Document:

<PAGE>

                                                                    Exhibit 10.9

                                                                  EXECUTION COPY

                                 U.S. $2,500,000

                AMENDED AND RESTATED CREDIT AGREEMENT (364 DAYS)

                                      among

                           NASCO INTERNATIONAL, INC.,

                                as the Borrower,

                                       and

                         VARIOUS FINANCIAL INSTITUTIONS
                        NOW OR HEREAFTER PARTIES HERETO,

                                 as the Lenders,

                               BANK ONE, WISCONSIN

                             as Documentation Agent

                                       and

                             BANK OF AMERICA, N.A.,

                   as the Administrative Agent for the Lenders

                         BANC OF AMERICA SECURITIES LLC
                   as Sole Lead Arranger and Sole Book Manager

<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                            PAGE
<S>                                                                         <C>
 ARTICLE I.  DEFINITIONS AND ACCOUNTING TERMS .............................    1
     SECTION 1.1  Defined Terms ...........................................    1
     SECTION 1.2  Use of Defined Terms ....................................   19
     SECTION 1.3  Cross-References ........................................   19
     SECTION 1.4  Accounting and Financial Determinations .................   19

 ARTICLE II.  COMMITMENTS, BORROWING PROCEDURES AND NOTES .................   19
     SECTION 2.1  Commitments .............................................   19
     SECTION 2.1.1  Commitment of Each Lender .............................   19
     SECTION 2.1.2  Lenders Not Permitted or Required to Make Loans .......   19
     SECTION 2.2  Reduction of Commitment Amount ..........................   20
     SECTION 2.3  Borrowing Procedure .....................................   20
     SECTION 2.3.1  Borrowings ............................................   20
     SECTION 2.3.2  All Borrowings ........................................   20
     SECTION 2.4  Continuation and Conversion Elections ...................   20
     SECTION 2.5  Funding .................................................   20
     SECTION 2.6  Notes ...................................................   21

 ARTICLE III.  REPAYMENTS, PREPAYMENTS, INTEREST AND FEES .................   21
     SECTION 3.1  Repayments and Prepayments ..............................   21
     SECTION 3.2  Interest Provisions .....................................   22
     SECTION 3.2.1  Rates .................................................   22
     SECTION 3.2.2  Default Rates .........................................   22
     SECTION 3.2.3  Payment Dates .........................................   23
     SECTION 3.3  Fees ....................................................   23
     SECTION 3.3.1 [Reserved] .............................................   23
     SECTION 3.3.2  Agents Fee ............................................   23
     SECTION 3.3.3  Non-Use Fees ..........................................   23
     SECTION 3.4  Extension of Stated Maturity Date .......................   24

 ARTICLE IV.  CERTAIN EURODOLLAR RATE AND OTHER PROVISIONS ................   24
     SECTION 4.1  Eurodollar Rate Lending Unlawful ........................   24
     SECTION 4.2  Deposits Unavailable ....................................   24
     SECTION 4.3  Increased Costs, etc. ...................................   25
     SECTION 4.4  Funding Losses ..........................................   25
     SECTION 4.5  Increased Capital Costs .................................   25
     SECTION 4.6  Taxes ...................................................   26
     SECTION 4.7  Payments, Computations, etc .............................   27
     SECTION 4.8  Sharing of Payments .....................................   27
     SECTION 4.9  Setoff ..................................................   28
     SECTION 4.10  Use of Proceeds ........................................   28
</TABLE>

                                       ii

<PAGE>

<TABLE>
<S>                                                                         <C>
ARTICLE V.  CONDITIONS TO EFFECTIVENESS AND BORROWINGS .....................  28
     SECTION 5.1  Effectiveness ............................................  28
     SECTION 5.1.1  Resolutions, etc. ......................................  29
     SECTION 5.1.2  Delivery of Notes ......................................  29
     SECTION 5.1.3  Credit Agreements ......................................  29
     SECTION 5.1.4  Confirmation ...........................................  29
     SECTION 5.1.5  Satisfaction with Tax Sharing Agreement ................  29
     SECTION 5.1.6  Opinions of Counsel ....................................  29
     SECTION 5.1.7  Closing Fees, Expenses, etc. ...........................  29
     SECTION 5.1.8  No Materially Adverse Effect ...........................  29
     SECTION 5.1.9  Satisfactory Legal Form ................................  29
     SECTION 5.1.10  Compliance with Warranties, No Default, etc. ..........  30
     SECTION 5.1.11  Consents, etc. ........................................  30
     SECTION 5.2  All Borrowings ...........................................  30
     SECTION 5.2.1  Compliance with Warranties, No Default, etc. ...........  30
     SECTION 5.2.2  Borrowing Request ......................................  31
     SECTION 5.2.3  Satisfactory Legal Form ................................  31

ARTICLE VI.  REPRESENTATIONS AND WARRANTIES ................................  32
     SECTION 6.1  Organization, etc. .......................................  32
     SECTION 6.2  Due Authorization, Non-Contravention, etc. ...............  32
     SECTION 6.3  Government Approval, Regulation, etc. ....................  32
     SECTION 6.4  Validity, etc. ...........................................  33
     SECTION 6.5  Financial Information ....................................  33
     SECTION 6.6  No Material Adverse Change ...............................  33
     SECTION 6.7  Litigation, Labor Controversies, etc. ....................  33
     SECTION 6.8  Subsidiaries .............................................  33
     SECTION 6.9  Ownership of Properties ..................................  34
     SECTION 6.10  Taxes ...................................................  34
     SECTION 6.11  Pension and Welfare Plans ...............................  34
     SECTION 6.12  Environmental Warranties ................................  34
     SECTION 6.13  Regulations U and X .....................................  35
     SECTION 6.14  Real Property; Mortgage, etc. ...........................  36
     SECTION 6.15  The Collateral Documents ................................  36
     SECTION 6.16  Accuracy of Information .................................  36
     SECTION 6.17  Subordinated Debt .......................................  36
     SECTION 6.18  Intellectual Property ...................................  37

ARTICLE VII.  COVENANTS ....................................................  37
     SECTION 7.1  Affirmative Covenants ....................................  37
     SECTION 7.1.1  Financial Information, Reports, Notices, etc. ..........  37
     SECTION 7.1.2  Compliance with Laws, etc. .............................  39
     SECTION 7.1.3  Maintenance of Properties ..............................  39
</TABLE>

                                      iii

<PAGE>

<TABLE>
<S>                                                                         <C>
     SECTION 7.1.4  Insurance ..............................................  39
     SECTION 7.1.5  Books and Records ......................................  40
     SECTION 7.1.6  Environmental Covenant .................................  40
     SECTION 7.1.7  Fourth Amendment to Mortgage ...........................  40
     SECTION 7.1.8  Modesto Property .......................................  41
     SECTION 7.1.9  Further Assurances. ....................................  42
     SECTION 7.2  Negative Covenants .......................................  42
     SECTION 7.2.1  Business Activities ....................................  42
     SECTION 7.2.2  Indebtedness ...........................................  42
     SECTION 7.2.3  Liens ..................................................  43
     SECTION 7.2.4  Financial Condition ....................................  44
     SECTION 7.2.5  Investments ............................................  44
     SECTION 7.2.6  Restricted Payments, etc. ..............................  45
     SECTION 7.2.7  Capital Expenditures, etc. .............................  46
     SECTION 7.2.8  Take or Pay Contracts ..................................  46
     SECTION 7.2.9  Consolidation, Merger, etc. ............................  46
     SECTION 7.2.10  Asset Dispositions, etc. ..............................  46
     SECTION 7.2.11  Modification of Tax Sharing Agreement and
                      Subordinated Debt ....................................  47
     SECTION 7.2.12  Transactions with Affiliates ..........................  47
     SECTION 7.2.13  Inconsistent Agreements ...............................  47
     SECTION 7.2.14  Negative Pledges, Restrictive Agreements, etc. ........  47
     SECTION 7.2.15  Management Fees .......................................  48
     SECTION 7.2.16  Tax Sharing Payments ..................................  48
     SECTION 7.2.17  Use of Proceeds .......................................  48

 ARTICLE VIII.  EVENTS OF DEFAULT ..........................................  48
     SECTION 8.1  Listing of Events of Default .............................  48
     SECTION 8.1.1  Non-Payment of Obligations .............................  48
     SECTION 8.1.2  Breach of Warranty .....................................  49
     SECTION 8.1.3  Non-Performance of Certain Covenants and Obligations ...  49
     SECTION 8.1.4  Non-Performance of Other Covenants and Obligations .....  49
     SECTION 8.1.5  Default on Other Indebtedness ..........................  49
     SECTION 8.1.6  Judgments ..............................................  49
     SECTION 8.1.7  Pension Plans ..........................................  49
     SECTION 8.1.8  Control of the Borrower ................................  50
     SECTION 8.1.9  Bankruptcy, Insolvency, etc. ...........................  50
     SECTION 8.1.10  Impairment of Security, etc. ..........................  50
     SECTION 8.2  Action if Bankruptcy .....................................  51
     SECTION 8.3  Action if Other Event of Default .........................  51
     SECTION 8.4  Cumulative Remedies ......................................  51

 ARTICLE IX.  THE AGENT ....................................................  51
</TABLE>

                                       iv

<PAGE>

<TABLE>
<S>                                                                         <C>
     SECTION 9.1  Actions .................................................   51
     SECTION 9.2  Funding Reliance, etc. ..................................   52
     SECTION 9.3  Exculpation .............................................   52
     SECTION 9.4  Successor ...............................................   52
     SECTION 9.5  Loans by Bank of America ................................   53
     SECTION 9.6  Credit Decisions ........................................   53
     SECTION 9.7  Copies, etc. ............................................   53
     SECTION 9.8  Action Through Agent ....................................   53
     SECTION 9.9  Documentation Agents ....................................   53
     SECTION 9.10  Collateral Matters .....................................   54

 ARTICLE X.  MISCELLANEOUS PROVISIONS .....................................   54
     SECTION 10.1  Waivers, Amendments, etc. ..............................   54
     SECTION 10.2  Notices ................................................   55
     SECTION 10.3  Payment of Costs and Expenses ..........................   55
     SECTION 10.4  Indemnification ........................................   56
     SECTION 10.5  Survival ...............................................   57
     SECTION 10.6  Severability ...........................................   57
     SECTION 10.7  Headings ...............................................   57
     SECTION 10.8  Execution in Counterparts ..............................   57
     SECTION 10.9  Governing Law; Entire Agreement ........................   58
     SECTION 10.10  Successors and Assigns ................................   58
     SECTION 10.11  Sale and Transfer of Loans and Notes; Participations
                     in Loans and Notes ...................................   58
     SECTION 10.11.1  Assignments .........................................   58
     SECTION 10.11.2  Participations ......................................   59
     SECTION 10.11.3  Information and Assistance ..........................   60
     SECTION 10.12  Other Transactions ....................................   60
     SECTION 10.13  Maximum Interest ......................................   60
     SECTION 10.14  Forum Selection and Consent to Jurisdiction ...........   62
     SECTION 10.15  Waiver of Jury Trial ..................................   62
</TABLE>

SCHEDULES

SCHEDULE I   --  Disclosure Schedule
SCHEDULE II  --  Pricing Schedule

EXHIBITS

EXHIBIT A   --   Form of Note
EXHIBIT B   --   Form of Borrowing Request
EXHIBIT C   --   Form of Continuation/Conversion Notice

                                       v

<PAGE>

EXHIBIT D  --  Copy of Pledge Agreement
EXHIBIT E  --  Copy of Security Agreement
EXHIBIT F  --  Form of Opinion of Counsel to the Borrower
EXHIBIT G  --  Form of Lender Assignment Agreement
EXHIBIT H  --  Form of Confirmation

                                       vi

<PAGE>

                      AMENDED AND RESTATED CREDIT AGREEMENT

          THIS AMENDED AND RESTATED CREDIT AGREEMENT (364 DAYS), dated as of May
29, 2001, among NASCO INTERNATIONAL, INC., a Wisconsin corporation (the
"Borrower"), the various financial institutions which are now, or in accordance
 --------
with Section 10.11.1 hereafter become, parties hereto (collectively, the
     ---------------
"Lenders"), BANK ONE, WISCONSIN, as Documentation Agent (in such capacity, the
 -------
"Documentation Agent"), and BANK OF AMERICA, N.A., as administrative agent (in
 -------------------
such capacity, the "Agent") for the Lenders.
                    -----

                              W I T N E S S E T H:
                              - - - - - - - - - -

          WHEREAS, the Borrower, various financial institutions and the Agent
have entered into a Credit Agreement dated as of March 31, 2000 (the "Existing
                                                                      --------
Credit Agreement");
----------------
          WHEREAS, the parties hereto have agreed to amend and restate the
Existing Credit Agreement so as to, among other things, decrease the amount of
the facility and amend certain covenants and various other provisions of the
Existing Credit Agreement;

          WHEREAS, proceeds of the Loans will be used to meet working capital
requirements of the Borrower;

          WHEREAS, the parties hereto intend that this Agreement and the
documents executed in connection herewith not effect a novation of the
obligations of the Borrower under the Existing Credit Agreement, but merely a
restatement of and, where applicable, an amendment to the terms governing such
obligations;

          NOW, THEREFORE, in consideration of the premises and the mutual
agreements and covenants herein contained, the parties agree as follows:

                                   ARTICLE I

                        DEFINITIONS AND ACCOUNTING TERMS

          SECTION 1.1 Defined Terms. The following terms (whether or not
                      -------------
underscored) when used in this Agreement, including its preamble and recitals,
shall, except where the context otherwise requires, have the following meanings
(such meanings to be equally applicable to the singular and plural forms
thereof):

          "Affiliate" of any Person means (a) any other Person which, directly
           ---------
or indirectly, controls, is controlled by or is under common control with such
Person (excluding any trustee under, or any committee with responsibility for
administering, any Plan) and (b) any Person who is a general partner, director
or officer of such Person or of any Person described in the foregoing

                                        1

<PAGE>

clause (a). A Person shall be deemed to be "controlled by" any other Person if
----------
such other Person possesses, directly or indirectly, power

               (a)   to vote 10% or more of the securities (on a fully diluted
          basis) having ordinary voting power for the election of directors or
          managing general partners; or

               (b)   to direct or cause the direction of the management and
          policies of such Person whether by contract or otherwise,

or the ownership, direct or indirect or beneficial, of 10% or more of any class
of stock of such Person.

          "Agent" is defined in the preamble and includes each other Person
           -----                    --------
which shall have subsequently been appointed as the successor Agent pursuant to
Section 9.4.
-----------

          "Agent's Fee Letter" means that certain Appendix A to the Summary of
           ------------------
Terms and Conditions dated May 29, 2001 regarding fees.

          "Agreement" means this Amended and Restated Credit Agreement (364
           ---------
Days) as the same may thereafter from time to time be further amended,
supplemented, amended and restated or otherwise modified in accordance with the
terms hereof.

          "Applicable Margin" means the rate per annum determined pursuant to
           -----------------
Schedule II.
-----------

          "Assignee Lender" is defined in Section 10.11.1.
           ---------------                ---------------

          "Authorized Officer" means, relative to the Borrower, those of its
           ------------------
officers whose signatures and incumbency shall have been certified to the Agent
and the Lenders pursuant to Section 5.1.1.
                            -------------

          "Bank of America" means Bank of America, N.A.
           ---------------

          "Base Rate" means a fluctuating rate per annum equal to the higher of
           ---------
(a) the Federal Funds Rate plus 1/2 of 1% and, (b) the rate of interest in
effect for such day as publicly announced from time to time by Bank of America
as its "prime rate." Such rate is a rate set by Bank of America based upon
various factors including Bank of America's costs and desired return, general
economic conditions and other factors, and is used as a reference point for
pricing some loans, which may be priced at, above, or below such announced rate.
Any change in such rate announced by Bank of America shall take effect at the
opening of business on the day specified in the public announcement of such
change.

          "Base Rate Loan" means a Loan bearing interest at a fluctuating rate
           --------------
determined by reference to the Base Rate.

          "Borrower" is defined in the preamble.
           --------                    --------

                                        2

<PAGE>

         "Borrowing" means the Loans of the same type and, in the case of
Eurodollar Rate Loans, having the same Interest Period made by all Lenders on
the same Business Day and pursuant to the same Borrowing Request in accordance
with Section 2.1.

         "Borrowing Request" means a loan request and certificate duly executed
by an Authorized Officer of the Borrower, substantially in the form of Exhibit B
hereto.

         "Business Day" means

               (a) any day which is neither a Saturday or Sunday nor a legal
         holiday on which banks are authorized or required to be closed in New
         York, New York, Chicago, Illinois or Ft. Atkinson, Wisconsin; and

               (b) relative to the making, continuing, prepaying or repaying of
         any Eurodollar Rate Loans, including with respect to the giving of
         notices required under this Agreement therefor, any day described in
         the foregoing clause (a) which is also a day on which dealings in
         Dollars are carried on in the London interbank market.

         "Business Plan" means the business plan for the Borrower entitled
"Nasco International, Inc. Consolidated Business Plan for Year Ended December
31, 2001", heretofore delivered to the Lenders.

         "Capital Expenditures" means, for any period, the sum of
          --------------------

               (a) the aggregate amount of all expenditures of the Borrower and
         its Subsidiaries for fixed or capital assets made during such period
         which, in accordance with GAAP, would be classified as capital
         expenditures and, without duplication, all amounts expended under
         Section 7.2.9(b); and

               (b) the aggregate amount of all Capitalized Lease Liabilities
         incurred during such period.

         "Capitalized Lease Liabilities" means all monetary obligations of the
Borrower or any of its Subsidiaries under any leasing or similar arrangement
which, in accordance with GAAP, would be classified as capitalized leases, and,
for purposes of this Agreement and each other Loan Document, the amount of such
obligations shall be the capitalized amount thereof, determined in accordance
with GAAP, and the stated maturity thereof shall be the date of the last payment
of rent or any other amount due under such lease prior to the first date upon
which such lease may be terminated by the lessee without payment of a penalty.

         "Cash Equivalent Investment" means, at any time:

               (a) any evidence of Indebtedness issued or guaranteed by the
         United States Government;

                                        3

<PAGE>

          (b) commercial paper, maturing not more than nine months from the date
     of issue, which is issued by

              (i)  a corporation (other than an Affiliate of the Borrower)
         organized under the laws of any state of the United States or of the
         District of Columbia and rated at least A-l by Standard & Poor's
         Ratings Services or P-l by Moody's Investors Service, Inc., or

              (ii) any Lender (or its holding company);

          (c) any certificate of deposit or bankers acceptance, maturing not
     more than one year after such time, which is issued by either

              (i)  a commercial banking institution that is a member of the
         Federal Reserve System and has a combined capital and surplus and
         undivided profits of not less than $500,000,000, or

              (ii) any Lender; or

          (d) any repurchase agreement entered into with any Lender, any other
     commercial banking institution of the stature referred to in clause (c)(i)
                                                                  -------------
     or any investment banking firm or broker which (directly or through a
     parent or subsidiary corporation) issues commercial paper maturing not more
     than nine months from the date of issue with a rating of at least A-1 by
     Standard & Poor's Ratings Group or P-1 by Moody's Investors Service, Inc.,
     which repurchase agreement

              (i)  is secured by a fully perfected security interest in any
         obligation of the type described in any of clauses (a) through (c),
                                                    -----------         ---
         and

              (ii) has a market value at the time such repurchase agreement is
         entered into of not less than 100% of the repurchase obligation of
         such Lender (or other commercial banking institution) thereunder.

         "CERCLA" means the Comprehensive Environmental Response, Compensation
          ------
and Liability Act of 1980, as amended.

         "CERCLIS" means the Comprehensive Environmental Response Compensation
          -------
Liability Information System List.

         "Change in Control" means
          -----------------

         (a) at any time when the aggregate principal amount of Indebtedness
     outstanding hereunder exceeds $10,000,000, Edward Netter and members of his
     family shall cease to own and control, individually or in the aggregate,
     directly or through corporations controlled by Edward Netter and members of
     his family, for any reason, free

                                        4

<PAGE>

     and clear of all Liens, options or other encumbrances or rights (other
     than any pledge of capital stock of Geneve granted in favor of a commercial
     lender securing Indebtedness, which Indebtedness may not exceed $10,000,000
     in principal amount unless and until the outstanding principal amount of
     all Loans is equal to or less than $10,000,000, it being understood and
     agreed that foreclosure upon such Lien shall constitute a "Change in
     Control"), at least 51% of the outstanding shares of capital stock having
     ordinary voting power for the election of directors of Geneve on a fully
     diluted basis, other than by reason of death or legal incapacity, in which
     case a "Change in Control" shall not be deemed to occur until the date
     which is six months after such death or legal incapacity; or

          (b) the failure of Geneve to own and control, directly (or indirectly
     through no more than one intermediate corporation) and free and clear of
     all Liens, options or other encumbrances or rights, at least 80% of the
     outstanding shares of capital stock having ordinary voting power for the
     election of directors of the Borrower on a fully diluted basis.

          "Code" means the Internal Revenue Code of 1986, as amended, reformed
           ----
or otherwise modified from time to time.

          "Collateral Documents" means, collectively, the Pledge Agreement, the
           --------------------
Security Agreement, the Mortgage, the Fourth Amendment to Mortgage, the Second
Amendment to Modesto Mortgage, and any other agreement, document or instrument
executed and delivered in connection therewith.

          "Commitment" means, relative to any Lender, such Lender's obligation
           ----------
to make Loans pursuant to Section 2.1.1; collectively, for all the Lenders, the
                          -------------
"Commitments".
 -----------

          "Commitment Amount" means, on any date on or prior to the Commitment
           -----------------
Termination Date, $2,500,000, as such amount may be reduced from time to time
pursuant to Section 2.2.
            -----------

          "Commitment Termination Date" means the earliest of
           ---------------------------

              (a) the Stated Maturity Date;

              (b) the date on which the Commitment Amount is terminated in full
          or reduced to zero pursuant to Section 2.2; and
                                         -----------

          (c) the date on which any Commitment Termination Event occurs.

Upon the occurrence of any event described in clauses (a), (b) or (c), the
                                                      ---  ---    ---
Commitments shall terminate automatically and without any further action.

                                        5

<PAGE>

          "Commitment Termination Event" means
           ----------------------------

               (a)  the occurrence of any Default described in clauses (a)
                                                                       ---
          through (d) of Section 8.1.9 with respect to the Borrower or any
                  ---    -------------
          Significant Subsidiary; or

               (b)  the occurrence and continuance of any other Event of Default
          and either

                    (i) the declaration of the Loans to be due and payable
               pursuant to Section 8.3, or
                           -----------

                    (ii) in the absence of such declaration, the giving of
               notice by the Agent, acting at the direction of the Required
               Lenders, to the Borrower that the Commitments have been
               terminated.

          "Confirmation" means the Confirmation executed and delivered by the
           ------------
Borrower pursuant to Section 5.1.4, substantially in the form of Exhibit H
                     -------------                               ---------
hereto, as amended, supplemented, amended and restated or otherwise modified
from time to time.

          "Consolidated Current Assets" means, as of the close of any month in
           ---------------------------
each Fiscal Year, all amounts which, in accordance with GAAP consistently
applied, would be included as current assets on a consolidated balance sheet of
the Borrower and each of its Subsidiaries at such time, but in any event not
including any cash or Cash Equivalent Investments.

           "Consolidated Current Assets Level" means, as of the last day of any
            ---------------------------------
Fiscal Quarter, the sum of (i) 80% of all amounts which, in accordance with GAAP
consistently applied, would be included as gross accounts receivable on a
consolidated balance sheet of the Borrower and each of its Subsidiaries at such
time plus (ii) 60% of all amounts which, in accordance with GAAP consistently
applied, would be included as gross inventory on a consolidated balance sheet of
the Borrower and each of its Subsidiaries at such time.

          "Consolidated Current Liabilities" means, as of the close of any month
           --------------------------------
in each Fiscal Year, all amounts which, in accordance with GAAP consistently
applied, would be included as current liabilities on a consolidated balance
sheet of the Borrower and each of its Subsidiaries at such time, but shall
exclude the current portion of long-term Indebtedness.

          "Consolidated Current Ratio" means, as of the close of any month in
           --------------------------
each Fiscal Year, the ratio of Consolidated Current Assets to Consolidated
Current Liabilities at such time.

          "Consolidated Debt Service Coverage Ratio" means, as of the close of
           ----------------------------------------
any Fiscal Quarter, the ratio of:

               (a) EBITDA computed for the four consecutive Fiscal Quarters
          ending on the computation date to

                                        6

<PAGE>

          (b) the sum of

          (i) Consolidated Interest Expense computed for four consecutive Fiscal
     Quarters ending on the computation date,

plus
----

          (ii) Required Principal Payments as of such computation date.

         "Consolidated Funded Debt" means, as of the date of any determination
          ------------------------
thereof, the aggregate outstanding principal amount of all Indebtedness of the
Borrower and each of its Subsidiaries of the nature referred to in clauses (a),
                                                                   -----------
(b), (c) and (f) of the definition of "Indebtedness".
---  ---     ---                       ------------

         "Consolidated Interest Expense" means, for any Fiscal Quarter, the
          -----------------------------
aggregate interest expense of the Borrower and each of its Subsidiaries for such
Fiscal Quarter, as determined in accordance with GAAP consistently applied,
including, without limitation, all commissions, discounts and other fees and
charges owed with respect to letters of credit and banker's acceptances and net
costs under interest rate swap or exchange agreements and the portion of any
obligation under capital leases allocable to interest expense but excluding in
any event any amounts payable under the Agent's Fee Letter.

         "Consolidated Net Income" means, for any period, all amounts which, in
          -----------------------
conformity with GAAP consistently applied, would be included under net income on
a consolidated income statement of the Borrower and each of its Subsidiaries for
such period.

         "Consolidated Net Worth" means, at any time, all amounts which, in
          ----------------------
accordance with GAAP consistently applied, would be included under shareholders'
equity on a consolidated balance sheet of the Borrower and each of its
Subsidiaries at such time; provided that, in any event, such amounts are to be
                           --------
net of amounts carried on the books of the Borrower and each of its Subsidiaries
for treasury stock.

         "Contingent Liability" means any agreement, undertaking or arrangement
          --------------------
by which any Person guarantees, endorses or otherwise becomes or is contingently
liable upon (by direct or indirect agreement, contingent or otherwise, to
provide funds for payment, to supply funds to, or otherwise to invest in, a
debtor, or otherwise to assure a creditor against loss) the indebtedness,
obligation or any other liability of any other Person (other than by
endorsements of instruments in the course of collection), or guarantees the
payment of dividends or other distributions upon the shares of any other Person.
The amount of any Person's obligation under any Contingent Liability shall
(subject to any limitation set forth therein) be deemed to be the outstanding
principal amount (or maximum principal amount, if larger) of the debt,
obligation or other liability guaranteed thereby.

                                        7

<PAGE>

         "Continuation/Conversion Notice" means a notice of continuation or
          ------------------------------
conversion and certificate duly executed by an Authorized Officer of the
Borrower, substantially in the form of Exhibit C hereto.
                                       ---------

         "Controlled Group" means all members of a controlled group of
          ----------------
corporations and all members of a controlled group of trades or businesses
(whether or not incorporated) under common control which, together with the
Borrower, are treated as a single employer under Section 414(b) or 414(c) of the
Code or section 4001 of ERISA.

         "Credit Agreement (Five Year)" means the Amended and Restated Credit
          ---------------------------
Agreement (Five Year) of the Borrower dated the date hereof providing for loans
in the principal amount of up to $51,000,000, as the same may thereafter from
time to time be amended, supplemented, amended and restated or otherwise
modified in accordance with the terms thereof.

         "Default" means any Event of Default or any condition, occurrence or
          -------
event which, after notice or lapse of time or both, would constitute an Event of
Default.

         "Disclosure Schedule" means the Disclosure Schedule attached hereto as
          -------------------
Schedule I, as it may be amended, supplemented or otherwise modified from time
----------
to time by the Borrower with the written consent of the Agent and the Required
Lenders.

         "Dollar" and the sign "$" mean lawful money of the United States.
          ------                -

         "Domestic Office" means, relative to any Lender, the office of such
          ---------------
Lender designated as such below its signature hereto or designated in the Lender
Assignment Agreement or such other office of a Lender (or any successor or
assign of such Lender) within the United States as may be designated from time
to time by notice from such Lender to each other Person party hereto.

         "Effective Date" is defined in Section 5.1.
          --------------

         "Environmental Laws" means all applicable federal, state or local
          ------------------
statutes, laws, ordinances, codes, rules, regulations and guidelines (including
consent decrees and administrative orders) relating to public health and safety
and protection of the environment.

         "EBITDA" means, for any period, Consolidated Net Income for such period
          ------
plus to the extent deducted in determining such Consolidated Net Income,
----
Consolidated Interest Expense, income tax expense, depreciation and amortization
for such period; provided that for purposes of calculating EBITDA for any
                 --------
Period, the consolidated net income of any Person acquired by the Borrower or
any Subsidiary during such period (plus, to the extent deducted in determining
such consolidated net income, interest expense, income tax expense, depreciation
and amortization of such Person) shall be included on a pro forma basis for such
                                                        --- -----
period (assuming the consummation of each such acquisition and the incurrence or
assumption of any Indebtedness in connection therewith occurred on the first day
of such period, but adjusted to add back non-recurring expenses (such as owner
compensation) to the extent disclosed to and approved by the Required Lenders)
based upon (a) to the extent available, (i) the audited consolidated balance
sheet of such

                                        8

<PAGE>

acquired Person and its consolidated Subsidiaries as at the end of the fiscal
year of such Person preceding the acquisition of such Person and the related
audited consolidated statements of income, stockholders' equity and cash flows
for such fiscal year and (ii) any subsequent unaudited financial statements for
such Person for the period prior to the acquisition of such Person so long as
such statements were prepared on a basis consistent with the audited financial
statements referred to above or (b) to the extent the items listed in clause (a)
                                                                      ----------
are not available, such historical financial statements and other information as
is disclosed to, and approved by, the Required Lenders.

     "ERISA" means the Employee Retirement Income Security Act of 1974, as
      -----
amended, and any successor statute of similar import, together with the
regulations thereunder, in each case as in effect from time to time. References
to sections of ERISA also refer to any successor sections.

     "Eurodollar Office" means, relative to any Lender, the office of such
      -----------------
Lender designated as such below its signature hereto or designated in the Lender
Assignment Agreement or such other office of a Lender (or any successor or
assign of such Lender) as may be designated from time to time by notice from
such Lender to the Borrower and the Agent, whether or not outside the United
States, which shall be making or maintaining Eurodollar Rate Loans of such
Lender hereunder.

     "Eurodollar Rate" means for any Interest Period with respect to any
      ---------------
Eurodollar Rate Loan, a rate per annum determined by Agent pursuant to the
following formula:

     Eurodollar Rate =   Eurodollar Base Rate
                         --------------------
                         1.00 - Eurodollar Reserve Percentage

     Where,

     "Eurodollar Base Rate" means, for such Interest Period:
      --------------------

          (a) the rate per annum (carried out to the fifth decimal place) equal
     to the rate determined by Agent to be the offered rate that appears on the
     page of the Telerate Screen that displays an average British Bankers
     Association Interest Settlement Rate for deposits in Dollars (for delivery
     on the first day of such Interest Period) with a term equivalent to such
     Interest Period, determined as of approximately 11:00 a.m. (London time)
     two Business Days prior to the first day of such Interest Period, or

          (b) in the event the rate referenced in the preceding subsection (a)
     does not appear on such page or service or such page or service shall cease
     to be available, the rate per annum (carried out to the fifth decimal
     place) equal to the rate determined by Agent to be the offered rate on such
     other page or other service that displays an average British Bankers
     Association Interest Settlement Rate for deposits in Dollars (for delivery
     on the

                                        9

<PAGE>

     first day of such Interest Period) with a term equivalent to such Interest
     Period, determined as of approximately 11:00 a.m. (London time) two
     Business Days prior to the first day of such Interest Period, or

          (c) in the event the rates referenced in the preceding subsections (a)
     and (b) are not available, the rate per annum determined by Agent as the
     rate of interest at which Dollar deposits (for delivery on the first day of
     such Interest Period) in same day funds in the approximate amount of the
     applicable Eurodollar Rate Loan and with a term equivalent to such Interest
     Period would be offered by its London Branch to major banks in the Offshore
     Dollar market at their request at approximately 11:00 a.m. (London time)
     two Business Days prior to the first day of such Interest Period.

     "Eurodollar Reserve Percentage" means, for any day during any Interest
      -----------------------------
Period, the reserve percentage (expressed as a decimal, rounded upward to the
next 1/100th of 1%) in effect on such day, whether or not applicable to any
Bank, under regulations issued from time to time by the Board of Governors of
the Federal Reserve System for determining the maximum reserve requirement
(including any emergency, supplemental or other marginal reserve requirement)
with respect to Eurocurrency funding (currently referred to as "Eurocurrency
liabilities"). The Eurodollar Rate for each outstanding Eurodollar Rate Loan
shall be adjusted automatically as of the effective date of any change in the
Eurodollar Reserve Percentage.

     The determination of the Eurodollar Reserve Percentage and the Eurodollar
Base Rate by Agent shall be conclusive in the absence of manifest error.

     "Eurodollar Rate Loan" means a Loan bearing interest, at all times during
      --------------------
an Interest Period applicable to such Loan, at a fixed rate of interest
determined by reference to the Eurodollar Rate.

     "Event of Default" is defined in Section 8.1.
      ----------------                -----------

     "Excess Cash Flow" means, for any period, the remainder of
      ----------------

          (a)  Consolidated Net Income for such period,

     plus
     ----

          (b)  to the extent deducted in determining such Consolidated Net
     Income, income tax expense, depreciation and amortization for such period,

     plus
     ----

          (c)  any decrease in working capital during such period

     plus
     ----

          (d)  any non-cash charges

                                       10

<PAGE>

         less
         ----
                   (e)   the sum, without duplication of

                   (i)   scheduled repayments of the loans under the Credit
                  Agreement (Five Year) made during such period pursuant to
                  Section 3.1.1 of such agreement,

         plus
         ----
                   (ii)  voluntary prepayments of the Loans pursuant to Section
                                                                        -------
                  3.1 during such period,
                  ---

         plus
         ----
                   (iii) cash payments made in such period with respect to
                  Capital Expenditures,

         plus
         ----
                   (iv)  all federal, state, local and foreign income taxes
                  paid by the Borrower and its Subsidiaries during such period,

         plus
         ----
                   (v)   any increases in working capital during such period.

         "Existing Credit Agreement" is defined in the recitals.
          -------------------------

         "Existing Note" means any promissory note of the Borrower payable to
          -------------
the initial Lender, executed and delivered by the Borrower in favor of such
Lender pursuant to the Existing Credit Agreement, evidencing the aggregate
Indebtedness of the Borrower to such Lender resulting from the Loans made to the
Borrower under the Existing Credit Agreement.

         "Federal Funds Rate" means, for any period, a fluctuating interest rate
          ------------------
per annum equal for each day during such period to

                   (a) the weighted average of the rates on overnight federal
         funds transactions with members of the Federal Reserve System arranged
         by federal funds brokers, as published 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

                   (b) if such rate is not so published for any day which is a
         Business Day, the average of the quotations for such day on such
         transactions received by Bank of America from three federal funds
         brokers of recognized standing selected by it.

         "Fiscal Quarter" means any quarter of a Fiscal Year.
          --------------

                                       11

<PAGE>

         "Fiscal Year" means any period of twelve consecutive calendar months
          -----------
ending on December 31; references to a Fiscal Year with a number corresponding
to any calendar year (e.g., the "2001 Fiscal Year") refer to the Fiscal Year
                      ---
ending on December 31 occurring during such calendar year.

         "Fourth Amendment to Mortgage" means the Fourth Amendment to Mortgage
          ----------------------------
executed and delivered by the Borrower pursuant to Section 7.1.7, in form
                                                   -------------
satisfactory to the Agent, as amended, supplemented, restated, extended,
renewed, partially released or otherwise modified from time to time.

         "F.R.S. Board" means the Board of Governors of the Federal Reserve
          ------------
 System or any successor thereto.

         "GAAP" is defined in Section 1.4.
          ----                -----------

         "Geneve" means Geneve Corporation, a Delaware corporation which
          ------
directly owns 80% of the voting stock of Holdings and, indirectly through such
ownership interest, owns 80% of the voting stock of the Borrower.

         "Hazardous Material" means
          ------------------

                  (a) any "hazardous substance", as defined by CERCLA;

                  (b) any "hazardous waste", as defined by the Resource
                      Conservation and Recovery Act, as amended;

                  (c) any petroleum product; or

                  (d) any pollutant or contaminant or hazardous, dangerous or
         toxic chemical, material or substance within the meaning of any other
         applicable federal, state or local law, regulation, ordinance or
         requirement (including consent decrees and administrative orders)
         relating to or imposing liability or standards of conduct concerning
         any hazardous, toxic or dangerous waste, substance or material, all as
         amended or hereafter amended.

         "Hedging Obligations" means, with respect to any Person, all
          -------------------
liabilities of such Person under interest rate swap agreements, interest rate
cap agreements and interest rate collar agreements, and all other agreements or
arrangements designed to protect such Person against fluctuations in interest
rates or currency exchange rates.

         "herein", "hereof", "hereto", "hereunder" and similar terms contained
          ------    ------    ------    ---------
in this Agreement or any other Loan Document refer to this Agreement or such
other Loan Document, as the case may be, as a whole and not to any particular
Section, paragraph or provision of this Agreement or such other Loan Document.

                                       12

<PAGE>

         "Highest Lawful Rate" means, with respect to any indebtedness owed to
          -------------------
any Lender hereunder or under any other Loan Document, the maximum nonusurious
interest rate, if any, that at any time or from time to time may be contracted
for, taken, reserved, charged or received by such Lender with respect to such
indebtedness under applicable law.

         "Holdings" means NASCO Holdings, Inc., a Wisconsin corporation.
          --------

         "Impermissible Qualification" means, relative to the opinion or
          ---------------------------
certification of any independent public accountant as to any financial statement
of the Borrower, any qualification or exception to such opinion or certification

                  (a) which is of a "going concern" or similar nature;

                  (b) which relates to the limited scope of examination of
         matters relevant to such financial statement; or

                  (c) which relates to the treatment or classification of any
         item in such financial statement and which, as a condition to its
         removal, would require an adjustment to such item the effect of which
         would be to cause the Borrower to be in default of any of its
         obligations under Section 7.2.4.
                           -------------
         "including" means including without limiting the generality of any
          ---------
description preceding such term, and, for purposes of this Agreement and each
other Loan Document, the parties hereto hereby agree that the rule of ejusdem
                                                                      -------
generis shall not be applicable to limit a general statement, which is followed
-------
by or referable to an enumeration of specific matters, to matters similar to the
matters specifically mentioned.

         "Indebtedness" of any Person means, without duplication:
          ------------

                  (a) all obligations of such Person for borrowed money and all
         obligations of such Person evidenced by bonds, debentures, notes or
         other similar instruments;

                  (b) all obligations, contingent or otherwise, relative to the
         face amount of all letters of credit, whether or not drawn, and
         banker's acceptances issued for the account of such Person;

                  (c) all obligations of such Person as lessee under leases
         which have been or should be, in accordance with GAAP, recorded as
         Capitalized Lease Liabilities;

                  (d) all other items which, in accordance with GAAP, would be
         included as liabilities on the liability side of the balance sheet of
         such Person as of the date at which Indebtedness is to be determined;

                  (e) net liabilities of such Person under all Hedging
         Obligations;

                                       13

<PAGE>

                  (f) whether or not so included as liabilities in accordance
         with GAAP, all obligations of such Person to pay the deferred purchase
         price of property or services, and indebtedness (excluding prepaid
         interest thereon) secured by a Lien on property owned or being
         purchased by such Person (including indebtedness arising under
         conditional sales or other title retention agreements), whether or not
         such indebtedness shall have been assumed by such Person or is limited
         in recourse; and

                  (g) all Contingent Liabilities of such Person in respect of
         any of the foregoing.

For all purposes of this Agreement, the Indebtedness of any Person shall include
the Indebtedness of any partnership or joint venture in which such Person is a
general partner or a joint venturer.

         "Indemnified Liabilities" is defined in Section 10.4.
          -----------------------

         "Indemnified Parties" is defined in Section 10.4.
          -------------------

         "Insignificant Subsidiary" means Nasco Exports.
          ------------------------

         "Interest Period" means, relative to any Eurodollar Rate Loans, the
period beginning on (and including) the date on which such Eurodollar Rate Loan
is made or continued as, or converted into, a Eurodollar Rate Loan pursuant to
Section 2.3 or 2.4 and shall end on (but exclude) the day which numerically
-----------    ---
corresponds to such date one, two, three or, if available (as determined in the
sole discretion of the Lenders), six months thereafter (or, if such month has no
numerically corresponding day, on the last Business Day of such month), as the
Borrower may select in its relevant notice pursuant to Section 2.3 or 2.4;
                                                       -----------    ---
provided, however, that
--------  -------

                  (a) the Borrower shall not be permitted to select Interest
         Periods to be in effect at any one time which have expiration dates
         occurring on more than five different dates;

                  (b) if such Interest Period would otherwise end on a day which
         is not a Business Day, such Interest Period shall end on the next
         following Business Day unless such next following Business Day is the
         first Business Day of a calendar month, in which case such Interest
         Period shall end on the Business Day next preceding such numerically
         corresponding day;

                  (c) Interest Periods shall be selected in a manner such that
         principal amounts of the Notes required to be repaid pursuant to
         Section 3.1(b) hereof shall not require the breakage of any Interest
         --------------
         Periods; and

                  (d) no Interest Period may end later than the Stated
         Maturity Date.

         "Investment" means, relative to any Person,
          ----------

                                       14

<PAGE>

          (a) any loan or advance made by such Person to any other Person
     (excluding commission, travel and similar advances to officers and
     employees made in the ordinary course of business);

          (b) any Contingent Liability of such Person; and

          (c) any ownership or similar interest held by such Person in any other
     Person.

The amount of any Investment shall be the original principal or capital amount
thereof less all returns of principal or equity thereon (and without adjustment
by reason of the financial condition of such other Person) and shall, if made by
the transfer or exchange of property other than cash, be deemed to have been
made in an original principal or capital amount equal to the fair market value
of such property.

     "Lead Arranger" means Banc of America Securities LLC, in its capacity as
      -------------
sole lead arranger and sole book manager.

     "Lender Assignment Agreement" means a Lender Assignment Agreement
      ---------------------------
substantially in the form of Exhibit D hereto.

     "Lenders" is defined in the preamble.
      -------                    --------

     "Lien" means any security interest, mortgage, pledge, hypothecation,
      ----
assignment, deposit arrangement, encumbrance, lien (statutory or otherwise),
charge against or interest in property to secure payment of a debt or
performance of an obligation or other priority or preferential arrangement of
any kind or nature whatsoever.

     "Loan" is defined in Section 2.1.1.
      ----                -------------

     "Loan Documents" means, collectively, this Agreement, the Notes, the
      --------------
Collateral Documents, the Confirmation, and any other document executed in
connection or pursuant hereto or thereto from time to time which sets forth that
it constitutes a "Loan Document", in each case as amended, supplemented, amended
and restated or otherwise modified from time to time.

     "Materially Adverse Effect" means, relative to any occurrence of whatever
      -------------------------
nature (including, without limitation, any adverse determination in any
litigation, arbitration, or governmental investigation or proceeding), a
materially adverse effect on:

          (a) the consolidated business, assets, revenues, financial condition,
     operations, or prospects of the Borrower and its Subsidiaries; or

          (b) the ability of the Borrower to perform any of its payment or other
     material obligations under this Agreement, the Notes, the Mortgage, any
     other Collateral Document or any other Loan Document.

                                       15

<PAGE>

     "Modesto Mortgage" means Deed of Trust, Security Agreement, Assignment of
      ----------------
Rents and Leases and Fixture Filing dated as of August 5, 1997 as amended,
supplemented, restated, extended, reviewed, partially released or otherwise
modified from time to time.

     "Modesto Property" means lots 3 and 4 of Landmark Business Center, as per
      ----------------
map thereof, recorded October 4, 1988 in Book 33, page 31, Stanislaus County,
California Records.

     "Monthly Payment Date" means the last day of each calendar month or, if any
      --------------------
such day is not a Business Day, the next succeeding Business Day.

     "Mortgage" means the Original Mortgage, as amended by the Fourth Amendment
      --------
to Mortgage, and as amended, supplemented, restated, extended, renewed,
partially released or otherwise modified from time to time.

     "Mortgaged Collateral" means the Collateral (as such term is defined in the
      --------------------
Mortgage).

     "Mortgaged Real Property" means the Property (as such term is defined in
      -----------------------
the Mortgage).

     "Nasco Exports" means Nasco Exports, Inc., a Wisconsin corporation and a
      -------------
direct, wholly-owned Subsidiary of the Borrower.

     "Note" means a promissory note of the Borrower payable to any Lender,
      ----
executed and delivered by the Borrower in accordance with this Agreement,
substantially in the form of Exhibit A hereto (as such promissory note may be
                             ---------
amended, endorsed or otherwise modified from time to time), evidencing the
aggregate Indebtedness of the Borrower to such Lender resulting from outstanding
Loans, and also means all other promissory notes accepted from time to time in
substitution therefor or renewal thereof.

     "Obligations" means all obligations (monetary or otherwise) of the Borrower
      -----------
arising under or in connection with this Agreement, the Notes, the Mortgage,
each other Collateral Document and each other Loan Document.

     "Original Credit Agreement" means the Third Amended and Restated Credit
      -------------------------
Agreement dated as of January 2, 1996 among the Borrower, certain Lenders and
Bank of America, N.A., as agent.

     "Original Mortgage" means that certain Mortgage (and Security Agreement)
      -----------------
executed and delivered by the Borrower pursuant to the Original Credit
Agreement, dated as of June 25, 1992, as amended, supplemented, amended and
restated and otherwise modified through the date hereof.

     "Organic Document" means, relative to the Borrower, its certificate of
      ---------------
incorporation, its by-laws and all shareholder agreements, voting trusts and
similar arrangements applicable to any of its authorized shares of capital
stock.

                                       16

<PAGE>

     "Participant" is defined in Section 10.11.
      -----------

     "PBGC" means the Pension Benefit Guaranty Corporation and any entity
      ----
succeeding to any or all of its functions under ERISA.

     "Pension Plan" means a "pension plan", as such term is defined in section
      ------------
3(2) of ERISA, which is subject to Title IV of ERISA (other than a multiemployer
plan as defined in section 4001(a)(3) of ERISA), and to which the Borrower or
any corporation, trade or business that is, along with the Borrower, a member of
a Controlled Group, may have liability, including any liability by reason of
having been a substantial employer within the meaning of section 4063 of ERISA
at any time during the preceding five years, or by reason of being deemed to be
a contributing sponsor under section 4069 of ERISA.

     "Percentage" means, relative to any Lender, the percentage set forth
      ----------
opposite its signature hereto or set forth in the Lender Assignment Agreement,
as such percentage may be adjusted from time to time pursuant to Lender
Assignment Agreement(s) executed by such Lender and its Assignee Lender(s) and
delivered pursuant to Section 10.11.
                      -------------

     "Person" means any natural person, corporation, partnership, limited
      ------
liability company, firm, association, trust, government, governmental agency or
any other entity, whether acting in an individual, fiduciary or other capacity.

     "Plan" means any Pension Plan or Welfare Plan.
      ----

     "Pledge Agreement" means the Pledge Agreement, executed and delivered by
      ----------------
the Borrower, a copy of which is attached as Exhibit D hereto, as amended,
                                             ---------
supplemented, amended and restated or otherwise modified from time to time.

     "Quarterly Payment Date" means the last day of each March, June, September
      ----------------------
and December or, if any such day is not a Business Day, the next succeeding
Business Day.

     "Release" means a "release", as such term is defined in CERCLA.
      -------

     "Required Lenders" means, at any time prior to the Effective Date, Lenders
      ----------------
having at least 66 2/3% of the Commitments and, from and after the Effective
Date, Lenders holding at least 66 2/3% of the then aggregate outstanding
principal amount of the Notes then held by the Lenders, or, if no such principal
amount is then outstanding, Lenders having at least 66 2/3% of the Commitments.

     "Required Principal Payments" means the principal amount of the scheduled
      ---------------------------
repayments set forth in Section 3.1.1 of the Credit Agreement (Five Year) for
the four consecutive Fiscal Quarters following the date on which such payments
are computed.

     "Resource Conservation and Recovery Act" means the Resource Conservation
      --------------------------------------
and Recovery Act, 42 U.S.C. Section 690, et seq., as in effect from time to
                                         ------
time.

                                       17

<PAGE>

     "Second Amendment to Modesto Mortgage" means the Second Amendment to the
      ------------------------------------
Modesto Mortgage executed and delivered by Borrower pursuant to Section 7.1.8,
                                                                -------------
in form satisfactory to the Agent, as amended, supplemented, restated, extended,
renewed, partially released or otherwise modified from time to time.

     "Security Agreement" means the Security Agreement, executed and delivered
      ------------------
by the Borrower, a copy of which is attached as Exhibit E hereto, together with
                                                ---------
the intellectual property agreements relating thereto, as amended, supplemented,
amended and restated or otherwise modified from time to time.

     "Senior Debt" means the remainder of (a) Consolidated Funded Debt minus (b)
      -----------                                                      -----
Subordinated Debt.

     "Senior Debt to EBITDA Ratio" means, at any date, the ratio of (a) Senior
      ---------------------------
Debt as of such date to (b) the sum of EBITDA for such period of four
consecutive Fiscal Quarters then most recently ended. For purposes of
calculating the Senior Debt to EBITDA Ratio as at any date, EBITDA shall be
calculated on a pro forma basis (as certified by the Borrower to the Agent)
                --- -----
assuming all acquisitions made, and all divestitures completed, during the four
consecutive Fiscal Quarters then most recently ended had been made on the first
day of such period (but without adjustment for expected cost savings or other
synergies).

     "Significant Subsidiaries" means all Subsidiaries of the Borrower other
      ------------------------
than the Insignificant Subsidiary.

     "Stated Maturity Date" means March 31, 2002 as such date may be extended
      --------------------
pursuant to Section 3.4.

     "Subordinated Debt" means unsecured Indebtedness of the Borrower for money
      -----------------
borrowed which is subordinated, upon terms satisfactory to the Agent and the
Required Lenders in their sole discretion, in right of payment to the payment in
full in cash of all Obligations.

     "Subsidiary" means, with respect to any Person, any corporation of which
      ----------
more than 50% of the 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) is at the time directly or indirectly owned by such Person, by such
Person and one or more other Subsidiaries of such Person, or by one or more
other Subsidiaries of such Person.

     "Taxes" is defined in Section 4.6.
      -----                -----------

     "type" means, relative to any Loan, the portion thereof, if any, being
      ----
maintained as a Base Rate Loan or a Eurodollar Rate Loan.

     "United States" or "U.S." means the United States of America, its fifty
      -------------      ---
States and the District of Columbia.

                                       18

<PAGE>

     "Welfare Plan" means a "welfare plan", as such term is defined in section
      ------------
3(1) of ERISA.

     SECTION 1.2  Use of Defined Terms. Unless otherwise defined or the context
                  --------------------
otherwise requires, terms for which meanings are provided in this Agreement
shall have such meanings when used in the Disclosure Schedule and in each Note,
Borrowing Request, Continuation/Conversion Notice, Loan Document, notice and
other communication delivered from time to time in connection with this
Agreement or any other Loan Document.

     SECTION 1.3  Cross-References. Unless otherwise specified, references in
                  ----------------
this Agreement and in each other Loan Document to any Article or Section are
references to such Article or Section of this Agreement or such other Loan
Document, as the case may be, and, unless otherwise specified, references in any
Article, Section or definition to any clause are references to such clause of
such Article, Section or definition.

     SECTION 1.4  Accounting and Financial Determinations. Unless otherwise
                  ---------------------------------------
specified, all accounting terms used herein or in any other Loan Document shall
be interpreted, all accounting determinations and computations hereunder or
thereunder (including under Section 7.2.4) shall be made, and all financial
                            -------------
statements required to be delivered hereunder or thereunder shall be prepared,
in accordance with those generally accepted accounting principles ("GAAP")
                                                                    ----
applied in the preparation of the financial statements referred to in Section
6.5 .

                                   ARTICLE II

                   COMMITMENTS, BORROWING PROCEDURES AND NOTES

     SECTION 2.1  Commitments. On the terms and subject to the conditions of
                  -----------
this Agreement (including Article V), each Lender severally agrees to make
                          ---------
revolving loans to the Borrower pursuant to its Commitment as follows:

     SECTION 2.1.1  Commitment of Each Lender. From time to time on any Business
                    -------------------------
Day occurring prior to the Commitment Termination Date, each Lender will make
loans (relative to such Lender, and of any type, its "Loans") to the Borrower
                                                      -----
equal to such Lender's Percentage of the aggregate amount of the Borrowing
requested by the Borrower to be made on such day. The commitment of each Lender
described in this Section 2.1.1 is herein referred to as its "Commitment". On
                  -------------                               ----------
the terms and subject to the conditions hereof, the Borrower may from time to
time borrow, prepay and reborrow Loans.

     SECTION 2.1.2  Lenders Not Permitted or Required to Make Loans. No Lender
                    -----------------------------------------------
shall be permitted or required to make any Loan if, after giving effect thereto,
the aggregate outstanding principal amount of all Loans

          (a) of all Lenders would exceed the Commitment Amount, or

          (b) of such Lender would exceed such Lender's Percentage of the
     Commitment Amount.

                                       19

<PAGE>

     SECTION 2.2  Reduction of Commitment Amount. The Borrower may, from time to
                  ------------------------------
time on any Business Day occurring after the time of the initial Borrowing
hereunder, voluntarily reduce the Commitment Amount; provided, however, that all
                                                     --------  -------
such reductions shall be irrevocable and shall require at least three Business
Days' prior notice to the Agent and be permanent, and any partial reduction of
the Commitment Amount shall be in a minimum amount of $500,000 and in an
integral multiple of $250,000.

     SECTION 2.3  Borrowing Procedure.
                  -------------------

     SECTION 2.3.1  Borrowings. By delivering a Borrowing Request to the Agent
                    ----------
on or before 9:00 a.m., Chicago time, on a Business Day subsequent to the date
of the initial Borrowing hereunder, the Borrower may from time to time
irrevocably request, on not less than three nor more than five Business Days
notice, that a Borrowing be made in a minimum amount of $500,000 and an integral
multiple of $250,000, or in the unused amount of the Commitments.

     SECTION 2.3.2  All Borrowings. On the terms and subject to the conditions
                    --------------
of this Agreement, each such Borrowing pursuant to Sections 2.3.1 and 2.3.2
                                                   --------------     -----
shall be comprised of the type of Loans specified in the Borrowing Request and
shall be made on the Business Day specified in such Borrowing Request. On or
before 10:00 a.m. (Chicago time), on such Business Day, each Lender shall
deposit with the Agent same day funds in an amount equal to such Lender's
Percentage of the requested Borrowing. Such deposit will be made to an account
which the Agent shall specify from time to time by notice to the Lenders. To the
extent funds are received from the Lenders, the Agent shall make such funds
available to the Borrower by wire transfer to the account the Borrower shall
have specified in its Borrowing Request. No Lender's obligation to make any Loan
shall be affected by any other Lender's failure to make any Loan.

     SECTION 2.4  Continuation and Conversion Elections. By delivering a
                  -------------------------------------
Continuation/Conversion Notice to the Agent on or before 9:00 a.m., Chicago
time, on a Business Day, the Borrower may from time to time irrevocably elect,
on not less than three nor more than five Business Days' notice, that all, or
any portion in an aggregate minimum amount of $500,000 and an integral multiple
of $250,000, of any Loans be, in the case of Base Rate Loans, converted into
Eurodollar Rate Loans or, in the case of Eurodollar Rate Loans, be converted
into a Base Rate Loan (in the absence of delivery of a Continuation/Conversion
Notice with respect to any Eurodollar Rate Loan at least three Business Days
before the last day of the then current Interest Period with respect thereto,
such Eurodollar Rate Loan shall, on such last day, automatically convert to a
Base Rate Loan); provided, however, that (a) each such conversion or
                 --------  -------
continuation shall be prorated among the applicable outstanding Loans of all
Lenders, and (b) no portion of the outstanding principal amount of any Loans may
be continued as, or be converted into, Eurodollar Rate Loans when any Default
has occurred and is continuing.

     SECTION 2.5  Funding. Each Lender may, if it so elects, fulfill its
                  -------
obligation to make, continue or convert Eurodollar Rate Loans hereunder by
causing one of its foreign branches or Affiliates (or an international banking
facility created by such Lender) to make or maintain such Eurodollar Rate Loan;
provided, however, that such Eurodollar Rate Loan shall nonetheless be deemed to
--------  -------
have been made and to be held by such Lender, and the obligation of the Borrower
to

                                       20

<PAGE>

repay such Eurodollar Rate Loan shall nevertheless be to such Lender for the
account of such foreign branch, Affiliate or international banking facility. In
addition, the Borrower hereby consents and agrees that, for purposes of any
determination to be made for purposes of Section 4.1, 4.2, 4.3 or 4.4, it shall
                                         -----------  ---  ---    ---
be conclusively assumed that each Lender elected to fund all Eurodollar Rate
Loans by purchasing, as the case may be, Dollar certificates of deposit in the
U.S. or Dollar deposits in its Eurodollar Office's interbank eurodollar market.

     SECTION 2.6  Notes. Each Lender's Loans under its Commitment shall be
                  -----
evidenced by a Note payable to the order of such Lender in a maximum principal
amount equal to such Lender's Percentage (as of the Effective Date) of the
Commitment Amount. The Note issued hereunder and as of the Effective Date shall
be issued in substitution and exchange for, and not in satisfaction or payment
of, the Existing Notes and the Indebtedness (together with the obligation to pay
accrued interest thereon) originally evidenced by the Existing Notes which is
now to be evidenced by the replacement Notes delivered pursuant to this
Agreement shall be (and the Borrower hereby acknowledges and agrees that such
Indebtedness is) a continuing Indebtedness, and nothing herein contained shall
be construed to deem such Existing Notes paid, or to release or terminate any
Lien or security interest given to secure such Existing Notes, which Liens and
security interests shall continue to secure such Indebtedness as evidenced by
such Notes. The Borrower hereby irrevocably authorizes each Lender to make (or
cause to be made) appropriate notations on the grid attached to such Lender's
Note (or on any continuation of such grid), which notations, if made, shall
evidence, inter alia, the date of, the outstanding principal of, and the
          ----------
interest rate and Interest Period applicable to the Loans evidenced thereby.
Such notations shall be conclusive and binding on the Borrower absent manifest
error; provided, however, that the failure of any Lender to make any such
       --------  -------
notations shall not limit or otherwise affect any Obligations of the Borrower.

                                 ARTICLE III.

                   REPAYMENTS, PREPAYMENTS, INTEREST AND FEES

     SECTION 3.1  Repayments and Prepayments. On the Stated Maturity Date, the
                  --------------------------
Borrower shall repay in full the entire unpaid principal amount of all
outstanding Loans, together with all accrued and unpaid interest thereon, all
fees in connection therewith and all other Obligations hereunder. Prior thereto,
the Borrower

          (a) may, from time to time on any Business Day, make a voluntary
     prepayment, in whole or in part, of the outstanding principal amount of any
     Loans; provided, however, that
            --------  -------

              (i)  any such prepayment shall be made pro rata among Loans of the
                                                     --- ----
          same type and, if applicable, having the same Interest Period of all
          Lenders,

              (ii) no such prepayment of any Eurodollar Rate Loan may be made
          on any day other than the last day of the Interest Period for such
          Loan,

                                       21

<PAGE>

               (iii) all such voluntary prepayments shall require at least three
          but no more than five Business Days' prior written notice to the
          Agent, and

               (iv)  all such voluntary partial prepayments shall be in an
          aggregate minimum amount of $100,000 and an integral multiple of
          $50,000 in excess thereof; and

          (b)  shall, on each date when any reduction in the Commitment Amount
     shall become effective, including pursuant to Section 2.2, make a mandatory
                                                   -----------
     prepayment of all Loans equal to the excess, if any, of the aggregate,
     outstanding principal amount of all Loans over the Commitment Amount as so
     reduced; and

          (c)  shall, immediately upon any acceleration of the Stated Maturity
     Date of any Loans pursuant to Section 8.2 or Section 8.3, repay all such
                                   -----------    -----------
     Loans so accelerated.

Each prepayment of any Loans made pursuant to this Section shall be without
premium or penalty, except as may be required by Section 4.4. No voluntary
                                                 -----------
prepayment of principal of any Loans shall cause a reduction in the Commitment
Amount.

     SECTION 3.2  Interest Provisions. Interest on the outstanding principal
                  -------------------
amount of Loans shall accrue and be payable in accordance with this Section 3.2.
                                                                    -----------

     SECTION 3.2.1  Rates. Pursuant to an appropriately delivered Borrowing
                    -----
Request or Continuation/Conversion Notice, the Borrower may elect that Loans
accrue interest at a rate per annum:

          (a)     on that portion maintained from time to time as a Base Rate
     Loan, equal to the sum of the Base Rate plus the Applicable Margin from
     time to time in effect; and

          (b)     on that portion maintained as a Eurodollar Rate Loan, during
     each Interest Period applicable thereto, equal to the sum of the Eurodollar
     Rate for such Interest Period plus the Applicable Margin.

     All Eurodollar Rate Loans shall bear interest from and including the first
day of the applicable Interest Period to (but not including) the last day of
such Interest Period at the interest rate determined as applicable to such
Eurodollar Rate Loan. All Base Rate Loans shall bear interest from and including
the date such Loans are made to (but not including) the day such Loans are
repaid or converted into Eurodollar Rate Loans.

     SECTION 3.2.2  Default Rates. So long as any Event of Default shall have
                    -------------
occurred and be continuing hereunder, interest on the unpaid principal amount of
the Loans outstanding shall be paid on demand at a rate per annum equal to the
Base Rate plus the Applicable Margin for Base Rate Loans plus 2%, and after the
date any principal amount of any Loan has become due and payable (whether on the
Stated Maturity Date, upon acceleration or otherwise), or after any other
monetary Obligation of the Borrower shall have become due and

                                       22

<PAGE>

payable, the Borrower shall pay interest (after as well as before judgment) on
demand on all of such amounts at a rate per annum equal to the Base Rate plus
the Applicable Margin for Base Rate Loans plus 2%.

     SECTION 3.2.3  Payment Dates. Interest accrued on each Loan shall be
                    -------------
payable, without duplication:

          (a)     upon payment in full thereof;

          (b)     on that portion of the Loans being paid or prepaid, on the
     date of any such payment or prepayment;

          (c)     with respect to Base Rate Loans, on each Monthly Payment Date
     occurring after the Effective Date;

          (d)     with respect to Eurodollar Rate Loans, the last day of each
     applicable Interest Period (and, if such Interest Period shall exceed three
     months, on the day three months after the commencement of such Interest
     Period);

          (e)     with respect to any Base Rate Loans converted into Eurodollar
     Rate Loans on a day when interest would not otherwise have been payable
     pursuant to clause (c), on the date of such conversion; and ----------

          (f)     on that portion of any Loans the Stated Maturity Date of which
     is accelerated pursuant to Section 8.2 or Section 8.3, immediately upon
                                -----------    -----------
     such acceleration.

Interest accrued on Loans or other monetary Obligations arising under this
Agreement or any other Loan Document after the date such amount is due and
payable (whether on the Stated Maturity Date, upon acceleration or otherwise)
shall be payable upon demand.

     SECTION 3.3  Fees. The Borrower agrees to pay the fees set forth in this
                  ----
Section 3.3. All such fees shall be non-refundable.
-----------

     SECTION 3.3.1  [Reserved].

     SECTION 3.3.2  Agent's Fee. The Borrower agrees to pay to the Agent for its
                    -----------
own account on or prior to the occurrence of the Effective Date the fees set
forth in the Agent's Fee Letter.

     SECTION 3.3.3  Non-Use Fees. The Company shall pay to the Agent for the
                    ------------
account of each Lender a non-use fee of .5% on the average daily unused portion
of such Lender's Percentage of the Commitment Amount, computed on a quarterly
basis in arrears on the last Business Day of each calendar quarter based upon
the daily utilization for that quarter as calculated by the Agent. For purposes
of calculating utilization under this subsection, the Commitment Amount shall be
deemed used to the extent of the principal amount of all Loans

                                       23

<PAGE>

then outstanding. Such non-use fee shall accrue from the Effective Date to the
Commitment Termination Date and shall be due and payable quarterly in arrears on
the last Business Day of each calendar quarter commencing June 30, 2001 through
the Commitment Termination Date, with the final payment to be made on the
Commitment Termination Date; provided that, in connection with any reduction or
                             --------
termination of the Commitments under Section 2.2, the accrued non-use fee
                                     -----------
calculated for the period ending on such date shall also be paid on the date of
such reduction or termination with (in the case of a reduction) the following
quarterly payment being calculated on the basis of the period from such
reduction date to the quarterly payment date. The non-use fees shall accrue at
all times after the above-mentioned commencement date, including at any time
during which one or more conditions in Article V are not met.
                                       ---------

     SECTION 3.4  Extension of Stated Maturity Date. Ninety days prior to the
                  ---------------------------------
Stated Maturity Date, the Borrower may, by notice to the Agent, request that all
Lenders extend for 364 additional days the Stated Maturity Date. Such extension
so requested shall become effective if (and only if) on or prior to 30 days
after such notice, each Lender shall have consented to such extension in writing
by notice to the Agent. If a Lender shall not respond to any such request, it
shall be deemed to have refused to extend.

                                   ARTICLE IV.

                  CERTAIN EURODOLLAR RATE AND OTHER PROVISIONS

     SECTION 4.1  Eurodollar Rate Lending Unlawful. If any Lender shall
                  --------------------------------
determine (which determination shall, upon notice thereof to the Borrower and
the Lenders, be conclusive and binding on the Borrower) that the introduction of
or any change in or in the interpretation of any law makes it unlawful, or any
central bank or other governmental authority asserts that it is unlawful, for
such Lender to make, continue or maintain any Loan as, or to convert any Loan
into, a Eurodollar Rate Loan of a certain type, the obligations of all Lenders
to make, continue, maintain or convert any such Loans shall, upon such
determination, forthwith be suspended until such Lender shall notify the Agent
that the circumstances causing such suspension no longer exist, and all
Eurodollar Rate Loans of such type shall automatically convert into Base Rate
Loans at the end of the then current Interest Periods with respect thereto or
sooner, if required by such law or assertion.

     SECTION 4.2  Deposits Unavailable. If the Agent shall have determined that
                  --------------------

          (a)     Dollar certificates of deposit or Dollar deposits, as the case
     may be, in the relevant amount and for the relevant Interest Period are not
     available to Bank of America in its relevant market; or

          (b)     by reason of circumstances affecting Bank of America's
     relevant market, adequate means do not exist for ascertaining the interest
     rate applicable hereunder to Eurodollar Rate Loans of such type,

                                       24

<PAGE>

then, upon notice from the Agent to the Borrower and the Lenders, the
obligations of all Lenders under Section 2.3 and Section 2.4 to make or continue
                                 -----------     -----------
any Loans as, or to convert any Loans into, Eurodollar Rate Loans of such type
shall forthwith be suspended until the Agent shall notify the Borrower and the
Lenders that the circumstances causing such suspension no longer exist.

     SECTION 4.3  Increased Costs, etc. The Borrower agrees to reimburse each
                  --------------------
Lender, upon demand, for any increase in the cost to such Lender of, or any
reduction in the amount of any sum receivable by such Lender, in respect of
making, continuing or maintaining (or of its obligation to make, continue or
maintain) any Loans as, or of converting (or of its obligation to convert) any
Loans into, Eurodollar Rate Loans (including without limitation by reason of any
increase in any reserve requirements or taxes).

     Each Lender shall promptly notify the Borrower in writing of the occurrence
of any such event, such notice to state, in reasonable detail, the reasons
therefor and the additional amount required fully to compensate such Lender for
such increased cost or reduced amount. Such additional amounts shall be payable
by the Borrower directly to such Lender within five days of its receipt of such
notice, and such notice shall, in the absence of manifest error, be conclusive
and binding on the Borrower. Such Lender will use such method of allocation as
it deems reasonable and appropriate.

     SECTION 4.4  Funding Losses. In the event any Lender shall incur any loss
                  --------------
or expense (including any loss or expense incurred by reason of the liquidation
or reemployment of deposits or other funds acquired by such Lender to make,
continue or maintain any portion of the principal amount of any Loan as, or to
convert any portion of the principal amount of any Loan into, a Eurodollar Rate
Loan) as a result of

          (a)     any conversion or repayment or prepayment of the principal
     amount of any Eurodollar Rate Loan on a date other than the scheduled last
     day of the Interest Period applicable thereto, whether pursuant to Section
     3.1 or otherwise;

          (b)     any Loans not being made as Eurodollar Rate Loans in
     accordance with the Borrower's request therefor; or

          (c)     any Loans not being continued as, or converted into,
     Eurodollar Rate Loans in accordance with the Continuation/Conversion Notice
     therefor,

then, upon the written notice of such Lender to the Borrower (with a copy to the
Agent), the Borrower shall, within five days of its receipt thereof, pay
directly to such Lender such amount as will (in the reasonable determination of
such Lender) reimburse such Lender for such loss or expense. Such written notice
(which shall include calculations in reasonable detail) shall, in the absence of
manifest error, be conclusive and binding on the Borrower.

     SECTION 4.5  Increased Capital Costs. If any change in, or the
                  -----------------------
introduction, adoption, effectiveness, interpretation, reinterpretation or
phase-in of, any law or regulation, directive, guideline, decision or request
(whether or not having the force of law) of any court, central bank,

                                       25

<PAGE>

regulator or other governmental authority affects or would affect the amount of
capital required or expected to be maintained by any Lender or any Person
controlling such Lender, and such Lender determines (in its sole and absolute
discretion) that the rate of return on its or such controlling Person's capital
as a consequence of its Commitment or the Loans made by such Lender is reduced
to a level below that which such Lender or such controlling Person could have
achieved but for the occurrence of any such circumstance, then, in any such case
upon notice from time to time by such Lender to the Borrower, the Borrower shall
immediately pay directly to such Lender additional amounts sufficient to
compensate such Lender or such controlling Person for such reduction in rate of
return. A statement of such Lender as to any such additional amount or amounts
(including calculations thereof in reasonable detail) shall, in the absence of
manifest error, be conclusive and binding on the Borrower. In determining such
amount, such Lender may use any method of averaging and attribution that it (in
its sole and absolute discretion) shall deem applicable.

     SECTION 4.6  Taxes. All payments by the Borrower of principal of, and
                  -----
interest on, the Loans and all other amounts payable hereunder shall be made
free and clear of and without deduction for any present or future income,
excise, stamp or franchise taxes and other taxes, fees, duties, withholdings or
other charges of any nature whatsoever imposed by any taxing authority, but
excluding franchise taxes and taxes imposed on or measured by any Lender's net
income or receipts (such non-excluded items being called "Taxes"). In the event
                                                          -----
that any withholding or deduction from any payment to be made by the Borrower
hereunder is required in respect of any Taxes pursuant to any applicable law,
rule or regulation, then the Borrower will

          (a)     pay directly to the relevant authority the full amount
     required to be so withheld or deducted;

          (b)     promptly forward to the Agent an official receipt or other
     documentation satisfactory to the Agent evidencing such payment to such
     authority; and

          (c)     pay to the Agent for the account of the Lenders such
     additional amount or amounts as is necessary to ensure that the net amount
     actually received by each Lender will equal the full amount such Lender
     would have received had no such withholding or deduction been required.

Moreover, if any Taxes are directly asserted against the Agent or any Lender
with respect to any payment received by the Agent or such Lender hereunder, the
Agent or such Lender may pay such Taxes and the Borrower will promptly pay such
additional amounts (including any penalties, interest or expenses) as is
necessary in order that the net amount received by such person after the payment
of such Taxes (including any Taxes on such additional amount) shall equal the
amount such person would have received had not such Taxes been asserted.

     If the Borrower fails to pay any Taxes when due to the appropriate taxing
authority or fails to remit to the Agent, for the account of the respective
Lenders, the required receipts or other required documentary evidence, the
Borrower shall indemnify the Lenders for any incremental Taxes, interest or
penalties that may become payable by any Lender as a result of

                                       26

<PAGE>

any such failure. For purposes of this Section 4.6, a distribution hereunder by
                                       -----------
the Agent or any Lender to or for the account of any Lender shall be deemed a
payment by the Borrower.

     Upon the request of the Borrower or the Agent, each Lender that is
organized under the laws of a jurisdiction other than the United States shall,
prior to the due date of any payments under the Notes, execute and deliver to
the Borrower and the Agent, on or about the first scheduled payment date in each
Fiscal Year, one or more (as the Borrower or the Agent may reasonably request)
United States Internal Revenue Service Forms W-8BEN or Forms W-8ECI or such
other forms of documents (or successor forms or documents), appropriately
completed, as may be applicable to establish the extent, if any, to which a
payment to such Lender is exempt from withholding or deduction of Taxes.

     SECTION 4.7  Payments, Computations, etc. Unless otherwise expressly
                  ---------------------------
provided, all payments by the Borrower pursuant to this Agreement, the Notes or
any other Loan Document shall be made by the Borrower to the Agent for the pro
                                                                           ---
rata account of the Lenders entitled to receive such payment. All such payments
----
required to be made to the Agent shall be made, without setoff, deduction or
counterclaim, not later than 10:00 a.m., Chicago time, on the date due, in same
day or immediately available funds, to such account as the Agent shall specify
from time to time by notice to the Borrower. Funds received after that time
shall be deemed to have been received by the Agent on the next succeeding
Business Day. The Agent shall promptly remit in same day funds to each Lender
its share, if any, of such payments received by the Agent for the account of
such Lender. The Borrower hereby authorizes the Agent to charge any account
maintained by the Borrower with the Agent or Bank of America for any amount due
and payable under this Agreement as and when so due and payable. All interest
and fees shall be computed on the basis of the actual number of days (including
the first day but excluding the last day) occurring during the period for which
such interest or fee is payable over a year comprised of 360 days. Whenever any
payment to be made shall otherwise be due on a day which is not a Business Day,
such payment shall (except as otherwise required by clause (c) of the definition
                                                    ----------
of the term "Interest Period" with respect to Eurodollar Rate Loans) be made on
             ---------------
the next succeeding Business Day and such extension of time shall be included in
computing interest and fees, if any, in connection with such payment.

     SECTION 4.8  Sharing of Payments. If any Lender shall obtain any payment or
                  -------------------
other recovery (whether voluntary, involuntary, by application of setoff or
otherwise) on account of any Loan (other than pursuant to the terms of Sections
                                                                       --------
4.3, 4.4 and 4.5) in excess of its pro rata share of payments then or therewith
---  ---     ---                   --- ----
obtained by all Lenders, such Lender shall purchase from the other Lenders such
participations in Loans made by them as shall be necessary to cause such
purchasing Lender to share the excess payment or other recovery ratably with
each of them; provided, however, that if all or any portion of the excess
              --------  -------
payment or other recovery is thereafter recovered from such purchasing Lender,
the purchase shall be rescinded and each Lender which has sold a participation
to the purchasing Lender shall repay to the purchasing Lender the purchase price
to the ratable extent of such recovery together with an amount equal to such
selling Lender's ratable share (according to the proportion of

                                       27

<PAGE>

          (a)     the amount of such selling Lender's required repayment to the
     purchasing Lender

to
--

          (b)     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 Borrower agrees that any Lender so
purchasing a participation from another Lender pursuant to this Section may, to
the fullest extent permitted by law, exercise all its rights of payment
(including pursuant to Section 4.9) with respect to such participation as fully
                       -----------
as if such Lender were the direct creditor of the Borrower in the amount of such
participation. If under any applicable bankruptcy, insolvency or other similar
law, any Lender receives a secured claim in lieu of a setoff to which this
Section applies, such Lender shall, to the extent practicable, exercise its
rights in respect of such secured claim in a manner consistent with the rights
of the Lenders entitled under this Section to share in the benefits of any
recovery on such secured claim.

     SECTION 4.9  Setoff. Each Lender shall, upon the occurrence of any Default
                  ------
described in clauses (a) through (d) of Section 8.1.9 or, with the consent of
             -----------         ---    -------------
the Required Lenders, upon the occurrence of any other Event of Default, have
the right to appropriate and apply to the payment of the Obligations owing to it
(whether or not then due), and (as security for such Obligations) the Borrower
hereby grants to each Lender a continuing security interest in, any and all
balances, credits, deposits, accounts or moneys of the Borrower then or
thereafter maintained with or otherwise held by such Lender; provided, however,
                                                             --------  -------
that any such appropriation and application shall be subject to the provisions
of Section 4.8. Each Lender agrees promptly to notify the Borrower and the Agent
   -----------
after any such setoff and application made by such Lender; provided, however,
                                                           --------  -------
that the failure to give such notice shall not affect the validity of such
setoff and application. The rights of each Lender under this Section are in
addition to other rights and remedies (including other rights of setoff under
applicable law or otherwise) which such Lender may have.

     SECTION 4.10  Use of Proceeds. The Borrower shall apply the proceeds of the
                   ---------------
Loans in accordance with the recitals; provided that, in no event shall the
                                       -------- ----
proceeds of the Loans be used by the Borrower or any of its Subsidiaries to
acquire all or any portion of the ownership or assets of any other Person or
entity except as otherwise permitted by this Agreement.

                                   ARTICLE V

                   CONDITIONS TO EFFECTIVENESS AND BORROWINGS

     SECTION 5.1  Effectiveness. This Agreement shall become effective, and all
                  -------------
loans outstanding under the Existing Credit Agreement shall be deemed to be
loans hereunder on the date (the "Effective Date") that each of the conditions
                                  --------------
precedent set forth in this Section 5.1 have been satisfied.
                            -----------

                                       28

<PAGE>

     SECTION 5.1.1 Resolutions, etc. The Agent shall have received from the
                   -----------------
Borrower a certificate, dated the date hereof, of its Secretary or Assistant
Secretary as to

          (a)  resolutions of its Board of Directors then in full force and
     effect authorizing the execution, delivery and performance of this
     Agreement, the Notes, each Collateral Document and each other Loan Document
     executed or to be executed by it; and

          (b)  the incumbency and signatures of those of its officers authorized
     to act with respect to this Agreement, the Notes, each Collateral Document
     and each other Loan Document executed or to be executed by it,

upon which certificate the Agent and each Lender may conclusively rely until the
Agent shall have received a further certificate of the Secretary of the Borrower
canceling or amending such prior certificate, which further certificate shall be
reasonably satisfactory to the Agent.

     SECTION 5.1.2 Delivery of Notes. The Agent shall have received from the
                   -----------------
Borrower, for the account of each Lender, a duly executed Note, dated as of the
date hereof.

     SECTION 5.1.3 Credit Agreements. The Agent shall have received executed
                   -----------------
counterparts of this Agreement and the Credit Agreement (Five Year) dated as of
the date hereof, duly executed by the Borrower, the Agent, and each of the
Lenders.

     SECTION 5.1.4 Confirmation. The Agent shall have received executed
                   ------------
counterparts of the Confirmation, dated as of the date hereof, duly executed by
the Borrower

     SECTION 5.1.5 Satisfaction with Tax Sharing Agreement The Agent and the
                   ---------------------------------------
Lenders shall have received true copies (as certified by an authorized officer
of the Borrower) of, and reviewed and become satisfied with the provisions of,
any tax sharing agreement to which the Borrower has become a party since March
31, 2000.

     SECTION 5.1.6 Opinions of Counsel. The Agent shall have received opinions,
                   -------------------
dated the date hereof and addressed to the Agent and each Lender, from Steven B.
Lapin, general counsel to the Borrower, substantially in the form of Exhibit F
                                                                     ---------
hereto.

     SECTION 5.1.7 Closing Fees, Expenses, etc. The Agent shall have received
                   ---------------------------
for its own account all fees, and all costs and expenses for which invoices have
been provided, due and payable pursuant to Sections 3.3 and 10.3.
                                           ------------     ----

     SECTION 5.1.8 No Materially Adverse Effect. No events have occurred which,
                   ----------------------------
as determined by the Agent, individually or in the aggregate, comprise a
Materially Adverse Effect since December 31, 2000.

     SECTION 5.1.9 Satisfactory Legal Form. All documents executed or submitted
                   -----------------------
pursuant hereto by the Borrower or on behalf of the Borrower or any of its
Subsidiaries shall be

                                       29

<PAGE>

satisfactory in form and substance to the Agent and its counsel; the Agent and
its counsel shall have received all information, approvals, opinions, documents
or instruments as the Agent or its counsel may reasonably request.

     SECTION 5.1.10 Compliance with Warranties, No Default, etc. Both before and
                    -------------------------------------------
after the Effective Date, the following statements shall be true and correct:

          (a)  the representations and warranties set forth in Article VI
                                                               ----------
     (excluding, however, those contained in Section 6.7) of this Agreement,
                                             -----------
     Article III of the Pledge Agreement, Article III of the Security Agreement,
     and Article I of the Mortgage shall be true and correct in all material
     respects with the same effect as if then made (unless stated to relate
     solely to an earlier date, in which case such representations and
     warranties shall be true and correct as of such earlier date);

          (b)  except as disclosed by the Borrower to the Agent and the Lenders
     pursuant to Section 6.7,
                 -----------

               (i)  no labor controversy, litigation, arbitration or
          governmental investigation or proceeding shall be pending or, to the
          knowledge of the Borrower, threatened against the Borrower or any of
          its Subsidiaries which might have a Materially Adverse Effect or which
          purports to affect the legality, validity or enforceability of this
          Agreement, the Notes, any Collateral Document or any other Loan
          Document, and

               (ii) no development shall have occurred in any labor controversy,
          litigation, arbitration or governmental investigation or proceeding
          disclosed pursuant to Section 6.7 which might have a Materially
                                -----------
          Adverse Effect; and

          (c)  no Default shall have then occurred and be continuing, and
     neither the Borrower nor any of its Subsidiaries shall be in violation of
     any law or governmental regulation or court order or decree, the violation
     of which could have a Materially Adverse Effect.

     SECTION 5.1.11 Consents, etc. Certified copies of all documents evidencing
                    -------------
any necessary corporate action, consents and governmental approvals (if any)
required for the execution, delivery and performance by the Borrower of each
document referred to in this Section 5.1.
                             -----------

     SECTION 5.2 All Borrowings. The obligation of each Lender to fund any Loan
                 --------------
on the occasion of any Borrowing shall be subject to the satisfaction of each of
the conditions precedent set forth in this Section 5.2.
                                           -----------

     SECTION 5.2.1 Compliance with Warranties, No Default, etc. Both before and
                   -------------------------------------------
after giving effect to any Borrowing (but, if any Default of the nature referred
to in Section 8.1.5 shall have occurred with respect to any other Indebtedness,
      -------------
without giving effect to the

                                       30

<PAGE>

application, directly or indirectly, of the proceeds thereof) the following
statements shall be true and correct

          (a) the representations and warranties set forth in Article VI
                                                              ----------
     (excluding, however, those contained in Section 6.7) of this Agreement,
                                             -----------
     Article III of the Pledge Agreement, Article III of the Security Agreement
     and Article I of the Mortgage shall be true and correct with the same
     effect as if then made (unless stated to relate solely to an earlier date,
     in which case such representations and warranties shall be true and correct
     as of such earlier date);

          (b) except as disclosed by the Borrower to the Agent and the Lenders
     pursuant to Section 6.7
                 -----------

               (i) no labor controversy, litigation, arbitration or governmental
          investigation or proceeding shall be pending or, to the knowledge of
          the Borrower, threatened against the Borrower or any of its
          Subsidiaries which might have a Materially Adverse Effect or which
          purports to affect the legality, validity or enforceability of this
          Agreement, the Notes, any Collateral Document or any other Loan
          Document; and

               (ii) no development shall have occurred in any labor controversy,
          litigation, arbitration or governmental investigation or proceeding
          disclosed pursuant to Section 6.7 which might have a Materially
                                -----------
          Adverse Effect; and

          (c) no Default shall have then occurred and be continuing, and neither
     the Borrower nor any of its Subsidiaries shall be in violation of any law
     or governmental regulation or court order or decree, the violation of which
     could have a Materially Adverse Effect.

     SECTION 5.2.2 Borrowing Request. The Agent shall have received a Borrowing
                   -----------------
Request for such Borrowing. Each of the delivery of a Borrowing Request and the
acceptance by the Borrower of the proceeds of such Borrowing shall constitute a
representation and warranty by the Borrower that on the date of such Borrowing
(both immediately before and after giving effect to such Borrowing and the
application of the proceeds thereof) the statements made in Section 5.2.1 are
                                                            -------------
true and correct.

     SECTION 5.2.3 Satisfactory Legal Form. All documents executed or submitted
                   -----------------------
pursuant hereto by the Borrower or any of its Subsidiaries shall be satisfactory
in form and substance to the Agent and its counsel; the Agent and its counsel
shall have received all information, approvals, opinions, documents or
instruments as the Agent or its counsel may reasonably request.

                                       31

<PAGE>

                                   ARTICLE VI

                         REPRESENTATIONS AND WARRANTIES

     In order to induce the Lenders and the Agent to enter into this Agreement
and to make Loans hereunder, the Borrower represents and warrants unto the Agent
and each Lender as set forth in this Article VI.
                                     ----------

     SECTION 6.1 Organization, etc. The Borrower and each of its Subsidiaries is
                 ------------------
a corporation validly organized and existing and in good standing under the laws
of the State of its incorporation, is duly qualified to do business and is in
good standing as a foreign corporation in each jurisdiction where the nature of
its business requires such qualification (except where the failure to be so
qualified would not have a Materially Adverse Effect), and has full power and
authority and holds all requisite governmental licenses, permits and other
approvals to enter into and perform its Obligations under this Agreement, the
Notes, the Fourth Amendment to Mortgage, the Second Amendment to Modesto
Mortgage, each Collateral Document and each other Loan Document and to own and
hold under lease its property and to conduct its business substantially as
currently conducted by it.

     SECTION 6.2 Due Authorization, Non-Contravention, etc. The execution,
                 ------------------------------------------
delivery and performance by the Borrower of this Agreement, the Notes, the
Fourth Amendment to Mortgage, the Second Amendment to Modesto Mortgage, each
other Collateral Document and each other Loan Document executed or to be
executed by it are within the Borrower's corporate powers, have been duly
authorized by all necessary corporate action, and do not

          (a)    contravene the Borrower's Organic Documents;

          (b)    contravene any contractual restriction, law or governmental
     regulation or court decree or order binding on or affecting the Borrower;
     or

          (c)    result in, or require the creation or imposition of, any Lien
     on any of the Borrower's properties (except pursuant to the Loan
     Documents).

     SECTION 6.3 Government Approval, Regulation, etc. No authorization or
                 -------------------------------------
approval or other action by, and no notice to or filing with, any governmental
authority or regulatory body or other Person is required for the due execution,
delivery or performance by the Borrower of this Agreement, the Notes, the Fourth
Amendment to Mortgage, the Second Amendment to Modesto Mortgage, any other
Collateral Document or any other Loan Document. The Borrower is not an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended, or a "holding company", or a "subsidiary company" of a "holding
company", or an "affiliate" of a "holding company" or of a "subsidiary company"
of a "holding company", within the meaning of the Public Utility Holding Company
Act of 1935, as amended. Neither the Borrower nor any of its Subsidiaries is in
violation of any provision of the Investment Company

                                       32

<PAGE>

Act of 1940, as amended, or the Public Utility Holding Company Act of 1935, as
amended, and, without limiting the generality of the foregoing, neither the
Borrower nor any of its Subsidiaries has performed, or has omitted to perform,
any action which, pursuant to any provision of either such Act, would result in
the Borrower being incapable of performing any of its obligations or agreements
hereunder or under the Notes, the Fourth Amendment to Mortgage, the Second
Amendment to Modesto Mortgage, any other Collateral Document or any other Loan
Document executed in connection with or pursuant hereto.

     SECTION 6.4 Validity, etc. This Agreement and each Original Collateral
                 --------------
Document constitutes, and the Notes, the Fourth Amendment to Mortgage, the
Second Amendment to Modesto Mortgage, each other Collateral Document and each
other Loan Document executed by the Borrower will, on the due execution and
delivery thereof, constitute, the legal, valid and binding obligations of the
Borrower enforceable in accordance with their respective terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency or similar
laws applying to creditors' rights generally or general equitable principles.

     SECTION 6.5 Financial Information. The consolidated and consolidating
                 ---------------------
balance sheets of the Borrower and each of its Subsidiaries as at December 31,
2000 for the Fiscal Year then ended and the related consolidated statements of
earnings and cash flow and the related consolidating statement of earnings of
the Borrower and each of its Subsidiaries, copies of which have been furnished
to the Agent and each Lender, have been prepared in accordance with GAAP
consistently applied, and present fairly the consolidated or consolidating, as
applicable, financial condition of the corporation(s) covered thereby as at the
date thereof and the results of their operations for the period then ended.
Neither the Borrower nor any of its Subsidiaries has any material liability,
contingent liability, liability for taxes, long-term leases or forward or
long-term commitments which are not reflected in the foregoing financial
statements (including the footnotes thereto).

     SECTION 6.6 No Material Adverse Change. Since the respective dates of the
                 --------------------------
financial statements described in Section 6.5, there has been no material
                                  -----------
adverse change on a consolidated basis in the financial condition, operations,
assets, business, properties or prospects of the Borrower and its Significant
Subsidiaries or in the ability of the Borrower to repay the Obligations when due
in accordance with the terms thereof.

     SECTION 6.7 Litigation, Labor Controversies, etc. There is no pending or,
                 -------------------------------------
to the knowledge of the Borrower, threatened litigation, action, proceeding, or
labor controversy affecting the Borrower or any of its Significant Subsidiaries,
or any of their respective properties, businesses, assets or revenues, which has
any reasonable likelihood of having a Materially Adverse Effect or which
purports to affect the legality, validity or enforceability of this Agreement,
the Notes, any Collateral Document or any other Loan Document.

     SECTION 6.8 Subsidiaries. The Borrower has no Subsidiaries, except those
                 ------------
Subsidiaries

                                       33

<PAGE>

          (a) which are identified in Item 6.8 ("Existing Subsidiaries") of
                                      --------
     the Disclosure Schedule and; or

          (b) which are permitted to have been acquired after the Effective
     Date, if any, in accordance with Section 7.2.5 or 7.2.9.
                                      -------------    -----

     SECTION 6.9   Ownership of Properties. The Borrower and each of its
                   -----------------------
Subsidiaries has good and marketable title to all of the properties and assets,
real and personal, tangible and intangible, of any nature whatsoever (including
patents, trademarks, trade names, service marks and copyrights) that it owns,
and a valid leasehold interest in all of such property which it leases, free and
clear of all Liens, charges or claims (including infringement claims with
respect to patents, trademarks, copyrights and the like) except as permitted
pursuant to Section 7.2.3.
            -------------

     SECTION 6.10  Taxes. Each of the Borrower and its Significant Subsidiaries
                   -----
has filed all tax returns and reports required by law to have been filed by it
and has paid all taxes and governmental charges thereby shown to be owing,
except any such taxes or charges which are being contested in good faith by
appropriate action and for which adequate reserves in accordance with GAAP shall
have been set aside on its books.

     SECTION 6.11  Pension and Welfare Plans. During the twelve-consecutive-
                   -------------------------
month period prior to the initial closing date of the Original Credit Agreement
and since such time through and including the date of the occurrence of the
Effective Date, no steps have been taken to terminate any Pension Plan, and no
contribution failure has occurred with respect to any Pension Plan sufficient to
give rise to a Lien under section 302(f) of ERISA. No condition exists or event
or transaction has occurred with respect to any Pension Plan which might result
in the incurrence by the Borrower or any member of the Controlled Group of any
material liability, fine or penalty. Except as disclosed in Item 6.11
("Post-Retirement Benefits") of the Disclosure Schedule, neither the Borrower
nor any member of the Controlled Group has any contingent liability with respect
to any post-retirement benefit under a Welfare Plan, other than liability for
continuation coverage described in Part 6 of Title I of ERISA.

     SECTION 6.12 Environmental Warranties. Except as set forth in Item 6.12
                  ------------------------                         ---------
("Environmental Matters") of the Disclosure Schedule:

          (a)  all facilities and property (including underlying groundwater)
     owned or leased or operated by the Borrower or any of its Subsidiaries have
     been, and continue to be, owned or leased by the Borrower and its
     Subsidiaries in material compliance with all Environmental Laws;

          (b)  there have been no past, and there are no pending or, to the best
     of the Borrower's knowledge, threatened

               (i) claims, complaints, notices or requests for information
          received by the Borrower or any of its Subsidiaries with respect to
          any alleged violation of any Environmental Law, or

                                       34

<PAGE>

               (ii) complaints, notices or inquiries to the Borrower or any of
          its Subsidiaries regarding potential liability under any Environmental
          Law;

          (c)  there have been no Releases of Hazardous Materials at, on or
     under any property now or previously owned or leased or operated by the
     Borrower or any of its Subsidiaries that, singly or in the aggregate, have,
     or may reasonably be expected to have, a Materially Adverse Effect;

          (d)  the Borrower and its Subsidiaries have been issued and are in
     material compliance with all permits, certificates, approvals, licenses and
     other authorizations relating to environmental matters and appropriate for
     their businesses;

          (e)  no property now or previously owned or leased by the Borrower or
     any of its Subsidiaries is listed or, to the best of the Borrower's
     knowledge, proposed for listing (with respect to owned property only) on
     the National Priorities List pursuant to CERCLA, on the CERCLIS or on any
     similar state list of sites requiring investigation or clean-up;

          (f)  there are no underground storage tanks, active or abandoned,
     including petroleum storage tanks, on or under any property now or
     previously owned or leased or operated by the Borrower or any of its
     Subsidiaries that, singly or in the aggregate, have, or may reasonably be
     expected to have, a Materially Adverse Effect;

          (g)  neither the Borrower nor any of its Subsidiaries has directly
     transported or directly arranged for the transportation of any Hazardous
     Material to any location which is listed or, to the best of the Borrower's
     knowledge, proposed for listing on the National Priorities List pursuant to
     CERCLA, on the CERCLIS or on any similar state list or which is the subject
     of federal, state or local enforcement actions or other investigations
     which may lead to claims that, singly or in the aggregate, would be
     material against the Borrower or any of its Significant Subsidiaries for
     any remedial work, damage to natural resources or personal injury,
     including claims under CERCLA;

          (h)  there are no polychlorinated biphenyls or friable asbestos
     present at any property now or previously owned or leased or operated by
     the Borrower or any of its Subsidiaries that, singly or in the aggregate,
     have, or may reasonably be expected to have, a Materially Adverse Effect;
     and

          (i)  no conditions exist at, on or under any property now or
     previously owned or leased or operated by the Borrower which, with the
     passage of time, or the giving of notice or both, would give rise to
     liability which would have, or may reasonably be expected to have, singly
     or in the aggregate, a Materially Adverse Effect under any Environmental
     Law.

     SECTION 6.13 Regulations U and X. The Borrower is not engaged in the
                  -------------------
business of extending credit for the purpose of purchasing or carrying margin
stock, and no proceeds of any

                                       35

<PAGE>

Loans will be used for a purpose which violates, or would be inconsistent with,
F.R.S. Board Regulation U or X. Less than 25% of the assets of the Borrower and
the consolidated assets of the Borrower and its Subsidiaries consist of margin
stock. Terms for which meanings are provided in F.R.S. Board Regulation U or X
or any regulations substituted therefor, as from time to time in effect, are
used in this Section with such meanings.

     SECTION 6.14 Real Property; Mortgage, etc. The Mortgaged Real Property and
                  -----------------------------
the Modesto Property constitute all of the real property in which the Borrower
has an ownership interest with a book value in excess of $50,000.

     SECTION 6.15 The Collateral Documents. The provisions of the Collateral
                  ------------------------
Documents executed by the Borrower or any of its Subsidiaries in favor of Bank
of America, as agent for the benefit of the Lenders, are effective to create, in
favor of the Lenders, securing the Notes and all other Obligations from time to
time outstanding, a legal, valid and enforceable security interest in all right,
title and interest of the Borrower and such Subsidiaries in any and all of the
collateral described therein, and all appropriate filings and recordings having
been made or appropriately provided for, each of such Collateral Documents
constitutes a fully perfected security interest in all right, title and interest
of the Borrower and such Subsidiaries in such collateral superior in right to
any liens, existing or future, which the Borrower or any such Subsidiary or any
creditors of or purchasers from, or any other Person, may have against such
collateral or interests therein, except to the extent, if any, otherwise
provided therein.

     SECTION 6.16 Accuracy of Information. All factual information heretofore or
                  -----------------------
contemporaneously furnished by or on behalf of the Borrower in writing to the
Agent or any Lender for purposes of or in connection with this Agreement or any
transaction contemplated hereby (including the Business Plan, true and complete
copies of which were furnished to the Agent and each Lender in connection with
its execution and delivery hereof) is, and all other such factual information
hereafter furnished by or on behalf of the Borrower to the Agent or any Lender
will be, true and accurate in every material respect on the date as of which
such information is dated or certified and, as to information (other than
financial statements but, subject to the proviso below; including the Business
Plan) provided prior to the Effective Date, as of the Effective Date, and such
information is not, or shall not be, as the case may be, incomplete by omitting
to state any material fact necessary to make such information not misleading;
provided that projections contained in the Business Plan or other materials
--------
furnished by the Borrower to the Agent or the Lenders were prepared in good
faith by the Borrower in a manner consistent with GAAP (as applied in the
financial statements referred to in Section 6.5) and represent the Borrower's
                                    -----------
reasonable estimates, as of the respective dates thereof, of the Borrower's
reasonably expected future performance. The Borrower has furnished the Lenders a
true and complete copy of each tax sharing agreement to which it has become a
party since March 31, 2000.

     SECTION 6.17 Subordinated Debt. Notwithstanding any bankruptcy, insolvency,
                  -----------------
reorganization, moratorium or similar proceeding in respect of the Borrower, at
all times, (a) the subordination provisions of any Subordinated Debt will be
enforceable by the Lender with

                                       36

<PAGE>

respect to the Obligations, (b) all Obligations, including the Obligations to
pay principal of and interest on the Loans and fees in connection therewith,
constitute "Senior Indebtedness" under any Subordinated Debt, and all such
Obligations will be entitled to the benefits of subordination created by any
Subordinated Debt, and (c) all payments of principal of or interest on any
Subordinated Debt made by the Borrower or from the liquidation of its property
will be subject to such subordination provisions. The Borrower acknowledges that
the Lenders are entering into this Agreement, and making the Loans, in reliance
upon the subordination provisions contained in all Subordinated Debt. The
Borrower shall have furnished to the Lenders a true and complete copy of the
proposed documents for any proposed Subordinated Debt at least ten Business Days
prior to the issuance thereof.

     SECTION 6.18 Intellectual Property. The Borrower has no patents, trademarks
                  ---------------------
or copyrights except those listed on the Annexes to the Security Agreement.

                                  ARTICLE VII

                                    COVENANTS

     SECTION 7.1  Affirmative Covenants. The Borrower agrees with the Agent and
                  ---------------------
each Lender that, so long as the Commitments are outstanding and, thereafter,
until all Obligations have been paid and performed in full, the Borrower will
perform the obligations set forth in this Section 7.1.
                                          -----------

     SECTION 7.1.1 Financial Information, Reports, Notices, etc. The Borrower
                   ---------------------------------------------
will furnish, or will cause to be furnished, to each Lender and the Agent copies
of the following financial statements, reports, notices and information:

          (a) as soon as available and in any event within 60 days after the end
     of each of the first three Fiscal Quarters of each Fiscal Year of the
     Borrower, consolidated and consolidating balance sheets of the Borrower and
     its Subsidiaries as of the end of such Fiscal Quarter, consolidated
     statements of earnings and cash flow of the Borrower and its Subsidiaries
     for such Fiscal Quarter and for the period commencing at the end of the
     previous Fiscal Year and ending with the end of such Fiscal Quarter and a
     consolidating statement of earnings of the Borrower and its Subsidiaries
     for such Fiscal Quarter and for the period commencing at the end of the
     previous Fiscal Year and ending with the end of such Fiscal Quarter,
     certified by the chief financial Authorized Officer of the Borrower;

          (b) as soon as available and in any event within 120 days after the
     end of each Fiscal Year of the Borrower, an appropriately updated business
     plan substantially in the form of, and containing the same scope of
     information as, the Business Plan and a copy of the annual audit report for
     such Fiscal Year for the Borrower and its Subsidiaries including therein
     consolidated and consolidating balance sheets of the Borrower and its
     Subsidiaries as of the end of such Fiscal Year, consolidated statements of
     earnings and cash flow of the Borrower and its Subsidiaries for such Fiscal
     Year and consolidating statements of earnings of the Borrower and its
     Subsidiaries for such Fiscal Year, in each

                                       37

<PAGE>

     case certified (without any Impermissible Qualification) in a manner
     acceptable to the Agent and the Required Lenders by KPMG LLP or other
     independent public accountants of recognized standing acceptable to the
     Agent and the Required Lenders, together with (i) a certificate from such
     accountants containing a computation of, and showing compliance with, each
     of the financial ratios and restrictions contained in Section 7.2.4 and to
                                                           -------------
     the effect that, in making the examination necessary for the signing of
     such annual report by such accountants, they have not become aware of any
     Default that has occurred and is continuing, or, if they have become aware
     of such Default, describing such Default and the steps, if any, being taken
     to cure it, and (ii) unaudited consolidated and consolidating financial
     statements for the Borrower and its Subsidiaries prepared on the basis of,
     and with figures used in the preparation of, such audited financial
     statements and comprised of balance sheets and statements of earnings and
     cash flow;

          (c) as soon as available and in any event within 60 days after the end
     of each Fiscal Quarter, a certificate, executed by the chief financial
     Authorized Officer of the Borrower, showing (in reasonable detail and with
     appropriate calculations and computations in all respects satisfactory to
     the Agent) compliance with the financial covenants set forth in Section
                                                                     -------
     7.2.4 and with the provisions of Sections 7.2.6, 7.2.7 and 7.2.10 and also
     -----                            --------------  -----     ------
     showing the amount of any inter-company advances by the Borrower to any of
     its Subsidiaries (broken out by Subsidiary);

          (d) as soon as possible and in any event within three Business Days
     after the occurrence of each Default, a statement of the chief financial
     Authorized Officer of the Borrower setting forth details of such Default
     and within four Business Days thereafter, the action which the Borrower has
     taken and proposes to take with respect thereto;

          (e) as soon as possible and in any event within five Business Days
     after (x) the occurrence of any adverse development with respect to any
     litigation, action, proceeding or labor controversy described in Section
                                                                      -------
     6.7, or (y) the commencement of any labor controversy, litigation, action,
     ---
     proceeding of the type described in Section 6.7, notice thereof and copies
                                         -----------
     of all documentation relating thereto;

          (f) promptly after the sending or filing thereof, copies of any
     reports and registration statements which the Borrower or any of its
     Subsidiaries may file with the Securities and Exchange Commission or any
     national securities exchange or pursuant to the Investment Company Act of
     1940, as amended, or the Public Utility Holding Company Act of 1935, as
     amended, and promptly after the receipt of any communication from any
     governmental authority or agency administering either of such Acts, copies
     thereof, as well as copies of any reports the Borrower furnishes to its
     securityholders which the Borrower reasonably determines to be material to
     the Lender or the Obligations;

          (g) immediately upon and in any event within five Business Days of
     becoming aware of the institution of any steps by the Borrower or any other
     Person to terminate any Pension Plan, or the failure to make a required
     contribution to any Pension

                                       38

<PAGE>

     Plan if such failure is sufficient to give rise to a Lien under section
     302(f) of ERISA, or the taking of any action with respect to a Pension Plan
     which could result in the requirement that the Borrower furnish a bond or
     other security to the PBGC or such Pension Plan, or the occurrence of any
     event with respect to any Pension Plan which could result in the incurrence
     by the Borrower of any material liability, fine or penalty, or any material
     increase in the contingent liability of the Borrower with respect to any
     post-retirement Welfare Plan benefit, notice thereof and copies of all
     documentation relating thereto; and

          (h) such other information respecting the condition or operations,
     financial or otherwise, of the Borrower or any of its Subsidiaries as any
     Lender through the Agent may from time to time reasonably request.

     SECTION 7.1.2 Compliance with Laws, etc. Other than with respect to the
                   --------------------------
Mortgaged Real Property (as to which the provisions of the Mortgage shall govern
and control), the Borrower will, and will 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):

          (a) the maintenance and preservation of its corporate existence and
     qualification as a foreign corporation (except where the failure to be so
     qualified would not have a material adverse effect on the consolidated
     financial condition, operations, assets, business, properties or prospects
     of the Borrower and its Significant Subsidiaries); and

          (b) the payment, before the same become delinquent, of all taxes,
     assessments and governmental charges imposed upon it or upon its property
     except to the extent being contested in good faith by appropriate action
     and for which adequate reserves in accordance with GAAP shall have been set
     aside on its books.

     SECTION 7.1.3 Maintenance of Properties. Other than with respect to the
                   -------------------------
Mortgaged Real Property (as to which the provisions of the Mortgage shall govern
and control), the Borrower will, and will cause each of its Significant
Subsidiaries to, maintain, preserve, protect and keep its properties in good
repair, working order and condition, and make necessary and proper repairs,
renewals and replacements so that its business carried on in connection
therewith may be properly conducted in all material respects at all times unless
the Borrower determines in good faith that the continued maintenance of any of
its properties is no longer economically desirable.

     SECTION 7.1.4 Insurance. Other than with respect to the Mortgaged Real
                   ---------
Property (as to which the provisions of the Mortgage shall govern and control),
the Borrower will, and will cause each of its Significant Subsidiaries to,
maintain or cause to be maintained with responsible insurance companies
insurance with respect to its properties and business (including business
interruption insurance) against such casualties and contingencies and of such
types and in such amounts as is customary in the case of similar businesses and
will, upon request of the

                                       39

<PAGE>

Agent, furnish to each Lender at reasonable intervals a certificate of an
Authorized Officer of the Borrower setting forth the nature and extent of all
insurance maintained by the Borrower and its Subsidiaries in accordance with
this Section.

     SECTION 7.1.5 Books and Records. The Borrower will, and will cause each of
                   -----------------
its Significant Subsidiaries to, keep books and records which accurately reflect
all of its material business affairs and transactions and permit the Agent and
each Lender or any of their respective representatives, at reasonable times and
intervals, to visit all of its offices, to discuss its financial matters with
its officers and independent public accountant (and the Borrower hereby
authorizes such independent public accountant to discuss the Borrower's
financial matters with each Lender or its representatives whether or not any
representative of the Borrower is present) and to examine (and, at the expense
of the Borrower, photocopy extracts from) any of its books or other corporate
records. The Borrower shall pay any fees of such independent public accountant
incurred in connection with the Agent's or any Lender's exercise of its rights
pursuant to this Section.

     SECTION 7.1.6 Environmental Covenant. The Borrower will, and will cause
                   ----------------------
each of its Subsidiaries to,

          (a) use and operate all of its facilities and properties in material
     compliance with all Environmental Laws, keep all necessary permits,
     approvals, certificates, licenses and other authorizations relating to
     environmental matters in effect and remain in material compliance
     therewith, and handle all Hazardous Materials in material compliance with
     all applicable Environmental Laws;

          (b) immediately and in any event within five Business Days notify the
     Agent and provide copies upon receipt of all written claims, complaints,
     notices or inquiries relating to the condition of its facilities and
     properties or compliance with Environmental Laws, and shall promptly take
     all action to seek to cure and have dismissed with prejudice to the
     satisfaction of the relevant governmental authorities and agencies any
     actions and proceedings relating to compliance with Environmental Laws; and

          (c) provide such information and certifications which the Agent may
     reasonably request from time to time to evidence compliance with this
     Section 7.1.6.
     -------------

     SECTION 7.1.7 Fourth Amendment to Mortgage. No later than 90 days after the
                   ----------------------------
date hereof, the Borrower shall deliver to the Agent executed counterparts of
the Fourth Amendment to Mortgage, duly executed by the Borrower, together with

          (a) evidence of the completion (or satisfactory arrangements for the
     completion) of all recordings and filings (including fixture filings) of
     the Fourth Amendment to Mortgage as may be necessary or desirable, in the
     reasonable opinion of the Agent and its counsel, to create (and continue) a
     valid, perfected first priority mortgage or deed of trust Lien, of record,
     against the properties purported to be covered thereby;

                                       40

<PAGE>

          (b) a mortgagee's title insurance policy endorsement in favor of the
     Agent and the Lenders in amounts and in form and substance and issued by
     issuers, in each case reasonably satisfactory to the Agent, with respect to
     the Mortgaged Real Property, insuring that title to such Mortgaged Real
     Property is marketable and that the interest created by the Mortgage
     constitutes a valid, perfected first mortgage Lien, of record, on the title
     to such property free and clear of all defects and encumbrances other than
     as approved by the Agent, and such policy shall also include such
     endorsements as the Agent shall request and shall be accompanied by
     evidence of the payment in full of all premiums thereon;

          (c) an opinion of Wisconsin counsel, dated a date satisfactory to the
     Agent, addressed to the Agent and each Lender, in form of satisfactory to
     the Agent and each Lender and

          (d) evidence reasonably satisfactory to the Agent that the Borrower
     has in effect the insurance with respect to the Mortgaged Real Property
     required to be carried by the Borrower pursuant to the terms of the
     Mortgage, such evidence to include, without limitation (i) a loss payable
     endorsement, in form satisfactory to the Agent, naming the Agent, as agent
     for the Lenders, as a loss payee with respect to all casualty insurance
     policies and (ii) an endorsement naming the Agent, as agent for the
     Lenders, as an additional insured with respect to all liability insurance
     policies.

     SECTION 7.1.8 Modesto Property. No later than 90 days after the date
                   ----------------
hereof, the Borrower shall deliver to the Agent executed counterparts of an
Second Amendment to Modesto Mortgage, duly executed by the Borrower, together
with

          (a) evidence of the completion (or satisfactory arrangements for the
     completion) of all recordings and filings (including fixture filings) of
     the Second Amendment to Modesto Mortgage as may be necessary or desirable,
     in the reasonable opinion of the Agent and its counsel, to create (and
     continue) a valid, perfected first priority mortgage or deed of trust Lien,
     of record, against the properties purported to be covered thereby;

          (b) a mortgagee's title insurance policy endorsement in favor of the
     Agent and the Lenders in amounts and in form and substance and issued by
     issuers, in each case reasonably satisfactory to the Agent, with respect to
     the Modesto Property, insuring that title to such Modesto Property is
     marketable and that the interest created by the Modesto Mortgage
     constitutes a valid, perfected first mortgage Lien, of record, on the title
     to such property free and clear of all defects and encumbrances other than
     as approved by the Agent, and such policy shall also include such
     endorsements as the Agent shall request and shall be accompanied by
     evidence of the payment in full of all premiums thereon;

          (c) an opinion of California counsel, dated a date satisfactory to the
     Agent, addressed to the Agent and each Lender, in form of satisfactory to
     the Agent and each Lender and

                                       41

<PAGE>

          (d) evidence reasonably satisfactory to the Agent that the Borrower
     has in effect the insurance with respect to the Modesto Property required
     to be carried by the Borrower pursuant to the terms of the Modesto
     Mortgage, such evidence to include, without limitation (i) a loss payable
     endorsement, in form satisfactory to the Agent, naming the Agent, as agent
     for the Lenders, as a loss payee with respect to all casualty insurance
     policies and (ii) an endorsement naming the Agent, as agent for the
     Lenders, as an additional insured with respect to all liability insurance
     policies.

     SECTION 7.1.9 Further Assurances. Promptly upon the written request of the
                   ------------------
Agent, or the Required Lenders, the Borrower shall, and shall cause each
Subsidiary to, execute, acknowledge, deliver, record, re-record, file, re-file,
register and re-register, any and all such further acts, deeds, conveyances,
security agreements, mortgages, assignments, estoppel certificates, financing
statements and continuations thereof, termination statements, notices of
assignment, transfers, certificates, assurances and other instruments the Agent
or the Required Lenders as the case may be, may reasonably request from time to
time in order (a) to ensure that (i) the Obligations are secured by
substantially all assets of the Borrower and (ii) the Obligations are secured by
substantially all of the assets of each Subsidiary (including, promptly upon the
acquisition or creation thereof, any Subsidiary created or acquired after the
date hereof), (b) to perfect and maintain the validity, effectiveness and
priority of any of the Loan Documents and the Liens intended to be created
thereby, and (c) to better assure, convey, grant, assign, transfer, preserve,
protect and confirm to the Agent and the Lenders the rights granted or now or
hereafter intended to be granted to the Agent and the Lenders under any Loan
Documents or under any other document executed in connection therewith.
Contemporaneously with the execution and delivery of any document referred to
above, the Borrower shall, and shall cause each Subsidiary to, deliver all
resolutions, opinions and corporate documents as the Agent or the Required
Lenders may reasonably request to confirm the enforceability of such document
and the perfection of the security interest created thereby, if applicable.

     SECTION 7.2 Negative Covenants. The Borrower agrees with the Agent and each
                 ------------------
Lender that, so long as the Commitments shall be outstanding and, thereafter,
until all Obligations have been paid and performed in full, the Borrower will
perform the obligations set forth in this Section 7.2.
                                          -----------

     SECTION 7.2.1 Business Activities. The Borrower will not, and will not
                   -------------------
permit any of its Subsidiaries to, engage in any business activity, other than
the business of selling, primarily through mail order and electronic means,
teaching aids and equipment to educators and specialized equipment and supplies
to farmers, ranchers, laboratories, hospitals and emergency services, and in the
financial services business and such activities as may be incidental or directly
related thereto.

     SECTION 7.2.2 Indebtedness. The Borrower will not, and will not permit any
                   ------------
of its Subsidiaries to, create, incur, assume or suffer to exist or otherwise
become or be liable in respect of any Indebtedness, other than, without
duplication, the following:

          (a) Indebtedness in respect of the Loans and other Obligations;

                                       42

<PAGE>

          (b) unsecured Indebtedness incurred in the ordinary course of business
     (including open accounts extended by suppliers on normal trade terms in
     connection with purchases of goods and services, but excluding Indebtedness
     incurred through the borrowing of money and Contingent Liabilities);

          (c) Indebtedness of the Borrower and its Subsidiaries in respect of
     Capitalized Lease Liabilities to the extent permitted in Section 7.2.7;
                                                              -------------

          (d) Indebtedness under the Credit Agreement (Five Year);

          (e) Indebtedness of the Borrower comprising reimbursement obligations
     in respect of letters of credit issued to support imported merchandise
     purchased from time to time by the Borrower, provided that the aggregate
                                                  --------
     amount of all such letters of credit and, in turn, of all such
     reimbursement obligations, shall not exceed $500,000; and

          (f) Indebtedness of the Borrower incurred in connection with the
     Guaranty, dated as of April 16, 2001 in favor of J-Star Industries, Inc.
     pursuant to which the Borrower has guaranteed the obligations of NHI, LLC
     under the Environmental Remediation and Indemnification Agreement, dated as
     of April 16, 2001, by and between NHI, LLC and J-Star Industries, Inc. and
     the Environmental Escrow Agreement, dated as of April 16, 2001, by and
     between NHI, LLC and J-Star Industries, Inc.

     SECTION 7.2.3 Liens. The Borrower will not, and will not permit any of its
                   -----
Subsidiaries to, create, incur, assume or suffer to exist any Lien upon any of
its property, revenues or assets, whether now owned or hereafter acquired,
except:

          (a) Liens securing payment of the Obligations and the "Obligations"
     under the Credit Agreement (Five Year), granted pursuant to any Loan
     Document;

          (b) Other than with respect to the Mortgaged Real Property and the
     Modesto Property (as to which the provisions of the Mortgage and the
     Modesto Mortgage shall govern and control), liens for taxes, assessments or
     other governmental charges or levies not at the time delinquent or
     thereafter payable without penalty or being contested in good faith by
     appropriate action and for which adequate reserves in accordance with GAAP
     shall have been set aside on its books;

          (c) Liens of carriers, warehousemen, mechanics, materialmen and
     landlords incurred in the ordinary course of business for sums not overdue
     or being contested in good faith by appropriate action and for which
     adequate reserves in accordance with GAAP shall have been set aside on its
     books;

          (d) Liens incurred in the ordinary course of business in connection
     with worker's compensation, unemployment insurance or other forms of
     governmental insurance or benefits, or to secure performance of tenders,
     statutory obligations, leases

                                       43

<PAGE>

     and contracts (other than for borrowed money) entered into in the ordinary
     course of business or to secure obligations on surety or appeal bonds;

          (e) judgment Liens in existence less than 15 days after the entry
     thereof or with respect to which execution has been stayed or the payment
     of which is covered in full (subject to a customary deductible) by
     insurance maintained with responsible insurance companies;

          (f) Liens to secure the reimbursement obligations permitted under
     Section 7.2.2(e) on the merchandise financed with the letters of credit
     ----------------
     described therein; and

          (g) Permitted Encumbrances (as defined in the Mortgage) with respect
     to the Mortgaged Real Property and the Modesto Property.

     SECTION 7.2.4 Financial Condition. The Borrower hereby covenants and agrees
                   -------------------
as set forth below:

          (a) Current Ratio. The Borrower will not permit its Consolidated
              -------------
     Current Ratio, as of the end of any month during any Fiscal Year, to be
     less than 2.0 to 1.

          (b) Consolidated Net Worth. The Borrower will not permit its
              ----------------------
     Consolidated Net Worth, at any time during any Fiscal Year, to be less than
     an amount equal to the sum of (i) $8,000,000 plus (ii) an amount equal to
                                                  ----
     50% of Consolidated Net Income for the period from the date hereof to the
     date of determination thereof (if positive).

          (c) Consolidated Current Assets Levels. The Borrower will not permit
              ----------------------------------
     its Consolidated Current Assets Level, as of the last day of any Fiscal
     Quarter, to be less than the amounts set forth below:

           Fiscal Quarter                    Amount
           --------------                    ------
           March 31                          $27,000,000
           June 30                           $31,000,000
           September 30                      $34,000,000
           December 31                       $25,000,000

          (d) Consolidated Debt Service Coverage Ratio. The Borrower will not
              ----------------------------------------
     permit its Consolidated Debt Service Coverage Ratio to be less than (x)
     1.25 to 1 from the Effective Date through September 29, 2001, (y) 1.50 to 1
     from September 30, 2001 through December 30, 2001 and (2) 1.75 to 1
     thereafter.

     SECTION 7.2.5 Investments. The Borrower will not, and will not permit any
                   -----------
of its Subsidiaries to, make, incur, assume or suffer to exist any Investment in
any other Person, except:

          (a) Cash Equivalent Investments;

                                       44

<PAGE>

          (b) without duplication, Investments permitted as Indebtedness
     pursuant to Section 7.2.2;
                 -------------

          (c) without duplication, Investments permitted as Capital Expenditures
     pursuant to Section 7.2.7; and
                 -------------

          (d) (i) Investments made prior to the Effective Date in its
     Subsidiaries, (ii) from and after the Effective Date and in the ordinary
     course of business, Investments by the Borrower in its Subsidiaries in an
     aggregate amount not to exceed $3,000,000 at any one time outstanding, or
     by any such Subsidiary in any of its Subsidiaries, by way of contributions
     to capital or loans or advances and (iii) from and after the Effective
     Date, Investments by the Borrower in Geneve in an aggregate amount not to
     exceed $3,000,000 at any one time outstanding (provided, that all such
                                                    --------
     Investments shall be by way of loans to Geneve made by the Borrower and
     evidenced by one or more promissory notes (each such promissory note to be
     in form and substance reasonably satisfactory to the Agent) duly executed
     and delivered in pledge to the Agent;

provided, however, that
--------  -------

          (e) any Investment which when made complies with the requirements of
     the definition of the term "Cash Equivalent Investment" may continue to be
                                 --------------------------
     held notwithstanding that such Investment if made thereafter would not
     comply with such requirements; and

          (f) no Investment otherwise permitted by clause (b), (c) or (d) shall
                                                   ----------  ---    ---
     be permitted to be made if, immediately before or after giving effect
     thereto, any Default shall have occurred and be continuing.

     SECTION 7.2.6 Restricted Payments, etc. On and at all times after the
                   -------------------------
Effective Date:

          (a) the Borrower will not declare, pay or make any dividend or
     distribution (in cash, property or obligations) on any shares of any class
     of capital stock (now or hereafter outstanding) of the Borrower or on any
     warrants, options or other rights with respect to any shares of any class
     of capital stock (now or hereafter outstanding) of the Borrower (other than
     dividends or distributions payable in its common stock or warrants to
     purchase its common stock or splitups or reclassifications of its stock
     into additional or other shares of its common stock), or apply, or permit
     any of its Subsidiaries to apply, any of its funds, property or assets to
     the purchase, redemption, sinking fund or other retirement of, or agree or
     permit any of its Subsidiaries to purchase or redeem, any shares of any
     class of capital stock (now or hereafter outstanding) of, the Borrower, or
     warrants, options or other rights with respect to any shares of any class
     of capital stock (now or hereafter outstanding) of the Borrower;

                                       45

<PAGE>

          (b) the Borrower will not prepay any other Indebtedness or prepay or
     repay any Subordinated Debt, except as expressly permitted under clause (d)
                                                                      ----------
     of Section 7.2.2; and
        -------------

          (c) the Borrower will not, and will not permit any Subsidiary to, make
     any deposit for any of the foregoing purposes;

provided, however, that,(i) the Borrower may pay a dividend of up to $1,800,000
--------  -------
to Holdings from the date hereof to December 31, 2001 and (ii) each year
thereafter the Borrower may pay a dividend up to an amount equal to 50% of the
Excess Cash Flow for the preceding Fiscal Year (so long as the Borrower has
first made the mandatory prepayment of the loans under the Credit Agreement
(Five Year) pursuant to Section 3.1.2(d) therein).

     SECTION 7.2.7 Capital Expenditures, etc. The Borrower will not, and will
                   --------------------------
not permit any of its Subsidiaries to, make or commit to make Capital
Expenditures in any Fiscal Year in excess of $2,700,000 in the aggregate.

     SECTION 7.2.8 Take or Pay Contracts. The Borrower will not, and will not
                   ---------------------
permit any of its Subsidiaries to, enter into or be a party to any arrangement
for the purchase of materials, supplies, other property or services if such
arrangement by its express terms requires that payment be made by the Borrower
or such Subsidiary regardless of whether such materials, supplies, other
property or services are delivered or furnished to it, unless the aggregate
amount payable under all such arrangements shall not exceed $100,000 in any
calendar year.

     SECTION 7.2.9 Consolidation, Merger, etc. The Borrower will not, and will
                   ---------------------------
not permit any of its Subsidiaries to, liquidate or dissolve, consolidate with,
or merge into or with, any other corporation, or purchase or otherwise acquire
all or substantially all of the assets of any Person (or of any division
thereof) except

          (a) any such Subsidiary may liquidate or dissolve voluntarily into,
     and may merge with and into, the Borrower or any wholly-owned Subsidiary,
     and the assets or stock of any Subsidiary may be purchased or otherwise
     acquired by the Borrower or any wholly-owned Subsidiary; and

          (b) so long as no Default has occurred and is continuing or would
     occur after giving effect thereto, the Borrower or any of its Subsidiaries
     may purchase all or substantially all of the assets of any Person, or
     acquire such Person by merger, if permitted (without duplication) by
     Section 7.2.7 to be made as a Capital Expenditure (provided that any
     -------------                                      --------
     amounts so expended shall count as Capital Expenditures for purposes of
     Section 7.2.7).
     -------------

     SECTION 7.2.10 Asset Dispositions, etc. The Borrower will not, and will not
                    ------------------------
permit any of its Subsidiaries to, sell, transfer, lease, contribute or
otherwise convey, or grant options, warrants or other rights with respect to,
all or any part of its assets (including accounts receivable and capital stock
of Subsidiaries) to any Person, other than the sale of inventory in the ordinary

                                       46

<PAGE>

course of business, unless (a) permitted by Section 7.2.6 or 7.2.9 or (b) in
                                            -------------    -----
addition to the exceptions provided in the foregoing clause (a), the net book
                                                     ----------
value of such assets, together with the net book value of all other assets sold,
transferred, leased, contributed or conveyed by the Borrower or any of its
Subsidiaries pursuant to this clause (b) since the Effective Date, does not
                              ----------
exceed $250,000.

     SECTION 7.2.11 Modification of Tax Sharing Agreement and Subordinated Debt.
                    -----------------------------------------------------------
The Borrower will not consent to any amendment, supplement or other modification
of any of the terms or provisions contained in, or applicable to, the tax
sharing agreement delivered to the Lenders pursuant to this Agreement or, after
the issuance thereof, the terms or provisions of any Subordinated Debt.

     SECTION 7.2.12 Transactions with Affiliates. The Borrower will not, and
                    ----------------------------
will not permit any Significant Subsidiary to, enter into, or cause, suffer or
permit to exist:

          (a) any arrangement or contract with any of its other Affiliates of a
     nature customarily entered into by Persons which are Affiliates of each
     other for tax or financial reporting purposes (including, without
     limitation, management or similar contracts or arrangements relating to the
     allocation of revenues, taxes and expenses or otherwise) unless such
     arrangement or contract is fair and equitable to the Borrower or such
     Significant Subsidiary; or

          (b) any other transaction, arrangement or contract with any of its
     other Affiliates which would not be entered into by a prudent Person in the
     position of the Borrower or such Significant Subsidiary with, or which is
     on terms which are less favorable than are obtainable from, any Person
     which is not one of its Affiliates.

     SECTION 7.2.13 Inconsistent Agreements. The Borrower will not enter into
                    -----------------------
any agreement containing any provision which would be violated or breached by
any borrowing by the Borrower made hereunder or by the performance by the
Borrower of its obligations hereunder or under any instrument executed pursuant
hereto.

     SECTION 7.2.14 Negative Pledges, Restrictive Agreements, etc. The Borrower
                    ----------------------------------------------
will not, and will not permit any of its Subsidiaries to, enter into any
agreement (excluding this Agreement and any other Loan Document) prohibiting

          (a) the creation or assumption of any Lien upon its properties,
     revenues or assets, whether now owned or hereafter acquired, or the ability
     of the Borrower to amend or otherwise modify this Agreement or any other
     Loan Document; or

          (b) the ability of any Subsidiary to make any payments, directly or
     indirectly, to the Borrower by way of dividends, advances, repayments of
     loans or advances, reimbursements of management and other intercompany
     charges, expenses and accruals or other returns on investments, or any
     other agreement or arrangement which restricts

                                       47

<PAGE>

     the ability of any such Subsidiary to make any payment, directly or
     indirectly, to the Borrower.

     SECTION 7.2.15 Management Fees. The Borrower will not, and will not permit
                    ---------------
any of its Subsidiaries to, pay management or similar fees to any Affiliate
(other than payments by any of the Borrower's Subsidiaries to the Borrower)
without the written approval of the Required Lenders which, when aggregated with
all other management fees paid by the Borrower and its Subsidiaries in any
Fiscal Year, would exceed the amounts set forth below opposite such Fiscal Year:

               Fiscal Year              Amount
               -----------              ------

                   2001               $1,611,624

                   2002               $1,708,321

                   2003               $1,810,821

                   2004               $1,919,470

                   2005               $2,034,638

                   2006               $2,156,716

provided that, in any event and at all times, no management fees may be paid
--------
when any Default has occurred and is continuing or would occur after giving
effect thereto.

     SECTION 7.2.16 Tax Sharing Payments. The Borrower will not, and will not
                    --------------------
permit any of its Subsidiaries to, make any tax sharing payments to Holdings
which, when aggregated with all other tax sharing payments made by the Borrower
and its Subsidiaries in any Fiscal Quarter, would exceed the estimated quarterly
tax sharing payments required to be made pursuant to the tax sharing agreement
heretofore delivered to the Lenders pursuant to this Agreement; provided that,
                                                                --------
in any event and at all times, no tax sharing payment may be paid when any
Default has occurred and is continuing or would occur after giving effect
thereto.

     SECTION 7.2.17 Use of Proceeds. The Borrower will not use the proceeds of
                    ---------------
the Loans for any purpose other than to meet working capital needs.

                                  ARTICLE VIII

                                EVENTS OF DEFAULT

     SECTION 8.1 Listing of Events of Default. Each of the following events or
                 ----------------------------
occurrences described in this Section 8.1 shall constitute an "Event of
                              -----------                      --------
Default".
-------

     SECTION 8.1.1 Non-Payment of Obligations. The Borrower shall default in the
                   --------------------------
payment or prepayment when due of any principal of any Loan, or the Borrower
shall default

                                       48

<PAGE>

(and such default shall continue unremedied for a period of five days) in the
payment when due of any interest on any Loan or any other Obligation.

     SECTION 8.1.2 Breach of Warranty. Any representation or warranty of the
                   ------------------
Borrower or any of its other Affiliates made or deemed to be made hereunder or
in any other Loan Document or in any other writing or certificate furnished by
or on behalf of the Borrower or any of its Affiliates to the Agent or any Lender
for the purposes of or in connection with this Agreement or any such other Loan
Document (including any certificates delivered pursuant to Article V) is or
                                                           ---------
shall be incorrect when made in any material respect.

     SECTION 8.1.3 Non-Performance of Certain Covenants and Obligations. The
                   ----------------------------------------------------
Borrower shall default in the due performance and observance of any of its
obligations under Section 7.2.1 through 7.2.16.
                  -------------         ------

     SECTION 8.1.4 Non-Performance of Other Covenants and Obligations. The
                   --------------------------------------------------
Borrower shall default in the due performance and observance of any other
agreement contained herein or in any other Loan Document (other than the
Mortgage), and such default shall continue unremedied for a period of 30 days
after notice thereof shall have been given to the Borrower by the Agent or an
Event of Default shall occur under (and as defined in) the Mortgage.

     SECTION 8.1.5 Default on Other Indebtedness. A default shall occur in the
                   -----------------------------
payment when due (subject to any applicable grace period), whether by
acceleration or otherwise, of any Indebtedness (other than the Loans) equal to
or in excess of $1,000,000 of the Borrower or any of the Borrower's Significant
Subsidiaries, or a default shall occur in the performance or observance of any
obligation or condition with respect to such Indebtedness if the effect of such
default is to accelerate the maturity of any such Indebtedness or such default
shall continue unremedied for any applicable period of time sufficient to permit
the holder or holders of such Indebtedness, or any trustee or agent for such
holders, to cause such Indebtedness to become due and payable prior to its
expressed maturity.

     SECTION 8.1.6 Judgments. Any judgment or order for the payment of money in
                   ---------
excess of $250,000 shall be rendered against the Borrower or any of its
Significant Subsidiaries and there shall be any period of 30 consecutive days
during which a stay of enforcement of such judgment or order, by reason of a
pending appeal or otherwise, shall not be in effect or, during such 30 day
period, enforcement proceedings shall have been commenced by any creditor and
not stayed or withdrawn.

     SECTION 8.1.7 Pension Plans. Any of the following events shall occur with
                   -------------
respect to any Pension Plan

          (a) the institution of any steps by the Borrower, any member of its
     Controlled Group or any other Person to terminate a Pension Plan if, as a
     result of such termination, the Borrower or any such member could be
     required to make a contribution to such Pension Plan, or could reasonably
     expect to incur a liability or obligation to such Pension Plan, in excess
     of $250,000; or

                                       49

<PAGE>

          (b)  a contribution failure occurs with respect to any Pension Plan
     sufficient to give rise to a Lien under section 302(f) of ERISA.

     SECTION 8.1.8   Control of the Borrower.  Any Change in Control shall
                     -----------------------
occur.

     SECTION 8.1.9   Bankruptcy, Insolvency, etc.  The Borrower or any of its
                     ---------------------------
Significant Subsidiaries shall

          (a)  become insolvent or generally fail to pay, or admit in writing
     its inability or unwillingness to pay, debts as they become due;

          (b)  apply for, consent to, or acquiesce in, the appointment of a
     trustee, receiver, sequestrator or other custodian for the Borrower or any
     of its Significant Subsidiaries or any property of any thereof, or make a
     general assignment for the benefit of creditors;

          (c)  in the absence of such application, consent or acquiescence,
     permit or suffer to exist the appointment of a trustee, receiver,
     sequestrator or other custodian for the Borrower or any of its Significant
     Subsidiaries or for a substantial part of the property of any thereof, and
     such trustee, receiver, sequestrator or other custodian shall not be
     discharged within 60 days, provided that the Borrower and each Significant
     Subsidiary hereby expressly authorizes the Agent and each Lender to appear
     in any court conducting any relevant proceeding during such 60-day period
     to preserve, protect and defend their rights under the Loan Documents;

          (d)  permit or suffer to exist the commencement of any bankruptcy,
     reorganization, debt arrangement or other case or proceeding under any
     bankruptcy or insolvency law, or any dissolution, winding up or liquidation
     proceeding, in respect of the Borrower or any of its Significant
     Subsidiaries, and, if any such case or proceeding is not commenced by the
     Borrower or such Significant Subsidiary, such case or proceeding shall be
     consented to or acquiesced in by the Borrower or such Significant
     Subsidiary or shall result in the entry of an order for relief or shall
     remain for 60 days undismissed, provided that the Borrower and each
     Significant Subsidiary hereby expressly authorizes the Agent and each
     Lender to appear in any court conducting any such case or proceeding during
     such 60-day period to preserve, protect and defend their rights under the
     Loan Documents; or

          (e)  take any action authorizing, or in furtherance of, any of the
     foregoing.

     SECTION 8.1.10  Impairment of Security, etc. Any Collateral Document or any
                     ---------------------------
other Loan Document, or any Lien granted thereunder, shall (except in accordance
with its terms), in whole or in part, terminate, cease to be effective or cease
to be the legally valid, binding and enforceable obligation of any Obligor party
thereto; the Borrower, any other Obligor or any other party shall, directly or
indirectly, contest in any manner such effectiveness, validity,

                                       50

<PAGE>

binding nature or enforceability; or any Lien securing any Obligation shall, in
whole or in part, cease to be a perfected first priority Lien.

     SECTION 8.2     Action if Bankruptcy. If any Event of Default described in
                     --------------------
clauses (a) through (d) of Section 8.1.9 shall occur, the outstanding principal
-----------         ---    -------------
amount of all outstanding Loans and all other Obligations shall automatically be
and become immediately due and payable, and the Commitments shall automatically
be terminated, without notice or demand.

     SECTION 8.3     Action if Other Event of Default. If any Event of Default
                     --------------------------------
(other than any Event of Default described in clauses (a) through (d) of Section
                                              -----------         ---    -------
8.1.9) shall occur for any reason, whether voluntary or involuntary, and be
-----
continuing, the Agent, upon the direction of the Required Lenders, shall by
notice to the Borrower declare the Commitments to be terminated and all or any
portion of the outstanding principal amount of the Loans and other Obligations
to be due and payable, whereupon the full unpaid amount of such Loans and other
Obligations which shall be so declared due and payable shall be and become
immediately due and payable, without further notice, demand or presentment.

     SECTION 8.4     Cumulative Remedies. The remedies provided herein are
                     -------------------
cumulative and not exclusive of any remedies provided by law.

                                   ARTICLE IX
                                    THE AGENT

     SECTION 9.1     Actions. Each Lender hereby appoints Bank of America as its
                     -------
Agent under and for purposes of this Agreement, the Notes, each Collateral
Document and each other Loan Document. Each Lender authorizes the Agent to act
on behalf of such Lender under this Agreement, the Notes, each Collateral
Document and each other Loan Document and, in the absence of other written
instructions from the Required Lenders received from time to time by the Agent
(with respect to which the Agent agrees that it will comply, except as otherwise
provided in this Section or as otherwise advised by counsel), to exercise such
powers hereunder and thereunder as are specifically delegated to or required of
the Agent by the terms hereof and thereof, together with such powers as may be
reasonably incidental thereto. Each Lender hereby indemnifies (which indemnity
shall survive any termination of this Agreement) the Agent, pro rata according
                                                            --- ----
to such Lender's Percentage, from and against any and all liabilities,
obligations, losses, damages, claims, costs or expenses of any kind or nature
whatsoever which may at any time be imposed on, incurred by, or asserted
against, the Agent in any way relating to or arising out of this Agreement, the
Notes, any Collateral Document and any other Loan Document, including reasonable
attorneys' fees, and as to which the Agent is not reimbursed by the Borrower;
provided, however, that no Lender shall be liable for the payment of any portion
--------  -------
of such liabilities, obligations, losses, damages, claims, costs or expenses
which are determined by a court of competent jurisdiction in a final proceeding
to have resulted solely from the Agent' s gross negligence or wilful misconduct.
The Agent shall not be required to take any action hereunder, under the Notes,
under any Collateral Document or under any other Loan Document, or to prosecute
or defend any suit in respect of this Agreement, the Notes, any Collateral
Document or any other Loan Document, unless it is indemnified hereunder to its
satisfaction. If

                                       51

<PAGE>

any indemnity in favor of the Agent shall be or become, in the Agent's
determination, inadequate, the Agent may call for additional indemnification
from the Lenders and cease to do the acts indemnified against hereunder until
such additional indemnity is given.

     SECTION 9.2     Funding Reliance, etc. Unless the Agent shall have been
                     ---------------------
notified by telephone, confirmed in writing, by any Lender by 4:00 p.m., Chicago
time, on the day prior to the date of any proposed Borrowing that such Lender
will not make available the amount which would constitute its Percentage of the
Loans of such proposed Borrowing, the Agent may assume that such Lender has made
such amount available to the Agent and, in reliance upon such assumption, make
available to the Borrower a corresponding amount. If and to the extent that such
Lender shall not have made such amount available to the Agent, such Lender and
the Borrower severally agree to repay the Agent forthwith on demand such
corresponding amount together with interest thereon, for each day from the date
the Agent made such amount available to the Borrower to the date such amount is
repaid to the Agent, at the interest rate applicable at the time to Loans.

     SECTION 9.3     Exculpation. Neither the Agent nor any of its directors,
                     -----------
officers, employees or agents shall be liable to any Lender for any action taken
or omitted to be taken by it under this Agreement, the Notes, any Collateral
Document or any other Loan Document, or in connection herewith or therewith,
except for its own wilful misconduct or gross negligence, nor responsible for
any recitals or warranties herein or therein, nor for the effectiveness,
enforceability, validity or due execution of this Agreement, the Notes, any
Collateral Document or any other Loan Document, nor for the creation, perfection
or priority of any Liens purported to be created by any of the Loan Documents,
or the validity, genuineness, enforceability, existence, value or sufficiency of
any collateral security, nor to make any inquiry respecting the performance by
the Borrower of its obligations hereunder or under the Notes, any Collateral
Document or any other Loan Document. Any such inquiry which may be made by the
Agent shall not obligate it to make any further inquiry or to take any action.
The Agent shall be entitled to rely upon advice of counsel concerning legal
matters and upon any notice, consent, certificate, statement or writing which
the Agent believes to be genuine and to have been presented by a proper Person.

     SECTION 9.4     Successor. The Agent may resign as such at any time upon at
                     ---------
least 30 days' prior notice to the Borrower and all Lenders. If the Agent at any
time shall resign, the Required Lenders may appoint another Lender as a
successor Agent which shall thereupon become the Agent hereunder. 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
notice of resignation, then the retiring Agent may, on behalf of the Lenders,
appoint a successor Agent, which shall be one of the Lenders or a commercial
banking institution organized under the laws of the U.S. (or any State thereof)
or a U.S. branch or agency of a commercial banking institution, 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 be entitled to receive from the retiring Agent such documents of transfer
and assignment as such successor Agent may reasonably request, and shall
thereupon

                                       52

<PAGE>

succeed to and become vested with all rights, powers, 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 the Agent, the provisions of

          (a)  this Article IX shall inure to its benefit as to any actions
                    ----------
     taken or omitted to be taken by it while it was the Agent under this
     Agreement; and

          (b)  Section 10.3 and Section 10.4 shall continue to inure to its
               ------------     ------------
     benefit.

     SECTION 9.5     Loans by Bank of America. Bank of America shall have the
                     ------------------------
same rights and powers with respect to (x) the Loans made by it or any of its
Affiliates, and (y) the Notes held by it or any of its Affiliates as any other
Lender and may exercise the same as if it were not the Agent. Bank of America
and its Affiliates may accept deposits from, lend money to, and generally engage
in any kind of business with the Borrower or any Subsidiary or Affiliate of the
Borrower as if Bank of America were not the Agent hereunder.

     SECTION 9.6     Credit Decisions. Each Lender acknowledges that it has,
                     ----------------
independently of the Agent and each other Lender, and based on such Lender's
review of the financial information of the Borrower, this Agreement, the other
Loan Documents (the terms and provisions of which being satisfactory to such
Lender) and such other documents, information and investigations as such Lender
has deemed appropriate, made its own credit decision to extend its Commitment.
Each Lender also acknowledges that it will, independently of the Agent and each
other Lender, and based on such other documents, information and investigations
as it shall deem appropriate at any time, continue to make its own credit
decisions as to exercising or not exercising from time to time any rights and
privileges available to it under this Agreement or any other Loan Document.

     SECTION 9.7     Copies, etc. The Agent shall give prompt notice to each
                     -----------
Lender of each notice or request required to be given by the Agent to the
Lenders pursuant to the terms of this Agreement (unless concurrently delivered
to the Lenders by the Borrower). The Agent will distribute to each Lender each
document or instrument received for the account of the Lenders and copies of all
other communications received by the Agent from the Borrower for distribution to
the Lenders by the Agent in accordance with the terms of this Agreement.

     SECTION 9.8     Action Through Agent. All actions taken with respect to any
                     --------------------
collateral security or guaranties provided under the Loan Documents shall be
taken solely by the Agent, and no Lender shall have any right to take any
actions individually with respect thereto.

     SECTION 9.9     Documentation Agents. None of the Lenders identified on the
                     --------------------
facing page or signature pages of this Agreement as a "documentation agent"
shall have any right, power, obligation, liability, responsibility or duty under
this Agreement other than those applicable to all Lenders as such. Each Lender
acknowledges that it has not relied, and will not rely, on any of the Lenders so
identified in deciding to enter into this Agreement or in taking or not taking
action hereunder.

                                       53

<PAGE>

     SECTION 9.10    Collateral Matters. (a) The Agent is authorized on behalf
                     ------------------
of all the Lenders, without the necessity of any notice to or further consent
from the Lenders, from time to time to take any action with respect to any
Collateral or the Collateral Documents which may be necessary to perfect and
maintain perfected the security interest in and Liens upon the Collateral
granted pursuant to the Collateral Documents.

     (b)  The Lenders irrevocably authorize the Agent, at its option and in its
discretion, to release any Lien granted to or held by the Agent upon any
Collateral (i) upon termination of the Commitments and payment in full of all
Loans and all other Obligations known to the Agent and payable under this
Agreement or any other Loan Document; (ii) constituting property sold or to be
sold or disposed of as part of or in connection with any disposition permitted
hereunder; (iii) constituting property in which the Borrower or any Subsidiary
owned no interest at the time the Lien was granted or any time thereafter; (iv)
constituting property leased to the Borrower or any Subsidiary under a lease
which has expired or been terminated in a transaction permitted under this
Agreement or is about to expire and which has not been, and is not intended by
the Borrower or such Subsidiary to be, renewed or extended;(v) consisting of an
instrument evidencing Indebtedness or other debt instrument, if the indebtedness
evidenced thereby has been paid in full; or (vi) if approved, authorized or
ratified in writing by the Required Lenders or all of the Lenders, as the case
may be, as provided in subsection 10.1(d). Upon request by the Agent at any
                       ------------------
time, the Lenders will confirm in writing the Agent's authority to release
particular types or items of Collateral pursuant to this subsection 9.10(a),
                                                         ------------------
provided that the absence of any such confirmation for whatever reason shall not
--------
affect the Agent's rights under this Section 9.11.
                                     ------------

     (c)  Each Lender agrees with and in favor of each other (which agreement
shall not be for the benefit of the Borrower or any Subsidiary) that the
Borrower's obligation to such Lender under this Agreement and the other Loan
Documents is not and shall not be secured by any real property collateral now or
hereafter acquired by such Lender other than the Mortgaged Real Property and the
Modesto Property.

                                   ARTICLE X

                            MISCELLANEOUS PROVISIONS

     SECTION 10.1    Waivers, Amendments, etc. The provisions of this Agreement
                     ------------------------
and of each other Loan Document may from time to time be amended, modified or
waived, if such amendment, modification or waiver is in writing and consented to
by the Borrower and the Required Lenders; provided, however, that no such
                                          --------  -------
amendment, modification or waiver which would:

          (a)  modify any requirement hereunder that any particular action be
     taken by all the Lenders or by the Required Lenders shall be effective
     unless consented to by each Lender;

          (b)  modify this Section 10.1, change the definition of "Required
                           ------------                            --------
     Lenders", increase the Commitment Amount or the Percentage of any Lender,
     -------
     reduce any fees

                                       54

<PAGE>

     described in Article III, release any collateral security, except as
                  -----------
     otherwise specifically provided or contemplated in this Agreement or in any
     Loan Document, or extend the Commitment Termination Date shall be made
     without the consent of each Lender and each holder of a Note;

          (c)  extend the due date for, or reduce the amount of, any scheduled
     repayment or prepayment of principal of or interest on any Loan (or reduce
     the principal amount of or rate of interest on any Loan) shall be made
     without the consent of the holder of that Note evidencing such Loan; or

          (d)  affect adversely the interests, rights or obligations of the
     Agent in its capacity as the Agent shall be made without consent of the
     Agent.

No failure or delay on the part of the Agent, any Lender or the holder of any
Note in exercising any power or right under this Agreement or any other Loan
Document shall operate as a waiver thereof, nor shall any single or partial
exercise of any such power or right preclude any other or further exercise
thereof or the exercise of any other power or right. No notice to or demand on
the Borrower in any case shall entitle it to any notice or demand in similar or
other circumstances. No waiver or approval by the Agent, any Lender or the
holder of any Note under this Agreement or any other Loan Document shall, except
as may be otherwise stated in such waiver or approval, be applicable to
subsequent transactions. No waiver or approval hereunder shall require any
similar or dissimilar waiver or approval thereafter to be granted hereunder.

     SECTION 10.2    Notices. All notices and other communications provided to
                     -------
any party hereto under this Agreement or any other Loan Document shall be in
writing or by facsimile and addressed, delivered or transmitted to such party at
its address or facsimile number set forth below its signature hereto or set
forth in the Lender Assignment Agreement or at such other address or facsimile
number as may be designated by such party in a notice to the other parties. Any
notice, if mailed and properly addressed with postage prepaid or if properly
addressed and sent by pre-paid courier service, shall be deemed given when
received; any notice, if transmitted by facsimile, shall be deemed given when
transmitted (upon receipt of electronic confirmation of transmission).

     SECTION 10.3    Payment of Costs and Expenses. The Borrower agrees to pay
                     -----------------------------
on demand all expenses of the Agent and the Lead Arranger (including the fees
and out-of-pocket expenses of counsel to the Agent and the Lead Arranger
(including the reasonable allocated cost of internal legal services and all
disbursements of internal counsel) and of local counsel, if any, who may be
retained by counsel to the Agent and the Lead Arranger) in connection with

          (a)  the negotiation, preparation, execution and delivery of this
     Agreement, the Notes, each Collateral Document and of each other Loan
     Document, including schedules and exhibits, and any amendments, waivers,
     consents, supplements or other modifications to this Agreement, the Notes,
     any Collateral Document or any other Loan Document as may from time to time
     hereafter be required or requested, whether or not the transactions
     contemplated hereby or thereby are consummated;

                                       55

<PAGE>

          (b)  the filing, recording, refiling or rerecording of the Fourth
     Amendment to Mortgage, the Second Amendment to Modesto Mortgage, the Pledge
     Agreement and the Security Agreement and/or any Uniform Commercial Code
     financing statements relating thereto and all amendments, supplements and
     modifications to any thereof and any and all other documents or instruments
     of further assurance required to be filed or recorded or refiled or
     rerecorded by the terms hereof or of the Mortgage, the Pledge Agreement or
     the Security Agreement;

          (c)  the preparation and review of the form of any document or
     instrument relevant to this Agreement, the Notes, any Collateral Document
     or any other Loan Document; and

          (d)  the administration of this Agreement, the Notes, the Collateral
     Documents and the other Loan Documents and the consideration of legal
     questions relevant hereto and thereto.

The Borrower further agrees to pay, and to hold the Agent and the Lenders
harmless from all liability for, any stamp or other taxes which may be payable
in connection with the execution or delivery of this Agreement, the borrowings
hereunder, or the issuance of the Notes or any other Loan Documents. The
Borrower also agrees to reimburse the Agent, the Lead Arranger and each Lender
upon demand for all reasonable out-of-pocket expenses (including reasonable
attorneys' fees and legal expenses) incurred by the Agent or the Lead Arranger
or such Lender in connection with (x) the negotiation of any restructuring or
"work-out", whether or not consummated, of any Obligations, and (y) the
enforcement of any Obligations.

     SECTION 10.4   Indemnification. In consideration of the execution and
                    ---------------
delivery of this Agreement by each Lender and the extension of the Commitments,
the Borrower hereby indemnifies, exonerates and holds the Agent and each Lender
and each of their respective officers, directors, employees and agents
(collectively, the "Indemnified Parties") free and harmless from and against any
                    -------------------
and all actions, causes of action, suits, losses, costs, liabilities and
damages, and expenses incurred in connection therewith (irrespective of whether
any such Indemnified Party is a party to the action for which indemnification
hereunder is sought), including reasonable attorneys' fees and disbursements
(collectively, the "Indemnified Liabilities"), incurred by the Indemnified
                    -----------------------
Parties or any of them as a result of, or arising out of, or relating to

          (a)  any transaction financed or to be financed in whole or in part,
     directly or indirectly, with the proceeds of any Loan;

          (b)  the entering into and performance of this Agreement and any other
     Loan Document by any of the Indemnified Parties (including any action
     brought by or on behalf of the Borrower as the result of any determination
     by the Required Lenders pursuant to Article V not to fund any Loans);
                                         ---------

                                       56

<PAGE>

          (c)  any investigation, litigation or proceeding related to any
     acquisition or proposed acquisition by the Borrower or any of its
     Subsidiaries of all or any portion of the stock or assets of any Person,
     whether or not the Agent or such Lender is party thereto;

          (d)  any investigation, litigation or proceeding related to any
     Aenvironmental cleanup, audit, compliance or other matter relating to the
     protection of the environment or the Release by the Borrower or any of its
     Subsidiaries of any Hazardous Material; and

          (e)  the presence on or under, or the escape, seepage, leakage,
     spillage, discharge, emission, discharging or releases from, any real
     property owned or operated by the Borrower or any Subsidiary thereof of any
     Hazardous Material (including any losses, liabilities, damages, injuries,
     costs, expenses or claims asserted or arising under any Environmental Law),
     regardless of whether caused by, or within the control of, the Borrower or
     such Subsidiary,

except for any such Indemnified Liabilities arising for the account of a
particular Indemnified Party by reason of the relevant Indemnified Party's gross
negligence or wilful misconduct. If and to the extent that the foregoing
undertaking may be unenforceable for any reason, the Borrower hereby agrees to
make the maximum contribution to the payment and satisfaction of each of the
Indemnified Liabilities which is permissible under applicable law.

     SECTION 10.5   Survival. The obligations of the Borrower under Sections
                    --------                                        --------
4.3, 4.4, 4.5, 4.6, 10.3 and 10.4, and the obligations of the Lenders under
---  ---  ---  ---  ----     ----
Section 9.1, shall in each case survive any termination of this Agreement, the
-----------
payment in full of all Obligations and the termination of all Commitments. The
representations and warranties made by the Borrower in this Agreement and in
each other Loan Document shall survive the execution and delivery of this
Agreement and each such other Loan Document.

     SECTION 10.6   Severability. Any provision of this Agreement, the Notes,
                    ------------
any Collateral Document or any other Loan Document which is prohibited or
unenforceable in any jurisdiction shall, as to such provision and such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions of this
Agreement, the Notes, any Collateral Document or such Loan Document or affecting
the validity or enforceability of such provision in any other jurisdiction.

     SECTION 10.7   Headings. The various headings of this Agreement and of each
                    --------
other Loan Document are inserted for convenience only and shall not affect the
meaning or interpretation of this Agreement or such other Loan Document or any
provisions hereof or thereof.

     SECTION 10.8   Execution in Counterparts. This Agreement may be executed by
                    -------------------------
the parties hereto in several counterparts, each of which shall be executed by
the Borrower and the Agent and be deemed to be an original and all of which
shall constitute together but one and the same agreement.

                                       57

<PAGE>

     SECTION 10.9   Governing Law; Entire Agreement. THIS AGREEMENT, THE NOTES,
                    -------------------------------
EACH COLLATERAL DOCUMENT AND EACH OTHER LOAN DOCUMENT SHALL EACH BE DEEMED TO BE
A CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF
ILLINOIS, EXCEPT AS TO ANY COLLATERAL DOCUMENT WHICH EXPRESSLY SPECIFIES THAT
THE LAWS OF ANOTHER STATE SHALL GOVERN SUCH DOCUMENT. This Agreement, the Notes,
the Collateral Documents and the other Loan Documents constitute the entire
understanding among the parties hereto with respect to the subject matter hereof
and supersede any prior agreements, written or oral, with respect thereto.

     SECTION 10.10  Successors and Assigns. This Agreement shall be binding upon
                    ----------------------
and shall inure to the benefit of the parties hereto and their respective
successors and assigns; provided, however, that:
                        --------  -------

          (a)  the Borrower may not assign or transfer its rights or obligations
     hereunder without the prior written consent of the Agent and all Lenders;
     and

          (b)  the rights of sale, assignment and transfer of the Lenders are
     subject to Section 10.11.
                -------------

     SECTION 10.11  Sale and Transfer of Loans and Notes; Participations in
                    -------------------------------------------------------
Loans and Notes. Each Lender may assign, or sell participations in, its Loans
---------------
and Commitment to one or more other Persons in accordance with this Section
                                                                    -------
10.11.
-----

     SECTION 10.11.1  Assignments. Any Lender, with notice to the Borrower and
                      -----------
the Agent, but without the consent of the Borrower or the Agent, may assign and
delegate to any of its Affiliates or any other Lender, or with the consent of
the Borrower and the Agent one or more commercial banks or other financial
institutions or funds (each such Affiliate, Lender, commercial bank, financial
institution or fund described as being the Person to whom such assignment and
delegation is to be made, being hereinafter referred to as an "Assignee
                                                               --------
Lender"), all or any fraction of such Lender's total Loans (which assignment and
------
delegation shall be of a constant, and not a varying, percentage of all the
assigning Lender's Loans) in a minimum aggregate amount of $2,500,000; provided,
                                                                       --------
however, that any such Assignee Lender will comply, if applicable, with the
-------
provisions contained in the last sentence of Section 4.6 and further, provided,
                                             -----------     -------  --------
however, that the Borrower and the Agent shall be entitled to continue to deal
-------
solely and directly with such Lender in connection with the interests so
assigned and delegated to an Assignee Lender until

          (a)  written notice of such assignment and delegation, together with
     payment instructions, addresses and related information with respect to
     such Assignee Lender, shall have been given to the Borrower and the Agent
     by such Lender and such Assignee Lender;

          (b)  such Assignee Lender shall have executed and delivered to the
     Borrower and the Agent a Lender Assignment Agreement, accepted by the
     Agent; and

                                       58

<PAGE>

          (c)  the processing fees described below shall have been paid.

From and after the date that the Agent accepts such Lender Assignment Agreement,
(x) the Assignee Lender thereunder shall be deemed automatically to have become
a party hereto and to the extent that rights and obligations hereunder have been
assigned and delegated to such Assignee Lender in connection with such Lender
Assignment Agreement, shall have the rights and obligations of a Lender
hereunder and under the other Loan Documents, (y) the assignor Lender, to the
extent that rights and obligations hereunder have been assigned and delegated by
it in connection with such Lender Assignment Agreement, shall be released from
its obligations hereunder and under the other Loan Documents and (z) the
assignor Lender and the Assignee Lender shall have the respective Percentages
set forth in the Lender Assignment Agreement. Within five Business Days after
its receipt of notice that the Agent has received an executed Lender Assignment
Agreement, the Borrower shall execute and deliver to the Agent (for delivery to
the relevant Assignee Lender) a new Note evidencing such Assignee Lender's
assigned Loans and, if the assignor Lender has retained Loans hereunder, a
replacement Note in the principal amount of the Loans retained by the assignor
Lender hereunder (such Note to be in exchange for, but not in payment of, that
Note then held by such assignor Lender). Each such Note shall be dated the date
of the predecessor Note. The assignor Lender shall mark the predecessor Note
"exchanged" and deliver it to the Borrower. Accrued interest on that part of the
predecessor Note evidenced by the new Note, and accrued fees, shall be paid as
provided in the Lender Assignment Agreement. Accrued interest on that part of
the predecessor Note evidenced by the replacement Note shall be paid to the
assignor Lender. Accrued interest and accrued fees shall be paid at the same
time or times provided in the predecessor Note and in this Agreement. Unless
otherwise agreed to by the Agent, such assignor Lender or such Assignee Lender
must also pay a processing fee to the Agent upon delivery of any Lender
Assignment Agreement in the amount of $5,000. Any attempted assignment and
delegation not made in accordance with this Section 10.11.1 shall be null and
                                            ---------------
void.

     SECTION 10.11.2 Participations. Any Lender may at any time sell to one or
                     --------------
more commercial banks or other Persons (each of such commercial banks and other
Persons being herein called a "Participant") participating interests in any of
                               -----------
the Loans or other interests of such Lender hereunder; provided, however, that
                                                       --------  ------

          (a)  no participation contemplated in this Section 10.11 shall relieve
                                                     -------------
     such Lender from its other obligations hereunder or under any other Loan
     Document;

          (b)  such Lender shall remain solely responsible for the performance
     of such other obligations;

          (c)  the Borrower and the Agent shall continue to deal solely and
     directly with such Lender in connection with such Lender's rights and
     obligations under this Agreement and each of the other Loan Documents;

          (d)  no Participant, unless such Participant is an Affiliate of such
     Lender, or is itself a Lender, shall be entitled to require such Lender to
     take or refrain from taking any

                                       59

<PAGE>

     action hereunder or under any other Loan Document, except that such Lender
     may agree with any Participant that such Lender will not, without such
     Participant's consent, take any actions of the type described in clause (b)
                                                                      ----------
     or (c) of Section 10.1; and
        ---    ------------

          (e)  the Borrower shall not be required to pay any amount under
     Section 4.6 that is greater than the amount which it would have been
     -----------
     required to pay had no participating interest been sold.

The Borrower acknowledges and agrees that each Participant, for purposes of
Sections 4.3, 4.4, 4.5, 4.6, 4.8, 4.9, 10.3 and 10.4, shall be considered a
------------  ---  ---  ---  ---  ---  ----     ----
Lender.

     SECTION 10.11.3  Information and Assistance. The Borrower hereby agrees to
                      --------------------------
provide prompt and reasonable assistance with respect to any contemplated or
proposed assignments or participations, and hereby further agrees that any
information supplied to a Lender pursuant hereto may be supplied by such Lender
to any bona fide potential assignee or participant.

     SECTION 10.12  Other Transactions. Nothing contained herein shall preclude
                    ------------------
the Agent or any other Lender from engaging in any transaction, in addition to
those contemplated by this Agreement or any other Loan Document, with the
Borrower or any of its Affiliates in which the Borrower or such Affiliate is not
restricted hereby from engaging with any other Person.

     SECTION 10.13  Maximum Interest. (a) It is the intention of the parties
                    ----------------
hereto that each Lender shall conform strictly to usury laws applicable to it.
Accordingly, the parties hereto stipulate and agree that none of the terms and
provisions contained in the Notes, this Agreement, any Collateral Document or
any other Loan Document shall ever be construed to create a contract to pay to
any Lender for the use, forbearance, or retention of money at a rate in excess
of the Highest Lawful Rate applicable to such Lender, and that for purposes
hereof, "interest" shall include the aggregate of all charges or other
consideration which constitute interest under applicable law and are contracted
for, taken, reserved, charged, or received under any of this Agreement, the
Notes, the Collateral Documents or the other Loan Documents or otherwise in
connection with the transactions contemplated by this Agreement. Further, if the
transactions contemplated hereby would be usurious as to any Lender under laws
applicable to it, then, in that event, notwithstanding anything to the contrary
in the Notes, this Agreement, any Collateral Document or in any other Loan
Document or agreement entered into in connection with or as security for the
Notes, it is agreed as follows: the aggregate of all consideration which
constitutes interest under law applicable to each such Lender that is contracted
for, taken, reserved, charged, or received by such Lender under the Notes, this
Agreement, or under any of the other aforesaid Loan Documents or agreements or
otherwise in connection with the Notes shall under no circumstances exceed the
maximum amount allowed by the law applicable to such Lender, and any excess
shall be credited by such Lender on the principal amount of the Indebtedness of
the Borrower owed to such Lender (or, if the principal amount of such
Indebtedness shall have been paid in full, to the extent such interest has been
received by a Lender it shall be refunded by such Lender to the Borrower). The
provisions of this Section 10.13(a) shall control over all other provisions of
                   ----------------
this Agreement, the Notes, the Collateral

                                       60

<PAGE>

Documents and the other Loan Documents which may be in apparent conflict
herewith. The parties further stipulate and agree that, without limitation on
the foregoing, all calculations of the rate or amount of interest contracted
for, taken, reserved, charged or received under any of this Agreement, the
Notes, the Collateral Documents and the other Loan Documents which are made for
the purpose of determining whether such rate or amount exceed the Highest Lawful
Rate shall be made, to the extent permitted by applicable law, by amortizing,
prorating, allocating, and spreading during the period of the full stated term
of the Indebtedness, and if longer and if permitted by applicable law, until
payment in full, all interest at any time so contracted for, taken, reserved,
charged, or received.

     (b)  If at any time the effective rate of interest which would otherwise
apply to any Indebtedness hereunder or evidenced by any Lender's Notes would
exceed the Highest Lawful Rate applicable to such Lender (taking into account
the interest rate applicable to such Indebtedness pursuant to the other
provisions of this Agreement, plus all additional charges and consideration
which have been contracted for, taken, reserved, charged, or received under this
Agreement, such Lender's Notes, the Collateral Documents, and the other Loan
Documents, or any of them, and which additional charges or consideration (the
"Additional Charges") constitute interest with respect to such Indebtedness),
 ------------------
the effective interest rate to apply to such Indebtedness made by such Lender
shall be limited to the Highest Lawful Rate, but any subsequent reductions in
the interest rate applicable to such Indebtedness owed to such Lender shall not
reduce the effective interest rate to apply to such Indebtedness owed to such
Lender below the Highest Lawful Rate applicable to such Lender until the total
amount of interest accrued on such Indebtedness equals the amount of interest
which would have accrued if the interest rate from time to time applicable to
such Indebtedness owed to such Lender had at all times been in effect with
respect to such Indebtedness pursuant to the other provisions of this Agreement
and the other Loan Documents and if the Lenders had collected all Additional
Charges called for under this Agreement, the Notes, the Collateral Documents and
the other Loan Documents. If at maturity or final payment of such Lender's
Obligations the total amount of interest paid to any Lender hereunder and under
the other Loan Documents (including amounts designated as "interest" plus any
Additional Charges which constitute interest with respect to such Lenders, and
taking into account the limitations of the first sentence of this Section
                                                                  -------
10.13(b)) is less than the total amount of such "interest" which would have been
--------
paid if all amounts were paid as required by this Agreement (without giving
effect to this Section 10.13) and the other Loan Documents (the amount of the
               -------------
difference described above, the "Deficiency"), then the Borrower agrees, to the
                                 ----------
fullest extent permitted by the laws applicable to such Lender, to pay to such
Lender an amount equal to the lesser of (i) the difference between (1) the
amount of such "interest" which would have accrued on such Lender's Notes if the
Highest Lawful Rate had at all times been in effect, and (2) the amount of
interest actually paid on such Lender's Notes (including amounts designated as
"interest" plus any Additional Charges which constitute interest with respect to
such Lender's Notes) and (ii) the amount of the Deficiency.

     (c)  Notwithstanding anything to the contrary contained above in this
Section 10.13, it is understood and agreed that (i) all representations and
-------------
warranties contained in this Agreement, in the Collateral Documents and in the
other Loan Documents have been made without reliance

                                       61

<PAGE>

upon, or giving effect to, the provisions of Section 10.13(a) and (ii) that the
                                             ----------------
Lenders have relied upon the accuracy of such representations and warranties.
Furthermore, the Borrower acknowledges and agrees that each Lender shall, to the
fullest extent permitted by law, be entitled to recover damages from the
Borrower in the event of a material misrepresentation by the Borrower.

     SECTION 10.14  Forum Selection and Consent to Jurisdiction. ANY LITIGATION
                    -------------------------------------------
BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS AGREEMENT,
THE NOTES, ANY COLLATERAL DOCUMENT OR ANY OTHER LOAN DOCUMENT, OR ANY COURSE OF
CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN) OR ACTIONS OF
THE AGENT, THE LENDERS OR THE BORROWER SHALL BE BROUGHT AND MAINTAINED
EXCLUSIVELY IN THE COURTS OF THE STATE OF ILLINOIS OR IN THE UNITED STATES
DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS; PROVIDED, HOWEVER, THAT
                                                      --------  -------
ANY SUIT SEEKING ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY BE
BROUGHT, AT THE AGENT'S OPTION, IN THE COURTS OF ANY JURISDICTION WHERE SUCH
COLLATERAL OR OTHER PROPERTY MAY BE FOUND. THE BORROWER HEREBY EXPRESSLY AND
IRREVOCABLY SUBMITS TO THE JURISDICTION OF THE COURTS OF THE STATE OF ILLINOIS
AND OF THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS
FOR THE PURPOSE OF ANY SUCH LITIGATION AS SET FORTH ABOVE AND IRREVOCABLY AGREES
TO BE BOUND BY ANY JUDGMENT RENDERED THEREBY IN CONNECTION WITH SUCH LITIGATION.
THE BORROWER FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS BY
REGISTERED MAIL, POSTAGE PREPAID, OR BY PERSONAL SERVICE WITHIN OR WITHOUT THE
STATE OF ILLINOIS. THE BORROWER HEREBY EXPRESSLY AND IRREVOCABLY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY HAVE OR HEREAFTER
MAY HAVE TO THE LAYING OF VENUE OF ANY SUCH LITIGATION BROUGHT IN ANY SUCH COURT
REFERRED TO ABOVE AND ANY CLAIM THAT ANY SUCH LITIGATION HAS BEEN BROUGHT IN AN
INCONVENIENT FORUM. TO THE EXTENT THAT THE BORROWER HAS OR HEREAFTER MAY ACQUIRE
ANY IMMUNITY FROM JURISDICTION OF ANY COURT OR FROM ANY LEGAL PROCESS (WHETHER
THROUGH SERVICE OR NOTICE, ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN AID OF
EXECUTION OR OTHERWISE) WITH RESPECT TO ITSELF OR ITS PROPERTY, THE BORROWER
HEREBY IRREVOCABLY WAIVES SUCH IMMUNITY IN RESPECT OF ITS OBLIGATIONS UNDER THIS
AGREEMENT, THE NOTES, THE COLLATERAL DOCUMENTS AND THE OTHER LOAN DOCUMENTS.

     SECTION 10.15  Waiver of Jury Trial. THE AGENT, THE LENDERS AND THE
                    --------------------
BORROWER HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHTS THEY
MAY HAVE TO A TRIAL BY JURY IN RESPECT OF

                                       62

<PAGE>

ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH,
THIS AGREEMENT, THE NOTES, ANY COLLATERAL DOCUMENT OR ANY OTHER LOAN DOCUMENT,
OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL OR
WRITTEN) OR ACTIONS OF THE AGENT, THE LENDERS OR THE BORROWER. THE BORROWER
ACKNOWLEDGES AND AGREES THAT IT HAS RECEIVED FULL AND SUFFICIENT CONSIDERATION
FOR THIS PROVISION (AND EACH OTHER PROVISION OF EACH OTHER LOAN DOCUMENT TO
WHICH IT IS A PARTY) AND THAT THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE
AGENT AND THE LENDERS ENTERING INTO THIS AGREEMENT AND EACH SUCH COLLATERAL
DOCUMENT AND EACH SUCH OTHER LOAN DOCUMENT.

                                       63

<PAGE>

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

                                          NASCO INTERNATIONAL, INC.

                                          By: /s/ Dean T. Johnson
                                              ------------------------------
                                              Title: Chief Financial Officer

                                          Address: 901 Janesville Avenue
                                                   Fort Atkinson, WI  53538-0901

                                          Telecopier No.: 920-563-0234

                                          Attention:  Dean T. Johnson
                                                      Chief Financial Officer

                                          Copy to:

                                             Geneve Corporation
                                             96 Cummings Point Road
                                             Stamford, Connecticut  06902

                                             Telecopier No.:  203-348-3103

                                             Attention: Theresa Herbert
                                                        Vice President

                                          BANK OF AMERICA, N.A.
                                            as Agent

                                          By: /s/ Gary R. Peet
                                              -----------------------
                                          Title: Managing Director

                                          Address:  231 South LaSalle Street
                                                    Chicago, Illinois 60697

                                          Telecopier No.:  312-987-0889

                                          Attention: Debra Basler
                                                     Vice President

                                      S-1

<PAGE>

         PERCENTAGE                                  LENDERS
         ----------                                  -------
         53.2710%                            BANK OF AMERICA, N.A.

                                           By: /s/ Gary R. Peet
                                               ------------------------
                                               Title: Managing Director

                                               Domestic
                                               Office: 231 South LaSalle Street
                                               Chicago, Illinois 60697

                                           Telecopy No.:  312-987-0889

                                           Attention:  Debra Basler
                                                       Vice President

                                          Eurodollar
                                          Office:  231 South LaSalle Street
                                                   Chicago, Illinois 60697

                                      S-2

<PAGE>

         46.7290%                           BANK ONE, WISCONSIN

                                            By: /s/ Paul C. Fuerst
                                                --------------------------------
                                            Title: Senior Vice President

                                            Domestic
                                            Office: 111 East Wisconsin Avenue
                                                    Mail Code WI1-2032
                                                    Milwaukee, Wisconsin 53202

                                            Telecopy No.: (414) 765-2176

                                            Attention: Mark Bruss

                                      S-3

<PAGE>

                                                                       EXHIBIT A

                                      NOTE

$1,331,775.00                                                Date:  May 29, 2001

     FOR VALUE RECEIVED, Nasco International, Inc., a Wisconsin corporation (the
"Borrower") hereby unconditionally promises to pay to the order of Bank of
America, N.A. (the "Lender"):

               (1) prior to or on the Stated Maturity Date the principal amount
                   of One million three hundred thirty-one thousand seven
                   hundred seventy-five Dollars ($1,331,775.00), or, if less,
                   the aggregate unpaid principal amount of Loans advanced by
                   the Lender to such Borrower pursuant to the Amended and
                   Restated Credit Agreement (364 Day) dated as of May 29, 2001
                   (as amended and in effect from time to time, the "Credit
                   Agreement"), among the Borrower, BankOne, Wisconsin, as
                   Documentation Agent, Bank of America, N.A. as Administrative
                   Agent, and the various financial institutions (including the
                   Lender) which are, or may from time to time become parties
                   thereto; and

               (2) interest on the principal balance hereof from time to time
                   outstanding from the Effective Date (as defined in the Credit
                   Agreement) through and including the maturity date hereof at
                   the times and at the rates provided in the Credit Agreement.

     This Note evidences borrowings under and has been issued by the Borrower in
accordance with the terms of the Credit Agreement. The Lender and any holder
hereof is entitled to the benefits of the Credit Agreement and the other Loan
Documents, and may enforce the agreements of the Borrower contained therein, and
any holder hereof may exercise the respective remedies provide for thereby or
otherwise available in respect thereof, all in accordance with the respective
terms thereof. All capitalized terms used in this Note and not otherwise defined
herein shall have the same meanings herein as in the Credit Agreement.

     The Borrower irrevocably authorizes the Lender to make or cause to be made,
at or about the date of any Loan made to such Borrower or at the time of receipt
of any payment of principal of this Note, an appropriate notation on the grid
attached to this Note, or the continuation of such grid, or any other similar
record, including computer records, reflecting the making of such Loan or (as
the case may be) the receipt of such payment. The outstanding amount of the
Loans set forth on the grid attached to this Note, or the continuation of such
grid, or any other similar record including computer records, maintained by the
Lender with respect

                                  Exhibit A-1

<PAGE>

to any Loans made to the Borrower shall be prima facie evidence of the principal
                                           -----------
amount thereof owing and unpaid by the Borrower to the Lender, but the failure
to record, or any error in so recording, any such amount on any such grid,
continuation or other record shall not limit or otherwise affect the obligation
of the Borrower hereunder or under the Credit Agreement to make payments of
principal and of interest on this Note when due.

     The Borrower has the right in certain circumstances and the obligation
under certain other circumstances to prepay the whole or part of the principal
of this Note severally owing by the Borrower on the terms and conditions
specified in the Credit Agreement.

     If any one or more of the Events of Default shall occur and be continuing
with respect to the Borrower, the entire unpaid principal amount of this Note
owing by such Borrower and all of the unpaid interest accrued thereon may become
or be declared due and payable in the manner and with the effect provided in the
Credit Agreement.

     No delay or omission on the part of the Lender or any holder hereof in
exercising any right hereunder shall operate as a waiver of such right or of any
other rights of the Lender or such holder, nor shall any delay, omission or
waiver on any one occasion be deemed a bar or waiver of the same or any other
right on any further occasion.

     Except to the extent otherwise provided in the Credit Agreement, the
Borrower hereby waives presentment, demand, notice, protest and all other
demands and notices in connection with the delivery, acceptance, performance,
default or enforcement of this Note, and assents to any extension or
postponement of time of payment or any other indulgence, to any substitution,
exchange or release of collateral and to the addition or release of any other
party or person primarily or secondarily liable.

     THIS NOTE AND THE OBLIGATIONS OF THE BORROWER HEREUNDER SHALL FOR ALL
PURPOSES BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF
ILLINOIS.

     IN WITNESS WHEREOF, the undersigned has caused this Note to be executed as
of the day and year first above written.

                                               NASCO INTERNATIONAL, INC.

                                               By: /s/ Dean T. Johnson
                                                   --------------------------
                                               Title: Chief Financial Officer

                                  Exhibit A-2

<PAGE>

                                                                       EXHIBIT A

                                      NOTE

$1,168,225.00                                                Date:  May 29, 2001

     FOR VALUE RECEIVED, Nasco International, Inc., a Wisconsin corporation (the
"Borrower") hereby unconditionally promises to pay to the order of Bank One,
Wisconsin (the "Lender"):

          (a) prior to or on the Stated Maturity Date the principal amount of
     One million one hundred sixty-eight thousand two hundred twenty-five
     Dollars ($1,168,225.00), or, if less, the aggregate unpaid principal amount
     of Loans advanced by the Lender to such Borrower pursuant to the Amended
     and Restated Credit Agreement (364 Days) dated as of May 29, 2001 (as
     amended and in effect from time to time, the "Credit Agreement"), among the
     Borrower, Bank One, Wisconsin, as Documentation Agent, Bank of America,
     N.A. as Administrative Agent, and the various financial institutions
     (including the Lender) which are, or may from time to time become parties
     thereto; and

          (b) interest on the principal balance hereof from time to time
     outstanding from the date of this Loan through and including the maturity
     date hereof at the times and at the rates provided in the Credit Agreement.

     This Note evidences borrowings under and has been issued by the Borrower in
accordance with the terms of the Credit Agreement. The Lender and any holder
hereof is entitled to the benefits of the Credit Agreement and the other Loan
Documents, and may enforce the agreements of the Borrower contained therein, and
any holder hereof may exercise the respective remedies provide for thereby or
otherwise available in respect thereof, all in accordance with the respective
terms thereof. All capitalized terms used in this Note and not otherwise defined
herein shall have the same meanings herein as in the Credit Agreement.

     The Borrower irrevocably authorizes the Lender to make or cause to be made,
at or about the date of any Loan made to such Borrower or at the time of receipt
of any payment of principal of this Note, an appropriate notation on the grid
attached to this Note, or the continuation of such grid, or any other similar
record, including computer records, reflecting the making of such Loan or (as
the case may be) the receipt of such payment. The outstanding amount of the
Loans set forth on the grid attached to this Note, or the continuation of such
grid, or any other similar record including computer records, maintained by the
Lender with respect to any Loans made to the Borrower shall be prima facie
                                                               ----- -----
evidence of the principal amount thereof owing and unpaid by the Borrower to the
Lender, but the failure to record, or any error is so recording, any such amount
on any such grid, continuation or other record shall not limit or

                                  Exhibit A-3

<PAGE>

 otherwise affect the obligation of the Borrower hereunder of under the Credit
 Agreement to make payments of principal and of interest on this Note when due.

     The Borrower has the right in certain circumstances and the obligation
under certain other circumstances to prepay the whole or part of the principal
of this Note severally owing by the Borrower on the terms and conditions
specified in the Credit Agreement.

     If any one or more of the Events of Default shall occur and be continuing
with respect to the Borrower, the entire unpaid principal amount of this Note
owing by such Borrower and all of the unpaid interest accrued thereon may become
or be declared due and payable in the manner and with the effect provided in the
Credit Agreement.

     No delay or omission on the part of the Lender or any holder hereof in
exercising any right hereunder shall operate as a waiver of such right or of any
other rights of the Lender or such holder, nor shall any delay, omission or
waiver on any one occasion be deemed a bar or waiver of the same or any other
right on any further occasion.

     Except to the extent otherwise provided in the Credit Agreement, the
Borrower hereby waives presentment, demand, notice, protest and all other
demands and notices in connection with the delivery, acceptance, performance,
default or enforcement of this Note, and assents to any extension or
postponement of time of payment or any other indulgence, to any substitution,
exchange or release of collateral and to the addition or release of any other
party or person primarily or secondarily liable.

     THIS NOTE AND THE OBLIGATIONS OF THE BORROWER HEREUNDER SHALL FOR ALL
PURPOSES BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF
ILLINOIS.

     IN WITNESS WHEREOF, the undersigned has caused this Note to be executed as
of the day and year first above written.

                                                NASCO INTERNATIONAL, INC.

                                                By: /s/ Dean T. Johnson
                                                    --------------------------
                                                Title: Chief Financial Officer

                                  Exhibit A-4

<PAGE>

                                                                       EXHIBIT B

                            FORM OF BORROWING REQUEST

Bank of America, N.A., as Administrative Agent
231 S. LaSalle Street
Chicago, IL  60697

Attention:   [Name]
             [Title]

Ladies and Gentlemen:

     This Borrowing Request is delivered to you pursuant to Section 2.3 of the
                                                            -----------
Amended and Restated Credit Agreement (364 Days), dated as of May 29, 2001
(together with all amendments, if any, from time to time made thereto, the
"Credit Agreement"), among Nasco International, Inc., a Wisconsin corporation
 ----------------
(the "Borrower"), certain financial institutions which are, or may from time to
      --------
time become parties thereto, Bank One, Wisconsin, as documentation agent and
Bank of America, N.A., as administrative agent (the "Agent"). Unless otherwise
                                                     -----
defined herein or the context otherwise requires, terms used herein have the
meanings provided in the Credit Agreement.

     The Borrower hereby requests that a Loan be made in the aggregate principal
amount of $ __________ on ___________, 200_ as a [Eurodollar Rate Loan having an
Interest Period of ________] [Base Rate Loan].

     The Borrower hereby acknowledges that, pursuant to Section 5.2.2 of the
                                                        -------------
Credit Agreement, each of the delivery of this Borrowing Request and the
acceptance by the Borrower of the proceeds of the Loans requested hereby
constitute a representation and warranty by the Borrower that, on the date of
such Loans, and before and after giving effect thereto and to the application of
the proceeds therefrom, all statements set forth in Section 5.2.1 are true and
                                                    -------------
correct in all material respects.

     The Borrower agrees that if prior to the time of the Borrowing requested
hereby any matter certified to herein by it will not be true and correct at such
time as if then made, it will immediately so notify the Agent. Except to the
extent, if any, that prior to the time of the Borrowing requested hereby the
Agent shall receive written notice to the contrary from the Borrower, each
matter certified to herein shall be deemed once again to be certified as true
and correct at the date of such Borrowing as if then made.

     Please transfer the proceeds of the Borrowing to the accounts of the
following persons at the financial institutions indicated:

                                  Exhibit B-1

<PAGE>

    Amount to              Person to be Paid                Name, Address, etc.
 be Transferred            -----------------               of Transferee Lender
 --------------                                            --------------------
                      Name                  Account No.
                      ----                  ----------

$____________     ____________            ______________   ____________________
                                                           ____________________
                                                           Attention: _________

$____________     ____________            ______________   ____________________
                                                           ____________________
                                                           Attention: _________

Balance of such   The Borrower            ______________   ____________________
proceeds
                                                           ____________________
                                                           Attention: _________

     The Borrower has caused this Borrowing Request to be executed and
delivered, and the certification and warranties contained herein to be made, by
its duly Authorized Officer this day of ____________, 200_.

                                           NASCO INTERNATIONAL, INC.

                                           By:_________________________________
                                              Title:

                                  Exhibit B-2

<PAGE>

                                                                       EXHIBIT C

                     FORM OF CONTINUATION/CONVERSION NOTICE

Bank of America, N.A., as Administrative Agent
231 S. LaSalle Street
Chicago, IL 60697

Attention:   [Name]
             [Title]

Ladies and Gentlemen:

     This Continuation/Conversion Notice is delivered to you pursuant to Section
                                                                         -------
2.4 of the Amended and Restated Credit Agreement (364 Days), dated as of May 29,
---
2001 (together with all amendments, if any, from time to time made thereto, the
"Credit Agreement"), among Nasco International, Inc., a Wisconsin corporation
 ----------------
(the "Borrower"), certain financial institutions which are, or may from time to
      --------
time become parties thereto, Bank One, Wisconsin, as documentation agent and
Bank of America, N.A., as administrative agent, (the "Agent"). Unless otherwise
                                                      -----
defined herein or the context otherwise requires, terms used herein have the
meanings provided in the Credit Agreement.

     The Borrower hereby requests that on ________ , 200_,

          (1)  $______ of the presently outstanding principal amount of the
     Loans originally made on ________, 200_ [and $____________ of the presently
     outstanding principal amount of the originally made on ___________, 200_],

          (2) and all presently being maintained as * [Base Rate Loans]
     [Eurodollar Rate Loans],

          (3)  be [converted into] [continued as],

          (4)  [Eurodollar Rate Loans having an Interest Period of __ months]
     [Base Rate Loans].

The Borrower hereby:

          (a)  certifies and warrants that no Default has occurred and is
     continuing; and

___________________
*    Select appropriate interest rate option.

                                  Exhibit C-1

<PAGE>

          (b) agrees that if prior to the time of such continuation or
     conversion any matter certified to herein by it will not be true and
     correct at such time as if then made, it will immediately so notify the
     Agent.

Except to the extent, if any, that prior to the time of the continuation or
conversion requested hereby the Agent shall receive written notice to the
contrary from the Borrower, each matter certified to herein shall be deemed to
be certified at the date of such continuation or conversion as if then made.

     The Borrower has caused this Continuation/Conversion Notice to be executed
and delivered, and the certification and warranties contained herein to be made,
by its Authorized Officer this __day of __________, 200_.

                                        NASCO INTERNATIONAL, INC.

                                        By:_____________________________________
                                           Title:

                                  Exhibit C-2

<PAGE>

                                                                       EXHIBIT D

               [COPY OF EXECUTED PLEDGE AGREEMENT TO BE ATTACHED]

                                  Exhibit D-1

<PAGE>

                                                                       EXHIBIT E

              [COPY OF EXECUTED SECURITY AGREEMENT TO BE ATTACHED]

                                  Exhibit E-1

<PAGE>

                                                                       EXHIBIT F

                           FORM OF OPINION OF COUNSEL

                                          __________, 2001

Bank of America, N.A.
  as Administrative Agent
231 South LaSalle Street
Chicago, Illinois  60697

        -and-

The Lenders from time
 to time parties to the
 Credit Agreement referred
 to below.

Re:  Amended and Restated Credit Agreement (Five Year) (herein referred to as
     the "Credit Agreement (Five Year)") among Nasco International, Inc., a
          ---------------------------
     Wisconsin corporation (the "Borrower"), the financial institutions from
                                 --------
     time to time parties thereto (the "Lenders"), Bank One, Wisconsin, as
                                        -------
     documentation agent and Bank of America, N.A., as administrative agent for
     the Lenders (in such capacity, the "Five Year Agreement Agent") and the
                                         -------------------------
     Amended and Restated Credit Agreement (364 Days) (herein referred to as the
                          ----------------
     "Credit Agreement (364 Days) and together with the Credit Agreement (Five
     Years) as the "Credit Agreements") among the Borrower, the financial
                    -----------------
     institutions from time to time parties thereto, Bank One, Wisconsin, as
     documentation agent and Bank of America, N.A. as administrative agent (in
     such capacity, the "364 Day Agent" and in both its capacities as the Five
     Year Agent and the 364 Day Agent, the "Agent").
                                            -----

Ladies and Gentlemen:

     I am the General Counsel of the Borrower and this letter is being furnished
to you as a condition to the occurrence on the date hereof of the Effective
Dates (as defined in the Credit Agreements).

     I have examined executed counterparts of (a) the Credit Agreements, (b) the
Notes delivered on the Effective Date to the Agent for the account of Bank One,
Wisconsin and Bank of America, N.A. under the Credit Agreements and (c)
originals or copies certified to my satisfaction of all such corporate records
of the Borrower and agreements and other instruments and certificates of public
officials and officers and representatives of the Borrower, and I have made such
other investigations, reviewed such other documents and considered such
questions of

                                  Exhibit F-1

<PAGE>

law, as in each case I have deemed necessary or appropriate in connection with
the opinions hereinafter expressed.

     Based on the foregoing, I am of the opinion that:

     1.   The Borrower is a corporation duly organized, validly existing and in
          good standing under the laws of the State of Wisconsin and is duly
          qualified to do business and in good standing as a foreign corporation
          in each jurisdiction where the nature of its business makes such
          qualification necessary and where the failure to so qualify might have
          a Materially Adverse Effect (as defined in each Credit Agreement).

     2.   The Borrower has full power, authority and legal right to conduct its
          business substantially as presently conducted by it and to own its
          properties, to execute and deliver the Credit Agreements and the
          Notes, to borrow under the Credit Agreements, and to perform and
          observe its obligations under, and the terms and provisions of, the
          Credit Agreements.

     3.   The execution and delivery by the Borrower of the Credit Agreements
          and the Notes and the performance and observance by it of its
          obligations under, and the terms and provisions of, and the borrowings
          by it under and the grant of the security interests and other Liens
          (as defined in each Credit Agreement) under, the Credit Agreements and
          the Notes, have been duly authorized by all necessary corporate
          action, require no governmental registrations, filings, consents or
          approvals, and do not violate or contravene or require any consent
          under (i) any provision of the certificate of incorporation or by-laws
          of the Borrower, (ii) any law or governmental regulation, (iii) any
          order or decree of any court or governmental agency, or (iv) any
          indenture, agreement or other instrument, in each case to which the
          Borrower is a party or which is binding upon any of its properties,
          and will not result in the creation or imposition of any security
          interest in or other Lien on any of its properties pursuant to the
          provisions of any agreement (excluding, however, the Credit Agreements
          and any instrument executed pursuant thereto) or other instrument
          binding upon or applicable to it.

     4.   The Credit Agreements and the Notes have been duly executed and
          delivered on behalf of the Borrower, and the Credit Agreements and the
          Notes constitute the legal, valid and binding obligations of the
          Borrower enforceable against the Borrower in accordance with their
          respective terms, subject, as to enforcement only, to bankruptcy,
          insolvency, reorganization, moratorium or similar laws at the time in
          effect affecting the enforceability of rights of creditors generally.

     5.   Neither the Borrower nor any Significant Subsidiary (as defined in
          each Credit Agreement) is in default (including after giving effect to
          the execution and delivery of the Credit Agreements and the making of
          the initial Loans and the consummation of the other transactions
          contemplated therein) under any agreement or instrument governing any
          Indebtedness which would cause an

                                  Exhibit F-2

<PAGE>

          Event of Default under Section 8.1.5 of either Credit Agreement or is
          in default under any law or governmental regulation or court decree or
          order the default under which would have a Materially Adverse Effect,
          nor am I aware of any facts or circumstances which would give rise to
          any such default.

     6.   No litigation, labor controversy, arbitration or governmental
          investigation or proceeding of the character referred to in Section
          6.7 of either Credit Agreement is pending, or, to the best of my
          knowledge (after due inquiry), threatened.

     I am a member of the Bar of the State of New York and I do not express any
opinions herein concerning any laws other than the State of New York. I note
that the Loan Documents are governed by Illinois law. For the purpose of the
opinion set forth in paragraph 4, however, I have assumed that New York law was
applicable.

                                                     Very truly yours,

                                                     Steven B. Lapin

                                  Exhibit F-3

<PAGE>

                                                                       EXHIBIT G

                       FORM OF LENDER ASSIGNMENT AGREEMENT

To:  Nasco International, Inc.
     901 Janesville Avenue
     Fort Atkinson, Wisconsin 53538

To:  Bank of America, N.A., as Agent
     231 South LaSalle Street
     Chicago, Illinois 60697

                            NASCO INTERNATIONAL, INC.
                            ------------------------

Ladies and Gentlemen:

     We refer to clause (b) of Section 10.11.1 of the Amended and Restated
Credit Agreement (364 Days), dated as of May 29, 2001 (together with all
amendments and other modifications, if any, from time to time thereafter made
thereto, the "Credit Agreement"), among Nasco International, Inc., a Wisconsin
              ----------------
corporation (the "Borrower"), the various financial institutions which are, or
                  --------
shall from time to time become, parties thereto (the "Lenders"), Bank One,
                                                      -------
Wisconsin as documentation agent and Bank of America, N.A. as administrative
agent (in such capacity, the "Agent") for the Lenders. Unless otherwise defined
                              -----
herein or the context otherwise requires, terms used herein have the meanings
provided in the Credit Agreement.

     This agreement is delivered to you pursuant to clause (b) of Section
10.11.1 of the Credit Agreement and also constitutes notice to each of you,
pursuant to Section 10.11.1 of the Credit Agreement, of the assignment and
delegation to _____________________ (the "Assignee") of __% of the Loans and
                                          --------
Commitment of _______________ (the "Assignor") outstanding under the Credit
                                    --------
Agreement on the date hereof and of all related rights and obligations under the
Credit Agreement and the other Loan Documents. After giving effect to the
foregoing assignment and delegation, the Assignor's and the Assignee's
Percentages for the purposes of the Credit Agreement are set forth opposite such
Person's name on the signature pages hereof.

     [Add paragraph dealing with accrued interest and any fees with respect to
Loans assigned.]

     The Assignee hereby acknowledges and confirms that it has received and
reviewed to its satisfaction a copy of the Credit Agreement and the exhibits
related thereto, together with copies of the documents which were required to be
delivered under the Credit Agreement as a condition to the making of the Loans
thereunder. The Assignee further confirms and agrees that in becoming a Lender
and in making its Commitment and Loans under the Credit Agreement, such actions
have and will be made without recourse to, or representation or warranty by, the
Agent or

                                  Exhibit G-1

<PAGE>

the Assignor, and expressly confirms for the benefit of the Agent each of the
provisions set forth in Article IX of the Credit Agreement.

     Except as otherwise provided in the Credit Agreement, effective as of the
date of acceptance hereof by the Agent

          (a)  the Assignee

               (i)  shall be deemed automatically to have become a party to the
          Credit Agreement, have all the rights and obligations of a "Lender"
          under the Credit Agreement and the other Loan Documents as if it were
          an original signatory thereto to the extent specified in the second
          paragraph hereof; and

               (ii) agrees to be bound by the terms and conditions set forth in
          the Credit Agreement and the other Loan Documents as if it were an
          original signatory thereto; and

          (b)  the Assignor shall be released from its obligations under the
     Credit Agreement and the other Loan Documents to the extent specified in
     the second paragraph hereof.

     The Assignor and the Assignee hereby agree that the [Assignor] [Assignee]
will pay to the Agent the processing fee referred to in Section 10.11.1 of the
Credit Agreement upon the delivery hereof.

     The Assignee hereby advises each of you of the following administrative
details with respect to the assigned Loans and Commitment and requests the Agent
to acknowledge receipt of this document:

          (A)  Address for Notices:

               Domestic Office

:              Address:

               Attention:

               Telephone:

               Facsimile:

               Eurodollar Office

               Address:

               Attention:

               Telephone:

                                  Exhibit G-2

<PAGE>

               Facsimile:

          (B)  Payment Instructions:

     The Assignee agrees to furnish the tax form required by the last paragraph
of Section 4.6. (if so required) of the Credit Agreement no later than the date
of acceptance hereof by the Agent.

                                  Exhibit G-3

<PAGE>

     This Agreement may be executed by the Assignor and Assignee and accepted by
the Agent in separate counterparts, each of which when so executed and delivered
shall be deemed to be an original and all of which taken together shall
constitute one and the same agreement, and shall be governed by the internal
laws of the State of Illinois.

Adjusted Percentage                           [ASSIGNOR]
-------------------

Commitment                 ______%            By:_______________________________
and Loans:                                        Title:

Adjusted Percentage                           [ASSIGNEE]
-------------------

Commitment                 ______%            By:_______________________________
and Loans:                                        Title:

Accepted and Acknowledged
this ___ day of ________, 200_
Bank of America, N.A. as Agent

By: _____________________________

Title:___________________________

                                  Exhibit G-4

<PAGE>

                                                                       EXHIBIT H

                                  CONFIRMATION

                          Dated as of _______ ___, 2001

To:  Bank of America, N.A., individually and as administrative agent (in such
     capacity, the "Administrative Agent"), and the other financial institutions
     party to the Restated Credit Agreement referred to below

     Please refer to the following:

     (a)  the Amended and Restated Credit Agreement dated as of the date hereof
(the "Restated Credit Agreement") among NASCO International, Inc. (the
"Borrower"), certain lenders, Bank One, Wisconsin, as documentation agent and
the Agent;

     (b)  the Pledge Agreement dated as of March 31, 2000 (as amended, the
"Pledge Agreement") between Borrower and the Agent;

     (c)  the Security Agreement dated as of March 31, 2000 (as amended, the
"Security Agreement") between the Borrower and the Agreement;

     (d)  the Original Mortgage dated as of June 25, 1992 executed by the
Borrower in favor of the Agent; and

     (e)  the Modesto Mortgage dated as of August 5, 1997 executed by the
Borrower in favor of the Agent.

     Each document referred to in items (b) through (e) above is called a
                                  --------           -
"Credit Document". Capitalized terms used but not defined herein shall have the
 ---------------
meanings set forth in the Restated Credit Agreement;

     The Borrower hereby confirms to the Lenders (as defined in the Restated
Credit Agreement) and the Agent that each Credit Document to which the Borrower
is a party continues in full force and effect on the date hereof after giving
effect to this Confirmation and is the legal, valid and binding obligation of
the Borrower, enforceable against the Borrower in accordance with its terms.

                                  Exhibit H-1

<PAGE>

     IN WITNESS WHEREOF, the Borrower has executed this Confirmation to be duly
executed and delivered by its officer thereunto duly authorized as the date
first above written.

                                    NASCO INTERNATIONAL, INC.

                                    By:
                                      Title:

                                    Address: 901 Janesville Avenue
                                             Fort Atkinson, Wisconsin 53538-0901

                                             Attention: Dean T.  Johnson
                                                        Chief Financial Officer

                                copy to:     Geneve Corporation
                                             96 Cummings Point Road
                                             Stamford, Connecticut 06902

                                             Telecopier No.  203-348-3103

                                             Attention: Theresa Herbert
                                                        Vice President

Accepted and Agreed as of ___________, 2001

BANK OF AMERICA, N.A.

By: _______________________________

Title:_____________________________<PAGE>

                                                                   Exhibit 10.12

<TABLE>
<CAPTION>
                                     Second Amended and
                                      Restated Mortgage

            Document Number           Title of Document
--------------------------------------------------------------------------------

<S>                                  <C>                       <C>
                                                                Record this document with the Register of Deeds
                                                               ------------------------------------------------
                                                                Name and Return Address

                                                                Mayer, Brown & Platt
                                                                350 S. Grand Avenue
                                                                25th Floor
                                                                Los Angeles, CA 90071
                                                               ---------------------------------------

                                                                05-14-09-21-001
                                                                05-14-09-21
                                                                05-140-09-12-64
                                                               ---------------------------------------

                                                                (Parcel Identification Number)

                                                                05-14-09-12-65
                                                                05-14-09-12-66
                                                                05-14-09-12-67
                                                                05-14-09-12-68
                                                                05-14-09-12-081
                                                                05-14-09-12-82
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
                               TABLE OF CONTENTS

                                                                               Page
<S>                                                                            <C>
ARTICLE I    COVENANTS AND AGREEMENTS OF THE MORTGAGOR ........................  7
     SECTION 1.1.   Payment of Secured Obligations and Other Obligations ......  7
     SECTION 1.2.   Title to Collateral, etc ..................................  8
     SECTION 1.3.   Title Insurance ...........................................  8
          SECTION 1.3.1.   Title Insurance Endorsement ........................  9
          SECTION 1.3.2.   [INTENTIONALLY OMITTED] ............................  9
          SECTION 1.3.3.   [INTENTIONALLY OMITTED] ............................  9
          SECTION 1.3.4.   Title Insurance Proceeds ...........................  9
     SECTION 1.4.   Recordation ...............................................  9
     SECTION 1.5.   Payment of Impositions, etc ...............................  9
     SECTION 1.6.   Insurance and Legal Requirements .......................... 10
     SECTION 1.7.   Security Interests, etc ................................... 11
     SECTION 1.8.   Permitted Contests ........................................ 11
     SECTION 1.9.   Leases .................................................... 12
     SECTION 1.10.  Compliance with Instruments ............................... 12
     SECTION 1.11.  Maintenance and Repair, etc ............................... 12
     SECTION 1.12.  Alterations, Additions, etc ............................... 13
     SECTION 1.13.  Acquired Property Subject to Lien ......................... 13
     SECTION 1.14.  Assignment of Leases, Rents, Proceeds, etc ................ 14
     SECTION 1.15.  No Claims Against the Mortgagee ........................... 17
     SECTION 1.16.  Indemnification Against Obligations ....................... 17
     SECTION 1.17.  No Credit for Payment of Taxes ............................ 18
     SECTION 1.18.  Offering of the Notes ..................................... 19
     SECTION 1.19.  Hazardous Material and Wastes ............................. 19
ARTICLE II   INSURANCE; DAMAGE, DESTRUCTION OR TAKING, ETC .................... 19
     SECTION 2.1.   Insurance ................................................. 19
          SECTION 2.1.1.   Risks to be Insured ................................ 19
          SECTION 2.1.2.   Policy Provisions .................................. 20
          SECTION 2.1.3.   Delivery of Policies, etc .......................... 21
</TABLE>

                                        i

<PAGE>

<TABLE>
<CAPTION>
                               TABLE OF CONTENTS
                                  (continued)
                                                                                 Page
<S>                                                                             <C>
          SECTION 2.1.4.   Separate Insurance ..................................  21
     SECTION 2.2.   Damage, Destruction or Taking; Mortgagor to Give Notice;
                    Assignment of Awards .......................................  21
     SECTION 2.3.   Application of Proceeds and Awards .........................  22
     SECTION 2.4.   Total Taking and Total Destruction .........................  24
ARTICLE III   EVENTS OF DEFAULT; REMEDIES, ETC .................................  25
     SECTION 3.1.   Events of Default; Acceleration ............................  25
     SECTION 3.2.   Legal Proceedings; Foreclosure .............................  26
     SECTION 3.3.   Power of Sale ..............................................  27
     SECTION 3.4.   Uniform Commercial Code Remedies ...........................  28
     SECTION 3.5.   Mortgagee Authorized to Execute Deeds, etc .................  28
     SECTION 3.6.   Purchase of Collateral by Mortgagee ........................  29
     SECTION 3.7.   Receipt a Sufficient Discharge to Purchaser ................  29
     SECTION 3.8.   Waiver of Appraisement, Valuation, etc .....................  29
     SECTION 3.9.   Sale a Bar Against Mortgagor ...............................  29
     SECTION 3.10.  Application of Proceeds of Sale and Other Moneys ...........  29
     SECTION 3.11.  Appointment of Receiver ....................................  31
     SECTION 3.12.  Possession, Management and Income ..........................  31
     SECTION 3.13.  Right of Mortgagee to Perform Mortgagor's Covenants, etc ...  31
     SECTION 3.14.  Subrogation ................................................  32
     SECTION 3.15.  Remedies, etc., Cumulative .................................  32
     SECTION 3.16.  Provisions Subject to Applicable Law .......................  32
     SECTION 3.17.  No Waiver, etc .............................................  33
     SECTION 3.18.  Compromise of Actions, etc .................................  33
     SECTION 3.19.  Foreclosure Without Deficiency Judgment ....................  33
ARTICLE IV    DEFINITIONS ......................................................  33
     SECTION 4.1.   Terms Defined in this Mortgage .............................  33
</TABLE>

                                       ii

<PAGE>

<TABLE>
<CAPTION>
                               TABLE OF CONTENTS
                                   (continued)
                                                                               Page
<S>                                                                            <C>
     SECTION 4.2.   Use of Defined Terms .....................................  36
     SECTION 4.3.   Credit Agreement Definitions .............................  36
ARTICLE V     MISCELLANEOUS ..................................................  36
     SECTION 5.1.   Further Assurances; Financing Statements .................  36
          SECTION 5.1.1.   Further Assurances ................................  36
          SECTION 5.1.2.   Financing Statements ..............................  37
     SECTION 5.2.   Additional Security ......................................  37
     SECTION 5.3.   Defeasance; Partial Release, etc .........................  37
          SECTION 5.3.1.   Defeasance ........................................  37
          SECTION 5.3.2.   Partial Release etc ...............................  37
     SECTION 5.4.   Notices, etc .............................................  38
     SECTION 5.5.   Waivers, Amendments, etc .................................  38
     SECTION 5.6.   Cross-References .........................................  38
     SECTION 5.7.   Headings .................................................  38
     SECTION 5.8.   Governing Law ............................................  38
     SECTION 5.9.   Successors and Assigns, etc ..............................  38
     SECTION 5.10.  Loan Document ............................................  38
     SECTION 5.11.  Severability .............................................  39
     SECTION 5.12.  Amended and Restated Mortgage ............................  39
</TABLE>

                                       iii

<PAGE>

                               TABLE OF CONTENTS

                                                                            Page

ACKNOWLEDGEMENTS

Schedule 1 - Description of the Land
Schedule 2 - Permitted Encumbrances

                                       iv

<PAGE>

================================================================================

                           NASCO INTERNATIONAL, INC.,

                                           Mortgagor,

                                       and

                        BANK OF AMERICA, N.A., as Agent,

                                           Mortgagee

                           _________________________

                      SECOND AMENDED AND RESTATED MORTGAGE
           (and Security Agreement and Assignment of Leases and Rents)

                           ___________________________

                           Dated as of August 21, 2001

               This instrument affects real and personal property
                       located in the County of Jefferson,
                               State of Wisconsin.

================================================================================

                              Record and return to:

                              Mayer, Brown & Platt
                      350 South Grand Avenue, 25/th/ Floor
                          Los Angeles, California 90071
                         Attention: Boise A. Ding, Esq.

<PAGE>

                      SECOND AMENDED AND RESTATED MORTGAGE
           (and Security Agreement and Assignment of Leases and Rents)
           -----------------------------------------------------------

     This Second Amended and Restated Mortgage (and Security Agreement and
Assignment of Leases and Rents) (this "Mortgage") has been executed by NASCO
                                       --------
INTERNATIONAL, INC., a Wisconsin corporation, having an address at 901
Janesville Avenue, Fort Atkinson, Wisconsin 53538-0901 (the "Mortgagor")to BANK
                                                             ---------
OF AMERICA, N.A.(successor in interest to Bank of America National Trust and
Savings Association and Continental Bank, N.A.), having an address at 231 South
LaSalle Street, Chicago, Illinois 60697, Attention: Ms. Debra Basler, as agent
                                         ---------
for the various financial institutions (the "Lenders") which are, or may from
                                             -------
time to time hereafter become, parties to the Credit Agreements, as hereinafter
defined (herein together with its successors and assigns acting as agent at the
time under such Credit Agreements, the "Mortgagee").
                                        ---------

                              W I T N E S S E T H:
                              - - - - - - - - - -

     WHEREAS, the Mortgagor is on the date of delivery hereof the owner of fee
title to the parcel or parcels of land described in Schedule 1 hereto (the
                                                    ----------
"Land") and of the Improvements (such term and other capitalized terms used in
 ----
this Mortgage having the respective meanings specified or referred to in Article
                                                                         -------
4);
-

     WHEREAS, pursuant to (i) an Amended and Restated Credit Agreement (Five
Year) dated May 29, 2001 (the "Credit Agreement (Five Year)") and (ii) an
                               ----------------  ---------
Amended and Restated Credit Agreement (364 Days) dated May 29, 2001 (the "Credit
                                                                          ------
Agreement (364 Days)") each among Mortgagor, certain lenders, Bank One,
-------------------
Wisconsin, as documentation agent and Mortgagee, as administrative agent [the
Credit Agreement (Five Year) and the Credit Agreement (364 Days) being
collectively referred to as the "Credit Agreements"] the lenders thereunder have
                                 -----------------
extended certain credit (herein referred to collectively as the "Loans"), which
                                                                 -----
Loans are evidenced by Notes issued under the Credit Agreements (the
indebtedness evidenced by such Notes is sometimes hereinafter referred to as the
"Secured Obligations")to the Mortgagor, including for, among other things,
 -------------------
meeting working capital requirements of the Mortgagor with respect to the Credit
Agreement (364 Days) and financing the AMEP Acquisition with respect to the
Credit Agreement (5 Year).

     WHEREAS, the Credit Agreement (Five Year) and the Credit Agreement (364
Days) amended and restated in their entirety,

                                       -2-

<PAGE>

respectively, that certain Credit Agreement (Five Year) dated March 31, 2000
(the "Original Credit Agreement (Five Year)") and a Credit Agreement (364 Days)
      ------------------------------------
dated March 31, 2000 (the "Original Credit Agreement (364 Days)") [the Original
                           -----------------------------------
Credit Agreement (364 Days) and the Original Credit Agreement (5 Year) being
collectively referred to as the "Original Credit Agreements"]. Under the
                                 --------------------------
Original Credit Agreements the lenders thereunder extended credit to Mortgagor
to refinance certain loans extended to Mortgagor under a Third Amended and
Restated Credit Agreement, dated as of January 2, 1996, as amended, supplemented
and otherwise modified prior to the date of the Original Credit Agreements ("The
                                                                             ---
First Refinanced Credit Agreement");
---------------------------------

     WHEREAS, under the Original Credit Agreements, the Mortgagor was required
to execute that certain Amended and Restated Mortgage (the "Existing Mortgage")
                                                            -----------------
dated June 26, 2000 recorded on July 26, 2000 in Volume 11578, Page 199 in the
Register of Deeds of Jefferson County, Wisconsin (the "Official Records"), which
                                                       ----------------
Existing Mortgage amended and restated that certain Mortgage (and Security
Agreement) dated June 25, 1992 recorded on July 2, 1992 in Volume 808 of Records
Page 183 as Document No. 890374 in the Official Records of Jefferson County,
Wisconsin, as amended by amendments recorded as Document Nos. 927262 and 951471
executed in connection with the First Refinanced Credit Agreement, pursuant to
which the Mortgagor granted to the Agent a security interest in, among other
things, the Collateral (as hereinafter defined);

     WHEREAS, it is an obligation of Mortgagor under the Credit Agreements that
Mortgagor execute and deliver this Mortgage which serves as a "Fourth Amendment
to Mortgage" as defined under the Credit Agreements;

     WHEREAS, as used in this Mortgage the term "Obligations" means and includes
                                                 -----------
all of the following:

          (a)  the principal of and interest on the Secured Obligations;

          (b)  all other indebtedness of any kind arising under, and all amounts
of any kind which, at any time become due and owing to the Mortgagee under or
with respect to the Credit Agreements, the Notes, this Mortgage, the Collateral
Documents referred to in the Credit Agreements, and any other document,
agreement or other instrument delivered pursuant to or in connection with the
Credit Agreements or this Mortgage (herein collectively called the "Loan
                                                                    ----
Documents");
---------

                                       -3-

<PAGE>

          (c) all of the covenants, obligations and agreements and the truth and
completeness of all representations and warranties, of the Mortgagor, in, under
or pursuant to the Loan Documents;

          (d) any and all advances, costs and expenses including, without
limitation, all costs of enforcement and collection, paid or incurred by the
Mortgagee to protect any of the Collateral (as hereinafter defined), perform any
obligation of the Mortgagor or any other Person under or with respect to the
Loan Documents or collect any amount owing to the Mortgagee and the Lenders
which is secured or evidenced hereby or by any other Loan Document; and

          (e) interest on all of the foregoing;

     NOW, THEREFORE, for good and valuable consideration the receipt of which is
hereby acknowledged, and in order to induce the Lenders to make Loans to the
Mortgagor from time to time pursuant to the Credit Agreements, the Mortgagor
hereby enters into this Mortgage which amends and restates in its entirety the
Existing Mortgage.

                                   G R A N T :
                                   -----------

     FOR and in consideration of the premises, and of the mutual covenants
herein contained, and in order to secure the full, timely and proper payment and
performance of and compliance with each and every one of the Obligations, the
Mortgagor hereby irrevocably grants, bargains, sells, mortgages, warrants,
aliens, demises, releases, hypothecates, pledges, assigns, transfers and conveys
to the Mortgagee and its successors and assigns, forever, all of the following
(the "Collateral"):
      ----------

          (a) Real Estate. All of the Land and all additional lands and estates
              -----------
     therein now owned or hereafter acquired by the Mortgagor for use or
     development with the Land or any portion thereof and which is made subject
     to the lien hereof from time to time by supplemental mortgage or otherwise,
     together with all and singular the tenements, rights, easements,
     hereditaments, rights of way, privileges, liberties, appendages and
     appurtenances now or hereafter belonging or in anywise pertaining to the
     Land and such additional lands and estates therein (including, without
     limitation, all rights relating to storm and sanitary sewer, water, gas,
     electric, railway and telephone services); all development rights, air
     rights, riparian rights, water, water rights, water stock, all rights in,
     to

                                       -4-

<PAGE>

and with respect to any and all oil, gas, coal, minerals and other substances of
any kind or character underlying or relating to the Land and such additional
lands and estates therein and any interest therein; all estate, claim, demand,
right, title or interest of the Mortgagor in and to any street, road, highway or
alley, vacated or other, adjoining the Land or any part thereof and such
additional lands and estates therein; all strips and gores belonging, adjacent
or pertaining to the Land or such additional lands and estates; and any
after-acquired title to any of the foregoing (herein collectively called the
"Real Estate");
 -----------

     (b) Improvements. All buildings, structures and other improvements and any
         ------------
additions and alterations thereto or replacements thereof, now or hereafter
built, constructed or located upon the Real Estate; and all furnishings,
fixtures, fittings, appliances, apparatus, equipment, machinery, building and
construction materials and other articles of every kind and nature whatsoever
and all replacements thereof, now or hereafter affixed or attached to, placed
upon or used in any way in connection with the complete and comfortable use,
enjoyment, occupation, operation, development and maintenance of the Real Estate
or such buildings, structures and other improvements now or hereafter owned by
the Mortgagor, including, but not limited to, partitions, furnaces, boilers, oil
burners, radiators and piping, plumbing and bathroom fixtures, refrigeration,
heating, ventilating, air conditioning and sprinkler systems, other fire
prevention and extinguishing apparatus and materials, vacuum cleaning systems,
gas and electric fixtures, incinerators, compactors, elevators, engines, motors,
generators and all other articles of property which are considered fixtures
under applicable law (such buildings, structures and other improvements and such
other property are herein collectively referred to as the "Improvements"; the
                                                           ------------
Real Estate and the Improvements are collectively referred to as the
"Property");
 --------

     (c) Goods. All building materials, goods, construction materials,
         -----
appliances (including, without limitation, stoves, ranges, ovens, disposals,
refrigerators, water fountains and coolers, fans, heaters, dishwashers, clothes
washers and dryers, water heaters, hood and fan combinations, kitchen equipment,
laundry equipment, kitchen cabinets and other similar equipment), stocks, beds,
mattresses, bedding and linens, supplies,

                                       -5-

<PAGE>

blinds, window shades, drapes, carpets, floor coverings, office equipment,
growing plants and shrubberies, control devices, equipment (including window
cleaning, building cleaning, swimming pool, recreational, monitoring, garbage,
pest control and other equipment), motor vehicles, tools, furnishings,
furniture, lighting, non-structural additions to the Real Estate and
Improvements and all other tangible property of any kind or character, together
with all replacements thereof, now or hereafter owned by the Mortgagor and
located on or in or used or useful in connection with the complete and
comfortable use, enjoyment, occupation, operation, development and maintenance
of the Property, regardless of whether or not located on or in the Property or
located elsewhere for purposes of storage, fabrication or otherwise, exclusive
of any of the foregoing items of property owned by tenants of portions of the
Improvements (herein collectively referred to as the "Goods");
                                                      -----

     (d) Intangibles. All goodwill, trademarks, trade names, option rights,
         -----------
purchase contracts, books and records and general intangibles of the Mortgagor
relating to the Property and all accounts, contract rights, instruments, chattel
paper and other rights of the Mortgagor for the payment of money for property
sold or lent, for services rendered, for money lent, or for advances or deposits
made, and any other intangible property of the Mortgagor relating to the
Property, but specifically excluding rights of the Mortgagor in, to and under
contracts with providers of goods or services in connection with the maintenance
and operation of the Property (herein collectively referred to as the
"Intangibles");
 -----------

     (e) Plans. All rights of the Mortgagor in and to all plans and
         -----
specifications, designs, drawings and other information, materials and matters
heretofore or hereafter prepared relating to the Improvements or any
construction on the Real Estate (herein collectively referred to as the
"Plans");
 -----

     (f) Permits. All rights of the Mortgagor in, to and under all permits,
         -------
franchises, licenses, approvals and other authorizations respecting the use,
occupation and operation of the Property and every part thereof and respecting
any business or other activity conducted on or from the Property, and any
product or proceed thereof or therefrom, including, without limitation, all
building permits, certificates of occupancy and other licenses,

                                       -6-

<PAGE>

     permits and approvals issued by governmental authorities having
     jurisdiction (herein collectively called the "Permits");
                                                   -------

          (g) Leases of Furniture, Furnishings and Equipment. All right, title
              ----------------------------------------------
     and interest of the Mortgagor as lessee in, to and under any leases of
     furniture, furnishings and equipment now or hereafter installed in or at
     any time used in connection with the Property;

          (h) Proceeds. All proceeds of the conversion, voluntary or involuntary
              --------
     of any of the foregoing into cash or liquidated claims, including, without
     limitation, proceeds of insurance and condemnation awards (herein
     collectively referred to as "Proceeds"); and
                                  --------

          (i) Other Property. All other property and rights of the Mortgagor of
              --------------
     every kind and character relating to the Property, and all proceeds and
     products of any of the foregoing.

     AND, without limiting any of the other provisions of this Mortgage, the
Mortgagor expressly grants to the Mortgagee, as secured party, a security
interest in all of those portions of the Collateral which are or may be subject
to the State Uniform Commercial Code provisions applicable to secured
transactions;

     TO HAVE AND TO HOLD the Collateral unto the Mortgagee and its successors
and assigns, forever.

     FURTHER to secure the full, timely and proper payment and performance of
the Obligations, the Mortgagor hereby covenants and agrees with and warrants to
the Mortgagee as follows:

                                   ARTICLE I

                    COVENANTS AND AGREEMENTS OF THE MORTGAGOR
                    -----------------------------------------

     SECTION 1.1. Payment of Secured Obligations and Other Obligations. The
                  ----------------------------------------------------
Mortgagor agrees that it will duly and punctually pay:

          (a) the principal of and interest on the Secured Obligations at the
     time outstanding in accordance with the terms thereof and hereof, and

                                       -7-

<PAGE>

               (b) when and as due and payable from time to time in accordance
          with the terms hereof or of any other applicable Loan Document, all
          other Obligations.

          SECTION 1.2. Title to Collateral, etc. The Mortgagor represents and
                       ------------------------
warrants to and covenants with the Mortgagee that:

               (a)  as of the date hereof and at all times hereafter while this
          Mortgage is outstanding, the Mortgagor is the absolute owner of the
          legal and beneficial title to the Property and to all other property
          included in the Collateral, and has good and marketable title in fee
          simple absolute to the Property, subject in each case only to this
          Mortgage and the encumbrances set forth in Schedule 2 hereto (the
                                                     ----------
          "Permitted Encumbrances");
           ----------------------

               (b)  the Mortgagor has good and lawful right, power and authority
          to execute this Mortgage and to convey, transfer, assign, mortgage and
          grant a security interest in the Collateral, all as provided herein;

               (c)  this Mortgage has been duly executed, acknowledged and
          delivered on behalf of the Mortgagor, all consents and other actions
          required to be taken by the officers, directors, shareholders and
          partners, as the case may be, of the Mortgagor have been duly and
          fully given and performed and this Mortgage constitutes the legal,
          valid and binding obligation of the Mortgagor, enforceable against the
          Mortgagor in accordance with its terms;

               (d)  the Mortgagor, at its expense, will warrant and defend to
          the Mortgagee and any purchaser under the power of sale herein or at
          any foreclosure sale such title to the Collateral and the first
          mortgagel ien and first priority perfected security interest of this
          Mortgage thereon and therein against all claims and demands and will
          maintain, preserve and protect such lien and security interest and
          will keep this Mortgage a valid, direct first mortgage lien of record
          on and a first priority perfected security interest in the Collateral,
          subject only to the Permitted Encumbrances; and

               (e)  the Mortgagor will maintain and preserve its corporate
          existence and good standing under the laws of the State.

          SECTION 1.3. Title Insurance.
                       ---------------

                                       -8-

<PAGE>

     SECTION 1.3.1. Title Insurance Endorsement. Concurrently with the execution
                    ---------------------------
and delivery of this Mortgage, the Mortgagor, at its expense, has obtained and
delivered to the Mortgagee a modification endorsement to Mortgagee's existing
lender's title policy relating to the Property in form and substance
satisfactory to Mortgagee and insuring that the lien of this Mortgage is a
valid, first priority lien on the Property. The Mortgagor has duly paid in full
all premiums and other charges due in connection with the issuance of such
endorsement.

     SECTION 1.3.2. [INTENTIONALLY OMITTED]

     SECTION 1.3.3. [INTENTIONALLY OMITTED]

     SECTION 1.3.4. Title Insurance Proceeds. All proceeds received by and
                    ------------------------
payable to the Mortgagee for any loss under the loan policy or policies of title
insurance referenced in Section 1.3.1, or under any policy or policies of title
                        -------------
insurance delivered to the Mortgagee in substitution therefor or replacement
thereof, shall be the property of the Mortgagee and shall be applied by the
Mortgagee in accordance with the provisions of Section 2.3.
                                               -----------

     SECTION 1.4.   Recordation. The Mortgagor, at its expense, will at all
                    -----------
times cause this Mortgage and any instruments amendatory hereof or supplemental
hereto and any instruments of assignment hereof or thereof (and any appropriate
financing statements or other instruments and continuations thereof) and each
other instrument delivered in connection with any Loan Document and intended
thereunder to be recorded, registered and filed and to be kept recorded,
registered and filed, in such manner and in such places, and will pay all such
recording, registration, filing fees, taxes and other charges, and will comply
with all such statutes and regulations as may be required by law in order to
establish, preserve, perfect and protect the lien and security interest of this
Mortgage as a valid, direct first mortgage lien and first priority perfected
security interest in the Collateral, subject only to Permitted Encumbrances. The
Mortgagor will pay or cause to be paid, and will indemnify the Mortgagee in
respect of, all taxes (including interest and penalties) at any time payable in
connection with the filing and recording of this Mortgage and any and all
supplements and amendments hereto.

     SECTION 1.5.   Payment of Impositions, etc. Subject to Section 1.8
                    ---------------------------             -----------
(relating to permitted contests), the Mortgagor will pay or cause to be paid
within 30 days after the same become a lien, but in any event before the same
would become delinquent

                                       -9-

<PAGE>

and before any fine, penalty, interest or cost may be added for non-payment, all
taxes, assessments, water and sewer rates, charges, license fees, inspection
fees and other governmental levies or payments, of every kind and nature
whatsoever, general and special, ordinary and extraordinary, unforeseen as well
as foreseen, which at any time may be assessed, levied, confirmed, imposed or
which may become a lien upon the Collateral, or any portion thereof, or which
are payable with respect thereto, or upon the rents, issues, income or profits
thereof, or on the occupancy, operation, use, possession or activities thereof,
whether any or all of the same be levied directly or indirectly or as excise
taxes or as income taxes, and all taxes, assessments or charges which may be
levied on the Secured Obligations, or the interest thereon (collectively, the
"Impositions"). The Mortgagor will deliver to the Mortgagee, upon request,
 -----------
copies of official receipts or other satisfactory proof evidencing such
payments. Notwithstanding the foregoing provisions of this Section 1.5, the
                                                           -----------
Mortgagee agrees that if the Mortgagor (through inadvertence), fails to make
payment of any Imposition which is in a de minimis amount (which shall be an
                                        -- -------
amount less than or equal to $5,000), then the Mortgagee shall not declare an
Event of Default as a result of such failure, provided (i) within five (5) days
after the Mortgagor receives notice of such unpaid Imposition, the Mortgagor
makes payment thereof and (ii) the Collateral is not, in the Mortgagee's
judgment, in any danger of being subjected to judicial proceedings, sold, lost,
forfeited or interfered with.

     SECTION 1.6.   Insurance and Legal Requirements. Subject to Section 1.8
                    --------------------------------             -----------
(relating to permitted contests), the Mortgagor, at its expense, will comply, or
cause compliance with

          (a) all provisions of any insurance policy covering or applicable to
     the Collateral or any part thereof, all requirements of the issuer of any
     such policy, and all orders, rules, regulations and other requirements of
     the National Board of Fire Underwriters (or any other body exercising
     similar functions) applicable to or affecting the Collateral or any part
     thereof or any use or condition of the Collateral or any part thereof
     (collectively, the "Insurance Requirements"); and
                         ----------------------

          (b) all laws, including Environmental Laws, statutes, codes, acts,
     ordinances, orders, judgments, decrees, injunctions, rules, regulations,
     permits, licenses, authorizations, directions and requirements of all
     governments, departments, commissions, boards, property owners
     associations, courts, authorities, agencies,

                                      -10-

<PAGE>

          officials and officers, foreseen or unforeseen, ordinary or
          extraordinary, which now or at any time hereafter may be applicable to
          the Collateral or any part thereof, or any of the adjoining sidewalks,
          curbs, vaults and vault space, if any, streets or ways, or any use or
          condition of the Collateral or any part thereof (collectively, the
          "Legal Requirements");
           ------------------

whether or not compliance therewith shall require structural changes in or
interference with the use and enjoyment of the Collateral or any part thereof.

          SECTION 1.7. Security Interests, etc. The Mortgagor will not directly
                       -----------------------
or indirectly create or permit or suffer to be created or to remain, and will
promptly discharge or cause to be discharged, any deed of trust, mortgage,
encumbrance or charge on, pledge of, security interest in or conditional sale or
other title retention agreement with respect to or any other lien on or in the
Collateral or any part thereof or the interest of the Mortgagor, the Mortgagee
therein or any Proceeds thereof or Rents (as hereinafter defined) or other sums
arising therefrom, other than (a) Permitted Encumbrances and (b) liens of
mechanics, materialmen, suppliers or vendors or rights thereto incurred in the
ordinary course of the business of the Mortgagor for sums not yet due or any
such liens or rights thereto which are at the time being contested as permitted
by Section 1.8. The Mortgagor will not postpone the payment of any sums for
   -----------
which liens of mechanics, materialmen, suppliers or vendors or rights thereto
have been incurred (unless such liens or rights thereto are at the time being
contested as permitted by Section 1.8), or enter into any contract under which
                          -----------
payment of such sums is postponable (unless such contract expressly provides for
the legal, binding and effective waiver of any such liens or rights thereto), in
either case, for more than 60 days after the completion of the action giving
rise to such liens or rights thereto.

          SECTION 1.8. Permitted Contests. After prior written notice to the
                       ------------------
Mortgagee, the Mortgagor at its expense may contest, or cause to be contested,
by appropriate action conducted in good faith, the amount or validity or
application, in whole or in part, of any Imposition, Legal Requirement or
Insurance Requirement or lien of a mechanic, materialman, supplier or vendor
(including, without limitation, any lien of any mechanic, materialman, supplier
or vendor arising from alterations or additions performed by the Mortgagor
pursuant to the provisions of Section 1.12), provided that, (a) in the case of
                              ------------   -------- ----
an unpaid Imposition, lien, encumbrance or charge, such

                                       -11-

<PAGE>

proceedings shall suspend the collection thereof from the Mortgagor, the
Mortgagee, and the Collateral (including any rent or other income therefrom) and
shall not interfere with the payment of any such rent or income, (b) neither the
Collateral nor any rent or other income therefrom nor any part thereof or
interest therein would be in any danger of being sold, forfeited, lost or
interfered with, (c) in the case of a Legal Requirement, neither the Mortgagor
nor the Mortgagee would be in danger of any civil or criminal liability for
failure to comply therewith, (d) the Mortgagor shall have furnished such
security, if any, as may be required in the proceedings or as may be requested
by the Mortgagee, (e) the non-payment of the whole or any part of any Imposition
will not result in the delivery of a tax deed to the Collateral or any part
thereof because of such non-payment, (f) the payment of any sums required to be
paid with respect to the Secured Obligations or under this Mortgage (other than
any unpaid Imposition, lien, encumbrance or charge at the time being contested
in accordance with this Section 1.8) shall not be interfered with or otherwise
                        -----------
affected, and (g) in the case of any Insurance Requirement, the failure of the
Mortgagor to comply therewith shall not affect the validity of any insurance
required to be maintained by the Mortgagor under Section 2.1.
                                                 -----------

          SECTION 1.9.  Leases. The Mortgagor represents and warrants to the
                        ------
Mortgagee that, as of the date hereof, there are no Leases (as hereinafter
defined) with respect to all or any portion of the Property. The Mortgagor
covenants and agrees with the Mortgagee that, after the date hereof, the
Mortgagor will not enter into any Lease of all or any portion of the Property
without first obtaining the written consent of the Mortgagee.

          SECTION 1.10. Compliance with Instruments. The Mortgagor at its
                        ---------------------------
expense will promptly comply with all rights of way or use, privileges,
franchises, servitudes, licenses, easements, tenements, hereditaments and
appurtenances forming a part of the Property and all instruments creating or
evidencing the same, in each case, to the extent compliance therewith is
required of the Mortgagor under the terms thereof. The Mortgagor will not take
any action which may result in a forfeiture or termination of the rights
afforded to the Mortgagor under any such instruments and will not, without the
prior written consent of the Mortgagee, amend in any material respect any of
such instruments.

          SECTION 1.11. Maintenance and Repair, etc. Subject to the provisions
                        ---------------------------
of Section 1.12, the Mortgagor will keep or cause to
   ------------

                                      -12-

<PAGE>

be kept all presently and subsequently erected or acquired Improvements and the
sidewalks, curbs, vaults and vault space, if any, located on or adjoining the
same, and the streets and the ways adjoining the same, in good order and repair
and in such a fashion that the value and utility of the Collateral will not be
diminished, and, at its sole cost and expense, will promptly make or cause to be
made all necessary and appropriate repairs, replacements and renewals thereof,
whether interior or exterior, structural or nonstructural, ordinary or
extraordinary, foreseen or unforeseen. All repairs, replacements and renewals
shall be substantially equal in quality to the original Improvements. The
Mortgagor at its expense will do or cause to be done all shoring of foundations
and walls of any building or other Improvements on the Property and (to the
extent permitted by law) of the ground adjacent thereto, and every other act
necessary or appropriate for the preservation and safety of the Property by
reason of or in connection with any excavation or other building operation upon
the Property and upon any adjoining property, whether or not the Mortgagor
shall, by any Legal Requirement, be required to take such action or be liable
for failure to do so.

     SECTION 1.12. Alterations, Additions, etc. So long as no Event of Default
                   ----------------------------
shall have occurred and be continuing, the Mortgagor shall have the right at any
time and from time to time to make or cause to be made reasonable alterations of
and additions to the Property or any part thereof, provided that any alteration
                                                   -------- ----
or addition: (a) shall not change the general character of the Property or
reduce the fair market value thereof below its value immediately before such
alteration or addition, or impair the usefulness of the Property; (b) is
effected with due diligence, in a good and workmanlike manner and in compliance
with all Legal Requirements and Insurance Requirements; and (c) is promptly and
fully paid for, or caused to be paid for, by the Mortgagor.

     SECTION 1.13. Acquired Property Subject to Lien. All property at any time
                   ---------------------------------
acquired by the Mortgagor and provided or required by this Mortgage to be or
become subject to the lien and security interest hereof, whether such property
is acquired by exchange, purchase, construction or otherwise, shall forthwith
become subject to the lien and security interest of this Mortgage without
further action on the part of the Mortgagor or the Mortgagee. The Mortgagor, at
its expense, will execute and deliver to (and will record and file as provided
in Section 1.4) an instrument supplemental to this Mortgage satisfactory in
   -----------
substance and form to the Mortgagee, whenever

                                      -13-

<PAGE>

such an instrument is necessary under applicable law to subject to the lien and
security interest of this Mortgage all right, title and interest of the
Mortgagor in and to all property provided or required by this Mortgage to be
subject to the lien and security interest hereof and acquired by the Mortgagor
since the date of this Mortgage or the date of the most recent supplemental
instrument so subjecting property to the lien and security interest hereof,
whichever is later.

     SECTION 1.14.  Assignment of Leases, Rents, Proceeds, etc.
                    ------------------------------------------

          (a) As part of the consideration for the Secured Obligations, and not
     as additional security therefor, Mortgagor hereby absolutely assigns and
     transfers to Mortgagee all the right, title and interest of Mortgagor in
     and to (i) all leases, licenses, occupancy agreements, concessions and
     other arrangements, oral or written, now existing or hereafter entered
     into, whereby any Person agrees to pay money or any other consideration for
     the use, possession or occupancy of, or any estate in, the Property or any
     portion thereof or interest therein, and all proceeds thereof (herein
     collectively referred to as the "Leases"), (ii) all rents, issues, profits,
                                      ------
     royalties, avails, income and other benefits derived or owned, directly or
     indirectly, by the Mortgagor from the Property, including, without
     limitation, all rents and other consideration payable by tenants, claims
     against guarantors, and any cash or other securities deposited to secure
     performance by tenants, under the Leases, and all proceeds thereof (herein
     collectively referred to as "Rents") and (iii) all Proceeds. In addition,
                                  -----
     Mortgagor hereby gives to and confers upon Mortgagee the right, power and
     authority to exercise all of Mortgagor's options, rights and remedies under
     the Leases and collect the Rents and Proceeds. Mortgagor hereby irrevocably
     appoints Mortgagee its true and lawful attorney-in-fact, coupled with an
     interest, at the option of Mortgagee, at any time and from time to time, to
     demand, receive and enforce payment, to give receipts, releases and
     satisfactions, to exercise all of Mortgagor's options, rights and remedies
     under the Leases and to sue, in the name of Mortgagor or Mortgagee, for all
     Rents and Proceeds, and apply the same to the Obligations secured hereby;
     provided, however, that Mortgagor shall have a license to collect such
     Rents and Proceeds as provided in Section 1.14(c) below. The assignment of
                                       --------------
     the Leases, Rents and Proceeds contained herein is intended to be an
     absolute assignment from

                                      -14-

<PAGE>

     Mortgagor to Mortgagee and not merely the passing of a security interest
     and shall be effective immediately upon the recording of this Mortgage.
     Mortgagor hereby waives any requirement that a receiver be appointed for
     the Collateral or that Mortgagee take possession of the Collateral in order
     for such assignment of the Leases, Rents and Proceeds to become effective.
     Nothing herein shall be construed as obligating Mortgagee to perform any of
     Mortgagor's obligations under any of the Leases or other agreements
     relating to the Collateral.

          (b) Mortgagor acknowledges and agrees that the acceptance by Mortgagee
     of the assignments of the Leases, Rents and Proceeds with all of the
     rights, powers, privileges and authority so created, shall not, prior to
     entry upon and taking of possession of the Property by Mortgagee, be deemed
     or construed to constitute Mortgagee a mortgagee in possession nor
     thereafter or at any time or in any event obligate Mortgagee to appear in
     or defend any action or proceeding relating to the Leases or to the
     Property, or to take any action hereunder, or to expend any money or incur
     any expenses or perform or discharge any obligation, duty or liability
     under the Leases or other agreements relating to the Collateral, or to
     assume any obligation or responsibility for any security deposits or other
     deposits delivered to Mortgagor by lessees thereunder and not assigned and
     delivered to Mortgagee, nor shall Mortgagee be liable in any way for any
     injury or damage to person or property sustained by any person or persons,
     firm or corporation, in or about the Property.

          (c) Notwithstanding the absolute, present and irrevocable assignment,
     grant and conveyance by Mortgagor to Mortgagee of the Leases, Rents and
     Proceeds contained in this Mortgage, except as is otherwise provided in
     this Mortgage, a license and permission is hereby given to the Mortgagor,
     so long as no Event of Default has occurred and is continuing hereunder, to
     collect, receive and apply such Rents, Proceeds and other rents, income,
     proceeds and benefits as they become due and payable, but not in advance
     thereof, and in accordance with all of the other terms, conditions and
     provisions hereof and of the Leases, contracts, agreements and other
     instruments with respect to which such payments are made or such other
     benefits are conferred. Upon the occurrence of an Event of Default,(i) such
     license and permission shall terminate immediately and automatically,
     without notice to the Mortgagor or any other

                                       -15-

<PAGE>

          Person, and shall not be reinstated upon a cure of such Event of
          Default without the express written consent of the Mortgagee and (ii)
          Mortgagee shall immediately be entitled to exercise all rights under
          the Leases and to the possession of all Rents and Proceeds, and to
          collect, receive and apply all Rents, Proceeds and all other rents,
          income, proceeds and benefits from the Collateral, including all
          right, title and interest of the Mortgagor in any escrowed sums or
          deposits or any portion thereof or interest therein, whether or not
          the Mortgagee takes possession of the Collateral or any part thereof.
          Furthermore, at the Mortgagee's option, upon the occurrence of an
          Event of Default hereunder, Mortgagee may:

                    (i)    enter upon and take possession of the Property for
               the purpose of collecting Rents, Proceeds and said rents, income,
               proceeds and other benefits;

                    (ii)   dispossess by the customary summary proceedings any
               tenant, purchaser or other Person defaulting in the payment of
               any amount when and as due and payable, or in the performance of
               any other obligation, under the Lease, contract or other
               instrument to which said Rents, Proceeds or other rents, income,
               proceeds or benefits relate;

                    (iii)  let or convey the Collateral or any portion thereof
               or any interest therein; and

                    (iv)   apply Rents, Proceeds and such rents, income,
               proceeds and other benefits, after the payment of all necessary
               fees, charges and expenses, on account of the Obligations in
               accordance with Section 3.10.
                               ------------

               (d)  Mortgagor hereby agrees to indemnify and hold Mortgagee
          harmless of and from any and all liability, loss, damage or expense
          that it may or might incur under or by reason of the assignments
          contained herein, or for any action taken by Mortgagee hereunder, or
          by reason or in defense of any and all claims and demands whatsoever
          that may be asserted against Mortgagee arising out of the Leases,
          including without limitation any claim by any lessees of credit for
          rental paid to and received by Mortgagor, but not delivered to
          Mortgagee, for any period under the Leases more than one (1) month in
          advance of the due date thereof. Should Mortgagee incur any such
          liability, loss, damage or expense, the amount thereof

                                      -16-

<PAGE>

     (including reasonable attorneys' fees) with interest thereon at the Default
     Rate shall be payable by Mortgagor immediately without demand, shall be
     secured by this Mortgage, and shall be part of the Obligations.

     SECTION 1.15.  No Claims Against the Mortgagee. Nothing contained in this
                    -------------------------------
Mortgage shall constitute any consent or request by the Mortgagee, express or
implied, for the performance of any labor or the furnishing of any materials or
other property in respect of the Property or any part thereof, or be construed
to permit the making of any claim against the Mortgagee in respect of labor or
services or the furnishing of any materials or other property or any claim that
any lien based on the performance of such labor or the furnishing of any such
materials or other property is prior to the lien and security interest of this
Mortgage. All contractors, subcontractors, vendors and other persons dealing
          ------------------------------------------------------------------
with the Property, or with any persons interested therein, are hereby required
------------------------------------------------------------------------------
to take notice of the provisions of this Section.
------------------------------------------------

     SECTION 1.16.  Indemnification Against Obligations. The Mortgagor will
                    -----------------------------------
protect, indemnify, save harmless and defend the Mortgagee, each commercial
banking institution (a "Participant") which pursuant to a participation
                        -----------
agreement has purchased a participation in any portion of the Loans or the
Commitment, or both, and each Lender (collectively, the "Indemnified Parties"
                                                         -------------------
and individually, an Indemnified Party") from and against any and all
                     -----------------
liabilities, obligations, claims, damages, penalties, causes of action, costs
and expenses (including, without limitation, attorneys' fees and expenses)
imposed upon or incurred by or asserted against any Indemnified Party by reason
of (a) ownership of an interest in this Mortgage, the Notes or the Property, (b)
any accident, injury to or death of persons or loss of or damage to or loss of
the use of property occurring on or about the Property or any part thereof or
the adjoining sidewalks, curbs, vaults and vault spaces, if any, streets, alleys
or ways, (c) any use, non-use or condition of the Property or any part thereof
or the adjoining sidewalks, curbs, vaults and vault spaces, if any, streets,
alleys or ways, (d) any failure on the part of the Mortgagor to perform or
comply with any of the terms of this Mortgage, (e) performance of any labor or
services or the furnishing of any materials or other property in respect of the
Collateral or any part thereof made or suffered to be made by or on behalf of
the Mortgagor, (f) any negligence or tortious act on the part of the Mortgagor
or any of its agents, contractors, lessees, licensees or invitees, (g) any work
in connection with any alterations, changes, new

                                      -17-

<PAGE>

construction or demolition of or additions to the Property, or (h) (i) any
Hazardous Material on, in, under or affecting all or any portion of the
Property, the groundwater, or any surrounding areas, (ii) any misrepresentation,
inaccuracy or breach of any warranty, covenant or agreement contained or
referred to in Section 1.19, (iii) any violation or claim of violation by the
               ------------
Mortgagor of any Environmental Laws, or (iv) the imposition of any lien for
damages caused by or the recovery of any costs for the cleanup, release or
threatened release of Hazardous Material. If any action or proceeding be
commenced, to which action or proceeding any Indemnified Party is made a party
by reason of the execution of this Mortgage or the Notes, or in which it becomes
necessary to defend or uphold the lien of this Mortgage, all sums paid by the
Indemnified Parties, for the expense of any litigation to prosecute or defend
the rights and lien created hereby, shall be paid by the Mortgagor to such
Indemnified Parties, as the case may be, as hereinafter provided. The Mortgagor
will pay and save the Indemnified Parties harmless against any and all liability
with respect to any intangible personal property tax or similar imposition of
the State or any subdivision or authority thereof now or hereafter in effect, to
the extent that the same may be payable by the Indemnified Parties in respect of
this Mortgage or any Secured Obligation. All amounts payable to the Indemnified
Parties under this Section 1.16 shall be deemed indebtedness secured by this
                   ------------
Mortgage and any such amounts which are not paid within 10 days after written
demand therefor by any Indemnified Party shall bear interest at the Default Rate
from the date of such demand. In case any action, suit or proceeding is brought
against any Indemnified Party by reason of any such occurrence, the Mortgagor,
upon request of such Indemnified Party, will, at the Mortgagor's expense, resist
and defend such action, suit or proceeding or cause the same to be resisted or
defended by counsel designated by the Mortgagor and approved by such Indemnified
Party. The obligations of the Mortgagor under this Section 1.16 shall survive
                                                   ------------
any discharge or reconveyance of this Mortgage or payment in full of the Secured
Obligations.

     SECTION 1.17. No Credit for Payment of Taxes. The Mortgagor shall not be
                   ------------------------------
entitled to any credit against the Obligations by reason of the payment of any
tax on the Property or any part thereof or by reason of the payment of any other
Imposition, and shall not apply for or claim any deduction from the taxable
value of the Property or any part thereof by reason of this Mortgage.

                                      -18-

<PAGE>

     SECTION 1.18. Offering of the Notes. Neither the Mortgagor nor any Person
                   ---------------------
acting on behalf of the Mortgagor has directly or indirectly offered the Notes
or any portion thereof or any similar security to, or solicited any offer to buy
any of the same from, any Person other than the Mortgagee. Neither the Mortgagor
nor any Person acting on behalf of the Mortgagor has taken or will take any
action which would subject the issuance of the Notes to the provisions of
section 5 of the Securities Act of 1933, as amended.

     SECTION 1.19. Hazardous Material and Wastes. Neither the Mortgagor nor, to
                   -----------------------------
the best knowledge of Mortgagor, any other Person has ever caused or permitted
any Hazardous Material to be held or disposed of on or at the Property or at any
other property legally or beneficially owned by the Mortgagor. The Mortgagor
further represents and warrants to the Mortgagee as set forth in Section 6.12 of
the Credit Agreements and agrees to perform the obligations set forth in
Sections 7.1.6 of the Credit Agreements.

                                   ARTICLE II

                 INSURANCE; DAMAGE, DESTRUCTION OR TAKING, ETC.
                  ---------------------------------------------

     SECTION 2.1. Insurance.
                  ---------

     SECTION 2.1.1. Risks to be Insured. The Mortgagor will, at its expense,
                    -------------------
maintain or cause to be maintained with insurance carriers approved by the
Mortgagee (a) insurance with respect to the Improvements against loss or damage
by fire, lightning and such other risks as are included in standard "all-risk"
policies, in amounts sufficient to prevent the Mortgagor and the Mortgagee from
becoming a co-insurer of any partial loss under the applicable policies, but in
any event in amounts not less than the then full insurable value (actual
replacement value) of the Improvements, as determined by the Mortgagor in
accordance with generally accepted insurance practice and approved by the
Mortgagee or, upon the request of the Mortgagee as determined at the Mortgagor's
expense by the insurer or insurers or by an expert approved by the Mortgagee,
(b) commercial general liability, including bodily injury and property damage,
insurance, with personal injury endorsement, applicable to the Property in such
amounts as are usually carried by Persons operating similar properties in the
same general locality, but in any event with a limit of not less than $3,000,000
per person for bodily injury liability, a limit of not less than $5,000,000 per
occurrence for bodily injury liability and $500,000 for all claims for property
damage liability with respect to any one

                                      -19-

<PAGE>

occurrence, (c) explosion insurance in respect of any steam and pressure boilers
and similar apparatus located in the Property in such amounts as are usually
carried by persons operating similar properties in the same general locality,
but in any event in an amount not less than $500,000, (d) worker's compensation
insurance to the full extent required by applicable law for all employees of the
Mortgagor engaged in any work on or about the Property and employer's liability
insurance with a limit of not less than $3,000,000 for each occurrence, (e)
all-risk, builders' risk insurance with respect to the Property during any
period during which there is any construction work being performed, against loss
or damage by fire or other risks, including vandalism, malicious mischief and
sprinkler leakage, as are included in so-called "extended coverage" clauses at
the time available, (f) business interruption insurance in an amount reasonably
satisfactory to the Mortgagee, and (g) such other insurance with respect to the
Property in such amounts and against such insurable hazards as the Mortgagee
from time to time may reasonably require by written notice to the Mortgagor.

     SECTION 2.1.2. Policy Provisions. All insurance maintained by the Mortgagor
                    -----------------
pursuant to Section 2.1.1 shall (a) (except for worker's compensation insurance)
            -------------
name the Mortgagor as the named insured and the Mortgagee as an additional
insured and loss payee, (b) (except for worker's compensation and commercial
general liability insurance) provide that the proceeds for any losses shall be
adjusted by the Mortgagor subject to the approval of the Mortgagee in the event
the proceeds shall exceed $100,000, and shall be payable to the Mortgagee, to be
held and applied as provided in Section 2.3, (c) include effective waivers by
                                -----------
the insurer of all rights of subrogation against the Mortgagee, the indebtedness
secured by this Mortgage and the Property and all claims for insurance premiums
against the Mortgagee, (d) provide that any losses shall be payable
notwithstanding (i) any act, failure to act or negligence of or violation of
warranties, declarations or conditions contained in such policy by any named
insured, (ii) the occupation or use of the Property for purposes more hazardous
than permitted by the terms thereof, (iii) any foreclosure or other action or
proceeding taken by the Mortgagee pursuant to any provision of this Mortgage, or
(iv) any change in title or ownership of the Property, (e) provide that no
cancellation, reduction in amount or material change in coverage thereof or any
portion thereof shall be effective until at least 30 days after receipt by the
Mortgagee of written notice thereof, and (f) be satisfactory in all other
respects to the Mortgagee. Any insurance maintained pursuant to this Section 2.1
                                                                     -----------
may be evidenced by blanket

                                      -20-

<PAGE>

insurance policies covering the Property and other properties or assets of the
Mortgagor, provided that any such policy shall specify the portion, if less than
           -------- ----
all, of the total coverage of such policy that is allocated to the Property and
shall in all other respects comply with the requirements of this Section 2.1.
                                                                 -----------

     SECTION 2.1.3. Delivery of Policies, etc. The Mortgagor will deliver to the
                    --------------------------
Mortgagee, promptly upon request, (a) the originals (or, at the Mortgagee's
option, certificates) of all policies evidencing all insurance required to be
maintained under Section 2.1.1 (or, in the case of blanket policies,
                 -------------
certificates thereof by the insurers together with a counterpart of each blanket
policy), and (b) evidence as to the payment of all premiums due thereon (with
respect to commercial general liability insurance policies, all installments for
the current year due thereon to such date), provided that the Mortgagee shall
                                            -------- ----
not be deemed by reason of its custody of such policies to have knowledge of the
contents thereof. The Mortgagor will also deliver to the Mortgagee not later
than 30 days prior to the expiration of any policy a binder or certificate of
the insurer evidencing the replacement thereof and not later than 15 days prior
to the expiration of such policy an original copy of the new policy (or, in the
case of a replacement blanket policy, a certificate thereof of the insurer
together with a counterpart of the blanket policy). In the event the Mortgagor
shall fail to effect or maintain any insurance required to be effected or
maintained pursuant to the provisions of this Section 2.1, the Mortgagor will
                                              -----------
indemnify the Mortgagee against damage, loss or liability resulting from all
risks for which such insurance should have been effected or maintained.

     SECTION 2.1.4. Separate Insurance. The Mortgagor will not take out separate
                    ------------------
insurance concurrent in form or contributing in the event of loss with that
required to be maintained pursuant to this Section 2.1.
                                           -----------

     SECTION 2.2.   Damage, Destruction or Taking; Mortgagor to Give Notice;
                    -------------------------------------------------------
Assignment of Awards.  In case of
--------------------

          (a) any damage to or destruction of the Collateral or any part
     thereof, or

          (b) any taking, whether for permanent or temporary use, of all or any
     part of the Collateral or any interest therein or right accruing thereto,
     as the result of or in anticipation of the exercise of the right of
     condemnation or eminent domain, or a change of grade affecting the
     Collateral or any portion thereof (a "Taking"), or the
                                           ------

                                      -21-

<PAGE>

     commencement of any proceedings or negotiations which may result in a
     Taking,

the Mortgagor will promptly give written notice thereof to the Mortgagee,
generally describing the nature and extent of such damage or destruction and the
Mortgagor's best estimate of the cost of restoring the Collateral, or the nature
of such proceedings or negotiations and the nature and extent of the Taking
which might result therefrom, as the case may be. The Mortgagee shall be
entitled to all insurance proceeds payable on account of such damage or
destruction and to all awards or payments allocable to the Collateral on account
of such Taking, and the Mortgagor hereby irrevocably assigns, transfers and sets
over to the Mortgagee all rights of the Mortgagor to any such proceeds, awards
or payments and irrevocably authorizes and empowers the Mortgagee, at its
option, in the name of the Mortgagor or otherwise, to file and prosecute what
would otherwise be the Mortgagor's claim for any such proceeds, award or payment
and to collect, receipt for and retain the same for disposition in accordance
with Section 2.3. The Mortgagor will pay all reasonable costs and expenses
     -----------
incurred by the Mortgagee in connection with any such damage, destruction or
Taking and seeking and obtaining any insurance proceeds, awards or payments in
respect thereof.

     SECTION 2.3.  Application of Proceeds and Awards. The Mortgagee may, at its
                   ----------------------------------
option, apply all amounts recovered under any insurance policy required to be
maintained by the Mortgagor hereunder and all awards received by it on account
of any Taking in any one or more of the following ways:

          (a) to the payment of the reasonable costs and expenses incurred by
     the Mortgagee in obtaining any such insurance proceeds or awards, including
     the fees and expenses of attorneys and insurance and other experts and
     consultants, the costs of litigation, arbitration, mediation,
     investigations and other judicial, administrative or other proceedings and
     all other out-of-pocket expenses;

          (b) Ratably, to the payment of any Obligation secured by this Mortgage
     other than indebtedness with respect to the Secured Obligations;

          (c) Ratably, to the payment of the principal of the Secured
     Obligations and any interest (including post-petition interest payable in
     any proceedings for bankruptcy under applicable law ("Post-Petition
                                                           -------------
     Interest") to the
     --------

                                      -22-

<PAGE>

     extent such interest is an Obligation) accrued and unpaid thereon, without
     regard to whether any portion or all of such amounts shall be matured or
     unmatured, together with interest at the Default Rate on any overdue
     principal and (to the extent permitted by applicable law) interest; and, in
     case such amount shall be insufficient to pay in full all such amounts,
     then such amount shall be applied, first, to the payment of all amounts of
                                        -----
     interest (including Post-Petition Interest to the extent such interest is
     an Obligation) accrued on the Secured Obligations and unpaid, second, to
                                                                   ------
     the payment of all amounts of principal at the time outstanding;

          (d) to fulfill any of the other covenants contained herein as the
     Mortgagee may determine;

          (e) to the Mortgagor for application to the cost of restoring the
     Collateral and the replacement of Goods destroyed, damaged or taken; or

          (f) to the Mortgagor.

     Notwithstanding the foregoing provisions of this Section 2.3 to the
                                                      -----------
contrary, and if each of the following conditions is satisfied, the Mortgagee,
upon request of the Mortgagor, shall apply insurance proceeds or condemnation
awards received by it to the restoration or replacement of the Collateral, to
the extent necessary for the restoration or replacement thereof:

               (i)   there shall then exist no uncured material Default;

               (ii)  the Mortgagor shall furnish to the Mortgagee a certificate
          of an architect or engineer reasonably acceptable to the Mortgagee
          stating (x) that the Collateral is capable of being restored, prior to
          the maturity of the Loans, to substantially the same condition as
          existed prior to the casualty or Taking, (y) the aggregate estimated
          direct and indirect costs of such restoration and (z) as to any
          Taking, that the property taken in such Taking, or sold under threat
          thereof, is not necessary to the Mortgagor's customary use or
          occupancy of the Property; and

               (iii) in the event that the estimated cost of restoration set
          forth in the certificate of such architect or engineer (and such
          revisions to such estimate as are from time to time made) exceeds the

                                      -23-

<PAGE>

          net insurance proceeds or condemnation awards actually received from
          time to time, the Mortgagor shall deposit the amount of such excess
          with the Mortgagee.

     In the event that such insurance proceeds or condemnation awards are to be
utilized in the restoration of the Collateral, the Mortgagee shall disburse such
Proceeds and the additional amounts deposited by the Mortgagor for such
restoration after receipt of a written request for disbursement, on not less
than five nor more than twelve Business Days' notice and, to the extent
applicable, in accordance with customary construction loan procedures and
conditions. In the event that such insurance or condemnation awards are to be
utilized to replace the Collateral so destroyed or taken, the Mortgagee shall
disburse such Proceeds after receipt of a written request for disbursement, on
not less than five nor more than twelve Business Days' notice simultaneously
with the acquisition of such replacement property by the Mortgagor. In the event
that, after the restoration or replacement of the Collateral, any insurance or
condemnation awards shall remain, such amount shall be paid to the Mortgagor.
Insurance proceeds and condemnation awards shall be invested in the manner
reasonably requested by the Mortgagor and approved by the Mortgagee, and all
interest earned thereon shall be applied as provided in this Section 2.3. If,
                                                             -----------
prior to the receipt by the Mortgagee of such insurance proceeds or condemnation
awards, the Collateral shall have been sold on foreclosure, the Mortgagee shall
have the right to receive said insurance proceeds or condemnation awards to the
extent of any deficiency found to be due upon such sale, with legal interest
thereon, whether or not a deficiency judgment shall have been sought or
recovered or denied, and the reasonable attorneys' fees, costs and disbursements
incurred by the Mortgagee in connection with the collection of such award or
payment.

     SECTION 2.4. Total Taking and Total Destruction. In the event of a Total
                  ----------------------------------
Destruction or a Total Taking, the Mortgagee shall apply all amounts recovered
under any insurance policy referred to in Section 2.1.1 and all awards received
                                          -------------
by it on account of any such Taking as follows:

          (a) first, to the payment of the reasonable costs and expenses
     incurred by the Mortgagee in obtaining any such insurance proceeds or
     awards, including the fees and expenses of attorneys and insurance and
     other experts and consultants, the costs of litigation, arbitration,
     mediation, investigations and other judicial,

                                      -24-

<PAGE>

     administrative or other proceedings and all other out-of-pocket expenses;

          (b)  second, Ratably, to the payment of any Obligation secured by this
     Mortgage other than indebtedness with respect to the Secured Obligations;

          (c)  third, Ratably, to the payment of the principal of the Secured
     Obligations and any interest (including Post-Petition Interest to the
     extent such interest is an Obligation) accrued and unpaid thereon, without
     regard to whether any portion or all of such amounts shall be matured or
     unmatured, together with interest at the Default Rate on any overdue
     principal and (to the extent permitted by applicable law) interest; and, in
     case such amount shall be insufficient to pay in full all such amounts,
     then such amount shall be applied, first, to the payment of all amounts of
                                        -----
     interest (including Post-Petition Interest to the extent such interest is
     an Obligation) accrued on the Secured Obligations and unpaid, and second,
                                                                       ------
     to the payment of all amounts of principal at the time outstanding;

          (d)  fourth, to fulfill any of the other covenants contained herein as
     the Mortgagee may determine; and

          (e)  fifth, the balance, if any, to the Mortgagor.

                                   ARTICLE III

                        EVENTS OF DEFAULT; REMEDIES, ETC.
                        --------------------------------

     SECTION 3.1. Events of Default; Acceleration. If any one or more of the
                  -------------------------------
following events (herein called "Events of Default") shall occur:
                                 -----------------

          (a)  if an "Event of Default" under and as defined in any of the
     Credit Agreements shall have occurred; or

          (b)  if the Mortgagor shall default in the due and punctual
     performance or observance of any of its obligations under Section 1.4, 1.5,
                                                               -----------  ---
     1.7, 1.9, or 2.1; or
     ---  ---     ---

          (c)  if the Mortgagor shall fail to duly and punctually perform or
     comply with any provision of this Mortgage other than the provisions
     referred to in clause (a) or (b) of this Section 3.1 and such default shall
                    ---------      -          -----------
     continue unremedied for a period of 30 days after the date

                                      -25-

<PAGE>

     that notice of such nonperformance or noncompliance is delivered to the
     Mortgagor; or

          (d)  if the Mortgagor shall, directly or indirectly, voluntarily or
     involuntarily, by operation of law or otherwise, sell, convey, transfer,
     assign, grant a security interest in or otherwise dispose of the Collateral
     or any portion thereof or estate or interest therein; or

          (e)  if subsequent to the date of this Mortgage the law of the State
     shall be changed by statutory enactment, judicial decision, regulation or
     otherwise, so as (i) to deduct from the value of land for the purpose of
     taxation (for state, county, municipal or other purpose) any lien or charge
     thereon, or (ii) to change the taxation of deeds of trust, mortgages or
     debts secured by land or the manner of collecting any such taxation, so as
     to affect this Mortgage, and thereafter, within 30 days following receipt
     of a written request from the Mortgagee, the Mortgagor shall have failed to
     enter into a lawful and binding agreement with the Mortgagee, satisfactory
     in substance and form to the Mortgagee, obligating the Mortgagor to
     reimburse the Mortgagee for any increase in taxation imposed on the
     Mortgagee by reason of any of the foregoing;

then and in any such event the Mortgagee may at any time thereafter exercise any
right or remedy granted to the Mortgagee under the Credit Agreements or the
other Loan Documents or available to the Mortgagee at law or in equity
including, without limitation, declare, by written notice to the Mortgagor, the
Secured Obligations and all other Obligations to be due and payable immediately
or on a date specified in such notice, and on such date the same shall be and
become due and payable, together with interest accrued thereon, without
presentment, demand, protest or notice, all of which the Mortgagor hereby
waives. The Mortgagor will pay on demand all costs and expenses, including,
without limitation, attorneys' fees and expenses, incurred by or on behalf of
the Mortgagee in enforcing this Mortgage or the Secured Obligations or any other
Loan Document, or occasioned by any default hereunder or thereunder.

     SECTION 3.2. Legal Proceedings; Foreclosure. If an Event of Default shall
                  ------------------------------
have occurred and be continuing, the Mortgagee at any time may, at its election,
proceed at law or in equity or otherwise to enforce the payment of the Secured
Obligations in accordance with the terms hereof and thereof and to foreclose the
lien of this Mortgage as against all or any part of the Collateral and to have
the same sold under the judgment or

                                      -26-

<PAGE>

decree of a court of competent jurisdiction. The Mortgagee shall be entitled to
recover in such proceedings all costs incident thereto, including attorneys'
fees and expenses in such amounts as may be fixed by the court. If the Mortgagee
commences a foreclosure action, the same shall be conducted pursuant to Wis.
Stats. Chapter 846 (as the same may be amended from time to time).

     SECTION 3.3. Power of Sale. If the unpaid principal amount of and interest
                  -------------
on the Secured Obligations shall have become due and payable (whether at
maturity or as an installment of combined principal and interest or by reason of
any prepayment requirement or by declaration or acceleration or otherwise) and
shall not have been paid, the Mortgagee may sell, assign, transfer and deliver
the whole or, from time to time, any part of the Collateral, or any interest in
any part thereof, at any private sale or at public auction, with or without
demand, advertisement or notice, for cash, on credit or for other property, for
immediate or future delivery, and for such price or prices and on such terms as
the Mortgagee in its uncontrolled discretion may determine, or as may be
required by law. Without limiting the authority granted in the immediately
preceding sentence, the Mortgagee shall, without demand on the Mortgagor, after
the lapse of such time as may then be required by law following the recordation
of the notice of default, and notice of default and notice of sale having been
given as then required by law, sell the Collateral on the date and at the time
and place designated in the notice of sale, either as a whole or in separate
parcels and in such order as the Mortgagee may determine, but subject to any
statutory right of the Mortgagor to direct the order in which such property, if
consisting of several known lots, parcels or interests, shall be sold, at public
auction to the highest bidder, the purchase price payable in lawful money of the
United States at the time of sale. The Person conducting the sale may, for any
cause deemed expedient, postpone the sale from time to time until it shall be
completed and, in every such case, notice of postponement shall be given by
public declaration thereof by such Person at the time and place last appointed
for the sale; provided that, if the sale is postponed for longer than one day
              -------- ----
beyond the day designated in the notice of sale, notice of sale, notice of the
time, date and place of sale shall be given in the same manner as the original
notice of sale. The Mortgagee shall execute and deliver to the purchaser at any
such sale a Mortgagee's deed conveying the property so sold, but without any
covenant or warranty, express or implied. The recitals in such Mortgagee's deed
of any matters or facts shall be conclusive proof of the truthfulness

                                      -27-

<PAGE>

thereof. Any Person, including the Mortgagee, may bid at the sale. The Mortgagee
shall apply the proceeds of the sale, to the extent consistent with this
Mortgage, to the payment of (a) the costs and expenses of exercising the power
of sale and of the sale, including the payment of attorneys' fees and costs, (b)
the cost of any evidence of title procured in connection with such sale, (c) all
sums expended under the terms hereof in conjunction with any default provision
hereof, not then repaid, with accrued interest at the Default Rate from the date
of incurrence, (d) all amounts then secured by this Mortgage, including the
outstanding principal amount of the Secured Obligations, together with interest
accrued and unpaid thereon, and (e) the remainder, if any, to the Person or
Persons legally entitled thereto, or the Mortgagee, in the Mortgagee's
discretion, may deposit the balance of such proceeds with any court or public
official authorized to receive such proceeds.

     SECTION 3.4. Uniform Commercial Code Remedies. If an Event of Default shall
                  --------------------------------
have occurred and be continuing, the Mortgagee may exercise from time to time
and at any time any rights and remedies available to it under applicable law
upon default in the payment of indebtedness, including, without limitation, any
right or remedy available to it as a secured party under the Uniform Commercial
Code of the State. The Mortgagor shall, promptly upon request by the Mortgagee,
assemble the Collateral, or any portion thereof generally described in such
request, and make them available to the Mortgagee at such place or places
designated by the Mortgagee and reasonably convenient to the Mortgagee and the
Mortgagor. If the Mortgagee elects to proceed under the Uniform Commercial Code
of the State to dispose of portions of the Collateral, the Mortgagee, at its
option, may give the Mortgagor notice of the time and place of any public sale
of any such property, or of the date after which any private sale or other
disposition thereof is to be made, by sending notice by registered or certified
first class mail, postage prepaid, to the Mortgagor at least ten days before the
time of the sale or other disposition. If any notice of any proposed sale,
assignment or transfer by the Mortgagee of any portion of the Collateral or any
interest therein is required by law, the Mortgagor conclusively agrees that ten
days' notice to the Mortgagor of the date, time and place (and, in the case of a
private sale, the terms) thereof is reasonable.

     SECTION 3.5. Mortgagee Authorized to Execute Deeds, etc. The Mortgagor
                  ------------------------------------------
irrevocably appoints the Mortgagee the true and lawful attorney of the
Mortgagor, in its name and stead and on

                                      -28-

<PAGE>

its behalf, for the purpose of effectuating, after the occurrence and during the
continuation of an Event of Default, any sale, assignment, transfer or delivery
for the enforcement hereof, whether pursuant to power of sale, foreclosure or
otherwise, to execute and deliver all such deeds, bills of sale, assignments,
releases and other instruments as may be designated in any such request.

     SECTION 3.6.  Purchase of Collateral by Mortgagee. The Mortgagee may be a
                   -----------------------------------
purchaser of the Collateral or of any part thereof or of any interest therein at
any sale thereof, whether pursuant to power of sale, foreclosure or otherwise,
and the Mortgagee may apply upon the purchase price thereof the indebtedness
secured hereby. Such purchaser shall, upon any such purchase, acquire good title
to the properties so purchased, free of the security interest and lien of this
Mortgage and free of all rights of redemption in the Mortgagor.

     SECTION 3.7.  Receipt a Sufficient Discharge to Purchaser. Upon any sale of
                   -------------------------------------------
the Collateral or any part thereof or any interest therein, whether pursuant to
power of sale, foreclosure or otherwise, the receipt of the Mortgagee or the
officer making the sale under judicial proceedings shall be a sufficient
discharge to the purchaser for the purchase money, and such purchaser shall not
be obliged to see to the application thereof.

     SECTION 3.8.  Waiver of Appraisement, Valuation, etc. The Mortgagor hereby
                   --------------------------------------
waives, to the fullest extent it may lawfully do so, the benefit of all
appraisement, valuation, stay, extension and redemption laws now or hereafter in
force and all rights of marshaling in the event of any sale of the Collateral or
any part thereof or any interest therein.

     SECTION 3.9.  Sale a Bar Against Mortgagor. Any sale of the Collateral or
                   ----------------------------
any part thereof or any interest therein under or by virtue of this Mortgage,
whether pursuant to power of sale, foreclosure or otherwise, shall forever be a
bar against the Mortgagor.

     SECTION 3.10. Application of Proceeds of Sale and Other Moneys. The
                   ------------------------------------------------
proceeds of any sale of the Collateral or any part thereof or any interest
therein under or by virtue of this Mortgage, whether pursuant to power of sale,
foreclosure or otherwise, and all other moneys at any time held by the Mortgagee
as part of the Collateral, shall be applied as follows:

                                      -29-

<PAGE>

     First: to the payment of the reasonable costs and expenses of such sale
     -----
(including, without limitation, the cost of evidence of title and the costs and
expenses, if any, of taking possession of, retaining custody over, repairing,
managing, operating, maintaining and preserving the Collateral or any part
thereof prior to such sale), all reasonable costs and expenses incurred by the
Mortgagee or any other Person in obtaining or collecting any insurance proceeds,
condemnation awards or other amounts received by the Mortgagee, all reasonable
costs and expenses of any receiver of the Collateral or any part thereof, and
any Impositions or other charges or expenses prior to the security interest or
lien of this Mortgage, which the Mortgagee may consider it necessary or
desirable to pay;

     Second: Ratably, to the payment of any indebtedness secured by this
     ------
Mortgage, other than indebtedness with respect to the Secured Obligations at the
time outstanding, which the Mortgagee may consider it necessary or desirable to
pay;

     Third: Ratably, to the payment of all amounts of principal of and interest
     -----
(including Post-Petition Interest to the extent such interest is an Obligation)
at the time due and payable on the Secured Obligations at the time outstanding
(whether due by reason of maturity or by reason of any prepayment requirement or
by declaration or acceleration or otherwise), including interest at the Default
Rate on any overdue principal and (to the extent permitted under applicable law)
on any overdue interest; and, in case such moneys shall be insufficient to pay
in full the amounts so due and unpaid with respect to the Secured Obligations at
the time outstanding, then, first, to the payment of all amounts of interest
                            -----
(including Post-Petition Interest to the extent such interest is an Obligation)
at the time due and payable on the Secured Obligations and, second, to the
                                                            ------
payment of all amounts of principal at the time due and payable on the Secured
Obligations; and

     Fourth: the balance, if any, held by the Mortgagee after payment in full of
     ------
all amounts referred to in subdivisions First, Second and Third, above, shall,
                                        -----  ------     -----
unless a court of competent jurisdiction may otherwise direct by final order not
subject to appeal, be paid to or upon the direction of the Mortgagor.

                                      -30-

<PAGE>

        SECTION 3.11. Appointment of Receiver. If an Event of Default shall have
                      -----------------------
occurred and be continuing, the Mortgagee shall, as a matter of right and
without regard to the adequacy of any security for the indebtedness secured
hereby or the solvency of the Mortgagor, be entitled to the appointment of a
receiver for all or any part of the Collateral, whether such receivership be
incidental to a proposed sale of the Collateral or otherwise, and the Mortgagor
hereby consents to the appointment of such a receiver and will not oppose any
such appointment and agrees that all expenses of such receivership shall be
borne by the Mortgagor and shall be an Obligation secured by this Mortgage.

        SECTION 3.12. Possession, Management and Income. If an Event of Default
                      ---------------------------------
shall have occurred and be continuing, in addition to, not in limitation of, the
rights and remedies provided in Section 1.14, the Mortgagee, upon five days'
                                ------------
notice to the Mortgagor, may enter upon and take possession of the Collateral or
any part thereof by force, summary proceeding, ejectment or otherwise and may
remove the Mortgagor and all other Persons and any and all property therefrom
and may hold, operate, maintain, repair, preserve and manage the same and
receive all earnings, income, Rents, issues and Proceeds accruing with respect
thereto or any part thereof. The Mortgagee shall be under no liability for or by
reason of any such taking of possession, entry, removal or holding, operation or
management, except that any amounts so received by the Mortgagee shall be
applied to pay all costs and expenses of so entering upon, taking possession of,
holding, operating, maintaining, repairing, preserving and managing the
Collateral or any part thereof, and any Impositions or other charges prior to
the lien and security interest of this Mortgage which the Mortgagee may consider
it necessary or desirable to pay, and any balance of such amounts shall be
applied as provided in Section 3.10.
                       ------------

        SECTION 3.13. Right of Mortgagee to Perform Mortgagor's Covenants, etc.
                      --------------------------------------------------------
If the Mortgagor shall fail to make any payment or perform any act required to
be made or performed hereunder or under the Credit Agreements or the other Loan
Documents, the Mortgagee, without notice to or demand upon the Mortgagor and
without waiving or releasing any obligation or Default, may (but shall be under
no obligation to) at any time thereafter make such payment or perform such act
for the account and at the expense of the Mortgagor, and may enter upon the
Collateral for such purpose and take all such action thereon as, in the
Mortgagee's opinion, may be necessary or appropriate therefor,

                                      -31-

<PAGE>

provided that the Mortgagee shall have no right to perform any covenant of the
--------
Mortgagor under Section 1.19 (or Section 1.4 to the extent that it includes any
                ------------     -----------
of the matters more specifically described in Section 1.19) until the entire
                                              ------------
outstanding principal amount of the Secured Obligations shall have become due
and payable by reason of the declaration of the Mortgagee or the Lenders or the
maturity of the Notes. No such entry and no such action shall be deemed an
eviction of any lessee of the Property or any part thereof. All sums so paid by
the Mortgagee and all costs and expenses (including, without limitation,
attorneys' fees and expenses) so incurred, together with interest thereon at the
Default Rate from the date of payment or incurring, shall constitute additional
indebtedness secured by this Mortgage and shall be paid by the Mortgagor to the
Mortgagee on demand.

        SECTION 3.14. Subrogation. To the extent that the Mortgagee, on or after
                      -----------
the date hereof, pays any sum due under any provision of any Legal Requirement
or any instrument creating any lien prior or superior to the lien of this
Mortgage, or the Mortgagor or any other Person pays any such sum with the
proceeds of the Loans evidenced by the Notes, the Mortgagee shall have and be
entitled to a lien on the Collateral equal in priority to the lien discharged,
and the Mortgagee shall be subrogated to, and receive and enjoy all rights and
liens possessed, held or enjoyed by, the holder of such lien, which shall remain
in existence and benefit the Mortgagee in securing the Obligations.

        SECTION 3.15. Remedies, etc., Cumulative. Each right, power and remedy
                      --------------------------
of the Mortgagee provided for in this Mortgage or now or hereafter existing at
law or in equity or by statute or otherwise shall be cumulative and concurrent
and shall be in addition to every other right, power or remedy provided for in
this Mortgage or the other Loan Documents, or now or hereafter existing at law
or in equity or by statute or otherwise, and the exercise or beginning of the
exercise by the Mortgagee of any one or more of the rights, powers or remedies
provided for in this Mortgage, or now or hereafter existing at law or in equity
or by statute or otherwise shall not preclude the simultaneous or later exercise
by the Mortgagee of any or all such rights, powers or remedies.

        SECTION 3.16. Provisions Subject to Applicable Law. All rights, powers
                      ------------------------------------
and remedies provided in this Mortgage may be exercised only to the extent that
the exercise thereof does not violate any applicable provisions of law and are
intended to be limited to the extent necessary so that they will not render

                                       -32-

<PAGE>

this Mortgage invalid, unenforceable or not entitled to be recorded, registered
or filed under the provisions of any applicable law. If any term of this
Mortgage or any application thereof shall be invalid or unenforceable, the
remainder of this Mortgage and any other application of such term shall not be
affected thereby.

        SECTION 3.17. No Waiver, etc. No failure by the Mortgagee to insist upon
                      --------------
the strict performance of any term hereof or of any other Loan Document, or to
exercise any right, power or remedy consequent upon a breach hereof or thereof,
shall constitute a waiver of any such term or of any such breach. No waiver of
any breach shall affect or alter this Mortgage, which shall continue in full
force and effect with respect to any other then existing or subsequent breach.
By accepting payment or performance of any of the Obligations before or after
its due date, the Mortgagee shall not be deemed to have waived its right either
to require prompt payment or performance when due of all other Obligations
payable hereunder or to declare a default for failure to effect such prompt
payment or performance.

        SECTION 3.18. Compromise of Actions, etc. Any action, suit or proceeding
                      --------------------------
brought by the Mortgagee pursuant to any of the terms of this Mortgage, the
Credit Agreements, any other Loan Document, or otherwise, and any claim made by
the Mortgagee hereunder or thereunder, may be compromised, withdrawn or
otherwise dealt with by the Mortgagee without any notice to or approval of the
Mortgagor.

        SECTION 3.19. Foreclosure Without Deficiency Judgment.  The Mortgagor
                      ---------------------------------------
agrees to the provisions of Wis. Stats. Sec. 846.103, as ay apply to the
Collateral, as such Section may be amended or renumbered from time to time.

                                   ARTICLE IV

                                   DEFINITIONS
                                   -----------

        SECTION 4.1. Terms Defined in this Mortgage.  When used herein the
                     ------------------------------
following terms have the following meanings:

        "Collateral": see the granting clause.
         ----------           ---------------

        "Credit Agreement (Five Year)": see the second recital.
         ----------------                       ------ -------

        "Credit Agreement (364 Days)": see the second recital.
         ----------------                      ------ -------

        "Credit Agreements": see the second recital.
         -----------------           ------ -------

                                      -33-

<PAGE>

         "Default" means any Event of Default or any condition or event which,
          -------
after notice or lapse of time, or both, would constitute an Event of Default.

         "Default Rate" means the per annum rate of interest specified in
          ------------
Section 3.2.2 of the Credit Agreements.

         "Event of Default": see Section 3.1.
          ----------------       -----------

         "Existing Mortgage": see the fourth recital.
          -----------------           ------ -------

         "First Refinanced Credit Agreement": see the third recital.
          ---------------------------------           ----- -------

         "Goods": see clause (c) of the granting clause.
          -----       ----------        -------- ------

         "herein", "hereof", "hereto", and "hereunder" and similar terms refer
          ------    ----      ------        ---------
to this Mortgage and not to any particular Section, paragraph or provision of
this Mortgage.

         "Impositions": see Section 1.5.
          -----------       -----------

         "Improvements": see clause (b) of the granting clause.
          ------------       ----------        -------- ------

         "Indemnified Parties": see Section 1.16.
          -------------------       ------------

         "Insurance Requirements": see paragraph (a) of Section 1.6.
          ----------------------       -------------    -----------

         "Intangibles": see clause (d) of the granting clause.
          -----------       ----------        -------- ------

         "Land": see the first recital.
          ----           ----- -------

         "Leases": see paragraph (a) of Section 1.14.
          ------       -------------    ------------

         "Legal Requirements": see paragraph (b) of Section 1.6.
          ------------------       -------------    -----------

         "Lenders": see the preamble.
          -------           --------

         "Loans": see the second recital.
          -----           ------ -------

         "Loan Document": see clause (b) of the sixth recital.
          -------------       ----------        ----- -------

         "Mortgage": see the preamble.
          --------           --------

         "Mortgagee": see the preamble.
          ---------           --------

         "Mortgagor":  see the preamble.
          ---------            --------

                                      -34-

<PAGE>

         "Notes": means, collectively, the "Notes" as defined in the Credit
          ----
Agreement (Five Year) and "Notes" as defined in the Credit Agreement (364 Days).

         "Obligations": see the sixth recital.
          -----------           ----- -------

         "Official Records": see the fourth recital.
          ----------------           ------ -------

         "Original Credit Agreement (5 Year)": see the third recital.
          ----------------------------------           ----- -------

         "Original Credit Agreement (364 Days)": see the third recital.
          ------------------------------------           ----- -------

         "Original Credit Agreements": see the third recital.
          --------------------------           ----- -------

         "Permits": see clause (f) of the granting clause.
          -------       ----------        -------- ------

         "Permitted Encumbrances":  see Section 1.2.
          ----------------------        -----------

         "Person" means a corporation, an association, a partnership, an
          ------
organization, a business, an individual, a government or political subdivision
thereof or a governmental agency or officer.

         "Plans": see clause (e) of the granting clause.
          -----       ----------        -------- ------

         "Post-Petition Interest": see Section 2.3.
          ----------------------       -----------

         "Proceeds": see clause (h) of the granting clause.
          --------       ----------        -------- ------

         "Property": see clause (b) of the granting clause.
          --------       ----------        -------- ------

         "Ratable" or "Ratably" means, in the context of a distribution of
          -------      -------
Collateral or Proceeds, an allocation of such Collateral or Proceeds among the
Lenders pro rata in accordance with their respective portion of the aggregate
        --- ----
dollar amount of the Obligations to which the distribution is being applied.

         "Real Estate": see clause (a) of the granting clause.
          -----------       ----------        -------- ------

         "Rents": see paragraph (a) of Section 1.14.
          -----       -------------    ------------

         "Secured Obligations": see the second recital.
          -------------------           ------ -------

         "State": means the State of Wisconsin.
          -----

         "Taking": see clause (b) of Section 2.2.
          ------       ----------    -----------

                                      -35-

<PAGE>

         "Total Destruction" means any damage to or destruction of the
          -----------------
Improvements or any part thereof which, in the reasonable estimation of the
Mortgagee shall require the expenditure of an amount in excess of $500,000 to
restore the Improvements to substantially the same condition of the Improvements
immediately prior to such damage or destruction.

         "Total Taking" means a Taking, whether permanent or for temporary use,
          ------------
which, in the reasonable judgment of the Mortgagee, shall substantially
interfere with the normal operation of the Property by the Mortgagor.

         SECTION 4.2.   Use of Defined Terms. Terms for which meanings are
                        --------------------
provided in this Mortgage shall, unless otherwise defined or the context
otherwise requires, have such meanings when used in any certificate and any
opinion, notice or other communication delivered from time to time in connection
with this Mortgage or pursuant hereto.

         SECTION 4.3.   Credit Agreement Definitions. Unless otherwise defined
                        ----------------------------
herein or the context otherwise requires, capitalized terms used in this
Mortgage, including its preamble and recitals, have the meanings provided in the
Credit Agreements.

                                    ARTICLE V

                                  MISCELLANEOUS
                                  -------------

         SECTION 5.1.   Further Assurances; Financing Statements.
                        ----------------------------------------

         SECTION 5.1.1. Further Assurances. The Mortgagor, at its expense, will
                        ------------------
execute, acknowledge and deliver all such instruments and take all such other
action as the Mortgagee from time to time may reasonably request:

                (a)  better to subject to the lien and security interest of this
         Mortgage all or any portion of the Collateral,

                (b)  to perfect, publish notice or protect the validity of the
         lien and security interest of this Mortgage,

                (c)  to preserve and defend the title to the Collateral and the
         rights of the Mortgagee therein against the claims of all Persons as
         long as this Mortgage shall remain undischarged,

                                      -36-

<PAGE>

                 (d)    better to subject to the lien and security interest of
         this Mortgage or to maintain or preserve the lien and security
         interest of this Mortgage with respect to any replacement or
         substitution for any Improvements or any other after-acquired property,
         or

                 (e)    in order further to effectuate the purposes of this
         Mortgage and to carry out the terms hereof and to better assure and
         confirm to the Mortgagee its rights, powers and remedies hereunder.

         SECTION 5.1.2. Financing Statements. Notwithstanding any other
                        --------------------
provision of this Mortgage, the Mortgagor hereby agrees that, without notice to
or the consent or signature of the Mortgagor, the Mortgagee may file with the
appropriate public officials such financing statements, continuation statements,
amendments and similar documents as are or may become necessary to perfect,
preserve or protect the security interest granted by this Mortgage.

         SECTION 5.2.   Additional Security. Without notice to or consent of the
                        -------------------
Mortgagor, and without impairment of the security interest and lien and rights
created by this Mortgage, the Mortgagee may accept from the Mortgagor or any
other Person additional security for the Secured Obligations. Neither the giving
of this Mortgage nor the acceptance of any such additional security shall
prevent the Mortgagee from resorting, first, to such additional security, or,
first, to the security created by this Mortgage, or concurrently to both, in any
case without affecting the Mortgagee's lien and rights under this Mortgage.

         SECTION 5.3.   Defeasance; Partial Release, etc.
                        --------------------------------

         SECTION 5.3.1. Defeasance. If the Mortgagor shall pay, in full, the
                        ----------
principal of and premium, if any, and interest on the Secured Obligations in
accordance with the terms thereof and hereof and all other sums payable
hereunder by the Mortgagor and shall comply with all the terms, conditions and
requirements hereof and of the Secured Obligations, then on such date, this
Mortgage shall be (except as provided herein) null and void and of no further
force and effect and the Collateral shall thereupon be, and be deemed to have
been, reconveyed, released and discharged from this Mortgage without further
notice on the part of either the Mortgagor or the Mortgagee.

         SECTION 5.3.2. Partial Release etc.  The Mortgagee may, at any time and
                        -------------------
from time to time, without liability therefor, and

                                       -37-

<PAGE>

without prior notice to the Mortgagor, release, reconvey any part of the
Collateral, consent to the making of any map or plat of the Property, join in
granting any easement thereon or join in any extension agreement or agreement
subordinating the lien of this Mortgage or enter into any other agreement in
connection with the Collateral.

         SECTION 5.4.   Notices, etc. All notices and other communications
                        ------------
provided to the Mortgagor or the Mortgagee under this Mortgage shall be given in
the manner and with the effect specified in the Credit Agreements. The foregoing
incorporation by reference of the Mortgagor's mailing address shall be deemed to
be a request by the Mortgagor that a copy of any notice of default and of any
notice of sale hereunder be mailed to the Mortgagor at such address as provided
by law.

         SECTION 5.5.   Waivers, Amendments, etc. The provisions of this
                        ------------------------
Mortgage may be amended, discharged or terminated and the observance or
performance of any provision of this Mortgage may be waived, either generally or
in a particular instance and either retroactively or prospectively, only by an
instrument in writing executed by the Mortgagor and the Mortgagee.

         SECTION 5.6.   Cross-References. References in this Mortgage and in
                        ----------------
each instrument executed pursuant hereto to any Section or Article are, unless
otherwise specified, to such Section or Article of this Mortgage or such
instrument, as the case may be, and references in any Section, Article or
definition to any clause are, unless otherwise specified, to such clause of such
Section, Article or definition.

         SECTION 5.7.   Headings. The various headings of this Mortgage and of
                        --------
each instrument executed pursuant hereto are inserted for convenience only and
shall not affect the meaning or interpretation of this Mortgage or such
instrument or any provisions hereof or thereof.

         SECTION 5.8.   Governing Law.  This Mortgage shall be deemed to be a
                        -------------
ontract made under and governed by the laws of the State.

         SECTION 5.9.   Successors and Assigns, etc. This Mortgage shall be
                        ---------------------------
binding upon and shall inure to the benefit of the parties hereto and their
respective successors and assigns.

         SECTION 5.10.  Loan Document.  This Mortgage is a Loan Document
                        -------------
executed pursuant to the Credit Agreements and shall (unless otherwise expressly
indicated herein) be construed,

                                       -38-

<PAGE>

administered and applied in accordance with the terms and provisions thereof,
including Article X thereof.
          ---------

         SECTION 5.11.  Severability. Any provision of this Mortgage or any
                        ------------
other Loan Document which is prohibited or unenforceable in any jurisdiction
shall as to such provision and such jurisdiction, be ineffective to the extent
of such prohibition or unenforceability without invalidating the remaining
provisions of this Mortgage or such Loan Document or affecting the validity or
unenforceability of such provision in any other jurisdiction.

         SECTION 5.12.  Amended and Restated Mortgage.  This Mortgage amends and
                        -----------------------------
restates in its entirety the Existing Mortgage.

                                       -39-

<PAGE>

         IN WITNESS WHEREOF, the Mortgagor has caused this Mortgage to be duly
executed as of the day and year first above written.

                                   MORTGAGOR:

ATTEST:                            NASCO INTERNATIONAL, INC.,
                                   a Wisconsin corporation

____________________________
Name:_______________________       By:________________________________________
[Assistant] Secretary              Name:______________________________________
                                   Title:_____________________________________

[Corporate Seal]

<PAGE>

                                 ACKNOWLEDGMENT

STATE OF ________________________________________)
                                                 )ss.:
COUNTY OF _______________________________________)

         On this the _____ day of __________, 2001, before me,
___________________, the undersigned officer, personally appeared
______________, who acknowledged himself to be the __________ of NASCO
INTERNATIONAL, INC., a Wisconsin corporation, and that he, as such
______________, being authorized so to do, executed the foregoing instrument for
the purposes therein contained, by signing the name of the corporation by
himself as ______________.

         In witness whereof I hereunto set my hand and official seal.

                                             __________________________________

                                             __________________________________
                                                     Title of Officer

<PAGE>

                                   SCHEDULE 1
                                   ----------

                             Description of the Land
                             -----------------------

          PARCEL 1:

          Lots 1 and 2 of Certified Survey Map No. 203, recorded in the Register
          of Deeds office for Jefferson County on February 25, 1973 in Volume 1
          of Certified Survey Maps at page 255, as Document No. 705845, being a
          part of the West 1/2 of the Northeast 1/4 of Section 9, in the City of
          Fort Atkinson, Jefferson County, Wisconsin.

          Also a parcel of land abutting the North line of Lot 1 described as
          follows:

          Beginning at an iron pipe marking the Northwest corner of said Lot 2;
          thence North 13(degrees)30' East, 13.35 feet along the Northerly
          extension of the West line of said Lot 2 to an iron pipe marking the
          Northeast corner of Lot 1; thence North 60(degrees)50'30" East, 85.61
          feet to an iron pipe; thence South 27(degrees)29'00" West, 73.49 feet
          to a point on the North line of said Lot 2; thence North
          76(degrees)30' West, 45.41 feet along said North line to the point of
          beginning, except the following:

          Beginning at the Southeast corner of Lot 2 said Certified Survey Map
          No. 203; thence North 13(degrees)30' East, 85.18 feet to the Northeast
          corner of said Lot 2; thence North 76(degrees)30' West, 207.64 feet to
          a point on the West property line of Lot 2 of Certified Survey Map No.
          1084; thence Southwesterly 84 feet more or less along the West line of
          said Lot 2 of Certified Survey Map No. 1084 extended to the point of
          intersection of said West line extended and the North right of way
          line of James Place; thence Southeasterly 215 feet more or less along
          the North right of way line of James Place; thence Southeasterly 215
          feet more or less along the North right of way line of James Place to
          the point of beginning.

          Tax Key No.: 05-14-09-21-001
          Address: Vacant Land

<PAGE>

         PARCEL 2:

         Commencing at a point on the center line of the highway leading from
         Fort Atkinson to Janesville 289.9 feet South of the North line of
         Section 9, Township 5 North, Range 14 East, in the City of Fort
         Atkinson, Jefferson County, Wisconsin (measured at right angles to said
         North Section Line); thence East 330.38 feet; thence South
         17(degrees)44'30" West, 275.77 feet; thence South 51(degrees)16' West,
         85.61 feet; thence North 86(degrees)04'30" West, 268.26 feet to the
         point on the center line of the aforesaid highway; thence Northerly
         along the center line of said highway to the point of beginning, being
         a part of the North 1/2 of said Section 9.

         Tax Key No.:      05-14-09-21
         Address: 901 Janesville Ave.

         PARCEL 3:

         Lot 1, Block 9, Fair Oaks Addition to Fort Atkinson, Jefferson County,
         Wisconsin.

         Tax Key No.:      05-140-09-12-64
         Address: Vacant Land

         PARCEL 4:

         Lot 2, in Block 9, according to the recorded Plat of Fair Oaks Addition
         to the City of Fort Atkinson, Jefferson County, Wisconsin.

         Tax Key No.:      05-14-09-12-65
         Address: 918 Erick St.

         PARCEL 5:

         PARCEL A:

         Beginning on the South line of Lot 2, Block 9, Fair Oaks Addition to
         the City of Fort Atkinson, Jefferson County, Wisconsin, at a point
         123.72 feet North 87(degrees)19' West of the Southeast corner of said
         Lot; thence North 87(degrees)19' West, 144.87 feet to the Southwest
         corner of said Lot 2; thence South 2(degrees)41' West, 102.33 feet;

<PAGE>

         thence South 87(degrees)19' East, 134.87 feet; thence North
         2(degrees)41' East, 102.33 feet to the place of beginning.

         PARCEL B:

         Beginning at the Southeast corner of Lot 2, Block 9, Fair Oaks Addition
         to the City of Fort Atkinson, Jefferson County, Wisconsin; thence North
         87(degrees)19' West, 123.72 feet; thence South 2(degrees)41' West,
         102.33 feet; thence South 87(degrees)19' East, 100 feet to an iron
         stake on the West line of Erick Street, being the point of curvature of
         a curve with a radius of 1217.41 feet; thence North 16(degrees)28'
         East, along the chord of said curve a distance of 105.16 feet to the
         place of beginning.

         Tax Key No.:      05-14-09-12-66
         Address: 932 Erick St.

         PARCEL 6:

         Commencing at the Southwest corner of Lot 2, Block 9, Fair Oaks
         Addition to the City of Fort Atkinson, Jefferson County, Wisconsin;
         thence South 16(degrees)0'28" West, 105.16 feet along the chord of a
         curve having a radius of 1217.41 feet to the point of beginning; thence
         South 18(degrees)29' West, 118.20 feet; thence South 63(degrees)29'
         West, 42.42 feet along the chord of a circle having a radius of 30
         feet; thence North 71(degrees)31' West 50 feet; thence North
         18(degrees)29' East, 125.56 feet; thence South 87(degrees)19' East,
         83.14 feet to the point of beginning.

         Tax Key No.:      05-14-09-12-67
         Address: 1000 Erick St.

         PARCEL 7:

         Lot 1 of Certified Survey Map No. 56, recorded September 24, 1970 in
         Volume 1 of Certified Survey Maps at page 76, as Document No. 688223,
         being a part of the Northwest 1/4 of the Northeast 1/4 of Section 9,
         Township 5 North, Range 14 East, in the City of Fort Atkinson,
         Jefferson County, Wisconsin.

         Tax Key No.:      05-14-09-12-68
         Address: 610 Talcott Ave.

<PAGE>

         PARCEL 8:

         Beginning at a point on the center line of the highway leading from
         Fort Atkinson to Janesville and on the North line of the Northwest 1/4
         of Section 9-5-14, City of Fort Atkinson, Jefferson County, Wisconsin;
         thence Southerly along the centerline of said highway to a point 289.9
         feet South of the North line of said 1/4 Section (measured at right
         angles to said North Section line); thence East and parallel to said
         North line 997.32 feet; thence North and parallel to the East line of
         said Section 9, 287.2 feet to the North line of said Section 9; thence
         West along the North line of said Section 9 to the point of beginning,
         except the North 33 feet thereof sold to the City of Fort Atkinson for
         street purposes by Quit Claim Deed recorded March 17, 1955 in Volume
         289 page 541.

         Tax Key No.:      05-14-09-12-081
         Address: 1405 Larson Rd.

         PARCEL 9:

         Lot 1 of Certified Survey Map No. 1084, recorded January 20, 1978 in
         Volume 3 of Certified Survey Maps at page 626, as Document No. 748437,
         being a part of the Northwest 1/4 and Northeast 1/4 of Section 9, City
         of Fort Atkinson, Jefferson County, Wisconsin.

         Also part of Lot 2 of said Certified Survey Map No. 1084, described as
         follows:

         Beginning at a 1 inch iron pipe at the Northeast corner of said Lot 2
         of Certified Survey Map No. 1084; thence North 87(degrees)45'48" West,
         along the North line of said Lot 2 of Certified Survey Map No. 1084,
         456.55 feet to a 1 inch iron pipe at the Northwest corner of said Lot 2
         of Certified Survey Map No. 1084; thence South 20(degrees)18'42" West,
         along the Westerly line of said Lot 2 of Certified Survey Map No. 1084
         and its extension, 359.21 feet to a 1 inch iron pipe being a point on a
         curve on the Northerly line of James Place; thence along said Northerly
         line, being the arc of a curve, concave Southwesterly, having a radius
         of 898.74 feet, a tangent bearing of South 76(degrees)07'05" East and a
         chord that bears South 76(degrees)14'47" East, 4.03 feet

<PAGE>

         to a 1 inch iron pipe; thence North 20(degrees)18'42" East, 81.84 feet
         to a 1 inch iron pipe; thence North 53(degrees)27'36" East, 302.56 feet
         to a 1 inch iron pipe; thence South 87(degrees)45'48" East, 302.20 feet
         to a 1 inch iron pipe; thence North 02(degrees)41' East, along the East
         line of said Lot 2 of Certified Survey Map No. 1084, 75.00 feet to the
         point of beginning.

         Tax Key No.:      05-14-09-12-82
         Address: 1405 Larsen Rd.

<PAGE>

                                                                      SCHEDULE 2

                             Permitted Encumbrances

1.       Liens for taxes and assessments, not yet due and payable.

2.       Utility Easement granted to Wisconsin Telephone Company recorded in the
         Register of Deeds office for Jefferson County on January 10, 1920 in
         Volume 4 of Miscellaneous at page 635.

3.       Utility Easement granted to Wisconsin Gas and Electric Company recorded
         in the Register of Deeds office for Jefferson County on December 2,
         1921 in Volume 167 of Records at page 364.

4.       Utility Easement granted to Wisconsin Gas and Electric Company recorded
         in the Register of Deeds office for Jefferson County on January 8, 1947
         in Volume 15 of Miscellaneous at page 164.

5.       Sewer and Waterline Agreement and related rights recorded on March 4,
         1949 in Volume 17 of Miscellaneous at page 31.

6.       Utility Easement granted to Wisconsin Gas and Electric Company recorded
         in the Register of Deeds office for Jefferson County on June 10, 1950
         in Volume 18 of Miscellaneous at page 82.

7.       Utility Easement granted to Wisconsin Bell, Inc., recorded in the
         Register of Deeds office for Jefferson County on March 15, 1988 in
         Volume 713 of Records at page 882, as Document No. 838917.

8.       Sanitary Sewer Easement, recorded in Register of Deeds office for
         Jefferson County on March 9, 1981 in Volume 608 of Records at page 641,
         as Document No. 774949.

9.       Utility Easement granted to Wisconsin Electric Power Company recorded
         in the Register of Deeds office for Jefferson County on October 13,
         1978 in Volume 577 of Records at page 396.

10.      Sanitary Sewer Easement, recorded in Register of deeds office for
         Jefferson County on July 20, 1988 in Volume 720 of Records at page 250,
         as Document No. 842698.

<PAGE>

11.      Easement contained in Quit Claim Deed, recorded in Register of Deeds
         office for Jefferson County on August 22, 1997 in Volume 1001 of
         Records at page 955, as Document No. 978160.

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00037-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00037-of-00352.parquet"}]]