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                                                                    Exhibit 10.3


                                AMENDMENT NO. 2
                                       to
                         RECEIVABLES PURCHASE AGREEMENT
                           Dated as of July 13, 2001

          THIS AMENDMENT NO. 2 ("Amendment") is entered into as of July 13, 2001
                                 ---------
by and among New School, Inc., as Seller ("Seller"), School Specialty, Inc., as
                                           ------
Servicer ("SSI"), Falcon Asset Securitization Corporation ("Falcon"), the
           ---                                              ------
Financial Institutions party hereto, and Bank One, NA (Main Office Chicago), as
agent (the "Agent").
            -----

                             PRELIMINARY STATEMENT

          A.  Seller, SSI, Falcon, the Financial Institutions and the Agent are
parties to that certain Receivables Purchase Agreement dated as of November 22,
2000 and amended by that certain Amendment No. 1 dated as of January 1, 2001 (as
the same may be further amended, restated, supplemented or otherwise modified
from time to time, the "Purchase Agreement").  Capitalized terms used herein and
                        ------------------
not otherwise defined shall have the meanings ascribed to them in the Purchase
Agreement.

          B.  Seller, SSI, Falcon, the Financial Institutions and the Agent have
agreed to amend Article IX to the Purchase Agreement, subject to the terms and
conditions hereinafter set forth.

          NOW, THEREFORE, in consideration of the premises set forth above, and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto hereby agree as follows:

          SECTION 1.  Amendment.   Effective as of the date hereof, subject to
                      ---------
the satisfaction of the condition precedent set forth in Section 2 below, the
                                                         ---------
Purchase Agreement is hereby amended as follows:

          1.1  Section 9.1(k)(i) is hereby deleted in its entirety and replaced
with the following therefor:

               (i)  the Consolidated Leverage Ratio shall exceed (A) 5.15:1.0
          for each fiscal quarter ending on the last Saturday in July of each
          year or (B) 4.40:1.0 for each fiscal quarter other than the fiscal
          quarter ending on the last Saturday in July of each year.

          1.2  Section 9.1(k) is hereby amended to add the following clause (iv)
at the end thereof:

               (iv)  the Consolidated Senior Leverage Ratio (as defined in the
          SSI Loan Agreement) shall exceed (A) 3.75:1.0 for each fiscal quarter
          ending on the last
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          Saturday in July of each year or (B) 3.00:1.0 for each fiscal quarter
          other than the fiscal quarter ending on the last Saturday in July of
          each year.

          SECTION 2.  Conditions Precedent.  This Amendment shall become
                      --------------------
effective and be deemed effective, as of the date first above written, upon (i)
receipt by the Agent of one copy of this Amendment duly executed by each of the
parties hereto and (ii) the issuance of the Senior Subordinated Notes (as
defined in the SSI Loan Agreement).

          SECTION 3.  Covenants, Representations and Warranties of the Seller
                      -------------------------------------------------------
and the Servicer.
----------------

          3.1  Upon the effectiveness of this Amendment, each of Seller and SSI
hereby reaffirms all covenants, representations and warranties made by it, to
the extent the same are not amended hereby, in the Purchase Agreement and agrees
that all such covenants, representations and warranties shall be deemed to have
been re-made as of the effective date of this Amendment.

          3.2  Each of Seller and SSI hereby represents and warrants as to
itself (i) that this Amendment constitutes the legal, valid and binding
obligation of such party enforceable against such party in accordance with its
terms, except as enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally and general principles of equity which may limit the
availability of equitable remedies and (ii) upon the effectiveness of this
Amendment, no event shall have occurred and be continuing which constitutes an
Amortization Event or a Potential Amortization Event.

          SECTION 4.  Reference to and Effect on the Investor Agreement.
                      -------------------------------------------------

          4.1  Upon the effectiveness of this Amendment, each reference in the
Purchase Agreement to "this Agreement," "hereunder," "hereof," "herein,"
"hereby" or words of like import shall mean and be a reference to the Purchase
Agreement as amended hereby, and each reference to the Purchase Agreement in any
other document, instrument or agreement executed and/or delivered in connection
with the Purchase Agreement shall mean and be a reference to the Purchase
Agreement as amended hereby.

          4.2  Except as specifically amended hereby, the Purchase Agreement and
other documents, instruments and agreements executed and/or delivered in
connection therewith shall remain in full force and effect and are hereby
ratified and confirmed.

          4.3  The execution, delivery and effectiveness of this Amendment
shall not operate as a waiver of any right, power or remedy of Falcon, the
Financial Institutions or the Agent under the Purchase Agreement or any of the
other Transaction Documents, nor constitute a waiver of any provision contained
therein, except as specifically set forth herein.

          SECTION 5.  GOVERNING LAW.  THIS AMENDMENT SHALL BE CONSTRUED IN
                      -------------
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK AND THE OBLIGATIONS, RIGHTS,
AND REMEDIES OF THE PARTIES UNDER THIS AGREEMENT SHALL BE DETERMINED IN
ACCORDANCE WITH SUCH LAWS.

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          SECTION 6.  Execution in Counterparts.  This Amendment may be executed
                      -------------------------
in any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed and delivered shall be deemed to be
an original and all of which taken together shall constitute but one and the
same instrument.

          SECTION 7.  Headings.  Section headings in this Amendment are included
                      --------
herein for convenience of reference only and shall not constitute a part of this
Amendment for any other purpose.

                                   * * * * *

                                       3
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          IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be executed on the date first set forth above by their respective officers
thereto duly authorized, to be effective as hereinabove provided.

                                     NEW SCHOOL, INC., as Seller

                                     By:  /s/ Mary M. Kabacinski
                                        ---------------------------
                                        Name:  Mary M. Kabacinski
                                        Title: Treasurer

                                     SCHOOL SPECIALTY, INC., as Servicer

                                     By:  /s/ Mary M. Kabacinski
                                        ---------------------------
                                        Name:  Mary M. Kabacinski
                                        Title: CFO

                                     FALCON ASSET SECURITIZATION CORPORATION


                                     By:  /s/ Elizabeth Chung
                                        ---------------------------
                                     Name:  Elizabeth Chung
                                     Title: Authorized Signatory


                                     BANK ONE, NA (MAIN OFFICE CHICAGO),
                                     as a Financial Institution and as Agent

                                     By:  /s/ Elizabeth Chung
                                        ---------------------------
                                        Name:  Elizabeth Chung
                                        Title: Authorized Signatory

                       Signature Page to Amendment No. 2