers agree to pay such Lender on demand the amount of such
reduction of return of capital as and when such reduction is determined, payable
within 30 days after presentation by such Lender of a statement in the amount
and setting forth in reasonable detail such Lender's calculation thereof and the
assumptions upon which such calculation was based (which statement shall be
deemed true and correct absent manifest error).  In determining such amount,
such Lender may use any reasonable averaging and attribution methods.  Failure
or delay on the part of any Lender to demand compensation pursuant to this
Section shall not constitute a waiver of such Lender's right to demand such
compensation; provided that Borrowers shall not be required to compensate a
Lender pursuant to this Section for any reductions in return incurred more than
180 days prior to the date that such Lender notifies Administrative Borrower of
such law, rule, regulation or guideline giving rise to such reductions and of
such Lender's intention to claim compensation therefor; provided further that if
such claim arises by reason of the adoption of or change in any law, rule,
regulation or guideline that is retroactive, then the 180-day period referred to
above shall be extended to include the period of retroactive effect thereof.

(b)

If any Lender requests additional or increased costs referred to in Section
2.12(d)(i) or amounts under Section 2.13(a) or sends a notice under Section
2.12(d)(ii) relative to changed circumstances (any such Lender, an "Affected
Lender"), then such Affected Lender shall use reasonable efforts to promptly
designate a different one of its lending offices or to assign its rights and
obligations hereunder to another of its offices or branches, if (i) in the
reasonable judgment of such Affected Lender, such designation or assignment
would eliminate or reduce amounts payable pursuant to Section 2.12(d)(i) or
Section 2.13(a), as applicable, or would eliminate the illegality or
impracticality of funding or maintaining LIBOR Rate Loans and (ii) in the
reasonable judgment of such Affected Lender, such designation or assignment
would not subject it to any material unreimbursed cost or expense and would not
otherwise be materially disadvantageous to it.  Borrowers agree to pay all
reasonable out-of-pocket costs and expenses incurred by such Affected Lender in
connection with any such designation or

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assignment.  If, after such reasonable efforts, such Affected Lender does not so
designate a different one of its lending offices or assign its rights to another
of its offices or branches so as to eliminate Borrowers' obligation to pay any
future amounts to such Affected Lender pursuant to Section 2.12(d)(i) or Section
2.13(a), as applicable, or to enable Borrowers to obtain LIBOR Rate Loans, then
Borrowers (without prejudice to any amounts then due to such Affected Lender
under Section 2.12(d)(i) or Section 2.13(a), as applicable) may, unless prior to
the effective date of any such assignment the Affected Lender withdraws its
request for such additional amounts under Section 2.12(d)(i) or Section 2.13(a),
as applicable, or indicates that it is no longer unlawful or impractical to fund
or maintain LIBOR Rate Loans, may seek a substitute Lender reasonably acceptable
to Agent to purchase the Obligations owed to such Affected Lender and such
Affected Lender's Commitments hereunder (a "Replacement Lender"), and if such
Replacement Lender agrees to such purchase, such Affected Lender shall assign to
the Replacement Lender its Obligations and Commitments, pursuant to an
Assignment and Acceptance Agreement, and upon such purchase by the Replacement
Lender, such Replacement Lender shall be deemed to be a "Lender" for purposes of
this Agreement and such Affected Lender shall cease to be a "Lender" for
purposes of this Agreement.

(c)

Notwithstanding anything herein to the contrary, (i) the issuance of any rules,
regulations or directions under the Dodd-Frank Wall Street Reform and Consumer
Protection Act and all requests, rules, guidelines or directives thereunder or
issued in connection therewith and (ii) all requests, rules, guidelines or
directives promulgated by the Bank for International Settlement, the Basel
Committee on Banking Supervision (or any successor or similar authority) or the
United States regulatory authorities, in each case pursuant to Basel III, with
respect to clauses (i) and (ii) above, after the date of this Agreement shall be
deemed to be a change in law, rule, regulation or guideline for purposes of
Sections 2.12 and 2.13 and the protection of Sections 2.12 and 2.13 shall be
available to each Lender and Issuing Lender regardless of any possible
contention of the invalidity or inapplicability of the law, rule, regulation,
guideline or other change or condition which shall have occurred or been
imposed, so long as it shall be customary for lenders or issuing banks affected
thereby to comply therewith.  Notwithstanding any other provision herein, no
Lender or Issuing Lender shall demand compensation pursuant to this Section 2.13
if it shall not at the time be the general policy or practice of such Lender or
Issuing Lender (as the case may be) to demand such compensation in similar
circumstances under comparable provisions of other credit agreements, if any.

2.14.

Joint and Several Liability of Borrowers.

(a)

Each Borrower is accepting joint and several liability hereunder and under the
other Loan Documents in consideration of the financial accommodations to be
provided by the Lender Group under this Agreement, for the mutual benefit,
directly and indirectly, of each Borrower and in consideration of the
undertakings of the other Borrowers to accept joint and several liability for
the Obligations.

(b)

Each Borrower, jointly and severally, hereby irrevocably and unconditionally
accepts, not merely as a surety but also as a co-debtor, joint and several
liability with the other Borrowers, with respect to the payment and performance
of all of the Obligations (including any Obligations arising under this Section
2.14), it being the intention of the parties

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hereto that all the Obligations shall be the joint and several obligations of
each Borrower without preferences or distinction among them.

(c)

If and to the extent that any Borrower shall fail to make any payment with
respect to any of the Obligations as and when due or to perform any of the
Obligations in accordance with the terms thereof, then in each such event the
other Borrowers will make such payment with respect to, or perform, such
Obligation.

(d)

The Obligations of each Borrower under the provisions of this Section 2.14
constitute the absolute and unconditional, full recourse Obligations of each
Borrower enforceable against each Borrower to the full extent of its properties
and assets, irrespective of the validity, regularity or enforceability of this
Agreement or any other circumstances whatsoever.

(e)

Except as otherwise expressly provided in this Agreement, each Borrower hereby
waives notice of acceptance of its joint and several liability, notice of any
Revolving Loans or Letters of Credit issued under or pursuant to this Agreement,
notice of the occurrence of any Default, Event of Default, or of any demand for
any payment under this Agreement, notice of any action at any time taken or
omitted by Agent or Lenders under or in respect of any of the Obligations, any
requirement of diligence or to mitigate damages and, generally, to the extent
permitted by applicable law, all demands, notices and other formalities of every
kind in connection with this Agreement (except as otherwise provided in this
Agreement).  Each Borrower hereby assents to, and waives notice of, any
extension or postponement of the time for the payment of any of the Obligations,
the acceptance of any payment of any of the Obligations, the acceptance of any
partial payment thereon, any waiver, consent or other action or acquiescence by
Agent or Lenders at any time or times in respect of any default by any Borrower
in the performance or satisfaction of any term, covenant, condition or provision
of this Agreement, any and all other indulgences whatsoever by Agent or Lenders
in respect of any of the Obligations, and the taking, addition, substitution or
release, in whole or in part, at any time or times, of any security for any of
the Obligations or the addition, substitution or release, in whole or in part,
of any Borrower.  Without limiting the generality of the foregoing, each
Borrower assents to any other action or delay in acting or failure to act on the
part of any Agent or Lender with respect to the failure by any Borrower to
comply with any of its respective Obligations, including any failure strictly or
diligently to assert any right or to pursue any remedy or to comply fully with
applicable laws or regulations thereunder, which might, but for the provisions
of this Section 2.14 afford grounds for terminating, discharging or relieving
any Borrower, in whole or in part, from any of its Obligations under this
Section 2.14, it being the intention of each Borrower that, so long as any of
the Obligations hereunder remain unsatisfied, the Obligations of each Borrower
under this Section 2.14 shall not be discharged except by performance and then
only to the extent of such performance.  The Obligations of each Borrower under
this Section 2.14 shall not be diminished or rendered unenforceable by any
winding up, reorganization, arrangement, liquidation, reconstruction or similar
proceeding with respect to any Borrower or any Agent or Lender.

(f)

Each Borrower represents and warrants to Agent and Lenders that such Borrower is
currently informed of the financial condition of Borrowers and of all other
circumstances which a diligent inquiry would reveal and which bear upon the risk
of

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nonpayment of the Obligations.  Each Borrower further represents and warrants to
Agent and Lenders that such Borrower has read and understands the terms and
conditions of the Loan Documents.  Each Borrower hereby covenants that such
Borrower will continue to keep informed of Borrowers' financial condition, the
financial condition of other guarantors, if any, and of all other circumstances
which bear upon the risk of nonpayment or nonperformance of the Obligations.

(g)

Each Borrower waives all rights and defenses arising out of an election of
remedies by Agent or any Lender, even though that election of remedies, such as
a nonjudicial foreclosure with respect to security for a guaranteed obligation,
has destroyed Agent's or such Lender's rights of subrogation and reimbursement
against such Borrower by the operation of Section 580(d) of the California Code
of Civil Procedure or any other similar laws or otherwise.

(h)

The provisions of this Section 2.14 are made for the benefit of Agent, Lenders
and their respective successors and assigns, and may be enforced by it or them
from time to time against any or all Borrowers as often as occasion therefor may
arise and without requirement on the part of Agent, Lender, successor or assign
first to marshal any of its or their claims or to exercise any of its or their
rights against any Borrower or to exhaust any remedies available to it or them
against any Borrower or to resort to any other source or means of obtaining
payment of any of the Obligations hereunder or to elect any other remedy.  The
provisions of this Section 2.14 shall remain in effect until all of the
Obligations shall have been paid in full or otherwise fully satisfied.  If at
any time, any payment, or any part thereof, made in respect of any of the
Obligations, is rescinded or must otherwise be restored or returned by Agent or
any Lender upon the insolvency, bankruptcy or reorganization of any Borrower, or
otherwise, the provisions of this Section 2.14 will forthwith be reinstated in
effect, as though such payment had not been made.

(i)

Each Borrower hereby agrees that it will not enforce any of its rights of
contribution or subrogation against any other Loan Party with respect to any
liability incurred by it hereunder or under any of the other Loan Documents, any
payments made by it to Agent or Lenders with respect to any of the Obligations
or any collateral security therefor until such time as all of the Obligations
have been paid in full in cash.  Any claim which any Borrower may have against
any other Loan Party with respect to any payments to any Agent or Lender
hereunder or under any other Loan Documents are hereby expressly made
subordinate and junior in right of payment, without limitation as to any
increases in the Obligations arising hereunder or thereunder, to the prior
payment in full in cash of the Obligations and, in the event of any insolvency,
bankruptcy, receivership, liquidation, reorganization or other similar
proceeding under the laws of any jurisdiction relating to any Loan Party, its
debts or its assets, whether voluntary or involuntary, all such Obligations
shall be paid in full in cash before any payment or distribution of any
character, whether in cash, securities or other property, shall be made to any
other Loan Party therefor.

3.

CONDITIONS; TERM OF AGREEMENT.

3.1.

Conditions Precedent to the Initial Extension of Credit.  The obligation of each
Lender to make the initial extensions of credit provided for hereunder is
subject to the fulfillment, to the satisfaction of Agent, each Co-Collateral
Agent and each Lender, of each of

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the conditions precedent set forth on Schedule 3.1 (the making of such initial
extensions of credit by a Lender being conclusively deemed to be its
satisfaction or waiver of the conditions precedent ).

3.2.

Conditions Precedent to all Extensions of Credit.  The obligation of the Lender
Group (or any member thereof) to make any Revolving Loans hereunder (or to
extend any other credit hereunder) at any time shall be subject to the following
conditions precedent:

(a)

the representations and warranties of Parent or its Subsidiaries contained in
this Agreement or in the other Loan Documents 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) on and as of the date of such
extension of credit, as though made on and as of such date (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

(b)

no Default or Event of Default shall have occurred and be continuing on the date
of such extension of credit, nor shall either result from the making thereof.

3.3.

Maturity.  This Agreement shall continue in full force and effect for a term
ending on the Maturity Date.

3.4.

Effect of Maturity.  On the Maturity Date, all commitments of the Lender Group
to provide additional credit hereunder shall automatically be terminated and all
of the Obligations immediately shall become due and payable without notice or
demand and Borrowers shall be required to repay all of the Obligations in full.
 No termination of the obligations of the Lender Group (other than payment in
full of the Obligations and termination of the Commitments) shall relieve or
discharge any Loan Party of its duties, obligations, or covenants hereunder or
under any other Loan Document and Agent's Liens in the Collateral shall continue
to secure the Obligations and shall remain in effect until all Obligations have
been paid in full and the Commitments have been terminated.  When all of the
Obligations have been paid in full and the Lender Group's obligations to provide
additional credit under the Loan Documents have been terminated irrevocably,
Agent will, at Borrowers' sole expense, execute and deliver any termination
statements, lien releases, discharges of security interests, and other similar
discharge or release documents (and, if applicable, in recordable form) as are
reasonably necessary to release, as of record, Agent's Liens and all notices of
security interests and liens previously filed by Agent.

3.5.

Early Termination by Borrowers.  Borrowers have the option, at any time upon 10
Business Days prior written notice to Agent, to terminate this Agreement and
terminate the Commitments hereunder by repaying to Agent all of the Obligations
in full.  The foregoing notwithstanding, (a) Borrowers may rescind termination
notices relative to proposed payments in full of the Obligations with the
proceeds of third party Indebtedness if the closing for such issuance or
incurrence does not happen on or before the date of the proposed termination (in
which case, a new notice shall be required to be sent in connection with any
subsequent

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termination), and (b) Borrowers may extend the date of termination at any time
with the consent of Agent (which consent shall not be unreasonably withheld or
delayed).

3.6.

Conditions Subsequent.  The obligation of the Lender Group (or any member
thereof) to continue to make Revolving Loans (or otherwise extend credit
hereunder) is subject to the fulfillment, on or before the date applicable
thereto, of the conditions subsequent set forth below (the failure by Borrowers
to so perform or cause to be performed such conditions subsequent as and when
required by the terms thereof (unless such date is extended, in writing, by
Agent, which Agent may do without obtaining the consent of the other members of
the Lender Group), shall constitute an Event of Default):

(a)

Use best efforts to, on or prior to the sixtieth (60th) day following the date
hereof (subject to extension by the Agent in its sole discretion), Borrowers to
obtain from each lessor of a Leased Real Property identified on Schedule 3.6(a),
to the extent not obtained on or prior to the Closing Date, a Collateral Access
Agreement, which agreement shall be in form and substance reasonably
satisfactory to the Agent, and deliver the same to the Agent;

(b)

Borrowers shall use best efforts to, on or prior to the ninetieth (90th) day
following the date hereof (subject to extension by the Agent in its sole
discretion), in respect of all Leased Real Property of the Loan Parties listed
on Schedule 3.6(b), obtain Mortgages in form and substance reasonably acceptable
to Agent (together with such amendments to the underlying leases as contemplated
in such form) and in all events satisfactory to the Agent, granting to the Agent
a second priority Lien (subject only to Permitted Liens) on each such leasehold
interest as security for the Obligations, and cause to be delivered such
agreements, instruments, policies, reports, surveys, opinions, evidence and
other items in respect of such other Leased Real Property as may be requested by
the Agent and are consistent with those delivered to Split Lien Agent with
respect to such Leased Real Property; and

(c)

Upon written request of the Agent, Borrowers shall use best efforts to, on or
prior to the sixtieth (60th) day following the date such request is made
(subject to extension by the Agent in its sole discretion), in respect of each
other Leased Real Property that Agent may identify to the Administrative
Borrower from time to time, grant a security interest in and Mortgage on such
other Leased Real Property existing as of the date hereof (and not listed on
Schedule 3.6(b) and deliver such agreements, instruments, policies, reports,
surveys, opinions, evidence and other items in respect of such other Leased Real
Property as may be requested by the Agent and are consistent with those
delivered to Split Lien Agent with respect to such Leased Real Property.

(d)

On or prior to the forty-fifth (45th) day following the Closing Date (subject to
extension by the Collateral Agents in their sole discretion), Borrowers shall
cause each deposit account and securities account of the Loan Parties maintained
with Bank of America, N.A. to either (i) be subject to a Control Agreement or
(ii) be closed and have all amounts on deposit in such accounts transferred to
deposit accounts subject to a Control Agreement; provided, that, beginning five
Business Days after the date hereof until Borrowers deliver such Control
Agreements, Borrowers shall transfer on a daily basis all available amounts on
deposit in such accounts to deposit accounts that are subject to a Control
Agreement.

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(e)

On or prior to the thirtieth (30th) day following the Closing Date (subject to
extension by the Agent in its sole discretion), Borrowers shall deliver to Agent
good standing certificates issued by North Carolina Secretary of State's office
with respect to Parent.

(f)

On or prior to May 29, 2012 (subject to extension by the Agents in their sole
discretion), Borrowers shall deliver to the Agents evidence of payment by the
Borrowers to Robert W. Baird & Co. Incorporated (“Baird”) of the fee payable to
Baird under the terms of Baird’s engagement letter with Parent dated January 20,
2012.

4.

REPRESENTATIONS AND WARRANTIES.

In order to induce the Lender Group to enter into this Agreement, each Borrower
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:

4.1.

Due Organization and Qualification; Subsidiaries.

(a)

Each Loan Party (i) is duly organized and existing and in good standing under
the laws of the jurisdiction of its organization, (ii) is qualified to do
business in any state where the failure to be so qualified could reasonably be
expected to result in a Material Adverse Effect, and (iii) has all requisite
power and authority to own and operate its properties, to carry on its business
as now conducted and as proposed to be conducted, to enter into the Loan
Documents to which it is a party and to carry out the transactions contemplated
thereby.

(b)

Set forth on Schedule 4.1(b) (as such Schedule may be updated from time to time
to reflect changes resulting from transactions permitted under this Agreement)
is a complete and accurate description of the authorized Equity Interest of
Parent, by class, and, as of the Closing Date, a description of the number of
shares of each such class that are issued and outstanding.  Other than as
described on Schedule 4.1(b), there are no subscriptions, options, warrants, or
calls relating to any shares of Parent's Equity Interest, including any right of
conversion or exchange under any outstanding security or other instrument.
 Parent is not subject to any obligation (contingent or otherwise) to repurchase
or otherwise acquire or retire any shares of its Equity Interest or any security
convertible into or exchangeable for any of its Equity Interest.

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(c)

Set forth on Schedule 4.1(c) (as such Schedule may be updated from time to time
to reflect changes resulting from transactions permitted under this Agreement),
is a complete and accurate list of Parent's direct and indirect Subsidiaries,
showing:  (i) the number of shares of each class of common and preferred Equity
Interests authorized for each of such Subsidiaries, and (ii) the number and the
percentage of the outstanding shares of each such class owned directly or
indirectly by Parent.  All of the outstanding Equity Interest of each such
Subsidiary has been validly issued and is fully paid and non-assessable.

(d)

Except as set forth on Schedule 4.1(c), there are no subscriptions, options,
warrants, or calls relating to any shares of Parent's or its Subsidiaries'
Equity Interest, including any right of conversion or exchange under any
outstanding security or other instrument.

4.2.

Due Authorization; No Conflict.

(a)

As to each Loan Party, the execution, delivery, and performance by such Loan
Party of the Loan Documents to which it is a party have been duly authorized by
all necessary action on the part of such Loan Party.

(b)

As to each Loan Party, the execution, delivery, and performance by such Loan
Party of the Loan Documents to which it is a party do not and will not
(i) violate any material provision of federal, state, or local law or regulation
applicable to any Loan Party or its Subsidiaries, the Governing Documents of any
Loan Party or its Subsidiaries, or any order, judgment, or decree of any court
or other Governmental Authority binding on any Loan Party or its Subsidiaries,
(ii) conflict with, result in a breach of, or constitute (with due notice or
lapse of time or both) a default under any material agreement of any Loan Party
or its Subsidiaries where any such conflict, breach or default could
individually or in the aggregate reasonably be expected to have a Material
Adverse Effect, (iii) result in or require the creation or imposition of any
Lien of any nature whatsoever upon any assets of any Loan Party, other than
Permitted Liens, or (iv) require any approval of any holder of Equity Interest
of a Loan Party or any approval or consent of any Person under any material
agreement of any Loan Party, other than consents or approvals that have been
obtained and that are still in force and effect and except, in the case of
material agreements, for consents or approvals, the failure to obtain could not
individually or in the aggregate reasonably be expected to cause a Material
Adverse Effect.

4.3.

Governmental Consents.  The execution, delivery, and performance by each Loan
Party of the Loan Documents to which such Loan Party is a party and the
consummation of the transactions contemplated by the Loan Documents do not and
will not require any registration with, consent, or approval of, or notice to,
or other action with or by, any Governmental Authority, other than
registrations, consents, approvals, notices, or other actions that have been
obtained and that are still in force and effect and except for filings and
recordings with respect to the Collateral to be made, or otherwise delivered to
Agent for filing or recordation, as of the Closing Date.

4.4.

Binding Obligations; Perfected Liens.

(a)

Each Loan Document has been duly executed and delivered by each Loan Party that
is a party thereto and is the legally valid and binding obligation of such Loan
Party,

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enforceable against such Loan Party in accordance with its respective terms,
except as enforcement may be limited by equitable principles or by bankruptcy,
insolvency, reorganization, moratorium, or similar laws relating to or limiting
creditors' rights generally.

(b)

Agent's Liens are validly created, perfected (other than (i) in respect of motor
vehicles that are subject to a certificate of title, (ii) money,
(iii) letter-of-credit rights (other than supporting obligations,
(iv) commercial tort claims (other than those that, by the terms of the Guaranty
and Security Agreement, are required to be perfected), and (v) any Deposit
Accounts and Securities Accounts not subject to a Control Agreement as permitted
by Section 7(k)(iv) of the Security Agreement, and subject only to the filing of
financing statements, and the recordation of the Mortgages, in each case, in the
appropriate filing offices), and first priority Liens, subject as to priority
only to Permitted Senior Liens.

4.5.

Title to Assets; No Encumbrances.  Each of the Loan Parties and its Subsidiaries
has (a) good, sufficient and legal title to (in the case of fee interests in
Real Property), (b) valid leasehold interests in (in the case of leasehold
interests in real or personal property), and (c) good and marketable title to
(in the case of all other personal property), all of their respective assets
reflected in their most recent financial statements delivered pursuant to
Section 5.1, in each case except for assets disposed of since the date of such
financial statements to the extent permitted hereby.  All of such assets are
free and clear of Liens except for Permitted Liens.

4.6.

Litigation.

(a)

There are no actions, suits, or proceedings pending or, to the knowledge of
Borrowers, after due inquiry, threatened in writing against a Loan Party or any
of its Subsidiaries that either individually or in the aggregate could
reasonably be expected to result in a Material Adverse Effect.

(b)

Schedule 4.6(b) sets forth a complete and accurate description, with respect to
each of the actions, suits, or proceedings with asserted liabilities in excess
of, or that could reasonably be expected to result in liabilities in excess of,
$100,000 that, as of the Closing Date, is pending or, to the knowledge of
Borrowers, after due inquiry, threatened against a Loan Party or any of its
Subsidiaries, of (i) the parties to such actions, suits, or proceedings,
(ii) the nature of the dispute that is the subject of such actions, suits, or
proceedings, (iii) the procedural status, as of the Closing Date, with respect
to such actions, suits, or proceedings, and (iv) whether any liability of the
Loan Parties' and their Subsidiaries in connection with such actions, suits, or
proceedings is covered by insurance.

4.7.

Compliance with Laws.  No Loan Party nor any of its Subsidiaries (a) is in
violation of any applicable laws, rules, regulations, executive orders, or codes
(including Environmental Laws) that, individually or in the aggregate, could
reasonably be expected to result in a Material Adverse Effect, or (b) is subject
to or in default with respect to any final judgments, writs, injunctions,
decrees, rules or regulations of any court or any federal, state, municipal or
other governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, that, individually

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4.8.

No Material Adverse Effect.  All historical financial statements relating to the
Loan Parties and their Subsidiaries that have been delivered by Borrowers to
Agent have been prepared in accordance with GAAP (except, in the case of
unaudited financial statements, for the lack of footnotes and being subject to
year-end audit adjustments) and present fairly in all material respects, the
Loan Parties' and their Subsidiaries' consolidated financial condition as of the
date thereof and results of operations for the period then ended.  Since January
28, 2012, no event, circumstance, or change has occurred that has or could
reasonably be expected to result in a Material Adverse Effect with respect to
the Loan Parties and their Subsidiaries.

4.9.

Solvency.

(a)

Each Loan Party is Solvent.

(b)

No transfer of property is being made by any Loan Party and no obligation is
being incurred by any Loan Party in connection with the transactions
contemplated by this Agreement or the other Loan Documents with the intent to
hinder, delay, or defraud either present or future creditors of such Loan Party.

4.10.

Employee Benefits

.  No Loan Party, none of their Subsidiaries, nor any of their ERISA Affiliates
maintains or contributes to any Benefit Plan.

4.11.

Environmental Condition.  Except as set forth on Schedule 4.11, (a) to
Borrowers' knowledge, no Loan Party's nor any of its Subsidiaries' properties or
assets has ever been used by a Loan Party, its Subsidiaries, or by previous
owners or operators in the disposal of, or to produce, store, handle, treat,
release, or transport, any Hazardous Materials, where such disposal, production,
storage, handling, treatment, release or transport was in violation, in any
material respect, of any applicable Environmental Law, (b) to Borrowers'
knowledge, after due inquiry, no Loan Party's nor any of its Subsidiaries'
properties or assets has ever been designated or identified in any manner
pursuant to any environmental protection statute as a Hazardous Materials
disposal site, (c) no Loan Party nor any of its Subsidiaries has received notice
that a Lien arising under any Environmental Law has attached to any revenues or
to any Real Property owned or operated by a Loan Party or its Subsidiaries, and
(d) no Loan Party nor any of its Subsidiaries nor any of their respective
facilities or operations is subject to any outstanding written order, consent
decree, or settlement agreement with any Person relating to any Environmental
Law or Environmental Liability that, individually or in the aggregate, could
reasonably be expected to result in a Material Adverse Effect.

4.12.

Complete Disclosure.  All factual information taken as a whole (other than
forward-looking information and projections and information of a general
economic nature and general information about Borrowers' industry) furnished by
or on behalf of a Loan Party or its Subsidiaries in writing to Agent, any
Co-Collateral Agent or any Lender (including all information contained in the
Schedules hereto or in the other Loan Documents) for purposes of or in
connection with this Agreement or the other Loan Documents, and all other such
factual information taken as a whole (other than forward-looking information and
projections and information of a general economic nature and general information
about Borrowers' industry) hereafter furnished by or on behalf of a Loan Party
or its Subsidiaries in writing to Agent, any Collateral Agent or any Lender will
be, true and accurate, in all material respects, on the date as

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of which such information is dated or certified and not incomplete by omitting
to state any fact necessary to make such information (taken as a whole) not
misleading in any material respect at such time in light of the circumstances
under which such information was provided.  The Projections delivered to Agent
and Co-Collateral Agents on March 28, 2012 represent, and as of the date on
which any other Projections are delivered to Agent and Co-Collateral Agents,
such additional Projections represent, Borrowers' good faith estimate, on the
date such Projections are delivered, of the Loan Parties' and their
Subsidiaries' future performance for the periods covered thereby based upon
assumptions believed by Borrowers to be reasonable at the time of the delivery
thereof to Agent and Co-Collateral Agents (it being understood that such
Projections are subject to significant uncertainties and contingencies, many of
which are beyond the control of the Loan Parties and their Subsidiaries, and no
assurances can be given that such Projections will be realized, and although
reflecting Borrowers' good faith estimate, projections or forecasts based on
methods and assumptions which Borrowers believed to be reasonable at the time
such Projections were prepared, are not to be viewed as facts, and that actual
results during the period or periods covered by the Projections may differ
materially from projected or estimated results).

4.13.

Patriot Act.  To the extent applicable, each Loan Party is in compliance, in all
material respects, with the (a) Trading with the Enemy Act, as amended, and each
of the foreign assets control regulations of the United States Treasury
Department (31 CFR, Subtitle B, Chapter V, as amended) and any other enabling
legislation or executive order relating thereto, and (b) Uniting and
Strengthening America by Providing Appropriate Tools Required to Intercept and
Obstruct Terrorism (USA Patriot Act of 2001) (the "Patriot Act").  No part of
the proceeds of the loans made hereunder will be used by any Loan Party or any
of their Affiliates, directly or indirectly, for any payments to any
governmental official or employee, political party, official of a political
party, candidate for political office, or anyone else acting in an official
capacity, in order to obtain, retain or direct business or obtain any improper
advantage, in violation of the United States Foreign Corrupt Practices Act of
1977, as amended.

4.14.

Indebtedness.  Set forth on Schedule 4.14 is a true and complete list of all
Indebtedness of each Loan Party and each of its Subsidiaries outstanding
immediately prior to the Closing Date that is to remain outstanding immediately
after giving effect to the closing hereunder on the Closing Date and such
Schedule accurately sets forth the aggregate principal amount of such
Indebtedness as of the date specified on such Schedule.

4.15.

Payment of Taxes.  Except as otherwise permitted under Section 5.5, all tax
returns and reports of each Loan Party and its Subsidiaries required to be filed
by any of them have been timely filed, and all taxes shown on such tax returns
to be due and payable and all assessments, fees and other governmental charges
upon a Loan Party and its Subsidiaries and upon their respective assets, income,
businesses and franchises that are due and payable have been paid when due and
payable.  Each Loan Party and each of its Subsidiaries have made adequate
provision in accordance with GAAP for all taxes not yet due and payable.
 Borrowers know of no proposed tax assessment against a Loan Party or any of its
Subsidiaries that is not being actively contested by such Loan Party or such
Subsidiary diligently, in good faith, and by appropriate proceedings; provided
such reserves or other appropriate provisions, if any, as shall be required in
conformity with GAAP shall have been made or provided therefor.

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4.16.

Margin Stock.  No Loan Party nor any of its Subsidiaries is engaged principally,
or as one of its important activities, in the business of extending credit for
the purpose of purchasing or carrying any Margin Stock.  No part of the proceeds
of the loans made to Borrowers will be used to purchase or carry any Margin
Stock or to extend credit to others for the purpose of purchasing or carrying
any Margin Stock or for any purpose that violates the provisions of Regulation
T, U or X of the Board of Governors.

4.17.

Governmental Regulation.  No Loan Party nor any of its Subsidiaries is subject
to regulation under the Federal Power Act or the Investment Company Act of 1940
or under any other federal or state statute or regulation which may limit its
ability to incur Indebtedness or which may otherwise render all or any portion
of the Obligations unenforceable.  No Loan Party nor any of its Subsidiaries is
a "registered investment company" or a company "controlled" by a "registered
investment company" or a "principal underwriter" of a "registered investment
company" as such terms are defined in the Investment Company Act of 1940.

4.18.

OFAC.  No Loan Party nor any of its Subsidiaries is in violation of any of the
country or list based economic and trade sanctions administered and enforced by
OFAC.  No Loan Party nor any of its Subsidiaries (a) is a Sanctioned Person or a
Sanctioned Entity, (b) has its assets located in Sanctioned Entities, or
(c) derives revenues from investments in, or transactions with Sanctioned
Persons or Sanctioned Entities.  No proceeds of any loan made hereunder will be
used to fund any operations in, finance any investments or activities in, or
make any payments to, a Sanctioned Person or a Sanctioned Entity.

4.19.

Employee and Labor Matters.  There is (i) no unfair labor practice complaint
pending or, to the knowledge of Borrowers, threatened against Parent or its
Subsidiaries before any Governmental Authority and no grievance or arbitration
proceeding pending or threatened against Parent or its Subsidiaries which arises
out of or under any collective bargaining agreement and that could reasonably be
expected to result in a material liability, (ii) no strike, labor dispute,
slowdown, stoppage or similar action or grievance pending or threatened in
writing against Parent or its Subsidiaries that could reasonably be expected to
result in a material liability, or (iii) to the knowledge of Borrowers, after
due inquiry, no union representation question existing with respect to the
employees of Parent or its Subsidiaries and no union organizing activity taking
place with respect to any of the employees of Parent or its Subsidiaries.  None
of Parent or its Subsidiaries has incurred any liability or obligation under the
Worker Adjustment and Retraining Notification Act or similar state law, which
remains unpaid or unsatisfied.  The hours worked and payments made to employees
of Parent or its Subsidiaries have not been in violation of the Fair Labor
Standards Act or any other applicable legal requirements, except to the extent
such violations could not, individually or in the aggregate, reasonably be
expected to result in a Material Adverse Effect.  All material payments due from
Parent or its Subsidiaries on account of wages and employee health and welfare
insurance and other benefits have been paid or accrued as a liability on the
books of Parent, except where the failure to do so could not, individually or in
the aggregate, reasonably be expected to result in a Material Adverse Effect.

4.20.

Intentionally Omitted.

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4.21.

Leases.  Each Loan Party and its Subsidiaries enjoy peaceful and undisturbed
possession under all leases material to their business and to which they are
parties or under which they are operating, and, subject to Permitted Protests,
all of such material leases are valid and subsisting and no material default by
the applicable Loan Party or its Subsidiaries exists under any of them.

4.22.

Eligible Accounts.  As to each Account that is identified by Borrowers as an
Eligible Account in a Borrowing Base Certificate submitted to Co-Collateral
Agents, such Account is (a) a bona fide existing payment obligation of the
applicable Account Debtor created by the sale and delivery of Inventory or the
rendition of services to such Account Debtor in the ordinary course of the
Borrowers' business, (b) owed to Borrowers without any known defenses, disputes,
offsets, counterclaims, or rights of return or cancellation, and (c) not
excluded as ineligible by virtue of one or more of the excluding criteria (other
than Co-Collateral Agents-discretionary criteria) set forth in the definition of
Eligible Accounts.

4.23.

Eligible Inventory.  As to each item of Inventory that is identified by the
Borrowers as Eligible Inventory in a Borrowing Base Certificate submitted to
Co-Collateral Agents, such Inventory is (a) of good and merchantable quality,
free from known defects, and (b) not excluded as ineligible by virtue of one or
more of the excluding criteria (other than Co-Collateral Agents-discretionary
criteria) set forth in the definition of Eligible Inventory.

4.24.

Location of Inventory.  The Inventory of Borrowers is not stored with a bailee,
warehouseman, or similar party except to the extent permitted under Section 6.13
and is located only at, or in-transit between, the locations identified on
Schedule 4.24 (as such Schedule may be updated pursuant to Section 5.14).

4.25.

Inventory Records.  Each Loan Party keeps correct and accurate records itemizing
and describing the type, quality, and quantity of its and its Subsidiaries'
Inventory and the book value thereof.

4.26.

Other Documents.  Borrowers have delivered to Agent a complete and correct copy
of the Split Lien Documents, including all schedules and exhibits thereto.  The
execution, delivery and performance of each of the Split Lien Documents has been
duly authorized by all necessary action on the part of Borrowers.

5.

AFFIRMATIVE COVENANTS.

Each Borrower covenants and agrees that, until termination of all of the
Commitments and payment in full of the Obligations:

5.1.

Financial Statements, Reports, Certificates.  Borrowers (a) will deliver to
Agent, with copies to each Lender, each of the financial statements, reports,
and other items set forth on Schedule 5.1 no later than the times specified
therein, (b) agree that no Subsidiary of a Loan Party will have a fiscal year
different from that of Borrowers, (c) agree to maintain a system of accounting
that enables Borrowers to produce financial statements in accordance with GAAP
(except, in the case of unaudited financial statements, for the lack of
footnotes and being subject to year-end audit adjustments), and (d) agree that
they will, and will cause each other Loan Party to, (i) keep a reporting system
that shows all additions, sales, claims, returns, and

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allowances with respect to their and their Subsidiaries' sales, and
(ii) maintain their billing systems and practices substantially as in effect as
of the Closing Date and shall only make material modifications thereto with
notice to, and with the consent of, Agent.

5.2.

Reporting.  Borrowers (a) will deliver to Agent and Co-Collateral Agents (and if
so requested by Agent, with copies for each Lender) each of the reports set
forth on Schedule 5.2 at the times specified therein, and (b) agree to use
commercially reasonable efforts in cooperation with Agent and Co-Collateral
Agents to facilitate and implement a system of electronic collateral reporting
in order to provide electronic reporting of each of the items set forth on such
Schedule.

5.3.

Existence.  Except as otherwise permitted under Section 6.3 or Section 6.4,
Parent will, and will cause each of its Subsidiaries to, at all times preserve
and keep in full force and effect such Person's valid existence and good
standing in its jurisdiction of organization and, except as could not reasonably
be expected to result in a Material Adverse Effect, good standing with respect
to all other jurisdictions in which it is qualified to do business and any
rights, franchises, permits, licenses, accreditations, authorizations, or other
approvals material to their businesses.

5.4.

Maintenance of Properties.  Parent will, and will cause each of its Subsidiaries
to, maintain and preserve all of its assets that are necessary or useful in the
proper conduct of its business in good working order and condition, ordinary
wear, tear, casualty, and condemnation and Permitted Dispositions excepted.

5.5.

Taxes.  Parent will, and will cause each of its Subsidiaries to, pay in full
before delinquency or before the expiration of any extension period all material
governmental assessments and taxes imposed, levied, or assessed against it, or
any of its assets or in respect of any of its income, businesses, or franchises,
except to the extent that the validity of such governmental assessment or tax is
the subject of a Permitted Protest.

5.6.

Insurance.  Parent will, and will cause each of its Subsidiaries to, at
Borrowers' expense, (a) maintain insurance respecting each of Parent's and its
Subsidiaries' assets wherever located, covering liabilities, losses or damages
as are customarily are insured against by other Persons engaged in same or
similar businesses and similarly situated and located.  All such policies of
insurance shall be with financially sound and reputable insurance companies
acceptable to Agent and in such amounts as is carried generally in accordance
with sound business practice by companies in similar businesses similarly
situated and located and, in any event, in amount, adequacy, and scope
reasonably satisfactory to Agent (it being agreed that the amount, adequacy, and
scope of the policies of insurance of Borrowers in effect as of the Closing Date
are acceptable to Agent).  All property insurance policies covering the
Collateral are to be made payable to Agent for the benefit of Agent and the
Lenders, as their interests may appear, in case of loss, pursuant to a standard
loss payable endorsement with a standard non-contributory "lender" or "secured
party" clause and are to contain such other provisions as Agent may reasonably
require to fully protect the Lenders' interest in the Collateral and to any
payments to be made under such policies.  All certificates of property and
general liability insurance are to be delivered to Agent, with the loss payable
(but only in respect of Collateral) and additional insured endorsements in favor
of Agent and shall provide for not less than 30 days

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(10 days in the case of non-payment) prior written notice to Agent of the
exercise of any right of cancellation.  If Parent or its Subsidiaries fail to
maintain such insurance, Agent may arrange for such insurance, but at Borrowers'
expense and without any responsibility on Agent's part for obtaining the
insurance, the solvency of the insurance companies, the adequacy of the
coverage, or the collection of claims.  Administrative Borrower shall give Agent
prompt notice of any loss exceeding $250,000 covered by its or its Subsidiaries'
property or business interruption insurance.  Upon the occurrence and during the
continuance of an Event of Default, Agent shall have the sole right to file
claims under any property insurance policies in respect of the Collateral, to
receive, receipt and give acquittance for any payments that may be payable
thereunder, and to execute any and all endorsements, receipts, releases,
assignments, reassignments or other documents that may be necessary to effect
the collection, compromise or settlement of any claims under any such insurance
policies.

5.7.

Inspection.

(a)

Parent will, and will cause each of its Subsidiaries to, permit Agent, any
Co-Collateral Agent, any Lender, and each of their respective duly authorized
representatives or agents to visit any of its properties and inspect any of its
assets or books and records, to examine and make copies of its books and
records, and to discuss its affairs, finances, and accounts with, and to be
advised as to the same by, its officers and employees (provided an authorized
representative of Administrative Borrower shall be allowed to be present) at
such reasonable times and intervals as Agent, any Co-Collateral Agent or any
Lender, as applicable, may designate and, so long as no Default or Event of
Default has occurred and is continuing, with reasonable prior notice to
Administrative Borrower and during regular business hours.

(b)

Parent will, and will cause each of its Subsidiaries to, permit Agent or
Co-Collateral Agents and each of its duly authorized representatives or agents
to conduct appraisals and valuations at such reasonable times and intervals and
in such manner as Agent or Co-Collateral Agents may designate.

5.8.

Compliance with Laws.  Parent will, and will cause each of its Subsidiaries to,
comply with the requirements of all applicable laws, rules, regulations, and
orders of any Governmental Authority, other than laws, rules, regulations, and
orders the non-compliance with which, individually or in the aggregate, could
not reasonably be expected to result in a Material Adverse Effect.

5.9.

Environmental.  Parent will, and will cause each of its Subsidiaries to,

(a)

Keep any property either owned or operated by Parent or its Subsidiaries free of
any Environmental Liens or post bonds or other financial assurances sufficient
to satisfy the obligations or liability evidenced by such Environmental Liens,

(b)

Comply, in all material respects, with Environmental Laws and provide to Agent
documentation of such compliance which Agent reasonably requests,

(c)

Promptly notify Agent of any release of which any Borrower has knowledge of a
Hazardous Material in any reportable quantity from or onto property owned or
operated by Parent or its Subsidiaries and take any Remedial Actions required to
abate said

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release or otherwise to come into compliance, in all material respects, with
applicable Environmental Law, and

(d)

Promptly, but in any event within 5 Business Days of its receipt thereof,
provide Agent with written notice of any of the following:  (i) notice that an
Environmental Lien has been filed against any of the real or personal property
of Parent or its Subsidiaries, (ii) commencement of any Environmental Action or
written notice that an Environmental Action will be filed against Parent or its
Subsidiaries, and (iii) written notice of a violation, citation, or other
administrative order from a Governmental Authority.

5.10.

Disclosure Updates.  Borrowers will, promptly and in no event later than 5
Business Days after obtaining knowledge thereof, notify Agent if any written
information, exhibit, or report furnished to Agent, any Co-Collateral Agent or
the Lenders contained, at the time it was furnished, any untrue statement of a
material fact or omitted to state any material fact necessary to make the
statements contained therein not misleading in light of the circumstances in
which made.  The foregoing to the contrary notwithstanding, any notification
pursuant to the foregoing provision will not cure or remedy the effect of the
prior untrue statement of a material fact or omission of any material fact nor
shall any such notification have the effect of amending or modifying this
Agreement or any of the Schedules hereto.

5.11.

Formation of Subsidiaries.  Parent will, at the time that any Loan Party forms
any direct or indirect Subsidiary or acquires any direct or indirect Subsidiary
after the Closing Date, within 10 days of such formation or acquisition (or such
later date as permitted by Agent in its sole discretion) (a) cause such new
Subsidiary to provide to Agent a guaranty of the Obligations, together with such
security agreements (including mortgages with respect to any Real Property owned
(x) in fee of such new Subsidiary with a fair market value in excess of $200,000
or (y) by lease, with respect to which the gross rental payments are in excess
of $100,000 annually and for which the term of the leasehold (after giving
effect to any renewals and extensions at the option of such new Subsidiary) is
two years or longer), as well as appropriate financing statements (and with
respect to all property subject to a mortgage, fixture filings), all in form and
substance reasonably satisfactory to Agent (including being sufficient to grant
Agent a first priority Lien (subject as to priority only to Permitted Senior
Liens) in and to the assets of such newly formed or acquired Subsidiary);
provided, such guaranty, and such security agreements shall not be required to
be provided to Agent with respect to any Subsidiary of Parent that is a CFC, so
long as such Subsidiary does not guaranty any of the Indebtedness under the
Split Lien Documents, if providing such agreements would result in adverse tax
consequences or the costs to the Loan Parties of providing such guaranty or such
security agreements are unreasonably excessive (as determined by Agent in
consultation with Administrative Borrower) in relation to the benefits to Agent
and the Lenders of the security or guarantee afforded thereby, (b) provide, or
cause the applicable Loan Party to provide, to Agent a pledge agreement and
appropriate certificates (to the extent required in the applicable pledge
agreement) and powers or financing statements, pledging all of the direct or
beneficial ownership interest in such new Subsidiary in form and substance
reasonably satisfactory to Agent to secure the Obligations; provided, that only
66% of the total outstanding voting Equity Interests of any first tier
Subsidiary of Parent that is a CFC (and none of the Equity Interests of any
Subsidiary of such CFC) shall be required to be pledged if pledging a greater
amount would result in adverse tax consequences or the costs to the Loan Parties
of providing such pledge are unreasonably

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excessive (as determined by Agent in consultation with Administrative Borrower)
in relation to the benefits to Agent and the Lenders of the security afforded
thereby (which pledge, if reasonably requested by Agent, shall be governed by
the laws of the jurisdiction of such Subsidiary), and (c) provide to Agent all
other documentation, including one or more opinions of counsel reasonably
satisfactory to Agent, which, in its opinion, is appropriate with respect to the
execution and delivery of the applicable documentation referred to above
(including policies of title insurance or other documentation with respect to
all Real Property owned in fee and subject to a mortgage).  Any document,
agreement, or instrument executed or issued pursuant to this Section 5.11 shall
constitute a Loan Document.

5.12.

Further Assurances.  Parent will, and will cause each of the other Loan Parties
to, at any time upon the reasonable request of Agent, execute or deliver to
Agent any and all financing statements, fixture filings, security agreements,
pledges, assignments, mortgages, deeds of trust, opinions of counsel, and all
other documents (the "Additional Documents") that Agent may reasonably request
in form and substance reasonably satisfactory to Agent, to create, perfect, and
continue perfected or to better perfect Agent's Liens in the assets of Parent
and its Subsidiaries (whether now owned or hereafter arising or acquired,
tangible or intangible, real or personal), to create and perfect Liens in favor
of Agent in any Real Property acquired (x) in fee by any Loan Party with a fair
market value in excess of $200,000 or (y) by lease, with respect to which the
gross rental payments are in excess of $100,000 annually and for which the term
of the leasehold (after giving effect to any renewals and extensions at the
option of Loan Parties) is two years or longer, and in order to fully consummate
all of the transactions contemplated hereby and under the other Loan Documents;
provided that the foregoing shall not apply to any Subsidiary of Parent that is
a CFC if providing such documents would result in adverse tax consequences or
the costs to the Loan Parties of providing such documents are unreasonably
excessive (as determined by Agent in consultation with Administrative Borrower)
in relation to the benefits to Agent and the Lenders of the security afforded
thereby.  To the maximum extent permitted by applicable law, if any Loan Party
refuses or fails to execute or deliver any reasonably requested Additional
Documents within a reasonable period of time following the request to do so,
each Loan Party hereby authorizes Agent to execute any such Additional Documents
in the applicable Loan Party's name and authorizes Agent to file such executed
Additional Documents in any appropriate filing office.  In furtherance of, and
not in limitation of, the foregoing, each Loan Party shall take such actions as
Agent may reasonably request from time to time to ensure that the Obligations
are guaranteed by the Guarantors and are secured by substantially all of the
assets of Parent and its Subsidiaries, including all of the outstanding capital
Equity Interests of Borrowers and Borrowers' Subsidiaries (subject to exceptions
and limitations contained in the Loan Documents with respect to CFCs).

5.13.

Lender Meetings.  Parent will, within 90 days after the close of each fiscal
year of Parent, at the request of Agent or of the Required Lenders and upon
reasonable prior notice, hold a meeting (at a mutually agreeable location and
time or, at the option of Agent, by conference call) with all Lenders who choose
to attend such meeting at which meeting shall be reviewed the financial results
of the previous fiscal year and the financial condition of Parent and its
Subsidiaries and the projections presented for the current fiscal year of
Parent.

5.14.

Location of Inventory.  Parent will, and will cause each of its Subsidiaries to,
keep its Inventory only at the locations identified on Schedule 4.24 and their
chief executive

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offices only at the locations identified on Schedule 4.24 as its chief executive
office; provided, that Borrowers may amend Schedule 4.24 so long as such
amendment occurs by written notice to Agents not less than 10 days prior to the
date on which such Inventory is moved to such new location or such chief
executive office is relocated and so long as such new location is within the
continental United States.

6.

NEGATIVE COVENANTS.

Each Borrower covenants and agrees that, until termination of all of the
Commitments and payment in full of the Obligations:

6.1.

Indebtedness.  Parent will not, and will not permit any of its Subsidiaries to
create, incur, assume, suffer to exist, guarantee, or otherwise become or
remain, directly or indirectly, liable with respect to any Indebtedness, except
for Permitted Indebtedness.  Parent will not, and will not permit any of its
Subsidiaries to be or remain liable with respect to surety and appeal bonds,
performance bonds, bid bonds, appeal bonds, completion guarantee or similar
obligations (whether or not drawn) except for Permitted Surety Bonds in an
aggregate amount not in excess of $30,000,000 at any time.

6.2.

Liens.  Parent will not, and will not permit any of its Subsidiaries to create,
incur, assume, or suffer to exist, directly or indirectly, any Lien on or with
respect to any of its assets, of any kind, whether now owned or hereafter
acquired, or any income or profits therefrom, except for Permitted Liens.

6.3.

Restrictions on Fundamental Changes.  Parent will not, and will not permit any
of its Subsidiaries to,

(a)

enter into any merger, consolidation, reorganization, or recapitalization, or
reclassify its Equity Interests, except for (i) any merger between Loan Parties,
provided, that a Borrower must be the surviving entity of any such merger to
which it is a party, (ii) any merger between a Loan Party and a Subsidiary of
such Loan Party that is not a Loan Party so long as such Loan Party is the
surviving entity of any such merger, and (iii) any merger between Subsidiaries
of Parent that are not Loan Parties,

(b)

liquidate, wind up, or dissolve itself (or suffer any liquidation or
dissolution), except for (i) the liquidation or dissolution of non-operating
Subsidiaries of Parent with nominal assets and nominal liabilities, (ii) the
liquidation or dissolution of a Loan Party (other than a Borrower) or any of its
wholly-owned Subsidiaries so long as all of the assets (including any interest
in any Equity Interests) of such liquidating or dissolving Loan Party or
Subsidiary are transferred to a Loan Party that is not liquidating or
dissolving, or (iii) the liquidation or dissolution of a Subsidiary of Parent
that is not a Loan Party (other than any such Subsidiary the Equity Interests of
which (or any portion thereof) is subject to a Lien in favor of Agent) so long
as all of the assets of such liquidating or dissolving Subsidiary are
transferred to a Subsidiary of Parent that is not liquidating or dissolving, or

(c)

suspend or cease operating a substantial portion of its or their business,
except as permitted pursuant to clauses (a) or (b) above or in connection with a
transaction permitted under Section 6.4.

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6.4.

Disposal of Assets.  Other than Permitted Dispositions or transactions expressly
permitted by Sections 6.3 or 6.9, Parent will not, and will not permit any of
its Subsidiaries to convey, sell, lease, license, assign, transfer, or otherwise
dispose of (or enter into an agreement to convey, sell, lease, license, assign,
transfer, or otherwise dispose of) any of its or their assets.

6.5.

Nature of Business.  Parent will not, and will not permit any of its
Subsidiaries to make any change in the nature of its or their business as
described in Schedule 6.5 or acquire any properties or assets that are not
reasonably related to the conduct of such business activities; provided, that
the foregoing shall not prevent Parent and its Subsidiaries from engaging in any
business that is reasonably related or ancillary to its or their business.

6.6.

Prepayments and Amendments.  Parent will not, and will not permit any of its
Subsidiaries to,

(a)

Except in connection with Refinancing Indebtedness permitted by Section 6.1,

(i)

optionally prepay, redeem, defease, purchase, or otherwise acquire any
Indebtedness of Parent or its Subsidiaries (including the Indebtedness under the
Split Lien Documents), other than (A) the Obligations in accordance with this
Agreement, (B) Permitted Intercompany Advances, (C) the Convertible Notes solely
pursuant to a Permitted Convertible Note Refinance, and (D) optional prepayments
of the Indebtedness under the Split Lien Documents made with Excess Proceeds, or

(ii)

make any payment on account of Indebtedness that has been contractually
subordinated in right of payment to the Obligations if such payment is not
permitted at such time under the subordination terms and conditions applicable
thereto, or

(b)

Directly or indirectly, amend, modify, or change any of the terms or provisions
of

(i)

any agreement, instrument, document, indenture, or other writing evidencing or
concerning Permitted Indebtedness other than (A) the Obligations in accordance
with this Agreement, (B) the Split Lien Documents in accordance with the terms
of the Split Lien Intercreditor Agreement (as in effect on the date hereof),
(C) Permitted Intercompany Advances, and (D) Indebtedness permitted under
clauses (c), (f), (h) and (i) of the definition of Permitted Indebtedness, or

(ii)

the Governing Documents of any Loan Party or any of its Subsidiaries if the
effect thereof, either individually or in the aggregate, could reasonably be
expected to be materially adverse to the interests of the Lenders.

6.7.

Restricted Payments.  Parent will not, and will not permit any of its
Subsidiaries to make any Restricted Payment; provided, that, so long as it is
permitted by law, and so long as no Default or Event of Default shall have
occurred and be continuing or would result therefrom,

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(a)

Parent may make distributions to former employees, officers, or directors of
Parent (or any spouses, ex-spouses, or estates of any of the foregoing) on
account of redemptions of Equity Interests of Parent held by such Persons,
provided, that the aggregate amount of such redemptions made by Parent (whether
in exchange for cash or the issuance of Indebtedness permitted under clause (j)
of the definition of Permitted Indebtedness) during the term of this Agreement,
does not exceed $250,000 in the aggregate,

(b)

Parent may make distributions to former employees, officers, or directors of
Parent (or any spouses, ex-spouses, or estates of any of the foregoing), solely
in the form of forgiveness of Indebtedness of such Persons owing to Parent on
account of repurchases of the Equity Interests of Parent held by such Persons;
provided that such Indebtedness was incurred by such Persons solely to acquire
Equity Interests of Parent, and

(c)

Loan Parties may make payments on account of Subordinated Indebtedness, to the
extent permitted by the subordination terms governing such Subordinated
Indebtedness.

6.8.

Accounting Methods.  Parent will not, and will not permit any of its
Subsidiaries to modify or change its fiscal year or its method of accounting
(other than as may be required to conform to GAAP).

6.9.

Investments.  Parent will not, and will not permit any of its Subsidiaries to,
directly or indirectly, make or acquire any Investment or incur any liabilities
(including contingent obligations) for or in connection with any Investment
except for Permitted Investments.

6.10.

Transactions with Affiliates.  Parent will not, and will not permit any of its
Subsidiaries to, directly or indirectly, enter into or permit to exist any
transaction with any Affiliate of Parent or any of its Subsidiaries except for:

(a)

transactions (other than the payment of management, consulting, monitoring, or
advisory fees) between Parent or its Subsidiaries, on the one hand, and any
Affiliate of Parent or its Subsidiaries, on the other hand, so long as such
transactions (i) are fully disclosed to Agent prior to the consummation thereof,
if they involve one or more payments by Parent or its Subsidiaries in excess of
$250,000 for any single transaction or series of related transactions, and
(ii) are no less favorable, taken as a whole, to Parent or its Subsidiaries, as
applicable, than would be obtained in an arm's length transaction with a
non-Affiliate,

(b)

so long as it has been approved by Parent's or its applicable Subsidiary's board
of directors (or comparable governing body) in accordance with applicable law,
any indemnity provided for the benefit of directors (or comparable managers) of
Parent or its applicable Subsidiary,

(c)

so long as it has been approved by Parent's or its applicable Subsidiary's board
of directors (or comparable governing body) in accordance with applicable law,
the payment of reasonable compensation, severance, or employee benefit
arrangements to employees, officers, and outside directors of Parent and its
Subsidiaries in the ordinary course of business and consistent with industry
practice, and

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(d)

transactions permitted by Section 6.3 or Section 6.7, or any Permitted
Intercompany Advance.

Notwithstanding anything contained in this Agreement to the contrary, except for
Permitted Intercompany Advances, no Loan Party shall enter into any transaction
with, make any loan, advance or other Investment in, or otherwise transfer any
property to any Subsidiary of Parent that is not a Loan Party.

6.11.

Use of Proceeds.  Parent will not, and will not permit any of its Subsidiaries
to use the proceeds of any loan made hereunder for any purpose other than (a) on
the Closing Date, (i) to repay, in full, the outstanding principal, accrued
interest, and accrued fees and expenses owing under or in connection with the
Existing Credit Facility, and (ii) to pay the fees, costs, and expenses incurred
in connection with this Agreement, the other Loan Documents, and the
transactions contemplated hereby and thereby, in each case, as set forth in the
Funds Flow Agreement, and (b) thereafter, consistent with the terms and
conditions hereof, for their lawful and permitted purposes (including that no
part of the proceeds of the loans made to Borrowers will be used to purchase or
carry any such Margin Stock or to extend credit to others for the purpose of
purchasing or carrying any such Margin Stock or for any purpose that violates
the provisions of Regulation T, U or X of the Board of Governors).

6.12.

Limitation on Issuance of Equity Interests.  Except for the issuance or sale of
Qualified Equity Interests by Parent, Parent will not, and will not permit any
of its Subsidiaries to issue or sell or enter into any agreement or arrangement
for the issuance or sale of any of its Equity Interests.

6.13.

Inventory at Bailees.  Parent will not, and will not permit any of its
Subsidiaries to store its Inventory at any time with a bailee, warehouseman, or
similar party except to the extent the aggregate amount of such Inventory does
not exceed $38,000,000 (or $44,000,000 after the consummation of the sale
described in clause (c) of the Pre-Approved Disposition Letter) during the
period commencing on May 1st through September 30 of each year and does not
exceed $10,000,000 (or $14,000,000 after the consummation of the sale described
in clause (c) of the Pre-Approved Disposition Letter) at any other time.

7.

FINANCIAL COVENANTS.

Each Borrower covenants and agrees that, until termination of all of the
Commitments and payment in full of the Obligations, Borrowers will:

(a)

Minimum Fixed Charge Coverage Ratio.  At all times during a Covenant Testing
Period (including the first and last day thereof), maintain a Fixed Charge
Coverage Ratio, measured for the 12 month period ending on the last day of each
fiscal month during the Covenant Testing Period (including the first and last
day thereof) of at least the applicable ratio set forth below:

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12 Fiscal Month Period
Ending

Minimum
Fixed Charge
Coverage
Ratio

May 31, 2012

0.69x

June 30, 2012

0.65x

July 28, 2012

0.82x

August 25, 2012

0.88x

September 29, 2012

0.89x

October 27, 2012,

0.97x

November 24, 2012

0.94x

December 29, 2012

0.94x

January 26, 2013

0.92x

February 23, 2013

0.91x

March 30, 2013

0.90x

April 27, 2013, May
25, 2013 and June 29,
2013

0.96x

July 27, 2013, August
24, 2013 and
September 28, 2013

1.01x

October 26, 2013,
November 23, 2013
and December 28,
2013

1.00x

January 25, 2014,
February 22, 2014 and
March 29, 2014

1.02x

April 26, 2014, May
24, 2014 and June 28,
2014

1.14x

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12 Fiscal Month Period
Ending

Minimum
Fixed Charge
Coverage
Ratio

July 26, 2014, August
23, 2014 and
September 27, 2014

October 25, 2014
November 22, 2014
and December 27,
2014

1.22x

1.26x

January 24, 2015,
February 21, 2015 and
March 28, 2015

April 25, 2015 and the
last day of each month
thereafter

1.25x

1.15x

(b)

Maximum Secured Leverage Ratio.  Not permit the Secured Leverage Ratio for the
trailing twelve month period, measured as of each date set forth below, to be
greater than the applicable ratio set forth below:

12 Fiscal Month Period
Ending

Maximum
Secured
Leverage
Ratio

July 28, 2012

5.12x

October 27, 2012

3.21x

January 26, 2013

2.45x

April 27, 2013

3.09x

July 27, 2013

4.13x

October 26, 2013

2.86x

January 25, 2014

2.08x

April 26, 2014

2.21x

July 26, 2014

October 25, 2014

3.25x

2.00x

January 24, 2015

2.00x

April 25, 2015

2.00x

July 25, 2015

2.50x

October 24, 2015

2.00x

 

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(c)

Maximum Total Leverage Ratio.  Not permit the Total Leverage Ratio for the
trailing twelve month period, measured as of each date set forth below, to be
greater than the applicable ratio set forth below:

12 Fiscal Month Period
Ending

Maximum
Total Leverage
Ratio

July 28, 2012

9.52x

October 27, 2012

7.15x

January 26, 2013

6.55x

April 27, 2013

6.99x

July 27, 2013

7.85x

October 26, 2013

6.70x

January 25, 2014

5.86x

April 26, 2014

5.63x

July 26, 2014

October 25, 2014

6.49x

5.05x

January 24, 2015

4.48x

April 25, 2015

4.49x

July 25, 2015

5.50x

October 24, 2015

4.50x

(d)

Maximum Term Loan Ratio.  Not permit the Term Loan Ratio for the trailing twelve
month period, measured as of each date set forth below, to be greater than the
applicable ratio set forth below:

12 Fiscal Month Period
Ending

Maximum
Term Loan
Ratio

July 28, 2012

2.28x

October 27, 2012

2.29x

January 26, 2013

2.32x

April 27, 2013

2.28x

July 27, 2013

2.11x

October 26, 2013

1.99x

January 25, 2014

2.00x

April 26, 2014

2.00x

July 26, 2014

October 25, 2014

1.66x

1.45x

January 24, 2015

1.46x

April 25, 2015

1.46x

July 25, 2015

1.45x

October 24, 2015

1.45x

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(e)

Minimum Interest Expense Coverage Ratio.  Not permit the Interest Coverage Ratio
for the trailing twelve month period, measured as of each date set forth below,
to be less than the applicable ratio set forth below:

12 Fiscal Month Period
Ending

Interest
Expense
Coverage
Ratio

July 28, 2012

2.31x

October 27, 2012

2.40x

January 26, 2013

2.23x

April 27, 2013

2.22x

July 27, 2013

2.36x

October 26, 2013

2.32x

January 25, 2014

2.40x

April 26, 2014

2.69x

July 26, 2014

October 25, 2014

2.87x

2.96x

January 24, 2015

2.71x

April 25, 2015

2.28x

July 25, 2015

2.25x

October 24, 2015

2.25x

 

(f)

Minimum Liquidity Test.  Not permit the Minimum Liquidity Test to be unsatisfied
as at the last day of any fiscal month.

8.

EVENTS OF DEFAULT.

Any one or more of the following events shall constitute an event of default
(each, an "Event of Default") under this Agreement:

8.1.

Payments.  If any Borrower fails to pay when due and payable, or when declared
due and payable, (a) all or any portion of the Obligations consisting of
interest, fees, or charges due the Lender Group, reimbursement of Lender Group
Expenses, or other amounts (other than any portion thereof constituting
principal) constituting Obligations (including any portion thereof 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), and such failure continues for a period of 3 Business Days, (b) all
or any portion of the principal of the Loans, or (c) any amount payable to
Issuing Lender in reimbursement of any drawing under a Letter of Credit;

8.2.

Covenants.  If any Loan Party or any of its Subsidiaries:

(a)

fails to perform or observe any covenant or other agreement contained in any of
(i) Sections 3.6, 5.1, 5.2, 5.3 (solely if a Loan Party is not in good standing
in its jurisdiction of organization), 5.6, 5.7 (solely if a Loan Party refuses
to allow Agent or its

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representatives or agents to visit such Loan Party's properties, inspect its
assets or books or records, examine and make copies of its books and records, or
discuss such Loan Party's affairs, finances, and accounts with officers and
employees of such Loan Party), 5.10, 5.11, 5.13, or 5.14 of this Agreement,
(ii) Sections 6 of this Agreement, (iii) Section 7 of this Agreement, or
(iv) Section 7 of the Guaranty and Security Agreement;

(b)

fails to perform or observe any covenant or other agreement contained in any of
Sections 5.3 (other than if a Loan Party is not in good standing in its
jurisdiction of organization), 5.4, 5.5, 5.8, and 5.12 of this Agreement and
such failure continues for a period of 10 days after the earlier of (i) the date
on which such failure shall first become known to any officer of any Borrower or
(ii) the date on which written notice thereof is given to Administrative
Borrower by Agent; or

(c)

fails to perform or observe any covenant or other agreement contained in this
Agreement, or in any of the other Loan Documents, in each case, other than any
such covenant or agreement that is the subject of another provision of this
Section 8 (in which event such other provision of this Section 8 shall govern),
and such failure continues for a period of 30 days after the earlier of (i) the
date on which such failure shall first become known to any officer of any
Borrower or (ii) the date on which written notice thereof is given to
Administrative Borrower by Agent;

8.3.

Judgments.  If one or more judgments, orders, or awards for the payment of money
involving an aggregate amount of $200,000, or more (except to the extent fully
covered (other than to the extent of customary deductibles) by insurance
pursuant to which the insurer has not denied coverage) is entered or filed
against a Loan Party or any of its Subsidiaries, or with respect to any of their
respective assets, and either (a) there is a period of 30 consecutive days at
any time after the entry of any such judgment, order, or award during which
(1) the same is not discharged, satisfied, vacated, or bonded pending appeal, or
(2) a stay of enforcement thereof is not in effect, or (b) enforcement
proceedings are commenced upon such judgment, order, or award;

8.4.

Voluntary Bankruptcy, etc.  If an Insolvency Proceeding is commenced by a Loan
Party or any of its Subsidiaries;

8.5.

Involuntary Bankruptcy, etc.  If an Insolvency Proceeding is commenced against a
Loan Party or any of its Subsidiaries and any of the following events occur:
 (a) such Loan Party or such Subsidiary consents to the institution of such
Insolvency Proceeding against it, (b) the petition commencing the Insolvency
Proceeding is not timely controverted, (c) the petition commencing the
Insolvency Proceeding is not dismissed within 60 calendar days of the date of
the filing thereof, (d) an interim trustee is appointed to take possession of
all or any substantial portion of the properties or assets of, or to operate all
or any substantial portion of the business of, such Loan Party or its
Subsidiary, or (e) an order for relief shall have been issued or entered
therein;

8.6.

Default Under Other Agreements.  If there is (a) an "Event of Default" (as
defined in the Split Lien Credit Agreement), (b) a default under the Convertible
Notes, (c) a default in one or more agreements to which a Loan Party or any of
its Subsidiaries is a party with

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one or more third Persons relative to a Loan Party's or any of its Subsidiaries'
Indebtedness involving an aggregate amount of $200,000 or more, and such default
(i) occurs at the final maturity of the obligations thereunder, or (ii) results
in a right by such third Person, irrespective of whether exercised, to
accelerate the maturity of such Loan Party's or its Subsidiary's obligations
thereunder, or (d) a default in or an involuntary early termination of one or
more Hedge Agreements to which a Loan Party or any of its Subsidiaries is a
party involving an aggregate amount of $200,000 or more;  

8.7.

Representations, etc.  If any warranty, representation, certificate, statement,
or Record made herein or in any other Loan Document or delivered in writing to
Agent, any Co-Collateral Agent or any Lender in connection with this Agreement
or any other Loan Document proves to be untrue in any material respect (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 issuance or making or deemed making thereof;

8.8.

Guaranty.  If the obligation of any Guarantor under any guaranty of the
Obligations is limited or terminated by operation of law or by such Guarantor
(other than in accordance with the terms of this Agreement);

8.9.

Security Documents.  If Guaranty and Security Agreement or any other Loan
Document that purports to create a Lien, shall, for any reason, fail or cease to
create a valid and perfected and, except to the extent of Permitted Senior
Liens, first priority Lien on the Collateral covered thereby, except (a) as a
result of a disposition of the applicable Collateral in a transaction permitted
under this Agreement, or (b) as the result of an action or failure to act on the
part of Agent;

8.10.

Loan Documents.  The validity or enforceability of any Loan Document shall at
any time for any reason  (other than solely as the result of an action or
failure to act on the part of Agent) be declared to be null and void, or a
proceeding shall be commenced by a Loan Party or its Subsidiaries, or by any
Governmental Authority having jurisdiction over a Loan Party or its
Subsidiaries, seeking to establish the invalidity or unenforceability thereof,
or a Loan Party or its Subsidiaries shall deny that such Loan Party or its
Subsidiaries has any liability or obligation purported to be created under any
Loan Document; or

8.11.

Change in Control.  A Change in Control shall occur, whether directly or
indirectly.

9.

RIGHTS AND REMEDIES.

9.1.

Rights and Remedies.  Upon the occurrence and during the continuation of an
Event of Default, Agent may, and, at the instruction of the Required Lenders,
shall (in each case under clauses (a) or (b) by written notice to Administrative
Borrower), in addition to any other rights or remedies provided for hereunder or
under any other Loan Document or by applicable law, do any one or more of the
following:

(a)

(i) declare the principal of, and any and all accrued and unpaid interest and
fees in respect of, the Loans and all other Obligations (other than the Bank
Product Obligations), whether evidenced by this Agreement or by any of the other
Loan Documents to be immediately

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due and payable, whereupon the same shall become and be immediately due and
payable and Borrowers shall be obligated to repay all of such Obligations in
full, without presentment, demand, protest, or further notice or other
requirements of any kind, all of which are hereby expressly waived by Borrowers,
(ii) terminate any Letter of Credit that may be terminated in accordance with
its terms, and (iii) direct Borrowers to provide (and Borrowers agree that upon
receipt of such notice it will provide) Letter of Credit Collateralization to
Agent to be held as security for Borrowers' reimbursement obligations for
drawings that may subsequently occur under issued and outstanding Letters of
Credit;

(b)

declare the Commitments terminated, whereupon the Commitments shall immediately
be terminated together with (i) any obligation of any Revolving Lender to make
Revolving Loans, (ii) the obligation of the Swing Lender to make Swing Loans,
and (iii) the obligation of Issuing Lender to issue Letters of Credit; and

(c)

exercise all other rights and remedies available to Agent or the Lenders under
the Loan Documents, under applicable law, or in equity.

The foregoing to the contrary notwithstanding, upon the occurrence of any Event
of Default described in Section 8.4 or Section 8.5, in addition to the remedies
set forth above, without any notice to any Borrower or any other Person or any
act by the Lender Group, the Commitments shall automatically terminate and the
Obligations (other than the Bank Product Obligations), inclusive of the
principal of, and any and all accrued and unpaid interest and fees in respect
of, the Loans and all other Obligations (other than the Bank Product
Obligations), whether evidenced by this Agreement or by any of the other Loan
Documents, shall automatically become and be immediately due and payable and
Borrowers shall automatically be obligated to repay all of such Obligations in
full (including Borrowers being obligated to provide (and Borrowers agree that
they will provide) (1) Letter of Credit Collateralization to Agent to be held as
security for Borrowers' reimbursement obligations in respect of drawings that
may subsequently occur under issued and outstanding Letters of Credit and
(2) Bank Product Collateralization to be held as security for Borrowers' or
their Subsidiaries' obligations in respect of outstanding Bank Products),
without presentment, demand, protest, or notice or other requirements of any
kind, all of which are expressly waived by Borrowers.

9.2.

Remedies Cumulative.  The rights and remedies of the Lender Group under this
Agreement, the other Loan Documents, and all other agreements shall be
cumulative.  The Lender Group shall have all other rights and remedies not
inconsistent herewith as provided under the Code, by law, or in equity.  No
exercise by the Lender Group of one right or remedy shall be deemed an election,
and no waiver by the Lender Group of any Event of Default shall be deemed a
continuing waiver.  No delay by the Lender Group shall constitute a waiver,
election, or acquiescence by it.

10.

WAIVERS; INDEMNIFICATION.

10.1.

Demand; Protest; etc.  Each Borrower waives demand, protest, notice of protest,
notice of default or dishonor, notice of payment and nonpayment, nonpayment at
maturity, release, compromise, settlement, extension, or renewal of documents,
instruments,

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chattel paper, and guarantees at any time held by the Lender Group on which any
Borrower may in any way be liable.

10.2.

The Lender Group's Liability for Collateral.  Each Borrower hereby agrees that:
 (a) so long as Agent complies with its obligations, if any, under the Code, the
Lender Group shall not in any way or manner be liable or responsible for:
 (i) the safekeeping of the Collateral, (ii) any loss or damage thereto
occurring or arising in any manner or fashion from any cause, (iii) any
diminution in the value thereof, or (iv) any act or default of any carrier,
warehouseman, bailee, forwarding agency, or other Person, and (b) all risk of
loss, damage, or destruction of the Collateral shall be borne by Borrowers.

10.3.

Indemnification.  Borrowers shall pay, indemnify, defend, and hold the
Agent-Related Persons, the Lender-Related Persons, and each Participant (each,
an "Indemnified Person") harmless (to the fullest extent permitted by law) from
and against any and all claims, demands, suits, actions, investigations,
proceedings, liabilities, fines, costs, penalties, and damages, and all
reasonable fees and disbursements of attorneys, experts, or consultants and all
other costs and expenses actually incurred in connection therewith or in
connection with the enforcement of this indemnification (as and when they are
incurred and irrespective of whether suit is brought), at any time asserted
against, imposed upon, or incurred by any of them (a) in connection with or as a
result of or related to the execution and delivery (provided that Borrowers
shall not be liable for costs and expenses (including attorneys' fees) of any
Lender (other than WFCF and GECC) incurred in advising, structuring, drafting,
reviewing, administering or syndicating the Loan Documents), enforcement,
performance, or administration (including any restructuring or workout with
respect hereto) of this Agreement, any of the other Loan Documents, or the
transactions contemplated hereby or thereby or the monitoring of Parent's and
its Subsidiaries' compliance with the terms of the Loan Documents (provided,
that the indemnification in this clause (a) shall not extend to (i) disputes
solely between or among the Lenders, (ii) disputes solely between or among the
Lenders and their respective Affiliates; it being understood and agreed that the
indemnification in this clause (a) shall extend to Agent (but not the Lenders)
relative to disputes between or among Agent on the one hand, and one or more
Lenders, or one or more of their Affiliates, on the other hand, or (iii) any
Taxes or any costs attributable to Taxes, which shall be governed by Section
16), (b) with respect to any investigation, litigation, or proceeding related to
this Agreement, any other Loan Document, or the use of the proceeds of the
credit provided hereunder (irrespective of whether any Indemnified Person is a
party thereto), or any act, omission, event, or circumstance in any manner
related thereto, and (c) in connection with or arising out of any presence or
release of Hazardous Materials at, on, under, to or from any assets or
properties owned, leased or operated by Parent or any of its Subsidiaries or any
Environmental Actions, Environmental Liabilities or Remedial Actions related in
any way to any such assets or properties of Parent or any of its Subsidiaries
(each and all of the foregoing, the "Indemnified Liabilities").  The foregoing
to the contrary notwithstanding, Borrowers shall have no obligation to any
Indemnified Person under this Section 10.3 with respect to any Indemnified
Liability that a court of competent jurisdiction finally determines to have
resulted from the gross negligence or willful misconduct of such Indemnified
Person or its officers, directors, employees, attorneys, or agents.  This
provision shall survive the termination of this Agreement and the repayment in
full of the Obligations.  If any Indemnified Person makes any payment to any
other Indemnified Person with respect to an Indemnified Liability as to which
Borrowers were required to indemnify the Indemnified Person

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receiving such payment, the Indemnified Person making such payment is entitled
to be indemnified and reimbursed by Borrowers with respect thereto.  WITHOUT
LIMITATION, THE FOREGOING INDEMNITY SHALL APPLY TO EACH INDEMNIFIED PERSON WITH
RESPECT TO INDEMNIFIED LIABILITIES WHICH IN WHOLE OR IN PART ARE CAUSED BY OR
ARISE OUT OF ANY NEGLIGENT ACT OR OMISSION OF SUCH INDEMNIFIED PERSON OR OF ANY
OTHER PERSON.

11.

NOTICES.

Unless otherwise provided in this Agreement, all notices or demands relating to
this Agreement or any other Loan Document shall be in writing and (except for
financial statements and other informational documents which may be sent by
first-class mail, postage prepaid) shall be personally delivered or sent by
registered or certified mail (postage prepaid, return receipt requested),
overnight courier, electronic mail (at such email addresses as a party may
designate in accordance herewith), or telefacsimile.  In the case of notices or
demands to any Borrower or Agent, as the case may be, they shall be sent to the
respective address set forth below:

If to any Borrower:

SCHOOL SPECIALTY, INC.
W6316 Design Drive
Greenville, WI  54942
Attn: Chief Financial Officer
Fax No. 920-882-5863

 

 

with copies to:

FRANZOI & FRANZOI, S.C.

514 Racine Street

Menasha, WI  54952

Attn: Joseph F. Franzoi IV, Esq.
Fax No. 920-725-0998

 

 

If to Agent:

WELLS FARGO CAPITAL FINANCE, LLC
150 South Wacker Drive, Suite 2200
Chicago, Illinois  60603
Attn:  Account Manager – School Specialty
Fax No. (312) 332-0429

 

 

with copies to:

GOLDBERG KOHN LTD.
55 East Monroe Street, Suite 3300
Chicago, Illinois  60606
Attn:  Keith G. Radner, Esq.
Fax No. (312) 332-2196

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If to GECC:

GENERAL ELECTRIC CAPITAL CORPORATION
500 West Monroe
Chicago, Illinois  60661
Attn:  Portfolio Manager – School Specialty
Fax No. (312) ____________

 

 

with copies to:

WINSTON & STRAWN LLP
35 Wacker Drive
Chicago, Illinois  60601
Attn:  Kevin M. Ryan, Esq.
Fax No. (312) 558-7482

Any party hereto may change the address at which they are to receive notices
hereunder, by notice in writing in the foregoing manner given to the other
party.  All notices or demands sent in accordance with this Section 11, shall be
deemed received on the earlier of the date of actual receipt or 3 Business Days
after the deposit thereof in the mail; provided, that (a) notices sent by
overnight courier service shall be deemed to have been given when received,
(b) notices by facsimile shall be deemed to have been given when sent (except
that, if not given during normal business hours for the recipient, shall be
deemed to have been given at the opening of business on the next Business Day
for the recipient) and (c) notices by electronic mail shall be deemed received
upon the sender's receipt of an acknowledgment from the intended recipient (such
as by the "return receipt requested" function, as available, return email or
other written acknowledgment).

12.

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

(a)

THE VALIDITY OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS (UNLESS EXPRESSLY
PROVIDED TO THE CONTRARY IN ANOTHER LOAN DOCUMENT IN RESPECT OF SUCH OTHER LOAN
DOCUMENT), THE CONSTRUCTION, INTERPRETATION, AND ENFORCEMENT HEREOF AND THEREOF,
THE RIGHTS OF THE PARTIES HERETO AND THERETO WITH RESPECT TO ALL MATTERS ARISING
HEREUNDER OR THEREUNDER OR RELATED HERETO OR THERETO, AND ANY CLAIMS,
CONTROVERSIES OR DISPUTES ARISING HEREUNDER OR THEREUNDER OR RELATED HERETO OR
THERETO SHALL BE DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK.

(b)

THE PARTIES AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING IN CONNECTION WITH
THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS SHALL BE TRIED AND LITIGATED ONLY IN
THE STATE 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

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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 BORROWER AND EACH MEMBER OF THE
LENDER GROUP WAIVE, TO THE EXTENT PERMITTED UNDER APPLICABLE LAW, ANY RIGHT EACH
MAY HAVE TO ASSERT THE DOCTRINE OF FORUM NON CONVENIENS OR TO OBJECT TO VENUE TO
THE EXTENT ANY PROCEEDING IS BROUGHT IN ACCORDANCE WITH THIS SECTION 12(b).

(c)

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

(d)

EACH BORROWER 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 ANY LOAN DOCUMENTS, 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 OR ANY OTHER LOAN DOCUMENT SHALL AFFECT ANY RIGHT
THAT AGENT MAY OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT AGAINST ANY LOAN PARTY OR ITS PROPERTIES IN
THE COURTS OF ANY JURISDICTION.

(e)

NO CLAIM MAY BE MADE BY ANY LOAN PARTY AGAINST THE 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 OTHER

-61-

LOAN DOCUMENT, OR ANY ACT, OMISSION, OR EVENT OCCURRING IN CONNECTION THEREWITH,
AND EACH LOAN PARTY 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.

13.

ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS.

13.1.

Assignments and Participations.

(a)

(i)

Subject to the conditions set forth in clause (a)(ii) below, any Lender may
assign and delegate all or any portion of its rights and duties under the Loan
Documents (including the Obligations owed to it and its Commitments) to one or
more assignees so long as such prospective assignee is an Eligible Transferee
(each, an "Assignee"), with the prior written consent (such consent not be
unreasonably withheld or delayed, and such consent not to be required in
connection with the exercise of any purchase right under Section 10 of the Split
Lien Intercreditor Agreement) of:

(A)

Administrative Borrower (not to be unreasonably withheld or delayed); provided,
that no consent of Administrative Borrower shall be required (1) if an Event of
Default has occurred and is continuing, or (2) in connection with an assignment
to a Person that is a Lender or an Affiliate (other than natural persons) of a
Lender or a Related Fund; provided further, that Administrative Borrower shall
be deemed to have consented to a proposed assignment unless it objects thereto
by written notice to Agent within 5 Business Days after having received notice
thereof; and

(B)

Agent, Swing Lender, and Issuing Lender; provided, that no consent of Agent,
Swing Lender or Issuing Lender shall be required in connection with an
assignment to a Person that is a Lender or an Affiliate (other than natural
persons) of a Lender or a Related Fund.

(ii)

Assignments shall be subject to the following additional conditions:

(A)

no assignment may be made to a natural person,

(B)

no assignment may be made to a Loan Party or an Affiliate of a Loan Party,

(C)

the amount of the Commitments and the other rights and obligations of the
assigning Lender hereunder and under the other Loan Documents subject to each
such assignment (determined as of the date the Assignment and Acceptance with
respect to such assignment is delivered to Agent) shall be in a minimum amount
(unless waived by Agent) of $5,000,000 (except such minimum amount shall not
apply to (I) an assignment or delegation by any Lender to any other Lender, an
Affiliate of any Lender, or a Related Fund of such Lender or (II) a group of new
Lenders, each of which is an Affiliate of each other or a Related Fund of such
new Lender to the extent that the aggregate amount to be assigned to all such
new Lenders is at least $5,000,000);

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(D)

each partial assignment shall be made as an assignment of a proportionate part
of all the assigning Lender's rights and obligations under this Agreement;

(E)

the parties to each assignment shall execute and deliver to Agent an Assignment
and Acceptance; provided, that Borrowers and Agents may continue to deal solely
and directly with the assigning Lender in connection with the interest so
assigned to an Assignee until written notice of such assignment, together with
payment instructions, addresses, and related information with respect to the
Assignee, have been given to Administrative Borrower and Agent by such Lender
and the Assignee.

(F)

unless waived by Agent, the assigning Lender or Assignee has paid to Agent, for
Agent's separate account, a processing fee in the amount of $3,500 (for the
avoidance of doubt, neither the assigning Lender nor Assignee may seek
reimbursement of such fee from a Credit Party); provided, that, with respect to
any assignment pursuant to Section 14.2, such fee, if applicable, shall not be
paid by assigning Lender; and

(G)

the assignee, if it is not a Lender, shall deliver to Agent an Administrative
Questionnaire in a form approved by Agent (the "Administrative Questionnaire").

(b)

From and after the date that Agent receives the executed Assignment and
Acceptance and, if applicable, payment of the required processing fee, (i) the
Assignee thereunder shall be a party hereto and, to the extent that rights and
obligations hereunder have been assigned to it pursuant to such Assignment and
Acceptance, shall be a "Lender" and shall have the rights and obligations of a
Lender under the Loan Documents, and (ii) the assigning Lender shall, to the
extent that rights and obligations hereunder and under the other Loan Documents
have been assigned by it pursuant to such Assignment and Acceptance, relinquish
its rights (except with respect to Section 10.3) and be released from any future
obligations under this Agreement (and in the case of an Assignment and
Acceptance covering all or the remaining portion of an assigning Lender's rights
and obligations under this Agreement and the other Loan Documents, such Lender
shall cease to be a party hereto and thereto); provided, that nothing contained
herein shall release any assigning Lender from obligations that survive the
termination of this Agreement, including such assigning Lender's obligations
under Section 15 and Section 17.9(a).

(c)

By executing and delivering an Assignment and Acceptance, the assigning Lender
thereunder and the Assignee thereunder confirm to and agree with each other and
the other parties hereto as follows:  (i) other than as provided in such
Assignment and Acceptance, such assigning Lender makes no representation or
warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with this Agreement or
the execution, legality, validity, enforceability, genuineness, sufficiency or
value of this Agreement or any other Loan Document furnished pursuant hereto,
(ii) such assigning Lender makes no representation or warranty and assumes no
responsibility with respect to the financial condition of any Loan Party or the
performance or observance by any Loan Party of any of its obligations under this
Agreement or any other Loan Document furnished pursuant hereto, (iii) such
Assignee confirms that it has received a copy of this Agreement, together with
such other documents and information as it has deemed appropriate to make its
own credit

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analysis and decision to enter into such Assignment and Acceptance, (iv) such
Assignee will, independently and without reliance upon Agent, such assigning
Lender or any other Lender, and based on such documents and information as it
shall deem appropriate at the time, continue to make its own credit decisions in
taking or not taking action under this Agreement, (v) such Assignee appoints and
authorizes Agent to take such actions and to exercise such powers under this
Agreement and the other Loan Documents as are delegated to Agent, by the terms
hereof and thereof, together with such powers as are reasonably incidental
thereto, and (vi) such Assignee agrees that it will perform all of the
obligations which by the terms of this Agreement are required to be performed by
it as a Lender.

(d)

Immediately upon Agent's receipt of the required processing fee, if applicable,
and delivery of notice to the assigning Lender pursuant to Section 13.1(b), this
Agreement shall be deemed to be amended to the extent, but only to the extent,
necessary to reflect the addition of the Assignee and the resulting adjustment
of the Commitments arising therefrom.  The Commitment allocated to each Assignee
shall reduce such Commitments of the assigning Lender pro tanto.

(e)

Any Lender may at any time sell to one or more commercial banks, financial
institutions, or other Persons (a "Participant") participating interests in all
or any portion of its Obligations, its Commitment, and the other rights and
interests of that Lender (the "Originating Lender") hereunder and under the
other Loan Documents; provided, that (i) the Originating Lender shall remain a
"Lender" for all purposes of this Agreement and the other Loan Documents and the
Participant receiving the participating interest in the Obligations, the
Commitments, and the other rights and interests of the Originating Lender
hereunder shall not constitute a "Lender" hereunder or under the other Loan
Documents and the Originating Lender's obligations under this Agreement shall
remain unchanged, (ii) the Originating Lender shall remain solely responsible
for the performance of such obligations, (iii) Borrowers, Agent, and the Lenders
shall continue to deal solely and directly with the Originating Lender in
connection with the Originating Lender's rights and obligations under this
Agreement and the other Loan Documents, (iv) no Lender shall transfer or grant
any participating interest under which the Participant has the right to approve
any amendment to, or any consent or waiver with respect to, this Agreement or
any other Loan Document, except to the extent such amendment to, or consent or
waiver with respect to this Agreement or of any other Loan Document would
(A) extend the final maturity date of the Obligations hereunder in which such
Participant is participating, (B) reduce the interest rate applicable to the
Obligations hereunder in which such Participant is participating, (C) release
all or substantially all of the Collateral or guaranties (except to the extent
expressly provided herein or in any of the Loan Documents) supporting the
Obligations hereunder in which such Participant is participating, (D) postpone
the payment of, or reduce the amount of, the interest or fees payable to such
Participant through such Lender (other than a waiver of default interest), or
(E) decreases the amount or postpones the due dates of scheduled principal
repayments or prepayments or premiums payable to such Participant through such
Lender, (v) no participation shall be sold to a natural person, (vi)  no
participation shall be sold to a Loan Party or an Affiliate of a Loan Party, and
(vii) all amounts payable by Borrowers hereunder shall be determined as if such
Lender had not sold such participation, except that, if amounts outstanding
under this Agreement are due and unpaid, or shall have been declared or shall
have become due and payable upon the occurrence of an Event of Default, each
Participant shall be deemed to have the right of set off in respect of its
participating interest in amounts

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owing under this Agreement to the same extent as if the amount of its
participating interest were owing directly to it as a Lender under this
Agreement.  The rights of any Participant only shall be derivative through the
Originating Lender with whom such Participant participates and no Participant
shall have any rights under this Agreement or the other Loan Documents or any
direct rights as to the other Lenders, Agent, Borrowers, the Collateral, or
otherwise in respect of the Obligations.  No Participant shall have the right to
participate directly in the making of decisions by the Lenders among themselves.

(f)

In connection with any such assignment or participation or proposed assignment
or participation or any grant of a security interest in, or pledge of, its
rights under and interest in this Agreement, a Lender may, subject to the
provisions of Section 17.9, disclose all documents and information which it now
or hereafter may have relating to Parent and its Subsidiaries and their
respective businesses.

(g)

Any other provision in this Agreement notwithstanding, any Lender may at any
time create a security interest in, or pledge, all or any portion of its rights
under and interest in this Agreement in favor of any Federal Reserve Bank in
accordance with Regulation A of the Federal Reserve Bank or U.S. Treasury
Regulation 31 CFR §203.24, and such Federal Reserve Bank may enforce such pledge
or security interest in any manner permitted under applicable law.

(h)

Agent (as a non-fiduciary agent on behalf of Borrowers) shall maintain, or cause
to be maintained, a register (the "Register") on which it enters the name and
address of each Lender as the registered owner of the Revolver Commitments (and
the principal amount thereof and stated interest thereon) held by such Lender
(each, a "Registered Loan").  Other than in connection with an assignment by a
Lender of all or any portion of its portion of the Revolver Commitments to an
Affiliate of such Lender or a Related Fund of such Lender (i) a Registered Loan
(and the registered note, if any, evidencing the same) may be assigned or sold
in whole or in part only by registration of such assignment or sale on the
Register (and each registered note shall expressly so provide) and (ii) any
assignment or sale of all or part of such Registered Loan (and the registered
note, if any, evidencing the same) may be effected only by registration of such
assignment or sale on the Register, together with the surrender of the
registered note, if any, evidencing the same duly endorsed by (or accompanied by
a written instrument of assignment or sale duly executed by) the holder of such
registered note, whereupon, at the request of the designated assignee(s) or
transferee(s), one or more new registered notes in the same aggregate principal
amount shall be issued to the designated assignee(s) or transferee(s).  Prior to
the registration of assignment or sale of any Registered Loan (and the
registered note, if any evidencing the same), Borrowers shall treat the Person
in whose name such Registered Loan (and the registered note, if any, evidencing
the same) is registered as the owner thereof for the purpose of receiving all
payments thereon and for all other purposes, notwithstanding notice to the
contrary.  In the case of any assignment by a Lender of all or any portion of
its Revolver Commitments to an Affiliate of such Lender or a Related Fund of
such Lender, and which assignment is not recorded in the Register, the assigning
Lender, on behalf of Borrowers, shall maintain a register comparable to the
Register.

(i)

In the event that a Lender sells participations in the Registered Loan, such
Lender, as a non-fiduciary agent on behalf of Borrowers, shall maintain (or
cause to be

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maintained) a register on which it enters the name of all participants in the
Registered Loans held by it (and the principal amount (and stated interest
thereon) of the portion of such Registered Loans that is subject to such
participations) (the "Participant Register").  A Registered Loan (and the
Registered Note, if any, evidencing the same) may be participated in whole or in
part only by registration of such participation on the Participant Register (and
each registered note shall expressly so provide).  Any participation of such
Registered Loan (and the registered note, if any, evidencing the same) may be
effected only by the registration of such participation on the Participant
Register.

(j)

Agent shall make a copy of the Register (and each Lender shall make a copy of
its Participant Register in the extent it has one) available for review by
Borrowers from time to time as Borrowers may reasonably request.

13.2.

Successors.  This Agreement shall bind and inure to the benefit of the
respective successors and assigns of each of the parties; provided, that no
Borrower may assign this Agreement or any rights or duties hereunder without the
Lenders' prior written consent and any prohibited assignment shall be absolutely
void ab initio.  No consent to assignment by the Lenders shall release any
Borrower from its Obligations.  A Lender may assign this Agreement and the other
Loan Documents and its rights and duties hereunder and thereunder pursuant to
Section 13.1 and, except as expressly required pursuant to Section 13.1, no
consent or approval by any Loan Party is required in connection with any such
assignment.

14.

AMENDMENTS; WAIVERS.

14.1.

Amendments and Waivers.

(a)

No amendment, waiver or other modification of any provision of this Agreement or
any other Loan Document (other than Bank Product Agreements or the Fee Letter),
and no consent with respect to any departure by Borrowers therefrom, shall be
effective unless the same shall be in writing and signed by the Required Lenders
(or by Agent at the written request of the Required Lenders) and the Loan
Parties that are party thereto and then any such waiver or consent shall be
effective, but only in the specific instance and for the specific purpose for
which given; provided, that:

(i)

no such waiver, amendment, or consent shall, unless in writing and signed by all
of the Lenders directly affected thereby and all of the Loan Parties that are
party thereto, do any of the following:

(A)

increase the amount of or extend the expiration date of any Commitment of any
Lender or amend, modify, or eliminate the last sentence of Section 2.4(c),

(B)

postpone or delay any date fixed by this Agreement or any other Loan Document
for any payment of principal, interest, fees, or other amounts due hereunder or
under any other Loan Document, and

(C)

reduce the principal of, or the rate of interest on, any loan or other extension
of credit hereunder, or reduce any fees or other amounts payable hereunder or

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under any other Loan Document (except in connection with the waiver of
applicability of Section 2.6(c) (which waiver shall be effective with the
written consent of the Required Lenders),

(ii)

no such waiver, amendment, or consent shall, unless in writing and signed by all
of the Lenders and all of the Loan Parties that are party thereto, do any of the
following:

(A)

amend, modify, or eliminate this Section or any provision of this Agreement
providing for consent or other action by all Lenders,

(B)

amend, modify, or eliminate Section 3.1 or 3.2,

(C)

amend, modify, or eliminate Section 15.11,

(D)

other than as permitted by Section 15.11, release Agent's Lien in and to any of
the Collateral,

(E)

amend, modify, or eliminate the definitions of "Required Lenders", Supermajority
Lenders or "Pro Rata Share",

(F)

contractually subordinate any of Agent's Liens,

(G)

other than in connection with a merger, liquidation, dissolution or sale of such
Person expressly permitted by the terms hereof or the other Loan Documents,
release any Borrower or any Guarantor from any obligation for the payment of
money or consent to the assignment or transfer by any Borrower or any Guarantor
of any of its rights or duties under this Agreement or the other Loan Documents,

(H)

amend, modify, or eliminate any of the provisions of Section 2.4(b)(i) or (ii),
or

(I)

amend, modify, or eliminate any of the provisions of Section 13.1 with respect
to assignments to, or participations with, Persons who are Loan Parties or
Affiliates of Loan Parties.

(b)

No amendment, waiver, modification, or consent shall amend, modify, waive, or
eliminate,

(i)

the definition of, or any of the terms or provisions of, the Fee Letter, without
the written consent of Agent and Borrowers (and shall not require the written
consent of any of the Lenders),

(ii)

any provision of Section 15 pertaining to Agent, or any other rights or duties
of Agent under this Agreement or the other Loan Documents, without the written
consent of Agent, Borrowers, and the Required Lenders, or

(iii)

 any provision of Section 15 pertaining to Co-Collateral Agents, or any other
rights or duties of Co-Collateral Agents under this Agreement or the other Loan

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Documents, without the written consent of each Co-Collateral Agent, Borrowers,
and the Required Lenders,

(c)

No amendment, waiver, modification, elimination, or consent shall, without
written consent of Borrowers and each Lender (i) modify, or eliminate the
definition of Borrowing Base or any of the defined terms (including the
definitions of Eligible Accounts, and Eligible Inventory) that are used in such
definition to the extent that any such change results in more credit being made
available to Borrowers based upon the Borrowing Base, but not otherwise, or the
definition of Maximum Revolver Amount or (ii) amend, modify or waive Section
2.1(c),

(d)

No amendment, waiver, modification, elimination, or consent shall amend, modify,
or waive any provision of this Agreement or the other Loan Documents pertaining
to Issuing Lender, or any other rights or duties of Issuing Lender or Underlying
Issuer under this Agreement or the other Loan Documents, without the written
consent of Issuing Lender, Agent, Borrowers, and the Required Lenders,

(e)

No amendment, waiver, modification, elimination, or consent shall amend, modify,
or waive any provision of this Agreement or the other Loan Documents pertaining
to Swing Lender, or any other rights or duties of Swing Lender under this
Agreement or the other Loan Documents, without the written consent of Swing
Lender, Agent, Borrowers, and the Required Lenders,

(f)

Anything in this Section 14.1 to the contrary notwithstanding, (i) any
amendment, modification, elimination, waiver, consent, termination, or release
of, or with respect to, any provision of this Agreement or any other Loan
Document that relates only to the relationship of the Lender Group among
themselves, and that does not affect the rights or obligations of any Borrower,
shall not require consent by or the agreement of any Loan Party, and (ii) any
amendment, waiver, modification, elimination, or consent of or with respect to
any provision of this Agreement or any other Loan Document may be entered into
without the consent of, or over the objection of, any Defaulting Lender other
than any of the matters governed by Section 14.1(a)(i) that affect such Lender.

14.2.

Replacement of Certain Lenders.

(a)

If (i) any action to be taken by the Lender Group or Agent hereunder requires
the consent, authorization, or agreement of all Lenders or all Lenders affected
thereby and if such action has received the consent, authorization, or agreement
of the Required Lenders but not of all Lenders or all Lenders affected thereby,
or (ii) any Lender makes a claim for compensation under Section 16, then
Borrowers or Agent, upon at least 5 Business Days prior irrevocable notice, may
permanently replace any Lender that failed to give its consent, authorization,
or agreement (a "Non-Consenting Lender") or any Lender that made a claim for
compensation (a "Tax Lender") with one or more Replacement Lenders, and the
Non-Consenting Lender or Tax Lender, as applicable, shall have no right to
refuse to be replaced hereunder.  Such notice to replace the Non-Consenting
Lender or Tax Lender, as applicable, shall specify an effective date for such
replacement, which date shall not be later than 15 Business Days after the date
such notice is given.

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(b)

Prior to the effective date of such replacement, the Non-Consenting Lender or
Tax Lender, as applicable, and each Replacement Lender shall execute and deliver
an Assignment and Acceptance, subject only to the Non-Consenting Lender or Tax
Lender, as applicable, being repaid in full its share of the outstanding
Obligations (without any premium or penalty of any kind whatsoever, but
including (i) all interest, fees and other amounts that may be due in payable in
respect thereof, and (ii) an assumption of its Pro Rata Share of participations
in the Letters of Credit).  If the Non-Consenting Lender or Tax Lender, as
applicable, shall refuse or fail to execute and deliver any such Assignment and
Acceptance prior to the effective date of such replacement, Agent may, but shall
not be required to, execute and deliver such Assignment and Acceptance in the
name or and on behalf of the Non-Consenting Lender or Tax Lender, as applicable,
and irrespective of whether Agent executes and delivers such Assignment and
Acceptance, the Non-Consenting Lender or Tax Lender, as applicable, shall be
deemed to have executed and delivered such Assignment and Acceptance.  The
replacement of any Non-Consenting Lender or Tax Lender, as applicable, shall be
made in accordance with the terms of Section 13.1.  Until such time as one or
more Replacement Lenders shall have acquired all of the Obligations, the
Commitments, and the other rights and obligations of the Non-Consenting Lender
or Tax Lender, as applicable, hereunder and under the other Loan Documents, the
Non-Consenting Lender or Tax Lender, as applicable, shall remain obligated to
make the Non-Consenting Lender's or Tax Lender's, as applicable, Pro Rata Share
of Revolving Loans and to purchase a participation in each Letter of Credit, in
an amount equal to its Pro Rata Share of participations in such Letters of
Credit.

14.3.

No Waivers; Cumulative Remedies

.  No failure by Agent, any Co-Collateral Agent or any Lender to exercise any
right, remedy, or option under this Agreement or any other Loan Document, or
delay by Agent or any Lender in exercising the same, will operate as a waiver
thereof.  No waiver by Agent or any Lender will be effective unless it is in
writing, and then only to the extent specifically stated.  No waiver by Agent or
any Lender on any occasion shall affect or diminish Agent's and each Lender's
rights thereafter to require strict performance by Borrowers of any provision of
this Agreement.  Agent's, each Co-Collateral Agent's and each Lender's rights
under this Agreement and the other Loan Documents will be cumulative and not
exclusive of any other right or remedy that Agent, any Co-Collateral Agent or
any Lender may have.

15.

AGENT; THE LENDER GROUP.

15.1.

Appointment and Authorization of Agent.  

(a)

Each Lender hereby designates and appoints WFCF as its agent and each of WFCF
and GECC as its co-collateral agents under this Agreement and the other Loan
Documents and each Lender hereby irrevocably authorizes (and by entering into a
Bank Product Agreement, each Bank Product Provider shall be deemed to designate,
appoint, and authorize) Agent and each Co-Collateral Agent to execute and
deliver each of the other Loan Documents on its behalf and to take such other
action on its behalf under the provisions of this Agreement and each other Loan
Document and to exercise such powers and perform such duties as are expressly
delegated to Agent and each Co-Collateral Agent by the terms of this Agreement
or any other Loan Document, together with such powers as are reasonably
incidental thereto.  Agent agrees to act as agent for and on behalf of the
Lenders (and the Bank Product Providers) and each Co-

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Collateral Agent agrees to act as a co-collateral agent for and on behalf of the
Lenders (and the Bank Product Providers) on the conditions contained in this
Section 15.  Any provision to the contrary contained elsewhere in this Agreement
or in any other Loan Document notwithstanding, neither Agent nor any
Co-Collateral Agent shall have any duties or responsibilities, except those
expressly set forth herein or in the other Loan Documents, nor shall Agent nor
any Co-Collateral Agent have or be deemed to have any fiduciary relationship
with any Lender (or Bank Product Provider), and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Agreement or any other Loan Document or otherwise exist against Agent or any
Co-Collateral Agent, as the case may be.  Without limiting the generality of the
foregoing, the use of the term "agent" and "co-collateral agent" in this
Agreement or the other Loan Documents with reference to Agent or any
Co-Collateral Agent, as the case may be, is not intended to connote any
fiduciary or other implied (or express) obligations arising under agency
doctrine of any applicable law.  Instead, such term is used merely as a matter
of market custom, and is intended to create or reflect only a representative
relationship between independent contracting parties.  Each Lender hereby
further authorizes (and by entering into a Bank Product Agreement, each Bank
Product Provider shall be deemed to authorize) Agent to act as the secured party
under each of the Loan Documents that create a Lien on any item of Collateral.
 Except as expressly otherwise provided in this Agreement, Agent shall have and
may use its sole discretion with respect to exercising or refraining from
exercising any discretionary rights or taking or refraining from taking any
actions that Agent expressly is entitled to take or assert under or pursuant to
this Agreement and the other Loan Documents.  Except as expressly otherwise
provided in this Agreement, each Co-Collateral Agent shall have and may use its
sole discretion with respect to exercising or refraining from exercising any
discretionary rights or taking or refraining from taking any actions that
Co-Collateral Agent expressly is entitled to take or assert under or pursuant to
this Agreement and the other Loan Documents.  Without limiting the generality of
the foregoing, or of any other provision of the Loan Documents that provides
rights or powers to Agent or any Co-Collateral Agent, as the case may be,
Lenders agree that Agent shall have the right to exercise the following powers
as long as this Agreement remains in effect:  (a) maintain, in accordance with
its customary business practices, ledgers and records reflecting the status of
the Obligations, the Collateral, payments and proceeds of Collateral, and
related matters, (b) execute or file any and all financing or similar statements
or notices, amendments, renewals, supplements, documents, instruments, proofs of
claim, notices and other written agreements with respect to the Loan Documents,
(c) make Revolving Loans, for itself or on behalf of Lenders, as provided in the
Loan Documents, (d) exclusively receive, apply, and distribute the Collections
of the Loan Parties as provided in the Loan Documents, (e) open and maintain
such bank accounts and cash management arrangements as Agent deems necessary and
appropriate in accordance with the Loan Documents for the foregoing purposes,
(f) perform, exercise, and enforce any and all other rights and remedies of the
Lender Group with respect to Borrowers or their Subsidiaries, the Obligations,
the Collateral, the Collections of the Loan Parties, or otherwise related to any
of same as provided in the Loan Documents, and (g) incur and pay such Lender
Group Expenses as Agent may deem necessary or appropriate for the performance
and fulfillment of its functions and powers pursuant to the Loan Documents.

(b)

With respect to any action or determination to be taken or made by the
Co-Collateral Agents hereunder or under any of the other Loan Documents,
Co-Collateral Agents hereby agree to seek, in good faith, to reach a consensus
decision for such action or determination.  If Co-Collateral Agents are unable
to agree on the action to be taken or the

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determination to be made, the determination or action shall be made by the
Co-Collateral Agent either asserting the more conservative credit judgment (that
is, that would result in the least amount of credit being available to the
Borrowers and their Subsidiaries under this Agreement) or declining to permit
the requested action for which consent is being sought by the Borrowers, as
applicable.

15.2.

Delegation of Duties.  Agent and each Co-Collateral Agent may execute any of its
duties under this Agreement or any other Loan Document by or through agents,
employees or attorneys in fact and shall be entitled to advice of counsel
concerning all matters pertaining to such duties.  Neither Agent nor any
Co-Collateral Agent shall be responsible for the negligence or misconduct of any
agent or attorney in fact that it selects as long as such selection was made
without gross negligence or willful misconduct.

15.3.

Liability of Agent.  None of the Agent-Related Persons shall (a) be liable for
any action taken or omitted to be taken by any of them under or in connection
with this Agreement or any other Loan Document or the transactions contemplated
hereby (except for its own gross negligence or willful misconduct), or (b) be
responsible in any manner to any of the Lenders (or Bank Product Providers) for
any recital, statement, representation or warranty made by Parent or any of its
Subsidiaries or Affiliates, or any officer or director thereof, contained in
this Agreement or in any other Loan Document, or in any certificate, report,
statement or other document referred to or provided for in, or received by Agent
or any Co-Collateral Agent under or in connection with, this Agreement or any
other Loan Document, or the validity, effectiveness, genuineness, enforceability
or sufficiency of this Agreement or any other Loan Document, or for any failure
of Parent or its Subsidiaries or any other party to any Loan Document to perform
its obligations hereunder or thereunder.  No Agent-Related Person shall be under
any obligation to any Lenders (or Bank Product Providers) to ascertain or to
inquire as to the observance or performance of any of the agreements contained
in, or conditions of, this Agreement or any other Loan Document, or to inspect
the books and records or properties of Parent or its Subsidiaries.

15.4.

Reliance by Agents.  Agent and each Co-Collateral Agent shall be entitled to
rely, and shall be fully protected in relying, upon any writing, resolution,
notice, consent, certificate, affidavit, letter, telegram, telefacsimile or
other electronic method of transmission, telex or telephone message, statement
or other document or conversation believed by it to be genuine and correct and
to have been signed, sent, or made by the proper Person or Persons, and upon
advice and statements of legal counsel (including counsel to Borrowers or
counsel to any Lender), independent accountants and other experts selected by
Agent or such Co-Collateral Agent, as applicable.  Agent and each Co-Collateral
Agent shall be fully justified in failing or refusing to take any action under
this Agreement or any other Loan Document unless Agent or such Co-Collateral
Agent, as applicable, shall first receive such advice or concurrence of the
Lenders as it deems appropriate and until such instructions are received, Agent
or such Co-Collateral Agent, as applicable, shall act, or refrain from acting,
as it deems advisable.  If Agent or any Co-Collateral Agent so requests, it
shall first be indemnified to its reasonable satisfaction by the Lenders (and,
if it so elects, the Bank Product Providers) against any and all liability and
expense that may be incurred by it by reason of taking or continuing to take any
such action.  Agent shall in all cases be fully protected in acting, or in
refraining from acting, under this Agreement or any other Loan Document in
accordance with a request or consent of the Required

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Lenders and such request and any action taken or failure to act pursuant thereto
shall be binding upon all of the Lenders (and Bank Product Providers).

15.5.

Notice of Default or Event of Default.  Neither Agent nor any Co-Collateral
Agent shall be deemed to have knowledge or notice of the occurrence of any
Default or Event of Default, except, in the case of Agent, with respect to
defaults in the payment of principal, interest, fees, and expenses required to
be paid to Agent for the account of the Lenders and, except with respect to
Events of Default of which Agent has actual knowledge, unless Agent and
Co-Collateral Agents shall have received written notice from a Lender or
Administrative Borrower referring to this Agreement, describing such Default or
Event of Default, and stating that such notice is a "notice of default."  Agent
promptly will notify the Lenders of its receipt of any such notice or of any
Event of Default of which Agent has actual knowledge.  If any Lender obtains
actual knowledge of any Event of Default, such Lender promptly shall notify the
other Lenders and Agents of such Event of Default.  Each Lender shall be solely
responsible for giving any notices to its Participants, if any.  Subject to
Section 15.4, Agent shall take such action with respect to such Default or Event
of Default as may be requested by the Required Lenders in accordance with
Section 9; provided, however, that unless and until Agent has received any such
request, Agent may (but shall not be obligated to) take such action, or refrain
from taking such action, with respect to such Default or Event of Default as it
shall deem advisable.

15.6.

Credit Decision.  Each Lender (and Bank Product Provider) acknowledges that none
of the Agent-Related Persons has made any representation or warranty to it, and
that no act by Agent or any Co-Collateral Agent hereinafter taken, including any
review of the affairs of Parent and its Subsidiaries or Affiliates, shall be
deemed to constitute any representation or warranty by any Agent-Related Person
to any Lender (or Bank Product Provider).  Each Lender represents (and by
entering into a Bank Product Agreement, each Bank Product Provider shall be
deemed to represent) to Agent that it has, independently and without reliance
upon any Agent-Related Person and based on such due diligence, documents and
information as it has deemed appropriate, made its own appraisal of and
investigation into the business, prospects, operations, property, financial and
other condition and creditworthiness of any Borrower or any other Person party
to a Loan Document, and all applicable bank regulatory laws relating to the
transactions contemplated hereby, and made its own decision to enter into this
Agreement and to extend credit to Borrowers.  Each Lender also represents (and
by entering into a Bank Product Agreement, each Bank Product Provider shall be
deemed to represent) that it will, independently and without reliance upon any
Agent-Related Person and based on such documents and information as it shall
deem appropriate at the time, continue to make its own credit analysis,
appraisals and decisions in taking or not taking action under this Agreement and
the other Loan Documents, and to make such investigations as it deems necessary
to inform itself as to the business, prospects, operations, property, financial
and other condition and creditworthiness of any Borrower or any other Person
party to a Loan Document.  Except for notices, reports, and other documents
expressly herein required to be furnished to the Lenders by Agent, neither Agent
nor any Co-Collateral Agent shall have any duty or responsibility to provide any
Lender (or Bank Product Provider) with any credit or other information
concerning the business, prospects, operations, property, financial and other
condition or creditworthiness of any Borrower or any other Person party to a
Loan Document that may come into the possession of any of the Agent-Related
Persons.  Each Lender acknowledges (and by entering into a Bank Product
Agreement, each Bank Product Provider shall be deemed to acknowledge) that
neither

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Agent nor any Co-Collateral Agent has any duty or responsibility, either
initially or on a continuing basis (except to the extent, if any, that is
expressly specified herein) to provide such Lender (or Bank Product Provider)
with any credit or other information with respect to Borrowers, their Affiliates
or any of their respective business, legal, financial or other affairs, and
irrespective of whether such information came into Agent's or any Co-Collateral
Agent’s or their respective Affiliates' or representatives' possession before or
after the date on which such Lender became a party to this Agreement (or such
Bank Product Provider entered into a Bank Product Agreement).

15.7.

Costs and Expenses; Indemnification.  Agents may incur and pay Lender Group
Expenses to the extent they reasonably deem necessary or appropriate for the
performance and fulfillment of their functions, powers, and obligations pursuant
to the Loan Documents, including court costs, attorneys fees and expenses, fees
and expenses of financial accountants, advisors, consultants, and appraisers,
costs of collection by outside collection agencies, auctioneer fees and
expenses, and costs of security guards or insurance premiums paid to maintain
the Collateral, whether or not Borrowers are obligated to reimburse Agents or
Lenders for such expenses pursuant to this Agreement or otherwise.  Agent is
authorized and directed to deduct and retain sufficient amounts from payments or
proceeds of the Collateral received by Agent to reimburse Agents for such
out-of-pocket costs and expenses prior to the distribution of any amounts to
Lenders (or Bank Product Providers).  In the event Agent or any Co-Collateral
Agent is not reimbursed for such costs and expenses by Parent or its
Subsidiaries, each Lender hereby agrees that it is and shall be obligated to pay
to Agent or such Co-Collateral Agent, as applicable, such Lender's ratable
thereof.  Whether or not the transactions contemplated hereby are consummated,
each of the Lenders, on a ratable basis, shall indemnify and defend the
Agent-Related Persons (to the extent not reimbursed by or on behalf of Borrowers
and without limiting the obligation of Borrowers to do so) from and against any
and all Indemnified Liabilities; provided, however, that no Lender shall be
liable for the payment to any Agent-Related Person of any portion of such
Indemnified Liabilities resulting solely from such Person's gross negligence or
willful misconduct nor shall any Lender be liable for the obligations of any
Defaulting Lender in failing to make a Revolving Loan or other extension of
credit hereunder.  Without limitation of the foregoing, each Lender shall
reimburse Agent and such Co-Collateral Agent upon demand for such Lender's
ratable share of any costs or out of pocket expenses (including attorneys,
accountants, advisors, and consultants fees and expenses) incurred by Agent in
connection with the preparation, execution, delivery, administration,
modification, amendment, or enforcement (whether through negotiations, legal
proceedings or otherwise) of, or legal advice in respect of rights or
responsibilities under, this Agreement or any other Loan Document to the extent
that Agent or such Co-Collateral Agent, as applicable, is not reimbursed for
such expenses by or on behalf of Borrowers.  The undertaking in this Section
shall survive the payment of all Obligations hereunder and the resignation or
replacement of Agent.

15.8.

Agent in Individual Capacity.  

(a)

WFCF and its Affiliates may make loans to, issue letters of credit for the
account of, accept deposits from, provide Bank Products to, acquire equity
interests in, and generally engage in any kind of banking, trust, financial
advisory, underwriting, or other business with Parent and its Subsidiaries and
Affiliates and any other Person party to any Loan Document as though WFCF were
not Agent hereunder, and, in each case, without notice to or

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consent of the other members of the Lender Group.  The other members of the
Lender Group acknowledge (and by entering into a Bank Product Agreement, each
Bank Product Provider shall be deemed to acknowledge) that, pursuant to such
activities, WFCF or its Affiliates may receive information regarding Parent or
its Affiliates or any other Person party to any Loan Documents that is subject
to confidentiality obligations in favor of Parent or such other Person and that
prohibit the disclosure of such information to the Lenders (or Bank Product
Providers), and the Lenders acknowledge (and by entering into a Bank Product
Agreement, each Bank Product Provider shall be deemed to acknowledge) that, in
such circumstances (and in the absence of a waiver of such confidentiality
obligations, which waiver Agent will use its reasonable best efforts to obtain),
Agent shall not be under any obligation to provide such information to them.
 The terms "Lender" and "Lenders" include WFCF in its individual capacity.

(b)

GECC and its Affiliates may make loans to, issue letters of credit for the
account of, accept deposits from, provide Bank Products to, acquire equity
interests in, and generally engage in any kind of banking, trust, financial
advisory, underwriting, or other business with Parent and its Subsidiaries and
Affiliates and any other Person party to any Loan Document as though GECC were
not a Co-Collateral Agent hereunder, and, in each case, without notice to or
consent of the other members of the Lender Group.  The other members of the
Lender Group acknowledge (and by entering into a Bank Product Agreement, each
Bank Product Provider shall be deemed to acknowledge) that, pursuant to such
activities, GECC or its Affiliates may receive information regarding Parent or
its Affiliates or any other Person party to any Loan Documents that is subject
to confidentiality obligations in favor of Parent or such other Person and that
prohibit the disclosure of such information to the Lenders (or Bank Product
Providers), and the Lenders acknowledge (and by entering into a Bank Product
Agreement, each Bank Product Provider shall be deemed to acknowledge) that, in
such circumstances (and in the absence of a waiver of such confidentiality
obligations, which waiver GECC will use its reasonable best efforts to obtain),
GECC in its capacity as Co-Collateral Agent shall not be under any obligation to
provide such information to them.  The terms "Lender" and "Lenders" include GECC
in its individual capacity.

15.9.

Successor Agent.  Agent may resign as Agent upon 30 days (10 days if an Event of
Default has occurred and is continuing) prior written notice to the Lenders
(unless such notice is waived by the Required Lenders) and Administrative
Borrower (unless such notice is waived by Administrative Borrower or an Event of
Default exists) and without any notice to the Bank Product Providers.  If Agent
resigns under this Agreement, the Required Lenders shall be entitled, with (so
long as no Event of Default has occurred and is continuing) the consent of
Administrative Borrower (such consent not to be unreasonably withheld, delayed,
or conditioned), appoint a successor Agent for the Lenders (and the Bank Product
Providers).  If, at the time that Agent's resignation is effective, it is acting
as a Co-Collateral Agent, as Issuing Lender or the Swing Lender, such
resignation shall also operate to effectuate its resignation as a Co-Collateral
Agent, Issuing Lender or the Swing Lender, as applicable, and it shall
automatically be relieved of any further obligation or duties as a Co-Collateral
Agent, to issue Letters of Credit, to cause the Underlying Issuer to issue
Letters of Credit, or to make Swing Loans.  If no successor Agent is appointed
prior to the effective date of the resignation of Agent, Agent may appoint,
after consulting with the Lenders and Administrative Borrower, a successor
Agent.  If Agent has materially breached or failed to perform any material
provision of this Agreement or of applicable law, the Required Lenders may agree
in writing to remove and

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replace Agent with a successor Agent from among the Lenders with (so long as no
Event of Default has occurred and is continuing) the consent of Administrative
Borrower (such consent not to be unreasonably withheld, delayed, or
conditioned).  In any such event, upon the acceptance of its appointment as
successor Agent hereunder, such successor Agent shall succeed to all the rights,
powers, and duties of the retiring Agent and the term "Agent" shall mean such
successor Agent and the retiring Agent's appointment, powers, and duties as
Agent shall be terminated.  After any retiring Agent's resignation hereunder as
Agent, the provisions of this Section 15 shall inure to its benefit as to any
actions taken or omitted to be taken by it while it was Agent under this
Agreement.  If no successor Agent has accepted appointment as Agent by the date
which is 30 days following a retiring Agent's notice of resignation, the
retiring Agent's resignation shall nevertheless thereupon become effective and
the Lenders shall perform all of the duties of Agent hereunder (other than the
duties of a Co-Collateral Agent) until such time, if any, as the Lenders appoint
a successor Agent as provided for above.

15.10.

Lender in Individual Capacity.  Any Lender and its respective Affiliates may
make loans to, issue letters of credit for the account of, accept deposits from,
provide Bank Products to, acquire Equity Interests in and generally engage in
any kind of banking, trust, financial advisory, underwriting, or other business
with Parent and its Subsidiaries and Affiliates and any other Person party to
any Loan Documents as though such Lender were not a Lender hereunder without
notice to or consent of the other members of the Lender Group (or the Bank
Product Providers).  The other members of the Lender Group acknowledge (and by
entering into a Bank Product Agreement, each Bank Product Provider shall be
deemed to acknowledge) that, pursuant to such activities, such Lender and its
respective Affiliates may receive information regarding Parent or its Affiliates
or any other Person party to any Loan Documents that is subject to
confidentiality obligations in favor of Parent or such other Person and that
prohibit the disclosure of such information to the Lenders, and the Lenders
acknowledge (and by entering into a Bank Product Agreement, each Bank Product
Provider shall be deemed to acknowledge) that, in such circumstances (and in the
absence of a waiver of such confidentiality obligations, which waiver such
Lender will use its reasonable best efforts to obtain), such Lender shall not be
under any obligation to provide such information to them.

15.11.

Collateral Matters.

(a)

The Lenders hereby irrevocably authorize (and by entering into a Bank Product
Agreement, each Bank Product Provider shall be deemed to authorize) Agent to
release any Lien on any Collateral (i) upon the termination of the Commitments
and payment and satisfaction in full by Borrowers of all of the Obligations,
(ii) constituting property being sold or disposed of if a release is required or
desirable in connection therewith and if Administrative Borrower certifies to
Agent that the sale or disposition is permitted under Section 6.4 (and Agent may
rely conclusively on any such certificate, without further inquiry),
(iii) constituting property in which Parent or its Subsidiaries owned no
interest at the time Agent's Lien was granted nor at any time thereafter, or
(iv) constituting property leased to Parent or its Subsidiaries under a lease
that has expired or is terminated in a transaction permitted under this
Agreement.  The Loan Parties and the Lenders hereby irrevocably authorize (and
by entering into a Bank Product Agreement, each Bank Product Provider shall be
deemed to authorize) Agent, based upon the instruction of the Required Lenders,
to (a) consent to, credit bid or purchase (either directly or through one or
more acquisition vehicles) all or any portion of the Collateral at any sale
thereof

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conducted under the provisions of the Bankruptcy Code, including under Section
363 of the Bankruptcy Code, (b) credit bid or purchase (either directly or
through one or more acquisition vehicles) all or any portion of the Collateral
at any sale or other disposition thereof conducted under the provisions of the
Code, including pursuant to Sections 9-610 or 9-620 of the Code, or (c) credit
bid or purchase (either directly or through one or more acquisition vehicles)
all or any portion of the Collateral at any other sale or foreclosure conducted
by Agent (whether by judicial action or otherwise) in accordance with applicable
law.  In connection with any such credit bid or purchase, (i) the Obligations
owed to the Lenders and the Bank Product Providers shall be entitled to be, and
shall be, credit bid on a ratable basis (with Obligations with respect to
contingent or unliquidated claims being estimated for such purpose if the fixing
or liquidation thereof would not unduly delay the ability of Agent to credit bid
or purchase at such sale or other disposition of the Collateral and, if such
claims cannot be estimated without unduly delaying the ability of Agent to
credit bid, then such claims shall be disregarded, not credit bid, and not
entitled to any interest in the asset or assets purchased by means of such
credit bid) and the Lenders and the Bank Product Providers whose Obligations are
credit bid shall be entitled to receive interests (ratably based upon the
proportion of their Obligations credit bid in relation to the aggregate amount
of Obligations so credit bid) in the asset or assets so purchased (or in the
Equity Interests of the acquisition vehicle or vehicles that are used to
consummate such purchase), and (ii) Agent, based upon the instruction of the
Required Lenders, may accept non-cash consideration, including debt and equity
securities issued by such acquisition vehicle or vehicles and in connection
therewith Agent may reduce the Obligations owed to the Lenders and the Bank
Product Providers (ratably based upon the proportion of their Obligations credit
bid in relation to the aggregate amount of Obligations so credit bid) based upon
the value of such non-cash consideration.  Except as provided above, Agent will
not execute and deliver a release of any Lien on any Collateral without the
prior written authorization of (y) if the release is of all or substantially all
of the Collateral, all of the Lenders (without requiring the authorization of
the Bank Product Providers), or (z) otherwise, the Required Lenders (without
requiring the authorization of the Bank Product Providers).  Upon request by
Agent or Administrative Borrower at any time, the Lenders will (and if so
requested, the Bank Product Providers will) confirm in writing Agent's authority
to release any such Liens on particular types or items of Collateral pursuant to
this Section 15.11; provided, that (1) Agent shall not be required to execute
any document necessary to evidence such release on terms that, in Agent's
opinion, would expose Agent to liability or create any obligation or entail any
consequence other than the release of such Lien without recourse,
representation, or warranty, and (2) such release shall not in any manner
discharge, affect, or impair the Obligations or any Liens (other than those
expressly being released) upon (or obligations of any Loan Party in respect of)
all interests retained by any Loan Party, including, the proceeds of any sale,
all of which shall continue to constitute part of the Collateral.  The Lenders
further hereby irrevocably authorize (and by entering into a Bank Product
Agreement, each Bank Product Provider shall be deemed to authorize) Agent, at
its option and in its sole discretion, to subordinate any Lien granted to or
held by Agent under any Loan Document to the holder of any Permitted Lien on
such property if such Permitted Lien secures Permitted Purchase Money
Indebtedness.

(b)

Agent shall have no obligation whatsoever to any of the Lenders (or the Bank
Product Providers) to assure that the Collateral exists or is owned by Parent or
its Subsidiaries or is cared for, protected, or insured or has been encumbered,
or that Agent's Liens have been properly or sufficiently or lawfully created,
perfected, protected, or enforced or are

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entitled to any particular priority, or that any particular items of Collateral
meet the eligibility criteria applicable in respect thereof or whether to
impose, maintain, reduce, or eliminate any particular reserve hereunder or
whether the amount of any such reserve is appropriate or not, or to exercise at
all or in any particular manner or under any duty of care, disclosure or
fidelity, or to continue exercising, any of the rights, authorities and powers
granted or available to Agent pursuant to any of the Loan Documents, it being
understood and agreed that in respect of the Collateral, or any act, omission,
or event related thereto, subject to the terms and conditions contained herein,
Agent may act in any manner it may deem appropriate, in its sole discretion
given Agent's own interest in the Collateral in its capacity as one of the
Lenders and that Agent shall have no other duty or liability whatsoever to any
Lender (or Bank Product Provider) as to any of the foregoing, except as
otherwise provided herein.

15.12.

Restrictions on Actions by Lenders; Sharing of Payments.

(a)

Each of the Lenders agrees that it shall not, without the express written
consent of Agent, and that it shall, to the extent it is lawfully entitled to do
so, upon the written request of Agent, set off against the Obligations, any
amounts owing by such Lender to Parent or its Subsidiaries or any deposit
accounts of Parent or its Subsidiaries now or hereafter maintained with such
Lender.  Each of the Lenders further agrees that it shall not, unless
specifically requested to do so in writing by Agent, take or cause to be taken
any action, including, the commencement of any legal or equitable proceedings to
enforce any Loan Document against any Borrower or any Guarantor or to foreclose
any Lien on, or otherwise enforce any security interest in, any of the
Collateral.

(b)

If, at any time or times any Lender shall receive (i) by payment, foreclosure,
setoff, or otherwise, any proceeds of Collateral or any payments with respect to
the Obligations, except for any such proceeds or payments received by such
Lender from Agent pursuant to the terms of this Agreement, or (ii) payments from
Agent in excess of such Lender's Pro Rata Share of all such distributions by
Agent, such Lender promptly shall (A) turn the same over to Agent, in kind, and
with such endorsements as may be required to negotiate the same to Agent, or in
immediately available funds, as applicable, for the account of all of the
Lenders and for application to the Obligations in accordance with the applicable
provisions of this Agreement, or (B) purchase, without recourse or warranty, an
undivided interest and participation in the Obligations owed to the other
Lenders so that such excess payment received shall be applied ratably as among
the Lenders in accordance with their Pro Rata Shares; provided, that to the
extent that such excess payment received by the purchasing party is thereafter
recovered from it, those purchases of participations shall be rescinded in whole
or in part, as applicable, and the applicable portion of the purchase price paid
therefor shall be returned to such purchasing party, but without interest except
to the extent that such purchasing party is required to pay interest in
connection with the recovery of the excess payment.

15.13.

Agency for Perfection.  Agent hereby appoints each other Lender (and each Bank
Product Provider) as its agent (and each Lender hereby accepts (and by entering
into a Bank Product Agreement, each Bank Product Provider shall be deemed to
accept) such appointment) for the purpose of perfecting Agent's Liens in assets
which, in accordance with Article 8 or Article 9, as applicable, of the Code can
be perfected by possession or control.  Should any Lender obtain possession or
control of any such Collateral, such Lender shall notify

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Agent thereof, and, promptly upon Agent's request therefor shall deliver
possession or control of such Collateral to Agent or in accordance with Agent's
instructions.

15.14.

Payments by Agent to the Lenders.  All payments to be made by Agent to the
Lenders (or Bank Product Providers) shall be made by bank wire transfer of
immediately available funds pursuant to such wire transfer instructions as each
party may designate for itself by written notice to Agent.  Concurrently with
each such payment, Agent shall identify whether such payment (or any portion
thereof) represents principal, premium, fees, or interest of the Obligations.

15.15.

Concerning the Collateral and Related Loan Documents.  Each member of the Lender
Group authorizes and directs Agent to enter into this Agreement and the other
Loan Documents.  Each member of the Lender Group agrees (and by entering into a
Bank Product Agreement, each Bank Product Provider shall be deemed to agree)
that any action taken by Agent in accordance with the terms of this Agreement or
the other Loan Documents relating to the Collateral and the exercise by Agent of
its powers set forth therein or herein, together with such other powers that are
reasonably incidental thereto, shall be binding upon all of the Lenders (and
such Bank Product Provider).

15.16.

Field Examination Reports; Confidentiality; Disclaimers by Lenders; Other
Reports and Information.  By becoming a party to this Agreement, each Lender:

(a)

is deemed to have requested that Agent furnish such Lender, promptly after it
becomes available, a copy of each field examination report respecting Parent or
its Subsidiaries (each, a "Report") prepared by or at the request of Agent or
any Co-Collateral Agent, and Agent shall so furnish each Lender with such
Reports,

(b)

expressly agrees and acknowledges that Agent and each Co-Collateral Agent does
not (i) make any representation or warranty as to the accuracy of any Report,
and (ii) shall not be liable for any information contained in any Report,

(c)

expressly agrees and acknowledges that the Reports are not comprehensive audits
or examinations, that Agent, or Co-Collateral Agents or other party performing
any field examination will inspect only specific information regarding Parent
and its Subsidiaries and will rely significantly upon Parent's and its
Subsidiaries' books and records, as well as on representations of Borrowers'
personnel,

(d)

agrees to keep all Reports and other material, non-public information regarding
Parent and its Subsidiaries and their operations, assets, and existing and
contemplated business plans in a confidential manner in accordance with Section
17.9, and

(e)

without limiting the generality of any other indemnification provision contained
in this Agreement, agrees:  (i) to hold Agent, any Co-Collateral Agent and any
other Lender preparing a Report harmless from any action the indemnifying Lender
may take or fail to take or any conclusion the indemnifying Lender may reach or
draw from any Report in connection with any loans or other credit accommodations
that the indemnifying Lender has made or may make to Borrowers, or the
indemnifying Lender's participation in, or the indemnifying Lender's purchase
of, a loan or loans of Borrowers, and (ii) to pay and protect, and

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indemnify, defend and hold Agent, any Co-Collateral Agent and any such other
Lender preparing a Report harmless from and against, the claims, actions,
proceedings, damages, costs, expenses, and other amounts (including, attorneys'
fees and costs) incurred by Agent, any such Co-Collateral Agent and any such
other Lender preparing a Report as the direct or indirect result of any third
parties who might obtain all or part of any Report through the indemnifying
Lender.

(f)

In addition to the foregoing, (x) any Lender may from time to time request of
Agent in writing that Agent provide to such Lender a copy of any report or
document provided by Parent or its Subsidiaries to Agent that has not been
contemporaneously provided by Parent or such Subsidiary to such Lender, and,
upon receipt of such request, Agent promptly shall provide a copy of same to
such Lender, (y) to the extent that Agent is entitled, under any provision of
the Loan Documents, to request additional reports or information from Parent or
its Subsidiaries, any Lender may, from time to time, reasonably request Agent to
exercise such right as specified in such Lender's notice to Agent, whereupon
Agent promptly shall request of Administrative Borrower the additional reports
or information reasonably specified by such Lender, and, upon receipt thereof
from Parent or such Subsidiary, Agent promptly shall provide a copy of same to
such Lender, and (z) any time that Agent renders to Borrowers a statement
regarding the Loan Account, Agent shall send a copy of such statement to each
Lender.

15.17.

Several Obligations; No Liability.  Notwithstanding that certain of the Loan
Documents now or hereafter may have been or will be executed only by or in favor
of Agent in its capacity as such, and not by or in favor of the Lenders, any and
all obligations on the part of Agent (if any) to make any credit available
hereunder shall constitute the several (and not joint) obligations of the
respective Lenders on a ratable basis, according to their respective
Commitments, to make an amount of such credit not to exceed, in principal
amount, at any one time outstanding, the amount of their respective Commitments.
 Nothing contained herein shall confer upon any Lender any interest in, or
subject any Lender to any liability for, or in respect of, the business, assets,
profits, losses, or liabilities of any other Lender.  Each Lender shall be
solely responsible for notifying its Participants of any matters relating to the
Loan Documents to the extent any such notice may be required, and no Lender
shall have any obligation, duty, or liability to any Participant of any other
Lender.  Except as provided in Section 15.7, no member of the Lender Group shall
have any liability for the acts of any other member of the Lender Group.  No
Lender shall be responsible to any Borrower or any other Person for any failure
by any other Lender (or Bank Product Provider) to fulfill its obligations to
make credit available hereunder, nor to advance for such Lender (or Bank Product
Provider) or on its behalf, nor to take any other action on behalf of such
Lender (or Bank Product Provider) hereunder or in connection with the financing
contemplated herein.

15.18.

Co-Lead Arrangers, Syndication Agent and Joint Book Runners.  Each of the
Co-Lead Arrangers, Syndication Agent and Joint Book Runners, in such capacities,
shall not have any right, power, obligation, liability, responsibility, or duty
under this Agreement other than those applicable to it in its capacity as a
Lender, as Agent, as Swing Lender, or as Issuing Lender.  Without limiting the
foregoing, each of the Co-Lead Arrangers, Syndication Agent and Joint Book
Runners, in such capacities, shall not have or be deemed to have any fiduciary
relationship with any Lender or any Loan Party.  Each Lender, Agent, Swing
Lender, Issuing Lender, and each Loan Party acknowledges that it has not relied,
and will not rely, on the Co-Lead Arrangers, Syndication Agent and Joint Book
Runners in deciding to enter into this

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Agreement or in taking or not taking action hereunder.  Each of the Co-Lead
Arrangers, Syndication Agent and Joint Book Runners, in such capacities, shall
be entitled to resign at any time by giving notice to Agent and Borrowers.

16.

WITHHOLDING TAXES.

16.1.

Payments.  All payments made by Borrowers hereunder or under any note or other
Loan Document will be made without setoff, counterclaim, or other defense.  In
addition, all such payments will be made free and clear of, and without
deduction or withholding for, any present or future Indemnified Taxes, and in
the event any deduction or withholding of Indemnified Taxes is required,
Borrowers shall comply with the next sentence of this Section 16.1.  If any
Indemnified Taxes are so levied or imposed, Borrowers agree to pay the full
amount of such Indemnified Taxes and such additional amounts as may be necessary
so that every payment of all amounts due under this Agreement, any note, or Loan
Document, including any amount paid pursuant to this Section 16.1 after
withholding or deduction for or on account of any Indemnified Taxes, will not be
less than the amount provided for herein; provided, that Borrowers shall not be
required to increase any such amounts to the extent that the increase in such
amount payable results from Agent's or such Lender's own willful misconduct or
gross negligence (as finally determined by a court of competent jurisdiction).
 Borrowers will furnish to Agent as promptly as possible after the date the
payment of any Indemnified Tax is due pursuant to applicable law, certified
copies of tax receipts evidencing such payment by Borrowers.  Borrowers agree to
pay any present or future stamp, value added or documentary taxes or any other
excise or property taxes, charges, or similar levies that arise from any payment
made hereunder or from the execution, delivery, performance, recordation, or
filing of, or otherwise with respect to this Agreement or any other Loan
Document.

16.2.

Exemptions.

(a)

If a Lender or Participant is entitled to claim an exemption or reduction from
United States withholding tax, such Lender or Participant agrees with and in
favor of Agent, to deliver to Agent (or, in the case of a Participant, to the
Lender granting the participation only) one of the following before receiving
its first payment under this Agreement:

(i)

if such Lender or Participant is entitled to claim an exemption from United
States withholding tax pursuant to the portfolio interest exception, (A) a
statement of the Lender or Participant, signed under penalty of perjury, that it
is not a (I) a "bank" as described in Section 881(c)(3)(A) of the IRC, (II) a
10% shareholder of any Borrower (within the meaning of Section 871(h)(3)(B) of
the IRC), or (III) a controlled foreign corporation related to any Borrower
within the meaning of Section 864(d)(4) of the IRC, and (B) a properly completed
and executed IRS Form W-8BEN or Form W-8IMY (with proper attachments);

(ii)

if such Lender or Participant is entitled to claim an exemption from, or a
reduction of, withholding tax under a United States tax treaty, a properly
completed and executed copy of IRS Form W-8BEN;

(iii)

if such Lender or Participant is entitled to claim that interest paid under this
Agreement is exempt from United States withholding tax because it is effectively

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connected with a United States trade or business of such Lender, a properly
completed and executed copy of IRS Form W-8ECI;

(iv)

if such Lender or Participant is entitled to claim that interest paid under this
Agreement is exempt from United States withholding tax because such Lender or
Participant serves as an intermediary, a properly completed and executed copy of
IRS Form W-8IMY (with proper attachments); or

(v)

a properly completed and executed copy of any other form or forms, including IRS
Form W-9, as may be required under the IRC or other laws of the United States as
a condition to exemption from, or reduction of, United States withholding or
backup withholding tax.

(b)

Each Lender or Participant shall provide new forms (or successor forms) upon the
expiration or obsolescence of any previously delivered forms and to promptly
notify Agent (or, in the case of a Participant, to the Lender granting the
participation only) of any change in circumstances which would modify or render
invalid any claimed exemption or reduction.

(c)

If a Lender or Participant claims an exemption from withholding tax in a
jurisdiction other than the United States, such Lender or such Participant
agrees with and in favor of Agent, to deliver to Agent (or, in the case of a
Participant, to the Lender granting the participation only) any such form or
forms, as may be required under the laws of such jurisdiction as a condition to
exemption from, or reduction of, foreign withholding or backup withholding tax
before receiving its first payment under this Agreement, but only if such Lender
or such Participant is legally able to deliver such forms, provided, that
nothing in this Section 16.2(c) shall require a Lender or Participant to
disclose any information that it deems to be confidential (including without
limitation, its tax returns).  Each Lender and each Participant shall provide
new forms (or successor forms) upon the expiration or obsolescence of any
previously delivered forms and to promptly notify Agent (or, in the case of a
Participant, to the Lender granting the participation only) of any change in
circumstances which would modify or render invalid any claimed exemption or
reduction.

(d)

If a Lender or Participant claims exemption from, or reduction of, withholding
tax and such Lender or Participant sells, assigns, grants a participation in, or
otherwise transfers all or part of the Obligations of Borrowers to such Lender
or Participant, such Lender or Participant agrees to notify Agent (or, in the
case of a sale of a participation interest, to the Lender granting the
participation only) of the percentage amount in which it is no longer the
beneficial owner of Obligations of Borrowers to such Lender or Participant.  To
the extent of such percentage amount, Agent will treat such Lender's or such
Participant's documentation provided pursuant to Section 16.2(a) or 16.2(c) as
no longer valid.  With respect to such percentage amount, such Participant or
Assignee may provide new documentation, pursuant to Section 16.2(a) or 16.2(c),
if applicable.  Borrowers agree that each Participant shall be entitled to the
benefits of this Section 16 with respect to its participation in any portion of
the Commitments and the Obligations so long as such Participant complies with
the obligations set forth in this Section 16 with respect thereto.

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16.3.

Reductions.

(a)

If a Lender or a Participant is entitled to a reduction in the applicable
withholding tax, Agent (or, in the case of a Participant, to the Lender granting
the participation) may withhold from any interest payment to such Lender or such
Participant an amount equivalent to the applicable withholding tax after taking
into account such reduction.  If the forms or other documentation required by
Section 16.2(a) or 16.2(c) are not delivered to Agent (or, in the case of a
Participant, to the Lender granting the participation), then Agent (or, in the
case of a Participant, to the Lender granting the participation) may withhold
from any interest payment to such Lender or such Participant not providing such
forms or other documentation an amount equivalent to the applicable withholding
tax.

(b)

If the IRS or any other Governmental Authority of the United States or other
jurisdiction asserts a claim that Agent (or, in the case of a Participant, to
the Lender granting the participation) did not properly withhold tax from
amounts paid to or for the account of any Lender or any Participant due to a
failure on the part of the Lender or any Participant (because the appropriate
form was not delivered, was not properly executed, or because such Lender failed
to notify Agent (or such Participant failed to notify the Lender granting the
participation) of a change in circumstances which rendered the exemption from,
or reduction of, withholding tax ineffective, or for any other reason) such
Lender shall indemnify and hold Agent harmless (or, in the case of a
Participant, such Participant shall indemnify and hold the Lender granting the
participation harmless) for all amounts paid, directly or indirectly, by Agent
(or, in the case of a Participant, to the Lender granting the participation), as
tax or otherwise, including penalties and interest, and including any taxes
imposed by any jurisdiction on the amounts payable to Agent (or, in the case of
a Participant, to the Lender granting the participation only) under this Section
16, together with all costs and expenses (including attorneys' fees and
expenses).  The obligation of the Lenders and the Participants under this
subsection shall survive the payment of all Obligations and the resignation or
replacement of Agent.

16.4.

Refunds.  If Agent or a Lender determines, in its sole discretion in good faith,
that it has received a refund of any Indemnified Taxes to which Borrowers have
paid additional amounts pursuant to this Section 16, so long as no Default or
Event of Default has occurred and is continuing, it shall pay over such refund
to Borrowers (but only to the extent of payments made, or additional amounts
paid, by Borrowers under this Section 16 with respect to Indemnified Taxes
giving rise to such a refund), net of all out-of-pocket expenses of Agent or
such Lender and without interest (other than any interest paid by the applicable
Governmental Authority with respect to such a refund); provided, that Borrowers,
upon the request of Agent or such Lender, agrees to repay the amount paid over
to Borrowers (plus any penalties, interest or other charges, imposed by the
applicable Governmental Authority, other than such penalties, interest or other
charges imposed as a result of the willful misconduct or gross negligence of
Agent hereunder) to Agent or such Lender in the event Agent or such Lender is
required to repay such refund to such Governmental Authority.  Notwithstanding
anything in this Agreement to the contrary, this Section 16 shall not be
construed to require Agent or any Lender to make available its tax returns (or
any other information which it deems confidential) to any Borrower or any other
Person.

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16.5.

Tax Indemnity.  The Loan Parties shall jointly and severally indemnify each
Indemnified Person (as defined in Section 10.3) (collectively a "Tax
Indemnitee") (but with respect to a Participant subject to the last sentence of
Section 16.2(d)) for the full amount of Taxes or other taxes arising in
connection with this Agreement or any other Loan Document (including, without
limitation, any Taxes or other taxes imposed or asserted on or attributable to
amounts payable under this Section 16) paid by such Tax Indemnitee and all
reasonable fees and disbursements of attorneys, experts, or consultants and all
other out-of-pocket costs and expenses actually incurred in connection therewith
or in connection with the enforcement of this indemnification, as and when they
are incurred and irrespective of whether suit is brought, whether or not such
Taxes or such other taxes were correctly or legally imposed or asserted by the
relevant Governmental Authority (other than Taxes or such other taxes resulting
from gross negligence or willful misconduct of such Tax Indemnitee as finally
determined by a court of competent jurisdiction and any tax imposed on the net
income or net profits of any Indemnified Person (including any branch profits
taxes)).  This Section 16.5 shall survive the termination of this Agreement and
the repayment of the Obligations.

17.

GENERAL PROVISIONS.

17.1.

Effectiveness.  This Agreement shall be binding and deemed effective when
executed by Borrowers, Agent, each Co-Collateral Agent, and each Lender whose
signature is provided for on the signature pages hereof.

17.2.

Section Headings.  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.

17.3.

Interpretation.  Neither this Agreement nor any uncertainty or ambiguity herein
shall be construed against the Lender Group or any Borrower, whether under any
rule of construction or otherwise.  On the contrary, 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.

17.4.

Severability of Provisions.  Each provision of this Agreement shall be severable
from every other provision of this Agreement for the purpose of determining the
legal enforceability of any specific provision.

17.5.

Bank Product Providers.  Each Bank Product Provider shall be deemed a third
party beneficiary hereof and of the provisions of the other Loan Documents for
purposes of any reference in a Loan Document to the parties for whom Agent is
acting.  Agent hereby agrees to act as agent for such Bank Product Providers
and, by virtue of entering into a Bank Product Agreement, the applicable Bank
Product Provider shall be automatically deemed to have appointed Agent as its
agent and to have accepted the benefits of the Loan Documents; it being
understood and agreed that the rights and benefits of each Bank Product Provider
under the Loan Documents consist exclusively of such Bank Product Provider's
being a beneficiary of the Liens and security interests (and, if applicable,
guarantees) granted to Agent and the right to share in payments and collections
out of the Collateral as more fully set forth herein.  In addition, each Bank
Product Provider, by virtue of entering into a Bank Product Agreement, shall be

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automatically deemed to have agreed that Co-Collateral Agents shall have the
right, but shall have no obligation, to establish, maintain, relax, or release
reserves in respect of the Bank Product Obligations and that if reserves are
established there is no obligation on the part of Co-Collateral Agents to
determine or insure whether the amount of any such reserve is appropriate or
not.  In connection with any such distribution of payments or proceeds of
Collateral, Agent shall be entitled to assume no amounts are due or owing to any
Bank Product Provider unless such Bank Product Provider has provided a written
certification (setting forth a reasonably detailed calculation) to Agent as to
the amounts that are due and owing to it and such written certification is
received by Agent a reasonable period of time prior to the making of such
distribution.  Agent shall have no obligation to calculate the amount due and
payable with respect to any Bank Products, but may rely upon the written
certification of the amount due and payable from the applicable Bank Product
Provider.  In the absence of an updated certification, Agent shall be entitled
to assume that the amount due and payable to the applicable Bank Product
Provider is the amount last certified to Agent by such Bank Product Provider as
being due and payable (less any distributions made to such Bank Product Provider
on account thereof).  Borrowers may obtain Bank Products from any Bank Product
Provider, although no Borrower is required to do so.  Borrowers acknowledge and
agree that no Bank Product Provider has committed to provide any Bank Products
and that the providing of Bank Products by any Bank Product Provider is in the
sole and absolute discretion of such Bank Product Provider.  Notwithstanding
anything to the contrary in this Agreement or any other Loan Document, no
provider or holder of any Bank Product shall have any voting or approval rights
hereunder (or be deemed a Lender) solely by virtue of its status as the provider
or holder of such agreements or products or the Obligations owing thereunder,
nor shall the consent of any such provider or holder be required (other than in
their capacities as Lenders, to the extent applicable) for any matter hereunder
or under any of the other Loan Documents, including as to any matter relating to
the Collateral or the release of Collateral or Guarantors.

17.6.

Debtor-Creditor Relationship.  The relationship between the Lenders and Agent,
on the one hand, and the Loan Parties, on the other hand, is solely that of
creditor and debtor.  No member of the Lender Group has (or shall be deemed to
have) any fiduciary relationship or duty to any Loan Party arising out of or in
connection with the Loan Documents or the transactions contemplated thereby, and
there is no agency or joint venture relationship between the members of the
Lender Group, on the one hand, and the Loan Parties, on the other hand, by
virtue of any Loan Document or any transaction contemplated therein.

17.7.

Counterparts; Electronic Execution.  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.

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17.8.

Revival and Reinstatement of Obligations; Certain Waivers.

If the incurrence or payment of the Obligations by any Loan Party or the
transfer to the Lender Group of any property should for any reason subsequently
be asserted, or declared, to be void or voidable under any state or federal law
relating to creditors' rights, including provisions of the Bankruptcy Code
relating to fraudulent conveyances, preferences, or other voidable or
recoverable payments of money or transfers of property (each, a "Voidable
Transfer"), and if the Lender Group is required to repay or restore, in whole or
in part, any such Voidable Transfer, or elects to do so upon the advice of
counsel, then, as to any such Voidable Transfer, or the amount thereof that the
Lender Group is required or elects to repay or restore, and as to all reasonable
costs, expenses, and attorneys' fees of the Lender Group related thereto, the
liability of Loan Parties automatically shall be revived, reinstated, and
restored and shall exist as though such Voidable Transfer had never been made.

17.9.

Confidentiality.

(a)

Agent and Lenders each individually (and not jointly or jointly and severally)
agree that material, non-public information regarding Parent and its
Subsidiaries, their operations, assets, and existing and contemplated business
plans ("Confidential Information") shall be treated by Agent and the Lenders in
a confidential manner, and shall not be disclosed by Agent and the Lenders to
Persons who are not parties to this Agreement, except:  (i) to attorneys for and
other advisors, accountants, auditors, and consultants to any member of the
Lender Group and to employees, directors and officers of any member of the
Lender Group (the Persons in this clause (i), "Lender Group Representatives") on
a "need to know" basis in connection with this Agreement and the transactions
contemplated hereby and on a confidential basis, (ii) to Subsidiaries and
Affiliates of any member of the Lender Group (including the Bank Product
Providers), provided that any such Subsidiary or Affiliate shall have agreed to
receive such information hereunder subject to the terms of this Section 17.9,
(iii) as may be required by regulatory authorities so long as such authorities
are informed of the confidential nature of such information, (iv) as may be
required by statute, decision, or judicial or administrative order, rule, or
regulation; provided that (x) prior to any disclosure under this clause (iv),
the disclosing party agrees to provide Administrative Borrower with prior notice
thereof, to the extent that it is practicable to do so and to the extent that
the disclosing party is permitted to provide such prior notice to Administrative
Borrower pursuant to the terms of the applicable statute, decision, or judicial
or administrative order, rule, or regulation and (y) any disclosure under this
clause (iv) shall be limited to the portion of the Confidential Information as
may be required by such statute, decision, or judicial or administrative order,
rule, or regulation, (v) as may be agreed to in advance in writing by
Administrative Borrower, (vi) as requested or required by any Governmental
Authority pursuant to any subpoena or other legal process, provided, that,
(x) prior to any disclosure under this clause (vi) the disclosing party agrees
to provide Administrative Borrower with prior written notice thereof, to the
extent that it is practicable to do so and to the extent that the disclosing
party is permitted to provide such prior written notice to Administrative
Borrower pursuant to the terms of the subpoena or other legal process and
(y) any disclosure under this clause (vi) shall be limited to the portion of the
Confidential Information as may be required by such Governmental Authority
pursuant to such subpoena or other legal process, (vii) as to any such
information that is or becomes generally available to the public (other than as
a result of prohibited disclosure by Agent or the Lenders or the Lender Group

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Representatives), (viii) in connection with any assignment, participation or
pledge of any Lender's interest under this Agreement, provided that prior to
receipt of Confidential Information any such assignee, participant, or pledgee
shall have agreed in writing to receive such Confidential Information hereunder
subject to the terms of this Section, (ix) in connection with any litigation or
other adversary proceeding involving parties hereto which such litigation or
adversary proceeding involves claims related to the rights or duties of such
parties under this Agreement or the other Loan Documents; provided, that, prior
to any disclosure to any Person (other than any Loan Party, Agent, any Lender,
any of their respective Affiliates, or their respective counsel) under this
clause (ix) with respect to litigation involving any Person (other than any
Borrower, Agent, any Lender, any of their respective Affiliates, or their
respective counsel), the disclosing party agrees to provide Administrative
Borrower with prior written notice thereof, and (x) in connection with, and to
the extent reasonably necessary for, the exercise of any secured creditor remedy
under this Agreement or under any other Loan Document.

(b)

Anything in this Agreement to the contrary notwithstanding, Agent may disclose
information concerning the terms and conditions of this Agreement and the other
Loan Documents to loan syndication and pricing reporting services or in its
marketing or promotional materials, with such information to consist of deal
terms and other information customarily found in such publications or marketing
or promotional materials and may otherwise use the name, logos, and other
insignia of any Borrower or the other Loan Parties and the Commitments provided
hereunder in any "tombstone" or other advertisements, on its website or in other
marketing materials of the Agent.

(c)

The Loan Parties hereby acknowledge that Agent or its Affiliates may make
available to the Lenders materials or information provided by or on behalf of
Borrowers hereunder (collectively, "Borrower Materials") by posting the Borrower
Materials on IntraLinks, SyndTrak or another similar electronic system (the
"Platform") and certain of the Lenders may be "public-side" Lenders (i.e.,
Lenders that do not wish to receive material non-public information with respect
to the Loan Parties or their securities) (each, a "Public Lender").  The Loan
Parties shall be deemed to have authorized Agent and its Affiliates and the
Lenders to treat Borrower Materials marked "PUBLIC" or otherwise at any time
filed with the SEC as not containing any material non-public information with
respect to the Loan Parties or their securities for purposes of United States
federal and state securities laws.  All Borrower Materials marked "PUBLIC" are
permitted to be made available through a portion of the Platform designated as
"Public Investor" (or another similar term).  Agent and its Affiliates and the
Lenders shall be entitled to treat any Borrower Materials that are not marked
"PUBLIC" or that are not at any time filed with the SEC as being suitable only
for posting on a portion of the Platform not marked as "Public Investor" (or
such other similar term).

17.10.

Survival.  All representations and warranties made by the Loan Parties in the
Loan Documents and in the certificates or other instru­ments delivered in
connection with or pursuant to this Agreement or any other Loan Document shall
be considered to have been relied upon by the other parties hereto and shall
survive the execution and delivery of the Loan Documents 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

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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 this Agreement is outstand­ing or unpaid or any Letter of
Credit is outstanding and so long as the Commitments have not expired or been
terminated.

17.11.

Patriot Act.  Each Lender that is subject to the requirements of the Patriot Act
hereby notifies each Borrower that pursuant to the requirements of the Act, it
is required to obtain, verify and record information that identifies each
Borrower, which information includes the name and address of each Borrower and
other information that will allow such Lender to identify Borrower in accordance
with the Patriot Act.  In addition, if Agent is required by law or regulation or
internal policies to do so, it shall have the right to periodically conduct
(a) Patriot Act searches, OFAC/PEP searches, and customary individual background
checks for the Loan Parties and (b) OFAC/PEP searches and customary individual
background checks for the Loan Parties' senior management and key principals,
and Borrowers agree to cooperate in respect of the conduct of such searches and
further agree that the reasonable costs and charges for such searches shall
constitute Lender Group Expenses hereunder and be for the account of Borrowers.

17.12.

Integration.  This Agreement, together with the other Loan Documents, reflects
the entire understanding of the parties with respect to the transactions
contemplated hereby and shall not be contradicted or qualified by any other
agreement, oral or written, before the date hereof.  The foregoing to the
contrary notwithstanding, all Bank Product Agreements, if any, are independent
agreements governed by the written provisions of such Bank Product Agreements,
which will remain in full force and effect, unaffected by any repayment,
prepayments, acceleration, reduction, increase, or change in the terms of any
credit extended hereunder, except as otherwise expressly provided in such Bank
Product Agreement.

17.13.

Split Lien Intercreditor Agreement.  Agent and each Lender hereunder, by its
acceptance of the benefits provided hereunder, (a) consents to the subordination
of Liens provided for in the Split Lien Intercreditor Agreement, (b) agrees that
it will be bound by, and will take no actions contrary to, the provisions of the
Split Lien Intercreditor Agreement, and (c) authorizes and instructs the Agent
to enter into the Split Lien Intercreditor Agreement as Agent on behalf of each
Lender.  Agent and each Lender hereby agrees that the terms, conditions and
provisions contained in this Agreement are subject to the Split Lien
Intercreditor Agreement and, in the event of a conflict between the terms of the
Split Lien Intercreditor Agreement and this Agreement, the terms of the Split
Lien Intercreditor Agreement shall govern and control.  Agent agrees to deliver
to Administrative Borrower a copy of any written notice delivered to Split Lien
Agent pursuant to the Intercreditor Agreement.

17.14.

Parent as Agent for Borrowers.  Each Borrower hereby irrevocably appoints Parent
as the borrowing agent and attorney-in-fact for all Borrowers ("Administrative
Borrower") which appointment shall remain in full force and effect unless and
until Agent shall have received prior written notice signed by each Borrower
that such appointment has been revoked and that another Borrower has been
appointed Administrative Borrower.  Each Borrower hereby irrevocably appoints
and authorizes Administrative Borrower (i) to provide Agent with all notices
with respect to Revolving Loans (inclusive of Swing Loans) and Letters of Credit
obtained for the benefit of any Borrower and all other notices and instructions
under this

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Agreement and (ii) to take such action as Administrative Borrower deems
appropriate on its behalf to obtain Revolving Loans (inclusive of Swing Loans)
and Letters of Credit and to exercise such other powers as are reasonably
incidental thereto to carry out the purposes of this Agreement.  Each Borrower
hereby jointly and severally agrees to indemnify each member of the Lender Group
and hold each member of the Lender Group harmless against any and all liability,
expense, loss or claim of damage or injury, made against the Lender Group by any
Credit Party or by any third party whosoever, arising from or incurred by reason
of (a) the handling of the Loan Account and Collateral of Borrowers as herein
provided, (b) the Lender Group's relying on any instructions of Administrative
Borrower, or (c) any other action taken by the Lender Group hereunder or under
the other Loan Documents, except that Borrowers will have no liability to the
relevant Agent-Related Person or Lender-Related Person under this Section 17.14
with respect to any liability that has been finally determined by a court of
competent jurisdiction to have resulted solely from the gross negligence or
willful misconduct of such Agent-Related Person or Lender-Related Person, as the
case may be.

17.15.

Senior Debt.  The Obligations are intended to be senior Indebtedness, and not
subordinated to any other senior Indebtedness, or made pari passu with
Indebtedness that is subordinated to any other Indebtedness, of any Loan Party.
 The Obligations are deemed to be expressly designated and named as “Designated
Senior Debt", “Designated Senior Indebtedness,” “Senior Indebtedness” or similar
terms for purposes of any present or future loan agreement, indenture, note
issuance or purchase agreement or other document under which such a designation
is applicable or available for senior Indebtedness of any Loan Party (including
without limitation the Indebtedness under the Convertible Note Indenture).

 [Signature pages to follow.]

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

BORROWERS:

SCHOOL SPECIALTY, INC., a Wisconsin corporation

By: /s/ David N. VanderPloeg___________
Name: David N. VanderPloeg____________
Title: CFO____________________________

 

CLASSROOMDIRECT.COM, LLC, a Delaware limited liability company

By: /s/ David N. VanderPloeg___________
Name: David N. VanderPloeg____________
Title: Treasurer_______________________

 

SPORTIME, LLC, a Delaware limited liability company

By: /s/ David N. VanderPloeg___________
Name: David N. VanderPloeg____________
Title: Treasurer_______________________

 

DELTA EDUCATION, LLC, a Delaware limited liability company

By: /s/ David N. VanderPloeg___________
Name: David N. VanderPloeg____________
Title: Treasurer_______________________

Signature Page to Credit Agreement

 

PREMIER AGENDAS, INC., a Washington corporation

By: /s/ David N. VanderPloeg____________
Name: David N. VanderPloeg____________
Title: Treasurer_______________________

 

CHILDCRAFT EDUCATION CORP., a New York corporation

By: /s/ David N. VanderPloeg____________
Name: David N. VanderPloeg____________
Title: Treasurer_______________________

 

BIRD-IN-HAND WOODWORKS, INC., a New Jersey corporation

By: /s/ David N. VanderPloeg____________
Name: David N. VanderPloeg____________
Title: Treasurer_______________________

 

CALIFONE INTERNATIONAL, INC., a Delaware corporation

By: /s/ David N. VanderPloeg____________
Name: David N. VanderPloeg____________
Title: Treasurer_______________________

Signature Page to Credit Agreement

 

WELLS FARGO CAPITAL FINANCE, LLC, a Delaware limited liability company, as
Agent, as Co-Collateral Agent, as Co-Lead Arranger, as Joint Book Runner and as
a Lender

By: /s/ Chris Heckman____________
Name: Chris Heckman____________
Its Authorized Signatory

Signature Page to Credit Agreement

 

GENERAL ELECTRIC CAPITAL CORPORATION, a Delaware corporation, as a Co-Collateral
Agent and as Syndication Agent

By: /s/ Kai Sorenson _________
Name: Kai Sorenson____________
Its Authorized Signatory

 

GE CAPITAL MARKETS, INC., a Delaware corporation, as Co-Lead Arranger and Joint
Book Runner

By: /s/ Jaqueline Hopkins_________
Name: Jaqueline Hopkins_________
Its Authorized Signatory

 

GE CAPITAL FINANCIAL INC., as a Lender

By: /s/ Heather Leigh Glade________
Name: Heather Leigh Glade________
Its Authorized Signatory

Signature Page to Credit Agreement

 

BANK OF MONTREAL, as a Lender

By: /s/ John S. Gil________
Name: John S. Gil________
Its Authorized Signatory

 

 

Signature Page to Credit Agreement

Schedule 1.1

As used in the Agreement, the following terms shall have the following
definitions:

"ABL Priority Collateral" has the meaning set forth in the Split Lien
Intercreditor Agreement.

“Accelerated Learning Business” means the Accelerated Learning Business
Segments, collectively and taken as a whole.

“Accelerated Learning Business Segments” means the collective reference to, and
individually any one of, (i) the Delta Business, (ii) Reading Business, (iii)
Health Business, and (iv) Planner Business.

"Accelerated Learning EBITDA" means, with respect to any fiscal period shall be
calculated in accordance with Exhibit A-2, and on a basis consistent (including
without limitation with respect to the allocation of corporate overhead) with
the Compliance Certificate delivered at the Closing Date, and means net income
of the Accelerated Learning Business less  (in each case to the extent included
in the calculation of net income, but without duplication): (i) income tax
credits and any other tax benefits, (ii) interest income, and (iii) cash or
non-cash gains or income from items that are extraordinary; plus: (in each case
to the extent deducted in the calculation of net income, but without
duplication): (i) any provision for income tax, (ii) Interest Expense, (iii)
depreciation and amortization, (iv) extraordinary non-cash losses (including
impairment charges) or expenses, (v) non-cash expense related to stock-based
compensation, and (vi) restructuring charges or expenses (including severance
costs) incurred in such period, in an amount not in excess of $1,000,000 for any
four-quarter period; provided that for purposes of calculating Accelerated
Learning EBITDA, no Reconcilable Inclusion with respect to the Accelerated
Learning Business shall be given effect and the applicable contracts, rights or
other assets (and any associated income or loss) shall not be considered part of
the Accelerated Learning Business; provided further that Accelerated Learning
EBITDA for any period that includes the date of the Seeds Divestiture occurred
shall be calculated on a pro forma basis as though the Seeds Divestiture had
occurred on the first day of such period. For any period, Accelerated Learning
EBITDA shall be reduced by the amount of Planner Business EBITDA that exceeds
50% of the aggregate Accelerated Learning EBITDA prior to such adjustment.

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

"Account Debtor" means any Person who is obligated on an Account, chattel paper,
or a general intangible.

"Accounting Changes" means changes in accounting principles required by the
promulgation of any rule, regulation, pronouncement or opinion by the Financial
Accounting Standards Board of the American Institute of Certified Public
Accountants (or successor thereto or any agency with similar functions).

Schedule 1.1 – Page 1

"Additional Documents" has the meaning specified therefor in Section 5.12 of the
Agreement.

"Administrative Borrower" has the meaning specified therefor in Section 17.14.

"Administrative Questionnaire" has the meaning specified therefor in Section
13.1(a).

"Affected Lender" has the meaning specified therefor in Section 2.13(b) of the
Agreement.

"Affiliate" means, as applied to any Person, any other Person who controls, is
controlled by, or is under common control with, such Person.  For purposes of
this definition, "control" means the possession, directly or indirectly through
one or more intermediaries, of the power to direct the management and policies
of a Person, whether through the ownership of Equity Interests, by contract, or
otherwise; provided, that, for purposes of the definition of Eligible Accounts
and Section 6.10 of the Agreement:  (a) any Person which owns directly or
indirectly 10% or more of the Equity Interests having ordinary voting power for
the election of directors or other members of the governing body of a Person or
10% or more of the partnership or other ownership interests of a Person (other
than as a limited partner of such Person) shall be deemed an Affiliate of such
Person, (b) each director (or comparable manager) of a Person shall be deemed to
be an Affiliate of such Person, and (c) each partnership in which a Person is a
general partner shall be deemed an Affiliate of such Person.

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

"Agents" means the Agent and the Co-Collateral Agents.

"Agent-Related Persons" means Agent and each Co-Collateral Agent, together with
their Affiliates, officers, directors, employees, attorneys, and agents.

"Agent's Account" means the Deposit Account of Agent identified on Schedule A-1
(or such other Deposit Account of Agent that has been designated as such, in
writing, by Agent to Administrative Borrower and the Lenders).

"Agent's Liens" means the Liens granted by Parent or its Subsidiaries to Agent
under the Loan Documents and securing the Obligations.

"Agreement" means the Credit Agreement to which this Schedule 1.1 is attached.

"Applicable Margin" means, as of any date of determination and with respect to
Base Rate Loans or LIBOR Rate Loans, as applicable, the applicable margin set
forth in the following table that corresponds to the Average Excess Availability
of Borrowers for the most recently completed fiscal quarter; provided, that for
the period from the Closing Date through and including October 27, 2012, the
Applicable Margin shall be set at the margin in the row styled "Level II";
provided further, that any time an Event of Default has occurred and is
continuing as a result of a breach of Section 5.2, the Applicable Margin shall
be set at the margin in the row styled "Level III":

Schedule 1.1 – Page 2

Level

Average Excess
Availability

Applicable Margin
Relative to Base Rate
Loans (the "Base Rate
Margin")

Applicable Margin
Relative to LIBOR Rate
Loans (the "LIBOR Rate
Margin")

I

> $60,000,000

1.25 percentage points

2.25 percentage points

II

< $60,000,000 and >
$30,000,000

1.50 percentage points

2.50 percentage points

III

< $30,000,000

1.75 percentage points

2.75 percentage points

The Applicable Margin shall be re-determined as of the first day of each fiscal
quarter of Parent.

"Applicable Unused Line Fee Percentage" means, as of any date of determination,
the applicable percentage set forth in the following table that corresponds to
the Average Revolver Usage of Borrowers for the most recently completed month as
determined by Agent in its Permitted Discretion; provided, that for the period
from the Closing Date through and including October 27, 2012, the Applicable
Unused Line Fee Percentage shall be set at the rate in the row styled "Level
II":

Level

Average Revolver Usage

Applicable Unused Line Fee Percentage

I

> $100,000,000

0.375 percentage points

II

< $100,000,000

0.50 percentage points

The Applicable Unused Line Fee Percentage shall be re-determined on the first
date of each month by Agent.  

"Application Event" means the occurrence of (a) a failure by Borrowers to repay
all of the Obligations in full on the Maturity Date, or (b) an Event of Default
and the election by Agent, the Co-Collateral Agents or the Required Lenders to
require that payments and proceeds of Collateral be applied pursuant to Section
2.4(b)(ii) of the Agreement.

"Assignee" has the meaning specified therefor in Section 13.1(a) of the
Agreement.

"Assignment and Acceptance" means an Assignment and Acceptance Agreement
substantially in the form of Exhibit A-1 to the Agreement.

"Authorized Person" means any one of the individuals identified on Schedule A-2
to the Agreement, as such schedule is updated from time to time by written
notice from Administrative Borrower to Agent.

Schedule 1.1 – Page 3

"Availability" means, as of any date of determination, the amount that Borrowers
are entitled to borrow as Revolving Loans under Section 2.1 of the Agreement
(after giving effect to the then outstanding Revolver Usage).

"Average Excess Availability" means, with respect to any period, the sum of the
aggregate amount of Excess Availability for each Business Day in such period
(calculated as of the end of each respective Business Day) divided by the number
of Business Days in such period.

"Average Revolver Usage" means, with respect to any period, the sum of the
aggregate amount of Revolver Usage for each Business Day in such period
(calculated as of the end of each respective Business Day) divided by the number
of Business Days in such period.

"Bank Product" means any one or more of the following financial products or
accommodations extended to Parent or its Subsidiaries by a Bank Product
Provider:  (a) credit cards (including commercial credit cards (including
so-called "procurement cards" or "P-cards")), (b) credit card processing
services, (c) debit cards, (d) stored value cards, (e) Cash Management Services,
or (f) transactions under Hedge Agreements.

"Bank Product Agreements" means those agreements entered into from time to time
by Parent or its Subsidiaries with a Bank Product Provider in connection with
the obtaining of any of the Bank Products.

"Bank Product Collateralization" means providing cash collateral (pursuant to
documentation reasonably satisfactory to Agent) to be held by Agent for the
benefit of the Bank Product Providers (other than the Hedge Providers) in an
amount determined by Agent as sufficient to satisfy the reasonably estimated
credit exposure with respect to the then existing Bank Product Obligations
(other than Hedge Obligations).

"Bank Product Obligations" means (a) all obligations, liabilities, reimbursement
obligations, fees, or expenses owing by Parent or its Subsidiaries to any Bank
Product Provider pursuant to or evidenced by a Bank Product Agreement and
irrespective of whether for the payment of money, whether direct or indirect,
absolute or contingent, due or to become due, now existing or hereafter arising,
(b) all Hedge Obligations, and (c) all amounts that Agent or any Lender is
obligated to pay to a Bank Product Provider as a result of Agent or such Lender
purchasing participations from, or executing guarantees or indemnities or
reimbursement obligations to, a Bank Product Provider with respect to the Bank
Products provided by such Bank Product Provider to Parent or its Subsidiaries;
provided, in order for any item described in clauses (a) (b), or (c) above, as
applicable, to constitute "Bank Product Obligations", if the applicable Bank
Product Provider is any Person other than Wells Fargo or its Affiliates, then
the applicable Bank Product must have been provided on or after the Closing Date
and Agent shall have received a Bank Product Provider Agreement within 10 days
after the date of the provision of the applicable Bank Product to Parent or its
Subsidiaries.

"Bank Product Provider" means any Lender or any of its Affiliates, including
each of the foregoing in its capacity, if applicable, as a Hedge Provider;
provided, that no such Person shall constitute a Bank Product Provider with
respect to a Bank Product unless and until

Schedule 1.1 – Page 4

(x) in the case of Wells Fargo or its Affiliates, Agent shall have received a
Bank Product Provider Agreement from such Person and with respect to the
applicable Bank Product prior to the date that is 10 days after the provision of
such Bank Product to Parent or its Subsidiaries, or (y) in the case of any other
Person, Agent shall have received a Bank Product Provider Agreement from such
Person and with respect to the applicable Bank Product within 10 days after the
provision of such Bank Product to Parent or its Subsidiaries; provided further,
that if, at any time, a Lender ceases to be a Lender under the Agreement, then,
from and after the date on which it ceases to be a Lender thereunder, neither it
nor any of its Affiliates shall constitute Bank Product Providers and the
obligations with respect to Bank Products provided by such former Lender or any
of its Affiliates shall no longer constitute Bank Product Obligations.

"Bank Product Provider Agreement" means (a) in the case of a Bank Product
Provider other than WFB or one of its Affiliates, an agreement in substantially
the form attached hereto as Exhibit B-2 to the Agreement, in form and substance
satisfactory to Agent, duly executed by the applicable Bank Product Provider,
Administrative Borrower, and Agent, and (b) in the case of WFB or one of its
Affiliates, an agreement between such Bank Product Provider and Agent in form
and substance satisfactory to Agent.

"Bank Product Reserves" means, as of any date of determination, those reserves
that Co-Collateral Agents deems necessary or appropriate to establish (based
upon the Bank Product Providers' determination of the liabilities and
obligations of Parent and its Subsidiaries in respect of Bank Product
Obligations) in respect of Bank Products then provided or outstanding.

"Bankruptcy Code" means title 11 of the United States Code, as in effect from
time to time.

"Base Rate" means the greatest of (a) the Federal Funds Rate plus ½%, (b) the
LIBOR Rate (which rate shall be calculated based upon an Interest Period of 1
month and shall be determined on a daily basis), plus 1 percentage point, and
(c) the rate of interest announced, from time to time, within Wells Fargo at its
principal office in San Francisco as its "prime rate", with the understanding
that the "prime rate" is one of Wells Fargo's base rates (not necessarily the
lowest of such rates) and serves as the basis upon which effective rates of
interest are calculated for those loans making reference thereto and is
evidenced by the recording thereof after its announcement in such internal
publications as Wells Fargo may designate.

"Base Rate Loan" means each portion of the Revolving Loans that bears interest
at a rate determined by reference to the Base Rate.

"Base Rate Margin" has the meaning set forth in the definition of Applicable
Margin.

"Benefit Plan" means a "defined benefit plan" (as defined in Section 3(35) of
ERISA) for which Parent or any of its Subsidiaries or ERISA Affiliates has been
an "employer" (as defined in Section 3(5) of ERISA) within the past six years.

Schedule 1.1 – Page 5

"Board of Directors" means, as to any Person, the board of directors (or
comparable managers) of such Person, or any committee thereof duly authorized to
act on behalf of the board of directors (or comparable managers).

"Board of Governors" means the Board of Governors of the Federal Reserve System
of the United States (or any successor).

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

"Borrower Materials" has the meaning specified therefor in Section 17.9(c) of
the Agreement.

"Borrowing" means a borrowing consisting of Revolving Loans made on the same day
by the Lenders (or Agent on behalf thereof), or by Swing Lender in the case of a
Swing Loan, or by Agent in the case of an Extraordinary Advance.

"Borrowing Base" means, as of any date of determination, the result of:

(a)

85% of the amount of Eligible Accounts, less the amount, if any, of the Dilution
Reserve, plus

(b)

the lower of

(i)

the product of 65% multiplied by the value (calculated at the lower of cost or
market on a basis consistent with Borrowers' historical accounting practices) of
Eligible Inventory (other than Eligible Slow Moving Inventory) at such time, and

(ii)

the product of 85% multiplied by the Net Recovery Percentage identified in the
most recent inventory appraisal ordered and obtained by Agent or the
Co-Collateral Agents multiplied by the value (calculated at the lower of cost or
market on a basis consistent with the Borrowers' historical accounting
practices) of Eligible Inventory (other than Eligible Slow Moving Inventory)
(such determination may be made as to different categories of Eligible Inventory
based upon the Net Recovery Percentage applicable to such categories) at such
time, plus

(c)

the lowest of

(i)

the product of 65% multiplied by the value (calculated at the lower of cost or
market on a basis consistent with Borrowers' historical accounting practices) of
Eligible Inventory that is Eligible Slow Moving Inventory at such time,

(ii)

the product of 85% multiplied by the Net Recovery Percentage identified in the
most recent inventory appraisal ordered and obtained by Agent or the
Co-Collateral Agents multiplied by the value (calculated at the lower of cost or
market on a basis consistent with the Borrowers' historical accounting
practices) of Eligible Inventory that is Eligible Slow Moving Inventory (such
determination may be made as to different categories of Eligible Inventory based
upon the Net Recovery Percentage applicable to such categories) at such time,
and

Schedule 1.1 – Page 6

(iii)

the Slow Moving Cap, minus

(d)

the aggregate amount of reserves, if any, established by Co-Collateral Agents
under Section 2.1(c) of the Agreement.

"Borrowing Base Certificate" means a certificate in the form of Exhibit B-1.

"Business Day" means any day that is not a Saturday, Sunday, or other day on
which banks are authorized or required to close in the state of Illinois, except
that, if a determination of a Business Day shall relate to a LIBOR Rate Loan,
the term "Business Day" also shall exclude any day on which banks are closed for
dealings in Dollar deposits in the London interbank market.

“Business Segment Financial Statements” means the consolidated and consolidating
monthly, quarterly and annual financial statements, including, in the case of
clauses (w), (x) and (y) below, balance sheets, income statements, and
statements of capital expenditures, retained earnings and shareholders’ equity,
and Product Development Expense, and (in the case of clause (z) below)
statements of revenue, gross margin, capital expenditures, and Product
Development Expense, in any event in no less a level of detail than the
financial statements provided to the Agent prior to the Closing Date, reflecting
the performance of (w) the Accelerated Learning Business (accompanied by
reconciling information in detail reasonably satisfactory to the Agent for any
Reconcilable Inclusions with respect to the Accelerated Learning Business), (x)
the Educational Resources Business, (y) each Business Segment on a standalone
basis (accompanied, in the case of the Planner Business, by reconciling
information in detail reasonably satisfactory to the Agent for any Reconcilable
Inclusions with respect to the Planner Business), and (z) each Delta Business
Sub-Segment on a standalone basis.

“Business Segments” means, collectively, each Accelerated Learning Business
Segment and each Educational Resources Business Segment.

"Capital Expenditures" means, with respect to any Person for any period, the
amount of all expenditures by such Person and its Subsidiaries during such
period that are capital expenditures as determined in accordance with GAAP,
whether such expenditures are paid in cash or financed, but excluding, without
duplication (a) expenditures made during such period in connection with the
replacement, substitution, or restoration of assets or properties pursuant to
Section 2.4(e)(ii) of the Agreement, (b) with respect to the purchase price of
assets that are purchased substantially contemporaneously with the trade-in of
existing assets during such period, the amount that the gross amount of such
purchase price is reduced by the credit granted by the seller of such assets for
the assets being traded in at such time, (c) capitalized software development
costs to the extent such costs are deducted from net earnings under the
definition of EBITDA for such period, and (d) expenditures during such period
that, pursuant to a written agreement, are reimbursed by a third Person
(excluding Parent or any of its Affiliates).

"Capitalized Lease Obligation" means that portion of the obligations under a
Capital Lease that is required to be capitalized in accordance with GAAP.

"Capital Lease" means a lease that is required to be capitalized for financial
reporting purposes in accordance with GAAP.

Schedule 1.1 – Page 7

"Carson-Dellosa Drag-Along Sale" means a Disposition of the entirety of the Loan
Parties' Equity Interests in Carson-Dellosa Publishing, LLC pursuant to the
exercise by the CJE Members (as defined in the Operating Agreement of
Carson-Dellosa Publishing, LLC) of their drag-along rights (under and pursuant
to Section 11.6 of the Operating Agreement of Carson-Dellosa Publishing, LLC) so
as to require the Loan Parties to dispose of such Equity Interests in accordance
with the terms of Section 11.6 of the Operating Agreement of Carson-Dellosa
Publishing, LLC.

"Cash Equivalents" means (a) marketable direct obligations issued by, or
unconditionally guaranteed by, the United States or issued by any agency thereof
and backed by the full faith and credit of the United States, in each case
maturing within 1 year from the date of acquisition thereof, (b) marketable
direct obligations issued or fully guaranteed by any state of the United States
or any political subdivision of any such state or any public instrumentality
thereof maturing within 1 year from the date of acquisition thereof and, at the
time of acquisition, having one of the two highest ratings obtainable from
either Standard & Poor's Rating Group ("S&P") or Moody's Investors Service, Inc.
("Moody's"), (c) commercial paper maturing no more than 270 days from the date
of creation thereof and, at the time of acquisition, having a rating of at least
A-1 from S&P or at least P-1 from Moody's, (d) certificates of deposit, time
deposits, overnight bank deposits or bankers' acceptances maturing within 1 year
from the date of acquisition thereof issued by any bank organized under the laws
of the United States or any state thereof or the District of Columbia or any
United States branch of a foreign bank having at the date of acquisition thereof
combined capital and surplus of not less than $1,000,000,000, (e) Deposit
Accounts maintained with (i) any bank that satisfies the criteria described in
clause (d) above, or (ii) any other bank organized under the laws of the United
States or any state thereof so long as the full amount maintained with any such
other bank is insured by the Federal Deposit Insurance Corporation,
(f) repurchase obligations of any commercial bank satisfying the requirements of
clause (d) of this definition or recognized securities dealer having combined
capital and surplus of not less than $1,000,000,000, having a term of not more
than seven days, with respect to securities satisfying the criteria in clauses
(a) or (d) above, (g) debt securities with maturities of six months or less from
the date of acquisition backed by standby letters of credit issued by any
commercial bank satisfying the criteria described in clause (d) above, and
(h) Investments in money market funds substantially all of whose assets are
invested in the types of assets described in clauses (a) through (g) above.

"Cash Management Services" means any cash management or related services
including treasury, depository, return items, overdraft, controlled
disbursement, merchant store value cards, e-payables services, electronic funds
transfer, interstate depository network, automatic clearing house transfer
(including the Automated Clearing House processing of electronic funds transfers
through the direct Federal Reserve Fedline system) and other customary cash
management arrangements.

"CFC" means a controlled foreign corporation (as that term is defined in the
IRC).

"Change in Control" means that:

(a)

any Person or two or more Persons acting in concert, shall have acquired
beneficial ownership, directly or indirectly, of Equity Interests of Parent (or
other securities

Schedule 1.1 – Page 8

convertible into such Equity Interests) representing 30% or more of the combined
voting power of all Equity Interests of Parent entitled (without regard to the
occurrence of any contingency) to vote for the election of members of the Board
of Directors of Parent;

(b)

any Person or two or more Persons acting in concert, shall have acquired by
contract or otherwise, or shall have entered into a contract or arrangement
that, upon consummation thereof, will result in its or their acquisition of the
power to exercise, directly or indirectly, a controlling influence over the
management or policies of Parent or control over the Equity Interests of such
Person entitled to vote for members of the Board of Directors of Parent on a
fully-diluted basis (and taking into account all such Equity Interests that such
Person or group has the right to acquire pursuant to any option right)
representing 30% or more of the combined voting power of such Equity Interests;

(c)

during any period of 24 consecutive months commencing on or after the Closing
Date, the occurrence of a change in the composition of the Board of Directors of
Parent such that a majority of the members of such Board of Directors are not
Continuing Directors;

(d)

Parent fails to own and control, directly or indirectly, 100% of the Equity
Interests of each other Loan Party;

(e)

the occurrence of any "Change in Control" as defined in the Split Lien Credit
Agreement; or

(f)

the occurrence of any "Change of Control" as defined in the Convertible Note
Indenture.

"Closing Date" means the date of the making of the initial Revolving Loan (or
other extension of credit) under the Agreement.

"Co-Collateral Agents" means, collectively, the Agent and GECC, each in its
capacity as a co-collateral agent and any successor co-collateral agents.

"Code" means the New York Uniform Commercial Code, as in effect from time to
time.

"Collateral" means all assets and interests in assets and proceeds thereof now
owned or hereafter acquired by Parent or its Subsidiaries in or upon which a
Lien is granted by such Person in favor of Agent, Co-Collateral Agents or the
Lenders under any of the Loan Documents.

"Collateral Access Agreement" means a landlord waiver, bailee letter, or
acknowledgement agreement of any lessor, warehouseman, processor, consignee, or
other Person in possession of, having a Lien upon, or having rights or interests
in Parent's or its Subsidiaries' books and records, Equipment, or Inventory, in
each case, in form and substance reasonably satisfactory to Co-Collateral
Agents.

"Commitment" means, with respect to each Lender, its Revolver Commitment, as the
context requires, and, with respect to all Lenders, their Revolver Commitments,
as the

Schedule 1.1 – Page 9

context requires, in each case as such Dollar amounts are set forth beside such
Lender's name under the applicable heading on Schedule C-1 to the Agreement or
in the Assignment and Acceptance pursuant to which such Lender became a Lender
under the Agreement, as such amounts may be reduced or increased from time to
time pursuant to assignments made in accordance with the provisions of Section
13.1 of the Agreement.

“Commodity Hedging Obligations” means any and all obligations of the Borrowers
and their Subsidiaries under (a) any and all agreements, devices or arrangements
designed to protect any Borrowers or any of their Subsidiaries from the
fluctuations of commodity prices, commodity price cap or collar protection
agreements, and commodity forward and future contracts, swaps, options, puts and
warrants, and (b) any and all cancellations, buy backs, reversals, terminations
or assignments of any of the foregoing.

"Compliance Certificate" means a certificate substantially in the form of
Exhibit C-1 to the Agreement delivered by the chief financial officer of
Administrative Borrower to Agent.

"Confidential Information" has the meaning specified therefor in Section 17.9(a)
of the Agreement.

"Continuing Director" means (a) any member of the Board of Directors who was a
director (or comparable manager) of Parent on the Closing Date, and (b) any
individual who becomes a member of the Board of Directors after the Closing Date
if such individual was approved, appointed or nominated for election to the
Board of Directors by a majority of the Continuing Directors, but excluding any
such individual originally proposed for election in opposition to the Board of
Directors in office at the Closing Date in an actual or threatened election
contest relating to the election of the directors (or comparable managers) of
Parent and whose initial assumption of office resulted from such contest or the
settlement thereof.

"Control Agreement" means a control agreement, in form and substance reasonably
satisfactory to Agent, executed and delivered by Parent or one of its
Subsidiaries, Agent, and the applicable securities intermediary (with respect to
a Securities Account) or bank (with respect to a Deposit Account).

"Convertible Note Indenture" means that certain Indenture dated as of March 1,
2011 between Parent and The Bank of New York Mellon Trust Company, N.A., as
trustee, as amended or modified from time to time, in an aggregate original
principal amount of $157,500,000.

"Convertible Notes" means convertible subordinated notes due 2026 issued
pursuant to the Convertible Note Indenture in an aggregate original principal
amount of $157,500,000.

"Copyright Security Agreement" has the meaning specified therefor in the
Guaranty and Security Agreement.

"Covenant Testing Period" means a period (a) commencing on the last day of the
fiscal month of Parent most recently ended on or prior to an Excess Availability
Trigger Date

Schedule 1.1 – Page 10

and for which Agent has received financial statements required to be delivered
pursuant to Schedule 5.1 and (b) ending on the first day after such Excess
Availability Trigger Date that Excess Availability has equaled or exceeded the
Minimum Excess Availability Amount for 45 consecutive days.

"Default" means an event, condition, or default that, with the giving of notice,
the passage of time, or both, would be an Event of Default.

"Defaulting Lender" means any Lender that (a) has failed to fund any amounts
required to be funded by it under the Agreement within 1 Business Day of the
date that it is required to do so under the Agreement (including the failure to
make available to Agent amounts required pursuant to a Settlement or to make a
required payment in connection with a Letter of Credit Disbursement),
(b) notified the Administrative Borrower, Agent, or any Lender in writing that
it does not intend to comply with all or any portion of its funding obligations
under the Agreement, (c) has made a public statement to the effect that it does
not intend to comply with its funding obligations under the Agreement or under
other agreements generally (as reasonably determined by Agent) under which it
has committed to extend credit, (d) failed, within 1 Business Day after written
request by Agent, to confirm that it will comply with the terms of the Agreement
relating to its obligations to fund any amounts required to be funded by it
under the Agreement, (e) otherwise failed to pay over to Agent, any
Co-Collateral Agent or any other Lender any other amount required to be paid by
it under the Agreement within 1 Business Day of the date that it is required to
do so under the Agreement, unless subject of a good faith dispute, or
(f) (i) becomes or is insolvent or has a parent company that has become or is
insolvent or (ii) becomes the subject of a bankruptcy or insolvency proceeding,
or has had a receiver, conservator, trustee, or custodian or appointed for it,
or has taken any action in furtherance of, or indicating its consent to,
approval of or acquiescence in any such proceeding or appointment or has a
parent company that has become the subject of a bankruptcy or insolvency
proceeding, or has had a receiver, conservator, trustee, or custodian appointed
for it, or has taken any action in furtherance of, or indicating its consent to,
approval of or acquiescence in any such proceeding or appointment.

"Defaulting Lender Rate" means (a) for the first 3 days from and after the date
the relevant payment is due, the Base Rate, and (b) thereafter, the interest
rate then applicable to Revolving Loans that are Base Rate Loans (inclusive of
the Base Rate Margin applicable thereto).

“Delta Business” means the Delta Business Sub-Segments collectively and taken as
a whole.

“Delta Business Sub-Segments” means the collective reference to, and
individually any one of, (i) Delta/FOSS, (ii) Frey Scientific, and (iii) Other
Science Products.

"Delta/Foss" means the Delta and Refurbishment marketing units that are a
sub-segment of the Delta Business that offers an inquiry-based elementary school
science curriculum, including instructional and classroom resources and hands-on
investigation materials, the Delta Science Module program, the FOSS (Full Option
Science System) program and kit refill materials.

Schedule 1.1 – Page 11

"Designated Account" means the Deposit Account of Administrative Borrower
identified on Schedule D-1 to the Agreement (or such other Deposit Account of
Administrative Borrower located at Designated Account Bank that has been
designated as such, in writing, by Administrative Borrower to Agent).

"Designated Account Bank" has the meaning specified therefor in Schedule D-1 to
the Agreement (or such other bank that is located within the United States that
has been designated as such, in writing, by Administrative Borrower to Agent).

“Designated Divestiture Business Unit” means the Approved Divestiture Unit
designated as the “Designated Divestiture Business Unit” in writing by the
Administrative Borrower to the Agent and approved by the Agent in writing prior
to the date hereof.

"Dilution" means, as of any date of determination, a percentage, based upon the
experience of the immediately prior 12 months, that is the result of dividing
the Dollar amount of (a) bad debt write-downs, discounts, advertising
allowances, credits, or other dilutive items with respect to Borrowers' Accounts
during such period, by (b) Borrowers' billings with respect to Accounts during
such period.

"Dilution Reserve" means, as of any date of determination, an amount sufficient
to reduce the advance rate against Eligible Accounts by 1 percentage point for
each percentage point by which Dilution is in excess of 5%.

"Disqualified Equity Interests" shall mean any Equity Interest that, by its
terms (or by the terms of any security or other Equity Interests into which it
is convertible or for which it is exchangeable), or upon the happening of any
event or condition (a) matures or is mandatorily redeemable (other than solely
for Qualified Equity Interests), pursuant to a sinking fund obligation or
otherwise (except as a result of a change of control or asset sale so long as
any rights of the holders thereof upon the occurrence of a change of control or
asset sale event shall be subject to the prior repayment in full of the Loans
and all other Obligations that are accrued and payable and the termination of
the Commitments), (b) is redeemable at the option of the holder thereof (other
than solely for Qualified Equity Interests), in whole or in part, (c) provides
for the scheduled payments of dividends in cash, or (d) is or becomes
convertible into or exchangeable for Indebtedness or any other Equity Interests
that would constitute Disqualified Equity Interests, in each case, prior to the
date that is 180 days after the Maturity Date.

"Dollars" or "$" means United States dollars.

"EBITDA" means, for any period, calculated in accordance with Exhibit A-3  and
on a basis consistent (including without limitation with respect to the
allocation of corporate overhead) with the Compliance Certificate delivered at
the Closing Date, net income of the Administrative Borrower and its Subsidiaries
on a consolidated basis less  (in each case to the extent included in the
calculation of net income, but without duplication): (i) income tax credits and
any other tax benefits, (ii) interest income, and (iii) cash or non-cash gains
or income from items that are extraordinary; plus: (in each case to the extent
deducted in the calculation of net income, but without duplication): (i) any
provision for income tax, (ii) Interest Expense, (iii) depreciation and
amortization, (iv) extraordinary non-cash losses (including impairment charges)

Schedule 1.1 – Page 12

or expenses, (v) non-cash expense related to stock-based compensation, and (vi)
restructuring charges or expenses (including severance costs) incurred in such
period, in an amount not in excess of (x) $4,000,000 for any four-quarter period
ending during the Administrative Borrower’s fiscal year ending in April 2013,
(y) $3,000,000 for any four-quarter period ending during the Administrative
Borrower’s fiscal year ending in April 2014, and (z) $2,000,000 for any
four-quarter period ending thereafter (provided that the amount of restructuring
charges and expenses associated with the Accelerated Learning Business and added
back pursuant to this clause (vi) shall not exceed $1,000,000 for any
four-quarter period); provided that (x) the net income of Carson-Dellosa
Publishing, LLC shall be excluded, except that it shall be included to the
extent of the amount of the excess, if any of (A) the amount of cash dividends
or other cash distributions actually paid to a Loan Party by Carson-Dellosa
Publishing, LLC (except in connection with a Carson-Dellosa Drag-Along Sale)
during such period over (B) the amount of cash contributions and advances
received from the Loan parties by Carson-Dellosa Publishing, LLC during such
period, and (y) the net losses of Carson-Dellosa Publishing, LLC shall be
excluded, except that it shall be included to the extent of the amount of the
excess, if any of (A) the amount of cash contributions and advances received
from the Loan Parties by Carson-Dellosa Publishing, LLC during such period over
(B) the amount of cash dividends or other cash distributions actually paid to a
Loan Party by Carson-Dellosa Publishing, LLC (except in connection with a
Carson-Dellosa Drag-Along Sale) during such period; provided further that EBITDA
for any period that includes the date of the Seeds Divestiture occurred shall be
calculated on a pro forma basis as though the Seeds Divestiture had occurred on
the first day of such period.

“Educational Resources Administrator” means the category within the Educational
Resources Segment that offers basic classroom supplies, office products,
janitorial and sanitation supplies, school equipment, technology products and
paper.

“Educational Resources Business” means the Educational Resources Business
Segments, collectively and taken as a whole.

“Educational Resources Business Segments” means the collective reference to, and
individually any one of, (i) Educational Resources Educator, (ii) Educational
Resources Administrator, and (iii) Educational Resources Furniture.

“Educational Resources Educator” means the category within the Educational
Resources Segment that offers supplemental learning materials, teaching
resources, upper-grade-level art supplies, early childhood products, physical
education equipment and special needs equipment and classroom technology.

“Educational Resources Furniture” means the category within the Educational
Resources Segment that offers classroom furniture, library furniture, cafeteria
furniture, office furniture, fixed furniture such as bleachers and lockers, as
well as construction and project management services.

"Eligible Accounts" means those Accounts created by a Borrower in the ordinary
course of its business, that arise out of such Borrower's sale of goods or
rendition of services, that comply with each of the representations and
warranties respecting Eligible Accounts made

Schedule 1.1 – Page 13

in the Loan Documents, and that are not excluded as ineligible by virtue of one
or more of the excluding criteria set forth below; provided, that such criteria
may be revised from time to time by Co-Collateral Agents in Co-Collateral
Agents' Permitted Discretion to address the results of any field examination
performed by (or on behalf of) Agent and/or Co-Collateral Agents from time to
time after the Closing Date.  In determining the amount to be included, Eligible
Accounts shall be calculated net of customer deposits, unapplied cash, taxes,
discounts, credits, allowances, and rebates.  Eligible Accounts shall not
include the following:

(a)

Accounts that the Account Debtor has failed to pay within 90 days of original
invoice date or within 60 days of original due date or Accounts with selling
terms of more than 60 days (provided, that, during the period commencing on
December 1st of each year through May 31st of the immediately subsequent year,
Accounts in an aggregate amount for all such Accounts not to exceed the lesser
of (x) 70% of all Accounts outstanding more than 90 days past their original
invoice date and (y) $5,000,000 shall not be ineligible under this clause (a) as
a result of being outstanding more than 90 days past original invoice date, so
long as such Accounts are not unpaid more than 120 days past their original
invoice date),

(b)

Accounts owed by an Account Debtor (or its Affiliates) where 50% or more of all
Accounts owed by that Account Debtor (or its Affiliates) are deemed ineligible
under clause (a) above,

(c)

Accounts with respect to which the Account Debtor is an Affiliate of a Borrower
or an employee or agent of a Borrower or any Affiliate of a Borrower,

(d)

Accounts arising in a transaction wherein goods are placed on consignment or are
sold pursuant to a guaranteed sale, a sale or return, a sale on approval, a bill
and hold, or any other terms by reason of which the payment by the Account
Debtor may be conditional,

(e)

Accounts that are not payable in Dollars,

(f)

Accounts with respect to which the Account Debtor either (i) does not maintain
its chief executive office in the United States or Canada, or (ii) is not
organized under the laws of the United States or any state thereof or Canada or
any province thereof, or (iii) is the government of any foreign country or
sovereign state, or of any state, province, municipality, or other political
subdivision thereof, or of any department, agency, public corporation, or other
instrumentality thereof, unless (A) the Account is supported by an irrevocable
letter of credit reasonably satisfactory to Agent (as to form, substance, and
issuer or domestic confirming bank) that has been delivered to Agent and is
directly drawable by Agent, or (B) the Account is covered by credit insurance in
form, substance, and amount, and by an insurer, reasonably satisfactory to
Agent,

(g)

Accounts with respect to which the Account Debtor is the United States or any
department, agency, or instrumentality of the United States (exclusive, however,
of Accounts (x) with respect to which the applicable Borrower has complied, to
the reasonable satisfaction of Co-Collateral Agents, with the Assignment of
Claims Act, 31 USC §3727 and (y) in an aggregate amount not to exceed
$2,000,000);

Schedule 1.1 – Page 14

(h)

Accounts with respect to which the Account Debtor is a creditor of a Borrower,
has or has asserted a right of recoupment or setoff, or has disputed its
obligation to pay all or any portion of the Account, to the extent of such
claim, right of recoupment or setoff, or dispute,

(i)

Accounts with respect to an Account Debtor whose total obligations owing to
Borrowers exceed 10% (such percentage, as applied to a particular Account
Debtor, being subject to reduction by Co-Collateral Agents in its Permitted
Discretion if the creditworthiness of such Account Debtor deteriorates) of all
Eligible Accounts, to the extent of the obligations owing by such Account Debtor
in excess of such percentage; provided, that, in each case, the amount of
Eligible Accounts that are excluded because they exceed the foregoing percentage
shall be determined by Co-Collateral Agents based on all of the otherwise
Eligible Accounts prior to giving effect to any eliminations based upon the
foregoing concentration limit,

(j)

Accounts with respect to which the Account Debtor is subject to an Insolvency
Proceeding, is not Solvent, has gone out of business, or as to which a Borrower
has received notice of an imminent Insolvency Proceeding or a material
impairment of the financial condition of such Account Debtor,

(k)

Accounts, the collection of which, Co-Collateral Agents, in their Permitted
Discretion, believes to be doubtful, including by reason of the Account Debtor's
financial condition,

(l)

Accounts that are not subject to a valid and perfected first priority Agent's
Lien, or are subject to a Lien other than the Liens of Agent and those permitted
in clauses (a), (b), (c) and (q) of the definition of the term Permitted Liens
(but as to Liens referred to in clause (c) only to the extent that Co-Collateral
Agents have established a reserve in respect thereof),

(m)

Accounts with respect to which (i) the goods giving rise to such Account have
not been shipped and billed to the Account Debtor, or (ii) the services giving
rise to such Account have not been performed and billed to the Account Debtor,

(n)

Accounts with respect to which the Account Debtor is a Sanctioned Person or
Sanctioned Entity,

(o)

Accounts that represent the right to receive progress payments or other advance
billings that are due prior to the completion of performance by Borrowers of the
subject contract for goods or services, or

(p)

Accounts arising from or in connection with contracts or projects that are
subject to a performance or surety bond.

"Eligible Inventory" means Inventory of a Borrower consisting of raw materials
and finished goods, that complies with each of the representations and
warranties respecting Eligible Inventory made in the Loan Documents, and that is
not excluded as ineligible by virtue of one or more of the excluding criteria
set forth below; provided, that such criteria may be revised from time to time
by Co-Collateral Agent in Co-Collateral Agents' Permitted Discretion to address
the results of any field examination or appraisal performed by Agent and/or Co-

Schedule 1.1 – Page 15

Collateral Agents from time to time after the Closing Date.  In determining the
amount to be so included, Inventory shall be valued at the lower of cost or
market on a basis consistent with Borrowers' historical accounting practices.
 An item of Inventory shall not be included in Eligible Inventory if:

(a)

the applicable Borrower does not have good, valid, and marketable title thereto,

(b)

the applicable Borrower does not have actual and exclusive possession thereof
(either directly or through a bailee or agent of such Borrower),

(c)

it is not located at one of the locations in the continental United States set
forth on Schedule E-1 to the Agreement (or in-transit from one such location to
another such location),

(d)

it is in-transit to or from a location of the applicable Borrower (other than
in-transit from one location set forth on Schedule E-1 to the Agreement to
another location set forth on Schedule E-1 to the Agreement); unless such
inventory is in transit outside of, but on route to, the United States of
America (including its inland waterways), is fully insured and the title
documents in respect thereof (x) are negotiable, (y) are in the possession of a
Title Document Agent, and (z) have been consigned and issued as follows:  "to
the order of a Title Document Agent, as agent for secured party, Wells Fargo
Capital Finance, LLC, which secured party has a security interest in the goods
covered by this document"; provided, that the maximum amount of in-transit
inventory not located in the United States of America (including its inland
waterways) at any one time included as Eligible Inventory shall not exceed
$2,500,000,

(e)

it is located on real property leased by the applicable Borrower, in a contract
warehouse or with a processor, in each case, unless a Landlord Reserve is in
place for such location or it is subject to a Collateral Access Agreement
executed by the lessor or warehouseman, as the case may be, and unless it is
segregated or otherwise separately identifiable from goods of others, if any,
stored on the premises,

(f)

it is the subject of a bill of lading or other document of title,

(g)

it is not subject to a valid and perfected first priority Agent's Lien, or is
subject to a Lien other than the Liens of Agent and those permitted in clauses
(a), (b), (c), (g), (p) and (q) of the definition of the term Permitted Liens
(but as to Liens referred to in clause (c), (g) and (p) only to the extent that
Co-Collateral Agents have established a reserve in respect thereof),

(h)

it consists of goods returned or rejected by a Borrower's customers,

(i)

it consists of goods that are obsolete or slow moving, restrictive or custom
items, work-in-process or goods that constitute spare parts, packaging and
shipping materials, supplies used or consumed in a Borrower's business, bill and
hold goods, defective goods, "seconds," or Inventory acquired on consignment;
provided, that, Eligible Slow Moving shall not be ineligible under this clause
(i) as a result of being slow moving, provided, further, that, if Borrowers have
not sold any Inventory of a particular type or category during the then

Schedule 1.1 – Page 16

immediately preceding 12 consecutive month period, such type or category of
Inventory shall be deemed ineligible as slow moving under this clause (i),

(j)

it is subject to third party trademark, or other intellectual property,
licensing or proprietary rights, unless Co-Collateral Agents are satisfied that
such Inventory can be freely sold by Agent on and after the occurrence of an
Event of a Default (without Agent infringing any rights of, or incurring any
liabilities to, any licensor or owner of such third party rights) despite such
third party rights, or

(k)

it is located at any site if the aggregate book value of Inventory at such
location is less than $100,000.

"Eligible Slow Moving Inventory" means Inventory of the type or category that
Borrowers then have a supply of 52 weeks or more (based on sales over the then
preceding 12 consecutive month period) unless Borrowers have not sold any
Inventory of such type or category during the then immediately preceding 12
consecutive month period.

"Eligible Transferee" means (a) any Lender (other than a Defaulting Lender), any
Affiliate of any Lender and any Related Fund of any Lender; and (b) (i) a
commercial bank organized under the laws of the United States or any state
thereof, and having total assets in excess of $1,000,000,000; (ii) a savings and
loan association or savings bank organized under the laws of the United States
or any state thereof, and having total assets in excess of $1,000,000,000;
(iii) a commercial bank organized under the laws of any other country or a
political subdivision thereof; provided that (A) (x) such bank is acting through
a branch or agency located in the United States or (y) such bank is organized
under the laws of a country that is a member of the Organization for Economic
Cooperation and Development or a political subdivision of such country, and
(B) such bank has total assets in excess of $1,000,000,000; (c) any other entity
(other than a natural person) that is an "accredited investor" (as defined in
Regulation D under the Securities Act) that extends credit or buys loans as one
of its businesses including insurance companies, investment or mutual funds and
lease financing companies, and having total assets in excess of $1,000,000,000;
(d) if no Event of Default exists, any Person (other than any natural Person);
and (e) during the continuation of an Event of Default, any other Person
approved by Agent; provided, that, except in connection with the exercise of any
purchase right under Section 10 of the Split Lien Intercreditor Agreement,
“Eligible Transferee” shall exclude any holder of any Indebtedness arising under
the Split Lien Documents.

"Environmental Action" means any written complaint, summons, citation, notice,
directive, order, claim, litigation, investigation, judicial or administrative
proceeding, judgment, letter, or other written communication from any
Governmental Authority, or any third party involving violations of Environmental
Laws or releases of Hazardous Materials (a) from any assets, properties, or
businesses of Parent, any Subsidiary of Parent, or any of their predecessors in
interest, (b) from adjoining properties or businesses, or (c) from or onto any
facilities which received Hazardous Materials generated by Parent, any
Subsidiary of Parent, or any of their predecessors in interest.

"Environmental Law" means any applicable federal, state, provincial, foreign or
local statute, law, rule, regulation, ordinance, code, binding and enforceable
guideline, binding

Schedule 1.1 – Page 17

and enforceable written policy, or rule of common law now or hereafter in effect
and in each case as amended, or any judicial or administrative interpretation
thereof, including any judicial or administrative order, consent decree or
judgment, in each case, to the extent binding on Parent or its Subsidiaries,
relating to the environment, the effect of the environment on employee health,
or Hazardous Materials, in each case as amended from time to time.

"Environmental Liabilities" means all liabilities, monetary obligations, losses,
damages, costs and expenses (including all reasonable fees, disbursements and
expenses of counsel, experts, or consultants, and costs of investigation and
feasibility studies), fines, penalties, sanctions, and interest incurred as a
result of any claim or demand, or Remedial Action required, by any Governmental
Authority or any third party, and which relate to any Environmental Action.

"Environmental Lien" means any Lien in favor of any Governmental Authority for
Environmental Liabilities.

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

"Equity Interest" means, with respect to a Person, all of the shares, options,
warrants, interests, participations, or other equivalents (regardless of how
designated) of or in such Person, whether voting or nonvoting, including capital
stock (or other ownership or profit interests or units), preferred stock, or any
other "equity security" (as such term is defined in Rule 3a11-1 of the General
Rules and Regulations promulgated by the SEC under the Exchange Act).

"ERISA" means the Employee Retirement Income Security Act of 1974, as amended,
and any successor statute thereto.

"ERISA Affiliate" means (a) any Person subject to ERISA whose employees are
treated as employed by the same employer as the employees of Parent or its
Subsidiaries under IRC Section 414(b), (b) any trade or business subject to
ERISA whose employees are treated as employed by the same employer as the
employees of Parent or its Subsidiaries under IRC Section 414(c), (c) solely for
purposes of Section 302 of ERISA and Section 412 of the IRC, any organization
subject to ERISA that is a member of an affiliated service group of which Parent
or any of its Subsidiaries is a member under IRC Section 414(m), or (d) solely
for purposes of Section 302 of ERISA and Section 412 of the IRC, any Person
subject to ERISA that is a party to an arrangement with Parent or any of its
Subsidiaries and whose employees are aggregated with the employees of Parent or
its Subsidiaries under IRC Section 414(o).

"Event of Default" has the meaning specified therefor in Section 8 of the
Agreement.

"Excess Availability" means, as of any date of determination, the amount equal
to Availability minus the aggregate amount, if any, of all trade payables of
Parent and its Subsidiaries aged in excess of historical levels with respect
thereto and all book overdrafts of Parent and its Subsidiaries in excess of
historical practices with respect thereto, in each case as determined by
Co-Collateral Agents in their Permitted Discretion.

Schedule 1.1 – Page 18

"Excess Availability Trigger Date" means any date Borrowers fail to maintain the
Minimum Excess Availability Amount.

"Excess Proceeds" means (x) the aggregate amount of Proceeds of the asset sales
described in, and subject to the terms of, the Pre-approved Disposition Letter
(other than of the Designated Divestiture Business Unit) less (y) the sum of
Minimum Term Loan Amount plus $5,000,000 plus the book value of the Accounts and
Inventory sold, transferred or otherwise disposed of pursuant to such asset
sales.

"Exchange Act" means the Securities Exchange Act of 1934, as in effect from time
to time.

"Excluded Taxes" means (i) any tax imposed on the net income or net profits of
any Lender or any Participant (including any branch profits taxes), in each case
imposed by the jurisdiction (or by any political subdivision or taxing authority
thereof) in which such Lender or such Participant is organized or the
jurisdiction (or by any political subdivision or taxing authority thereof) in
which such Lender's or such Participant's principal office is located in each
case as a result of a present or former connection between such Lender or such
Participant and the jurisdiction or taxing authority imposing the tax (other
than any such connection arising solely from such Lender or such Participant
having executed, delivered or performed its obligations or received payment
under, or enforced its rights or remedies under the Agreement or any other Loan
Document); (ii) taxes resulting from a Lender's or a Participant's failure to
comply with the requirements of Section 16.2 of the Agreement, and (iii) any
United States federal withholding taxes that would be imposed on amounts payable
to a Foreign Lender based upon the applicable withholding rate in effect at the
time such Foreign Lender becomes a party to the Agreement (or designates a new
lending office), except that Taxes shall include (A) any amount that such
Foreign Lender (or its assignor, if any) was previously entitled to receive
pursuant to Section 16.1 of the Agreement, if any, with respect to such
withholding tax at the time such Foreign Lender becomes a party to the Agreement
(or designates a new lending office), and (B) additional United States federal
withholding taxes that may be imposed after the time such Foreign Lender becomes
a party to the Agreement (or designates a new lending office), as a result of a
change in law, rule, regulation, order or other decision with respect to any of
the foregoing by any Governmental Authority.

"Existing Credit Facility" means Credit Agreement among School Specialty, Inc.,
as the Borrower, the Subsidiaries of the Borrower as identified therein, as the
Guarantors, Bank of America, N.A. as Administrative Agent, Swing Line Lender and
L/C Issuer, JPMorgan Chase Bank, N.A., and U.S. Bank National Association as
Co-Syndication Agents and other Lenders Parties arranged by Banc of America
Securities LLC as Sole Lead Arranger and Sole Book Manager dated as of April 32,
2010, as amended.

"Extraordinary Advances" has the meaning specified therefor in Section
2.3(d)(ii) of the Agreement.

"Extraordinary Receipts" means (a) so long as no Event of Default has occurred
and is continuing, proceeds of judgments, proceeds of settlements, or other
consideration of any kind received in connection with any cause of action or
claim, and (b) if an Event of Default has

Schedule 1.1 – Page 19

occurred and is continuing, any payments received by Parent or any of its
Subsidiaries not in the ordinary course of business (and not consisting of
proceeds described in Section 2.4(e)(ii) of the Agreement) consisting of
(i) proceeds of judgments, proceeds of settlements, or other consideration of
any kind received in connection with any cause of action or claim,
(ii) indemnity payments (other than to the extent such indemnity payments are
immediately payable to a Person that is not an Affiliate of Parent or any of its
Subsidiaries, and (iii) any purchase price adjustment received in connection
with any purchase agreement.

"Fee Letter" means that certain fee letter, dated as of even date with the
Agreement, between Borrowers and Agent, in form and substance reasonably
satisfactory to Agent.

"Federal Funds Rate" means, for any period, a fluctuating interest rate per
annum equal to, for each day during such period, the weighted average of the
rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers, as published on the next
succeeding Business Day by the Federal Reserve Bank of New York, or, if such
rate is not so published for any day which is a Business Day, the average of the
quotations for such day on such transactions received by Agent from three
Federal funds brokers of recognized standing selected by it.

"Fixed Charges" means for any measuring period the sum, without duplication, in
each case with respect to the Borrowers and their Subsidiaries on a consolidated
basis, of (i) Interest Expense (other than Non-Cash Interest Expense) paid or
payable during such period; (ii) payments in respect of FX and Currency Option
Obligations, Commodity Hedging Obligations and Rate Hedging Obligations (on a
net basis to the extent subject to a net settlement agreement); (iii) payments
in respect of Capitalized Lease Obligations and other purchase money
Indebtedness; (iv) cash payments in respect of taxes, net of cash refunds of
taxes paid relating to the same tax year; (v) payments in respect of any Benefit
Plan or other employee benefit plan or pension, to the extent such payments do
not result in a deduction from EBITDA; (vi) scheduled payments in respect of all
Indebtedness other than Indebtedness referred to above; (vii) the aggregate
amount of Unfinanced Capital Expenditures; (viii) payments in respect of any
litigation or any extraordinary or one-time cash payments, to the extent in
excess of $1,000,000 in the aggregate for such measuring period; and (ix)
Product Development Expense; minus, to the extent received in cash during such
period, any tax refund in respect of income taxes relating to fiscal years 2012
or later other than cash tax refunds deducted from cash tax payments pursuant to
clause (iv) above.

"Fixed Charge Coverage Ratio" means for any measuring period the ratio of (x)
EBITDA for such period to (y) Fixed Charges for such period.

"Flow of Funds Agreement" means a flow of funds agreement, dated as of even date
herewith, in form and substance reasonably satisfactory to Agent, executed and
delivered by each Loan Party and Agent.

"Foreign Lender" means any Lender or Participant that is not a United States
person within the meaning of IRC section 7701(a)(30).

Schedule 1.1 – Page 20

"Frey Scientific" means the marketing unit that is a sub-segment of the Delta
Business that offers a line of science supplies and equipment for k-12
classrooms and science labs, as well as lab design services and furniture.

"Funding Date" means the date on which a Borrowing occurs.

"Funding Losses" has the meaning specified therefor in Section 2.12(b)(ii) of
the Agreement.

“FX and Currency Option Obligations” means any and all obligations of the
Borrowers and their Subsidiaries, whether absolute or contingent and howsoever
and whenever created, arising, evidenced or acquired (including all renewals,
extensions and modifications thereof and substitutions therefor), under any and
all agreements, devices or arrangements designed to protect any Borrower or any
of their Subsidiaries from variations in the comparative value of currencies,
including foreign exchange purchase and future purchase transactions, currency
options, currency swaps and cross currency rate swaps.

"GECC" means General Electric Capital Corporation, a Delaware corporation.

"GECM" means GE Capital Markets, Inc.

"GAAP" means generally accepted accounting principles as in effect from time to
time in the United States, consistently applied.

"Governing Documents" means, with respect to any Person, the certificate or
articles of incorporation, by-laws, or other organizational documents of such
Person.

"Governmental Authority" means any federal, state, local, or other governmental
or administrative body, instrumentality, board, department, or agency or any
court, tribunal, administrative hearing body, arbitration panel, commission, or
other similar dispute-resolving panel or body.

"Guarantor" means (a) each Subsidiary of Parent (other than a Borrower) and
(b) each other Person that becomes a guarantor of the Obligations after the
Closing Date pursuant to Section 5.11 of the Agreement.

"Guaranty and Security Agreement" means a guaranty and security agreement, dated
as of even date with the Agreement, in form and substance reasonably
satisfactory to Co-Collateral Agents, executed and delivered by each Borrower
and each Guarantor to Agent.

"Hazardous Materials" means (a) substances that are defined or listed in, or
otherwise classified pursuant to, any applicable laws or regulations as
"hazardous substances," "hazardous materials," "hazardous wastes," "toxic
substances," or any other formulation intended to define, list, or classify
substances by reason of deleterious properties such as ignitability,
corrosivity, reactivity, carcinogenicity, reproductive toxicity, or "EP
toxicity", (b) oil, petroleum, or petroleum derived substances, natural gas,
natural gas liquids, synthetic gas, drilling fluids, produced waters, and other
wastes associated with the exploration, development, or production of crude oil,
natural gas, or geothermal resources, (c) any flammable substances or explosives
or

Schedule 1.1 – Page 21

any radioactive materials, and (d) asbestos in any form or electrical equipment
that contains any oil or dielectric fluid containing levels of polychlorinated
biphenyls in excess of 50 parts per million.

"Health Business" means a segment of the Accelerated Learning Business that
offers physical education and health solutions under the SPARK brand.

"Hedge Agreement" means a "swap agreement" as that term is defined in Section
101(53B)(A) of the Bankruptcy Code.

"Hedge Obligations" means any and all obligations or liabilities, whether
absolute or contingent, due or to become due, now existing or hereafter arising,
of Parent or its Subsidiaries arising under, owing pursuant to, or existing in
respect of Hedge Agreements entered into with one or more of the Hedge
Providers.

"Hedge Provider" means any Lender or any of its Affiliates; provided, that no
such Person shall constitute a Hedge Provider unless and until (x) in the case
of Wells Fargo or its Affiliates, Agent shall have received a Bank Product
Provider Agreement from such Person and with respect to the applicable Hedge
Agreement prior to the date that is 10 days after the execution and delivery of
such Hedge Agreement with Parent or its Subsidiaries, or (y) in the case of any
other Person, Agent shall have received a Bank Product Provider Agreement from
such Person and with respect to the applicable Hedge Agreement within 10 days
after the execution and delivery of such Hedge Agreement with Parent or its
Subsidiaries; provided further, that if, at any time, a Lender ceases to be a
Lender under the Agreement, then, from and after the date on which it ceases to
be a Lender thereunder, neither it nor any of its Affiliates shall constitute
Hedge Providers and the obligations with respect to Hedge Agreements entered
into with such former Lender or any of its Affiliates shall no longer constitute
Hedge Obligations.

"Indebtedness" as to any Person means (a) all obligations of such Person for
borrowed money, (b) all obligations of such Person evidenced by bonds,
debentures, notes, or other similar instruments and all reimbursement or other
obligations in respect of letters of credit, bankers acceptances, or other
financial products, (c) all obligations of such Person as a lessee under Capital
Leases, (d) all obligations or liabilities of others secured by a Lien on any
asset of such Person, irrespective of whether such obligation or liability is
assumed, (e) all obligations of such Person to pay the deferred purchase price
of assets (other than trade payables incurred in the ordinary course of business
and repayable in accordance with customary trade practices and, for the
avoidance of doubt, other than royalty payments payable in the ordinary course
of business in respect of non-exclusive licenses), (f) all monetary obligations
of such Person owing under Hedge Agreements (which amount shall be calculated
based on the amount that would be payable by such Person if the Hedge Agreement
were terminated on the date of determination), (g) any Disqualified Equity
Interests of such Person, and (h) any obligation of such Person guaranteeing or
intended to guarantee (whether directly or indirectly guaranteed, endorsed,
co-made, discounted, or sold with recourse) any obligation of any other Person
that constitutes Indebtedness under any of clauses (a) through (g) above;
provided that  reimbursement obligations with respect to Permitted Surety Bonds
that have not been drawn shall not constitute Indebtedness.  For purposes of
this definition, (i) the amount of any

Schedule 1.1 – Page 22

Indebtedness represented by a guaranty or other similar instrument shall be the
lesser of the principal amount of the obligations guaranteed and still
outstanding and the maximum amount for which the guaranteeing Person may be
liable pursuant to the terms of the instrument embodying such Indebtedness, and
(ii) the amount of any Indebtedness which is limited or is non-recourse to a
Person or for which recourse is limited to an identified asset shall be valued
at the lesser of (A) if applicable, the limited amount of such obligations, and
(B) if applicable, the fair market value of such assets securing such
obligation.

"Indemnified Liabilities" has the meaning specified therefor in Section 10.3 of
the Agreement.

"Indemnified Person" has the meaning specified therefor in Section 10.3 of the
Agreement.

"Indemnified Taxes" means, any Taxes other than Excluded Taxes.

"Insolvency Proceeding" means any proceeding commenced by or against any Person
under any provision of the Bankruptcy Code or under any other state or federal
bankruptcy or insolvency law, assignments for the benefit of creditors, formal
or informal moratoria, compositions, extensions generally with creditors, or
proceedings seeking reorganization, arrangement, or other similar relief.

"Intercompany Subordination Agreement" means an intercompany subordination
agreement, dated as of even date with the Agreement, executed and delivered by
Parent, each of its Subsidiaries each of the other Loan Parties, and Agent, the
form and substance of which is reasonably satisfactory to Agent.

"Interest Expense" means, for any period and without duplication, the sum of (a)
the aggregate of the cash interest expense and Non-Cash Interest Expense of Loan
Parties for such period, determined on a consolidated basis in accordance with
GAAP, and including, without limitation, the component of payments in respect of
conditional sale contracts, Capitalized Lease Obligations, purchase money
Indebtedness  and Sale/Leaseback Liabilities and title retention agreements
treated under GAAP as interest, (b) all commissions, discounts and other fees
and charges with respect to letters of credit and bankers’ acceptance
financings, (c) all commitment and facility or analogous fees payable under any
Indebtedness or other financing agreements, (d) all collateral monitoring fees
and expenses, agent fees and other expenses and indemnities owing under any
Indebtedness or other financing agreements and any Lender Group Expenses and
other fees and amounts payable to Agent, Co-Collateral Agents and Lenders
(excluding (i) the Closing Fee (as defined in the Split Lien Credit Agreement as
in effect on the date hereof), (ii) any Early Payment Fee (as defined in the
Split Lien Credit Agreement as in effect on the date hereof), and (iii) all
Lender Group Expenses and expenses of the Split Lien Agent incurred or accrued
in the case of this clause (iii) with respect to, but only with respect to, the
period prior to the Closing Date and that are payable on or prior to the Closing
Date, other than the annual agent’s fee payable to the Split Lien Agent pursuant
to the Administrative Agent Fee Agreement (as defined in the Split Lien Credit
Agreement as in effect on the date hereof), which shall be included in Interest
Expense) and (e) all Rate Hedging Obligations.

Schedule 1.1 – Page 23

"Interest Expense Coverage Ratio" means, for any period, the ratio of (x) EBITDA
for such period to (y) Interest Expense (other than Non-Cash Interest Expense)
paid or payable for such period.

"Interest Period" means, with respect to each LIBOR Rate Loan, a period
commencing on the date of the making of such LIBOR Rate Loan (or the
continuation of a LIBOR Rate Loan or the conversion of a Base Rate Loan to a
LIBOR Rate Loan) and ending 14 days or 1, 2, 3 or 6 months thereafter; provided,
that (a) interest shall accrue at the applicable rate based upon the LIBOR Rate
from and including the first day of each Interest Period to, but excluding, the
day on which any Interest Period expires, (b) any Interest Period that would end
on a day that is not a Business Day shall be extended to the next succeeding
Business Day unless such Business Day falls in another calendar month, in which
case such Interest Period shall end on the next preceding Business Day, (c) with
respect to an Interest Period of a month or greater that begins on the last
Business Day of a calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest Period), the
Interest Period shall end on the last Business Day of the calendar month that is
1, 2, 3 or 6 months after the date on which the Interest Period began, as
applicable, and (d) Borrowers may not elect an Interest Period which will end
after the Maturity Date.

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

"Inventory Reserves" means, as of any date of determination, (a) Landlord
Reserves, and (b) those reserves that Co-Collateral Agents deem necessary or
appropriate, in their Permitted Discretion and subject to Section 2.1(c), to
establish and maintain (including reserves for slow moving Inventory and
Inventory shrinkage) with respect to Eligible Inventory or the Maximum Revolver
Amount.

"Investment" means, with respect to any Person, any investment by such Person in
any other Person (including Affiliates) in the form of loans, guarantees,
advances, capital contributions (excluding (a) commission, travel, and similar
advances to officers and employees of such Person made in the ordinary course of
business, and (b) bona fide accounts receivable arising in the ordinary course
of business), or acquisitions of Indebtedness, Equity Interests, or all or
substantially all of the assets of such other Person (or of any division or
business line of such other Person), and any other items that are or would be
classified as investments on a balance sheet prepared in accordance with GAAP.
 The amount of any Investment shall be the original cost of such Investment plus
the cost of all additions thereto, without any adjustment for increases or
decreases in value, or write-ups, write-downs, or write-offs with respect to
such Investment.

"IRC" means the Internal Revenue Code of 1986, as in effect from time to time.

"ISP" means, with respect to any Letter of Credit, the "International Standby
Practices 1998" published by the Institute of International Banking Law &
Practice (or such later version thereof as may be in effect at the time of
issuance).

"Issuer Document" means, with respect to any Letter of Credit, a letter of
credit application, a letter of credit agreement, or any other document,
agreement or instrument entered

Schedule 1.1 – Page 24

into (or to be entered into) by a Borrower in favor of Issuing Lender or
Underlying Issuer and relating to such Letter of Credit.

"Issuing Lender" means WFCF or any other Lender that, at the request of
Administrative Borrower and with the consent of Agent, agrees, in such Lender's
sole discretion, to become an Issuing Lender for the purpose of issuing Letters
of Credit or Reimbursement Undertakings pursuant to Section 2.11 of the
Agreement and Issuing Lender shall be a Lender.

"Landlord Reserve" means, as to each location at which any Loan Party has
Inventory or books and records located and as to which a Collateral Access
Agreement has not been received by Agent, (x) in the case of real property
leased by the applicable Borrower, a reserve in an amount equal to the greater
of (a) the number of months' rent for which the landlord will have, under
applicable law, a Lien in the Inventory of such Loan Party to secure the payment
of rent or other amounts under the lease relative to such location, and (b) 3
months' rent under the lease relative to such location and (y) in the case of
any other location, a reserve in an amount determined by Co-Collateral Agents in
their Permitted Discretion.

“Lease” means a lease, license, concession, occupancy agreement or other
agreement (written or oral, now or at any time in effect) which grants to any
Person a possessory interest in, or the right to use, all or any part of a
parcel of Real Property.

“Leased Real Property” means any leasehold interest in Real Property of any Loan
Party as lessee, sublessee or the like under any Lease.

"Lender" has the meaning set forth in the preamble to the Agreement, shall
include Issuing Lender and the Swing Lender, and shall also include any other
Person made a party to the Agreement pursuant to the provisions of Section 13.1
of the Agreement and "Lenders" means each of the Lenders or any one or more of
them.

"Lender Group" means each of the Lenders (including Issuing Lender and the Swing
Lender), each of the Co-Collateral Agents and Agent, or any one or more of them.

"Lender Group Expenses" means all (a) costs or expenses (including taxes and
insurance premiums) required to be paid by Parent or its Subsidiaries under any
of the Loan Documents that are paid, advanced, or incurred by the Lender Group,
(b) documented out-of-pocket fees or charges paid or incurred by Agent and each
Co-Collateral Agent in connection with the Lender Group's transactions with
Parent or its Subsidiaries under any of the Loan Documents, including, fees or
charges for background checks, OFAC/PEP searches, photocopying, notarization,
couriers and messengers, telecommunication, public record searches, filing fees,
recording fees, publication, appraisal (including periodic collateral appraisals
or business valuations to the extent of the fees and charges (and up to the
amount of any limitation) contained in the Agreement or the Fee Letter), real
estate surveys, real estate title policies and endorsements, and environmental
audits, (c) Agent's customary fees and charges (as adjusted from time to time)
with respect to the disbursement of funds (or the receipt of funds) to or for
the account of Borrowers (whether by wire transfer or otherwise), together with
any out-of-pocket costs and expenses incurred in connection therewith,
(d) customary charges imposed or incurred by Agent resulting from the dishonor
of checks payable by or to any Loan Party, (e) reasonable

Schedule 1.1 – Page 25

documented out-of-pocket costs and expenses paid or incurred by the Lender Group
to correct any default or enforce any provision of the Loan Documents, or during
the continuance of an Event of Default, in gaining possession of, maintaining,
handling, preserving, storing, shipping, selling, preparing for sale, or
advertising to sell the Collateral, or any portion thereof, irrespective of
whether a sale is consummated, (f) field examination, appraisal, and valuation
fees and expenses of Agent and each Co-Collateral Agent related to any field
examinations, appraisals, or valuation to the extent of the fees and charges
(and up to the amount of any limitation) provided in Section 2.10 of the
Agreement, (g) Agent's reasonable costs and expenses (including reasonable
documented attorneys' fees and expenses) relative to third party claims or any
other lawsuit or adverse proceeding paid or incurred, whether in enforcing or
defending the Loan Documents or otherwise in connection with the transactions
contemplated by the Loan Documents, Agent's Liens in and to the Collateral, or
the Lender Group's relationship with Parent or any of its Subsidiaries, (h)
Agent's and each Co-Collateral Agent's reasonable documented costs and expenses
(including reasonable documented attorneys' fees and due diligence expenses)
incurred in advising, structuring, drafting, reviewing, administering (including
travel, meals, and lodging), syndicating (including reasonable costs and
expenses relative to CUSIP, DXSyndicate™, SyndTrak or other communication costs
incurred in connection with a syndication of the loan facilities), or amending,
waiving, or modifying the Loan Documents, (i) Agent's, each Co-Collateral Agent
and each Lender's reasonable documented costs and expenses (including reasonable
documented attorneys', accountants', consultants', and other advisors' fees and
expenses) incurred in terminating, enforcing (including attorneys, accountants,
consultants, and other advisors fees and expenses incurred in connection with a
"workout," a "restructuring," or an Insolvency Proceeding concerning Parent or
any of its Subsidiaries or in exercising rights or remedies under the Loan
Documents), or defending the Loan Documents, irrespective of whether a lawsuit
or other adverse proceeding is brought, or in taking any enforcement action or
any Remedial Action with respect to the Collateral, and (j) the fees, charges,
commissions and costs provided for in Section 2.11(j) of the Agreement
(including any fronting fees) and all other fees, charges, commissions, costs
and expenses for amendments, renewals, extensions, transfers, or drawings from
time to time charged by the Underlying Issuer or incurred or charged by Issuing
Lender in respect of Letters of Credit and out-of-pocket fees, costs, and
expenses charged by the Underlying Issuer or incurred or charged by Issuing
Lender in connection with the issuance, amendment, renewal, extension, or
transfer of, or drawing under, any Letter of Credit or any demand for payment
thereunder.

"Lender Group Representatives" has the meaning specified therefor in Section
17.9 of the Agreement.

"Lender-Related Person" means, with respect to any Lender, such Lender, together
with such Lender's Affiliates, officers, directors, employees, attorneys, and
agents.

"Letter of Credit" means a letter of credit (as that term is defined in the
Code) issued by Issuing Lender or a letter of credit (as that term is defined in
the Code) issued by Underlying Issuer, as the context requires.

"Letter of Credit Collateralization" means either (a) providing cash collateral
(pursuant to documentation reasonably satisfactory to Agent, including
provisions that specify that the Letter of Credit Fees and all fees, charges and
commissions provided for in Section

Schedule 1.1 – Page 26

2.11(j) of the Agreement (including any fronting fees) will continue to accrue
while the Letters of Credit are outstanding) to be held by Agent for the benefit
of the Revolving Lenders in an amount equal to 105% of the then existing Letter
of Credit Usage, (b) delivering to Agent documentation executed by all
beneficiaries under the Letters of Credit, in form and substance reasonably
satisfactory to Agent and Issuing Lender, terminating all of such beneficiaries'
rights under the Letters of Credit, or (c) providing Agent with a standby letter
of credit, in form and substance reasonably satisfactory to Agent, from a
commercial bank acceptable to Agent (in its sole discretion) in an amount equal
to 105% of the then existing Letter of Credit Usage (it being understood that
the Letter of Credit Fee and all fronting fees set forth in the Agreement will
continue to accrue while the Letters of Credit are outstanding and that any such
fees that accrue must be an amount that can be drawn under any such standby
letter of credit).

"Letter of Credit Disbursement" means a payment made by Issuing Lender or
Underlying Issuer pursuant to a Letter of Credit.

"Letter of Credit Exposure" means, as of any date of determination with respect
to any Lender, such Lender's Pro Rata Share of the Letter of Credit Usage on
such date.

"Letter of Credit Fee" has the meaning specified therefor in Section 2.6(b) of
the Agreement.

"Letter of Credit Usage" means, as of any date of determination, the aggregate
undrawn amount of all outstanding Letters of Credit.

"LIBOR Deadline" has the meaning specified therefor in Section 2.12(b)(i) of the
Agreement.

"LIBOR Notice" means a written notice in the form of Exhibit L-1.

"LIBOR Option" has the meaning specified therefor in Section 2.12(a) of the
Agreement.

"LIBOR Rate" means the rate per annum rate appearing on Macro*World's
(www.mworld.com; the "Service") Page BBA LIBOR - USD (or on any successor or
substitute page of such Service, or any successor to or substitute for such
Service) 2 Business Days prior to the commencement of the requested Interest
Period, for a term, and in an amount, comparable to the Interest Period and the
amount of the LIBOR Rate Loan requested (whether as an initial LIBOR Rate Loan
or as a continuation of a LIBOR Rate Loan or as a conversion of a Base Rate Loan
to a LIBOR Rate Loan) by Borrowers in accordance with the Agreement (and, if any
such rate is below zero, the LIBOR Rate shall be deemed to be zero), which
determination shall be made by Agent and shall be conclusive in the absence of
manifest error.

"LIBOR Rate Loan" means each portion of a Revolving Loan that bears interest at
a rate determined by reference to the LIBOR Rate.

"LIBOR Rate Margin" has the meaning set forth in the definition of Applicable
Margin.

Schedule 1.1 – Page 27

"Lien" means any mortgage, deed of trust, pledge, hypothecation, assignment,
charge, deposit arrangement, encumbrance, easement, lien (statutory or other),
security interest, or other security arrangement and any other preference,
priority, or preferential arrangement of any kind or nature whatsoever,
including any conditional sale contract or other title retention agreement, the
interest of a lessor under a Capital Lease and any synthetic or other financing
lease having substantially the same economic effect as any of the foregoing.

"Loan" shall mean any Revolving Loan (including any Swing Loan or Extraordinary
Advance) made (or to be made) hereunder.

"Loan Account" has the meaning specified therefor in Section 2.9 of the
Agreement.

"Loan Documents" means the Agreement, the Control Agreements, the Copyright
Security Agreement, any Borrowing Base Certificate, the Fee Letter, the Guaranty
and Security Agreement, the Intercompany Subordination Agreement, any Issuer
Documents, the Letters of Credit, the Mortgages, the Patent Security Agreement,
the Trademark Security Agreement, any note or notes executed by a Borrower in
connection with the Agreement and payable to any member of the Lender Group, and
any other instrument or agreement entered into, now or in the future, by Parent
or any of its Subsidiaries and any member of the Lender Group in connection with
the Agreement.

"Loan Party" means any Borrower or any Guarantor.

"Margin Stock" as defined in Regulation U of the Board of Governors as in effect
from time to time.

"Material Adverse Effect" means (a) a material adverse effect in the business,
operations, results of operations, assets, liabilities or financial condition of
Parent and its Subsidiaries, taken as a whole, (b) a material impairment of
Parent's and its Subsidiaries' ability to perform their obligations under the
Loan Documents to which they are parties or of the Lender Group's ability to
enforce the Obligations or realize upon the Collateral (other than as a result
of as a result of an action taken or not taken that is solely in the control of
Agent), or (c) a material impairment of the enforceability or priority of
Agent's Liens with respect to all or a material portion of the Collateral as a
result of an action or failure to act on the part of Parent or its Subsidiaries.

"Maturity Date" means the earliest of (x) October 31, 2015, (y) September 30,
2014 if the Indebtedness under the Convertible Note Documents has not been
refinanced prior to such date and (z) 60 days prior to the first put date
occurring after the date hereof pursuant to the Convertible Note Documents (as
amended, supplemented or modified) or any Indebtedness refinancing the
Convertible Notes.

"Maximum Revolver Amount" means $200,000,000, decreased by the amount of
reductions in the Revolver Commitments made in accordance with Section 2.4(c) of
the Agreement.

Schedule 1.1 – Page 28

"Minimum Excess Availability Amount" means, as of any date of determination, the
greater of (a) 12.5% of the Maximum Revolver Amount and (b) $25,000,000.

“Minimum Liquidity Test” means, with respect to the Borrowers and their
Subsidiaries at the close of business on the last Business Day of each fiscal
month, that (x) the sum of (i) Availability at such time plus (ii) the lesser of
Qualified Cash at such time and $2,000,000 exceeds (y) $20,000,000.

“Minimum Term Loan Amount” means the amount necessary to prepay $10,000,000 in
principal amount of the Split Lien Debt plus accrued interest payable thereon
plus the amount of the Early Payment Fee (as defined in the Split Lien Credit
Agreement in effect as of the date hereof) payable in respect thereof.

"Moody's" has the meaning specified therefor in the definition of Cash
Equivalents.

"Mortgages" means, individually and collectively, one or more mortgages, deeds
of trust, or deeds to secure debt, executed and delivered by Parent or its
Subsidiaries in favor of Agent, in form and substance reasonably satisfactory to
Co-Collateral Agents, that encumber the Real Property Collateral.

"Net Cash Proceeds" means:

(a)

with respect to any sale or disposition by Parent or any of its Subsidiaries of
assets, the amount of cash proceeds received (directly or indirectly) from time
to time (whether as initial consideration or through the payment of deferred
consideration) by or on behalf of Parent or its Subsidiaries, in connection
therewith after deducting therefrom only (i) the amount of any Indebtedness
secured by any Permitted Lien on any asset (other than (A) Indebtedness owing to
Agent, any Co-Collateral Agent or any Lender under the Agreement or the other
Loan Documents, (B) Indebtedness under the Split Lien Documents and
(C) Indebtedness assumed by the purchaser of such asset) which is required to
be, and is, repaid in connection with such sale or disposition, (ii) reasonable
fees, commissions, and expenses related thereto and required to be paid by
Parent or such Subsidiary in connection with such sale or disposition,
(iii) taxes paid or payable to any taxing authorities by Parent or such
Subsidiary in connection with such sale or disposition, in each case to the
extent, but only to the extent, that the amounts so deducted are, at the time of
receipt of such cash, actually paid or payable to a Person that is not an
Affiliate of Parent or any of its Subsidiaries, and are properly attributable to
such transaction; and (iv) all amounts that are set aside as a reserve (A) for
adjustments in respect of the purchase price of such assets, (B) for any
liabilities associated with such sale or casualty, to the extent such reserve is
required by GAAP, and (C) for the payment of unassumed liabilities relating to
the assets sold or otherwise disposed of at the time of, or within 30 days
after, the date of such sale or other disposition, to the extent that in each
case the funds described above in this clause (iv) are (x) deposited into escrow
with a third party escrow agent or set aside in a separate Deposit Account that
is subject to a Control Agreement in favor of Agent and (y) paid to Agent as a
prepayment of the applicable Obligations in accordance with Section 2.4(e) of
the Agreement at such time when such amounts are no longer required to be set
aside as such a reserve; and

Schedule 1.1 – Page 29

(b)

with respect to the issuance or incurrence of any Indebtedness by Parent or any
of its Subsidiaries, or the issuance by Parent or any of its Subsidiaries of any
Equity Interests, the aggregate amount of cash received (directly or indirectly)
from time to time (whether as initial consideration or through the payment or
disposition of deferred consideration) by or on behalf of Parent or such
Subsidiary in connection with such issuance or incurrence, after deducting
therefrom only (i) reasonable fees, commissions, and expenses related thereto
and required to be paid by Parent or such Subsidiary in connection with such
issuance or incurrence, (ii) taxes paid or payable to any taxing authorities by
Parent or such Subsidiary in connection with such issuance or incurrence, in
each case to the extent, but only to the extent, that the amounts so deducted
are, at the time of receipt of such cash, actually paid or payable to a Person
that is not an Affiliate of Parent or any of its Subsidiaries, and are properly
attributable to such transaction.

"Net Recovery Percentage" means, as of any date of determination, the percentage
of the book value of any category of Borrowers' Inventory that is estimated to
be recoverable in an orderly liquidation of such Inventory net of all associated
costs and expenses of such liquidation, such percentage to be determined as to
each category of Inventory and to be as specified in the most recent appraisal
received by Agent from an appraisal company selected by Co-Collateral Agents, it
being acknowledged and agreed that such percentages shall, to the extent set
forth in such appraisal, vary between the "busy" season (initially, which shall
be deemed to be the period commencing on May 1st through September 30 of each
year or, thereafter, 30 days prior to the corresponding dates of the "busy"
season set forth in any subsequent appraisal) and the "non-busy" season.  For
avoidance of doubt, Inventory of the type that Borrowers then have a supply of
52 weeks or more and less than 104 weeks (based on sales over the then preceding
12 consecutive month period) shall be considered one category and Inventory of
the type that Borrowers then have a supply of more than 104 weeks (based on
sales over the then preceding 12 consecutive month period) shall be considered a
separate category.

"Non-Cash Interest Expense" means all in interest expense other than interest
expense that is paid or payable in cash, and which shall include pay-in-kind or
capitalized interest expense.

"Non-Consenting Lender" has the meaning specified therefor in Section 14.2(a) of
the Agreement.

"Non-Defaulting Lender" means each Lender other than a Defaulting Lender.

"Obligations" means (a) all loans (including the Revolving Loans (inclusive of
Extraordinary Advances and Swing Loans)), debts, 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), reimbursement or indemnification obligations with
respect to Reimbursement Undertakings or with respect to Letters of Credit
(irrespective of whether contingent), premiums, liabilities (including all
amounts charged to the Loan Account pursuant to the Agreement), obligations
(including indemnification obligations), 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

Schedule 1.1 – Page 30

in any such Insolvency Proceeding), guaranties, and all covenants and duties of
any other kind and description owing by any Loan Party arising out of, under,
pursuant to, in connection with, or evidenced by the Agreement or any of the
other Loan Documents and irrespective of whether for the payment of money,
whether direct or indirect, absolute or contingent, due or to become due, now
existing or hereafter arising, and including all interest not paid when due and
all other expenses or other amounts that any Borrower is required to pay or
reimburse by the Loan Documents or by law or otherwise in connection with the
Loan Documents, (b) all debts, liabilities, or obligations (including
reimbursement obligations, irrespective of whether contingent) owing by any
Borrower or any other Loan Party to an Underlying Issuer now or hereafter
arising from or in respect of an Underlying Letters of Credit, and (c) all Bank
Product Obligations.  Without limiting the generality of the foregoing, the
Obligations of Borrowers under the Loan Documents include the obligation to pay
(i) the principal of the Revolving Loans, (ii) interest accrued on the Revolving
Loans, (iii) the amount necessary to reimburse Issuing Lender for amounts paid
or payable pursuant to Letters of Credit or Reimbursement Undertakings and the
amount necessary to reimburse Underlying Issuer for amounts paid or payable
pursuant to Letters of Credit, (iv) Letter of Credit commissions, charges,
expenses, and fees, (v) Lender Group Expenses, (vi) fees payable under the
Agreement or any of the other Loan Documents, and (vii) indemnities and other
amounts payable by any Loan Party under any Loan Document.  Any reference in the
Agreement or in the Loan Documents to the Obligations shall include all or any
portion thereof and any extensions, modifications, renewals, or alterations
thereof, both prior and subsequent to any Insolvency Proceeding.

"OFAC" means The Office of Foreign Assets Control of the U.S. Department of the
Treasury.

"Other Science Projects" means the marketing units that are sub-segments of the
Delta Business that offer grade 6-12 learning systems that integrate textbooks,
equipment and technology under the CPO Science brand, a supplementary science
curriculum under the NEO/SCI brand and SCIS brands, and a math curriculum,
supplementary products and manipulatives primarily under the ThinkMath brand.

"Originating Lender" has the meaning specified therefor in Section 13.1(e) of
the Agreement.

"Overadvance" means, as of any date of determination, that the Revolver Usage is
greater than any of the limitations set forth in Section 2.1 or Section 2.11.

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

"Participant" has the meaning specified therefor in Section 13.1(e) of the
Agreement.

"Participant Register" has the meaning set forth in Section 13.1(i) of the
Agreement.

"Patent Security Agreement" has the meaning specified therefor in the Guaranty
and Security Agreement.

Schedule 1.1 – Page 31

"Patriot Act" has the meaning specified therefor in Section 4.13 of the
Agreement.

"Perfection Certificate" means a certificate in the form of Exhibit P-1.

"Permitted Convertible Note Refinance" means the refinance of the Indebtedness
outstanding under the Convertible Notes with the proceeds of the issuance of
Equity Interests of Holdings (other than Disqualified Equity Interests) or
Refinancing Indebtedness.

"Permitted Discretion" means a determination made in the exercise of reasonable
(from the perspective of a secured asset-based lender) business judgment.

"Permitted Dispositions" means:

(a)

sales, abandonment, or other dispositions of Equipment that is substantially
worn, damaged, or obsolete or no longer used or useful in the ordinary course of
business and leases or subleases of Real Property not useful in the conduct of
the business of Parent and its Subsidiaries,

(b)

sales of Inventory to buyers in the ordinary course of business,

(c)

the use or transfer of money or Cash Equivalents in a manner that is not
prohibited by the terms of the Agreement or the other Loan Documents,

(d)

the licensing, on a non-exclusive basis, of patents, trademarks, copyrights, and
other intellectual property rights in the ordinary course of business,

(e)

the granting of Permitted Liens,

(f)

the sale or discount, in each case without recourse, of accounts receivable
arising in the ordinary course of business, but only in connection with the
compromise or collection thereof,

(g)

any involuntary loss, damage or destruction of property,

(h)

any involuntary condemnation, seizure or taking, by exercise of the power of
eminent domain or otherwise, or confiscation or requisition of use of property,

(i)

the leasing or subleasing of assets of Parent or its Subsidiaries in the
ordinary course of business,

(j)

the sale or issuance of Equity Interests (other than Disqualified Equity
Interests) of Parent,

(k)

(i) the lapse of registered patents, trademarks, copyrights and other
intellectual property of Parent and its Subsidiaries to the extent not
economically desirable in the conduct of their business or (ii) the abandonment
of patents, trademarks, copyrights, or other intellectual property rights in the
ordinary course of business so long as (in each case under clauses (i) and
(ii)), (A) with respect to copyrights, such copyrights are not material revenue

Schedule 1.1 – Page 32

generating copyrights, and (B) such lapse is not materially adverse to the
interests of the Lender Group,

(l)

the making of Restricted Payments that are expressly permitted to be made
pursuant to the Agreement,

(m)

the making of Permitted Investments,

(n)

within 12 months of the date hereof, the asset sales described in, and subject
to the terms of, the Pre-approved Disposition Letter dated as of the date hereof
among Borrowers and Agent (the "Pre-Approved Disposition Letter") so long as
 (i) both before and immediately after giving effect to such sale there is no
Default or Event of Default in existence, (ii) Borrowers prepay the Revolving
Loans in an amount not less than the book value of the Accounts and Inventory
sold, transferred or otherwise disposed of pursuant to such asset sales, and
(iii) (x) to the extent the Net Cash Proceeds of such asset sales are equal to
or less than Minimum Term Loan Amount plus $5,000,000 plus the book value of
Accounts and Inventory sold in such assets sales (other than of the Designated
Divestiture Business Unit), the corresponding prepayments of the Indebtedness
under the Split Lien Documents do not exceed the lesser of (1) the Minimum Term
Loan Amount or (2) the aggregate Net Cash Proceeds of such sales less the book
value of the Accounts and Inventory sold, transferred or otherwise disposed of
pursuant to such asset sale and (y) to the extent the Net Cash Proceeds of such
asset sales (other than of the Designated Divestiture Business Unit) are more
than the Minimum Term Loan Amount plus $5,000,000 plus the book value of
Accounts and Inventory sold in such assets sales, the corresponding prepayments
of the Indebtedness under the Split Lien Documents do not exceed the aggregate
Net Cash Proceeds of such sales less $5,000,000 plus the book value of the
Accounts and Inventory sold, transferred or otherwise disposed of pursuant to
such asset sale;

(o)

a Carson-Dellosa Drag-Along Sale; and

(p)

dispositions of fixed assets not otherwise permitted in clauses (a) through (m)
above so long as (i) no Default or Event of Default then exists or would arise
therefrom, (ii) such disposition is made at fair market value, and (iii) the
aggregate fair market value of all such fixed assets disposed of in all such
dispositions in any fiscal year (including the proposed disposition) would not
exceed $250,000.

"Permitted Indebtedness" means:

(a)

Indebtedness evidenced by the Agreement or the other Loan Documents, as well as
Indebtedness owed to Underlying Issuers with respect to Underlying Letters of
Credit,

(b)

Indebtedness set forth on Schedule 4.14 to the Agreement and any Refinancing
Indebtedness in respect of such Indebtedness,

(c)

Permitted Purchase Money Indebtedness and any Refinancing Indebtedness in
respect of such Indebtedness,

(d)

endorsement of instruments or other payment items for deposit,

Schedule 1.1 – Page 33

(e)

Indebtedness consisting of (i) unsecured guarantees incurred in the ordinary
course of business with respect to Permitted Surety Bonds; (ii) unsecured
guarantees arising with respect to customary indemnification obligations to
purchasers in connection with Permitted Dispositions; and (iii) unsecured
guarantees with respect to Indebtedness of Parent or one of its Subsidiaries, to
the extent that the Person that is obligated under such guaranty could have
incurred such underlying Indebtedness,

(f)

Permitted Surety Bonds in an aggregate amount not to exceed $30,000,000,

(g)

Indebtedness owed to any Person providing property, casualty, liability, or
other insurance to Parent or any of its Subsidiaries, so long as the amount of
such Indebtedness is not in excess of the amount of the unpaid cost of, and
shall be incurred only to defer the cost of, such insurance for the year in
which such Indebtedness is incurred and such Indebtedness is outstanding only
during such year,

(h)

the incurrence by Parent or its Subsidiaries of Indebtedness under Hedge
Agreements that are incurred for the bona fide purpose of hedging the interest
rate, commodity, or foreign currency risks associated with Parent's and its
Subsidiaries' operations and not for speculative purposes,

(i)

Indebtedness incurred in the ordinary course of business in respect of credit
cards, credit card processing services, debit cards, stored value cards,
purchase cards (including so-called "procurement cards" or "P-cards"), or Cash
Management Services,

(j)

unsecured Indebtedness of Parent owing to former employees, officers, or
directors (or any spouses, ex-spouses, or estates of any of the foregoing)
incurred in connection with the repurchase by Parent of the Equity Interests of
Parent that has been issued to such Persons, so long as (i) no Default or Event
of Default has occurred and is continuing or would result from the incurrence of
such Indebtedness, (ii) the aggregate amount of all such Indebtedness
outstanding at any one time does not exceed $250,000, and (iii) such
Indebtedness is subordinated to the Obligations on terms and conditions
reasonably acceptable to Agent,

(k)

Indebtedness composing Permitted Investments,

(l)

unsecured Indebtedness incurred in respect of netting services, overdraft
protection, and other like services, in each case, incurred in the ordinary
course of business,

(m)

Indebtedness outstanding under the Split Lien Documents (and any refinancing of
such Indebtedness to the extent such refinancing is permitted by, and subject to
the terms of, the Split Lien Intercreditor Agreement as in effect on the date
hereof) in an aggregate principal amount not to exceed $90,000,000 (plus
interest, fees and expenses paid in kind),

(n)

Indebtedness under the Convertible Notes in an aggregate principal amount not to
exceed $157,500,000 (plus accreted principal) and any Indebtedness incurred in
connection with a Permitted Convertible Note Refinance,

Schedule 1.1 – Page 34

(o)

accrual of interest, accretion or amortization of original issue discount, or
the payment of interest in kind, in each case, on Indebtedness that otherwise
constitutes Permitted Indebtedness,

(p)

any other unsecured Indebtedness incurred by Parent or any of its Subsidiaries
in an aggregate outstanding amount not to exceed $500,000 at any one time; and

(q)

Fee payable to Baird under the terms of Baird’s engagement letter dated January
20, 2012 with Parent in accordance with Section 3.6(f) of the Agreement.

"Permitted Intercompany Advances" means loans and other Investments made by
(a) a Loan Party to another Loan Party other than Parent, (b) a Subsidiary of
Parent that is not a Loan Party to another Subsidiary of Parent that is not a
Loan Party, (c) a Subsidiary of Parent that is not a Loan Party to a Loan Party,
so long as the parties thereto are party to the Intercompany Subordination
Agreement, and (d) a Loan Party to a Subsidiary of Parent that is not a Loan
Party so long as (i) the aggregate amount of all such loans and other
Investments (by type, not by the borrower) does not exceed $250,000 outstanding
at any one time, (ii) at the time of the making of such loan or other
Investment, no Event of Default has occurred and is continuing or would result
therefrom, and (iii) Borrowers have Excess Availability of $30,000,000 or
greater immediately after giving effect to each such loan.

"Permitted Investments" means:

(a)

Investments in cash and Cash Equivalents,

(b)

Investments in negotiable instruments deposited or to be deposited for
collection in the ordinary course of business,

(c)

advances made in connection with purchases of goods or services in the ordinary
course of business,

(d)

Investments received in settlement of amounts due to any Loan Party or any of
its Subsidiaries effected in the ordinary course of business or owing to any
Loan Party or any of its Subsidiaries as a result of Insolvency Proceedings
involving an account debtor or upon the foreclosure or enforcement of any Lien
in favor of a Loan Party or its Subsidiaries,

(e)

Investments owned by any Loan Party or any of its Subsidiaries on the Closing
Date and set forth on Schedule P-1 to the Agreement,

(f)

guarantees permitted under the definition of Permitted Indebtedness,

(g)

Permitted Intercompany Advances,

(h)

Equity Interests or other securities acquired in connection with the
satisfaction or enforcement of Indebtedness or claims due or owing to a Loan
Party or its Subsidiaries (in bankruptcy of customers or suppliers or otherwise
outside the ordinary course of business) or as security for any such
Indebtedness or claims,

Schedule 1.1 – Page 35

(i)

deposits of cash made in the ordinary course of business to secure performance
of operating leases,

(j)

(i) non-cash loans and advances to employees, officers, and directors of Parent
or any of its Subsidiaries for the purpose of purchasing Equity Interests in
Parent so long as the proceeds of such loans are used in their entirety to
purchase such Equity Interests in Parent, and (ii) loans and advances to
employees and officers of Parent or any of its Subsidiaries in the ordinary
course of business for any other business purpose and in an aggregate amount not
to exceed $250,000 at any one time,

(k)

Investments resulting from entering into (i) Bank Product Agreements, or
(ii) agreements relative to Indebtedness that is permitted under clause (j) of
the definition of Permitted Indebtedness,

(l)

equity Investments by any Loan Party in any Subsidiary of such Loan Party which
is required by law to maintain a minimum net capital requirement or as may be
otherwise required by applicable law, and

(m)

so long as no Event of Default has occurred and is continuing or would result
therefrom, any other Investments in an aggregate amount not to exceed $250,000
during the term of the Agreement.

"Permitted Liens" means

(a)

Liens granted to, or for the benefit of, Agent to secure the Obligations,

(b)

Liens for unpaid taxes, assessments, or other governmental charges or levies
that either (i) are not yet delinquent, or (ii) do not have priority over
Agent's Liens and the underlying taxes, assessments, or charges or levies are
the subject of Permitted Protests,

(c)

judgment Liens arising solely as a result of the existence of judgments, orders,
or awards that do not constitute an Event of Default under Section 8.3 of the
Agreement,

(d)

Liens set forth on Schedule P-2 to the Agreement; provided, that to qualify as a
Permitted Lien, any such Lien described on Schedule P-2 to the Agreement shall
only secure the Indebtedness that it secures on the Closing Date and any
Refinancing Indebtedness in respect thereof,

(e)

the interests of lessors under operating leases and non-exclusive licensors
under license agreements,

(f)

purchase money Liens or the interests of lessors under Capital Leases to the
extent that such Liens or interests secure Permitted Purchase Money Indebtedness
and so long as (i) such Lien attaches only to the asset purchased or acquired
and the proceeds thereof, and (ii) such Lien only secures the Indebtedness that
was incurred to acquire the asset purchased or acquired or any Refinancing
Indebtedness in respect thereof,

Schedule 1.1 – Page 36

(g)

Liens arising by operation of law in favor of warehousemen, landlords, carriers,
mechanics, materialmen, laborers, or suppliers, incurred in the ordinary course
of business and not in connection with the borrowing of money, and which Liens
either (i) are for sums not yet delinquent, or (ii) are the subject of Permitted
Protests,

(h)

Liens on amounts deposited to secure Parent's and its Subsidiaries' obligations
in connection with worker's compensation or other unemployment insurance,

(i)

Liens on amounts deposited to secure Parent's and its Subsidiaries' obligations
in connection with the making or entering into of bids, tenders, or leases in
the ordinary course of business and not in connection with the borrowing of
money,

(j)

Liens on amounts deposited to secure Parent's and its Subsidiaries reimbursement
obligations with respect to Permitted Surety Bonds permitted pursuant to clause
(f) of the definition of Permitted Indebtedness,

(k)

with respect to any Real Property, easements, rights of way, and zoning
restrictions that do not materially interfere with or impair the use or
operation thereof,

(l)

non-exclusive licenses of patents, trademarks, copyrights, and other
intellectual property rights in the ordinary course of business,

(m)

Liens that are replacements of Permitted Liens to the extent that the original
Indebtedness is the subject of permitted Refinancing Indebtedness and so long as
the replacement Liens only encumber those assets that secured the original
Indebtedness,

(n)

rights of setoff or bankers' liens upon deposits of funds in favor of banks or
other depository institutions, solely to the extent incurred in connection with
the maintenance of such Deposit Accounts in the ordinary course of business,

(o)

Liens granted in the ordinary course of business on the unearned portion of
insurance premiums securing the financing of insurance premiums to the extent
the financing is permitted under the definition of Permitted Indebtedness,

(p)

Liens in favor of customs and revenue authorities arising as a matter of law to
secure payment of customs duties not yet delinquent in connection with the
importation of goods,

(q)

Liens on Collateral securing the Indebtedness under the Split Lien Documents
subject to the Split Lien Intercreditor Agreement, and

(r)

other Liens on assets (other than Accounts or Inventory) which do not secure
Indebtedness for borrowed money or letters of credit and as to which the
aggregate amount of the obligations secured thereby does not exceed $100,000.

“Permitted PMM/Capital Lease Debt” means Capitalized Lease Obligations and
purchase money Indebtedness with respect to fixed assets (i) outstanding on the
Closing Date and set forth on Schedule 4.14 hereof and described as such on such
Schedule and (ii) incurred

Schedule 1.1 – Page 37

after the Closing Date in an aggregate principal amount for all such Capitalized
Lease Obligations and purchase money Indebtedness not to exceed $500,000
outstanding at any time, provided that such Capitalized Lease Obligations and
purchase money Indebtedness are entered into in connection with, and at the time
of or no later than 20 days after, the acquisition by the Borrowers of equipment
useful and used in the ordinary course of the Borrowers’ business and the
principal amount of such Capitalized Lease Obligations and purchase money
Indebtedness when incurred does not exceed the purchase price of the property
financed, and no such Capitalized Lease Obligations and purchase money
Indebtedness shall be refinanced for a principal amount in excess of the
principal amount refinanced.

"Permitted Protest" means the right of Parent or any of its Subsidiaries to
protest any Lien (other than any Lien that secures the Obligations), taxes
(other than payroll taxes or taxes that are the subject of a United States
federal tax lien), or rental payment, provided that (a) a reserve with respect
to such obligation is established on Parent's or its Subsidiaries' books and
records in such amount as is required under GAAP, (b) any such protest is
instituted promptly and prosecuted diligently by Parent or its Subsidiary, as
applicable, in good faith, and (c) Agent is satisfied that, while any such
protest is pending, there will be no impairment of the enforceability, validity,
or priority of any of Agent's Liens.

"Permitted Purchase Money Indebtedness" means, as of any date of determination,
Indebtedness (other than the Obligations, but including Capitalized Lease
Obligations), incurred after the Closing Date and at the time of, or within 20
days after, the acquisition of any fixed assets for the purpose of financing all
or any part of the acquisition cost thereof, in an aggregate principal amount
outstanding at any one time not in excess of $500,000.

"Permitted Senior Liens" means Permitted Liens which are non-consensual
Permitted Liens, permitted purchase money Liens, the interests of lessors under
Capital Leases, and, solely with respect to the Split Lien Priority Collateral,
Liens securing the Indebtedness under the Split Lien Documents.

“Permitted Surety Bonds” means unsecured guarantees and reimbursement
obligations incurred in the ordinary course of business with respect to surety
and appeal bonds, performance bonds, bid bonds, appeal bonds, completion
guarantee and similar obligations.

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

"Planner Business" means the business unit comprised of Premier Agendas, Inc.,
Premier School Agendas, Ltd. and Select Agendas, Corp.

“Planner Business EBITDA” means, for any period, calculated in accordance with
Exhibit B  and on a basis consistent (including without limitation with respect
to the allocation of corporate overhead) with the Compliance Certificate
delivered at the Closing Date, net income of the Planner Business on a
consolidated basis less  (in each case to the extent included in the calculation
of net income, but without duplication): (i) income tax credits and any other
tax

Schedule 1.1 – Page 38

benefits, (ii) interest income, and (iii) cash or non-cash gains or income from
items that are extraordinary; plus: (in each case to the extent deducted in the
calculation of net income, but without duplication): (i) any provision for
income tax, (ii) Interest Expense, (iii) depreciation and amortization, (iv)
extraordinary non-cash losses (including impairment charges) or expenses, (v)
non-cash expense related to stock-based compensation, and (vi) restructuring
charges or expenses (including severance costs) incurred in such period, in an
amount not in excess of $1,000,000 for any four-quarter period; provided that
for purposes of calculating Planner Business EBITDA, no Reconcilable Inclusion
with respect to the Planner Business shall be given effect and the applicable
contracts, rights or other assets (and any associated income or loss) shall not
be considered part of the Planner Business.

"Platform" has the meaning specified therefor in Section 17.9(c) of the
Agreement.

“Product Development Expense” means, for any period, the capitalized cash
investment on product development for such period.

"Projections" means Parent's forecasted (a) balance sheets, (b) profit and loss
statements, and (c) cash flow statements, all prepared on a basis consistent
with Parent's historical financial statements, together with appropriate
supporting details and a statement of underlying assumptions.

"Pro Rata Share" means, as of any date of determination:

(a)

with respect to a Lender's obligation to make all or a portion of the Revolving
Loans, with respect to such Lender's right to receive payments of interest,
fees, and principal with respect to the Revolving Loans, and with respect to all
other computations and other matters related to the Revolver Commitments or the
Revolving Loans, the percentage obtained by dividing (i) the Revolving Loan
Exposure of such Lender by (ii) the aggregate Revolving Loan Exposure of all
Lenders,

(b)

 with respect to a Lender's obligation to participate in the Letters of Credit,
with respect to such Lender's obligation to reimburse Issuing Lender, and with
respect to such Lender's right to receive payments of Letter of Credit fees, and
with respect to all other computations and other matters related to the Letters
of Credit, the percentage obtained by dividing (i) the Revolving Loan Exposure
of such Lender by (ii) the aggregate Revolving Loan Exposure of all Lenders;
provided, that if all of the Revolving Loans have been repaid in full and all
Revolver Commitments have been terminated, but Letters of Credit remain
outstanding, Pro Rata Share under this clause shall be determined as if the
Revolver Commitments had not been terminated and based upon the Revolver
Commitments as they existed immediately prior to their termination, and

(c)

[intentionally omitted]

(d)

with respect to all other matters and for all other matters as to a particular
Lender (including the indemnification obligations arising under Section 15.7 of
the Agreement), the percentage obtained by dividing (i) the Revolving Loan
Exposure of such Lender by (ii) the aggregate Revolving Loan Exposure of all
Lenders, in any such case as the applicable percentage

Schedule 1.1 – Page 39

may be adjusted by assignments permitted pursuant to Section 13.1; provided,
that if all of the Loans have been repaid in full, all Letters of Credit have
been made the subject of Letter of Credit Collateralization, and all Commitments
have been terminated, Pro Rata Share under this clause shall be determined as if
the Revolving Loan Exposures had not been repaid, collateralized, or terminated
and shall be based upon the Revolving Loan Exposures as they existed immediately
prior to their repayment, collateralization, or termination.

"Protective Advances" has the meaning specified therefor in Section 2.3(d)(i) of
the Agreement.

"Public Lender" has the meaning specified therefor in Section 17.9(c) of the
Agreement.

"Qualified Cash" means, as of any date of determination, the amount of
unrestricted cash and Cash Equivalents of Parent and its Subsidiaries that is in
Deposit Accounts or in Securities Accounts, or any combination thereof, and
which such Deposit Account or Securities Account is the subject of a Control
Agreement and is maintained by a branch office of the bank or securities
intermediary located within the United States.

"Qualified Equity Interest" means and refers to any Equity Interests issued by
Parent (and not by one or more of its Subsidiaries) that is not a Disqualified
Equity Interest.

“Rate Hedging Obligations” means any and all obligations of the Borrowers and
their Subsidiaries under (a) any and all agreements, devices or arrangements
designed to protect any Borrowers or any of their Subsidiaries from the
fluctuations of interest rates, including interest rate exchange agreements,
interest rate cap or collar protection agreements, and interest rate options,
puts and warrants, and (b) any and all cancellations, buy backs, reversals,
terminations or assignments of any of the foregoing.

"Reading Business" means the literacy and intervention division of the
Accelerated Learning Business.

"Real Property" means any estates or interests in real property now owned or
hereafter acquired by Parent or its Subsidiaries and the improvements thereto.

"Real Property Collateral" means the Real Property identified on Schedule R-1 to
the Agreement and any Real Property hereafter acquired by Parent or its
Subsidiaries.

"Receivable Reserves" means, as of any date of determination, those reserves
that Co-Collateral Agents deem necessary or appropriate, in their Permitted
Discretion and subject to Section 2.1(c), to establish and maintain (including
reserves for rebates, discounts, warranty claims, and returns) with respect to
the Eligible Accounts or the Maximum Revolver Amount.

"Reconcilable Inclusion" means, with respect to the Accelerated Learning
Business and the Planner Business, any inclusion within the Accelerated Learning
Business or the Planner Business, respectively, of contracts, rights or other
assets that (x) prior to such inclusion, were included in a different Business
Segment, or (y) in the case of contracts, rights or other assets not previously
included in a different Business Segment, are not consistent with the

Schedule 1.1 – Page 40

then-existing other contracts, rights and other assets of the Accelerated
Learning Business or the Planner Business, respectively.

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

"Reference Period" has the meaning set forth in the definition of EBITDA.

"Refinancing Indebtedness" means refinancings, renewals, or extensions of
Indebtedness so long as:

(a)

such refinancings, renewals, or extensions do not result in an increase in the
principal amount of the Indebtedness so refinanced, renewed, or extended, other
than by the amount of premiums paid thereon and the fees and expenses incurred
in connection therewith and by the amount of unfunded commitments with respect
thereto,

(b)

such refinancings, renewals, or extensions do not result in a shortening of the
average weighted maturity (measured as of the refinancing, renewal, or
extension) of the Indebtedness so refinanced, renewed, or extended, nor are they
on terms or conditions that, taken as a whole, are or could reasonably be
expected to be materially adverse to the interests of the Lenders,

(c)

if the Indebtedness that is refinanced, renewed, or extended was subordinated in
right of payment to the Obligations, then the terms and conditions of the
refinancing, renewal, or extension must include subordination terms and
conditions that are at least as favorable to the Lender Group as those that were
applicable to the refinanced, renewed, or extended Indebtedness, and

(d)

the Indebtedness that is refinanced, renewed, or extended is not recourse to any
Person that is liable on account of the Obligations other than those Persons
which were obligated with respect to the Indebtedness that was refinanced,
renewed, or extended.

"Register" has the meaning set forth in Section 13.1(h) of the Agreement.

"Registered Loan" has the meaning set forth in Section 13.1(h) of the Agreement.

"Reimbursement Undertaking" has the meaning specified therefor in Section
2.11(a) of the Agreement.

"Related Fund" means any Person (other than a natural person) that is engaged in
making, purchasing, holding or investing in bank loans and similar extensions of
credit in the ordinary course and that is administered, advised or managed by
(a) a Lender, (b) an Affiliate of a Lender or (c) an entity or an Affiliate of
an entity that administers, advises or manages a Lender.

"Remedial Action" means all actions taken to (a) clean up, remove, remediate,
contain, treat, monitor, assess, evaluate, or in any way address Hazardous
Materials in the indoor or outdoor environment, (b) prevent or minimize a
release or threatened release of Hazardous

Schedule 1.1 – Page 41

Materials so they do not migrate or endanger or threaten to endanger public
health or welfare or the indoor or outdoor environment, (c) restore or reclaim
natural resources or the environment, (d) perform any pre-remedial studies,
investigations, or post-remedial operation and maintenance activities, or
(e) conduct any other actions with respect to Hazardous Materials required by
Environmental Laws.

"Replacement Lender" has the meaning specified therefor in Section 2.13(b) of
the Agreement.

"Report" has the meaning specified therefor in Section 15.16 of the Agreement.

"Required Availability" means that the sum of (a) Excess Availability, plus
(b) Qualified Cash exceeds $25,000,000.

"Required Lenders" means, at any time, Lenders having or holding more than 50%
of the sum of the aggregate Revolving Loan Exposure of all Lenders; provided,
that (i) the Revolving Loan Exposure of any Defaulting Lender shall be
disregarded in the determination of the Required Lenders, and (ii) at any time
there are 2 or more Lenders, "Required Lenders" must include at least 2 Lenders
(who are not Affiliates of one another).

"Reserves" means, as of any date of determination, those reserves (other than
Receivable Reserves, Bank Product Reserves, and Inventory Reserves) that
Co-Collateral Agents deem necessary or appropriate, in their Permitted
Discretion and subject to Section 2.1(c), to establish and maintain (including
reserves with respect to (a) sums that Parent or its Subsidiaries are required
to pay under any Section of the Agreement or any other Loan Document (such as
taxes, assessments, insurance premiums, or, in the case of leased assets, rents
or other amounts payable under such leases) and has failed to pay, and
(b) amounts owing by Parent or its Subsidiaries to any Person to the extent
secured by a Lien on, or trust over, any of the Collateral (other than a
Permitted Lien), which Lien or trust, in the Permitted Discretion of
Co-Collateral Agents likely would be pari passu with or have a priority superior
to the Agent's Liens (such as Liens or trusts in favor of landlords,
warehousemen, carriers, mechanics, materialmen, laborers, or suppliers, or Liens
or trusts for ad valorem, excise, sales, or other taxes where given priority
under applicable law) in and to such item of the Collateral) with respect to the
Borrowing Base or the Maximum Revolver Amount.  

"Restricted Payment" means to (a) declare or pay any dividend or make any other
payment or distribution, directly or indirectly, on account of Equity Interests
issued by Parent (including any payment in connection with any merger or
consolidation involving Parent) or to the direct or indirect holders of Equity
Interests issued by Parent in their capacity as such (other than dividends or
distributions payable in Qualified Equity Interests issued by Parent, or
(b) purchase, redeem, make any sinking fund or similar payment, or otherwise
acquire or retire for value (including in connection with any merger or
consolidation involving Parent) any Equity Interests issued by Parent, (c) make
any payment to retire, or to obtain the surrender of, any outstanding warrants,
options, or other rights to acquire Equity Interests of Parent now or hereafter
outstanding, and (d) make, or cause or suffer to permit any of Parent's
Subsidiaries to make, any payment or prepayment of principal of, premium, if
any, or interest on, or redemption,

Schedule 1.1 – Page 42

purchase, retirement, defeasance (including in-substance or legal defeasance),
sinking fund or similar payment with respect to, any Subordinated Indebtedness.

"Revolver Commitment" means, with respect to each Revolving Lender, its Revolver
Commitment, and, with respect to all Revolving Lenders, their Revolver
Commitments, in each case as such Dollar amounts are set forth beside such
Revolving Lender's name under the applicable heading on Schedule C-1 to the
Agreement or in the Assignment and Acceptance pursuant to which such Revolving
Lender became a Revolving Lender under the Agreement, as such amounts may be
reduced or increased from time to time pursuant to assignments made in
accordance with the provisions of Section 13.1 of the Agreement.

"Revolver Usage" means, as of any date of determination, the sum of (a) the
amount of outstanding Revolving Loans (inclusive of Swing Loans and
Extraordinary Advances), plus (b) the amount of the Letter of Credit Usage.

"Revolving Lender" means a Lender that has a Revolver Commitment or that has an
outstanding Revolving Loan.

"Revolving Loan Exposure" means, with respect to any Revolving Lender, as of any
date of determination (a) prior to the termination of the Revolver Commitments,
the amount of such Lender's Revolver Commitment, and (b) after the termination
of the Revolver Commitments, the aggregate outstanding principal amount of the
Revolving Loans of such Lender.

"Revolving Loans" has the meaning specified therefor in Section 2.1(a) of the
Agreement.

“Sale/Leaseback Liabilities” means any amount or liability in respect of
sale/leaseback or analogous transactions that is or is required under GAAP to be
shown on the consolidated balance sheet of the Borrowers and their consolidated
Subsidiaries.

"Sanctioned Entity" means (a) a country or a government of a country, (b) an
agency of the government of a country, (c) an organization directly or
indirectly controlled by a country or its government, (d) a Person resident in
or determined to be resident in a country, in each case, that is subject to a
country sanctions program administered and enforced by OFAC.

"Sanctioned Person" means a person named on the list of Specially Designated
Nationals maintained by OFAC.

"S&P" has the meaning specified therefor in the definition of Cash Equivalents.

"SEC" means the United States Securities and Exchange Commission and any
successor thereto.

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

Schedule 1.1 – Page 43

"Securities Act" means the Securities Act of 1933, as amended from time to time,
and any successor statute.

“Secured Debt” means (a) Indebtedness under the Split Lien Documents, (b) the
Obligations, (c) all Permitted PMM/Capital Lease Debt, and (d) all
Sale/Leaseback Liabilities.

“Secured Leverage Ratio” means for any measuring period the ratio of (x) the
aggregate amount of Secured Debt of the Borrowers and their Subsidiaries, on a
consolidated basis, as of the last day of such period to (y) EBITDA for such
period.

“Seeds Divestiture” means the disposition by the Loan Parties of the Seeds of
Science / Roots of Reading business in January 2012.

"Settlement" has the meaning specified therefor in Section 2.3(e)(i) of the
Agreement.

"Settlement Date" has the meaning specified therefor in Section 2.3(e)(i) of the
Agreement.

"Slow Moving Cap" means, initially, $5,000,000 as of the Closing Date and shall
reduce as of the last day of each month thereafter by $138,889 .

"Solvent" means, with respect to any Person as of any date of determination,
that (a) at fair valuations, the sum of such Person's debts (including
contingent liabilities) is less than all of such Person's assets, (b) such
Person is not engaged or about to engage in a business or transaction for which
the remaining assets of such Person are unreasonably small in relation to the
business or transaction or for which the property remaining with such Person is
an unreasonably small capital, and (c) such Person has not incurred and does not
intend to incur, or reasonably believe that it will incur, debts beyond its
ability to pay such debts as they become due (whether at maturity or otherwise),
and (d) such Person is "solvent" or not "insolvent", as applicable within the
meaning given those terms and similar terms under applicable laws relating to
fraudulent transfers and conveyances.  For purposes of this definition, the
amount of any contingent liability at any time shall be computed as the amount
that, in light of all of the facts and circumstances existing at such time,
represents the amount that can reasonably be expected to become an actual or
matured liability (irrespective of whether such contingent liabilities meet the
criteria for accrual under Statement of Financial Accounting Standard No. 5).

"Split Lien Agent" means the "Term Loan Agent" as defined in the Split Lien
Intercreditor Agreement.

"Split Lien Credit Agreement" means that certain Credit Agreement dated as of
the date hereof among Borrowers, Select Agendas, Corp., Split Lien Agent and the
lenders from time to time party thereto, as amended from time to time to the
extent permitted under the Split Lien Intercreditor Agreement.

"Split Lien Documents" means the "Term Loan Documents" as defined in the Split
Lien Intercreditor Agreement (as in effect on the date hereof).

Schedule 1.1 – Page 44

"Split Lien Intercreditor Agreement" means that certain Intercreditor Agreement
dated as of the date hereof between Agent and Split Lien Agent and acknowledged
by the Loan Parties, as amended or modified from time to time.

"Split Lien Priority Collateral" means the "Term Loan Priority Collateral" as
defined in the Split Lien Intercreditor Agreement.

"Subordinated Indebtedness" means any unsecured Indebtedness of Parent or its
Subsidiaries incurred from time to time that is subordinated in right of payment
to the Obligations and that (a) is only guaranteed by the Guarantors, (b) is not
subject to scheduled amortization, redemption, sinking fund or similar payment
and does not have a final maturity, in each case, on or before the date that is
six months after the Maturity Date, (c) does not include any financial covenants
or any covenant or agreement that is more restrictive or onerous on any Loan
Party in any material respect than any comparable covenant in the Agreement, and
(iv) contains customary subordination (including customary payment blocks during
a payment default under any "senior debt" designated thereunder) and turnover
provisions and shall be limited to cross-payment default and cross-acceleration
to other "senior debt" designated thereunder.

"Subsidiary" of a Person means a corporation, partnership, limited liability
company, or other entity in which that Person directly or indirectly owns or
controls the Equity Interests having ordinary voting power to elect a majority
of the Board of Directors of such corporation, partnership, limited liability
company, or other entity.

"Supermajority Lenders" means, at any time, Lenders having or holding more than
66 2/3% of the sum of the aggregate Revolving Loan Exposure of all Lenders;
provided, that (i) the Revolving Loan Exposure of any Defaulting Lender shall be
disregarded in the determination of the Supermajority Lenders, and (ii) at any
time there are 2 or more Lenders, "Supermajority Lenders" must include at least
2 Lenders (who are not Affiliates of one another).

"Swing Lender" means WFCF or any other Lender that, at the request of
Administrative Borrower and with the consent of Agent agrees, in such Lender's
sole discretion, to become the Swing Lender under Section 2.3(b) of the
Agreement.

"Swing Loan" has the meaning specified therefor in Section 2.3(b) of the
Agreement.

"Swing Loan Exposure" means, as of any date of determination with respect to any
Lender, such Lender's Pro Rata Share of the Swing Loans on such date.

"Taxes" means any taxes, levies, imposts, duties, fees, assessments or other
charges of whatever nature now or hereafter imposed by any jurisdiction or by
any political subdivision or taxing authority thereof or therein, and all
interest, penalties or similar liabilities with respect thereto.

"Tax Lender" has the meaning specified therefor in Section 14.2(a) of the
Agreement.

Schedule 1.1 – Page 45

"Term Loan Ratio" means for any measuring period the ratio of (x) the aggregate
amount of Indebtedness under the Split Lien Documents as of the last day of such
period to (y) Accelerated Learning EBITDA for such period.

"Title Document Agent" means UPS Supply Chain Solutions, Inc. and any other
Person selected by Borrower Representative after written notice by Borrower
Representative to Agent who is reasonably acceptable to Agent to receive and
retain possession of negotiable documents (as defined in Section 7-104 of the
UCC) issued for any Inventory or other property of Borrowers in accordance with
a Title Document Agency Agreement, such receipt and retention of possession
being for the purpose of more fully perfecting and preserving Agent's security
interests in such negotiable documents and the property represented thereby.
 For avoidance of doubt, no Person shall be a Title Document Agent unless such
Person has executed and delivered a Title Document Agency Agreement.

"Title Document Agency Agreement" means an agreement among a Borrower, a Title
Document Agent, and Agent, in form and substance acceptable to Agent.

"Total Leverage Ratio" means for any measuring period the ratio of (x) the
aggregate amount of Indebtedness of the Parent and its Subsidiaries, on a
consolidated basis, as of the last day of such period to (y) EBITDA for such
period.

"Trademark Security Agreement" has the meaning specified therefor in the
Guaranty and Security Agreement.

"UCP 600" means the rules of the Uniform Customs and Practice for Documentary
Credits, as most recently published by the International Chamber of Commerce and
in effect as of July 1, 2007 (or such later version thereof as may be in effect
at the time of issuance).

"Underlying Issuer" means Wells Fargo or one of its Affiliates.

"Underlying Letter of Credit" means a Letter of Credit that has been issued by
an Underlying Issuer.

“Unfinanced Capital Expenditures” means Capital Expenditures that are made from
available cash of the Borrowers and not from the proceeds of Permitted
PMM/Capital Lease Debt (including any Permitted PMM/Capital Lease Debt incurred
after the acquisition of the asset acquired to directly or indirectly finance
such acquisition), and are made in respect of assets that are not subject to any
capital lease, and are not pledged to secure any purchase money Indebtedness
(whenever incurred).

"United States" means the United States of America.

"Unused Line Fee" has the meaning specified therefor in Section 2.10(b) of the
Agreement.

"Voidable Transfer" has the meaning specified therefor in Section 17.8 of the
Agreement.

Schedule 1.1 – Page 46

"Wells Fargo" means Wells Fargo Bank, National Association, a national banking
association.

"WFCF" means Wells Fargo Capital Finance, LLC, a Delaware limited liability
company.

Schedule 1.1 – Page 47