Exhibit 4.1 


EXECUTION COPY  





CREDIT AGREEMENT


Dated as of June 1, 2007


Among


SCHOLASTIC CORPORATION
and

SCHOLASTIC INC.

as Borrowers


and


THE INITIAL LENDERS NAMED HEREIN 


as Initial Lenders


and


SUNTRUST BANK and THE ROYAL BANK OF SCOTLAND
plc


as Documentation Agents


and


BANK OF AMERICA, N.A.
and WACHOVIA BANK, NATIONAL ASSOCIATION 


as Syndication Agents 


and


JPMORGAN CHASE BANK, NATIONAL ASSOCIATION


as Administrative Agent






	
 


	
J.P. MORGAN SECURITIES INC.
  

  and 

  BANC OF AMERICA SECURITIES LLC


	
 


	
as Joint Lead Arrangers
  and Joint Bookrunners










TABLE OF CONTENTS


	
 

	
 

	
 


	
ARTICLE I

	
 

	
 


	
 

	
 

	
 


	
SECTION 1.01

	
Certain
  Defined Terms

	
1


	
 

	
 

	
 


	
SECTION 1.02

	
Computation
  of Time Periods

	
13


	
 

	
 

	
 


	
SECTION 1.03

	
Accounting
  Terms

	
13


	
 

	
 

	
 


	
ARTICLE II

	
 

	
 


	
 

	
 

	
 


	
SECTION 2.01

	
Commitments

	
14


	
 

	
 

	
 


	
SECTION 2.02

	
Making the
  Revolving Credit Advances and the Term Loan Advances.

	
14


	
 

	
 

	
 


	
SECTION 2.03

	
The
  Competitive Bid Advances

	
16


	
 

	
 

	
 


	
SECTION 2.04

	
Swingline
  Advances.

	
19


	
 

	
 

	
 


	
SECTION 2.05

	
Termination
  or Reduction of the Commitments

	
20


	
 

	
 

	
 


	
SECTION 2.06

	
Repayment of
  Revolving Credit Advances, Term Loan Advances, Swingline Advances and Letter
  of Credit Advances; Evidence of Debt

	
20


	
 

	
 

	
 


	
SECTION 2.07

	
Interest on
  Revolving Credit Advances, Term Loan Advances, Swingline Advances and Letter
  of Credit Advances

	
21


	
 

	
 

	
 


	
SECTION 2.08

	
Interest
Rate Determination 

	
22


	
 

	
 

	
 


	
SECTION 2.09

	
Optional
  Conversion of Revolving Credit Advances and Term Loan Advances

	
23


	
 

	
 

	
 


	
SECTION 2.10

	
Prepayments
  of Revolving Credit Advances and Term Loan Advances

	
23


	
 

	
 

	
 


	
SECTION 2.11

	
Increased
  Costs

	
24


	
 

	
 

	
 


	
SECTION 2.12

	
Illegality

	
24


	
 

	
 

	
 


	
SECTION 2.13

	
Payments and
  Computations

	
25


	
 

	
 

	
 


	
SECTION 2.14

	
Taxes

	
26


	
 

	
 

	
 


	
SECTION 2.15

	
Sharing of
  Payments, Etc.

	
27


	
 

	
 

	
 


	
SECTION 2.16

	
Letters of
  Credit

	
28


	
 

	
 

	
 


	
SECTION 2.17

	
Use of
  Proceeds

	
31


	
 

	
 

	
 


	
SECTION 2.18

	
Increase in
  the Aggregate Commitments

	
31


	
 

	
 

	
 


	
SECTION 2.19

	
Obligations
  and Communications of the Borrowers

	
32











	
 

	
 

	
 


	
SECTION 2.20

	
Subrogation
  and Contribution

	
33


	
 

	
 

	
 


	
SECTION 2.21

	
Fees.

	
33


	
 

	
 

	
 


	
ARTICLE III

	
 

	
 


	
 

	
 

	
 


	
SECTION 3.01

	
Conditions
  Precedent to Effectiveness of Sections 2.01, 2.03 and 2.16

	
34


	
 

	
 

	
 


	
SECTION 3.02

	
Conditions
  Precedent to each Borrowing, each Issuance and Renewal of Letters of Credit
  and each Increase Date

	
35


	
 

	
 

	
 


	
SECTION 3.03

	
Conditions
  Precedent to Each Competitive Bid Borrowing

	
35


	
 

	
 

	
 


	
SECTION 3.04

	
Determinations
  Under Section 3.01

	
36


	
 

	
 

	
 


	
ARTICLE IV

	
 

	
 


	
 

	
 

	
 


	
SECTION 4.01

	
Representations
  and Warranties of the Borrowers

	
36


	
 

	
 

	
 


	
ARTICLE V

	
 

	
 


	
 

	
 

	
 


	
SECTION 5.01

	
Affirmative
  Covenants

	
38


	
 

	
 

	
 


	
SECTION 5.02

	
Negative
  Covenants

	
40


	
 

	
 

	
 


	
SECTION 5.03

	
Financial
  Covenants

	
42


	
 

	
 

	
 


	
ARTICLE VI

	
 

	
 


	
 

	
 

	
 


	
SECTION 6.01

	
Events of
  Default

	
42


	
 

	
 

	
 


	
SECTION 6.02

	
Actions in
  Respect of the Letters of Credit upon Event of Default

	
45


	
 

	
 

	
 


	
ARTICLE VII

	
 

	
 


	
 

	
 

	
 


	
SECTION 7.01

	
Authorization
  and Action

	
45


	
 

	
 

	
 


	
SECTION 7.02

	
Agent’s
  Reliance, Etc.

	
45


	
 

	
 

	
 


	
SECTION 7.03

	
JPMCB and
  Affiliates

	
46


	
 

	
 

	
 


	
SECTION 7.04

	
Lender
  Credit Decision

	
46


	
 

	
 

	
 


	
SECTION 7.05

	
Indemnification

	
46


	
 

	
 

	
 


	
SECTION 7.06

	
Successor
  Agent

	
47


	
 

	
 

	
 


	
SECTION 7.07

	
Other Agents

	
47


	
 

	
 

	
 


	
ARTICLE VIII

	
 

	
 


	
 

	
 

	
 


	
SECTION 8.01

	
Amendments,
  Etc.

	
48











	
 

	
 

	
 


	
SECTION 8.02

	
Notices,
  Etc.

	
48


	
 

	
 

	
 


	
SECTION 8.03

	
No Waiver;
  Remedies

	
48


	
 

	
 

	
 


	
SECTION 8.04

	
Costs and
  Expenses

	
48


	
 

	
 

	
 


	
SECTION 8.05

	
Right of
  Set-off

	
50


	
 

	
 

	
 


	
SECTION 8.06

	
Binding
  Effect

	
50


	
 

	
 

	
 


	
SECTION 8.07

	
Assignments
  and Participations

	
50


	
 

	
 

	
 


	
SECTION 8.08

	
Confidentiality

	
52


	
 

	
 

	
 


	
SECTION 8.09

	
No Liability
  of the Issuing Banks

	
52


	
 

	
 

	
 


	
SECTION 8.10

	
Governing
  Law

	
53


	
 

	
 

	
 


	
SECTION 8.11

	
Execution in
  Counterparts

	
53


	
 

	
 

	
 


	
SECTION 8.12

	
Waiver of
  Jury Trial

	
53


	
 

	
 

	
 


	
SECTION 8.13

	
USA Patriot
  Act

	
53





Schedules 


Commitment
Schedule 


Schedule
2.16(h) – Existing Letters of Credit 


Schedule
4.01(i) - Subsidiaries 


Schedule
5.02(a) - Existing Liens 


	
 

	
 

	
 


	
Exhibits

	
 

	
 


	
 

	
 

	
 


	
Exhibit A-1

	
-

	
Form of
  Revolving Credit Note


	
 

	
 

	
 


	
Exhibit A-2

	
-

	
Form of
  Competitive Bid Note


	
 

	
 

	
 


	
Exhibit A-3

	
-

	
Form of Term
  Loan Note


	
 

	
 

	
 


	
Exhibit B-1

	
-

	
Form of
  Notice of Revolving Credit Borrowing


	
 

	
 

	
 


	
Exhibit B-2

	
-

	
Form of
  Notice of Competitive Bid Borrowing


	
 

	
 

	
 


	
Exhibit B-3

	
-

	
Form of
  Notice of Term Loan Borrowing


	
 

	
 

	
 


	
Exhibit C

	
-

	
Form of Assignment
  and Acceptance











	
 

	
 

	
 


	
Exhibit D

	
-

	
Form of
  Opinion of Counsel for the Borrowers


	
 

	
 

	
 


	
Exhibit E

	
-

	
Form of
  Financial Covenants Compliance Certificate


	
 

	
 

	
 


	
Exhibit F

	
-

	
List of
  Closing Documents











CREDIT AGREEMENT


Dated as of June
1, 2007



                    This
CREDIT AGREEMENT is by and among SCHOLASTIC CORPORATION, a Delaware corporation
(the “Holding Company”), and SCHOLASTIC INC., a New York corporation (the
“Operating Company”; the Holding Company and the Operating Company are,
collectively, the “Borrowers” and, individually, each a “Borrower”), the banks,
financial institutions and other institutional lenders (the “Initial Lenders”)
listed on the signature pages hereof, SUNTRUST BANK and THE ROYAL BANK OF
SCOTLAND plc, as documentation agents, BANK OF AMERICA, N.A. and WACHOVIA BANK,
NATIONAL ASSOCIATION, as syndication agents, and JPMORGAN CHASE BANK, NATIONAL
ASSOCIATION (“JPMCB”), as administrative agent (the “Agent”) for the Lenders
(as hereinafter defined). The parties hereto hereby agree as follows:  


ARTICLE I


DEFINITIONS AND
ACCOUNTING TERMS



                    SECTION
1.01 Certain Defined Terms.




                    As
used in this Agreement, the following terms shall have the following meanings
(such meanings to be equally applicable to both the singular and plural forms
of the terms defined): 


	
 

	
 


	
 

	
          “Advance” means a
Revolving
  Credit Advance, a Term Loan Advance, a Swingline Advance, a Competitive Bid
  Advance or a Letter of Credit Advance. 


	
 

	
 


	
 

	
          “Affiliate”
  means, as to any Person, any other Person that, directly or indirectly,
  controls, is controlled by or is under common control with such Person or is
  a director or officer of such Person. For purposes of this definition, the
  term “control” (including the terms “controlling”, “controlled by” and “under
  common control with”) of a Person means the possession, direct or indirect,
  of the power to vote 5% or more of the Voting Stock of such Person or to
  direct or cause the direction of the management and policies of such Person,
  whether through the ownership of Voting Stock, by contract or otherwise. 


	
 

	
 


	
 

	
          “Agent’s
  Account” means, at any time, the account of the Agent most recently
  designated by it for the applicable purpose by notice to the Lenders. 


	
 

	
 


	
 

	
          “Applicable
  Lending Office” means, with respect to each Lender, such Lender’s
  Domestic Lending Office in the case of a Base Rate Advance and such Lender’s
  Eurodollar Lending Office in the case of a Eurodollar Rate Advance and, in
  the case of a Competitive Bid Advance, the office of such Lender notified by
  such Lender to the Agent as its Applicable Lending Office with respect to
  such Competitive Bid Advance. 


	
 

	
 


	
 

	
          “Applicable
  Rate” means (a) for Base Rate Advances and any Swingline Advance, 0% per
  annum, (b) for Eurodollar Rate Advances and (c) for the facility fee, a
  percentage per annum determined by reference to the Consolidated Debt Ratio
  as of the most recent determination date, provided that until the
  Applicable Pricing Date, the “Applicable Rate” shall be the applicable
  rate per annum set forth below under the Applicable Pricing Level: 





1







	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
Consolidated Debt

Ratio 

	
  

	
Applicable Rate for

Eurodollar Rate

Advances

(Revolving Loan

Advances) 

	
  

	
Applicable Rate for

Eurodollar Rate

Advances

(Term Loan Advances) 

	
  

	
Applicable Rate

for Facility Fee 

	
  


	

	


	

	


	

	


	

	



	
Level 1 

  Less than 0.20 to 1.0

	
 

	
0.50%

	
 

	
0.625%

	
 

	
0.125%

	
 


	
Level 2

  Greater than or equal to 0.20 to 1.0 but less than 0.30 to 1.0

	
 

	
0.60%

	
 

	
0.750%

	
 

	
0.150%

	
 


	
Level 3

  Greater than or equal to 0.30 to 1.0 but less than 0.40 to 1.0

	
 

	
0.70%

	
 

	
0.875%

	
 

	
0.175%

	
 


	
Level 4

  Greater than or equal to 0.40 to 1.0 but less than 0.50 to 1.0

	
 

	
0.80%

	
 

	
1.00%

	
 

	
0.200%

	
 


	
Level 5

  Greater than or equal to 0.50 to 1.0

	
 

	
1.00%

	
 

	
1.25%

	
 

	
0.250%

	
 







	
 

	
 


	
 

	
For purposes of the foregoing, subject to the
proviso above, (a) the Applicable Rate shall be determined as of the end of
each fiscal quarter of the Holding Company based upon the Holding Company’s
annual or quarterly Consolidated financial statements delivered pursuant to
Section 5.01(a), and each change in the Applicable Rate resulting from a
change in the Consolidated Debt Ratio shall be effective during the period
commencing on and including the date that is five (5) Business Days after
such date of delivery to the Agent of such Consolidated financial statements
indicating such change and ending on the date immediately preceding the
effective date of the next such change, provided that the Consolidated Debt Ratio
shall be deemed to be in Level 5 (A) at any time that an Event of Default has
occurred and is continuing or (B) at the option of the Agent or at the
request of the Required Lenders if the Borrowers fail to deliver the annual
or quarterly Consolidated financial statements required to be delivered
pursuant to Section 5.01, during the period beginning five (5) Business Days
following the expiration of the time for delivery thereof until the date that
is five (5) Business Days after such consolidated financial statements are
delivered.  


	
 

	
 


	
 

	
          “Applicable
  Pricing Date” means (i) December 1, 2007 if the Term Loan Borrowing has
  been made and (ii) the date of delivery to the Agent, pursuant to Section
  5.01, of the Holding Company’s Consolidated financial information for the
  Holding Company’s fiscal quarter ending on or about May 31, 2007 if the Term
  Loan Borrowing has not been made. 


	
 

	
 


	
 

	
          “Applicable
  Pricing Level” means (i) Level 4 if the Term Loan Borrowing has been made
  and (ii) Level 2 if the Term Loan Borrowing has not been made. 





2







	
 

	
 


	
 

	
          “Approved
  Fund” means any Person (other than a natural person) that is engaged in
  making, purchasing, holding or investing in bank loans and similar extensions
  of credit in the ordinary course of its business and that is administered or
  managed by (a) a Lender, (b) an Affiliate of a Lender or (c) an entity or an
  Affiliate of an entity that administers or manages a Lender. 


	
 

	
 


	
 

	
          “Assignment
and Acceptance” means an assignment and acceptance entered into by a
Lender and an Eligible Assignee, and accepted by the Agent, in substantially
the form of Exhibit C hereto.  


	
 

	
 


	
 

	
          “Assuming
  Lender” has the meaning specified in Section 2.18(d). 


	
 

	
 


	
 

	
          “Assumption
  Agreement” has the meaning specified in Section 2.18(d)(ii). 


	
 

	
 


	
 

	
          “Available
  Amount” of any Letter of Credit means, at any time, the maximum amount
  available to be drawn under such Letter of Credit at such time (assuming
  compliance at such time with all conditions to drawing). 


	
 

	
 


	
 

	
          “Base
  Rate” means, for any day, a fluctuating interest rate per annum in effect
  from time to time, which rate per annum shall at all times be equal to the
  higher of: 


	
 

	
 


	
 

	
                   (a)
  the Prime Rate in effect on such day; and


	
 

	
 


	
 

	
                   (b)
  1⁄2 of one percent per annum above the Federal Funds Rate.


	
 

	
 


	
 

	
          “Base
  Rate Advance” means a Revolving Credit Advance or Term Loan Advance that
  bears interest as provided in Section 2.07(a)(i) or a Swingline Advance. 


	
 

	
 


	
 

	
          “Borrowing”
  means a Revolving Credit Borrowing, the Term Loan Borrowing, a Competitive
  Bid Borrowing or a Swingline Advance. 


	
 

	
 


	
 

	
          “Business
  Day” means a day of the year on which banks are not required or
  authorized by law to close in New York City and, if the applicable Business
  Day relates to any Eurodollar Rate Advances or LIBO Rate Advances, on which
  dealings are carried on in the London interbank market. 


	
 

	
 


	
 

	
          “Class”,
  when used in reference to any Advance or Borrowing, refers to whether such
  Advance, or the Advances comprising such Borrowing, are Revolving Credit
  Advances, Term Loan Advances or Swingline Advances. 


	
 

	
 


	
 

	
          “Commitment”
  means a Revolving Credit Commitment or a Term Loan Commitment.


	
 

	
 


	
 

	
          “Commitment
Date” has the meaning specified in Section 2.18(b). 


	
 

	
 


	
 

	
          “Commitment Schedule”
means the Schedule attached hereto identified as such.  


	
 

	
 


	
 

	
          “Competitive
  Bid Advance” means an advance by a Lender to a Borrower as part of a
  Competitive Bid Borrowing resulting from the competitive bidding procedure
  described in Section 2.03 and refers to a Fixed Rate Advance or a LIBO Rate
  Advance. 


	
 

	
 


	
 

	
          “Competitive
  Bid Borrowing” means a borrowing consisting of simultaneous Competitive
  Bid Advances from each of the Lenders whose offer to make one or more 





3







	
 

	
 


	
 

	
Competitive Bid Advances as part of such borrowing
  has been accepted under the competitive bidding procedure described in
  Section 2.03. 


	
 

	
 


	
 

	
          “Competitive
Bid Note” means a promissory note of a Borrower payable to the order of
any Lender requesting the same, in substantially the form of Exhibit A-2 hereto, evidencing the indebtedness of such Borrower to such Lender resulting
from a Competitive Bid Advance made by such Lender.  


	
 

	
 


	
 

	
          “Confidential
  Information” means information that the Borrowers furnish to the Agent or
  any Lender in a writing or orally designated as confidential, but does not
  include any such information that is or becomes generally available to the
  public or that is or becomes available to the Agent or such Lender from a
  source other than a Borrower not known to such Lender to be bound by a
  confidentiality obligation. 


	
 

	
 


	
 

	
          “Consolidated”
  refers to the consolidation of accounts in accordance with GAAP. 


	
 

	
 


	
 

	
          “Consolidated
  Debt Ratio” shall mean, as of any time, the ratio of (a) Total
  Consolidated Debt to (b) the sum of (i) Total Consolidated Debt, (ii) the
  aggregate value of stockholders’ equity (as set forth in the then most
  current consolidated balance sheet of the Holding Company) but excluding
  unrealized gains and losses reflected in other comprehensive income in
  respect of qualified and non-qualified defined benefit pension plans, as well
  as other post-retirements benefit plans of the Borrowers and their
  Consolidated Subsidiaries, and (iii) the aggregate value of all preferred
  stock (as set forth in the most current consolidated balance sheet of the
  Holding Company). 


	
 

	
 


	
 

	
          “Consolidated
Interest Coverage Ratio” shall mean, for any period of the most recent
four consecutive fiscal quarters of the Borrowers and their Subsidiaries
ending on or before any date of determination, the ratio of (a) the sum of
(i) net income (or net loss), (ii) any extraordinary, non-recurring or
unusual non-cash losses, (iii) income tax expense, (iv) depreciation expense,
(v) amortization expense (but excluding any amortization of prepublication
costs and expenses) and (vi) gross interest expense, less (vii) any
extraordinary, non-recurring or unusual non-cash gains, to (b) gross interest
expense, all as recorded for such period.  


	
 

	
 


	
 

	
          “Consolidated
  Total Assets” means, as of the date of any determination thereof, total
  assets of the Borrowers and their Consolidated Subsidiaries. 


	
 

	
 


	
 

	
          “Convert”,
“Conversion” and “Converted” each refers to a conversion of Revolving
Credit Advances or Term Loan Advances of one Type into Revolving Credit
Advances or Term Loan Advances of the other Type pursuant to Section 2.08 or
2.09.  


	
 

	
 


	
 

	
          “Credit
  Exposure” means, as to any Lender at any time, the sum of (a) such
  Lender’s Revolving Credit Exposure at such time, plus (b) an amount equal to
  the aggregate principal amount of its Term Loan Advances outstanding at such
  time. 


	
 

	
 


	
 

	
          “Debt”
  of any Person means, without duplication, (a) all indebtedness of such Person
  for borrowed money, (b) all obligations of such Person for the deferred
  purchase price of property or services (other than trade payables incurred in
  the ordinary course of such Person’s business), (c) all obligations of such
  Person evidenced by notes, bonds, debentures or other similar instruments,
  (d) all obligations of such Person as lessee under leases that have been or
  should be, in accordance with GAAP, recorded as capital leases, (e) all
  obligations, contingent or otherwise, of such Person in respect of
  acceptances, letters of credit or similar extensions of credit (other 





4









	
 

	
 


	
 

	
than obligations in respect of letters of credit
  issued to provide for the payment of goods or services, to backstop worker’s
  compensation obligations or as rental security deposits, in each case
  incurred in the ordinary course of business), (f) all Debt of others referred
  to in clauses (a) through (e) above or clause (g) below guaranteed directly
  or indirectly in any manner by such Person, or in effect guaranteed directly
  or indirectly by such Person through an agreement (1) to pay or purchase such
  Debt or to advance or supply funds for the payment or purchase of such Debt,
  (2) to purchase, sell or lease (as lessee or lessor) property, or to purchase
  or sell services, primarily for the purpose of enabling the debtor to make
  payment of such Debt or to assure the holder of such Debt against loss, (3)
  to supply funds to or in any other manner invest in the debtor (including any
  agreement to pay for property or services irrespective of whether such
  property is received or such services are rendered) or (4) otherwise to
  assure a creditor against loss, and (h) all Debt referred to in clauses (a)
  through (f) above secured by (or for which the holder of such Debt has an
  existing right, contingent or otherwise, to be secured by) any Lien on
  property (including, without limitation, accounts and contract rights) owned
  by such Person, even though such Person has not assumed or become liable for the
  payment of such Debt. 


	
 

	
 


	
 

	
          “Default”
means any Event of Default or any event that would constitute an Event of
Default but for the requirement that notice be given or time elapse or both.  


	
 

	
 


	
 

	
          “Default
Termination Notice” has the meaning specified in Section 2.16(a).  


	
 

	
 


	
 

	
          “Domestic
Lending Office” means, with respect to any Lender, the office of such Lender
specified from time to time by such Lender to the Borrowers and the Agent.  


	
 

	
 


	
 

	
          “Effective
Date” has the meaning specified in Section 3.01.  


	
 

	
 


	
 

	
          “Eligible
Assignee” means (i) a Lender, (ii) a United States Affiliate of a Lender or
an Approved Fund, and (iii) any other commercial bank, finance company,
insurance company or other financial institution having total assets in
excess of $1,000,000,000, in each case to the extent approved by the Agent
and each Issuing Bank and, so long as no Event of Default has occurred and is
continuing and other than in connection with an assignment to a Lender, a United
States Affiliate of a Lender or an Approved Fund, the Borrowers, all such
approvals not to be unreasonably withheld or delayed; provided, however, that
neither Borrower nor an Affiliate of a Borrower shall qualify as an Eligible
Assignee.  


	
 

	
 


	
 

	
          “Environmental
Claim” means (a) any unfulfilled responsibility or liability or unlawful act
or omission under any Environmental Law; (b) any tortious act or omission or
breach of contract pertaining to any Environmental Substance; or (c) any
other violation or claim under any Environmental Law or in respect of any
Environmental Substance.  


	
 

	
 


	
 

	
          “Environmental
Law” and “Environmental Laws” respectively mean any one or more of the
applicable laws pertaining to: (a) any emission, discharge, release, runoff,
disposal or presence in the environment of any Environmental Substance; (b)
any cleanup, containment, manufacturing, treatment, handling, transportation,
storage or sale of or other activity pertaining to any Environmental
Substance; or (c) any other peril to public or occupational health or safety
or to the environment that may be posed by an Environmental Substance.  


	
 

	
 


	
 

	
          “Environmental Substance” means any toxic
substance, hazardous material, contaminant, waste, pollutant or other similar
product or substance that may pose a threat to public or occupational health
or safety or to the environment.  





5








	
 

	
 


	
 

	
          “ERISA”
  means the Employee Retirement Income Security Act of 1974, as amended from
  time to time, and the regulations promulgated and rulings issued thereunder. 


	
 

	
 


	
 

	
          “ERISA
  Affiliate” means any Person that for purposes of Title IV of ERISA is a
  member of the Borrowers’ controlled group, or under common control with the
  Borrowers, within the meaning of Section 414 of the Internal Revenue Code. 


	
 

	
 


	
 

	
          “ERISA
  Event” means (a) (i) the occurrence of a reportable event, within the
  meaning of Section 4043 of ERISA, with respect to any Plan unless the 30-day
  notice requirement with respect to such event has been waived by the PBGC, or
  (ii) the requirements of subsection (1) of Section 4043(b) of ERISA (without
  regard to subsection (2) of such Section) are met with a contributing
  sponsor, as defined in Section 4001(a)(13) of ERISA, of a Plan, and an event
  described in paragraph (9), (10), (11), (12) or (13) of Section 4043(c) of
  ERISA is reasonably expected to occur with respect to such Plan within the
  following 30 days; (b) the application for a minimum funding waiver with
  respect to a Plan; (c) the provision by the administrator of any Plan of a
  notice of intent to terminate such Plan pursuant to Section 4041(a)(2) of
  ERISA (including any such notice with respect to a plan amendment referred to
  in Section 4041(e) of ERISA); (d) the cessation of operations at a facility
  of either Borrower or any ERISA Affiliate in the circumstances described in
  Section 4062(e) of ERISA; (e) the withdrawal by either or either Borrower or
  any ERISA Affiliate from a Multiple Employer Plan during a plan year for
  which it was a substantial employer, as defined in Section 4001(a)(2) of
  ERISA; (f) the conditions for the imposition of a lien under Section 302(f)
  of ERISA shall have been met with respect to any Plan; (g) the adoption of an
  amendment to a Plan requiring the provision of security to such Plan pursuant
  to Section 307 of ERISA; or (h) the institution by the PBGC of proceedings to
  terminate a Plan pursuant to Section 4042 of ERISA, or the occurrence of any
  event or condition described in Section 4042 of ERISA that constitutes
  grounds for the termination of, or the appointment of a trustee to
  administer, a Plan. 


	
 

	
 


	
 

	
          “Eurocurrency
Liabilities” has the meaning assigned to that term in Regulation D of the
Board of Governors of the Federal Reserve System, as in effect from time to
time.  


	
 

	
 


	
 

	
          “Eurodollar
Lending Office” means, with respect to any Lender, the office of such Lender
specified by such Lender to the Borrowers and the Agent from time to time.  


	
 

	
 


	
 

	
          “Eurodollar
Rate” means, for any Interest Period for each Eurodollar Rate Advance
comprising part of the same Revolving Credit Borrowing or Term Loan
Borrowing, an interest rate per annum equal to the rate per annum obtained by
dividing (a) the rate per annum (rounded upward to the nearest whole multiple
of 1/100 of 1% per annum) appearing on Reuters BBA LIBOR Rates Page 3750 (or
any successor page) as the London interbank offered rate for deposits in U.S.
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 or, if for any reason such rate is not available, the rate per annum
at which deposits in U.S. dollars are offered by the principal office of
JPMCB in London, England to prime banks in the London interbank market at
11:00 A.M. (London time) two Business Days before the first day of such
Interest Period in an amount equal to $5,000,000 and for a period equal to
such Interest Period by (b) a percentage equal to 100% minus the Eurodollar
Rate Reserve Percentage for such Interest Period. If the Reuters BBA LIBOR
Rates Page 3750 (or any successor page) is unavailable, the Eurodollar Rate
for any Interest Period for each Eurodollar Rate Advance comprising part of
the same Revolving Credit Borrowing or Term Loan Borrowing shall be
determined by the Agent on the basis of the applicable rate furnished to and
received by the Agent from JPMCB two Business  





6







	
 

	
 


	
 

	
Days before
the first day of such Interest Period, subject, however, to the provisions of
Section 2.08.  


	
 

	
 


	
 

	
          “Eurodollar
  Rate Advance” means a Revolving Credit Advance or a Term Loan Advance
  that bears interest as provided in Section 2.07(a)(ii). 


	
 

	
 


	
 

	
          “Eurodollar
  Rate Reserve Percentage” for any Interest Period for all Eurodollar Rate
  Advances or LIBO Rate Advances comprising part of the same Borrowing means
  the reserve percentage applicable three Business Days before the first day of
  such Interest Period under regulations issued from time to time by the Board
  of Governors of the Federal Reserve System (or any successor) for determining
  the maximum reserve requirement (including, without limitation, any
  emergency, supplemental or other marginal reserve requirement) for a member
  bank of the Federal Reserve System in New York City with respect to
  liabilities or assets consisting of or including Eurocurrency Liabilities (or
  with respect to any other category of liabilities that includes deposits by
  reference to which the interest rate on Eurodollar Rate Advances or LIBO Rate
  Advances is determined) having a term equal to such Interest Period. 


	
 

	
 


	
 

	
          “Events
  of Default” has the meaning specified in Section 6.01. 


	
 

	
 


	
 

	
          “Existing
  Credit Agreement” means the Credit Agreement dated as of March 31, 2004
  among the Borrowers, the lenders parties thereto and Citibank, N.A., as
  agent, as amended, supplemented or otherwise modified prior to the Effective
  Date. 


	
 

	
 


	
 

	
          “Existing
  Letters of Credit” has the meaning specified in Section 2.16(h). 


	
 

	
 


	
 

	
          “Facility”
  means the Revolving Credit Facility, the Term Loan Facility or the Letter of
  Credit Facility. 


	
 

	
 


	
 

	
          “Federal
  Funds Rate” means, for any period, a fluctuating interest rate per annum
  equal for each day during such period to the weighted average (rounded
  upwards, if necessary, to the next 1/100 of 1%) of the rates on overnight
  Federal funds transactions with members of the Federal Reserve System
  arranged by Federal funds brokers, as published for such day (or, if such day
  is not a Business Day, for the next preceding Business Day) by the Federal
  Reserve Bank of New York, or, if such rate is not so published for any day that
  is a Business Day, the average (rounded upwards, if necessary, to the next
  1/100 of 1%) of the quotations for such day on such transactions received by
  the Agent from three Federal funds brokers of recognized standing selected by
  it. 


	
 

	
 


	
 

	
          “Fixed
  Rate Advances” has the meaning specified in Section 2.03(a)(i). 


	
 

	
 


	
 

	
          “GAAP”
  has the meaning specified in Section 1.03. 


	
 

	
 


	
 

	
          “Increase
  Date” has the meaning specified in Section 2.18(a). 


	
 

	
 


	
 

	
          “Increasing
  Lender” has the meaning specified in Section 2.18(b). 


	
 

	
 


	
 

	
          “Information
  Memorandum” means the information memorandum dated May 2007 used by the
  Agent in connection with the syndication of the Commitments. 


	
 

	
 


	
 

	
          “Interest
  Period” means, for each Eurodollar Rate Advance comprising part of the
  same Revolving Credit Borrowing, each Eurodollar Rate Advance comprising part
  of the same Term 





7







	
 

	
 


	
 

	
Loan
Borrowing, and each LIBO Rate Advance comprising part of the same Competitive
Bid Borrowing, the period commencing on the date of such Eurodollar Rate
Advance or LIBO Rate Advance or the date of the Conversion of any Base Rate
Advance into such Eurodollar Rate Advance and ending on the last day of the
period selected by the applicable Borrower pursuant to the provisions below
and, thereafter, with respect to Eurodollar Rate Advances, each subsequent
period commencing on the last day of the immediately preceding Interest
Period and ending on the last day of the period selected by such Borrower
pursuant to the provisions below. The duration of each such Interest Period
shall be one, two, three or six months, as the applicable Borrower may, upon
notice received by the Agent not later than 11:00 A.M. (New York City time)
on the third Business Day prior to the first day of such Interest Period,
select; provided, however, that:  








	
 

	
 


	
 

	
          (i)
  the Borrowers may not select any Interest Period that ends after the
  Termination Date; 


	
 

	
 


	
 

	
          (ii)
  Interest Periods commencing on the same date for Eurodollar Rate Advances
  comprising part of the same Revolving Credit Borrowing or the same Term Loan
  Borrowing or for LIBO Rate Advances comprising part of the same Competitive
  Bid Borrowing shall be of the same duration; 


	
 

	
 


	
 

	
          (iii)
  whenever the last day of any Interest Period would otherwise occur on a day
  other than a Business Day, the last day of such Interest Period shall be
  extended to occur on the next succeeding Business Day, provided, however,
  that, if such extension would cause the last day of such Interest Period to
  occur in the next following calendar month, the last day of such Interest
  Period shall occur on the next preceding Business Day; and 


	
 

	
 


	
 

	
          (iv)
  whenever the first day of any Interest Period occurs on a day of an initial
  calendar month for which there is no numerically corresponding day in the
  calendar month that succeeds such initial calendar month by the number of
  months equal to the number of months in such Interest Period, such Interest
  Period shall end on the last Business Day of such succeeding calendar month. 








	
 

	
 


	
 

	
          “Internal
  Revenue Code” means the Internal Revenue Code of 1986, as amended from
  time to time, and the regulations promulgated and rulings issued thereunder. 


	
 

	
 


	
 

	
          “Issuing
  Bank” means JPMorgan Chase Bank, National Association, Bank of America,
  N.A. and any other Lender approved as an Issuing Bank by the Agent and the
  Borrowers (such approval not to be unreasonably withheld or delayed) so long
  as each such Lender expressly agrees to perform in accordance with their
  terms all of the obligations that by the terms of this Agreement are required
  to be performed by it as an Issuing Bank and notifies the Agent of its
  Applicable Lending Office (which information shall be recorded by the Agent
  in the Register). 


	
 

	
 


	
 

	
          “JPMCB”
  means JPMorgan Chase Bank, National Association, and its successors and
  assigns. 


	
 

	
 


	
 

	
          “L/C
  Related Documents” has the meaning specified in Section 2.16(f). 


	
 

	
 


	
 

	
          “Lenders”
  means the Initial Lenders, each Assuming Lender that shall become a party
  hereto pursuant to Section 2.18 and each Person that shall become a party
  hereto pursuant to 





8







	
 

	
 


	
 

	
Section
  8.07. Unless the context otherwise requires, the term “Lenders” includes the
  Swingline Lender. 


	
 

	
 


	
 

	
          “Letter
  of Credit” has the meaning specified in Section 2.16(a). 


	
 

	
 


	
 

	
          “Letter
  of Credit Advance” means an advance made by any Issuing Bank or any
  Lender pursuant to Section 2.16(d). 


	
 

	
 


	
 

	
          “Letter
  of Credit Agreement” has the meaning specified in Section 2.16(b)(i). 


	
 

	
 


	
 

	
          “Letter
  of Credit Collateral” has the meaning specified in Section 6.02(b). 


	
 

	
 


	
 

	
          “Letter
  of Credit Collateral Account” means a non-interest bearing cash
  collateral account to be established and maintained by the Agent, over which
  the Agent shall have sole dominion and control, upon terms as may be
  satisfactory to the Agent. 


	
 

	
 


	
 

	
          “Letter
  of Credit Facility” means $50,000,000, as such amount may be reduced at
  or prior to such time pursuant to Section 2.05. 


	
 

	
 


	
 

	
          “LIBO
  Rate” means, for any Interest Period for all LIBO Rate Advances
  comprising part of the same Competitive Bid Borrowing, an interest rate per
  annum equal to the rate per annum obtained by dividing (a) the rate per annum
  (rounded upward to the nearest whole multiple of 1/100 of 1% per annum)
  appearing on Reuters BBA LIBOR Rates Page 3750 (or any successor page) as the
  London interbank offered rate for deposits in U.S. 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 or, if for any
  reason such rate is not available, the rate per annum at which deposits in
  U.S. dollars offered by the principal office of JPMCB in London, England to
  prime banks in the London interbank market at 11:00 A.M. (London time) two
  Business Days before the first day of such Interest Period in an amount equal
  to $5,000,000 and for a period equal to such Interest Period by (b) a percentage
  equal to 100% minus the Eurodollar Rate Reserve Percentage for such Interest
  Period. If the Reuters BBA LIBOR Rates Page 3750 (or any successor page) is
  unavailable, the LIBO Rate for any Interest Period for each LIBO Rate Advance
  comprising part of the same Competitive Bid Borrowing shall be determined by
  the Agent on the basis of the applicable rate furnished to and received by
  the Agent from JPMCB two Business Days before the first day of such Interest
  Period, subject, however, to the provisions of Section 2.08. 


	
 

	
 


	
 

	
          “LIBO
  Rate Advances” means a Competitive Bid Advance bearing interest based on
  the LIBO Rate. 


	
 

	
 


	
 

	
          “Lien” means
any lien, security interest or other charge or encumbrance of any kind, or
any other type of preferential arrangement, including, without limitation,
the lien or retained security title of a conditional vendor and any easement,
right of way or other encumbrance on title to real property.  


	
 

	
 


	
 

	
          “Loan
  Documents” means this Agreement, any Notes and each Letter of Credit
  Agreement, as each may be amended, supplemented or otherwise modified from
  time to time. 


	
 

	
 


	
 

	
          “Material
  Adverse Change” means any material adverse change in the assets,
  business, operations, property or condition (financial or otherwise) of the
  Borrowers and their Subsidiaries taken as a whole. 





9






	
 

	
 


	
 

	
          “Material
  Adverse Effect” means a material adverse effect on (a) the assets,
  business, operations, property or condition (financial or otherwise) of the
  Borrowers and their Subsidiaries taken as a whole or (b) the ability of the
  Borrowers to perform their obligations under the Loan Documents. 


	
 

	
 


	
 

	
          “Money
  Market Rate” means such rate of interest per annum (if any) as the
  Swingline Lender may quote from time to time on any single commercial
  borrowing for a period of up to 90 days. 


	
 

	
 


	
 

	
          “Multiemployer
  Plan” means a multiemployer plan, as defined in Section 4001(a)(3) of
  ERISA, to which a Borrower or any ERISA Affiliate is making or accruing an
  obligation to make contributions, or has within any of the preceding five
  plan years made or accrued an obligation to make contributions. 


	
 

	
 


	
 

	
          “Multiple
  Employer Plan” means a single employer plan, as defined in Section
  4001(a)(15) of ERISA, that (a) is maintained for employees of a Borrower or
  any ERISA Affiliate and at least one Person other than such Borrower and the
  ERISA Affiliates or (b) was so maintained and in respect of which such
  Borrower or any ERISA Affiliate could have liability under Section 4064 or 4069
  of ERISA in the event such plan has been or were to be terminated. 


	
 

	
 


	
 

	
          “Note”
  means a Revolving Credit Note, Term Loan Note or a Competitive Bid Note.


	
 

	
 


	
 

	
          “Notice
  of Competitive Bid Borrowing” has the meaning specified in Section
  2.03(a).


	
 

	
 


	
 

	
          “Notice
  of Issuance” has the meaning specified in Section 2.16(b)(i). 


	
 

	
 


	
 

	
          “Notice
  of Renewal” has the meaning specified in Section 2.16(a). 


	
 

	
 


	
 

	
          “Notice
  of Revolving Credit Borrowing” has the meaning specified in Section
  2.02(a).


	
 

	
 


	
 

	
          “Notice
  of Term Loan Borrowing” has the meaning specified in Section 2.02(a). 


	
 

	
 


	
 

	
          “Notice
  of Termination” has the meaning specified in Section 2.16(a).


	
 

	
 


	
 

	
          “PBGC”
  means the Pension Benefit Guaranty Corporation (or any successor). 


	
 

	
 


	
 

	
          “Permitted
  Liens” means each of the following: (a) Liens for taxes, assessments and
  governmental charges or levies to the extent not required to be paid under
  Section 5.01(e) hereof; (b) Liens imposed by law, such as materialmen’s,
  mechanics’, carriers’, workmen’s and repairmen’s Liens and other similar
  Liens arising in the ordinary course of business securing obligations that
  are not overdue for a period of more than 30 days or are being contested by
  good faith by appropriate proceedings and as to which appropriate reserves
  are being maintained; (c) pledges or deposits to secure obligations under
  workers’ compensation laws or similar legislation or to secure public or
  statutory obligations; and (d) easements, rights of way and other
  encumbrances on title to real property that do not render title to the
  property encumbered thereby unmarketable or materially adversely affect the
  use of such property for its present purposes. 


	
 

	
 


	
 

	
          “Person”
  means an individual, partnership, corporation (including a business trust),
  joint stock company, trust, unincorporated association, joint venture,
  limited liability company or other entity, or a government or any political
  subdivision or agency thereof. 





10






	
 

	
 


	
 

	
          “Plan”
  means a Single Employer Plan or a Multiple Employer Plan. 


	
 

	
 


	
 

	
          “Prime
  Rate” means the rate of interest per annum publicly announced from time
  to time by JPMCB as its prime rate at its offices at 270 Park Avenue in New
  York City; each change in the Prime Rate shall be effective from and
  including the date such change is publicly announced as being effective. 


	
 

	
 


	
 

	
          “Pro
Rata Share” of any amount means, with respect to any Lender at any time,
(a) with respect to Revolving Credit Advances, Letter of Credit Advances or
Swingline Advances, the product of such amount times a fraction the numerator
of which is the amount of such Lender’s Revolving Credit Commitment at such
time and the denominator of which is the Revolving Credit Facility at such
time and (b) with respect to Term Loan Advances, the product of such amount
times a fraction the numerator of which is the amount of such Lender’s
outstanding Term Loan Advances and the denominator of which is the aggregate
outstanding amount of the Term Loan Advances of all Lenders.  


	
 

	
 


	
 

	
          “Register”
  has the meaning specified in Section 8.07(f). 


	
 

	
 


	
 

	
          “Required
  Lenders” means, at any time, Lenders having Credit Exposure and unused
  Commitments representing more than 50% of the sum of the total Credit
  Exposure and unused Commitments at such time. 


	
 

	
 


	
 

	
          “Revolving
  Credit Advance” means an advance by a Lender to a Borrower as part of a
  Revolving Credit Borrowing and refers to a Base Rate Advance or a Eurodollar
  Rate Advance. 


	
 

	
 


	
 

	
          “Revolving
  Credit Borrowing” means a borrowing consisting of simultaneous Revolving
  Credit Advances of the same Type made by each of the Lenders pursuant to
  Section 2.01. 


	
 

	
 


	
 

	
          “Revolving
  Credit Commitment” means, with respect to any Lender at any time (a) the
  amount set forth opposite such Lender’s name on the Commitment Schedule under
  the caption “Revolving Credit Commitment” (b) if such Lender has become a
  Lender hereunder pursuant to an Assumption Agreement, the amount set forth in
  such Assumption Agreement or (c) if such Lender has entered into any
  Assignment and Acceptance, the amount set forth for such Lender in the
  Register maintained by the Agent pursuant to Section 8.07(f), as such amount
  may be reduced pursuant to Section 2.05 or increased pursuant to Section
  2.18. On the date hereof, the aggregate Revolving Credit Commitments of the
  Lenders is $325,000,000. 


	
 

	
 


	
 

	
          “Revolving
  Credit Commitment Increase” has the meaning specified in Section 2.18(a).
  


	
 

	
 


	
 

	
          “Revolving
  Credit Exposure” means, with respect to any Lender at any time, the sum
  of the outstanding principal amount of such Lender’s Revolving Credit
  Advances and its Letter of Credit Advances and Swingline Exposure at such
  time, plus its Pro Rata Share of the aggregate Available Amount of each
  Letter of Credit. 


	
 

	
 


	
 

	
          “Revolving
  Credit Facility” means, at any time, the aggregate amount of the Lenders’
  Revolving Credit Commitments at such time. 


	
 

	
 


	
 

	
          “Revolving
  Credit Note” means a promissory note of a Borrower payable to the order
  of any Lender requesting the same, in substantially the form of Exhibit
  A-1 hereto, evidencing the aggregate indebtedness of such Borrower to
  such Lender resulting from the Revolving Credit Advances made by such Lender.
  





11






	
 

	
 


	
 

	
          “Robinson
  Family” means Richard Robinson, Barbara Robinson Buckland, Florence R.
  Ford, Mary Sue Robinson Morrill and William W. Robinson, the spouses and
  descendants of any of them, and any trust or estate whose legal
  representatives or beneficiaries (or in the case of a Person with more than
  one legal representative or beneficiary, at least half of whose legal
  representatives or beneficiaries) consist of one or more of the foregoing
  individuals, spouses and descendants; and the trusts respectively created
  under the will of Maurice R. Robinson and/or the will of Florence L. Robinson
  so long as at least half of their respective trustees or beneficiaries
  continue to consist of one or more of the foregoing individuals, spouses
  and/or descendants. 


	
 

	
 


	
 

	
          “Significant
  Subsidiary” shall mean any Subsidiary that owns 10% or more of the total
  consolidated assets of the Holding Company and its subsidiaries and
  contributes 10% or more of their total consolidated revenue from operations.
  Each direct and indirect parent (other than the Holding Company or the
  Operating Company) of a Significant Subsidiary also shall be deemed a
  Significant Subsidiary. 


	
 

	
 


	
 

	
          “Single
  Employer Plan” means a single employer plan, as defined in Section
  4001(a)(15) of ERISA, that (a) is maintained for employees of a Borrower or
  any ERISA Affiliate and no Person other than the Borrowers and the ERISA
  Affiliates or (b) was so maintained and in respect of which a Borrower or any
  ERISA Affiliate could have liability under Section 4069 of ERISA in the event
  such plan has been or were to be terminated. 


	
 

	
 


	
 

	
          “Subsidiary”
  of any Person means any corporation, partnership, joint venture, limited
  liability company, trust or estate of which (or in which) more than 50% of
  (a) the issued and outstanding capital stock having ordinary voting power to
  elect a majority of the Board of Directors of such corporation (irrespective
  of whether at the time capital stock of any other class or classes of such
  corporation shall or might have voting power upon the occurrence of any
  contingency), (b) the interest in the capital or profits of such limited
  liability company, partnership or joint venture or (c) the beneficial
  interest in such trust or estate is at the time directly or indirectly owned
  or controlled by such Person, by such Person and one or more of its other
  Subsidiaries or by one or more of such Person’s other Subsidiaries. 


	
 

	
 


	
 

	
          “Swingline
  Advance” means an Advance made pursuant to Section 2.04. 


	
 

	
 


	
 

	
          “Swingline
  Exposure” means, at any time, the aggregate principal amount of all
  Swingline Advances outstanding at such time. The Swingline Exposure of any
  Lender at any time shall be its Pro Rata Share of the total Swingline Exposure
  at such time. 


	
 

	
 


	
 

	
          “Swingline
  Lender” means JPMorgan Chase Bank, National Association, in its capacity
  as lender of Swingline Advances hereunder. 


	
 

	
 


	
 

	
          “Term
  Loan Advance” means an advance by a Lender to a Borrower as part of the
  Term Loan Borrowing and refers to a Base Rate Advance or a Eurodollar Rate
  Advance. 


	
 

	
 


	
 

	
          “Term
  Loan Advance Period” means the period commencing on the Effective Date
  and ending at 3:00 p.m., New York time, on July 1, 2007. 


	
 

	
 


	
 

	
          “Term
  Loan Borrowing” means the borrowing consisting of simultaneous Term Loan
  Advances of the same Type made by each of the Lenders pursuant to Section
  2.01. 


	
 

	
 


	
 

	
          “Term
  Loan Commitment” means (a) as to any Lender, the aggregate commitment of
  such Lender to make Term Loan Advances equal to the amount set forth opposite
  such Lender’s 





12






	
 

	
 


	
 

	
name on the
  Commitment Schedule under the caption “Term Loan Commitment” and (b) as to
  all Lenders, the aggregate commitment of all Lenders to make Term Loan Advances,
  which aggregate commitment shall be up to $200,000,000 on the date of this
  Agreement. After advancing the Term Loan Advances, each reference to a
  Lender’s Term Loan Commitment shall refer to that Lender’s Pro Rata Share of
  the outstanding Term Loan Advances. 


	
 

	
 


	
 

	
          “Term
  Loan Facility” means, at any time, the aggregate amount of the Lenders’
  Term Loan Commitments at such time. 


	
 

	
 


	
 

	
          “Term
Loan Note” means a promissory note of a Borrower payable to the order of
any Lender requesting the same, in substantially the form of Exhibit A-3
hereto, evidencing the aggregate indebtedness of such Borrower to such Lender
resulting from the Term Loan Advances made by such Lender.  


	
 

	
 


	
 

	
          “Termination
  Date” means the earlier of June 1, 2012 and the date of termination in
  whole of the Revolving Credit Commitments pursuant to Section 2.05 or 6.01. 


	
 

	
 


	
 

	
          “Total
  Consolidated Debt” shall mean the consolidated Debt of the Borrowers and
  their Subsidiaries. 


	
 

	
 


	
 

	
          “Type”,
  when used in reference to any Advance or Borrowing, refers to whether the
  rate of interest on such Advance, or the Advances comprising such Borrowing,
  is determined by reference to the Eurodollar Rate or the Base Rate. 


	
 

	
 


	
 

	
          “Unused
Revolving Credit Commitment” means, with respect to any Lender at any
time, (a) such Lender’s Revolving Credit Commitment at such time minus (b)
the sum of (i) the aggregate principal amount of all Revolving Credit
Advances, Letter of Credit Advances and Swingline Advances made by such
Lender, in each case in its capacity as a Lender, and outstanding at such
time, and (ii) such Lender’s Pro Rata Share of (A) the aggregate Available
Amount of all Letters of Credit outstanding at such time, (B) the aggregate
amount of the Competitive Bid Advances and Swingline Advances outstanding at
such time, and (C) to the extent not included in clause (b)(i) of this
definition, the aggregate principal amount of all Letter of Credit Advances
made by the Issuing Banks pursuant to Section 2.16(d) and outstanding at such
time.  


	
 

	
 


	
 

	
          “Voting
  Stock” means capital stock issued by a corporation, or equivalent
  interests in any other Person, the holders of which are ordinarily, in the
  absence of contingencies, entitled to vote for the election of a majority of
  the directors (or persons performing similar functions) of such Person, even
  if the right so to vote has been suspended by the happening of such a
  contingency. 





                    SECTION
1.02 Computation of Time Periods. In this Agreement in the computation
of periods of time from a specified date to a later specified date, the word
“from” means “from and including” and the words “to” and “until” each mean “to
but excluding”. 


                    SECTION
1.03 Accounting Terms. All accounting terms not specifically defined
herein shall be construed in accordance with generally accepted accounting
principles (“GAAP”). 


ARTICLE II


AMOUNTS AND TERMS OF THE ADVANCES


13






                    SECTION
2.01 Commitments. Subject to the terms and conditions hereinafter set
forth, (a) each Lender severally agrees, on the terms and conditions
hereinafter set forth, to make Revolving Credit Advances to any Borrower from
time to time on any Business Day during the period from the Effective Date until
the Termination Date in an amount for each such Advance not to exceed such
Lender’s Unused Revolving Credit Commitment at such time and (b) each Lender
agrees to make a single Term Loan Advance to any one Borrower on any Business
Day during the Term Loan Advance Period, in an amount equal to such Lender’s
Term Loan Commitment by making immediately available funds available to the
Agent’s Account, not later than the time specified by the Agent. Each Revolving
Credit Borrowing (other than a Swingline Advance) shall be in an aggregate
amount of $1,000,000 or an integral multiple of $500,000 in excess thereof in
the case of Base Rate Advances, or shall be in an aggregate amount of
$5,000,000 or an integral multiple of $1,000,000 in excess thereof in the case of
Eurodollar Rate Advances, and shall consist of Revolving Credit Advances of the
same Type made on the same day by the Lenders ratably according to their
respective Commitments. Each Swingline Advance shall be in an amount that is an
integral multiple of $250,000 and not less than $250,000. Within the limits of
each Lender’s Revolving Credit Commitment, the Borrowers may borrow Revolving
Credit Borrowings under this Section 2.01, prepay Revolving Credit Borrowings
pursuant to Section 2.10 and reborrow Revolving Credit Borrowings under this
Section 2.01. Amounts repaid or prepaid in respect of the Term Loan Borrowing
may not be reborrowed. 


                    SECTION
2.02 Making the Revolving Credit Advances and the Term Loan Advances.


	
 

	
 


	
 

	
          (a) Advances.


	
 

	
 


	
 

	
          (i) Revolving
  Credit Advances. Each Revolving Credit Borrowing shall be made on notice,
  given not later than (x) 11:00 A.M. (New York City time) on the third
  Business Day prior to the date of the proposed Revolving Credit Borrowing in
  the case of a Revolving Credit Borrowing consisting of Eurodollar Rate
  Advances or (y) 11:00 A.M. (New York City time) on the date of the proposed
  Revolving Credit Borrowing in the case of a Revolving Credit Borrowing
  consisting of Base Rate Advances, by the applicable Borrower to the Agent,
  which shall give to each Lender prompt notice thereof by telecopier. Each
  such notice of a Revolving Credit Borrowing (a “Notice of Revolving Credit
  Borrowing”) shall be by telephone, confirmed immediately in writing, or
  telecopier in substantially the form of Exhibit B-1 hereto, specifying
  therein the requested (i) date of such Revolving Credit Borrowing, (ii) Type
  of Advances comprising such Revolving Credit Borrowing, (iii) aggregate
  amount of such Revolving Credit Borrowing, and (iv) in the case of a
  Revolving Credit Borrowing consisting of Eurodollar Rate Advances, initial
  Interest Period for each such Revolving Credit Advance. Each Lender shall,
  before 2:00 P.M. (New York City time) on the date of such Revolving Credit
  Borrowing make available for the account of its Applicable Lending Office to
  the Agent at the Agent’s Account, in same day funds, such Lender’s ratable
  portion of such Revolving Credit Borrowing. After the Agent’s receipt of such
  funds and upon fulfillment of the applicable conditions set forth in Article
  III, the Agent will make such funds available to the applicable Borrower at
  the Agent’s address referred to in Section 8.02; provided, however,
  that, in the case of any such Borrowing, the Agent shall first make a portion
  of such funds equal to the aggregate principal amount of any Letter of Credit
  Advances made by any Issuing Bank and by any other Lender and outstanding on
  the date of such Revolving Credit Borrowing, plus interest accrued and unpaid
  thereon to and as of such date, available to such Issuing Bank and such other
  Lenders for repayment of such Letter of Credit Advances. 


	
 

	
 


	
 

	
          (ii) Term
  Loan Advances. If not made on the Effective Date, the Term Loan Advances
  shall be made during the Term Loan Advance Period on notice, given not later
  than 11:00 A.M. (New York City time) on the third Business Day prior to the
  date of the Term Loan 





14







	
 

	
 


	
 

	
Advances, by
the applicable Borrower to the Agent, which shall give to each Lender prompt
notice thereof by telecopier. Such notice to the Agent of the Term Loan
Borrowing (a “Notice of Term Loan Borrowing”) shall be by telephone,
confirmed immediately in writing, or telecopier in substantially the form of
Exhibit B-3 hereto, specifying therein the requested (i) date of Term Loan
Advance, (ii) Type of Advances comprising such Term Loan Borrowing, (iii) in
the event the Term Loan Borrowing shall consist of Eurodollar Rate Advances,
initial Interest Period for such Eurodollar Rate Advance. Each Lender shall,
before 2:00 P.M. (New York City time) on the date of the Term Loan Borrowing
make available for the account of its Applicable Lending Office to the Agent
at the Agent’s Account, in same day funds, such Lender’s ratable portion of
the Term Loan Borrowing. After the Agent’s receipt of such funds and upon
fulfillment of the applicable conditions set forth in Article III, the Agent
will make such funds available to the applicable Borrower at the Agent’s
address referred to in Section 8.02.  


	
 

	
 


	
                    (b)
  Anything in subsection (a) above to the contrary notwithstanding, (i) the
  Borrowers may not select Eurodollar Rate Advances for any Revolving Credit
  Borrowing or the Term Loan Borrowing if the aggregate amount of such
  Revolving Credit Borrowing or Term Loan Borrowing, as applicable, is less
  than $5,000,000 or if the obligation of the Lenders and/or the Lenders, as
  applicable, to make Eurodollar Rate Advances shall then be suspended pursuant
  to Section 2.08 or 2.12 and (ii) no more than twelve separate Eurodollar Rate
  Advances may be outstanding at any time. 


	
 

	
 


	
                    (c)
  Each Notice of Revolving Credit Borrowing and each Notice of Term Loan
  Borrowing shall be irrevocable and binding on the applicable Borrower. In the
  case of any Revolving Credit Borrowing or the Term Loan Borrowing that the
  related Notice of Revolving Credit Borrowing or Notice of Term Loan
  Borrowing, as applicable, specifies is to be comprised of Eurodollar Rate
  Advances, the applicable Borrower shall indemnify each Lender against any
  loss, cost or expense incurred by such Lender as a result of any failure to
  fulfill on or before the date specified in such Notice of Revolving Credit
  Borrowing for such Revolving Credit Borrowing or such Notice of Term Loan
  Borrowing for such Term Loan Borrowing, as applicable, the applicable
  conditions set forth in Article III, including, without limitation, any loss
  (including loss of anticipated profits), cost or expense incurred by reason
  of the liquidation or reemployment of deposits or other funds acquired by
  such Lender to fund the Revolving Credit Advance or Term Loan Advance, as
  applicable, to be made by such Lender as part of such Revolving Credit
  Borrowing or Term Loan Borrowing, as applicable, when such Revolving Credit
  Advance or Term Loan Advance, as applicable, as a result of such failure, is
  not made on such date. 


	
 

	
 


	
                    (d)
  Unless the Agent shall have received notice from a Lender prior to the date
  of any Revolving Credit Borrowing or the Term Loan Borrowing that such Lender
  will not make available to the Agent such Lender’s ratable portion of such
  Revolving Credit Borrowing or Term Loan Borrowing, as applicable, the Agent
  may assume that such Lender has made such portion available to the Agent on
  the date of such Revolving Credit Borrowing or Term Loan Borrowing, as
  applicable, in accordance with subsection (a) of this Section 2.02 and the
  Agent may, in reliance upon such assumption, make available to the applicable
  Borrower on such date a corresponding amount. If and to the extent that such
  Lender shall not have so made such ratable portion available to the Agent,
  such Lender and the applicable Borrower severally agree to repay to the Agent
  forthwith on demand such corresponding amount together with interest thereon,
  for each day from the date such amount is made available to such Borrower
  until the date such amount is repaid to the Agent, at (i) in the case of such
  Borrower, the interest rate applicable at the time to Revolving Credit
  Advances comprising such Revolving Credit Borrowing or to Term Loan Advances
  comprising such Term Loan Borrowing, as applicable, and (ii) in the case of
  such Lender, the Federal Funds Rate. If such Lender shall repay to the Agent
  such corresponding amount, such amount so repaid shall constitute such
  Lender’s Revolving Credit Advance as part of such Revolving Credit Borrowing
  or Term Loan Advance as part of such Term Loan Borrowing, as applicable, for
  purposes of this Agreement. 





15







                    (e)
The failure of any Lender to make the Revolving Credit Advance to be made by it
as part of any Revolving Credit Borrowing or the Term Loan Advance to be made
by it as part of the Term Loan Borrowing, as applicable, shall not relieve any
other Lender of its obligation, if any, hereunder to make its Revolving Credit
Advance on the date of such Revolving Credit Borrowing or its Term Loan Advance
on the date of such Term Loan Borrowing, as applicable, but no Lender shall be
responsible for the failure of any other Lender to make the Revolving Credit
Advance to be made by such other Lender on the date of any Revolving Credit
Borrowing or the Term Loan Advance to be made by such other Lender on the day
of the Term Loan Borrowing, as applicable. 


                    
(f) Notwithstanding the foregoing, Swingline Advances shall be made as provided
in Section 2.04. 


                    SECTION
2.03 The Competitive Bid Advances. (a) Each Lender severally agrees that
either Borrower may make Competitive Bid Borrowings under this Section 2.03
from time to time on any Business Day during the period from the date hereof
until the date occurring 30 days prior to the Termination Date in the manner
set forth below; provided that such Competitive Bid Borrowing shall not
exceed the aggregate Unused Revolving Credit Commitments of the Lenders in
effect immediately prior to giving effect to such Competitive Bid Borrowing and
the aggregate principal amount of all Competitive Bid Borrowings shall not
exceed $100,000,000. 


	
 

	
 


	
 

	
          (i)
  Either Borrower may request a Competitive Bid Borrowing under this Section
  2.03 by delivering to the Agent, by telecopier, a notice of a Competitive Bid
  Borrowing (a “Notice of Competitive Bid Borrowing”), in substantially
  the form of Exhibit B-2 hereto, specifying therein the requested (v)
  date of such proposed Competitive Bid Borrowing, (w) aggregate amount of such
  proposed Competitive Bid Borrowing, (x) in the case of a Competitive Bid
  Borrowing consisting of LIBO Rate Advances, Interest Period, or in the case
  of a Competitive Bid Borrowing consisting of Fixed Rate Advances, maturity
  date for repayment of each Fixed Rate Advance to be made as part of such
  Competitive Bid Borrowing (which maturity date may not be earlier than the
  date occurring 7 days after the date of such Competitive Bid Borrowing or
  later than Termination Date), (y) interest payment date or dates relating
  thereto, and (z) other terms (if any) to be applicable to such Competitive
  Bid Borrowing, not later than 10:00 A.M. (New York City time) (A) at least
  one Business Day prior to the date of the proposed Competitive Bid Borrowing,
  if such Borrower shall specify in the Notice of Competitive Bid Borrowing
  that the rates of interest to be offered by the Lenders shall be fixed rates
  per annum (the Advances comprising any such Competitive Bid Borrowing being
  referred to herein as “Fixed Rate Advances”) and (B) at least four
  Business Days prior to the date of the proposed Competitive Bid Borrowing, if
  such Borrower shall instead specify in the Notice of Competitive Bid
  Borrowing that the Advances comprising such Competitive Bid Borrowing shall
  be LIBO Rate Advances. Each Notice of Competitive Bid Borrowing shall be
  irrevocable and binding on such Borrower. The Agent shall in turn promptly
  notify each Lender of each request for a Competitive Bid Borrowing received
  by it from such Borrower by sending such Lender a copy of the related Notice
  of Competitive Bid Borrowing. 


	
 

	
 


	
 

	
          (ii)
  Each Lender may, if, in its sole discretion, it elects to do so, irrevocably
  offer to make one or more Competitive Bid Advances to such Borrower as part
  of such proposed Competitive Bid Borrowing at a rate or rates of interest
  specified by such Lender in its sole discretion, by notifying the Agent
  (which shall give prompt notice thereof to such Borrower), (A) before 9:30
  A.M. (New York City time) on the date of such proposed Competitive Bid
  Borrowing, in the case of a Competitive Bid Borrowing consisting of Fixed
  Rate Advances and (B) before 10:00 A.M. (New York City time) three Business
  Days before the date of such proposed Competitive Bid Borrowing, in the case
  of a Competitive Bid Borrowing consisting of 





16






	
 

	
 

	
 


	
 

	
LIBO Rate
  Advances of the minimum amount and maximum amount of each Competitive Bid
  Advance which such Lender would be willing to make as part of such proposed
  Competitive Bid Borrowing (which amounts of such proposed Competitive Bid
  may, subject to the proviso to the first sentence of this Section 2.03(a),
  exceed such Lender’s Commitment, if any), the rate or rates of interest therefor and such Lender’s Applicable Lending Office with respect to such
  Competitive Bid Advance; provided that if the Agent in its capacity as
  a Lender shall, in its sole discretion, elect to make any such offer, it
  shall notify such Borrower of such offer at least 30 minutes before the time
  and on the date on which notice of such election is to be given to the Agent,
  by the other Lenders. If any Lender shall elect not to make such an offer,
  such Lender shall so notify the Agent before 10:00 A.M. (New York City time),
  and such Lender shall not be obligated to, and shall not, make any
  Competitive Bid Advance as part of such Competitive Bid Borrowing; provided
  that the failure by any Lender to give such notice shall not cause such
  Lender to be obligated to make any Competitive Bid Advance as part of such
  proposed Competitive Bid Borrowing. 


	
 

	
 


	
 

	
          (iii)
  Such Borrower shall, in turn, (A) before 10:30 A.M. (New York City time) on
  the date of such proposed Competitive Bid Borrowing, in the case of a
  Competitive Bid Borrowing consisting of Fixed Rate Advances and (B) before
  11:00 A.M. (New York City time) three Business Days before the date of such
  proposed Competitive Bid Borrowing, in the case of a Competitive Bid
  Borrowing consisting of LIBO Rate Advances, either: 


	
 

	
 

	
 


	
 

	
 

	
          (x)
  cancel such Competitive Bid Borrowing by giving the Agent notice to that
  effect, or 


	
 

	
 

	
 


	
 

	
 

	
          (y)
  accept one or more of the offers made by any Lender or Lenders pursuant to
  paragraph (ii) above, in its sole discretion, by giving notice to the Agent
  of the amount of each Competitive Bid Advance (which amount shall be equal to
  or greater than the minimum amount, and equal to or less than the maximum
  amount, notified to such Borrower by the Agent on behalf of such Lender for
  such Competitive Bid Advance pursuant to paragraph (ii) above) to be made by
  each Lender as part of such Competitive Bid Borrowing, and reject any
  remaining offers made by Lenders pursuant to paragraph (ii) above by giving
  the Agent notice to that effect. Such Borrower shall accept the offers made
  by any Lender or Lenders to make Competitive Bid Advances in order of the
  lowest to the highest rates of interest offered by such Lenders. If two or more
  Lenders have offered the same interest rate, the amount to be borrowed at
  such interest rate will be allocated among such Lenders in proportion to the
  amount that each such Lender offered at such interest rate. 


	
 

	
 

	
 


	
 

	
          (iv)
  If such Borrower notifies the Agent that such Competitive Bid Borrowing is
  cancelled pursuant to paragraph (iii)(x) above, the Agent shall give prompt
  notice thereof to the Lenders and such Competitive Bid Borrowing shall not be
  made. 


	
 

	
 

	
 


	
 

	
          (v)
  If such Borrower accepts one or more of the offers made by any Lender or
  Lenders pursuant to paragraph (iii)(y) above, the Agent shall in turn
  promptly notify (A) each Lender that has made an offer as described in
  paragraph (ii) above, of the date and aggregate amount of such Competitive
  Bid Borrowing and whether or not any offer or offers made by such Lender
  pursuant to paragraph (ii) above have been accepted by such Borrower, (B)
  each Lender that is to make a Competitive Bid Advance as part of such
  Competitive Bid Borrowing, of the amount of each Competitive Bid Advance to
  be made by such Lender as part of such Competitive Bid Borrowing, and (C)
  each Lender that is to make a Competitive Bid Advance as part of such
  Competitive Bid Borrowing, upon receipt, that the Agent has received forms of
  documents 





17






	
 

	
 


	
 

	
appearing to
  fulfill the applicable conditions set forth in Article III. Each Lender that
  is to make a Competitive Bid Advance as part of such Competitive Bid
  Borrowing shall, before 11:00 A.M. (New York City time) on the date of such
  Competitive Bid Borrowing specified in the notice received from the Agent
  pursuant to clause (A) of the preceding sentence or any later time when such
  Lender shall have received notice from the Agent pursuant to clause (C) of
  the preceding sentence, make available for the account of its Applicable
  Lending Office to the Agent at its address referred to in Section 8.02, in
  same day funds, such Lender’s portion of such Competitive Bid Borrowing. Upon
  fulfillment of the applicable conditions set forth in Article III and after
  receipt by the Agent of such funds, the Agent will make such funds available
  to such Borrower at the location specified by such Borrower in its Notice of
  Competitive Bid Borrowing. Promptly after each Competitive Bid Borrowing the
  Agent will notify each Lender of the amount of the Competitive Bid Borrowing
  and the dates upon which such Competitive Bid Borrowing commenced and will
  terminate. 


	
 

	
 


	
 

	
          (vi)
  If such Borrower notifies the Agent that it accepts one or more of the offers
  made by any Lender or Lenders pursuant to paragraph (iii)(y) above, such
  notice of acceptance shall be irrevocable and binding on such Borrower. Such
  Borrower shall indemnify each Lender against any loss, cost or expense
  incurred by such Lender as a result of any failure to fulfill on or before
  the date specified in the related Notice of Competitive Bid Borrowing for
  such Competitive Bid Borrowing the applicable conditions set forth in Article
  III, including, without limitation, any loss (including loss of anticipated
  profits), cost or expense incurred by reason of the liquidation or
  reemployment of deposits or other funds acquired by such Lender to fund the
  Competitive Bid Advance to be made by such Lender as part of such Competitive
  Bid Borrowing when such Competitive Bid Advance, as a result of such failure,
  is not made on such date. 





                    (b)
Each Competitive Bid Borrowing shall be in an aggregate amount of $5,000,000 or
an integral multiple of $1,000,000 in excess thereof and, following the making
of each Competitive Bid Borrowing, the Borrower making such Competitive Bid
Borrowing shall be in compliance with the limitation set forth in the proviso
to the first sentence of subsection (a) above. 


                    (c)
Within the limits and on the conditions set forth in this Section 2.03, any
Borrower may from time to time borrow under this Section 2.03, repay or prepay
pursuant to subsection (d) below, and reborrow under this Section 2.03, provided
that a Competitive Bid Borrowing shall not be made on more than one day within
any period of three Business Days. 


                    (d)
Any Borrower making a Competitive Bid Borrowing shall repay to the Agent for
the account of each Lender that has made a Competitive Bid Advance, on the
earlier of the Termination Date or the maturity date of each Competitive Bid
Advance (such maturity date being that specified by such Borrower for repayment
of such Competitive Bid Advance in the related Notice of Competitive Bid
Borrowing delivered pursuant to subsection (a)(i) above and, if applicable,
provided in the Competitive Bid Note evidencing such Competitive Bid Advance),
the then unpaid principal amount of such Competitive Bid Advance. No Borrower
shall have any right to prepay any principal amount of any Competitive Bid
Advance unless, and then only on the terms, specified by such Borrower for such
Competitive Bid Advance in the related Notice of Competitive Bid Borrowing
delivered pursuant to subsection (a)(i) above and, if applicable, set forth in
the Competitive Bid Note evidencing such Competitive Bid Advance. 


                    (e)
Each Borrower making a Competitive Bid Borrowing shall pay interest on the
unpaid principal amount of each Competitive Bid Advance from the date of such
Competitive Bid Advance to the date the principal amount of such Competitive
Bid Advance is repaid in full, at the rate of interest for such Competitive Bid
Advance specified by the Lender making such Competitive Bid 


18






Advance in its
notice with respect thereto delivered pursuant to subsection (a)(ii) above,
payable on the interest payment date or dates specified by such Borrower for
such Competitive Bid Advance in the related Notice of Competitive Bid Borrowing
delivered pursuant to subsection (a)(i) above, and, if applicable, as provided
in the Competitive Bid Note evidencing such Competitive Bid Advance. Upon the
occurrence and during the continuance of an Event of Default, such Borrower
shall pay interest on the amount of unpaid principal of each Competitive Bid
Advance owing to a Lender, payable in arrears on the date or dates interest is
payable thereon, at a rate per annum equal at all times to 2% per annum above
the rate per annum required to be paid on such Competitive Bid Advance under
the terms of such Competitive Bid Advance unless otherwise agreed in any
applicable Competitive Bid Note. 


                    (f)
The indebtedness of any Borrower resulting from each Competitive Bid Advance
made to such Borrower as part of a Competitive Bid Borrowing shall, to the
extent requested by any Lender making such Competitive Bid Advance, be
evidenced by a separate Competitive Bid Note of such Borrower payable to the
order of such Lender. 


                    SECTION
2.04 Swingline Advances. 



                    (a)
Subject to the terms and conditions set forth herein, the Swingline Lender
agrees to make Swingline Advances to the Borrowers from time to time during the
period from the Effective Date until the Termination Date, in an aggregate
principal amount at any time outstanding that will not result in (i) the
aggregate principal amount of outstanding Swingline Advances exceeding
$15,000,000 or (ii) the sum of the total Revolving Credit Exposures plus the
aggregate principal amount of outstanding Competitive Loans exceeding the total
Revolving Credit Commitments; provided that the Swingline Lender shall not be
required to make a Swingline Advance to refinance an outstanding Swingline
Advance. Within the foregoing limits and subject to the terms and conditions
set forth herein, the Borrowers may borrow, prepay and reborrow Swingline
Advances.  


                    (b)
To request a Swingline Advance, the applicable Borrower shall notify the Agent
of such request by telephone (confirmed by telecopy), not later than 12:00
noon, New York City time, on the day of a proposed Swingline Advance. Each such
notice shall be irrevocable and shall specify the requested date (which shall
be a Business Day) and amount of the requested Swingline Advance. The Agent
will promptly advise the Swingline Lender of any such notice received from the
applicable Borrower. The Swingline Lender shall make each Swingline Advance
available to the applicable Borrower by means of a credit to the general
deposit account of such Borrower with the Swingline Lender. 


                    (c)
The Swingline Lender may by written notice given to the Agent not later than
10:00 a.m., New York City time, on any Business Day require the Lenders to
acquire participations on such Business Day in all or a portion of the
Swingline Advances outstanding. Such notice shall specify the aggregate amount
of Swingline Advances in which Lenders will participate. Promptly upon receipt
of such notice, the Agent will give notice thereof to each Lender, specifying
in such notice such Lender’s Pro Rata Share of such Swingline Advance or
Advances. Each Lender hereby absolutely and unconditionally agrees, upon
receipt of notice as provided above, to pay to the Agent, for the account of
the Swingline Lender, such Lender’s Pro Rata Share of such Swingline Advance or
Advances. Each Lender acknowledges and agrees that its obligation to acquire
participations in Swingline Advances pursuant to this paragraph is absolute and
unconditional and shall not be affected by any circumstance whatsoever,
including the occurrence and continuance of an Event of Default or reduction or
termination of the Revolving Credit Commitments, and that each such payment
shall be made without any offset, abatement, withholding or reduction
whatsoever. Each Lender shall comply with its obligation under this paragraph
by wire transfer of immediately available funds, in the same manner as provided
in Section 2.02 with respect to Loans made by such Lender (and Section 2.02
shall apply, mutatis mutandis, to the 


19






payment
obligations of the Lenders), and the Agent shall promptly pay to the Swingline
Lender the amounts so received by it from the Lenders. The Agent shall notify
the Borrowers of any participations in any Swingline Advance acquired pursuant
to this paragraph, and thereafter payments in respect of such Swingline Advance
shall be made to the Agent and not to the Swingline Lender. Any amounts
received by the Swingline Lender from any Borrower (or other party on behalf of
the Borrowers) in respect of a Swingline Advance after receipt by the Swingline
Lender of the proceeds of a sale of participations therein shall be promptly
remitted to the Agent; any such amounts received by the Agent shall be promptly
remitted by the Agent to the Lenders that shall have made their payments
pursuant to this paragraph and to the Swingline Lender, as their interests may
appear; provided that any such payment so remitted shall be repaid to
the Swingline Lender or to the Agent, as applicable, if and to the extent such
payment is required to be refunded to the applicable Borrower for any reason.
The purchase of participations in a Swingline Advance pursuant to this
paragraph shall not relieve any Borrower of any default in the payment thereof.



                    SECTION
2.05 Termination or Reduction of the Commitments. Unless previously
terminated, (i) the Term Loan Commitments shall terminate at 5:00 p.m., New
York time, at the end of the Term Loan Advance Period (it being understood and
agreed that any portion of the Term Loan Commitment not used on the date of the
funding of the Term Loan Advances will be permanently reduced and cancelled)
and (ii) all other Commitments shall terminate on the Termination Date. The
Borrowers shall have the right, upon at least five Business Days’ notice to the
Agent, to terminate in whole or reduce ratably in part the unused portions of
the Letter of Credit Facility and the Unused Revolving Credit Commitments, provided
that each partial reduction shall be in the aggregate amount of $5,000,000 or
an integral multiple of $1,000,000 in excess thereof. The Letter of Credit
Facility shall be permanently reduced from time to time on the date of each
reduction in the Revolving Credit Facility by the amount, if any, by which the
Letter of Credit Facility exceeds the Revolving Credit Facility after giving
effect to such reduction of the Revolving Credit Facility. 


                    SECTION
2.06 Repayment of Revolving Credit Advances, Term Loan Advances, Swingline
Advances and Letter of Credit Advances; Evidence of Debt. (a) Revolving
Credit Advances. The Borrowers shall repay to the Agent for the ratable
account of the Lenders on the Termination Date the aggregate principal amount
of the Revolving Credit Advances then outstanding. 


                    (b)
Term Loan Advances. The applicable Borrower shall repay the Term Loan
Advances on the last day of each calendar quarter (commencing with the calendar
quarter ending on December 31, 2007) in an aggregate principal amount equal to
$10,700,000 (assuming that the entire $200,000,000 of the Term Loan Commitment
is funded or a proportionately lesser amount if a lesser amount of the Term
Loan Commitment is funded) on each such day. To the extent not previously
repaid, all unpaid Term Loan Advances shall be paid in full in dollars by such
Borrower on the Termination Date. 


                    (c)
Letter of Credit Advances. The Borrowers shall repay to the Agent for
the account of each Issuing Bank and each other Lender that has made a Letter
of Credit Advance the outstanding principal amount of each Letter of Credit
Advance made by each of them on the earlier of the Termination Date or on
demand. 


                    (d)
Swingline Advances. The Borrowers shall repay the then unpaid principal
amount of each Swingline Advance (and accrued interest thereon) on the earlier
of (i) the Termination Date and (ii) the first date after such Swingline
Advance is made that is the 15th or last day of a calendar month and
is at least two Business Days after such Swingline Advance is made; provided
that on each date that a Revolving Credit Borrowing or Competitive Bid
Borrowing is made, the Borrowers shall repay all Swingline Advances then
outstanding. 


20






                    (e)
Each Lender shall maintain in accordance with its usual practice an account or
accounts evidencing the indebtedness of the Borrowers to such Lender resulting
from each Advance made by such Lender, including the amounts of principal and
interest payable and paid to such Lender from time to time hereunder. The Agent
shall maintain accounts in which it shall record (i) the amount of each Advance
made hereunder, the Class and Type thereof and the Interest Period applicable
thereto, (ii) the amount of any principal or interest due and payable or to
become due and payable from each Borrower to each Lender hereunder and (iii)
the amount of any sum received by the Agent hereunder for the account of the
Lenders and each Lender’s share thereof. The entries made in the accounts
maintained pursuant to this paragraph (c) shall be prima facie evidence
of the existence and amounts of the obligations recorded therein; provided
that the failure of any Lender or the Agent to maintain such accounts or any
error therein shall not in any manner affect the obligation of any Borrower to
repay the Advances in accordance with the terms of this Agreement. 


                    (f)
Any Lender may request that Advances made by it be evidenced by the applicable
Notes. In such event, the Borrowers shall prepare, execute and deliver to such
Lender the applicable Notes payable to the order of such Lender (or, if
requested by such Lender, to such Lender and its registered assigns).
Thereafter, the Advances evidenced by such Notes and interest thereon shall at
all times (including after assignment pursuant to Section 8.07) be represented
by such Notes payable to the order of the payee named therein (or, if such
promissory note is a registered note, to such payee and its registered
assigns). 


                    SECTION
2.07 Interest on Revolving Credit Advances, Term Loan Advances, Swingline
Advances and Letter of Credit Advances. (a) Scheduled Interest. The
Borrowers shall pay interest on the unpaid principal amount of each Revolving
Credit Advance, each Term Loan Advance, each Swingline Advance and each Letter
of Credit Advance owing to each Lender from the date of such Advance until such
principal amount shall be paid in full, at the following rates per annum: 


	
 

	
 


	
 

	
          (i)
Base Rate Advances. During such periods as such Advance is a Base Rate
Advance, a rate per annum equal at all times to the sum of (x) the Base Rate
in effect from time to time plus (y) the Applicable Rate in effect from time
to time, payable in arrears quarterly on the last day of each February, May,
August and November during such periods and on the date all Base Rate
Advances shall be Converted or paid in full.  


	
 

	
 


	
 

	
          (ii)
Eurodollar Rate Advances. During such periods as such Advance is a
Eurodollar Rate Advance, a rate per annum equal at all times during each
Interest Period for such Advance to the sum of (x) the Eurodollar Rate for
such Interest Period for such Advance plus (y) the Applicable Rate in effect
from time to time payable in arrears on the last day of such Interest Period
and, if such Interest Period has a duration of more than three months, on
each day that occurs during such Interest Period every three months from the
first day of such Interest Period and on the date such Eurodollar Rate
Advance shall be Converted or paid in full.  


	
 

	
 


	
 

	
          (iii)
  Swingline Advances. With respect to a Swingline Advance, a rate per
  annum equal at all times to either (x) the Base Rate in effect from time to
  time or (y) the Money Market Rate in effect from time to time, payable in
  accordance with the terms of Section 2.06(d). Each Swingline Advance shall be
  a Base Rate Advance unless, prior to requesting a Swingline Loan, the
  applicable Borrower shall have requested that such Swingline Advance bear
  interest at the Money Market Rate and the Swingline Lender shall have quoted
  a Money Market Rate therefor which such Borrower shall select in its notice
  delivered pursuant to Section 2.04(b); provided that the Swingline
  Lender shall only be required to provide interest rate quotes for a Money
  Market Rate to the extent of availability of Money Market Rates by the
  Swingline Lender.





21







                    (b)
Default Interest. Upon the occurrence and during the continuance of an
Event of Default, the Agent may, and upon the request of the Required Lenders
shall, give notice to the Borrowers to pay, and the Borrower shall pay,
interest (“Default Interest”) on the unpaid principal amount of each Advance
owing to each Lender, payable in arrears on the dates referred to in clause
(a)(i) or (a)(ii) above, at a rate per annum equal at all times to 2% per annum
above the rate per annum required to be paid on such Advance pursuant to clause
(a)(i) or (a)(ii) above; provided, however, that following acceleration of the
Advances pursuant to Section 6.01, Default Interest shall accrue and be payable
whether or not previously required by the Agent.  


                    SECTION
2.08 Interest Rate Determination. (a) The Agent shall give prompt notice
to the Borrowers and the Lenders of the applicable interest rate determined by
the Agent for purposes of Section 2.07(a)(i) or (ii). 


                    (b)
If, with respect to any Eurodollar Rate Advances, the Required Lenders
reasonably determine and notify the Agent that the Eurodollar Rate for any
Interest Period for such Advances will not adequately reflect the cost to such
Required Lenders of making, funding or maintaining their respective Eurodollar
Rate Advances for such Interest Period, the Agent shall forthwith so notify the
Borrowers and the Lenders, whereupon (i) each Eurodollar Rate Advance will
(unless repaid, or otherwise Converted by the Borrowers) automatically, on the
last day of the then existing Interest Period therefor, Convert into a Base
Rate Advance, and (ii) the obligation of the Lenders to make, or to Convert
Revolving Credit Advances into, Eurodollar Rate Advances shall be suspended
until the Agent shall notify the Borrowers and the Lenders that the
circumstances causing such suspension no longer exist. Each Lender that
provides a notice as described in this Section 2.08(b) agrees to provide to the
Borrowers a certificate in reasonable detail summarizing the basis for such
notice. 


                    (c)
If the Borrowers shall fail to select the duration of any Interest Period for
any Eurodollar Rate Advances in accordance with the provisions contained in the
definition of “Interest Period” in Section 1.01, the Agent will forthwith so
notify the Borrowers and the Lenders and such Advances will automatically, on
the last day of the then existing Interest Period therefor, be Converted into
Base Rate Advances. 


                    (d)
On the date on which the aggregate unpaid principal amount of Eurodollar Rate
Advances comprising any Borrowing shall be reduced, by payment or prepayment or
otherwise, to less than $5,000,000, such Advances shall automatically Convert
into Base Rate Advances. 


                    (e)
Upon the occurrence and during the continuance of any Event of Default, (i)
each Eurodollar Rate Advance will automatically, on the last day of the then
existing Interest Period therefor, Convert into a Base Rate Advance and (ii)
the obligation of the Lenders to make, or to Convert Advances into, Eurodollar
Rate Advances shall be suspended. 


                    (f)
If Reuters BBA LIBOR Rates Page 3750 is unavailable and JPMCB is unable to
furnish timely information to the Agent for determining the Eurodollar Rate or
LIBO Rate for any Eurodollar Rate Advances or LIBO Rate Advances, as the case
may be, 


	
 

	
 


	
 

	
          (i)
  the Agent shall forthwith notify the Borrowers and the Lenders that the
  interest rate cannot be determined for such Eurodollar Rate Advances or LIBO
  Rate Advances, as the case may be, 


	
 

	
 


	
 

	
          (ii)
  with respect to Eurodollar Rate Advances, each such Advance will, on the last
  day of the then existing Interest Period therefor, be prepaid by the
  Borrowers or be automatically 





22






	
 

	
 


	
 

	
Converted
  into a Base Rate Advance (or if such Advance is then a Base Rate Advance,
  will continue as a Base Rate Advance) at the Borrowers’ election, and 


	
 

	
 


	
 

	
          (iii)
  the obligation of the Lenders to make Eurodollar Rate Advances or LIBO Rate
  Advances or to Convert Revolving Credit Advances into Eurodollar Rate
  Advances shall be suspended until the Agent shall notify the Borrowers and
  the Lenders that the circumstances causing such suspension no longer exist. 





                    SECTION
2.09 Optional Conversion of Revolving Credit Advances and Term Loan Advances.
Each Borrower may on any Business Day, upon notice given to the Agent not later
than 11:00 A.M. (New York City time) on the third Business Day prior to the
date of the proposed Conversion and subject to the provisions of Sections 2.08
and 2.12, Convert Revolving Credit Advances or Term Loan Advances of one Type
comprising the same Borrowing made to such Borrower into Revolving Credit
Advances or Term Loan Advances, as applicable, of the other Type; provided,
however, that any Conversion of Eurodollar Rate Advances into Base Rate
Advances shall be made only on the last day of an Interest Period for such
Eurodollar Rate Advances, any Conversion of Base Rate Advances into Eurodollar
Rate Advances shall be in an amount not less than the minimum amount specified
in Section 2.02(b) and no Conversion of any Revolving Credit Advances or Term
Loan Advances shall result in more separate Revolving Credit Borrowings and
Term Loan Borrowing than permitted under Section 2.02(b). Each such notice of a
Conversion shall, within the restrictions specified above, specify (i) the date
of such Conversion, (ii) the Revolving Credit Advances or Term Loan Advances,
as applicable, to be Converted, and (iii) if such Conversion is into Eurodollar
Rate Advances, the duration of the initial Interest Period for each such
Advance. Each notice of Conversion shall be irrevocable and binding on the
applicable Borrower. This Section shall not apply to Competitive Bid Borrowings
or Swingline Advances, which may not be converted or continued. 


                    SECTION
2.10 Prepayments of Revolving Credit Advances and Term Loan Advances.
(a) Optional. Each Borrower may, upon notice at least one Business Day
prior to the date of such prepayment to the Agent (and, in the case of
prepayment of a Swingline Advance, the Swingline Lender) stating the proposed
date and aggregate principal amount of the prepayment, and if such notice is
given such Borrower shall, prepay the outstanding principal amount of the
Revolving Credit Advances comprising part of the same Revolving Credit
Borrowing or the Term Loan Advances comprising part of the Term Loan Borrowing,
as applicable, made to such Borrower in whole or ratably in part, together with
accrued interest to the date of such prepayment on the principal amount
prepaid; provided, however, that (x) each partial prepayment
shall be in an aggregate principal amount of $1,000,000 or an integral multiple
of $500,000 in excess thereof in the case of Base Rate Advances and in an
aggregate principal amount of $5,000,000 or an integral multiple of $1,000,000
in excess thereof in the case of Eurodollar Rate Advances and (y) in the event
of any such prepayment of a Eurodollar Rate Advance, such Borrower shall be
obligated to reimburse the Lenders in respect thereof pursuant to Section
8.04(c). 


                    (b)
Mandatory. (i) (A) The Borrowers shall, on each Business Day, prepay an
aggregate principal amount of the Revolving Credit Advances comprising part of
the same Borrowings or the Letter of Credit Advances equal to the amount by
which (1) the sum of the aggregate principal amount of (x) the Revolving Credit
Advances, (y) the Letter of Credit Advances and (z) the Competitive Bid
Advances then outstanding plus the aggregate Available Amount of all
Letters of Credit then outstanding exceeds (2) the Revolving Credit Facility on
such Business Day. Such prepayments of the Revolving Credit Facility shall be first
applied to prepay Letter of Credit Advances then outstanding until such
Advances are paid in full, and second applied to prepay Revolving Credit
Advances then outstanding comprising part of the same Borrowings until such
Advances are paid in full. 


23






                    (B)
The Borrowers shall, on each Business Day and on the Termination Date, pay to
the Agent for deposit in the Letter of Credit Collateral Account an amount
sufficient to cause the aggregate amount on deposit in such account to equal
the amount by which the aggregate Available Amount of all Letters of Credit
then outstanding exceeds the Letter of Credit Facility on such Business Day or
the Termination Date, as the case may be. 


	
 

	
 


	
 

	
          (ii)
  All prepayments under this subsection (b) shall be made together with accrued
  interest to the date of such prepayment on the principal amount prepaid. 





                    SECTION
2.11 Increased Costs. (a) If, due to either (i) the introduction of or
any change in or in the interpretation of any law or regulation after the date
hereof or (ii) the compliance with any guideline or request from any central
bank or other governmental authority made after the date hereof (whether or not
having the force of law), there shall be any increase in the cost to any Lender
of agreeing to make or making, funding or maintaining Eurodollar Rate Advances
or LIBO Rate Advances or of agreeing to issue or of issuing or maintaining or
participating in Letters of Credit (excluding for purposes of this Section 2.11
any such increased costs resulting from (i) Taxes or Other Taxes (as to which
Section 2.14 shall govern) and (ii) changes in the basis of taxation of overall
net income or overall gross income by the United States or by the foreign
jurisdiction or state under the laws of which such Lender is organized or has
its Applicable Lending Office or any political subdivision thereof), then the
Borrowers shall from time to time, upon demand by such Lender (with a copy of such
demand to the Agent), pay to the Agent for the account of such Lender
additional amounts sufficient to compensate such Lender for such increased
cost; provided, however, that before making any such demand, each
Lender agrees to use reasonable efforts (consistent with its internal policy
and legal and regulatory restrictions) to designate a different Applicable
Lending Office if the making of such a designation would avoid the need for, or
reduce the amount of, such increased cost and would not, in the reasonable
judgment of such Lender, be otherwise disadvantageous to such Lender. A
certificate in reasonable detail summarizing the basis for and calculating the
amount of such increased cost, submitted to the Borrowers and the Agent by such
Lender shall be prima facie evidence of the amount claimed so long as any
underlying determinations and allocations are made on a reasonable basis; provided,
however, that no Lender shall be required to disclose in any such
certificate any confidential proprietary information. 


                    (b)
If any Lender determines that compliance with any law or regulation or any
guideline or request from any central bank or other governmental authority
(whether or not having the force of law) affects or would affect the amount of
capital required or expected to be maintained by such Lender or any corporation
controlling such Lender and that the amount of such capital is increased by or
based upon the existence of such Lender’s commitment to lend or to issue or
participate in Letters of Credit hereunder and other commitments of this type
or the issuance or maintenance of the Letters of Credit, then, upon demand by
such Lender (with a copy of such demand to the Agent), the Borrowers shall pay
to the Agent for the account of such Lender, from time to time as specified by
such Lender, additional amounts sufficient to compensate such Lender or such
corporation in the light of such circumstances, to the extent that such Lender
reasonably determines such increase in capital to be allocable to the existence
of such Lender’s commitment to lend or to issue or participate in Letters of
Credit hereunder or the issuance or maintenance of the Letters of Credit (or
other similar contingent obligations). A certificate in reasonable detail summarizing
the basis for and calculating such amounts submitted to the Borrowers and the
Agent by such Lender shall be prima facie evidence of the amount claimed so
long as any underlying determinations and allocations are made on a reasonable
basis; provided, however, that no Lender shall be required to
disclose in any such certificate any confidential proprietary information. 


                    SECTION
2.12 Illegality. Notwithstanding any other provision of this Agreement,
if any Lender shall notify the Agent that the introduction of or any change in
or in the interpretation of any 


24






law or
regulation makes it unlawful, or any central bank or other governmental
authority asserts that it is unlawful, for any Lender or its Eurodollar Lending
Office to perform its obligations hereunder to make Eurodollar Rate Advances or
to fund or maintain Eurodollar Rate Advances hereunder, (a) each Eurodollar
Rate Advance will automatically, upon such demand, Convert into a Base Rate
Advance and (b) the obligation of the Lenders to make Eurodollar Rate Advances
or LIBO Rate Advances or to Convert Revolving Credit Advances into Eurodollar
Rate Advances shall be suspended until the Agent shall notify the Borrowers and
the Lenders that the circumstances causing such suspension no longer exist; provided,
however, that before making any such demand, each Lender agrees to use
reasonable efforts (consistent with its internal policy and legal and
regulatory restrictions) to designate a different Eurodollar Lending Office if
the making of such a designation would allow such Lender or its Eurodollar
Lending Office to continue to perform its obligations to make Eurodollar Rate
Advances or to continue to fund or maintain Eurodollar Rate Advances and would
not, in the judgment of such Lender, be otherwise disadvantageous to such
Lender. 


                    SECTION
2.13 Payments and Computations. (a) The Borrowers shall make each
payment hereunder not later than 11:00 A.M. (New York City time) on the day
when due to the Agent at the Agent’s Account in same day funds and without
deduction, set off or counterclaim. The Agent will promptly thereafter cause to
be distributed like funds relating to the payment of principal or interest or
facility fees ratably (other than amounts payable pursuant to Section 2.03,
2.04, 2.11, 2.14 or 8.04(c)) to the Lenders for the account of their respective
Applicable Lending Offices, and like funds relating to the payment of any other
amount payable to any Lender to such Lender for the account of its Applicable
Lending Office, in each case to be applied in accordance with the terms of this
Agreement. Upon any Assuming Lender becoming a Lender hereunder as a result of
a Revolving Credit Commitment Increase pursuant to Section 2.18, and upon the
Agent’s receipt of such Lender’s Assumption Agreement and recording of the
information contained therein in the Register, from and after the applicable
Increase Date, the Agent shall make all payments hereunder and under any Notes
issued in connection therewith in respect of the interest assumed thereby to
the Assuming Lender. Upon its acceptance of an Assignment and Acceptance and
recording of the information contained therein in the Register pursuant to
Section 8.07(c), from and after the effective date specified in such Assignment
and Acceptance, the Agent shall make all payments hereunder and under any Notes
in respect of the interest assigned thereby to the Lender assignee thereunder,
and the parties to such Assignment and Acceptance shall make all appropriate
adjustments in such payments for periods prior to such effective date directly
between themselves. 


                    (b)
Each Borrower hereby authorizes each Lender, if and to the extent payment owed
to such Lender is not made when due hereunder or under any Note held by such
Lender, to charge from time to time against any or all of such Borrower’s
accounts with such Lender any amount so due. 


                    (c)
All computations of interest based on the Base Rate shall be made by the Agent
on the basis of a year of 365 or 366 days, as the case may be, and all
computations of interest based on the Eurodollar Rate, the LIBO Rate or the
Federal Funds Rate, or in respect of Fixed Rate Advances, facility fees, Letter
of Credit commissions, any other fees shall be made by the Agent on the basis
of a year of 360 days, in each case for the actual number of days (including
the first day but excluding the last day) occurring in the period for which
such interest, fees or commissions are payable. Each determination by the Agent
of an interest rate hereunder shall be conclusive and binding for all purposes,
absent manifest error. 


                    (d)
Whenever any payment hereunder or under any Notes shall be stated to be due on
a day other than a Business Day, such payment shall be made on the next
succeeding Business Day, and such extension of time shall in such case be
included in the computation of payment of interest or facility fee, as the case
may be; provided, however, that, if such extension would cause
payment of interest on or 


25






principal of
Eurodollar Rate Advances or LIBO Rate Advances to be made in the next following
calendar month, such payment shall be made on the next preceding Business Day. 


                    (e)
Unless the Agent shall have received notice from the applicable Borrower prior
to the date on which any payment is due to the Lenders hereunder that such
Borrower will not make such payment in full, the Agent may assume that such
Borrower has made such payment in full to the Agent on such date and the Agent
may, in reliance upon such assumption, cause to be distributed to each Lender
on such due date an amount equal to the amount then due such Lender. If and to
the extent the applicable Borrower shall not have so made such payment in full
to the Agent, each Lender shall repay to the Agent forthwith on demand such
amount distributed to such Lender together with interest thereon, for each day
from the date such amount is distributed to such Lender until the date such
Lender repays such amount to the Agent, at the Federal Funds Rate. 


                    SECTION
2.14 Taxes. (a) Any and all payments by the Borrowers hereunder or under
any Notes shall be made, in accordance with Section 2.13, free and clear of and
without deduction for 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, taxes imposed on its net income, and
franchise taxes imposed on it in lieu of net income taxes, by the jurisdiction
under the laws of which such Lender or the Agent (as the case may be) is
organized or any political subdivision thereof and, in the case of each Lender,
taxes imposed on its net income, and franchise taxes imposed on it in lieu of
net income taxes, by the jurisdiction of such Lender’s Applicable Lending
Office or any political subdivision thereof (all such non-excluded taxes,
levies, imposts, deductions, charges, withholdings and liabilities in respect
of payments hereunder or under any Notes being hereinafter referred to as “Taxes”).
If the Borrowers shall be required by law to deduct any Taxes from or in
respect of any sum payable hereunder or under any Note to any Lender or the
Agent, (i) the sum payable shall be increased as may be necessary so that after
making all required deductions (including deductions applicable to additional
sums payable under this Section 2.14) such Lender or the Agent (as the case may
be) receives an amount equal to the sum it would have received had no such
deductions been made, (ii) the Borrowers shall make such deductions and (iii)
the Borrowers shall pay the full amount deducted to the relevant taxation
authority or other authority in accordance with applicable law. 


                    (b)
In addition, the Borrowers shall pay any present or future stamp or documentary
taxes or any other excise or property taxes, charges or similar levies that
arise from any payment made hereunder or under any Notes or from the execution,
delivery or registration of, performing under, or otherwise with respect to,
this Agreement or any Notes (hereinafter referred to as “Other Taxes”). 


                    (c)
The Borrowers shall indemnify each Lender and the Agent for and hold it
harmless against the full amount of Taxes or Other Taxes (including, without
limitation, taxes of any kind imposed by any jurisdiction on amounts payable
under this Section 2.14) imposed on or paid by such Lender or the Agent (as the
case may be) and any liability (including penalties, interest and expenses)
arising therefrom or with respect thereto. This indemnification shall be made
within 30 days from the date such Lender or the Agent (as the case may be)
makes written demand therefor. 


                    (d)
Within 30 days after the date of any payment of Taxes, the Borrowers shall
furnish to the Agent, at its address referred to in Section 8.02, the original
or a certified copy of a receipt evidencing such payment. In the case of any
payment hereunder or under any Notes by or on behalf of the Borrowers through
an account or branch outside the United States or by or on behalf of the
Borrowers by a payor that is not a United States person, if the Borrowers
determine that no Taxes are payable in respect thereof, the Borrowers shall
furnish, or shall cause such payor to furnish, to the Agent, at such address,
an opinion of counsel acceptable to the Agent stating that such payment is
exempt from Taxes. 


26






For purposes
of this subsection (d) and subsection (e), the terms “United States” and
“United States person” shall have the meanings specified in Section 7701
of the Internal Revenue Code. 


                    (e)
Each Lender organized under the laws of a jurisdiction outside the United
States, on or prior to the date of its execution and delivery of this Agreement
in the case of each Initial Lender and on the date of the Assumption Agreement
or the Assignment and Acceptance pursuant to which it becomes a Lender in the
case of each other Lender, and from time to time thereafter as requested in
writing by the Borrowers (but only so long as such Lender remains lawfully able
to do so), shall provide each of the Agent and the Borrowers with two original
Internal Revenue Service forms W-8ECI or W-8BEN, as appropriate, or any
successor or other form prescribed by the Internal Revenue Service, certifying
that such Lender is exempt from or entitled to a reduced rate of United States
withholding tax on payments pursuant to this Agreement or any Notes. Each
Lender organized under the laws of a jurisdiction outside the United States, on
or prior to the date of execution and delivery of this Agreement, or at the
time such Lender first becomes a party to this Agreement, represents and
warrants that it is lawfully able to provide the Borrowers with a valid form
W-8ECI or W-8BEN resulting in exemption form United States withholding tax on
payments of interest pursuant to this Agreement or any Notes. If any form or
document referred to in this subsection (e) requires the disclosure of
information, other than information necessary to compute the tax payable and
information required on the date hereof by Internal Revenue Service form W-8ECI
or W-8BEN, that the Lender reasonably considers to be confidential, the Lender
shall give notice thereof to the Borrowers and shall not be obligated to
include in such form or document such confidential information. 


                    (f)
For any period with respect to which a Lender has failed to provide the
Borrowers with the appropriate form described in Section 2.14(e) (other than
if such failure is due to a change in law occurring subsequent to the date on
which a form originally was required to be provided, or if such form otherwise
is not required under subsection (e) above), such Lender shall not be entitled
to indemnification under Section 2.14(a) or (c) with respect to Taxes imposed
by the United States by reason of such failure; provided, however,
that should a Lender become subject to Taxes because of its failure to deliver
a form required hereunder, the Borrowers shall take such steps as the Lender
shall reasonably request to assist the Lender to recover such Taxes. 


                    (g)
Any Lender claiming any additional amounts payable pursuant to this Section
2.14 agrees to use reasonable efforts (consistent with its internal policy and
legal and regulatory restrictions) to change the jurisdiction of its Eurodollar
Lending Office if the making of such a change would avoid the need for, or
reduce the amount of, any such additional amounts that may thereafter accrue
and would not, in the reasonable judgment of such Lender, be otherwise
disadvantageous to such Lender. 



                    SECTION
2.15 Sharing of Payments, Etc. If any Lender shall obtain any payment
(whether voluntary, involuntary, through the exercise of any right of set-off,
or otherwise) on account of the Advances owing to it (other than pursuant to
Section 2.11, 2.14 or 8.04(c)) in excess of its ratable share of payments on
account of the Advances obtained by all the Lenders, such Lender shall forthwith
purchase from the other Lenders such participations in the Advances owing to
them as shall be necessary to cause such purchasing Lender to share the excess
payment ratably with each of them; provided, however, that if all or any
portion of such excess payment is thereafter recovered from such purchasing
Lender, such purchase from each Lender shall be rescinded and such Lender shall
repay to the purchasing Lender the purchase price to the extent of such
recovery together with an amount equal to such Lender’s ratable share
(according to the proportion of (i) the amount of such Lender’s required
repayment to (ii) the total amount so recovered from the purchasing Lender) of
any interest or other amount paid or payable by the purchasing Lender in respect
of the total amount so recovered. The Borrowers agree that any Lender so
purchasing a participation from another Lender pursuant to this Section 2.15
may, to the  


27






fullest extent
permitted by law, exercise all its rights of payment (including the right of
set-off) with respect to such participation as fully as if such Lender were the
direct creditor of the respective Borrowers in the amount of such
participation. 


                    SECTION
2.16 Letters of Credit. (a) The Letter of Credit Facility. Each
Issuing Bank severally agrees, on the terms and conditions hereinafter set
forth, to issue standby letters of credit (together with the Existing Letters
of Credit, the “Letters of Credit”) for the account of any Borrower from
time to time on any Business Day during the period from the date hereof until
10 days before the Termination Date in an aggregate Available Amount for all
Letters of Credit not to exceed at any time the lesser of (i) the Letter of
Credit Facility at such time and (ii) the Unused Revolving Credit Commitments
of the Lenders at such time. No Letter of Credit shall have an expiration date
(including all rights of the applicable Borrower or the beneficiary to require
renewal) later than the earlier of (A) 10 days before the Termination Date and
(B) one year after the date of issuance thereof (but such Letter of Credit may
by its terms be automatically renewable annually upon notice (a “Notice of
Renewal”) given to the Issuing Bank that issued such Letter of Credit and
the Agent on or prior to any date for notice of renewal set forth in such
Letter of Credit but in any event at least three Business Days prior to the
date of the proposed renewal of such Letter of Credit and upon fulfillment of
the applicable conditions set forth in Article III unless such Issuing Bank has
notified the Borrowers (with a copy to the Agent) on or prior to the date for
notice of termination set forth in such Letter of Credit but in any event at
least 30 Business Days prior to the date of automatic renewal of its election
not to renew such Letter of Credit (a “Notice of Termination”)); provided
that the terms of each Letter of Credit that is automatically renewable
annually shall (x) require the Issuing Bank that issued such Letter of Credit
to give the beneficiary named in such Letter of Credit notice of any Notice of
Termination, (y) permit such beneficiary, upon receipt of such notice, to draw
under such Letter of Credit prior to the date such Letter of Credit otherwise
would have been automatically renewed and (z) not permit the expiration date
(after giving effect to any renewal) of such Letter of Credit in any event to
be extended to a date after the dates referred to in clause (A) above. If
either a Notice of Renewal is not given by the applicable Borrower or a Notice
of Termination is given by the relevant Issuing Bank pursuant to the
immediately preceding sentence, such Letter of Credit shall expire on the date
on which it otherwise would have been automatically renewed; provided, however,
that even in the absence of receipt of a Notice of Renewal the relevant Issuing
Bank may in its discretion, unless instructed to the contrary by the Agent or
the applicable Borrower, deem that a Notice of Renewal had been timely
delivered and in such case, a Notice of Renewal shall be deemed to have been so
delivered for all purposes under this Agreement. Each Letter of Credit shall
contain a provision authorizing the Issuing Bank that issued such Letter of
Credit to deliver to the beneficiary of such Letter of Credit, upon the
occurrence and during the continuance of an Event of Default, a notice (a “Default
Termination Notice”) terminating such Letter of Credit and giving such
beneficiary 15 days to draw such Letter of Credit. Within the limits of the
Letter of Credit Facility, and subject to the limits referred to above, the
Borrowers may request the issuance of Letters of Credit under this Section
2.16(a), repay any Letter of Credit Advances resulting from drawings thereunder
pursuant to Section 2.16(d) and request the issuance of additional Letters of
Credit under this Section 2.16(a). 


                    (b)
Request for Issuance. (i) Each Letter of Credit shall be issued upon
notice, given not later than 11:00 A.M. (New York City time) on the second
Business Day prior to the date of the proposed issuance of such Letter of
Credit, by any Borrower to any Issuing Bank, which shall give to the Agent and
each Lender prompt notice thereof by telecopier. Each such notice of issuance
of a Letter of Credit (a “Notice of Issuance”) shall be by telephone,
confirmed immediately in writing, or telecopier, specifying therein the
requested (A) date of such issuance (which shall be a Business Day), (B)
Available Amount of such Letter of Credit, (C) expiration date of such Letter
of Credit, (D) name and address of the beneficiary of such Letter of Credit and
(E) form of such Letter of Credit, and shall be accompanied by such application
and agreement for letter of credit as such Issuing Bank may specify to such
Borrower for use in connection with such requested Letter of Credit (in each
case, a “Letter of Credit Agreement”). If 


28







(x) the
requested form of such Letter of Credit is reasonably acceptable to such
Issuing Bank in its sole discretion and (y) it has not received notice of
objection to such issuance from the Required Lenders, such Issuing Bank will,
upon fulfillment of the applicable conditions set forth in Article III, make
such Letter of Credit available to the applicable Borrower at its office
referred to in Section 8.02 or as otherwise agreed with such Borrower in
connection with such issuance. In the event and to the extent that the
provisions of any Letter of Credit Agreement shall conflict with this
Agreement, the provisions of this Agreement shall govern. 


	
 

	
 


	
 

	
          (ii)
  Each Issuing Bank shall furnish (A) to the Agent on the first Business Day of
  each week a written report summarizing issuance and expiration dates of
  Letters of Credit issued by such Issuing Bank during the previous week and
  drawings during such week under all Letters of Credit issued by such Issuing
  Bank, (B) to each Lender on the first Business Day of each month a written
  report summarizing issuance and expiration dates of Letters of Credit issued
  by such Issuing Bank during the preceding month and drawings during such
  month under all Letters of Credit issued by such Issuing Bank and (C) to the
  Agent and each Lender on the first Business Day of each calendar quarter a
  written report setting forth the average daily aggregate Available Amount
  during the preceding calendar quarter of all Letters of Credit issued by such
  Issuing Bank. 





                    (c)
Participations. By the issuance of a Letter of Credit (or an amendment
to a Letter of Credit increasing the amount thereof) and without any further
action on the part of the applicable Issuing Bank or the Lenders, such Issuing
Bank hereby grants to each Lender, and each Lender hereby acquires from such
Issuing Bank, a participation in such Letter of Credit equal to such Lender’s
Pro Rata Share of the Available Amount of such Letter of Credit. Each Borrower
hereby agrees to each such participation. In consideration and in furtherance
of the foregoing, each Lender hereby absolutely and unconditionally agrees to
pay to the Agent, for the account of such Issuing Bank, such Lender’s Pro Rata
Share of each drawing made under a Letter of Credit funded by such Issuing Bank
and not reimbursed by the applicable Borrower on the date made, or of any
reimbursement payment required to be refunded to any Borrower for any reason.
Each Lender acknowledges and agrees that its obligation to acquire
participations pursuant to this paragraph in respect of Letters of Credit is
absolute and unconditional and shall not be affected by any circumstance
whatsoever, including any amendment, renewal or extension of any Letter of
Credit or the occurrence and continuance of a Default or reduction or
termination of the Revolving Credit Commitments, and that each such payment
shall be made without any offset, abatement, withholding or reduction
whatsoever. Each Lender further acknowledges and agrees that its participation
in each Letter of Credit will be automatically adjusted to reflect such
Lender’s Pro Rata Share of the Available Amount of such Letter of Credit at
each time such Lender’s Revolving Credit Commitment is amended pursuant to the
operation of Section 2.18, an assignment in accordance with Section 8.07 or
otherwise pursuant to this Agreement. 


                    (d)
Drawing and Reimbursement. The payment by any Issuing Bank of a draft
drawn under any Letter of Credit shall constitute for all purposes of this
Agreement the making by such Issuing Bank of a “Letter of Credit Advance”,
which shall be a Base Rate Advance, in the amount of such draft. Each Issuing
Bank shall give prompt notice to the applicable Borrower and the Agent of each
drawing under any Letter of Credit issued by it. Upon written demand by such
Issuing Bank, each Lender shall pay to the Agent such Lender’s Pro Rata Share
of such outstanding Letter of Credit Advance, by making available for the
account of its Applicable Lending Office to the Agent for the account of such
Issuing Bank, by deposit to the Agent’s Account, in same day funds, an amount
equal to the portion of the outstanding principal amount of such Letter of
Credit Advance to be funded by such Lender. Each Lender acknowledges and agrees
that its obligation to make Letter of Credit Advances pursuant to this
paragraph in respect of Letters of Credit is absolute and unconditional and
shall not be affected by any circumstance whatsoever, including any amendment,
renewal or extension of any Letter of Credit or the 


29






occurrence and
continuance of a Default or reduction or termination of the Revolving Credit
Commitments, and that each such payment shall be made without any offset,
abatement, withholding or reduction whatsoever. Promptly after receipt thereof,
the Agent shall transfer such funds to such Issuing Bank. Each Lender agrees to
fund its Pro Rata Share of an outstanding Letter of Credit Advance on (i) the
Business Day on which demand therefor is made by the Issuing Bank which made
such Advance, provided notice of such demand is given not later than
11:00 A.M. (New York City time) on such Business Day or (ii) the first Business
Day next succeeding such demand if notice of such demand is given after such
time. If and to the extent that any Lender shall not have so made the amount of
such Letter of Credit Advance available to the Agent, such Lender agrees to pay
to the Agent forthwith on demand such amount together with interest thereon,
for each day from the date of demand by such Issuing Bank until the date such
amount is paid to the Agent, at the Federal Funds Rate for its account or the
account of such Issuing Bank, as applicable. If such Lender shall pay to the
Agent such amount for the account of such Issuing Bank on any Business Day,
such amount so paid in respect of principal shall constitute a Letter of Credit
Advance made by such Lender on such Business Day for purposes of this
Agreement, and the outstanding principal amount of the Letter of Credit Advance
made by such Issuing Bank shall be reduced by such amount on such Business Day.



                    (e)
Failure to Make Letter of Credit Advances. The failure of any Lender to
make the Letter of Credit Advance to be made by it on the date specified in
Section 2.16(d) shall not relieve any other Lender of its obligation hereunder
to make its Letter of Credit Advance on such date, but no Lender shall be
responsible for the failure of any other Lender to make the Letter of Credit
Advance to be made by such other Lender on such date. 


                    (f)
Obligations Absolute. The obligations of the Borrowers under this
Agreement, any Letter of Credit Agreement and any other agreement or instrument
relating to any Letter of Credit shall be unconditional and irrevocable, and
shall be paid strictly in accordance with the terms of this Agreement, such
Letter of Credit Agreement and such other agreement or instrument under all
circumstances, including, without limitation, the following circumstances: 


	
 

	
 


	
 

	
          (i)
  any lack of validity or enforceability of this Agreement, any Note, any
  Letter of Credit Agreement, any Letter of Credit or any other agreement or
  instrument relating thereto (all of the foregoing being, collectively, the “L/C
  Related Documents”); 


	
 

	
 


	
 

	
          (ii)
  any change in the time, manner or place of payment of, or in any other term
  of, all or any of the obligations of any Borrower in respect of any L/C
  Related Document or any other amendment or waiver of or any consent to
  departure from all or any of the L/C Related Documents; 


	
 

	
 


	
 

	
          (iii)
  the existence of any claim, set-off, defense or other right that any Borrower
  may have at any time against any beneficiary or any transferee of a Letter of
  Credit (or any Persons for whom any such beneficiary or any such transferee
  may be acting), any Issuing Bank or any other Person, whether in connection
  with the transactions contemplated by the L/C Related Documents or any
  unrelated transaction; 


	
 

	
 


	
 

	
          (iv)
  any statement or any other document presented under a 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; 


	
 

	
 


	
 

	
          (v)
  payment by any Issuing Bank under a Letter of Credit against presentation of
  a draft or certificate that does not strictly comply with the terms of such
  Letter of Credit, unless





30






	
 

	
 


	
 

	
such draft
  or certificate is substantially different from the applicable form specified
  by such Letter of Credit; 


	
 

	
 


	
 

	
          (vi)
  any exchange, release or non-perfection of any Letter of Credit Collateral or
  other collateral, or any release or amendment or waiver of or consent to
  departure from any guarantee, for all or any of the obligations of the
  applicable Borrower in respect of the L/C Related Documents; or 


	
 

	
 


	
 

	
          (vii)
  any other circumstance or happening whatsoever, whether or not similar to any
  of the foregoing, including, without limitation, any other circumstance that
  might otherwise constitute a defense available to, or a discharge of, the
  applicable Borrower or a guarantor. 





                    (g)
Compensation. (i) The Borrowers shall pay to the Agent for the account
of each Lender a commission on such Lender’s Pro Rata Share of the average
daily aggregate Available Amount of all Letters of Credit outstanding from time
to time at a rate per annum equal to the Applicable Rate for Eurodollar Rate
Advances in effect from time to time calculated and payable for the quarterly
period ending on the last Business Day of each February, May, August and
November, and on the Termination Date. 


	
 

	
 


	
 

	
          (ii)
  The Borrower shall pay to each Issuing Bank, for its own account, such
  commissions, issuance fees, fronting fees, transfer fees and other fees and
  charges in connection with the issuance or administration of each Letter of
  Credit as the Borrowers and such Issuing Bank shall agree.





                    (h)
Existing Letters of Credit. Effective as of the Effective Date (i) the
letters of credit issued for the account of the Borrowers prior to such date
under the Existing Credit Agreement and set forth on Schedule 2.16(h)
hereto (such letters of credit being the “Existing Letters of Credit”)
in an aggregate face amount not exceeding the total amount set forth on such
Schedule will be deemed to have been issued as, and be, Letters of Credit
hereunder and (ii) the Existing Letters of Credit and the reimbursement
obligations in respect thereof shall be obligations of the Borrowers hereunder.



                    SECTION
2.17 Use of Proceeds. The proceeds of the Advances shall be available
(and the Borrowers agree that they shall use such proceeds) for general
corporate purposes of the Borrowers and their Subsidiaries (including share
repurchases, refinancing existing indebtedness and consensual acquisitions). 


                    SECTION
2.18 Increase in the Aggregate Commitments. (a) The Borrowers may, at
any time but in any event not more than once in any calendar year prior to the
Termination Date, by notice to the Agent, request that the aggregate amount of
the Revolving Credit Commitment be increased by an amount of $10,000,000 or an
integral multiple of $10,000,000 in excess thereof (each a “Revolving Credit
Commitment Increase”) to be effective as of a date that is at least 90 days
prior to the scheduled Termination Date then in effect (the “Increase Date”)
as specified in the related notice to the Agent; provided, however that (i) in
no event shall the aggregate amount of the Revolving Credit Commitments at any
time exceed $475,000,000 and (ii) on the date of any request by the Borrowers
for a Revolving Credit Commitment Increase and on the related Increase Date, no
Default shall have occurred and be continuing. 


                    (b)
The Agent shall promptly notify the Lenders of a request by the Borrowers for a
Revolving Credit Commitment Increase, which notice shall include (i) the
proposed amount of such requested Revolving Credit Commitment Increase, (ii)
the proposed Increase Date and (iii) the date by which Lenders wishing to
participate in the Revolving Credit Commitment Increase must commit to an 


31






increase in
the amount of their respective Revolving Credit Commitments (the “Commitment
Date”). Each Lender that is willing to participate in such requested
Revolving Credit Commitment Increase (each an “Increasing Lender”)
shall, in its sole discretion, give written notice to the Agent on or prior to
the Commitment Date of the amount by which it is willing to increase its
Revolving Credit Commitment. If the Lenders notify the Agent that they are
willing to increase the amount of their respective Revolving Credit Commitments
by an aggregate amount that exceeds the amount of the requested Revolving
Credit Commitment Increase, the requested Revolving Credit Commitment Increase
shall be allocated among the Lenders willing to participate therein in such
amounts as are agreed between the Borrowers and the Agent. 


                    (c)
Promptly following each Commitment Date, the Agent shall notify the Borrowers
as to the amount, if any, by which the Lenders are willing to participate in
the requested Revolving Credit Commitment Increase. If the aggregate amount by
which the Lenders are willing to participate in any requested Revolving Credit
Commitment Increase on any such Commitment Date is less than the requested
Revolving Credit Commitment Increase, then the Borrowers may extend offers to
one or more Eligible Assignees to participate in any portion of the requested
Revolving Credit Commitment Increase that has not been committed to by the Lenders
as of the applicable Commitment Date; provided, however, that the
Revolving Credit Commitment of each such Eligible Assignee shall be in an
amount of $5,000,000 or an integral multiple of $1,000,000 is excess thereof. 


                    (d)
On each Increase Date, each Eligible Assignee that accepts an offer to
participate in a requested Revolving Credit Commitment Increase in accordance
with Section 2.18(c) (each such Eligible Assignee, an “Assuming Lender”)
shall become a Lender party to this Agreement as of such Increase Date and the
Commitment of each Increasing Lender for such requested Revolving Credit
Commitment Increase shall be so increased by such amount (or by the amount
allocated to such Lender pursuant to the last sentence of Section 2.18(b)) as
of such Increase Date; provided, however, that the Agent shall have
received on or before such Increase Date the following, each dated such date: 


	
 

	
 


	
 

	
          (i)
  (A) certified copies of resolutions of the Board of Directors of each
  Borrower or an authorized committee of such Board approving the Revolving
  Credit Commitment Increase and the corresponding modifications to this
  Agreement and (B) an opinion of counsel for the Borrowers (which may be
  in-house counsel), in substantially the form of Exhibit D hereto; 


	
 

	
 


	
 

	
          (ii)
  an assumption agreement from each Assuming Lender, if any, in form and
  substance satisfactory to the Borrowers and the Agent (each an “Assumption
  Agreement”), duly executed by such Eligible Assignee, the Agent and the
  Borrowers; and 


	
 

	
 


	
 

	
          (iii)
  confirmation from each Increasing Lender of the increase in the amount of its
  Revolving Credit Commitment in a writing satisfactory to the Borrowers and
  the Agent. 





On each
Increase Date, upon fulfillment of the conditions set forth in the immediately
preceding sentence of this Section 2.18(d), the Agent shall notify the Lenders
(including, without limitation, each Assuming Lender) and the Borrowers, on or
before 1:00 P.M. (New York City time), by telecopier, of the occurrence of the
Revolving Credit Commitment Increase to be effected on such Increase Date and
shall record in the Register the relevant information with respect to each
Increasing Lender and each Assuming Lender on such date. 


                    SECTION
2.19 Obligations and Communications of the Borrowers. All obligations,
representations, warranties, covenants and other agreements of either or both
of the Borrowers under this Agreement, the Notes and the other Loan Documents
shall be joint and several liabilities of both of the Borrowers; provided,
however, that anything herein or in the other Loan Documents to the
contrary 


32






notwithstanding,
the liability of the Operating Company with respect to the obligations of the
Holding Company shall in no event exceed the maximum permissible amount for
which the Operating Company may be obligated under § 548 of the United States
Bankruptcy Code or applicable state fraudulent conveyance law. Any notice given
to, any knowledge held by or any knowledge imputed to either Borrower shall be
deemed to be within the knowledge of both of the Borrowers. Any certificate,
notice, request, statement or other document or communication signed or made on
behalf or in the name of either or both of the Borrowers shall be deemed to have
been signed or made by both of the Borrowers unless expressly disclaimed in a
particular document or communication. Reference to a single specific Borrower,
whether by name, officer’s title, letterhead or otherwise, shall not constitute
an express disclaimer of any of the foregoing. Any telephone notice permitted
to be given by the Borrowers under this Article II shall be sufficient if given
by an appropriate officer of either Borrower, and shall be deemed to have been
given by both Borrowers. 


                    SECTION
2.20 Subrogation and Contribution. Each Borrower covenants and agrees
that, until the obligations of the Borrowers under this Agreement and the other
Loan Documents have been fully paid and satisfied, any and all subrogation,
contribution and other similar rights of such Borrower against or in respect of
(A) the other Borrower, (B) any of the assets and properties of the other
Borrower, or (C) any other co-obligor or indemnitor of any of the other
Borrower’s payments or obligations under any of the Loan Documents, whether now
existing or hereafter acquired or created, and whether resulting from any
payment made by such Borrower or otherwise, shall be subordinate and inferior
in dignity and deferred as to payment to the full payment and satisfaction of
all of such obligations. (However, such subordination of subrogation,
contribution and similar rights is not intended to include, and this Section is
not intended to affect, the intercompany advances and dividends permitted under
this Agreement.) Neither Borrower shall seek any payment or exercise or enforce
any right, power, privilege, remedy or interest that it may have with respect
to any such subrogation, contribution or other similar right except with the
prior written consent of the Agent (with the consent of the Required Lenders,
as and if required) and for the benefit of all of the Lenders. Any payment,
asset or property delivered to or for the benefit of any Borrower in respect of
any such subrogation, contribution or other similar right shall be accepted in
trust for the benefit of all of the Lenders and shall be promptly paid or
delivered to the Agent (for the benefit of all of the Lenders) to be credited
and applied to the payment and satisfaction of the obligations of the Borrowers
under this Agreement and the other Loan Documents, whether contingent, matured
or unmatured, or to be held by the Agent (for the benefit of all of the
Lenders) as additional collateral, as the Agent (with the consent of the
Required Lenders, as and if required) may elect in its sole and absolute
discretion. 


                    SECTION
2.21 Fees. 


                    (a)
Facility Fee. The Borrowers, jointly and severally, agree to pay to the
Agent for the account of each Lender a facility fee on the aggregate amount of
such Lender’s Revolving Credit Commitment from the date hereof in the case of
each Initial Lender and from the effective date specified in the Assumption
Agreement or in the Assignment and Acceptance pursuant to which it became a
Lender in the case of each other Lender until the Termination Date at a rate
per annum equal to the Applicable Rate in effect from time to time, payable in
arrears quarterly on the last day of each February, May, August and November,
commencing August 31, 2007, and on the Termination Date. 


                    (b)
Agent’s Fees. The Borrowers, jointly and severally, shall pay to the
Agent for its own account such fees as may from time to time be agreed between
the Borrowers and the Agent. 


ARTICLE III


CONDITIONS TO EFFECTIVENESS AND LENDING


33






                    SECTION
3.01 Conditions Precedent to Effectiveness of Sections 2.01, 2.03, 2.04 and
2.16. Sections 2.01, 2.03, 2.04 and 2.16 of this Agreement shall become
effective on and as of the first date (the “Effective Date”) on which
the following conditions precedent have been satisfied: 


                    (a)
There shall have occurred no Material Adverse Change since May 31, 2006. 


                    (b)
There shall exist no action, suit, investigation, litigation or proceeding
affecting the Holding Company or any of its Subsidiaries pending or threatened
before any court, governmental agency or arbitrator that (i) would be
reasonably likely to have a Material Adverse Effect or (ii) purports to affect
the legality, validity or enforceability of this Agreement or any Note or the
consummation of the transactions contemplated hereby. 


                    (c)
All governmental and third party consents and approvals necessary in connection
with the transactions contemplated hereby shall have been obtained (without the
imposition of any conditions that are not acceptable to the Lenders) and shall
remain in effect, and no law or regulation shall be applicable in the
reasonable judgment of the Lenders that restrains, prevents or imposes
materially adverse conditions upon the transactions contemplated hereby. 


                    (d)
The Borrowers shall have paid all accrued fees and expenses of the Agent and
the Lenders (including the accrued fees and expenses of counsel to the Agent). 


                    (e)
On the Effective Date, the following statements shall be true and the Agent
shall have received for the account of each Lender a certificate signed by a
duly authorized officer of the Holding Company, dated the Effective Date,
stating that: 


	
 

	
 


	
 

	
          (i)
  The representations and warranties contained in Section 4.01 are correct on
  and as of the Effective Date, and 


	
 

	
 


	
 

	
          (ii)
  No event has occurred and is continuing that constitutes a Default. 





                    (f)
The Agent shall have received on or before the Effective Date the following,
each dated such day, in form and substance satisfactory to the Agent and
(except for any Revolving Credit Notes or Term Loan Notes) in sufficient copies
for each Lender: 


	
 

	
 


	
 

	
          (i)
  (a) The Revolving Credit Notes to the order of any Lenders requesting the
  same and (b) the Term Loan Notes to the order of any Lenders requesting to
  the same. 


	
 

	
 


	
 

	
          (ii)
  Certified copies of the resolutions of the Board of Directors or (in the case
  of the Term Loan Facility) an authorized committee of the Board of Directors
  of each Borrower approving this Agreement and any Notes, and of all documents
  evidencing other necessary corporate action and governmental approvals, if
  any, with respect to this Agreement and any Notes. 


	
 

	
 


	
 

	
          (iii)
  A certificate of the Secretary or an Assistant Secretary of each Borrower
  certifying the names and true signatures of the officers of such Borrower
  authorized to sign this Agreement, the Notes and the other documents to be
  delivered hereunder. 


	
 

	
 


	
 

	
          (iv)
  A favorable opinion of Devereux Chatillon, Senior Vice President and General
  Counsel of the Borrowers, substantially in the form of Exhibit D
  hereto and as to such other matters as the Agent may reasonably request. 





34






	
 

	
 


	
 

	
          (v)
  Such documents and certificates as the Agent or its counsel may reasonably
  request relating to the organization, existence and good standing of the
  Borrowers, and any other legal matters relating to the Borrowers or the Loan
  Documents, all in form and substance satisfactory to the Agent and its
  counsel and as further described in the list of closing documents attached as
  Exhibit F. 





                    (g)
The Borrowers shall have terminated the commitments, and, prior to or
simultaneously with the initial Borrowing hereunder, paid in full all Debt,
interest, fees and other amounts outstanding, under the Existing Credit
Agreement, and each of the Lenders that is a party to such credit facility hereby
waives, upon execution of this Agreement, the five Business Days’ notice
required by Section 2.05 of said Credit Agreement relating to the termination
of commitments thereunder. 


                    SECTION
3.02 Conditions Precedent to each Borrowing, each Issuance and Renewal of
Letters of Credit and each Increase Date. The obligation of each Lender to
make an Advance (other than a Letter of Credit Advance made by an Issuing Bank
or a Lender pursuant to Section 2.16(d)) on the occasion of each Borrowing (including
the initial Borrowing) the obligation of each Issuing Bank to issue Letters of
Credit (including the initial issuance) or renew a Letter of Credit from time
to time and each Revolving Credit Commitment Increase shall be subject to the
conditions precedent that the Effective Date shall have occurred and on the
date of such Borrowing, issuance or renewal or the applicable Increase Date the
following statements shall be true (and each of the giving of the applicable
Notice of Revolving Credit Borrowing, Notice of Term Loan Borrowing, Notice of
Issuance, Notice of Renewal or request for Revolving Credit Commitment Increase
and the acceptance by the Borrowers of the proceeds of such Borrowing or such
Letter of Credit issuance or the renewal of such Letter of Credit shall
constitute a representation and warranty by the Borrowers that on the date of
such Borrowing, issuance, renewal or Increase Date such statements are true): 


	
 

	
 


	
 

	
          (i)
  the representations and warranties contained in Section 4.01 (excluding the
  representation and warranty contained in Section 4.01(f)(ii)) are correct on
  and as of such date before and after giving effect to such Borrowing,
  issuance or renewal or such Increase Date and to the application of the
  proceeds therefrom, as though made on and as of such date; and 


	
 

	
 


	
 

	
          (ii)
  no event has occurred and is continuing, or would result from such Borrowing,
  issuance or renewal or Increase Date or from the application of the proceeds
  therefrom, that constitutes a Default. 





                    SECTION
3.03 Conditions Precedent to Each Competitive Bid Borrowing. The
obligation of each Lender that is to make a Competitive Bid Advance on the
occasion of a Competitive Bid Borrowing to make such Competitive Bid Advance as
part of such Competitive Bid Borrowing is subject to the conditions precedent
that (i) the Agent shall have received the written confirmatory Notice of
Competitive Bid Borrowing with respect thereto, (ii) on or before the date of
such Competitive Bid Borrowing, but prior to such Competitive Bid Borrowing,
the Agent shall have received, to the extent requested by such Lender, a
Competitive Bid Note payable to the order of such Lender for each of the one or
more Competitive Bid Advances to be made by such Lender as part of such
Competitive Bid Borrowing, in a principal amount equal to the principal amount
of the Competitive Bid Advance to be evidenced thereby and otherwise on such
terms as were agreed to for such Competitive Bid Advance in accordance with
Section 2.03, and (iii) on the date of such Competitive Bid Borrowing the
following statements shall be true (and each of the giving of the applicable
Notice of Competitive Bid Borrowing and the acceptance by the applicable
Borrower of the proceeds of such Competitive Bid Borrowing shall constitute a
representation and warranty by the Borrowers that on the date of such
Competitive Bid Borrowing such statements are true): 


35






                    (a)
the representations and warranties contained in Section 4.01 (excluding the
representation and warranty contained in Section 4.01(f)(ii)) are correct on
and as of the date of such Competitive Bid Borrowing, before and after giving
effect to such Competitive Bid Borrowing and to the application of the proceeds
therefrom, as though made on and as of such date, and 


                    (b)
no event has occurred and is continuing, or would result from such Competitive
Bid Borrowing or from the application of the proceeds therefrom, that
constitutes a Default. 


                    SECTION
3.04 Determinations Under Section 3.01. For purposes of determining
compliance with the conditions specified in Section 3.01, each Lender shall be
deemed to have consented to, approved or accepted or to be satisfied with each
document or other matter required thereunder to be consented to or approved by
or acceptable or satisfactory to the Lenders unless an officer of the Agent
responsible for the transactions contemplated by the Loan Documents shall have
received notice from such Lender prior to the date that the Borrowers, by
notice to the Lenders, designate as the proposed Effective Date, specifying its
objection thereto. The Agent shall promptly notify the Lenders of the
occurrence of the Effective Date. 


ARTICLE IV


REPRESENTATIONS AND WARRANTIES


                    SECTION
4.01 Representations and Warranties of the Borrowers. The Borrowers
represent and warrant as follows: 


                    (a)
Each Borrower is a corporation duly organized, validly existing and in good
standing under the laws of the State of its incorporation. 


                    (b)
The execution, delivery and performance by each Borrower of this Agreement and
the other Loan Documents to be delivered by it, and the consummation of the
transactions contemplated hereby, are within such Borrower’s corporate powers,
have been duly authorized by all necessary corporate action, and do not
contravene (i) such Borrower’s charter or by-laws or (ii) law or any
contractual restriction binding on or affecting such Borrower. 


                    (c)
This Agreement has been, and each of the other Loan Documents to be delivered
by it when delivered hereunder will have been, duly executed and delivered by
each Borrower. This Agreement is, and each of the other Loan Documents when
delivered hereunder will be, the legal, valid and binding obligation of each
Borrower party thereto enforceable against such Borrower in accordance with
their respective terms. 


                    (d)
No authorization or approval or other action by, and no notice to or filing
with, any governmental authority or regulatory body or any other third party is
required for the due execution, delivery and performance by any Borrower of
this Agreement or the other Loan Documents to be delivered by it. 


                    (e)
There is no pending or threatened action, suit, investigation, litigation or
proceeding, including, without limitation, any Environmental Claim, affecting
the Holding Company or any of its Subsidiaries before any court, governmental
agency or arbitrator that (i) would be reasonably likely to have a Material
Adverse Effect or (ii) purports to affect the legality, validity or
enforceability of this Agreement or any Note or the consummation of the
transactions contemplated hereby. 


36






                    (f)
(i) The Consolidated balance sheet of the Holding Company and its Subsidiaries
as at May 31, 2006, and the related Consolidated statements of income and cash
flows of the Holding Company and its Subsidiaries for the fiscal year then
ended, accompanied by an opinion of Ernst & Young LLP, independent public
accountants, the consolidating balance sheet of the Holding Company and its
Subsidiaries as at May 31, 2006, and the related consolidating statements of
income and cash flows of the Holding Company and its Subsidiaries for the
fiscal year then ended, duly certified by the chief financial officer of the
Holding Company, and the Consolidated and consolidating balance sheet of the
Holding Company and its Subsidiaries as at February 28, 2007, and the related
Consolidated and consolidating statements of income and cash flows of the
Holding Company and its Subsidiaries for the nine months then ended, duly
certified by the chief financial officer of the Holding Company, copies of
which have been furnished to each Lender, fairly present, subject, in the case
of said balance sheet as at February 28, 2007, and said statements of income
and cash flows for the nine months then ended, to year-end audit adjustments,
the Consolidated financial condition of the Holding Company and its
Subsidiaries as at such dates and the Consolidated results of the operations of
the Holding Company and its Subsidiaries for the periods ended on such dates,
all in accordance with generally accepted accounting principles consistently
applied. 


                    (ii)
Since May 31, 2006, there has been no Material Adverse Change. 


                    (g)
Each of the Borrowers and their Subsidiaries has good, marketable fee or
leasehold title (as applicable) or ownership interest to all of the material
assets and properties of the Borrowers and their Subsidiaries, free and clear
of all Liens, other than Liens permitted by the Loan Documents. 


                    (h)
The operations and properties of each Borrower and each of its Subsidiaries comply
in all material respects with all applicable Environmental Laws, all past
non-compliance with such Environmental Laws has been resolved without material
ongoing obligations or costs, and no circumstances exist that could reasonably
be likely to (i) form the basis of an Environmental Claim against either
Borrower or any of its Subsidiaries or any of their properties that could have
a Material Adverse Effect or (ii) cause any such property to be subject to any
restrictions on ownership, occupancy, use or transferability under any
Environmental Law that could have a Material Adverse Effect. 


                    (i)
Set forth on Schedule 4.01(i) hereto is a complete and accurate list of
all Subsidiaries of each of the Borrowers as of the date hereof, showing (as to
each such Subsidiary) the jurisdiction of its incorporation. All of the
outstanding capital stock and other ownership interests (other than directors
qualifying shares) in each of the Borrower’s Subsidiaries has been validly
issued, are fully paid and non-assessable and are owned by such Borrower or one
or more of its Subsidiaries free and clear of all Liens and, as of the date
hereof, free of any outstanding options, warrants, rights of conversion or
purchase or similar rights. 


                    (j)
Each of the outstanding securities issued by the Holding Company was duly
authorized and validly issued, is fully paid and non-assessable, and is not and
will not be subject to any preemptive or similar right or restriction. Each of
those outstanding securities was acquired from the issuer in a transaction in
compliance with the Securities Act of 1933, as amended, and other applicable
laws. 


                    (k)
No Borrower is engaged in the business of extending credit for the purpose of
purchasing or carrying margin stock (within the meaning of Regulation U issued
by the Board of Governors of the Federal Reserve System), and no proceeds of
any Advance will be used to purchase or carry any margin stock in violation of
Regulation U issued by the Board of Governors of the Federal Reserve System or
to extend credit to others for the purpose of purchasing or carrying any margin
stock. 


37






                    (l)
No Borrower is an “investment company”, or a company “controlled” by an
“investment company”, within the meaning of the Investment Company Act of 1940,
as amended. 


ARTICLE V


COVENANTS OF THE BORROWERS


                    SECTION
5.01 Affirmative Covenants. So long as any Advance shall remain unpaid
or any Lender shall have any Commitment hereunder, each of the Borrowers will: 


                    (a)
Reporting Requirements. Provide to the Lenders the following: 


           (i)
promptly after the commencement thereof, notice of all actions and proceedings
before any court, governmental agency or arbitrator affecting either Borrower
or any of its Subsidiaries of the type described in Section 4.01(e); 


           (ii)
as soon as possible and in any event within five days after the occurrence of
each Default continuing on the date of such statement, a statement of the chief
financial officer of the Holding Company setting forth details of such Default
and the action that the Borrowers have taken and proposes to take with respect
thereto and any other event that would be reasonably likely to have or has had
a Material Adverse Effect. 


           (iii)
as soon as available and in any event within 60 days after the end of each of
the first three quarters of each fiscal year of the Holding Company, the
Consolidated balance sheet of the Holding Company and its Subsidiaries as of
the end of such quarter and Consolidated statements of income and cash flows of
the Holding Company and its Subsidiaries for the period commencing at the end
of the previous fiscal year and ending with the end of such quarter, duly
certified (subject to year-end audit adjustments) by the chief executive
officer, the chief financial officer, the chief accounting officer, the
vice-president and treasurer or the vice-president and controller of the
Holding Company as having been prepared in accordance with generally accepted
accounting principles and certificates of the chief executive officer, the
chief financial officer, the chief accounting officer, the vice-president and
treasurer or the vice-president and controller of the Holding Company in
substantially the form of Exhibit E as to compliance with the terms of
this Agreement and setting forth in reasonable detail the calculations
necessary to demonstrate compliance with Section 5.03; 


           (iv)
as soon as available and in any event within 90 days after the end of each
fiscal year of the Holding Company, (A) a copy of the annual audit report for
such year for the Holding Company and its Subsidiaries, containing the
Consolidated balance sheet of the Holding Company and its Subsidiaries as of
the end of such fiscal year and Consolidated statements of income and cash
flows of the Holding Company and its Subsidiaries for such fiscal year, in each
case accompanied by an opinion by Ernst & Young LLP or other independent
public accountants of recognized standing regularly retained by the Borrowers
to audit their books and reasonably acceptable to the Required Lenders, (B) the
consolidating balance sheet of the Holding Company and its Subsidiaries as of
the end of such fiscal year and consolidating statements of income and cash
flows of the Holding Company and its Subsidiaries for such fiscal year and (C)
certificates of the chief executive officer, the chief financial officer, the
chief accounting officer, the vice-president and treasurer or the
vice-president and controller of the Holding Company in substantially the form
of Exhibit E as to compliance with the terms of this Agreement and setting
forth in reasonable detail the calculations necessary to demonstrate compliance
with Section 5.03;  


38








	
 

	
 


	
 

	
          (v)
  promptly after the sending or filing thereof, copies of all quarterly and
  annual reports and proxy solicitations that the Holding Company sends to its
  public securityholders generally, and copies of all reports on Form 8-K and
  registration statements for the public offering of securities that the
  Holding Company or any Subsidiary files with the Securities and Exchange
  Commission or any national securities exchange; and 


	
 

	

          (vi)
  such other information respecting the Borrowers or any of their Subsidiaries
  as any Lender through the Agent may from time to time reasonably request.





Documents
required to be delivered pursuant to clauses (iii), (iv), (v) or (vi) of this
Section 5.01(a) may be delivered electronically and if so delivered, shall be
deemed to have been delivered on the date (i) on which the Holding Company
posts such documents, or provides a link thereto on the Holding Company’s
website on the Internet at the website address <www.scholastic.com>; (ii)
on which such documents are posted on the Holding Company’s behalf on
IntraLinksTM or a substantially similar electronic platform, if any, to which
each Lender and the Agent have access (whether a commercial, third-party
website or whether sponsored by the Agent); or (iii) on which such documents
are filed for public availability on the U.S. Securities and Exchange
Commission’s Electronic Data Gathering and Retrieval System; provided that the
Holding Company shall notify (which may be by facsimile or electronic mail) the
Agent of the posting of any such documents and provide to the Agent by
electronic mail electronic versions (i.e., soft copies) of such documents.
Notwithstanding anything contained herein, in every instance the Holding
Company shall be required to provide paper copies of the compliance
certificates required by clauses (iii) and (iv) of this Section 5.01 to the
Agent. 


                    (b)
Visitation Rights. At any reasonable time and from time to time, permit
the Agent or any of the Lenders or any agents or representatives thereof, to
examine and make copies of and abstracts from the records and books of account
of, and visit the properties of, such Borrower and any of its Subsidiaries, and
to discuss the affairs, finances and accounts of such Borrower and any of its
Subsidiaries with any of their officers or directors and with their independent
certified public accountants. 


                    (c)
Preservation of Corporate Existence, Etc. Preserve and maintain, and
cause each of its Significant Subsidiaries to preserve and maintain, its
corporate existence, rights (charter and statutory) and franchises; provided,
however, that such Borrower and its Subsidiaries may consummate any
merger or consolidation permitted under Section 5.02(c) and provided further
that neither such Borrower nor any of its Significant Subsidiaries shall be
required to preserve any right or franchise (x) if the Board of Directors of
such Borrower or such Significant Subsidiary shall determine that the
preservation thereof is no longer desirable in the conduct of the business of
such Borrower or such Significant Subsidiary, as the case may be, and that the
loss thereof is not disadvantageous in any material respect to such Borrower or
the Lenders or (y) in any jurisdiction where the failure to do so would not be
reasonably likely to have a Material Adverse Effect. 


                    (d)
Compliance with Laws, Etc. Comply, and cause each of its Subsidiaries to
comply, in all material respects, with all applicable laws, rules, regulations
and orders, such compliance to include, without limitation, compliance with
ERISA and Environmental Laws other than to the extent the noncompliance
therewith or violation thereof would not be reasonably likely to have a
Material Adverse Effect. 


                    (e)
Payment of Taxes, Etc. Pay and discharge, and cause each of its
Subsidiaries to pay and discharge, before the same shall become delinquent, (i)
all taxes, assessments and governmental charges or levies imposed upon it or
upon its property unless such failure to pay or discharge would not be
reasonably likely to have a significant adverse effect on the business of the
Borrowers and the Subsidiaries taken as a whole and (ii) all lawful claims
that, if unpaid, might by law become a Lien upon 


39






its property
unless such failure to pay or discharge would not be reasonably likely to have
a Material Adverse Effect; provided, however, that neither such
Borrowers nor any of its Subsidiaries shall be required to pay or discharge any
such tax, assessment, charge or claim that is being contested in good faith and
by proper proceedings and as to which appropriate reserves are being
maintained, unless and until any Lien resulting therefrom attaches to its
property and becomes enforceable against its other creditors. 


                    (f)
Maintenance of Insurance. Maintain, and cause each of its Subsidiaries
to maintain, insurance with responsible and reputable insurance companies or
associations in such amounts and covering such risks (excluding publisher’s
liability insurance) as is usually carried by companies engaged in similar
businesses and owning similar properties in the same general areas in which
such Borrower or such Subsidiary operates; provided, however,
that each Borrower and its Subsidiaries may self-insure to the same extent as
other companies engaged in similar businesses and owning similar properties in
the same general areas in which such Borrower or such Subsidiary operates and
to the extent consistent with prudent business practice. 


                    (g)
Keeping of Books. Maintain, and cause each of its Subsidiaries to
maintain, a standard system of accounting in accordance with generally accepted
accounting principles consistently applied. 


                    (h)
Maintenance of Properties, Etc. Maintain and preserve, and cause each of
its Subsidiaries to maintain and preserve, all of its properties that are used
or useful in the conduct of its business in good working order and condition,
ordinary wear and tear excepted, other than to the extent any such failure to
maintain and preserve would not be reasonably likely to have a Material Adverse
Effect. 


                    SECTION
5.02 Negative Covenants. So long as any Advance shall remain unpaid or any
Lender shall have any Commitment hereunder, neither Borrower will: 



                    (a)
Liens, Etc. Create or suffer to exist, or permit any of its Subsidiaries to
create or suffer to exist, any Lien on or with respect to any of its
properties, whether now owned or hereafter acquired, or assign, or permit any
of its Subsidiaries to assign, any right to receive income, other than:  


	
 

	
 


	
 

	
          (i)
  Permitted Liens, 


	
 

	
 


	
 

	
          (ii)
  purchase money Liens (including leases treated as security interests) upon or
  in any real property or equipment acquired or held by any Borrower or any
  Subsidiary in the ordinary course of business to secure the purchase price of
  such property or equipment or to secure Debt incurred solely for the purpose
  of financing the acquisition of such property or equipment, or Liens existing
  on such property or equipment at the time of its acquisition (other than any
  such Liens created in contemplation of such acquisition that were not
  incurred to finance the acquisition of such property) or extensions, renewals
  or replacements of any of the foregoing for the same or a lesser amount,
    provided, however, that no such Lien shall extend to or cover any properties
  of any character other than the real property or equipment being acquired,
  and no such extension, renewal or replacement shall extend to or cover any
  properties not theretofore subject to the Lien being extended, renewed or
  replaced, 


	
 

	
 


	
 

	
          (iii)
  the Liens existing on the Effective Date and described on Schedule 5.02(a)  hereto, 





40






	
 

	
 


	
 

	
          (iv)
  Liens on property of a Person existing at the time such Person is merged into
  or consolidated with any Borrower or any Subsidiary of such Borrower or
  becomes a Subsidiary of such Borrower; provided that such Liens were
  not created in contemplation of such merger, consolidation or acquisition and
  do not extend to any assets other than those of the Person so merged into or
  consolidated with such Borrower or such Subsidiary or acquired by such
  Borrower or such Subsidiary, 


	
 

	
 


	
 

	
          (v)
  other Liens securing Debt in an aggregate principal amount not to exceed
  $50,000,000 at any time outstanding; 


	
 

	
 


	
 

	
          (vi)
  Liens incurred in respect of judgments and awards discharged within 30 days
  from the making thereof or under review in an appropriate forum so long as
  enforcement thereof is effectively stayed;


	
 

	
 


	
 

	
          (vii)
  Liens incurred in respect of rental or security deposits; and


	
 

	
 


	
 

	
          (viii)
  the replacement, extension or renewal of any Lien permitted by clause (iii)
  or (iv) above upon or in the same property theretofore subject thereto or the
  replacement, extension or renewal (without increase in the amount or change
  in any direct or contingent obligor) of the Debt secured thereby.





                    (b)
Sales, Etc. of Assets. Sell, lease, transfer or otherwise dispose of, or
permit any of its Subsidiaries to sell, lease, transfer or otherwise dispose
of, any assets, or grant any option or other right to purchase, lease or
otherwise acquire any assets, except (i) sales of inventory and equipment in
the ordinary course of its business, (ii) in a transaction authorized by
subsection (c) of this Section, (iii) sales of assets for fair value in an
aggregate amount not to exceed 15% of Consolidated Total Assets as of the last
day of the most recently ended fiscal quarter preceding the date of any such
sale of assets and (iv) the sale of either (x) the real property located at 557
Broadway, New York, New York, Maumelle, Arkansas and Danbury, Connecticut or
(y) the real property comprising the distribution center located in Jefferson
City, Missouri, in each case, for fair value in connection with any
sale-leaseback transaction. 


                    (c)
Mergers, Etc. Merge or consolidate with or into any Person, or permit
any of its Subsidiaries to do so, except that (i) any Subsidiary of either
Borrower may merge or consolidate with or into any other Subsidiary of such
Borrower, (ii) any Subsidiary of either Borrower may merge into such Borrower
and (iii) either Borrower may merge with any other Person so long as such
Borrower is the surviving corporation, provided, in each case, that no Default
shall have occurred and be continuing at the time of such proposed transaction
or would result therefrom. 


                    (d)
Change in Nature of Business. Make, or permit any of its Subsidiaries to
make, any material change in the nature of the business of the Borrowers and
their Subsidiaries, taken as a whole, as carried on at the date hereof. 


                    (e)
Dividends, Etc. Declare or make any dividend payment or other
distribution of assets, properties, cash, rights, obligations or securities on
account of any shares of any class of capital stock of the Holding Company, or
purchase, redeem or otherwise acquire for value (other than any redemption or repurchase
pursuant to the application of any change of control provision contained in any
issuance of convertible Debt) (or permit any of its Subsidiaries to do so) any
shares of any class of capital stock of the Holding Company or any warrants,
rights or options to acquire any such shares, now or hereafter outstanding, or
enter into any transaction that has a substantially similar effect as the
previously described transactions, except that, so long as no Default shall
have occurred and be continuing at the time of any action described below or
would result therefrom, the Holding Company may (i) declare and 


41






make any
dividend payment or other distribution payable in common stock of the Holding
Company, (ii) purchase, redeem or otherwise acquire shares of its common stock
or warrants, rights or options to acquire any such shares to the extent that
any such purchase, redemption or acquisition is effected solely with the Term
Loan Advances and (iii) declare or pay cash dividends to its stockholders and
purchase, redeem or otherwise acquire shares of its common stock or warrants,
rights or options to acquire any such shares in an amount equal to the sum of
(A) the cash proceeds received from the substantially concurrent issue of new
shares of its common stock, (B) the aggregate amount of cash received and net
tax benefit received from the exercise by employees of the Borrowers and their
Subsidiaries of stock options or the purchase of shares of stock under the
employee stock purchase plan after May 31, 2006 and (C) the sum of (x)
$75,000,000 and (y) 50% of net income of the Holding Company and its
Subsidiaries arising after May 31, 2006 and computed on a cumulative
Consolidated basis. 


                    (f)
Transactions with Affiliates. Conduct, and cause each of its
Subsidiaries to conduct, any transactions otherwise permitted under this
Agreement with any of their unconsolidated Affiliates other than on terms that
are fair and reasonable and no less favorable to such Borrower or such
Subsidiary than it would obtain in a comparable arm’s-length transaction with a
Person not an Affiliate. 


                    (g)
Accounting Changes. Make or permit, or permit any of its Subsidiaries to
make or permit, any change in accounting policies or reporting practices, except
as required or permitted by generally accepted accounting principles. 


                    SECTION
5.03 Financial Covenants. So long as any Advance shall remain unpaid or
any Lender shall have any Commitment hereunder, the Borrowers will: 


                    (a)
    Consolidated Debt Ratio. Maintain at all times a Consolidated Debt Ratio of not
more than 0.60:1. 


                    (b) Consolidated
      Interest Coverage Ratio. Maintain as at the last day of each
of their fiscal quarters a Consolidated Interest Coverage Ratio of not less
than 3.50:1. 


ARTICLE VI


EVENTS OF DEFAULT


                    SECTION
6.01Events of Default. If any of the following events (“Events of
Default”) shall occur and be continuing: 


                    (a)
any representation or warranty made in this Agreement or any other Loan
Document shall prove to have been false or misleading in any material respect
when made (or deemed made); or 


                    (b)
any report, statement, certificate, schedule or other document or information
furnished (whether prior to, on or after the Effective Date) in connection with
this Agreement or any of the other Loan Documents shall prove to have been
false or misleading in any material respect when furnished (or deemed
furnished); or 


                    (c)
any default, whether in whole or in part, shall occur in the payment of the
principal of any Advance, or shall occur and continue for more than three
Business Days in the payment of any interest on or any other amount respecting
the Advances or any of the other obligations of the Borrowers under the Loan
Documents; or 


42






                    (d)
any default, whether in whole or in part, shall occur in the due observance or
performance of any covenant, term or provision to be performed (i) under
Sections 5.01(a)(ii), 5.02(e) or 5.03 of this Agreement or (ii) under Sections
5.01(b) or 5.02 of this Agreement (other than under Section 5.02(e) hereof) and
such default described in this clause (ii) shall continue for a period of five
Business Days after the earlier of notice thereof to or knowledge thereof by
either Borrower; or 


                    (e)
any default, whether in whole or in part, shall occur in the due observance or
performance of any other covenant, term or provision to be performed under this
Agreement and the other Loan Documents by either Borrower or any other party
thereto (other than any Lender), which default is not described in any other
subsection of this Section, and such default shall continue for a period of ten
days after the earlier of notice thereof to or knowledge thereof by either
Borrower; provided, however, that if such default is capable of
being cured and if the Borrowers shall have commenced to cure such default
within such period and shall proceed continuously in good faith and with due
diligence to cure such default, then such period instead shall be thirty days;
or 


                    (f)
(i) any payment default of $10,000,000 or more shall occur under any instrument
or agreement (other than a Loan Document) respecting any Debt of either
Borrower or any of their Subsidiaries, unless payment shall be made or action
shall be taken within three Business Days after such default in an amount or
manner sufficient to cure it, provided that such payment or action will
not result in a breach of any term or provision of this Agreement and the other
Loan Documents, with the various financial measurements and covenants set forth
in Section 5.03 of this Agreement being recalculated on a pro forma basis (from
the then most recent quarterly or subsequent pro forma calculations) to include
the effect of any such payment or (ii) any Debt of either Borrower or of any of
their Subsidiaries of $15,000,000 or more in principal or notional amount shall
be accelerated or otherwise become due or be required to be prepaid,
repurchased or redeemed (other than pursuant to a regularly scheduled mandatory
prepayment, repurchase or redemption or the application of the change of
control provision contained in any Debt instrument, as in effect on the date
hereof, or any substantially identical provision contained in any subsequent
issuance of debt) prior to its scheduled maturity; or 


                    (g)
either Borrower or any of their Significant Subsidiaries shall (i) fail or be
unable to pay its debts generally as they become due, (ii) make a general
assignment for the benefit of its creditors, (iii) apply for or consent to the
appointment of a receiver, trustee, assignee, custodian, sequestrator,
liquidator or similar official for itself or any of its assets and properties,
(iv) commence a voluntary case for relief as a debtor under the United States
Bankruptcy Code, (v) file with or otherwise submit to any governmental
authority any petition, answer or other document seeking (A) reorganization,
(B) an arrangement with creditors or (C) to take advantage of any other present
or future applicable law respecting bankruptcy, reorganization, insolvency,
readjustment of debts, relief of debtors, dissolution or liquidation, (vi) file
or otherwise submit any answer or other document admitting or failing to
contest the material allegations of a petition or other document filed or
otherwise submitted against it in any proceeding under any such applicable law,
(vii) be adjudicated a bankrupt or insolvent, or (viii) take any action for the
purpose of effecting any of the foregoing; or 


                    (h)
any case, proceeding or other action shall be commenced against either Borrower
or any of their Significant Subsidiaries for the purpose of effecting, or an
order, judgment or decree shall be entered by any court of competent
jurisdiction approving (in whole or in part), anything specified in subsection
(g) of this Section, or any receiver, trustee, assignee, custodian,
sequestrator, liquidator or other official shall be appointed with respect to
either Borrower or any of their Significant Subsidiaries, or shall be appointed
to take or shall otherwise acquire possession or control of all or a
substantial part of the assets and properties of either Borrower or any of
their Significant Subsidiaries, and any of the foregoing shall continue
unstayed and in effect for any period of sixty days; or 


43






                    (i)
one or more final judgments for the payment of money in excess of an aggregate
of $10,000,000 shall be rendered against either Borrower or any of their
Subsidiaries and the same shall remain undischarged for a period of thirty days
during which levy and execution shall not be effectively stayed or contested in
good faith; or 


                    (j)
either Borrower or any ERISA Affiliate shall, or shall be reasonably expected
to, incur liability as a result of one or more of the following: (i) the
occurrence of any ERISA Event; (ii) the partial or complete withdrawal of
either Borrower or any ERISA Affiliate from a Multiemployer Plan; or (iii) the
reorganization or termination of a Multiemployer Plan; provided that any
such event(s) (individually or in the aggregate with any other such event(s))
would be reasonably likely to have or has had (in the reasonable judgment of
the Required Lenders) a Material Adverse Effect; or 


                    (k)
the Holding Company shall own less than all of the outstanding securities
issued by the Operating Company, or any other Person shall acquire any option,
warrant or other right to acquire any of those securities; or 


                    (l)
the Robinson Family shall cease to own (in the aggregate) at least fifty-one
percent (51.00%) of the issued and outstanding shares of Class A Stock of the
Holding Company; or any other Person shall acquire any option, warrant or other
right to acquire (from the Robinson Family, the Holding Company or otherwise)
any securities issued by the Holding Company that, if exercised, would result
in the Robinson Family holding less than 51% of such stock; or 


                    (m)
the Board of Directors of the Holding Company shall submit to its shareholders
for adoption, or the shareholders of the Holding Company shall adopt, any
supplement, modification or amendment to or restatement of the certificate of
incorporation or the by-laws of the Holding Company that would in any way
directly or indirectly (i) alter the relative voting rights or powers of the
classes of the capital stock of the Holding Company, (ii) add any additional
classes of capital stock with any voting rights, or (iii) adversely affect the
rights, powers, privileges, remedies or interests of the Agent or the Lenders
under this Agreement or any other Loan Document, in any such case without the
prior written consent of the Required Lenders; 


then, and in
any such event, the Agent (i) shall at the request, or may with the consent, of
the Required Lenders, by notice to the Borrowers, declare the obligation of
each Lender to make Advances (other than Letter of Credit Advances by an
Issuing Bank or a Lender pursuant to Section 2.16(d)) and of each Issuing Bank
to issue Letters of Credit to be terminated, whereupon the same shall forthwith
terminate, and (ii) shall at the request, or may with the consent, of the Required
Lenders, (A) by notice to the Borrowers, declare the Advances, all interest
thereon and all other amounts payable under this Agreement to be forthwith due
and payable, whereupon the Advances, all such interest and all such amounts
shall become and be forthwith due and payable, without presentment, demand,
protest or further notice of any kind, all of which are hereby expressly waived
by the Borrowers, (B) by notice to each party required under the terms of any
agreement in support of which a Letter of Credit is issued, request that all
obligations under such agreement be declared to be due and payable and (C) by
notice to each Issuing Bank, direct such Issuing Bank to deliver a Default
Termination Notice to the beneficiary of each Letter of Credit issued by it,
and each Issuing Bank shall deliver such Default Termination Notices; provided,
however, that in the event of an actual or deemed entry of an order for
relief with respect to either Borrower under the United States Bankruptcy Code,
(1) the obligation of each Lender to make Advances (other than Letter of Credit
Advances by an Issuing Bank or a Lender pursuant to Section 2.04(c) or Section
2.16(d)) and of each Issuing Bank to issue Letters of Credit shall
automatically be terminated and (2) the Advances, all such interest and all
such amounts shall automatically become and be due and payable, without
presentment, demand, protest or any notice of any kind, all of which are hereby
expressly waived by each Borrower. 


44






                    SECTION
6.02 Actions in Respect of the Letters of Credit upon Event of Default.
If any Event of Default shall have occurred and be continuing, the Agent may,
or shall at the request of the Required Lenders, irrespective of whether it is
taking any of the actions described in Section 6.01 or otherwise, make demand
upon the Borrowers to, and forthwith upon such demand the Borrowers will, pay
to the Agent on behalf of the Lenders in same day funds at the Agent’s office
designated in such demand, for deposit in the Letter of Credit Collateral
Account, an amount equal to the aggregate Available Amount of all Letters of
Credit then outstanding. If at any time the Agent determines that any funds
held in the Letter of Credit Collateral Account are subject to any right or
claim of any Person other than the Agent and the Lenders or that the total
amount of such funds is less than the aggregate Available Amount of all Letters
of Credit, the Borrowers will, forthwith upon demand by the Agent, pay to the
Collateral Agent, as additional funds to be deposited and held in the Letter of
Credit Collateral Account, an amount equal to the excess of (a) such aggregate
Available Amount over (b) the total amount of funds, if any, then held in the
Letter of Credit Collateral Account that the Agent determines to be free and
clear of any such right and claim. Upon the drawing of any Letter of Credit for
which funds are on deposit in the Letter of Credit Collateral Account, such
funds shall be applied to reimburse the relevant Issuing Bank or Lenders, as
applicable, to the extent permitted by applicable law. If the Borrowers have
not delivered the cash collateral as specified above within five Business Days
after it was due, at any time and from time to time thereafter, the Lenders in
their sole and absolute discretion may (but shall not be obligated to) advance
to the Borrowers all or any portion of the required cash collateral, by credit
to the Letter of Credit Collateral Account or otherwise; and amounts advanced
by the Lenders pursuant to this option and outstanding from time to time shall
be due and payable, together with interest and additional interest thereon at
the rates provided in Section 2.07 of this Agreement, on demand, and shall
otherwise constitute “Letter of Credit Advances” for all purposes under this
Agreement and the other Loan Documents. 


ARTICLE VII


THE AGENT


                    SECTION
7.01 Authorization and Action. Each Lender hereby appoints and
authorizes the Agent to take such action as agent on its behalf and to exercise
such powers and discretion under this Agreement and the other Loan Documents as
are delegated to the Agent by the terms hereof, together with such powers and
discretion as are reasonably incidental thereto. As to any matters not
expressly provided for by the Loan Documents (including, without limitation,
enforcement or collection of the Advances), the Agent shall not be required to
exercise any discretion or take any action, but shall be required to act or to
refrain from acting (and shall be fully protected in so acting or refraining
from acting) upon the instructions of the Required Lenders, and such
instructions shall be binding upon all Lenders and all holders of Notes; provided,
however, that the Agent shall not be required to take any action that
exposes the Agent to personal liability or that is contrary to this Agreement
or applicable law. The Agent agrees to give to each Lender prompt notice of
each notice given to it by any Borrower pursuant to the terms of this
Agreement. 


                    SECTION
7.02 Agent’s Reliance, Etc. Neither the Agent nor any of its directors,
officers, agents or employees shall be liable for any action taken or omitted
to be taken by it or them under or in connection with Loan Documents, except
for its or their own gross negligence or willful misconduct. Without limitation
of the generality of the foregoing, the Agent: (i) may treat the Lender that
made any Advance as the holder of the Debt resulting therefrom until the Agent
receives and accepts an Assumption Agreement entered into by an Assuming Lender
as provided in Section 2.18 or an Assignment and Acceptance entered into by
such Lender, as assignor, and an Eligible Assignee, as assignee, as provided in
Section 8.07; (ii) may consult with legal counsel (including counsel for the
Borrowers), independent public accountants and other experts selected by it and
shall not be liable for any 


45






action taken
or omitted to be taken in good faith by it in accordance with the advice of such
counsel, accountants or experts; (iii) makes no warranty or representation to
any Lender and shall not be responsible to any Lender for any statements,
warranties or representations (whether written or oral) made in or in
connection with the Loan Documents; (iv) shall not have any duty (fiduciary or otherwise)
to ascertain or to inquire as to the performance or observance of any of the
terms, covenants or conditions of the Loan Documents on the part of any
Borrower or to inspect the property (including the books and records) of the
Borrowers; (v) shall not be responsible to any Lender for the due execution,
legality, validity, enforceability, genuineness, sufficiency or value of, or
the perfection or priority of any lien or security interest created or
purported to be created under or in connection with, the Loan Documents or any
other instrument or document furnished pursuant hereto; (vi) shall incur no
liability under or in respect of any Loan Document by acting upon any notice,
consent, certificate or other instrument or writing (which may be by telecopier,
telegram) believed by it to be genuine and signed or sent by the proper party
or parties; (vii) shall be deemed not to have knowledge of any Default unless
and until written notice (including facsimile notice) thereof is given to the
Agent by either Borrower or a Lender; and (viii) shall not, except as expressly
set forth herein, have any duty to disclose, and shall not be liable for the
failure to disclose, any information relating to the Borrowers or any of their
Subsidiaries that is communicated to or obtained by the bank serving as Agent
or any of its Affiliates in any capacity. 


                    SECTION
7.03 JPMCB and Affiliates. With respect to its Commitment, the Advances
made by it and any Note issued to it, JPMCB shall have the same rights and
powers under the Loan Documents as any other Lender and may exercise the same
as though it were not the Agent; and the term “Lender” or “Lenders” shall,
unless otherwise expressly indicated, include JPMCB in its individual
capacity. JPMCB and its Affiliates may accept deposits from, lend money to, act
as trustee under indentures of, accept investment banking engagements from and
generally engage in any kind of business with, any Borrower, any of its
Subsidiaries and any Person who may do business with or own securities of any
such Borrower or any such Subsidiary, all as if JPMCB were not the Agent and
without any duty to account therefor to the Lenders. 


                    SECTION
7.04 Lender Credit Decision. Each Lender acknowledges that it has, independently
and without reliance upon the Agent or any other Lender and based on the
financial statements referred to in Section 4.01 and such other documents and
information as it has deemed appropriate, made its own credit analysis and
decision to enter into this Agreement. Each Lender also acknowledges that it
will, independently and without reliance upon the Agent 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. 


                    SECTION
7.05 Indemnification. (a) Each Lender agrees to indemnify the Agent (to
the extent not reimbursed by the Borrowers), from and against such Lender’s
ratable share (determined as provided below) of any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever that may be imposed
on, incurred by, or asserted against the Agent in any way relating to or
arising out of the Loan Documents or any action taken or omitted by the Agent
under the Loan Documents (collectively, the “Indemnified Costs”), provided
that no Lender shall be liable for any portion of the Indemnified Costs
resulting from the Agent’s gross negligence or willful misconduct. Without
limitation of the foregoing, each Lender agrees to reimburse the Agent promptly
upon demand for its ratable share of any out-of-pocket expenses (including
reasonable counsel fees) 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,
to the extent that the Agent is not reimbursed for such expenses by the
Borrowers. In the case of any investigation, litigation or proceeding giving
rise to any Indemnified Costs, this Section 7.05 applies 


46






whether any
such investigation, litigation or proceeding is brought by the Agent, any
Lender or a third party. 


                    (b)
Each Lender severally agrees to indemnify each Issuing Bank (to the extent not
promptly reimbursed by the Borrowers) from and against such Lender’s ratable
share (determined as provided below) of any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever that may be imposed on, incurred
by, or asserted against such Issuing Bank in any way relating to or arising out
of the Loan Documents or any action taken or omitted by such Issuing Bank under
the Loan Documents; provided, that no Lender shall be liable for any
portion of such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements resulting from such Issuing
Bank’s gross negligence or willful misconduct. Without limitation of the
foregoing, each Lender agrees to reimburse such Issuing Bank promptly upon
demand for its ratable share of any costs and expenses (including, without
limitation, fees and expenses of counsel) payable by the Borrowers under
Section 8.04, to the extent that such Issuing Bank is not promptly reimbursed
for such costs and expenses by the Borrowers. 


                    (c)
For purposes of this Section 7.05, the Lenders’ respective ratable shares of
any amount shall be determined, at any time, according to the sum of (i) the
aggregate principal amount of the Revolving Credit Advances, Term Loan
Advances, Swingline Advances and Letter of Credit Advances outstanding at such
time and owing to the respective Lender, (ii) their respective Pro Rata Shares
of the aggregate Available Amount of all Letters of Credit outstanding at such
time and (iii) their respective Unused Revolving Credit Commitments at such
time; provided that the aggregate principal amount of Letter of Credit
Advances owing to any Issuing Bank shall be considered to be owed to the
Lenders ratably in accordance with their respective Revolving Credit
Commitments. The failure of any Lender to reimburse any Agent or any Issuing
Bank, as the case may be, promptly upon demand for its ratable share of any
amount required to be paid by the Lenders to such Agent or such Issuing Bank,
as the case may be, as provided herein shall not relieve any other Lender of
its obligation hereunder to reimburse such Agent or such Issuing Bank, as the
case may be, for its ratable share of such amount, but no Lender shall be
responsible for the failure of any other Lender to reimburse such Agent or such
Issuing Bank, as the case may be, for such other Lender’s ratable share of such
amount. Without prejudice to the survival of any other agreement of any Lender
hereunder, the agreement and obligations of each Lender contained in this
Section 7.05 shall survive the payment in full of principal, interest and all
other amounts payable hereunder and under the other Loan Documents. 


                    SECTION
7.06 Successor Agent. The Agent may resign at any time by giving written
notice thereof to the Lenders and the Borrowers. Upon any such resignation, the
Required Lenders shall have the right to appoint a successor Agent. If no
successor Agent shall have been so appointed by the Required Lenders, and shall
have accepted such appointment, within 30 days after the retiring Agent’s
giving of notice of resignation, then the retiring Agent may, on behalf of the
Lenders, appoint a successor Agent, which shall be a commercial bank organized
under the laws of the United States of America or of any State thereof and
having a combined capital and surplus of at least $500,000,000. Upon the
acceptance of any appointment as Agent hereunder by a successor Agent, such
successor Agent shall thereupon succeed to and become vested with all the
rights, powers, discretion, privileges and duties of the retiring Agent, and
the retiring Agent shall be discharged from its duties and obligations under
this Agreement. After any retiring Agent’s resignation hereunder as Agent, the
provisions of this Article VII shall inure to its benefit as to any actions
taken or omitted to be taken by it while it was Agent under this Agreement. 


                    SECTION
7.07 Other Agents. Each Lender hereby acknowledges that neither
syndication agent nor any other Lender designated as any “Agent” on the
signature pages hereof has any responsibility or liability hereunder other than
in its capacity as a Lender.


47






ARTICLE VIII


MISCELLANEOUS


                    SECTION
8.01 Amendments, Etc. No amendment or waiver of any provision of this
Agreement, nor consent to any departure by any Borrower therefrom, shall in any
event be effective unless the same shall be in writing and signed by the
Required Lenders, and then such waiver or consent shall be effective only in
the specific instance and for the specific purpose for which given; provided,
however, that no amendment, waiver or consent shall, unless in writing and
signed by all the Lenders adversely affected thereby, do any of the
following: (a) waive any of the conditions specified in Section 3.01, (b)
increase the Commitments of the Lenders or subject the Lenders to any
additional obligations, (c) reduce the principal of, or interest on, any
Advance or any fees or other amounts payable hereunder, (d) postpone any date
fixed for any payment of principal of, or interest on, any Advance or any fees
or other amounts payable hereunder, (e) change the percentage of the
Commitments, the aggregate unpaid principal amount of any Advance or the
percentage or number of Lenders, that shall be required for the Lenders or any
of them to take any action hereunder or (f) amend this Section 8.01; and
provided further that (x) no amendment, waiver or consent shall, unless in
writing and signed by the Agent in addition to the Lenders required above to
take such action, affect the rights or duties of the Agent under this Agreement
or any Note and (y) no amendment, waiver or consent shall, unless in writing
and signed by the Issuing Banks and/or the Swingline Lender in addition to the
Lenders required above to take such action, adversely affect the rights or
obligations of the Issuing Banks and/or the Swingline Lender, as applicable, in
their capacities as such under this Agreement. 


                    SECTION
8.02 Notices, Etc. All notices and other communications provided for
hereunder shall be in writing (including telecopier or telegraphic
communication) and mailed, telecopied, telegraphed or delivered, if to the
Holding Company or to the Operating Company, at its address at 557 Broadway,
New York, New York 10012, Attention: Gil Dickoff, Vice President and Treasurer,
and (in the case of notices of Default) Devereux Chatillon, Senior Vice
President and General Counsel; if to any Lender or Issuing Bank, at its address
specified in its administrative questionnaire delivered to the Agent in
connection with the Facilities; if to the Swingline Lender, at its address at
JPMorgan Chase Bank, National Association, 10 South Dearborn, 7th Floor,
Chicago, IL 60603-0010, Attn: JPMorgan Loan Services; and if to the Agent, at
its address at JPMorgan Chase Bank, National Association, 10 South Dearborn,
7th Floor, Chicago, IL 60603-0010, Attn: JPMorgan Loan Services, Attention:
Loan and Agency Services Group; or, as to any Borrower or the Agent, at such
other address as shall be designated by such party in a written notice to the
other parties and, as to each other party, at such other address as shall be
designated by such party in a written notice to the Borrowers and the Agent. All
such notices and communications shall, when mailed, telecopied or telegraphed,
be effective when deposited in the mails, telecopied or delivered to the
telegraph company, respectively, except that notices and communications to the
Agent pursuant to Article II, III or VII shall not be effective until received
by the Agent. Delivery by  telecopier of
an executed counterpart of any amendment or waiver of any provision of this
Agreement or any Notes or of any Exhibit hereto to be executed and delivered
hereunder shall be effective as delivery of a manually executed counterpart
thereof. 


                    SECTION
8.03 No Waiver; Remedies. No failure on the part of any Lender or the
Agent to exercise, and no delay in exercising, any right hereunder or under any
Note shall operate as a waiver thereof; nor shall any single or partial
exercise of any such right preclude any other or further exercise thereof or
the exercise of any other right. The remedies herein provided are cumulative
and not exclusive of any remedies provided by law. 


                    SECTION
8.04 Costs and Expenses. (a) The Borrowers jointly and severally agree to
pay on demand all reasonable costs and expenses of the Agent in connection with
the preparation, 


48






execution,
delivery, administration, modification and amendment of the Loan Documents to
be delivered hereunder, including, without limitation, the reasonable fees and
expenses of counsel for the Agent with respect thereto and with respect to
advising the Agent as to its rights and responsibilities under the Loan
Documents. The Borrowers further jointly and severally agree to pay on demand
all reasonable costs and expenses of the Agent and the Lenders, if any
(including, without limitation, reasonable counsel fees and expenses), in
connection with the enforcement (whether through negotiations, legal
proceedings or otherwise) of this Agreement, the Notes and the other Loan
Documents to be delivered hereunder, including, without limitation, reasonable
fees and expenses of counsel for the Agent and each Lender in connection with
the enforcement of rights under this Section 8.04(a). 


                    (b)
The Borrowers jointly and severally agree to indemnify and hold harmless the
Agent and each Lender and each of their Affiliates and their officers,
directors, employees, agents and advisors (each, an “Indemnified Party”)
from and against any and all claims, damages, losses, liabilities and expenses
(including, without limitation, reasonable fees and expenses of counsel)
incurred by or asserted or awarded against any Indemnified Party, in each case
arising out of or in connection with or by reason of (including, without
limitation, in connection with any investigation, litigation or proceeding or
preparation of a defense in connection therewith) (i) the Loan Documents, any
of the transactions contemplated herein or the actual or proposed use of the
proceeds of the Advances or (ii) the actual or alleged presence of
Environmental Substances on any property of any Borrower or any of its
Subsidiaries or any Environmental Claim relating in any way to any Borrower or
any of its Subsidiaries, except to the extent such claim, damage, loss,
liability or expense is found in a final, non-appealable  judgment by a court of competent
jurisdiction to have resulted from such Indemnified Party’s gross negligence or
willful misconduct. In the case of an investigation, litigation or other
proceeding to which the indemnity in this Section 8.04(b) applies, such
indemnity shall be effective whether or not such investigation, litigation or
proceeding is brought by a Borrower, its directors, shareholders or creditors
or an Indemnified Party or any other Person or any Indemnified Party is
otherwise a party thereto and whether or not the transactions contemplated
hereby are consummated. The Borrowers also agree that no Indemnified Party
shall have any liability (whether direct or indirect, in contract, tort or
otherwise) to the Borrowers or any of their shareholders or creditors for or in
connection with the transactions contemplated hereby, except to the extent such
liability is found in a final
nonappealable  judgment by a
court of competent jurisdiction to have resulted from such Indemnified Party’s
gross negligence or willful misconduct. 


                    (c)
If any payment of principal of, or Conversion of, any Eurodollar Rate Advance
or LIBO Rate Advance is made by any Borrower to or for the account of a Lender
other than on the last day of the Interest Period for such Advance, as a result
of a payment or Conversion pursuant to Section 2.08(d) or (e), 2.10 or 2.12,
acceleration of the maturity of the Advances pursuant to Section 6.01 or for
any other reason, or by an Eligible Assignee to a Lender other than on the last
day of the Interest Period for such Advance upon an assignment of rights and
obligations under this Agreement pursuant to Section 8.07 as a result of a
demand by the Borrowers pursuant to Section 8.07(a), such Borrower shall, upon
demand by such Lender (with a copy of such demand to the Agent), pay to the Agent
for the account of such Lender any amounts required to compensate such Lender
for any additional losses, costs or expenses that it may reasonably incur as a
result of such payment or Conversion, including, without limitation, any loss
(including loss of anticipated profits), cost or expense incurred by reason of
the liquidation or reemployment of deposits or other funds acquired by any
Lender to fund or maintain such Advance. 


                    (d)
Without prejudice to the survival of any other agreement of the Borrowers
hereunder, the agreements and obligations of the Borrowers contained in
Sections 2.11, 2.14 and 8.04 shall survive the payment in full of principal,
interest and all other amounts payable hereunder and under the other Loan
Documents. 


49






                    SECTION
8.05 Right of Set-off. Upon (i) the occurrence and during the
continuance of any Event of Default and (ii) the making of the request or the
granting of the consent specified by Section 6.01 to authorize the Agent to
declare the Advances due and payable pursuant to the provisions of Section
6.01, each Lender and each of its Affiliates is hereby authorized at any time
and from time to time, 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 and other indebtedness at any time owing by such Lender
or such Affiliate to or for the credit or the account of any Borrower against
any and all of the obligations of such Borrower now or hereafter existing under
this Agreement and any Note held by such Lender, whether or not such Lender
shall have made any demand under this Agreement or such Note and although such
obligations may be unmatured. Each Lender agrees promptly to notify such Borrower
after any such set-off and application, provided that the failure to give such
notice shall not affect the validity of such set-off and application. The
rights of each Lender and its Affiliates under this Section are in addition to
other rights and remedies (including, without limitation, other rights of
set-off) that such Lender and its Affiliates may have. 


                    SECTION
8.06 Binding Effect. This Agreement shall become effective (other than
Sections 2.01, 2.03 and 2.16, which shall only become effective upon
satisfaction of the conditions precedent set forth in Section 3.01) when it
shall have been executed by the Borrowers and the Agent and when the Agent
shall have been notified by each Initial Lender that such Initial Lender has executed
it and thereafter shall be binding upon and inure to the benefit of the
Borrowers, the Agent and each Lender and their respective successors and
assigns, except that no Borrower shall have the right to assign its rights
hereunder or any interest herein without the prior written consent of the
Lenders. 


                    SECTION
8.07 Assignments and Participations. (a) Each Lender may and, if
demanded by the Borrowers (following a demand by such Lender pursuant to
Section 2.11 or 2.14) upon at least five Business Days’ notice to such Lender
and the Agent, will assign to one or more Persons all or a portion of its
rights and obligations under this Agreement (including, without limitation, all
or a portion of its Commitment, its Advances owing to it and any Notes held by
it); provided, however, that (i) each such assignment shall be of
a constant, and not a varying, percentage of all rights and obligations
(including the Revolving Credit Facility and the Term Loan Facility and Term
Loans) under this Agreement (other than any right to make Competitive Bid
Advances, Competitive Bid Advances owing to it and any Competitive Bid Notes),
(ii) except in the case of an assignment to a Person that, immediately prior to
such assignment, was a Lender or an assignment of all of a Lender’s rights and
obligations under this Agreement, the amount of the Commitment of the assigning
Lender being assigned pursuant to each such assignment (determined as of the
date of the Assignment and Acceptance with respect to such assignment) shall in
no event be less than $5,000,000, (iii) each such assignment shall be to an
Eligible Assignee, (iv) each such assignment made as a result of a demand by
the Borrowers pursuant to this Section 8.07(a) shall be arranged by the
Borrowers after consultation with the Agent and shall be either an assignment
of all of the rights and obligations of the assigning Lender under this
Agreement or an assignment of a portion of such rights and obligations made
concurrently with another such assignment or other such assignments that
together cover all of the rights and obligations of the assigning Lender under
this Agreement, (v) no Lender shall be obligated to make any such assignment as
a result of a demand by the Borrowers pursuant to this Section 8.07(a) unless
and until such Lender shall have received one or more payments from either the
Borrowers or one or more Eligible Assignees in an aggregate amount at least
equal to the aggregate outstanding principal amount of the Advances owing to
such Lender, together with accrued interest thereon to the date of payment of
such principal amount and all other amounts payable to such Lender under this
Agreement, (vi) the parties to each such assignment shall execute and deliver
to the Agent, for its acceptance and recording in the Register, an Assignment
and Acceptance, together with any Revolving Credit Note or Term Loan Note
subject to such assignment and a processing and recordation fee of $3,500, and
(vii) any such assignment shall be subject to the prior written consent (such
consent not to be unreasonably withheld) of: (a) the Borrowers, provided that
no consent of the 


50






Borrowers
shall be required for an assignment to a Lender, an Affiliate of a Lender, an
Approved Fund or, if an Event of Default has occurred and is continuing, any
other assignee, (b) the Agent and (c) the Issuing Banks. 


                    (b)
[Intentionally Omitted]. 


                    (c)
Upon such execution, delivery, acceptance and recording, from and after the
effective date specified in each Assignment and Acceptance, (x) the assignee
thereunder shall be a party hereto and, to the extent that rights and
obligations hereunder have been assigned to it pursuant to such Assignment and
Acceptance, have the rights and obligations of a Lender or an Issuing Bank, as
the case may be, hereunder and (y) the Lender or Issuing Bank assignor
thereunder shall, to the extent that rights and obligations hereunder 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). 


                    (d)
By executing and delivering an Assignment and Acceptance, the Lender assignor
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 the Loan Documents
or the execution, legality, validity, enforceability, genuineness, sufficiency
or value of, or the perfection or priority of any lien or security interest
created or purported to be created under or in connection with, the Loan
Documents or any other instrument or document furnished pursuant hereto; (ii)
such assigning Lender makes no representation or warranty and assumes no
responsibility with respect to the financial condition of the Borrowers or the
performance or observance by any Borrower of any of its obligations under the
Loan Documents or any other instrument or document furnished pursuant hereto;
(iii) such assignee confirms that it has received a copy of this Agreement,
together with copies of the financial statements referred to in Section 4.01
and 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 confirms that it is an Eligible Assignee; (vi)
such assignee appoints and authorizes the Agent to take such action as agent on
its behalf and to exercise such powers and discretion under this Agreement as
are delegated to the Agent by the terms hereof, together with such powers and
discretion as are reasonably incidental thereto; and (vii) such assignee agrees
that it will perform in accordance with their terms all of the obligations that
by the terms of this Agreement are required to be performed by it as a Lender. 


                    (e)
Upon its receipt of an Assignment and Acceptance executed by an assigning
Lender and an assignee representing that it is an Eligible Assignee, together
with any Note or Notes subject to such assignment, the Agent shall, if such
Assignment and Acceptance has been completed and is in substantially the form
of Exhibit C hereto, (i) accept such Assignment and Acceptance, (ii)
record the information contained therein in the Register and (iii) give prompt
notice thereof to the Borrowers. 


                    (f)
The Agent shall maintain at its address referred to in Section 8.02 a copy of
each Assumption Agreement and each Assignment and Acceptance delivered to and
accepted by it and a register for the recordation of the names and addresses of
the Lenders and the Commitment of, and principal amount of the Advances owing
to, each Lender from time to time (the “Register”). The entries in the
Register shall be conclusive and binding for all purposes, absent manifest
error, and the Borrowers, the Agent and the Lenders may treat each Person whose
name is recorded in the Register as a Lender 


51






hereunder for
all purposes of this Agreement. The Register shall be available for inspection
by the Borrowers or any Lender at any reasonable time and from time to time
upon reasonable prior notice. 


                    (g)
Each Lender may sell participations to one or more banks or other entities
(other than a Borrower or any of its Affiliates) in or to all or a portion of
its rights and obligations under this Agreement (including, without limitation,
all or a portion of its Commitment, the Advances owing to it and any Note or
Notes held by it); provided, however, that (i) such Lender’s
obligations under this Agreement (including, without limitation, its Commitment
to the Borrowers hereunder) shall remain unchanged and such Lender agrees that
it will not raise (and hereby expressly waives) any defense relating to any
such participation, (ii) such Lender shall remain solely responsible to the
other parties hereto for the performance of such obligations, (iii) such Lender
shall remain the holder of any such Note for all purposes of this Agreement,
(iv) the Borrowers, the Agent and the other Lenders shall continue to deal
solely and directly with such Lender in connection with such Lender’s rights
and obligations under this Agreement, (v) no participant under any such
participation shall have any right to approve any amendment or waiver of any
provision of this Agreement or any Note, or any consent to any departure by any
Borrower therefrom, except to the extent that such amendment, waiver or consent
would reduce the principal of, or interest on, any Advances or any fees or
other amounts payable hereunder, in each case to the extent subject to such
participation, or postpone any date fixed for any payment of principal of, or
interest on, any Advances or any fees or other amounts payable hereunder, in
each case to the extent subject to such participation and (vi) such Lender
shall not permit its direct or indirect participants to further assign or
participate its interest. 


                    (h)
Any Lender may, in connection with any assignment or participation or proposed
assignment or participation pursuant to this Section 8.07, disclose to the
assignee or participant or proposed assignee or participant, any information
relating to the Borrowers furnished to such Lender by or on behalf of the
Borrowers; provided that, prior to any such disclosure, the assignee or
participant or proposed assignee or participant shall agree to preserve the
confidentiality of any Confidential Information relating to the Borrowers
received by it from such Lender. 


                    (i)
Notwithstanding any other provision set forth in this Agreement, any Lender may
at any time create a security interest in all or any portion of its rights
under this Agreement (including, without limitation, the Advances owing to it
and any Note or Notes held by it) in favor of any Federal Reserve Bank in
accordance with Regulation A of the Board of Governors of the Federal Reserve
System. 


                    SECTION
8.08 Confidentiality. Neither the Agent nor any Lender shall disclose
any Confidential Information to any other Person without the prior written
consent of the Borrowers, other than (a) to the Agent’s or such Lender’s
Affiliates and their officers, directors, employees, agents and advisors and,
as contemplated by Section 8.07(h), to actual or prospective assignees and
participants, and then only on a confidential basis, (b) as required by any
law, rule or regulation or judicial process, (c) as requested or required by
any state, federal or foreign authority or examiner regulating banks or banking
and (d) in connection with the exercise of any remedies hereunder or any suit,
action or proceeding relating to this Agreement or the enforcement of rights
hereunder. 


                    SECTION
8.09 No Liability of the Issuing Banks. The Borrower assumes all risks
of the acts or omissions of any beneficiary or transferee of any Letter of
Credit with respect to its use of such Letter of Credit. Neither any Issuing
Bank nor any of its officers or directors shall be liable or responsible
for: (a) the use that may be made of any Letter of Credit or any acts or
omissions of any beneficiary or transferee in connection therewith; (b) the
validity, sufficiency or genuineness of documents, or of any endorsement
thereon, even if such documents should prove to be in any or all respects
invalid, insufficient, fraudulent or forged; (c) payment by such Issuing Bank
against presentation of documents that do not comply with the terms of a Letter
of Credit, including failure of any documents to bear any 


52






reference or
adequate reference to the Letter of Credit, unless such documents are
substantially different from the applicable form specified by such Letter of
Credit; or (d) any other circumstances whatsoever in making or failing to make
payment under any Letter of Credit, except that the applicable Borrower shall
have a claim against such Issuing Bank, and such Issuing Bank shall be liable
to such Borrower, to the extent of any direct, but not consequential, damages
suffered by such Borrower that such Borrower proves were caused by (i) such
Issuing Bank’s willful misconduct or gross negligence in determining whether
documents presented under any Letter of Credit comply with the terms of the
Letter of Credit or (ii) such Issuing Bank’s willful failure to make lawful
payment under a Letter of Credit after the presentation to it of a draft and
certificates strictly complying with the terms and conditions of the Letter of
Credit. In furtherance and not in limitation of the foregoing, such Issuing
Bank may accept documents that appear on their face to be in order, without
responsibility for further investigation, regardless of any notice or
information to the contrary. 


                    SECTION
8.10 Governing Law. This Agreement and any Notes shall be governed by,
and construed in accordance with, the laws of the State of New York. 


                    SECTION
8.11 Execution in Counterparts. This Agreement may be executed in any
number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one and the same agreement.
Delivery of an executed counterpart of a signature page to this Agreement by
telecopier shall be effective as delivery of a manually executed counterpart of
this Agreement. 


                    SECTION
8.12 Waiver of Jury Trial. Each of the Borrowers, the Agent and the Lenders
hereby irrevocably waives all right to trial by jury in any action, proceeding
or counterclaim (whether based on contract, tort or otherwise) arising out of
or relating to this Agreement or any Notes or the actions of the Agent or any
Lender in the negotiation, administration, performance or enforcement thereof. 


                    SECTION
8.13 USA Patriot Act. Each Lender that is subject to the requirements of
the USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26,
2001)) (the “Act”) hereby notifies the Borrowers that pursuant to the
requirements of the Act, it is required to obtain, verify and record
information that identifies each Borrower, which information includes the name
and address of each Borrower and other information that will allow such Lender
to identify each Borrower in accordance with the Act. 


[Signature Pages Follow]


53







          IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed by their respective authorized officers as of the day and year first
above written.


	
 

	
 

	
 

	
 


	
 

	
SCHOLASTIC CORPORATION


	
 

	
 

	
 


	
 

	
By:  

	



	
 

	
 

	



	
 

	
Name:

	
Maureen O’Connell 


	
 

	
Title:

	
Executive Vice
  President, 


	
 

	
 

	
Chief Administrative
  Officer and Chief 


	
 

	
 

	
Financial Officer 


	
 

	
 

	
 








	
 

	
 

	
 

	
 


	
 

	
SCHOLASTIC INC.


	
 

	
 

	
 


	
 

	
By:  

	



	
 

	
 

	



	
 

	
Name:

	
Maureen O’Connell 


	
 

	
Title:

	
Executive Vice
  President, 


	
 

	
 

	
Chief Administrative
  Officer and Chief 


	
 

	
 

	
Financial Officer 


	
 

	
 

	
 





Signature Page to Credit Agreement 

Scholastic Corporation and Scholastic Inc.






	
 

	
 

	
 

	
 


	
 

	
JPMORGAN CHASE BANK,


	
 

	
NATIONAL ASSOCIATION,


	
 

	
individually as a
  Lender, as the Swingline Lender, 
as an Issuing Bank and as Administrative
  Agent


	
 

	
 


	
 

	
By:  

	



	
 

	
 

	



	
 

	
Name:

	
Deborah Hinkles


	
 

	
Title:

	
Vice President





Signature Page to Credit Agreement 

Scholastic Corporation and Scholastic Inc.






	
 

	
 

	
 

	
 


	
 

	
BANK OF AMERICA,


	
 

	
NATIONAL ASSOCIATION,


	
 

	
individually as a
  Lender, as an Issuing Bank and as a Syndication Agent


	
 

	
 


	
 

	
By:  

	



	
 

	
 

	



	
 

	
Name:

	
Richard Williams


	
 

	
Title:

	
Senior Vice President





Signature Page to Credit Agreement 

Scholastic Corporation and Scholastic Inc.






	
 

	
 

	
 

	
 


	
 

	
WACHOVIA
  BANK,


	
 

	
NATIONAL
  ASSOCIATION,


	
 

	
individually as a
  Lender and as a Syndication Agent


	
 

	
 


	
 

	
By:  

	



	
 

	
 

	



	
 

	
Name:

	
Tyrone J. Williams


	
 

	
Title:

	
Senior Vice President





Signature Page to Credit Agreement 

Scholastic Corporation and Scholastic Inc.






	
 

	
 

	
 

	
 


	
 

	
SUNTRUST
  BANK,


	
 

	
individually
  as a Lender and as a Documentation Agent


	
 

	
 

	
 

	
 


	
 

	
By:  

	



	
 

	
 

	



	
 

	
Name:

	
Kip Hurd


	
 

	
Title:

	
Director





Signature Page to Credit Agreement 

Scholastic Corporation and Scholastic Inc.






	
 

	
 

	
 

	
 


	
 

	
THE
  ROYAL BANK OF SCOTLAND plc,


	
 

	
individually
  as a Lender and as a Documentation Agent


	
 

	
 

	
 

	
 


	
 

	
By:  

	



	
 

	
 

	



	
 

	
Name:

	
Andrew Wynn


	
 

	
Title:

	
Managing
  Director, Head of TMT





Signature Page to Credit Agreement 

Scholastic Corporation and Scholastic Inc.






	
 

	
 

	
 

	
 


	
 

	
DEUTSCHE BANK AG NEW
  YORK BRANCH,


	
 

	
as a Lender


	
 

	
 

	
 

	
 


	
 

	
By:  

	



	
 

	
 

	



	
 

	
Name:

	
Yvonne Tilden


	
 

	
Title:

	
Vice President








	
 

	
 

	
 

	
 


	
 

	
By:  

	



	
 

	
 

	



	
 

	
Name:

	
Andreas Neumeier


	
 

	
Title:

	
Director





Signature Page to Credit Agreement 

Scholastic Corporation and Scholastic Inc.






	
 

	
 

	
 

	
 


	
 

	
HSBC
  BANK USA, NATIONAL ASSOCIATION,


	
 

	
as a Lender


	
 

	
 

	
 

	
 


	
 

	
By:  

	



	
 

	
 

	



	
 

	
Name:

	
Richard van der Meer


	
 

	
Title:

	
Vice
  President





Signature Page to Credit Agreement 

Scholastic Corporation and Scholastic Inc.






	
 

	
 

	
 

	
 


	
 

	
HSBC
  BANK plc,


	
 

	
as a Lender


	
 

	
 

	
 

	
 


	
 

	
By:  

	



	
 

	
 

	



	
 

	
Name:

	
STEPHEN HURST


	
 

	
Title:

	
CORPORATE BANKING
  MANAGER





Signature Page to Credit Agreement 

Scholastic Corporation and Scholastic Inc.






	
 

	
 

	
 

	
 


	
 

	
THE
  GOVERNOR AND COMPANY OF THE 

  BANK OF IRELAND,


	
 

	
as a Lender


	
 

	
 

	
 

	
 


	
 

	
By:  

	



	
 

	
 

	



	
 

	
Name:

	
Gwen Evans


	
 

	
Title:

	
Authorised
  Signatory


	
 

	
 

	
 


	
 

	
By:  

	



	
 

	
 

	



	
 

	
Name:

	
Paul Kelly


	
 

	
Title:

	
Authorised Signatory





Signature Page to Credit Agreement 

Scholastic Corporation and Scholastic Inc.






	
 

	
 

	
 

	
 


	
 

	
THE BANK OF NEW YORK,


	
 

	
as a Lender


	
 

	
 

	
 

	
 


	
 

	
By:  

	



	
 

	
 

	



	
 

	
Name:

	
Thomas J. McCormack


	
 

	
Title:

	
Vice President





Signature Page to Credit Agreement 

Scholastic Corporation and Scholastic Inc.






	
 

	
 

	
 

	
 


	
 

	
CITIBANK, N.A.,


	
 

	
as a Lender


	
 

	
 

	
 

	
 


	
 

	
By:  

	



	
 

	
 

	



	
 

	
Name:

	
JaHan Wang


	
 

	
Title:

	
Vice President





Signature Page to Credit Agreement 

Scholastic Corporation and Scholastic Inc.






	
 

	
 

	
 

	
 


	
 

	
TD
  BANKNORTH, N.A.,


	
 

	
as a Lender


	
 

	
 

	
 

	
 


	
 

	
By:  

	



	
 

	
 

	



	
 

	
Name:

	
JEFF (ILLEGIBLE)


	
 

	
Title:

	
SENIOR VICE PRESIDENT





Signature Page to Credit Agreement 

Scholastic Corporation and Scholastic Inc.






	
 

	
 

	
 

	
 


	
 

	
UBS
  LOAN FINANCE LLC,


	
 

	
as a Lender


	
 

	
 

	
 

	
 


	
 

	
By:  

	



	
 

	
 

	



	
 

	
Name:

	
Irja R. Otsa


	
 

	
Title:

	
Associate
  Director


	
 

	
 

	
 


	
 

	
By:  

	



	
 

	
 

	



	
 

	
Name:

	
David B. Julie


	
 

	
Title:

	
Associate Director





Signature Page to Credit Agreement

Scholastic Corporation and Scholastic Inc.







COMMITMENTS
AND APPLICABLE LENDING OFFICES


	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
Name of Initial Lender

	
 

	
Revolving Credit

  Commitment

	
 

	
Term Loan

  Commitment


	


	
 

	


	
 

	



	
 

	
 

	
 

	
 

	
 


	
JPMorgan Chase Bank, National Association

	
 

	
 

	
$

	
45,500,000

	
 

	
 

	
 

	
$

	
24,500,000

	
 


	
Bank of America, N.A.

	
 

	
 

	
$

	
45,500,000

	
 

	
 

	
 

	
$

	
24,500,000

	
 


	
SunTrust Bank

	
 

	
 

	
$

	
35,000,000

	
 

	
 

	
 

	
$

	
22,500,000

	
 


	
The Royal Bank of Scotland plc

	
 

	
 

	
$

	
35,000,000

	
 

	
 

	
 

	
$

	
22,500,000

	
 


	
Wachovia Bank, National Association

	
 

	
 

	
$

	
35,000,000

	
 

	
 

	
 

	
$

	
22,500,000

	
 


	
Deutsche Bank AG New York Branch

	
 

	
 

	
$

	
23,000,000

	
 

	
 

	
 

	
$

	
14,500,000

	
 


	
HSBC BANK USA, National Association

	
 

	
 

	
$

	
15,000,000

	
 

	
 

	
 

	
$

	
10,000,000

	
 


	
The Governor and Company of the Bank of Ireland

	
 

	
 

	
$

	
23,000,000

	
 

	
 

	
 

	
$

	
14,500,000

	
 


	
The Bank of New York

	
 

	
 

	
$

	
15,000,000

	
 

	
 

	
 

	
$

	
10,000,000

	
 


	
Citibank, N.A.

	
 

	
 

	
$

	
15,000,000

	
 

	
 

	
 

	
$

	
10,000,000

	
 


	
TDBanknorth, N.A.

	
 

	
 

	
$

	
15,000,000

	
 

	
 

	
 

	
$

	
10,000,000

	
 


	
UBS Loan Finance LLC

	
 

	
 

	
$

	
15,000,000

	
 

	
 

	
 

	
$

	
10,000,000

	
 


	
HSBC Bank plc

	
 

	
 

	
$

	
8,000,000

	
 

	
 

	
 

	
$

	
4,500,000

	
 


	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	


	


	


	


	


	


	


	


	


	


	



	
Total

	
 

	
 

	
$

	
325,000,000

	
 

	
 

	
 

	
$

	
200,000,000

	
 


	


	


	


	


	


	


	


	


	


	


	






1






EXHIBIT
A-1 - FORM OF

REVOLVING CREDIT

PROMISSORY NOTE


Dated:
_______________, 200_


          FOR
VALUE RECEIVED, the undersigned, [NAME OF BORROWER], a
_________________________ corporation (the “Borrower”), HEREBY PROMISES
TO PAY to the order of _________________________ (the “Lender”) for the
account of its Applicable Lending Office on the Termination Date (each as
defined in the Credit Agreement referred to below) the aggregate principal
amount of the Revolving Credit Advances made by the Lender to the Borrower
pursuant to the Credit Agreement dated as of June 1, 2007 among the Borrower,
[Scholastic Corporation][Scholastic Inc.], the Lender and certain other lenders
parties thereto, JPMorgan Chase Bank, National Association, as Agent for the
Lender and such other lenders (as amended or modified from time to time, the “Credit
Agreement”; the terms defined therein being used herein as therein defined)
outstanding on the Termination Date.


          The
Borrower promises to pay interest on the unpaid principal amount of each
Revolving Credit Advance from the date of such Revolving Credit Advance until
such principal amount is paid in full, at such interest rates, and payable at
such times, as are specified in the Credit Agreement.


          Both
principal and interest are payable in lawful money of the United States of
America to the Agent in same day funds. Each Revolving Credit Advance owing to
the Lender by the Borrower pursuant to the Credit Agreement, and all payments
made on account of principal thereof, shall be recorded by the Lender and,
prior to any transfer hereof, endorsed on the grid attached hereto which is
part of this Promissory Note.


          This
Promissory Note is one of the Revolving Credit Notes referred to in, and is
entitled to the benefits of, the Credit Agreement. The Credit Agreement, among
other things, (i) provides for the making of Revolving Credit Advances by the
Lender to the Borrower from time to time, the indebtedness of the Borrower
resulting from each such Revolving Credit Advance being evidenced by this
Promissory Note and (ii) contains provisions for acceleration of the maturity
hereof upon the happening of certain stated events and also for prepayments on
account of principal hereof prior to the maturity hereof upon the terms and
conditions therein specified.


          The
Borrower hereby waives presentment, demand, protest and notice of any kind. No
failure to exercise, and no delay in exercising, any rights hereunder on the
part of the holder hereof shall operate as a waiver of such rights.


	
 

	
 

	
 


	
 

	
[NAME OF BORROWER]


	
 

	
 


	
 

	
By


	
 

	
 

	



	
 

	
 

	
     Title:





2






ADVANCES
AND PAYMENTS OF PRINCIPAL


	
 

	
 

	
 

	
 

	
 


	


	


	



	
Date

	
Amount of

  Advance

	
Amount of

  Principal Paid

  or Prepaid

	
Unpaid Principal

  Balance

	
Notation

  Made By


	


	


	


	


	



	


	


	


	


	



	


	


	


	


	



	


	


	


	


	



	


	


	


	


	



	


	


	


	


	



	


	


	


	


	



	


	


	


	


	



	


	


	


	


	



	


	


	


	


	



	


	


	


	


	



	


	


	


	


	



	


	


	


	


	



	


	


	


	


	



	


	


	


	


	



	


	


	


	


	



	


	


	


	


	



	


	


	


	


	



	


	


	


	


	



	


	


	


	


	



	


	


	


	


	



	


	


	


	


	



	


	


	


	


	



	


	


	


	


	



	


	


	


	


	



	


	


	


	


	






3






EXHIBIT
A-2 - FORM OF

COMPETITIVE BID

PROMISSORY NOTE


     U.S. $_______________       
              
              
          Dated:
_______________, 200_


          FOR VALUE RECEIVED, the
undersigned, [NAME OF BORROWER], a _________________________ corporation (the
“Borrower”), HEREBY PROMISES TO PAY to the order of _________________________
(the “Lender”) for the account of its Applicable Lending Office (as defined in
the Credit Agreement dated as of June 1, 2007 among the Borrower, [Scholastic
Corporation] [Scholastic Inc.], the Lender and certain other lenders parties
thereto, JPMorgan Chase Bank, National Association, as Agent for the Lender and
such other lenders (as amended or modified from time to time, the “Credit Agreement”; the terms defined therein being used herein as therein defined)),
on _______________, 200_, the principal amount of U.S. $_______________].


          The
Borrower promises to pay interest on the unpaid principal amount hereof from
the date hereof until such principal amount is paid in full, at the interest
rate and payable on the interest payment date or dates provided below:


          Interest
Rate: _____% per annum (calculated on the basis of a year of _____ days for the
actual number of days elapsed).


          Both principal and interest are
payable in lawful money of ________________ to the Agent, for the account of
the Lender at the office of _________________________ in same day funds.


          This
Promissory Note is one of the Competitive Bid Notes referred to in, and is
entitled to the benefits of, the Credit Agreement. The Credit Agreement, among
other things, contains provisions for acceleration of the maturity hereof upon
the happening of certain stated events.


          The
Borrower hereby waives presentment, demand, protest and notice of any kind. No
failure to exercise, and no delay in exercising, any rights hereunder on the
part of the holder hereof shall operate as a waiver of such rights.


          This
Promissory Note shall be governed by, and construed in accordance with, the
laws of the State of New York.


	
 

	
 

	
 


	
 

	
[NAME OF BORROWER]


	
 

	
 


	
 

	
By


	
 

	
 

	



	
 

	
 

	
     Title:







4






EXHIBIT
A-3 - FORM OF

TERM LOAN

PROMISSORY NOTE


Dated:
_______________, 200_


          FOR
VALUE RECEIVED, the undersigned, [NAME OF BORROWER], a
_________________________ corporation (the “Borrower”), HEREBY PROMISES TO PAY
to the order of _________________________ (the “Lender”) for the account of its
Applicable Lending Office on the Termination Date (each as defined in the
Credit Agreement referred to below) the aggregate principal amount of the Term
Loan Advance made by the Lender to the Borrower pursuant to the Credit
Agreement dated as of June 1, 2007 among the Borrower, [Scholastic
Corporation][Scholastic Inc.], the Lender and certain other lenders parties
thereto, JPMorgan Chase Bank, National Association, as Agent for the Lender and
such other lenders (as amended or modified from time to time, the “Credit
Agreement”; the terms defined therein being used herein as therein defined)
outstanding on the Termination Date.


          The
Borrower promises to pay interest on the unpaid principal amount of the Term
Loan Advance from the date of the Term Loan Advance until such principal amount
is paid in full, at such interest rates, and payable at such times, as are
specified in the Credit Agreement.


          Both
principal and interest are payable in lawful money of the United States of
America to the Agent in same day funds. The Term Loan Advance owing to the
Lender by the Borrower pursuant to the Credit Agreement, and all payments made
on account of principal thereof, shall be recorded by the Lender and, prior to
any transfer hereof, endorsed on the grid attached hereto which is part of this
Promissory Note.


          This
Promissory Note is one of the Term Loan Notes referred to in, and is entitled
to the benefits of, the Credit Agreement. The Credit Agreement, among other
things, (i) provides for the making of the Term Loan Advance by the Lender to
the Borrower from time to time, the indebtedness of the Borrower resulting from
the Term Loan Advance being evidenced by this Promissory Note and (ii) contains
provisions for acceleration of the maturity hereof upon the happening of
certain stated events and also for prepayments on account of principal hereof
prior to the maturity hereof upon the terms and conditions therein specified.


          The
Borrower hereby waives presentment, demand, protest and notice of any kind. No
failure to exercise, and no delay in exercising, any rights hereunder on the
part of the holder hereof shall operate as a waiver of such rights.


	
 

	
 

	
 


	
 

	
[NAME OF BORROWER]


	
 

	
 


	
 

	
By


	
 

	
 

	



	
 

	
 

	
     Title:








5







PAYMENTS OF PRINCIPAL


	
 

	
 

	
 

	
 


	


	


	


	



	
Date

	
Amount of

  Principal Paid

  or Prepaid

	
Unpaid Principal

  Balance

	
Notation

  Made By


	


	


	


	



	
 

	
 

	
 

	
 


	


	


	


	



	
 

	
 

	
 

	
 


	


	


	


	



	
 

	
 

	
 

	
 


	


	


	


	



	
 

	
 

	
 

	
 


	


	


	


	



	
 

	
 

	
 

	
 


	


	


	


	



	
 

	
 

	
 

	
 


	


	


	


	



	
 

	
 

	
 

	
 


	


	


	


	



	
 

	
 

	
 

	
 


	


	


	


	



	
 

	
 

	
 

	
 


	


	


	


	



	
 

	
 

	
 

	
 


	


	


	


	



	
 

	
 

	
 

	
 


	


	


	


	



	
 

	
 

	
 

	
 


	


	


	


	



	
 

	
 

	
 

	
 


	


	


	


	



	
 

	
 

	
 

	
 


	


	


	


	



	
 

	
 

	
 

	
 


	


	


	


	



	
 

	
 

	
 

	
 


	


	


	


	



	
 

	
 

	
 

	
 


	


	


	


	



	
 

	
 

	
 

	
 


	


	


	


	



	
 

	
 

	
 

	
 


	


	


	


	



	
 

	
 

	
 

	
 


	


	


	


	



	
 

	
 

	
 

	
 


	


	


	


	



	
 

	
 

	
 

	
 


	


	


	


	



	
 

	
 

	
 

	
 


	


	


	


	



	
 

	
 

	
 

	
 


	


	


	


	



	
 

	
 

	
 

	
 


	


	


	


	






6







	
 

	
 


	
 

	
EXHIBIT B-1
  - FORM OF NOTICE OF

    REVOLVING CREDIT BORROWING


	
 

	
 


	
JPMorgan Chase Bank, National Association,
  as Agent

  for the Lenders parties

  to the Credit Agreement

  referred to below

  270 Park Avenue

  New York, New York 10017

	
 





[Date]


                    Attention:
Loan and Agency Services Group 


Ladies and
Gentlemen: 


                    The
undersigned, [Name of Borrower], refers to the Credit Agreement, dated as of
June 1, 2007 (as amended or modified from time to time, the “Credit Agreement”,
the terms defined therein being used herein as therein defined), among the
undersigned, [Scholastic Corporation][Scholastic Inc.], certain Lenders parties
thereto, JPMorgan Chase Bank, National Association, as Agent for said Lenders,
and hereby gives you notice, irrevocably, pursuant to Section 2.02 of the
Credit Agreement that the undersigned hereby requests a Revolving Credit
Borrowing under the Credit Agreement, and in that connection sets forth below
the information relating to such Revolving Credit Borrowing (the “Proposed
Revolving Credit Borrowing”) as required by Section 2.02(a) of the Credit
Agreement: 


                    (i)
The Business Day of the Proposed Revolving Credit Borrowing is _______________,
200_. 



	
 

	
 


	
 

	
         (ii)
The Type of Advances comprising the Proposed Revolving Credit Borrowing is
[Base Rate Advances] [Eurodollar Rate Advances]. 





                          (iii)
The aggregate amount of the Proposed Revolving Credit Borrowing is
$_______________. 


	
 

	
 


	
 

	
          [(iv)
  The initial Interest Period for each Eurodollar Rate Advance made as part of
  the Proposed Revolving Credit Borrowing is _____ month[s].]





                    The
undersigned hereby certifies that the following statements are true on the date
hereof, and will be true on the date of the Proposed Revolving Credit
Borrowing: 


                    (A)
the representations and warranties contained in Section 4.01 of the Credit
Agreement are correct, before and after giving effect to the Proposed Revolving
Credit Borrowing and to the application of the proceeds therefrom, as though
made on and as of such date; and 


                    (B)
no event has occurred and is continuing, or would result from such Proposed
Revolving Credit Borrowing or from the application of the proceeds therefrom,
that constitutes a Default. 


7






	
 

	
 


	
Very truly
  yours,


	
 


	
[NAME OF
  BORROWER]


	
 


	
By

	
 


	
 

	



	
           Title:







8







	
 

	
 


	
 

	
EXHIBIT B-2
  - FORM OF NOTICE OF

       COMPETITIVE BID BORROWING


	
 

	
 


	
JPMorgan Chase Bank, National Association,
  as Agent

  for the Lenders parties

  to the Credit Agreement

  referred to below

  270 Park Avenue

  New York, New York 10017

	
 





[Date]


                    Attention:
Loan and Agency Services Group 


Ladies and
Gentlemen: 


                    The
undersigned, [Name of Borrower], refers to the Credit Agreement, dated as of
June 1, 2007 (as amended or modified from time to time, the “Credit
Agreement”, the terms defined therein being used herein as therein
defined), among the undersigned, [Scholastic Corporation][Scholastic Inc.], certain
Lenders parties thereto, JPMorgan Chase Bank, National Association, as Agent
for said Lenders, and hereby gives you notice, irrevocably, pursuant to Section
2.03 of the Credit Agreement that the undersigned hereby requests a Competitive
Bid Borrowing under the Credit Agreement, and in that connection sets forth the
terms on which such Competitive Bid Borrowing (the “Proposed Competitive Bid
Borrowing”) is requested to be made: 


	
 

	
 

	
 

	
 


	
 

	
(A)

	
Date of
  Competitive Bid Borrowing

	
 


	
 

	
 

	
 

	



	
 

	
(B)

	
Amount of
  Competitive Bid Borrowing

	
 


	
 

	
 

	
 

	



	
 

	
(C)

	
[Maturity
  Date] [Interest Period]

	
 


	
 

	
 

	
 

	



	
 

	
(D)

	
Interest
  Rate Basis

	
 


	
 

	
 

	
 

	



	
 

	
(E)

	
Interest
  Payment Date(s)

	
 


	
 

	
 

	
 

	



	
 

	
(F)

	
 

	
 


	
 

	
 

	


	






                    The
undersigned hereby certifies that the following statements are true on the date
hereof, and will be true on the date of the Proposed Competitive Bid Borrowing:



                    (a)
the representations and warranties contained in Section 4.01 are correct,
before and after giving effect to the Proposed Competitive Bid Borrowing and to
the application of the proceeds therefrom, as though made on and as of such
date; 


                    (b)
no event has occurred and is continuing, or would result from the Proposed
Competitive Bid Borrowing or from the application of the proceeds therefrom,
that constitutes a Default; and 


                    (c)
the aggregate amount of the Proposed Competitive Bid Borrowing and all other
Borrowings to be made on the same day under the Credit Agreement is within the
aggregate amount of the unused Commitments of the Lenders. 


                    The
undersigned hereby confirms that the Proposed Competitive Bid Borrowing is to
be made available to it in accordance with Section 2.03(a)(v) of the Credit
Agreement. 


9







	
 

	
 


	
Very truly
  yours,


	
 


	
[NAME OF
  BORROWER]


	
 


	
By

	
 


	
 

	



	
           Title:








10






	
 

	
 


	
 

	
EXHIBIT B-3
  - FORM OF NOTICE OF

                   TERM
  LOAN BORROWING


	
 

	
 


	
JPMorgan Chase Bank, National Association,
  as Agent

  for the Lenders parties

  to the Credit Agreement

  referred to below

  270 Park Avenue

  New York, New York 10017

	
 





[Date]


                    Attention:
Loan and Agency Services Group 


Ladies and
Gentlemen: 


                    The
undersigned, [Name of Borrower], refers to the Credit Agreement, dated as of
June 1, 2007 (as amended or modified from time to time, the “Credit
Agreement”, the terms defined therein being used herein as therein
defined), among the undersigned, [Scholastic Corporation][Scholastic Inc.],
certain Lenders parties thereto, JPMorgan Chase Bank, National Association, as
Agent for said Lenders, and hereby gives you notice, irrevocably, pursuant to
Section 2.02 of the Credit Agreement that the undersigned hereby requests the
Term Loan Borrowing under the Credit Agreement, and in that connection sets
forth below the information relating to the Term Loan Borrowing (the “Proposed
Term Loan Borrowing”) as required by Section 2.02(a) of the Credit
Agreement: 


                    (i)
The Business Day of the Proposed Term Loan Borrowing is _______________, 200_. 


	
 

	
 


	
 

	
         (ii)
The Type of Advances comprising the Proposed Term Loan Borrowing is [Base Rate
Advances] [Eurodollar Rate Advances]. 






                         (iii)
The aggregate amount of the Proposed Term Loan Borrowing is $_______________. 


	
 

	
 


	
 

	
          [(iv)
  The initial Interest Period for each Eurodollar Rate Advance made as part of
  the Proposed Term Loan Borrowing is _____ month[s].]





                    The
undersigned hereby certifies that the following statements are true on the date
hereof, and will be true on the date of the Proposed Term Loan Borrowing: 


                    (A)
the representations and warranties contained in Section 4.01 of the Credit
Agreement are correct, before and after giving effect to the Proposed Term Loan
Borrowing and to the application of the proceeds therefrom, as though made on
and as of such date; and 


                    (B)
no event has occurred and is continuing, or would result from such Proposed
Revolving Term Loan Borrowing or from the application of the proceeds
therefrom, that constitutes a Default. 


11






	
 

	
 


	
Very truly
  yours,


	
 


	
[NAME OF
  BORROWER]


	
 


	
By

	
 


	
 

	



	
           Title:







12







EXHIBIT C - FORM OF

ASSIGNMENT AND ACCEPTANCE 


                    Reference
is made to the Credit Agreement dated as of June 1, 2007 (as amended or
modified from time to time, the “Credit Agreement”) among Scholastic
Corporation, a Delaware corporation, and Scholastic Inc., a New York
corporation (the “Borrowers”), the Lenders (as defined in the Credit
Agreement), JPMorgan Chase Bank, National Association, as administrative agent
for the Lenders (the “Agent”). Terms defined in the Credit Agreement are used
herein with the same meaning.  


                    The
“Assignor” and the “Assignee” referred to on Schedule I hereto agree as
follows: 


                    1.
The Assignor hereby sells and assigns to the Assignee, and the Assignee hereby
purchases and assumes from the Assignor, an interest in and to the Assignor’s
rights and obligations under the Credit Agreement as of the date hereof (other
than in respect of Competitive Bid Advances and any Competitive Bid Notes)
equal to the percentage interest specified on Schedule 1 hereto of all outstanding
rights and obligations under the Credit Agreement together with participations
in Letters of Credit held by the Assignor on the date hereof (other than in
respect of Competitive Bid Advances and any Competitive Bid Notes). After
giving effect to such sale and assignment, the Assignee’s Commitment and the
amount of the Revolving Credit Advances owing to the Assignee will be as set
forth on Schedule 1 hereto. 


                    2.
The Assignor (i) represents and warrants that it is the legal and beneficial
owner of the interest being assigned by it hereunder and that such interest is
free and clear of any adverse claim; (ii) makes no representation or warranty
and assumes no responsibility with respect to any statements, warranties or
representations made in or in connection with the Credit Agreement or the
execution, legality, validity, enforceability, genuineness, sufficiency or
value of, or the perfection or priority of any lien or security interest
created or purported to be created under or in connection with, the Loan
Documents or any other instrument or document furnished pursuant thereto; (iii)
makes no representation or warranty and assumes no responsibility with respect
to the financial condition of the Borrowers or the performance or observance by
any Borrower of any of its obligations under any Loan Document or any other
instrument or document furnished pursuant thereto; and (iv) attaches the Note,
if any, held by the Assignor [and requests that the Agent exchange such Note
for a new Note payable to the order of [the Assignee in an amount equal to the
Commitment assumed by the Assignee pursuant hereto or new Notes payable to the
order of the Assignee in an amount equal to the Commitment assumed by the
Assignee pursuant hereto and] the Assignor in an amount equal to the Commitment
retained by the Assignor under the Credit Agreement, [respectively,] as
specified on Schedule 1 hereto. 


                    3.
The Assignee (i) confirms that it has received a copy of the Credit Agreement,
together with copies of the financial statements referred to in Section 4.01
thereof and such other documents and information as it has deemed appropriate
to make its own credit analysis and decision to enter into this Assignment and
Acceptance; (ii) agrees that it will, independently and without reliance upon
the Agent, the Assignor 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 the Credit Agreement;
(iii) confirms that it is an Eligible Assignee; (iv) appoints and authorizes
the Agent to take such action as agent on its behalf and to exercise such
powers and discretion under the Loan Documents as are delegated to the Agent by
the terms thereof, together with such powers and discretion as are reasonably
incidental thereto; (v) agrees that it will perform in accordance with their
terms all of the obligations that by the terms of the Credit Agreement are
required to be performed by it as a Lender; and (vi) attaches any U.S. Internal
Revenue Service forms required under Section 2.14 of the Credit Agreement. 


13






                    4.
Following the execution of this Assignment and Acceptance, it will be delivered
to the Agent for acceptance and recording by the Agent. The effective date for
this Assignment and Acceptance (the “Effective Date”) shall be the date of
acceptance hereof by the Agent, unless otherwise specified on Schedule 1
hereto.  


                    5.
Upon such acceptance and recording by the Agent, as of the Effective Date, (i)
the Assignee shall be a party to the Credit Agreement and, to the extent
provided in this Assignment and Acceptance, have the rights and obligations of
a Lender thereunder and (ii) the Assignor shall, to the extent provided in this
Assignment and Acceptance, relinquish its rights and be released from its
obligations under the Credit Agreement. 


                    6.
Upon such acceptance and recording by the Agent, from and after the Effective
Date, the Agent shall make all payments under the Credit Agreement and any
Notes in respect of the interest assigned hereby (including, without
limitation, all payments of principal, interest and facility fees with respect
thereto) to the Assignee. The Assignor and Assignee shall make all appropriate
adjustments in payments under the Credit Agreement and any Notes for periods
prior to the Effective Date directly between themselves. 


                    7.
This Assignment and Acceptance shall be governed by, and construed in
accordance with, the laws of the State of New York. 


                    8.
This Assignment and Acceptance may be executed in any number of counterparts
and by different parties hereto in separate counterparts, each of which when so
executed shall be deemed to be an original and all of which taken together
shall constitute one and the same agreement. Delivery of an executed
counterpart of Schedule 1 to this Assignment and Acceptance by telecopier shall
be effective as delivery of a manually executed counterpart of this Assignment
and Acceptance. 


                    IN
WITNESS WHEREOF, the Assignor and the Assignee have caused Schedule 1 to this
Assignment and Acceptance to be executed by their officers thereunto duly
authorized as of the date specified thereon. 


14






Schedule 1
to
Assignment and Acceptance


	
 

	
 

	
 

	
 

	
 

	
 


	
 

	
Percentage
  interest assigned:

	
 

	
 

	
________

	
%


	
 

	
 

	
 

	
 

	
 

	
 


	
 

	
Assignee’s
  Commitment:

	
 

	
$

	
________

	
 


	
 

	
 

	
 

	
 

	
 

	
 


	
 

	
Aggregate
  outstanding principal amount of Revolving

	
 

	
 

	
 

	
 


	
 

	
Credit
  Advances assigned:

	
 

	
$

	
________

	
 


	
 

	
 

	
 

	
 

	
 

	
 


	
 

	
Aggregate
  outstanding principal amount of Term Loan Advance

	
 

	
 

	
 

	
 


	
 

	
assigned:

	
 

	
$

	
________

	
 


	
 

	
 

	
 

	
 

	
 

	
 


	
 

	
Principal
  amount of Revolving Credit Advance payable to

	
 

	
 

	
 

	
 


	
 

	
Assignee:

	
 

	
$

	
________

	
 


	
 

	
 

	
 

	
 

	
 

	
 


	
 

	
Principal
  amount of Revolving Credit Advance payable to

	
 

	
 

	
 

	
 


	
 

	
Assignor:

	
 

	
$

	
________

	
 


	
 

	
 

	
 

	
 

	
 

	
 


	
 

	
Principal
  amount of Term Loan Advance payable to Assignee:

	
 

	
$

	
________

	
 


	
 

	
 

	
 

	
 

	
 

	
 


	
 

	
Principal
  amount of Term Loan Advance payable to Assignor:

	
 

	
$

	
________

	
 


	
 

	
 

	
 

	
 

	
 

	
 


	
 

	
Effective
  Date*:___________________, 200_

	
 

	
 

	
 

	
 








	
 

	
 

	
 


	
 

	
[NAME OF
  ASSIGNOR], as Assignor


	
 

	
 

	
 


	
 

	
By

	
 


	
 

	
 

	



	
 

	
 

	
   Title:


	
 

	
 

	
 


	
 

	
Dated: ___________________,
  200_


	
 

	
 

	
 


	
 

	
 

	
 


	
 

	
[NAME OF
  ASSIGNEE], as Assignee


	
 

	
 

	
 


	
 

	
By

	
 


	
 

	
 

	



	
 

	
 

	
   Title:


	
 

	
 

	
 


	
 

	
Dated: ___________________,
  200_


	
 

	
 

	
 


	
 

	
Domestic
  Lending Office:


	
 

	
 

	
      [Address]









	
 

	
 


	
*

	
This date should be no
  earlier than five Business Days after the delivery of this Assignment and
  Acceptance to the Agent. 





15







	
 

	
 

	
 

	
 


	
 

	
 

	
Eurodollar Lending Office:

	
 


	
 

	
 

	
[Address]

	
 


	
 

	
 

	
 

	
 


	
Accepted
  this

	
 

	
 


	
 

	
 

	
 

	
 


	
_______ day
  of ___________________, 200_

	
 

	
 


	
 

	
 

	
 

	
 


	
JPMORGAN
  CHASE BANK, NATIONAL

	
 

	
 


	
ASSOCIATION,
  as Agent

	
 

	
 


	
 

	
 

	
 

	
 


	
By

	
 

	
 

	
 


	
 

	


	
 

	
 


	
Title:

	
 

	
 


	
 

	
 

	
 

	
 


	
Approved
  this________day

	
 

	
 


	
 

	
 

	
 

	
 


	
of ___________________,
  200_

	
 

	
 


	
 

	
 

	
 

	
 


	
SCHOLASTIC
  CORPORATION

	
 

	
 


	
 

	
 

	
 

	
 


	
By

	
 

	
 

	
 


	
 

	


	
 

	
 


	
 

	
Title:

	
 

	
 


	
 

	
 

	
 

	
 


	
SCHOLASTIC
  INC.

	
 

	
 


	
 

	
 

	
 

	
 


	
By

	
 

	
 

	
 


	
 

	


	
 

	
 


	
 

	
Title:

	
 

	
 





16






EXHIBIT D - FORM OF

OPINION OF COUNSEL

FOR THE BORROWERS 


[Effective Date]


	
 

	
 


	
To each of
  the Lenders parties


	
 

	
to the
  Credit Agreement dated


	
 

	
as of June
  1, 2007


	
 

	
among
  Scholastic Corporation, Scholastic Inc., 


	
 

	
said Lenders
  and JPMorgan Chase Bank, National Association,


	
 

	
as Agent for said Lenders, and


	
 

	
to JPMorgan
  Chase Bank, National Association, as Agent 





Scholastic Corporation and Scholastic Inc.


Ladies and
Gentlemen: 


                    This
opinion is furnished to you pursuant to Section 3.01(h)(iv) of the Credit
Agreement, dated as of June 1, 2007 (the “Credit Agreement”), among
Scholastic Corporation and Scholastic Inc. (the “Borrowers”), the Lenders
parties thereto, JPMorgan Chase Bank, National Association, as Agent for said
Lenders. Terms defined in the Credit Agreement are used herein as therein
defined.  


                    We
have acted as counsel for the Borrowers in connection with the preparation,
execution and delivery of the Credit Agreement. 


                    In
that connection, we have examined: 


	
 

	
 


	
 

	
          (1)
  The Credit Agreement. 


	
 

	
 


	
 

	
          (2)
  The documents furnished by the Borrowers pursuant to Article III of the
  Credit Agreement. 


	
 

	
 


	
 

	
          (3)
The [Articles] [Certificate] of Incorporation of each Borrower and all
amendments thereto (the “Charter”).  


	
 

	
 


	
 

	
          (4)
  The by-laws of each Borrower and all amendments thereto (the “By-laws”).
  


	
 

	
 


	
 

	
          (5)
  A certificate of the Secretary of State of Delaware, dated _______________,
  2007, attesting to the continued corporate existence and good standing of the
  Holding Company in that State. 


	
 

	
 


	
 

	
          (6)
  A certificate of the Secretary of State of New York, dated _______________,
  2007 attesting to the continued corporate existence and good standing of the
  Operating Company in that State. 





We have also
examined the originals, or copies certified to our satisfaction, of the
documents listed in certificates of the chief financial officers of the
Borrowers, dated the date hereof (the “Certificates”), 


17






certifying
that the documents listed in such certificate are all of the indentures, loan
or credit agreements, leases, guarantees, mortgages, security agreements,
bonds, notes and other agreements or instruments, and all of the orders, writs,
judgments, awards, injunctions and decrees, that affect or purport to affect
such Borrower’s right to borrow money or such Borrower’s obligations under the
Credit Agreement or any Notes. In addition, we have examined the originals, or
copies certified to our satisfaction, of such other corporate records of the
Borrowers, certificates of public officials and of officers of the Borrowers,
and agreements, instruments and other documents, as we have deemed necessary as
a basis for the opinions expressed below. As to questions of fact material to
such opinions, we have, when relevant facts were not independently established by
us, relied upon certificates of the Borrowers or their officers or of public
officials. We have assumed the due execution and delivery, pursuant to due
authorization, of the Credit Agreement by the Initial Lenders and the Agent. 


                    Our
opinions expressed below are limited to the law of the State of New York, the
General Corporation Law of the State of Delaware and the Federal law of the
United States. 


                    Based
upon the foregoing and upon such investigation as we have deemed necessary, we are
of the following opinion: 


	
 

	
 


	
 

	
          1.
  Each Borrower is a corporation duly organized, validly existing and in good
  standing under the laws of the State of its incorporation. 


	
 

	
 


	
 

	
          2.
  The execution, delivery and performance by each Borrower of the Credit
  Agreement and any Notes to which it is a party, and the consummation of the
  transactions contemplated thereby, are within such Borrower’s corporate
  powers, have been duly authorized by all necessary corporate action, and do
  not contravene (i) the Charter or the By-laws of such Borrower or (ii) any
  law, rule or regulation applicable to such Borrower (including, without
  limitation, Regulation X of the Board of Governors of the Federal Reserve
  System) or (iii) any contractual or legal restriction contained in any
  indentures, loan or credit agreements, leases, guarantees, mortgages,
  security agreements, bonds, notes and other agreements or instruments, or any
  orders, writs, judgments, awards, injunctions and decrees, that affect or
  purport to affect such Borrower’s right to borrow money or such Borrower’s
  obligations under the Credit Agreement or any Notes. The Credit Agreement and
  the Notes have been duly executed and delivered on behalf of each Borrower. 


	
 

	
 


	
 

	
          3.
  No authorization, approval or other action by, and no notice to or filing
  with, any governmental authority or regulatory body or any other third party
  is required for the due execution, delivery and performance by any Borrower
  of the Credit Agreement and the Notes to which it is a party. 


	
 

	
 


	
 

	
          4.
  The Credit Agreement is, and after giving effect to the initial Borrowing,
  the Notes to which it is a party will be, legal, valid and binding
  obligations of each Borrower enforceable against such Borrower in accordance
  with their respective terms.


	
 

	
 


	
 

	
          5.
  To the best of our knowledge, there are no pending or overtly threatened
  actions or proceedings against any Borrower or any of its Subsidiaries before
  any court, governmental agency or arbitrator that purport to affect the
  legality, validity, binding effect or enforceability of the Credit Agreement
  or any of the Notes or the consummation of the transactions contemplated
  thereby or that are likely to have a Material Adverse Effect. 





                    The
opinions set forth above are subject to the following qualifications: 


18







	
 

	
 


	
 

	
          (a)
  Our opinion in paragraph 4 above as to enforceability is subject to the
  effect of any applicable bankruptcy, insolvency (including, without
  limitation, all laws relating to fraudulent transfers), reorganization,
  moratorium or similar law affecting creditors’ rights generally. 


	
 

	
 


	
 

	
          (b)
  Our opinion in paragraph 4 above as to enforceability is subject to the
  effect of general principles of equity, including, without limitation, concepts
  of materiality, reasonableness, good faith and fair dealing (regardless of
  whether considered in a proceeding in equity or at law). 


	
 

	
 


	
 

	
          (c)
  We express no opinion as to (i) Section 2.14 of the Credit Agreement insofar
  as it provides that any Lender purchasing a participation from another Lender
  pursuant thereto may exercise set-off or similar rights with respect to such
  participation and (ii) the effect of the law of any jurisdiction other than
  the State of New York wherein any Lender may be located or wherein
  enforcement of the Credit Agreement or any Notes may be sought that limits
  the rates of interest legally chargeable or collectible. 





Very truly yours,


19







EXHIBIT E - FORM OF FINANCIAL 

COVENANTS COMPLIANCE CERTIFICATE 


	
 


	
FINANCIAL COVENANTS COMPLIANCE CERTIFICATE


	
 


	
respecting


	
 


	
SCHOLASTIC CORPORATION


	
 


	
and


	
 


	
SCHOLASTIC INC.


	
 


	
[MONTH and DATE], 200_





                     Pursuant
to the Credit Agreement dated as of June 1, 2007 (as the same may be
supplemented, modified, amended or restated from time to time in the manner
provided therein, the “Credit Agreement”), the undersigned, being
respectively, the [PRINT TITLE] of Scholastic Corporation and the [PRINT
TITLE] of Scholastic Inc. (individually, a “Borrower” and,
collectively, the “Borrowers”), hereby certify to JPMorgan Chase Bank,
National Association, as Agent (the “Agent”), and to each of the
Lenders, as of the date hereof that: 


	
 

	
 


	
 

	
          (d)
  the representations and warranties contained in Section 4.01 are correct as
  though made on and as of the date hereof; 


	
 


	
 

	
          (e)
  no event has occurred and is continuing that constitutes a Default; and 


	
 


	
 

	
          (f)
  attached hereto are the calculations of, and the confirmations of the
  Borrowers’ compliance with, the financial covenants set forth in Section 5.03
  of the Credit Agreement. 





                     Capitalized
terms and non-capitalized words and phrases used and not otherwise defined in
this Certificate shall have the meanings respectively assigned to them in the
Lender and by counsel to the Agent in giving any opinion or advice requested of
such counsel.


	
 

	
 


	
(SIGNATURE)

	
 


	
 

	
 


	
DATE SIGNED: _____________, 

	
 200_


	
 

	
 


	
(SIGNATURE)

	
 


	
 

	
 


	
DATE SIGNED: _____________, 

	
 200_





20






EXHIBIT F – LIST OF CLOSING DOCUMENTS 


	
 


	
SCHOLASTIC CORPORATION


	
and


	
SCHOLASTIC INC.


	
 


	
CREDIT FACILITIES


	
 


	
June 1, 2007


	
 


	
LIST OF CLOSING DOCUMENTS1





A. LOAN
DOCUMENTS


	
 

	
 


	
1.

	
Credit
Agreement (the “Credit Agreement”) by and among Scholastic Corporation,
a Delaware corporation (the “Holding Company”), and Scholastic
Inc., a New York corporation (the “Operating Company”; and,
collectively with the Holding Company, the “Borrowers”), the
institutions from time to time parties thereto as Lenders (the “Lenders”)
and JPMorgan Chase Bank, National Association, in its capacity as
Administrative Agent for itself and the other Lenders (the “Administrative
Agent”), evidencing a revolving credit facility to the Borrowers from
the Lenders in an initial aggregate principal amount of $325,000,000 and a
term loan facility to any one Borrower from the Lenders in an initial
aggregate principal amount of $200,000,000.  





SCHEDULES


	
 

	
 

	
 

	
 


	
 

	
Commitment
  Schedule

	
 

	
 


	
 

	
Schedule 2.16(h)

	
—

	
Existing Letters of Credit


	
 

	
Schedule 4.01(i)

	
—

	
Subsidiaries


	
 

	
Schedule 5.02(a)

	
—

	
Existing Liens


	
 

	
 

	
 

	
 





EXHIBITS


	
 

	
 

	
 

	
 


	
 

	
Exhibit A-1

	
—

	
Form of
  Revolving Credit Note


	
 

	
Exhibit A-2

	
—

	
Form of
  Competitive Bid Note


	
 

	
Exhibit A-3

	
—

	
Form of Term
  Loan Note


	
 

	
Exhibit B-1

	
—

	
Form of
  Notice of Revolving Credit Borrowing


	
 

	
Exhibit B-2

	
—

	
Form of
  Notice of Competitive Bid Borrowing


	
 

	
Exhibit B-3

	
—

	
Form of
  Notice of Term Loan Borrowing


	
 

	
Exhibit C

	
—

	
Form of
  Assignment and Acceptance


	
 

	
Exhibit D

	
—

	
Form of
  Opinion of Counsel for the Borrowers


	
 

	
Exhibit E

	
—

	
Form of
  Financial Covenants Compliance Certificate


	
 

	
Exhibit F

	
—

	
List of
  Closing Documents










1  Each capitalized term used herein and not
defined herein shall have the meaning assigned to such term in the
above-defined Credit Agreement. Items appearing in bold and italics
shall be prepared and/or provided by the Borrowers and/or Borrowers’ counsel.


21






	
 

	
 


	
2.

	
Notes
  executed by the Borrowers in favor of each of the Lenders, if any, which has
  requested a note pursuant to Section 3.01(h) of the Credit Agreement. 


	
 

	
 


	
B. CORPORATE DOCUMENTS


	
 


	
3.

	
Certificate of the Secretary or an
  Assistant Secretary of each Borrower certifying (i) that there have been no
  changes in the Certificate of Incorporation or other charter document of such
  Borrower, as attached thereto and as certified as of a recent date by the
  Secretary of State of the jurisdiction of its organization, since the date of
  the certification thereof by such secretary of state, (ii) the By-Laws or
  other applicable organizational document, as attached thereto, of such
  Borrower as in effect on the date of such certification, (iii) resolutions of
  the Board of Directors or other governing body of such Borrower authorizing
  the execution, delivery and performance of each Loan Document to which it is
  a party, and (iv) the names and true signatures of the incumbent officers of
  each Borrower authorized to sign the Loan Documents to which it is a party,
  and authorized to request a Borrowing or the issuance of a Letter of Credit
  under the Credit Agreement. 


	
 

	
 


	
5.

	
Good Standing Certificate for each Borrower
  from the Secretary of State of the jurisdiction of its organization.
  


	
 

	
 


	
C. OPINIONS


	
 


	
6.

	
Opinion of Devereux Chatillon, Senior Vice
  President and General Counsel of the Borrowers. 


	
 

	
 


	
D. CLOSING CERTIFICATES AND
  MISCELLANEOUS


	
 


	
7.

	
A Certificate signed by duly authorized
  officer of the Holding Company certifying the following: (i) the
  representations and warranties contained in Section 4.01 of the Credit
  Agreement are correct on and as of the Effective Date and (ii) no Default has
  occurred and is then continuing. 


	
 

	
 


	
8.

	
Payoff documentation providing evidence
  reasonably satisfactory to the Administrative Agent that the Existing Credit
  Agreement has been terminated and cancelled (along with all of the agreements,
  documents and instruments delivered in connection therewith) and all
  Indebtedness owing thereunder has been repaid and any and all liens
  thereunder have been terminated. 





22