Exhibit 10.7

AMENDED AND RESTATED CREDIT AGREEMENT

DATED AS OF MAY 20, 2003

AMONG

THE FINANCIAL INSTITUTIONS NAMED HEREIN

AS THE LENDERS

AND

BANK OF AMERICA, N.A.

AS THE AGENT

AND

PSS WORLD MEDICAL, INC. AND CERTAIN OF ITS SUBSIDIARIES

AS THE BORROWERS

AND

CERTAIN OTHER SUBSIDIARIES OF PSS WORLD MEDICAL, INC.

AS THE GUARANTORS

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TABLE OF CONTENTS

Section   Page    
   
ARTICLE 1 LOANS AND LETTERS OF CREDIT 2     
1.1 Credit Facility 2  1.2 Revolving Loans 2  1.3 Letters of Credit 5  1.4 Bank
Products 9     
ARTICLE 2 INTEREST AND FEES 9     
2.1 Interest 9  2.2 Continuation and Conversion Elections 10  2.3 Maximum
Interest Rate 11  2.4 Arrangement, Closing and Administrative Fees 11  2.5
Unused Line Fee 11  2.6 Letter of Credit Fees 12     
ARTICLE 3 PAYMENTS AND PREPAYMENTS 12     
3.1 Revolving Loans 12  3.2 Termination of Facility 12  3.3 LIBOR Loan
Prepayments 13  3.4 Payments by the Borrowers 13  3.5 Payments as Revolving
Loans 13  3.6 Apportionment, Application and Reversal of Payments 13  3.7
Indemnity for Returned Payments 14  3.8 Agent’s and Lenders’ Books and Records;
Monthly Statements 14  3.9 Borrowers’ Agent 15  3.10 Joint and Several Liability
15  3.11 Obligations Absolute 16  3.12 Waiver of Suretyship Defenses 16  3.13
Contribution and Indemnification among the Borrowers 16     
ARTICLE 4 TAXES, YIELD PROTECTION AND ILLEGALITY 17     
4.1 Taxes 17  4.2 Illegality 18  4.3 Increased Costs and Reduction of Return 19 
4.4 Funding Losses 20  4.5 Inability to Determine Rates 20  4.6 Certificates of
Lender 20  4.7 Survival 20  4.8 Assignment of Commitments Under Certain
Circumstances 20     
ARTICLE 5 BOOKS AND RECORDS; FINANCIAL INFORMATION; NOTICES 21     
5.1 Books and Records 21  5.2 Financial Information 21  5.3 Notices to the
Lenders 24     
ARTICLE 6 GENERAL WARRANTIES AND REPRESENTATIONS 27     
6.1 Authorization, Validity, and Enforceability of this Agreement and the Loan
Documents 27  6.2 Validity and Priority of Security Interest 27  6.3
Organization and Qualification 27  6.4 Corporate Name; Prior Transactions 27 
6.5 Subsidiaries and Affiliates 28  6.6 Financial Statements and Projections 28 
6.7 Capitalization 28  6.8 Solvency 28  6.9 Debt 28  6.10 Distributions 29  6.11
Real Estate; Leases 29  6.12 Proprietary Rights 29  6.13 Trade Names 29  6.14
Litigation 29  6.15 Labor Disputes 29  6.16 Environmental Laws 30  6.17 No
Violation of Law 31  6.18 No Default 31  6.19 ERISA Compliance 31  6.20 Taxes
32  6.21 Regulated Entities 32  6.22 Use of Proceeds; Margin Regulations 32 
6.23 Senior Subordinated Notes 32  6.24 No Material Adverse Change 32  6.25 Full
Disclosure 32  6.26 Material Agreements 33  6.27 Bank Accounts 33  6.28
Governmental Authorization 33  6.29 Tax Shelter Regulations 33     
ARTICLE 7 AFFIRMATIVE AND NEGATIVE COVENANTS 33     
7.1 Taxes and Other Obligations 33  7.2 Legal Existence and Good Standing 34 
7.3 Compliance with Law and Agreements; Maintenance of Licenses 34  7.4
Maintenance of Property; Inspection of Property 34  7.5 Insurance 35  7.6
Insurance and Condemnation Proceeds 35  7.7 Environmental Laws 36  7.8
Compliance with ERISA 37  7.9 Mergers, Consolidations or Sales 37  7.10
Distributions; Capital Change; Restricted Investments 39  7.11 Transactions
Affecting Collateral or Obligations 39  7.12 Guaranties 39  7.13 Debt 39  7.14
Prepayment 40  7.15 Transactions with Affiliates 40  7.16 Investment Banking and
Finder’s Fees 40  7.17 Business Conducted 41  7.18 Liens 41  7.19 Sale and
Leaseback Transactions 41  7.20 New Subsidiaries 41  7.21 Fiscal Year 41  7.22
Capital Expenditures 41  7.23 Financial Covenants 41  7.24 Minimum Excess
Availability 42  7.25 Use of Proceeds 42  7.26 Further Assurances 43     
ARTICLE 8 CONDITIONS OF LENDING 43     
8.1 Conditions Precedent to Making of Loans on the Closing Date 43  8.2
Conditions Precedent to Each Loan 45     
ARTICLE 9 DEFAULT; REMEDIES 45     
9.1 Events of Default 45  9.2 Remedies 48     
ARTICLE 10 TERM AND TERMINATION 50     
10.1 Term and Termination 50     
ARTICLE 11 AMENDMENTS; WAIVERs; PARTICIPATIONS; ASSIGNMENTS; SUCCESSORS 50     
11.1 Amendments and Waivers 50  11.2 Assignments; Participations 51     
ARTICLE 12 THE AGENT 53     
12.1 Appointment and Authorization 53  12.2 Delegation of Duties 54  12.3
Liability of the Agent 54  12.4 Reliance by the Agent 55  12.5 Notice of Default
55  12.6 Credit Decision 55  12.7 Indemnification 56  12.8 Agent in Individual
Capacity 56  12.9 Successor Agent 56  12.10 Withholding Tax 57  12.11 Collateral
Matters 58  12.12 Restrictions on Actions by Lenders; Sharing of Payments 59 
12.13 Agency for Perfection 60  12.14 Payments by the Agent to the Lenders 60 
12.15 Settlement 60  12.16 Letters of Credit; Intra-Lender Issues 64  12.17
Concerning the Collateral and the Related Loan Documents 66  12.18 Field Audit
and Examination Reports; Disclaimer by Lenders 66  12.19 Relation Among Lenders
67     
ARTICLE 13 Subsidiary guaranties 67     
13.1 Subsidiary Guaranties 67  13.2 Obligations Absolute 67  13.3 Waiver of
Suretyship Defenses 67  13.4 Contribution and Indemnification 68  13.5
Subordination of Intercompany Debt 68     
ARTICLE 14 MISCELLANEOUS 69     
14.1 No Waivers; Cumulative Remedies 69  14.2 Severability 69  14.3 Governing
Law; Choice of Forum; Service of Process 69  14.4 WAIVER OF JURY TRIAL 70  14.5
Survival of Representations and Warranties 70  14.6 Other Security and
Guaranties 70  14.7 Fees and Expenses 71  14.8 Notices 71  14.9 Waiver of
Notices 73  14.10 Binding Effect 73  14.11 Indemnity of the Agent and the
Lenders by the Borrowers 73  14.12 Limitation of Liability 74  14.13 Final
Agreement 74  14.14 Counterparts 74  14.15 Captions 75  14.16 Right of Setoff
75  14.17 Confidentiality 75  14.18 Conflicts with Other Loan Documents 76 
14.19 No Novation 76     

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ANNEXES, EXHIBITS AND SCHEDULES

ANNEX A - DEFINED TERMS
EXHIBIT A - FORM OF BORROWING BASE CERTIFICATE
EXHIBIT B - FORM OF NOTICE OF BORROWING
EXHIBIT C - FORM OF NOTICE OF CONTINUATION/CONVERSION
EXHIBIT D - FORM OF ASSIGNMENT AND ACCEPTANCE AGREEMENT
SCHEDULE 1 - LENDERS’ COMMITMENTS
SCHEDULE 1 - EXISTING INVESTMENTS
SCHEDULE 6 - ORGANIZATION AND QUALIFICATIONS
SCHEDULE 6 - CORPORATE NAME; PRIOR TRANSACTIONS
SCHEDULE 6 - SUBSIDIARIES AND AFFILIATES
SCHEDULE 6 - CAPITALIZATION
SCHEDULE 6 - DEBT
SCHEDULE 6 - REAL ESTATE; LEASES
SCHEDULE 6 - PROPRIETARY RIGHTS
SCHEDULE 6 - TRADE NAMES
SCHEDULE 6 - LITIGATION
SCHEDULE 6 - LABOR DISPUTES
SCHEDULE 6 - ENVIRONMENTAL LAWS
SCHEDULE 6 - MATERIAL AGREEMENTS
SCHEDULE 6 - BANK ACCOUNTS
SCHEDULE 7 - PERMITTED AFFILIATE TRANSACTIONS

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AMENDED AND RESTATED CREDIT AGREEMENT

This Amended and Restated Credit Agreement, dated as of May 20, 2003 (this
“Agreement”), among the financial institutions from time to time parties hereto
(such financial institutions, together with their respective successors and
assigns, are referred to hereinafter each individually as a “Lender” and
collectively as the “Lenders”), Bank of America, N.A., as agent for the Lenders
(in its capacity as agent, the “Agent”), PSS World Medical, Inc., a Florida
corporation (“PSS”), Gulf South Medical Supply, Inc., a Delaware corporation
(“Gulf South”), and Physician Sales & Services Limited Partnership, a Florida
limited partnership (“PSS LP”); PSS, Gulf South and PSS LP are referred to
hereinafter each individually as a “Borrower” and collectively as the
“Borrowers”), and PSS Holding, Inc., a Florida corporation (“PSS Holding”), PSS
Service, Inc., a Florida corporation (“PSS Service”), Physician Sales & Service,
Inc., a Florida corporation (“Physician Sales & Service”), and ThriftyMed, Inc.,
a Florida corporation (“ThriftyMed”; PSS Holding, PSS Service, Physician Sales &
Service, and ThriftyMed are referred to hereinafter each individually as a
“Guarantor” and collectively as the “Guarantors”).

        W I T N E S S E T H:

WHEREAS, the Borrowers, the Guarantors, Bank of America, N.A., as agent, the
lenders party thereto, General Electric Capital Corporation, as syndication
agent, Fleet Capital Corporation, as documentation agent, and Banc of America
Securities LLC, as arranger, are parties to that certain Credit Agreement dated
as of May 24, 2001 (as amended, the “Existing Agreement”); and

WHEREAS, the Borrowers, the Guarantors, the Agent and the Lenders desire to
amend and restate the Existing Agreement in order to provide the Borrowers a
credit facility on the terms set forth herein, which credit facility the
Borrowers will use for the purposes permitted hereunder; and

WHEREAS, in order to utilize the financial powers of the Borrowers in the most
efficient and economical manner, and in order to facilitate the financing of the
Borrowers’ working capital needs, the Lenders will, at the request of the
Borrowers, extend financial accommodations to the Borrowers based on the
combined borrowing base of the Borrowers in accordance with the provisions set
forth in this Agreement; and

WHEREAS, the Borrowers’ and Guarantors’ business is a mutual and collective
enterprise and the Borrowers and Guarantors believe that the consolidation of
all loans and other financial accommodations under this Agreement will enhance
the aggregate borrowing powers of the Borrowers and Guarantors and facilitate
the administration of their loan relationship with the Agent and the Lenders,
all to the mutual advantage of the Borrowers and Guarantors; and

WHEREAS, each Borrower and Guarantor acknowledges that it will receive
substantial direct and indirect benefits by reason of the making of loans and
other financial accommodations to the Borrowers as provided in this Agreement,
by virtue of the Borrowers’ and Guarantors’ various inter-relationships as joint
guarantors or joint obligors and the beneficiaries thereof, as lessors and
lessees, as suppliers and customers, and as joint venturers; and

WHEREAS, the Agent’s and the Lenders’ willingness to extend financial
accommodations to the Borrowers, and to administer the Borrowers’ and
Guarantors’ collateral security therefor, on a combined basis as more fully set
forth in this Agreement, is done solely as an accommodation to the Borrowers and
Guarantors and at the Borrowers’ and Guarantors’ request and in furtherance of
the Borrowers’ and Guarantors’ mutual and collective enterprise; and

WHEREAS, capitalized terms used in this Agreement and not otherwise defined
herein shall have the meanings ascribed thereto in Annex A which is attached
hereto and incorporated herein; the rules of construction contained therein
shall govern the interpretation of this Agreement; and all Annexes, Exhibits and
Schedules attached hereto are incorporated herein by reference.

NOW, THEREFORE, in consideration of the mutual conditions and agreements set
forth in this Agreement, and for good and valuable consideration, the receipt of
which is hereby acknowledged, the Lenders, the Agent, the Borrowers and the
Guarantors hereby agree as follows.

ARTICLE 1

LOANS AND LETTERS OF CREDIT

1.1              Credit Facility. Subject to all of the terms and conditions of
this Agreement, the Lenders agree to make available a revolving credit facility
to the Borrowers from time to time during the term of this Agreement of up to
the Maximum Revolver Amount. The credit facility shall be composed of a
revolving line of credit consisting of Revolving Loans and Letters of Credit.

1.2             Revolving Loans.

    (a)        Amounts. Subject to the terms and conditions hereof, each Lender
severally, but not jointly, agrees, upon a Borrower’s request from time to time
on any Business Day, during the period from the Closing Date to the Termination
Date, to make revolving loans (the “Revolving Loans”) to the Borrowers in
amounts not to exceed such Lender’s Pro Rata Share of Availability, except for
Non-Ratable Loans and Agent Advances. The Lenders, however, in their unanimous
discretion, may elect to make Revolving Loans or issue or arrange to have issued
Letters of Credit in excess of the Borrowing Base on one or more occasions, but
if they do so, neither the Agent nor the Lenders shall be deemed thereby to have
changed the limits of the Borrowing Base or to be obligated to exceed such
limits on any other occasion. If any Borrowing would exceed Availability after
giving effect to any Borrowing, the Lenders may refuse to make or may otherwise
restrict the making of Revolving Loans as the Lenders determine until such
excess has been eliminated, subject to the Agent’s authority, in its sole
discretion, to make Agent Advances pursuant to the terms of Section 1.2(i).

    (b)        Procedure for Borrowing.

    (i)               Each Borrowing of Revolving Loans shall be made upon a
Borrower’s irrevocable written notice delivered to the Agent in the form of a
notice of borrowing substantially in the form of Exhibit B (“Notice of
Borrowing”), which must be received by the Agent prior to (i) 12:00 noon
(Atlanta, Georgia time) three Business Days prior to the requested Funding Date
in the case of LIBOR Loans, and (ii) 11:00 a.m. (Atlanta, Georgia time) on the
requested Funding Date in the case of Base Rate Loans, specifying:

    (A)                      the amount of the Borrowing, which in the case of a
LIBOR Loan must equal or exceed $1,000,000 (and increments of $500,000 in excess
of such amount);

    (B)                      the requested Funding Date, which must be a
Business Day;

    (C)                      whether the Loans requested are to be Base Rate
Revolving Loans or LIBOR Revolving Loans (and if not specified, it shall be
deemed a request for a Base Rate Revolving Loan); and

    (D)               the duration of the Interest Period for LIBOR Revolving
Loans (and if not specified, it shall be deemed a request for an Interest Period
of one month); provided, however, that with respect to the Revolving Loans to be
made on the Closing Date, such Borrowings will consist of Base Rate Revolving
Loans only.

    (ii)               In lieu of delivering a Notice of Borrowing, a Borrower
may give the Agent telephonic notice of such request for advances to the
Designated Account on or before the deadline set forth above. The Agent at all
times shall be entitled to rely on such telephonic notice in making such Loans,
regardless of whether any written confirmation is received.

    (iii)        Whenever checks are presented to the Bank for payment against
the Designated Account or any other account of a Borrower maintained with the
Bank in an amount greater than the then available balance in such accounts, such
presentation shall be deemed to be a request for a Base Rate Revolving Loan on
the date of such presentation in an amount equal to the excess of such checks
over such available balances (less the amount of collections credited to the
Loan Account on such date), and such request shall be irrevocable.

    (iv)        At the election of the Required Lenders, the Borrowers shall
have no right to request a LIBOR Loan while a Default or Event of Default has
occurred and is continuing.

    (c)        Reliance upon Authority. Prior to the Closing Date, the
Borrowers’ Agent shall deliver to the Agent a notice setting forth the account
of the Borrowers’ Agent (the “Designated Account”) to which the Agent is
authorized to transfer the proceeds of the Loans requested hereunder. The
Borrowers’ Agent may designate a replacement account from time to time by
written notice to the Agent. All such Designated Accounts must be reasonably
satisfactory to the Agent. The Agent is entitled to rely conclusively on any
person’s request for Loans on behalf of a Borrower, so long as the proceeds
thereof are to be transferred to the Designated Account. The Agent has no duty
to verify the identity of any individual representing himself or herself as a
person authorized by a Borrower to make such requests on its behalf.

    (d)        No Liability. The Agent shall not incur any liability to any
Borrower as a result of acting upon any notice referred to in Section 1.2 which
the Agent believes in good faith to have been given by an officer or other
person duly authorized by a Borrower to request Loans on its behalf. The
crediting of Loans to the Designated Account conclusively establishes the
obligation of the Borrowers to repay such Loans as provided herein.

    (e)        Notice Irrevocable. Any Notice of Borrowing (or telephonic notice
in lieu thereof) made pursuant to Section 1.2 shall be irrevocable. The
Borrowers shall be bound to borrow the funds requested therein in accordance
therewith.

    (f)        Agent’s Election. Promptly after receipt of a Notice of Borrowing
(or telephonic notice in lieu thereof), the Agent shall elect to have the terms
of Section 1.2(g) or the terms of Section 1.2(h) apply to such requested
Borrowing. If the Bank declines in its sole discretion to make a Non-Ratable
Loan pursuant to Section 1.2(h), the terms of Section 1.2(g) shall apply to the
requested Borrowing.

    (g)        Making of Loans. If the Agent elects to have the terms of this
Section 1.2(g) apply to a requested Borrowing, then promptly after receipt of a
Notice of Borrowing or telephonic notice in lieu thereof, the Agent shall notify
the Lenders by telecopy, telephone or e-mail of the requested Borrowing. Each
Lender shall transfer its Pro Rata Share of the requested Borrowing available to
the Agent in immediately available funds, to the account from time to time
designated by the Agent, not later than 12:00 noon (Atlanta, Georgia time) on
the applicable Funding Date. After the Agent’s receipt of all proceeds of such
Revolving Loans, the Agent shall make the proceeds of such Revolving Loans
available to the Borrowers on the applicable Funding Date on or before 3:00 p.m.
(Atlanta, Georgia time) by transferring same day funds to the Designated
Account; provided, however, that the amount of Revolving Loans so made on any
date shall not exceed Availability on such date.

    (h)        Making of Non-Ratable Loans. If the Agent elects, with the
consent of the Bank, to have the terms of this Section 1.2(h) apply to a
requested Borrowing, the Bank shall make a Revolving Loan in the amount of that
Borrowing available to the Borrowers on the applicable Funding Date by
transferring same day funds on or before 3:00 p.m. (Atlanta, Georgia time) to
the Designated Account. Each Revolving Loan made solely by the Bank pursuant to
this Section 1.2(h) is herein referred to as a “Non-Ratable Loan”, and such
Loans are collectively referred to as the “Non-Ratable Loans.” Each Non-Ratable
Loan shall be subject to all the terms and conditions applicable to other
Revolving Loans except that all payments thereon shall be payable to the Bank
solely for its own account. The Agent shall not request the Bank to make any
Non-Ratable Loan if (i) the Agent has received written notice from the Required
Lenders that one or more of the applicable conditions precedent set forth in
Article 8 will not be satisfied on the requested Funding Date for the applicable
Borrowing, or (ii) the requested Borrowing would exceed Availability on that
Funding Date. The Non-Ratable Loans shall be secured by the Agent’s Liens in and
to the Collateral and shall constitute Base Rate Revolving Loans and Obligations
hereunder.

    (i)        Agent Advances. Subject to the limitations set forth below, the
Agent is authorized by the Borrowers and the Lenders, from time to time in the
Agent’s sole discretion, (i) after the occurrence of a Default or an Event of
Default, or (ii) at any time that any of the other conditions precedent set
forth in Article 8 have not been satisfied, to make Base Rate Revolving Loans to
the Borrowers on behalf of the Lenders, in an aggregate amount outstanding at
any time not to exceed the lesser of $15,000,000 and 10% of the Borrowing Base
(provided that the Aggregate Revolver Outstandings (including such Agent
Advances) shall not exceed the Maximum Revolver Amount), which the Agent, in its
reasonable business judgment, deems necessary or desirable (A) to preserve or
protect the Collateral, or any portion thereof, (B) to enhance the likelihood
of, or maximize the amount of, repayment of the Loans and other Obligations
(including through Base Rate Revolving Loans for the purpose of enabling the
Borrowers to meet payroll and associated tax obligations), or (C) to pay any
other amount chargeable to the Borrowers pursuant to the terms of this
Agreement, including costs, fees and expenses as described in Section 14.7 (any
of such advances are herein referred to as “Agent Advances”); provided, that the
Required Lenders may at any time revoke the Agent’s authorization to make Agent
Advances. Any such revocation must be in writing and shall become effective
prospectively upon the Agent’s receipt thereof. The Agent Advances shall be
secured by the Agent’s Liens in and to the Collateral and shall constitute Base
Rate Revolving Loans and Obligations hereunder.

1.3             Letters of Credit.

    (a)        Agreement to Issue or Cause To Issue. Subject to the terms and
conditions of this Agreement, the Agent agrees (i) to cause the Letter of Credit
Issuer to issue for the account of the Borrowers one or more
commercial/documentary and standby letters of credit (each, a “Letter of
Credit”) and/or (ii) to provide credit support or other enhancement to a Letter
of Credit Issuer acceptable to the Agent, which issues a Letter of Credit for
the account of the Borrowers (any such credit support or enhancement being
herein referred to as a “Credit Support”) from time to time during the term of
this Agreement.

    (b)        Amounts; Outside Expiration Date. The Agent shall not have any
obligation to issue or cause to be issued any Letter of Credit or to provide
Credit Support for any Letter of Credit at any time if: (i) the maximum face
amount of the requested Letter of Credit is greater than the Unused Letter of
Credit Subfacility at such time; (ii) the maximum undrawn amount of the
requested Letter of Credit and all commissions, fees, and charges due from the
Borrowers in connection with the opening thereof would exceed Availability at
such time; or (iii) such Letter of Credit has an expiration date less than 30
days prior to the Stated Termination Date or more than 12 months from the date
of issuance for standby letters of credit and 180 days for documentary letters
of credit. With respect to any Letter of Credit which contains any “evergreen”
or automatic renewal provision, each Lender shall be deemed to have consented to
any such extension or renewal unless any such Lender shall have provided to the
Agent written notice that it declines to consent to any such extension or
renewal at least thirty (30) days prior to the date on which the Letter of
Credit Issuer is entitled to decline to extend or renew the Letter of Credit,
provided, that, no such extension or renewal shall cause the expiration date of
such Letter of Credit to extend beyond the 30th day prior to the Stated
Termination Date. If all of the requirements of this Section 1.3 are met and no
Default or Event of Default has occurred and is continuing, no Lender shall
decline to consent to any such extension or renewal.

    (c)        Other Conditions. In addition to the conditions precedent
contained in Article 8, the obligation of the Agent to issue or to cause to be
issued any Letter of Credit or to provide Credit Support for any Letter of
Credit is subject to the following conditions precedent having been satisfied in
a manner reasonably satisfactory to the Agent:

    (i)               The Borrowers shall have delivered to the Letter of Credit
Issuer, at such times and in such manner as such Letter of Credit Issuer may
prescribe, an application in form and substance satisfactory to such Letter of
Credit Issuer and reasonably satisfactory to the Agent for the issuance of the
Letter of Credit and such other documents as may be required pursuant to the
terms thereof, and the form, terms and purpose of the proposed Letter of Credit
shall be reasonably satisfactory to the Agent and the Letter of Credit Issuer,
provided that such application and other documents shall not contain any
operating or financial covenants inconsistent with the terms of the other Loan
Documents (including any requirement for collateral other than the Agent’s
Liens) or any requirement for fronting fees other than fronting fees payable
under Section 2.6; and

    (ii)               As of the date of issuance, no order of any court,
arbitrator or Governmental Authority shall purport by its terms to enjoin or
restrain money center banks generally from issuing letters of credit of the type
and in the amount of the proposed Letter of Credit, and no law, rule or
regulation applicable to money center banks generally and no request or
directive (whether or not having the force of law) from any Governmental
Authority with jurisdiction over money center banks generally shall prohibit, or
request that the proposed Letter of Credit Issuer refrain from, the issuance of
letters of credit generally or the issuance of such Letters of Credit.

    (d)        Issuance of Letters of Credit.

    (i)              Request for Issuance. The Borrowers must notify the Agent
of a requested Letter of Credit at least three (3) Business Days prior to the
proposed issuance date. Such notice shall be irrevocable and must specify the
original face amount of the Letter of Credit requested, the Business Day of
issuance of such requested Letter of Credit, whether such Letter of Credit may
be drawn in a single or in partial draws, the Business Day on which the
requested Letter of Credit is to expire, the purpose for which such Letter of
Credit is to be issued, and the beneficiary of the requested Letter of Credit.
The Borrowers shall attach to such notice the proposed form of the conditions
for drawing under the Letter of Credit.

    (ii)              Responsibilities of the Agent; Issuance. As of the
Business Day immediately preceding the requested issuance date of the Letter of
Credit, the Agent shall determine the amount of the applicable Unused Letter of
Credit Subfacility, Aggregate Revolver Outstandings and Availability. If (A) the
face amount of the requested Letter of Credit is less than the Unused Letter of
Credit Subfacility and (B) the amount of such requested Letter of Credit and all
commissions, fees, and charges due from the Borrowers in connection with the
opening thereof would not exceed Availability, the Agent shall cause the Letter
of Credit Issuer to issue the requested Letter of Credit on the requested
issuance date so long as the other conditions hereof are met.

    (iii)              No Extensions or Amendment. The Agent shall not be
obligated to cause the Letter of Credit Issuer to extend or amend any Letter of
Credit issued pursuant hereto unless the requirements of this Section 1.3 are
met as though a new Letter of Credit were being requested and issued.

    (e)        Payments Pursuant to Letters of Credit. The Borrowers agree to
reimburse immediately the Letter of Credit Issuer for any draw under any Letter
of Credit and the Agent for the account of the Lenders upon any payment pursuant
to any Credit Support, and to pay the Letter of Credit Issuer the amount of all
other charges and fees payable to the Letter of Credit Issuer in connection with
any Letter of Credit immediately when due, irrespective of any claim, setoff,
defense or other right which any Borrower may have at any time against the
Letter of Credit Issuer, the beneficiary of any Letter of Credit or any other
Person. Each drawing under any Letter of Credit shall constitute a request by
the Borrowers to the Agent for a Borrowing of a Base Rate Revolving Loan in the
amount of such drawing. The Funding Date with respect to such borrowing shall be
the date of such drawing.

    (f)        Indemnification; Exoneration; Power of Attorney.

    (i)              Indemnification. In addition to amounts payable as
elsewhere provided in this Section 1.3, the Borrowers agree to protect,
indemnify, pay and save the Lenders and the Agent harmless from and against any
and all claims, demands, liabilities, damages, losses, costs, charges and
expenses (including reasonable attorneys’ fees) which any Lender or the Agent
(other than the Bank or any of its affiliates in its capacity as Letter of
Credit Issuer) may incur or be subject to as a consequence, direct or indirect,
of the issuance of any Letter of Credit or the provision of any Credit Support
or enhancement in connection therewith. The Borrowers’ obligations under this
Section 1.3 shall survive payment of all other Obligations.

    (ii)              Assumption of Risk by the Borrowers. As among the
Borrowers, the Lenders and the Agent, the Borrowers assume all risks of the acts
and omissions of, or misuse of any of the Letters of Credit by, the respective
beneficiaries of such Letters of Credit. In furtherance and not in limitation of
the foregoing, the Lenders and the Agent shall not be responsible for: (A) the
form, validity, sufficiency, accuracy, genuineness or legal effect of any
document submitted by any Person in connection with the application for and
issuance of and presentation of drafts with respect to any of the Letters of
Credit, even if it should prove to be in any or all respects invalid,
insufficient, inaccurate, fraudulent or forged; (B) the validity or sufficiency
of any instrument transferring or assigning or purporting to transfer or assign
any 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; (C) the failure of the beneficiary of any Letter of Credit to duly
comply with conditions required in order to draw upon such Letter of Credit; (D)
errors, omissions, interruptions, or delays in transmission or delivery of any
messages, by mail, cable, telegraph, telex or otherwise, whether or not they be
in cipher; (E) errors in interpretation of technical terms; (F) any loss or
delay in the transmission or otherwise of any document required in order to make
a drawing under any Letter of Credit or of the proceeds thereof; (G) the
misapplication by the beneficiary of any Letter of Credit of the proceeds of any
drawing under such Letter of Credit; (H) any consequences arising from causes
beyond the control of the Lenders or the Agent, including any act or omission,
whether rightful or wrongful, of any present or future dejure or defacto
Governmental Authority; or (I) the Letter of Credit Issuer’s honor of a draw for
which the draw or any certificate fails to comply in any respect with the terms
of the Letter of Credit. None of the foregoing shall affect, impair or prevent
the vesting of any rights or powers of the Agent or any Lender under this
Section 1.3(f).

    (iii)              Exoneration. Without limiting the foregoing, no action or
omission whatsoever by the Agent or any Lender (excluding the Bank or any of its
affiliates in its capacity as a Letter of Credit Issuer) shall result in any
liability of the Agent or any Lender to any Borrower, or relieve the Borrowers
of any of their obligations hereunder to any such Person.

    (iv)              Rights Against Letter of Credit Issuer. Nothing contained
in this Agreement, including clauses (i) and (ii) of this Section 1.3(f), is
intended to limit the Borrowers’ rights, if any, with respect to the Letter of
Credit Issuer which arise as a result of the letter of credit application and
related documents executed by and between the Borrowers and the Letter of Credit
Issuer.

    (v)              Account Party. The Borrowers hereby authorize and direct
any Letter of Credit Issuer with respect to any Letter of Credit to name the
applicable Borrower as the “Account Party” therein and to deliver to the Agent
all instruments, documents and other writings and property received by the
Letter of Credit Issuer pursuant to such Letter of Credit, and to accept and
rely upon the Agent’s instructions and agreements with respect to all matters
arising in connection with such Letter of Credit or the application therefor.

    (g)        Supporting Letter of Credit. If, notwithstanding the provisions
of Section 1.3(b) and Section 10.1, any Letter of Credit or Credit Support is
outstanding upon the termination of this Agreement, then upon such termination
the Borrowers shall deposit with the Agent, for the ratable benefit of the Agent
and the Lenders, with respect to each Letter of Credit or Credit Support then
outstanding, a standby letter of credit (a “Supporting Letter of Credit”) in
form and substance satisfactory to the Agent, issued by an issuer satisfactory
to the Agent in an amount equal to the greatest amount for which such Letter of
Credit or such Credit Support may be drawn plus any fees and expenses associated
with such Letter of Credit or such Credit Support, under which Supporting Letter
of Credit the Agent is entitled to draw amounts necessary to reimburse the Agent
and the Lenders for payments to be made by the Agent and the Lenders under such
Letter of Credit or Credit Support and any fees and expenses associated with
such Letter of Credit or Credit Support. Such Supporting Letter of Credit shall
be held by the Agent, for the ratable benefit of the Agent and the Lenders, as
security for, and to provide for the payment of, the aggregate undrawn amount of
such Letters of Credit or such Credit Support remaining outstanding.

1.4             Bank Products. The Obligors may request, and the Bank may, in
its sole and absolute discretion, arrange for the Obligors to obtain from the
Bank, or the Bank’s Affiliates, Bank Products, although the Obligors are not
required to do so. If Bank Products are provided by an Affiliate of the Bank,
the Obligors agree to indemnify and hold the Bank harmless from any and all
costs and obligations now or hereafter incurred by the Bank which arise from any
indemnity given by the Bank to its Affiliates related to such Bank Products;
provided, however, nothing contained herein is intended to limit the Obligors’
rights, if any, with respect to any such Affiliate that provides Bank Products,
to the extent such rights arise as a result of the execution of documents by and
between the Obligors and such Affiliate which relate to Bank Products. The
agreement contained in this Section shall survive termination of this Agreement.
The Obligors acknowledge and agree that the obtaining of Bank Products from the
Bank or its Affiliates (a) is in the sole and absolute discretion of the Bank or
its Affiliates, and (b) is subject to all rules and regulations of the Bank or
its Affiliates.

ARTICLE 2

INTEREST AND FEES

2.1             Interest.

    (a)        Interest Rates. All outstanding Obligations shall bear interest
on the unpaid principal amount thereof (including, to the extent permitted by
law, on interest thereon not paid when due) from the date made until paid in
full in cash at a rate determined by reference to the Base Rate or LIBOR plus
the Applicable Margins as set forth below, but not to exceed the Maximum Rate.
If at any time Loans are outstanding with respect to which the Borrowers have
not delivered to the Agent a notice specifying the basis for determining the
interest rate applicable thereto in accordance herewith, those Loans shall bear
interest at a rate determined by reference to the Base Rate until notice to the
contrary has been given to the Agent in accordance with this Agreement and such
notice has become effective. Except as otherwise provided herein, the
outstanding Obligations shall bear interest as follows:

    (i)               For all Base Rate Loans and other Obligations (other than
LIBOR Loans), at a fluctuating per annum rate equal to the Base Rate plus the
Applicable Margin; and

    (ii)               For all LIBOR Loans, at a per annum rate equal to LIBOR
plus the Applicable Margin.

Each change in the Base Rate shall be reflected in the interest rate applicable
to Base Rate Loans as of the effective date of such change. All interest charges
shall be computed on the basis of a year of 360 days and actual days elapsed
(which results in more interest being paid than if computed on the basis of a
365-day year). The Borrowers shall pay to the Agent, for the ratable benefit of
the Lenders, interest accrued on all Base Rate Loans in arrears on the first day
of each month hereafter and on the Termination Date. The Borrowers shall pay to
the Agent, for the ratable benefit of Lenders, interest on all LIBOR Loans in
arrears on each LIBOR Interest Payment Date.

    (b)        Default Rate. If any Default or Event of Default occurs and is
continuing and the Agent or the Required Lenders in their discretion so elect,
then, while any such Default or Event of Default is continuing, all of the
Obligations shall bear interest at the Default Rate applicable thereto.

2.2             Continuation and Conversion Elections.

    (a)        If no Default or Event of Default exists, the Borrowers may:

    (i)               elect, as of any Business Day, in the case of Base Rate
Loans, to convert any Base Rate Loan (or any part thereof in an amount not less
than $1,000,000, or that is in an integral multiple of $500,000 in excess
thereof) into LIBOR Loans; or

    (ii)               elect, as of the last day of the applicable Interest
Period, to continue any LIBOR Loans having Interest Periods expiring on such day
(or any part thereof in an amount not less than $1,000,000, or that is in an
integral multiple of $500,000 in excess thereof);

provided, that if at any time the aggregate amount of LIBOR Loans in respect of
any Borrowing is reduced, by payment, prepayment, or conversion of part thereof
to be less than $1,000,000, such LIBOR Loans shall automatically convert into
Base Rate Loans; provided further that if the Notice of Continuation/Conversion
shall fail to specify the duration of the Interest Period, such Interest Period
shall be one month.

    (b)        The Borrowers shall deliver a notice of continuation/conversion
(“Notice of Continuation/Conversion”) to the Agent not later than 12:00 noon
(Atlanta, Georgia time) at least three (3) Business Days in advance of the
Continuation/Conversion Date, if the Loans are to be converted into or continued
as LIBOR Loans and specifying:

    (i)               the proposed Continuation/Conversion Date;

    (ii)                the aggregate amount of Loans to be converted or
renewed;

    (iii)               the type of Loans resulting from the proposed conversion
or continuation; and

    (iv)                the duration of the requested Interest Period, provided,
however, the Borrowers may not select an Interest Period that ends after the
Stated Termination Date.

In lieu of delivering a Notice of Continuation/Conversion, a Borrower may give
the Agent telephonic notice of such request on or before the deadline set forth
above. The Agent at all times shall be entitled to rely on such telephonic
notice with respect to such continuation or conversion, regardless of whether
any written confirmation is received.

    (c)        If upon the expiration of the Interest Period applicable to any
LIBOR Loan, the Borrowers shall have failed to timely select a new Interest
Period to be applicable to such LIBOR Loan, or at the election of the Required
Lenders if any Default or Event of Default then exists, the Borrowers shall be
deemed to have elected to convert such LIBOR Loan into a Base Rate Loan
effective as of the expiration date of such Interest Period.

    (d)        The Agent will promptly notify each Lender of its receipt of a
Notice of Continuation/Conversion. All conversions and continuations shall be
made ratably according to the respective outstanding principal amounts of the
Loans with respect to which the notice was given held by each Lender.

    (e)        There may not be more than eight (8) different LIBOR Loans in
effect hereunder at any time.

2.3              Maximum Interest Rate. In no event shall any interest rate
provided for hereunder exceed the maximum rate legally chargeable by any Lender
under applicable law for such Lender with respect to loans of the type provided
for hereunder (the “Maximum Rate”). If, in any month, any interest rate, absent
such limitation, would have exceeded the Maximum Rate, then the interest rate
for that month shall be the Maximum Rate, and, if in future months, that
interest rate would otherwise be less than the Maximum Rate, then that interest
rate shall remain at the Maximum Rate until such time as the amount of interest
paid hereunder equals the amount of interest which would have been paid if the
same had not been limited by the Maximum Rate. In the event that, upon payment
in full of the Obligations, the total amount of interest paid or accrued under
the terms of this Agreement is less than the total amount of interest which
would, but for this Section 2.3, have been paid or accrued if the interest rate
otherwise set forth in this Agreement had at all times been in effect, then the
Borrowers shall, to the extent permitted by applicable law, pay the Agent, for
the account of the Lenders, an amount equal to the excess of (a) the lesser of
(i) the amount of interest which would have been charged if the Maximum Rate
had, at all times, been in effect, or (ii) the amount of interest which would
have accrued had the interest rate otherwise set forth in this Agreement, at all
times, been in effect, over (b) the amount of interest actually paid or accrued
under this Agreement. If a court of competent jurisdiction determines that the
Agent and/or any Lender has received interest and other charges hereunder in
excess of the Maximum Rate, such excess shall be deemed received on account of,
and shall automatically be applied to reduce, the Obligations other than
interest, in the inverse order of maturity, and if there are no Obligations
outstanding, the Agent and/or such Lender shall refund to the Borrowers’ Agent
such excess.

2.4             Arrangement, Closing and Administrative Fees. The Borrowers
agree to pay the Agent on the Closing Date the arrangement and closing fee set
forth in the Fee Letter. The Borrowers also agree to pay to the Agent on the
Closing Date and each Anniversary Date the administrative fee set forth in the
Fee Letter. All fees described in this Section 2.4 shall be fully earned as of
the due date thereof, are not subject to refund or rebate and are for the
Agent’s own account and not for the benefit of any Lender.

2.5             Unused Line Fee. On the first day of each month, and on the
Termination Date, the Borrowers agree to pay to the Agent, for the account of
the Lenders, in accordance with their respective Pro Rata Shares, an unused line
fee (the “Unused Line Fee”) equal to three-eighths of one percent (0.375%) per
annum times the amount by which the Maximum Revolver Amount exceeded the sum of
the average daily amount of the Aggregate Revolver Outstandings during the
immediately preceding month or shorter period if calculated for the first month
hereafter or on the Termination Date. The Unused Line Fee shall be computed on
the basis of a 360-day year for the actual number of days elapsed. All principal
payments received by the Agent that constitute collected funds shall be deemed
to reduce the Aggregate Revolver Outstandings immediately upon receipt for
purposes of calculating the Unused Line Fee pursuant to this Section 2.5;
provided, however, that in the event a principal payment received by the Agent
will not be credited until the following Business Day in accordance with Section
3.4(a), the Aggregate Revolver Outstandings shall be deemed to have been reduced
on the day such payment is actually credited.

2.6             Letter of Credit Fees. On the first day of each month and on the
Termination Date, the Borrowers agree to pay to the Agent, for the account of
the Lenders, in accordance with their respective Pro Rata Shares, a fee (the
“Letter of Credit Fee”) equal to the Applicable Margin in effect with respect to
LIBOR Loans, on a per annum basis, multiplied by the average daily undrawn
amount of Letters of Credit outstanding during the immediately preceding month.
The Letter of Credit Fee shall be computed on the basis of a 360-day year for
the actual number of days elapsed. The Borrowers also agree to pay to the Agent,
for the benefit of the Letter of Credit Issuer, a fronting fee of one-quarter of
one percent (0.25%) of the face amount of each Letter of Credit upon the
issuance thereof, and to pay to the Letter of Credit Issuer all out-of-pocket
costs, fees and expenses incurred by the Letter of Credit Issuer in connection
with the application for, processing of, issuance of, or amendment to any Letter
of Credit.

ARTICLE 3

PAYMENTS AND PREPAYMENTS

3.1             Revolving Loans. The Borrowers shall repay the outstanding
principal balance of the Revolving Loans, plus all accrued but unpaid interest
thereon, on the Termination Date. The Borrowers may prepay the Revolving Loans
at any time and reborrow the Revolving Loans subject to the terms of this
Agreement. In addition, and without limiting the generality of the foregoing,
the Borrowers shall immediately pay to the Agent, for the account of the
Lenders, the amount, without duplication, by which (a) the Aggregate Revolver
Outstandings exceeds (b) the lesser of (i) the Maximum Revolver Amount or the
Borrowing Base minus (ii) without duplication, Reserves, at any time.

3.2             Termination of Facility. The Borrowers may terminate this
Agreement upon at least ten (10) Business Days’ notice to the Agent and the
Lenders of their intent to terminate, and at least three (3) Business Days’
notice to the Agent and the Lenders of the actual termination date, upon (a) the
payment in full of all outstanding Revolving Loans, together with accrued
interest thereon, and the cancellation and return of all outstanding Letters of
Credit (or the delivery to the Agent of Supporting Letters of Credit with
respect thereto), (b) if such termination occurs on or prior to March 31, 2005,
the payment of the applicable Early Termination Fee to the Agent, for the
account of the Lenders in accordance with their Pro Rata Shares, (c) the payment
in full in cash of all reimbursable expenses and other Obligations, and (d) with
respect to any LIBOR Loans prepaid, payment of the amounts due under Section
4.4, if any.

3.3             LIBOR Loan Prepayments. In connection with any prepayment, if
any LIBOR Loan is prepaid or converted to a Base Rate Loan prior to the
expiration date of the Interest Period applicable thereto, the Borrowers shall
pay to the Agent, for the account of the Lenders, the amounts described in
Section 4.4.

3.4             Payments by the Borrowers.

    (a)        All payments to be made by the Borrowers shall be made without
set-off, recoupment or counterclaim. Except as otherwise expressly provided
herein, all payments by the Borrowers shall be made to the Agent for the account
of the Lenders, at the account designated by the Agent, and shall be made in
Dollars and in immediately available funds, no later than 12:00 noon (Atlanta,
Georgia time) on the date specified herein. Any payment received by the Agent
after such time shall be deemed (for purposes of calculating interest only) to
have been received on the following Business Day and any applicable interest
shall continue to accrue.

    (b)        Subject to the provisions set forth in the definition of
“Interest Period”, whenever any payment is due on a day other than a Business
Day, such payment shall be due on the following Business Day, and such extension
of time shall in such case be included in the computation of interest or fees,
as the case may be.

3.5             Payments as Revolving Loans. At the election of the Agent, all
payments of principal, interest, reimbursement obligations in connection with
Letters of Credit and Credit Support for Letters of Credit, fees, premiums,
reimbursable expenses and other sums payable hereunder may be paid from the
proceeds of Revolving Loans made hereunder. The Borrowers hereby irrevocably
authorize the Agent to charge the Loan Account for the purpose of paying all
amounts from time to time due hereunder and agree that all such amounts charged
shall constitute Base Rate Revolving Loans (including Non-Ratable Loans and
Agent Advances).

3.6             Apportionment, Application and Reversal of Payments. Principal
and interest payments shall be apportioned ratably among the Lenders (according
to the unpaid principal balance of the Loans to which such payments relate held
by each Lender) and payments of the fees shall, as applicable, be apportioned
ratably among the Lenders, except for fees payable solely to Agent and the
Letter of Credit Issuer and except as provided in Section 11.1(b). All payments
shall be remitted to the Agent and all such payments not relating to principal
or interest of specific Loans, or not constituting payment of specific fees, and
all proceeds of Accounts or other Collateral received by the Agent, shall be
applied, ratably, subject to the provisions of this Agreement, first, to pay any
fees, indemnities or expense reimbursements then due to the Agent from any
Obligor; second, to pay any fees or expense reimbursements then due to the
Lenders from any Obligor and to pay any amounts under ACH Transactions then
owing to the Bank or any Affiliate of the Bank; third, to pay interest due in
respect of all Loans, including Non-Ratable Loans and Agent Advances; fourth, to
pay or prepay principal of the Non-Ratable Loans and Agent Advances; fifth, to
pay or prepay principal of the Revolving Loans (other than Non-Ratable Loans and
Agent Advances) and unpaid reimbursement obligations in respect of Letters of
Credit; sixth, to pay an amount to the Agent equal to all outstanding Letter of
Credit Obligations to be held as cash collateral for such Obligations; and
seventh, to the payment of any other Obligation due to the Agent or any Lender
by any Obligor (including any amounts relating to Hedge Agreements or other Bank
Products). Notwithstanding anything to the contrary contained in this Agreement,
unless so directed by the Borrowers, or unless an Event of Default has occurred
and is continuing, neither the Agent nor any Lender shall apply any payments
which it receives to any LIBOR Loan, except (a) on the expiration date of the
Interest Period applicable to any such LIBOR Loan, or (b) in the event, and only
to the extent, that there are no outstanding Base Rate Loans and, in any event,
the Borrowers shall pay LIBOR breakage losses in accordance with Section 4.4.
The Agent and the Lenders shall have the continuing and exclusive right to apply
and reverse and reapply any and all such proceeds and payments to any portion of
the Obligations.

3.7             Indemnity for Returned Payments. If, after receipt of any
payment which is applied to the payment of all or any part of the Obligations,
the Agent, any Lender, the Bank or any Affiliate of the Bank is for any reason
compelled to surrender such payment or proceeds to any Person because such
payment or application of proceeds is invalidated, declared fraudulent, set
aside, determined to be void or voidable as a preference, impermissible setoff,
or a diversion of trust funds, or for any other reason, then the Obligations or
part thereof intended to be satisfied shall be revived and continued and this
Agreement shall continue in full force as if such payment or proceeds had not
been received by the Agent or such Lender and the Borrowers shall be liable to
pay to the Agent and the Lenders, and hereby does indemnify the Agent and the
Lenders and hold the Agent and the Lenders harmless for, the amount of such
payment or proceeds surrendered. The provisions of this Section 3.7 shall be and
remain effective notwithstanding any contrary action which may have been taken
by the Agent or any Lender in reliance upon such payment or application of
proceeds, and any such contrary action so taken shall be without prejudice to
the Agent’s and the Lenders’ rights under this Agreement and shall be deemed to
have been conditioned upon such payment or application of proceeds having become
final and irrevocable. The provisions of this Section 3.7 shall survive the
termination of this Agreement.

3.8             Agent’s and Lenders’ Books and Records; Monthly Statements. The
Agent shall record the principal amount of the Loans owing to each Lender, the
undrawn face amount of all outstanding Letters of Credit and the aggregate
amount of unpaid reimbursement obligations outstanding with respect to the
Letters of Credit from time to time on its books. In addition, each Lender may
note the date and amount of each payment or prepayment of principal of such
Lender’s Loans in its books and records. Failure by the Agent or any Lender to
make such notation shall not affect the obligations of the Borrowers with
respect to the Loans or the Letters of Credit. The Borrowers agree that the
Agent’s and each Lender’s books and records showing the Obligations and the
transactions pursuant to this Agreement and the other Loan Documents shall be
admissible in any action or proceeding arising therefrom, and shall constitute
rebuttably presumptive proof thereof, irrespective of whether any Obligation is
also evidenced by a promissory note or other instrument. The Agent will provide
to the Borrowers’ Agent a monthly statement of Loans, payments, and other
transactions pursuant to this Agreement. Such statement shall be deemed correct,
accurate, and binding on the Borrowers and an account stated (except for
reversals and reapplications of payments made as provided in Section 3.6 and
corrections of errors discovered by the Agent), unless the Borrowers notify the
Agent in writing to the contrary within sixty (60) days after such statement is
rendered. In the event a timely written notice of objections is given by the
Borrowers, only the items to which exception is expressly made will be
considered to be disputed by the Borrowers.

3.9             Borrowers’ Agent. Each of the Borrowers other than PSS hereby
appoints PSS, and PSS shall act under this Agreement, as the agent,
attorney-in-fact and legal representative of such other Borrowers for all
purposes, including requesting Loans and receiving account statements and other
notices and communications to the Borrowers (or any of them) from the Agent or
any Lender. The Agent, the Letter of Credit Issuer and the Lenders may rely, and
shall be fully protected in relying, on any Notice of Borrowing, Notice of
Conversion or Continuation, request for a Letter of Credit, disbursement
instruction, report, information or any other notice or communication made or
given by PSS, whether in its own name, as Borrowers’ Agent, on behalf of any
other Borrower or on behalf of the “Borrowers”, and neither the Agent nor the
Letter of Credit Issuer or any Lender shall have any obligation to make any
inquiry or request any confirmation from or on behalf of any other Borrower as
to the binding effect on it of any such Notice, request, instruction, report,
information, other notice or communications, nor shall the joint and several
character of the Borrowers’ obligations hereunder be affected, provided, that
the provisions of this Section 3.9 shall not be construed so as to preclude any
Borrower from taking actions permitted to be taken by a “Borrower” hereunder.

3.10             Joint and Several Liability.

    (a)        Joint and Several Liability. All Loans made to the Borrowers and
all of the other Obligations of the Borrowers, including all interest, fees and
expenses with respect thereto and all indemnity and reimbursement obligations
hereunder, shall constitute one joint and several direct and general obligation
of all of the Borrowers. Notwithstanding anything to the contrary contained
herein, each of the Borrowers shall be jointly and severally, with each other
Borrower, directly and unconditionally, liable for all Obligations, it being
understood that the advances to each Borrower inure to the benefit of all
Borrowers, and that the Agent, the Letter of Credit Issuer and the Lenders are
relying on the joint and several liability of the Borrowers as co-makers in
extending the Loans hereunder and issuing Letters of Credit. Each Borrower
hereby unconditionally and irrevocably agrees that upon default in the payment
when due (whether at stated maturity, by acceleration or otherwise) of any
principal of, or interest on, any Obligation, it will forthwith pay the same,
without notice or demand.

    (b)        No Reduction in Obligations. No payment or payments made by any
of the Borrowers or any other Person or received or collected by the Agent, the
Letter of Credit Issuer or any Lender from any of the Borrowers or any Person by
virtue of any action or proceeding or any setoff or appropriation or application
at any time or from time to time in reduction of or in payment of the
Obligations shall be deemed to modify, reduce, release or otherwise affect the
liability of each Borrower under this Agreement, which shall remain liable for
all remaining and thereafter arising Obligations until the Obligations are paid
in full and the Commitments are terminated.

3.11             Obligations Absolute. Each Borrower agrees that the Obligations
will be paid strictly in accordance with the terms of the Loan Documents,
regardless of any law, regulation or order now or hereafter in effect in any
jurisdiction affecting any of such terms or the rights of the Agent, the Letter
of Credit Issuer or any Lender with respect thereto. All Obligations shall be
conclusively presumed to have been created in reliance hereon. The liabilities
of each Borrower under this Agreement shall be absolute and unconditional
irrespective of: (a) any lack of validity or enforceability of any Loan Document
or any other agreement or instrument relating thereto; (b) any change in the
time, manner or place of payments of, or in any other term of, all or any part
of the Obligations, or any other amendment or waiver thereof or any consent to
departure therefrom, including any increase in the Obligations resulting from
the extension of additional credit to any Borrower or otherwise; (c) any taking,
exchange, release or non-perfection of any Collateral, or any release or
amendment or waiver of or consent to departure from any guaranty for all or any
of the Obligations; (d) any change, restructuring or termination of the
structure or existence of any Borrower or other Obligor; or (e) any other
circumstance which otherwise constitute a defense available to, or a discharge
of, any Borrower or other Obligor, other than the indefeasible payment in full
of the Obligations. This Agreement shall continue to be effective or be
reinstated, as the case may be, if at any time any payment of any of the
Obligations is rescinded or must otherwise be returned by the Agent, the Letter
of Credit Issuer or any Lender upon the insolvency, bankruptcy or reorganization
of any Borrower or other Obligor or otherwise, all as though such payment had
not been made.

3.12             Waiver of Suretyship Defenses. Each Borrower agrees that the
joint and several liability of the Borrowers provided for in Section 3.10 shall
not be impaired or affected by any modification, supplement, extension or
amendment of any contract of agreement to which the other Borrowers or Obligors
may hereafter agree (other than an agreement signed by the Agent and the Lenders
specifically releasing such liability), nor by any delay, extension of time,
renewal, compromise or other indulgence granted by the Agent or any Lender with
respect to any of the Obligations, nor by any other agreements or arrangements
whatever with the other Borrowers, the Obligors or with anyone else, each
Borrower hereby waiving all notice of such delay, extension, release,
substitution, renewal, compromise or other indulgence, and hereby consenting to
be bound thereby as fully and effectually as if it had expressly agreed thereto
in advance. The liability of each Borrower is direct and unconditional as to all
of the Obligations, and may be enforced without requiring the Agent or any
Lender first to resort to any other right, remedy or security. Each Borrower
hereby expressly waives promptness, diligence, notice of acceptance and any
other notice (except to the extent expressly provided for herein or in another
Loan Document) with respect to any of the Obligations, this Agreement or any
other Loan Documents and any requirement that the Agent or any Lender protect,
secure, perfect or insure any Lien or any property subject thereto or exhaust
any right or take any action against any Borrower, any Obligor or any other
Person or any collateral, including any rights any Borrower may otherwise have
under O.C.G.A. § 10-7-24 or any successor statute or any analogous statute in
any jurisdiction under the laws of which any Borrower is organized or in which
any Borrower conducts business.

3.13             Contribution and Indemnification among the Borrowers. Each
Borrower is obligated to repay the Obligations as joint and several obligors
under this Agreement. To the extent that any Borrower shall, under this
Agreement as a joint and several obligor, repay any of the Obligations
constituting Loans made to another Borrower hereunder or other Obligations
incurred directly and primarily by any other Borrower (an “Accommodation
Payment”), then, to the extent that such Borrower has not received the benefit
of such repaid Obligations (whether through an inter-company loan or otherwise),
the Borrower making such Accommodation Payment shall be entitled to contribution
and indemnification from, and be reimbursed by, each of the other Borrowers in
an amount, for each of such other Borrowers, equal to a fraction of such
Accommodation Payment, the numerator of which fraction is such other Borrower’s
“Allocable Amount” (as defined below) and the denominator of which fraction is
the sum of the Allocable Amounts of all of the Borrowers. As of any date of
determination, the “Allocable Amount” of each Borrower shall be equal to the
maximum amount of liability for Accommodation Payments which could be asserted
against such Borrower hereunder without (a) rendering such Borrower “insolvent”
within the meaning of Section 101(31) of Title 11 of the United States Code
entitled “Bankruptcy” (the “Bankruptcy Code”), Section 2 of the Uniform
Fraudulent Transfer Act (the “UFTA”), or Section 2 of the Uniform Fraudulent
Conveyance Act (“UFCA”), (b) leaving such Borrower with unreasonably small
capital or assets, within the meaning of Section 548 of the Bankruptcy Code,
Section 4 of the UFTA, or Section 4 of the UFCA, or (c) leaving such Borrower
unable to pay its debts as they become due within the meaning of Section 548 of
the Bankruptcy Code, Section 4 of the UFTA, or Section 5 of the UFCA. All rights
and claims of contribution, indemnification and reimbursement under this Section
3.13 shall be subordinate in right of payment to the prior payment in full of
the Obligations.

ARTICLE 4

TAXES, YIELD PROTECTION AND ILLEGALITY

4.1             Taxes.

    (a)        Except as provided in Section 4.1(f), any and all payments by the
Borrowers to each Lender or the Agent under this Agreement and any other Loan
Document shall be made free and clear of, and without deduction or withholding
for, any Taxes. In addition, the Borrowers shall pay all Other Taxes.

    (b)        If the Borrowers fail to pay any Taxes or Other Taxes described
in Section 4.1(a) when due, the Borrowers shall indemnify and hold harmless each
Lender and the Agent for the full amount of such Taxes or Other Taxes (including
any Taxes or Other Taxes imposed by any jurisdiction on amounts payable under
this Section 4.1) paid by any Lender or the Agent and any liability (including
penalties, interest, additions to tax and expenses) arising therefrom or with
respect thereto. Payment under this indemnification shall be made within 30 days
after the date such Lender or the Agent makes written demand therefor and
provides documentation reasonably satisfactory to the Borrowers’ Agent of the
payment of such Taxes or Other Taxes.

    (c)        If the Borrowers shall be required by law to deduct or withhold
any Taxes or Other Taxes from or in respect of any sum payable hereunder to any
Lender or the Agent, then, subject to Section 12.10:

    (i)               the sum payable shall be increased as necessary so that
after making all required deductions and withholdings (including deductions and
withholdings applicable to additional sums payable under this Section 4.1) such
Lender or the Agent, as the case may be, receives an amount equal on an
after-tax basis to the sum it would have received had no such deductions or
withholdings been made;

    (ii)               the Borrowers shall make such deductions and
withholdings; and

    (iii)               the Borrowers shall pay the full amount deducted or
withheld to the relevant taxing authority or other authority in accordance with
applicable law.

    (d)        At the Agent’s request, within 30 days after the date of any
payment by the Borrowers of Taxes or Other Taxes, the Borrowers shall furnish to
the Agent the original or a certified copy of a receipt evidencing payment
thereof, or other evidence of payment satisfactory to the Agent.

    (e)        If the Borrowers are required to pay additional amounts to any
Lender or the Agent pursuant to subsection (c) of this Section 4.1, then such
Lender shall use reasonable efforts (consistent with legal and regulatory
restrictions) to change the jurisdiction of its lending office so as to
eliminate any such additional payment by the Borrowers which may thereafter
accrue, if such change in the judgment of such Lender is not otherwise
disadvantageous to such Lender.

    (f)        Notwithstanding anything else in this Agreement, the Borrowers
shall not be required to indemnify any Lender or to pay any increased amounts to
any Lender, in respect of any Taxes pursuant to this Section 4.1 or otherwise to
the extent that any obligation to withhold or deduct amounts with respect to
such Taxes existed (i) on the date such Lender (or its successor or assign)
became a party to this Agreement or (ii) if a Lender after becoming a party to
this Agreement changes the office to which payments are made, on the date of
such change. The foregoing sentence shall not in any manner limit the Borrowers’
obligations with respect to Other Taxes.

4.2             Illegality.

    (a)        If any Lender determines that the introduction of any Requirement
of Law, or any change in any Requirement of Law, or in the interpretation or
administration of any Requirement of Law, has made it unlawful, or that any
central bank or other Governmental Authority has asserted that it is unlawful,
for any Lender or its applicable lending office to make LIBOR Loans, then, on
notice thereof by that Lender to the Borrowers’ Agent through the Agent, any
obligation of that Lender to make LIBOR Loans shall be suspended until that
Lender notifies the Agent and the Borrowers’ Agent that the circumstances giving
rise to such determination no longer exist. The affected Lender shall provide
prompt notice to the Agent and the Borrowers’ Agent of the cessation of such
circumstances.

    (b)        If any Lender determines that it is unlawful to maintain any
LIBOR Loan, the Borrowers shall, upon the Borrowers’ Agent’s receipt of notice
of such fact and demand from such Lender (with a copy to the Agent), prepay in
full such LIBOR Loans of that Lender then outstanding, together with interest
accrued thereon and amounts required under Section 4.4, either on the last day
of the Interest Period thereof, if that Lender may lawfully continue to maintain
such LIBOR Loans to such day, or immediately, if that Lender may not lawfully
continue to maintain such LIBOR Loans. If the Borrowers are required to so
prepay any LIBOR Loans, then, concurrently with such prepayment, the Borrowers
shall borrow from the affected Lender, in the amount of such repayment, a Base
Rate Loan.

4.3             Increased Costs and Reduction of Return.

    (a)        If any Lender determines that due to either (i) the introduction
of or any change in the interpretation of any law or regulation, or (ii) the
compliance by that Lender with any guideline or request from any central bank or
other Governmental Authority (whether or not having the force of law) (excluding
any costs resulting from reserve requirements taken into account in the
definition of LIBOR), there shall be any increase in the cost to such Lender of
agreeing to make or making, funding or maintaining any LIBOR Loans, then the
Borrowers shall be liable for, and shall from time to time, upon demand (with a
copy of such demand to be sent to the Agent), pay to the Agent for the account
of such Lender, additional amounts as are sufficient to compensate such Lender
for such increased costs.

    (b)        If any Lender shall have determined that (i) the introduction of
any Capital Adequacy Regulation, (ii) any change in any Capital Adequacy
Regulation, (iii) any change in the interpretation or administration of any
Capital Adequacy Regulation by any central bank or other Governmental Authority
charged with the interpretation or administration thereof, or (iv) compliance by
such Lender or any corporation or other entity controlling such Lender with any
Capital Adequacy Regulation, affects or would affect the amount of capital
required or expected to be maintained by such Lender or any corporation or other
entity controlling such Lender and (taking into consideration such Lender’s or
such corporation’s or other entity’s policies with respect to capital adequacy
and such Lender’s desired return on capital) determines that the amount of such
capital is increased as a consequence of its Commitment, loans, credits or
obligations under this Agreement, then, upon demand of such Lender to the
Borrowers through the Agent, the Borrowers shall pay to such Lender, from time
to time as specified by such Lender, additional amounts sufficient to compensate
such Lender for such increase.

    (c)        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 the Borrowers shall not be required to
compensate a Lender pursuant to this Section for any increased costs or reduced
returns incurred more than 180 days prior to the date that such Lender notifies
the Borrowers’ Agent of the event giving rise to such increased costs or reduced
returns and of such Lender’s intention to claim compensation therefor; provided
further that, if the event giving rise to such increased costs or reduced
returns is retroactive, then the 180-day period referred to above shall be
extended to include the period of retroactive effect thereof.

4.4             Funding Losses. The Borrowers shall reimburse each Lender and
hold each Lender harmless from any loss or expense which such Lender may sustain
or incur as a consequence of:

    (a)        the failure of the Borrowers to make on a timely basis any
payment of principal of any LIBOR Loan;

    (b)        the failure of the Borrowers to borrow, continue or convert a
Loan after any Borrower has given (or is deemed to have given) a Notice of
Borrowing or a Notice of Continuation/Conversion; or

    (c)        the prepayment or other payment (including after acceleration
thereof) of any LIBOR Loans on a day that is not the last day of the relevant
Interest Period;

including any loss or expense arising from the liquidation or reemployment of
funds obtained by it to maintain its LIBOR Loans or from fees payable to
terminate the deposits from which such funds were obtained, but excluding any
loss of profit or Applicable Margin. The Borrowers shall also pay any customary
administrative fees charged by any Lender in connection with the foregoing.

4.5             Inability to Determine Rates. If the Agent determines that for
any reason adequate and reasonable means do not exist for determining LIBOR for
any requested Interest Period with respect to a proposed LIBOR Loan, or that
LIBOR for any requested Interest Period with respect to a proposed LIBOR Loan
does not adequately and fairly reflect the cost to the Lenders of funding such
Loan, the Agent will promptly so notify the Borrowers’ Agent and each Lender.
Thereafter, the obligation of the Lenders to make or maintain LIBOR Loans
hereunder shall be suspended until the Agent revokes such notice in writing.
Upon receipt of such notice, the Borrowers may revoke any Notice of Borrowing or
Notice of Continuation/Conversion then submitted by any Borrower. If the
Borrowers do not revoke such Notice, the Lenders shall make, convert or continue
the Loans, as proposed by the Borrowers, in the amount specified in the
applicable notice submitted by the Borrowers, but such Loans shall be made,
converted or continued as Base Rate Loans instead of LIBOR Loans.

4.6             Certificates of Lender. If any Lender claims reimbursement or
compensation under this Article 4, the affected Lender shall determine the
amount thereof and shall deliver to the Borrowers’ Agent (with a copy to the
Agent) a certificate setting forth in reasonable detail the amount payable to
the affected Lender, and such certificate shall be conclusive and binding on the
Borrowers in the absence of manifest error.

4.7             Survival. The agreements and obligations of the Borrowers in
this Article 4 shall survive the payment of all other Obligations and the
termination of this Agreement.

4.8             Assignment of Commitments Under Certain Circumstances. In the
event (a) any Lender requests compensation pursuant to Section 4.3 in an
aggregate amount in excess of $100,000, (b) any Lender delivers a notice
described in Section 4.2, or (c) the Borrowers are required to pay additional
amounts to any Lender or any Governmental Authority on account of any Lender
pursuant to Section 4.1 in an aggregate amount in excess of $100,000, the
Borrowers may, at their sole expense and effort (including with respect to the
processing fee referred to in Section 11.2(a)), upon notice to such Lender and
the Agent, require such Lender to transfer and assign, without recourse (in
accordance with and subject to the restrictions contained in Section 11.2), all
of its interests, rights and obligations under this Agreement to an Eligible
Assignee that shall assume such assigned obligations (which assignee may be
another Lender, if a Lender accepts such assignment), provided that (i) such
assignment shall not conflict with any law, rule or regulation or order of any
court or other Governmental Authority having jurisdiction, (ii) no Event of
Default shall have occurred and be continuing, (iii) the Borrowers or such
assignee shall have paid to such Lender in immediately available funds an amount
equal to the sum of 100% of the principal of and interest accrued to the date of
such payment on the outstanding Loans of such Lender, plus all fees and other
amounts accrued for the account of such Lender hereunder (including any amounts
under Sections 4.1, 4.2 and 4.3), (iv) such assignment is consummated within
ninety (90) days after the date on which the Borrowers’ right under this Section
arises, and (v) such assignee is reasonably acceptable to the Agent; provided
further that if prior to any such assignment the circumstances or event that
resulted in such Lender’s request or notice under Section 4.2 or 4.3 or demand
for additional amounts under Section 4.1, as the case may be, shall cease to
exist or become inapplicable for any reason, or if such Lender shall waive its
rights in respect of such circumstances or event under Section 4.1, 4.2 or 4.3,
as the case may be, then such Lender shall not thereafter be required to make
such assignment hereunder.

ARTICLE 5

BOOKS AND RECORDS; FINANCIAL INFORMATION; NOTICES

5.1             Books and Records. The Obligors shall maintain, at all times,
correct and complete books, records and accounts in which complete, correct and
timely entries are made of their transactions in accordance with GAAP applied
consistently with the audited Financial Statements required to be delivered
pursuant to Section 5.2(a). The Obligors shall, by means of appropriate entries,
reflect in such accounts and in all Financial Statements proper liabilities and
reserves for all taxes and proper provision for depreciation and amortization of
property and bad debts, all in accordance with GAAP. The Obligors shall maintain
at all times books and records pertaining to the Collateral in such detail, form
and scope as the Agent shall reasonably require, including, but not limited to,
records of (a) all payments received and all credits and extensions granted with
respect to the Accounts, and (b) the return, rejection, repossession, stoppage
in transit, loss, damage, or destruction of any Inventory.

5.2             Financial Information. The Obligors shall promptly furnish to
the Agent and each Lender all such financial information as the Agent shall
reasonably request. Without limiting the foregoing, the Obligors will furnish to
the Agent and each Lender, in such detail as the Agent or the Lenders shall
request, the following:

    (a)        As soon as available, but in any event not later than ninety (90)
days after the close of each Fiscal Year, consolidated audited and consolidating
unaudited balance sheets, statements of operations, statements of cash flow and
changes in shareholders’ equity for the Obligors and their consolidated
Subsidiaries for such Fiscal Year, and the accompanying notes thereto, setting
forth in each case in comparative form figures for the previous Fiscal Year, all
in reasonable detail, fairly presenting the financial position and the results
of operations of the Obligors and their consolidated Subsidiaries as at the date
thereof and for the Fiscal Year then ended, and prepared in accordance with
GAAP. Such statements shall be examined in accordance with generally accepted
auditing standards by and, in the case of such statements performed on a
consolidated basis, accompanied by a report thereon unqualified in any respect
of independent certified public accountants selected by the Obligors and
reasonably satisfactory to the Agent. The Obligors hereby authorize the Agent to
communicate directly with their certified public accountants and, by this
provision, authorize those accountants to disclose to the Agent any and all
financial statements and other supporting financial documents and schedules
relating to any Obligor and to discuss directly with the Agent the finances and
affairs of any Obligor. The Obligors shall be entitled to have a representative
present during all such communications.

    (b)        As soon as available, but in any event not later than thirty (30)
days after the end of each month (other than any month ending as of the end of a
fiscal quarter or year), consolidated unaudited balance sheets of the Obligors
and their consolidated Subsidiaries as at the end of such month, and
consolidated unaudited statements of operations and statements of cash flow for
the Obligors and their consolidated Subsidiaries for such month and for the
period from the beginning of the Fiscal Year to the end of such month, all in
reasonable detail, fairly presenting the financial position and results of
operations of the Obligors and their consolidated Subsidiaries as at the date
thereof and for such periods, and, in each case, in comparable form, figures for
the corresponding period in the prior Fiscal Year and in the Obligors’ budget,
and prepared in accordance with GAAP applied consistently with the audited
Financial Statements required to be delivered pursuant to Section 5.2(a). The
Borrowers shall certify by a certificate signed by a Designated Financial
Officer that all such statements have been prepared in accordance with GAAP and
present fairly the Obligors’ financial position as at the dates thereof and its
results of operations for the periods then ended, subject to normal year-end
adjustments.

    (c)        As soon as available, but in any event not later than forty-five
(45) days after the end of each fiscal quarter, consolidated and consolidating
unaudited balance sheets of the Borrowers and their consolidated Subsidiaries as
at the end of such fiscal quarter, and consolidated and consolidating unaudited
statements of operations and statements of cash flow for the Borrowers and their
consolidated Subsidiaries for such fiscal quarter and for the period from the
beginning of the Fiscal Year to the end of such fiscal quarter, all in
reasonable detail, fairly presenting the financial position and results of
operations of the Borrowers and their consolidated Subsidiaries as at the date
thereof and for such periods, and, in each case, in comparable form, figures for
the corresponding period in the prior Fiscal Year and in the Borrowers’ budget,
and prepared in accordance with GAAP applied consistently with the audited
Financial Statements required to be delivered pursuant to Section 5.2(a). The
Borrowers shall certify by a certificate signed by a Designated Financial
Officer that all such statements have been prepared in accordance with GAAP and
present fairly the Borrowers’ financial position as at the dates thereof and its
results of operations for the periods then ended, subject to normal year-end
adjustments.

    (d)        With each of the audited Financial Statements delivered pursuant
to Section 5.2(a), a certificate (which certificate may be eliminated, narrowed
in scope or qualified to the extent required by generally applicable accounting
rules and guidelines) of the independent certified public accountants that
examined such statements to the effect that they have reviewed and are familiar
with this Agreement and that, in examining such Financial Statements, they did
not become aware of any fact or condition which then constituted a Default or
Event of Default with respect to a financial covenant, except for those, if any,
described in reasonable detail in such certificate.

    (e)        With each of the Financial Statements delivered pursuant to
Sections 5.2(a) and (c), a certificate of a Designated Financial Officer of the
Borrowers setting forth in reasonable detail the calculations required to
establish that the Obligors were in compliance with the covenants set forth in
Sections 7.22 and 7.23 during the period covered in such Financial Statements
and as at the end thereof. With each of the Financial Statements delivered
pursuant to Sections 5.2(b) and (c), a certificate of a Designated Financial
Officer of the Borrowers containing an update of any changes in the landlord
with respect to leased Real Estate (or the amount of rent payable with respect
to leased Real Estate or delinquencies in the payment of rent with respect to
leased Real Estate) or the bank accounts listed on Schedule 6.27, and stating
that, except as explained in reasonable detail in such certificate, (i) all of
the representations and warranties of the Obligors contained in this Agreement
and the other Loan Documents are correct and complete in all material respects
as at the date of such certificate as if made at such time, except for those
that speak as of a particular date, (ii) each Obligor is, at the date of such
certificate, in compliance in all material respects with all of its respective
covenants and agreements in this Agreement and the other Loan Documents
(including, without limitation, a certification that no Obligor: has changed its
legal name or jurisdiction of organization; changed the names under which it
sells Inventory or creates Accounts; entered into any merger or acquisition;
caused any Collateral to be located in a location not previously disclosed to
the Agent in writing; formed any Subsidiary; or acquired any new material
Proprietary Rights or made a filing of an application for the registration of
any patent, trademark or copyright with the United States Patent and Trademark
Office, the United States Copyright Office or any similar office or agency),
(iii) no Default or Event of Default then exists or existed during the period
covered by the Financial Statements for such month, and (iv) explaining, in form
consistent with the Borrowers’ past practices or otherwise acceptable to the
Agent, the material variances of the figures in the corresponding budgets and
prior Fiscal Year financial statements (unless such variances are explained in
filings with the Securities and Exchange Commission under the Exchange Act). If
such certificate discloses that a representation or warranty is not correct or
complete, or that a covenant has not been complied with, or that a Default or
Event of Default existed or exists, such certificate shall set forth what action
the Obligors have taken or propose to take with respect thereto.

    (f)        No sooner than sixty (60) days and not less than five (5) days
prior to the beginning of each Fiscal Year, commencing with the fiscal year
ending April 2, 2004, annual forecasts (to include forecasted consolidated and
consolidating balance sheets, statements of operations and statements of cash
flow) for the Obligors and their Subsidiaries as at the end of and for each
month of such Fiscal Year.

    (g)        If requested by the Agent, promptly after filing with the PBGC
and the IRS, a copy of each annual report or other filing filed with respect to
each Plan of any Obligor (other than any annual report or other filing that is
the subject of Section 5.3(l)).

    (h)        Promptly upon the filing thereof, copies of all reports, if any,
to or other documents filed by any Obligor or any Subsidiary with the Securities
and Exchange Commission under the Exchange Act, and all reports, notices, or
statements sent or received by any Obligor or any Subsidiary to or from the
holders of any equity interests of any Obligor (other than routine non-material
correspondence sent by shareholders of any Obligor to such Obligor) or any such
Subsidiary or of any Debt of any Obligor or any Subsidiary registered under the
Securities Act of 1933 or to or from the trustee under any indenture under which
the same is issued.

    (i)        As soon as available, but in any event not later than 15 days
after any Obligor’s receipt thereof, a copy of all management reports and
management letters prepared for such Obligor by any independent certified public
accountants of such Obligor.

    (j)        Promptly after their preparation, copies of any and all proxy
statements, financial statements, and reports which any Obligor makes available
to its shareholders.

    (k)        If requested by the Agent, promptly after filing with the IRS, a
copy of each tax return filed by any Obligor or by any Subsidiary.

    (l)        No later than five Business Days after the date of the most
recent Borrowing Base Certificate, an updated Borrowing Base Certificate as of a
date subsequent to the date of such prior Borrowing Base Certificate, together
with all supporting information with respect thereto in accordance with
Section 9 of the Security Agreement.

    (m)        Such additional information as the Agent and/or any Lender may
from time to time reasonably request regarding the financial and business
affairs of any Obligor or any Subsidiary; provided, however, that the Obligors
shall not be obligated to provide any information under this clause (m) that
would vitiate the attorney-client privilege, but in such event the Obligors will
make available to the Agent, promptly following the Agent’s request, copies of
all pleadings relating to the subject litigation.

5.3             Notices to the Lenders. The Obligors shall notify the Agent and
the Lenders in writing of the following matters at the following times:

    (a)        Immediately after becoming aware of any Default or Event of
Default;

    (b)        Immediately after becoming aware of the assertion by the holder
of any Debt of any Obligor in a face amount in excess of $1,000,000 that a
default exists with respect thereto or that such Obligor is not in compliance
with the terms thereof, or the threat or commencement by such holder of any
enforcement action because of such asserted default or non-compliance;

    (c)        Promptly after becoming aware of any event or circumstance
generally affecting the Obligors’ industry which could reasonably be expected to
have a Materially Adverse Effect, and immediately after becoming aware of any
other event or circumstance which could reasonably be expected to have a
Material Adverse Effect (other than changes in general economic circumstances);

    (d)        Immediately after becoming aware of any pending or threatened
action, suit, or proceeding, by any Person against any Obligor, or any pending
or threatened investigation by a Governmental Authority involving any Obligor,
which could reasonably be expected to have a Material Adverse Effect;

    (e)        Immediately after becoming aware of any pending or threatened
strike, work stoppage, unfair labor practice claim, or other labor dispute
affecting any Obligor in a manner which could reasonably be expected to have a
Material Adverse Effect;

    (f)        Immediately after becoming aware of any violation of any law,
statute, regulation, or ordinance of a Governmental Authority affecting any
Obligor which could reasonably be expected to have a Material Adverse Effect;

    (g)        Immediately after receipt of any written notice of any violation
by any Obligor or any Subsidiary of any Environmental Law which could reasonably
be expected to have a Material Adverse Effect or that any Governmental Authority
has asserted in writing that any Obligor or any Subsidiary is not in compliance
with any Environmental Law or is investigating any Obligor’s or any Subsidiary’s
compliance therewith and such noncompliance could reasonably be expected to have
a Material Adverse Effect;

    (h)        Immediately after receipt of any written notice that any Obligor
or any Subsidiary is or may be liable to any Person as a result of the Release
or threatened Release of any Contaminant or that any Obligor or any Subsidiary
is subject to investigation by any Governmental Authority evaluating whether any
remedial action is needed to respond to the Release or threatened Release of any
Contaminant which, in either case, is reasonably likely to give rise to
liability in excess of $1,000,000;

    (i)        Immediately after receipt of any written notice of the imposition
of any Environmental Lien against any property of any Obligor or any Subsidiary;

    (j)        Any change in any Obligor’s name, state of organization,
locations of Collateral, or form of organization, or to which instruments in
payment of Accounts may be made payable, in each case at least thirty (30) days
prior thereto;

    (k)        Within ten (10) Business Days after any Obligor or any ERISA
Affiliate knows or has reason to know, that an ERISA Event or a prohibited
transaction (as defined in Sections 406 of ERISA and 4975 of the Code) has
occurred, and, when known, any action taken or threatened by the IRS, the DOL or
the PBGC with respect thereto;

    (l)        Upon request, or, in the event that such filing reflects a
significant change with respect to the matters covered thereby, within ten (10)
Business Days after the filing thereof with the PBGC, the DOL or the IRS, as
applicable, copies of the following: (i) each annual report (form 5500 series),
including Schedule B thereto, filed with the PBGC, the DOL or the IRS with
respect to each Plan, (ii) a copy of each funding waiver request filed with the
PBGC, the DOL or the IRS with respect to any Plan and all communications
received by any Obligor or any ERISA Affiliate from the PBGC, the DOL or the IRS
with respect to such request, (iii) a copy of each other filing or notice filed
with the PBGC, the DOL or the IRS, with respect to each Plan by any Obligor or
any ERISA Affiliate, and (iv) a copy of each favorable determination letter from
the IRS regarding the qualification of a Plan under Section 401(a) of the Code;

    (m)        Upon request, copies of each actuarial report for any Plan or
Multi-employer Plan and annual report for any Multi-employer Plan; and within
three (3) Business Days after receipt thereof by any Obligor or any ERISA
Affiliate, copies of the following: (i) any notices of the PBGC’s intention to
terminate a Plan or to have a trustee appointed to administer such Plan;
(ii) any unfavorable determination letter from the IRS regarding the
qualification of a Plan under Section 401(a) of the Code; or (iii) any notice
from a Multi-employer Plan regarding the imposition of withdrawal liability;

    (n)        Within ten (10) Business Days after the occurrence thereof: (i)
any changes in the benefits of any existing Plan which increase one or more
Obligor’s annual costs with respect thereto by an amount in excess of
$1,000,000, or the establishment of any new Plan or the commencement of
contributions to any Plan to which any Obligor or any ERISA Affiliate was not
previously contributing; or (ii) any failure by any Obligor or any ERISA
Affiliate to make a required installment or any other required payment under
Section 412 of the Code on or before the due date for such installment or
payment;

    (o)        Within three (3) Business Days after any Obligor or any ERISA
Affiliate knows or has reason to know that any of the following events has or
will occur: (i) a Multi-employer Plan has been or will be terminated; (ii) the
administrator or plan sponsor of a Multi-employer Plan intends to terminate a
Multi-employer Plan; or (iii) the PBGC has instituted or will institute
proceedings under Section 4042 of ERISA to terminate a Multi-employer Plan; and

    (p)        Promptly after any Borrower has notified the Agent of any
intention by such Borrower to treat the Loans and/or Letters of Credit and
related transactions as being a “reportable transaction” (within the meaning of
Treasury Regulation Section 1.6011-4), a duly completed copy of IRS Form 8886 or
any successor form.

Each notice given under this Section 5.3 shall describe the subject matter
thereof in reasonable detail and shall set forth the action that the applicable
Obligor, its Subsidiary, or any ERISA Affiliate, as applicable, has taken or
proposes to take with respect thereto.

ARTICLE 6

GENERAL WARRANTIES AND REPRESENTATIONS

Each Obligor warrants and represents to the Agent and the Lenders that except as
hereafter disclosed to and accepted by the Agent and the Required Lenders in
writing:

6.1             Authorization, Validity, and Enforceability of this Agreement
and the Loan Documents.

Each Obligor has the power and authority to execute, deliver and perform this
Agreement and the other Loan Documents to which it is a party, to incur the
Obligations, and to grant to the Agent Liens upon and security interests in the
Collateral. Each Obligor has taken all necessary action (including obtaining
approval of its stockholders if necessary) to authorize its execution, delivery,
and performance of this Agreement and the other Loan Documents to which it is a
party. This Agreement and the other Loan Documents to which it is a party have
been duly executed and delivered by such Obligor and constitute the legal, valid
and binding obligations of such Obligor, enforceable against it in accordance
with their respective terms. Each Obligor’s execution, delivery, and performance
of this Agreement and the other Loan Documents to which it is a party do not and
will not conflict with, or constitute a violation or breach of, or result in the
imposition of any Lien upon the property of such Obligor or any of its
Subsidiaries, by reason of the terms of (a) any contract, mortgage, lease,
agreement, indenture, or instrument to which such Obligor is a party or which is
binding upon it, (b) any Requirement of Law applicable to such Obligor or any of
its Subsidiaries, or (c) the certificate or articles of incorporation or by-laws
or the limited liability company or limited partnership agreement of such
Obligor or any of its Subsidiaries.

6.2             Validity and Priority of Security Interest. The provisions of
this Agreement and the other Loan Documents create legal and valid Liens on all
the Collateral in favor of the Agent, for the ratable benefit of the Agent and
the Lenders, and such Liens constitute perfected and continuing Liens on all the
Collateral, having priority over all other Liens on the Collateral, except for
those Liens identified in clauses (c), (d) and (e) of the definition of
Permitted Liens and as otherwise provided in the Security Agreement, securing
all of the Obligations, and enforceable against each Obligor and all third
parties.

6.3             Organization and Qualification. Each Obligor (a) is duly
organized or incorporated and validly existing and in good standing under the
laws of the state of its organization or incorporation, (b) is qualified to do
business and is in good standing in the jurisdictions set forth on Schedule 6.3
(which are the only jurisdictions on the Closing Date in which such
qualification is necessary in order for it to own or lease its property and
conduct its business, other than those jurisdictions in which the failure to
qualify could not reasonably be expected to have a Material Adverse Effect), and
(c) has all requisite power and authority to conduct its business and to own its
property.

6.4             Corporate Name; Prior Transactions. Except as set forth on
Schedule 6.4, no Obligor has, during the five (5) years prior to the Closing
Date, been known by or used any other corporate or fictitious name, or been a
party to any merger or consolidation, or acquired all or substantially all of
the assets of any Person, or acquired any of its property outside of the
ordinary course of business.

6.5             Subsidiaries and Affiliates. Schedule 6.5 sets forth a correct
and complete list as of the Closing Date of the name and relationship to PSS of
each and all of PSS’s Subsidiaries and other Affiliates. Each Subsidiary (a) is
duly incorporated or organized and validly existing in good standing under the
laws of its state of incorporation or organization set forth on Schedule 6.5,
(b) is qualified to do business and in good standing in each jurisdiction in
which the failure to so qualify or be in good standing could reasonably be
expected to have a Material Adverse Effect, and (c) has all requisite power and
authority to conduct its business and own its property.

6.6              Financial Statements and Projections.

    (a)        The Obligors have delivered to the Agent and the Lenders the
audited balance sheet and related statements of income, retained earnings, cash
flows, and changes in stockholders equity for the Obligors and their
consolidated Subsidiaries as of March 29, 2002, and for the Fiscal Year then
ended, accompanied by the report thereon of the Borrower’s independent certified
public accountants, KPMG LLP. The Obligors have also delivered to the Agent and
the Lenders the unaudited balance sheet and related statements of operations and
cash flows for the Obligors and their consolidated Subsidiaries as of March 28,
2003. All such financial statements have been prepared in accordance with GAAP
and present accurately and fairly in all material respects the financial
position of the Obligors and their consolidated Subsidiaries as at the dates
thereof and their results of operations for the periods then ended.

    (b)        The Latest Projections when submitted to the Lenders as required
herein represent the Obligors’ best estimate of the future financial performance
of the Obligors and their consolidated Subsidiaries for the periods set forth
therein. The Latest Projections have been prepared on the basis of the
assumptions set forth therein, which the Obligors believe are fair and
reasonable in light of current and reasonably foreseeable business conditions at
the time submitted to the Lenders, it being understood that actual results may
differ from projections.

6.7             Capitalization. Schedule 6.7 sets forth, as of the Closing Date,
the number of authorized shares of capital stock or similar equity interests of
each Obligor, the number of such shares or other interests that are outstanding,
and the names of (a) the record and beneficial owners, of public record as of
the Closing Date, of each owner of more than 5% of the capital stock of PSS, and
(b) the record and beneficial owners of all such shares of the other Obligors.
All such issued and outstanding shares or other interests are validly issued,
fully paid and non-assessable.

6.8             Solvency. Each Obligor is Solvent prior to and after giving
effect to the Borrowings to be made on the Closing Date, the issuance of any
Letters of Credit to be issued on the Closing Date, and the guaranty obligations
to be incurred on the Closing Date.

6.9             Debt. After giving effect to the making of the Loans to be made
on the Closing Date, the Obligors and their Subsidiaries have no Debt, except
(a) the Obligations, (b) Debt described on Schedule 6.9, and (c) other Permitted
Debt.

6.10             Distributions. Since March 29, 2002, no Distribution has been
declared, paid, or made upon or in respect of any capital stock or other
securities of (a) PSS, except of the type permitted under Section 7.10(a)(ii),
and (b) any other Obligor, except of the type permitted under Section
7.10(a)(i).

6.11             Real Estate; Leases. Schedule 6.11 sets forth, as of the
Closing Date, a correct and complete list of all Real Estate owned by any
Obligor or any Subsidiary, all leases and subleases of real or personal property
held by any Obligor as lessee or sublessee (other than leases of personal
property as to which an Obligor is lessee or sublessee for which the value of
such personal property in the aggregate is less than $1,000,000), and all leases
and subleases of real or personal property held by any Obligor as lessor, or
sublessor. Each of such leases and subleases is valid and enforceable in
accordance with its terms and is in full force and effect, and, to the Obligors’
knowledge, no default by any party to any such lease or sublease exists, except
in each case where the failure could not reasonably be expected to have a
Material Adverse Effect. The applicable Obligor has good and marketable title in
fee simple to the Real Estate identified on Schedule 6.11 as owned by such
Obligor, or valid leasehold interests in all material Real Estate designated
therein as “leased” by such Obligor, and each Obligor has good, indefeasible,
and merchantable title to all of its other property reflected on the March 29,
2002 Financial Statements delivered to the Agent and the Lenders, except as
disposed of in the ordinary course of business since the date thereof, free of
all Liens except Permitted Liens.

6.12             Proprietary Rights. Schedule 6.12 sets forth, as of the Closing
Date, a correct and complete list of all of each Obligor’s Proprietary Rights.
None of the Proprietary Rights is subject to any licensing agreement or similar
arrangement except as set forth on Schedule 6.12 or as could not reasonably be
expected to have a Material Adverse Effect. To the best of the Obligors’
knowledge, none of the Proprietary Rights infringes on or conflicts with any
other Person’s property, and no other Person’s property infringes on or
conflicts with the Proprietary Rights, except, in each case, where such
infringement or conflict could not reasonably be expected to have a Material
Adverse Effect. The Proprietary Rights described on Schedule 6.12 constitute all
of the property of such type necessary to the current and anticipated (as of the
Closing Date) future conduct of the Obligors’ business.

6.13             Trade Names. All trade names or styles under which any Obligor
or any Subsidiary sells Inventory or creates Accounts, as of the Closing Date,
or to which instruments in payment of Accounts may be made payable, as of the
Closing Date, are listed on Schedule 6.13.

6.14             Litigation. Except as set forth on Schedule 6.14, there is no
pending, or, to the best of any Obligor’s knowledge, threatened, action, suit,
proceeding, or counterclaim by any Person, or, to the best of any Obligor’s
knowledge, investigation by any Governmental Authority, or any basis for any of
the foregoing, which could reasonably be expected to have a Material Adverse
Effect.

6.15             Labor Disputes. Except as set forth on Schedule 6.15, as of the
Closing Date (a) there is no collective bargaining agreement or other labor
contract covering employees of any Obligor or any Subsidiary, (b) no such
collective bargaining agreement or other labor contract is scheduled to expire
during the term of this Agreement, (c) no union or other labor organization is
seeking to organize, or to be recognized as, a collective bargaining unit of
employees of any Obligor or any Subsidiary or for any similar purpose, and
(d) there is no pending or (to the best of any Obligor’s knowledge) threatened,
strike, work stoppage, material unfair labor practice claim, or other material
labor dispute against or affecting adversely any Obligor or any Subsidiary or
their employees.

6.16             Environmentsl Laws.. Except as set forth on Schedule 6.16 or as
could not reasonably be expected to have a Material Adverse Effect:

    (a)        The Obligors and their Subsidiaries have complied in all material
respects with all Environmental Laws and neither any Obligor nor any Subsidiary
nor any of their presently owned real property or presently conducted
operations, nor their previously owned real property or prior operations, is
subject to any enforcement order from or liability agreement with any
Governmental Authority or any settlement agreement with any private Person
respecting (i) compliance with any Environmental Law, or (ii) any potential
liabilities and costs or remedial action arising from the Release or threatened
Release of a Contaminant.

    (b)        The Obligors and their Subsidiaries have obtained all permits
necessary for their current operations under Environmental Laws, and all such
permits are in good standing and the Obligors and their Subsidiaries are in
compliance with all material terms and conditions of such permits.

    (c)        Neither any Obligor nor any Subsidiary, nor, to the best of any
Obligor’s knowledge, any of the predecessors in interest of any Obligor or any
Subsidiary, has in violation of applicable law stored, treated or disposed of
any hazardous waste.

    (d)        Neither any Obligor nor any Subsidiary has received any summons,
complaint, order or similar written notice indicating that it is not currently
in compliance with, or that any Governmental Authority is investigating its
compliance with, any Environmental Laws or that it is or may be liable to any
other Person as a result of a Release or threatened Release of a Contaminant.

    (e)        To the best of any Obligor’s knowledge, none of the present or
past operations of any Obligor or any Subsidiary is the subject of any
investigation by any Governmental Authority evaluating whether any remedial
action is needed to respond to a Release or threatened Release of a Contaminant.

    (f)        There is not now, nor, to the best of any Obligor’s knowledge,
has there ever been, on or in the Real Estate:

    (i)               any underground storage tanks or surface impoundments,

    (ii)               any asbestos-containing material, or

    (iii)               any polychlorinated biphenyls (PCBs) used in hydraulic
oils, electrical transformers or other equipment.

    (g)        Neither any Obligor nor any Subsidiary has filed any notice under
any requirement of Environmental Law reporting a spill or accidental and
unpermitted Release or discharge of a Contaminant into the environment.

    (h)        Neither any Obligor nor any Subsidiary has entered into any
negotiations or settlement agreements with any Person (including the prior owner
of its property) imposing material obligations or liabilities on any Obligor or
any Subsidiary with respect to any remedial action in response to the Release of
a Contaminant or environmentally related claim.

    (i)        None of the products manufactured, distributed or sold by any
Obligor or any Subsidiary contain asbestos containing material.

    (j)        No Environmental Lien has attached to any Real Estate.

6.17             No Violation of Law. Neither any Obligor nor any Subsidiary is
in violation of any law, statute, regulation, ordinance, judgment, order, or
decree applicable to it which violation could reasonably be expected to have a
Material Adverse Effect.

6.18             No Default. Neither any Obligor nor any Subsidiary is in
default with respect to any note, indenture, loan agreement, mortgage, lease,
deed, or other agreement to which such Obligor or such Subsidiary is a party or
by which it is bound, which default could reasonably be expected to have a
Material Adverse Effect.

6.19             ERISA Compliance.

    (a)        Each Plan is in compliance in all material respects with the
applicable provisions of ERISA, the Code and other federal or state law. Each
actively maintained Plan which is intended to qualify under Section 401(a) of
the Code has received a favorable determination letter from the IRS. Each
terminating Plan, which is intended to qualify under Section 401(a) of the Code
and which is currently maintained by the Obligors as a result of the stock
purchase of its sponsoring corporation by the Obligors, has received or is
scheduled to receive a favorable determination letter from the IRS. To the best
knowledge of the Obligors, nothing has occurred which would cause the loss of
qualification under Section 401(a) of the Code with respect to any such actively
maintained or terminating Plan. Each Obligor and each ERISA Affiliate has made
all required contributions to any Plan subject to Section 412 of the Code, and
no application for a funding waiver or an extension of any amortization period
pursuant to Section 412 of the Code has been made with respect to any Plan.

    (b)        There are no pending or, to the best knowledge of any Obligor,
threatened claims, actions or lawsuits, or action by any Governmental Authority
with respect to any Plan which has resulted or could reasonably be expected to
result in a Material Adverse Effect. There has been no prohibited transaction or
violation of the fiduciary responsibility rules with respect to any Plan which
has resulted or, to the best knowledge of any Obligor, could reasonably be
expected to result in a Material Adverse Effect.

    (c)        (i)  No ERISA Event has occurred or is reasonably expected to
occur; (ii) no Pension Plan has any Unfunded Pension Liability; (iii) neither
any Obligor nor any ERISA Affiliate has incurred, or reasonably expects to
incur, any liability under Title IV of ERISA with respect to any Pension Plan
(other than premiums due and not delinquent under Section 4007 of ERISA); (iv)
neither any Obligor nor any ERISA Affiliate has incurred, or reasonably expects
to incur, any liability (and no event has occurred which, with the giving of
notice under Section 4219 of ERISA, would result in such liability) under
Section 4201 or 4243 of ERISA with respect to a Multi-employer Plan; and (v)
neither any Obligor nor any ERISA Affiliate has engaged in a transaction that
could be subject to Section 4069 or 4212(c) of ERISA.

6.20             Taxes. Each Obligor and each Subsidiary has filed all federal
and other tax returns and reports required to be filed and has paid all federal
and other material taxes, assessments, fees and other governmental charges
levied or imposed upon such Obligor or Subsidiary or its properties, income or
assets otherwise due and payable, unless such unpaid taxes and assessments would
constitute a Permitted Lien.

6.21             Regulated Entities. Neither any Obligor, any Person controlling
any Obligor, nor any Subsidiary is an “Investment Company” within the meaning of
the Investment Company Act of 1940. No Obligor is subject to regulation under
the Public Utility Holding Company Act of 1935, the Federal Power Act, the
Interstate Commerce Act, any state public utilities code or law, or any other
federal or state statute or regulation limiting its ability to incur
indebtedness or enter into any Guaranty.

6.22             Use of Proceeds; Margin Regulations. The proceeds of the Loans
are to be used solely for working capital purposes and general corporate
purposes, and to finance Permitted Acquisitions and Permitted Stock Redemptions.
Neither any Obligor nor any Subsidiary is engaged in the business of purchasing
or selling Margin Stock or extending credit for the purpose of purchasing or
carrying Margin Stock.

6.23             Senior Subordinated Notes. All Debt and other obligations
outstanding under the Senior Subordinated Notes Indenture and the Senior
Subordinated Notes have been paid in full and the Senior Subordinated Notes
Indenture (as it relates to the Senior Subordinated Notes) and each Senior
Subordinated Note has terminated and is no longer effective.

6.24             No Material Adverse Change. No Material Adverse Effect has
occurred since March 29, 2002. If a fact or circumstance disclosed in the
Financial Statements referred to in Section 6.6(a) or one of the Schedules
hereto, or an action, suit, proceeding or other matter disclosed in Schedule
6.14 or 6.16, should in the future have a Material Adverse Effect, such Material
Adverse Effect shall constitute a change or event subject to this Section 6.24,
notwithstanding any such disclosure.

6.25             Full Disclosure. None of the representations or warranties made
by any Obligor or any Subsidiary in the Loan Documents as of the date such
representations and warranties are made or deemed made, and none of the
statements contained in any exhibit, report, statement or certificate furnished
by or on behalf of any Obligor or any Subsidiary in connection with the Loan
Documents (including the offering and disclosure materials delivered by or on
behalf of any Obligor to the Lenders prior to the Closing Date), when taken as a
whole with all statements contained in all such materials delivered by the
Obligors, contains any untrue statement of a material fact or omits any material
fact required to be stated therein or necessary to make the statements made
therein, in light of the circumstances under which they are made, not misleading
as of the time when made or delivered.

6.26             Material Agreements. Schedule 6.26 hereto sets forth as of the
Closing Date all material agreements and contracts to which any Obligor or any
Subsidiaries is a party or is bound as of the date hereof.

6.27             Bank Accounts. Schedule 6.27 contains as of the Closing Date a
complete and accurate list of all bank accounts maintained by any Obligor with
any bank or other financial institution and a brief description of the purpose
of each such bank account.

6.28             Governmental Authorization. No approval, consent, exemption,
authorization, or other action by, or notice to, or filing with, any
Governmental Authority or other Person is necessary or required in connection
with the execution, delivery or performance by, or enforcement against, any
Obligor of this Agreement or any other Loan Document, except for filings
necessary to perfect the Agent’s Liens and routine filings by PSS under the
Exchange Act to comply with reporting obligations thereunder.

6.29             Tax Shelter Regulations. The Borrowers do not intend to treat
the Loans and/or Letters of Credit and related transactions as being a
“reportable transaction” (within the meaning of Treasury Regulation
Section 1.6011-4). In the event any Borrower determines to take any action
inconsistent with such intention, it will promptly notify the Agent thereof. If
any Borrower so notifies the Agent, the Borrowers acknowledge that one or more
of the Lenders may treat its Loans and/or its interest in Non-Ratable Loans
and/or Agent Advances and/or Letters of Credit as part of a transaction that is
subject to Treasury Regulation Section 301.6112-1, and such Lender or Lenders,
as applicable, will maintain the lists and other records required by such
Treasury Regulation.

ARTICLE 7

AFFIRMATIVE AND NEGATIVE COVENANTS

Each Obligor covenants to the Agent and each Lender that so long as any of the
Obligations remain outstanding or this Agreement is in effect:

7.1             Taxes and Other Obligations. Each Obligor shall, and shall cause
each of its Subsidiaries to, (a) file when due all tax returns and other reports
which it is required to file; (b) pay, or provide for the payment, when due, of
all material taxes, fees, assessments and other governmental charges against it
or upon its property, income and franchises, make all required withholding and
other tax deposits, and establish adequate reserves for the payment of all such
items, and provide to the Agent and the Lenders, upon request, satisfactory
evidence of its timely compliance with the foregoing; and (c) pay when due all
claims of materialmen, mechanics, carriers, warehousemen, landlords, processors
and other like Persons; provided, however, so long as such Obligor has notified
the Agent in writing, neither such Obligor nor any of its Subsidiaries need pay
any tax, fee, assessment, or governmental charge (i) it is contesting in good
faith by appropriate proceedings diligently pursued, (ii) as to which such
Obligor or its Subsidiary, as the case may be, has established proper reserves
as required under GAAP, and (iii) the nonpayment of which does not result in the
imposition of a Lien (other than a Permitted Lien).

7.2             Legal Existence and Good Standing. Each Obligor shall, and shall
cause each of its Subsidiaries to, maintain its legal existence and its
qualification and good standing in all jurisdictions in which the failure to
maintain such existence and qualification or good standing could reasonably be
expected to have a Material Adverse Effect.

7.3             Compliance with Law and Agreements; Maintenance of Licenses.
Each Obligor shall comply, and shall cause each Subsidiary to comply, with all
Requirements of Law of any Governmental Authority having jurisdiction over it or
its business (including the Federal Fair Labor Standards Act and all
Environmental Laws), except where the failure to do so could not reasonably be
expected to have a Material Adverse Effect. Each Obligor shall, and shall cause
each of its Subsidiaries to, obtain and maintain all licenses, permits,
franchises, and governmental authorizations necessary to own its property and to
conduct its business as conducted on the Closing Date, except where the failure
to do so could not reasonably be expected to have a Material Adverse Effect. No
Obligor shall modify, amend or alter its certificate or articles of
incorporation, or its limited liability company operating agreement or limited
partnership agreement, as applicable, other than in a manner which does not
adversely affect the rights of the Lenders or the Agent.

7.4             Maintenance of Property; Inspection of Property.

    (a)        Each Obligor shall, and shall cause each of its Subsidiaries to,
maintain all of its property necessary and useful in the conduct of its
business, in good operating condition and repair, ordinary wear and tear
excepted.

    (b)        Each Obligor shall permit representatives and independent
contractors of the Agent (at the expense of the Obligors) to visit and inspect
any of its properties, to examine its corporate, financial and operating
records, and make copies thereof or abstracts therefrom and to discuss its
affairs, finances and accounts with its directors, officers and independent
public accountants, at such reasonable times during normal business hours and as
soon as may be reasonably desired, upon reasonable advance notice to the
Borrowers’ Agent; provided, however, (i) if no Event of Default exists, the
Obligors shall not be responsible for the expense of more than four (4) such
inspections and audits per year, (ii) when an Event of Default exists, the Agent
or any Lender may do any of the foregoing at the expense of the Obligors at any
time during normal business hours and without advance notice, and (iii) the
Obligors shall be entitled to have a representative present at all such
inspections, visits and discussions.

    (c)        The Borrowers shall cooperate with the Agent and its
representatives and independent contractors (such cooperation to include the
Borrowers making their books and records, Collateral and personnel available to
the Agent and its representatives and independent contractors) in order to
enable the Agent to obtain an Appraisal of the Borrowers’ Inventory (a) on or
about the Closing Date, and (b) at such times thereafter as the Agent, in its
sole discretion, may request. The Agent shall select any and all appraisers in
its sole discretion. The Borrowers will reimburse the Agent for all of its
reasonable out-of-pocket costs and expenses actually incurred in connection with
(i) up to two Appraisals conducted during each calendar year, and (ii) each such
Appraisal conducted during the existence of an Event of Default.

7.5             Insurance.

    (a)        Each Obligor shall maintain, and shall cause each of its
Subsidiaries to maintain, with financially sound and reputable insurers having a
rating of at least A or better by Best Rating Guide, insurance against loss or
damage by fire with extended coverage; theft, burglary, pilferage and loss in
transit; public liability and third party property damage; larceny, embezzlement
or other criminal liability; business interruption; public liability and third
party property damage; and such other hazards or of such other types and in such
amounts (with the amount of any such insurance on Inventory to be reasonably
satisfactory to the Agent) as is customary for Persons engaged in the same or
similar business, under policies reasonably acceptable to the Agent. Each
Obligor shall also maintain flood insurance (through its umbrella policy or
otherwise) for its Inventory and Equipment which is, at any time, located in an
area that has been identified by the Director of the Federal Emergency
Management Agency as a Special Flood Hazard Area, provided that no such flood
insurance shall be required for locations designated as Flood Zone A5 by the
Federal Emergency Management Agency.

    (b)        Each Obligor shall cause the Agent, for the ratable benefit of
the Agent and the Lenders, to be named as secured party or mortgagee and sole
loss payee or additional insured, in a manner acceptable to the Agent. Each
policy of insurance shall contain a clause or endorsement requiring the insurer
to give not less than thirty (30) days’ prior written notice to the Agent in the
event of cancellation of the policy for any reason whatsoever and a clause or
endorsement stating that the interest of the Agent shall not be impaired or
invalidated by any act or neglect of any Obligor or any of its Subsidiaries or
the owner of any Real Estate for purposes more hazardous than are permitted by
such policy. All premiums for such insurance shall be paid by the applicable
Obligor when due, and certificates of insurance and photocopies of the policies
shall be delivered to the Agent. If any Obligor fails to procure such insurance
or to pay the premiums therefor when due, the Agent may, and at the direction of
the Required Lenders shall, do so from the proceeds of Revolving Loans upon
three Business Days’ notice to the Borrowers’ Agent (no such notice to be
necessary in the case of the Obligors’ failure to pay premiums when due).

7.6             Insurance and Condemnation Proceeds. The Obligors shall promptly
notify the Agent and the Lenders of any loss, damage, or destruction to the
Collateral, whether or not covered by insurance, with a value in excess of
$100,000. So long as no Event of Default shall have occurred and be continuing,
the Obligors may collect all insurance and condemnation proceeds and deal with
the applicable insurers in good faith, provided that all proceeds thereof shall
be applied to the Obligations in accordance with Section 3.6. During the
occurrence and continuance of an Event of Default, the Agent is hereby
authorized to collect all insurance and condemnation proceeds in respect of
Collateral directly and to apply or remit them, after deducting from such
proceeds the reasonable expenses, if any, incurred by the Agent in the
collection or handling thereof, to the Obligations in accordance with Section
3.6.

7.7             Environmental Laws.

    (a)        Each Obligor shall, and shall cause each of its Subsidiaries to,
conduct its business in compliance with all Environmental Laws applicable to it,
including those relating to the generation, handling, use, storage, and disposal
of any Contaminant, except to the extent the failure to do so could not
reasonably be expected to have a Material Adverse Effect. Each Obligor shall,
and shall cause each of its Subsidiaries to, take prompt and appropriate action
to respond to any non-compliance with Environmental Laws, except to the extent
the failure to do so could not reasonably be expected to have a Material Adverse
Effect, and shall regularly report to the Agent on such response.

    (b)        Without limiting the generality of the foregoing, each Obligor
shall submit to the Agent and the Lenders annually, commencing on the first
Anniversary Date, and on each Anniversary Date thereafter, an update of the
status of each environmental compliance or liability issue as to which
notification was given (or required to be given) pursuant to Section 5.3. In
connection with the foregoing, the Agent or any Lender may request copies of
technical reports prepared by any Obligor and its communications with any
Governmental Authority to determine whether such Obligor or any of its
Subsidiaries is proceeding reasonably to correct, cure or contest in good faith
any alleged non-compliance or environmental liability. In connection with any
alleged noncompliance or environmental liability which may result in liability
in excess of $250,000, each Obligor shall, at the Agent’s or the Required
Lenders’ request and at no cost or expense to the Agent or any Lender,
(i) retain an independent environmental engineer reasonably acceptable to the
Agent to evaluate the site, including tests if appropriate, where the
non-compliance or alleged non-compliance with Environmental Laws has occurred
and prepare and deliver to the Agent, in sufficient quantity for distribution by
the Agent to the Lenders, a report setting forth the results of such evaluation,
a proposed plan for responding to any environmental problems described therein,
and an estimate of the costs thereof, and (ii) provide to the Agent and the
Lenders a supplemental report of such engineer whenever the scope of the
environmental problems, or the response thereto or the estimated costs thereof,
shall increase in any material respect.

    (c)        If the Agent has reasonable cause to believe that, as a result of
non-compliance with Environmental Laws, the Obligors may have liability in
excess of $250,000, the Agent may exercise its rights under this Section 7.7(c).
The Agent and its representatives will have the right at any reasonable time to
enter and visit the Real Estate and any other place where any property of any
Obligor is located for the purposes of observing the Real Estate, taking and
removing soil or groundwater samples, and conducting tests on any part of the
Real Estate. The Agent is under no duty, however, to visit or observe the Real
Estate or to conduct tests, and any such acts by the Agent will be solely for
the purposes of protecting the Agent’s Liens and preserving the Agent’s and the
Lenders’ rights under the Loan Documents. No site visit, observation or testing
by the Agent or any Lender will result in a waiver of any default of any Obligor
or impose any liability on the Agent or any Lender. In no event will any site
visit, observation or testing by the Agent be a representation that hazardous
substances are or are not present in, on or under the Real Estate, or that there
has been or will be compliance with any Environmental Law. No Obligor nor any
other party is entitled to rely on any site visit, observation or testing by the
Agent. The Agent and the Lenders owe no duty of care to protect any Obligor or
any other party against, or to inform any Obligor or any other party of, any
hazardous substances or any other adverse condition affecting the Real Estate.
The Agent may in its discretion disclose to the Obligors or to any other party
if so required by law any report or findings made as a result of, or in
connection with, any site visit, observation or testing by the Agent, provided,
however, that the Agent shall give the Borrowers’ Agent reasonable advance
written notice to the extent practicable of any disclosure to be made by the
Agent to any third party, which notice shall include the basis for the
conclusion that such disclosure is legally required. The Obligors understand and
agree that the Agent makes no warranty or representation to any Obligor or any
other party regarding the truth, accuracy or completeness of any such report or
findings that may be disclosed. The Obligors also understand that depending on
the results of any site visit, observation or testing by the Agent and disclosed
to any Obligor, the Obligors may have a legal obligation to notify one or more
environmental agencies of the results, that such reporting requirements are
site-specific, and are to be evaluated by the Obligors without advice or
assistance from the Agent. In each instance, the Agent will give the Obligors
reasonable notice before entering the Real Estate or any other place the Agent
is permitted to enter under this Section 7.7(c). The Agent will make reasonable
efforts to avoid interfering with the Obligors’ use of the Real Estate or any
other property in exercising any rights provided hereunder. Notwithstanding
anything to the contrary set forth herein, the Agent shall secure from its
representatives customary indemnification, liability insurance and
confidentiality protections.

7.8             Compliance with ERISA. Each Obligor shall, and shall cause each
of its ERISA Affiliates, except where the failure to do so could not reasonably
by expected to have a Material Adverse Effect, to: (a) maintain each Plan in
compliance in all material respects with the applicable provisions of ERISA, the
Code and other federal or state law; (b) cause each Plan which is qualified
under Section 401(a) of the Code to maintain such qualification; (c) make all
required contributions to any Plan subject to Section 412 of the Code; (d) not
engage in a prohibited transaction or violation of the fiduciary responsibility
rules with respect to any Plan; and (e) not engage in a transaction that could
be subject to Section 4069 or 4212(c) of ERISA.

7.9             Mergers, Consolidations or Sales. Neither any Obligor nor any
Subsidiary shall enter into any transaction of merger, reorganization, or
consolidation, or transfer, sell, assign, lease, or otherwise dispose of all or
any part of its property, or wind up, liquidate or dissolve, or agree to do any
of the foregoing (collectively, “Asset Dispositions”), except:

    (a)        for sales of Inventory in the ordinary course of its business,

    (b)        for sales or other dispositions of items of Equipment or other
Fixed Assets in the ordinary course of business that are obsolete or no longer
useable by the Obligors in their business with an orderly liquidation value not
to exceed $2,500,000 in the aggregate in any Fiscal Year,

    (c)        the issuance of equity securities (excluding equity securities
which require mandatory redemption or repurchase by PSS except at a time when
all Obligations have been repaid in full) by PSS,

    (d)        sales of Cash Equivalents and investments described under clauses
(d) through (j), (l), (n) and (q) of the definition of Restricted Investments,
in each case for fair value,

    (e)        Asset Dispositions resulting from casualties and condemnations,

    (f)        Asset Dispositions among Obligors,

    (g)        Asset Dispositions of Equipment or other Fixed Assets of an
Obligor or Subsidiary which will be replaced or upgraded with Equipment or other
Fixed Assets, provided that (i) such replaced or upgraded Equipment and Fixed
Assets are acquired (or a firm order therefore is placed) within 180 days after
such disposition, and (ii) the book value of all property disposed of pursuant
to this clause (g) does not exceed $2,500,000 in the aggregate in any Fiscal
Year,

    (h)        if no Event of Default exists, mergers or consolidations of any
Subsidiary into an Obligor where such Obligor is the surviving entity,

    (i)        mergers or consolidations of any Subsidiary of an Obligor with
any Person (other than an Obligor) in order to effectuate a Permitted
Acquisition if (i) such Subsidiary shall be the surviving entity, and (ii) the
Obligors comply with the requirements set forth in the definition of Permitted
Acquisition,

    (j)        if no Event of Default exists, dissolutions, liquidations and
winding-ups of any Subsidiary of a Borrower that is not an Obligor,

    (k)        any asset or stock sale or other disposition not related to the
core business of the Borrowers conducted on the Closing Date so long as such
assets were acquired by the Borrowers or a Subsidiary pursuant to a Permitted
Acquisition and the aggregate proceeds of all such sales and dispositions do not
exceed $5,000,000 in any Fiscal Year,

    (l)        sales of assets in connection with any sale and leaseback
transaction permitted under Section 7.19,

    (m)        the sale, lease, transfer, assignment or other disposition of
assets (other than in connection with a casualty or condemnation or a
securitization transaction) of the Borrowers or any of their Subsidiaries to any
other Person so long as the consideration received consists of cash and the fair
market value of all property disposed of pursuant to this clause (m) does not
exceed $5,000,000 in the aggregate in any Fiscal Year, and

    (n)        any other sale, lease, transfer, assignment or other disposition
of assets, provided that (i) the consideration therefore is at least 75% cash or
Cash Equivalents, (ii) such transaction does not involve the sale or other
disposition of a minority equity interest in any Obligor or a securitization
transaction, (iii) the aggregate net book value of all the assets sold or
otherwise disposed of by the Obligors in all such transactions in reliance on
this clause (n) shall not exceed $10,000,000 in any Fiscal Year, and (iv) no
Default or Event of Default shall have occurred and be continuing immediately
before or after giving effect to such transaction and, whether or not the
Borrowers are at the time of such transaction required to comply with the
financial covenants in Section 7.23, the Borrowers shall have delivered to the
Agent a certificate demonstrating that, upon giving effect on a pro forma basis
to such transaction (such financial covenants shall be measured as of the most
recently ended fiscal month for the twelve fiscal month period then ended and
shall be calculated as if such Asset Disposition had been consummated on the
first day of such twelve fiscal month period), the Borrowers will be in
compliance with such covenants.

All proceeds of Asset Dispositions shall be applied to the Obligations in
accordance with Section 3.6.

7.10             Distributions; Capital Change; Restricted Investments. Neither
any Obligor nor any Subsidiary shall (a) directly or indirectly declare or make,
or incur any liability to make, any Distribution, except (i) Distributions to
any Obligor by its Subsidiaries, (ii) repurchases of equity securities and
equity rights, from former or departing officers, directors and employees not to
exceed $1,000,000 in the aggregate in any Fiscal Year, and (iii) Permitted Stock
Redemptions, (b) make any change in its capital structure which could reasonably
be expected to have a Material Adverse Effect, or (c) make any Restricted
Investment.

7.11             Transactions Affecting Collateral or Obligations. Neither any
Obligor nor any Subsidiary shall enter into any transaction which would have a
Material Adverse Effect.

7.12             Guaranties. Neither any Obligor nor any Subsidiary shall make,
issue, or become liable on any Guaranty, except Guaranties of the Obligations in
favor of the Agent and any Guaranty in respect of Debt otherwise permitted under
Section 7.13 (except clauses (b) and (d) thereof).

7.13             Debt. Neither any Obligor nor any Subsidiary shall incur or
maintain any Debt, other than, without duplication, the following (Debt
permitted under this Section 7.13 is hereafter referred to as “Permitted Debt”):

    (a)        the Obligations;

    (b)        Debt described on Schedule 6.9;

    (c)        Capital Leases of Equipment and purchase money secured Debt
incurred to purchase or refinance the purchase of Equipment, provided that
(i) Liens securing the same attach only to the Equipment acquired by the
incurrence of such Debt and other Equipment the financing of which was provided
by the same vendor, and (ii) the aggregate amount of such Debt (including
Capital Leases) outstanding does not exceed $10,000,000 at any time;

    (d)        any Refinancing by an Obligor or any Subsidiary of Debt incurred
in accordance with clause (b) above; provided that (i) the principal amount of
such Refinanced Debt is not increased, (ii) the Liens, if any, securing such
Refinanced Debt do not attach to any assets in addition to those assets, if any,
securing the Debt to be refinanced, (iii) no Person that is not an obligor or
guarantor of such Debt shall become an obligor or guarantor of such Refinanced
Debt; and (iv) the terms of such refunding, renewal or extension are no less
favorable to the Obligors, the Agent or the Lenders than the original Debt;

    (e)        intercompany Debt among the Borrowers and their Subsidiaries to
the extent the Investment represented thereby is permitted under Section 7.10
and such Debt is subordinated to the repayment of the Obligations at least to
the extent set forth in Section 13.5;

    (f)        Debt incurred in connection with a Permitted Acquisition, to the
extent permitted under the definition of Permitted Acquisition that consists of
(i) Debt existing prior to the consummation of the Permitted Acquisition (and
not incurred in contemplation thereof) that is permitted to be assumed by the
Obligors pursuant to clause (c) above, and (ii) Debt acceptable to the Agent
that is incurred in favor of the seller in such Permitted Acquisition as a
portion of the purchase price for such Permitted Acquisition, including all Debt
under non-compete arrangements entered into in connection with such Permitted
Acquisition that is acceptable to the Agent; and

    (g)        other Debt, that is not secured by any Lien, in an aggregate
amount outstanding at any time not to exceed $5,000,000.

7.14             Prepayment. Neither any Obligor nor any Subsidiary shall
voluntarily prepay any Debt, except (a) the Obligations in accordance with the
terms of this Agreement, (b) in connection with Refinancings permitted under
Section 7.13(d), and (c) intercompany Debt, provided no such intercompany Debt
will be prepaid to any non-Obligor if an Event of Default exists.

7.15             Transactions with Affiliates. Except as set forth below,
neither any Obligor nor any Subsidiary shall, sell, transfer, distribute, or pay
any money or property, including, but not limited to, any fees or expenses of
any nature (including, but not limited to, any fees or expenses for management
services), to any Affiliate, or lend or advance money or property to any
Affiliate, or invest in (by capital contribution or otherwise) or purchase or
repurchase any stock or indebtedness, or any property, of any Affiliate, or
become liable on any Guaranty of the indebtedness, dividends, or other
obligations of any Affiliate. Notwithstanding the foregoing, the following shall
be permitted: (a) transactions with Affiliates expressly permitted hereunder
with respect to Affiliates, (b) transactions set forth on Schedule 7.15, (c)
compensation and indemnity arrangements with officers, directors and employees
in the ordinary course of business, and (d) while no Event of Default has
occurred and is continuing, the Obligors and their Subsidiaries may engage in
transactions with Affiliates in the ordinary course of business on terms no less
favorable to the Obligors and their Subsidiaries than would be obtained in a
comparable arm’s-length transaction with a third party who is not an Affiliate.
The terms of all such transactions shall be made available to the Agent upon
request.

7.16             Investment Banking and Finder’s Fees. Neither any Obligor nor
any Subsidiary shall pay or agree to pay, or reimburse any other party with
respect to, any investment banking or similar or related fee, underwriter’s fee,
finder’s fee, or broker’s fee to any Person in connection with this Agreement,
other than under the Fee Letter. The Obligors shall defend and indemnify the
Agent and the Lenders against and hold them harmless from all claims of any
Person that any Obligor is obligated to pay for any such fees, and all costs and
expenses (including attorneys’ fees) incurred by the Agent and/or any Lender in
connection therewith.

7.17             Business Conducted. The Obligors shall not, and shall not
permit any Subsidiary to, engage, directly or indirectly, in any line of
business other than the businesses in which the Obligors and their Subsidiaries
are engaged on the Closing Date and businesses reasonably incidental or
reasonably relating thereto.

7.18             Liens. Neither any Obligor nor any Subsidiary shall create,
incur, assume, or permit to exist any Lien on any property now owned or
hereafter acquired by any of them, except (a) Permitted Liens, (b) Liens, if
any, in effect as of the Closing Date described in Schedule 6.9 securing Debt
described in Schedule 6.9, (c) Liens securing Capital Leases and purchase money
Debt permitted under Section 7.13, and (d) Liens securing Debt permitted under
Section 7.13(f)(i), provided that such Liens do not cover or relate to any
Inventory or Accounts or any assets other than the assets acquired pursuant to
such Permitted Acquisition.

7.19             Sale and Leaseback Transactions. Neither any Obligor nor any
Subsidiary shall, directly or indirectly, enter into any arrangement with any
Person providing for such Obligor or such Subsidiary to lease or rent property
that such Obligor or such Subsidiary has sold or will sell or otherwise transfer
to such Person, other than sale and leaseback transactions resulting in proceeds
to the Obligors in the aggregate not to exceed $1,000,000 during each Fiscal
Year.

7.20             New Subsidiaries. Neither any Obligor nor any Subsidiary shall,
directly or indirectly, organize, create, acquire or permit to exist any
Subsidiary other than those listed on Schedule 6.5, new United States
Subsidiaries that become Guarantors upon their creation pursuant to legal
documentation acceptable to the Agent, and Subsidiaries formed or acquired in
connection with Permitted Acquisitions.

7.21             Fiscal Year. The Obligors shall not change their Fiscal Year.

7.22             Capital Expenditures. Neither any Obligor nor any Subsidiary
shall make or incur any Capital Expenditure if, after giving effect thereto, the
aggregate amount of all Capital Expenditures by the Obligors and their
Subsidiaries on a consolidated basis would exceed $25,000,000 during any Fiscal
Year.

7.23             Financial Covenants.

The Borrowers and their consolidated Subsidiaries shall:

    (a)        have EBITDA for each period of four consecutive fiscal quarters
ending on the last day of each fiscal quarter set forth below of not less than
the applicable amount set forth below:

Period Ending

Minimum EBITDA

Each four fiscal quarter period ending on or
after March 28, 2003 but prior to the fiscal
quarter ending on or about April 2, 2004

$38,000,000 Each four fiscal quarter period ending on or
after April 2, 2004 but prior to the fiscal
quarter ending on or about April 1, 2005

$41,000,000 Each four fiscal quarter period ending thereafter $44,000,000

(b)

maintain a Leverage Ratio as of each fiscal quarter ending as of the applicable
date set forth below of not more than the applicable ratio set forth below:

Fiscal Quarter Ending

Maximum Leverage Ratio

Each four fiscal quarter period ending on or
after March 28, 2003 but prior to the fiscal
quarter ending on or about April 2, 2004

3.0 to 1 Each four fiscal quarter period ending thereafter

2.5 to 1

provided, however, the Borrowers shall only be required to comply with this
Section 7.23 with respect to any fiscal quarter end if, at any time during such
fiscal quarter then ended, Excess Availability was less than $25,000,000.

7.24             Minimum Excess Availability.. The The Borrowers shall maintain
Excess Availability of not less than $15,000,000 at all times.

7.25             Use of Proceeds. The proceeds of the Loans shall be used to
finance ongoing working capital needs and for general corporate purposes, and to
finance Permitted Acquisitions and Permitted Stock Redemptions. The Obligors
shall not, and shall not suffer or permit any Subsidiary to, use any portion of
the Loan proceeds, directly or indirectly, (a) to purchase or carry Margin
Stock, (b) to repay or otherwise refinance Debt of any Obligor or any other
Person incurred to purchase or carry Margin Stock, (c) to extend credit for the
purpose of purchasing or carrying any Margin Stock, or (d) to acquire any
security in any transaction that is subject to Section 13 or 14 of the Exchange
Act.

7.26             Further Assurances. The Obligors shall execute and deliver, or
cause to be executed and delivered, to the Agent and/or the Lenders such
documents and agreements, and shall take or cause to be taken such actions, as
the Agent or any Lender may, from time to time, request in good faith to carry
out the terms and conditions of this Agreement and the other Loan Documents.

ARTICLE 8

CONDITIONS OF LENDING

8.1             Conditions Precedent to Making of Loans on the Closing Date. The
obligation of the Lenders to make the initial Revolving Loans on the Closing
Date, and the obligation of the Agent to cause the Letter of Credit Issuer to
issue any Letter of Credit on the Closing Date, are subject to the following
conditions precedent having been satisfied in a manner satisfactory to the Agent
and each Lender:

    (a)        This Agreement and the other Loan Documents shall have been
executed by each party thereto and the Obligors shall have performed and
complied with all covenants, agreements and conditions contained herein and the
other Loan Documents which are required to be performed or complied with by the
Obligors before or on such Closing Date.

    (b)        Upon making the Revolving Loans (including such Revolving Loans
made to finance any amounts due under the Fee Letter or otherwise as
reimbursement for fees, costs and expenses then payable under this Agreement or
any other Loan Document) and with all obligations of the Obligors current,
Availability shall be at least $30,000,000.

    (c)        All representations and warranties made hereunder and in the
other Loan Documents shall be true and correct as if made on such date.

    (d)        No Default or Event of Default shall have occurred and be
continuing after giving effect to the Loans to be made and the Letters of Credit
to be issued on the Closing Date.

    (e)        The Agent and the Lenders shall have received such opinions of
counsel for the Obligors as the Agent or any Lender shall request, each such
opinion to be in a form, scope, and substance satisfactory to the Agent, the
Lenders, and their respective counsel.

    (f)        The Agent shall be satisfied that all Debt and other obligations
under the Senior Subordinated Notes Indenture and the Senior Subordinated Notes
have been paid in full and that the Senior Subordinated Notes Indenture (as it
relates to the Senior Subordinated Notes) and each Senior Subordinated Note has
terminated and is no longer effective.

    (g)        The Agent shall have received:

    (i)               proper financing statements in appropriate form for filing
under the UCC of all jurisdictions that the Agent may deem necessary or
desirable in order to perfect the Agent’s Liens; and

    (ii)               duly executed UCC-3 Termination Statements and such other
instruments, or duly executed payoff letters obligating the secured parties
thereunder to provide such UCC-3 Termination Statements and instruments, in form
and substance satisfactory to the Agent, as shall be necessary to terminate and
satisfy all Liens on the Property of the Obligors except Permitted Liens.

    (h)        The Obligors shall have paid all fees and expenses of the Agent
and the Attorney Costs incurred in connection with any of the Loan Documents and
the transactions contemplated thereby to the extent invoiced with reasonably
requested supporting information.

    (i)        The Agent shall have received evidence, in form, scope, and
substance reasonably satisfactory to the Agent, of all insurance coverage as
required by this Agreement.

    (j)        The Agent and the Lenders shall have had an opportunity, if they
so choose, to examine the books of account and other records and files of the
Obligors and to make copies thereof, and to conduct a pre-closing audit which
shall include, without limitation, verification of Accounts and the Borrowing
Base, and the results of such examination and audit shall have been satisfactory
to the Agent and the Lenders in all respects.

    (k)        All proceedings taken in connection with the execution of this
Agreement, all other Loan Documents and all documents and papers relating
thereto shall be satisfactory in form, scope, and substance to the Agent and the
Lenders.

    (l)        Without limiting the generality of the items described above, the
Obligors and each other Person guarantying or securing payment of the
Obligations shall have delivered or caused to be delivered to the Agent (in form
and substance reasonably satisfactory to the Agent) the financial statements,
instruments, resolutions, documents, agreements, certificates, opinions and
other items set forth on the “Closing Checklist” delivered by the Agent (or its
counsel) to PSS (or its counsel) prior to the Closing Date.

The acceptance by any Borrower of any Loans made or Letters of Credit issued on
the Closing Date shall be deemed to be a representation and warranty made by the
Obligors to the effect that all of the conditions precedent to the making of
such Loans or the issuance of such Letters of Credit have been satisfied, with
the same effect as delivery to the Agent and the Lenders of a certificate signed
by a Responsible Officer, dated the Closing Date, to such effect.

Execution and delivery to the Agent by a Lender of a counterpart of this
Agreement shall be deemed confirmation by such Lender that (x) all conditions
precedent in this Section 8.1 have been fulfilled to the satisfaction of such
Lender, (y) the decision of such Lender to execute and deliver to the Agent an
executed counterpart of this Agreement was made by such Lender independently and
without reliance on the Agent or any other Lender as to the satisfaction of any
condition precedent set forth in this Section 8.1, and (z) all documents sent to
such Lender for approval consent, or satisfaction were acceptable to such
Lender.

8.2             Conditions Precedent to Each Loan. The obligation of the Lenders
to make each Loan, including the initial and all subsequent Revolving Loans, and
the obligation of the Agent to cause the Letter of Credit Issuer to issue any
Letter of Credit, shall be subject to the further conditions precedent that on
and as of the date of any such extension of credit:

    (a)        The following statements shall be true, and the acceptance by any
Obligor of any extension of credit shall be deemed to be a statement to the
effect set forth in clauses (i), (ii), (iii) and (iv) with the same effect as
the delivery to the Agent and the Lenders of a certificate signed by a
Responsible Officer, dated the date of such extension of credit, stating that:

    (i)               The representations and warranties contained in this
Agreement and the other Loan Documents are correct in all material respects on
and as of the date of such extension of credit as though made on and as of such
date, other than any such representation or warranty which relates to a
specified prior date and except to the extent the Agent and the Lenders have
been notified in writing by the Obligors that any representation or warranty is
not correct and the Required Lenders have explicitly waived in writing
compliance with such representation or warranty;

    (ii)               No Default or Event of Default has occurred and is
continuing;

    (iii)               No event has occurred and is continuing, or would result
from such extension of credit, which has had or would have a Material Adverse
Effect; and

    (iv)               Each of the Obligors is Solvent (taking into account
contribution rights).

    (b)        No such Borrowing shall exceed Availability; provided, however,
that the foregoing conditions precedent are not conditions to each Lender
participating in or reimbursing the Bank or the Agent for such Lenders’ Pro Rata
Share of any Non-Ratable Loan or Agent Advance made in accordance with the
provisions of Sections 1.2(h) and (i).

ARTICLE 9

DEFAULT; REMEDIES

9.1             Events of Default. It shall constitute an event of default
("Event of Default") if any one or more of the following shall occur for any
reason:

    (a)        any failure by any Obligor to pay the principal of or interest or
premium on any of the Obligations or any fee or other amount owing hereunder or
under any of the Obligations when due, whether upon demand or otherwise;
provided, that, if the Agent fails to charge the Borrowers’ Loan Account for any
interest payment or other Obligation (other than principal) for which the
Borrowers’ Agent does not receive prior demand or notice of the amount and due
date thereof at a time when the Borrowers have sufficient Availability to pay
such amount in full (taking into account the provisions of Section 7.24 and all
other amounts charged to the Loan Account on such date), then the non-payment of
such interest or other Obligation shall not constitute an Event of Default under
this clause (a) unless and until the Borrowers’ Agent has received notice of the
amount due and the Borrowers fail to pay such amount within two Business Days
thereafter;

    (b)        any representation or warranty made or deemed made by any Obligor
or any Subsidiary in this Agreement or in any of the other Loan Documents, any
Financial Statement, or any certificate furnished by any Obligor or any
Subsidiary at any time to the Agent or any Lender shall prove to be untrue in
any material respect as of the date on which made, deemed made, or furnished;

    (c)        (i)  any default shall occur in the observance or performance of
any of the covenants and agreements contained in Sections 5.2(l), 7.2, 7.5, 7.9
through 7.26 of this Agreement, or Section 9 or 11 of the Security Agreement;
(ii) any default shall occur in the observance or performance of any of the
covenants and agreements contained in Sections 5.2 (other than Section 5.2(l))
or 5.3 and such default shall continue for five (5) Business Days or more; or
(iii) any default shall occur in the observance or performance of any of the
other covenants or agreements contained in any other Section of this Agreement
or any other Loan Document, and such default shall continue for thirty (30) days
or more;

    (d)        any default shall occur with respect to any Debt (other than the
Obligations) of any Obligor or any Subsidiary in an outstanding principal amount
which exceeds $5,000,000, or under any agreement or instrument under or pursuant
to which any such Debt may have been issued, created, assumed, or guaranteed by
any Obligor or any Subsidiary, and such default shall continue for more than the
period of grace, if any, therein specified, if the effect thereof (with or
without the giving of notice or further lapse of time or both) is to accelerate,
or to permit the holders of any such Debt to accelerate, the maturity of any
such Debt; or any such Debt shall be declared due and payable or be required to
be prepaid (other than by a regularly scheduled required prepayment) prior to
the stated maturity thereof; provided, however, in the case of Debt consisting
solely of obligations of an Obligor under a non-compete agreement, if such
Obligor defaults in the payment of such obligations in response to the
counter-party’s violation of its non-compete agreement, such default shall not
constitute an Event of Default under this clause (d) so long as such Obligor is
contesting in good faith any action or claim brought by such counter-party as a
result of such default;

    (e)        any Obligor or any of its Subsidiaries shall (i) file a voluntary
petition in bankruptcy or file a voluntary petition or an answer or otherwise
commence any action or proceeding seeking reorganization, arrangement or
readjustment of its debts or for any other relief under the federal Bankruptcy
Code, as amended, or under any other bankruptcy or insolvency act or law, state
or federal, now or hereafter existing, or consent to, approve of, or acquiesce
in, any such petition, action or proceeding; (ii) apply for or acquiesce in the
appointment of a receiver, assignee, liquidator, sequestrator, custodian,
monitor, trustee or similar officer for it or for all or any part of its
property; (iii) make an assignment for the benefit of creditors; or (iv) be
unable generally to pay its debts as they become due;

    (f)        an involuntary petition shall be filed or an action or proceeding
otherwise commenced seeking reorganization, arrangement, consolidation or
readjustment of the debts of any Obligor or any Subsidiary or for any other
relief under the federal Bankruptcy Code, as amended, or under any other
bankruptcy or insolvency act or law, state or federal, now or hereafter
existing, and such petition or proceeding shall not be dismissed within sixty
(60) days after the filing or commencement thereof or an order of relief shall
be entered with respect thereto;

    (g)        a receiver, assignee, liquidator, sequestrator, custodian,
monitor, trustee or similar officer for any Obligor or any Subsidiary or for all
or any part of its property shall be appointed or a warrant of attachment,
execution or similar process shall be issued against any part of the property of
any Obligor or any of its Subsidiary;

    (h)        any Obligor or any Subsidiary shall file a certificate of
dissolution under applicable state law or shall be liquidated, dissolved or
wound-up or shall commence or have commenced against it any action or proceeding
for dissolution, winding-up or liquidation, or shall take any corporate action
in furtherance thereof, except as permitted under Section 7.9(j);

    (i)        all or any material part of the property of the Obligors, taken
as a whole, shall be nationalized, expropriated or condemned, seized or
otherwise appropriated, or custody or control of such property or of any such
Obligor shall be assumed by any Governmental Authority or any court of competent
jurisdiction at the instance of any Governmental Authority, except where
contested in good faith by proper proceedings diligently pursued where a stay of
enforcement is in effect;

    (j)        any Loan Document shall be terminated, revoked or declared void
or invalid or unenforceable or challenged by any Obligor;

    (k)        one or more judgments, orders, decrees or arbitration awards is
entered against any Obligor or any Subsidiary involving in the aggregate
liability as to any single or related or unrelated series of transactions,
incidents or conditions, of $5,000,000 or more (to the extent not paid or fully
covered by insurance provided by a carrier that has acknowledged coverage and
has the ability to perform), and the same shall remain unsatisfied, unvacated
and unstayed pending appeal for a period of thirty (30) days (or such longer
period expressly contemplated by the terms thereof during which a stay against
enforcement is in effect) after the entry thereof;

    (l)        any loss, theft, damage or destruction of any item or items of
Collateral or other property of any Obligor or any Subsidiary occurs which could
reasonably be expected to cause a Material Adverse Effect and is not adequately
covered by insurance;

    (m)        there is filed against any Obligor or any Subsidiary any action,
suit or proceeding under any federal or state racketeering statute (including
the Racketeer Influenced and Corrupt Organization Act of 1970), which action,
suit or proceeding (i) is not dismissed within one hundred twenty (120) days,
and (ii) could reasonably be expected to result in the confiscation or
forfeiture of any material portion of the Collateral;

    (n)        for any reason other than the failure of the Agent to take any
action available to it to maintain perfection of the Agent’s Liens pursuant to
the Loan Documents, any Loan Document ceases to be in full force and effect or
any Lien of the Agent with respect to any material portion of the Collateral
intended to be secured thereby ceases to be, or is not, valid, perfected and
prior to all other Liens (other than Permitted Liens) or is terminated, revoked
or declared void;

    (o)        an ERISA Event shall occur with respect to a Pension Plan or
Multi-employer Plan which has resulted or could reasonably be expected to result
in liability of any Obligor or any Subsidiary under Title IV of ERISA to the
Pension Plan, Multi-employer Plan or the PBGC in an aggregate amount in excess
of $5,000,000; (ii) the aggregate amount of Unfunded Pension Liability among all
Pension Plans at any time exceeds $5,000,000; or (iii) any Obligor or any
Subsidiary or any ERISA Affiliate shall fail to pay when due, after the
expiration of any applicable grace period, any installment payment with respect
to its withdrawal liability under Section 4201 of ERISA under a Multi-employer
Plan in an aggregate amount in excess of $5,000,000;

    (p)        there occurs a Change of Control; or

    (q)        there occurs an event that will have a material adverse effect on
the ability of the Obligors, taken as a whole, to pay the Obligations in full in
a timely manner.

9.2             Remedies.

    (a)        If a Default or an Event of Default exists, the Agent may, in its
discretion, and shall, at the direction of the Required Lenders, do one or more
of the following at any time or times and in any order, without notice to or
demand on any Borrower or other Obligor: (i) reduce the Maximum Revolver Amount,
or the advance rates against Eligible Accounts and/or Eligible Inventory used in
computing the Borrowing Base, or reduce one or more of the other elements used
in computing the Borrowing Base; (ii) restrict the amount of or refuse to make
Loans; and (iii) restrict or refuse to provide Letters of Credit or Credit
Support. If an Event of Default exists, the Agent shall, at the direction of the
Required Lenders, do one or more of the following, in addition to the actions
described in the preceding sentence, at any time or times and in any order,
without notice to or demand on any Borrower or other Obligor: (A) terminate the
Commitments and this Agreement; (B) declare any or all Obligations to be
immediately due and payable; provided, however, that upon the occurrence of any
Event of Default described in Sections 9.1(e), 9.1(f), 9.1(g), or 9.1(h), the
Commitments shall automatically and immediately expire and all Obligations shall
automatically become immediately due and payable without notice or demand of any
kind; (C) require the Borrowers to cash collateralize, or provide Supporting
Letters of Credit for, all outstanding Letter of Credit Obligations; and (D)
pursue its other rights and remedies under the Loan Documents and applicable
law.

    (b)        If an Event of Default has occurred and is continuing: (i) the
Agent shall have, for the benefit of the Lenders, in addition to all other
rights of the Agent and the Lenders, the rights and remedies of a secured party
under the Loan Documents and the UCC (except any consent of an Obligor under
Section 9-620 of the UCC must be in writing and may not be deemed given by
failure to respond to any notice given by any secured party thereunder);
(ii) the Agent may, at any time, take possession of the Collateral and keep it
on any Obligor’s premises, at no cost to the Agent or any Lender, or remove any
part of it to such other place or places as the Agent may desire, or the
Obligors shall, upon the Agent’s demand, at the Obligors’ cost, assemble the
Collateral and make it available to the Agent at a place reasonably convenient
to the Agent; and (iii) the Agent may sell and deliver any Collateral at public
or private sales, for cash, upon credit or otherwise, at such prices and upon
such terms as the Agent deems advisable, in its sole discretion, and may, if the
Agent deems it reasonable, postpone or adjourn any sale of the Collateral by an
announcement at the time and place of sale or of such postponed or adjourned
sale without giving a new notice of sale. Without in any way requiring notice
(unless the UCC expressly requires a longer notice period) to be given in the
following manner, each Obligor agrees that any notice by the Agent of sale,
disposition or other intended action hereunder or in connection herewith,
whether required by the UCC or otherwise, shall constitute reasonable notice to
such Obligor if such notice is mailed by registered or certified mail, return
receipt requested, postage prepaid, or is delivered personally against receipt,
at least five (5) Business Days prior to such action to the address for notices
to the Obligors specified in or pursuant to Section 14.8. If any Collateral is
sold on terms other than payment in full at the time of sale, no credit shall be
given against the Obligations until the Agent or the Lenders receive payment,
and if the buyer defaults in payment, the Agent may resell the Collateral
without further notice to any Obligor. In the event the Agent seeks to take
possession of all or any portion of the Collateral by judicial process, each
Obligor irrevocably waives: (A) the posting of any bond, surety or security with
respect thereto which might otherwise be required; (B) any demand for possession
prior to the commencement of any suit or action to recover the Collateral; and
(C) any requirement that the Agent retain possession and not dispose of any
Collateral until after trial or final judgment. Each Obligor agrees that the
Agent has no obligation to preserve rights to the Collateral or marshal any
Collateral for the benefit of any Person. The Agent is hereby granted a license
or other right to use, without charge, each Obligor’s labels, patents,
copyrights, name, trade secrets, trade names, trademarks, and advertising
matter, or any similar property, in completing production of, advertising or
selling any Collateral, and each Obligor’s rights under all licenses and all
franchise agreements shall inure to the Agent’s benefit for such purpose. The
proceeds of sale shall be applied first to all expenses of sale, including
attorneys’ fees, and then to the Obligations. The Agent will return any excess
to the Borrowers’ Agent and the Obligors shall remain liable for any deficiency.
Nothing herein waives any rights of the Borrowers or any Obligor which cannot be
waived under the UCC.

    (c)        If an Event of Default occurs, each Obligor hereby waives, to the
extent permitted by applicable law, all rights to notice and hearing prior to
the exercise by the Agent of the Agent’s rights to repossess the Collateral
without judicial process or to reply, attach or levy upon the Collateral without
notice or hearing.

ARTICLE 10

TERM AND TERMINATION

10.1            Term and Termination. The term of this Agreement shall end on
the Stated Termination Date unless sooner terminated in accordance with the
terms hereof. The Agent, upon direction from the Required Lenders, may terminate
this Agreement without notice upon the occurrence of an Event of Default. Upon
the effective date of termination of this Agreement for any reason whatsoever,
all Obligations (including all unpaid principal, accrued and unpaid interest and
any early termination or prepayment fees or penalties) shall become immediately
due and payable and the Borrowers shall immediately arrange for the cancellation
and return of Letters of Credit then outstanding. Notwithstanding the
termination of this Agreement, until all Obligations are indefeasibly paid and
performed in full in cash, the Obligors shall remain bound by the terms of this
Agreement and shall not be relieved of any of their Obligations hereunder or
under any other Loan Document, and the Agent and the Lenders shall retain all
their rights and remedies hereunder (including the Agent’s Liens in and all
rights and remedies with respect to all then existing and after-arising
Collateral).

ARTICLE 11

AMENDMENTS; WAIVERS; PARTICIPATIONS; ASSIGNMENTS; SUCCESSORS

11.1             Amendments and Waivers.

    (a)        No amendment or waiver of any provision of this Agreement or any
other Loan Document, and no consent with respect to any departure by any Obligor
therefrom, shall be effective unless the same shall be in writing and signed by
the Required Lenders (or by the Agent at the written request of the Required
Lenders) and the Obligors and then any such waiver or consent shall be effective
only in the specific instance and for the specific purpose for which given;
provided, however, that no such waiver, amendment, or consent shall, unless in
writing and signed by all the Lenders affected thereby and the Obligors and
acknowledged by the Agent, do any of the following:

    (i)               increase or extend the Commitment of any Lender;

    (ii)               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 to the Lenders (or any of them) hereunder or under any other Loan
Document;

    (iii)               reduce the principal of, or the rate or amount of
interest specified herein on any Loan, or any fees or other amounts payable
hereunder or under any other Loan Document;

    (iv)               change the percentage of the Commitments or of the
aggregate unpaid principal amount of the Loans which is required for the Lenders
or any of them to take any action hereunder;

    (v)               increase any of the percentages set forth in the
definition of the Borrowing Base;

    (vi)               amend this Section or any provision of this Agreement
providing for consent or other action by all Lenders;

    (vii)               release any Guaranties of the Obligations or release
Collateral other than as permitted by Section 12.11;

    (viii)               change the definition of “Required Lenders”; or

    (ix)               increase the Maximum Revolver Amount, the Maximum
Inventory Loan Amount or the Letter of Credit Subfacility; provided, however,
the Agent may, in its sole discretion and notwithstanding the limitations
contained in clauses (v) and (ix) above and any other terms of this Agreement,
make Agent Advances in accordance with Section 1.2(i); providedfurther, that no
amendment, waiver or consent shall, unless in writing and signed by the Agent,
affect the rights or duties of the Agent under this Agreement or any other Loan
Document; providedfurther, that Schedule 1.1 hereto (Commitments) may be amended
from time to time by the Agent alone to reflect assignments of Commitments in
accordance herewith; and providedfurther, that any Loan Document relating to
Bank Products may be amended by the applicable Obligor and the Bank (or any
Affiliate of the Bank) without the consent or approval of any other Lender.

    (b)        If any fees are paid to the Lenders as consideration for
amendments, waivers or consents with respect to this Agreement, at Agent’s
election, such fees may be paid only to those Lenders that agree to such
amendments, waivers or consents within the time specified for submission
thereof.

    (c)        If, in connection with any proposed amendment, waiver or consent
(a “Proposed Change”) requiring the consent of all Lenders, the consent of
Required Lenders is obtained, but the consent of other Lenders is not obtained
(any such Lender whose consent is not obtained as described in this clause (c)
being referred to as a “Non-Consenting Lender”), then, so long as the Agent is
not a Non-Consenting Lender, at the Borrowers’ request, the Agent or an Eligible
Assignee shall have the right (but not the obligation) with the Agent’s
approval, to purchase from the Non-Consenting Lenders, and the Non-Consenting
Lenders agree that they shall sell, all the Non-Consenting Lenders’ Commitments
for an amount equal to the principal balances thereof and all accrued interest
and fees with respect thereto through the date of sale pursuant to Assignment
and Acceptance Agreement(s), without premium or discount.

11.2             Assignments; Participations.

    (a)        Any Lender may, with the written consent of the Agent (which
consent shall not be unreasonably withheld), and, if no Default or Event of
Default exists, with the written consent of the Borrowers’ Agent (which consent
shall not be unreasonably withheld), assign and delegate to one or more Eligible
Assignees (provided that no consent of the Agent or the Borrowers’ Agent shall
be required in connection with any assignment and delegation by a Lender to an
Affiliate of such Lender capable, in the good faith judgment of such Lender, of
performing its obligations hereunder) (each an “Assignee”) all, or any ratable
part of all, of the Loans, the Commitments and the other rights and obligations
of such Lender hereunder, in a minimum amount of $5,000,000 (provided that,
unless an assignor Lender has assigned and delegated all of its Loans and
Commitments, no such assignment and/or delegation shall be permitted unless,
after giving effect thereto, such assignor Lender retains a Commitment in a
minimum amount of $5,000,000); provided, however, that the Obligors and the
Agent may continue to deal solely and directly with such Lender in connection
with the interest so assigned to an Assignee until (i) written notice of such
assignment, together with payment instructions, addresses and related
information with respect to the Assignee, shall have been given to the
Borrowers’ Agent and the Agent by such Lender and the Assignee; (ii) such Lender
and its Assignee shall have delivered to the Borrowers’ Agent and the Agent an
Assignment and Acceptance in the form of Exhibit D (“Assignment and
Acceptance”), and (iii) the assignor Lender or Assignee has paid to the Agent a
processing fee in the amount of $3,500. Any assignment in violation of this
Section 11.2 shall be null and void.

    (b)        From and after the date that the Agent notifies the assignor
Lender that it has received an executed Assignment and Acceptance (including the
consent of the Borrowers’ Agent, if required) and payment of the
above-referenced processing fee, (i) the Assignee thereunder shall be a party
hereto and, to the extent that rights and obligations, including, but not
limited to, the obligation to participate in Letters of Credit and Credit
Support have been assigned to it pursuant to such Assignment and Acceptance,
shall have the rights and obligations of a Lender under the Loan Documents, and
(ii) the assignor 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 and be released from
its 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, such Lender shall cease to be a party
hereto).

    (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 or the attachment, perfection, or priority of any Lien granted
by any Obligor to the Agent or any Lender in the Collateral; (ii) such assigning
Lender makes no representation or warranty and assumes no responsibility with
respect to the financial condition of any Obligor or the performance or
observance by any Obligor 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 analysis and
decision to enter into such Assignment and Acceptance; (iv) such Assignee will,
independently and without reliance upon the 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 the Agent to take such action as agent on its behalf and to exercise
such powers under this Agreement as are delegated to the Agent by the terms
hereof, together with such powers, including the discretionary rights and
incidental power, as are reasonably incidental thereto; and (vi) such Assignee
agrees that it will perform in accordance with their terms all of the
obligations which by the terms of this Agreement are required to be performed by
it as a Lender.

    (d)        Immediately upon satisfaction of the requirements of Section
11.2(a), 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 not Affiliates of the Borrowers (a
“Participant”) participating interests in any Loans, the Commitment of that
Lender and the other interests of that Lender (the “originating Lender”)
hereunder and under the other Loan Documents; provided, however, that (i) 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) the Obligors and the Agent 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, and (iv) no Lender shall transfer or grant any participating
interest under which the Participant has rights to approve any amendment to, or
any consent or waiver with respect to, this Agreement or any other Loan Document
except the matters set forth in Section 11.1(a)(i), (ii) and (iii), and all
amounts payable by the Obligors 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 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 owing under
this Agreement to the same extent and subject to the same limitation as if the
amount of its participating interest were owing directly to it as a Lender under
this Agreement. Any Participant exercising such right of set-off shall give
prompt written notice thereof to the Borrowers’ Agent after such set-off.

    (f)        Notwithstanding any other provision in this Agreement, 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 FRB or U.S. Treasury Regulation 31
CFR §203.14, and such Federal Reserve Bank may enforce such pledge or security
interest in any manner permitted under applicable law.

ARTICLE 12

THE AGENT

12.1             Appointment and Authorization. Each Lender hereby designates
and appoints Bank as its Agent under this Agreement and the other Loan
Documents, and each Lender hereby irrevocably authorizes the Agent to take such
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 it by the terms of this Agreement or any other Loan Document,
together with such powers as are reasonably incidental thereto. The Agent agrees
to act as such on the express conditions contained in this Article 12. The
provisions of this Article 12 are solely for the benefit of the Agent and the
Lenders and no Obligor shall have any rights as a third party beneficiary of any
of the provisions contained herein, except with respect to the provisions of
Sections 12.9, 12.10 and 12.11 to the extent such Sections provide rights or
benefits to the Obligors. Notwithstanding any provision to the contrary
contained elsewhere in this Agreement or in any other Loan Document, the Agent
shall not have any duties or responsibilities, except those expressly set forth
herein, nor shall the Agent have or be deemed to have any fiduciary relationship
with any Lender, 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 the Agent. Without limiting the generality
of the foregoing sentence, the use of the term “agent” in this Agreement with
reference to the Agent 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 an administrative relationship between independent
contracting parties. Except as expressly otherwise provided in this Agreement,
the 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 which the Agent is expressly entitled to take or assert
under this Agreement and the other Loan Documents, including (a) the
determination of the applicability of ineligibility criteria with respect to the
calculation of the Borrowing Base, (b) the making of Agent Advances pursuant to
Section 1.2(i), and (c) the exercise of remedies pursuant to Section 9.2, and
any action so taken or not taken shall be deemed consented to by the Lenders.

12.2             Delegation of Duties. The 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. The Agent shall not 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.

12.3             Liability of the 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 for any
recital, statement, representation or warranty made by any Obligor or any
Subsidiary or Affiliate of any Obligor, or any officer 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 the
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 any Obligor 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 Lender
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 properties, books or records of any Obligor or any
Subsidiary or Affiliate of any Obligor.

12.4             Reliance by the Agent. The Agent shall be entitled to rely, and
shall be fully protected in relying, upon any writing, resolution, notice,
consent, certificate, affidavit, letter, telegram, facsimile, 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 the Obligors), independent accountants and other experts selected by the
Agent. The Agent shall be fully justified in failing or refusing to take any
action under this Agreement or any other Loan Document unless it shall first
receive such advice or concurrence of the Required Lenders as it deems
appropriate and, if it so requests, it shall first be indemnified to its
satisfaction by the Lenders against any and all liability and expense which may
be incurred by it by reason of taking or continuing to take any such action. The
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 Lenders (or all Lenders if so required by
Section 11.1) and such request and any action taken or failure to act pursuant
thereto shall be binding upon all of the Lenders.

12.5             Notice of Default. The Agent shall not be deemed to have
knowledge or notice of the occurrence of any Default or Event of Default (other
than an Event of Default arising out of the Borrowers’ failure to pay principal,
interest or fees hereunder in a timely manner), unless the Agent shall have
received written notice from a Lender or an Obligor referring to this Agreement,
describing such Default or Event of Default and stating that such notice is a
“notice of default.” The Agent will notify the Lenders of its receipt of any
such notice. The 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 the Agent has received any
such request, the 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.

12.6             Credit Decision. Each Lender acknowledges that none of the
Agent-Related Persons has made any representation or warranty to it, and that no
act by the Agent hereinafter taken, including any review of the affairs of the
Obligors and their Affiliates, shall be deemed to constitute any representation
or warranty by any Agent-Related Person to any Lender. Each Lender represents to
the Agent that it has, independently and without reliance upon any Agent-Related
Person and based on such 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 the
Obligors and their Affiliates, 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 the Obligors. Each Lender also represents
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 the Obligors. Except for notices, reports and other
documents expressly herein required to be furnished to the Lenders by the Agent,
the Agent shall not have any duty or responsibility to provide any Lender with
any credit or other information concerning the business, prospects, operations,
property, financial and other condition or creditworthiness of the Obligors
which may come into the possession of any of the Agent-Related Persons.

12.7             Indemnification. Whether or not the transactions contemplated
hereby are consummated, the Lenders shall indemnify upon demand the
Agent-Related Persons (to the extent not reimbursed by or on behalf of the
Borrowers and without limiting the obligation of the Borrowers to do so), in
accordance with their Pro Rata Shares, from and against any and all Indemnified
Liabilities as such term is defined in Section 14.11; provided, however, that no
Lender shall be liable for the payment to the Agent-Related Persons of any
portion of such Indemnified Liabilities resulting solely from such Person’s
gross negligence or willful misconduct. Without limitation of the foregoing,
each Lender shall reimburse the Agent upon demand for its Pro Rata Share of any
costs or out-of-pocket expenses (including Attorney Costs) incurred by the 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, any other Loan Document, or any document
contemplated by or referred to herein, to the extent that the Agent is not
reimbursed for such expenses by or on behalf of the Obligors. The undertaking in
this Section 12.7 shall survive the payment of all Obligations hereunder and the
resignation or replacement of the Agent.

12.8             Agent in Individual Capacity. The Bank and its Affiliates may
make loans to, issue letters of credit for the account of, accept deposits from,
acquire equity interests in and generally engage in any kind of banking, trust,
financial advisory, underwriting or other business with any Obligors and their
Subsidiaries and Affiliates as though the Bank were not the Agent hereunder and
without notice to or consent of the Lenders. The Lenders acknowledge that the
Bank or its Affiliates may receive information regarding any Obligor, its
Affiliates and Account Debtors (including information that may be subject to
confidentiality obligations in favor of such Obligor or such Subsidiary), and
the Lenders acknowledge that the Agent and the Bank shall be under no obligation
to provide such information to them. With respect to its Loans, the Bank shall
have the same rights and powers under this Agreement as any other Lender and may
exercise the same as though it were not the Agent, and the terms “Lender” and
“Lenders” include the Bank in its individual capacity.

12.9             Successor Agent. The Agent may resign as Agent upon at least 30
days’ prior notice to the Lenders and the Borrowers’ Agent, such resignation to
be effective upon the acceptance of a successor agent to its appointment as
Agent. In the event the Bank sells all of its Commitment and Loans as part of a
sale, transfer or other disposition by the Bank of substantially all of its loan
portfolio, the Bank shall resign as Agent and such purchaser or transferee shall
become the successor Agent hereunder. Subject to the foregoing, if the Agent
resigns under this Agreement, the Required Lenders shall appoint from among the
Lenders a successor agent for the Lenders. If no successor agent is appointed
prior to the effective date of the resignation of the Agent, the Agent may
appoint, after consulting with the Lenders and the Borrowers’ Agent, a successor
agent from among the Lenders. 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 Article 12 shall continue to inure to its benefit as to
any actions taken or omitted to be taken by it while it was Agent under this
Agreement.

12.10             Withholding Tax.

    (a)        If any Lender is a “foreign corporation, partnership or trust”
within the meaning of the Code and such Lender is eligible to claim exemption
from, or a reduction of, the U.S. withholding tax imposed by Sections 1441 or
1442 of the Code, such Lender agrees with and in favor of the Agent, to deliver
to the Agent:

    (i)               if such Lender is eligible to claim an exemption from, or
a reduction of, withholding tax under a United States of America tax treaty,
properly completed IRS Form W-8BEN before the payment of any interest in the
first calendar year and before the payment of any interest in each third
succeeding calendar year during which interest may be paid under this Agreement;

    (ii)               if such Lender is eligible to claim that interest paid
under this Agreement is exempt from United States of America withholding tax
because it is effectively connected with a United States of America trade or
business of such Lender, two properly completed and executed copies of IRS Form
W-8ECI before the payment of any interest is due in the first taxable year of
such Lender and in each succeeding taxable year of such Lender during which
interest may be paid under this Agreement, and IRS Form W-9; and

    (iii)               such other form or forms as may be required under the
Code or other laws of the United States of America as a condition to exemption
from, or reduction of, United States of America withholding tax.

Such Lender agrees to promptly notify the Agent of any change in circumstances
which would modify or render invalid any claimed exemption or reduction.

    (b)        If any Lender claims exemption from, or reduction of, withholding
tax under a United States of America tax treaty by providing IRS Form FW-8BEN
and such Lender sells, assigns, grants a participation in, or otherwise
transfers all or part of the Obligations owing to such Lender, such Lender
agrees to notify the Agent of the percentage amount in which it is no longer the
beneficial owner of Obligations of the Borrowers to such Lender. To the extent
of such percentage amount, the Agent will treat such Lender’s IRS Form W-8BEN as
no longer valid.

    (c)        If any Lender claiming exemption from United States of America
withholding tax by filing IRS Form W-8ECI with the Agent sells, assigns, grants
a participation in, or otherwise transfers all or part of the Obligations owing
to such Lender, such Lender agrees to undertake sole responsibility for
complying with the withholding tax requirements imposed by Sections 1441 and
1442 of the Code.

    (d)        If any Lender is entitled to a reduction in the applicable
withholding tax, the Agent may withhold from any interest payment to such Lender
an amount equivalent to the applicable withholding tax after taking into account
such reduction. If the forms or other documentation required by subsection (a)
of this Section are not delivered to the Agent, then the Agent may withhold from
any interest payment to such Lender not providing such forms or other
documentation an amount equivalent to the applicable withholding tax and the
Borrowers shall be under no obligation under Section 4.1(a), Section 4.1(c)(i)
or otherwise to increase the amount of any payment to such Lender or to
indemnify such Lender in respect of the withholding taxes to the extent that
such withholding taxes would have been avoided had such Lender supplied such
documentation.

    (e)        If the IRS or any other Governmental Authority of the United
States of America or other jurisdiction asserts a claim that the Agent did not
properly withhold tax from amounts paid to or for the account of any Lender
(because the appropriate form was not delivered, was not properly executed, or
because such Lender failed to notify the Agent 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 the Agent fully for all
amounts paid, directly or indirectly, by the Agent as tax or otherwise,
including penalties and interest, and including any taxes imposed by any
jurisdiction on the amounts payable to the Agent under this Section, together
with all costs and expenses (including Attorney Costs). The obligation of the
Lenders under this subsection shall survive the payment of all Obligations and
the resignation or replacement of the Agent.

12.11             Collateral Matters.

    (a)        The Lenders hereby irrevocably authorize the Agent, at its option
and in its sole discretion, to release any Agent’s Liens upon any Collateral
(i) upon the termination of the Commitments and payment and satisfaction in full
by the Borrowers of all Loans and Letter of Credit Obligations, and the
termination of all outstanding Letters of Credit (whether or not any of such
obligations are due) and all other Obligations; (ii) constituting property being
sold or disposed of if the Borrowers’ Agent certifies to the Agent that the sale
or disposition is made in compliance with Section 7.9 (and the Agent may rely
conclusively on any such certificate, without further inquiry);
(iii) constituting property in which the Obligors owned no interest at the time
the Lien was granted or at any time thereafter; or (iv) constituting property
leased to an Obligor under a lease which has expired or been terminated in a
transaction permitted under this Agreement. Except as provided above, the Agent
will not release any of the Agent’s Liens without the prior written
authorization of the Lenders; provided that the Agent may, in its discretion,
release the Agent’s Liens on any Subsidiary being sold (whether through a stock
or asset sale), and on Collateral valued in the aggregate not in excess of
$5,000,000 during each Fiscal Year, with the prior written authorization of the
Required Lenders. Upon request by the Agent or the Borrowers’ Agent at any time,
the Lenders will confirm in writing the Agent’s authority to release any Agent’s
Liens upon particular types or items of Collateral pursuant to this Section
12.11.

    (b)        Upon receipt by the Agent of any authorization required pursuant
to Section 12.11(a) from the Lenders of the Agent’s authority to release the
Agent’s Liens upon particular types or items of Collateral, and upon at least
five (5) Business Days prior written request by the Borrowers’ Agent, the Agent
shall (and is hereby irrevocably authorized by the Lenders to) execute such
documents as may be necessary to evidence the release of the Agent’s Liens upon
such Collateral (including amendments or terminations of UCC financing
statements, if any, the return of stock certificates, if any, and the release of
any Subsidiary being released in its entirety from its obligations, if any,
under the Loan Documents); provided, however, that (i) the Agent shall not be
required to execute any such document on terms which, in the Agent’s opinion,
would expose the Agent to liability or create any obligation or entail any
consequence other than the release of such Liens without recourse or warranty,
and (ii) 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 Obligor in respect of) all interests retained by the
applicable Obligor, including the proceeds of any sale, all of which shall
continue to constitute part of the Collateral.

    (c)        The Agent shall have no obligation whatsoever to any of the
Lenders to assure that the Collateral exists or is owned by any Obligor or is
cared for, protected or insured or has been encumbered, or that the Agent’s
Liens have been properly or sufficiently or lawfully created, perfected,
protected or enforced or are entitled to any particular priority, 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 the 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, the Agent may act in any manner it may deem
appropriate, in its sole discretion, given the Agent’s own interest in the
Collateral in its capacity as one of the Lenders and that the Agent shall have
no other duty or liability whatsoever to any Lender as to any of the foregoing.

12.12             Restrictions on Actions by Lenders; Sharing of Payments.

    (a)        Each of the Lenders agrees that it shall not, without the express
consent of all Lenders, and that it shall, to the extent it is lawfully entitled
to do so, upon the request of all Lenders, set off against the Obligations, any
amounts owing by such Lender to any Obligor or any accounts of any Obligor now
or hereafter maintained with such Lender. Each of the Lenders further agrees
that it shall not, unless specifically requested to do so by the Agent, take or
cause to be taken any action to enforce its rights under this Agreement or
against any Obligor, including the commencement of any legal or equitable
proceedings, 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 of any Obligor to such Lender arising under, or
relating to, this Agreement or the other Loan Documents, except for any such
proceeds or payments received by such Lender from the Agent pursuant to the
terms of this Agreement, or (ii) payments from the Agent in excess of such
Lender’s ratable portion of all such distributions by the Agent, such Lender
shall promptly (A) turn the same over to the Agent, in kind, and with such
endorsements as may be required to negotiate the same to the Agent, or in same
day 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, however, that if all or part of
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.

12.13             Agency for Perfection. Each Lender hereby appoints each other
Lender as agent for the purpose of perfecting the Lenders’ security interest in
assets which, in accordance with Article 9 of the UCC can be perfected only by
possession. Should any Lender (other than the Agent) obtain possession of any
such Collateral, such Lender shall notify the Agent thereof, and, promptly upon
the Agent’s request therefor, shall deliver such Collateral to the Agent or in
accordance with the Agent’s instructions.

12.14             Payments by the Agent to the Lenders. All payments to be made
by the Agent to the Lenders shall be made by bank wire transfer or internal
transfer of immediately available funds to each Lender pursuant to wire transfer
instructions delivered in writing to the Agent on or prior to the Closing Date
(or if such Lender is an Assignee, on the applicable Assignment and Acceptance),
or pursuant to such other wire transfer instructions as each party may designate
for itself by written notice to the Agent. Concurrently with each such payment,
the Agent shall identify whether such payment (or any portion thereof)
represents principal, premium or interest on the Revolving Loans or otherwise.
Unless the Agent receives notice from the Borrowers prior to the date on which
any payment is due to the Lenders that the Borrowers will not make such payment
in full as and when required, the Agent may assume that the Borrowers have made
such payment in full to the Agent on such date in immediately available funds
and the 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 the Borrowers have not made
such payment in full to the Agent, each Lender shall repay to the Agent on
demand such amount distributed to such Lender, together with interest thereon at
the Federal Funds Rate for each day from the date such amount is distributed to
such Lender until the date repaid.

12.15             Settlement.

    (a)        

    (i)               Each Lender’s funded portion of the Revolving Loans is
intended by the Lenders to be equal at all times to such Lender’s Pro Rata Share
of the outstanding Revolving Loans. Notwithstanding such agreement, the Agent,
the Bank, and the other Lenders agree (which agreement shall not be for the
benefit of or enforceable by any Obligor) that in order to facilitate the
administration of this Agreement and the other Loan Documents, settlement among
them as to the Revolving Loans, the Non-Ratable Loans and the Agent Advances
shall take place on a periodic basis in accordance with the following
provisions:

    (ii)               The Agent shall request settlement (“Settlement”) with
the Lenders on at least a weekly basis, or on a more frequent basis at Agent’s
election, (A) on behalf of the Bank, with respect to each outstanding
Non-Ratable Loan, (B) for itself, with respect to each Agent Advance, and (C)
with respect to collections received, in each case, by notifying the Lenders of
such requested Settlement by telecopy, telephone or other similar form of
transmission, of such requested Settlement, no later than 12:00 noon (Atlanta,
Georgia time) on the date of such requested Settlement (the “Settlement Date”).
Each Lender (other than the Bank, in the case of Non-Ratable Loans, and the
Agent, in the case of Agent Advances) shall transfer the amount of such Lender’s
Pro Rata Share of the outstanding principal amount of the Non-Ratable Loans and
Agent Advances with respect to each Settlement to the Agent, to Agent’s account,
not later than 2:00 p.m. (Atlanta, Georgia time), on the Settlement Date
applicable thereto. Settlements may occur during the continuation of a Default
or an Event of Default and whether or not the applicable conditions precedent
set forth in Article 8 have then been satisfied. Such amounts made available to
the Agent shall be applied against the amounts of the applicable Non-Ratable
Loan or Agent Advance and, together with the portion of such Non-Ratable Loan or
Agent Advance representing the Bank’s Pro Rata Share thereof, shall constitute
Revolving Loans of such Lenders. If any such amount is not transferred to the
Agent by any Lender on the Settlement Date applicable thereto, the Agent shall
be entitled to recover such amount on demand from such Lender together with
interest thereon at the Federal Funds Rate for the first three (3) days from and
after the Settlement Date and thereafter at the Interest Rate then applicable to
the Revolving Loans (A) on behalf of the Bank, with respect to each outstanding
Non-Ratable Loan, and (B) for itself, with respect to each Agent Advance.

    (iii)               Notwithstanding the foregoing, not more than one (1)
Business Day after demand is made by the Agent (whether before or after the
occurrence of a Default or an Event of Default and regardless of whether the
Agent has requested a Settlement with respect to a Non-Ratable Loan or Agent
Advance), each other Lender (A) shall irrevocably and unconditionally purchase
and receive from the Bank or the Agent, as applicable, without recourse or
warranty, an undivided interest and participation in such Non-Ratable Loan or
Agent Advance equal to such Lender’s Pro Rata Share of such Non-Ratable Loan or
Agent Advance, and (B) if Settlement has not previously occurred with respect to
such Non-Ratable Loans or Agent Advances, upon demand by Bank or Agent, as
applicable, shall pay to Bank or Agent, as applicable, as the purchase price of
such participation an amount equal to one-hundred percent (100%) of such
Lender’s Pro Rata Share of such Non-Ratable Loans or Agent Advances. If such
amount is not in fact made available to the Agent by any Lender, the Agent shall
be entitled to recover such amount on demand from such Lender together with
interest thereon at the Federal Funds Rate for the first three (3) days from and
after such demand and thereafter at the Interest Rate then applicable to Base
Rate Revolving Loans.

    (iv)               From and after the date, if any, on which any Lender
purchases an undivided interest and participation in any Non-Ratable Loan or
Agent Advance pursuant to clause (iii) above, the Agent shall promptly
distribute to such Lender such Lender’s Pro Rata Share of all payments of
principal and interest and all proceeds of Collateral received by the Agent in
respect of such Non-Ratable Loan or Agent Advance.

    (v)               Between Settlement Dates, the Agent, to the extent no
Agent Advances are outstanding, may pay over to the Bank any payments received
by the Agent, which in accordance with the terms of this Agreement would be
applied to the reduction of the Revolving Loans, for application to the Bank’s
Revolving Loans, including Non-Ratable Loans. If, as of any Settlement Date,
collections received since the then immediately preceding Settlement Date have
been applied to the Bank’s Revolving Loans (other than to Non-Ratable Loans or
Agent Advances in which such Lender has not yet funded its purchase of a
participation pursuant to clause (iii) above), as provided for in the previous
sentence, the Bank shall pay to the Agent for the accounts of the Lenders, to be
applied to the outstanding Revolving Loans of such Lenders, an amount such that
each 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, the Bank with respect to Non-Ratable Loans, the Agent with
respect to Agent Advances, and each Lender with respect to the Revolving Loans
other than Non-Ratable Loans and Agent Advances, shall be entitled to interest
at the applicable rate or rates payable under this Agreement on the actual
average daily amount of funds employed by the Bank, the Agent and the other
Lenders.

    (vi)        Unless the Agent has received written notice from a Lender to
the contrary, the Agent may assume that the applicable conditions precedent set
forth in Article 8 have been satisfied and the requested Borrowing will not
exceed the Maximum Revolver Amount on any Funding Date for a Revolving Loan or
Non-Ratable Loan.

    (b)        Lenders’ Failure to Perform. All Revolving Loans (other than
Non-Ratable Loans and Agent Advances) shall be made by the Lenders
simultaneously 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 Loans 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 obligation to make any Revolving Loans
hereunder, (ii) no failure by any Lender to perform its obligation to make any
Revolving Loans hereunder shall excuse any other Lender from its obligation to
make any Revolving Loans hereunder, and (iii) the obligations of each Lender
hereunder shall be several, not joint and several.

    (c)        Defaulting Lenders. Unless the Agent receives notice from the
Required Lenders on or prior to the Closing Date or, with respect to any
Borrowing after the Closing Date, at least one Business Day prior to the date of
such Borrowing, that such Lenders will not make available to the Agent those
Lenders’ Pro Rata Shares of a requested Borrowing, (i) the Agent may assume that
each Lender has made such amount available to the Agent in immediately available
funds on the Funding Date, and (ii) each Lender shall be obligated to make its
Pro Rata Share of such Borrowing available notwithstanding the existence of any
Default or Event of Default or the non-satisfaction of any condition precedent
in Article 8 (other than the conditions precedent set forth in Section 8.2(b),
(c) and (d)). Furthermore, the Agent may, in reliance upon such assumption, make
available to the Borrowers on such date a corresponding amount and all Lenders
shall be liable to the Agent for such amount. If any Lender has not transferred
its full Pro Rata Share to the Agent in immediately available funds, and the
Agent has transferred the corresponding amount to the Borrowers, on the Business
Day following such Funding Date that Lender shall make such amount available to
the Agent, together with interest at the Federal Funds Rate for that day. A
notice by the Agent submitted to any Lender with respect to amounts owing shall
be conclusive, absent manifest error. If a Lender’s full Pro Rata Share is
transferred to the Agent as required, the amount transferred to the Agent shall
constitute that Lender’s Loan for all purposes of this Agreement. If that amount
is not transferred to the Agent on the Business Day following the Funding Date,
the Agent will notify the Borrowers’ Agent of such failure to fund and, upon
demand by the Agent, the Borrowers shall pay such amount to the Agent for the
Agent’s account, together with interest thereon for each day elapsed since the
date of such Borrowing, at a rate per annum equal to the Interest Rate
applicable at the time to the Loans comprising that particular Borrowing. The
failure of any Lender to make any Loan on any Funding Date (any such Lender,
prior to the cure of such failure, being hereinafter referred to as a
“Defaulting Lender”) shall not relieve any other Lender of its obligation
hereunder to make a Loan on that Funding Date. No Lender shall be responsible
for any other Lender’s failure to advance such other Lender’s Pro Rata Share of
any Borrowing.

    (d)        Retention of Defaulting Lender’s Payments. The Agent shall not be
obligated to transfer to a Defaulting Lender any payments made by any Obligor to
the Agent for the Defaulting Lender’s benefit; nor shall a Defaulting Lender be
entitled to the sharing of any payments hereunder. Amounts payable to a
Defaulting Lender shall instead be paid to or retained by the Agent. In its
discretion, the Agent may loan to the Borrowers the amount of all such payments
received or retained by it for the account of such Defaulting Lender. Any
amounts so loaned to the Borrowers shall bear interest at the rate applicable to
Base Rate Revolving Loans and for all other purposes of this Agreement shall be
treated as if they were Revolving Loans, provided, however, that for purposes of
voting or consenting to matters with respect to the Loan Documents and
determining Pro Rata Shares, such Defaulting Lender shall be deemed not to be a
“Lender”. Until a Defaulting Lender cures its failure to fund its Pro Rata Share
of any Borrowing (i) such Defaulting Lender shall not be entitled to any portion
of the Unused Line Fee, and (ii) the Unused Line Fee shall accrue in favor of
the Lenders which have funded their respective Pro Rata Shares of such requested
Borrowing and shall be allocated among such performing Lenders ratably based
upon their relative Commitments. This Section 12.15(d) shall remain effective
with respect to such Lender until such time as the Defaulting Lender shall no
longer be in default of any of its obligations under this Agreement. The terms
of this Section 12.15(d) shall not be construed to increase or otherwise affect
the Commitment of any Lender, or relieve or excuse the performance by any
Obligor of its duties and obligations hereunder.

    (e)        Removal of Defaulting Lender. At the Borrowers’ request, the
Agent or an Eligible Assignee reasonably acceptable to the Agent and the
Borrowers’ Agent shall have the right (but not the obligation) to purchase from
any Defaulting Lender, and each Defaulting Lender shall, upon such request, sell
and assign to the Agent or such Eligible Assignee, all of the Defaulting
Lender’s outstanding Commitments hereunder. Such sale shall be consummated
promptly after the Agent has arranged for a purchase by the Agent or an Eligible
Assignee pursuant to an Assignment and Acceptance, and at a price equal to the
outstanding principal balance of the Defaulting Lender’s Loans, plus accrued
interest and fees, without premium or discount.

12.16             Letters of Credit; Intra-Lender Issues.

    (a)        Notice of Letter of Credit Balance. On each Settlement Date the
Agent shall notify each Lender of the issuance of all Letters of Credit since
the prior Settlement Date.

    (b)        Participations in Letters of Credit.

    (i)              Purchase of Participations. Immediately upon issuance of
any Letter of Credit in accordance with Section 1.3(d), each Lender shall be
deemed to have irrevocably and unconditionally purchased and received without
recourse or warranty, an undivided interest and participation equal to such
Lender’s Pro Rata Share of the face amount of such Letter of Credit or the
Credit Support provided through the Agent to the Letter of Credit Issuer, if not
the Bank, in connection with the issuance of such Letter of Credit (including
all obligations of the Obligors with respect thereto, and any security therefor
or guaranty pertaining thereto).

    (ii)              Sharing of Reimbursement Obligation Payments. Whenever the
Agent receives a payment from any Obligor on account of reimbursement
obligations in respect of a Letter of Credit or Credit Support as to which the
Agent has previously received for the account of the Letter of Credit Issuer
thereof payment from a Lender, the Agent shall promptly pay to such Lender such
Lender’s Pro Rata Share of such payment from such Obligor. Each such payment
shall be made by the Agent on the next Settlement Date.

    (iii)              Documentation. Upon the request of any Lender, the Agent
shall furnish to such Lender copies of any Letter of Credit, Credit Support for
any Letter of Credit, reimbursement agreements executed in connection therewith,
applications for any Letter of Credit, and such other documentation as may
reasonably be requested by such Lender.

    (iv)              Obligations Irrevocable. The obligations of each Lender to
make payments to the Agent with respect to any Letter of Credit or with respect
to their participation therein or with respect to any Credit Support for any
Letter of Credit or with respect to the Revolving Loans made as a result of a
drawing under a Letter of Credit and the obligations of the Obligor for whose
account the Letter of Credit or Credit Support was issued to make payments to
the Agent, for the account of the Lenders, shall be irrevocable and shall not be
subject to any qualification or exception whatsoever, including any of the
following circumstances:

    (1)               any lack of validity or enforceability of this Agreement
or any of the other

Loan Documents;

    (2)               the existence of any claim, setoff, defense or other right
which any Obligor may have at any time against a beneficiary named in a Letter
of Credit or any transferee of any Letter of Credit (or any Person for whom any
such transferee may be acting), any Lender, the Agent, the issuer of such Letter
of Credit, or any other Person, whether in connection with this Agreement, any
Letter of Credit, the transactions contemplated herein or any unrelated
transactions (including any underlying transactions between any Obligor or any
other Person and the beneficiary named in any Letter of Credit);

    (3)               any draft, certificate or any other document presented
under the Letter of Credit proving to be forged, fraudulent, invalid or
insufficient in any respect or any statement therein being untrue or inaccurate
in any respect;

    (4)               the surrender or impairment of any security for the
performance or observance of any of the terms of any of the Loan Documents;

    (5)               the occurrence of any Default or Event of Default; or

    (6)               the failure of the Obligors to satisfy the applicable
conditions precedent set forth in Article 8.

    (c)        Recovery or Avoidance of Payments; Refund of Payments In Error.
In the event any payment by or on behalf of any Obligor received by the Agent
with respect to any Letter of Credit or Credit Support provided for any Letter
of Credit and distributed by the Agent to the Lenders on account of their
respective participations therein is thereafter set aside, avoided or recovered
from the Agent in connection with any receivership, liquidation or bankruptcy
proceeding, the Lenders shall, upon demand by the Agent, pay to the Agent their
respective Pro Rata Shares of such amount set aside, avoided or recovered,
together with interest at the rate required to be paid by the Agent upon the
amount required to be repaid by it. Unless the Agent receives notice from the
Borrowers prior to the date on which any payment is due to the Lenders that the
Borrowers will not make such payment in full as and when required, the Agent may
assume that the Borrowers have made such payment in full to the Agent on such
date in immediately available funds and the 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 the Borrowers have not made such payment in full to the Agent, each
Lender shall repay to the Agent on demand such amount distributed to such
Lender, together with interest thereon at the Federal Funds Rate for each day
from the date such amount is distributed to such Lender until the date repaid.

    (d)        Indemnification by Lenders. To the extent not reimbursed by the
Obligors and without limiting the obligations of the Obligors hereunder, the
Lenders agree to indemnify the Letter of Credit Issuer ratably in accordance
with their respective Pro Rata Shares, for any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses
(including attorneys’ fees) or disbursements of any kind and nature whatsoever
that may be imposed on, incurred by or asserted against the Letter of Credit
Issuer in any way relating to or arising out of any Letter of Credit or the
transactions contemplated thereby or any action taken or omitted by the Letter
of Credit Issuer under any Letter of Credit or any Loan Document in connection
therewith; provided that no Lender shall be liable for any of the foregoing to
the extent it arises from the gross negligence or willful misconduct of the
Person to be indemnified. Without limitation of the foregoing, each Lender
agrees to reimburse the Letter of Credit Issuer promptly upon demand for its Pro
Rata Share of any costs or expenses payable by the Obligors to the Letter of
Credit Issuer, to the extent that the Letter of Credit Issuer is not promptly
reimbursed for such costs and expenses by the Obligors. The agreement contained
in this Section 12.16(d) shall survive payment in full of all other Obligations.

12.17             Concerning the Collateral and the Related Loan Documents. Each
Lender authorizes and directs the Agent to enter into the other Loan Documents,
for the ratable benefit and obligation of the Agent and the Lenders. Each Lender
agrees that any action taken by the Agent or the Required Lenders, as
applicable, in accordance with the terms of this Agreement or the other Loan
Documents, and the exercise by the Agent or the Required Lenders, as applicable,
of their respective powers set forth therein or herein, together with such other
powers that are reasonably incidental thereto, shall be binding upon all of the
Lenders. The Lenders acknowledge that the Revolving Loans, Agent Advances,
Non-Ratable Loans, Bank Products and all interest, fees and expenses hereunder
constitute one Debt, secured pari passu by all of the Collateral.

12.18             Field Audit and Examination Reports; Disclaimer by Lenders..
By signing this Agreement, each Lender:

    (a)        is deemed to have requested that the Agent furnish such Lender,
promptly after it becomes available, a copy of each field audit or examination
report (each a “Report” and collectively, “Reports”) prepared by or on behalf of
the Agent;

    (b)        expressly agrees and acknowledges that neither the Bank nor the
Agent (i) makes any representation or warranty as to the accuracy of any Report,
or (ii) shall be liable for any information contained in any Report;

    (c)        expressly agrees and acknowledges that the Reports are not
comprehensive audits or examinations, that the Agent or the Bank or other party
performing any audit or examination will inspect only specific information
regarding the Obligors and will rely significantly upon the Obligors’ books and
records, as well as on representations of the Obligors’ personnel;

    (d)        agrees to keep all Reports confidential and strictly for its
internal use, and not to distribute except to its participants, or use any
Report in any other manner; and

    (e)        without limiting the generality of any other indemnification
provision contained in this Agreement, agrees: (i) to hold the Agent and any
such other Lender preparing a Report harmless from any action the indemnifying
Lender may take or 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 the Borrowers, or the indemnifying
Lender’s participation in, or the indemnifying Lender’s purchase of, a loan or
loans of the Borrowers; and (ii) to pay and protect, and indemnify, defend and
hold the Agent and any such other Lender preparing a Report harmless from and
against, the claims, actions, proceedings, damages, costs, expenses and other
amounts (including Attorney Costs) incurred by the 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.

12.19             Relation Among Lenders. The Lenders are not partners or
co-venturers, and no Lender shall be liable for the acts or omissions of, or
(except as otherwise set forth herein in case of the Agent) authorized to act
for, any other Lender.

ARTICLE 13

SUBSIDIARY GUARANTIES

13.1             Subsidiary Guaranties. Each of the Guarantors hereby
unconditionally and irrevocably, jointly and severally, guarantees the full
payment and performance by the Borrowers of all of the Obligations, whether now
existing or hereafter arising. Each Guarantor hereby unconditionally and
irrevocably agrees that upon default in the payment when due (whether at stated
maturity, by acceleration or otherwise) of any principal of, or interest on, any
Loan or any other Obligation, it will forthwith pay the same, without notice or
demand.

13.2             Obligations Absolute. Each Guarantor agrees that the
Obligations will be paid strictly in accordance with the terms of the Loan
Documents, regardless of any law, regulation or order now or hereafter in effect
in any jurisdiction affecting any of such terms or the rights of the Agent or
any Lender with respect thereto. All Obligations shall be conclusively presumed
to have been created in reliance hereon. The Guarantors’ obligations under this
Agreement shall be absolute and unconditional irrespective of: (a) any lack of
validity or enforceability of any Loan Document or any other agreement or
instrument relating thereto; (b) any change in the time, manner or place of
payments of, or in any other term of, all or any part of the Obligations, or any
other amendment or waiver thereof or any consent to departure therefrom,
including any increase in the Obligations resulting from the extension of
additional credit to any Borrower or otherwise; (c) any taking, exchange,
release or non-perfection of any Collateral, or any release or amendment or
waiver of or consent to departure from any guaranty for all or any of the
Obligations; (d) any change, restructuring or termination of the corporate
structure or existence of any Obligor; or (e) any other circumstance which might
otherwise constitute a defense available to, or a discharge of, any Obligor. The
Guarantors’ obligations under this Agreement shall continue to be effective or
be reinstated, as the case may be, if at any time any payment of any of the
Obligations is rescinded or must otherwise be returned by the Agent or any
Lender upon the insolvency, bankruptcy or reorganization of any Obligor or
otherwise, all as though such payment had not been made. The Guarantors’
obligations under this Agreement may be deemed by the Agent to be an agreement
of guaranty or surety.

13.3             Waiver of Suretyship Defenses. Each Guarantor agrees that the
joint and several liability of the Guarantors provided for in Section 13.1 shall
not be impaired or affected by any modification, supplement, extension or
amendment of any contract or agreement to which any other Obligor may hereafter
agree (other than an agreement signed by the Agent and the Lenders specifically
releasing such liability), nor by any delay, extension of time, renewal,
compromise or other indulgence granted by the Agent or any Lender with respect
to any of the Obligations, nor by any other agreements or arrangements whatever
with the other Obligors or with anyone else, each Guarantor hereby waiving all
notice of such delay, extension, release, substitution, renewal, compromise or
other indulgence, and hereby consenting to be bound thereby as fully and
effectually as if it had expressly agreed thereto in advance. The liability of
each Guarantor is direct and unconditional as to all of the Obligations, and may
be enforced without requiring the Agent or any Lender first to resort to any
other right, remedy or security. Each Guarantor hereby expressly waives
promptness, diligence, notice of acceptance and any other notice (except to the
extent expressly provided for herein or in another Loan Document) with respect
to any of the Obligations, this Agreement or any other Loan Document and any
requirement that the Agent or any Lender protect, secure, perfect or insure any
Lien or any property subject thereto or exhaust any right or take any action
against any Obligor or any other Person or any Collateral, including any rights
any Guarantor may otherwise have under Official Code of Georgia Annotated
Section 10-7-24 or any successor statute or any analogous statute in any
jurisdiction under the laws of which any Guarantor is incorporated or in which
any Guarantor conducts business.

13.4             Contribution and Indemnification. To the extent that any
Guarantor shall repay any of the Obligations (an “Accommodation Payment”), then,
to the extent that such Guarantor has not received the benefit of such repaid
Obligations (whether through an inter-company loan or otherwise), the Guarantor
making such Accommodation Payment shall be entitled to contribution and
indemnification from, and be reimbursed by, each of the other Obligors in an
amount, for each of such other Obligors, equal to a fraction of such
Accommodation Payment, the numerator of which fraction is such other Obligors’
“Allocable Amount” (as defined below) and the denominator of which is the sum of
the Allocable Amounts of all of the Obligors. As of any date of determination,
the “Allocable Amount” of each Guarantor shall be equal to the maximum amount of
liability for Accommodation Payments which could be asserted against such
Guarantor hereunder without (a) rendering such Guarantor “insolvent” within the
meaning of the Bankruptcy Code, Section 2 of the Uniform Fraudulent Transfer Act
(the “UFTA”), Section 2 of the Uniform Fraudulent Conveyance Act (“UFCA”), (b)
leaving such Guarantor with unreasonably small capital or assets, within the
meaning of Section 548 of the Bankruptcy Code, Section 4 of the UFTA, or
Section 4 of the UFCA, or (c) leaving such Guarantor unable to pay its debts as
they become due within the meaning of Section 548 of the Bankruptcy Code,
Section 4 of the UFTA, or Section 5 of the UFCA. All rights and claims of
contribution, indemnification and reimbursement under this Section 13.4 shall be
subordinate in right of payment to the prior payment in full of the Obligations.

13.5             Subordination of Intercompany Debt. Each of the Obligors hereby
agrees that (a) all Debt owing by any Obligor or any Subsidiary to any other
Obligor or any Subsidiary shall be subject and subordinate in all respects to
the Obligations, provided that, as long as no Event of Default exists, payments
may be made on such Debt to the extent expressly permitted hereunder, (b) it
shall deliver, or cause to be delivered, to the Agent the original of each
promissory note evidencing such Debt, properly endorsed over to the Agent, and
(c) all such promissory notes shall contain a legend in the form set forth
below:

  THE INDEBTEDNESS EVIDENCED BY THIS PROMISSORY NOTE IS SUBJECT AND SUBORDINATE
TO THE “OBLIGATIONS” AS DESCRIBED IN THAT CERTAIN AMENDED AND RESTATED CREDIT
AGREEMENT, DATED AS OF MAY 20, 2003, AMONG PSS WORLD MEDICAL, INC. AND CERTAIN
OF ITS SUBSIDIARIES, THE LENDERS FROM TIME TO TIME PARTY THERETO, AND BANK OF
AMERICA, N.A., AS AGENT, AS AMENDED, MODIFIED AND SUPPLEMENTED FROM TIME TO
TIME.

ARTICLE 14

MISCELLANEOUS

14.1             No Waivers; Cumulative Remedies. No failure by the Agent or any
Lender to exercise any right, remedy, or option under this Agreement or any
present or future supplement thereto, or in any other agreement between or among
any Obligor and the Agent and/or any Lender, or delay by the Agent or any Lender
in exercising the same, will operate as a waiver thereof. No waiver by the Agent
or any Lender will be effective unless it is in writing, and then only to the
extent specifically stated. No waiver by the Agent or the Lenders on any
occasion shall affect or diminish the Agent’s and each Lender’s rights
thereafter to require strict performance by the Obligors of any provision of
this Agreement. The Agent and the Lenders may proceed directly to collect the
Obligations without any prior recourse to the Collateral. The Agent’s and each
Lender’s rights under this Agreement will be cumulative and not exclusive of any
other right or remedy which the Agent or any Lender may have.

14.2             Severability. The illegality or unenforceability of any
provision of this Agreement or any Loan Document or any instrument or agreement
required hereunder shall not in any way affect or impair the legality or
enforceability of the remaining provisions of this Agreement or any instrument
or agreement required hereunder.

14.3             Governing Law; Choice of Forum; Service of Process..

    (a)        THIS AGREEMENT SHALL BE INTERPRETED AND THE RIGHTS AND
LIABILITIES OF THE PARTIES HERETO DETERMINED IN ACCORDANCE WITH THE INTERNAL
LAWS (AS OPPOSED TO THE CONFLICT OF LAWS PROVISIONS PROVIDED THAT PERFECTION
ISSUES WITH RESPECT TO ARTICLE 9 OF THE UCC MAY GIVE EFFECT TO APPLICABLE CHOICE
OR CONFLICT OF LAW RULES SET FORTH IN ARTICLE 9 OF THE UCC) OF THE STATE OF
GEORGIA; PROVIDED THAT THE AGENT AND THE LENDERS SHALL RETAIN ALL RIGHTS ARISING
UNDER FEDERAL LAW.

    (b)        ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR
ANY OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF GEORGIA OR
OF THE UNITED STATES OF AMERICA LOCATED IN THE NORTHERN DISTRICT OF GEORGIA, AND
BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH OF THE OBLIGORS, THE AGENT AND
THE LENDERS CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE
NON-EXCLUSIVE JURISDICTION OF THOSE COURTS. EACH OF THE OBLIGORS, THE AGENT AND
THE LENDERS IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION TO THE
LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY
NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH
JURISDICTION IN RESPECT OF THIS AGREEMENT OR ANY DOCUMENT RELATED HERETO.
NOTWITHSTANDING THE FOREGOING: (1) THE AGENT AND THE LENDERS SHALL HAVE THE
RIGHT TO BRING ANY ACTION OR PROCEEDING AGAINST ANY OBLIGOR OR ITS PROPERTY IN
THE COURTS OF ANY OTHER JURISDICTION THE AGENT OR THE LENDERS DEEM NECESSARY OR
APPROPRIATE IN ORDER TO REALIZE ON THE COLLATERAL OR OTHER SECURITY FOR THE
OBLIGATIONS AND (2) EACH OF THE PARTIES HERETO ACKNOWLEDGES THAT ANY APPEALS
FROM THE COURTS DESCRIBED IN THE IMMEDIATELY PRECEDING SENTENCE MAY HAVE TO BE
HEARD BY A COURT LOCATED OUTSIDE THOSE JURISDICTIONS.

    (c)        EACH OBLIGOR HEREBY WAIVES PERSONAL SERVICE OF ANY AND ALL
PROCESS UPON IT AND CONSENTS THAT ALL SUCH SERVICE OF PROCESS MAY BE MADE BY
REGISTERED MAIL (RETURN RECEIPT REQUESTED) DIRECTED TO SUCH OBLIGOR AT THE
BORROWERS’ AGENT’S ADDRESS SET FORTH IN SECTION 14.8 AND SERVICE SO MADE SHALL
BE DEEMED TO BE COMPLETED FIVE (5) BUSINESS DAYS AFTER THE SAME SHALL HAVE BEEN
SO DEPOSITED IN THE U.S. MAILS, POSTAGE PREPAID. NOTHING CONTAINED HEREIN SHALL
AFFECT THE RIGHT OF AGENT OR THE LENDERS TO SERVE LEGAL PROCESS BY ANY OTHER
MANNER PERMITTED BY LAW.

14.4             WAIVER OF JURY TRIAL. EACH OBLIGOR, THE LENDERS AND THE AGENT
EACH IRREVOCABLY WAIVE THEIR RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY CLAIM
OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF OR RELATED TO THIS AGREEMENT,
THE OTHER LOAN DOCUMENTS, OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, IN
ANY ACTION, PROCEEDING OR OTHER LITIGATION OF ANY TYPE BROUGHT BY ANY OF THE
PARTIES AGAINST ANY OTHER PARTY OR ANY AGENT-RELATED PERSON, PARTICIPANT OR
ASSIGNEE, WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT CLAIMS, OR OTHERWISE.
EACH OBLIGOR, THE LENDERS AND THE AGENT EACH AGREE THAT ANY SUCH CLAIM OR CAUSE
OF ACTION SHALL BE TRIED BY A COURT TRIAL WITHOUT A JURY. WITHOUT LIMITING THE
FOREGOING, THE PARTIES FURTHER AGREE THAT THEIR RESPECTIVE RIGHT TO A TRIAL BY
JURY IS WAIVED BY OPERATION OF THIS SECTION AS TO ANY ACTION, COUNTERCLAIM OR
OTHER PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART, TO CHALLENGE THE VALIDITY OR
ENFORCEABILITY OF THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS OR ANY PROVISION
HEREOF OR THEREOF. THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS,
RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS.

14.5             Survival of Representations and Warranties. All of the
Obligors’ representations and warranties contained in this Agreement shall
survive the execution, delivery, and acceptance thereof by the parties,
notwithstanding any investigation by the Agent or the Lenders or their
respective agents.

14.6             Other Security and Guaranties. The Agent may, without notice or
demand and without affecting the Obligors’ obligations hereunder, from time to
time: (a) take from any Person and hold collateral (other than the Collateral)
for the payment of all or any part of the Obligations and exchange, enforce or
release such collateral or any part thereof; and (b) accept and hold any
endorsement or guaranty of payment of all or any part of the Obligations and
release or substitute any such endorser or guarantor, or any Person who has
given any Lien in any other collateral as security for the payment of all or any
part of the Obligations, or any other Person in any way obligated to pay all or
any part of the Obligations.

14.7             Fees and Expenses. The Borrowers agree to pay to the Agent, for
its benefit, on demand, all reasonable costs and expenses that the Agent pays or
incurs in connection with the negotiation, preparation, syndication,
consummation, administration, enforcement, and termination of this Agreement or
any of the other Loan Documents, including: (a) Attorney Costs; (b) reasonable
costs and expenses (including attorneys’ and paralegals’ fees and disbursements)
for any amendment, supplement, waiver, consent, or subsequent closing in
connection with the Loan Documents and the transactions contemplated thereby;
(c) costs and expenses of lien searches; (d) taxes, fees and other charges for
filing financing statements and continuations, and other actions to perfect,
protect, and continue the Agent’s Liens (including reasonable costs and expenses
paid or incurred by the Agent in connection with the consummation of Agreement);
(e) sums paid or incurred to pay any amount or take any action required of any
Obligor under the Loan Documents that such Obligor fails to pay or take;
(f) costs of appraisals (including all Appraisals), inspections, and
verifications of the Collateral, including travel, lodging, and meals for
inspections of the Collateral and the Obligors’ operations by the Agent plus the
Agent’s then customary charge for field examinations and audits and the
preparation of reports thereof (such charge is currently $750 per day (or
portion thereof) for each Person retained or employed by the Agent with respect
to each field examination or audit); and (g) costs and expenses of forwarding
loan proceeds, collecting checks and other items of payment, and establishing
and maintaining Payment Accounts and lock boxes, and costs and expenses of
preserving and protecting the Collateral. In addition, the Borrowers agree to
pay on demand to the Agent, for its benefit, all costs and expenses incurred by
the Agent (including Attorneys’ Costs), and to the other Lenders, for their
benefit, on demand, all reasonable fees, expenses and disbursements incurred by
such other Lenders for one law firm retained by such other Lenders, in each
case, paid or incurred to obtain payment of the Obligations, enforce the Agent’s
Liens, sell or otherwise realize upon the Collateral, and otherwise enforce the
provisions of the Loan Documents, or to defend any claims made or threatened
against the Agent or any Lender arising out of the transactions contemplated
hereby (including preparations for and consultations concerning any such
matters). The foregoing shall not be construed to limit any other provisions of
the Loan Documents regarding costs and expenses to be paid by the Borrowers. All
of the foregoing costs and expenses shall be charged to the Borrowers’ Loan
Account as Revolving Loans as described in Section 3.5.

14.8             Notices. Except as otherwise provided herein, all notices,
demands and requests that any party is required or elects to give to any other
shall be in writing, or by a telecommunications device capable of creating a
written record, and any such notice shall become effective (a) upon personal
delivery thereof, including, but not limited to, delivery by overnight mail and
courier service, (b) five (5) days after it shall have been mailed by United
States mail, first class, certified or registered, with postage prepaid, or
(c) in the case of notice by such a telecommunications device, when properly
transmitted, in each case addressed to the party to be notified as follows:

If to the Agent or to the Bank:

           Bank of America, N.A          600 Peachtree Street, 5th Floor
         Atlanta, GA 30308          Attention: Business Credit-Account Executive
         Telecopy No.: 404-607-6439

         with copies to:

         Troutman Sanders LLP          600 Peachtree Street, 52nd Floor
         Atlanta, GA 30308          Attention: Michael Leveille
         Telecopy No.: 404-885-3995

If to any Borrower or Guarantor:

         PSS World Medical, Inc.          4345 Southpoint Boulevard
         Jacksonville, FL 32216          Attention: David Klarner
         Telecopy No.: 904-332-3214

         with copies to:

         Foley & Lardner          The Greenleaf Building          200 Laura
Street          Jacksonville, FL 32202          Attention: Charles V. Hedrick
         Telecopy No.: 904-359-8700

If to a Lender:

         To the address of such Lender set forth on the signature page hereto or
on the          Assignment and Acceptance for such Lender, as applicable

or to such other address as each party may designate for itself by like notice.
Failure or delay in delivering copies of any notice, demand, request, consent,
approval, declaration or other communication to the persons designated above to
receive copies shall not adversely affect the effectiveness of such notice,
demand, request, consent, approval, declaration or other communication.

14.9             Waiver of Notices. Unless otherwise expressly provided herein,
each Obligor waives presentment, and notice of demand or dishonor and protest as
to any instrument, notice of intent to accelerate the Obligations and notice of
acceleration of the Obligations, as well as any and all other notices to which
it might otherwise be entitled. No notice to or demand on any Obligor which the
Agent or any Lender may elect to give shall entitle any Obligor to any or
further notice or demand in the same, similar or other circumstances.

14.10             Binding Effect. The provisions of this Agreement shall be
binding upon and inure to the benefit of the respective representatives,
successors, and assigns of the parties hereto; provided, however, that no
interest herein may be assigned by any Obligor without prior written consent of
the Agent and each Lender. The rights and benefits of the Agent and the Lenders
hereunder shall, if such Persons so agree, inure to any party acquiring any
interest in the Obligations or any part thereof.

14.11             Indemnity of the Agent and the Lenders by the Borrowers.

    (a)        The Borrowers agree to defend, indemnify and hold the
Agent-Related Persons and each Lender, and each of their respective officers,
directors, employees, counsel, representatives, agents and attorneys-in-fact
(each, an “Indemnified Person”) harmless from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, charges, expenses and disbursements (including Attorney Costs) of any
kind or nature whatsoever which may at any time (including at any time following
repayment of the Loans and the termination, resignation or replacement of the
Agent or replacement of any Lender) be imposed on, incurred by or asserted
against any such Person in any way relating to or arising out of this Agreement
or any document contemplated by or referred to herein, or the transactions
contemplated hereby, or any action taken or omitted by any such Person under or
in connection with any of the foregoing, including with respect to any
investigation, litigation or proceeding (including any Insolvency Proceeding or
appellate proceeding) related to or arising out of this Agreement, any other
Loan Document, or the Loans or the use of the proceeds thereof, whether or not
any Indemnified Person is a party thereto (all the foregoing, collectively, the
“Indemnified Liabilities”); provided, that the Borrowers shall have no
obligation hereunder to any Indemnified Person with respect to Indemnified
Liabilities resulting solely from the gross negligence or willful misconduct of
such Indemnified Person. The agreements in this Section 14.11 shall survive
payment of all other Obligations and the termination of this Agreement.

    (b)        The Borrowers agree to indemnify, defend and hold harmless the
Agent and the Lenders from any loss or liability directly or indirectly arising
out of the use, generation, manufacture, production, storage, release,
threatened release, discharge, disposal or presence of a hazardous substance
attributable to any Borrower or to real property owned or leased by any
Borrower. This indemnity will apply whether the hazardous substance is on, under
or about real property owned or leased by any Borrower. The indemnity includes
but is not limited to Attorneys Costs. The indemnity extends to the Agent and
the Lenders, their parents, affiliates, subsidiaries and all of their directors,
officers, employees, agents, successors, attorneys and assigns. “Hazardous
substances” means any substance, material or waste that is or becomes designated
or regulated as “toxic,” “hazardous,” “pollutant,” or “contaminant” or a similar
designation or regulation under any applicable Environmental Law including
petroleum or natural gas. This indemnity will survive repayment of all other
Obligations and the termination of this Agreement. Notwithstanding anything to
the contrary contained herein, the Borrowers shall have no obligation hereunder
with respect to any liability or loss resulting from the gross negligence or
willful misconduct of any party indemnified hereunder or with respect to any
hazardous substance placed or deposited on, under or about any real property by
any party indemnified hereunder in violation of Environmental Laws.

    (c)        Unless an Event of Default (other than an Event of Default under
Section 9.1(c)) exists at the time of any settlement, the Borrowers shall not be
liable under this Agreement for any settlement made by any Indemnified Person
without the Borrowers’ prior written consent (which consent shall not be
unreasonably withheld). The Borrowers agree to indemnify and hold harmless any
Indemnified Person from and against any loss or liability by reason of the
settlement of any claim or action with the consent of the Borrowers. The
Borrowers shall not settle any claim or action without the prior written consent
of the applicable Indemnified Person, which consent shall not be unreasonably
withheld.

14.12             Limitation of Liability. NO CLAIM MAY BE MADE BY ANY OBLIGOR,
ANY LENDER OR OTHER PERSON AGAINST THE AGENT, ANY LENDER, OR THE AFFILIATES,
DIRECTORS, OFFICERS, EMPLOYEES, COUNSEL, REPRESENTATIVES, AGENTS OR
ATTORNEYS-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 LOAN DOCUMENT, OR ANY ACT, OMISSION OR EVENT
OCCURRING IN CONNECTION THEREWITH, AND EACH OBLIGOR AND EACH LENDER 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.

14.13             Final Agreement. This Agreement and the other Loan Documents
are intended by the Obligors, the Agent and the Lenders to be the final,
complete, and exclusive expression of the agreement between them. This Agreement
supersedes any and all prior oral or written agreements relating to the subject
matter hereof (except for the Fee Letter). No modification, rescission, waiver,
release, or amendment of any provision of this Agreement or any other Loan
Document shall be made, except by a written agreement signed by the Obligors and
a duly authorized officer of each of the Agent and the requisite Lenders.

14.14             Counterparts. This Agreement may be executed in any number of
counterparts, and by the Agent, each Lender and each Obligor in separate
counterparts, each of which shall be an original, but all of which shall
together constitute one and the same agreement; signature pages may be detached
from multiple separate counterparts and attached to a single counterpart so that
all signature pages are physically attached to the same document.

14.15             Captions. The captions contained in this Agreement are for
convenience of reference only, are without substantive meaning and should not be
construed to modify, enlarge, or restrict any provision.

14.16             Right of Setoff. In addition to any rights and remedies of the
Lenders provided by law, if an Event of Default exists or the Loans have been
accelerated, each Lender is authorized at any time and from time to time,
without prior notice to any Obligor, any such notice being waived by the
Obligors to the fullest extent permitted by law, to set off and apply any and
all deposits (general or special, time or demand, provisional or final) at any
time held by, and other indebtedness at any time owing by, such Lender or any
Affiliate of such Lender to or for the credit or the account of any Obligor
against any and all Obligations owing to such Lender, now or hereafter existing,
irrespective of whether or not the Agent or such Lender shall have made demand
under this Agreement or any Loan Document and although such Obligations may be
contingent or unmatured. Each Lender agrees promptly to notify the Borrowers’
Agent and the Agent after any such set-off and application made by such Lender;
provided, however, that the failure to give such notice shall not affect the
validity of such set-off and application. NOTWITHSTANDING THE FOREGOING, NO
LENDER SHALL EXERCISE ANY RIGHT OF SET-OFF, BANKER’S LIEN, OR THE LIKE AGAINST
ANY DEPOSIT ACCOUNT OR PROPERTY OF ANY OBLIGOR HELD OR MAINTAINED BY SUCH LENDER
WITHOUT THE PRIOR WRITTEN UNANIMOUS CONSENT OF THE LENDERS.

14.17             Confidentiality.

    (a)        Each Obligor hereby consents that the Agent and each Lender may
issue and disseminate to the public general information describing the credit
accommodations entered into pursuant to this Agreement, including the names and
addresses of the Obligors and a general description of the Obligors’ business
and may use each Obligor’s name in advertising and other promotional material.

    (b)        Each Lender severally agrees to take normal and reasonable
precautions and exercise due care to maintain the confidentiality of all
information identified as “confidential” or “secret” by any Obligor and provided
to the Agent or such Lender by or on behalf of any Obligor, under this Agreement
or any other Loan Document, except to the extent that such information (i) was
or becomes generally available to the public other than as a result of
disclosure by the Agent or such Lender, or (ii) was or becomes available on a
nonconfidential basis from a source other than an Obligor, provided that such
source is not bound by a confidentiality agreement with any Obligor known to the
Agent or such Lender; provided, however, that the Agent and any Lender may
disclose such information (1) at the request or pursuant to any requirement of
any Governmental Authority to which the Agent or such Lender is subject or in
connection with an examination of the Agent or such Lender by any such
Governmental Authority; (2) pursuant to subpoena or other court process; (3)
when required to do so in accordance with the provisions of any applicable
Requirement of Law; (4) to the extent reasonably required in connection with any
litigation or proceeding (including, but not limited to, any bankruptcy
proceeding) to which the Agent, any Lender or their respective Affiliates may be
party; (5) to the extent reasonably required in connection with the exercise of
any remedy hereunder or under any other Loan Document; (6) to the Agent’s or
such Lender’s independent auditors, accountants, attorneys and other
professional advisors; (7) to any prospective Participant or Assignee under any
Assignment and Acceptance, actual or potential, provided that such prospective
Participant or Assignee agrees to keep such information confidential to the same
extent required of the Agent and the Lenders hereunder; (8) as expressly
permitted under the terms of any other document or agreement regarding
confidentiality to which any Obligor is party or is deemed party with the Agent
or such Lender, and (9) to its Affiliates. Notwithstanding anything herein to
the contrary, the information subject to this Section 14.17(b) shall not
include, and the Agent and each Lender may disclose without limitation of any
kind, any information with respect to the “tax treatment” and “tax structure”
(in each case, within the meaning of Treasury Regulation Section 1.6011-4) of
the transactions contemplated hereby and all materials of any kind (including
opinions or other tax analyses) that are provided to the Agent or such Lender
relating to such tax treatment and tax structure; provided that with respect to
any document or similar item that in either case contains information concerning
the tax treatment or tax structure of the transactions as well as other
information, this sentence shall only apply to such portions of the document or
similar item that relate to the tax treatment or tax structure of the Loans,
Letters of Credit and transactions contemplated hereby.

14.18             Conflicts with Other Loan Documents. Unless otherwise
expressly provided in this Agreement (or in another Loan Document by specific
reference to the applicable provision contained in this Agreement), if any
provision contained in this Agreement conflicts with any provision of any other
Loan Document, the provision contained in this Agreement shall govern and
control.

14.19             No Novation. The amendment and restatement of the terms of the
Existing Agreement, as more fully set forth in this Agreement, shall not
constitute a novation of any of the indebtedness outstanding under the Existing
Agreement.

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--------------------------------------------------------------------------------

Credit Agmt (Receivables and Inventory) PSS.DOCCredit
Agreement

IN WITNESS WHEREOF, the parties have entered into this Amended and Restated
Credit Agreement on the date first above written.

  "BORROWERS"

  PSS WORLD MEDICAL, INC.

By:
Name:
Title:

  GULF SOUTH MEDICAL SUPPLY, INC.

By:
Name:
Title:

  PHYSICIAN SALES & SERVICE
LIMITED PARTNERSHIP

By: PSS World Medical, Inc.,
         its general partner

By:
Name:
Title:

  "GUARANTORS"

  PSS HOLDING, INC.

By:
Name:
Title:

  PSS SERVICE, INC.

By:
Name:
Title:

  PHYSICIAN SALES & SERVICE, INC.

By:
Name:
Title:

  THRIFTYMED, INC.

By:
Name:
Title:

  "AGENT"

  Bank of America, N.A., as the Agent

By:
Name:
Title:

  "LENDERS"

Address:
                                           
600 Peachtree Street, 5th Floor
Atlanta, GA 30308
Attn: Business Credit - Account Executive
Telecopy No: 404-607-6439

Bank of America, N.A., as a Lender

By:
Name:
Title:

--------------------------------------------------------------------------------

ANNEX A

TO

CREDIT AGREEMENT

DEFINITIONS

Capitalized terms used in the Loan Documents shall have the following respective
meanings (unless otherwise defined therein), and all section references in the
following definitions shall refer to sections of the Agreement:

“Account Debtor” means each Person obligated in any way on or in connection with
an Account.

“Accounts” means all of any Obligor’s now owned or hereafter acquired or arising
accounts, as defined in the UCC, including any rights to payment for the sale or
lease of goods or rendition of services, whether or not they have been earned by
performance.

“Accounts Payable Turnover” means (a) in the case of the determination thereof
as of any fiscal month end of the Obligors, the quotient obtained by dividing
(i) 360 by (ii) the quotient of (A) the product obtained by multiplying (1) the
Obligors’ cost of goods sold during the three fiscal month period ending on such
fiscal month end, by (2) four, divided by (B) the aggregate outstanding accounts
payable of the Obligors as of such fiscal month end, and (b) in the case of the
determination thereof as of the date of any Permitted Acquisition or Permitted
Stock Redemption, the quotient obtained by dividing (i) 360 by (ii) the quotient
of (A) the product obtained by multiplying (1) the Obligors’ cost of goods sold
during the three fiscal month period ending on the last day of the most recently
ended fiscal month for which the Borrowers have delivered the financial
statements required under Section 5.2(b) or (c), as the case may be, by (2)
four, divided by (B) the aggregate outstanding accounts payable of the Obligors
as of the close of business on the Business Day immediately preceding such
Permitted Acquisition or Permitted Stock Redemption.

“ACH Transactions” means any cash management, disbursement or related services,
including overdrafts and the automatic clearing house transfer of funds by the
Bank or any Affiliate of the Bank for the account of any Obligor.

“Adjusted Net Earnings from Operations” means, with respect to any fiscal period
of the Obligors, the net income of the Obligors and their consolidated
Subsidiaries after provision for income taxes for such fiscal period, as
determined in accordance with GAAP and reported on the Financial Statements for
such period, excluding any and all of the following included in such net income:
(a) gain or loss arising from the sale of any capital assets; (b) gain arising
from any write-up in the book value of any asset; (c) earnings of any Person,
substantially all the assets of which have been acquired by an Obligor in any
manner, to the extent realized by such other Person prior to the date of
acquisition; (d) earnings of any Person in which an Obligor has an ownership
interest unless (and only to the extent) such earnings shall actually have been
received by such Obligor in the form of cash distributions; (e) earnings of any
Person (other than an Obligor or another consolidated Subsidiary) to which
assets of any Obligor shall have been sold, transferred or disposed of, or into
which an Obligor shall have been merged, or which has been a party with any
Obligor to any consolidation or other form of reorganization, prior to the date
of such transaction; (f) gain arising from the acquisition of debt or equity
securities of any Obligor or from cancellation or forgiveness of Debt; (g) to
the extent such fiscal period includes March 28, 2003, the actual cash
prepayment premium paid by PSS in the amount of $4,505,000 in connection with
the redemption of the Senior Subordinated Notes on March 28, 2003; (h) gain (and
non-cash loss) arising from extraordinary items, as determined in accordance
with GAAP, or from any other non-recurring transaction; and (i) gain or loss
resulting from the operations or disposition of PSS’s former Subsidiaries
forming the Diagnostic Imaging division.

“Affiliate” means, as to any Person, any other Person which, directly or
indirectly, is in control of, is controlled by, or is under common control with,
such Person or which owns, directly or indirectly, five percent (5%) or more of
the outstanding equity interest of such Person. A Person shall be deemed to
control another Person if the controlling Person possesses, directly or
indirectly, the power to direct or cause the direction of the management and
policies of the other Person, whether through the ownership of voting
securities, by contract, or otherwise.

“Agent” means the Bank, solely in its capacity as agent for the Lenders, and any
successor agent.

“Agent Advances” has the meaning specified in Section 1.2(i).

“Agent’s Liens” means the Liens in the Collateral granted to the Agent, for the
benefit of the Lenders, the Bank and the Agent pursuant to this Agreement and
the other Loan Documents.

“Agent-Related Persons” means the Agent, together with its Affiliates, and the
officers, directors, employees, counsel, representatives, agents and
attorneys-in-fact of the Agent and such Affiliates.

“Aggregate Revolver Outstandings” means, at any date of determination, the sum
of (a) the aggregate unpaid principal balance of Revolving Loans, (b) the
aggregate amount of Pending Revolving Loans, (c) one hundred percent (100%) of
the aggregate undrawn face amount of all outstanding Letters of Credit, and (d)
the aggregate amount of any unpaid reimbursement obligations in respect of
Letters of Credit.

“Agreement” means the Amended and Restated Credit Agreement to which this Annex
A is attached, as from time to time amended, modified or restated.

“Anniversary Date” means each anniversary of the Closing Date.

“Applicable Margin” means

    (i)        with respect to Base Rate Loans and all other Obligations (other
than LIBOR Loans), 0.25%; and

    (ii)        with respect to LIBOR Loans, 2.25%.

        The Applicable Margins shall be adjusted (up or down) prospectively on a
quarterly basis as determined by the Leverage Ratio, commencing with the first
day of the first calendar month that occurs more than 5 days after delivery of
the Borrowers’ quarterly Financial Statements to Lenders for the fiscal quarter
ending September 26, 2003. Adjustments in Applicable Margins shall be determined
by reference to the following grids:

If the Ratio of Adjusted
Funded Debt to EBITDA is: Level of
Applicable Margins: > 3.5 to 1.0 Level I > 3.0 to 1.0 but < 3.5 to 1.0 Level II
> 2.5 to 1.0 but < 3.0 to 1.0 Level III > 2.0 to 1.0 but < 2.5 to 1.0 Level IV >
1.35 to 1.0 but < 2.0 to 1.0 Level V < 1.35 to 1.0 Level VI

  Applicable Margins   Level I Level II Level III Level IV Level V Level VI Base
Rate Loans 1.00% 0.75% 0.50% 0.25% 0.00% 0.00% LIBOR Loans 3.00% 2.75% 2.50%
2.25% 2.00% 1.75%

        All adjustments in the Applicable Margins after the adjustments with
respect to the fiscal quarter ending September 26, 2003 shall be implemented
quarterly on a prospective basis, for each calendar month commencing at least 5
days after the date of delivery to the Lenders of quarterly unaudited or annual
audited (as applicable) Financial Statements evidencing the need for an
adjustment. Concurrently with the delivery of those Financial Statements, the
Borrowers shall deliver to the Agent and the Lenders a certificate, signed by a
Designated Financial Officer, setting forth in reasonable detail the basis for
the continuance of, or any change in, the Applicable Margins. In the event that,
subsequent to the setting of the Applicable Margins based on the Borrowers’
unaudited Financial Statements as of the end of the last fiscal quarter of any
Fiscal Year, the Borrowers deliver their audited Financial Statements as of the
end of such Fiscal Year and such audited Financial Statements call for a higher
level set forth in the foregoing grid, such higher level shall apply
retroactively to the date of the setting of the Applicable Margins based on such
unaudited Financial Statements. Failure to timely deliver such Financial
Statements shall, at the election of the Agent and in addition to any other
remedy provided for in the Agreement, result in an increase in the Applicable
Margins to the highest level set forth in the foregoing grid, until the first
day of the first calendar month following the delivery of those Financial
Statements demonstrating that such an increase is not required. If a Default or
Event of Default has occurred and is continuing at the time any reduction in the
Applicable Margins is to be implemented, no reduction may occur until the first
day of the first calendar month following the date on which such Default or
Event of Default is waived or cured.

“Appraisal” means an appraisal, prepared on a basis satisfactory to the Agent,
setting forth the Net Orderly Liquidation Value of all of each Borrower’s
Inventory, which appraisal shall be prepared in accordance with Section 7.4(c).

“Asset Dispositions” has the meaning set forth in Section 7.9.

“Assignee” has the meaning specified in Section 11.2(a).

“Assignment and Acceptance” has the meaning specified in Section 11.2(a).

“Attorney Costs” means and includes all reasonable fees, expenses and
disbursements of any law firm or other counsel engaged by the Agent, including
the reasonably allocated costs and expenses of internal legal services of the
Agent.

“Availability” means, at any time (a) the lesser of the Maximum Revolver Amount
or the Borrowing Base, minus (b) without duplication, Reserves, minus (c) the
Aggregate Revolver Outstandings.

“Bank” means Bank of America, N.A., a national banking association, or any
successor entity thereto.

“Bank Products” means any one or more of the following types of services or
facilities extended to an Obligor by the Bank or by any Affiliate of the Bank:
(a) credit cards; (b) ACH Transactions; and (c) Hedge Agreements.

“Bank Products Reserves” means all reserves which the Agent from time to time
establishes in its reasonable discretion with respect to Bank Products.

"Bankruptcy Code" means Title 11 of the United States Code (11 U.S.C.ss. 101 et
seq.).

“Base Rate” means, for any day, the rate of interest in effect for such day as
publicly announced from time to time by the Bank in Charlotte, North Carolina as
its “prime rate” (the “prime rate” being a rate set by the Bank based upon
various factors including the Bank’s costs and desired return, general economic
conditions and other factors, and is used as a reference point for pricing some
loans, which may be priced at, above, or below such announced rate). Any change
in the prime rate announced by the Bank shall take effect at the opening of
business on the day specified in the public announcement of such change. Each
Interest Rate based upon the Base Rate shall be adjusted simultaneously with any
change in the Base Rate.

“Base Rate Loans” means all Base Rate Revolving Loans.

“Base Rate Revolving Loan” means a Revolving Loan during any period in which it
bears interest based on the Base Rate.

“Blocked Account Agreement” means an agreement among the Borrowers, the Agent
and a Clearing Bank, in form and substance reasonably satisfactory to the Agent,
concerning the collection of payments which represent the proceeds of Accounts
or of any other Collateral.

“Borrowers’ Agent” means PSS, in its capacity as agent for the Borrowers in
accordance with Section 3.9.

“Borrowing” means a borrowing hereunder consisting of Revolving Loans made on
the same day by the Lenders to the Borrowers or by the Bank in the case of a
Borrowing funded by Non-Ratable Loans or by the Agent in the case of a Borrowing
consisting of an Agent Advance, or the issuance of a Letter of Credit hereunder.

“Borrowing Base” means, at any time, an amount equal to (a) the sum of (i)
eighty percent (80%) of the Net Amount of Eligible Accounts; plus (ii) the
lesser of (A) the Maximum Inventory Loan Amount, (B) fifty-five percent (55%) of
the net amount of Eligible Inventory (provided such advance rate shall be
forty-five percent (45%) until the Agent has received and had a reasonable
amount of time to review the initial Appraisal), or (C) eighty percent (80%) of
the Net Orderly Liquidation Value of Eligible Inventory (which shall be
determined between Appraisal dates by reference to the ratio of the Net Orderly
Liquidation Value of Eligible Inventory as set forth in the most recent
Appraisal to the book value of Eligible Inventory as of the effective date of
such Appraisal); minus (b) the sum of (i) a Reserve in the amount of three (3)
months of rental, storage and other charges with respect to leased and warehouse
premises at which Inventory is located from time to time for which a landlord or
similar waiver acceptable to the Agent has not been obtained, as such Reserve
may be modified by the Agent from time to time in its reasonable credit
judgment, plus (ii) the amount of such other Reserves from time to time
established by the Agent in its reasonable credit judgment.

“Borrowing Base Certificate” means a certificate by a Responsible Officer of the
Borrowers, substantially in the form of Exhibit A (or another form acceptable to
the Agent) setting forth the calculation of the Borrowing Base, including a
calculation of each component thereof, all in such detail as shall be reasonably
satisfactory to the Agent. All calculations of the Borrowing Base in connection
with the preparation of any Borrowing Base Certificate shall originally be made
by the Borrowers and certified to the Agent; provided, that the Agent shall have
the right to review and adjust, in the exercise of its reasonable credit
judgment, any such calculation (a) to reflect its reasonable estimate of
declines in value of any of the Collateral described therein, and (b) to the
extent that such calculation is not in accordance with this Agreement.

“Business Day” means (a) any day that is not a Saturday, Sunday, or a day on
which banks in Atlanta, Georgia or Charlotte, North Carolina are required or
permitted to be closed, and (b) with respect to all notices, determinations,
fundings and payments in connection with LIBOR or LIBOR Loans, any day that is a
Business Day pursuant to clause (a) above and that is also a day on which
trading in Dollars is carried on by and between banks in the London interbank
market.

“Capital Adequacy Regulation” means any guideline, request or directive of any
central bank or other Governmental Authority, or any other law, rule or
regulation, whether or not having the force of law, in each case, regarding
capital adequacy of any bank or of any corporation controlling a bank.

“Capital Expenditures” means all payments due (whether or not paid during any
fiscal period) in respect of the cost of any fixed asset or improvement, or
replacement, substitution, or addition thereto, which has a useful life of more
than one year, including, without limitation, those costs arising in connection
with the direct or indirect acquisition of such asset by way of increased
product or service charges or in connection with a Capital Lease. Capital
Expenditures do not include the purchase price payable under any Permitted
Acquisition.

“Capital Lease” means any lease of property by any Obligor which, in accordance
with GAAP, should be reflected as a capital lease on the balance sheet of such
Obligor.

“Cash Equivalents” means:

    (a)        direct obligations of the United States of America, or any agency
thereof, or obligations guaranteed by the United States of America, provided
that such obligations mature within ninety days from the date of acquisition
thereof;

    (b)        acquisitions of certificates of deposit maturing within ninety
days from the date of acquisition, bankers’ acceptances, Eurodollar bank
deposits, or overnight bank deposits, in each case issued by, created by, or
with (i) any Lender, (ii) any bank or trust company organized under the laws of
the United States of America or any state thereof having capital and surplus
aggregating at least $100,000,000, or (iii) any bank having one of the two
highest ratings from both Moody’s Investors Service, Inc. and Standard & Poor’s
Corporation;

    (c)        repurchase agreements with a bank or trust company (including any
of the Lenders that are banks) or recognized securities dealer having capital
and surplus in excess of $100,000,000 for direct obligations issued by or fully
guaranteed by the United States of America in which the applicable Obligor shall
have a perfected first priority security interest (subject to no other Liens)
and having, on the date of purchase thereof, a fair market value of at least
100% of the amount of the repurchase obligations; and

    (d)        Investments, classified in accordance with GAAP as current
assets, in money market investment programs registered under the Investment
Company Act of 1940, as amended, which are administered by reputable financial
institutions having capital of at least $500,000,000 and the portfolios of which
are limited to investments of the character described in the foregoing clauses
(a) through (c).

“Change of Control” means the occurrence of any of the following: (a) a Person
or “group” of Persons (within the meaning of Section 13(d) of the Exchange Act),
shall acquire, beneficially or of record, 30% or more of the outstanding voting
stock (stock entitled to vote for election of directors) of PSS; (b) during any
period of two consecutive calendar years, individuals who at the beginning of
such period constituted the Board of Directors of PSS (together with any new
directors whose election by the Board of Directors of PSS or whose nomination
for election by the shareholders of PSS, as the case may be, was approved by a
vote of a majority of the directors then still in office who either were
directors at the beginning of such period or whose election or nomination for
election was previously so approved) cease for any reason to constitute a
majority of the directors of PSS, as the case may be, then in office; or (c) PSS
shall cease to own 100% of the voting stock of any other Obligor or such
ownership shall cease to vest in PSS voting control with respect to any other
Obligor, except as a result of a transaction permitted under this Agreement.

“Chattel Paper” means all of any Obligor’s now owned or hereafter acquired
chattel paper, as defined in the UCC, including electronic chattel paper.

“Clearing Bank” means the Bank or any other banking institution with whom a
Payment Account has been established pursuant to a Blocked Account Agreement.

“Closing Date” means the date of this Agreement.

“Code” means the Internal Revenue Code of 1986.

“Collateral” means all of the “Collateral”, as defined in the Security
Agreement, all of the “Pledged Collateral”, as defined in the Pledge Agreements,
and all other assets of any Person from time to time subject to Agent’s Liens
securing payment or performance of the Obligations.

“Commitment” means, at any time with respect to a Lender, the principal amount
set forth beside such Lender’s name under the heading “Commitment” on
Schedule 1.1 attached to this Agreement or on the signature page of the
Assignment and Acceptance pursuant to which such Lender became a Lender
hereunder in accordance with the provisions of Section 11.2, as such Commitment
may be adjusted from time to time in accordance with the provisions of
Section 11.2, and “Commitments” means, collectively, the aggregate amount of the
commitments of all of the Lenders.

“Contaminant” means any waste, pollutant, hazardous substance, toxic substance,
hazardous waste, special waste, petroleum or petroleum-derived substance or
waste, asbestos in any form or condition, polychlorinated biphenyls (“PCBs”), or
any constituent of any such substance or waste.

“Continuation/Conversion Date” means the date on which a Loan is converted into
or continued as a LIBOR Loan.

“Copyright Security Agreement” means the Amended and Restated Conditional
Assignment and Copyright Security Agreement dated as of the date hereof,
executed and delivered by the Obligors to the Agent, for the benefit of the
Agent and the Lenders, to evidence and perfect the Agent’s Liens in the
Obligors’ present and future copyrights and related licenses and rights.

“Credit Support” has the meaning specified in Section 1.3(a).

“Debt” means, without duplication, all liabilities, obligations and indebtedness
of any Obligor to any Person, of any kind or nature, now or hereafter owing,
arising, due or payable, howsoever evidenced, created, incurred, acquired or
owing, whether primary, secondary, direct, contingent, fixed or otherwise, in
each case to the extent such liabilities, obligations and indebtedness consist
of (a) indebtedness for borrowed money or the deferred purchase price of
property (including obligations to be paid in one or more installments under
non-compete arrangements entered into in connection with Permitted
Acquisitions), excluding trade payables; (b) the Obligations; (c) obligations
and liabilities of any Person secured by any Lien on any Obligor’s property,
even though such Obligor shall not have assumed or become liable for the payment
thereof; provided, however, that all such obligations and liabilities which are
limited in recourse to such property shall be included in Debt only to the
extent of the book value of such property as would be shown on a balance sheet
of such Obligor prepared in accordance with GAAP; (d) the principal amount of
all obligations or liabilities created or arising under any Capital Lease or
conditional sale or other title retention agreement with respect to property
used or acquired by any Obligor, even if the rights and remedies of the lessor,
seller or lender thereunder are limited to repossession of such property;
provided, however, that all such obligations and liabilities which are limited
in recourse to such property shall be included in Debt only to the extent of the
book value of such property as would be shown on a balance sheet of such Obligor
prepared in accordance with GAAP; (e) obligations and liabilities under
Guaranties of Debt; and (f) the present value (discounted at the Base Rate) of
lease payments due under synthetic leases.

“Default” means any event or circumstance which, with the giving of notice, the
lapse of time, or both, would (if not cured, waived, or otherwise remedied
during such time) constitute an Event of Default.

“Default Rate” means a fluctuating per annum interest rate at all times equal to
the sum of (a) the otherwise applicable Interest Rate, plus (b) two percent (2%)
per annum. Each Default Rate shall be adjusted simultaneously with any change in
the applicable Interest Rate. In addition, the Default Rate shall result in an
increase in the Letter of Credit Fee by two percentage points per annum.

“Defaulting Lender” has the meaning specified in Section 12.15(c).

“Designated Account” has the meaning specified in Section 1.2(c).

“Designated Financial Officer” means each of the chief financial officer, the
treasurer and any other financial officer of PSS reasonably acceptable to the
Agent.

“Distribution” means, in respect of any corporation: (a) the payment or making
of any dividend or other distribution of property in respect of capital stock
(or any options or warrants for, or other rights with respect to, such stock) of
such corporation, other than distributions in capital stock (or any options or
warrants for such stock) of such corporation; or (b) the redemption or other
acquisition by such corporation of any capital stock (or any options or warrants
for such stock) of such corporation other than through the issuance of capital
stock of such corporation.

“Documents” means all documents as such term is defined in the UCC, including
bills of lading, warehouse receipts or other documents of title, now owned or
hereafter acquired by any Obligor.

“DOL” means the United States Department of Labor or any successor department or
agency.

“Dollar” and “$” means dollars in the lawful currency of the United States.
Unless otherwise specified, all payments under this Agreement and the other Loan
Documents shall be made in Dollars.

“Early Termination Fee” means the fee due and payable to the Agent, for the
benefit of the Lenders in accordance with their Pro Rata Shares, in an amount
equal to (a) two percent (2%) of the Maximum Revolver Amount if the Agreement is
terminated by the Borrowers on or prior to March 31, 2004, or (b) one percent
(1%) of the Maximum Revolver Amount if the Agreement is terminated by the
Borrowers after March 31, 2004 but on or prior to March 31, 2005; provided,
however, no such fee shall be due and payable if the Agreement is terminated in
connection with a refinancing in full of the Obligations under the Agreement
with another lending department of the Bank.

“EBITDA” means, with respect to any fiscal period of the Obligors, Adjusted Net
Earnings from Operations, plus, to the extent deducted in the determination of
Adjusted Net Earnings from Operations for that fiscal period, Interest Expense,
federal, state, local and foreign income taxes, depreciation and amortization,
plus, unless paid in cash during the applicable period, all restructuring
charges of the Obligors for periods subsequent to the Closing Date.

“Eligible Accounts” means the Accounts arising from the sale of goods or
rendition of services in the ordinary course of business which the Agent in the
exercise of its reasonable commercial discretion determines to be Eligible
Accounts. Without limiting the discretion of the Agent to establish other
criteria of ineligibility, Eligible Accounts shall not, unless the Required
Lenders in their sole discretion elect, include any Account:

    (a)        with respect to which more than 90 days have elapsed since the
date of the original invoice therefor or which is more than 60 days past due;

    (b)        with respect to which any of the representations, warranties,
covenants, and agreements contained in the Security Agreement are incorrect or
have been breached;

    (c)        which represents a progress billing (as hereinafter defined) or
as to which the applicable Borrower has extended the time for payment without
the consent of the Agent; for the purposes hereof, “progress billing” means any
invoice for goods sold or leased or services rendered under a contract or
agreement pursuant to which the Account Debtor’s obligation to pay such invoice
is conditioned upon a Borrower’s completion of any further performance under the
contract or agreement (and “progress billings” shall include deferred service
revenue billings);

    (d)        with respect to which any one or more of the following events has
occurred to the Account Debtor on such Account: death or judicial declaration of
incompetency of an Account Debtor who is an individual; the filing by or against
the Account Debtor of a request or petition for liquidation, reorganization,
arrangement, adjustment of debts, adjudication as a bankrupt, winding-up, or
other relief under the bankruptcy, insolvency, or similar laws of the United
States, any state or territory thereof, or any foreign jurisdiction, now or
hereafter in effect; the making of any general assignment by the Account Debtor
for the benefit of creditors; the appointment of a receiver or trustee for the
Account Debtor or for any of the assets of the Account Debtor, including,
without limitation, the appointment of or taking possession by a “custodian,” as
defined in the Federal Bankruptcy Code; the institution by or against the
Account Debtor of any other type of insolvency proceeding (under the bankruptcy
laws of the United States or otherwise) or of any formal or informal proceeding
for the dissolution or liquidation of, settlement of claims against, or winding
up of affairs of, the Account Debtor; the sale, assignment, or transfer of all
or substantially all of the assets of the Account Debtor; the nonpayment
generally by the Account Debtor of its debts as they become due; or the
cessation of the business of the Account Debtor as a going concern;

    (e)        owing by an Account Debtor for which fifty percent (50%) or more
of the aggregate Dollar amount of outstanding Accounts owed at such time by such
Account Debtor are classified as ineligible under this definition;

    (f)        owed by an Account Debtor which: (i) does not maintain its chief
executive office in the United States of America; or (ii) is not organized under
the laws of the United States of America; 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; except to the extent that such
Account is secured or payable by a letter of credit satisfactory to the Agent in
its discretion;

    (g)        owed by an Account Debtor which is an Affiliate or employee of a
Borrower;

    (h)        except as provided in clause (j) below, with respect to which
either the perfection, enforceability, or validity of the Agent’s Liens in such
Account, or the Agent’s right or ability to obtain direct payment to the Agent
of the proceeds of such Account, is governed by any federal, state, or local
statutory requirements other than those of the UCC;

    (i)        owed by an Account Debtor to which any Borrower or any of its
Subsidiaries is indebted in any way, or which is subject to any right of setoff
or recoupment by the Account Debtor, unless the Account Debtor has entered into
an agreement acceptable to the Agent to waive setoff rights; or if the Account
Debtor thereon has disputed liability or made any claim with respect to any
other Account due from such Account Debtor; but in each such case only to the
extent of such indebtedness, setoff, recoupment, dispute, or claim;

    (j)        owed by the government of the United States of America, or any
department, agency, public corporation, or other instrumentality thereof, unless
the Federal Assignment of Claims Act of 1940, as amended (31 U.S.C. § 3727 et
seq.), and any other steps necessary to perfect the Agent’s Liens therein, have
been complied with to the Agent’s satisfaction with respect to such Account;

    (k)        owed by any state, municipality, or other political subdivision
of the United States of America, or any department, agency, public corporation,
or other instrumentality thereof and as to which the Agent determines that its
Lien therein is not or cannot be perfected;

    (l)        which represents a sale on a bill-and-hold, guaranteed sale, sale
and return, sale on approval, consignment, or other repurchase or return basis;

    (m)        which is evidenced by a promissory note or other instrument or by
chattel paper;

    (n)        if the Agent believes, in the exercise of its reasonable
judgment, that the prospect of collection of such Account is impaired or that
the Account may not be paid by reason of the Account Debtor’s financial
inability to pay;

    (o)        with respect to which the Account Debtor is located in any state
requiring the filing of a Notice of Business Activities Report or similar report
in order to permit the applicable Borrower to seek judicial enforcement in such
State of payment of such Account, unless such Borrower has qualified to do
business in such state or has filed a Notice of Business Activities Report or
equivalent report for the then current year;

    (p)        which arises out of a sale not made in the ordinary course of the
applicable Borrower’s business, or to the extent such Account arises out of
finance charges;

    (q)        with respect to which the goods giving rise to such Account have
not been shipped and delivered to and accepted by the Account Debtor or the
services giving rise to such Account have not been performed by the applicable
Borrower, and, if applicable, accepted by the Account Debtor, or the Account
Debtor revokes its acceptance of such goods or services;

    (r)        owed by an Account Debtor which is obligated to the Borrowers
respecting Accounts the aggregate unpaid balance of which exceeds five percent
(5%) (or, with the approval of the Agent, ten percent (10%)) of the aggregate
unpaid balance of all Accounts owed to the Borrowers at such time by all of the
Borrowers’ Account Debtors, but only to the extent of such excess; or

    (s)        which is not subject to a first priority and perfected security
interest in favor of the Agent for the benefit of the Lenders.

If any Account at any time ceases to be an Eligible Account, then such Account
shall promptly be excluded from the calculation of Eligible Accounts.

With the consent of the Agent, the amount of Accounts included as ineligible
under one or more categories above may be estimated as a fixed percentage of
total Accounts or otherwise. The consent of the Agent may be evidenced by the
use of a form of Borrowing Base Certificate specifying the estimated amounts or
in such other manner as the Agent may designate. Such consent may be withdrawn
by the Agent in its discretion by written notice to the Borrowers’ Agent.

“Eligible Assignee” means (a) a commercial bank, commercial finance company or
other asset based lender, having total assets in excess of $1,000,000,000; (b)
any Lender listed on the signature page of this Agreement; (c) any Affiliate of
any Lender capable, in the good faith judgment of such Lender, of performing its
obligations hereunder; and (d) if an Event of Default has occurred and is
continuing, any Person reasonably acceptable to the Agent.

“Eligible Inventory” means Inventory, valued at the lower of cost (on a
first-in, first-out basis) or market, which the Agent, in its reasonable
commercial discretion, determines to be Eligible Inventory. Without limiting the
discretion of the Agent to establish other criteria of ineligibility, Eligible
Inventory shall not, unless the Required Lenders in their sole discretion elect,
include any Inventory:

    (a)        that is not owned by a Borrower;

    (b)        that is not subject to the Agent’s Liens, which are perfected as
to such Inventory, or that are subject to any other Lien whatsoever (other than
the Liens described in clause (d) of the definition of Permitted Liens provided
that such Permitted Liens (i) are junior in priority to the Agent’s Liens or
subject to Reserves, and (ii) do not impair directly or indirectly the ability
of the Agent to realize on or obtain the full benefit of the Collateral);

    (c)        that does not consist of finished goods;

    (d)        that consists of raw materials, work-in-process, samples,
prototypes, supplies, or packing and shipping materials;

    (e)        that is not in good condition, is unmerchantable, or does not
meet all standards imposed by any Governmental Authority, having regulatory
authority over such goods, their use or sale;

    (f)        that is not currently either usable or salable, at prices
approximating at least cost, in the normal course of the Borrowers’ business, or
that is slow moving or stale;

    (g)        that is returned goods, unless such returned goods are in readily
saleable condition and the Agent consents to their inclusion in the Borrowing
Base, or that is obsolete or repossessed or used goods taken in trade;

    (h)        that is located outside the United States of America (or that is
in-transit from vendors or suppliers);

    (i)        that is located in a public warehouse or in possession of a
bailee or in a facility leased by a Borrower, if the warehouseman, bailee or
lessor has not delivered to the Agent, if requested by the Agent, a
subordination agreement in form and substance satisfactory to the Agent or if a
Reserve for rents or storage charges has not been established for Inventory at
that location;

    (j)        that constitutes (i) flu vaccines, (ii) pharmaceutical products
with an expiration date that is less than one year after the date of the
corresponding Borrowing Base Certificate or that have been held in inventory by
a Borrower for more than 90 days, and (iii) other pharmaceutical goods, and
other goods the sale of which is subject to or requires any license or permit
from any Governmental Authority, which the Agent in its reasonable commercial
discretion determines to be ineligible;

    (k)        that contains or bears any Proprietary Rights licensed to a
Borrower by any Person, if the Agent is not satisfied that it may sell or
otherwise dispose of such Inventory in accordance with the terms of the Security
Agreement and Section 9.2 without infringing the rights of the licensor of such
Proprietary Rights or violating any contract with such licensor (and without
payment of any royalties other than any royalties due with respect to the sale
or disposition of such Inventory pursuant to the existing license agreement),
and as to which the applicable Borrower has not delivered to the Agent a consent
or sublicense agreement from such licensor in form and substance acceptable to
the Agent if requested;

    (l)        that is not reflected in the details of a current perpetual
inventory report;

    (m)        that is Inventory placed on consignment; or

    (n)        that is located in a Flood Zone A5, as designated by the Federal
Emergency Management Agency, unless covered by flood insurance.

If any Inventory at any time ceases to be Eligible Inventory, such Inventory
shall promptly be excluded from the calculation of Eligible Inventory.

“Environmental Claims” means all claims, however asserted, by any Governmental
Authority or other Person alleging potential liability or responsibility for
violation of any Environmental Law, or for a Release or injury to the
environment.

“Environmental Laws” means all federal, state or local laws, statutes, common
law duties, rules, regulations, ordinances and codes, together with all
administrative orders, directed duties, licenses, authorizations and permits of,
and agreements with, any Governmental Authority, in each case relating to
environmental, health and safety matters.

“Environmental Lien” means a Lien in favor of any Governmental Authority for
(a) any liability under Environmental Laws, or (b) damages arising from, or
costs incurred by such Governmental Authority in response to, a Release or
threatened Release of a Contaminant into the environment.

“Equipment” means all of any Obligor’s now owned and hereafter acquired
machinery, equipment, furniture, furnishings, fixtures, and other tangible
personal property (except Inventory), including embedded software, motor
vehicles with respect to which a certificate of title has been issued, aircraft,
dies, tools, jigs, molds and office equipment, as well as all of such types of
property leased by any Obligor and all of such Obligor’s rights and interests
with respect thereto under such leases (including, without limitation, options
to purchase); together with all present and future additions and accessions
thereto, replacements therefor, component and auxiliary parts and supplies used
or to be used in connection therewith, and all substitutes for any of the
foregoing, and all manuals, drawings, instructions, warranties and rights with
respect thereto; wherever any of the foregoing is located.

“ERISA” means the Employee Retirement Income Security Act of 1974, and
regulations promulgated thereunder.

“ERISA Affiliate” means any trade or business (whether or not incorporated)
under common control with any Obligor within the meaning of Section 414(b) or
(c) of the Code (and Sections 414(m) and (o) of the Code for purposes of
provisions relating to Section 412 of the Code).

“ERISA Event” means (a) a Reportable Event with respect to a Pension Plan, (b) a
withdrawal by any Obligor or any ERISA Affiliate from a Pension Plan subject to
Section 4063 of ERISA during a plan year in which it was a substantial employer
(as defined in Section 4001(a)(2) of ERISA) or a cessation of operations which
is treated as such a withdrawal under Section 4062(e) of ERISA, (c) a complete
or partial withdrawal by any Obligor or any ERISA Affiliate from a
Multi-employer Plan or notification that a Multi-employer Plan is in
reorganization, (d) the filing of a notice of intent to terminate, the treatment
of a Plan amendment as a termination under Section 4041 or 4041A of ERISA, or
the commencement of proceedings by the PBGC to terminate a Pension Plan or
Multi-employer Plan, (e) the occurrence of an event or condition which might
reasonably be expected to constitute grounds under Section 4042 of ERISA for the
termination of, or the appointment of a trustee to administer, any Pension Plan
or Multi-employer Plan, or (f) the imposition of any liability under Title IV of
ERISA, other than for PBGC premiums due but not delinquent under Section 4007 of
ERISA, upon any Obligor or any ERISA Affiliate.

“Event of Default” has the meaning specified in Section 9.1.

“Excess Availability” means, at any time (a) the Borrowing Base, minus (b)
without duplication, Reserves, minus (c) the Aggregate Revolver Outstandings.

“Exchange Act” means the Securities Exchange Act of 1934, and regulations
promulgated thereunder.

“FDIC” means the Federal Deposit Insurance Corporation, and any Governmental
Authority succeeding to any of its principal functions.

“Federal Funds Rate” means, for any day, the rate per annum (rounded upwards, if
necessary, to the nearest 1/100 of 1%) equal to the weighted average of the
rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers on such day, as published by
the Federal Reserve Bank of New York on the Business Day next succeeding such
day; provided that (a) if such day is not a Business Day, the Federal Funds Rate
for such day shall be such rate on such transactions on the next preceding
Business Day as so published on the next succeeding Business Day, and (b) if no
such rate is so published on such next succeeding Business Day, the Federal
Funds Rate for such day shall be the average rate charged to the Bank on such
day on such transactions as determined by the Agent.

“Federal Reserve Board” means the Board of Governors of the Federal Reserve
System or any successor thereto.

“Fee Letter” means the fee letter dated as of the Closing Date between the Agent
and the Borrowers’ Agent.

“Financial Statements” means, according to the context in which it is used, the
financial statements referred to in Sections 5.2 and 6.6 or any other financial
statements required to be given to the Lenders pursuant to this Agreement.

“Fiscal Year” means the Obligors’ fiscal year for financial accounting purposes.
The current Fiscal Year of the Obligors will end on April 2, 2004.

“Fixed Assets” means the Equipment and Real Estate of each Obligor.

“Funded Debt” means (a) all principal of Debt under this Agreement, and, without
duplication, (b) (i) Debt for money borrowed, (ii) Debt, whether or not in any
such case the same was for money borrowed, (A) represented by notes payable, and
drafts accepted, that represent extensions of credit, (B) constituting
obligations evidenced by bonds, debentures, notes or similar instruments, or (C)
upon which interest charges are customarily paid or that was issued or assumed
as full or partial payment for property (other than trade credit that is
incurred in the ordinary course of business), including Debt to be paid in one
or more installments under non-compete arrangements entered into in connection
with Permitted Acquisitions, (iii) Debt that constitutes an obligation under a
Capital Lease, and (iv) Debt that is such by virtue of clause (d) of the
definition thereof, but only to the extent that the obligations guaranteed are
obligations that would constitute Funded Debt.

“Funding Date” means the date on which a Borrowing occurs.

“GAAP” means generally accepted accounting principles and practices set forth
from time to time in the opinions and pronouncements of the Accounting
Principles Board and the American Institute of Certified Public Accountants and
statements and pronouncements of the Financial Accounting Standards Board (or
agencies with similar functions of comparable stature and authority within the
U.S. accounting profession), which are applicable to the circumstances as of the
Closing Date. Notwithstanding anything to the contrary set forth in the
Agreement, all references to GAAP as they relate to monthly financial statements
shall be deemed to refer to GAAP as described in the preceding sentence with the
exception of those non-GAAP practices of the Borrowers consistent with their
historical practices immediately prior to the Closing Date. All calculations
made for the purposes of determining compliance with this Agreement shall
(except as otherwise expressly provided herein) be made by application of GAAP
applied on a basis consistent with the most recent annual or quarterly Financial
Statements delivered pursuant to Section 5.2 (or, prior to the delivery of the
first Financial Statements pursuant to Section 5.2, consistent with the
Financial Statements as at March 29, 2002); provided, however, that if (a) the
Borrowers shall object to determining such compliance on such basis at the time
of delivery of such Financial Statements due to any change in GAAP or the rules
promulgated with respect thereto after the Closing Date or (b) the Agent or the
Required Lenders shall so object in writing within 90 days after delivery of
such Financial Statements, then such calculations shall be made on a basis
consistent with the most recent Financial Statements delivered by the Borrowers
to the Lenders as to which no such objection shall have been made.

“General Intangibles” means all of each Obligor’s now owned or hereafter
acquired general intangibles, choses in action and causes of action and all
other intangible personal property of each Obligor of every kind and nature
(other than Accounts), including, without limitation, all contract rights,
payment intangibles, Proprietary Rights, corporate or other business records,
inventions, designs, blueprints, plans, specifications, patents, patent
applications, trademarks, service marks, trade names, trade secrets, goodwill,
copyrights, computer software, customer lists, registrations, licenses,
franchises, tax refund claims, any funds which may become due to such Obligor in
connection with the termination of any Plan or other employee benefit plan or
any rights thereto and any other amounts payable to such Obligor from any Plan
or other employee benefit plan, rights and claims against carriers and shippers,
rights to indemnification, business interruption insurance and proceeds thereof,
property, casualty or any similar type of insurance and any proceeds thereof,
proceeds of insurance covering the lives of key employees on which such Obligor
is beneficiary, rights to receive dividends, distributions, cash, Instruments
and other property in respect of or in exchange for pledged equity interests or
Investment Property and any letter of credit, guarantee, claim, security
interest or other security held by or granted to such Obligor.

“Governmental Authority” means any nation or government, any state or other
political subdivision thereof, any central bank (or similar monetary or
regulatory authority) thereof, any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government,
and any corporation or other entity owned or controlled, through stock or
capital ownership or otherwise, by any of the foregoing.

“Guarantor” means each “Guarantor”, as defined in the first paragraph of the
Agreement, together with any hereafter acquired or formed Subsidiary of PSS that
becomes a “Guarantor” after the Closing Date pursuant to Section 7.20 or the
provisions of the definition of “Permitted Acquisition”.

“Guaranty” means, with respect to any Person, all obligations of such Person
which in any manner directly or indirectly guarantee or assure, or in effect
guarantee or assure, the payment or performance of any indebtedness, dividend or
other obligations of any other Person (the “guaranteed obligations”), or assure
or in effect assure the holder of the guaranteed obligations against loss in
respect thereof, including any such obligations incurred through an agreement,
contingent or otherwise: (a) to purchase the guaranteed obligations or any
property constituting security therefor; (b) to advance or supply funds for the
purchase or payment of the guaranteed obligations or to maintain a working
capital or other balance sheet condition; or (c) to lease property or to
purchase any debt or equity securities or other property or services.

“Hedge Agreement” means any and all transactions, agreements or documents now
existing or hereafter entered into, which provides for an interest rate, credit,
commodity or equity swap, cap, floor, collar, forward foreign exchange
transaction, currency swap, cross currency rate swap, currency option, or any
combination of, or option with respect to, these or similar transactions, for
the purpose of hedging any Obligor’s exposure to fluctuations in interest or
exchange rates, loan, credit exchange, security or currency valuations or
commodity prices.

“Instruments” means all instruments as such term is defined in the UCC, now
owned or hereafter acquired by any Obligor.

“Interest Expense” means, for any fiscal period, the aggregate amount of
interest required to be paid or accrued by the Borrowers and their consolidated
Subsidiaries during such period on all Debt of the Borrowers and their
consolidated Subsidiaries during all or any part of such period, whether such
interest was or is required to be reflected as an item of expense or
capitalized, including payments consisting of interest in respect of Capital
Leases or synthetic leases and unused commitment fees, facility fees and similar
fees or expenses in connection with the borrowing of money.

“Interest Period” means, as to any LIBOR Loan, the period commencing on the
Funding Date of such Loan or on the Continuation/Conversion Date on which the
Loan is converted into or continued as a LIBOR Loan, and ending on the date one,
two, three or six months thereafter as selected by a Borrower in its Notice of
Borrowing, in the form attached hereto as Exhibit B, or Notice of
Continuation/Conversion, in the form attached hereto as Exhibit C, provided
that:

    (a)        if any Interest Period would otherwise end on a day that is not a
Business Day, that Interest Period shall be extended to the following Business
Day unless the result of such extension would be to carry such Interest Period
into another calendar month, in which event such Interest Period shall end on
the preceding Business Day;

    (b)        any Interest Period pertaining to a LIBOR Loan 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) shall end on the last Business Day of the calendar month at the end of
such Interest Period; and

    (c)        no Interest Period shall extend beyond the Stated Termination
Date.

“Interest Rate” means each or any of the interest rates, including the Default
Rate, set forth in Section 2.1.

“Inventory” means all of each Obligor’s now owned and hereafter acquired
inventory, goods and merchandise, wherever located, to be furnished under any
contract of service or held for sale or lease, all returned goods, raw
materials, work-in-process, finished goods (including embedded software), other
materials and supplies of any kind, nature or description which are used or
consumed in such Obligor’s business or used in connection with the packing,
shipping, advertising, selling or finishing of such goods, merchandise, and all
documents of title or other Documents representing them.

“Investment Property” means all of each Obligor’s right title and interest in
and to any and all (a) securities, whether certificated or uncertificated, (b)
securities entitlements, (c) securities accounts, (d) commodity contracts, or
(e) commodity accounts, as each such term is defined in the UCC.

“IRS” means the Internal Revenue Service and any Governmental Authority
succeeding to any of its principal functions under the Code.

“Latest Projections” means: (a) on the Closing Date and thereafter until the
Agent receives new projections pursuant to Section 5.2(e), the projections of
the Obligors’ financial condition, results of operations, and cash flows, for
the period commencing on March 29, 2003 and ending on March 31, 2006 and
delivered to the Agent prior to the Closing Date; and (b) thereafter, the
projections most recently received by the Agent pursuant to Section 5.2(f).

“Lender” and “Lenders” have the meanings specified in the introductory paragraph
hereof and shall include the Agent to the extent of any Agent Advance
outstanding and the Bank to the extent of any Non-Ratable Loan outstanding.

“Letter of Credit” has the meaning specified in Section 1.3(a).

“Letter of Credit Fee” has the meaning specified in Section 2.6.

“Letter of Credit Issuer” means the Bank or any affiliate of the Bank that
issues any Letter of Credit pursuant to this Agreement.

“Letter of Credit Obligations” means, at any date of determination, the sum of
(a) one hundred percent (100%) of the aggregate undrawn face amount of all
outstanding Letters of Credit and Credit Support, plus (b) the aggregate amount
of any unpaid reimbursement obligations in respect of Letters of Credit and
Credit Support.

“Letter of Credit Subfacility” means $15,000,000.

“Leverage Ratio” means, with respect to any fiscal period of the Borrowers, the
ratio of (a) all Funded Debt of the Borrowers and their consolidated
Subsidiaries as of the last day of such fiscal period, to (b) EBITDA of the
Borrowers and their consolidated Subsidiaries for the twelve fiscal month period
ending on the last day of such fiscal period, in each case on a consolidated
basis for the Borrowers and their consolidated Subsidiaries.

“LIBOR” means, for any Interest Period, with respect to LIBOR Loans, the rate of
interest per annum determined pursuant to the following formula:

LIBOR =   Offshore Base Rate
    1.00 - Eurodollar Reserve Percentage

         Where,

          “Offshore Base Rate” means the rate per annum appearing on Telerate
Page 3750 (or any successor page) as the London interbank offered rate for
deposits in Dollars at approximately 11:00 a.m. (London time) two Business Days
prior to the first day of such Interest Period for a term comparable to such
Interest Period. If for any reason such rate is not available, the Offshore Base
Rate shall be, for any Interest Period, the rate per annum appearing on Reuters
Screen LIBO Page as the London interbank offered rate for deposits in Dollars at
approximately 11:00 a.m. (London time) two Business Days prior to the first day
of such Interest Period for a term comparable to such Interest Period; provided,
however, if more than one rate is specified on Reuters Screen LIBO Page, the
applicable rate shall be the arithmetic mean of all such rates. If for any
reason none of the foregoing rates is available, the Offshore Base Rate shall
be, for any Interest Period, the rate per annum determined by Agent as the rate
of interest at which dollar deposits in the approximate amount of the LIBOR Loan
comprising part of such Borrowing would be offered by the Bank’s London Branch
to major banks in the offshore dollar market at their request at or about 11:00
a.m. (London time) two Business Days prior to the first day of such Interest
Period for a term comparable to such Interest Period.

          “Eurodollar Reserve Percentage” means, for any day during any Interest
Period, the reserve percentage (expressed as a decimal, rounded upward to the
next 1/100th of 1%) in effect on such day applicable to member banks under
regulations issued from time to time by the Federal Reserve Board for
determining the maximum reserve requirement (including any emergency,
supplemental or other marginal reserve requirement) with respect to Eurocurrency
funding (currently referred to as “Eurocurrency liabilities”). The Offshore Rate
for each outstanding LIBOR Loan shall be adjusted automatically as of the
effective date of any change in the Eurodollar Reserve Percentage.

“LIBOR Interest Payment Date” means, with respect to a LIBOR Loan, the
Termination Date, the first day of each calendar month while such LIBOR Loan is
outstanding and the last day of each Interest Period applicable to such Loan.

“LIBOR Loans” means all LIBOR Revolving Loans.

“LIBOR Revolving Loan” means a Revolving Loan during any period in which it
bears interest based on LIBOR.

“Lien” means: (a) any interest in property securing an obligation owed to, or a
claim by, a Person other than the owner of the property, whether such interest
is based on the common law, statute, or contract, and including a security
interest, charge, claim, or lien arising from a mortgage, deed of trust,
encumbrance, pledge, hypothecation, assignment, deposit arrangement, agreement,
security agreement, conditional sale or trust receipt or a lease, consignment or
bailment for security purposes; (b) to the extent not included under clause (a),
any reservation, exception, encroachment, easement, right-of-way, covenant,
condition, restriction, lease or other title exception or encumbrance affecting
real property; and (c) any contingent or other agreement to provide any of the
foregoing, except any agreement conditioned on the termination of the
Commitments and the payment in full of the Obligations.

“Loan Account” means the loan account of the Borrowers, which account shall be
maintained by the Agent.

“Loan Documents” means this Agreement, the Fee Letter, the Trademark Security
Agreement, the Copyright Security Agreement, the Security Agreement, each Pledge
Agreement, and any other agreements, instruments, and documents heretofore, now
or hereafter evidencing, securing, guaranteeing or otherwise relating to the
Obligations, the Collateral, or any other aspect of the transactions
contemplated by this Agreement.

“Loans” means, collectively, all loans and advances provided for in Article 1.

“Margin Stock” means “margin stock” as such term is defined in Regulation T, U
or X of the Federal Reserve Board.

“Material Adverse Effect” means (a) a material adverse change in, or a material
adverse effect upon, the operations, business, properties, condition (financial
or otherwise) or prospects of the Obligors, taken as a whole, or the Collateral,
taken as a whole; (b) a material impairment of the ability of any Obligor to
perform any material obligation under any Loan Document to which it is a party;
or (c) a material adverse effect upon the legality, validity, binding effect or
enforceability against any Obligor of any Loan Document to which it is a party.

“Maximum Inventory Loan Amount” means $65,000,000.

“Maximum Revolver Amount” means $150,000,000.

“Multi-employer Plan” means a “multi-employer plan” as defined in Section
4001(a)(3) of ERISA which is or was at any time during the current year or the
immediately preceding six (6) years contributed to by any Obligor or any ERISA
Affiliate.

“Net Amount of Eligible Accounts” means, at any time, the gross amount of
Eligible Accounts less sales, excise or similar taxes, and less returns,
discounts, claims, credits, allowances, accrued rebates, offsets, deductions,
counterclaims, disputes and other defenses of any nature at any time issued,
owing, granted, outstanding, available or claimed.

“Net Orderly Liquidation Value” means the net orderly liquidation value of the
Inventory, as reflected in the most recent Appraisal received by the Agent in
accordance with Section 7.4(c).

“Non-Ratable Loan” and “Non-Ratable Loans” have the meanings specified in
Section 1.2(h).

“Notice of Borrowing” has the meaning specified in Section 1.2(b).

“Notice of Continuation/Conversion” has the meaning specified in Section 2.2(b).

“Obligations” means all present and future loans, advances, liabilities,
obligations, covenants, duties, and debts owing by any Obligor to the Agent
and/or any Lender, arising under or pursuant to this Agreement or any of the
other Loan Documents, whether or not evidenced by any note, or other instrument
or document, whether arising from an extension of credit, opening of a letter of
credit, acceptance, loan, guaranty, indemnification or otherwise, whether direct
or indirect, absolute or contingent, due or to become due, primary or secondary,
as principal or guarantor, and including all principal, interest, charges,
expenses, fees, attorneys’ fees, filing fees and any other sums chargeable to
any Obligor hereunder or under any of the other Loan Documents. “Obligations”
includes, without limitation, (a) all debts, liabilities, and obligations now or
hereafter arising from or in connection with the Letters of Credit, and (b) all
debts, liabilities and obligations now or hereafter arising from or in
connection with Bank Products.

“Obligor” means any Borrower or any Guarantor, and “Obligors” means the
Borrowers and the Guarantors, collectively.

“Other Taxes” means any present or future stamp or documentary taxes or any
other excise or property taxes, charges or similar levies which arise from any
payment made hereunder or from the execution, delivery or registration of, or
otherwise with respect to, this Agreement or any other Loan Documents.

“Participant” means any Person who shall have been granted the right by any
Lender to participate in the financing provided by such Lender under this
Agreement, and who shall have entered into a participation agreement in form and
substance satisfactory to such Lender.

“Payment Account” means each bank account established pursuant to the Security
Agreement, to which the proceeds of Accounts and other Collateral are deposited
or credited, and which is maintained in the name of the Agent or any Obligor, as
the Agent may determine, on terms acceptable to the Agent.

“PBGC” means the Pension Benefit Guaranty Corporation or any Governmental
Authority succeeding to the functions thereof.

“Pending Revolving Loans” means, at any time, the aggregate principal amount of
all Revolving Loans requested in any Notice of Borrowing received by the Agent
which have not yet been advanced.

“Pension Plan” means a pension plan (as defined in Section 3(2) of ERISA)
subject to Title IV of ERISA which any Obligor sponsors, maintains, or to which
it makes, is making, or is obligated to make contributions, or in the case of a
Multi-employer Plan has made contributions at any time during the immediately
preceding five (5) plan years.

“Permitted Acquisition” means the acquisition by an Obligor of all or a
substantial portion of the assets or equity interests of another Person in the
same or a similar line of business to that conducted by the Obligors (the
“Target”) so long as: (a) the Obligors shall provide the Agent notice of the
proposed Acquisition, and such pro forma and historical financial statements and
other information and documents relating to the proposed Acquisition as the
Agent may request, at least 15 days prior to the date of the consummation of the
proposed Acquisition; (b) the purchase price for such acquisition does not
exceed $10,000,000 individually or $25,000,000 in the aggregate for all such
acquisitions (it being understood that purchase price shall include all cash
paid at closing, all Debt described in Section 7.13(f), and all other purchase
price consideration (other than good faith “earn out” consideration not intended
as a substitute for cash consideration to circumvent the limitations contained
in this definition) in connection with such acquisition); (c) no Default or
Event of Default exists before or after giving effect to such acquisition; (d)
after giving effect to the consummation of such acquisition (including any Loans
made hereunder to finance such acquisition), Excess Availability is greater than
$20,000,000; provided, that no assets of the Target shall be included in the
calculation of Excess Availability for purposes of this clause (d) or otherwise
until the Agent has completed a satisfactory field examination with respect to
the Target and its assets (it being understood that, notwithstanding the
completion of a satisfactory field examination, the Agent shall have the right,
in its reasonable commercial discretion, to establish lower advance rates and/or
reserves against the Accounts and Inventory of the Target and/or to elect not to
include any such Accounts or Inventory as Eligible Accounts or Eligible
Inventory); (e) after giving effect to the consummation of such Acquisition, the
Borrowers are in compliance with the financial covenants set forth in Section
7.23 on a pro forma basis (it being understood that this requirement shall apply
whether or not Excess Availability is greater than $25,000,000 after giving
effect to the consummation of such Acquisition); provided, that such financial
covenants shall be measured as of the most recently ended fiscal month for which
the Borrowers have delivered the financial statements required under Section
5.2(b) or (c), as the case may be, for the twelve fiscal month period then
ended; (f) the Accounts Payable Turnover, calculated as of the date of such
proposed Acquisition and as of the most recently ended fiscal month for which
the Borrowers have delivered the financial statements required under Section
5.2(b) or (c), as the case may be, shall not in either case exceed 45 days; (g)
such acquisition does not involve a “hostile” takeover or tender offer; (h) a
Responsible Officer delivers to the Agent a certificate (i) demonstrating
compliance with clauses (d), (e) and (f) above, and (ii) stating that no Default
or Event of Default exists before or after giving effect to such acquisition;
(i) after giving effect to the consummation of such acquisition (including any
Loans made hereunder to finance such acquisition) the Aggregate Revolver
Outstandings shall not exceed the Maximum Revolver Amount minus $20,000,000; and
(j) if the Target will become a Subsidiary of a Borrower in connection with such
acquisition, the Borrowers and the Target shall cause the Target to become a
Borrower (or, if the Agent requires, a Guarantor) hereunder and grant to the
Agent, for the benefit of the Agent and the Lenders, a perfected, first-priority
Lien on substantially all of the assets of the Target, all pursuant to
documentation in form and substance acceptable to the Agent in its discretion.

“Permitted Debt” has the meaning set forth in Section 7.13.

“Permitted Liens” means:

    (a)        Liens for taxes not delinquent or statutory Liens for taxes in an
amount not to exceed $500,000 provided that the payment of such taxes which are
due and payable is being contested in good faith and by appropriate proceedings
diligently pursued and as to which adequate financial reserves have been
established on the Obligors’ books and records and a stay of enforcement of any
such Lien is in effect;

    (b)        the Agent’s Liens;

    (c)        Liens consisting of deposits made in the ordinary course of
business in connection with, or to secure payment of, obligations under worker’s
compensation, unemployment insurance, social security and other similar laws, or
to secure the performance of bids, tenders or contracts (other than for the
repayment of Debt) or to secure indemnity, performance or other similar bonds
for the performance of bids, tenders or contracts (other than for the repayment
of Debt) or to secure statutory obligations (other than liens arising under
ERISA or Environmental Liens) or surety or appeal bonds, or to secure indemnity,
performance or other similar bonds;

    (d)        Liens securing the claims or demands of materialmen, mechanics,
carriers, warehousemen, landlords and other like Persons, provided that such
Liens secure only amounts which are not yet due and payable (or, if due and
payable, are unfiled and no other action has been taken to enforce the same) or
are being contested in good faith by appropriate proceedings diligently pursued
and for which adequate reserves determined in accordance with GAAP have been
established (and as to which the property subject to any such Lien is not yet
subject to foreclosure, sale or loss on account thereof);

    (e)        Liens constituting encumbrances in the nature of leases,
reservations, exceptions, encroachments, easements, rights of way, covenants
running with the land, and other similar title exceptions or encumbrances
affecting any Real Estate; provided that they do not in the aggregate materially
detract from the value of the Real Estate or materially interfere with its use
in the ordinary conduct of the applicable Obligor’s business;

    (f)        Liens arising from judgments and attachments in connection with
court proceedings provided that the attachment or enforcement of such Liens
would not result in an Event of Default hereunder and such Liens are being
contested in good faith by appropriate proceedings, adequate reserves have been
set aside and no material Property is subject to a material risk of loss or
forfeiture and the claims in respect of such Liens are fully covered by
insurance (subject to ordinary and customary deductibles) and a stay of
execution pending appeal or proceeding for review is in effect;

    (g)        Liens in favor of customs and revenue authorities arising as a
matter of law to secure payment of customs duties not yet due and payable in
connection the importation of goods;

    (h)        Liens securing Refinancings permitted under this Agreement
limited to the property securing the Debt subject to the Refinancing;

    (i)        Liens consisting of limitations on dispositions of property
arising under contracts for Asset Dispositions on the property subject to the
Asset Disposition pending the closing of such Asset Disposition; and

    (j)        Liens in cash or Cash Equivalents in an aggregate amount at any
time not to exceed $250,000 as security for the Obligors’ obligations with
respect to Bank Products.

“Permitted Stock Redemptions” means redemptions of capital stock of PSS so long
as: (a) the aggregate redemption price for such redemptions does not exceed
$35,000,000, (b) no Default or Event of Default exists before or after giving
effect to such redemption, (c) after giving effect to the consummation of any
such redemption (including any Loans made hereunder to finance such redemption),
Excess Availability is greater than $20,000,000; (d) after giving effect to the
consummation of any such redemption, the Obligors are in compliance with the
financial covenants set forth in Section 7.23 on a pro forma basis (it being
understood that this requirement shall apply whether or not Excess Availability
is greater than $25,000,000 after giving effect to the consummation of such
redemption), provided, that such financial covenants shall be measured as of the
most recently ended fiscal month for which the Borrowers have delivered the
financial statements required under Section 5.2(b) or (c), as the case may be,
for the twelve fiscal month period then ended; (e) the Accounts Payable
Turnover, calculated as of the date of such proposed redemption and as of the
most recently ended fiscal month for which the Borrowers have delivered the
financial statements required under Section 5.2(b) or (c), as the case may be,
shall not in either case exceed 45 days; (f) a Responsible Officer delivers to
the Agent a certificate (i) demonstrating compliance with clauses (c), (d) and
(e) above, and (ii) stating that no Default or Event of Default exists before or
after giving effect to such redemption; and (f) after giving effect to the
consummation of such redemption (including any Loans made hereunder to finance
such redemption) the Aggregate Revolver Outstandings shall not exceed the
Maximum Revolver Amount minus $20,000,000.

“Person” means any individual, sole proprietorship, partnership, limited
liability company, joint venture, trust, unincorporated organization,
association, corporation, Governmental Authority, or any other entity.

“Plan” means an employee benefit plan (as defined in Section 3(3) of ERISA)
which any Obligor sponsors or maintains or to which any Obligor makes, is
making, or is obligated to make contributions and includes any Pension Plan.

“Pledge Agreement” means each Pledge Agreement dated on or about the Closing
Date pursuant to which an Obligor pledges to the Agent, for the benefit of
itself and the Lenders, 100% of the capital stock or other equity interests of
each Subsidiary owned by such Obligor.

“Pro Rata Share” means, with respect to a Lender, a fraction (expressed as a
percentage), the numerator of which is the amount of such Lender’s Commitment
and the denominator of which is the sum of the amounts of all of the Lenders’
Commitments, or if no Commitments are outstanding, a fraction (expressed as a
percentage), the numerator of which is the amount of Obligations owed to such
Lender and the denominator of which is the aggregate amount of the Obligations
owed to the Lenders, in each case giving effect to a Lender’s participation in
Non-Ratable Loans and Agent Advances.

“Proprietary Rights” means all of each Obligor’s now owned and hereafter arising
or acquired: licenses, franchises, permits, patents, patent rights, copyrights,
works which are the subject matter of copyrights, trademarks, service marks,
trade names, trade styles, patent, trademark and service mark applications, and
all licenses and rights related to any of the foregoing, including those
patents, trademarks, service marks, trade names and copyrights set forth on
Schedule 6.12 hereto, and all other rights under any of the foregoing, all
extensions, renewals, reissues, divisions, continuations, and
continuations-in-part of any of the foregoing, and all rights to sue for past,
present and future infringement of any of the foregoing.

“Real Estate” means all of each Obligor’s now or hereafter owned or leased
estates in real property, including, without limitation, all fees, leaseholds
and future interests, together with all of each Obligor’s now or hereafter owned
or leased interests in the improvements thereon, the fixtures attached thereto
and the easements appurtenant thereto.

“Refinance” means, in respect of any security or Debt, to refinance, extend,
renew, refund, repay, prepay, redeem, defease or retire, or to issue a security
or Debt in exchange or replacement for, such security or Debt in whole or in
part. “Refinanced” and “Refinancing” shall have correlative meanings.

“Release” means a release, spill, emission, leaking, pumping, injection,
deposit, disposal, discharge, dispersal, leaching or migration of a Contaminant
into the indoor or outdoor environment or into or out of any Real Estate or
other property, including the movement of Contaminants through or in the air,
soil, surface water, groundwater or Real Estate or other property other than in
accordance with Environmental Laws.

“Reportable Event” means, any of the events set forth in Section 4043(b) of
ERISA or the regulations thereunder, other than any such event for which the
30-day notice requirement under ERISA has been waived in regulations issued by
the PBGC.

“Required Lenders” means at any time Lenders whose Pro Rata Shares aggregate
more than 50%.

“Requirement of Law” means, as to any Person, any law (statutory or common),
treaty, rule or regulation or determination of an arbitrator or of a
Governmental Authority, in each case applicable to or binding upon the Person or
any of its property or to which the Person or any of its property is subject.

“Reserves” means reserves that limit the availability of credit hereunder,
consisting of reserves against Availability, Excess Availability, the Maximum
Revolver Amount, Eligible Accounts or Eligible Inventory, established by the
Agent from time to time in the Agent’s reasonable credit judgment. Without
limiting the generality of the foregoing, the following reserves shall be deemed
to be a reasonable exercise of the Agent’s credit judgment: (a) Bank Products
Reserves, (b) reserves for rent at leased locations and storage charges at
warehouse locations (only if the Agent has not received a landlord’s or
warehouseman’s waiver or subordination in form and substance satisfactory to the
Agent), (c) Inventory shrinkage reserves, and (d) dilution reserves.

“Responsible Officer” means the chief executive officer or the president of PSS,
or any other officer having substantially the same authority and responsibility;
or, with respect to compliance with financial covenants and the preparation of
the Borrowing Base Certificate, a Designated Financial Officer.

“Restricted Investment” means, as to each Obligor, any acquisition of property
by such Obligor in exchange for cash or other property, whether in the form of
an acquisition of stock, Debt, or other indebtedness or obligation, or the
purchase or acquisition of any other property, or a loan, advance, capital
contribution, or subscription (each an “Investment”), except the following:

    (a)        acquisitions of Equipment to be used in the business of such
Obligor so long as the acquisition costs thereof constitute Capital Expenditures
permitted hereunder;

    (b)        acquisitions of Inventory, Real Estate and Proprietary Rights in
the ordinary course of business of such Obligor;

    (c)        acquisitions of assets (including assets received in connection
with the settlement of Accounts with bankrupt or insolvent Account Debtors)
acquired in the ordinary course of business of such Obligor, but in any event
excluding acquisitions of all or a substantial portion of the assets or equity
interests of another Person;

    (d)        direct obligations of the United States of America, or any agency
thereof, or obligations guaranteed by the United States of America, provided
that such obligations mature within one year from the date of acquisition
thereof;

    (e)        acquisitions of certificates of deposit maturing within one year
from the date of acquisition, bankers’ acceptances, Eurodollar bank deposits, or
overnight bank deposits, in each case issued by, created by, or with (i) any
Lender, (ii) any bank or trust company organized under the laws of the United
States of America or any state thereof having capital and surplus aggregating at
least $100,000,000, or (iii) any bank having one of the two highest ratings from
both Moody’s Investors Service, Inc. and Standard & Poor’s Corporation;

    (f)        acquisitions of commercial paper given a rating of “A2” or better
by Standard & Poor’s Corporation or “P2” or better by Moody’s Investors Service,
Inc. and maturing not more than 90 days from the date of creation thereof;

    (g)        repurchase agreements with a bank or trust company (including any
of the Lenders that are banks) or recognized securities dealer having capital
and surplus in excess of $100,000,000 for direct obligations issued by or fully
guaranteed by the United States of America in which the applicable Borrower or
any other Obligor shall have a perfected first priority security interest
(subject to no other Liens) and having, on the date of purchase thereof, a fair
market value of at least 100% of the amount of the repurchase obligations;

    (h)        marketable direct obligations issued by any state of the United
States of America or any political subdivision of any such state or any public
instrumentality thereof maturing within one year from the date of acquisition
thereof or which the holder has the right to require the issuer to repurchase at
a price greater than or equal to the principal amount thereof within one year
from the date of acquisition and, at the time of acquisition, having one of the
two highest ratings obtainable from both Standard & Poor’s Corporation and
Moody’s Investors Service, Inc.;

    (i)        Investments, classified in accordance with GAAP as current
assets, in money market investment programs registered under the Investment
Company Act of 1940, as amended, which are administered by reputable financial
institutions having capital of at least $500,000,000 and the portfolios of which
are limited to investments of the character described in the foregoing clauses
(d) through (h);

    (j)        other liquid Investments with a maturity within 60 days after the
acquisition thereof so long as the aggregate outstanding amount of such liquid
Investments (net of return of such Investments through repayment of principal,
return of capital or sale) does not exceed $10,000,000 at any time;

    (k)        Hedge Agreements;

    (l)        investments in cash collateral for Letter of Credit Obligations,
in each case deposited with the Agent as provided in this Agreement;

    (m)        Permitted Acquisitions;

    (n)        Investments existing as of the Closing Date and set forth on
Schedule 1.2;

    (o)        Investments by an Obligor in another Obligor;

    (p)        advances to officers, directors and employees (i) existing as of
the Closing Date in an aggregate amount not to exceed $250,000, (ii) for moving,
travel and other expenses (including commission draws) incurred in the ordinary
course of business consistent with the Borrowers’ past practices, and (iii)
arising after the Closing Date for other purposes in an aggregate outstanding
amount not to exceed $500,000;

    (q)        Investments consisting of Guarantees otherwise permitted under
Section 7.12; and

    (r)        Investments consisting of consideration received in Asset
Dispositions permitted under Section 7.9.

“Revolving Loans” has the meaning specified in Section 1.2 and includes each
Agent Advance and Non-Ratable Loan.

“Security Agreement” means the Amended and Restated Security Agreement of even
date herewith among the Obligors and the Agent for the benefit of the Agent and
the Lenders.

“Senior Subordinated Notes” means the PSS’s 8½% Senior Subordinated Notes due
2007 issued pursuant to the Senior Subordinated Notes Indenture.

“Senior Subordinated Notes Indenture” means PSS’s October 7, 1997 Indenture with
respect to its 8½% Senior Subordinated Notes due 2007.

“Settlement” and “Settlement Date” have the meanings specified in
Section 12.15(a)(ii).

“Solvent” means, when used with respect to any Person, that at the time of
determination:

    (a)        the assets of such Person, at a fair valuation, are in excess of
the total amount of its debts (including contingent liabilities); and

    (b)        the present fair saleable value of its assets is greater than its
probable liability on its existing debts as such debts become absolute and
matured; and

    (c)        it is then able and expects to be able to pay its debts
(including contingent debts and other commitments) as they mature; and

    (d)        it has capital sufficient to carry on its business as conducted
and as proposed to be conducted.

For purposes of determining whether a Person is Solvent, the amount of any
contingent liability shall be computed as the amount that, in light of all the
facts and circumstances existing at such time, represents the amount that can
reasonably be expected to become an actual or matured liability.

“Stated Termination Date” means March 31, 2006.

“Subsidiary” of a Person means any corporation, association, partnership,
limited liability company, joint venture or other business entity of which more
than fifty percent (50%) of the voting stock or other equity interests (in the
case of Persons other than corporations), is owned or controlled directly or
indirectly by the Person, or one or more of the Subsidiaries of the Person, or a
combination thereof. Unless the context otherwise clearly requires, references
herein to a “Subsidiary” refer to a Subsidiary of the Borrowers.

“Supporting Letter of Credit” has the meaning specified in Section 1.3(g).

“Supporting Obligations” means all supporting obligations as such term is
defined in the UCC.

“Taxes” means any and all present or future taxes, levies, imposts, deductions,
charges or withholdings, and all liabilities with respect thereto, excluding, in
the case of each Lender and the Agent, such taxes (including income taxes or
franchise taxes) as are imposed on or measured by the Agent’s or each Lender’s
net income in any the jurisdiction (whether federal, state or local and
including any political subdivision thereof) under the laws of which such Lender
or the Agent, as the case may be, is organized or maintains a lending office;
provided, however, that the term “Taxes” shall not include “Other Taxes”.

“Termination Date” means the earliest to occur of (a) the Stated Termination
Date, (b) the date the Agreement is terminated either by the Borrowers pursuant
to Section 3.2 or by the Required Lenders pursuant to Section 9.2, and (c) the
date this Agreement is otherwise terminated for any reason whatsoever pursuant
to the terms of this Agreement.

“Trademark Agreement” means the Amended and Restated Conditional Assignment and
Trademark Security Agreement, dated as of the date hereof, executed and
delivered by the Obligors to the Agent to evidence and perfect the Agent’s Liens
in each Obligor’s present and future patents, trademarks, and related licenses
and rights.

“UCC” means the Uniform Commercial Code, as in effect from time to time, of the
State of Georgia or of any other state the laws of which are required as a
result thereof to be applied in connection with the issue of perfection of
security interests.

“Unfunded Pension Liability” means the excess of a Plan’s benefit liabilities
under Section 4001(a)(16) of ERISA, over the current value of that Plan’s
assets, determined in accordance with the assumptions used for funding the
Pension Plan pursuant to Section 412 of the Code for the applicable plan year.

“Unused Letter of Credit Subfacility” means an amount equal to the Letter of
Credit Subfacility minus the sum of (a) the aggregate undrawn amount of all
outstanding Letters of Credit plus, without duplication, (b) the aggregate
unpaid reimbursement obligations with respect to all Letters of Credit.

“Unused Line Fee” has the meaning specified in Section 2.5.

Accounting Terms.     Any accounting term used in the Agreement shall have,
unless otherwise specifically provided herein, the meaning customarily given in
accordance with GAAP, and all financial computations in the Agreement shall be
computed, unless otherwise specifically provided therein, in accordance with
GAAP as consistently applied and using the same method for inventory valuation
as used in the preparation of the Financial Statements.

Interpretive Provisions. (a) The meanings of defined terms are equally
applicable to the singular and plural forms of the defined terms.

    (b)        The words “hereof,” “herein,” “hereunder” and similar words refer
to the Agreement as a whole and not to any particular provision of the
Agreement; and Subsection, Section, Schedule and Exhibit references are to the
Agreement unless otherwise specified.

    (c)        (i) The term “documents” includes any and all instruments,
documents, agreements, certificates, indentures, notices and other writings,
however evidenced.

    (ii)               The term “including” is not limiting and means “including
without limitation.”

    (iii)               In the computation of periods of time from a specified
date to a later specified date, the word “from” means “from and including,” the
words “to” and “until” each mean “to but excluding” and the word “through” means
“to and including.”

    (iv)        The word “or” is not exclusive.

    (d)        Unless otherwise expressly provided herein, (i) references to
agreements (including the Agreement) and other contractual instruments shall be
deemed to include all subsequent amendments and other modifications thereto, but
only to the extent such amendments and other modifications are not prohibited by
the terms of any Loan Document, and (ii) references to any statute or regulation
are to be construed as including all statutory and regulatory provisions
consolidating, amending, replacing, supplementing or interpreting the statute or
regulation.

    (e)        The captions and headings of the Agreement and other Loan
Documents are for convenience of reference only and shall not affect the
interpretation of the Agreement.

    (f)        The Agreement and other Loan Documents may use several different
limitations, tests or measurements to regulate the same or similar matters. All
such limitations, tests and measurements are cumulative and shall each be
performed in accordance with their terms.

    (g)        For purposes of Section 9.1, a breach of a financial covenant
contained in Sections 7.22 and 7.23 shall be deemed to have occurred as of any
date of determination thereof by the Agent or as of the last day of any
specified measuring period, regardless of when the Financial Statements
reflecting such breach are delivered to the Agent.

    (h)        The Agreement and the other Loan Documents are the result of
negotiations among and have been reviewed by counsel to the Agent, each Obligor
and the other parties, and are the products of all parties. Accordingly, they
shall not be construed against the Lenders or the Agent merely because of the
Agent’s or Lenders’ involvement in their preparation.