Document:

Exhibit 10.2

  
  
 EXHIBIT
10.2 
  
 THIS LEASE, made this 11th day of July, 2002 between R C Realty Corp. (hereinafter called Lessor) and
MainStreet BankShares, Inc. (hereinafter called Lessee) which terms “Lessor” and “Lessee” shall include, wherever the context admits or requires, singular or plural and their heirs, legal representatives, successors and assigns
of the respective parties; 
  
 WITNESSETH: 
  
 PREMISES 
  
 That the Lessor, in consideration of the
covenants of the Lessee, does hereby lease and demise unto said Lessee and Lessee hereby agrees to take and lease from the Lessor, for the terms hereinafter specified the following described premises: 
  
 That certain store building containing approximately 2,486 square feet of area located in the Patrick Henry Mall shopping center
development located on East Church Street in the City of Martinsville, Virginia formerly occupied by Piedmont Trust Bank as marked in red on the attached Exhibit A. 
  
 TERM 
  
 For the Lessee to have and to hold for a period of
five years commencing August 1, 2002 and terminating July 31, 2007. This lease is granted and accepted upon the following terms, covenants, conditions and stipulations: 
  
 RENTAL 
  
 7.  The Lessee agrees to pay to the
Lessor as rental for the demised premises during the first three years of the lease term $30,000.00 per annum with monthly payments of $2,500.00. Rental for the last two years of the lease term will be $33,000.00 per annum with monthly payments of
$2,750.00. The rental shall be paid in twelve equal monthly installments which shall be due and payable in advance on the first of each and every calendar month of the lease term, and any extensions thereof. 
  
 USE 
  
 8.  The demised premises shall be used for banking and banking services. Lessee’s employees, customers and invitees are granted full use of the common areas of the shopping center. Lessee at all times shall fully and
promptly comply with all laws, ordinances and regulations of every lawful authority having jurisdiction of said premises and the character and manner of operation of the business conducted in or at said premises. 
  
 UTILITIES 
  
 9. The
Lessee agrees to pay for all utilities used by Lessee at the demised premises. Lessor shall at all times provide access to utilities. 
  
 LESSEE’S REPAIRS 
  
 10.  The Lessee agrees to keep the interior of the demised
premises, along with the florescent fixtures, windows and exterior plate glass in good condition and repair, excepting all repairs which are made necessary by reason of fire and other unavoidable casualties and reasonable wear and tear. Lessee will
provide for its interior cleaning and janitorial service. 
  
 LESSOR’S REPAIRS 
  
 11.  The Lessor shall, at its cost and expense, keep and maintain the common areas (including the parking area) in good
condition and repair. Lessor will keep and maintain the foundation and structural members in good condition and repair, and shall make any and all structural repairs to the exterior of said premises. Lessor will keep and maintain the roof, gutter,
downspouts in good condition and repair. Lessor also accepts responsibility for maintenance of the exterior of the building, parking areas, snow removal and landscaping except as provided under Paragraph 10. 
  
 SIGNS 
  
 12.  Lessee may place, erect and maintain, with the approval of the Lessor, signs on the demised premises, but the signs must be compatible with signs of adjoining Lessees and not obstruct the view of other signs. All signs
shall remain the property of Lessee and may be removed at any time during the term of this lease, or any extensions thereof, provided Lessee shall repair or reimburse Lessor for the cost of any damage to the demised premises resulting from the
installation or removal of such signs. 
  

 

  
  
 FURNITURE AND EQUIPMENT

  
 7.  Furniture and equipment left from the tenancy of Piedmont Trust Bank will remain the property
of Lessor. Lessee will have the right to use furniture and equipment during the term of this lease. Lessee agrees to not remove any furniture or equipment from the demised premises without notifying Lessor. Lessor will compile a list of residual
furniture and equipment prior to occupancy. 
  
 FIXTURES AND INTERIOR ALTERATIONS 
  
 8.  The Lessee, at its own expense and with the written permission of Lessor which shall not be unreasonably withheld, may from
time to time during the term of this lease, make any interior alterations, additions, and improvements in and to the demised premises which it may deem necessary or desirable and which do not adversely affect the structural integrity thereof, but it
shall make them in a good workmanlike manner and in accordance with all valid requirements of municipal or other governmental authorities. All permanent structural improvements shall belong to the Lessor and become a part of the premises upon
termination or expiration of this lease. 
  
 LESSEE may construct and build or install in said premises any and all
racks, counters, shelves, and other fixtures and equipment of any kind and nature as may be necessary or desirable in the Lessee’s business, which racks, counters, shelves, and other fixtures and equipment shall at all times be and remain the
property of the Lessee and Lessee shall have the right to remove all or any part of same from said premises at any time; provided Lessee shall repair or reimburse Lessor for the cost of repairing any damage to said premises resulting from the
installation or removal of such items. 
  
 INDEMNIFICATION 
  
 9.  Lessee agrees to indemnify and save harmless the Lessor from any claim or loss by reason of accident or damage to any person or property happening on or about
demised premises. 
  
 CLEANLINESS 
  
 10.  Lessee shall at all times keep the interior of the building in a reasonably neat and orderly condition and shall keep the walkway, entryways and delivery areas adjoining the building
reasonably clean and free from rubbish, dirt, snow, and ice. Lessee will not make or suffer any waste of the premises or permit anything to be done in or upon the demised premises creating a nuisance thereon, and Lessee further agrees to permit
Lessor or its agent at all reasonable times to enter upon the premises for making repairs and for examining or showing the same to prospective purchasers and/or Lessees. 
  
 QUIET ENJOYMENT 
  
 11.  The Lessor covenants,
warrants and represents that upon commencement of the lease term, the shopping center, including the demised premises, will be free and clear of all liens and encumbrances superior to the leasehold hereby created; that the lessor has full right; and
power to execute and perform this lease and to grant the estate demised herein; and that the Lessee on paying the rent herein reserved and performing the covenants and agreements hereof shall peaceably and quietly have, hold and enjoy the demised
premises and all rights, easements, appurtenances and privileges belonging or in anyway appertaining thereto during the full term of this lease and any extensions thereof. 
  
 DEFAULT 
  
 12.  In the event the Lessee should fail
to pay any of the monthly installments of rent reserved herein for a period of more than ten (10) days after the same shall become due and payable, or if the Lessee shall fail to keep or shall violate any other condition, stipulation or agreement
contained, on the part of the Lessee to be kept and performed, and if either such failure or violation shall have continued for a period of thirty (30) days after the Lessee shall have received written notice by certified or registered mail at its
office address hereinafter designated, from the Lessor to pay such rent or to cure such violation of failure, then, in any such event, the Lessor, at its option, may either (a) terminate this lease, or (b) re-enter the demised premises by summary
proceeding or otherwise expel Lessee and remove all property therefrom and relet the premises at the best possible rent obtainable, making reasonable efforts and receive the rent therefrom; but Lessee shall remain liable for the deficiency, if any,
between Lessee’s rent hereunder and the price obtained by Lessor on reletting. However, a default shall be deemed cured if the Lessee in good faith commences performance requisite to cure same within thirty (30) days after receipt of notice and
thereafter continuously and with reasonable diligence proceeds to complete the performance required to cure such default. 
  
 NOTICES

  
 13.  All notices required to be given to the Lessor hereunder shall be sent by registered or
certified mail to, and all rent payments shall be made to Lessor at P. O. Box 952, Martinsville, VA 24114 or to such other address as Lessor may direct from time to time by written notice forwarded to Lessee by registered or certified mail.

  

  
  
 All
notices required to be given to Lessee shall be sent by registered or certified mail to Lessee c/o Cecil R. McCullar, 730 East Main Street, Suite #12, P. O. Box 1224, Martinsville, Virginia, 24114-1224, or to such other address as Lessee may direct
from time to time by written notice forwarded to Lessor by registered or certified mail. 
  
 END OF TENANCY 
  
 14.  The Lessee will yield up the demised premises, residual furniture and equipment and all additions thereto (except sign,
equipment and trade fixtures installed by the Lessee at its expense) at the termination of the tenancy in as good and tenable condition as the same are at the beginning of Lessee’s occupancy, reasonable wear and tear, damages by fire and other
casualties and condemnation appropriation by eminent domain excepted, and also excepting any damage, disrepair and other condition that the Lessor is obligated hereunder to repair and correct. 
  

TAXES 
  
 15.  All taxes, assessments and
charges on land or improvements and obligations secured by mortgage or other lien upon the demises premises of the shopping center shall be promptly paid by the Lessor when due. Lessee will, however, reimburse Lessor the amount of tax increase
attributable to any improvements to the demised premises made by Lessee over the 1998 tax amount. 
  
 BENEFITS 

 
 16.  This lease and all covenants and provisions thereof shall inure to the benefit of and be binding upon the heirs,
legal representatives, successor, and assigns of the parties hereto. Each provision hereof shall be deemed both a covenant and a condition and shall run with the land. 
  
 HVAC REPAIRS 
  
 17.  Lessor will have the heating,
ventilating and air conditioning systems serviced and put in first class operating condition upon the signing of this lease. Lessee will assume responsibility for any routine maintenance and repairs and agrees to provide and insure regular routine
maintenance to the units by securing a maintenance contract with a qualified HVAC contractor. However, Lessor agrees to accept responsibility for repair or replacement of units in excess of $250.00 per occurrence during the lease term provided
Lessee has maintained units on a regular basis. 
  
 RENEWAL OPTIONS 
  
 18.  If both parties are agreeable, Lessee and Lessor will negotiate options to renew this lease during the last six months of current term. 

 
 CENTER’S USE 
  
 19.  It is understood that buildings in the Patrick Henry Mall will be leased only to Lessees whose businesses comply with uses allowed under the City of Martinsville zoning regulations. Lessor specifically agrees to not
lease space for flea markets, car, truck and RV sales, produce stands, circuses, and parking space for in transit hazardous waste. 
  
 OBSTRUCTION OF VIEW 
  
 20.  Lessor will not allow any structures to be placed on
the common areas which would obstruct the view of premises from Church Street. 
  
 PUBLIC LIABILITY INSURANCE 

 
 21.  Lessee shall, during the entire term hereof, keep in full force and effect a policy of public liability and
property damage insurance with respect to claims arising from the use and occupancy of the premises by Lessee, under which the limits of public liability shall not be less than $1,000,000.00 combined single limit per occurrence or the equivalent
thereof. Such policy shall provide that not less than 30 days written notice be given to Lessor in advance of the effective date of cancellation, non-renewal or material change in such policy. A copy of certificate reflecting such insurance coverage
shall be delivered to Lessor upon request thereof. 
  
 Lessor shall, during the entire term hereof, keep in full
force and effect a policy of public liability and property damage insurance with respect to the parking and other common areas of the shopping center under which the limits of public liability shall not be less than $1,000,000.00 combined single
limit per occurrence or the equivalent thereof. Such policy shall provide that not less than 30 days written notice be given to Lessee in advance of the effective date of cancellation, non-renewal or material change in such policy. A copy of
certificate reflecting such insurance coverage shall be delivered to Lessee upon request thereof. 
  

  
  
 DAMAGE BY FIRE OR
CASUALTY 
  
 22.  During the term of this lease Lessor agrees to carry standard form “All
Risk” property insurance on the building wherein the premises are situated for full replacement thereof and shall provide Lessee with a certificate of insurance reflecting such coverage, if requested. 
  
 If premises or a portion thereof shall be destroyed or injured by any cause and such destruction or injury could reasonably be repaired
within 90 days thereafter, Lessor shall with diligence undertake and substantially complete repairs within 90 days after the happening of such destruction or injury. If Lessee shall be deprived of the occupancy of any portion of the premises due to
any destruction or injury but can nevertheless continue to engage in its regular business, a rental abatement shall by allowed in proporation to the area rendered untenantable and continuing until premises are restored. No rent shall be payable
during any period that Lessee is unable to engage in its regular business. 
  
 If the destruction or injury cannot
reasonably be repaired within 90 days after the happening thereof, Lessor shall notify Lessee within 30 days after the happening of such destruction or injury whether or not Lessor will repair or rebuild. If Lessor elects not to repair or rebuild,
this lease shall be terminated. If Lessor shall elect to repair or rebuild, Lessor shall specify the time within which repairs or reconstruction will be completed and Lessee shall have the option within 30 days after the receipt of such notice to
elect either to terminate this lease and further liability thereunder or to extend the term or renewal term of this lease by a period of time equivalent to the period from the happening of such destruction or injury until the premises are restored
to their former condition. In the event Lessee elects to extend the term of the lease, Lessor shall restore the premises to their former condition within the time specified in the notice and Lessee shall be entitled to an abatement of rent in the
manner hereinbefore described. 
  
 WAIVER OF SUBROGATION 
  
 23.  Lessor and Lessee agree (to the extent that such agreement does not invalidate coverage under any policy of insurance) that, in the event the demised
premises, or any part thereof, are damaged or destroyed by fire or other casualty that is covered by insurance of the Lessor or Lessee, or the sub-lessee’s assignees or transferees or Lessee, the rights of any party against the other or against
the employees, agents or licensee of any party, with respect to such damage or destruction and with respect to any loss resulting therefrom, including the interruption of the business of any parties, are hereby waived to the extent of the coverage
of said insurance. Lessor and Lessee further agree that all policies of fire, extended coverage, business interruption and other insurance covering the demised premises or the contents therein shall, if possible, provide that the insurance shall not
be impaired if the insureds have waived their rights of recovery from any person or persons prior to the date and time of loss or damage. Any additions premiums for such clause or endorsement shall be paid by the primary insured. 

 
 CONTINGENCY CLAUSE 
  
 24.  If for any reason Lessee is prevented from organizing and opening as planned this lease may be cancelled by notifying Lessor in writing. 
  
 COMPLETE AGREEMENT 
  
 25.  This written lease
contains the complete agreement of the parties to the leasing of the demised premises. No waiver or any breach of covenant herein shall be construed as a waiver of the covenant itself or any subsequent breach thereof. 
  
 IN WITNESS WHEREOF, the Lessor and Lessee have executed this agreement the day and year first above written. 
  
 Signed, sealed and delivered in the presence of 
  
 
	  	    	 R. C. REALTY CORP.
 
	  	    	  
	 
	 
	    	 
	  	  
	 SECRETARY
 	    	 PRESIDENT
 
	 
	  	    	 MAINSTREET BANKSHARES, INC.
 
	  	    	  	  	  
	 
	 
	    	 
	  	  
	 SECRETARY
 	    	 CECIL R. McCULLAR
 PRESIDENT/CHIEF EXECUTIVE OFFICERsec document

                                                                   EXHIBIT 10.16

                 FIFTH AMENDMENT TO LOAN AND SECURITY AGREEMENT
                 ----------------------------------------------

            WHEREAS, The Millbrook Press Inc., a Delaware corporation,  with its
chief  executive  office  located  at  2  Old  New  Milford  Road,   Brookfield,
Connecticut  06804  (referred to herein as  "Borrower")  entered into a Loan and
Security Agreement with People's Bank, a Connecticut  banking corporation with a
place of business  located at Bridgeport  Center,  850 Main Street,  Bridgeport,
Connecticut 06607 (referred to herein as "Lender") dated as of December 14, 1995
(the  Loan  and  Security  Agreement  being  herein  referred  to as  the  "Loan
Agreement"); and

            WHEREAS,  Borrower and Lender entered into a First Amendment to Loan
and Security  Agreement dated as of June 17, 1997 and a Second Amendment to Loan
and Security  Agreement  dated as of June 10, 1998 and a Letter  Amendment dated
January 8, 1999 to provide  Borrower with a LIBOR interest rate option,  a Third
Amendment  to the Loan and  Security  dated as of January  31, 2000 and a Fourth
Amendment to the Loan and Security  Agreement  dated as of October 26, 2001 (the
Loan and Security  Agreement,  as amended by all of the prior Amendments and the
Letter Amendment shall be referred to herein as the "Amended Agreement"); and

            WHEREAS,  Borrower has advised  Lender that Borrower is  terminating
its distribution  and fulfillment  relationship  with Mercedes  Distribution and
entering into a distribution  and fulfillment  contract with Simon and Schuster,
Inc.; and

            WHEREAS,  Borrower and Lender have agreed to further amend the terms
and provisions of the Amended Agreement effective as of be date stated herein by
the provisions set forth below;

            NOW,  THEREFORE,  Borrower and Lender hereby agree that effective as
of June 30, 2002, the Amended  Agreement shall be further amended to contain the
provisions  set  forth  below  and  the  applicable  provisions  of the  Amended
Agreement  shall be  superseded  to the extent  necessary  to give effect to the
provisions set forth below:

     1. The definitional  term "Account Debtor" shall be deleted in its entirety
and replaced with the following:

          "Account  Debtor" means any Person who is or who may become  obligated
          under, with respect to, or on account of an Account but from and after
          October 31,  2002,  Account  Debtor  shall mean only Simon & Schuster,
          Inc.

     2. The definitional term "Collateral"  shall be deleted in its entirety and
replaced with the following:

          "Collateral"  means each of the  following:  the Accounts;  Borrower's
          Books;  the Equipment;  the General  Intangibles;  the Inventory;  the
          Negotiable  Collateral;  any money,  or other assets of Borrower which
          now or  hereafter  come into the  possession,  custody,  or control of
          People's and the Letter of Credit issued by Chase  Manhattan Bank USA,
          N.A. bearing number 72454 and all rights to draw  thereunder;  and the
          proceeds and products,  whether tangible or intangible,  of any

                                       2

          of the foregoing  including  proceeds of insurance covering any or all
          of the  Collateral,  and  any  and  all  Accounts,  Borrower's  Books,
          Equipment,  General  Intangibles,  Inventory,  Negotiable  Collateral,
          money,  deposit  accounts,  or other  tangible or intangible  property
          resulting from the sale, exchange, collection, or other disposition of
          any of the foregoing,  or any portion thereof or interest therein, and
          the proceeds thereof.

     3. The  definitional  term  "Eligible  Accounts"  shall be  deleted  in its
entirety and replaced with the following:

        "Eligible Accounts" means:
         -----------------

               (i) Through October 31, 2002,  those Accounts created by Borrower
in the ordinary  course of business that arise out of Borrower's  sale of goods,
that comply in all material respects with all of Borrower's  representations and
warranties  to  People's,  that  are  and  at all  times  shall  continue  to be
acceptable  to People's in all respects  and that  People's has made one or more
Advances  against on or before  July 31, 2002 but under no  circumstances  shall
Eligible Accounts include the following:

          (a) Accounts  (due within 60 days) that the Account  Debtor has failed
to pay within  sixty (60) days of due date,  Accounts  (due within 90 days) that
the Account  Debtor has failed to pay within  thirty (30) days and all  Accounts
owed by an Account  Debtor that has failed to pay fifty percent (50%) or more of
its Accounts owed to Borrower within sixty (60) days of due date;

          (b) Accounts  with respect to which the Account  Debtor is an officer,
employee, Affiliate, or agent of Borrower;

          (c) Accounts  with  respect to which goods are placed on  consignment,
guaranteed sale, sale or return, sale on approval, bill and hold, or other terms
by  reason  of which the  payment  by the  Account  Debtor  may be  conditional;
provided,  however, that this subsection shall not make ineligible,  any Account
which otherwise would be eligible, if the Account Debtor is a wholesaler and has
the right  within six (6)  months  from the  creation  of the sale to return the
purchased goods in accordance with normal industry standards; provided, however,
that People's  shall have the right to impose  reasonable  reserves from time to
time in connection  with any Accounts from Account  Debtors who are  wholesalers
who have or exercise such right of return;

          (d)  Accounts  with  respect  to which  the  Account  Debtor  is not a
resident  of the United  States,  and which are not either (i) covered by credit
insurance in form and amount,  and by an insurer,  satisfactory to People's,  or
(ii)  supported  by one or more letters of credit that are  assignable  by their
terms and have been delivered to People's in an amount,  of a tenor,  and issued
by a financial institution, acceptable to People's;

          (e) Accounts  with  respect to which the Account  Debtor is the United
States or any department, agency, or instrumentality of the United States;

                                       2

          (f) Accounts with respect to which Borrower is or may become liable to
the Account Debtor for goods sold or services  rendered by the Account Debtor to
Borrower;

          (g)  Accounts  with  respect  to which  the  Account  Debtor  disputes
liability or makes any claim with respect  thereto to the extent of such dispute
or claim, or is subject to any Insolvency Proceeding,  or becomes insolvent,  or
goes out of business;

          (h) Accounts  the  collection  of which  People's,  in its  reasonable
credit  judgment,  believes to be  doubtful  by reason of the  Account  Debtor's
financial condition;

          (i) Accounts that are payable in other than United States Dollars; and

          (j) Accounts that represent progress payments or advance billings that
are due prior to the  completion  of  performance  by  Borrower  of the  subject
contract for goods or services;  provided,  however;  that upon delivery of such
goods or services or completion of  performance  such account shall be deemed an
Eligible Account; and

               (ii) From and after July 1, 2002, the net amount owed to Borrower
by Simon & Schuster,  Inc.  arising under Section  10(b) of a  "Fulfillment  and
Billing Services Agreement" dated as of April 2, 2002 which have been identified
in a statement  issued by Simon & Schuster,  Inc.  delivered  to Borrower and to
Lender (by Simon & Schuster or  Borrower)  and which are due within  ninety (90)
days of the end of the month for which the statement is issued, that are, in the
event of non payment by Simon & Schuster in  accordance  with Section 10(b) of a
"Fulfillment  and  Billing  Services  Agreement"  dated  as of  April  2,  2002,
recoverable  by Lender by a drawing  under the Chase  Manhattan  Bank USA,  N.A.
Letter of Credit Number 72454 and that are and at all times shall continue to be
acceptable to People's in all respects;  provided,  however,  that  standards of
eligibility  may be fixed and revised  from time to time by People's in People's
reasonable credit judgment.

     4. Section 2.1(a) of the Amended Agreement shall be deleted in its entirety
and the following inserted in lieu thereof.

          2.1  Revolving  Advances.  (a) Subject to the terms and  conditions of
     this Agreement,  People's agrees to make revolving  advances to Borrower in
     an amount at any one time outstanding not to exceed the Borrowing Base. For
     purposes  of  this  Agreement,   "Borrowing   Base",  as  of  any  date  of
     determination,  shall  mean an amount  equal to the  lesser  of (i)  eighty
     percent (80%) of the amount of Eligible  Accounts (as defined in Subsection
     (a) above through June 30, 2002 or as defined in Subsection  (b) above from
     and after July 1, 2002) or (ii)  $3,500,000  plus (iii) an amount  equal to
     the lowest of :(x) fifty percent (50%) of the amount of Eligible Inventory,
     (y) the amount of credit  availability  created by Section  2.1(a) above or
     (z) Three Million Seven Hundred Fifty Thousand Dollars ($3,750,000).

     5.  Section 5.2 of the Amended  Agreement  shall be deleted in its entirety
and the following inserted in lieu thereof:

                                       3

          5.2 Eligible  Accounts.  The Eligible Accounts are, at the time of the
     creation  thereof and as of each date on which Borrower  includes them in a
     Borrowing Base calculation or certification, bona fide existing obligations
     created by the sale and  delivery of  Inventory  to Account  Debtors in the
     ordinary course of Borrower's  business,  unconditionally  owed to Borrower
     without  defenses,  disputes,  offsets,  counterclaims  as  to  such  sales
     occurring on or before June 30, 2002 and under the  Fulfillment and Billing
     Services Agreement dated as of April 2, 2002 between Simon & Schuster, Inc.
     and Borrower as to such sales  occurring from and after July 1, 2002 in the
     ordinary course of Borrower's  business.  As to Eligible Accounts which are
     the subject of Advances on and prior to June 30, 2002, the Inventory giving
     rise to such Eligible Accounts has been delivered to the Account Debtor, or
     to the Account Debtor's agent for immediate  shipment to and  unconditional
     acceptance  by the  Account  Debtor.  At the  time  of the  creation  of an
     Eligible Account and as of each date on which Borrower includes an Eligible
     Account in a Borrowing Base calculation or certification,  Borrower has not
     received notice of actual or imminent bankruptcy,  insolvency,  or material
     impairment  of the financial  condition of any  applicable  Account  Debtor
     regarding such Eligible Account.

     6. All references to the Term Loan or Term Loans and references to interest
on the Term Loan  contained  in  Sections  2.1(e),  2.3(c) and  2.6(e)  shall be
deleted as the Term Loans have been repaid in full.

     7. Except as herein amended, all of the terms and provisions of the Amended
Agreement shall remain in full force and effect.

     8.  All of the  representations  and  warranties  made by the  Obligors  in
Section 5 of the Amended Agreement are true and correct on the date hereof as if
made  on and as of the  date  hereof,  except  to the  extent  that  any of such
representations and warranties relate by their terms to a prior date.

     9. Borrower and Lender agree that this Fifth Amendment to Loan and Security
Agreement has been prepared by the mutual effort of both parties and that in the
event of a conflict or interpretive question with respect to any term, provision
or section  contained in this Fifth Amendment to Loan and Security  Agreement or
the First, Second, Third, Fourth or Letter Amendments, that this Fifth Amendment
to Loan and Security  Agreement shall not be construed more strictly against any
one party than any other party;  it being  agreed that both  Borrower and Lender
have equally negotiated the terms hereof and thereof.

     10. The revisions and amendments  recited herein shall not become effective
and shall be of no force or effect until:

          (a) Borrower has  executed  this Fifth  Amendment to Loan and Security
Agreement; and

          (b) Borrower and Simon & Schuster,  Inc, have executed the Fulfillment
and Billing Services Agreement dated as of April 2, 2002 in form satisfactory to
Lender; and

                                       4

          (c) Chase Manhattan Bank USA, N.A., has issued and delivered to Lender
Letter of Credit Number 72454 in form satisfactory to Lender.

            The date of execution  of this Fifth  Amendment to Loan and Security
Agreement by Borrower is as of June 30, 2002.

LENDER:                                      BORROWER:

PEOPLES BANK                                 THE MILLBROOK PRESS INC.

By:___________________________               By:___________________________
Peter Coates
Vice President                               Title:_________________________

                                       5

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