10-Q

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JANUARY 24, 2004.

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934.

Commission File No. 0-20572

PATTERSON DENTAL COMPANY

(Exact Name of Registrant as Specified in its Charter)

Minnesota	41-0886515
(State of Incorporation)	(IRS Employer Identification No.)

1031 Mendota Heights Road, St. Paul, Minnesota 55120

(Address of Principal Executive Offices)

(Zip Code)

(651) 686-1600

(Registrant’s Telephone Number, Including Area Code)

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for at least the past 90 days.

x Yes    ¨ No

Indicate by check mark whether the Registrant is an accelerated filer (as defined in rule 12b-2 of the Act.)

x Yes    ¨ No

Patterson Dental Company has outstanding 68,391,000 shares of common stock as of March 2, 2004.

Page 1 of 19

PATTERSON DENTAL COMPANY

INDEX

		Page
PART I - FINANCIAL INFORMATION
Item 1 - Financial Statements		3-10
	Consolidated Balance Sheets as of January 24, 2004 and April 26, 2003	3
	Consolidated Statements of Income for the Three Months and Nine Months Ended January 24, 2004 and January 25, 2003	4
	Consolidated Statements of Cash Flows for the Nine Months Ended January 24, 2004 and January 25, 2003	5
	Notes to Consolidated Financial Statements	6
Item 2 - Management’s Discussion and Analysis of Financial Condition and Results of Operations		11-17
Item 3 - Quantitative and Qualitative Disclosures About Market Risk		17
Item 4 - Controls and Procedures		17
PART II - OTHER INFORMATION
Item 2 - Changes in Securities and Use of Proceeds		18
Item 6 - Exhibits and Reports on Form 8-K		18
Signatures		19

Safe Harbor Statement Under The Private Securities Litigation Reform Act Of 1995:

This Form 10-Q for the period ended January 24, 2004, contains certain forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995, which may be identified by the use of forward-looking terminology such as “may”, “will”, “expect”, “anticipate”, “estimate”, “believe”, “goal”, or “continue”, or comparable terminology that involves risks and uncertainties that are qualified in their entirety by cautionary language set forth in the Company’s Form 10-K report filed July 24, 2003, and the Company’s Form 8-K report filed September 15, 2003, and other documents filed with the Securities and Exchange Commission. See also page 15 of this Form 10-Q.

2

PART I FINANCIAL INFORMATION

PATTERSON DENTAL COMPANY

CONSOLIDATED BALANCE SHEETS

(Dollars in thousands)

	January 24, 2004			April 26, 2003
	(unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	215,017		$	195,182
Short-term investments		7,535			22,266
Receivables, net		288,594			248,585
Inventory		164,614			125,340
Prepaid expenses and other current assets		33,541			14,744
Total current assets		709,301			606,117
Property and equipment, net		71,830			57,254
Long-term receivables, net		19,324			19,588
Goodwill		594,696			125,400
Identifiable intangibles, net		99,751			9,670
Other		9,107			5,949
Total assets	$	1,504,009		$	823,978
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	114,088		$	111,543
Accrued payroll expense		28,748			33,693
Other accrued expenses		49,901			33,490
Income taxes payable		11,486			5,153
Current maturities of long-term debt		20,035			145
Total current liabilities		224,258			184,024
Long-term debt		484,564			129
Deferred taxes		44,262			6,139
Total liabilities		753,084			190,292
STOCKHOLDERS’ EQUITY
Common stock		684			681
Additional paid-in capital		94,569			86,703
Accumulated other comprehensive income (loss)		4,511			(519	)
Retained earnings		673,693			569,353
Notes receivable from ESOP		(22,532	)		(22,532	)
Total stockholders’ equity		750,925			633,686
Total liabilities and stockholders’ equity	$	1,504,009		$	823,978

See accompanying notes.

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PATTERSON DENTAL COMPANY

CONSOLIDATED STATEMENTS OF INCOME

(Dollars in thousands except per share amounts)

(Unaudited)

	Three Months Ended						Nine Months Ended
	January 24, 2004			January 25, 2003			January 24, 2004			January 25, 2003
Net sales	$	521,218		$	421,070		$	1,431,990		$	1,209,630
Cost of sales		330,345			273,305			930,214			790,916
Gross margin		190,873			147,765			501,776			418,714
Operating expenses		123,882			101,288			333,498			290,916
Operating income		66,991			46,477			168,278			127,798
Other income and (expense):
Finance income, net		1,500			1,681			4,763			4,772
Interest expense		(4,317	)		(34	)		(6,238	)		(45	)
Gain on currency exchange		27			108			405			38
Income before income taxes and cumulative effect of accounting change		64,201			48,232			167,208			132,563
Income taxes		24,140			18,130			62,868			49,840
Income before cumulative effect of accounting change		40,061			30,102			104,340			82,723
Cumulative effect of accounting change		—			—			—			3,372
Net income	$	40,061		$	30,102		$	104,340		$	86,095
Before cumulative effect of accounting change:
Earnings per share - basic	$	0.59		$	0.44		$	1.54		$	1.22
Earnings per share - diluted	$	0.58		$	0.44		$	1.52		$	1.21
After cumulative effect of accounting change:
Earnings per share - basic	$	0.59		$	0.44		$	1.54		$	1.27
Earnings per share - diluted	$	0.58		$	0.44		$	1.52		$	1.26
Weighted average common shares:
Basic		67,994			67,797			67,913			67,855
Diluted		69,085			68,406			68,788			68,505

See accompanying notes.

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PATTERSON DENTAL COMPANY

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in thousands)

(Unaudited)

	Nine Months Ended
	January 24, 2004			January 25, 2003
Operating activities:
Income before cumulative effect of accounting change	$	104,340		$	82,723
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation		9,007			8,011
Amortization of intangibles		4,307			1,858
Bad debt expense		1,803			697
Change in assets and liabilities, net of acquired		(26,106	)		(59,074	)
Net cash provided by operating activities		93,351			34,215
Investing activities:
Additions to property and equipment, net		(11,290	)		(8,658	)
Acquisitions, net		(581,782	)		(4,956	)
Sale (purchase) of short-term investments		14,731			(3,041	)
Net cash used in investing activities		(578,341	)		(16,655	)
Financing activities:
Payments and retirement of long-term debt and obligations under capital leases		(3,870	)		(275	)
Proceeds from debt		498,750			—
Common stock issued (purchased), net		7,879			(8,117	)
Net cash provided by (used in) financing activities		502,759			(8,392	)
Effect of exchange rate changes on cash		2,066			211
Net increase in cash and cash equivalents		19,835			9,379
Cash and cash equivalents at beginning of period		195,182			125,986
Cash and cash equivalents at end of period	$	215,017		$	135,365

See accompanying notes.

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PATTERSON DENTAL COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands except per share data)

(Unaudited)

January 24, 2004

NOTE 1 GENERAL

Basis of Presentation

In the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments necessary to present fairly the financial position of the Company as of January 24, 2004 and the results of operations and the cash flows for the periods ended January 24, 2004 and January 25, 2003. Such adjustments are of a normal recurring nature. The results of operations for the quarter ended January 24, 2004 and January 25, 2003, are not necessarily indicative of the results to be expected for the full year. The balance sheet at April 26, 2003, is derived from the audited balance sheet as of that date. These financial statements should be read in conjunction with the financial statements included in the 2003 Annual Report on Form 10-K filed on July 24, 2003.

The consolidated financial statements of Patterson Dental Company include the assets and liabilities of PDC Funding Company, LLC, a wholly owned subsidiary and a separate legal entity under Minnesota law. The assets of PDC Funding Company, LLC, would be available first and foremost to satisfy the claims of its creditors. There are no known creditors of PDC Funding Company, LLC.

Fiscal Year End

The fiscal year end of the Company is the last Saturday in April. The third quarter of fiscal 2004 and 2003 represent the 13 weeks ended January 24, 2004 and January 25, 2003, respectively.

Comprehensive Income

Total comprehensive income was $40,951 and $109,370 for the three and nine months ended January 24, 2004, respectively, and $31,182 and $87,020 for the three and nine months ended January 25, 2003, respectively.

Stock-Based Compensation

The Company has adopted the disclosure requirements of SFAS No. 148, “Accounting for Stock-Based Compensation-Transition and Disclosure, an amendment of FASB Statement 123.” The Company has chosen to continue with its current practice of applying the recognition and measurement principles of APB No. 25 “Accounting for Stock Issued to Employees.” This method defines the Company’s cost as the excess of the stock’s market value at the time of the grant over the amount that the employee is required to pay. In accordance with APB Opinion No. 25, no compensation expense was recognized for the stock based plans for the quarter ended January 24, 2004 and January 25, 2003, as the price paid was not less than 100 percent of fair market value.

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The following table illustrates the effect on net earnings and net earnings per share if the Company had applied the fair value recognition provisions of SFAS No. 123, “Accounting for Stock Based Compensation” to stock-based employee compensation:

	Three Months Ended				Nine Months Ended
	January 24, 2004		January 25, 2003		January 24, 2004		January 25, 2003
Income before cumulative effect of accounting change, as reported	$	40,061	$	30,102	$	104,340	$	82,723
Deduct: total stock-based employee compensation expense determined under fair value based method for all awards, net of related tax effect		522		373		1,524		1,102
Pro forma net earnings	$	39,539	$	29,729	$	102,816	$	81,621
Earnings per share before cumulative effect of accounting change—basic:
As reported	$	0.59	$	0.44	$	1.54	$	1.22
Pro forma	$	0.58	$	0.44	$	1.51	$	1.20
Earnings per share before cumulative effect of accounting change — diluted:
As reported	$	0.58	$	0.44	$	1.52	$	1.21
Pro forma	$	0.58	$	0.44	$	1.50	$	1.19

Earnings Per Share

The following table sets forth the denominator for the computation of basic and diluted earnings per share:

	Three Months Ended		Nine Months Ended
	January 24, 2004	January 25, 2003	January 24, 2004	January 25, 2003
Denominator:
Denominator for basic earnings per share - weighted-average shares	67,994	67,797	67,913	67,855
Effect of dilutive securities:
Stock option plans	817	520	670	567
Employee Stock Purchase Plan	12	9	11	9
Capital Accumulation Plan	174	80	135	74
Convertible debentures	88	—	59	—
Dilutive potential common shares	1,091	609	875	650
Denominator for diluted earnings per share - adjusted weighted-average shares and assumed conversions	69,085	68,406	68,788	68,505

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NOTE 2 GOODWILL AND OTHER INTANGIBLE ASSETS

The Company adopted Statement No. 142 “Goodwill and Other Intangible Assets”, in the first quarter of fiscal 2003. With the adoption of the Statement, the Company recognized as the cumulative effect of a change in accounting principle the remaining balance of its unamortized deferred credits. The deferred credits were negative goodwill that arose from acquisitions in the 1980’s and amounted to approximately $3.4 million at the time of the adoption.

The goodwill balance by business segment as of April 26, 2003 and January 24, 2004 is as follows:

	Balance at April 26, 2003		Acquisition Activity		Translation And Other Activity		Balance at January 24, 2004
Dental Supply	$	66,769	$	—	$	1,147	$	67,916
Rehabilitative Supply		—		467,065		—		467,065
Veterinary Supply		58,631		—		1,084		59,715
Total	$	125,400	$	467,065	$	2,231	$	594,696

The increase in the goodwill balance during the nine-month period ended January 24, 2004 reflects the preliminary purchase price allocation of the acquisition of AbilityOne Products Corp., contingent earn-out payments from acquisitions made in prior years and changes in currency exchange rates.

Balances of acquired intangible assets excluding goodwill are as follows:

	January 24, 2004		April 26, 2003
Trade names and trademarks	$	56,363	$	—
Customer lists and other amortizable intangible assets		52,084		14,050
Total		108,447		14,050
Less: Accumulated amortization		8,696		4,380
Total identifiable intangible assets, net	$	99,751	$	9,670

Future amortization expense will approximate $2,900, $10,000, $5,200, $4,300, $3,300 and $2,900 for the fourth quarter of fiscal 2004, and for fiscal years 2005, 2006, 2007, 2008 and 2009, respectively.

NOTE 3 ACQUISITIONS

On September 12, 2003 the Company acquired the stock of AbilityOne Products Corp. (“AbilityOne”) as a logical extension of Patterson’s value-added, specialty distribution strategy into a large new and growing market. The purchase price of $584.8 million consists of a base price of $576.0 million and an additional $8.8 million for an idle facility and transaction expenses. The idle facility, classified in “Prepaid expenses and other current assets” on the balance sheet, was the former headquarters of an entity acquired by AbilityOne. The activities formerly performed at this facility were moved to other locations within AbilityOne.

8

The acquisition was initially debt financed through a $500 million bridge loan. This loan was replaced by permanent debt financing in November 2003, which is more fully described in Note 5 to the Consolidated Financial Statements. In conjunction with the transaction, the Company also issued $4.5 million of convertible debentures maturing in 2006. The debentures are convertible into the Common Stock of Patterson Dental Company at a price of $50.98 per share. Interest on the debentures is accrued at the rate of 0.5% per annum.

The results of AbilityOne’s operations are included in the accompanying financial statements since the date of acquisition. The preliminary purchase price plus direct acquisition costs have been allocated on the basis of estimated fair values at the date of acquisition. The preliminary purchase price allocation is as follows:

Purchase price	$	584,770
Less:
Accounts receivable		27,930
Income tax receivable		8,069
Inventory		24,394
Fixed assets		11,830
Other assets		10,473
Accounts payable		(12,701	)
Deferred taxes		(37,603	)
Accrued expenses		(8,961	)
Identifiable intangible assets		94,274
Goodwill	$	467,065

The deferred tax liability primarily represents a provision for deferred taxes against the identifiable intangible assets. This provision will normalize income tax expense in future periods as the intangibles are amortized, sold or written down.

The following pro forma summary presents the results of operations, as if the acquisition had occurred at the beginning of the fiscal period. The pro forma results of operations are not necessarily indicative of the results that would have been achieved had the two companies been combined:

	Three Months Ended				Nine Months Ended
	Jan. 24, 2004		Jan. 25, 2003		Jan. 24, 2004		Jan. 25, 2003
Net sales	$	521,218	$	471,976	$	1,512,513	$	1,366,273
Income before cumulative effect of accounting change	$	40,061	$	33,480	$	111,183	$	93,679
Earnings per share before cumulative effect of accounting change:
Basic	$	0.59	$	0.49	$	1.64	$	1.38
Diluted	$	0.58	$	0.49	$	1.62	$	1.37

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NOTE 4 SEGMENT REPORTING

Since fiscal 2002 Patterson Dental Company has operated in two reportable segments, dental supply and veterinary supply. In September 2003, the Company purchased AbilityOne Products Corp. AbilityOne is the world’s leading distributor of rehabilitative supplies and non-wheelchair assistive patient products to the global physical and occupational therapy markets. AbilityOne became a reportable business segment of the Company, and now Patterson Dental Company is comprised of three reportable segments: dental, veterinary, and rehabilitative supply. The Company’s reportable business segments are strategic business units that offer similar products and services to different customer bases. The dental supply segment provides a virtually complete range of consumable dental products, clinical and laboratory equipment and value-added services to dentists, dental laboratories, institutions and other healthcare providers throughout North America. The veterinary supply segment provides consumable supplies, equipment, diagnostic products, biologicals (vaccines) and pharmaceuticals to companion-pet veterinary clinics primarily in the Eastern, Mid-Atlantic and Southeastern regions of the United States. The rehabilitative supply segment provides a comprehensive range of distributed and self-manufactured rehabilitative medical supplies and non-wheelchair assistive products to acute care hospitals, long-term care facilities, rehabilitation clinics, dealers and schools.

The accounting policies of the segments are the same as those described in the summary of significant accounting policies. The Company evaluates segment performance based on operating income.

The following table presents information about the Company’s reportable segments:

	Three Months Ended				Nine Months Ended
	January 24, 2004		January 25, 2003		January 24, 2004		January 25, 2003
Net sales
Dental supply	$	425,145	$	380,822	$	1,189,614	$	1,077,143
Rehabilitative supply		52,989		—		84,831		—
Veterinary supply		43,084		40,248		157,545		132,487
Consolidated net sales	$	521,218	$	421,070	$	1,431,990	$	1,209,630
Operating income
Dental supply	$	54,436	$	44,119	$	139,254	$	117,930
Rehabilitative supply		10,270		—		17,813		—
Veterinary supply		2,285		2,358		11,211		9,868
Consolidated operating income	$	66,991	$	46,477	$	168,278	$	127,798

	January 24, 2004		April 26, 2003
Total assets
Dental supply	$	637,774	$	692,740
Rehabilitative supply		668,768		—
Veterinary supply		197,467		131,238
Consolidated total assets	$	1,504,009	$	823,978

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The following table presents sales information by product for the Company:

	Three Months Ended				Nine Months Ended
	January 24, 2004		January 25, 2003		January 24, 2004		January 25, 2003
Net sales
Consumable and printed office products	$	307,109	$	247,336	$	894,583	$	765,369
Equipment and software		177,731		143,823		430,440		348,239
Other		36,378		29,911		106,967		96,022
Total	$	521,218	$	421,070	$	1,431,990	$	1,209,630

NOTE 5 LONG-TERM DEBT

During the third quarter, the Company executed two debt financing arrangements totaling $650 million. A portion of this financing replaces the $500 million bridge loan that was used to fund the acquisition of AbilityOne Products Corp. in September 2003. The financing arrangements, which carried an overall effective rate of less than 4.0% at closing, consist of two components: a $350 million private placement of fixed and floating-rate senior notes, with maturities from November 2006 through November 2010, and a $300 million floating-rate bank credit agreement, consisting of a term loan and revolving credit facility. Under the bank agreement, the $100 million, fully amortizing term loan matures in November 2008, as does the $200 million revolving credit line. The Company had drawn $50 million under the revolving credit line at January 24, 2004.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

OVERVIEW

This Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A) should be read in conjunction with the MD&A included in our Form 10-K report filed July 24, 2003, and the Company’s Form 8-K report filed September 15, 2003, for important background information regarding, among other things, an overview to the markets in which we operate and our business strategies.

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RESULTS OF OPERATIONS

The following table sets forth, for the periods indicated, the percentage of net sales represented by certain operational data.

	Three Months Ended				Nine Months Ended
	January 24, 2004		January 25, 2003		January 24, 2004		January 25, 2003
Net sales	100.0	%	100.0	%	100.0	%	100.0	%
Cost of sales	63.4	%	64.9	%	65.0	%	65.4	%
Gross margin	36.6	%	35.1	%	35.0	%	34.6	%
Operating expenses	23.8	%	24.1	%	23.2	%	24.0	%
Operating income	12.8	%	11.0	%	11.8	%	10.6	%
Other (expense) income, net	(0.5	)%	0.4	%	(0.1	)%	0.6	%
Income before income tax and cumulative of accounting change	12.3	%	11.4	%	11.7	%	11.2	%
Income before cumulative effect of accounting change	7.7	%	7.1	%	7.3	%	7.1	%

QUARTER ENDED JANUARY 24, 2004 COMPARED TO QUARTER ENDED JANUARY 25, 2003.

Net Sales. Net sales for the three months ended January 24, 2004 (“Current Quarter”) totaled $521.2 million, a 23.8% increase from $421.1 million reported for the three months ended January 25, 2003 (“Prior Quarter”). Current Quarter results include $53.0 of incremental revenue from the acquisition of AbilityOne Products Corp. (“AbilityOne”) on September 12, 2003. Excluding AbilityOne, net sales increased 11.2%.

Dental segment sales rose 11.6% to $425.1 million. Sales growth in the dental supply segment was led by sales of equipment, which grew 18.6% reflecting strong demand for the CEREC^®3 dental restorative system, digital radiography systems and computer hardware. Consumable and printed office products increased 5.7% in the Current Quarter led by U.S. consumable growth of 6.2%. This improvement reflects the positive impact of strengthened market focus, new sales training, tools and programs, and the addition of territory sales representatives to the sales force. Sales of other services and products, consisting primarily of parts, technical service labor, software support and insurance e-claims, grew 20.8% compared to the Prior Quarter.

Veterinary sales increased 7.0% to $43.1 million compared to $40.2 million in the Prior Quarter. Higher sales growth in the first and second quarters of this year was due to a temporary pharmaceutical distribution agreement. Although this agreement was largely converted to an agency arrangement prior to the start of the Current Quarter, there was some impact in the Current Quarter which was more than offset by the volume generated from this agreement in the Prior Quarter, which was the period this agreement began. Excluding the former distribution agreement, sales growth going forward is expected to outpace the 6% to 7% growth rate of the

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U.S. companion-pet veterinary supply market, but will be generally offset by the impact of the contract over the next three quarters .

Rehabilitative sales stemming from the AbilityOne acquisition amounted to $53.0 million. This is the first full quarter contribution from AbilityOne. On a pro forma basis, sales increased about 4%.

Gross Margins. Gross margins increased from 35.1% to 36.6% in the Current Quarter with a contribution from AbilityOne of 1 percentage point. The AbilityOne product lines carry higher margins overall than either the dental or veterinary segments. The remainder of the increase is from the dental segment and is attributable to product mix along with some pricing improvement. Veterinary gross margins improved over the first half of the year due primarily to changes in product mix but were down year-over-year due to erosion in agency commission rates.

Operating Expenses. Operating expenses as a percent of sales improved from 24.1% in the Prior Quarter to 23.8% in the Current Quarter. The dental segment gained leverage on the operating expense line despite substantial investments in the sales organization, the new technical service system and other corporate objectives. This gain was partially offset by expenses recorded by AbilityOne, which included $2.2 million of amortization expense relating to the identifiable intangibles arising from the preliminary valuation of their assets. As a percent of sales, the veterinary segment showed a 40 basis point improvement in expenses quarter over quarter.

Operating Income. Operating income increased 44.1% and improved 1.8 percentage points as a percent of sales. The 1.8 percentage point increase is attributable to the strong operating metrics of AbilityOne combined with the improved dental gross margins and leverage on the expense structures of both the dental and veterinary segments. Excluding AbilityOne, operating margin improved 1.1 percentage points.

Other Income (Expense). The net expense of $2.8 million for the Current Quarter compared to $1.8 million of income in the Prior Quarter is primarily due to the interest expense incurred on the debt financing used to purchase AbilityOne including the write-off of $800,000 of remaining origination fees on the bridge loan, which was retired during the period.

Income Taxes. The effective income tax rate is unchanged in the Current Quarter at 37.6%.

Earnings Per Share. Diluted earnings per share increased to $0.58 versus $0.44 a year ago. The AbilityOne acquisition provided earnings of approximately $0.05 per diluted share.

NINE-MONTHS ENDED JANUARY 24, 2004 COMPARED TO NINE-MONTHS ENDED JANUARY 25, 2003.

Net Sales. Net sales for the nine months ended January 24, 2004 (“Current Period”) totaled $1,432.0 million, an 18.4% increase from $1,209.6 million reported for the nine months ended January 25, 2003 (“Prior Period”). Results for the period benefited from $84.8 million of incremental revenue from AbilityOne. Excluding AbilityOne, net sales increased 11.4%.

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Dental segment sales rose 10.4% to $1,189.6 million versus $1,077.1 million in the Prior Period. Nine-month trends parallel third quarter results where increases reflect strong equipment sales, which grew 20.7% due to continuing demand for the CEREC^®3 dental restorative system, digital radiography systems and computer hardware. Consumable and printed office products increased 5.0% in the Current Period. Sales of other services and products, consisting primarily of parts, technical service labor, software support and insurance e-claims, grew 10.0%. The impact of acquisitions over the first nine months was negligible. Canadian dental sales increased 2.2% over the Prior Period in local currencies.

Veterinary sales increased 18.9% to $157.5 million compared to $132.5 million in the Prior Period. Excluding the impact of the previously mentioned pharmaceutical distribution agreement, sales increased by approximately 8%.

On a pro forma basis, rehabilitative sales increased about 6% from $156.6 in the Prior Period to $165.4 in the Current Period.

Gross Margins. Gross profit increased 19.8% from 34.6% to 35.0% as a percent of sales in the Current Period solely as a result of the AbilityOne contribution. Excluding AbilityOne, margins declined to 34.4% due to a shift in the veterinary sales mix. While the veterinary segment realized substantial sales growth, these sales carried a lower margin rate due to the temporary pharmaceutical distribution agreement discussed above. Gross margins in the dental segment improved by 10 basis points.

Operating Expenses. Operating expenses as a percent of sales improved from 24.0% in the Prior Period to 23.2% in the Current Period. The expense rate improvement resulted from leveraging both the infrastructure attained through acquisitions and investments in our hardware and networking initiative. The sales volume generated by the veterinary pharmaceutical distribution agreement in the first six months of the year positively impacted the veterinary expense ratios. The addition of AbilityOne had no impact on the consolidated expense rate.

Operating Income. Operating income increased 31.7% and margins improved 1.2 percentage points. Excluding AbilityOne, operating margin improved 60 basis points. The AbilityOne contribution to gross margins combined with the positive trends in the dental and veterinary expense ratios resulted in higher operating margin.

Other Income (Expense). The $5.8 million decline compared to the Prior Period reflects the impact of the interest expense arising from the debt financing used to purchase AbilityOne.

Income Taxes. The effective income tax rate is 37.6% in the Current and Prior Period.

Earnings Per Share, Before Cumulative Effect of Accounting Change. Diluted earnings per share before the cumulative effect of accounting change increased to $1.52 versus $1.21 a year ago. Earnings per share includes an approximate $0.09 contribution from AbilityOne.

14

LIQUIDITY AND CAPITAL RESOURCES

For the nine months ended January 24, 2004, Patterson generated $93.4 million of cash from operations on earnings of $104.3 million, compared to $34.2 million on earnings before cumulative effect of accounting change of $82.7 million in the Prior Period. Payments on trade payables were lower by $21.4 million as the Company paid down dated payables in the Prior Period and fluctuations occurring in the normal course of business activities, in the aggregate, accounted for the balance of the year-over-year change in cash flows from operations.

Cash flows for investing activities include $580.3 million for the acquisition of AbilityOne on September 12, 2003. The acquisition was initially debt financed through a $500 million bridge loan. In November 2003, the bridge loan was converted into two permanent debt financing arrangements as more fully described in Note 5 to the Consolidated Financial Statements and in Contractual Obligations below. Prior Period investments include $4.5 million used primarily for the acquisition of Distribution Quebec Dentaire Inc.

The Company expects funds generated by operations, existing cash balances and availability under the new committed debt facilities will be sufficient to meet the Company’s working capital needs and finance anticipated expansion plans and strategic initiatives over the next fiscal year.

CONTRACTUAL OBLIGATIONS

Since April 26, 2003, the Company entered into two new debt financing arrangements including both bank and private debt for $650 million. The bank portion of the package totals $300 million and is comprised of a $100 million five year, amortizing term loan and a $200 million five year, revolving credit facility. The private debt is a total of $350 million of fixed and floating rate notes with maturities ranging from 3 to 7 years with one year, no-call provisions.

The Company had two primary objectives in placing this debt: one, to lower its overall cost of capital, and two, to provide significant flexibility in financing the growth of the business. Proceeds from these issuances were used to repay the $500 million bridge financing obtained in connection with the AbilityOne acquisition. After refinancing the bridge loan, approximately $150 million of capacity remains for future use under the bank agreement.

The following table updates information about the Company’s contractual obligations:

Contractual Obligations	Total		Less than 1 year		1-3 years		3-5 years		More than 5 years
Long-Term Debt	$	504,599	$	20,035	$	74,564	$	345,000	$	65,000

CRITICAL ACCOUNTING POLICIES

There has been no material change in the Company’s Critical Accounting Policies, as disclosed in its 2003 Annual Report on Form 10-K filed July 24, 2003.

15

FACTORS THAT MAY AFFECT FUTURE OPERATING RESULTS

Certain information of a non-historical nature contains forward-looking statements. Words such as “believes,” “expects,” “plans,” “estimates,” “intends” and variations of such words are intended to identify such forward-looking statements. The statements are not guaranties of future performance and are subject to certain risks, uncertainties or assumptions that are difficult to predict; therefore, the Company cautions shareholders and prospective investors that the following important factors, among others, could cause the Company’s actual operating results to differ materially from those expressed in any forward-looking statements. The statements under this caption are intended to serve as cautionary statements within the meaning of the Private Securities Litigation Reform Act of 1995. The following information is not intended to limit in any way the characterization of other statements or information under other captions as cautionary statements for such purpose. The order in which such factors appear below should not be construed to indicate their relative importance or priority.

• The Company’s ability to meet increased competition from national, regional and local full-service distributors and mail-order distributors of dental, veterinary and rehabilitative and assistive living products, while maintaining current or improved profit margins.

• The ability of the Company to retain its base of customers and to increase its market share.

• The ability of the Company to maintain satisfactory relationships with qualified and motivated sales personnel.

• The continued ability of the Company to maintain satisfactory relationships with key vendors and the ability of the Company to create relationships with additional manufacturers of quality, innovative products.

• Changes in the economics of dentistry affecting dental practice growth and the demand for dental products, including the ability and willingness of dentists to invest in high-technology diagnostic and therapeutic products.

• Reduced growth in expenditures for dental services by private dental insurance plans.

• The accuracy of the Company’s assumptions concerning future per capita expenditures for dental services, including assumptions as to population growth and the demand for preventive dental services such as periodontic, endodontic and orthodontic procedures.

• The rate of growth in demand for infection control products currently used for prevention of the spread of communicable diseases such as AIDS, hepatitis and herpes.

• Changes in the economics of the veterinary supply market, including reduced growth in per capita expenditures for veterinary services and reduced growth in the number of households owning pets.

• The effects of healthcare related legislation and regulation, which may affect expenditures or reimbursements for rehabilitative and assistive products.

16

• The accuracy of assumptions concerning future per capita expenditures for rehabilitative supplies and non-wheelchair assistive patient products, including assumptions as to population growth.

• The ability of the Company to successfully integrate and profitably manage recent acquisitions in the veterinary and rehabilitation supplies and non-wheelchair assistive patient products industries.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

In November 2003, the Company entered into a $650 million debt financing arrangement. At January 24, 2004 the Company had $500 million outstanding of which $350 million is variable-rate debt. After adjusting for the effect of variable-rate assets, primarily cash and cash equivalents, the Company has approximately $150 million of net variable-rate debt exposed to market risk. A sensitivity analysis of the impact on the net variable-rate debt of a hypothetical 10% change in short-term interest rates indicates that interest expense would not have changed materially for the three months ended January 24, 2004. Additional information regarding the new debt financing is included in Note 5 to the Consolidated Financial Statements. There have been no other material changes from April 26, 2003 in our market risk. For further information on market risk, refer to Item 7A in our Annual Report on Form 10-K for the fiscal year ended April 26, 2003.

ITEM 4. CONTROLS AND PROCEDURES

As of January 24, 2004, the Company carried out an evaluation, under the supervision and with the participation of the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”)). Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective as of January 24, 2004 to ensure that information required to be disclosed by the Company in reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms.

During the fiscal quarter ended January 24, 2004, there were no significant changes in the Company’s internal controls over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) that have materially affected, or are reasonably likely to materially affect, the Company’s internal controls over financial reporting.

17

PART II OTHER INFORMATION

ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS

(a) None

(b) None

(c) On September 12, 2003, the Company issued its unregistered convertible debentures in the amount of $3.0 million and $1.5 million in reliance on Regulation D of the Securities Act of 1933. The debentures were issued as part of the consideration for the acquisition of AbilityOne Products Corp. and are convertible to 58,846 and 29,423 shares of common stock respectively. The debentures are convertible beginning July 14, 2006 and expire September 12, 2006. The Agreement and Plan of Merger Among Patterson Dental Company, RETEP, Inc., AbilityOne Products Corp. and AbilityOne II, L.L.C., as Representative of the Company Stockholders was filed as Exhibit 2 to the Company’s Form 8-K filed with the Securities and Exchange Commission on September 15, 2003. See also Note 3 to Notes to Consolidated Financial Statements of this Form 10-Q.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits

4.5	Credit Agreement dated as of November 25, 2003 among Patterson Dental Company, as the Company, the Subsidiary Borrowers from time to time parties hereto, the Lenders from time to time parties hereto, Bank One, NA (main office Chicago), as Administrative Agent, Bank of America, N.A., as Syndication Agent and Suntrust Bank, the Northern Trust Company, and U.S. Bank National Association, as Documentation Agents.
4.6	Note Purchase Agreement dated as of November 15, 2003 among Patterson Dental Company, AbilityOne Products Corp., AbilityOne Corporation, Patterson Dental Supply, Inc., Webster Veterinary Supply, Inc. and Webster Management, LP
31.1	Certification of Chief Executive Officer Pursuant to 18 U.S.C.ss.1350, as Adopted, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	Certification of Chief Financial Officer Pursuant to 18 U.S.C.ss.1350, as Adopted, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1	Certification of Chief Executive Officer Pursuant to 18 U.S.C.ss.1350, as Adopted, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2	Certification of Chief Financial Officer Pursuant to 18 U.S.C.ss.1350, as Adopted, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

18

(b) Reports on Form 8-K:

In a Form 8-K dated November 20, 2003 the Company furnished an earnings press release announcing its 2004 second quarter results.

A Form 8-K/A was filed November 21, 2003 amending a Form 8-K filed September 15, 2003 announcing the Company’s acquisition of AbilityOne Products Corp.

All other items under Part II have been omitted because they are inapplicable or the answers are negative, or, in the case of legal proceedings, were previously reported in the Annual Report on Form 10-K filed July 24, 2003.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

		PATTERSON DENTAL COMPANY (Registrant)
Dated: March 9, 2004
	By:	/s/ R. Stephen Armstrong
		R. Stephen Armstrong
		Executive Vice President, Treasurer and Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)

19

EX-4.5

                                                                     Exhibit 4.5

                                CREDIT AGREEMENT

                          DATED AS OF NOVEMBER 25, 2003

                                      AMONG

                            PATTERSON DENTAL COMPANY,
                                 AS THE COMPANY

           THE SUBSIDIARY BORROWERS FROM TIME TO TIME PARTIES HERETO,

                  THE LENDERS FROM TIME TO TIME PARTIES HERETO,

                       BANK ONE, NA (MAIN OFFICE CHICAGO),
                             AS ADMINISTRATIVE AGENT


                             BANK OF AMERICA, N.A.,
                              AS SYNDICATION AGENT

                                       AND

                                 SUNTRUST BANK,
                         THE NORTHERN TRUST COMPANY, AND
                         U.S. BANK NATIONAL ASSOCIATION,
                             AS DOCUMENTATION AGENTS

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

                       BANC ONE CAPITAL MARKETS, INC. AND
                         BANC OF AMERICA SECURITIES LLC,
                   AS CO-LEAD ARRANGERS AND JOINT BOOK RUNNERS

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

                         SIDLEY AUSTIN BROWN & WOOD LLP
                                 Bank One Plaza
                            10 South Dearborn Street
                             Chicago, Illinois 60603



                                TABLE OF CONTENTS

ARTICLE I    DEFINITIONS.......................................................1
     1.1.    Certain Defined Terms.............................................1
     1.2.    Plural Forms.....................................................21

ARTICLE II   THE CREDITS......................................................21
     2.1.    Term Loan........................................................21
     2.2.    Revolving Loans..................................................22
     2.3.    Swing Line Loans.................................................22
     2.4.    Determination of Dollar Amounts; Required Payments;
             Termination......................................................24
     2.5.    Commitment Fee; Reductions in Aggregate Revolving Loan
             Commitment.......................................................25
     2.6.    Minimum Amount of Each Advance...................................25
     2.7.    Optional Principal Payments......................................25
     2.8.    Method of Selecting Types and Interest Periods for New
             Advances.........................................................26
     2.9.    Conversion and Continuation of Outstanding Advances; No
             Conversion or Continuation of Eurocurrency Advances After
             Default..........................................................26
     2.10.   Method of Borrowing..............................................27
     2.11.   Changes in Interest Rate, etc....................................28
     2.12.   Rates Applicable After Default...................................28
     2.13.   Method of Payment; Non-availability of Original Currency.........28
     2.14.   Advances to be Made in euro......................................29
     2.15.   Noteless Agreement; Evidence of Indebtedness.....................29
     2.16.   Telephonic Notices...............................................30
     2.17.   Interest Payment Dates; Interest and Fee Basis...................31
     2.18.   Notification of Advances, Interest Rates, Prepayments and
             Commitment Reduction.............................................31
     2.19.   Lending Installations............................................31
     2.20.   Non-Receipt of Funds by the Agent................................32
     2.21.   Market Disruption................................................32
     2.22.   Judgment Currency................................................33
     2.23.   Replacement of Lender............................................33
     2.24.   Facility LCs.....................................................34
     2.25.   Subsidiary Borrowers.............................................39

ARTICLE III  YIELD PROTECTION; TAXES..........................................39
     3.1.    Yield Protection.................................................39
     3.2.    Changes in Capital Adequacy Regulations..........................40
     3.3.    Availability of Types of Advances................................41
     3.4.    Funding Indemnification..........................................41
     3.5.    Taxes............................................................41
     3.6.    Lender Statements; Survival of Indemnity.........................43
     3.7.    Alternative Lending Installation.................................43

ARTICLE IV   CONDITIONS PRECEDENT.............................................44

                                        i



     4.1.    Effectiveness of Commitments.....................................44
     4.2.    Each Credit Extension............................................46
     4.3.    Initial Advance to Each New Subsidiary Borrower..................46

ARTICLE V    REPRESENTATIONS AND WARRANTIES...................................47
     5.1.    Existence and Standing...........................................47
     5.2.    Authorization and Validity.......................................47
     5.3.    No Conflict; Government Consent..................................47
     5.4.    Financial Statements.............................................48
     5.5.    Material Adverse Change..........................................48
     5.6.    Taxes............................................................48
     5.7.    Litigation and Contingent Obligations............................48
     5.8.    Subsidiaries.....................................................49
     5.9.    ERISA............................................................49
     5.10.   Accuracy of Information..........................................49
     5.11.   Regulation U.....................................................49
     5.12.   Material Agreements..............................................49
     5.13.   Compliance With Laws.............................................50
     5.14.   Ownership of Properties..........................................50
     5.15.   Plan Assets; Prohibited Transactions.............................50
     5.16.   Environmental Matters............................................50
     5.17.   Investment Company Act...........................................50
     5.18.   Public Utility Holding Company Act...............................50
     5.19.   Insurance........................................................50
     5.20.   Solvency.........................................................51
     5.21.   No Default or Unmatured Default..................................51
     5.22.   Reportable Transaction...........................................51
     5.23.   Post-Retirement Benefits.........................................51
     5.24.   AbilityOne Acquisition...........................................51

ARTICLE VI   COVENANTS........................................................51
     6.1.    Financial Reporting..............................................51
     6.2.    Use of Proceeds..................................................53
     6.3.    Notice of Default................................................53
     6.4.    Conduct of Business..............................................53
     6.5.    Taxes............................................................54
     6.6.    Insurance........................................................54
     6.7.    Compliance with Laws.............................................54
     6.8.    Maintenance of Properties........................................54
     6.9.    Inspection; Keeping of Books and Records.........................54
     6.10.   Dividends........................................................55
     6.11.   Merger...........................................................55
     6.12.   Sale of Assets...................................................55
     6.13.   Investments and Acquisitions.....................................56
     6.14.   Indebtedness.....................................................59
     6.15.   Liens............................................................60
     6.16.   Affiliates.......................................................62

                                       ii



     6.17.   Financial Contracts..............................................63
     6.18.   Subsidiary Covenants.............................................63
     6.19.   Contingent Obligations...........................................63
     6.20.   Leverage Ratio...................................................63
     6.21.   Interest Expense Coverage Ratio..................................63
     6.22.   Minimum Consolidated Net Worth...................................64
     6.23.   Additional Subsidiary Guarantors.................................64
     6.24.   Foreign Subsidiary Investments...................................64
     6.25.   Subordinated Indebtedness........................................64
     6.26.   Sale of Accounts.................................................64

ARTICLE VII  DEFAULTS.........................................................65

ARTICLE VIII ACCELERATION, WAIVERS, AMENDMENTS AND REMEDIES...................68
     8.1.    Acceleration.....................................................68
     8.2.    Amendments.......................................................69
     8.3.    Preservation of Rights...........................................70

ARTICLE IX   GENERAL PROVISIONS...............................................70
     9.1.    Survival of Representations......................................70
     9.2.    Governmental Regulation..........................................70
     9.3.    Headings.........................................................70
     9.4.    Entire Agreement.................................................70
     9.5.    Several Obligations; Benefits of this Agreement..................70
     9.6.    Expenses; Indemnification........................................71
     9.7.    Numbers of Documents.............................................72
     9.8.    Accounting.......................................................72
     9.9.    Severability of Provisions.......................................72
     9.10.   Nonliability of Lenders..........................................72
     9.11.   Confidentiality..................................................73
     9.12.   Lenders Not Utilizing Plan Assets................................73
     9.13.   Nonreliance......................................................73
     9.14.   Disclosure.......................................................74
     9.15.   Performance of Obligations.......................................74
     9.16.   Relations Among Lenders..........................................74
     9.17.   USA Patriot Act Notification.....................................75
             IMPORTANT INFORMATION ABOUT PROCEDURES FOR OPENING A
             NEW ACCOUNT......................................................75

ARTICLE X    THE AGENT........................................................75
     10.1.   Appointment; Nature of Relationship..............................75
     10.2.   Powers...........................................................76
     10.3.   General Immunity.................................................76
     10.4.   No Responsibility for Loans, Recitals, etc.......................76
     10.5.   Action on Instructions of Lenders................................76
     10.6.   Employment of Agents and Counsel.................................76
     10.7.   Reliance on Documents; Counsel...................................77

                                       iii



     10.8.   Agent's Reimbursement and Indemnification........................77
     10.9.   Notice of Default................................................77
     10.10.  Rights as a Lender...............................................78
     10.11.  Lender Credit Decision...........................................78
     10.12.  Successor Agent..................................................78
     10.13.  Agent and Arranger Fees..........................................79
     10.14.  Delegation to Affiliates.........................................79
     10.15.  No Duties Imposed on Syndication Agents, Documentation
             Agents or Arrangers..............................................79

ARTICLE XI   SETOFF; RATABLE PAYMENTS.........................................79
     11.1.   Setoff...........................................................79
     11.2.   Ratable Payments.................................................79

ARTICLE XII  BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS................80
     12.1.   Successors and Assigns; Designated Lenders.......................80
     12.2.   Participations...................................................82
     12.3.   Assignments......................................................83
     12.4.   Dissemination of Information.....................................85
     12.5.   Tax Certifications...............................................85

ARTICLE XIII NOTICES..........................................................85
     13.1.   Notices; Effectiveness; Electronic Communication.................85
     13.2.   Change of Address, Etc...........................................86

ARTICLE XIV  COUNTERPARTS; INTEGRATION; EFFECTIVENESS; ELECTRONIC
             EXECUTION........................................................86
     14.1.   Counterparts; Effectiveness......................................86
     14.2.   Electronic Execution of Assignments..............................86

ARTICLE XV   CHOICE OF LAW; CONSENT TO JURISDICTION; WAIVER OF JURY
             TRIAL............................................................87
     15.1    CHOICE OF LAW....................................................87
     15.2    CONSENT TO JURISDICTION..........................................87
     15.3    WAIVER OF JURY TRIAL.............................................87

ARTICLE XVI  CO-BORROWER PROVISIONS...........................................87
     16.1.   Appointment......................................................87
     16.2.   Separate Actions.................................................88
     16.3.   Co-Borrower Obligations Absolute and Unconditional...............88
     16.4.   Waivers and Acknowledgements.....................................89
     16.5.   Contribution Among Borrowers.....................................90
     16.6.   Subrogation......................................................90
     16.7.   Subordination....................................................90

                                       iv



                                    SCHEDULES
                                    ---------

Commitment Schedule

Pricing Schedule


                                    EXHIBITS
                                    --------

Exhibit E-1  -  Form of Promissory Note for Term Loan (if requested)

Exhibit E-2  -  Form of Promissory Note for Revolving Loan (if requested)


                                       v



                                CREDIT AGREEMENT

     This Credit Agreement, dated as of November 25, 2003, is entered into by
and among Patterson Dental Company, a Minnesota corporation, as the Company, the
Subsidiary Borrowers from time to time parties hereto, the Lenders and Bank One,
NA, a national banking association having its principal office in Chicago,
Illinois, as Administrative Agent. The parties hereto agree as follows:

                                    ARTICLE I

                                   DEFINITIONS

     1.1.   Certain Defined Terms. As used in this Agreement:

     "AbilityOne" means AbilityOne Products Corp., a Delaware corporation.

     "AbilityOne Acquisition" means the acquisition by the Company or a
Subsidiary or Subsidiaries of the Company of all of the capital stock of
AbilityOne on the terms and conditions set forth in the AbilityOne Acquisition
Agreement.

     "AbilityOne Acquisition Agreement" means that certain Agreement and Plan of
Merger dated as of August 15, 2003 by and among the Company, RETEP, Inc.,
AbilityOne Products Corp., and AbilityOne II, L.L.C., as representative of the
company stockholders, as in effect on September 12, 2003 and without giving
effect to any subsequent amendment or modification thereto.

     "AbilityOne Corporation" means AbilityOne Corporation, a Michigan
corporation.

     "Accounting Changes" is defined in Section 9.8 hereof.

     "Accounts" means the Company's or a Subsidiary's right to the payment of
money from the sale, lease or other disposition of goods or other assets by the
Company or a Subsidiary, a rendering of services by the Company or a Subsidiary,
a loan by the Company or a Subsidiary, the overpayment of taxes or other
liabilities of the Company, or otherwise, however such right to payment may be
evidenced, together with all other rights and interests (including all liens and
security interests) that the Company or Subsidiary may at any time have against
any account debtor or other party obligated thereon or against any of the
property of such account debtor or other party.

     "Acquisition" means any transaction, or any series of related transactions,
consummated on or after the Closing Date, by which the Company or any of its
Subsidiaries (i) acquires any going concern business or all or substantially all
of the assets of any Person, or division thereof, whether through purchase of
assets, merger or otherwise or (ii) directly or indirectly acquires from one or
more Persons (in one transaction or as the most recent transaction in a series
of transactions) at least a majority (in number of votes) of the securities of a
corporation which have ordinary voting power for the election of directors
(other than securities having such power only



by reason of the happening of a contingency) or a majority (by percentage of
voting power) of the outstanding ownership interests of a partnership or limited
liability company of any Person.

     "Advance" means a borrowing hereunder consisting of the aggregate amount of
the several Revolving Loans or Term Loans, as the case may be, (i) made by some
or all of the Lenders on the same Borrowing Date, or (ii) converted or continued
by the Lenders on the same date of conversion or continuation, consisting, in
either case, of the aggregate amount of the several Loans of the same Type and,
in the case of Eurocurrency Loans, in the same Agreed Currency and for the same
Interest Period. The term "Advance" shall include Swing Line Loans unless
otherwise expressly provided.

     "Affected Lenders" is defined in Section 2.23.

     "Affiliate" of any Person means any other Person directly or indirectly
controlling, controlled by or under common control with such Person. A Person
shall be deemed to control another Person if the controlling Person is the
"beneficial owner" (as defined in Rule 13d-3 under the Securities Exchange Act
of 1934) of 10% or more of any class of voting securities (or other ownership
interests) of the controlled Person or possesses, directly or indirectly, the
power to direct or cause the direction of the management or policies of the
controlled Person, whether through ownership of voting securities, by contract
or otherwise.

     "Agent" means Bank One in its capacity as contractual representative of the
Lenders pursuant to Article X, and not in its individual capacity as a Lender,
as Administrative Agent, and any successor Agent appointed pursuant to Article
X.

     "Aggregate Outstanding Revolving Credit Exposure" means, at any time, the
aggregate of the Outstanding Revolving Credit Exposure of all the Lenders.

     "Aggregate Revolving Loan Commitment" means the aggregate of the Revolving
Loan Commitments of all the Lenders, as may be increased or reduced from time to
time pursuant to the terms hereof. The initial Aggregate Revolving Loan
Commitment is Two Hundred Million and 00/100 Dollars ($200,000,000).

     "Agreed Currencies" means (i) Dollars, (ii) so long as such currencies
remain Eligible Currencies, British Pounds Sterling, Canadian Dollars and euro,
and (iii) any other Eligible Currency which the applicable Borrower requests the
Agent to include as an Agreed Currency hereunder and which is acceptable to all
of the Lenders. For the purposes of this definition, each of the specific
currencies referred to in clause (ii) (except for euro), above, shall mean and
be deemed to refer to the lawful currency of the jurisdiction referred to in
connection with such currency, e.g., "Canadian Dollars" means the lawful
currency of Canada.

     "Agreement" means this Credit Agreement, as it may be amended, restated,
supplemented or otherwise modified and as in effect from time to time.

     "Agreement Accounting Principles" means generally accepted accounting
principles as in effect in the United States from time to time, applied in a
manner consistent with that used in preparing the financial statements of the
Company referred to in Section 5.4; provided, however, that except as provided
in Section 9.8, with respect to the calculation of the financial covenants

                                        2



set forth in Sections 6.20, 6.21 and 6.22 (and the defined terms used in such
Sections), "Agreement Accounting Principles" means generally accepted accounting
principles as in effect in the United States as of the Closing Date, applied in
a manner consistent with that used in preparing the financial statements of the
Company referred to in Section 5.4 hereof.

     "Alternate Base Rate" means, for any day, a fluctuating rate of interest
per annum equal to the higher of (i) the Prime Rate for such day and (ii) the
sum of (a) the Federal Funds Effective Rate for such day and (b) one-half of one
percent (0.5%) per annum.

     "Applicable Fee Rate" means, with respect to the Commitment Fee at any
time, the percentage rate per annum which is applicable at such time with
respect to such fee as set forth in the Pricing Schedule.

     "Applicable Margin" means, with respect to Advances of any Type at any
time, the percentage rate per annum which is applicable at such time with
respect to Advances of such Type as set forth in the Pricing Schedule.

     "Approved Fund" means any Fund that is administered or managed by (i) a
Lender, (ii) an Affiliate of a Lender or (iii) an entity or an Affiliate of an
entity that administers or manages a Lender.

     "Approximate Equivalent Amount" of any currency with respect to any amount
of Dollars shall mean the Equivalent Amount of such currency with respect to
such amount of Dollars on or as of such date, rounded up to the nearest amount
of such currency as determined by the Agent from time to time.

     "Arrangers" means, collectively, Banc One Capital Markets, Inc., a Delaware
corporation, and its successors, and Banc of America Securities LLC, and its
successors, in their capacities as Co-Lead Arrangers and Joint Book Runners.

     "Article" means an article of this Agreement unless another document is
specifically referenced.

     "Assignment Agreement" is defined in Section 12.3.1.

     "Assumption Letter" means a letter of a Domestic Subsidiary that is a
Wholly-Owned Subsidiary of the Company addressed to the Agent and the Lenders,
acknowledged by the Agent and consented to by each then existing Borrower, in
substantially the form of Exhibit H hereto, pursuant to which such Subsidiary
agrees to become a "Subsidiary Borrower" and agrees to be bound by the terms and
conditions hereof.

     "Authorized Officer" means, for any Person, any of the chief executive
officer, president, chief operating officer, chief financial officer, treasurer
or assistant treasurer of such Person, acting singly.

     "Available Aggregate Revolving Loan Commitment" means, at any time, the
Aggregate Revolving Loan Commitment then in effect minus the Aggregate
Outstanding Revolving Credit Exposure at such time.

                                        3



     "Bank One" means Bank One, NA, a national banking association having its
principal office in Chicago, Illinois, in its individual capacity, and its
successors.

     "Borrower" means any of the Company or any of the Subsidiary Borrowers, and
"Borrowers" shall mean the Company and the Subsidiary Borrowers.

     "Borrowing Date" means a date on which an Advance is made hereunder.

     "Borrowing Notice" is defined in Section 2.8.

     "Business Day" means (i) with respect to any borrowing, payment or rate
selection of Eurocurrency Advances, a day (other than a Saturday or Sunday) on
which banks generally are open in Chicago, Illinois for the conduct of
substantially all of their commercial lending activities, interbank wire
transfers can be made on the Fedwire system and dealings in Dollars and the
other Agreed Currencies are carried on in the London interbank market (and, if
the Advances which are the subject of such borrowing, payment or rate selection
are denominated in euro, a day upon which such clearing system as is determined
by the Agent to be suitable for clearing or settlement of euro is open for
business) and (ii) for all other purposes, a day (other than a Saturday or
Sunday) on which banks generally are open in Chicago, Illinois for the conduct
of substantially all of their commercial lending activities and interbank wire
transfers can be made on the Fedwire system.

     "Capitalized Lease" of a Person means any lease of Property by such Person
as lessee which would be capitalized on a balance sheet of such Person prepared
in accordance with Agreement Accounting Principles.

     "Capitalized Lease Obligations" of a Person means the amount of the
obligations of such Person under Capitalized Leases which would be shown as a
liability on a balance sheet of such Person prepared in accordance with
Agreement Accounting Principles.

     "Cash Equivalent Investments" means (i) short-term obligations of, or fully
guaranteed by, the United States of America, (ii) commercial paper rated A-1 or
better by S&P or P-1 or better by Moody's, (iii) demand deposit accounts
maintained in the ordinary course of business, (iv) certificates of deposit
issued by and time deposits with commercial banks (whether domestic or foreign)
having capital and surplus in excess of $100,000,000, and (v) money market funds
investing primarily in assets of the type described in clauses (i) and (ii) of
this definition; provided in each case that the same provides for payment of
both principal and interest (and not principal alone or interest alone) and is
not subject to any contingency regarding the payment of principal or interest.

     "Change in Control" means (i) the acquisition by any Person, or two or more
Persons acting in concert, of beneficial ownership (within the meaning of Rule
13d-3 of the SEC under the Securities Exchange Act of 1934) of 30% or more of
the outstanding shares of voting stock of the Company; (ii) other than pursuant
to a transaction otherwise permitted under this Agreement, the Company shall
cease to own, directly or indirectly and free and clear of all Liens or other
encumbrances, all of the outstanding shares of voting stock of the Subsidiary
Borrowers and the other Guarantors on a fully diluted basis; (iii) the majority
of the Board of Directors of any Borrower fails to consist of Continuing
Directors or (iv) any "Change of Control" (or similar

                                        4



term) under (and as defined in) the Note Purchase Agreement or the Senior Notes
shall have occurred.

     "Closing Date" means November 25, 2003.

     "Code" means the Internal Revenue Code of 1986, as amended, reformed or
otherwise modified from time to time, and any rule or regulation issued
thereunder.

     "Collateral Shortfall Amount" is defined in Section 8.1.

     "Commitment Fee" is defined in Section 2.5.1.

     "Commitment Schedule" means the Schedule identifying each Lender's
Revolving Loan Commitment and Term Loan Commitment as of the Closing Date
attached hereto and identified as such.

     "Company" means Patterson Dental Company, a Minnesota corporation, and its
permitted successors and assigns (including, without limitation, a debtor in
possession on its behalf).

     "Computation Date" is defined in Section 2.4.1.

     "Consolidated Adjusted EBITDA" means, as to any Person for any period, the
sum of Consolidated EBIT for such period plus consolidated depreciation and
amortization for such period. For Persons acquired by the Company or any
Subsidiary during the relevant measurement period, their EBITDA results will be
included in the calculation of Consolidated Adjusted EBITDA as if those Persons
were owned by the Company or such Subsidiary for the entire reporting period.
Consolidated Adjusted EBITDA will be calculated on a rolling four-quarter basis.

     "Consolidated Adjusted Net Income" means, as to any Person for any period,
the Consolidated Net Income of such Person, provided that, for Persons acquired
by the Company or any Subsidiary during the relevant measurement period, their
Consolidated Net Income will be included in the calculation of Consolidated
Adjusted Net Income as if those Persons were owned by the Company or such
Subsidiary for the entire reporting period. Consolidated Adjusted Net Income
will be calculated on a rolling four-quarter basis.

     "Consolidated EBIT" means, as to any Person and with reference to any
period, Consolidated Net Income plus, to the extent deducted from revenues in
determining Consolidated Net Income, (i) Consolidated Interest Expense, and (ii)
expense for federal, state, local and foreign income and franchise taxes paid or
accrued, all calculated for such Person and its Subsidiaries on a consolidated
basis.

     "Consolidated Interest Expense" means, as to any Person and with reference
to any period, the interest expense of such Person and its Subsidiaries
calculated on a consolidated basis for such period including, without
limitation, such interest expense as may be attributable to capitalized leases,
receivables transaction financing costs, the discount or implied interest

                                        5



component of off-balance sheet liabilities, all commissions, discounts and other
fees and charges owed with respect to Letters of Credit and net mark-to-market
exposure.

     "Consolidated Net Income" means as to any Person and with reference to any
period, the net income (or loss) of such Person and its Subsidiaries calculated
on a consolidated basis for such period, excluding any non-cash charges or gains
which are unusual, non-recurring or extraordinary.

     "Consolidated Net Worth" means, as of any date of determination, the
consolidated total stockholders' equity (including capital stock, additional
paid-in capital and retained earnings) of the Company and its Subsidiaries
determined in accordance with Agreement Accounting Principles.

     "Consolidated Total Debt" means (i) all indebtedness of the Company and its
Subsidiaries, on a consolidated basis, reflected on a balance sheet prepared in
accordance with Agreement Accounting Principles, plus, without duplication (ii)
the face amount of all outstanding Letters of Credit in respect of which the
Company or any Subsidiary has any reimbursement obligation and the principal
amount of all Contingent Obligations of the Company and its Subsidiaries, plus
Capitalized Lease Obligations, plus obligations arising from the sale of
accounts receivable and other forms of off-balance sheet financing, including
Off-Balance Sheet Liabilities.

     "Contingent Obligation" of a Person means any agreement, undertaking or
arrangement by which such Person assumes, guarantees, endorses, contingently
agrees to purchase or provide funds for the payment of, or otherwise becomes or
is contingently liable upon, the obligation or liability of any other Person, or
agrees to maintain the net worth or working capital or other financial condition
of any other Person, or otherwise assures any creditor of such other Person
against loss, including, without limitation, any comfort letter, operating
agreement, take-or-pay contract, application for a Letter of Credit or the
obligations of any such Person as general partner of a partnership with respect
to the liabilities of the partnership.

     "Continuing Director" means, with respect to any Person as of any date of
determination, any member of the board of directors of such Person who (i) was a
member of such board of directors on the Closing Date, or (ii) was nominated for
election or elected to such board of directors with the approval of the required
majority of the Continuing Directors who were members of such board at the time
of such nomination or election; provided that if any individual who is so
elected or nominated in connection with a merger, consolidation, acquisition or
similar transaction and who was not a Continuing Director prior thereto,
together with all other individuals so elected or nominated in connection with
such merger, consolidation, acquisition or similar transaction who were not
Continuing Directors prior thereto, constitute a majority of the members of the
board of directors of such Person, such individual shall not be a Continuing
Director.

     "Controlled Group" means all members of a controlled group of corporations
or other business entities and all trades or businesses (whether or not
incorporated) under common control which, together with the Company or any of
its Subsidiaries, are treated as a single employer under Section 414 of the
Code.

                                        6



     "Conversion/Continuation Notice" is defined in Section 2.9.

     "Credit Extension" means the making of an Advance or the issuance of a
Facility LC hereunder.

     "Credit Extension Date" means the Borrowing Date for an Advance or the
issuance date for a Facility LC.

     "Credit Party" means, collectively, the Borrowers and each of the
Guarantors.

     "Default" means an event described in Article VII.

     "Designated Lender" means, with respect to each Designating Lender, each
Eligible Designee designated by such Designating Lender pursuant to Section
12.1.2.

     "Designating Lender" means, with respect to each Designated Lender, the
Lender that designated such Designated Lender pursuant to Section 12.1.2.

     "Designation Agreement" is defined in Section 12.1.2.

     "Disqualified Stock" means any preferred or other capital stock that, by
its terms (or by the terms of any security into which it is convertible or for
which it is exchangeable), or upon the happening of any event, matures or is
mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or
redeemable at the option of the holder thereof, in whole or in part, on or prior
to the date that is ninety-one (91) days after the later of (i) the Revolving
Loan Termination Date and (ii) the Term Loan Maturity Date.

     "Dollar Amount" of any currency at any date shall mean (i) the amount of
such currency if such currency is Dollars or (ii) the Equivalent Amount if such
currency is any Eligible Currency other than Dollars.

     "Dollar" and "$" means the lawful currency of the United States of America.

     "Domestic Subsidiary" means any Subsidiary of any Person that is not a
Foreign Subsidiary.

     "Eligible Currency" means any currency other than Dollars (i) that is
readily available, (ii) that is freely traded, (iii) in which deposits are
customarily offered to banks in the London interbank market, (iv) which is
convertible into Dollars in the international interbank market and (v) as to
which an Equivalent Amount may be readily calculated. If, after the designation
by the Lenders of any Eligible Currency as an Agreed Currency, (x) currency
control or other exchange regulations are imposed in the country in which such
currency is issued with the result that different types of such currency are
introduced, (y) such currency is, in the determination of the Agent, no longer
readily available or freely traded or (z) in the determination of the Agent, an
Equivalent Amount of such currency is not readily calculable, the Agent shall
promptly notify the Lenders and the Company, and such currency shall no longer
be an Agreed Currency until such time as all of the Lenders agree to reinstate
such currency as an Agreed Currency and promptly, but in any event within five
Business Days of receipt of such notice from the Agent,

                                        7



the Borrowers shall repay all Loans in such affected currency or convert such
Loans into Loans in Dollars or another Agreed Currency, subject to the other
terms set forth in Article II.

     "Eligible Designee" means a special purpose corporation, partnership,
trust, limited partnership or limited liability company that is administered by
the respective Designating Lender or an Affiliate of such Designating Lender and
(i) is organized under the laws of the United States of America or any state
thereof, (ii) is engaged primarily in making, purchasing or otherwise investing
in commercial loans in the ordinary course of its business and (iii) issues (or
the parent of which issues) commercial paper rated at least A-1 or the
equivalent thereof by S&P or P-1 or the equivalent thereof by Moody's.

     "Environmental Laws" means any and all applicable federal, state, local and
foreign statutes, laws, judicial decisions, regulations, ordinances, rules,
judgments, orders, decrees, plans, injunctions, permits, concessions, grants,
franchises, licenses, agreements and other governmental restrictions relating to
(i) the protection of the environment, (ii) the effect of the environment on
human health, (iii) emissions, discharges or releases of pollutants,
contaminants, hazardous substances or wastes into surface water, ground water or
land, or (iv) the manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling of pollutants, contaminants, hazardous
substances or wastes or the clean-up or other remediation thereof.

     "Equivalent Amount" of any Eligible Currency with respect to any amount of
Dollars at any date shall mean the equivalent in such currency of such amount of
Dollars, calculated on the basis of the arithmetical mean of the buy and sell
spot rates of exchange of the Agent for such other currency at 11:00 a.m.,
London time, on the date on or as of which such amount is to be determined.

     "ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and any rules or regulations promulgated thereunder.

     "euro" means the euro referred to in Council Regulation (EC) No. 1103/97
dated June 17, 1997 passed by the Council of the European Union, or, if
different, the then lawful currency of the member states of the European Union
that participate in the third stage of Economic and Monetary Union.

     "Eurocurrency Advance" means an Advance which, except as otherwise provided
in Section 2.12, bears interest at the applicable Eurocurrency Rate.

     "Eurocurrency Loan" means a Revolving Loan which, except as otherwise
provided in Section 2.12, bears interest at the applicable Eurocurrency Rate.

     "Eurocurrency Payment Office" of the Agent shall mean, for each of the
Agreed Currencies, the office, branch, affiliate or correspondent bank of the
Agent specified as the "Eurocurrency Payment Office" for such currency in
Schedule 1.1.1 hereto or such other office, branch, affiliate or correspondent
bank of the Agent as it may from time to time specify to the Borrowers and each
Lender as its Eurocurrency Payment Office.

     "Eurocurrency Rate" means, with respect to a Eurocurrency Advance for the
relevant Interest Period, the sum of (i) the quotient of (a) the Eurocurrency
Reference Rate applicable to

                                        8



such Interest Period, divided by (b) one minus the Reserve Requirement
(expressed as a decimal) applicable to such Interest Period, if any, plus (ii)
the then Applicable Margin, changing as and when the Applicable Margin changes.

     "Eurocurrency Reference Rate" means, with respect to a Eurocurrency Advance
for the relevant Interest Period, the applicable British Bankers' Association
LIBOR rate for deposits in the applicable Agreed Currency as reported by any
generally recognized financial information service as of 11:00 a.m. (London
time) two (2) Business Days prior to the first day of such Interest Period, and
having a maturity equal to such Interest Period, provided that, if no such
British Bankers' Association LIBOR rate is available to the Agent, the
applicable Eurocurrency Reference Rate for the relevant Interest Period shall
instead be the rate determined by the Agent to be the rate at which Bank One or
one of its affiliate banks offers to place deposits in the applicable Agreed
Currency with first-class banks in the London interbank market at approximately
11:00 a.m. (London time) two (2) Business Days prior to the first day of such
Interest Period, in the approximate amount of Bank One's relevant Eurocurrency
Loan and having a maturity equal to such Interest Period.

     "Excluded Taxes" means, in the case of each Lender or applicable Lending
Installation and the Agent, taxes imposed on its overall net income, and
franchise taxes imposed on it, by (i) the jurisdiction under the laws of which
such Lender or the Agent is incorporated or organized or any political
combination or subdivision or taxing authority thereof or (ii) the jurisdiction
in which the Agent's or such Lender's principal executive office or such
Lender's applicable Lending Installation is located.

     "Exhibit" refers to an exhibit to this Agreement, unless another document
is specifically referenced.

     "Existing Credit Agreement" means that certain Bridge Credit Agreement,
dated as of September 12, 2003, by and among the Company, the lenders parties
thereto, and Banc One Mezzanine Corporation, as Administrative Agent, as the
same has been amended, restated, supplemented or otherwise modified from time to
time.

     "Facility LC" is defined in Section 2.24.1.

     "Facility LC Application" is defined in Section 2.24.3.

     "Facility LC Collateral Account" is defined in Section 2.24.11.

     "Federal Funds Effective Rate" means, for any day, an interest rate per
annum equal to the weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by Federal
funds brokers on such day, as published for such day (or, if such day is not a
Business Day, for the immediately preceding Business Day) by the Federal Reserve
Bank of New York, or, if such rate is not so published for any day which is a
Business Day, the average of the quotations at approximately 10:00 a.m. (Chicago
time) on such day on such transactions received by the Agent from three (3)
Federal funds brokers of recognized standing selected by the Agent in its sole
discretion.

                                        9



     "Floating Rate" means, for any day, a rate per annum equal to the sum of
(i) the Alternate Base Rate for such day, changing when and as the Alternate
Base Rate changes plus (ii) the then Applicable Margin, changing as and when the
Applicable Margin changes.

     "Floating Rate Advance" means an Advance which, except as otherwise
provided in Section 2.12, bears interest at the Floating Rate.

     "Floating Rate Loan" means a Loan which, except as otherwise provided in
Section 2.12, bears interest at the Floating Rate.

     "Foreign Subsidiary" means (i) any Subsidiary of any Person that is not
organized under the laws of a jurisdiction located in the United States of
America and (ii) any Subsidiary of a Person described in clause (i) hereof that
is organized under the laws of a jurisdiction located in the United States of
America.

     "Foreign Subsidiary Investment" means the sum, without duplication, of (i)
the aggregate outstanding principal amount of all intercompany loans made on or
after the Closing Date from any Credit Party to any Foreign Subsidiary; (ii) all
outstanding Investments made on or after the Closing Date by any Credit Party in
any Foreign Subsidiary; and (iii) an amount equal to the net benefit derived by
the Foreign Subsidiaries resulting from any non-arm's-length transactions, or
any other transfer of assets conducted, in each case entered into on or after
the Closing Date, between any Credit Party, on the one hand, and such Foreign
Subsidiaries, on the other hand, other than (a) transactions in the ordinary
course of business, (b) in respect of legal, accounting, reporting, listing and
similar administrative services provided by any Credit Party to any such Foreign
Subsidiary in the ordinary course of business consistent with past practice and
(c) the AbilityOne Acquisition.

     "Fund" means any Person (other than a natural person) that is (or will be)
engaged in making, purchasing, holding or otherwise investing in commercial
loans and similar extensions of credit in the ordinary course of its business.

     "Guarantor" means each of the Company's Material Domestic Subsidiaries
which become Guarantors in satisfaction of the provisions of Section 6.23, in
each case, together with their respective permitted successors and assigns.

     "Guaranty" means the Guaranty, in substantially the form of Exhibit I,
entered into by each Guarantor in favor of the Agent for the benefit of the
Holders of Obligations, as the same may be amended, restated, supplemented or
otherwise modified from time to time.

     "Holders of Obligations" means the holders of the Obligations and the Rate
Management Obligations and shall refer to (i) each Lender in respect of its
Loans, (ii) the LC Issuers in respect of Reimbursement Obligations, (iii) the
Agent, the Lenders and the LC Issuers in respect of all other present and future
obligations and liabilities of the Company or any of its Domestic Subsidiaries
of every type and description arising under or in connection with this Agreement
or any other Loan Document, (iv) each Person benefiting from indemnities made by
the Company or any Subsidiary hereunder or under other Loan Documents in respect
of the obligations and liabilities of the Company or such Subsidiary to such
Person, (v) each Lender, in respect of all Rate Management Obligations owing to
any Person in such Person's capacity as exchange party

                                       10



or counterparty under any Rate Management Transaction so long as such Person is
(or, at the time such Person entered into such Rate Management Transaction, was)
a Lender or an affiliate of a Lender, and (vi) their respective permitted
successors, transferees and assigns.

     "Indebtedness" of a Person means, at any time, without duplication, such
Person's (i) obligations for borrowed money, (ii) obligations representing the
deferred purchase price of Property or services (other than current accounts
payable arising in the ordinary course of such Person's business payable on
terms customary in the trade), (iii) obligations, whether or not assumed,
secured by Liens or payable out of the proceeds or production from Property now
or hereafter owned or acquired by such Person, (iv) obligations which are
evidenced by notes, bonds, debentures, acceptances, or other instruments, (v)
obligations to purchase securities or other Property arising out of or in
connection with the sale of the same or substantially similar securities or
Property, (vi) Capitalized Lease Obligations, (vii) Contingent Obligations of
such Person, (viii) reimbursement obligations under letters of credit, bankers'
acceptances, surety bonds and similar instruments (ix) Off-Balance Sheet
Liabilities, (x) obligations under Sale and Leaseback Transactions, (xi) Net
Mark-to-Market Exposure under Rate Management Transactions, (xii) Disqualified
Stock, and (xiii) any other obligation for borrowed money or other financial
accommodation which in accordance with Agreement Accounting Principles would be
shown as a liability on the consolidated balance sheet of such Person.

     "Indemnification Letter" is defined in Section 2.1.1.

     "Interest Expense Coverage Ratio" is defined in Section 6.21.

     "Interest Period" means, with respect to a Eurocurrency Advance, a period
of one, two, three or six months, or, to the extent available to all of the
Lenders, nine or twelve months, commencing on a Business Day selected by the
applicable Borrower pursuant to this Agreement. Such Interest Period shall end
on but exclude the day which corresponds numerically to such date one, two,
three or six months, or if applicable nine or twelve months, thereafter,
provided, however, that if there is no such numerically corresponding day in
such next, second, third, sixth, ninth or twelfth succeeding month, such
Interest Period shall end on the last Business Day of such next, second, third,
sixth, ninth or twelfth succeeding month. If an Interest Period would otherwise
end on a day which is not a Business Day, such Interest Period shall end on the
next succeeding Business Day, provided, however, that if said next succeeding
Business Day falls in a new calendar month, such Interest Period shall end on
the immediately preceding Business Day.

     "Investment" of a Person means any loan, advance (other than commission,
travel, relocation and similar advances to directors, officers and employees
made in the ordinary course of business), extension of credit (other than
accounts receivable arising in the ordinary course of business on terms
customary in the trade) or contribution of capital by such Person; stocks,
bonds, mutual funds, partnership interests, notes, debentures or other
securities owned by such Person; any deposit accounts and certificates of
deposit owned by such Person; and structured notes, derivative financial
instruments and other similar instruments or contracts owned by such Person.

     "LC Draft" means a draft drawn on an LC Issuer pursuant to a Facility LC.

                                       11



     "LC Fee" is defined in Section 2.24.4.

     "LC Issuer" means Bank One (or any subsidiary or affiliate of Bank One
designated by Bank One) or any of the other Lenders, as applicable, in its
respective capacity as issuer of Facility LCs hereunder.

     "LC Obligations" means, at any time, the sum, without duplication, of (i)
the aggregate undrawn amount under all Facility LCs outstanding at such time
plus (ii) the aggregate unpaid amount at such time of all Reimbursement
Obligations.

     "LC Payment Date" is defined in Section 2.24.5.

     "Lenders" means the lending institutions listed on the signature pages of
this Agreement and their respective successors and assigns. Unless otherwise
specified, the term "Lenders" includes the Swing Line Lender and the LC Issuers.

     "Lending Installation" means, with respect to a Lender or the Agent, the
office, branch, subsidiary or affiliate of such Lender or the Agent with respect
to each Agreed Currency listed on the signature pages hereof or on the
administrative information sheets provided to the Agent in connection herewith
or on a Schedule or otherwise selected by such Lender or the Agent pursuant to
Section 2.19.

     "Letter of Credit" of a Person means a letter of credit or similar
instrument which is issued upon the application of such Person or upon which
such Person is an account party or for which such Person is in any way liable.

     "Leverage Ratio" means, as the end of any of the Company's fiscal quarters,
the ratio of Consolidated Total Debt as of the end of such fiscal quarter to
Consolidated Adjusted EBITDA for the four consecutive fiscal quarters then
ended; provided, that the Leverage Ratio shall be calculated, with respect to
Permitted Acquisitions, on a pro forma basis using historical financial
statements and containing reasonable adjustments satisfactory to the Agent,
broken down by fiscal quarter in the Company's reasonable judgment.

     "Lien" means any lien (statutory or other), mortgage, pledge,
hypothecation, assignment, deposit arrangement, encumbrance or preference,
priority or other security agreement or preferential arrangement of any kind or
nature whatsoever (including, without limitation, the interest of a vendor or
lessor under any conditional sale, Capitalized Lease or other title retention
agreement, and, in the case of stock, stockholders agreements, voting trust
agreements and all similar arrangements).

     "Loan" means, with respect to a Lender, such Lender's loan made pursuant to
Article II (or any conversion or continuation thereof), whether constituting a
Term Loan, Revolving Loan or a Swing Line Loan.

     "Loan Documents" means this Agreement, each Assumption Letter, the Facility
LC Applications, the Guaranty, and all other documents, instruments, notes
(including any Notes issued pursuant to Section 2.15 (if requested)) and
agreements executed in connection herewith

                                       12



or therewith or contemplated hereby or thereby, as the same may be amended,
restated or otherwise modified and in effect from time to time.

     "Material Adverse Effect" means a material adverse effect on (i) the
business, Property, condition (financial or otherwise), operations or results of
operations, performance or prospects of the Company and its Subsidiaries taken
as a whole, (ii) the ability of the Company or any Subsidiary to perform its
obligations under the Loan Documents, (iii) the validity or enforceability of
any of the Loan Documents or (iv) the rights or remedies of the Agent, the LC
Issuers or the Lenders under any of the Loan Documents.

     "Material Domestic Subsidiary" means (i) PDSI, Webster, Webster Management,
AbilityOne Corporation and AbilityOne, and (ii) any other Domestic Subsidiary of
the Company (other than an SPV) that meets one or both of the following
criteria: (i) such Domestic Subsidiary's total assets, determined on a
consolidated basis with its Subsidiaries is greater than or equal to fifteen
percent (15%) of the consolidated total assets of the Company and its
Subsidiaries; or (ii) such Domestic Subsidiary's Consolidated Adjusted Net
Income is greater than or equal to fifteen percent (15%) of the Company's
Consolidated Adjusted Net Income, in each case for the four consecutive fiscal
quarters most recently ended.

     "Material Indebtedness" means any Indebtedness in an outstanding principal
amount of $10,000,000 or more in the aggregate (or the equivalent thereof in any
currency other than Dollars).

     "Material Indebtedness Agreement" means any agreement under which any
Material Indebtedness was created or is governed or which provides for the
incurrence of Indebtedness in an amount which would constitute Material
Indebtedness (whether or not an amount of Indebtedness constituting Material
Indebtedness is outstanding thereunder).

     "Modify" and "Modification" are defined in Section 2.24.1.

     "Moody's" means Moody's Investors Services, Inc. and any successor thereto.

     "Multiemployer Plan" means a multiemployer plan, as defined in Section
4001(a)(3) of ERISA, which is covered by Title IV of ERISA and to which the
Company or any member of the Controlled Group is obligated to make
contributions.

     "National Currency Unit" means the unit of currency (other than a euro
unit) of each member state of the European Union that participates in the third
stage of Economic and Monetary Union.

     "Net Mark-to-Market Exposure" of a Person means, as of any date of
determination, the excess (if any) of all unrealized losses over all unrealized
profits of such Person arising from Rate Management Transactions. "Unrealized
losses" means the fair market value of the cost to such Person of replacing such
Rate Management Transaction as of the date of determination (assuming the Rate
Management Transaction were to be terminated as of that date), and "unrealized
profits" means the fair market value of the gain to such Person of replacing
such Rate Management Transaction as of the date of determination (assuming such
Rate Management Transaction were to be terminated as of that date).

                                       13



     "Non-U.S. Lender" is defined in Section 3.5(iv).

     "Note" is defined in Section 2.15.

     "Note Purchase Agreement" means, collectively, any one or more agreements
entered into by the Company with respect to the Company's issuance and private
placement of the Company's senior unsecured debt securities (the "Senior
Notes"), as such Note Purchase Agreement may be amended, modified or
supplemented from time to time in a manner that is not materially adverse to the
interests of the Lenders.

     "Obligations" means all Loans, all Reimbursement Obligations, advances,
debts, liabilities, obligations, covenants and duties owing by any Borrower or
any Subsidiary to the Agent, any Lender, the Swing Line Lender, any LC Issuer,
the Arrangers, any affiliate of the Agent, any Lender, the Swing Line Lender,
any LC Issuer or the Arrangers, or any indemnitee under the provisions of
Section 9.6 or any other provisions of the Loan Documents, in each case of any
kind or nature, present or future, arising under this Agreement or any other
Loan Document, whether or not evidenced by any note, guaranty or other
instrument, whether or not for the payment of money, whether arising by reason
of an extension of credit, loan, foreign exchange risk, guaranty,
indemnification, or in any other manner, whether direct or indirect (including
those acquired by assignment), absolute or contingent, due or to become due, now
existing or hereafter arising and however acquired. The term includes, without
limitation, all interest, charges, expenses, fees, attorneys' fees and
disbursements, paralegals' fees (in each case whether or not allowed), and any
other sum chargeable to the Company or any Subsidiary under this Agreement or
any other Loan Document.

     "Off-Balance Sheet Liability" of a Person means the principal component of
(i) any repurchase obligation or liability of such Person with respect to
accounts or notes receivable sold by such Person, (ii) any liability under any
Sale and Leaseback Transaction which is not a Capitalized Lease, (iii) any
liability under any so-called "synthetic lease" or "tax ownership operating
lease" transaction entered into by such Person, (iv) any Receivables Purchase
Facility or (v) any obligation arising with respect to any other transaction
which is the functional equivalent of or takes the place of borrowing but which
does not constitute a liability on the consolidated balance sheets of such
Person, but excluding from this clause (v) all Operating Leases.

     "Off-Balance Sheet Trigger Event" is defined in Section 7.17.

     "Operating Lease" of a Person means any lease of Property (other than a
Capitalized Lease) by such Person as lessee which has an original term
(including any required renewals and any renewals effective at the option of the
lessor) of one year or more.

     "Other Taxes" is defined in Section 3.5(ii).

     "Outstanding Revolving Credit Exposure" means, as to any Lender at any
time, the sum of (i) the aggregate principal amount of its Revolving Loans
outstanding at such time, plus (ii) an amount equal to its ratable obligation to
purchase participations in the aggregate principal amount of Swing Line Loans
outstanding at such time, plus (iii) an amount equal to its ratable obligation
to purchase participations in the LC Obligations at such time.

                                       14



     "Participants" is defined in Section 12.2.1.

     "Payment Date" means the last day of each March, June, September and
December, the Revolving Loan Termination Date and the Term Loan Maturity Date.

     "PBGC" means the Pension Benefit Guaranty Corporation, or any successor
thereto.

     "PDSI" means Patterson Dental Supply, Inc., a Minnesota corporation.

     "Permitted Acquisition" is defined in Section 6.13.5.

     "Permitted Purchase Money Debt" is defined in Section 6.14.5.

     "Person" means any natural person, corporation, firm, joint venture,
partnership, limited liability company, association, enterprise, trust or other
entity or organization, or any government or political subdivision or any
agency, department or instrumentality thereof.

     "Plan" means an employee pension benefit plan, excluding any Multiemployer
Plan, which is covered by Title IV of ERISA or subject to the minimum funding
standards under Section 412 of the Code as to which the Company or any member of
the Controlled Group may have any liability.

     "Pricing Schedule" means the Schedule identifying the Applicable Margin and
Applicable Fee Rate attached hereto and identified as such.

     "Prime Rate" means a rate per annum equal to the prime rate of interest
announced from time to time by Bank One or its parent (which is not necessarily
the lowest rate charged to any customer), changing when and as said prime rate
changes.

     "Property" of a Person means any and all property, whether real, personal,
tangible, intangible, or mixed, of such Person, or other assets owned, leased or
operated by such Person.

     "Pro Rata Share" means, with respect to any Lender, the percentage obtained
by dividing (i) the sum of such Lender's Revolving Loan Commitment and Term
Loans at such time by (ii) the sum of the Aggregate Revolving Loan Commitment
and the aggregate amount of all of the Term Loans at such time; provided,
however, if all of the Revolving Loan Commitments are terminated pursuant to the
terms of this Agreement, then "Pro Rata Share" means the percentage obtained by
dividing (a) the sum of such Lender's Outstanding Revolving Credit Exposure and
Term Loans at such time by (b) the sum of the Aggregate Outstanding Revolving
Credit Exposure and the aggregate outstanding amount of all Term Loans at such
time.

     "Purchase Price" means the total consideration and other amounts payable in
connection with any Acquisition, including, without limitation, any portion of
the consideration payable in cash, all Indebtedness, liabilities and contingent
obligations incurred or assumed in connection with such Acquisition and all
transaction costs and expenses incurred in connection with such Acquisition, but
exclusive of the value of any capital stock or other equity interests of the
Company or any Subsidiary issued as consideration for such Acquisition.

                                       15



     "Purchasers" is defined in Section 12.3.1.

     "Rate Management Obligations" of a Person means any and all obligations of
such Person, whether absolute or contingent and howsoever and whensoever
created, arising, evidenced or acquired (including all renewals, extensions and
modifications thereof and substitutions therefor), under (i) any and all Rate
Management Transactions, and (ii) any and all cancellations, buy backs,
reversals, terminations or assignments of any Rate Management Transactions.

     "Rate Management Transaction" means any transaction (including an agreement
with respect thereto) now existing or hereafter entered into by the Company or a
Subsidiary which is a rate swap, basis swap, forward rate transaction, commodity
swap, commodity option, equity or equity index swap, equity or equity index
option, bond option, interest rate option, foreign exchange transaction, cap
transaction, floor transaction, collar transaction, forward transaction,
currency swap transaction, cross-currency rate swap transaction, currency option
or any other similar transaction (including any option with respect to any of
these transactions) or any combination thereof, whether linked to one or more
interest rates, foreign currencies, commodity prices, equity prices or other
financial measures.

     "Receivables Purchase Documents" means each of (i) that certain Receivables
Sale Agreement dated as of May 10, 2002, among the originators named therein and
PDC Funding Company, LLC, as buyer and that certain Receivables Purchase
Agreement dated as of May 10, 2002, among PDC Funding Company, LLC, the Company,
Preferred Receivables Funding Corporation, the financial institutions party
thereto and Bank One, as agent, as such agreements may be amended, restated,
extended or otherwise modified from time to time, (ii) that certain Third
Amended and Restated Contract Purchase Agreement, dated as of June 19, 2002,
among the Company, PDSI, Webster, U.S. Bank National Association, individually
and as agent, and certain buyers identified therein, as such Third Amended and
Restated Contract Purchase Agreement may be amended, restated, extended or
otherwise modified from time to time and (iii) any comparable additional or
replacement facility made available to the Company or any Subsidiary, provided
that any such facility: (a) provides for the sale by the Company or such
Subsidiary of rights to payment; (b) evidences the intent of the parties that
for accounting and all other purposes, such sale is to be treated as a sale by
the Company or a Subsidiary, as the case may be, and a purchase by the
transferee (and not as a lending transaction); (c) provides for the delivery of
such true sale, non-consolidation and other opinions of outside counsel as are
then customary or required in connection with such a transaction; (d) the
parties to such transaction treat such transaction as a sale for all other
accounting purposes; and (e) such sale is without recourse to the Company or
such Subsidiary, except to the extent of normal and customary conditions and
rights of limited recourse that are consistent with the opinions referred to in
clause (c) and with the treatment of such sale as a true sale for accounting
purpose.

     "Receivables Purchase Facility" means (i) the transactions contemplated by
the Receivables Purchase Documents and (ii) other sales (including licenses),
with limited recourse, or no recourse, by PDSI, Webster, Webster Management,
AbilityOne Corporation, or AbilityOne of Accounts derived from sales on contract
of furnishings and equipment (but not, however, (a) open account sales of
supplies or (b) Accounts derived from provisions of services).

                                       16



     "Regulation D" means Regulation D of the Board of Governors of the Federal
Reserve System as from time to time in effect and any successor thereto or other
regulation or official interpretation of said Board of Governors relating to
reserve requirements applicable to member banks of the Federal Reserve System.

     "Regulation U" means Regulation U of the Board of Governors of the Federal
Reserve System as from time to time in effect and any successor or other
regulation or official interpretation of said Board of Governors relating to the
extension of credit by banks, non-banks and non-broker lenders for the purpose
of purchasing or carrying margin stocks applicable to member banks of the
Federal Reserve System.

     "Regulation X" means Regulation X of the Board of Governors of the Federal
Reserve System as from time to time in effect and any successor or other
regulation or official interpretation of said Board of Governors relating to the
extension of credit by foreign lenders for the purpose of purchasing or carrying
margin stock (as defined therein).

     "Reimbursement Obligations" means, at any time, with respect to any LC
Issuer, the aggregate of all obligations of the Borrowers then outstanding under
Section 2.24 to reimburse such LC Issuer for amounts paid by such LC Issuer in
respect of any one or more drawings under Facility LCs issued by such LC Issuer;
or, as the context may require, all such Reimbursement Obligations then
outstanding to reimburse all of the LC Issuers.

     "Reportable Event" means a reportable event as defined in Section 4043 of
ERISA and the regulations issued under such section, with respect to a Plan
subject to Title IV of ERISA, excluding, however, such events as to which the
PBGC has by regulation waived the requirement of Section 4043(a) or (b) of ERISA
that it be notified within 30 days of the occurrence of such event, provided,
however, that a failure to meet the minimum funding standard of Section 412 of
the Code and of Section 302 of ERISA shall be a Reportable Event regardless of
the issuance of any such waiver of the notice requirement in accordance with
either Section 4043(a) or (b) of ERISA or Section 412(d) of the Code.

     "Required Lenders" means Lenders in the aggregate having more than 50% of
the Aggregate Revolving Loan Commitment (or, if all of the Revolving Loan
Commitments are terminated pursuant to the terms of this Agreement, the
Aggregate Outstanding Revolving Credit Exposure) and Term Loans at such time.

     "Reserve Requirement" means, with respect to an Interest Period, the
maximum aggregate reserve requirement (including all basic, supplemental,
marginal and other reserves) which is imposed under Regulation D on
"Eurocurrency liabilities" (as defined in Regulation D).

     "Revolving Loan" means, with respect to a Lender, such Lender's loan made
pursuant to its commitment to lend set forth in Section 2.2 (and any conversion
or continuation thereof).

     "Revolving Loan Commitment" means, for each Lender, including without
limitation, each LC Issuer, such Lender's obligation to make Revolving Loans to,
and participate in Facility LCs issued upon the application of, the Borrowers in
an aggregate amount not exceeding the amount set forth for such Lender on the
Commitment Schedule or in any Assignment Agreement

                                       17



delivered pursuant to Section 12.3, as such amount may be modified from time to
time pursuant to the terms hereof.

     "Revolving Loan Pro Rata Share" means, with respect to any Lender, the
percentage obtained by dividing (i) such Lender's Revolving Loan Commitment at
such time by (ii) the Aggregate Revolving Loan Commitment at such time;
provided, however, if all of the Revolving Loan Commitments are terminated
pursuant to the terms of this Agreement, then "Revolving Loan Pro Rata Share"
means the percentage obtained by dividing (a) such Lender's Outstanding
Revolving Credit Exposure at such time by (b) the Aggregate Outstanding
Revolving Credit Exposure at such time.

     "Revolving Loan Termination Date" means the earlier of (i) November 25,
2008, and (ii) the date of termination in whole of the Aggregate Revolving Loan
Commitment pursuant to Section 2.5.2 hereof or the Revolving Loan Commitments
pursuant to Section 8.1 hereof.

     "S&P" means Standard and Poor's Ratings Group, a division of The
McGraw-Hill Companies, Inc., and any successor thereto.

     "Sale and Leaseback Transaction" means any sale or other transfer of
Property by any Person with the intent to lease such Property as lessee.

     "Schedule" refers to a specific schedule to this Agreement, unless another
document is specifically referenced.

     "SEC" means the United States Securities and Exchange Commission, and any
successor thereto.

     "Section" means a numbered section of this Agreement, unless another
document is specifically referenced.

     "Senior Notes" is defined in the definition of "Note Purchase Agreement".

     "Single Employer Plan" means a Plan maintained by the Company or any member
of the Controlled Group for employees of the Company or any member of the
Controlled Group.

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

     (i)    the fair value of its assets (both at fair valuation and at present
            fair saleable value) is equal to or in excess of the total amount of
            its liabilities, including, without limitation, contingent
            liabilities; and

     (ii)   it is then able and expects to be able to pay its debts as they
            mature; and

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

     With respect to contingent liabilities (such as litigation, guarantees and
pension plan liabilities), such liabilities shall be computed at the amount
which, in light of all the facts and

                                       18



circumstances existing at the time, represent the amount which can reasonably be
expected to become an actual or matured liability.

     "SPV" means any special purpose entity established for the purpose of
purchasing receivables in connection with a receivables securitization
transaction permitted under the terms of this Agreement.

     "Subordinated Indebtedness" of a Person means any Indebtedness of such
Person the payment of which is subordinated to payment of the Obligations to the
written satisfaction of the Required Lenders.

     "Subsidiary" of a Person means (i) any corporation more than 50% of the
outstanding securities having ordinary voting power of which shall at the time
be owned or controlled, directly or indirectly, by such Person or by one or more
of its Subsidiaries or by such Person and one or more of its Subsidiaries, or
(ii) any partnership, limited liability company, association, joint venture or
similar business organization more than 50% of the ownership interests having
ordinary voting power of which shall at the time be so owned or controlled.
Unless otherwise expressly provided, all references herein to a "Subsidiary"
shall mean a Subsidiary of the Company.

     "Subsidiary Borrower" means each of the Company's Domestic Subsidiaries
that are Wholly-Owned Subsidiaries listed on the signature pages of this
Agreement, and any other Domestic Subsidiary that is a Wholly-Owned Subsidiary
of the Company duly designated by the Company pursuant to Section 2.25 to
request Credit Extensions hereunder, which Domestic Subsidiary shall have
delivered to the Agent an Assumption Letter in accordance with Section 2.25 and
such other documents as may be required pursuant to this Agreement, in each
case, together with its permitted successors and assigns, including a
debtor-in-possession on behalf of such Subsidiary Borrower. The initial
Subsidiary Borrowers are AbilityOne Corporation, AbilityOne, PDSI, Webster and
Webster Management.

     "Substantial Portion" means, with respect to the Property of the Company
and its Subsidiaries, Property which represents more than 10% of the
consolidated assets of the Company and its Subsidiaries or property which is
responsible for more than 10% of the consolidated net sales or of the
Consolidated Net Income of the Company and its Subsidiaries, in each case, as
would be shown in the consolidated financial statements of the Company and its
Subsidiaries as at the end of the four fiscal quarter period ending with the
fiscal quarter immediately prior to the fiscal quarter in which such
determination is made (or if financial statements have not been delivered
hereunder for that fiscal quarter which ends the four fiscal quarter period,
then the financial statements delivered hereunder for the quarter ending
immediately prior to that quarter).

     "Swing Line Borrowing Notice" is defined in Section 2.3.2.

     "Swing Line Commitment" means the obligation of the Swing Line Lender to
make Swing Line Loans up to a maximum principal amount of $5,000,000 at any one
time outstanding.

                                       19



     "Swing Line Lender" means Bank One or such other Lender which may succeed
to its rights and obligations as Swing Line Lender pursuant to the terms of this
Agreement.

     "Swing Line Loan" means a Loan made available to the Company by the Swing
Line Lender pursuant to Section 2.3.

     "Taxes" means any and all present or future taxes, duties, levies, imposts,
deductions, charges or withholdings, and any and all liabilities with respect to
the foregoing, but excluding Excluded Taxes and Other Taxes.

     "Term Loan" is defined in Section 2.1.1.

     "Term Loan Commitment" means, as to each Lender, its obligation to make
Term Loans to the Borrowers pursuant to Section 2.1 on the Closing Date in an
aggregate principal amount set forth for such Lender on the Commitment Schedule.

     "Term Loan Maturity Date" means the earlier of (i) November 25, 2008 and
(ii) the Revolving Loan Termination Date.

     "Term Loan Pro Rata Share" means, with respect to any Lender, the
percentage obtained by dividing (a) such Lender's Term Loan Commitment at such
time by (b) the aggregate Term Loan Commitments at such time.

     "Transaction Documents" means the Loan Documents, the Note Purchase
Agreement, the Senior Notes and the documents executed and delivered by the
Company or any of its Subsidiaries in connection with the AbilityOne Acquisition
including, without limitation, the AbilityOne Acquisition Agreement.

     "Transferee" is defined in Section 12.4.

     "Type" means, with respect to any Advance, its nature as a Floating Rate
Advance or a Eurocurrency Advance and with respect to any Loan, its nature as a
Floating Rate Loan or a Eurocurrency Loan.

     "Unfunded Liabilities" means the amount (if any) by which the present value
of all vested and unvested accrued benefits under each Single Employer Plan
subject to Title IV of ERISA exceeds the fair market value of all such Plan's
assets allocable to such benefits, all determined as of the then most recent
valuation date for such Plan for which a valuation report is available, using
PBGC actuarial assumptions for single employer plan terminations.

     "Unmatured Default" means an event which but for the lapse of time or the
giving of notice, or both, would constitute a Default.

     "Webster" means Webster Veterinary Supply, Inc., a Minnesota corporation.

     "Webster Management" means Webster Management, LP, a Minnesota limited
partnership.

                                       20



     "Weighted Average Life to Maturity" means when applied to any Indebtedness
at any date, the number of years obtained by dividing (i) the sum of the
products obtained by multiplying (a) the amount of each then remaining
installment, sinking fund, serial maturity or other required scheduled payments
of principal, including payment at final maturity, in respect thereof, by (b)
the number of years (calculated to the nearest one-twelfth) that will elapse
between such date and the making of such payment, by (ii) the then outstanding
principal amount of such Indebtedness.

     "Wholly-Owned Subsidiary" of a Person means (i) any Subsidiary all of the
outstanding voting securities (other than directors' qualifying shares) of which
shall at the time be owned or controlled, directly or indirectly, by such Person
or one or more Wholly-Owned Subsidiaries of such Person, or by such Person and
one or more Wholly-Owned Subsidiaries of such Person, or (ii) any partnership,
limited liability company, association, joint venture or similar business
organization 100% of the ownership interests having ordinary voting power of
which shall at the time be so owned or controlled.

     1.2.   Plural Forms. The foregoing definitions shall be equally applicable
to both the singular and plural forms of the defined terms.

                                   ARTICLE II

                                   THE CREDITS

     2.1.   Term Loan.

            2.1.1    Amounts of Term Loans. Subject to the terms and conditions
     set forth in this Agreement and upon the satisfaction of the conditions
     precedent set forth in Sections 4.1 and 4.2, each Lender severally and not
     jointly agrees to make on the Closing Date, a term loan, in Dollars, to the
     Borrowers in an aggregate amount up to such Lender's Term Loan Commitment
     (each individually, a "Term Loan" and, collectively, the "Term Loans"). All
     Term Loans shall be made by the Lenders on the Closing Date simultaneously
     and proportionately to their respective Term Loan Pro Rata Shares, it being
     understood that no Lender shall be responsible for any failure by any other
     Lender to perform its obligation to make any Term Loan hereunder nor shall
     the Term Loan Commitment of any Lender be increased or decreased as a
     result of any such failure. Unless the Borrowers have delivered to the
     Agent a written agreement pursuant to which the Borrowers agree to
     indemnify the Agent and the Lenders in accordance with Section 3.4 of this
     Agreement in the event any Eurocurrency Advance is not made on the Closing
     Date for any reason (the "Indemnification Letter") on or before the third
     (3rd) Business Day prior to the Closing Date and in form and substance
     reasonably acceptable to the Agent, the Term Loans shall initially be
     Floating Rate Loans and thereafter may be continued as Floating Rate Loans
     or converted into Eurocurrency Loans in the manner provided in Section 2.8
     and subject to the other conditions and limitations therein set forth and
     set forth in this Article II.

            2.1.2    Repayment of the Term Loans. The Term Loans shall be repaid
     in twenty (20) equal consecutive quarterly installments of Five Million
     Dollars ($5,000,000),

                                       21



     payable on the last day of each calendar quarter, commencing on March 31,
     2004 and continuing thereafter until the Term Loan Maturity Date and the
     Term Loans shall be permanently reduced by the amount of each installment
     on the date payment thereof is made hereunder. Notwithstanding the
     foregoing, the final installment payable on the Term Loan Maturity Date
     shall be in the amount of the then outstanding principal balance of the
     Term Loans. No installment of any Term Loan may be reborrowed once repaid.

     2.2.   Revolving Loans. From and including the Closing Date and prior to
the Revolving Loan Termination Date, upon the satisfaction of the conditions
precedent set forth in Sections 4.1, 4.2 and 4.3, as applicable, each Lender
severally and not jointly agrees, on the terms and conditions set forth in this
Agreement, to (i) make Revolving Loans to the Borrowers in Agreed Currencies
from time to time and (ii) participate in Facility LCs issued upon the request
of the Borrowers, in each case in Dollar Amounts not to exceed in the aggregate
such Lender's Revolving Loan Pro Rata Share of the Available Aggregate Revolving
Loan Commitment; provided that (i) at no time shall the Aggregate Outstanding
Revolving Credit Exposure hereunder exceed the Aggregate Revolving Loan
Commitment, (ii) all Floating Rate Loans shall be made in Dollars, and (iii) at
no time shall the aggregate outstanding Dollar Amount of all Revolving Loans
denominated in Agreed Currencies other than Dollars exceed $50,000,000. Unless
the Borrowers have delivered to the Agent an Indemnification Letter on or before
the third (3rd) Business Day prior to the Closing Date with respect to all
Revolving Loans requested to be made as Eurocurrency Advances on the Closing
Date or on or before the third (3rd) Business Day thereafter, the Revolving
Loans made on the Closing Date or on or before the third (3rd) Business Day
thereafter shall initially be Floating Rate Loans and thereafter may be
continued as Floating Rate Loans or converted into Eurocurrency Loans in the
manner provided in Section 2.8 and subject to the other conditions and
limitations therein set forth and set forth in this Article II and set forth in
the definition of Interest Period. Revolving Loans made after the third (3rd)
Business Day after the Closing Date shall be, at the option of the applicable
Borrower, selected in accordance with Section 2.8, either Floating Rate Loans or
Eurocurrency Loans. Each Advance under this Section 2.2 shall consist of
Revolving Loans made by each Lender ratably in proportion to such Lender's
respective Revolving Loan Pro Rata Share. The LC Issuers will issue Facility LCs
hereunder on the terms and conditions set forth in Section 2.24. Subject to the
terms of this Agreement, the Borrowers may borrow, repay and reborrow Revolving
Loans at any time prior to the Revolving Loan Termination Date. On the Revolving
Loan Termination Date, the commitment of each Lender to lend hereunder shall
automatically expire and the Borrowers shall repay in full the outstanding
principal balance of the Revolving Loans. Additionally, the Borrowers shall make
the mandatory prepayments prescribed in Section 2.4.

     2.3.   Swing Line Loans.

            2.3.1    Amount of Swing Line Loans. Upon the satisfaction of the
     conditions precedent set forth in Section 4.1 and Section 4.2, if
     applicable, from and including the Closing Date and prior to the Revolving
     Loan Termination Date, the Swing Line Lender agrees, on the terms and
     conditions set forth in this Agreement, to make Swing Line Loans, in
     Dollars, to the Company from time to time in an aggregate principal amount
     not to exceed the Swing Line Commitment, provided that (i) the Aggregate
     Outstanding Revolving Credit Exposure shall not at any time exceed the
     Aggregate Revolving Loan

                                       22



     Commitment, and (ii) at no time shall the sum of (a) the Swing Line Loans
     then outstanding, plus (b) the outstanding Revolving Loans made by the
     Swing Line Lender pursuant to Section 2.2 (including its participation in
     any Facility LCs), exceed the Swing Line Lender's Revolving Loan Commitment
     at such time. Subject to the terms of this Agreement, the Company may
     borrow, repay and reborrow Swing Line Loans at any time prior to the
     Revolving Loan Termination Date.

            2.3.2    Borrowing Notice. The Company shall deliver to the Agent
     and the Swing Line Lender irrevocable notice (a "Swing Line Borrowing
     Notice") not later than 12:00 noon (Chicago time) on the Borrowing Date of
     each Swing Line Loan, specifying (i) the applicable Borrowing Date (which
     date shall be a Business Day and which may be the same day as the date the
     Swing Line Borrowing Notice was given), and (ii) the aggregate amount of
     the requested Swing Line Loan which shall be an amount not less than
     $100,000 (and increments of $100,000 if in excess thereof). The Swing Line
     Loans shall bear interest at the Floating Rate or such other rate per annum
     as shall be agreed to by the Swing Line Lender and the Company.

            2.3.3    Making of Swing Line Loans. Promptly after receipt of a
     Swing Line Borrowing Notice, the Agent shall notify each Lender by fax or
     other similar form of transmission, of the requested Swing Line Loan. Not
     later than 2:00 p.m. (Chicago time) on the applicable Borrowing Date, the
     Swing Line Lender shall make available the Swing Line Loan, in funds
     immediately available in Chicago, to the Agent at its address specified
     pursuant to Article XIII. The Agent will promptly make the funds so
     received from the Swing Line Lender available to the Company on the
     Borrowing Date at the Agent's aforesaid address.

            2.3.4    Repayment of Swing Line Loans. Each Swing Line Loan shall
     be paid in full by the Company on or before the fifth (5th) Business Day
     after the Borrowing Date for such Swing Line Loan. In addition, the Swing
     Line Lender (i) may at any time in its sole discretion with respect to any
     outstanding Swing Line Loan, or (ii) shall, on the fifth (5th) Business Day
     after the Borrowing Date of any Swing Line Loan, require each Lender
     (including the Swing Line Lender) to make a Revolving Loan in the amount of
     such Lender's Revolving Loan Pro Rata Share of such Swing Line Loan
     (including, without limitation, any interest accrued and unpaid thereon),
     for the purpose of repaying such Swing Line Loan. Not later than 12:00 noon
     (Chicago time) on the date of any notice received pursuant to this Section
     2.3.4, each Lender shall make available its required Revolving Loan, in
     funds immediately available in Chicago to the Agent at its address
     specified pursuant to Article XIII. Revolving Loans made pursuant to this
     Section 2.3.4 shall initially be Floating Rate Loans and thereafter may be
     continued as Floating Rate Loans or converted into Eurocurrency Loans in
     the manner provided in Section 2.9 and subject to the other conditions and
     limitations set forth in this Article II. Unless a Lender shall have
     notified the Swing Line Lender, prior to its making any Swing Line Loan,
     that any applicable condition precedent set forth in Sections 4.1 or 4.2
     had not then been satisfied, such Lender's obligation to make Revolving
     Loans pursuant to this Section 2.3.4 to repay Swing Line Loans shall be
     unconditional, continuing, irrevocable and absolute and shall not be
     affected by any circumstances, including, without limitation, (a) any
     set-off, counterclaim, recoupment, defense or other right which such

                                       23



     Lender may have against the Agent, the Swing Line Lender or any other
     Person, (b) the occurrence or continuance of a Default or Unmatured
     Default, (c) any adverse change in the condition (financial or otherwise)
     of the Company, or (d) any other circumstances, happening or event
     whatsoever. In the event that any Lender fails to make payment to the Agent
     of any amount due under this Section 2.3.4, the Agent shall be entitled to
     receive, retain and apply against such obligation the principal and
     interest otherwise payable to such Lender hereunder until the Agent
     receives such payment from such Lender or such obligation is otherwise
     fully satisfied. In addition to the foregoing, if for any reason any Lender
     fails to make payment to the Agent of any amount due under this Section
     2.3.4, such Lender shall be deemed, at the option of the Agent, to have
     unconditionally and irrevocably purchased from the Swing Line Lender,
     without recourse or warranty, an undivided interest and participation in
     the applicable Swing Line Loan in the amount of such Revolving Loan, and
     such interest and participation may be recovered from such Lender together
     with interest thereon at the Federal Funds Effective Rate for each day
     during the period commencing on the date of demand and ending on the date
     such amount is received. On the Revolving Loan Termination Date, the
     Company shall repay in full the outstanding principal balance of the Swing
     Line Loans.

     2.4.   Determination of Dollar Amounts; Required Payments; Termination.

            2.4.1    Determination of Dollar Amounts. The Agent will determine
     the Dollar Amount of: (a) each Advance as of the date three (3) Business
     Days prior to the Borrowing Date or, if applicable, date of
     conversion/continuation of such Advance, and (b) all outstanding Advances
     on and as of the last Business Day of each calendar quarter and on any
     other Business Day elected by the Agent in its discretion or upon
     instruction by the Required Lenders. Each day upon or as of which the Agent
     determines Dollar Amounts as described in the preceding clauses (a) and (b)
     is herein described as a "Computation Date" with respect to each Advance
     for which a Dollar Amount is determined on or as of such date. If at any
     time the Dollar Amount of the sum of the aggregate principal amount of all
     outstanding Advances (calculated, with respect to those Advances
     denominated in Agreed Currencies other than Dollars, as of the most recent
     Computation Date with respect to each such Advance) exceeds $50,000,000,
     the Borrowers shall immediately repay Advances in an aggregate principal
     amount sufficient to eliminate any such excess.

            2.4.2    Required Payments; Terminations. Any outstanding Revolving
     Loans shall be paid in full by the Borrowers on the Revolving Loan
     Termination Date, any outstanding Term Loans shall be paid in full by the
     Borrowers on the Term Loan Maturity Date, and all other unpaid Obligations
     shall be paid in full by the Borrowers on the later of the Revolving Loan
     Termination Date and the Term Loan Maturity Date. Notwithstanding the
     termination of the Revolving Loan Commitments under this Agreement on the
     Revolving Loan Termination Date, until all of the Obligations (other than
     contingent indemnity obligations) shall have been fully paid and satisfied
     and all financing arrangements among the Borrowers and the Lenders
     hereunder and under the other Loan Documents shall have been terminated,
     all of the rights and remedies under this Agreement and the other Loan
     Documents shall survive.

                                       24



            2.4.3    Mandatory Prepayments of Aggregated Outstanding Revolving
     Credit Exposure. If at any time and for any reason, the amount of the
     Aggregate Outstanding Revolving Credit Exposure is greater than the
     Aggregate Revolving Loan Commitment, the Borrowers shall immediately make a
     mandatory prepayment of the Aggregate Outstanding Revolving Credit Exposure
     in an amount equal to such excess.

     2.5.   Commitment Fee; Reductions in Aggregate Revolving Loan Commitment.

            2.5.1    The Commitment Fee. The Company shall pay to the Agent, for
     the account of the Lenders in accordance with their Revolving Loan Pro Rata
     Shares, from and after the Closing Date until the date on which the
     Aggregate Revolving Loan Commitment shall be terminated in whole, a
     commitment fee (the "Commitment Fee") accruing at the rate of the then
     Applicable Fee Rate on the daily average Available Aggregate Revolving Loan
     Commitment (provided that, for purposes of determining the Commitment Fee,
     all outstanding Swing Line Loans shall be excluded from the calculation of
     the Available Aggregate Revolving Loan Commitment). All such Commitment
     Fees payable hereunder shall be payable quarterly in arrears on each
     Payment Date; provided, that if any Lender continues to have Outstanding
     Revolving Credit Exposure after the termination of its Revolving Loan
     Commitment, then the Commitment Fee shall continue to accrue and be due and
     payable pursuant to the terms hereof until such Outstanding Revolving
     Credit Exposure is reduced to zero.

            2.5.2    Reductions in Aggregate Revolving Loan Commitment. The
     Borrowers may permanently reduce the Aggregate Revolving Loan Commitment in
     whole, or in part, ratably among the Lenders in a minimum amount of
     $5,000,000 (and in multiples of $1,000,000 if in excess thereof)(or the
     Approximate Equivalent Amount if denominated in an Agreed Currency other
     than Dollars), upon at least three (3) Business Days' prior written notice
     to the Agent, which notice shall specify the amount of any such reduction,
     provided, however, that the amount of the Aggregate Revolving Loan
     Commitment may not be reduced below the Dollar Amount of the Aggregate
     Outstanding Revolving Credit Exposure. All accrued Commitment Fees shall be
     payable on the effective date of any termination of the Revolving Loan
     Commitments hereunder and on the final date upon which all Revolving Loans
     are repaid. For purposes of calculating the Commitment Fee hereunder, the
     principal amount of each Advance made in an Agreed Currency other than
     Dollars shall be at any time the Dollar Amount of such Advance as
     determined on the most recent Computation Date with respect to such
     Advance.

     2.6.   Minimum Amount of Each Advance. Each Eurocurrency Advance shall be
in the minimum amount of $1,000,000 (and in multiples of $100,000 if in excess
thereof)(or the Approximate Equivalent Amounts if denominated in an Agreed
Currency other than Dollars), and each Floating Rate Advance (other than a Swing
Line Loan or an Advance to repay Swing Line Loans) shall be in the minimum
amount of $1,000,000 (and in multiples of $100,000 if in excess thereof),
provided, however, that any Floating Rate Advance may be in the amount of the
Available Aggregate Revolving Loan Commitment.

     2.7.   Optional Principal Payments. The Borrowers may from time to time
pay, without penalty or premium, all outstanding Floating Rate Advances (other
than Swing Line Loans), or

                                       25



any portion of the outstanding Floating Rate Advances (other than Swing Line
Loans), in a minimum aggregate amount of $1,000,000 or any integral multiple of
$1,000,000 in excess thereof, upon one (1) Business Day's prior notice to the
Agent by 11:00 a.m. (Chicago time) on the date of any anticipated repayment. The
Company may at any time pay, without penalty or premium, all outstanding Swing
Line Loans, or, in a minimum amount of $100,000 and increments of $100,000 in
excess thereof, any portion of the outstanding Swing Line Loans, with notice to
the Agent and the Swing Line Lender by 11:00 a.m. (Chicago time) on the date of
repayment. The Borrowers may from time to time pay, subject to the payment of
any funding indemnification amounts required by Section 3.4 but without penalty
or premium, all outstanding Eurocurrency Advances, or, in a minimum aggregate
amount of $1,000,000 or any integral multiple of $1,000,000 in excess thereof
(or the Approximate Equivalent Amount if denominated in an Agreed Currency other
than Dollars), any portion of the outstanding Eurocurrency Advances upon three
(3) Business Days' prior notice to the Agent.

     2.8.   Method of Selecting Types and Interest Periods for New Advances. The
applicable Borrower shall select the Type of Advance and, in the case of each
Eurocurrency Advance, the Interest Period and Agreed Currency applicable thereto
from time to time; provided that there shall be no more than 10 Interest Periods
in effect with respect to all of the Loans at any time, unless such limit has
been waived by the Agent in its sole discretion. The applicable Borrower shall
give the Agent irrevocable notice (a "Borrowing Notice") not later than 11:00
a.m. (Chicago time) on the Borrowing Date of each Floating Rate Advance (other
than a Swing Line Loan), three (3) Business Days before the Borrowing Date for
each Eurocurrency Advance denominated in Dollars and four (4) Business Days
before the Borrowing Date for each Eurocurrency Advance denominated in an Agreed
Currency other than Dollars, specifying:

            (a)  the Borrowing Date, which shall be a Business Day, of such
Advance,

            (b)  the aggregate amount of such Advance,

            (c)  the Type of Advance selected, and

            (d)  in the case of each Eurocurrency Advance, the Interest Period
and Agreed Currency applicable thereto.

With respect to the Term Loans, the Borrowers may not select an Interest Period
that ends after the Term Loan Maturity Date. With respect to the Revolving
Loans, the Borrowers may not select an Interest Period that ends after the
Revolving Loan Termination Date.

     2.9.   Conversion and Continuation of Outstanding Advances; No Conversion
or Continuation of Eurocurrency Advances After Default. Floating Rate Advances
(other than Swing Line Advances) shall continue as Floating Rate Advances unless
and until such Floating Rate Advances are converted into Eurocurrency Advances
pursuant to this Section 2.9 or are repaid in accordance with Section 2.7. Each
Eurocurrency Advance shall continue as a Eurocurrency Advance until the end of
the then applicable Interest Period therefor, at which time:

            2.9.1    each such Eurocurrency Advance denominated in Dollars shall
     be automatically converted into a Floating Rate Advance unless (x) such
     Eurocurrency

                                       26



     Advance is or was repaid in accordance with Section 2.7 or (y) the
     applicable Borrower shall have given the Agent a Conversion/Continuation
     Notice (as defined below) requesting that, at the end of such Interest
     Period, such Eurocurrency Advance either continue as a Eurocurrency Advance
     for the same or another Interest Period or be converted into a Floating
     Rate Advance; and

            2.9.2    each such Eurocurrency Advance denominated in an Agreed
     Currency other than Dollars shall be automatically converted into a
     Eurocurrency Advance in the same Agreed Currency with an Interest Period of
     one month unless (x) such Eurocurrency Advance is or was repaid in
     accordance with Section 2.7 or (y) the applicable Borrower shall have given
     the Agent a Conversion/Continuation Notice (as defined below) requesting
     that, at the end of such Interest Period, such Eurocurrency Advance
     continue as a Eurocurrency Advance for the same or another Interest Period.

Subject to the terms of Section 2.6 and the payment of any funding
indemnification amounts required by Section 3.4, the applicable Borrower may
elect from time to time to convert all or any part of an Advance of any Type
(other than a Swing Line Advance) into any other Type or Types of Advances
denominated in the same or any other Agreed Currency; provided that (i) any
conversion of any Eurocurrency Advance shall be made on, and only on, the last
day of the Interest Period applicable thereto and (ii) Eurocurrency Advances
consisting of Term Loans may only be converted or continued in Dollars.
Notwithstanding anything to the contrary contained in this Section 2.9 during
the continuance of a Default or an Unmatured Default, the Agent may (or shall at
the direction of the Required Lenders), by notice to the Borrowers, declare that
no Advance may be made as, converted to or, following the expiration of any
Interest Periods then in effect, continued as a Eurocurrency Advance. The
applicable Borrower shall give the Agent irrevocable notice (a
"Conversion/Continuation Notice") of each conversion of an Advance or
continuation of a Eurocurrency Advance not later than 12:00 noon (Chicago time)
on the same Business Day, in the case of a conversion into a Floating Rate
Advance, three (3) Business Days, in the case of a conversion into or
continuation of a Eurocurrency Advance denominated in Dollars, or four (4)
Business Days, in the case of a conversion into or continuation of a
Eurocurrency Advance denominated in an Agreed Currency other than Dollars, prior
to the date of the requested conversion or continuation, specifying:

     (i)    the requested date, which shall be a Business Day, of such
            conversion or continuation, and

     (ii)   the Agreed Currency, amount and Type(s) of Advance(s) into which
            such Advance is to be converted or continued and, in the case of a
            conversion into or continuation of a Eurocurrency Advance, the
            duration of the Interest Period applicable thereto.

     2.10.  Method of Borrowing. On each Borrowing Date, each Lender shall make
available its Loan or Loans, if any, (i) if such Loan is denominated in Dollars,
not later than 12:00 noon, Chicago time, in Federal or other funds immediately
available to the Agent, in Chicago, Illinois at its address specified in or
pursuant to Article XIII and, (ii) if such Loan is denominated in an Agreed
Currency other than Dollars, not later than 12:00 noon, local time, in the city
of the Agent's Eurocurrency Payment Office for such currency, in such funds as
may

                                       27



then be customary for the settlement of international transactions in such
currency in the city of and at the address of the Agent's Eurocurrency Payment
Office for such currency. Unless the Agent determines that any applicable
condition specified in Article IV has not been satisfied, the Agent will make
the funds so received from the Lenders available to the applicable Borrower at
the Agent's aforesaid address. Notwithstanding the foregoing provisions of this
Section 2.10, to the extent that a Revolving Loan made by a Lender matures on
the Borrowing Date of a requested Revolving Loan, such Lender shall apply the
proceeds of the Revolving Loan it is then making to the repayment of principal
of the maturing Revolving Loan.

     2.11.  Changes in Interest Rate, etc. Each Floating Rate Advance (other
than a Swing Line Advance) shall bear interest on the outstanding principal
amount thereof, for each day from and including the date such Advance is made or
is automatically converted from a Eurocurrency Advance into a Floating Rate
Advance pursuant to Section 2.9, to but excluding the date it is paid or is
converted into a Eurocurrency Advance pursuant to Section 2.9 hereof, at a rate
per annum equal to the Floating Rate for such day. Each Swing Line Loan shall
bear interest on the outstanding principal amount thereof, for each day from and
including the day such Swing Line Loan is made to but excluding the date it is
fully paid at a rate per annum equal to the Floating Rate for such day or at
such other rate per annum as shall be agreed to by the Swing Line Lender and the
Company. Changes in the rate of interest on that portion of any Advance
maintained as a Floating Rate Advance will take effect simultaneously with each
change in the Alternate Base Rate. Each Eurocurrency Advance shall bear interest
on the outstanding principal amount thereof from and including the first day of
the Interest Period applicable thereto to (but not including) the last day of
such Interest Period at the Eurocurrency Rate determined by the Agent as
applicable to such Eurocurrency Advance based upon the applicable Borrower's
selections under Sections 2.8 and 2.9 and otherwise in accordance with the terms
hereof. No Interest Period in respect of any Revolving Loan may end after the
Revolving Loan Termination Date. No Interest Period in respect of any Term Loan
may end after the Term Loan Maturity Date.

     2.12.  Rates Applicable After Default. During the continuance of a Default
the Required Lenders may, at their option, by notice to the Borrowers (which
notice may be revoked at the option of the Required Lenders notwithstanding any
provision of Section 8.2 requiring unanimous consent of the Lenders to changes
in interest rates), declare that (i) each Eurocurrency Advance shall bear
interest for the remainder of the applicable Interest Period at a rate per annum
equal to the Floating Rate in effect from time to time plus 2% per annum, (ii)
each Floating Rate Advance and each Swing Line Loan shall bear interest at a
rate per annum equal to the Floating Rate in effect from time to time plus 2%
per annum, and (iii) the LC Fee described in the first sentence of Section
2.24.4 shall be increased to a rate per annum equal to the Floating Rate in
effect from time to time plus 2% per annum; provided that, during the
continuance of a Default under Section 7.2, 7.3 (solely arising as a result of a
breach of any of Sections 6.20 through 6.22), 7.6 or 7.7, the interest rates set
forth in clauses (i) and (ii) above and the increase in the LC Fee set forth in
clause (iii) above shall be applicable to all Credit Extensions, Advances, fees
and other Obligations hereunder without any election or action on the part of
the Agent, any LC Issuer or any Lender.

     2.13.  Method of Payment; Non-availability of Original Currency.

                                       28



            2.13.1   Method of Payment. Each Advance shall be repaid and each
     payment of interest thereon shall be paid in the currency in which such
     Advance was made or, where such currency has converted to euro, in euro.
     All payments of the Obligations hereunder shall be made, without setoff,
     deduction, or counterclaim, in immediately available funds to the Agent at
     (except as set forth in the next sentence) the Agent's address specified
     pursuant to Article XIII, or at any other Lending Installation of the Agent
     specified in writing by the Agent to the Company, by 12:00 noon (local
     time) on the date when due and shall (except with respect to repayments of
     Swing Line Loans, and except in the case of Reimbursement Obligations for
     which any LC Issuer has not been fully indemnified by the Lenders, or as
     otherwise specifically required hereunder) be applied ratably by the Agent
     among the Lenders. All payments to be made by the Borrowers hereunder in
     any currency other than Dollars shall be made in such currency on the date
     due in such funds as may then be customary for the settlement of
     international transactions in such currency for the account of the Agent,
     at its Eurocurrency Payment Office for such currency and shall be applied
     ratably by the Agent among the Lenders. Each payment delivered to the Agent
     for the account of any Lender shall be delivered promptly by the Agent to
     such Lender in the same type of funds that the Agent received at, (a) with
     respect to Floating Rate Loans and Eurocurrency Loans denominated in
     Dollars, its address specified pursuant to Article XIII or at any Lending
     Installation specified in a notice received by the Agent from such Lender
     and (b) with respect to Eurocurrency Loans denominated in an Agreed
     Currency other than Dollars, in the funds received from the Borrowers at
     the address of the Agent's Eurocurrency Payment Office for such currency.
     The Agent is hereby authorized to charge the account of any Borrower
     maintained with Bank One for each payment of the Obligations as it becomes
     due hereunder. Each reference to the Agent in this Section 2.13 shall also
     be deemed to refer, and shall apply equally to the LC Issuers in the case
     of payments required to be made by any Borrower to the LC Issuers pursuant
     to Section 2.24.6.

            2.13.2   Non-availability of Original Currency. Notwithstanding the
     foregoing provisions of this Section, if, after the making of any Advance
     in any currency other than Dollars, currency control or exchange
     regulations are imposed in the country which issues such currency with the
     result that the type of currency in which the Advance was made (the
     "Original Currency") no longer exists or the applicable Borrower is not
     able to make payment to the Agent for the account of the Lenders in such
     Original Currency, then all payments to be made by the applicable Borrower
     hereunder in such currency shall instead be made when due in Dollars in an
     amount equal to the Dollar Amount (as of the date of repayment) of such
     payment due, it being the intention of the parties hereto that the
     applicable Borrower take all risks of the imposition of any such currency
     control or exchange regulations.

     2.14.  Advances to be Made in euro. If any Advance made (or to be made)
would, but for the provisions of this Section 2.14, be capable of being made in
either euro or in a National Currency Unit, such Advance shall be made in euro.

     2.15.  Noteless Agreement; Evidence of Indebtedness.

                                       29



     (i)    Each Lender shall maintain in accordance with its usual practice an
            account or accounts evidencing the indebtedness of the Borrowers to
            such Lender resulting from each Loan made by such Lender from time
            to time, including the amounts of principal and interest payable and
            paid to such Lender from time to time hereunder.

     (ii)   The Agent shall also maintain accounts in which it will record (a)
            the date and the amount of each Loan made hereunder, the Agreed
            Currency and Type thereof and the Interest Period (in the case of a
            Eurocurrency Advance) with respect thereto, (b) the amount of any
            principal or interest due and payable or to become due and payable
            from the Borrowers to each Lender hereunder, (c) the original stated
            amount of each Facility LC and the amount of LC Obligations
            outstanding at any time, (d) the effective date and amount of each
            Assignment Agreement delivered to and accepted by it and the parties
            thereto pursuant to Section 12.3, (e) the amount of any sum received
            by the Agent hereunder from the Borrowers and each Lender's share
            thereof, and (f) all other appropriate debits and credits as
            provided in this Agreement, including, without limitation, all fees,
            charges, expenses and interest.

     (iii)  The entries maintained in the accounts maintained pursuant to
            paragraphs (i) and (ii) above shall be prima facie evidence of the
            existence and amounts of the Obligations therein recorded; provided,
            however, that the failure of the Agent or any Lender to maintain
            such accounts or any error therein shall not in any manner affect
            the obligation of the Borrowers to repay the Obligations in
            accordance with their terms.

     (iv)   Any Lender may request that its Term Loans, Revolving Loans or, in
            the case of the Swing Line Lender, the Swing Line Loans, be
            evidenced by promissory notes (the "Notes") in substantially the
            form of Exhibit E-1 or E-2, with appropriate changes for notes
            evidencing Swing Line Loans. In such event, each Borrower shall
            prepare, execute and deliver to such Lender such Note(s) payable to
            the order of such Lender or its registered assigns. Thereafter, the
            Loans evidenced by such Notes and interest thereon shall at all
            times (prior to any assignment pursuant to Section 12.3) be
            represented by one or more Notes payable to the order of the payee
            named therein, except to the extent that any such Lender
            subsequently returns any such Note(s) for cancellation and requests
            that such Loans once again be evidenced as described in paragraphs
            (i) and (ii) above.

     2.16.  Telephonic Notices. Each Borrower hereby authorizes the Lenders and
the Agent to extend, convert or continue Advances, effect selections of Agreed
Currencies and Types of Advances and to transfer funds based on telephonic
notices made by any person or persons the Agent or any Lender in good faith
believes to be acting on behalf of such Borrower, it being understood that the
foregoing authorization is specifically intended to allow Borrowing Notices and
Conversion/Continuation Notices to be given telephonically. Each Borrower agrees
to deliver promptly to the Agent a written confirmation, signed by an Authorized
Officer of such Borrower, if such confirmation is requested by the Agent or any
Lender, of each telephonic notice. If the written confirmation differs in any
material respect from the action taken by the

                                       30



Agent and the Lenders, the records of the Agent and the Lenders shall govern
absent manifest error.

     2.17.  Interest Payment Dates; Interest and Fee Basis. Interest accrued on
each Floating Rate Advance shall be payable in arrears on each Payment Date,
commencing with the first such date to occur after the Closing Date, on any date
on which the Floating Rate Advance is prepaid, whether due to acceleration or
otherwise, and at maturity. Interest accrued on that portion of the outstanding
principal amount of any Floating Rate Advance converted into a Eurocurrency
Advance on a day other than a Payment Date shall be payable on the date of
conversion. Interest accrued on each Eurocurrency Advance shall be payable on
the last day of its applicable Interest Period, on any date on which the
Eurocurrency Advance is prepaid, whether by acceleration or otherwise, and at
maturity. Interest accrued on each Eurocurrency Advance having an Interest
Period longer than three (3) months shall also be payable on the last day of
each three-month interval during such Interest Period. Interest on Eurocurrency
Advances, Swing Line Loans, LC Fees and all other fees hereunder shall be
calculated for actual days elapsed on the basis of a 360-day year, except for
interest on Revolving Loans denominated in British Pounds Sterling which shall
be calculated for actual days elapsed on the basis of a 365-day year. Interest
on Floating Rate Advances shall be calculated for actual days elapsed on the
basis of a 365/366-day year. Interest shall be payable for the day an Advance is
made but not for the day of any payment on the amount paid if payment is
received prior to 12:00 noon (local time) at the place of payment. If any
payment of principal of or interest on an Advance, any fees or any other amounts
payable to the Agent or any Lender hereunder shall become due on a day which is
not a Business Day, such payment shall be made on the next succeeding Business
Day and, in the case of a principal payment, such extension of time shall be
included in computing interest, fees and commissions in connection with such
payment.

     2.18.  Notification of Advances, Interest Rates, Prepayments and Commitment
Reduction. Promptly after receipt thereof, the Agent will notify each Lender of
the contents of each Aggregate Revolving Loan Commitment reduction notice,
Borrowing Notice, Swing Line Borrowing Notice, Conversion/Continuation Notice,
and repayment notice received by it hereunder. Promptly after notice from the
applicable LC Issuer, the Agent will notify each Lender of the contents of each
request for issuance of a Facility LC hereunder. The Agent will notify the
Borrowers and each Lender of the interest rate applicable to each Eurocurrency
Advance promptly upon determination of such interest rate and will give the
Borrowers and each Lender prompt notice of each change in the Alternate Base
Rate.

     2.19.  Lending Installations.

            2.19.1   Each Lender may book its Revolving Loans denominated in an
     Agreed Currency other than Dollars at the appropriate Lending Installation
     listed on the administrative information sheets provided to the Agent in
     connection herewith or such other Lending Installation designated by such
     Lender in accordance with the final sentence of this Section 2.19.1. All
     terms of this Agreement shall apply to any such Lending Installation and
     the Revolving Loans denominated in an Agreed Currency other than Dollars
     and any Notes evidencing such Revolving Loans issued hereunder shall be
     deemed held by each Lender for the benefit of any such Lending
     Installation. Each Lender may, by written notice to the Agent and the
     Borrowers in accordance with Article

                                       31



     XIII, designate replacement or additional Lending Installations through
     which such Revolving Loans will be made by it and for whose account such
     Revolving Loan payments are to be made.

            2.19.2   Except for Revolving Loans denominated in an Agreed
     Currency other than Dollars, each Lender may book its Loans and its
     participation in any LC Obligations and the LC Issuers may book the
     Facility LCs issued by it at any Lending Installation selected by such
     Lender or LC Issuer, as applicable, and may change its Lending Installation
     from time to time. All terms of this Agreement shall apply to any such
     Lending Installation and the Loans, Facility LCs, participations in LC
     Obligations and any Notes evidencing a Loan issued hereunder shall be
     deemed held by each Lender or LC Issuer, as applicable, for the benefit of
     any such Lending Installation. Each Lender and LC Issuer may, by written
     notice to the Agent and the Borrowers in accordance with Article XIII,
     designate replacement or additional Lending Installations through which
     Loans will be made by it or Facility LCs will be issued by it and for whose
     account Loan payments or payments with respect to Facility LCs are to be
     made.

     2.20.  Non-Receipt of Funds by the Agent. Unless the applicable Borrower or
a Lender, as the case may be, notifies the Agent prior to the date on which it
is scheduled to make payment to the Agent of (i) in the case of a Lender, the
proceeds of a Loan or (ii) in the case of any Borrower, a payment of principal,
interest or fees to the Agent for the account of the Lenders, that it does not
intend to make such payment, the Agent may assume that such payment has been
made. The Agent may, but shall not be obligated to, make the amount of such
payment available to the intended recipient in reliance upon such assumption. If
such Lender or the applicable Borrower, as the case may be, has not in fact made
such payment to the Agent, the recipient of such payment shall, on demand by the
Agent, repay to the Agent the amount so made available together with interest
thereon in respect of each day during the period commencing on the date such
amount was so made available by the Agent until the date the Agent recovers such
amount at a rate per annum equal to (x) in the case of payment by a Lender, the
Federal Funds Effective Rate for such day for the first three days and,
thereafter, the interest rate applicable to the relevant Loan or (y) in the case
of payment by any Borrower, the interest rate applicable to the relevant Loan.

     2.21.  Market Disruption. Notwithstanding the satisfaction of all
conditions referred to in Article II and Article IV with respect to any Advance
in any Agreed Currency other than Dollars, if there shall occur on or prior to
the date of such Advance any change in national or international financial,
political or economic conditions or currency exchange rates or exchange controls
which would in the reasonable opinion of the Agent or the Required Lenders make
it impracticable for the Eurocurrency Loans comprising such Advance to be
denominated in the Agreed Currency specified by the applicable Borrower, then
the Agent shall forthwith give notice thereof to such Borrower and the Lenders,
and such Loans shall not be denominated in such Agreed Currency but shall be
made on such Borrowing Date in Dollars, in an aggregate principal amount equal
to the Dollar Amount of the aggregate principal amount specified in the related
Borrowing Notice or Conversion/Continuation Notice, as the case may be, as
Floating Rate Loans, unless such Borrower notifies the Agent at least one
Business Day before such date that (i) it elects not to borrow on such date or
(ii) it elects to borrow on such date in a different Agreed Currency, provided
that (a) the denomination of such Loans in such different Agreed

                                       32



Currency would in the opinion of the Agent and the Required Lenders be
practicable and (b) such borrowing shall be in an aggregate principal amount
equal to the Dollar Amount of the aggregate principal amount specified in the
related Borrowing Notice or Conversion/Continuation Notice, as the case may be.

     2.22.  Judgment Currency. If for the purposes of obtaining judgment in any
court it is necessary to convert a sum due from any Borrower hereunder in the
currency expressed to be payable herein (the "specified currency") into another
currency, the parties hereto agree, to the fullest extent that they may
effectively do so, that the rate of exchange used shall be that at which in
accordance with normal banking procedures the Agent could purchase the specified
currency with such other currency at the Agent's main Chicago office on the
Business Day preceding that on which final, non-appealable judgment is given.
The obligations of the Borrowers in respect of any sum due to any Lender or the
Agent hereunder shall, notwithstanding any judgment in a currency other than the
specified currency, be discharged only to the extent that on the Business Day
following receipt by such Lender or the Agent (as the case may be) of any sum
adjudged to be so due in such other currency such Lender or the Agent (as the
case may be) may in accordance with normal, reasonable banking procedures
purchase the specified currency with such other currency. If the amount of the
specified currency so purchased is less than the sum originally due to such
Lender or the Agent, as the case may be, in the specified currency, each
Borrower agrees, to the fullest extent that it may effectively do so, as a
separate obligation and notwithstanding any such judgment, to indemnify such
Lender or the Agent, as the case may be, against such loss, and if the amount of
the specified currency so purchased exceeds (a) the sum originally due to any
Lender or the Agent, as the case may be, in the specified currency and (b) any
amounts shared with other Lenders as a result of allocations of such excess as a
disproportionate payment to such Lender under Section 12.2, such Lender or the
Agent, as the case may be, agrees to remit such excess to the applicable
Borrower.

     2.23.  Replacement of Lender. If any Borrower is required pursuant to
Section 3.1, 3.2 or 3.5 to make any additional payment to any Lender or if any
Lender's obligation to make or continue, or to convert Floating Rate Advances
into, Eurocurrency Advances shall be suspended pursuant to Section 3.3 (any
Lender so affected an "Affected Lender"), the Company may elect, if such amounts
continue to be charged or such suspension is still effective, to terminate or
replace the Revolving Loan Commitment and Term Loans of such Affected Lender,
provided that no Default or Unmatured Default shall have occurred and be
continuing at the time of such termination or replacement, and provided further
that, concurrently with such termination or replacement, (i) if the Affected
Lender is being replaced, another bank or other entity which is reasonably
satisfactory to the Company and the Agent shall agree, as of such date, to
purchase for cash the Outstanding Revolving Credit Exposure and Term Loans of
the Affected Lender pursuant to an Assignment Agreement substantially in the
form of Exhibit C and to become a Lender for all purposes under this Agreement
and to assume all obligations of the Affected Lender to be terminated as of such
date and to comply with the requirements of Section 12.3 applicable to
assignments, and (ii) the Borrowers shall pay to such Affected Lender in
immediately available funds on the day of such replacement (A) all interest,
fees and other amounts then accrued but unpaid to such Affected Lender by the
Borrowers hereunder to and including the date of termination, including without
limitation payments due to such Affected Lender under Sections 3.1, 3.2 and 3.5,
and (B) an amount, if any, equal to the payment which would have been due to
such Lender on the day of such replacement under Section 3.4 had the

                                       33



Loans of such Affected Lender been prepaid on such date rather than sold to the
replacement Lender, in each case to the extent not paid by the purchasing Lender
and (iii) if the Affected Lender is being terminated, the Borrowers shall pay to
such Affected Lender all Obligations due to such Affected Lender (including the
amounts described in the immediately preceding clauses (i) and (ii) plus the
outstanding principal balance of such Affected Lender's Revolving Loans and Term
Loans).

     2.24.  Facility LCs.

            2.24.1   Issuance; Transitional Facility LCs.

                     (a)  Issuance. The LC Issuers hereby agree, on the terms
            and conditions set forth in this Agreement, to issue commercial and
            standby Letters of Credit in Dollars (each, together with the
            Letters of Credit deemed issued by the LC Issuers hereunder pursuant
            to Section 2.24.1(b), a "Facility LC") and to renew, extend,
            increase, decrease or otherwise modify each Facility LC ("Modify,"
            and each such action, a "Modification"), from time to time from and
            including the Closing Date and prior to the Revolving Loan
            Termination Date upon the request of the applicable Borrower;
            provided that immediately after each such Facility LC is issued or
            Modified, (i) the aggregate amount of the outstanding LC Obligations
            shall not exceed $15,000,000 and (ii) the Aggregate Outstanding
            Revolving Credit Exposure shall not exceed the Aggregate Revolving
            Loan Commitment. No Facility LC shall have an expiry date later than
            the earlier of (x) the fifth Business Day prior to the Revolving
            Loan Termination Date and (y) one year after its issuance; provided
            that any Facility LC with a one-year tenor may provide for the
            renewal thereof for additional one year periods (which shall in no
            event extend beyond the date referred to in clause (x) above).

                     (b)  Transitional Provision. Schedule 2.24 contains a
            schedule of certain Letters of Credit issued for the account of the
            Borrowers prior to the Closing Date. Subject to the satisfaction of
            the conditions contained in Sections 4.1 and 4.2, from and after the
            Closing Date such Letters of Credit shall be deemed to be Facility
            LCs issued pursuant to this Section 2.24.

            2.24.2   Participations. On the Closing Date, with respect to the
     Facility LCs identified on Schedule 2.24, and upon the issuance or
     Modification by the applicable LC Issuer of a Facility LC in accordance
     with this Section 2.24, such LC Issuer shall be deemed, without further
     action by any party hereto, to have unconditionally and irrevocably sold to
     each Lender, and each Lender shall be deemed, without further action by any
     party hereto, to have unconditionally and irrevocably purchased from such
     LC Issuer, a participation in such Facility LC (and each Modification
     thereof) and the related LC Obligations in proportion to its Revolving Loan
     Pro Rata Share.

            2.24.3   Notice. The applicable Borrower shall give the applicable
     LC Issuer notice prior to 10:00 a.m. (Chicago time) at least five Business
     Days prior to the proposed date of issuance or Modification of each
     Facility LC, specifying the beneficiary, the proposed date of issuance (or
     Modification) and the expiry date of such Facility LC,

                                       34



     and describing the proposed terms of such Facility LC and the nature of the
     transactions proposed to be supported thereby. The applicable LC Issuer
     shall promptly notify the Agent, and, upon issuance only, the Agent shall
     promptly notify each Lender, of the contents thereof and of the amount of
     such Lender's participation in such Facility LC. The issuance or
     Modification by any LC Issuer of any Facility LC shall, in addition to the
     conditions precedent set forth in Article IV (the satisfaction of which
     such LC Issuer shall have no duty to ascertain), be subject to the
     conditions precedent that such Facility LC shall be satisfactory to such LC
     Issuer and that the applicable Borrower shall have executed and delivered
     such application agreement and/or such other instruments and agreements
     relating to such Facility LC as such LC Issuer shall have reasonably
     requested (each, a "Facility LC Application"). In the event of any conflict
     between the terms of this Agreement and the terms of any Facility LC
     Application, the terms of this Agreement shall control.

            2.24.4   LC Fees. The Company shall pay to the Agent, for the
     account of the Lenders ratably in accordance with their respective
     Revolving Loan Pro Rata Shares, (i) with respect to each standby Facility
     LC, a letter of credit fee at a per annum rate equal to the Applicable
     Margin for Eurocurrency Loans in effect from time to time on the average
     daily undrawn amount under such Facility LC, such fee to be payable in
     arrears on each Payment Date, and (ii) with respect to each commercial
     Facility LC, a one-time letter of credit fee in an amount to be agreed upon
     between the Company and the applicable LC Issuer based upon the initial
     stated amount (or, with respect to a Modification of any such commercial
     Facility LC which increases the stated amount thereof, such increase in the
     stated amount) thereof, such fee to be payable on the date of such issuance
     or increase. The applicable Borrower shall also pay to each LC Issuer for
     its own account (x) at the time of such LC Issuer's issuance of any standby
     Facility LC, a fronting fee in an amount equal to 0.125% multiplied by the
     face amount of such standby Facility LC, and (y) documentary and processing
     charges in connection with the issuance, or Modification cancellation,
     negotiation, or transfer of, and draws under Facility LCs in accordance
     with the applicable LC Issuer's standard schedule for such charges as in
     effect from time to time. Each fee described in this Section 2.24.4 shall
     constitute an "LC Fee".

            2.24.5   Administration; Reimbursement by Lenders. Upon receipt from
     the beneficiary of any Facility LC of any demand for payment under such
     Facility LC, the applicable LC Issuer shall notify the Agent and the Agent
     shall promptly notify the applicable Borrower and each other Lender as to
     the amount to be paid by such LC Issuer as a result of such demand and the
     proposed payment date to such beneficiary (the "LC Payment Date");
     provided, however, that the failure of such LC Issuer to so notify such
     Borrower shall not in any manner affect the obligations of any Borrower to
     reimburse such LC Issuer pursuant to Section 2.24.6. The responsibility of
     each LC Issuer to the Borrowers and each Lender shall be only to determine
     that the documents (including each demand for payment) delivered under each
     Facility LC issued by such LC Issuer in connection with such presentment
     shall be in conformity in all material respects with such Facility LC. Each
     LC Issuer shall endeavor to exercise the same care in the issuance and
     administration of the Facility LCs issued by such LC Issuer as it does with
     respect to Letters of Credit in which no participations are granted, it
     being understood that in the absence of any gross negligence or willful
     misconduct by the applicable LC

                                       35



     Issuer, each Lender shall be unconditionally and irrevocably liable without
     regard to the occurrence of any Default or any condition precedent
     whatsoever, to reimburse such LC Issuer on demand for (i) such Lender's
     Revolving Loan Pro Rata Share of the amount of each payment made by such LC
     Issuer under each Facility LC issued by such LC Issuer to the extent such
     amount is not reimbursed by the Borrowers pursuant to Section 2.24.6 below,
     plus (ii) interest on the foregoing amount to be reimbursed by such Lender,
     for each day from the date of the applicable LC Issuer's demand for such
     reimbursement (or, if such demand is made after 11:00 a.m. (Chicago time)
     on such date, from the next succeeding Business Day) to the date on which
     such Lender pays the amount to be reimbursed by it, at a rate of interest
     per annum equal to the Federal Funds Effective Rate for the first three
     days and, thereafter, at a rate of interest equal to the rate applicable to
     Floating Rate Advances.

            2.24.6   Reimbursement by Borrowers. The Borrowers shall be
     irrevocably and unconditionally obligated to reimburse the LC Issuers on or
     before the applicable LC Payment Date for any amounts to be paid by any LC
     Issuer upon any drawing under any Facility LC issued by such LC Issuer,
     without presentment, demand, protest or other formalities of any kind;
     provided that no Borrower nor any Lender shall hereby be precluded from
     asserting any claim for direct (but not consequential) damages suffered by
     any Borrower or such Lender to the extent, but only to the extent, caused
     by (i) the willful misconduct or gross negligence of the applicable LC
     Issuer in determining whether a request presented under any Facility LC
     issued by it complied with the terms of such Facility LC or (ii) the
     applicable LC Issuer's failure to pay under any Facility LC issued by it
     after the presentation to it of a request strictly complying with the terms
     and conditions of such Facility LC. All such amounts paid by any LC Issuer
     and remaining unpaid by the Borrowers shall bear interest, payable on
     demand, for each day until paid at a rate per annum equal to (x) the rate
     applicable to Floating Rate Advances for such day if such day falls on or
     before the applicable LC Payment Date and (y) the sum of 2% plus the rate
     applicable to Floating Rate Advances for such day if such day falls after
     such LC Payment Date. Each LC Issuer will pay to each Lender ratably in
     accordance with its Revolving Loan Pro Rata Share all amounts received by
     it from the Borrowers for application in payment, in whole or in part, of
     the Reimbursement Obligation in respect of any Facility LC issued by such
     LC Issuer, but only to the extent such Lender has made payment to such LC
     Issuer in respect of such Facility LC pursuant to Section 2.24.5. Subject
     to the terms and conditions of this Agreement (including, without
     limitation, the submission of a Borrowing Notice in compliance with Section
     2.9 and the satisfaction of the applicable conditions precedent set forth
     in Article IV), the Borrowers may request an Advance hereunder for the
     purpose of satisfying any Reimbursement Obligation.

            2.24.7   Obligations Absolute. The Borrowers' obligations under this
     Section 2.24 shall be absolute and unconditional under any and all
     circumstances and irrespective of any setoff, counterclaim or defense to
     payment which any Borrower may have or have had against any LC Issuer, any
     Lender or any beneficiary of a Facility LC. The Borrowers further agree
     with the LC Issuers and the Lenders that the LC Issuers and the Lenders
     shall not be responsible for, and the Borrowers' Reimbursement Obligation
     in respect of any Facility LC shall not be affected by, among other things,
     the validity or genuineness of documents or of any endorsements thereon,
     even if such documents

                                       36



     should in fact prove to be in any or all respects invalid, fraudulent or
     forged, or any dispute between or among any Borrower, any of their
     respective Affiliates, the beneficiary of any Facility LC or any financing
     institution or other party to whom any Facility LC may be transferred or
     any claims or defenses whatsoever of any Borrower or of any of their
     respective Affiliates against the beneficiary of any Facility LC or any
     such transferee. No LC Issuer shall be liable for any error, omission,
     interruption or delay in transmission, dispatch or delivery of any message
     or advice, however transmitted, in connection with any Facility LC. Each
     Borrower agrees that any action taken or omitted by any LC Issuer or any
     Lender under or in connection with each Facility LC and the related drafts
     and documents, if done without gross negligence or willful misconduct,
     shall be binding upon such Borrower and shall not put any LC Issuer or any
     Lender under any liability to any Borrower. Nothing in this Section 2.24.7
     is intended to limit the right of any Borrower to make a claim against any
     LC Issuer for damages as contemplated by the proviso to the first sentence
     of Section 2.24.6.

            2.24.8   Actions of LC Issuers. Each LC Issuer shall be entitled to
     rely, and shall be fully protected in relying, upon any Facility LC, draft,
     writing, resolution, notice, consent, certificate, affidavit, letter,
     cablegram, telegram, telecopy, telex or teletype message, statement, order
     or other document believed by it to be genuine and correct and to have been
     signed, sent or made by the proper Person or Persons, and upon advice and
     statements of legal counsel, independent accountants and other experts
     selected by such LC Issuer. Each LC Issuer shall be fully justified in
     failing or refusing to take any action under this Agreement unless it shall
     first have received such advice or concurrence of the Required Lenders as
     it reasonably deems appropriate or it shall first be indemnified to its
     reasonable satisfaction by the Lenders against any and all liability and
     expense which may be incurred by it by reason of taking or continuing to
     take any such action. Notwithstanding any other provision of this Section
     2.24, each LC Issuer shall in all cases be fully protected in acting, or in
     refraining from acting, under this Agreement in accordance with a request
     of the Required Lenders, and such request and any action taken or failure
     to act pursuant thereto shall be binding upon the Lenders and any future
     holders of a participation in any Facility LC.

            2.24.9   Indemnification. The Borrowers hereby agree to indemnify
     and hold harmless each Lender, each LC Issuer and the Agent, and their
     respective directors, officers, agents and employees from and against any
     and all claims and damages, losses, liabilities, reasonable costs or
     expenses which such Lender, such LC Issuer or the Agent may incur (or which
     may be claimed against such Lender, such LC Issuer or the Agent by any
     Person whatsoever) by reason of or in connection with the issuance,
     execution and delivery or transfer of or payment or failure to pay under
     any Facility LC or any actual or proposed use of any Facility LC,
     including, without limitation, any claims, damages, losses, liabilities,
     reasonable costs or expenses which any LC Issuer may incur by reason of or
     in connection with (i) the failure of any other Lender to fulfill or comply
     with its obligations to such LC Issuer hereunder (but nothing herein
     contained shall affect any rights any Borrower may have against any
     defaulting Lender) or (ii) by reason of or on account of such LC Issuer
     issuing any Facility LC which specifies that the term "Beneficiary"
     included therein includes any successor by operation of law of the named
     Beneficiary, but which Facility LC does not require that any drawing by any
     such

                                       37



     successor Beneficiary be accompanied by a copy of a legal document,
     satisfactory to such LC Issuer, evidencing the appointment of such
     successor Beneficiary; provided that no Borrower shall be required to
     indemnify any Lender, any LC Issuer or the Agent for any claims, damages,
     losses, liabilities, costs or expenses to the extent, but only to the
     extent, caused by (x) the willful misconduct or gross negligence of the
     applicable LC Issuer in determining whether a request presented under any
     Facility LC issued by such LC Issuer complied with the terms of such
     Facility LC or (y) any LC Issuer's failure to pay under any Facility LC
     issued by such LC Issuer after the presentation to it of a request strictly
     complying with the terms and conditions of such Facility LC. Nothing in
     this Section 2.24.9 is intended to limit the obligations of any Borrower
     under any other provision of this Agreement.

            2.24.10  Lenders' Indemnification. Each Lender shall, ratably in
     accordance with its Revolving Loan Pro Rata Share, indemnify each LC
     Issuer, its affiliates and their respective directors, officers, agents and
     employees (to the extent not reimbursed by any Borrower) against any cost,
     expense (including reasonable counsel fees and disbursements), claim,
     demand, action, loss or liability (except such as result from such
     indemnitees' gross negligence or willful misconduct or the applicable LC
     Issuer's failure to pay under any Facility LC issued by such LC Issuer
     after the presentation to it of a request strictly complying with the terms
     and conditions of such Facility LC) that such indemnitees may suffer or
     incur in connection with this Section 2.24 or any action taken or omitted
     by such indemnitees hereunder.

            2.24.11  Facility LC Collateral Account. The Borrowers agree that
     the Company will, on behalf of each of the Borrowers, upon the request of
     the Agent or the Required Lenders and until the final expiration date of
     any Facility LC and thereafter as long as any amount is payable to the LC
     Issuers or the Lenders in respect of any Facility LC, maintain a special
     collateral account pursuant to arrangements satisfactory to the Agent (the
     "Facility LC Collateral Account") at the Agent's office at the address
     specified pursuant to Article XIII, in the name of the Company but under
     the sole dominion and control of the Agent, for the benefit of the Lenders
     and in which no Borrower shall have any interest other than as set forth in
     Section 8.1. Each Borrower hereby pledges, assigns and grants to the Agent,
     on behalf of and for the ratable benefit of the Lenders and the LC Issuers,
     a security interest in all of such Borrower's right, title and interest in
     and to all funds which may from time to time be on deposit in the Facility
     LC Collateral Account to secure the prompt and complete payment and
     performance of the Obligations. The Agent will invest any funds on deposit
     from time to time in the Facility LC Collateral Account in certificates of
     deposit of Bank One having a maturity not exceeding 30 days. Nothing in
     this Section 2.24.11 shall either obligate the Agent to require any
     Borrower to deposit any funds in the Facility LC Collateral Account or
     limit the right of the Agent to release any funds held in the Facility LC
     Collateral Account in each case other than as required by Section 8.1.

            2.24.12  Rights as a Lender. In its capacity as a Lender, each LC
     Issuer shall have the same rights and obligations as any other Lender.

                                       38



     2.25.  Subsidiary Borrowers. The Company may at any time or from time to
time, with the consent of the Agent, add as a party to this Agreement any
Domestic Subsidiary that is a Wholly-Owned Subsidiary to be a Subsidiary
Borrower hereunder by the execution and delivery to the Agent and the Lenders of
(a) a duly completed Assumption Letter by such Domestic Subsidiary, with the
acknowledgement of the Agent and written consent of the Borrowers at the foot
thereof, (b) such opinions, agreements, documents, certificates or other items
as may be required by Section 4.3, such documents with respect to any additional
Subsidiary Borrowers to be substantially similar in form and substance to the
Loan Documents executed on or about the date hereof by the Subsidiary Borrowers
parties hereto as of the Closing Date. Upon such execution, delivery and consent
such Subsidiary shall for all purposes be a party hereto as a Subsidiary
Borrower as fully as if it had executed and delivered this Agreement. So long as
the principal of and interest on any Credit Extensions made to any Subsidiary
Borrower under this Agreement shall have been repaid or paid in full, all
Facility LCs issued for the account of such Subsidiary Borrower have expired or
been returned and terminated and all other obligations of such Subsidiary
Borrower under this Agreement shall have been fully performed, the Company may,
by not less than five (5) Business Days' prior notice to the Agent (which shall
promptly notify the Lenders thereof), terminate such Subsidiary Borrower's
status as a "Subsidiary Borrower" (it being understood and agreed that such
Subsidiary Borrower shall remain liable with respect to indemnification and
similar obligations incurred prior to such termination). The Agent shall give
the Lenders written notice of the addition of any Subsidiary Borrowers to this
Agreement.

                                   ARTICLE III

                             YIELD PROTECTION; TAXES

     3.1.   Yield Protection. If, on or after the Closing Date, the adoption of
any law or any governmental or quasi-governmental rule, regulation, policy,
guideline or directive (whether or not having the force of law), or any change
in any such law, rule, regulation, policy, guideline or directive or in the
interpretation or administration thereof by any governmental or
quasi-governmental authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by any Lender or
applicable Lending Installation or any LC Issuer with any request or directive
(whether or not having the force of law) of any such authority, central bank or
comparable agency:

     (i)    subjects any Lender or any applicable Lending Installation or any LC
            Issuer to any Taxes, or changes the basis of taxation of payments
            (other than with respect to Excluded Taxes) to any Lender or any LC
            Issuer in respect of its Revolving Loan Commitments, Loans, Facility
            LCs or participations therein, or

     (ii)   imposes or increases or deems applicable any reserve, assessment,
            insurance charge, special deposit or similar requirement against
            assets of, deposits with or for the account of, or credit extended
            by, any Lender or any applicable Lending Installation or any LC
            Issuer (other than reserves and assessments taken into account in
            determining the interest rate applicable to Eurocurrency Advances)
            with respect to its Revolving Loan Commitment, Loans, Facility LCs
            or participations therein, or

                                       39



     (iii)  imposes any other condition the result of which is to increase the
            cost to any Lender, any applicable Lending Installation or any LC
            Issuer of making, funding or maintaining its Revolving Loan
            Commitment, Loans or of issuing or participating in Facility LCs, or
            reduces any amount receivable by any Lender or any applicable
            Lending Installation or any LC Issuer in connection with its
            Revolving Loan Commitment or Loans or Facility LCs (including
            participations therein), or requires any Lender or any applicable
            Lending Installation or any LC Issuer to make any payment calculated
            by reference to the amount of Revolving Loan Commitment or Loans or
            Facility LCs (including participations therein) held or interest or
            LC Fees received by it, by an amount deemed material by such Lender
            or such LC Issuer, as applicable,

and the result of any of the foregoing is to increase the cost to such Lender or
applicable Lending Installation or such LC Issuer of making or maintaining its
Loans (including, without limitation, any conversion of any Loan denominated in
an Agreed Currency other than euro into a Loan denominated in euro) or Revolving
Loan Commitment or of issuing or participating in Facility LCs, as applicable,
or to reduce the return received by such Lender or applicable Lending
Installation or LC Issuer in connection with such Loans, Revolving Loan
Commitment or Facility LCs (including participations therein), then, within 15
days of demand, accompanied by the written statement required by Section 3.6, by
such Lender or LC Issuer, the Borrowers shall pay such Lender or LC Issuer such
additional amount or amounts as will compensate such Lender or LC Issuer for
such increased cost or reduction in amount received.

     3.2.   Changes in Capital Adequacy Regulations. If a Lender or any LC
Issuer determines the amount of capital required or expected to be maintained by
such Lender or such LC Issuer, any Lending Installation of such Lender or such
LC Issuer or any corporation controlling such Lender or such LC Issuer is
increased as a result of a Change, then, within 15 days of demand, accompanied
by the written statement required by Section 3.6, by such Lender or such LC
Issuer, the Borrowers shall pay such Lender or such LC Issuer the amount
necessary to compensate for any shortfall in the rate of return on the portion
of such increased capital which such Lender or such LC Issuer determines is
attributable to this Agreement, its Outstanding Revolving Credit Exposure, its
Term Loans or its Revolving Loan Commitment or its commitment to issue Facility
LCs, as applicable, hereunder (after taking into account such Lender's or such
LC Issuer's policies as to capital adequacy). "Change" means (i) any change
after the Closing Date in the Risk-Based Capital Guidelines or (ii) any adoption
of, or change in, or change in the interpretation or administration of any other
law, governmental or quasi-governmental rule, regulation, policy, guideline,
interpretation, or directive (whether or not having the force of law) after the
Closing Date which affects the amount of capital required or expected to be
maintained by any Lender or any LC Issuer or any Lending Installation or any
corporation controlling any Lender or any LC Issuer. "Risk-Based Capital
Guidelines" means (i) the risk-based capital guidelines in effect in the United
States on the Closing Date, including transition rules, and (ii) the
corresponding capital regulations promulgated by regulatory authorities outside
the United States implementing the July 1988 report of the Basle Committee on
Banking Regulation and Supervisory Practices Entitled "International Convergence
of Capital Measurements and Capital Standards," including transition rules, and
any amendments to such regulations adopted prior to the Closing Date.

                                       40



     3.3.   Availability of Types of Advances. If (x) any Lender determines
that maintenance of its Eurocurrency Loans at a suitable Lending Installation
would violate any applicable law, rule, regulation, or directive, whether or not
having the force of law, or (y) the Required Lenders determine that (i) deposits
of a type, currency and maturity appropriate to match fund Eurocurrency Advances
are not available or (ii) the interest rate applicable to Eurocurrency Advances
does not accurately reflect the cost of making or maintaining Eurocurrency
Advances, or (iii) no reasonable basis exists for determining the Eurocurrency
Reference Rate, then the Agent shall suspend the availability of Eurocurrency
Advances and require any affected Eurocurrency Advances to be repaid or
converted to Floating Rate Advances on the respective last days of the then
current Interest Periods with respect to such Loans or within such earlier
period as required by law, subject to the payment of any funding indemnification
amounts required by Section 3.4.

     3.4.   Funding Indemnification. If any payment of a Eurocurrency Advance
occurs on a date which is not the last day of the applicable Interest Period,
whether because of acceleration, prepayment or otherwise, or a Eurocurrency
Advance is not made or continued, or a Floating Rate Advance is not converted
into a Eurocurrency Advance, on the date specified by the applicable Borrower
for any reason other than default by the Lenders, or a Eurocurrency Advance is
not prepaid on the date specified by the applicable Borrower for any reason, the
Borrowers will, jointly and severally, indemnify each Lender for any reasonable
loss or cost incurred by it resulting therefrom, including, without limitation,
any reasonable loss or cost in liquidating or employing deposits acquired to
fund or maintain such Eurocurrency Advance.

     3.5.   Taxes. (i) All payments by the Borrowers to or for the account of
any Lender or any LC Issuer or the Agent hereunder or under any Note shall be
made free and clear of and without deduction for any and all Taxes. If any
Borrower shall be required by law to deduct any Taxes from or in respect of any
sum payable hereunder to any Lender, any LC Issuer or the Agent, (a) the sum
payable shall be increased as necessary so that after making all required
deductions (including deductions applicable to additional sums payable under
this Section 3.5) such Lender, such LC Issuer or the Agent (as the case may be)
receives an amount equal to the sum it would have received had no such
deductions been made, (b) such Borrower shall make such deductions, (c) such
Borrower shall pay the full amount deducted to the relevant authority in
accordance with applicable law and (d) such Borrower shall furnish to the Agent
the original copy of a receipt evidencing payment thereof or, if a receipt
cannot be obtained with reasonable efforts, such other evidence of payment as is
reasonably acceptable to the Agent, in each case within 30 days after such
payment is made.

     (ii)   In addition, the Borrowers shall pay any present or future stamp or
            documentary taxes and any other excise or property taxes, charges or
            similar levies which arise from any payment made hereunder or under
            any Note or Facility LC Application or from the execution or
            delivery of, or otherwise with respect to, this Agreement or any
            Note or Facility LC Application or any other Loan Document ("Other
            Taxes").

     (iii)  The Borrowers shall indemnify the Agent, each LC Issuer and each
            Lender for the full amount of Taxes or Other Taxes (including,
            without limitation, any Taxes or Other Taxes imposed on amounts
            payable under this Section 3.5) paid by the

                                       41



            Agent, such LC Issuer or such Lender as a result of its Revolving
            Loan Commitment, any Credit Extensions made by it hereunder, any
            Facility LC issued or participated in by it hereunder, or otherwise
            in connection with its participation in this Agreement and any
            liability (including penalties, interest and expenses) arising
            therefrom or with respect thereto. Payments due under this
            indemnification shall be made within 30 days of the date the Agent,
            such LC Issuer or such Lender makes demand therefor pursuant to
            Section 3.6.

     (iv)   Each Lender that is not incorporated under the laws of the United
            States of America or a state thereof (each a "Non-U.S. Lender")
            agrees that it will, not more than ten Business Days after the date
            on which it becomes a party to this Agreement (but in any event
            before a payment is due to it hereunder), (i) deliver to each of the
            Company and the Agent two duly completed copies of United States
            Internal Revenue Service Form W-8BEN or W-8ECI or successor forms,
            certifying in either case that such Non-U.S. Lender is entitled to
            receive payments under this Agreement or under any Note or Facility
            LC Application without deduction or withholding of any United States
            federal income taxes, or (ii) in the case of a Non-U.S. Lender that
            is fiscally transparent, deliver to the Agent a United States
            Internal Revenue Service Form W-8IMY or successor form together with
            the applicable accompanying duly completed copies of United States
            Internal Revenue Service applicable Forms W-8 or W-9 or successor
            forms, as the case may be, and certify that it is entitled to an
            exemption from United States withholding tax. Each Non-U.S. Lender
            further undertakes to deliver to each of the Company and the Agent
            renewals or additional copies of such form (or any successor form)
            (x) on or before the date that such form expires or becomes
            obsolete, (y) after the occurrence of any event requiring a change
            in the most recent forms so delivered by it, and (z) from time to
            time upon reasonable request by the Company or the Agent. All forms
            or amendments described in the preceding sentence shall certify that
            such Lender is entitled to receive payments under this Agreement
            without deduction or withholding of any United States federal income
            taxes, unless an event (including without limitation any change in
            treaty, law or regulation) has occurred prior to the date on which
            any such delivery would otherwise be required which renders all such
            forms inapplicable or which would prevent such Lender from duly
            completing and delivering any such form or amendment with respect to
            it and such Lender advises the Company and the Agent that it is not
            capable of receiving payments without any deduction or withholding
            of United States federal income tax.

     (v)    For any period during which a Non-U.S. Lender has failed to provide
            the Company with an appropriate form pursuant to clause (iv) above
            (unless such failure is due to a change in treaty, law or
            regulation, or any change in the interpretation or administration
            thereof by any governmental authority, occurring subsequent to the
            date on which a form originally was required to be provided), such
            Non-U.S. Lender shall not be entitled to indemnification under this
            Section 3.5 with respect to Taxes imposed by the United States;
            provided that, should a Non-U.S. Lender which is otherwise exempt
            from or subject to a reduced rate of withholding tax become subject
            to Taxes because of its failure to deliver a form

                                       42



            required under clause (iv) above, the Company shall take such steps
            as such Non-U.S. Lender shall reasonably request to assist such
            Non-U.S. Lender to recover such Taxes.

     (vi)   Any Lender that is entitled to an exemption from or reduction of
            withholding tax with respect to payments under this Agreement or any
            Note pursuant to the law of any relevant jurisdiction or any treaty
            shall deliver to the Company (with a copy to the Agent), at the time
            or times prescribed by applicable law, such properly completed and
            executed documentation prescribed by applicable law as will permit
            such payments to be made without withholding or at a reduced rate.

     (vii)  If the U.S. Internal Revenue Service or any other governmental
            authority of the United States or any other country or any political
            subdivision thereof asserts a claim that the Agent did not properly
            withhold tax from amounts paid to or for the account of any Lender
            (because the appropriate form was not delivered or properly
            completed, because such Lender failed to notify the Agent of a
            change in circumstances which rendered its exemption from
            withholding ineffective, or for any other reason), such Lender shall
            indemnify the Agent fully for all amounts paid, directly or
            indirectly, by the Agent as tax, withholding therefor, or otherwise,
            including penalties and interest, and including taxes imposed by any
            jurisdiction on amounts payable to the Agent under this subsection,
            together with all costs and expenses related thereto (including
            attorneys fees of attorneys for the Agent, which attorneys may be
            employees of the Agent). The obligations of the Lenders under this
            Section 3.5(vii) shall survive the payment of the Obligations and
            termination of this Agreement.

     3.6.   Lender Statements; Survival of Indemnity. Each Lender shall deliver
a written statement of such Lender to the Company (with a copy to the Agent) as
to the amount due, if any, under Section 3.1, 3.2, 3.4 or 3.5. Such written
statement shall set forth in reasonable detail the calculations upon which such
Lender determined such amount and shall be final, conclusive and binding on the
Borrowers in the absence of manifest error. Determination of amounts payable
under such Sections in connection with a Eurocurrency Loan shall be calculated
as though each Lender funded its Eurocurrency Loan through the purchase of a
deposit of the type, currency and maturity corresponding to the deposit used as
a reference in determining the Eurocurrency Rate applicable to such Loan,
whether in fact that is the case or not. Unless otherwise provided herein, the
amount specified in the written statement of any Lender shall be payable on
demand after receipt by the Company of such written statement. The obligations
of the Borrowers under Sections 3.1, 3.2, 3.4 and 3.5 shall survive payment of
the Obligations and termination of this Agreement.

     3.7.   Alternative Lending Installation. To the extent reasonably possible,
each Lender shall designate an alternate Lending Installation with respect to
its Eurocurrency Loans to reduce any liability of the Borrowers to such Lender
under Sections 3.1, 3.2 and 3.5 or to avoid the unavailability of Eurocurrency
Advances under Section 3.3, so long as such designation is not, in the judgment
of such Lender, reasonably disadvantageous to such Lender. A Lender's
designation of an alternative Lending Installation shall not affect any
Borrower's rights under Section 2.23 to replace a Lender.

                                       43



                                   ARTICLE IV

                              CONDITIONS PRECEDENT

     4.1.   Effectiveness of Commitments. This Agreement shall not become
effective, nor shall any Lender be required to make any Credit Extension
hereunder, unless on or before November 30, 2003 the following conditions
precedent have been satisfied and the Company has furnished to the Agent with
sufficient copies for the Lenders:

            4.1.1    Copies of the articles or certificate of incorporation (or
     the equivalent thereof) of each Credit Party, in each case, together with
     all amendments thereto, and a certificate of good standing, each certified
     by the appropriate governmental officer in its jurisdiction of organization
     and accompanied by a certification by the Secretary or Assistant Secretary
     of such Credit Party that there have been no changes in the matters
     certified by such governmental officer since the date of such governmental
     officer's certification.

            4.1.2    Copies, certified by the Secretary or Assistant Secretary
     (or the equivalent thereof) of each Credit Party, in each case, of its
     by-laws and of its Board of Directors' resolutions and of resolutions or
     actions of any other body authorizing the execution of the Loan Documents
     to which such Credit Party is a party.

            4.1.3    An incumbency certificate, executed by the Secretary or
     Assistant Secretary (or the equivalent thereof) of each Credit Party which
     shall identify by name and title and bear the signatures of the Authorized
     Officers and any other officers of each such Credit Party authorized to
     sign the Loan Documents to which it is a party, upon which certificate the
     Agent and the Lenders shall be entitled to rely until informed of any
     change in writing by the applicable Credit Party.

            4.1.4    A certificate reasonably acceptable to the Agent signed by
     the chief financial officer of the Company, stating that on the Closing
     Date (a) no Default or Unmatured Default has occurred and is continuing,
     (b) all of the representations and warranties in Article V shall be true
     and correct (or in the case of representations and warranties applicable to
     AbilityOne prior to the date of the AbilityOne Acquisition, true and
     correct to the best of such officer's knowledge) as of such date and (c) no
     material adverse change in the business, Property, condition (financial or
     otherwise), operations or results of operations, performance or prospects
     of the Company and its Subsidiaries (including for the period commencing on
     September 12, 2003, AbilityOne and its Subsidiaries) taken as a whole has
     occurred since April 26, 2003 and, to the best of such officer's knowledge,
     of AbilityOne and its Subsidiaries taken as a whole has occurred since
     December 31, 2002.

            4.1.5    An initial compliance certificate, dated as of the Closing
     Date and reflecting calculations as of July 26, 2003, in substantially the
     form of Exhibit B hereto.

                                       44



            4.1.6    Written opinions of Matthew Levitt, counsel to the Credit
     Parties, in form and substance reasonably satisfactory to the Agent and
     addressed to the Lenders in substantially the forms of Exhibit A hereto.

            4.1.7    Duly executed originals of this Agreement from each of the
     Credit Parties parties thereto and duly executed originals of any Note(s)
     requested by a Lender pursuant to Section 2.15 payable to the order of each
     such requesting Lender, and copies of the AbilityOne Acquisition Agreement.

            4.1.8    Written money transfer instructions, in substantially the
     form of Exhibit D, addressed to the Agent and signed by an Authorized
     Officer of the Company, together with such other related money transfer
     authorizations as the Agent may have reasonably requested.

            4.1.9    The Agent shall have determined that (i) there is an
     absence of any material adverse change or disruption in primary or
     secondary loan syndication markets, financial markets or in capital markets
     generally that would likely impair syndication of the Loans hereunder, and
     (ii) the Company has fully cooperated with the Agent's syndication efforts,
     including, without limitation, by providing the Agent with information
     regarding the Company's and its Subsidiaries' operations and prospects and
     such other information as the Agent deems necessary to successfully
     syndicate the Loans hereunder.

            4.1.10   Evidence satisfactory to the Agent that the Existing Credit
     Agreement shall have been or shall simultaneously on the Closing Date be
     terminated (except for those provisions that expressly survive the
     termination thereof), all loans outstanding and other amounts owed to the
     lenders or agents thereunder shall have been, or shall simultaneously with
     the initial Advance hereunder, be paid in full, and all liens and security
     interests granted in connection therewith shall have been or shall
     simultaneously on the initial Borrowing Date be terminated.

            4.1.11   Evidence satisfactory to the Agent that (i) the issuance of
     Indebtedness by the Company under the Note Purchase Agreement and the
     Senior Notes has been approved by all necessary corporate action of the
     Company's directors, (ii) the Note Purchase Agreement and the issuance of
     the Senior Notes shall close contemporaneously with the initial funding
     under this Agreement, and (iii) the Company shall have received cash
     proceeds from the issuance of the Senior Notes in an aggregate principal
     amount not less than $350,000,000; and the Agent shall have received copies
     of the duly executed Note Purchase Agreement and the Senior Notes in form
     and substance satisfactory to the Agent and its counsel.

            4.1.12   Evidence satisfactory to the Agent that the Company has
     paid to the Agent and the Arrangers the fees agreed to in the fee letter
     dated October 2, 2003, among the Agent, the Arrangers and the Company.

            4.1.13   Such other documents as any Lender or its counsel may have
     reasonably requested, including, without limitation, those documents set
     forth in Exhibit G hereto.

                                       45



     4.2.   Each Credit Extension. The Lenders shall not (except as otherwise
set forth in Section 2.3.4 with respect to Revolving Loans extended for the
purpose of repaying Swing Line Loans) be required to make any Credit Extension
unless on the applicable Credit Extension Date:

            4.2.1    There exists no Default or Unmatured Default.

            4.2.2    The representations and warranties contained in Article V
     are true and correct as of such Credit Extension Date except to the extent
     any such representation or warranty is stated to relate solely to an
     earlier date, in which case such representation or warranty shall have been
     true and correct on and as of such earlier date.

            4.2.3    All legal matters incident to the making of such Credit
     Extension shall be satisfactory to the Lenders and their counsel.

     Each Borrowing Notice, request for issuance of a Facility LC or Swing Line
Borrowing Notice, as the case may be, or request for Modification of a Facility
LC, with respect to each such Credit Extension shall constitute a representation
and warranty by the applicable Borrower that the conditions contained in
Sections 4.2.1, 4.2.2 and 4.2.3 have been satisfied.

     4.3.   Initial Advance to Each New Subsidiary Borrower. The Lenders shall
not be required to make a Credit Extension hereunder to a new Subsidiary
Borrower added after the Closing Date unless (a) the conditions contained in
Section 4.2 have been satisfied and (b) the Company has furnished or caused to
be furnished to the Agent with sufficient copies for the Lenders:

            4.3.1    The Assumption Letter executed and delivered by such
     Subsidiary Borrower and containing the acknowledgment of the Agent and the
     written consent of the Borrowers, as contemplated by Section 2.25.

            4.3.2    Copies of the articles or certificate of incorporation (or
     the equivalent thereof) of such Subsidiary Borrower, together with all
     amendments thereto, and a certificate of good standing, each certified by
     the appropriate governmental officer in its jurisdiction of organization
     and accompanied by a certification by the Secretary or Assistant Secretary
     of such Subsidiary Borrower that there have been no changes in the matters
     certified by such governmental officer since the date of such governmental
     officer's certification.

            4.3.3    Copies, certified by the Secretary or Assistant Secretary
     (or the equivalent thereof) of such Subsidiary Borrower of its by-laws and
     of its Board of Directors' resolutions and of resolutions or actions of any
     other body authorizing the execution of the Loan Documents to which such
     Subsidiary Borrower is a party.

            4.3.4    An incumbency certificate, executed by the Secretary or
     Assistant Secretary (or the equivalent thereof) of such Subsidiary Borrower
     which shall identify by name and title and bear the signatures of the
     Authorized Officers and any other officers of such Subsidiary Borrower
     authorized to sign the Loan Documents to which it is a party, upon which
     certificate the Agent and the Lenders shall be entitled to rely until
     informed of any change in writing by such Subsidiary Borrower.

                                       46



            4.3.5    An opinion of counsel to such Subsidiary Borrower,
     substantially in the form of Exhibit E hereto.

                                    ARTICLE V

                         REPRESENTATIONS AND WARRANTIES

     Each Borrower represents and warrants to each Lender, LC Issuer and the
Agent as of each of (i) the Closing Date and (ii) each other date as required by
Section 4.2:

     5.1.   Existence and Standing. Each of the Company and its Subsidiaries is
a corporation, partnership (in the case of Subsidiaries only) or limited
liability company duly and properly incorporated or organized, as the case may
be, validly existing and (to the extent such concept applies to such entity) in
good standing under the laws of its jurisdiction of incorporation or
organization, (ii) has all requisite corporate, partnership or limited liability
company power and authority, as the case may be, to own, operate and encumber
its Property and (iii) is qualified to do business and is in good standing (to
the extent such concept applies to such entity) in all jurisdictions where the
nature of the business conducted by it makes such qualification necessary and
where failure to so qualify would reasonably be expected to have a Material
Adverse Effect.

     5.2.   Authorization and Validity. Each Credit Party has the requisite
corporate, partnership or limited liability company power and authority and
legal right to execute and deliver the Transaction Documents to which it is a
party and to perform its obligations thereunder. The execution and delivery by
each Credit Party of the Transaction Documents to which it is a party and the
performance of its obligations thereunder have been duly authorized by proper
corporate, partnership or limited liability company, as the case may be,
proceedings, and the Transaction Documents to which each Credit Party is a party
constitute legal, valid and binding obligations of such Credit Party enforceable
against such Credit Party in accordance with their terms, except as
enforceability may be limited by (i) bankruptcy, insolvency, fraudulent
conveyances, reorganization or similar laws relating to or affecting the
enforcement of creditors' rights generally; (ii) general equitable principles
(whether considered in a proceeding in equity or at law); and (iii) requirements
of reasonableness, good faith and fair dealing.

     5.3.   No Conflict; Government Consent. Neither the execution and delivery
by any Credit Party of the Transaction Documents to which it is a party, nor the
consummation by such Credit Party of the transactions therein contemplated, nor
compliance by such Credit Party with the provisions thereof will violate (i) any
applicable law, rule, regulation, order, writ, judgment, injunction, decree or
award binding on such Credit Party or (ii) such Credit Party's articles or
certificate of incorporation, partnership agreement, certificate of partnership,
articles or certificate of organization, by-laws, or operating agreement or
other management agreement, as the case may be, or (iii) the provisions of any
indenture, instrument or agreement to which such Credit Party is a party or is
subject, or by which it, or its Property, is bound, or conflict with, or
constitute a default under, or result in, or require, the creation or imposition
of any Lien in, of or on the Property of such Credit Party pursuant to the terms
of, any such indenture, instrument or agreement. No order, consent,
adjudication, approval, license, authorization, or validation of, or filing,
recording or registration with, or exemption by, or other action in respect of
any governmental or public body or authority, or any subdivision thereof, which
has not been

                                       47



obtained by any Credit Party, is required to be obtained by such Credit Party in
connection with the execution and delivery of the Transaction Documents, the
borrowings under this Agreement, the payment and performance by the Credit
Parties of the Obligations or the legality, validity, binding effect or
enforceability of any of the Transaction Documents.

     5.4.   Financial Statements. The April 26, 2003 consolidated financial
statements of the Company and its Subsidiaries (other than AbilityOne and its
Subsidiaries) and, to the best of the Company's knowledge, the December 31, 2002
consolidated financial statements of AbilityOne and its Subsidiaries, in each
case heretofore delivered to the Agent and the Lenders, were prepared in
accordance with generally accepted accounting principles in effect on the date
such statements were prepared and fairly present the consolidated financial
condition and operations of the Company and its Subsidiaries (other than
AbilityOne and its Subsidiaries) and, to the best of the Company's knowledge,
AbilityOne and its Subsidiaries, as applicable, at such date and the
consolidated results of their operations for the period then ended.

     5.5.   Material Adverse Change. Since April 26, 2003, there has been no
change in the business, Property, condition (financial or otherwise), operations
or results of operations, performance or prospects of the Company and its
Subsidiaries (including for the period commencing on September 12, 2003,
AbilityOne and its Subsidiaries) taken as a whole which could reasonably be
expected to have a Material Adverse Effect. To the best of the Company's
knowledge, since December 31, 2002, there has been no change in the business,
Property, condition (financial or otherwise), operations or results of
operations, performance or prospects of AbilityOne and its Subsidiaries taken as
a whole which could reasonably be expected to have a Material Adverse Effect.

     5.6.   Taxes. The Company and the Subsidiaries have filed all United States
federal tax returns and all other tax returns which are required to be filed and
have paid all taxes due pursuant to said returns or pursuant to any assessment
received by the Company or any Subsidiaries, except in respect of such taxes, if
any, as are being contested in good faith and as to which adequate reserves have
been provided in accordance with Agreement Accounting Principles and as to which
no Lien exists (except as permitted by Section 6.15.1) and as to which the
failure to file such return or pay such taxes could not reasonably be expected
to have a Material Adverse Effect. The United States income tax returns of the
Company and the Subsidiaries (other than those that became Subsidiaries after
April 25, 1998) have been audited by the Internal Revenue Service through the
fiscal year ended April 25, 1998. No liens have been filed and no claims are
being asserted with respect to such taxes. The charges, accruals and reserves on
the books of the Company and the Subsidiaries in respect of any taxes or other
governmental charges are adequate.

     5.7.   Litigation and Contingent Obligations. There is no litigation,
arbitration, governmental investigation, proceeding or inquiry pending or, to
the knowledge of any of their officers, threatened against or affecting the
Company or any Subsidiaries which could reasonably be expected to have a
Material Adverse Effect or which seeks to prevent, enjoin or delay the making of
any Loans. Other than any liability incident to any litigation, arbitration or
proceeding which could not reasonably be expected to have a Material Adverse
Effect, the Company and its Subsidiaries has no material contingent obligations
required to be reflected on

                                       48



the Company's consolidated balance sheet in accordance with generally accepted
accounting principles and not provided for or disclosed in the financial
statements referred to in Section 5.4.

     5.8.   Subsidiaries. Schedule 5.8 contains an accurate list of all
Subsidiaries of the Company as of the Closing Date, setting forth their
respective jurisdictions of organization and the percentage of their respective
capital stock or other ownership interests owned by the Company or other
Subsidiaries. All of the issued and outstanding shares of capital stock or other
ownership interests of such Subsidiaries have been (to the extent such concepts
are relevant with respect to such ownership interests) duly authorized and
issued and are fully paid and non-assessable.

     5.9.   ERISA. The Unfunded Liabilities of all Single Employer Plans do not
in the aggregate exceed $10,000,000. Neither the Company nor any other member of
the Controlled Group has incurred, or is reasonably expected to incur, pursuant
to Section 4201 of ERISA, any withdrawal liability to Multiemployer Plans. Each
Plan complies in all material respects with all applicable requirements of law
and regulations. No Reportable Event has occurred with respect to any Plan.
Neither the Company nor any other member of the Controlled Group has withdrawn
from any Multiemployer Plan within the meaning of Title IV of ERISA or initiated
steps to do so, and, to the knowledge of the Company, no steps have been taken
to reorganize or terminate, within the meaning of Title IV of ERISA, any
Multiemployer Plan.

     5.10.  Accuracy of Information. The information, exhibits or reports
furnished by the Company or any Subsidiary to the Agent or to any Lender in
connection with the negotiation of, or compliance with, the Transaction
Documents do not contain any material misstatement of fact or omit to state a
material fact or any fact necessary to make the statements contained therein, in
light of the circumstances under which they were made, not misleading. The
projected and pro-forma financial information furnished by or on behalf of any
Credit Party to the Agent or any Lender in connection with the negotiation of,
or compliance with, the Transaction Documents, were prepared in good faith based
upon assumptions believed to be reasonable at the time.

     5.11.  Regulation U. Neither the Company nor any Subsidiary is engaged
principally, or as one of its important activities, in the business of extending
credit for the purpose, whether immediate, incidental or ultimate of buying or
carrying margin stock (as defined in Regulation U), and after applying the
proceeds of each Credit Extension, margin stock (as defined in Regulation U)
constitutes less than 25% of the value of those assets of the Company and the
Subsidiaries which are subject to any limitation on sale, pledge, or any other
restriction hereunder.

     5.12.  Material Agreements. Neither the Company nor any Subsidiary is a
party to any agreement or instrument or subject to any charter or other
corporate restriction which could reasonably be expected to have a Material
Adverse Effect. Neither the Company nor any Subsidiary is in default in the
performance, observance or fulfillment of any of the obligations, covenants or
conditions contained in (i) any agreement or instrument to which it is a party,
which default could reasonably be expected to have a Material Adverse Effect or
(ii) any agreement or instrument evidencing or governing Indebtedness.

                                       49



     5.13.  Compliance With Laws. The Company and the Subsidiaries have complied
in all material respects with all applicable statutes, rules, regulations,
orders and restrictions of any domestic or foreign government or any
instrumentality or agency thereof having jurisdiction over the conduct of their
respective businesses or the ownership of their respective Property except for
any failure to comply with any of the foregoing which could not reasonably be
expected to have a Material Adverse Effect.

     5.14.  Ownership of Properties. The Company and the Subsidiaries have good
title, free of all Liens other than those permitted by Section 6.15, to all of
the assets reflected in the Company's most recent consolidated financial
statements provided to the Agent, as owned by the Company and the Subsidiaries
except (i) assets sold or otherwise transferred as permitted under Section 6.12
and (ii) to the extent the failure to hold such title could not reasonably be
expected to have a Material Adverse Effect.

     5.15.  Plan Assets; Prohibited Transactions. None of the Credit Parties is
an entity deemed to hold "plan assets" within the meaning of 29 C.F.R. Section
2510.3-101 of an employee benefit plan (as defined in Section 3(3) of ERISA)
which is subject to Title I of ERISA or any plan (within the meaning of Section
4975 of the Code), and assuming the accuracy of the representations and
warranties made in Section 9.12 and in any assignment made pursuant to Section
12.3.3, neither the execution of this Agreement nor the making of Loans
hereunder gives rise to a prohibited transaction within the meaning of Section
406 of ERISA or Section 4975 of the Code.

     5.16.  Environmental Matters. In the ordinary course of its business, the
officers of the Company and the Subsidiaries consider the effect of
Environmental Laws on the business of the Company and the Subsidiaries, in the
course of which they identify and evaluate potential risks and liabilities
accruing to the Company or any Subsidiary due to Environmental Laws. On the
basis of this consideration, the Company has concluded that Environmental Laws
cannot reasonably be expected to have a Material Adverse Effect. Neither the
Company nor any Subsidiary has received any notice to the effect that its
operations are not in material compliance with any of the requirements of
applicable Environmental Laws or are the subject of any federal or state
investigation evaluating whether any remedial action is needed to respond to a
release of any toxic or hazardous waste or substance into the environment, which
non-compliance or remedial action could reasonably be expected to have a
Material Adverse Effect.

     5.17.  Investment Company Act. Neither the Company nor any Subsidiary is an
"investment company" or a company "controlled" by an "investment company",
within the meaning of the Investment Company Act of 1940, as amended.

     5.18.  Public Utility Holding Company Act. Neither the Company nor any
Subsidiary is 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", as such terms are defined in the Public Utility Holding
Company Act of 1935, as amended.

     5.19.  Insurance. The Company maintains, and has caused each Subsidiary to
maintain, with financially sound and reputable insurance companies insurance on
all their Property in such

                                       50



amounts, subject to such deductibles and self-insurance retentions and covering
such properties and properties and risks as is consistent with sound business
practice.

     5.20.  Solvency. After giving effect to (i) the Credit Extensions to be
made on the Closing Date or such other date as Credit Extensions requested
hereunder are made, (ii) the other transactions contemplated by this Agreement
and the other Transaction Documents, and (iii) the payment and accrual of all
transaction costs with respect to the foregoing, the Company and its
Subsidiaries taken as a whole are Solvent.

     5.21.  No Default or Unmatured Default. No Default or Unmatured Default has
occurred and is continuing.

     5.22.  Reportable Transaction. No Borrower intends to treat the Advances
and related transactions as being a "reportable transaction" (within the meaning
of the Treasury Regulation Section 1.6011-4). In the event any Borrower
determines to take any action inconsistent with such intention, it will promptly
notify the Agent thereof. Each Borrower acknowledges that one or more of the
Lenders may treat its Advances as part of a transaction that is subject to
Treasury Regulation Section 1.6011-4 or Section 301.6112-1, and the Agent and
such Lender or Lenders, as applicable, may file such IRS forms or maintain such
lists and other records as they may determine is required by such Treasury
Regulations.

     5.23.  Post-Retirement Benefits. The present value of the expected cost of
post-retirement medical and insurance benefits payable by the Company and its
Subsidiaries to its employees and former employees, as estimated by the Company
in accordance with procedures and assumptions deemed reasonable by the Required
Lenders is zero.

     5.24.  AbilityOne Acquisition. (i) No material breach, default or waiver of
any term or provision of the AbilityOne Acquisition Agreement by the Company or
any of its Subsidiaries, which are parties thereto, or, to the best of the
Company's knowledge, the other parties thereto, has occurred (except for such
breaches, defaults and waivers, if any, consented to in writing by the Agent);
and (ii) the Company owns, directly or indirectly, not less than one hundred
percent of the capital stock of AbilityOne.

                                   ARTICLE VI

                                    COVENANTS

     During the term of this Agreement, unless the Required Lenders shall
otherwise consent in writing:

     6.1.   Financial Reporting. The Company will maintain, for itself and each
Subsidiary, a system of accounting established and administered in accordance
with generally accepted accounting principles, and furnish to the Lenders:

            6.1.1    Within 90 days after the close of each of the Company's
     fiscal years, commencing with the fiscal year ending April 24, 2004,
     financial statements prepared in accordance with Agreement Accounting
     Principles on a consolidated basis, for itself and its Subsidiaries,
     including balance sheets as of the end of such period, statements of

                                       51



     income and statements of cash flows, accompanied by (a) an audit report,
     unqualified as to scope, of a nationally recognized firm of independent
     public accountants or other independent public accountants reasonably
     acceptable to the Required Lenders; (b) any management letter prepared by
     said accountants, and (c) a certificate of said accountants that, in the
     course of their examination necessary for their certification of the
     foregoing, they have obtained no knowledge of any Default or Unmatured
     Default, or if, in the opinion of such accountants, any Default or
     Unmatured Default shall exist, stating the nature and status thereof.

            6.1.2    Within 45 days after the close of the first three quarterly
     periods of each of the Company's fiscal years, commencing with the fiscal
     quarter ending October 25, 2003, for the Company and its Subsidiaries,
     consolidated unaudited balance sheets as at the close of each such period
     and consolidated statements of income and a statement of cash flows for the
     period from the beginning of such fiscal year to the end of such quarter,
     all certified as to fairness of presentation, compliance with Agreement
     Accounting Principles and consistency by its chief financial officer or
     treasurer.

            6.1.3    Together with the financial statements required under
     Sections 6.1.1 and 6.1.2, a compliance certificate in substantially the
     form of Exhibit B signed by its chief financial officer or treasurer
     showing the calculations necessary to determine compliance with this
     Agreement, which certificate shall also state that no Default or Unmatured
     Default exists, or if any Default or Unmatured Default exists, stating the
     nature and status thereof, and a certificate executed and delivered by the
     chief executive officer or chief financial officer stating that the Company
     and each of its respective principal officers are in compliance with all
     requirements of Section 302 and Section 906 of the Sarbanes-Oxley Act of
     2002 and all rules and regulations related thereto.

            6.1.4    Within 120 days after the close of each of the Company's
     fiscal years, a copy of the plan and forecast (including a projected
     balance sheet, income statements and funds flow statements, and any
     narrative prepared with respect thereto) of the Company and its
     Subsidiaries for the upcoming fiscal year prepared in such detail as shall
     be reasonably satisfactory to the Agent.

            6.1.5    Within 270 days after the close of each fiscal year of the
     Company, if applicable, a copy of the actuarial report showing the Unfunded
     Liabilities of each Single Employer Plan as of the valuation date occurring
     in such fiscal year, certified by an actuary enrolled under ERISA.

            6.1.6    As soon as possible and in any event within 10 days after
     any Borrower knows that any Reportable Event has occurred with respect to
     any Plan, a statement, signed by the chief financial officer or treasurer
     of the Company, describing said Reportable Event and the action which the
     Company proposes to take with respect thereto.

            6.1.7    As soon as possible and in any event within 10 days after
     receipt by the Company or any Subsidiary, a copy of (a) any notice or claim
     to the effect that the Company or any Subsidiary is or may be liable to any
     Person as a result of the release by

                                       52



     the Company, any Subsidiary, or any other Person of any toxic or hazardous
     waste or substance into the environment, and (b) any notice alleging any
     violation of any Environmental Law by the Company or any Subsidiary, which,
     in either case, could reasonably be expected to have a Material Adverse
     Effect.

            6.1.8    Promptly upon the furnishing thereof to the shareholders of
     the Company, copies of all financial statements, reports and proxy
     statements so furnished.

            6.1.9    Promptly upon the filing thereof, copies of all
     registration statements and annual, quarterly, monthly or other regular
     reports which the Company or any Subsidiary files with the SEC, including,
     without limitation, all certifications and other filings required by
     Section 302 and Section 906 of the Sarbanes-Oxley Act of 2002 and all rules
     and regulations related thereto.

            6.1.10   Prior to the execution thereof, draft copies of all
     material amendments to the Note Purchase Agreement and the Senior Notes.

            6.1.11   Such other information (including non-financial
     information) as the Agent or any Lender may from time to time reasonably
     request.

     6.2.   Use of Proceeds. Each Borrower will use (i) the proceeds of the Term
Loans solely for repayment of a portion of the Indebtedness outstanding under
the Existing Credit Agreement, and (ii) the proceeds of the Revolving Loans for
general corporate purposes including, without limitation, for working capital,
Permitted Acquisitions, repayment of Indebtedness outstanding under the Existing
Credit Agreement and to pay fees and expenses incurred in connection with this
Agreement). The Borrowers shall use the proceeds of Credit Extensions in
compliance with all applicable legal and regulatory requirements and any such
use shall not result in a violation of any such requirements, including, without
limitation, Regulation U and X, the Securities Act of 1933, as amended, and the
Securities Exchange Act of 1934, as amended, and the regulations promulgated
thereunder.

     6.3.   Notice of Default. Within five (5) Business Days after an Authorized
Officer of any Borrower becomes aware thereof, such Borrower will, and the
Company will cause each other Subsidiary to, give notice in writing to the
Lenders of the occurrence of (i) any Default or Unmatured Default, (ii) the
occurrence of any Off-Balance Sheet Trigger Event or any material default under
or with respect to any Material Indebtedness or any material service agreement
to which the Company or any Subsidiary is a party (together with copies of all
default notices, if any, pertaining thereto) and (iii) any other development,
financial or otherwise, which could reasonably be expected to have a Material
Adverse Effect.

     6.4.   Conduct of Business. Each Borrower will, and the Company will cause
each other Subsidiary to, carry on and conduct its business in substantially the
same manner and in substantially the same fields of enterprise as conducted by
the Company or its Subsidiaries as of the Closing Date, and do all things
necessary to remain duly incorporated or organized, validly existing and (to the
extent such concept applies to such entity) in good standing as a domestic
corporation, partnership or limited liability company in its jurisdiction of
incorporation or organization, as the case may be, as in effect on the Closing
Date, and, except to the extent

                                       53



failure to do so could not reasonably be expected to have a Material Adverse
Effect, maintain all requisite authority to conduct its business in each
jurisdiction in which its business is conducted.

     6.5.   Taxes. Each Borrower will, and the Company will cause each other
Subsidiary to, timely file complete and correct United States federal and
applicable foreign, state and local tax returns required by law and pay when due
all taxes, assessments and governmental charges and levies upon it or its
income, profits or Property, except (i) those which are being contested in good
faith by appropriate proceedings and with respect to which adequate reserves
have been set aside in accordance with Agreement Accounting Principles and (ii)
those taxes, assessments, charges and levies which by reason of the amount
involved or the remedies available to the applicable taxing authority could not
reasonably be expected to have a Material Adverse Effect.

     6.6.   Insurance. Each Borrower will, and the Company will cause each other
Subsidiary to, maintain with financially sound and reputable insurance companies
insurance on all their Property in such amounts, subject to such deductibles and
self-insurance retentions, and covering such properties and risks as is
consistent with sound business practice, and the Company will furnish to any
Lender upon request full information as to the insurance carried.

     6.7.   Compliance with Laws. Each Borrower will, and the Company will cause
each other Subsidiary to, comply with all laws, rules, regulations, orders,
writs, judgments, injunctions, decrees or awards to which it may be subject
including, without limitation, all Environmental Laws and Section 302 and
Section 906 of the Sarbanes-Oxley Act of 2002, except where the failure to do
so, individually or in the aggregate, could not reasonably be expected to have a
Material Adverse Effect.

     6.8.   Maintenance of Properties. Subject to Section 6.12, each Borrower
will, and the Company will cause each other Subsidiary to, do all things
necessary to maintain, preserve, protect and keep its Property used in the
operation of its business in good repair, working order and condition (ordinary
wear and tear excepted), and make all necessary and proper repairs, renewals and
replacements so that its business carried on in connection therewith may be
properly conducted at all times, except where the failure to do so, individually
or in the aggregate, could not reasonably be expected to have a Material Adverse
Effect.

     6.9.   Inspection; Keeping of Books and Records. Each Borrower will, and
the Company will cause each other Subsidiary to, permit the Agent and the
Lenders, by their respective representatives and agents, to inspect any of the
Property, books and financial records of the Company and each Subsidiary, to
examine and make copies of the books of accounts and other financial records of
the Company and each Subsidiary, and to discuss the affairs, finances and
accounts of the Company and each Subsidiary with, and to be advised as to the
same by, their respective officers at such reasonable times and intervals as the
Agent or any Lender may designate. Each Borrower shall keep and maintain, and
the Company shall cause each of the other Subsidiaries to keep and maintain, in
all material respects, complete, accurate and proper books of record and account
in which entries in conformity with Agreement Accounting Principles shall be
made of all dealings and transactions in relation to their respective businesses
and activities. If a Default has occurred and is continuing, the Company, upon
the Agent's request, shall turn over copies of any such records to the Agent or
its representatives.

                                       54



     6.10.  Dividends. No Borrower will, nor will the Company permit any other
Subsidiary to, declare or pay any dividend or make any distribution on its
capital stock (other than dividends payable in its own capital stock) or redeem,
repurchase or otherwise acquire or retire any of its capital stock at any time
outstanding, except that (i) any Subsidiary of the Company may declare and pay
dividends or make distributions to any Borrower or to a Guarantor and (ii) the
Company may declare and pay dividends on its capital stock, and may repurchase
shares of its capital stock pursuant to the share repurchase program described
in note 11 to its audited financial statements for the year ended April 26,
2003, provided that no Default or Unmatured Default shall exist before or after
giving effect to such dividends or be created as a result thereof.

     6.11.  Merger. No Borrower will, nor will the Company permit any other
Subsidiary to, merge or consolidate with or into any other Person, except that:

            6.11.1   (x) A Subsidiary Borrower may merge into (i) the Company,
     provided the Company shall be the continuing or surviving corporation, or
     (ii) another Subsidiary Borrower or any other Person that becomes a
     Subsidiary Borrower promptly upon the completion of the applicable merger
     or consolidation, and (y) a Guarantor may merge into (i) any Borrower,
     provided such Borrower shall be the continuing or surviving corporation, or
     (ii) another Guarantor or any other Person that becomes a Guarantor
     promptly upon the completion of the applicable merger or consolidation.

            6.11.2   A Subsidiary that is not a Guarantor or Subsidiary Borrower
     and not required to be a Guarantor may merge or consolidate with or into
     the Company or any Wholly-Owned Subsidiary.

            6.11.3   Any Subsidiary of the Company may consummate any merger or
     consolidation in connection with any Permitted Acquisition.

     6.12.  Sale of Assets. No Borrower will, nor will the Company permit any
other Subsidiary to, lease, sell, transfer or otherwise dispose of its Property
to any other Person, except:

            6.12.1   Sales of inventory in the ordinary course of business.

            6.12.2   A disposition of assets (i) by the Company or any
     Subsidiary to any Credit Party, (ii) by a Subsidiary that is not a Credit
     Party and not required to be a Guarantor to any other Subsidiary and (iii)
     subject to Section 6.24, by any Credit Party to any Foreign Subsidiary.

            6.12.3   A disposition of obsolete property or property no longer
     used in the business of the Company or any Subsidiary.

            6.12.4   So long as no Default or Unmatured Default has occurred, a
     disposition of assets for an aggregate purchase price of up to $350,000,000
     outstanding at any time pursuant to, and in accordance with, the
     Receivables Purchase Facilities.

                                       55



            6.12.5   The license or sublicense of software, trademarks, and
     other intellectual property in the ordinary course of business which do not
     materially interfere with the business of the Company or any Subsidiary.

            6.12.6   Consignment arrangements (as consignor or consignee) or
     similar arrangements for the sale of goods in the ordinary course of
     business and consistent with the past practices of the Company and the
     Subsidiaries.

            6.12.7   So long as no Default or Unmatured Default shall have
     occurred and is continuing or would result therefrom, leases, sales or
     other dispositions of its Property that (i) are for consideration
     consisting at least seventy-five percent (75%) of cash, (ii) are for not
     less than fair market value, and (iii) together with all other Property of
     the Company and the Subsidiaries previously leased, sold or disposed of
     (other than dispositions otherwise permitted by this Section 6.12) as
     permitted by this Section 6.12.7 during the twelve-month period ending with
     the month in which any such lease, sale or other disposition occurs, do not
     constitute in the aggregate a Substantial Portion of the Property of the
     Company and its Subsidiaries.

     6.13.  Investments and Acquisitions. No Borrower will, nor will the Company
permit any other Subsidiary to, make or suffer to exist any Investments
(including without limitation, loans and advances to, and other Investments in,
Subsidiaries), or to create any Subsidiary or to become or remain a partner in
any partnership or joint venture, or to make any Acquisition of any Person,
except:

            6.13.1   Subject to Section 6.24, cash and Cash Equivalent
     Investments and other Investments that comply with the Company's investment
     policy as in effect on the Closing Date, a copy of which the Company has
     provided to the Agent.

            6.13.2   Existing Investments in Subsidiaries and other Investments
     in existence on the Closing Date and described in Schedule 6.13 and any
     renewal or extension of any such Investments that does not increase the
     amount of the Investment being renewed or extended as determined as of such
     date of renewal or extension.

            6.13.3   Investments in trade receivables or received in connection
     with the bankruptcy or reorganization of suppliers and customers and in
     settlement of delinquent obligations of, and other disputes with, customers
     and suppliers arising in the ordinary course of business.

            6.13.4   Investments consisting of intercompany loans permitted
     under Section 6.14.6.

            6.13.5   All Acquisitions meeting the following requirements or
     otherwise approved by the Required Lenders (each such Acquisition
     constituting a "Permitted Acquisition"):

     (i)    as of the date of the consummation of such Acquisition, no Default
            or Unmatured Default shall have occurred and be continuing or would
            result from such

                                       56



            Acquisition, and the representation and warranty contained in
            Section 5.11 shall be true both before and after giving effect to
            such Acquisition;

     (ii)   such Acquisition is consummated on a non-hostile basis pursuant to a
            negotiated acquisition agreement approved by the board of directors
            or other applicable governing body of the seller or entity to be
            acquired, and no material challenge to such Acquisition (excluding
            the exercise of appraisal rights) shall be pending or threatened in
            writing by any shareholder or director of the seller or entity to be
            acquired;

     (iii)  the business to be acquired in such Acquisition is similar or
            related to one or more of the lines of business in which the Company
            and the Subsidiaries are engaged on the Closing Date;

     (iv)   as of the date of the consummation of such Acquisition, all material
            governmental and corporate approvals required in connection
            therewith shall have been obtained;

     (v)    the Purchase Price for each such Acquisition together with the
            Purchase Price of all other Permitted Acquisitions shall not exceed
            an amount equal to $100,000,000 in any twelve-month period
            (excluding from the calculation thereof during the twelve-month
            period immediately following the AbilityOne Acquisition, the
            Purchase Price of the AbilityOne Acquisition);

     (vi)   with respect to each Permitted Acquisition with respect to which the
            Purchase Price shall be greater than $30,000,000, not less than
            fifteen (15) days prior to the consummation of such Permitted
            Acquisition, the Company shall have delivered to the Agent a pro
            forma consolidated balance sheet, income statement and cash flow
            statement of the Company and the Subsidiaries (the "Acquisition Pro
            Forma"), based on the Company's most recent financial statements
            delivered pursuant to Section 6.1.1 and using historical financial
            statements for the acquired entity provided by the seller(s) or
            which shall be complete and shall fairly present, in all material
            respects, the financial condition and results of operations and cash
            flows of the Company and its Subsidiaries in accordance with
            Agreement Accounting Principles, but taking into account such
            Permitted Acquisition and the repayment of any Indebtedness in
            connection with such Permitted Acquisition, and such Acquisition Pro
            Forma shall reflect that, on a pro forma basis, the Company would
            have been in compliance with the financial covenants set forth in
            Sections 6.20, 6.21 and 6.22 for the four fiscal quarter period
            reflected in the compliance certificate most recently delivered to
            the Agent pursuant to Section 6.1.3 prior to the consummation of
            such Permitted Acquisition (giving effect to such Permitted
            Acquisition as if made on the first day of such period); and

     (vii)  prior to (or, with respect to clause (A) below, concurrently with)
            the consummation of each such Permitted Acquisition, the Company
            shall deliver to the Agent a documentation, information and
            certification package in form and substance acceptable to the Agent,
            including, without limitation;

                                       57



            (A)  to the extent required under Section 6.23, a supplement to the
                 Guaranty if the Permitted Acquisition is an Acquisition of
                 equities and the target company will not be merged with the
                 Company or any other Borrower;

            (B)  the financial statements of the target entity together with any
                 pro forma financial statements, projections, forecasts and
                 budgets prepared by the Company in connection therewith;

            (C)  a copy of the acquisition agreement for such Acquisition,
                 together with drafts of the material schedules thereto;

            (D)  a copy of all documents, instruments and agreements with
                 respect to any Indebtedness to be incurred or assumed in
                 connection with such Acquisition; and

            (E)  such other documents or information as shall be reasonably
                 requested by the Agent or any Lender.

            6.13.6   Investments constituting promissory notes and other
     non-cash consideration received in connection with any transfer of assets
     permitted under Section 6.12.7.

            6.13.7   Customer advances in the ordinary course of business.

            6.13.8   Extensions of customer or trade credit in the ordinary
     course of business consistent with the Company's and the Subsidiaries' past
     practices.

            6.13.9   Investments constituting Rate Management Transactions
     permitted under Section 6.17.

            6.13.10  Subject to Section 6.24, the creation or formation of new
     Subsidiaries (as opposed to the Acquisition of new Subsidiaries), so long
     as all applicable requirements under Section 6.23 shall have been, or
     concurrently therewith are, satisfied.

            6.13.11  Investments constituting expenditures for any purchase or
     other acquisition of any asset which would be classified as a fixed or
     capital asset on a consolidated balance sheet of the Company and its
     Subsidiaries prepared in accordance with Agreement Accounting Principles to
     the extent otherwise permitted under this Agreement.

            6.13.12  Investments by (i) the Company and its Subsidiaries in any
     Credit Party, (ii) any Subsidiary which is not a Credit Party and is not
     required to be a Guarantor in any other Subsidiary which is not a Credit
     Party and is not required to be a Guarantor and (iii) subject to Section
     6.24, any Credit Party in any Foreign Subsidiary.

            6.13.13  Deposits made in the ordinary course of business and
     referred to in Sections 6.15.4, 6.15.6 and 6.15.7.

                                       58



            6.13.14  (a) cash Investments constituting the initial
     capitalization of an SPV in connection with the consummation of any
     Receivables Purchase Facility permitted under this Agreement in an
     aggregate amount (calculated based on aggregate of the initial cash
     capitalization amount of each such SPV) not to exceed $10,000,000, and (b)
     other Investments in connection with any Receivables Purchase Facility
     permitted under this Agreement (including intercompany Indebtedness
     permitted under Section 6.14.4(b)).

            6.13.15  Additional Investments in an amount not to exceed
     $10,000,000 at any one time outstanding.

     6.14.  Indebtedness. No Borrower will, nor will the Company permit any
other Subsidiary to, create, incur or suffer to exist any Indebtedness, except:

            6.14.1   The Obligations.

            6.14.2   Indebtedness existing on the Closing Date and described in
     Schedule 6.14, and any replacement, renewal, refinancing or extension of
     any such Indebtedness that (i) does not exceed the aggregate principal
     amount (plus accrued interest and any applicable premium and associated
     fees and expenses) of the Indebtedness being replaced, renewed, refinanced
     or extended, (ii) does not have a Weighted Average Life to Maturity at the
     time of such replacement, renewal, refinancing or extension that is less
     than the Weighted Average Life to Maturity of the Indebtedness being
     replaced, renewed, refinanced or extended and (iii) does not rank at the
     time of such replacement, renewal, refinancing or extension senior to the
     Indebtedness being replaced, renewed, refinanced or extended.

            6.14.3   Indebtedness arising under Rate Management Transactions
     permitted under Section 6.17;

            6.14.4   (a) Amounts owing under the Receivables Purchase
     Facilities, the principal amount of which shall not exceed $350,000,000 in
     the aggregate at any time and (b) subordinated intercompany Indebtedness
     owing to the Company or any Subsidiary of the Company by any SPV in
     connection with a Receivables Purchase Facility permitted hereunder.

            6.14.5   Secured or unsecured purchase money Indebtedness (including
     Capitalized Leases) incurred by the Company or any Subsidiary after the
     Closing Date to finance the acquisition of assets used in its business, if
     (1) at the time of such incurrence, no Default or Unmatured Default has
     occurred and is continuing or would result from such incurrence, (2) such
     Indebtedness does not exceed the lower of the fair market value or the cost
     of the applicable fixed assets on the date acquired, (3) such Indebtedness
     does not exceed $10,000,000 in the aggregate outstanding at any time, and
     (4) any Lien securing such Indebtedness is permitted under Section 6.15
     (such Indebtedness being referred to herein as "Permitted Purchase Money
     Indebtedness").

            6.14.6   Indebtedness arising from intercompany loans and advances
     made by (i) the Company or any Subsidiary to any Credit Party, (ii) any
     Subsidiary that is not a Credit Party to any other Subsidiary that is not a
     Credit Party or (iii) subject to Section

                                       59



     6.24, any Credit Party to any Foreign Subsidiary; provided that all such
     Indebtedness shall be expressly subordinated to the Obligations.

            6.14.7   Indebtedness incurred or assumed by the Company or any
     Subsidiary in connection with a Permitted Acquisition but not created in
     contemplation of such event.

            6.14.8   Indebtedness constituting Contingent Obligations otherwise
     permitted by Section 6.19.

            6.14.9   Indebtedness under (i) performance bonds and surety bonds
     and (ii) bank overdrafts outstanding for not more than two (2) Business
     Days, in each case incurred in the ordinary course of business.

            6.14.10  To the extent the same constitutes Indebtedness,
     obligations in respect of earn-out arrangements permitted pursuant to a
     Permitted Acquisition.

            6.14.11  Unsecured Indebtedness arising under the Note Purchase
     Agreement and the Senior Notes, the outstanding principal amount of which
     shall not exceed $350,000,000 in the aggregate at any time.

            6.14.12  Additional Indebtedness in an aggregate principal amount in
     Dollars not to exceed $10,000,000 at any time.

     6.15.  Liens. No Borrower will, nor will the Company permit any other
Subsidiary to, create, incur, or suffer to exist any Lien in, of or on the
Property of the Company or any Subsidiary, except:

            6.15.1   Liens, if any, securing Obligations.

            6.15.2   Liens for taxes, assessments or governmental charges or
     levies on its Property if the same shall not at the time be delinquent or
     thereafter can be paid without penalty, or are being contested in good
     faith and by appropriate proceedings and for which adequate reserves in
     accordance with Agreement Accounting Principles shall have been set aside
     on its books.

            6.15.3   Liens imposed by law, such as landlords', wage earners',
     carriers', warehousemen's and mechanics' liens and other similar liens
     arising in the ordinary course of business which secure payment of
     obligations not more than 45 days past due or which are being contested in
     good faith by appropriate proceedings and for which adequate reserves in
     accordance with Agreement Accounting Principles shall have been set aside
     on its books.

            6.15.4   Liens arising out of pledges or deposits under worker's
     compensation laws, unemployment insurance, old age pensions, or other
     social security or retirement benefits, or similar legislation.

            6.15.5   Liens existing on the Closing Date and described in
     Schedule 6.15.

                                       60



            6.15.6   Deposits securing liability to insurance carriers under
     insurance or self-insurance arrangements.

            6.15.7   Deposits to secure the performance of bids, trade contracts
     (other than for borrowed money), leases, statutory obligations, surety and
     appeal bonds, performance bonds and other obligations of a like nature
     incurred in the ordinary course of business.

            6.15.8   Easements, reservations, rights-of-way, restrictions,
     survey exceptions and other similar encumbrances as to real property of the
     Company and the Subsidiaries which customarily exist on properties of
     corporations engaged in similar activities and similarly situated and which
     are not material in amount and that do not materially interfere with the
     conduct of the business of the Company or such Subsidiary conducted at the
     property subject thereto.

            6.15.9   Liens arising by reason of any judgment, decree or order of
     any court or other governmental authority, but only to the extent and for
     an amount and for a period not resulting in a Default under Section 7.8.

            6.15.10  Liens on receivables and related assets (including, without
     limitation, (i) any interest in the equipment or inventory (including
     returned or repossessed goods), if any, the sale, financing or lease of
     which gave rise to the receivables, together with insurance related
     thereto, (ii) all security interests purporting to secure payment of the
     receivables, (iii) all guaranties, insurance, letters of credit or other
     agreements supporting or securing payment of the receivables, (iv) all
     contracts associated with the receivables, (v) all collection accounts and
     lockbox accounts into which receivables payments are made, (vi) all records
     relating to the receivables, and (vii) all proceeds of the foregoing)
     arising in connection with a Receivables Purchase Facility permitted under
     Section 6.14.4.

            6.15.11  Liens existing on any specific fixed asset of any
     Subsidiary of the Company at the time such Subsidiary becomes a Subsidiary
     and not created in contemplation of such event.

            6.15.12  Liens on any specific fixed asset securing Indebtedness
     incurred or assumed for the purpose of financing or refinancing all or any
     part of the cost of acquiring or constructing such asset; provided that
     such Lien attaches to such asset concurrently with or within six (6) months
     after the acquisition or completion or construction thereof.

            6.15.13  Liens existing on any specific fixed asset of any
     Subsidiary of the Company at the time such Subsidiary is merged or
     consolidated with or into the Company or any Subsidiary and not created in
     contemplation of such event.

            6.15.14  Liens existing on any specific fixed asset prior to the
     acquisition thereof by the Company or any Subsidiary and not created in
     contemplation thereof; provided that such Liens do not encumber any other
     property or assets, other than improvements thereon and proceeds thereof.

                                       61



            6.15.15  Liens arising out of the refinancing, extension, renewal or
     refunding of any Indebtedness secured by any Lien permitted under Sections
     6.15.5 and 6.15.11 through 6.15.14; provided that (i) such Indebtedness is
     not secured by any additional assets, other than improvements thereon and
     proceeds thereof, and (ii) the amount of such Indebtedness secured by any
     such Lien is not increased.

            6.15.16  Liens securing Permitted Purchase Money Indebtedness;
     provided that such Liens shall not apply to any property of the Company or
     any Subsidiary other than that purchased with the proceeds of such
     Permitted Purchase Money Indebtedness, other than improvements thereon and
     proceeds thereof.

            6.15.17  Liens in respect of Capitalized Lease Obligations to the
     extent permitted hereunder and Liens arising under any equipment, furniture
     or fixtures leases or Property consignments to the Company or any
     Subsidiary otherwise permitted under the Loan Documents.

            6.15.18  Licenses, leases or subleases granted to others in the
     ordinary course of business consistent with the Company's and the
     Subsidiaries' past practices that do not materially interfere with the
     conduct of the business of the Company and the Subsidiaries taken as a
     whole.

            6.15.19  Statutory and contractual landlords' Liens under leases to
     which the Company or any Subsidiary is a party.

            6.15.20  Liens in favor of a banking institution arising as a matter
     of applicable law encumbering deposits (including the right of set-off)
     held by such banking institutions incurred in the ordinary course of
     business and which are within the general parameters customary in the
     banking industry.

            6.15.21  Liens in favor of customs and revenue authorities arising
     as a matter of applicable law to secure the payment of customs' duties in
     connection with the importation of goods.

            6.15.22  Any interest or title of a lessor, sublessor, licensee or
     licensor under any lease or license agreement permitted by this Agreement.

            6.15.23  Liens not otherwise permitted under this Section 6.15 to
     the extent attaching to Properties and assets with an aggregate fair market
     value not in excess of, and securing liabilities not in excess of,
     $10,000,000, in the aggregate at any one time outstanding.

     6.16.  Affiliates. No Borrower will enter into, directly or indirectly, nor
will the Company permit any other Subsidiary to enter into, directly or
indirectly, any transaction (including, without limitation, the purchase or sale
of any Property or service) with, or make any payment or transfer to, any
Affiliate (other than the Borrowers and the Guarantors) except (a) in the
ordinary course of business and pursuant to the reasonable requirements of such
Borrower's or such Subsidiary's business and upon fair and reasonable terms no
less favorable to such Borrower or such Subsidiary than such Borrower or such
Subsidiary would obtain in a

                                       62



comparable arm's-length transaction and (b) in connection with any Receivables
Purchase Facility permitted under Section 6.14.4.

     6.17.  Financial Contracts. No Borrower will, nor will the Company permit
any other Subsidiary to, enter into or remain liable upon any Rate Management
Transactions except for those entered into (i) by the Company and its
Subsidiaries in the ordinary course of business for bona fide hedging purposes
and not for speculative purposes and (ii) by any SPV in connection with a
Receivables Purchase Facility permitted hereunder.

     6.18.  Subsidiary Covenants. No Borrower will, and the Company will not
permit any other Subsidiary (other than any SPV) to, create or otherwise cause
to become effective any consensual encumbrance or restriction of any kind on the
ability of any Subsidiary (other than any SPV) (i) to pay dividends or make any
other distribution on its stock, (ii) to pay any Indebtedness or other
obligation owed to the Company or any Subsidiary, (iii) to make loans or
advances or other Investments in the Company or any Subsidiary, or (iv) to sell,
transfer or otherwise convey any of its property to the Company or any
Subsidiary, except for such encumbrances or restrictions existing under or by
reason of (a) this Agreement, the other Loan Documents, the Note Purchase
Agreement and the Receivables Purchase Documents, (b) customary provisions
restricting subletting or assignment of any lease governing any leasehold
interest of the Company or any of its Subsidiaries, (c) customary provisions
restricting assignment of any licensing agreement or other contract entered into
by Company and its Subsidiaries in the ordinary course of business, (d)
restrictions on the transfer of any asset pending the close of the sale of such
asset and (e) restrictions on the transfer of any assets subject to a Lien
permitted by Section 6.15.

     6.19.  Contingent Obligations. No Borrower will, nor will the Company
permit any other Subsidiary to, make or suffer to exist any Contingent
Obligation (including, without limitation, any Contingent Obligation with
respect to the obligations of a Subsidiary), except Contingent Obligations
arising with respect to (i) this Agreement and the other Loan Documents,
including, without limitation, Reimbursement Obligations (ii) customary
indemnification obligations in favor of purchasers in connection with asset
dispositions permitted hereunder, (iii) customary indemnification obligations
under such Person's charter and bylaws (or equivalent formation documents), (iv)
indemnities in favor of the Persons issuing title insurance policies insuring
the title to any property, (v) guarantees of (a) real property leases of the
Company and its Subsidiaries and (b) personal property Operating Leases of the
Company and its Subsidiaries, in each case entered into in the ordinary course
of business by the Company or any of the Subsidiaries, (vi) the Receivables
Purchase Facility and (vii) other Contingent Obligations constituting guarantees
of Indebtedness of the Company or any of its Subsidiaries permitted under
Section 6.14, provided that to the extent such Indebtedness is subordinated to
the Obligations each such Contingent Obligation shall be subordinated to the
Obligations on terms reasonably acceptable to the Agent.

     6.20.  Leverage Ratio. The Company will maintain, as of the end of each
fiscal quarter, a Leverage Ratio of not greater than 3.25 to 1.00.

     6.21.  Interest Expense Coverage Ratio. The Company will not permit the
ratio (the "Interest Expense Coverage Ratio"), determined as of the end of each
of its fiscal quarters for the

                                       63



then most-recently ended four fiscal quarters of (i) Consolidated EBIT during
such period to (ii) Consolidated Interest Expense during such period, all
calculated for the Company and its Subsidiaries on a consolidated basis, to be
less than 3.00 to 1.00.

     6.22.  Minimum Consolidated Net Worth. The Company will at all times
maintain Consolidated Net Worth of not less than the sum of (i) $500,000,000,
plus (ii) 50% of the cumulative positive quarterly Consolidated Net Income for
all fiscal quarters of the Company following the fiscal quarter of the Company
ending July 26, 2003 (without taking into account any net loss in any such
fiscal quarter), plus (iii) 100% of the amount, if any, by which stockholder's
equity of the Company is, in accordance with Agreement Accounting Principles,
increased for all fiscal quarters of the Company following the fiscal quarter of
the Company ending July 26, 2003 as a result of (A) the issuance of any capital
stock of the Company or (B) any Acquisition (including the AbilityOne
Acquisition).

     6.23.  Additional Subsidiary Guarantors. The Company shall execute or shall
cause to be executed on the date any Person becomes a Material Domestic
Subsidiary of the Company (other than an SPV or a Subsidiary Borrower), the
Guaranty (or a supplement to the Guaranty) pursuant to which such Material
Domestic Subsidiary shall become a Guarantor, and shall deliver or cause to be
delivered to the Agent all appropriate corporate resolutions and other
documentation (including opinions of counsel) in each case in form and substance
reasonably satisfactory to the Agent. If at any time (a) the aggregate assets of
all of the Company's Domestic Subsidiaries that are not Subsidiary Borrowers or
Guarantors under the Guaranty exceeds twenty percent (20%) of the consolidated
total assets of the Company and its Subsidiaries, or (b) the aggregate
Consolidated Adjusted Net Income for the four consecutive fiscal quarters most
recently ended of all of the Company's Domestic Subsidiaries that are not
Subsidiary Borrowers or Guarantors under the Guaranty exceeds twenty percent
(20%) of the Company's Consolidated Adjusted Net Income for such period, the
Company will, within 30 days after its senior management becomes aware (or
reasonably should have become aware) of such event, cause to be executed and
delivered to the Agent a supplement to the Guaranty (together with such other
documents, opinions and information as the Agent may require) with respect to
additional Domestic Subsidiaries to the extent necessary so that, after giving
effect thereto, the threshold levels in clauses (a) and (b) above are not
exceeded.

     6.24.  Foreign Subsidiary Investments. No Borrower will, nor will the
Company permit any other Credit Party to, enter into or suffer to exist Foreign
Subsidiary Investments at any time in an aggregate amount greater than
$50,000,000.

     6.25.  Subordinated Indebtedness. No Borrower will, nor with the Company
permit any other Subsidiary to, make any amendment or modification to the
indenture, note or other agreement evidencing or governing any Subordinated
Indebtedness, or directly or indirectly voluntarily prepay, defease or in
substance defease, purchase, redeem, retire or otherwise acquire, any
Subordinated Indebtedness.

     6.26.  Sale of Accounts. No Borrower will, nor will the Company permit any
other Subsidiary to, sell or otherwise dispose of any notes receivable or
accounts receivable, with or without recourse except to the extent permitted by
Section 6.12.4.

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                                   ARTICLE VII

                                    DEFAULTS

     The occurrence of any one or more of the following events shall constitute
a Default:

     7.1    Any representation or warranty made or deemed made by or on behalf
of the Company or any Subsidiary to the Lenders or the Agent under or in
connection with this Agreement, any Credit Extension, or any certificate or
information delivered in connection with this Agreement or any other Transaction
Document shall be false in any material respect on the date as of which made or
deemed made.

     7.2    Nonpayment of (i) principal of any Loan when due, (ii) any
Reimbursement Obligation within one Business Day after the same becomes due or
(iii) interest upon any Loan, any Commitment Fee, LC Facility Fee or other
Obligations under any of the Loan Documents within five (5) days after such
interest, fee or other Obligation becomes due.

     7.3    The breach by any Borrower of any of the terms or provisions of any
of Sections 6.1 through 6.3 or any of Sections 6.10 through 6.26.

     7.4    The breach by any Borrower (other than a breach which constitutes a
Default under another Section of this Article VII) or any other Credit Party of
any of the terms or provisions of this Agreement or any other Loan Document to
which it is a party which is not remedied within five (5) days after the earlier
to occur of (i) written notice from the Agent or any Lender to the Company or
(ii) an Authorized Officer of any Borrower otherwise become aware of any such
breach.

     7.5    Failure of the Company or any Subsidiary to pay when due any
Material Indebtedness (beyond the applicable grace period with respect thereto,
if any); or the default by the Company or any Subsidiary in the performance
(beyond the applicable grace period with respect thereto, if any) of any term,
provision or condition contained in any Material Indebtedness Agreement, or any
other event shall occur or condition exist, the effect of which default, event
or condition is to cause, or to permit the holder(s) of such Material
Indebtedness or the lender(s) under any Material Indebtedness Agreement to
cause, such Material Indebtedness to become due prior to its stated maturity or
any commitment to lend under any Material Indebtedness Agreement to be
terminated prior to its stated expiration date; or any Material Indebtedness of
the Company or any Subsidiary shall be declared to be due and payable or
required to be prepaid or repurchased (other than by a regularly scheduled
payment) prior to the stated maturity thereof; or the Company or any Subsidiary
shall not pay, or admit in writing its inability to pay, its debts generally as
they become due.

     7.6    The Company or any Subsidiary shall (i) have an order for relief
entered with respect to it under the Federal bankruptcy laws as now or hereafter
in effect, (ii) make an assignment for the benefit of creditors, (iii) apply
for, seek, consent to, or acquiesce in, the appointment of a receiver,
custodian, trustee, examiner, liquidator or similar official for it or any
Substantial Portion of its Property, (iv) institute any proceeding seeking an
order for relief under the Federal bankruptcy laws as now or hereafter in effect
or seeking to adjudicate it a bankrupt or

                                       65



insolvent, or seeking dissolution, winding up, liquidation, reorganization,
arrangement, adjustment or composition of it or its debts under any law relating
to bankruptcy, insolvency or reorganization or relief of debtors or fail to file
an answer or other pleading denying the material allegations of any such
proceeding filed against it, (v) take any corporate or partnership action to
authorize or effect any of the foregoing actions set forth in this Section 7.6
or (vi) fail to contest in good faith any appointment or proceeding described in
Section 7.7.

     7.7    Without the application, approval or consent of the Company or any
Subsidiary, a receiver, trustee, examiner, liquidator or similar official shall
be appointed for the Company or any Subsidiary or any Substantial Portion of its
Property, or a proceeding described in Section 7.6(iv) shall be instituted
against the Company or any Subsidiary and such appointment continues
undischarged or such proceeding continues undismissed or unstayed for a period
of 30 consecutive days.

     7.8    Any court, government or governmental agency shall condemn, seize or
otherwise appropriate, or take custody or control of, all or any portion of the
Property of the Company and the Subsidiaries which, when taken together with all
other Property of the Company and the Subsidiaries so condemned, seized,
appropriated, or taken custody or control of, during the twelve-month period
ending with the month in which any such action occurs, constitutes a Substantial
Portion.

     7.9    The Company or any Subsidiary shall fail within 30 days to pay, bond
or otherwise discharge one or more (i) judgments or orders for the payment of
money in excess of $5,000,000 (or the equivalent thereof in currencies other
than Dollars) in the aggregate, or (ii) nonmonetary judgments or orders which,
individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect, which judgment(s), in any such case, is/are not (a)
stayed on appeal or otherwise being appropriately contested in good faith or (b)
paid in full by third-party insurers under the Company's or any Subsidiary's
insurance policies.

     7.10   The Unfunded Liabilities of all Single Employer Plans shall exceed
$10,000,000 in the aggregate, or any Reportable Event shall occur in connection
with any Plan.

     7.11   Nonpayment by the Company or any Subsidiary of any Rate Management
Obligation, in an outstanding principal amount of $5,000,000 or more, when due
or the breach by the Company or any Subsidiary of any term, provision or
condition contained in any Rate Management Transaction or any transaction of the
type described in the definition of "Rate Management Transactions," whether or
not any Lender or Affiliate of a Lender is a party thereto.

     7.12   Any Change in Control shall occur.

     7.13   The Company or any other member of the Controlled Group shall have
been notified by the sponsor of a Multiemployer Plan that it has incurred,
pursuant to Section 4201 of ERISA, withdrawal liability to such Multiemployer
Plan in an amount which, when aggregated with all other amounts required to be
paid to Multiemployer Plans by the Company or any other member of the Controlled
Group as withdrawal liability (determined as of the date of such notification),
exceeds $10,000,000 or requires payments exceeding $10,000,000 per annum.

                                       66



     7.14   The Company or any other member of the Controlled Group shall have
been notified by the sponsor of a Multiemployer Plan that such Multiemployer
Plan is in reorganization or is being terminated, within the meaning of Title IV
of ERISA, if as a result of such reorganization or termination the aggregate
annual contributions of the Company and the other members of the Controlled
Group (taken as a whole) to all Multiemployer Plans which are then in
reorganization or being terminated have been or will be increased, in the
aggregate, over the amounts contributed to such Multiemployer Plans for the
respective plan years of such Multiemployer Plans immediately preceding the plan
year in which the reorganization or termination occurs by an amount exceeding
$10,000,000.

     7.15   The Company or any Subsidiary shall (i) be the subject of any
proceeding or investigation pertaining to the release by the Company or any
Subsidiary or any other Person of any toxic or hazardous waste or substance into
the environment, or (ii) violate any Environmental Law, which, in the case of an
event described in clause (i) or clause (ii), has resulted in liability to the
Company or any Subsidiary in an amount equal to $10,000,000 or more, which
liability is not paid, bonded or otherwise discharged within 60 days or which is
not stayed on appeal and being appropriately contested in good faith.

     7.16   Any Loan Document shall fail to remain in full force or effect
against the Company or any Subsidiary or any action shall be taken or shall fail
to be taken to discontinue or to assert the invalidity or unenforceability of,
or which results in the discontinuation or invalidity or unenforceability of,
any Loan Document.

     7.17   An event (such event, an "Off-Balance Sheet Trigger Event") shall
occur which (i) permits the investors or purchasers in respect of Off-Balance
Sheet Liabilities of the Company or any Affiliate of the Company to require the
amortization or liquidation of such Off-Balance Sheet Liabilities as a result of
the non-payment of any Off-Balance Sheet Liability having an aggregate
outstanding principal amount (or similar outstanding liability) greater than or
equal to $5,000,000 and (x) such Off-Balance Sheet Trigger Event shall not be
remedied or waived within the later to occur of the tenth day after the
occurrence thereof or the expiry date of any grace period related thereto under
the agreement evidencing such Off-Balance Sheet Liabilities, or (y) such
investors shall require the amortization or liquidation of such Off-Balance
Sheet Liabilities as a result of such Off-Balance Sheet Trigger Event, (ii)
results in the termination of reinvestments of collections or proceeds of
receivables and related assets under the agreements evidencing such Off-Balance
Sheet Liabilities, or (iii) causes or otherwise permits the replacement or
substitution of the Company or any Affiliate thereof as the servicer under the
agreements evidencing such Off-Balance Sheet Liabilities; provided, however,
that this Section 7.17 shall not apply on any date with respect to (a) any
voluntary request by the Company or an Affiliate thereof for an above-described
amortization, liquidation, or termination of reinvestments so long as the
aforementioned investors or purchasers cannot independently require on such date
such amortization, liquidation or termination of reinvestments or (b) any
scheduled amortization or liquidation at the stated maturity of the facility
evidencing such Off-Balance Sheet Liabilities.

                                       67



                                  ARTICLE VIII

                 ACCELERATION, WAIVERS, AMENDMENTS AND REMEDIES

     8.1.   Acceleration. (i) If any Default described in Section 7.6 or 7.7
occurs with respect to any Credit Party, the obligations of the Lenders to make
Loans hereunder and the obligation and power of the LC Issuers to issue Facility
LCs shall automatically terminate and the Obligations shall immediately become
due and payable without any election or action on the part of the Agent, any LC
Issuer or any Lender, and the Borrowers will be and become thereby
unconditionally obligated, without any further notice, act or demand, to pay the
Agent an amount in immediately available funds, which funds shall be held in the
Facility LC Collateral Account, equal to (x) the amount of the LC Obligations at
such time minus (y) the amount on deposit in the Facility LC Collateral Account
at such time which is free and clear of all rights and claims of third parties
and has not been applied against the Obligations (the "Collateral Shortfall
Amount"). Without prejudice to the provisions of Section 4.2, if any other
Default occurs, the Required Lenders (or the Agent with the consent of the
Required Lenders) may (a) terminate or suspend the obligations of the Lenders to
make Loans hereunder and the obligation and power of the LC Issuers to issue
Facility LCs, or declare the Obligations to be due and payable, or both,
whereupon the Obligations shall become immediately due and payable, without
presentment, demand, protest or notice of any kind, all of which each Borrower
hereby expressly waives and (b) upon notice to the Borrowers and in addition to
the continuing right to demand payment of all amounts payable under this
Agreement, make demand on the Borrowers to pay, and the Borrowers will forthwith
upon such demand and without any further notice or act pay to the Agent the
Collateral Shortfall Amount which funds shall be deposited in the Facility LC
Collateral Account.

     (ii)   If at any time while any Default is continuing, the Agent determines
            that the Collateral Shortfall Amount at such time is greater than
            zero, the Agent may make demand on the Borrowers to pay, and the
            Borrowers will, forthwith upon such demand and without any further
            notice or act, pay to the Agent the Collateral Shortfall Amount,
            which funds shall be deposited in the Facility LC Collateral
            Account.

     (iii)  The Agent may at any time or from time to time after funds are
            deposited in the Facility LC Collateral Account, apply such funds to
            the payment of the Obligations and any other amounts as shall from
            time to time have become due and payable by the Borrowers to the
            Lenders or the LC Issuers under the Loan Documents.

     (iv)   At any time while any Default is continuing, no Borrower nor any
            Person claiming on behalf of or through any Borrower shall have any
            right to withdraw any of the funds held in the Facility LC
            Collateral Account. After all of the Obligations have been
            indefeasibly paid in full and the Aggregate Revolving Loan
            Commitment has been terminated, any funds remaining in the Facility
            LC Collateral Account shall be returned by the Agent to the Company
            or paid to whomever may be legally entitled thereto at such time.

                                       68



     (v)    If, after acceleration of the maturity of the Obligations or
            termination of the obligations of the Lenders to make Loans and the
            obligations and power of the LC Issuers to issue Facility LCs
            hereunder as a result of any Default (other than any Default as
            described in Section 7.6 or 7.7 with respect to any Credit Party)
            and before any judgment or decree for the payment of the Obligations
            due shall have been obtained or entered, the Required Lenders (in
            their sole discretion) shall so direct, the Agent shall, by notice
            to the Borrowers, rescind and annul such acceleration and/or
            termination.

     8.2.   Amendments. Subject to the provisions of this Section 8.2, the
Required Lenders (or the Agent with the consent in writing of the Required
Lenders) and the Borrowers may enter into agreements supplemental hereto for the
purpose of adding or modifying any provisions to the Loan Documents or changing
in any manner the rights of the Lenders or the Borrowers hereunder or thereunder
or waiving any Default hereunder or thereunder; provided, however, that no such
supplemental agreement shall, without the consent of each Lender affected
thereby:

            8.2.1    Extend the Revolving Loan Termination Date, extend the
     final maturity of any Revolving Loan or extend the expiry date of any
     Facility LC to a date after the Revolving Loan Termination Date, extend the
     final maturity date of any Term Loan to a date after the Term Loan Maturity
     Date, or postpone any regularly scheduled payment of principal of any Loan
     or forgive all or any portion of the principal amount thereof, or any
     Reimbursement Obligation related thereto, or reduce the rate or extend the
     time of payment of interest or fees thereon or Reimbursement Obligations
     related thereto (other than a waiver of the application of the default rate
     of interest or LC Fees pursuant to Section 2.12 hereof, which shall only
     require the approval of the Required Lenders).

            8.2.2    Reduce the percentage specified in the definition of
     Required Lenders or any other percentage of Lenders specified to be the
     applicable percentage in this Agreement to act on specified matters or
     amend the definition of "Pro Rata Share", "Revolving Loan Pro Rata Share"
     or "Term Loan Pro Rata Share".

            8.2.3    Increase the amount of the Revolving Loan Commitment of any
     Lender hereunder or the commitment to issue Facility LCs, or permit any
     Borrower to assign its rights or obligations under this Agreement.

            8.2.4    Amend this Section 8.2.

            8.2.5    Other than in connection with a transaction permitted under
     this Agreement, release (i) any Borrower from its obligations under Article
     XVI or (ii) any Guarantor that remains a Material Domestic Subsidiary from
     its obligations under the Guaranty.

No amendment of any provision of this Agreement relating to the Agent shall be
effective without the written consent of the Agent. The Agent may waive payment
of the fee required under Section 12.3.3 without obtaining the consent of any
other party to this Agreement. No amendment of any provision of this Agreement
relating to the Swing Line Lender or any Swing Line Loan shall be effective
without the written consent of the Swing Line Lender. No

                                       69



amendment of any provisions of this Agreement relating to any LC Issuer shall be
effective without the written consent of such LC Issuer.

     8.3.   Preservation of Rights. No delay or omission of the Lenders, the LC
Issuers or the Agent to exercise any right under the Loan Documents shall impair
such right or be construed to be a waiver of any Default or an acquiescence
therein, and the making of a Credit Extension notwithstanding the existence of a
Default or Unmatured Default or the inability of a Borrower to satisfy the
conditions precedent to such Credit Extension shall not constitute any waiver or
acquiescence. Any single or partial exercise of any such right shall not
preclude other or further exercise thereof or the exercise of any other right,
and no waiver, amendment or other variation of the terms, conditions or
provisions of the Loan Documents whatsoever shall be valid unless in writing
signed by, or by the Agent with the consent of, the requisite number of Lenders
required pursuant to Section 8.2, and then only to the extent in such writing
specifically set forth. All remedies contained in the Loan Documents or by law
afforded shall be cumulative and all shall be available to the Agent, the LC
Issuers and the Lenders until all of the Obligations have been paid in full.

                                   ARTICLE IX

                               GENERAL PROVISIONS

     9.1.   Survival of Representations. All representations and warranties of
the Borrowers contained in this Agreement shall survive the making of the Credit
Extensions herein contemplated.

     9.2.   Governmental Regulation. Anything contained in this Agreement to the
contrary notwithstanding, neither any LC Issuer nor any Lender shall be
obligated to extend credit to any Borrower in violation of any limitation or
prohibition provided by any applicable statute or regulation.

     9.3.   Headings. Section headings in the Loan Documents are for convenience
of reference only, and shall not govern the interpretation of any of the
provisions of the Loan Documents.

     9.4.   Entire Agreement. The Loan Documents embody the entire agreement and
understanding among the Borrowers, the Agent, the LC Issuers and the Lenders and
supersede all prior agreements and understandings among the Borrowers, the
Agent, the LC Issuers and the Lenders relating to the subject matter thereof
other than those contained in the fee letter described in Section 10.13 which
shall survive and remain in full force and effect during the term of this
Agreement.

     9.5.   Several Obligations; Benefits of this Agreement. The respective
obligations of the Lenders hereunder are several and not joint and no Lender
shall be the partner or agent of any other (except to the extent to which the
Agent is authorized to act as such). The failure of any Lender to perform any of
its obligations hereunder shall not relieve any other Lender from any of its
obligations hereunder. This Agreement shall not be construed so as to confer any
right or benefit upon any Person other than the parties to this Agreement and
their respective successors

                                       70



and assigns, provided, however, that the parties hereto expressly agree that the
Arrangers shall enjoy the benefits of the provisions of Sections 9.6, 9.10 and
10.11 to the extent specifically set forth therein and shall have the right to
enforce such provisions on its own behalf and in its own name to the same extent
as if it were a party to this Agreement.

     9.6.   Expenses; Indemnification.

     (i)    The Borrowers shall reimburse the Agent and the Arrangers for any
            reasonable costs, internal charges and out-of-pocket expenses
            (including outside attorneys' and paralegals' fees and expenses
            of and fees for other advisors and professionals engaged by the
            Agent or the Arrangers and, unless a Default shall be continuing,
            with the consent of the Company) paid or incurred by the Agent or
            the Arrangers in connection with the investigation, preparation,
            negotiation, documentation, execution, delivery, syndication,
            distribution (including, without limitation, via the internet),
            review, amendment, modification and administration of the
            Transaction Documents. Each Borrower also agrees to reimburse the
            Agent, the Arrangers, the LC Issuers and the Lenders for any
            costs, internal charges and out-of-pocket expenses (including
            outside attorneys' and paralegals' fees and expenses of outside
            attorneys and paralegals for the Agent, the Arrangers, the LC
            Issuers and the Lenders) paid or incurred by the Agent, the
            Arrangers, any LC Issuer or any Lender in connection with the
            collection and enforcement of the Loan Documents. Expenses being
            reimbursed by the Borrowers under this Section include, without
            limitation, costs and expenses incurred in connection with the
            Reports described in the following sentence. Each Borrower
            acknowledges that from time to time Bank One may prepare and may
            distribute to the Lenders (but shall have no obligation or duty
            to prepare or to distribute to the Lenders) certain audit reports
            (the "Reports") pertaining to such Borrower's assets for internal
            use by Bank One from information furnished to it by or on behalf
            of such Borrower, after Bank One has exercised its rights of
            inspection pursuant to this Agreement.

     (ii)   Each Borrower hereby further agrees to indemnify the Agent, the
            Arrangers, each LC Issuer, each Lender, their respective
            affiliates, and each of their directors, officers and employees
            against all losses, claims, damages, penalties, judgments,
            liabilities and expenses (including, without limitation, all
            expenses of litigation or preparation therefor whether or not the
            Agent, the Arrangers, any LC Issuer, any Lender or any affiliate
            is a party thereto, and all outside attorneys' and paralegals'
            fees and expenses of outside attorneys and paralegals of the
            party seeking indemnification) which any of them may pay or incur
            arising out of or relating to this Agreement, the other
            Transaction Documents, the AbilityOne Acquisition and the other
            transactions contemplated hereby or the direct or indirect
            application or proposed application of the proceeds of any Credit
            Extension hereunder except to the extent that they are determined
            in a final non-appealable judgment by a court of competent
            jurisdiction to have resulted from the gross negligence or
            willful misconduct of the party seeking indemnification. The
            obligations of the Borrowers under this Section 9.6 shall survive
            the termination of this Agreement.

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     9.7.   Numbers of Documents. All statements, notices, closing documents,
and requests hereunder shall be furnished to the Agent with sufficient
counterparts so that the Agent may furnish one to each of the Lenders, to the
extent that the Agent deems necessary.

     9.8.   Accounting. Except as provided to the contrary herein, all
accounting terms used in the calculation of any financial covenant or test shall
be interpreted and all accounting determinations hereunder in the calculation of
any financial covenant or test shall be made in accordance with Agreement
Accounting Principles. If any changes in generally accepted accounting
principles are hereafter required or permitted and are adopted by the Company or
any Subsidiary with the agreement of its independent certified public
accountants and such changes result in a change in the method of calculation of
any of the financial covenants, tests, restrictions or standards herein or in
the related definitions or terms used therein ("Accounting Changes"), the
parties hereto agree, at the Company's request, to enter into negotiations, in
good faith, in order to amend such provisions in a credit neutral manner so as
to reflect equitably such changes with the desired result that the criteria for
evaluating the Company's and its Subsidiaries' financial condition shall be the
same after such changes as if such changes had not been made; provided, however,
until such provisions are amended in a manner reasonably satisfactory to the
Agent and the Required Lenders, no Accounting Change shall be given effect in
such calculations. In the event such amendment is entered into, all references
in this Agreement to Agreement Accounting Principles shall mean generally
accepted accounting principles, including the Accounting Change, as of the date
of such amendment. Notwithstanding the foregoing, all financial statements to be
delivered by the Borrowers pursuant to Section 6.1 shall be prepared in
accordance with generally accepted accounting principles in effect at such time.

     9.9.   Severability of Provisions. Any provision in any Loan Document that
is held to be inoperative, unenforceable, or invalid in any jurisdiction shall,
as to that jurisdiction, be inoperative, unenforceable, or invalid without
affecting the remaining provisions in that jurisdiction or the operation,
enforceability, or validity of that provision in any other jurisdiction, and to
this end the provisions of all Loan Documents are declared to be severable.

     9.10.  Nonliability of Lenders. The relationship between the Borrowers on
the one hand and the Lenders, the LC Issuers and the Agent on the other hand
shall be solely that of borrower and lender. Neither the Agent (except to the
limited extent as provided by Section 12.3.4 relating to maintaining the
Register), the Arrangers, the LC Issuers, nor any Lender shall have any
fiduciary responsibilities to any Borrower or any other Credit Party. Neither
the Agent, the Arrangers, the LC Issuers nor any Lender undertakes any
responsibility to any Borrower or any other Credit Party to review or inform any
Credit Party of any matter in connection with any phase of any Credit Party's
business or operations. Each Borrower agrees that neither the Agent, the
Arrangers, the LC Issuers, nor any Lender shall have liability to any Borrower
(whether sounding in tort, contract or otherwise) for losses suffered by any
Borrower in connection with, arising out of, or in any way related to, the
transactions contemplated and the relationship established by the Loan
Documents, or any act, omission or event occurring in connection therewith,
unless it is determined in a final non-appealable judgment by a court of
competent jurisdiction that such losses resulted from the gross negligence or
willful misconduct of the party from which recovery is sought. Neither the
Agent, the Arrangers, the LC Issuers nor any Lender shall have any liability
with respect to, and each Borrower hereby waives, releases and agrees

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not to sue for, any special, indirect, consequential or punitive damages
suffered by the Company or any Subsidiary in connection with, arising out of, or
in any way related to the Loan Documents or the transactions contemplated
thereby.

     9.11.  Confidentiality. Each Lender agrees to hold any confidential
information which it may receive from any Borrower pursuant to this Agreement in
confidence in accordance with its respective customary practices (but in any
event in accordance with reasonable confidentiality practices), except for
disclosure (i) to its Affiliates and to other Lenders and their respective
Affiliates, for use solely in connection with the transactions contemplated
hereby, (ii) to legal counsel, accountants, and other professional advisors to
such Lender or to a Transferee who are expected to be involved in the evaluation
of such information in connection with the transactions contemplated hereby, in
each case which have been informed as to the confidential nature of such
information, (iii) to regulatory officials having jurisdiction over it, (iv) to
any Person as required by law, regulation, or legal process, (v) of information
that presently or hereafter becomes available to such Lender on a
non-confidential basis from a source other than any Borrower and other than as a
result of disclosure not otherwise permitted by this Section 9.11, (vi) to any
Person in connection with any legal proceeding to which such Lender is a party,
(vii) to such Lender's direct or indirect contractual counterparties in credit
derivative transactions or to legal counsel, accountants and other professional
advisors to such counterparties, in each case which have been informed as to the
confidential nature of such information, (viii) permitted by Section 12.4 and
(ix) to rating agencies if requested or required by such agencies in connection
with a rating relating to the Credit Extensions hereunder. Without limiting
Section 9.4, each Borrower agrees that the terms of this Section 9.11 shall set
forth the entire agreement between the Borrowers and each Lender (including the
Agent) with respect to any confidential information previously or hereafter
received by such Lender in connection with this Agreement or any other Loan
Document, and this Section 9.11 shall supersede any and all prior
confidentiality agreements entered into by such Lender with respect to such
confidential information. Notwithstanding anything herein to the contrary,
confidential information shall not include, and each party hereto (and each
employee, representative or other agent of any party hereto) may disclose to any
and all Persons, without limitation of any kind, the U.S. federal income tax
treatment and U.S. federal income tax structure of the transactions contemplated
hereby and all materials of any kind (including opinions or other tax analyses)
that are or have been provided to such party relating to such tax treatment or
tax structure, and it is hereby confirmed that each party hereto has been
authorized to make such disclosures since the commencement of discussions
regarding the transactions contemplated hereby.

     9.12.  Lenders Not Utilizing Plan Assets. Each Lender and Designated Lender
represents and warrants that none of the consideration used by such Lender or
Designated Lender to make its Loans constitutes for any purpose of ERISA or
Section 4975 of the Code assets of any "plan" as defined in Section 3(3) of
ERISA or Section 4975 of the Code and the rights and interests of such Lender or
Designated Lender in and under the Loan Documents shall not constitute such
"plan assets" under ERISA.

     9.13.  Nonreliance. Each Lender hereby represents that it is not relying on
or looking to any margin stock (as defined in Regulation U) as collateral in the
extension or maintenance of the credit provided for herein.

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     9.14.  Disclosure. Each Borrower and each Lender, including the LC Issuers,
hereby acknowledge and agree that each Lender and/or its Affiliates from time to
time may hold investments in, make other loans to or have other relationships
with the Borrowers and their Affiliates.

     9.15.  Performance of Obligations. Each Borrower agrees that the Agent may,
but shall have no obligation to (i) at any time, pay or discharge taxes, liens,
security interests or other encumbrances levied or placed on or threatened
against any collateral for the Obligations and (ii) after the occurrence and
during the continuance of a Default make any other payment or perform any act
required of the Company or any Subsidiary under any Loan Document or take any
other action which the Agent in its discretion deems necessary or desirable to
protect or preserve the collateral, if any, for the Obligations, including,
without limitation, any action to (x) effect any repairs or obtain any insurance
called for by the terms of any of the Loan Documents and to pay all or any part
of the premiums therefor and the costs thereof and (y) pay any rents payable by
the Company or any Subsidiary which are more than 30 days past due, or as to
which the landlord has given notice of termination, under any lease. The Agent
shall use its best efforts to give the Company notice of any action taken under
this Section 9.15 prior to the taking of such action or promptly thereafter
provided the failure to give such notice shall not affect any Borrower's
obligations in respect thereof. Each Borrower, jointly and severally, agrees to
pay the Agent, upon demand, the principal amount of all funds advanced by the
Agent under this Section 9.15, together with interest thereon at the rate from
time to time applicable to Floating Rate Loans from the date of such advance
until the outstanding principal balance thereof is paid in full. If the
Borrowers fail to make payment in respect of any such advance under this Section
9.15 within one (1) Business Day after the date the Company receives written
demand therefor from the Agent, the Agent shall promptly notify each Lender and
each Lender agrees that it shall thereupon make available to the Agent, in
Dollars in immediately available funds, the amount equal to such Lender's Pro
Rata Share of such advance. If such funds are not made available to the Agent by
such Lender within one (1) Business Day after the Agent's demand therefor, the
Agent will be entitled to recover any such amount from such Lender together with
interest thereon at the Federal Funds Effective Rate for each day during the
period commencing on the date of such demand and ending on the date such amount
is received. The failure of any Lender to make available to the Agent its Pro
Rata Share of any such unreimbursed advance under this Section 9.15 shall
neither relieve any other Lender of its obligation hereunder to make available
to the Agent such other Lender's Pro Rata Share of such advance on the date such
payment is to be made nor increase the obligation of any other Lender to make
such payment to the Agent. All outstanding principal of, and interest on,
advances made under this Section 9.15 shall constitute Obligations until paid in
full by the Borrowers.

     9.16.  Relations Among Lenders.

            9.16.1   No Action Without Consent. Except with respect to the
     exercise of setoff rights of any Lender, including the LC Issuers, in
     accordance with Section 11.1, the proceeds of which are applied in
     accordance with this Agreement, each Lender agrees that it will not take
     any action, nor institute any actions or proceedings, against any Borrower
     or any other obligor hereunder or with respect to any Loan Document,
     without the prior written consent of the Required Lenders or, as may be
     provided in this Agreement or the other Loan Documents, with the consent of
     the Agent.

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            9.16.2   Not Partners; No Liability. The Lenders, including the LC
     Issuers, are not partners or co-venturers, and no Lender shall be liable
     for the acts or omissions of, or (except as otherwise set forth herein in
     case of the Agent) authorized to act for, any other Lender. The Agent shall
     have the exclusive right on behalf of the Lenders to enforce the payment of
     the principal of and interest on any Loan or any Facility LC after the date
     such principal or interest has become due and payable pursuant to the terms
     of this Agreement.

     9.17.  USA Patriot Act Notification. The following notification is provided
to the Borrowers pursuant to Section 326 of the USA Patriot Act of 2001, 31
U.S.C. Section 5318:

          IMPORTANT INFORMATION ABOUT PROCEDURES FOR OPENING A NEW ACCOUNT. To
     help the government fight the funding of terrorism and money laundering
     activities, Federal law requires all financial institutions to obtain,
     verify, and record information that identifies each person or entity that
     opens an account, including any deposit account, treasury management
     account, loan, other extension of credit, or other financial services
     product. What this means for the Borrowers: When a Borrower opens an
     account, the Agent and the Lenders will ask for such Borrower's name, tax
     identification number, business address, and other information that will
     allow the Agent and the Lenders to identify such Borrower. The Agent and
     the Lenders may also ask to see such Borrower's legal organizational
     documents or other identifying documents.

                                    ARTICLE X

                                    THE AGENT

     10.1.  Appointment; Nature of Relationship. Bank One is hereby appointed by
each of the Lenders as its contractual representative (herein referred to as the
"Agent") hereunder and under each other Loan Document, and each of the Lenders
irrevocably authorizes the Agent to act as the contractual representative of
such Lender with the rights and duties expressly set forth herein and in the
other Loan Documents. The Agent agrees to act as such contractual representative
upon the express conditions contained in this Article X. Notwithstanding the use
of the defined term "Agent," it is expressly understood and agreed that the
Agent shall not have any fiduciary responsibilities to any of the Holders of
Obligations (including, without limitation, the Lenders) by reason of this
Agreement or any other Loan Document and that the Agent is merely acting as the
contractual representative of the Lenders with only those duties as are
expressly set forth in this Agreement and the other Loan Documents. In its
capacity as the Lenders' contractual representative, the Agent (i) does not
hereby assume any fiduciary duties to any of the Holders of Obligations, (ii) is
a "representative" of the Holders of Obligations within the meaning of the term
"secured party" as defined in the Illinois Uniform Commercial Code and (iii) is
acting as an independent contractor, the rights and duties of which are limited
to those expressly set forth in this Agreement and the other Loan Documents.
Each of the Lenders, for itself and on behalf of its Affiliates as Holders of
Obligations, hereby agrees to assert no claim against the Agent on any agency
theory or any other theory of liability for breach of fiduciary duty, all of
which claims each Holder of Obligations hereby waives.

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     10.2.  Powers. The Agent shall have and may exercise such powers under the
Loan Documents as are specifically delegated to the Agent by the terms of each
thereof, together with such powers as are reasonably incidental thereto. The
Agent shall have no implied duties or fiduciary duties to the Lenders, or any
obligation to the Lenders to take any action thereunder except any action
specifically provided by the Loan Documents to be taken by the Agent.

     10.3.  General Immunity. Neither the Agent nor any of its directors,
officers, agents or employees shall be liable to any Borrower, any Subsidiary,
any Lender or any Holder of Obligations for any action taken or omitted to be
taken by it or them hereunder or under any other Loan Document or in connection
herewith or therewith except to the extent such action or inaction is determined
in a final, non-appealable judgment by a court of competent jurisdiction to have
arisen from the gross negligence or willful misconduct of such Person.

     10.4.  No Responsibility for Loans, Recitals, etc. Neither the Agent nor
any of its directors, officers, agents or employees shall be responsible for or
have any duty to ascertain, inquire into, or verify (a) any statement, warranty
or representation made in connection with any Loan Document or any borrowing
hereunder; (b) the performance or observance of any of the covenants or
agreements of any obligor under any Loan Document, including, without
limitation, any agreement by an obligor to furnish information directly to each
Lender; (c) the satisfaction of any condition specified in Article IV, except
receipt of items required to be delivered solely to the Agent; (d) the existence
or possible existence of any Default or Unmatured Default; (e) the validity,
enforceability, effectiveness, sufficiency or genuineness of any Loan Document
or any other instrument or writing furnished in connection therewith; (f) the
value sufficiency, creation, perfection or priority of any Lien in any
collateral security; or (g) the financial condition of the Company, any
Subsidiary or any guarantor of any of the Obligations or of any of the
Company's, such Subsidiary's or any such guarantor's respective Subsidiaries.
The Agent shall have no duty to disclose to the Lenders information that is not
required to be furnished by any Borrower to the Agent at such time, but is
voluntarily furnished by such Borrower to the Agent (either in its capacity as
Agent or in its individual capacity).

     10.5.  Action on Instructions of Lenders. The Agent shall in all cases be
fully protected in acting, or in refraining from acting, hereunder and under any
other Loan Document in accordance with written instructions signed by the
Required Lenders (or all of the Lenders in the event that and to the extent that
this Agreement expressly requires such approval), and such instructions and any
action taken or failure to act pursuant thereto shall be binding on all of the
Lenders. The Lenders hereby acknowledge that the Agent shall be under no duty to
take any discretionary action permitted to be taken by it pursuant to the
provisions of this Agreement or any other Loan Document unless it shall be
requested in writing to do so by the Required Lenders (or all of the Lenders in
the event that and to the extent that this Agreement expressly requires such
approval). The Agent shall be fully justified in failing or refusing to take any
action hereunder and under any other Loan Document unless it shall first be
indemnified to its satisfaction by the Lenders pro rata against any and all
liability, cost and expense that it may incur by reason of taking or continuing
to take any such action.

     10.6.  Employment of Agents and Counsel. The Agent may execute any of its
duties as Agent hereunder and under any other Loan Document by or through
employees, agents, and attorneys-in-fact and shall not be answerable to the
Lenders, except as to money or securities

                                       76



received by it or its authorized agents, for the default or misconduct of any
such agents or attorneys-in-fact selected by it with reasonable care. The Agent
shall be entitled to advice of counsel concerning the contractual arrangement
between the Agent and the Lenders and all matters pertaining to the Agent's
duties hereunder and under any other Loan Document.

     10.7.  Reliance on Documents; Counsel. The Agent shall be entitled to rely
upon any Note, notice, consent, certificate, affidavit, letter, telegram,
facsimile, telex, electronic mail message, statement, paper or document believed
by it to be genuine and correct and to have been signed or sent by the proper
person or persons, and, in respect to legal matters, upon the opinion of counsel
selected by the Agent, which counsel may be employees of the Agent. For purposes
of determining compliance with the conditions specified in Sections 4.1, 4.2 and
4.3, each Lender that has signed this Agreement (or otherwise become party
hereto pursuant to an Assignment Agreement) shall be deemed to have consented
to, approved or accepted or to be satisfied with, each document or other matter
required thereunder to be consented to or approved by or acceptable or
satisfactory to a Lender unless the Agent shall have received notice from such
Lender prior to the applicable date specifying its objection thereto.

     10.8.  Agent's Reimbursement and Indemnification. The Lenders agree to
reimburse and indemnify the Agent ratably in proportion to the Lenders' Pro Rata
Shares of the Aggregate Revolving Loan Commitment (or, if the Aggregate
Revolving Loan Commitment has been terminated, of the Aggregate Outstanding
Revolving Credit Exposure) plus the Term Loans (i) for any amounts not
reimbursed by the Borrowers for which the Agent is entitled to reimbursement by
any Credit Party under the Loan Documents, (ii) for any other expenses incurred
by the Agent on behalf of the Lenders, in connection with the preparation,
execution, delivery, administration and enforcement of the Loan Documents
(including, without limitation, for any expenses incurred by the Agent in
connection with any dispute between the Agent and any Lender or between two or
more of the Lenders) and (iii) for any liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
of any kind and nature whatsoever which may be imposed on, incurred by or
asserted against the Agent in any way relating to or arising out of the Loan
Documents or any other document delivered in connection therewith or the
transactions contemplated thereby (including, without limitation, for any such
amounts incurred by or asserted against the Agent in connection with any dispute
between the Agent and any Lender or between two or more of the Lenders), or the
enforcement of any of the terms of the Loan Documents or of any such other
documents, provided that (i) no Lender shall be liable for any of the foregoing
to the extent any of the foregoing is found in a final, non-appealable judgment
by a court of competent jurisdiction to have resulted from the gross negligence
or willful misconduct of the Agent and (ii) any indemnification required
pursuant to Section 3.5(vii) shall, notwithstanding the provisions of this
Section 10.8, be paid by the relevant Lender in accordance with the provisions
thereof. The obligations of the Lenders under this Section 10.8 shall survive
payment of the Obligations and termination of this Agreement.

     10.9.  Notice of Default. The Agent shall not be deemed to have knowledge
or notice of the occurrence of any Default or Unmatured Default hereunder unless
the Agent has received written notice from a Lender or the Company referring to
this Agreement describing such Default or Unmatured Default and stating that
such notice is a "notice of default". In the event that the Agent receives such
a notice, the Agent shall give prompt notice thereof to the Lenders.

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     10.10. Rights as a Lender. In the event the Agent is a Lender, the Agent
shall have the same rights and powers hereunder and under any other Loan
Document with respect to its Revolving Loan Commitment and its Credit Extensions
as any Lender and may exercise the same as though it were not the Agent, and the
term "Lender" or "Lenders" shall, at any time when the Agent is a Lender, unless
the context otherwise indicates, include the Agent in its individual capacity.
The Agent and its Affiliates may accept deposits from, lend money to, and
generally engage in any kind of trust, debt, equity or other transaction, in
addition to those contemplated by this Agreement or any other Loan Document,
with the Company or any Subsidiary in which the Company or such Subsidiary is
not restricted hereby from engaging with any other Person. The Agent, in its
individual capacity, is not obligated to remain a Lender.

     10.11. Lender Credit Decision. Each Lender acknowledges that it has,
independently and without reliance upon the Agent, the Arrangers or any other
Lender and based on the financial statements prepared by the Company and such
other documents and information as it has deemed appropriate, made its own
credit analysis and decision to enter into this Agreement and the other Loan
Documents. Each Lender also acknowledges that it will, independently and without
reliance upon the Agent, the Arrangers or any other Lender and based on such
documents and information as it shall deem appropriate at the time, continue to
make its own credit decisions in taking or not taking action under this
Agreement and the other Loan Documents.

     10.12. Successor Agent. The Agent may resign at any time by giving written
notice thereof to the Lenders and the Company, such resignation to be effective
upon the appointment of a successor Agent or, if no successor Agent has been
appointed, forty-five days after the retiring Agent gives notice of its
intention to resign. The Agent may be removed at any time with or without cause
by written notice received by the Agent from the Required Lenders, such removal
to be effective on the date specified by the Required Lenders. Upon any such
resignation or removal, the Required Lenders shall have the right to appoint, on
behalf of the Borrowers and the Lenders, a successor Agent. If no successor
Agent shall have been so appointed by the Required Lenders within thirty days
after the resigning Agent's giving notice of its intention to resign, then the
resigning Agent may appoint, on behalf of the Borrowers and the Lenders, a
successor Agent. Notwithstanding the two immediately preceding sentences: (x)
subject to clause (y) of this sentence, the consent of the Borrowers shall be
required prior to the appointment of a successor Agent unless such successor
Agent is a Lender or an Affiliate of a Lender, provided that the consent of the
Borrowers shall not be required if a Default has occurred and is continuing, and
(y) the Agent may at any time without the consent of any Borrower or any Lender,
appoint any of its Affiliates which is a commercial bank as a successor Agent
hereunder. If the Agent has resigned or been removed and no successor Agent has
been appointed, the Lenders may perform all the duties of the Agent hereunder
and the Borrowers shall make all payments in respect of the Obligations to the
applicable Lender and for all other purposes shall deal directly with the
Lenders. No successor Agent shall be deemed to be appointed hereunder until such
successor Agent has accepted the appointment. Any such successor Agent shall be
a commercial bank having capital and retained earnings of at least $100,000,000.
Upon the acceptance of any appointment as Agent hereunder by a successor Agent,
such successor Agent shall thereupon succeed to and become vested with all the
rights, powers, privileges and duties of the resigning or removed Agent. Upon
the effectiveness of the resignation or removal of the Agent, the resigning or
removed Agent shall be discharged from its

                                       78



duties and obligations hereunder and under the Loan Documents. After the
effectiveness of the resignation or removal of an Agent, the provisions of this
Article X shall continue in effect for the benefit of such Agent in respect of
any actions taken or omitted to be taken by it while it was acting as the Agent
hereunder and under the other Loan Documents. In the event that there is a
successor to the Agent by merger, or the Agent assigns its duties and
obligations to an Affiliate pursuant to this Section 10.12, then the term "Prime
Rate" as used in this Agreement shall mean the prime rate, base rate or other
analogous rate of the new Agent.

     10.13. Agent and Arranger Fees. The Company agrees to pay to the Agent and
the Arrangers, for their respective accounts, the fees agreed to by the Company,
the Agent, Bank of America, N.A. and the Arrangers pursuant to that certain
letter agreement dated October 2, 2003, or as otherwise agreed from time to
time.

     10.14. Delegation to Affiliates. The Borrowers and the Lenders agree that
the Agent may delegate any of its duties under this Agreement to any of its
Affiliates. Any such Affiliate (and such Affiliate's directors, officers, agents
and employees) which performs duties in connection with this Agreement shall be
entitled to the same benefits of the indemnification, waiver and other
protective provisions to which the Agent is entitled under Articles IX and X.

     10.15. No Duties Imposed on Syndication Agents, Documentation Agents or
Arrangers. None of the Persons identified on the cover page to this Agreement,
the signature pages to this Agreement or otherwise in this Agreement as a
"Syndication Agent," "Documentation Agent" or "Arranger" shall have any right,
power, obligation, liability, responsibility or duty under this Agreement other
than, if such Person is a Lender, those applicable to all Lenders as such.
Without limiting the foregoing, none of the Persons identified on the cover page
to this Agreement, the signature pages to this Agreement or otherwise in this
Agreement as a "Syndication Agent," "Documentation Agent" or "Arranger" shall
have or be deemed to have any fiduciary duty to or fiduciary relationship with
any Holder of Obligations. Each of the Holders of Obligations acknowledges that
it has not relied, and will not rely, on any of the Persons so identified in
deciding to enter into this Agreement or in taking or not taking action
hereunder.

                                   ARTICLE XI

                            SETOFF; RATABLE PAYMENTS

     11.1.  Setoff. In addition to, and without limitation of, any rights of the
Lenders under applicable law, if any Borrower becomes insolvent, however
evidenced, or any other Default occurs and continues, any and all deposits
(including all account balances, whether provisional or final and whether or not
collected or available) and any other Indebtedness at any time held or owing by
any Lender or any Affiliate of any Lender to or for the credit or account of
such Borrower or any Subsidiary may be offset and applied toward the payment of
the Obligations owing to such Lender, whether or not the Obligations, or any
part thereof, shall then be due.

     11.2.  Ratable Payments. If any Lender, whether by setoff or otherwise, has
payment made to it upon its Outstanding Revolving Credit Exposure or its Term
Loans (other than payments received pursuant to Section 3.1, 3.2, 3.4 or 3.5) in
a greater proportion than that

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received by any other Lender, such Lender agrees, promptly upon demand, to
purchase a participation in the Aggregate Outstanding Revolving Credit Exposure
and Term Loans held by the other Lenders so that after such purchase each Lender
will hold its Pro Rata Share of the Aggregate Outstanding Revolving Credit
Exposure and outstanding principal balance of all Term Loans. If any Lender,
whether in connection with setoff or amounts which might be subject to setoff or
otherwise, receives collateral or other protection for its Obligations or such
amounts which may be subject to setoff, such Lender agrees, promptly upon
demand, to take such action necessary such that all Lenders share in the
benefits of such collateral ratably in proportion to their respective Pro Rata
Shares of the Aggregate Outstanding Revolving Credit Exposure and Term Loans. In
case any such payment is disturbed by legal process, or otherwise, appropriate
further adjustments shall be made.

                                   ARTICLE XII

                BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS

     12.1.  Successors and Assigns; Designated Lenders.

            12.1.1   Successors and Assigns. The terms and provisions of the
     Loan Documents shall be binding upon and inure to the benefit of the
     Borrowers, the Agent and the Lenders and their respective successors and
     assigns permitted hereby, except that (i) no Borrower shall have any right
     to assign its rights or obligations under the Loan Documents without the
     prior written consent of each Lender, (ii) any assignment by any Lender
     must be made in compliance with Section 12.3, and (iii) any transfer by
     Participants must be made in compliance with Section 12.2. Any attempted
     assignment or transfer by any party not made in compliance with this
     Section 12.1 shall be null and void, unless such attempted assignment or
     transfer is treated as a participation in accordance with Section 12.3.2.
     The parties to this Agreement acknowledge that clause (ii) of this Section
     12.1 relates only to absolute assignments and this Section 12.1 does not
     prohibit assignments creating security interests, including, without
     limitation, (x) any pledge or assignment by any Lender of all or any
     portion of its rights under this Agreement and any Note to a Federal
     Reserve Bank, (y) in the case of a Lender which is a Fund, any pledge or
     assignment of all or any portion of its rights under this Agreement and any
     Note to its trustee in support of its obligations to its trustee or (z) any
     pledge or assignment by any Lender of all or any portion of its rights
     under this Agreement and any Note to direct or indirect contractual
     counterparties in credit derivative transactions relating to the Loans;
     provided, however, that no such pledge or assignment creating a security
     interest shall release the transferor Lender from its obligations hereunder
     unless and until the parties thereto have complied with the provisions of
     Section 12.3. The Agent may treat the Person which made any Loan or which
     holds any Note as the owner thereof for all purposes hereof unless and
     until such Person complies with Section 12.3; provided, however, that the
     Agent may in its discretion (but shall not be required to) follow
     instructions from the Person which made any Loan or which holds any Note to
     direct payments relating to such Loan or Note to another Person. Any
     assignee of the rights to any Loan or any Note agrees by acceptance of such
     assignment to be bound by all the terms and provisions of the Loan
     Documents. Any request, authority or consent of any Person, who at the time
     of making such request or giving such authority or consent is

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     the owner of the rights to any Loan (whether or not a Note has been issued
     in evidence thereof), shall be conclusive and binding on any subsequent
     holder or assignee of the rights to such Loan.

            12.1.2   Designated Lenders.

     (i)    Subject to the terms and conditions set forth in this Section
            12.1.2, any Lender may from time to time elect to designate an
            Eligible Designee to provide all or any part of the Loans to be made
            by such Lender pursuant to this Agreement; provided that the
            designation of an Eligible Designee by any Lender for purposes of
            this Section 12.1.2 shall be subject to the approval of the Agent
            (which consent shall not be unreasonably withheld or delayed). Upon
            the execution by the parties to each such designation of an
            agreement in the form of Exhibit F hereto (a "Designation
            Agreement") and the acceptance thereof by the Agent, the Eligible
            Designee shall become a Designated Lender for purposes of this
            Agreement. The Designating Lender shall thereafter have the right to
            permit the Designated Lender to provide all or a portion of the
            Loans to be made by the Designating Lender pursuant to the terms of
            this Agreement and the making of the Loans or portion thereof shall
            satisfy the obligations of the Designating Lender to the same
            extent, and as if, such Loan was made by the Designating Lender. As
            to any Loan made by it, each Designated Lender shall have all the
            rights a Lender making such Loan would have under this Agreement and
            otherwise; provided, (x) that all voting rights under this Agreement
            shall be exercised solely by the Designating Lender, (y) each
            Designating Lender shall remain solely responsible to the other
            parties hereto for its obligations under this Agreement, including
            the obligations of a Lender in respect of Loans made by its
            Designated Lender and (z) no Designated Lender shall be entitled to
            reimbursement under Article III hereof for any amount which would
            exceed the amount that would have been payable by the Borrowers to
            the Lender from which the Designated Lender obtained any interests
            hereunder. No additional Notes shall be required with respect to
            Loans provided by a Designated Lender; provided, however, to the
            extent any Designated Lender shall advance funds, the Designating
            Lender shall be deemed to hold the Notes in its possession as an
            agent for such Designated Lender to the extent of the Loan funded by
            such Designated Lender. Such Designating Lender shall act as
            administrative agent for its Designated Lender and give and receive
            notices and communications hereunder. Any payments for the account
            of any Designated Lender shall be paid to its Designating Lender as
            administrative agent for such Designated Lender and no Borrower nor
            the Agent shall be responsible for any Designating Lender's
            application of such payments. In addition, any Designated Lender may
            (1) with notice to, but without the consent of any Borrower or the
            Agent, assign all or portions of its interests in any Loans to its
            Designating Lender or to any financial institution consented to by
            the Agent providing liquidity and/or credit facilities to or for the
            account of such Designated Lender and (2) subject to advising any
            such Person that such information is to be treated as confidential
            in accordance with Section 9.11, disclose on a confidential basis
            any non-public information relating to its Loans to any rating
            agency, commercial paper dealer or

                                       81



            provider of any guarantee, surety or credit or liquidity enhancement
            to such Designated Lender.

     (ii)   Each party to this Agreement hereby agrees that it shall not
            institute against, or join any other Person in instituting against,
            any Designated Lender any bankruptcy, reorganization, arrangement,
            insolvency or liquidation proceeding or other proceedings under any
            federal or state bankruptcy or similar law for one year and a day
            after the payment in full of all outstanding senior indebtedness of
            any Designated Lender; provided that the Designating Lender for each
            Designated Lender hereby agrees to indemnify, save and hold harmless
            each other party hereto for any loss, cost, damage and expense
            arising out of its inability to institute any such proceeding
            against such Designated Lender. This Section 12.1.2 shall survive
            the termination of this Agreement.

     12.2.  Participations.

            12.2.1   Permitted Participants; Effect. Any Lender may at any time
     sell to one or more banks or other entities ("Participants") participating
     interests in any Outstanding Revolving Credit Exposure of such Lender, any
     Term Loans of such Lender, any Note held by such Lender, any Revolving Loan
     Commitment of such Lender or any other interest of such Lender under the
     Loan Documents. In the event of any such sale by a Lender of participating
     interests to a Participant, such Lender's obligations under the Loan
     Documents shall remain unchanged, such Lender shall remain solely
     responsible to the other parties hereto for the performance of such
     obligations, such Lender shall remain the owner of its Outstanding
     Revolving Credit Exposure and its Term Loans and the holder of any Note
     issued to it in evidence thereof for all purposes under the Loan Documents,
     all amounts payable by the Borrowers under this Agreement shall be
     determined as if such Lender had not sold such participating interests, and
     the Borrowers and the Agent shall continue to deal solely and directly with
     such Lender in connection with such Lender's rights and obligations under
     the Loan Documents.

            12.2.2   Voting Rights. Each Lender shall retain the sole right to
     approve, without the consent of any Participant, any amendment,
     modification or waiver of any provision of the Loan Documents other than
     any amendment, modification or waiver with respect to any Credit Extension
     or Revolving Loan Commitment in which such Participant has an interest
     which would require consent of all of the Lenders pursuant to the terms of
     Section 8.2.

            12.2.3   Benefit of Certain Provisions. Each Borrower agrees that
     each Participant shall be deemed to have the right of setoff provided in
     Section 11.1 in respect of its participating interest in amounts owing
     under the Loan Documents to the same extent as if the amount of its
     participating interest were owing directly to it as a Lender under the Loan
     Documents, provided that each Lender shall retain the right of setoff
     provided in Section 11.1 with respect to the amount of participating
     interests sold to each Participant. The Lenders agree to share with each
     Participant, and each Participant, by exercising the right of setoff
     provided in Section 11.1, agrees to share with each Lender, any amount
     received pursuant to the exercise of its right of setoff, such amounts to
     be shared in

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     accordance with Section 11.2 as if each Participant were a Lender. Each
     Borrower further agrees that each Participant shall be entitled to the
     benefits of Sections 3.1, 3.2, 3.4 and 3.5 to the same extent as if it were
     a Lender and had acquired its interest by assignment pursuant to Section
     12.3, provided that (i) a Participant shall not be entitled to receive any
     greater payment under Section 3.1, 3.2 or 3.5 than the Lender who sold the
     participating interest to such Participant would have received had it
     retained such interest for its own account, unless the sale of such
     interest to such Participant is made with the prior written consent of the
     Borrowers, and (ii) any Participant not incorporated under the laws of the
     United States of America or any State thereof agrees to comply with the
     provisions of Section 3.5 to the same extent as if it were a Lender.

     12.3.  Assignments.

            12.3.1   Permitted Assignments. Any Lender may at any time assign to
     one or more banks or other entities ("Purchasers") all or any part of its
     rights and obligations under the Loan Documents. Such assignment shall be
     evidenced by an agreement substantially in the form of Exhibit C or in such
     other form as may be agreed to by the parties thereto (each such agreement,
     an "Assignment Agreement"). Each such assignment with respect to a
     Purchaser which is not a Lender or an Affiliate of a Lender or an Approved
     Fund shall, unless otherwise consented to in writing by the Company, on
     behalf of the Borrowers, and the Agent, either be in an amount equal to the
     entire applicable Outstanding Revolving Credit Exposure and/or Term Loans,
     as applicable, of the assigning Lender or (unless each of the Agent and,
     prior to the occurrence and continuance of a Default, the Company, on
     behalf of the Borrowers, otherwise consents) be in an aggregate amount not
     less than $5,000,000. The amount of the assignment shall be based on the
     Outstanding Revolving Credit Exposure and/or Term Loans, as applicable,
     subject to the assignment, determined as of the date of such assignment or
     as of the "Trade Date," if the "Trade Date" is specified in the Assignment
     Agreement.

            12.3.2   Consents. The consent of the Company shall be required
     prior to an assignment becoming effective unless the Purchaser is a Lender,
     an Affiliate of a Lender or an Approved Fund (other than a Lender or
     Affiliate of a Lender or an Approved Fund that becomes a Lender solely by
     means of the settlement of a credit derivative), provided that the consent
     of the Company shall not be required if (i) a Default or Unmatured Default
     has occurred and is continuing or (ii) if such assignment is in connection
     with the physical settlement of any Lender's obligations to direct or
     indirect contractual counterparties in credit derivative transactions
     relating to the Loans; provided, that the assignment without the Company's
     consent pursuant to clause (ii) shall not increase the Borrowers' liability
     under Section 3.5. The consent of the Agent shall be required prior to an
     assignment becoming effective unless the Purchaser is a Lender, an
     Affiliate of a Lender or an Approved Fund (other than a Lender or Affiliate
     of a Lender or an Approved Fund that becomes a Lender solely by means of
     the settlement of a credit derivative). Any consent required under this
     Section 12.3.2 shall not be unreasonably withheld or delayed.

            12.3.3   Effect; Effective Date. Upon (i) delivery to the Agent of
     an Assignment Agreement, together with any consents required by Sections
     12.3.1 and 12.3.2, and (ii)

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     payment of a $3,500 fee to the Agent by the assigning Lender or the
     Purchaser for processing such assignment (unless such fee is waived by the
     Agent or unless such assignment is made to such assigning Lender's
     Affiliate), such assignment shall become effective on the effective date
     specified in such assignment. The Assignment Agreement shall contain a
     representation and warranty by the Purchaser to the effect that none of the
     funds, money, assets or other consideration used to make the purchase and
     assumption of the Revolving Loan Commitment and Outstanding Revolving
     Credit Exposure and/or Term Loans, as applicable, under the applicable
     Assignment Agreement constitutes "plan assets" as defined under ERISA and
     that the rights, benefits and interests of the Purchaser in and under the
     Loan Documents will not be "plan assets" under ERISA. On and after the
     effective date of such assignment, such Purchaser shall for all purposes be
     a Lender party to this Agreement and any other Loan Document executed by or
     on behalf of the Lenders and shall have all the rights, benefits and
     obligations of a Lender under the Loan Documents, to the same extent as if
     it were an original party thereto, and the transferor Lender shall be
     released with respect to the Revolving Loan Commitment and Outstanding
     Revolving Credit Exposure and/or Term Loans, as applicable, assigned to
     such Purchaser without any further consent or action by the Company, the
     Lenders or the Agent. In the case of an assignment covering all of the
     assigning Lender's rights, benefits and obligations under this Agreement,
     such Lender shall cease to be a Lender hereunder but shall continue to be
     entitled to the benefits of, and subject to, those provisions of this
     Agreement and the other Loan Documents which survive payment of the
     Obligations and termination of the Loan Documents. Any assignment or
     transfer by a Lender of rights or obligations under this Agreement that
     does not comply with this Section 12.3 shall be treated for purposes of
     this Agreement as a sale by such Lender of a participation in such rights
     and obligations in accordance with Section 12.2. Upon the consummation of
     any assignment to a Purchaser pursuant to this Section 12.3.3, the
     transferor Lender, the Agent and the Borrowers shall, if the transferor
     Lender or the Purchaser desires that its Loans be evidenced by Notes, make
     appropriate arrangements so that, upon cancellation and surrender to the
     Company of the Notes (if any) held by the transferor Lender, new Notes or,
     as appropriate, replacement Notes are issued to such transferor Lender, if
     applicable, and new Notes or, as appropriate, replacement Notes, are issued
     to such Purchaser, in each case in principal amounts reflecting their
     respective Revolving Loan Commitments (or, if the Revolving Loan
     Termination Date has occurred, their respective Outstanding Revolving
     Credit Exposure) or Term Loans, as applicable, as adjusted pursuant to such
     assignment.

            12.3.4   Register. The Agent, acting solely for this purpose as an
     agent of the Borrowers (and each Borrower hereby designates the Agent to
     act in such capacity), shall maintain at one of its offices in Chicago,
     Illinois a copy of each Assignment and Assumption delivered to it and a
     register (the "Register") for the recordation of the names and addresses of
     the Lenders, and the Revolving Loan Commitments of, and principal amounts
     of and interest on the Loans owing to, each Lender pursuant to the terms
     hereof from time to time and whether such Lender is an original Lender or
     assignee of another Lender pursuant to an assignment under this Section
     13.3. The entries in the Register shall be conclusive, and the Borrowers,
     the Agent and the Lenders may treat each Person whose name is recorded in
     the Register pursuant to the terms hereof as a Lender hereunder for all
     purposes of this Agreement, notwithstanding notice to the contrary. The

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     Register shall be available for inspection by any Borrower and any Lender,
     at any reasonable time and from time to time upon reasonable prior notice.

     12.4.  Dissemination of Information. Each Borrower authorizes each Lender
to disclose to any Participant or Purchaser or any other Person acquiring an
interest in the Loan Documents by operation of law (each a "Transferee") and any
prospective Transferee any and all information in such Lender's possession
concerning the creditworthiness of the Company and the Subsidiaries; provided
that each Transferee and prospective Transferee agrees to be bound by Section
9.11 of this Agreement.

     12.5.  Tax Certifications. If any interest in any Loan Document is
transferred to any Transferee which is not organized under the laws of the
United States or any State thereof, the transferor Lender shall cause such
Transferee, concurrently with the effectiveness of such transfer, to comply with
the provisions of Section 3.5(iv).

                                  ARTICLE XIII

                                     NOTICES

     13.1.  Notices; Effectiveness; Electronic Communication.

            13.1.1   Notices Generally. Except in the case of notices and other
     communications expressly permitted to be given by telephone (and except as
     provided in Section 13.1.2), all notices and other communications provided
     for herein shall be in writing and shall be delivered by hand or overnight
     courier service, mailed by certified or registered mail or sent by
     telecopier as follows:

     (i)    if to any Borrower, at the Company's address or telecopier number
            set forth on the signature page hereof;

     (ii)   if to the Agent or the Swing Line Lender or if the LC Issuer is Bank
            One, at its address or telecopier number set forth on the signature
            page hereof;

     (iii)  if to a Lender or to any LC Issuer other than Bank One, to it at its
            address (or telecopier number) set forth in its administrative
            questionnaire delivered to the Agent.

     Notices sent by hand or overnight courier service, or mailed by certified
     or registered mail, shall be deemed to have been given when received;
     notices sent by telecopier shall be deemed to have been given when sent
     (except that, if not given during normal business hours for the recipient,
     shall be deemed to have been given at the opening of business on the next
     Business Day for the recipient). Notices delivered through electronic
     communications to the extent provided in Section 13.1.2, shall be effective
     as provided in Section 13.1.2.

            13.1.2   Electronic Communications. Notices and other communications
     to the Lenders may be delivered or furnished by electronic communication
     (including e-mail and internet or intranet websites) pursuant to procedures
     approved by the Agent or as

                                       85



     otherwise determined by the Agent, provided that the foregoing shall not
     apply to notices to any Lender pursuant to Article II if such Lender has
     notified the Agent that it is incapable of receiving notices under such
     Article by electronic communication. The Agent or the Company, on behalf of
     each Borrower, may, in its respective discretion, agree to accept notices
     and other communications to it hereunder by electronic communications
     pursuant to procedures approved by it or as it otherwise determines,
     provided that such determination or approval may be limited to particular
     notices or communications.

     Unless the Agent otherwise prescribes, (i) notices and other communications
     sent to an e-mail address shall be deemed received upon the sender's
     receipt of an acknowledgement from the intended recipient (such as by the
     "return receipt requested" function, as available, return e-mail or other
     written acknowledgement), provided that if such notice or other
     communication is not given during the normal business hours of the
     recipient, such notice or communication shall be deemed to have been given
     at the opening of business on the next Business Day for the recipient, and
     (ii) notices or communications posted to an Internet or intranet website
     shall be deemed received upon the deemed receipt by the intended recipient
     at its e-mail address as described in the foregoing clause (i) of
     notification that such notice or communication is available and identifying
     the website address therefor.

     13.2.  Change of Address, Etc. Any party hereto may change its address or
telecopier number for notices and other communications hereunder by notice to
the other parties hereto.

                                   ARTICLE XIV

         COUNTERPARTS; INTEGRATION; EFFECTIVENESS; ELECTRONIC EXECUTION

     14.1.  Counterparts; Effectiveness. This Agreement may be executed in
counterparts (and by different parties hereto in different counterparts), each
of which shall constitute an original, but all of which when taken together
shall constitute a single contract. Except as provided in Article IV, this
Agreement shall become effective when it shall have been executed by the Agent
and when the Agent shall have received counterparts hereof which, when taken
together, bear the signatures of each of the parties hereto, and thereafter
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns. Delivery of an executed counterpart of a
signature page of this Agreement by telecopy shall be effective as delivery of a
manually executed counterpart of this Agreement.

     14.2.  Electronic Execution of Assignments. The words "execution,"
"signed," "signature," and words of like import in any assignment and assumption
agreement shall be deemed to include electronic signatures or the keeping of
records in electronic form, each of which shall be of the same legal effect,
validity or enforceability as a manually executed signature or the use of a
paper-based recordkeeping system, as the case may be, to the extent and as
provided for in any applicable law, including the Federal Electronic Signatures
in Global and National Commerce Act, or any other state laws based on the
Uniform Electronic Transactions Act.

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                                   ARTICLE XV

          CHOICE OF LAW; CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL

     15.1.  CHOICE OF LAW. THE LOAN DOCUMENTS (OTHER THAN THOSE CONTAINING A
CONTRARY EXPRESS CHOICE OF LAW PROVISION) SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAWS, INCLUDING 735 ILCS SECTION 105/5-1 ET SEQ.
BUT OTHERWISE WITHOUT REGARD TO THE CONFLICT OF LAWS PROVISIONS, OF THE STATE OF
ILLINOIS, BUT GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL BANKS.

     15.2.  CONSENT TO JURISDICTION. EACH BORROWER HEREBY IRREVOCABLY SUBMITS TO
THE NON-EXCLUSIVE JURISDICTION OF ANY UNITED STATES FEDERAL OR ILLINOIS STATE
COURT SITTING IN CHICAGO, ILLINOIS IN ANY ACTION OR PROCEEDING ARISING OUT OF OR
RELATING TO ANY LOAN DOCUMENTS AND EACH BORROWER HEREBY IRREVOCABLY AGREES THAT
ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED
IN ANY SUCH COURT AND IRREVOCABLY WAIVES ANY OBJECTION IT MAY NOW OR HEREAFTER
HAVE AS TO THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN SUCH A
COURT OR THAT SUCH COURT IS AN INCONVENIENT FORUM. NOTHING HEREIN SHALL LIMIT
THE RIGHT OF THE AGENT, ANY LC ISSUER, ANY LENDER OR ANY HOLDER OF OBLIGATIONS
TO BRING PROCEEDINGS AGAINST ANY BORROWER IN THE COURTS OF ANY OTHER
JURISDICTION. ANY JUDICIAL PROCEEDING BY ANY BORROWER AGAINST THE AGENT, ANY LC
ISSUER, ANY LENDER OR HOLDER OF OBLIGATIONS OR ANY AFFILIATE OF THE AGENT, ANY
LC ISSUER, ANY LENDER OR HOLDER OF OBLIGATIONS INVOLVING, DIRECTLY OR
INDIRECTLY, ANY MATTER IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH
ANY LOAN DOCUMENT SHALL BE BROUGHT ONLY IN A COURT SITTING IN CHICAGO, ILLINOIS.

     15.3.  WAIVER OF JURY TRIAL. EACH BORROWER, THE AGENT, EACH LC ISSUER, EACH
LENDER AND EACH HOLDER OF OBLIGATIONS HEREBY WAIVE TRIAL BY JURY IN ANY JUDICIAL
PROCEEDING INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN
TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED
WITH ANY LOAN DOCUMENT OR THE RELATIONSHIP ESTABLISHED THEREUNDER.

                                   ARTICLE XVI

                             CO-BORROWER PROVISIONS

     16.1.  Appointment. Each of the Borrowers hereby irrevocably designates,
appoints and authorizes each other Borrower as its agent and attorney-in-fact to
take actions under this Agreement and the other Loan Documents, together with
such powers as are reasonably

                                       87



incidental thereto. The Agent and the Lenders shall be entitled to rely, and
shall be fully protected in relying, upon any communication from or to any
Borrower as having been delivered by or to all Borrowers. Any action taken by
one Borrower under this Agreement and the other Loan Documents shall be binding
upon each other Borrower. Each Borrower agrees that it is jointly and severally
liable to the Agent and the Lenders for the payment of (i) the Obligations and
(ii) all Rate Management Obligations owing to any Holder of Obligations
(collectively, the "Co-Borrower Obligations") and that such liability is
independent of the Obligations and Rate Management Obligations of each other
Borrower and whether such Obligations and/or Rate Management Obligations become
unenforceable against any other Borrower.

     16.2.  Separate Actions. A separate action or actions may be brought and
prosecuted against any Borrower whether such action is brought against any other
Borrower or whether any other Borrower is joined in such action or actions. Each
Borrower authorizes the Agent and the Lenders to release the other Borrowers
without in any manner or to any extent affecting the liability of such Borrower
hereunder or under the Loan Documents. Each Borrower waives any defense arising
by reason of any disability or other defense of any other Borrower, or the
cessation for any reason whatsoever of the liability of any other Borrower with
respect to any of the Co-Borrower Obligations, or any claim that such Borrower's
liability hereunder exceeds or is more burdensome than the liability of any
other Borrower.

     16.3.  Co-Borrower Obligations Absolute and Unconditional. Each Borrower
hereby agrees that its Co-Borrower Obligations hereunder and under the Loan
Documents shall be unconditional, irrespective of:

            (a)  the validity, enforceability, avoidance or subordination of any
of the Co-Borrower Obligations or any of the Loan Documents as to any other
Borrower;

            (b)  the absence of any attempt by, or on behalf of, the Agent or
any Lender to collect, or to take any other action to enforce, all or any part
of the Co-Borrower Obligations whether from or against any other Borrower or any
other Person liable for such Co-Borrower Obligations;

            (c)  the election of any remedy available under the Loan Documents
or applicable law by, or on behalf of, the Agent or any Lender with respect to
all or any part of the Co-Borrower Obligations;

            (d)  the waiver, consent, extension, forbearance or granting of any
indulgence by, or on behalf of, the Agent or any Lender with respect to any
provision of any of the Loan Documents;

            (e)  the failure of the Agent or any Lender to take any steps to
perfect and maintain its security interest in, or to preserve its rights to, any
security or collateral for the Co-Borrower Obligations;

            (f)  the election by, or on behalf of, the Agent or any Lender, in
any proceeding described in Section 8.01(f), involving any other Borrower of any
right which is comparable to the rights set forth in Section 1111(b)(2) of the
Bankruptcy Code;

                                       88



            (g)  any borrowing or grant of a security interest by any other
Borrower or any receiver or assignee following the occurrence of any event
described in Section 8.01(f), pursuant to any provision of applicable law
comparable to Section 364 of the Bankruptcy Code;

            (h)  the disallowance, under any provision of applicable law
comparable to Section 502 of the Bankruptcy Code, of all or any portion of the
claims against any other Borrower held by any Lender or any Agent, for repayment
of all or any part of the Co-Borrower Obligations;

            (i)  the insolvency of any other Borrower; and

            (j)  any other circumstance which might otherwise constitute a legal
or equitable discharge or defense of such Borrower (other than payment in full
in cash of the Co-Borrower Obligations and the termination of the Commitments).

     16.4.  Waivers and Acknowledgements.

            16.4.1   Except as otherwise expressly provided under any provision
     of the Loan Documents or as required by any mandatory provision of
     applicable law, each Borrower hereby waives diligence, presentment, demand
     of payment, filing of claims with a court in the event of receivership,
     insolvency or bankruptcy of any Borrower or any other Person, protest or
     notice with respect to the Co-Borrower Obligations, all setoffs and
     counterclaims and all presentments, demands for performance, notices of
     nonperformance, protests, notices of protest, notices of dishonor and
     notices of acceptance of this Agreement and the other Loan Documents, the
     benefits of all statutes of limitation, and all other demands whatsoever
     (and shall not require that the same be made on any other Borrower as a
     condition precedent to such other Borrower's Co-Borrower Obligations
     hereunder), and covenants that this Agreement (and the joint and several
     liability of each Borrower under Section 11.01) will not be discharged,
     except by payment in full in cash of the Co-Borrower Obligations and the
     termination of the Commitments. Each Borrower further waives all notices of
     the existence, creation or incurrence of new or additional Indebtedness,
     arising either from additional loans extended to any other Borrower or
     otherwise, and also waives all notices that the principal amount, or any
     portion thereof, and/or any interest on any instrument or document
     evidencing all or any part of the Co-Borrower Obligations is due, notices
     of any and all proceedings to collect from the maker, any endorser or any
     other guarantor of all or any part of the Co-Borrower Obligations, or from
     any other Person, and, to the extent permitted by law, notices of exchange,
     sale, surrender or other handling of any security or collateral given to
     the Agent or any Lender to secure payment of all or any part of the
     Co-Borrower Obligations.

            16.4.2   The Agent and/or the Lenders are hereby authorized, without
     notice or demand and without affecting the liability of the Borrowers
     hereunder, from time to time, (i) to accept partial payments on all or any
     part of the Co-Borrower Obligations; (ii) to take and hold security or
     collateral for the payment of all or any part of the Co-Borrower
     Obligations, this Agreement, or any other guaranties of all or any part of
     the Co-Borrower Obligations or other liabilities of the Borrowers, and
     (iii) to settle, release,

                                       89



     exchange, enforce, waive, compromise or collect or otherwise liquidate all
     or any part of the Co-Borrower Obligations, this Agreement, any guaranty of
     all or any part of the Co-Borrower Obligations, and any security or
     collateral for the Co-Borrower Obligations or for any such guaranty,
     irrespective of the effect on the contribution or subrogation rights of the
     Borrowers. Any of the foregoing may be done in any manner, without
     affecting or impairing the obligations of each Borrower hereunder.

     16.5.  Contribution Among Borrowers. The Borrowers agree as between
themselves and without limiting any liability of any Borrower hereunder to the
Agent or the Lenders, that to the extent any payment of the Co-Borrower
Obligations of the Borrowers is required to be made under this Agreement, to the
extent that any Borrower shall make a payment under this Agreement (a "Borrower
Payment") which, taking into account all other Borrower Payments then previously
or concurrently made by any other Borrower, exceeds the amount which otherwise
would have been paid by or attributable to such Borrower if each Borrower had
paid the aggregate Co-Borrower Obligations satisfied by such Borrower Payment in
the same proportion as such Borrower's "Allocable Amount" (as defined below) (as
determined immediately prior to such Borrower Payment) bore to the aggregate
Allocable Amounts of each of the Borrowers as determined immediately prior to
the making of such Borrower Payment, then, following payment in full in cash of
the Co-Borrower Obligations, such Borrower shall be entitled to receive
contribution and indemnification payments from, and be reimbursed by, each other
Borrower for the amount of such excess, pro rata based upon their respective
Allocable Amounts in effect immediately prior to such Borrower Payment. As of
any date of determination, the "Allocable Amount" of any Borrower shall be equal
to the maximum amount of the claim which could then be recovered from such
Borrower under this Agreement without rendering such claim voidable or avoidable
under Section 548 of Chapter 11 of the Bankruptcy Code or under any applicable
state Uniform Fraudulent Transfer Act, Uniform Fraudulent Conveyance Act or
similar statute or common law.

     16.6.  Subrogation. Until the Co-Borrower Obligations shall have been paid
in full in cash and the Commitments shall have been terminated, each Borrower
hereby agrees that it (i) shall have no right of subrogation with respect to
such Co-Borrower Obligations (under contract, Section 509 of the Bankruptcy Code
or any comparable provision of any other applicable law, or otherwise) or any
other right of indemnity, reimbursement or contribution, and (ii) hereby waives
any right to enforce any remedy which the Agent or any Lender may now have or
may hereafter have against any other Borrower, any endorser or any other
Guarantor of all or any part of the Co-Borrower Obligations or any other Person,
and each Borrower hereby waives any benefit of, and any right to participate in,
any security or collateral given to the Agent and the Lenders to secure the
payment or performance of all or any part of the Co-Borrower Obligations or any
other liability of any other Borrower to the Agent and the Lenders.

     16.7.  Subordination. Each Borrower agrees that any and all claims of such
Borrower against the other Borrowers, the Guarantors or any endorser or other
guarantor of all or any part of the Co-Borrower Obligations, or against any of
their respective properties, shall be subordinated to all of the Co-Borrower
Obligations. Notwithstanding any right of any Borrower to ask for, demand, sue
for, take or receive any payment from any other Borrower, all rights and Liens
of such Borrower, whether now or hereafter arising and howsoever existing, in
any assets of such other Borrower (whether constituting part of any collateral
or otherwise) shall be and

                                       90



hereby are subordinated to the rights of the Agent or the Lenders in those
assets. Such Borrower shall have no right to possession of any such asset or to
foreclose upon any such asset, whether by judicial action or otherwise, unless
and until all of the Co-Borrower Obligations shall have been paid in full in
cash and the Commitments shall have been terminated. If all or any part of the
assets of any Borrower, or the proceeds thereof, are subject to any
distribution, division or application to the creditors of such Borrower, whether
partial or complete, voluntary or involuntary, and whether by reason of
liquidation, bankruptcy, arrangement, receivership, assignment for the benefit
of creditors or any other action or proceeding, or if the business of any
Borrower is dissolved or if substantially all of the assets of any Borrower are
sold, then, and in any such event, any payment or distribution of any kind or
character, either in cash, securities or other property, which shall be payable
or deliverable upon or with respect to any Indebtedness of any Borrower to any
other Borrower ("Inter-Borrower Debt") shall be paid or delivered directly to
the Agent for application to the Co-Borrower Obligations, due or to become due,
until such Co-Borrower Obligations shall have been paid in full in cash. Each
Borrower irrevocably authorizes and empowers the Agent and each of the Lenders
to demand, sue for, collect and receive every such payment or distribution and
give acquittance therefor and to make and present for and on behalf of such
Borrower such proofs of claim and take such other action, in the Agent's or such
Lender's own name or in the name of such Borrower or otherwise, as the Agent or
any Lender may deem reasonably necessary or reasonably advisable for the
enforcement of this Agreement. After the occurrence and during the continuance
of a Default or an Unmatured Default, each Lender may vote, with respect to the
Co-Borrower Obligations owed to it, such proofs of claim in any such proceeding,
receive and collect any and all dividends or other payments or disbursements
made thereon in whatever form the same may be paid or issued and apply the same
on account of any of the Co-Borrower Obligations. Except as permitted under
Sections 7.02(d) and (e), should any payment, distribution, security or
instrument or proceeds thereof be received by any Borrower upon or with respect
to the Inter-Borrower Debt prior to the payment in full in cash of all of the
Co-Borrower Obligations and the termination of the Commitments, such Borrower
shall receive and hold the same in trust, as trustee, for the benefit of the
Agent and the Lenders and shall forthwith deliver the same to the Agent in
precisely the form received (accompanied by the endorsement or assignment of
such Borrower where necessary), for application to the Co-Borrower Obligations,
due or not due, and, until so delivered, the same shall be held in trust by such
Borrower as the property of the Agent and the Lenders. After the occurrence and
during the continuance of a Default or an Unmatured Default, if any Borrower
fails to make any such endorsement or assignment to the Agent or the Lenders,
the Agent or the Lenders (or any of their respective officers or employees) are
hereby irrevocably authorized to make the same. Each Borrower agrees that until
the Co-Borrower Obligations have been paid in full in cash and the Commitments
have been terminated, such Borrower will not assign or transfer to any Person
any claim such Borrower has or may have against any other Borrower (other than
in favor of the Agent pursuant to the Loan Documents).

                The remainder of this page is intentionally blank

                                       91



     IN WITNESS WHEREOF, the initial Borrowers, the Lenders, the LC Issuers and
the Agent have executed this Agreement as of the date first above written.

                                        PATTERSON DENTAL COMPANY,
                                        as a Borrower


                                        By: /s/ R. Stephen Armstrong
                                        Print Name: R. Stephen Armstrong
                                        Title: Executive Vice President,
                                               Chief Financial Officer
                                               and Treasurer
                                               1031 Mendota Heights Road
                                               St. Paul, MN 55120

                                        Attention: R. Stephen Armstrong
                                               Executive Vice President,
                                               Chief Financial Officer,
                                               and Treasurer
                                        Telephone: (651) 686-1769
                                        FAX: (651) 686-8984


                               SIGNATURE PAGE TO
                   PATTERSON DENTAL COMPANY CREDIT AGREEMENT



                                        ABILITYONE CORPORATION,
                                        as a Borrower


                                        By: /s/ R. Stephen Armstrong
                                        Print Name: R. Stephen Armstrong
                                        Title: Vice President and Treasurer
                                               1031 Mendota Heights Road
                                               St. Paul, MN 55120

                                        Attention: R. Stephen Armstrong
                                               Vice President and Treasurer
                                        Telephone: (651) 686-1769
                                        FAX: (651) 686-8984


                               SIGNATURE PAGE TO
                   PATTERSON DENTAL COMPANY CREDIT AGREEMENT



                                        ABILITYONE PRODUCTS CORP.,
                                        as a Borrower


                                        By: /s/ R. Stephen Armstrong
                                        Print Name: R. Stephen Armstrong
                                        Title: Vice President and Treasurer
                                               1031 Mendota Heights Road
                                               St. Paul, MN 55120

                                        Attention: R. Stephen Armstrong
                                               Vice President and Treasurer
                                        Telephone: (651) 686-1769
                                        FAX: (651) 686-8984


                               SIGNATURE PAGE TO
                   PATTERSON DENTAL COMPANY CREDIT AGREEMENT



                                        PATTERSON DENTAL SUPPLY, INC.,
                                        as a Borrower


                                        By: /s/ R. Stephen Armstrong
                                        Print Name: R. Stephen Armstrong
                                        Title: Vice President and Treasurer
                                               1031 Mendota Heights Road
                                               St. Paul, MN 55120

                                        Attention: R. Stephen Armstrong
                                               Vice President and Treasurer
                                        Telephone: (651) 686-1769
                                        FAX: (651) 686-8984


                               SIGNATURE PAGE TO
                   PATTERSON DENTAL COMPANY CREDIT AGREEMENT



                                        WEBSTER VETERINARY SUPPLY, INC.,
                                        as a Borrower


                                        By: /s/ R. Stephen Armstrong
                                        Print Name: R. Stephen Armstrong
                                        Title: Vice President and Treasurer
                                               1031 Mendota Heights Road
                                               St. Paul, MN 55120

                                        Attention: R. Stephen Armstrong
                                               Vice President and Treasurer
                                        Telephone: (651) 686-1769
                                        FAX: (651) 686-8984


                               SIGNATURE PAGE TO
                   PATTERSON DENTAL COMPANY CREDIT AGREEMENT



                                        WEBSTER MANAGEMENT, LP,
                                        as a Borrower


                                        By: WEBSTER VETERINARY SUPPLY, INC.
                                        Its General Partner


                                        By: /s/ R. Stephen Armstrong
                                        Print Name: R. Stephen Armstrong
                                        Title: Vice President and Treasurer
                                               1031 Mendota Heights Road
                                               St. Paul, MN 55120

                                        Attention: R. Stephen Armstrong
                                               Vice President and Treasurer
                                        Telephone: (651) 686-1769
                                        FAX: (651) 686-8984


                               SIGNATURE PAGE TO
                   PATTERSON DENTAL COMPANY CREDIT AGREEMENT



                                        BANK ONE, NA (MAIN BRANCH CHICAGO),
                                        individually, as an LC Issuer and the
                                        Swing Line Lender, and as
                                        Administrative Agent


                                        By: /s/ Anthony F. Maggiore
                                        Print Name: Anthony F. Maggiore
                                        Title: Director, Capital Markets
                                               Bank One, NA
                                               111 E. Wisconsin Avenue, WI1-2042
                                               Milwaukee, Wisconsin 53202

                                        Attention: Anthony F. Maggiore
                                               Telephone: (414) 765 - 3111
                                               FAX: (414) 765 - 2625


                               SIGNATURE PAGE TO
                   PATTERSON DENTAL COMPANY CREDIT AGREEMENT



                                        BANK OF AMERICA, N.A.,
                                        individually, as a Lender and as
                                        Syndication Agent


                                        By: /s/ Philip S. Durand
                                        Print Name: Philip S. Durand
                                        Title: Managing Director
                                               100 North Tryon Street,
                                               NC1-007-17-11 Charlotte,
                                               North Carolina 28202

                                        Attention: Jeanie Del Sordo
                                               Telephone: (704) 388-5954
                                               FAX: (704) 409-0606


                               SIGNATURE PAGE TO
                   PATTERSON DENTAL COMPANY CREDIT AGREEMENT



                                        HARRIS TRUST & SAVINGS BANK,
                                        as a Lender


                                        By: /s/ Michael Pincus
                                        Print Name: Michael Pincus
                                        Title: Managing Director
                                               111 West Monroe Street,
                                               20/th/ Floor East
                                               Chicago, Illinois 60603

                                        Attention: Todd Kostelnik
                                               Telephone: (312) 461-3139
                                               FAX: (312) 461-7365


                               SIGNATURE PAGE TO
                   PATTERSON DENTAL COMPANY CREDIT AGREEMENT



                                        KEY BANK NATIONAL ASSOCIATION,
                                        as a Lender


                                        By: /s/ Christopher Swindell
                                        Print Name: Christopher Swindell
                                        Title: Senior Vice President
                                               1211 SW Fifth Avenue, Suite 400
                                               Portland, Oregon 97201

                                        Attention: Christopher Swindell
                                               Telephone: (503) 790-7570
                                               FAX: (503) 790-7574


                               SIGNATURE PAGE TO
                   PATTERSON DENTAL COMPANY CREDIT AGREEMENT



                                        NATIONAL CITY BANK OF MICHIGAN/ILLINOIS,
                                        as a Lender


                                        By: /s/ Elizabeth G. Brandt
                                        Print Name: Elizabeth G. Brandt
                                        Title: Vice President
                                               One North Franklin, Suite 3600
                                               Chicago, Illinois 60606

                                        Attention: Elizabeth G. Brandt
                                               Telephone: (312) 384-4653
                                               FAX: (312) 384-4666


                               SIGNATURE PAGE TO
                   PATTERSON DENTAL COMPANY CREDIT AGREEMENT



                                        PNC BANK, NATIONAL ASSOCIATION,
                                        as a Lender


                                        By: /s/ Philip K. Liebscher
                                        Print Name: Philip K. Liebscher
                                        Title: Vice President
                                               249 Fifth Avenue, P1-POPP-2-3
                                               Pittsburgh, Pennsylvania
                                               15222-2707

                                        Attention: Philip K. Liebscher
                                               Telephone: (412) 762-3202
                                               FAX: (412) 762-6484


                               SIGNATURE PAGE TO
                   PATTERSON DENTAL COMPANY CREDIT AGREEMENT



                                        SUNTRUST BANK,
                                        as a Documentation Agent and as a Lender


                                        By: /s/ W. Brooks Hubbard
                                        Print Name: W. Brooks Hubbard
                                        Title: Director
                                               Mail Code NA1907
                                               201 4/th/ Avenue North,
                                               3/rd/ Floor
                                               Nashville, Tennessee 37219

                                        Attention: W. Brooks Hubbard
                                               Telephone: (615) 748-4465
                                               FAX: (615) 748-5117


                               SIGNATURE PAGE TO
                   PATTERSON DENTAL COMPANY CREDIT AGREEMENT



                                        THE BANK OF TOKYO-MITSUBISHI, LTD.,
                                        CHICAGO BRANCH,
                                        as a Lender


                                        By: /s/ Patrick McCue
                                        Print Name: Patrick McCue
                                        Title: Vice President & Manager
                                               601 Carlson Parkway, Suite 370
                                               Minnetonka, Minnesota 55305

                                        Attention: Patrick McCue
                                               Telephone: (952) 473-6110
                                               FAX: (952) 473-5152


                               SIGNATURE PAGE TO
                   PATTERSON DENTAL COMPANY CREDIT AGREEMENT



                                        THE NORTHERN TRUST COMPANY,
                                        as a Documentation Agent and as a Lender


                                        By:  /s/ John C. Canty
                                        Print Name: John C. Canty
                                        Title: Vice President
                                               50 South LaSalle, Suite B2
                                               Chicago, Illinois 60675

                                        Attention: John C. Canty
                                               Telephone: (312) 444-7729
                                               FAX: (312) 444-7028


                                SIGNATURE PAGE TO
                    PATTERSON DENTAL COMPANY CREDIT AGREEMENT



                                        UNION BANK OF CALIFORNIA, N.A.,
                                        as a Lender


                                        By:  /s/ Christine Davis
                                        Print Name: Christine Davis
                                        Title: Vice President
                                               445 S. Figueroa St., G16-110
                                               Los Angeles, California 90071

                                        Attention: Matthew Krajniak (credit
                                                   contact)
                                               Telephone: (213) 236-6491
                                               FAX: (213) 236-7636

                                        Attention: Shirley Davis (operations
                                                   contact)
                                               Telephone: (323) 720-2682
                                               FAX: (323) 720-2252/51


                                SIGNATURE PAGE TO
                    PATTERSON DENTAL COMPANY CREDIT AGREEMENT



                                        U.S. BANK NATIONAL ASSOCIATION,
                                        as a Documentation Agent and as a Lender


                                        By:  /s/ Karen E. Weathers
                                        Print Name: Karen E. Weathers
                                        Title: Vice President
                                               U.S. Bancorp Center
                                               BC-MN-H03N
                                               800 Nicollet Mall, 15/th/ Floor
                                               Minneapolis, MN 55420
                                        Attention:
                                               Telephone: (612) 303-3764
                                               FAX: (612) 303-2265


                                SIGNATURE PAGE TO
                   PATTERSON DENTAL COMPANY CREDIT AGREEMENT



                                        WELLS FARGO BANK, NATIONAL ASSOCIATION,
                                        as a Lender


                                        By:  /s/ Scott D. Bjelde
                                        Print Name: Scott D. Bjelde
                                        Title: VP & Senior Banker


                                        By:  /s/ Jennifer D. Barrett
                                        Print Name: Jennifer D. Barrett
                                        Title: VP & Loan Team Member

                                               Wells Fargo Bank
                                               MAC N 9305-031
                                               Sixth and Marquette
                                               Minneapolis MN 55479
                                        Attention:  Scott D. Bjelde
                                               Telephone: (612) 667-6126
                                               FAX: (612) 667-2276


                                SIGNATURE PAGE TO
                    PATTERSON DENTAL COMPANY CREDIT AGREEMENT



                               COMMITMENT SCHEDULE

                           Revolving Loan Commitments

                                               Amount of        % of Aggregate
                                               Revolving          Revolving
Lender                                       Loan Commitment    Loan Commitment
- ----------------------------------------    ----------------    ---------------
Bank One, NA (Main Office Chicago)          $  23,333,333.35      11.666,666,66%
Bank of America, N.A.                       $  23,333,333.34      11.666,666,65%
Harris Trust & Savings Bank                 $  13,333,333.33       6.666,666,67%
Key Bank National Association               $  13,333,333.33       6.666,666,67%
National City Bank of Michigan/Illinois     $  13,333,333.33       6.666,666,67%
PNC Bank, National Association              $  13,333,333.33       6.666,666,67%
SunTrust Bank                               $  20,000,000.00      10.000,000,00%
The Bank of Tokyo-Mitsubishi, Ltd.,
Chicago Branch                              $  13,333,333.33       6.666,666,67%
The Northern Trust Company                  $  20,000,000.00      10.000,000,00%
Union Bank of California, N.A.              $  13,333,333.33       6.666,666,67%
U.S. Bank National Association              $  20,000,000.00      10.000,000,00%
Wells Fargo Bank, National Association      $  13,333,333.33       6.666,666,67%
- -------------------------------------------------------------------------------
TOTAL                                       $ 200,000,000.00                100%



                              Term Loan Commitments

                                                                % of Aggregate
                                             Amount of Term       Term Loan
Lender                                      Loan Commitment       Commitment
- ----------------------------------------    ----------------    ---------------
Bank One, NA (Main Office Chicago)          $  11,666,666.65      11.666,666,65%
Bank of America, N.A.                       $  11,666,666.66      11.666,666,66%
Harris Trust & Savings Bank                 $   6,666,666.67       6.666,666,67%
Key Bank National Association               $   6,666,666.67       6.666,666,67%
National City Bank of Michigan/Illinois     $   6,666,666.67       6.666,666,67%
PNC Bank, National Association              $   6,666,666.67       6.666,666,67%
SunTrust Bank                               $  10,000,000.00      10.000,000,00%
The Bank of Tokyo-Mitsubishi, Ltd.,
Chicago Branch                              $   6,666,666.67       6.666,666,67%
The Northern Trust Company                  $  10,000,000.00      10.000,000,00%
Union Bank of California, N.A.              $   6,666,666.67       6.666,666,67%
U.S. Bank National Association              $  10,000,000.00      10.000,000,00%
Wells Fargo Bank, National Association      $   6,666,666.67       6.666,666,67%
- -------------------------------------------------------------------------------
TOTAL:                                      $ 100,000,000.00                100%



                                PRICING SCHEDULE

====================================================================
Applicable           Level I     Level II     Level III     Level IV
Margin               Status      Status       Status        Status
- --------------------------------------------------------------------
Eurocurrency Rate      0.625%       0.750%        1.000%       1.375%
- --------------------------------------------------------------------
Floating Rate           0.00%        0.00%         0.00%        0.00%
====================================================================

====================================================================
Applicable Fee       Level I     Level II     Level III     Level IV
Rate                 Status      Status       Status        Status
- --------------------------------------------------------------------
Commitment Fee         0.175%       0.200%        0.250%       0.300%
- --------------------------------------------------------------------

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

          The Applicable Margin and Applicable Fee Rate shall be determined
based upon Level III until the delivery of the Financials for the fiscal period
ending October 25, 2003.

     For the purposes of this Schedule, the following terms have the following
meanings, subject to the final paragraph of this Schedule:

     "Financials" means the annual or quarterly financial statements of the
Company delivered pursuant to Section 6.1.1 or 6.1.2.

     "Level I Status" exists at any date if, as of the last day of the fiscal
quarter of the Company referred to in the most recent Financials, the Leverage
Ratio is less than or equal to 2.00 to 1.00.

     "Level II Status" exists at any date if, as of the last day of the fiscal
quarter of the Company referred to in the most recent Financials, (i) the
Company has not qualified for Level I Status and (ii) the Leverage Ratio is less
than or equal to 2.50 to 1.00.

     "Level III Status" exists at any date if, as of the last day of the fiscal
quarter of the Company referred to in the most recent Financials, (i) the
Company has not qualified for Level I Status or Level II Status and (ii) the
Leverage Ratio is less than or equal to 3.00 to 1.00.

     "Level IV Status" exists at any date if the Company has not qualified for
Level I Status, Level II Status or Level III Status.

     "Status" means Level I Status, Level II Status, Level III Status or Level
IV Status.

The Applicable Margin and Applicable Fee Rate shall be determined in accordance
with the foregoing table based on the Company's Status as reflected in the then
most recent Financials. Adjustments, if any, to the Applicable Margin or
Applicable Fee Rate shall be effective five Business Days after the Agent has
received the applicable Financials. If the Company fails to



deliver the Financials to the Agent at the time required pursuant to Section
6.1, then the Applicable Margin and Applicable Fee Rate shall be the highest
Applicable Margin and Applicable Fee Rate set forth in the foregoing table until
five days after such Financials are so delivered.




                                   EXHIBIT E-1

                             FORM OF TERM LOAN NOTE

                                                               ________ __, 20__

     PATTERSON DENTAL COMPANY, a Minnesota corporation, ABILITYONE CORPORATION,
a Michigan corporation, ABILITYONE PRODUCTS CORP., a Delaware corporation,
PATTERSON DENTAL SUPPLY, INC., a Minnesota corporation, WEBSTER VETERINARY
SUPPLY, INC., a Minnesota corporation and WEBSTER MANAGEMENT, LP, a Minnesota
limited partnership (the "Borrowers"), jointly and severally, promise to pay to
the order of [LENDER] or its registered assigns (the "Lender") the aggregate
unpaid principal amount of the Term Loan made by the Lender to the Borrowers
pursuant to Article II of the Agreement (as hereinafter defined), in immediately
available funds at the main office of Bank One, NA in Chicago, Illinois, as
Administrative Agent (the "Agent"), together with interest on the unpaid
principal amount hereof at the rates and on the dates set forth in the
Agreement. The Borrowers shall pay, in Dollars, the principal of and accrued and
unpaid interest on the Term Loan in full on the Term Loan Maturity Date. The
principal indebtedness evidenced hereby shall be payable in installments as set
forth in Section 2.1 of the Agreement with a final installment payable on the
Term Loan Maturity Date.

     The Lender shall, and is hereby authorized to, record on the schedule
attached hereto, or to otherwise record in accordance with its usual practice,
the date and amount of the Term Loan and the date and amount of each principal
payment hereunder.

     This Note is one of the Notes issued pursuant to, and is entitled to the
benefits of, the Credit Agreement, dated as of November 25, 2003 (which, as it
may be amended, restated, supplemented or otherwise modified and in effect from
time to time, is herein called the "Agreement"), among the Borrowers, the
Lenders, and the Agent, to which Agreement reference is hereby made for a
statement of the terms and conditions governing this Note, including the terms
and conditions under which this Note may be prepaid or its maturity date
accelerated. [This Note is guaranteed pursuant to the Guaranty, as more
specifically described in the Agreement, and reference is made thereto for a
statement of the terms and provisions thereof.] Capitalized terms used herein
and not otherwise defined herein are used with the meanings attributed to them
in the Agreement.

          This Note shall be governed by, and construed in accordance with, the
internal law, including 735 ILCS Sections 105/5-1 et seq. but otherwise without
regard to the conflict of law provisions, of the State of Illinois, but giving
effect to federal laws applicable to national banks.



                                        PATTERSON DENTAL COMPANY


                                        By:
                                            ------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------


                                        ABILITYONE CORPORATION


                                        By:
                                            ------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------


                                        ABILITYONE PRODUCTS CORP.


                                        By:
                                            ------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------


                                        PATTERSON DENTAL SUPPLY, INC.


                                        By:
                                            ------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------


                                        WEBSTER VETERINARY SUPPLY, INC.


                                        By:
                                            ------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------


                                        WEBSTER MANAGEMENT, LP,
                                        By WEBSTER VETERINARY SUPPLY, INC.
                                        Its General Manager


                                        By:
                                            ------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------



                SCHEDULE OF TERM LOANS AND PAYMENTS OF PRINCIPAL
                                       TO
                             NOTE OF THE BORROWERS,
                               DATED [DATE], 20__


          Principal     Maturity      Principal
          Amount of    of Interest     Amount       Unpaid
Date      Term Loan      Period         Paid       Balance
- ----------------------------------------------------------




                                   EXHIBIT E-2

                           FORM OF REVOLVING LOAN NOTE

                                                               ________ __, 20__

     PATTERSON DENTAL COMPANY, a Minnesota corporation, ABILITYONE CORPORATION,
a Michigan corporation, ABILITYONE PRODUCTS CORP., a Delaware corporation,
PATTERSON DENTAL SUPPLY, INC., a Minnesota corporation, WEBSTER VETERINARY
SUPPLY, INC., a Minnesota corporation and WEBSTER MANAGEMENT, LP, a Minnesota
limited partnership (the "Borrowers"), jointly and severally, promise to pay to
the order of [LENDER] or its registered assigns (the "Lender") the aggregate
unpaid principal amount of all Revolving Loans made by the Lender to the
Borrowers pursuant to Article II of the Agreement (as hereinafter defined), in
immediately available funds at the place specified pursuant to Article II of the
Agreement, together with interest on the unpaid principal amount hereof at the
rates and on the dates set forth in the Agreement. The Borrowers shall pay, in
the applicable Agreed Currency, the principal of and accrued and unpaid interest
on the Revolving Loans in full on the Revolving Loan Termination Date and shall
make such mandatory payments as are required to be made under the terms of
Article II of the Agreement.

     The Lender shall, and is hereby authorized to, record on the schedule
attached hereto, or to otherwise record in accordance with its usual practice,
the date, currency, amount, and Interest Period, in the case of Eurocurrency
Rate Loans, of each Revolving Loan and the date, currency and amount of each
principal payment hereunder.

     This Note is one of the Notes issued pursuant to, and is entitled to the
benefits of, the Credit Agreement, dated as of November 25, 2003 (which, as it
may be amended, restated, supplemented or otherwise modified and in effect from
time to time, is herein called the "Agreement"), among the Borrowers, the
Lenders, and Bank One, NA (Main Office Chicago) as Administrative Agent (the
"Agent"), to which Agreement reference is hereby made for a statement of the
terms and conditions governing this Note, including the terms and conditions
under which this Note may be prepaid or its maturity date accelerated. [This
Note is guaranteed pursuant to the Guaranty, as more specifically described in
the Agreement, and reference is made thereto for a statement of the terms and
provisions thereof.] Capitalized terms used herein and not otherwise defined
herein are used with the meanings attributed to them in the Agreement.

          This Note shall be governed by, and construed in accordance with, the
internal law, including 735 ILCS Sections 105/5-1 et seq. but otherwise without
regard to the conflict of law provisions, of the State of Illinois, but giving
effect to federal laws applicable to national banks.



                                        PATTERSON DENTAL COMPANY


                                        By:
                                            ------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------


                                        ABILITYONE CORPORATION


                                        By:
                                            ------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------


                                        ABILITYONE PRODUCTS CORP.


                                        By:
                                            ------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------


                                        PATTERSON DENTAL SUPPLY, INC.


                                        By:
                                            ------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------


                                        WEBSTER VETERINARY SUPPLY, INC.


                                        By:
                                            ------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------


                                        WEBSTER MANAGEMENT, LP,
                                        By WEBSTER VETERINARY SUPPLY, INC.
                                        Its General Manager


                                        By:
                                            ------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------

                     Signature Page for Revolving Loan Note



              SCHEDULE OF REVOLVING LOANS AND PAYMENTS OF PRINCIPAL
                                       TO
                             NOTE OF THE BORROWERS,
                               DATED [DATE], 20__


                          Principal       Maturity     Principal
                          Amount of      of Interest    Amount      Unpaid
Date         Currency   Revolving Loan     Period        Paid      Balance
- --------------------------------------------------------------------------

EX-4.6

                                                                     Exhibit 4.6

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

                            PATTERSON DENTAL COMPANY
                            ABILITYONE PRODUCTS CORP.
                             ABILITYONE CORPORATION
                          PATTERSON DENTAL SUPPLY, INC.
                         WEBSTER VETERINARY SUPPLY, INC.
                             WEBSTER MANAGEMENT, LP

                            $350,000,000 Senior Notes

        $70,000,000 3.14% Senior Notes, Series A-1, due November 25, 2006
        $50,000,000 3.65% Senior Notes, Series A-2, due November 25, 2007
        $30,000,000 4.14% Senior Notes, Series A-3, due November 25, 2008

   $135,000,000 Floating Rate Senior Notes, Series B-1, due November 25, 2008
    $65,000,000 Floating Rate Senior Notes, Series B-2, due November 25, 2010

                                   ----------

                             NOTE PURCHASE AGREEMENT

                                   ----------

                          Dated as of November 15, 2003

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

                                                    SERIES A-1 PPN: 70341 @ AA 7
                                                    SERIES A-2 PPN: 70341 @ AB 5
                                                    SERIES A-3 PPN: 70341 @ AC 3
                                                    SERIES B-1 PPN: 70341 @ AD 1
                                                    SERIES B-2 PPN: 70341 @ AE 9



                                TABLE OF CONTENTS

Section                                                                     Page
- -------                                                                     ----

1.  AUTHORIZATION OF NOTES.....................................................1
    1.1.   The Notes...........................................................1
    1.2.   Floating Interest Rate Provisions for Series B Notes................2

2.  SALE AND PURCHASE OF NOTES.................................................3

3.  CLOSING....................................................................3

4.  CONDITIONS TO CLOSING......................................................4
    4.1.   Representations and Warranties......................................4
    4.2.   Performance; No Default.............................................4
    4.3.   Compliance Certificates.............................................4
    4.4.   Opinions of Counsel.................................................4
    4.5.   Purchase Permitted By Applicable Law, etc...........................4
    4.6.   Sale of Other Notes.................................................5
    4.7.   Payment of Special Counsel Fees.....................................5
    4.8.   Private Placement Number............................................5
    4.9.   Changes in Corporate Structure......................................5
    4.10.  Credit Agreement....................................................5
    4.11.  Proceedings and Documents...........................................5

5.  REPRESENTATIONS AND WARRANTIES OF THE COMPANY..............................6
    5.1.   Organization; Power and Authority...................................6
    5.2.   Authorization, etc..................................................6
    5.3.   Disclosure..........................................................6
    5.4.   Organization and Ownership of Shares of Subsidiaries; Affiliates....7
    5.5.   Financial Statements................................................7
    5.6.   Compliance with Laws, Other Instruments, etc........................8
    5.7.   Governmental Authorizations, etc....................................8
    5.8.   Litigation; Observance of Agreements, Statutes and Orders...........8
    5.9.   Taxes...............................................................8
    5.10.  Title to Property; Leases...........................................9
    5.11.  Licenses, Permits, etc..............................................9
    5.12.  Compliance with ERISA...............................................9
    5.13.  Private Offering by the Company....................................10
    5.14.  Use of Proceeds; Margin Regulations................................11
    5.15.  Existing Debt; Future Liens........................................11
    5.16.  Foreign Assets Control Regulations, Anti-Terrorism Order, etc......11
    5.17.  Status under Certain Statutes......................................12
    5.18.  Environmental Matters..............................................12
    5.19.  Solvency of Obligors...............................................12

6.  REPRESENTATIONS OF THE PURCHASERS.........................................13
    6.1.   Purchase for Investment............................................13

                                        i



    6.2.   Source of Funds....................................................13

7.  INFORMATION AS TO COMPANY.................................................14
    7.1.   Financial and Business Information.................................14
    7.2.   Officer's Certificate..............................................17
    7.3.   Inspection.........................................................17

8.  PREPAYMENT OF THE NOTES...................................................18
    8.1.   No Scheduled Prepayments...........................................18
    8.2.   Optional Prepayments...............................................18
    8.3.   Allocation of Partial Prepayments..................................20
    8.4.   Maturity; Surrender, etc...........................................20
    8.5.   Purchase of Notes..................................................21
    8.6.   Make-Whole Amount..................................................21
    8.7.   LIBOR Breakage Amount..............................................22

9.  AFFIRMATIVE COVENANTS.....................................................23
    9.1.   Compliance with Law................................................23
    9.2.   Insurance..........................................................23
    9.3.   Maintenance of Properties..........................................23
    9.4.   Payment of Taxes and Claims........................................23
    9.5.   Corporate Existence, etc...........................................24
    9.6.   Ranking of Notes...................................................24
    9.7.   Subsidiary Guaranties..............................................24

10. NEGATIVE COVENANTS........................................................24
    10.1.  Consolidated Net Worth.............................................24
    10.2.  Consolidated Debt..................................................25
    10.3.  Interest Coverage..................................................25
    10.4.  Priority Debt......................................................25
    10.5.  Liens..............................................................25
    10.6.  Subsidiary Debt....................................................26
    10.7.  Mergers, Consolidations, etc.......................................27
    10.8.  Sale of Assets.....................................................28
    10.9.  Nature of Business.................................................28
    10.10. Transactions with Affiliates.......................................29

11. EVENTS OF DEFAULT.........................................................29

12. REMEDIES ON DEFAULT, ETC..................................................31
    12.1.  Acceleration.......................................................31
    12.2.  Other Remedies.....................................................32
    12.3.  Rescission.........................................................32
    12.4.  No Waivers or Election of Remedies, Expenses, etc..................32

13. REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES.............................33
    13.1.  Registration of Notes..............................................33
    13.2.  Transfer and Exchange of Notes.....................................33
    13.3.  Replacement of Notes...............................................33

                                       ii



14. PAYMENTS ON NOTES.........................................................34
    14.1.  Place of Payment...................................................34
    14.2.  Home Office Payment................................................34

15. EXPENSES, ETC.............................................................35
    15.1.  Transaction Expenses...............................................35
    15.2.  Survival...........................................................35

16. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT..............35

17. AMENDMENT AND WAIVER......................................................36
    17.1.  Requirements.......................................................36
    17.2.  Solicitation of Holders of Notes...................................36
    17.3.  Binding Effect, etc................................................36
    17.4.  Notes held by Obligors, etc........................................37

18. NOTICES...................................................................37

19. REPRODUCTION OF DOCUMENTS.................................................37

20. CONFIDENTIAL INFORMATION..................................................38

21. SUBSTITUTION OF PURCHASER.................................................39

22. RELEASE OF OBLIGOR OR SUBSIDIARY GUARANTOR................................39

23. MISCELLANEOUS.............................................................40
    23.1.  Successors and Assigns.............................................40
    23.2.  Payments Due on Non-Business Days..................................40
    23.3.  Severability.......................................................40
    23.4.  Construction.......................................................40
    23.5.  Counterparts.......................................................40
    23.6.  Governing Law; Submission to Jurisdiction..........................40

SCHEDULE B     --  Defined Terms

EXHIBIT 1(a)   --  Form of Series A-1 Senior Note
EXHIBIT 1(b)   --  Form of Series A-2 Senior Note
EXHIBIT 1(c)   --  Form of Series A-3 Senior Note
EXHIBIT 1(d)   --  Form of Series B-1 Senior Note
EXHIBIT 1(e)   --  Form of Series B-2 Senior Note

                                       iii



                            PATTERSON DENTAL COMPANY
                            ABILITYONE PRODUCTS CORP.
                             ABILITYONE CORPORATION
                          PATTERSON DENTAL SUPPLY, INC.
                         WEBSTER VETERINARY SUPPLY, INC.
                             WEBSTER MANAGEMENT, LP
                            1031 Mendota Heights Road
                               St. Paul, MN 55120
                                 (651) 686-8984
                               Fax: (651) 686-[__]


                            $350,000,000 Senior Notes

        $70,000,000 3.14% Senior Notes, Series A-1, due November 25, 2006
        $50,000,000 3.65% Senior Notes, Series A-2, due November 25, 2007
        $30,000,000 4.14% Senior Notes, Series A-3, due November 25, 2008
   $135,000,000 Floating Rate Senior Notes, Series B-1, due November 25, 2008
    $65,000,000 Floating Rate Senior Notes, Series B-2, due November 25, 2010


                                                   Dated as of November 15, 2003


TO EACH OF THE PURCHASERS LISTED IN
     THE ATTACHED SCHEDULE A:

Ladies and Gentlemen:

            PATTERSON DENTAL COMPANY, a Minnesota corporation (the "Company"),
ABILITYONE PRODUCTS CORP., a Delaware corporation ("AbilityOne"), ABILITYONE
CORPORATION, a Michigan corporation ("AbilityOne Corporation"), PATTERSON DENTAL
SUPPLY, INC., a Minnesota corporation ("PDSI"), WEBSTER VETERINARY SUPPLY, INC.,
a Minnesota corporation ("Webster"), and WEBSTER MANAGEMENT, LP, a Minnesota
limited partnership ("Webster Management" and, collectively with the Company,
AbilityOne, AbilityOne Corporation, PDSI and Webster, the "Obligors"), jointly
and severally agree with you as follows:

1.     AUTHORIZATION OF NOTES.

1.1.   The Notes.

            The Obligors have authorized the issue and sale of $350,000,000
aggregate principal amount of its Senior Notes consisting of (i) $70,000,000
aggregate principal amount of their 3.14% Senior Notes, Series A-1, due November
25, 2006 (the "Series A-1 Notes");



(ii) $50,000,000 aggregate principal amount of their 3.65% Senior Notes, Series
A-2, due November 25, 2007 (the "Series A-2 Notes"); (iii) $30,000,000 aggregate
principal amount of their 4.14% Senior Notes, Series A-3, due November 25, 2008
(the "Series A-3 Notes" and, collectively with the Series A-1 Notes and the
Series A-2 Notes, the "Series A Notes"); (iv) $135,000,000 aggregate principal
amount of their Floating Rate Senior Notes, Series B-1, due November 25, 2008
(the "Series B-1 Notes"); and (v) $65,000,000 Floating Rate Senior Notes, Series
B-2, due November 25, 2010 (the "Series B-2 Notes" and, together with Series B-1
Notes, the "Series B Notes" and, the Series B Notes together with the Series A
Notes, the "Notes", such term to include any such notes issued in substitution
therefor pursuant to Section 13 of this Agreement). The Notes shall be
substantially in the forms set out in Exhibits 1(a) through 1(e), with such
changes therefrom, if any, as may be approved by you and the Company. Certain
capitalized terms used in this Agreement are defined in Schedule B; references
to a "Schedule" or an "Exhibit" are, unless otherwise specified, to a Schedule
or an Exhibit attached to this Agreement.

1.2.   Floating Interest Rate Provisions for Series B Notes.

            (a)  Adjusted LIBOR Rate. "Adjusted LIBOR Rate" means, for each
     Interest Period, the rate per annum equal to .75% plus LIBOR for such
     Interest Period. For purposes of determining Adjusted LIBOR Rate, the
     following terms have the following meanings:

                 "LIBOR" means, for any Interest Period, the rate per annum
            (rounded upwards, if necessary, to the next higher one
            hundred-thousandth of a percentage point) for deposits in U.S.
            Dollars for a 3-month period that appears on the Bloomberg Financial
            Markets Service Page BBAM-1 (or if such page is not available, the
            Reuters Screen LIBO Page) as of 11:00 a.m. (London, England time) on
            the date two Business Days before the commencement of such Interest
            Period (or three Business Days before the commencement of the first
            Interest Period).

                 "Reuters Screen LIBO Page" means the display designated as the
            "LIBO" page on the Reuters Monitory Money Rates Service (or such
            other page as may replace the LIBO page on that service) or such
            other service as may be nominated by the British Bankers'
            Association as the information vendor for the purpose of displaying
            British Bankers' Association Interest Settlement Rates for U.S.
            Dollar deposits.

            (b)  Determination of the Adjusted LIBOR Rate. The Adjusted LIBOR
       Rate shall be determined by the Company, and notice thereof shall be
       given to the holders of the Series B Notes, within two Business Days
       after the beginning of each Interest Period, together with (i) a copy of
       the relevant screen used for the determination of LIBOR, (ii) a
       calculation of the Adjusted LIBOR Rate for such Interest Period, (iii)
       the number of days in such Interest Period, (iv) the date on which
       interest for such Interest Period will be paid and (v) the amount of
       interest to be paid to each holder of Series B Notes on such date. If the
       holders of a majority in principal amount of the Series B Notes
       outstanding do not concur with such determination by the Company, as
       evidenced by a single written

                                        2



       notice delivered to the Company within 10 Business Days after receipt by
       such holders of the notice delivered by the Company pursuant to the
       immediately preceding sentence, the determination of the Adjusted LIBOR
       Rate shall be made by such holders of the Notes, and any such
       determination made in accordance with the provisions of this Agreement
       shall be conclusive and binding absent manifest error.

            (c)  Interest Period. "Interest Period" means, for any period for
       which interest is to be calculated or paid on the Series B Notes, the
       period commencing on the Interest Payment Date on the Series B Notes and
       continuing up to, but not including, the next February 25, May 25, August
       25 or November 25, as the case may be; provided, however, that the first
       Interest Period shall commence on the date of Closing and continue up to,
       but not include, February 25, 2004.

2.     SALE AND PURCHASE OF NOTES.

            Subject to the terms and conditions of this Agreement, the Obligors
will issue and sell to you and each of the other purchasers named in Schedule A
(the "Other Purchasers"), and you and the Other Purchasers will purchase from
the Obligors, at the Closing provided for in Section 3, Notes in the principal
amount and series specified opposite your names in Schedule A at the purchase
price of 100% of the principal amount thereof. Your obligation hereunder and the
obligations of the Other Purchasers are several and not joint obligations and
you shall have no liability to any Person for the performance or non-performance
by any Other Purchaser hereunder.

3.     CLOSING.

            The sale and purchase of the Notes to be purchased by you and the
Other Purchasers shall occur at the offices of Gardner Carton & Douglas LLP, 191
N. Wacker Drive, Suite 3700, Chicago, Illinois 60606 at 9:00 a.m., Chicago time,
at a closing (the "Closing") on November 25, 2003 or on such other Business Day
thereafter on or prior to December 15, 2003 as may be agreed upon by the Company
and you and the Other Purchasers. At the Closing the Obligors will deliver to
you the Notes to be purchased by you in the form of a single Note (or such
greater number of Notes in denominations of at least $100,000 as you may
request) dated the date of the Closing and registered in your name (or in the
name of your nominee), against delivery by you to the Obligors or their order of
immediately available funds in the amount of the purchase price therefor by wire
transfer of immediately available funds for the account of the Company (for the
benefit of the Obligors) to account number 1731 0172 5153 at US Bank National
Association, Minneapolis Office, 601 2nd Avenue South, Minneapolis, MN 55402,
ABA No. 091000022. If at the Closing any Obligor fails to tender such Notes to
you as provided above in this Section 3, or any of the conditions specified in
Section 4 shall not have been fulfilled to your satisfaction, you shall, at your
election, be relieved of all further obligations under this Agreement, without
thereby waiving any rights you may have by reason of such failure or such
nonfulfillment.

                                        3



4.     CONDITIONS TO CLOSING.

            Your obligation to purchase and pay for the Notes to be sold to you
at the Closing is subject to the fulfillment to your satisfaction, prior to or
at the Closing, of the following conditions:

4.1.   Representations and Warranties.

            The representations and warranties of the Obligors in this Agreement
shall be correct when made and at the time of the Closing.

4.2.   Performance; No Default.

            The Obligors shall have performed and complied with all agreements
and conditions contained in this Agreement required to be performed or complied
with by them prior to or at the Closing and after giving effect to the issue and
sale of the Notes (and the application of the proceeds thereof as contemplated
by Section 5.14) no Default or Event of Default shall have occurred and be
continuing. Neither any Obligor nor any other Subsidiary shall have entered into
any transaction since the date of the Memorandum that would have been prohibited
by Section 10 had such Section applied since such date.

4.3.   Compliance Certificates.

            (a)  Officer's Certificate. Each Obligor shall have delivered to you
       an Officer's Certificate, dated the date of the Closing, certifying that
       the conditions specified in Sections 4.1, 4.2 and 4.9 have been
       fulfilled.

            (b)  Secretary's Certificate. Each Obligor shall have delivered to
       you a certificate certifying as to the resolutions attached thereto and
       other corporate proceedings relating to the authorization, execution and
       delivery of the Notes and the Agreement.

4.4.   Opinions of Counsel.

            You shall have received opinions in form and substance satisfactory
to you, dated the date of the Closing (a) from Briggs and Morgan and from
Matthew L. Levitt, Esq., counsel to the Obligors, covering the matters set forth
in Exhibit 4.4(a) and covering such other matters incident to the transactions
contemplated hereby as you or your counsel may reasonably request (and the
Obligors instruct their counsel to deliver such opinion to you) and (b) from
Gardner Carton & Douglas LLP, your special counsel in connection with such
transactions, substantially in the form set forth in Exhibit 4.4(b) and covering
such other matters incident to such transactions as you may reasonably request.

4.5.   Purchase Permitted By Applicable Law, etc.

            On the date of the Closing your purchase of Notes shall (i) be
permitted by the laws and regulations of each jurisdiction to which you are
subject, without recourse to provisions (such as Section 1405(a)(8) of the New
York Insurance Law) permitting limited investments by

                                        4



insurance companies without restriction as to the character of the particular
investment, (ii) not violate any applicable law or regulation (including,
without limitation, Regulation U, T or X of the Board of Governors of the
Federal Reserve System) and (iii) not subject you to any tax, penalty or
liability under or pursuant to any applicable law or regulation, which law or
regulation was not in effect on the date hereof. If requested by you, you shall
have received an Officer's Certificate certifying as to such matters of fact as
you may reasonably specify to enable you to determine whether such purchase is
so permitted.

4.6.   Sale of Other Notes.

            Contemporaneously with the Closing the Obligors shall sell to the
Other Purchasers and the Other Purchasers shall purchase the Notes to be
purchased by them at the Closing as specified in Schedule A.

4.7.   Payment of Special Counsel Fees.

            Without limiting the provisions of Section 15.1, the Obligors shall
have paid on or before the Closing the fees, charges and disbursements of your
special counsel referred to in Section 4.4, to the extent reflected in a
statement of such counsel rendered to the Obligors at least one Business Day
prior to the Closing.

4.8.   Private Placement Number.

            A Private Placement Number issued by Standard & Poor's CUSIP Service
Bureau (in cooperation with the Securities Valuation Office of the National
Association of Insurance Commissioners) shall have been obtained by Gardner
Carton & Douglas for each series of the Notes.

4.9.   Changes in Corporate Structure.

            Except as specified in Schedule 4.9, no Obligor shall have changed
its jurisdiction of organization or been a party to any merger or consolidation
and shall not have succeeded to all or any substantial part of the liabilities
of any other entity, at any time following the date of the most recent financial
statements referred to in Schedule 5.5.

4.10.  Credit Agreement.

            You shall have received a copy of the executed Credit Agreement.

4.11.  Proceedings and Documents.

            All corporate or partnership and other proceedings in connection
with the transactions contemplated by this Agreement and all documents and
instruments incident to such transactions shall be satisfactory to you and your
special counsel, and you and your special counsel shall have received all such
counterpart originals or certified or other copies of such documents as you or
they may reasonably request.

                                        5



5.     REPRESENTATIONS AND WARRANTIES OF THE COMPANY.

            Each Obligor represents and warrants to you that:

5.1.   Organization; Power and Authority.

            Each Obligor is a corporation or limited partnership duly organized,
validly existing and in good standing under the laws of its jurisdiction of
organization, and is duly qualified as a foreign corporation or foreign limited
partnership and is in good standing in each jurisdiction in which such
qualification is required by law, other than those jurisdictions as to which the
failure to be so qualified or in good standing could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect. Each
Obligor has the corporate or partnership power and authority to own or hold
under lease the properties it purports to own or hold under lease, to transact
the business it transacts and proposes to transact, to execute and deliver this
Agreement and the Notes and to perform the provisions hereof and thereof.

5.2.   Authorization, etc.

            This Agreement and the Notes have been duly authorized by all
necessary corporate or partnership action on the part of each Obligor, and this
Agreement constitutes, and upon execution and delivery thereof each Note will
constitute, a legal, valid and binding obligation of each Obligor enforceable
against each Obligor in accordance with its terms, except as such enforceability
may be limited by (i) applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting the enforcement of creditors' rights
generally and (ii) general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).

5.3.   Disclosure.

            The Obligors, through their agents, Banc One Capital Markets, Inc.
and Banc of America Securities LLC, have delivered to you and each Other
Purchaser a copy of a Confidential Private Placement Memorandum, dated October
2003, including the Company's Annual Reports on Form 10-K for the fiscal years
ended April 26, 2003 and April 27, 2002, the Company's Quarterly Report on Form
10-Q for the fiscal quarter ended July 26, 2003 and its Current Report on Form
8-K dated September 12, 2003 (the "Memorandum"), relating to the transactions
contemplated hereby. The Memorandum fairly describes, in all material respects,
the general nature of the business and principal properties of the Company and
its Subsidiaries. Except as disclosed in Schedule 5.3, this Agreement, the
Memorandum, the documents, certificates or other writings delivered to you by or
on behalf of the Obligors in connection with the transactions contemplated
hereby and the financial statements listed in Schedule 5.5, taken as a whole, do
not contain any untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein not misleading in light
of the circumstances under which they were made. Except as disclosed in the
Memorandum or as expressly described in Schedule 5.3, or in one of the
documents, certificates or other writings identified therein, or in the
financial statements listed in Schedule 5.5, since April 26, 2003, there has
been no change in

                                        6



the financial condition, operations, business or properties of the Company or
any Subsidiary except changes that individually or in the aggregate could not
reasonably be expected to have a Material Adverse Effect. There is no fact known
to any Obligor that could reasonably be expected to have a Material Adverse
Effect that has not been set forth herein or in the Memorandum or in the other
documents, certificates and other writings delivered to you by or on behalf of
the Obligors specifically for use in connection with the transactions
contemplated hereby.

5.4.   Organization and Ownership of Shares of Subsidiaries; Affiliates.

            (a)  Schedule 5.4 contains (except as noted therein) complete and
       correct lists of: (i) the Company's Subsidiaries, showing, as to each
       Subsidiary, the correct name thereof, the jurisdiction of its
       organization, and the percentage of shares of each class of its capital
       stock or similar equity interests outstanding owned by the Company and
       each other Subsidiary, (ii) the Company's Affiliates, other than
       Subsidiaries, and (iii) the Company's directors and senior officers.

            (b)  All of the outstanding shares of capital stock or similar
       equity interests of each Subsidiary shown in Schedule 5.4 as being owned
       by the Company and its Subsidiaries have been validly issued, are fully
       paid and nonassessable and are owned by the Company or another Subsidiary
       free and clear of any Lien (except as otherwise disclosed in Schedule
       5.4).

            (c)  Each Subsidiary identified in Schedule 5.4 is a corporation or
       other legal entity duly organized, validly existing and in good standing
       under the laws of its jurisdiction of organization, and is duly qualified
       as a foreign corporation or other legal entity and is in good standing in
       each jurisdiction in which such qualification is required by law, other
       than those jurisdictions as to which the failure to be so qualified or in
       good standing could not, individually or in the aggregate, reasonably be
       expected to have a Material Adverse Effect. Each such Subsidiary has the
       corporate or other power and authority to own or hold under lease the
       properties it purports to own or hold under lease and to transact the
       business it transacts and proposes to transact.

            (d)  No Subsidiary is a party to, or otherwise subject to, any legal
       restriction or any agreement (other than this Agreement, the agreements
       listed on Schedule 5.4 and customary limitations imposed by corporate or
       limited partnership law statutes) restricting the ability of such
       Subsidiary to pay dividends out of profits or make any other similar
       distributions of profits to the Company or any of its Subsidiaries that
       owns outstanding shares of capital stock or similar equity interests of
       such Subsidiary.

5.5.   Financial Statements.

            The Company has delivered to you and each Other Purchaser copies of
the financial statements of the Company and its Subsidiaries listed on Schedule
5.5. All of said financial statements (including in each case the related
schedules and notes) fairly present in all material respects the consolidated
financial position of the Company and its Subsidiaries as of the respective
dates specified in such Schedule and the consolidated results of their
operations

                                        7



and cash flows for the respective periods so specified and have been prepared in
accordance with GAAP consistently applied throughout the periods involved except
as set forth in the notes thereto (subject, in the case of any interim financial
statements, to normal year-end adjustments).

5.6.   Compliance with Laws, Other Instruments, etc.

            The execution, delivery and performance by each Obligor of this
Agreement and the Notes will not (i) contravene, result in any breach of, or
constitute a default under, or result in the creation of any Lien in respect of
any property of any Obligor or any other Subsidiary under, any indenture,
mortgage, deed of trust, loan, purchase or credit agreement, lease, corporate
charter or by-laws, or any other agreement or instrument to which any Obligor or
any other Subsidiary is bound or by which any Obligor or any other Subsidiary or
any of their respective properties may be bound or affected, (ii) conflict with
or result in a breach of any of the terms, conditions or provisions of any
order, judgment, decree, or ruling of any court, arbitrator or Governmental
Authority applicable to any Obligor or any other Subsidiary or (iii) violate any
provision of any statute or other rule or regulation of any Governmental
Authority applicable to any Obligor or any other Subsidiary.

5.7.   Governmental Authorizations, etc.

            No consent, approval or authorization of, or registration, filing or
declaration with, any Governmental Authority is required in connection with the
execution, delivery or performance by any Obligor of this Agreement or the
Notes.

5.8.   Litigation; Observance of Agreements, Statutes and Orders.

            (a)  Except as disclosed in Schedule 5.8, there are no actions,
       suits or proceedings pending or, to the knowledge of any Obligor,
       threatened against or affecting any Obligor or any other Subsidiary or
       any property of any Obligor or any other Subsidiary in any court or
       before any arbitrator of any kind or before or by any Governmental
       Authority that, individually or in the aggregate, could reasonably be
       expected to have a Material Adverse Effect.

            (b)  Neither any Obligor nor any other Subsidiary is in default
       under any term of any agreement or instrument to which it is a party or
       by which it is bound, or any order, judgment, decree or ruling of any
       court, arbitrator or Governmental Authority or is in violation of any
       applicable law, ordinance, rule or regulation (including Environmental
       Laws and the USA Patriot Act) of any Governmental Authority, which
       default or violation, individually or in the aggregate, could reasonably
       be expected to have a Material Adverse Effect.

5.9.   Taxes.

            The Company and its Subsidiaries have filed all tax returns that are
required to have been filed in any jurisdiction, and have paid all taxes shown
to be due and payable on such returns and all other taxes and assessments levied
upon them or their properties, assets, income or franchises, to the extent such
taxes and assessments have become due and payable and before

                                        8



they have become delinquent, except for any taxes and assessments (i) the amount
of which is not individually or in the aggregate Material or (ii) the amount,
applicability or validity of which is currently being contested in good faith by
appropriate proceedings and with respect to which the Company or a Subsidiary,
as the case may be, has established adequate reserves in accordance with GAAP.
The Company knows of no basis for any other tax or assessment that could
reasonably be expected to have a Material Adverse Effect. The charges, accruals
and reserves on the books of the Company and its Subsidiaries in respect of
Federal, state or other taxes for all fiscal periods are adequate. The Federal
income tax liabilities of the Company and its subsidiaries have been determined
by the Internal Revenue Service and paid for all fiscal years up to and
including the fiscal year ended April 25, 1998.

5.10.  Title to Property; Leases.

            The Company and its Subsidiaries have good and sufficient title to
their respective properties that individually or in the aggregate are Material,
including all such properties reflected in the most recent audited balance sheet
referred to in Section 5.5 or purported to have been acquired by the Company or
any Subsidiary after said date (except as sold or otherwise disposed of in the
ordinary course of business), in each case free and clear of Liens prohibited by
this Agreement. All leases that individually or in the aggregate are Material
are valid and subsisting and are in full force and effect in all material
respects.

5.11.  Licenses, Permits, etc.

            Except as disclosed in Schedule 5.11,

            (a)  the Company and its Subsidiaries own or possess all licenses,
       permits, franchises, authorizations, patents, copyrights, service marks,
       trademarks and trade names, or rights thereto, that individually or in
       the aggregate are Material, without known conflict with the rights of
       others;

            (b)  to the best knowledge of each Obligor, no product of any
       Obligor or any other Subsidiary infringes in any material respect any
       license, permit, franchise, authorization, patent, copyright, service
       mark, trademark, trade name or other right owned by any other Person; and

            (c)  to the best knowledge of each Obligor, there is no Material
       violation by any Person of any right of any Obligor or any other
       Subsidiary with respect to any patent, copyright, service mark,
       trademark, trade name or other right owned or used by the any Obligor or
       any other Subsidiary.

5.12.  Compliance with ERISA.

            (a)  The Company and each ERISA Affiliate have operated and
       administered each Plan in compliance with all applicable laws except for
       such instances of noncompliance as have not resulted in and could not
       reasonably be expected to result in a Material Adverse Effect. Neither
       the Company nor any ERISA Affiliate has incurred any liability pursuant
       to Title I or IV of ERISA or the penalty or excise tax provisions of the

                                        9



       Code relating to employee benefit plans (as defined in Section 3 of
       ERISA), and no event, transaction or condition has occurred or exists
       that could reasonably be expected to result in the incurrence of any such
       liability by the Company or any ERISA Affiliate, or in the imposition of
       any Lien on any of the rights, properties or assets of the Company or any
       ERISA Affiliate, in either case pursuant to Title I or IV of ERISA or to
       such penalty or excise tax provisions or to Section 401(a)(29) or 412 of
       the Code, other than such liabilities or Liens as would not be
       individually or in the aggregate Material.

            (b)  The present value of the aggregate benefit liabilities under
       each of the Plans (other than Multiemployer Plans), determined as of the
       end of such Plan's most recently ended plan year on the basis of the
       actuarial assumptions specified for funding purposes in such Plan's most
       recent actuarial valuation report, did not exceed the aggregate current
       value of the assets of such Plan allocable to such benefit liabilities.
       The term "benefit liabilities" has the meaning specified in section 4001
       of ERISA and the terms "current value" and "present value" have the
       meaning specified in section 3 of ERISA.

            (c)  The Company and its ERISA Affiliates have not incurred
       withdrawal liabilities (and are not subject to contingent withdrawal
       liabilities) under section 4201 or 4204 of ERISA in respect of
       Multiemployer Plans that individually or in the aggregate are Material.

            (d)  The expected postretirement benefit obligation (determined as
       of the last day of the Company's most recently ended fiscal year in
       accordance with Financial Accounting Standards Board Statement No. 106,
       without regard to liabilities attributable to continuation coverage
       mandated by section 4980B of the Code) of the Company and its
       Subsidiaries is not Material.

            (e)  The execution and delivery of this Agreement and the issuance
       and sale of the Notes hereunder will not involve any transaction that is
       subject to the prohibitions of section 406 of ERISA or in connection with
       which a tax could be imposed pursuant to section 4975(c)(1)(A)-(D) of the
       Code. The representation by the Company in the first sentence of this
       Section 5.12(e) is made in reliance upon and subject to the accuracy of
       your representation in Section 6.2 as to the sources of the funds used to
       pay the purchase price of the Notes to be purchased by you.

5.13.  Private Offering by the Company.

            Neither any Obligor nor anyone acting on its behalf has offered the
Notes or any similar securities for sale to, or solicited any offer to buy any
of the same from, or otherwise approached or negotiated in respect thereof with,
any person other than you and the Other Purchasers and not more than [_] other
Institutional Investors, each of which has been offered the Notes at a private
sale for investment. Neither any Obligor nor anyone acting on its behalf has
taken, or will take, any action that would subject the issuance or sale of the
Notes to the registration requirements of Section 5 of the Securities Act.

                                       10



5.14.  Use of Proceeds; Margin Regulations.

            The Obligors will apply the proceeds of the sale of the Notes to
refinance Debt of the Company as set forth in Schedule 5.14 and for general
corporate purposes. No part of the proceeds from the sale of the Notes will be
used, directly or indirectly, for the purpose of buying or carrying any margin
stock within the meaning of Regulation U of the Board of Governors of the
Federal Reserve System (12 CFR 221), or for the purpose of buying or carrying or
trading in any securities under such circumstances as to involve any Obligor in
a violation of Regulation X of said Board (12 CFR 224) or to involve any broker
or dealer in a violation of Regulation T of said Board (12 CFR 220). Margin
stock does not constitute more than 1% of the value of the consolidated assets
of the Company and its Subsidiaries and the Obligors do not have any present
intention that margin stock will constitute more than 1% of the value of such
assets. As used in this Section, the terms "margin stock" and "purpose of buying
or carrying" shall have the meanings assigned to them in said Regulation U.

5.15.  Existing Debt; Future Liens.

            (a)  Except as described therein, Schedule 5.15 sets forth a
       complete and correct list of all outstanding Debt of the Company and its
       Subsidiaries as of November 15, 2003, since which date there has been no
       Material change in the amounts, interest rates, sinking funds,
       installment payments or maturities of the Debt of the Company or its
       Subsidiaries. Neither any Obligor nor any other Subsidiary is in default
       and no waiver of default is currently in effect, in the payment of any
       principal or interest on any Debt of any Obligor or any other Subsidiary
       and no event or condition exists with respect to any Debt of any Obligor
       or any other Subsidiary that would permit (or that with notice or the
       lapse of time, or both, would permit) one or more Persons to cause such
       Debt to become due and payable before its stated maturity or before its
       regularly scheduled dates of payment.

            (b)  Except as disclosed in Schedule 5.15, neither any Obligor nor
       any other Subsidiary has agreed or consented to cause or permit in the
       future (upon the happening of a contingency or otherwise) any of its
       property, whether now owned or hereafter acquired, to be subject to a
       Lien not permitted by Section 10.5.

5.16.  Foreign Assets Control Regulations, Anti-Terrorism Order, etc.

            Neither the sale of the Notes by the Obligors hereunder nor their
use of the proceeds thereof will violate (a) the Trading with the Enemy Act, as
amended, (b) any of the foreign assets control regulations of the United States
Treasury Department (31 CFR, Subtitle B, Chapter V, as amended) or any enabling
legislation or executive order relating thereto, (c) the Anti-Terrorism Order or
(d) the United States Foreign Corrupt Practices Act of 1997, as amended. Without
limiting the foregoing, neither any Obligor nor any other Subsidiary (i) is a
blocked person described in Section 1 of the Anti-Terrorism Order or (ii)
engages in any dealings or transactions, or is otherwise associated, with any
such person.

                                       11



5.17.  Status under Certain Statutes.

            Neither any Obligor nor any other Subsidiary is subject to
regulation under the Investment Company Act of 1940, as amended, the Public
Utility Holding Company Act of 1935, as amended, the ICC Termination Act, as
amended, or the Federal Power Act, as amended.

5.18.  Environmental Matters.

            Neither any Obligor nor any other Subsidiary has knowledge of any
claim or has received any notice of any claim, and no proceeding has been
instituted raising any claim against any Obligor or any other Subsidiary or any
of their respective real properties now or formerly owned, leased or operated by
any of them or other assets, alleging any damage to the environment or violation
of any Environmental Laws, except, in each case, such as could not reasonably be
expected to result in a Material Adverse Effect. Except as otherwise disclosed
to you in writing,

            (a)  neither any Obligor nor any other Subsidiary has knowledge of
       any facts which would give rise to any claim, public or private, of
       violation of Environmental Laws or damage to the environment emanating
       from, occurring on or in any way related to real properties now or
       formerly owned, leased or operated by any of them or to other assets or
       their use, except, in each case, such as could not reasonably be expected
       to result in a Material Adverse Effect;

            (b)  neither any Obligor nor any other Subsidiary has stored any
       Hazardous Materials on real properties now or formerly owned, leased or
       operated by any of them and has not disposed of any Hazardous Materials
       in a manner contrary to any Environmental Laws in each case in any manner
       that could reasonably be expected to result in a Material Adverse Effect;
       and

            (c)  all buildings on all real properties now owned, leased or
       operated by any Obligor or any other Subsidiary are in compliance with
       applicable Environmental Laws, except where failure to comply could not
       reasonably be expected to result in a Material Adverse Effect.

5.19.  Solvency of Obligors.

            After giving effect to the transactions contemplated herein, (i) the
present value of the assets of each Obligor, at a fair valuation, is in excess
of the amount that will be required to pay its probable liability on its
existing debts as said debts become absolute and matured, (ii) each Obligor has
received reasonably equivalent value for issuing and selling the Notes, (iii)
the property remaining in the hands of each Obligor is not an unreasonably small
capital, and (iv) each Obligor is able to pay its debts as they mature.

                                       12



6.     REPRESENTATIONS OF THE PURCHASERS.

6.1.   Purchase for Investment.

            You represent that you are purchasing the Notes for your own account
or for one or more separate accounts maintained by you or for the account of one
or more pension or trust funds and not with a view to the distribution thereof,
provided that the disposition of your or their property shall at all times be
within your or their control. You understand that the Notes have not been
registered under the Securities Act and may be resold only if registered
pursuant to the provisions of the Securities Act or if an exemption from
registration is available, except under circumstances where neither such
registration nor such an exemption is required by law, and that the Obligors are
not required to register the Notes. You represent that you are an "accredited
investor" within the meaning of subparagraph (a)(1), (2), (3) or (7) of Rule 501
of Regulation D under the Securities Act

6.2.   Source of Funds.

            You represent that at least one of the following statements is an
accurate representation as to each source of funds (a "Source") to be used by
you to pay the purchase price of the Notes to be purchased by you hereunder:

            (a)  the Source is an "insurance company general account" (as the
       term is defined in the United States Department of Labor's Prohibited
       Transaction Exemption ("PTE") 95-60) in respect of which the reserves and
       liabilities (as defined by the annual statement for life insurance
       companies approved by the National Association of Insurance Commissioners
       (the "NAIC Annual Statement") for the general account contract(s) held by
       or on behalf of any employee benefit plan together with the amount of the
       reserves and liabilities for the general account contract(s) held by or
       on behalf of any other employee benefit plans maintained by the same
       employer (or affiliate thereof as defined in PTE 95-60) or by the same
       employee organization in the general account do not exceed 10% of the
       total reserves and liabilities of the general account (exclusive of
       separate account liabilities) plus surplus as set forth in the NAIC
       Annual Statement filed with such Purchaser's state of domicile; or

            (b)  the Source is a separate account that is maintained solely in
       connection with such Purchaser's fixed contractual obligations under
       which the amounts payable, or credited, to any employee benefit plan (or
       its related trust) that has any interest in such separate account (or to
       any participant or beneficiary of such plan (including any annuitant))
       are not affected in any manner by the investment performance of the
       separate account; or

            (c)  the Source is either (i) an insurance company pooled separate
       account, within the meaning of PTE 90-1 (issued January 29, 1990), or
       (ii) a bank collective investment fund, within the meaning of PTE 91-38
       (issued July 12, 1991) and, except as you have disclosed to the Company
       in writing pursuant to this paragraph (c), no employee benefit plan or
       group of plans maintained by the same employer or employee

                                       13



       organization beneficially owns more than 10% of all assets allocated to
       such pooled separate account or collective investment fund; or

            (d)  the Source constitutes assets of an "investment fund" (within
       the meaning of Part V of PTE 84-14 (the "QPAM Exemption") managed by a
       "qualified professional asset manager" or "QPAM" (within the meaning of
       Part V of the QPAM Exemption), no employee benefit plan's assets that are
       included in such investment fund, when combined with the assets of all
       other employee benefit plans established or maintained by the same
       employer or by an affiliate (within the meaning of Section V(c)(1) of the
       QPAM Exemption) of such employer or by the same employee organization and
       managed by such QPAM, exceed 20% of the total client assets managed by
       such QPAM, the conditions of Part I(c) and (g) of the QPAM Exemption are
       satisfied, neither the QPAM nor a person controlling or controlled by the
       QPAM (applying the definition of "control" in Section V(e) of the QPAM
       Exemption) owns a 5% or more interest in the Company and (i) the identity
       of such QPAM and (ii) the names of all employee benefit plans whose
       assets are included in such investment fund have been disclosed to the
       Company in writing pursuant to this clause (d); or

            (e)  the Source constitutes assets of a "plan(s)" (within the
       meaning of Section IV of PTE 96-23 (the "INHAM Exemption") managed by an
       "in-house asset manager" or "INHAM" (within the meaning of Part IV of the
       INHAM exemption), the conditions of Part I(a), (g) and (h) of the INHAM
       Exemption are satisfied, neither the INHAM nor a person controlling or
       controlled by the INHAM (applying the definition of "control" in Section
       IV(h) of the INHAM Exemption) owns a 5% or more interest in the Company
       and (i) the identity of such INHAM and (ii) the name(s) of the employee
       benefit plan(s) whose assets constitute the Source have been disclosed to
       the Company in writing pursuant to this clause (e); or

            (f)  the Source is a governmental plan; or

            (g)  the Source is one or more employee benefit plans, or a separate
       account or trust fund comprised of one or more employee benefit plans,
       each of which has been identified to the Company in writing pursuant to
       this paragraph (g); or

            (h)  the Source does not include assets of any employee benefit
       plan, other than a plan exempt from the coverage of ERISA.

As used in this Section 6.2, the terms "employee benefit plan", "governmental
plan" and "separate account" shall have the respective meanings assigned to such
terms in Section 3 of ERISA.

7.     INFORMATION AS TO COMPANY.

7.1.   Financial and Business Information

            The Company will deliver to each holder of Notes that is an
Institutional Investor:

                                       14



            (a)  Quarterly Statements -- within 60 days after the end of each
       quarterly fiscal period in each fiscal year of the Company (other than
       the last quarterly fiscal period of each such fiscal year), duplicate
       copies of,

                 (i)   a consolidated balance sheet of the Company and its
            Subsidiaries as at the end of such quarter,

                 (ii)  consolidated statements of income of the Company and its
            Subsidiaries for such quarter and (in the case of the second and
            third quarters) for the portion of the fiscal year ending with such
            quarter, and

                 (iii) consolidated statements of cash flows of the Company and
            its Subsidiaries for such quarter or (in the case of the second and
            third quarters) for the portion of the fiscal year ending with such
            quarter,

       setting forth in each case in comparative form the figures for the
       corresponding periods in the previous fiscal year, all in reasonable
       detail, prepared in accordance with GAAP applicable to quarterly
       financial statements generally, and certified by a Senior Financial
       Officer as fairly presenting, in all material respects, the financial
       position of the companies being reported on and their results of
       operations and cash flows, subject to changes resulting from year-end
       adjustments, provided that delivery within the time period specified
       above of copies of the Company's Quarterly Report on Form 10-Q prepared
       in compliance with the requirements therefor and filed with the
       Securities and Exchange Commission shall be deemed to satisfy the
       requirements of this Section 7.1(a);

            (b)  Annual Statements -- within 105 days after the end of each
       fiscal year of the Company, duplicate copies of,

                 (i)   a consolidated balance sheet of the Company and its
            Subsidiaries, as at the end of such year, and

                 (ii)  consolidated statements of income, changes in
            shareholders' equity and cash flows of the Company and its
            Subsidiaries, for such year,

       setting forth in each case in comparative form the figures for the
       previous fiscal year, all in reasonable detail, prepared in accordance
       with GAAP, and accompanied by an opinion of independent certified public
       accountants of recognized national standing, which opinion shall state
       that such financial statements present fairly, in all material respects,
       the financial position of the companies being reported upon and their
       results of operations and cash flows and have been prepared in conformity
       with GAAP, and that the examination of such accountants in connection
       with such financial statements has been made in accordance with generally
       accepted auditing standards, and that such audit provides a reasonable
       basis for such opinion in the circumstances, provided that the delivery
       within the time period specified above of the Company's Annual Report on
       Form 10-K for such fiscal year (together with the Company's annual report
       to shareholders, if any, prepared pursuant to Rule 14a-3 under the
       Exchange Act) prepared

                                       15



       in accordance with the requirements therefor and filed with the
       Securities and Exchange Commission shall be deemed to satisfy the
       requirements of this Section 7.1(b);

            (c)  SEC and Other Reports -- promptly upon their becoming
       available, one copy of (i) each financial statement, report, notice or
       proxy statement sent by any Obligor or any other Subsidiary to public
       securities holders generally, and (ii) each regular or periodic report,
       each registration statement other than registration statements on Form
       S-8 (without exhibits except as expressly requested by such holder), and
       each prospectus and all amendments thereto filed by any Obligor or any
       other Subsidiary with the Securities and Exchange Commission and of all
       press releases and other statements made available generally by any
       Obligor or any other Subsidiary to the public concerning developments
       that are Material;

            (d)  Notice of Default or Event of Default -- promptly, and in any
       event within five Business Days after a Responsible Officer becoming
       aware of the existence of any Default or Event of Default or that any
       Person has given any notice or taken any action with respect to a claimed
       default hereunder or that any Person has given notice or taken any action
       with respect to a claimed default of the type referred to in Section
       11(f), a written notice specifying the nature and period of existence
       thereof and what action the Obligors are taking or propose to take with
       respect thereto;

            (e)  ERISA Matters -- promptly, and in any event within five
       Business Days after a Responsible Officer becoming aware of any of the
       following, a written notice setting forth the nature thereof and the
       action, if any, that the Company or an ERISA Affiliate proposes to take
       with respect thereto:

                 (i)   with respect to any Plan, any reportable event, as
            defined in section 4043(b) of ERISA and the regulations thereunder,
            for which notice thereof has not been waived pursuant to such
            regulations as in effect on the date hereof; or

                 (ii)  the taking by the PBGC of steps to institute, or the
            threatening by the PBGC of the institution of, proceedings under
            section 4042 of ERISA for the termination of, or the appointment of
            a trustee to administer, any Plan, or the receipt by the Company or
            any ERISA Affiliate of a notice from a Multiemployer Plan that such
            action has been taken by the PBGC with respect to such Multiemployer
            Plan; or

                 (iii) any event, transaction or condition that could result in
            the incurrence of any liability by the Company or any ERISA
            Affiliate pursuant to Title I or IV of ERISA or the penalty or
            excise tax provisions of the Code relating to employee benefit
            plans, or in the imposition of any Lien on any of the rights,
            properties or assets of the Company or any ERISA Affiliate pursuant
            to Title I or IV of ERISA or such penalty or excise tax provisions,
            if such liability or Lien, taken together with any other such
            liabilities or Liens then existing, could reasonably be expected to
            have a Material Adverse Effect;

                                       16



            (f)  Notices from Governmental Authority -- promptly, and in any
       event within 30 days of receipt thereof, copies of any notice to any
       Obligor or any other Subsidiary from any Federal or state Governmental
       Authority relating to any order, ruling, statute or other law or
       regulation that could reasonably be expected to have a Material Adverse
       Effect; and

            (g)  Requested Information -- with reasonable promptness, such other
       data and information relating to the business, operations, affairs,
       financial condition, assets or properties of any Obligor or any other
       Subsidiary or relating to the ability of any Obligor to perform its
       obligations hereunder and under the Notes as from time to time may be
       reasonably requested by any such holder of Notes.

7.2.   Officer's Certificate.

            Each set of financial statements delivered to a holder of Notes
pursuant to Section 7.1(a) or (b) shall be accompanied by a certificate of a
Senior Financial Officer setting forth:

            (a)  Covenant Compliance -- the information (including detailed
       calculations) required in order to establish whether the Company was in
       compliance with the requirements of Section 10.1 through Section 10.10,
       inclusive, during the quarterly or annual period covered by the
       statements then being furnished (including with respect to each such
       Section, where applicable, the calculations of the maximum or minimum
       amount, ratio or percentage, as the case may be, permissible under the
       terms of such Sections, and the calculation of the amount, ratio or
       percentage then in existence); and

            (b)  Event of Default -- a statement that such officer has reviewed
       the relevant terms hereof and has made, or caused to be made, under his
       or her supervision, a review of the transactions and conditions of the
       Company and its Subsidiaries from the beginning of the quarterly or
       annual period covered by the statements then being furnished to the date
       of the certificate and that such review shall not have disclosed the
       existence during such period of any condition or event that constitutes a
       Default or an Event of Default or, if any such condition or event existed
       or exists (including any such event or condition resulting from the
       failure of any Obligor or any other Subsidiary to comply with any
       Environmental Law), specifying the nature and period of existence thereof
       and what action the Company shall have taken or proposes to take with
       respect thereto.

7.3.   Inspection.

            The Company will permit the representatives of each holder of Notes
that is an Institutional Investor:

            (a)  No Default -- if no Default or Event of Default then exists, at
       the expense of such holder and upon reasonable prior notice to the
       Company, to visit the principal executive office of the Company, to
       discuss the affairs, finances and accounts of the Company and its
       Subsidiaries with the Company's officers, and (with the consent of the

                                       17



       Company, which consent will not be unreasonably withheld) its independent
       public accountants, and (with the consent of the Company, which consent
       will not be unreasonably withheld) to visit the other offices and
       properties of the Company and each Subsidiary, all at such reasonable
       times and as often as may be reasonably requested in writing; and

            (b)  Default -- if a Default or Event of Default then exists, at the
       expense of the Company, to visit and inspect any of the offices or
       properties of the Company or any Subsidiary, to examine all their
       respective books of account, records, reports and other papers, to make
       copies and extracts therefrom, and to discuss their respective affairs,
       finances, and accounts with their respective officers and independent
       public accountants (and by this provision the Company authorizes said
       accountants to discuss the affairs, finances and accounts of the Company
       and its Subsidiaries), all at such times and as often as may be
       requested.

8.     PREPAYMENT OF THE NOTES.

8.1.   No Scheduled Prepayments.

            No regularly scheduled prepayments are due on the Notes prior to
their stated maturity.

8.2.   Optional Prepayments.

            (a)  Series A Notes. The Obligors may, at their option, upon notice
       as provided below, prepay at any time all, or from time to time any part
       of, one or more series of the Series A Notes in an amount not less than
       $1,000,000 in the aggregate in the case of a partial prepayment, at 100%
       of the principal amount so prepaid, plus the Make-Whole Amount determined
       for the prepayment date with respect to such principal amount. The
       Company will give each holder of each series of the Series A Notes to be
       prepaid written notice of each optional prepayment under this Section
       8.2(a) not less than 30 days and not more than 60 days prior to the date
       fixed for such prepayment. Each such notice shall specify such date, the
       aggregate principal amount of each series of the Series A Notes to be
       prepaid on such date, the principal amount of each Series A Note held by
       such holder to be prepaid (determined in accordance with Section 8.3),
       and the interest to be paid on the prepayment date with respect to such
       principal amount being prepaid, and shall be accompanied by a certificate
       of a Senior Financial Officer as to the estimated Make-Whole Amount due
       in connection with such prepayment (calculated as if the date of such
       notice were the date of the prepayment), setting forth the details of
       such computation. Two Business Days prior to such prepayment, the Company
       shall deliver to each holder of Series A Notes a certificate of a Senior
       Financial Officer specifying the calculation of such Make-Whole Amount as
       of the specified prepayment date.

            (b)  Series B Notes. The Series B Notes may not be prepaid prior to
       November 25, 2004. At any time on or after November 25, 2004, the
       Obligors may, at their option, upon notice as provided below, prepay all,
       or from time to time any part of, one or both series of the Series B
       Notes in an amount not less than $1,000,000 in the

                                       18



       aggregate in the case of a partial prepayment, at 100% of the principal
       amount so prepaid and if such prepayment is to occur on any date other
       than an Interest Payment Date, the LIBOR Breakage Amount, if any. The
       Company will give each holder of each series of Series B Notes to be
       prepaid written notice of each optional prepayment under this Section
       8.2(b) not less than 30 days and not more than 60 days prior to the date
       fixed for such prepayment. Each such notice shall specify such date, the
       aggregate principal amount of each series of the Series B Notes to be
       prepaid on such date, the principal amount of each Series B Note held by
       such holder to be prepaid (determined in accordance with Section 8.3),
       and the interest to be paid on the prepayment date with respect to such
       principal amount being prepaid.

            (c)  Offer to Prepay at Par Upon Certain Sales of Assets.

                 (i)   Notice and Offer. In the event of any Debt Prepayment
            Application under Section 10.8 of this Agreement, the Obligors will,
            within 10 days of the occurrence of the Transfer (a "Debt Prepayment
            Transfer") in respect of which an offer to prepay the Notes (the
            "Prepayment Offer") is being made to comply with the requirements
            for a Debt Prepayment Application (as set forth in the definition
            thereof), give notice of such Debt Prepayment Transfer to each
            holder of Notes. Such notice shall contain, and shall constitute, an
            irrevocable offer to prepay, at the election of each holder, a
            portion of the Notes held by such holder equal to such holder's
            Ratable Portion of the Net Proceeds Amount in respect of such Debt
            Prepayment Transfer on a date specified in such notice (the
            "Transfer Prepayment Date") that is not less than 30 days and not
            more than 60 days after the date of such notice.

                 (ii)  Acceptance and Payment. To accept such Prepayment Offer,
            a holder of Notes shall cause a notice of such acceptance to be
            delivered to the Company not later than 10 days prior to the
            Transfer Prepayment Date. Failure to accept such offer in writing
            within 10 days prior to the Transfer Prepayment Date shall be deemed
            to be rejection of the Prepayment Offer. If so accepted by any
            holder of a Note, such Prepayment Offer equal to not less than such
            holder's Ratable Portion of the Net Proceeds Amount in respect of
            such Debt Prepayment Transfer, together with any additional amount
            offered to and accepted by such holder pursuant to the following
            sentence shall be due and payable on the Transfer Prepayment Date.
            If any holder of Notes fails to accept such Prepayment Offer, such
            holder's Ratable Portion of the Net Proceeds Amount shall be offered
            pro rata to each holder of Notes that has accepted such Prepayment
            Offer. A Prepayment Offer pursuant to this Section 8.2(c) shall be
            made at 100% of the principal amount of such Notes being so prepaid,
            together with interest on such principal amount then being prepaid
            accrued to the Transfer Prepayment Date, plus the LIBOR Breakage
            Amount, if any.

                 (iii) Officer's Certificate. Each offer to prepay the Notes
            pursuant to this Section 8.2(c) shall be accompanied by a
            certificate, executed by a Senior Financial Officer and dated the
            date of such offer, specifying:

                                       19



                       (A)  the Transfer Prepayment Date and the Net Proceeds
            Amount in respect of the applicable Debt Prepayment Transfer;

                       (B)  that such offer is being made pursuant to Section
            8.2(c) and Section 10.8 of this Agreement;

                       (C)  the principal amount of each Note offered to be
            prepaid;

                       (D)  the interest that would be due on each such Note
            offered to be prepaid, accrued to the date fixed for payment;

                       (E)  whether any LIBOR Breakage Amount will be payable;
            and

                       (F)  in reasonable detail, the nature of the Transfer
            giving rise to such Debt Prepayment Transfer.

            (d)  Prepayments During Defaults or Events of Defaults. Anything in
       Section 8.2(a) and (b) to the contrary notwithstanding, during the
       continuance of a Default or Event of Default the Obligors may prepay less
       than all of the outstanding Notes pursuant to Sections 8.2(a) and 8.2(b)
       only if such prepayment is allocated among all of the Notes at the time
       outstanding in proportion, as nearly as practicable, to the respective
       unpaid principal amounts thereof not theretofore called for prepayment.

            (e)  Notice Concerning Status of Holders of Notes. Promptly after
       each prepayment date under Section 8.2(a) or (b) or Transfer Prepayment
       Date under Section 8.2(c) and the making of all prepayments contemplated
       thereunder (and, in any event, within 30 days thereafter), the Company
       will deliver to each holder of Notes a certificate signed by a Senior
       Financial Officer containing a list of the then current holders of Notes
       (together with their addresses) and setting forth as to each such holder
       the outstanding principal amount of Notes held by such holder at such
       time.

8.3.   Allocation of Partial Prepayments.

            In the case of each partial prepayment of Notes of a series pursuant
to Section 8.2(a) or (b), the principal amount of the Notes of the series to be
prepaid shall be allocated among all of the Notes of such series at the time
outstanding in proportion, as nearly as practicable, to the respective unpaid
principal amounts thereof not theretofore called for prepayment.

8.4.   Maturity; Surrender, etc.

            In the case of each prepayment of Notes pursuant to this Section 8,
the principal amount of each Note to be prepaid shall mature and become due and
payable on the date fixed for such prepayment, together with interest on such
principal amount accrued to such date and the applicable Make-Whole Amount, if
any, and LIBOR Breakage Amount, if any. From and after such date, unless the
Obligors shall fail to pay such principal amount when so due and payable,
together with the interest and Make-Whole Amount, if any, or LIBOR Breakage

                                       20



Amount, if any, as aforesaid, interest on such principal amount shall cease to
accrue. Any Note paid or prepaid in full shall be surrendered to the Company and
canceled and shall not be reissued, and no Note shall be issued in lieu of any
prepaid principal amount of any Note.

8.5.   Purchase of Notes.

            The Obligors will not and will not permit any Affiliate to purchase,
redeem, prepay or otherwise acquire, directly or indirectly, any of the
outstanding Notes except upon the payment or prepayment of the Notes in
accordance with the terms of this Agreement and the Notes. The Company will
promptly cancel all Notes acquired by any Obligor or any Affiliate pursuant to
any payment, prepayment or purchase of Notes pursuant to any provision of this
Agreement and no Notes may be issued in substitution or exchange for any such
Notes.

8.6.   Make-Whole Amount.

            The term "Make-Whole Amount" means, with respect to any Series A
Note, an amount equal to the excess, if any, of the Discounted Value of the
Remaining Scheduled Payments with respect to the Called Principal of such Series
A Note over the amount of such Called Principal, provided that the Make-Whole
Amount may in no event be less than zero. For the purposes of determining the
Make-Whole Amount, the following terms have the following meanings:

            "Called Principal" means, with respect to any Series A Note, the
       principal of such Series A Note that is to be prepaid pursuant to Section
       8.2(a) or has become or is declared to be immediately due and payable
       pursuant to Section 12.1, as the context requires.

            "Discounted Value" means, with respect to the Called Principal of
       any Series A Note, the amount obtained by discounting all Remaining
       Scheduled Payments with respect to such Called Principal from their
       respective scheduled due dates to the Settlement Date with respect to
       such Called Principal, in accordance with accepted financial practice and
       at a discount factor (applied on the same periodic basis as that on which
       interest on the Series A Notes is payable) equal to the Reinvestment
       Yield with respect to such Called Principal.

            "Reinvestment Yield" means, with respect to the Called Principal of
       any Series A Note, .50% over the yield to maturity implied by (i) the
       yields reported, as of 10:00 A.M. (New York City time) on the second
       Business Day preceding the Settlement Date with respect to such Called
       Principal, on the display designated as the "PX1 Screen" on the Bloomberg
       Financial Market Service (or such other display as may replace the PX1
       Screen on Bloomberg Financial Market Service) for actively traded U.S.
       Treasury securities having a maturity equal to the Remaining Average Life
       of such Called Principal as of such Settlement Date, or (ii) if such
       yields are not reported as of such time or the yields reported as of such
       time are not ascertainable, the Treasury Constant Maturity Series Yields
       reported, for the latest day for which such yields have been so reported
       as of the second Business Day preceding the Settlement Date with respect
       to such Called Principal, in Federal Reserve Statistical Release H.15
       (519) (or any

                                       21



       comparable successor publication) for actively traded U.S. Treasury
       securities having a constant maturity equal to the Remaining Average Life
       of such Called Principal as of such Settlement Date. Such implied yield
       will be determined, if necessary, by (a) converting U.S. Treasury bill
       quotations to bond-equivalent yields in accordance with accepted
       financial practice and (b) interpolating linearly between (1) the
       actively traded U.S. Treasury security with the maturity closest to and
       greater than the Remaining Average Life and (2) the actively traded U.S.
       Treasury security with the maturity closest to and less than the
       Remaining Average Life.

            "Remaining Average Life" means, with respect to any Called
       Principal, the number of years (calculated to the nearest one-twelfth
       year) obtained by dividing (i) such Called Principal into (ii) the sum of
       the products obtained by multiplying (a) the principal component of each
       Remaining Scheduled Payment with respect to such Called Principal by (b)
       the number of years (calculated to the nearest one-twelfth year) that
       will elapse between the Settlement Date with respect to such Called
       Principal and the scheduled due date of such Remaining Scheduled Payment.

            "Remaining Scheduled Payments" means, with respect to the Called
       Principal of any Series A Note, all payments of such Called Principal and
       interest thereon that would be due after the Settlement Date with respect
       to such Called Principal if no payment of such Called Principal were made
       prior to its scheduled due date, provided that if such Settlement Date is
       not a date on which interest payments are due to be made under the terms
       of the Series A Notes, then the amount of the next succeeding scheduled
       interest payment will be reduced by the amount of interest accrued to
       such Settlement Date and required to be paid on such Settlement Date
       pursuant to Section 8.2(a) or 12.1.

            "Settlement Date" means, with respect to the Called Principal of any
       Series A Note, the date on which such Called Principal is to be prepaid
       pursuant to Section 8.2(a) or has become or is declared to be immediately
       due and payable pursuant to Section 12.1, as the context requires.

8.7.   LIBOR Breakage Amount.

            The term "LIBOR Breakage Amount" means any loss, cost or expense
reasonably incurred by any holder of a Series B Note as a result of any payment
or prepayment of such Note (whether voluntary, mandatory, automatic, by reason
of acceleration or otherwise) on a day other than an Interest Payment Date or at
scheduled maturity thereof, and any loss or expense arising from the liquidation
or reemployment of funds obtained by such holder or from fees payable to
terminate the deposits from which such funds were obtained. Any such loss, cost
or expense shall be limited to the time period from the date of such prepayment
through the earlier of the next Interest Payment Date or the maturity of such
Series B Note. Each holder of a Series B Note shall determine the LIBOR Breakage
Amount with respect to the principal amount of its Series B Notes then being
paid or prepaid (or required to be paid or prepaid) by written notice to the
Company setting forth such determination in reasonable detail not less than two
Business Days prior to the date of prepayment. Each such determination shall be
conclusive absent manifest error.

                                       22



9.     AFFIRMATIVE COVENANTS.

            The Obligors, jointly and severally, covenant that so long as any of
the Notes are outstanding:

9.1.   Compliance with Law.

            The Obligors will, and will cause each other Subsidiary to, comply
with all laws, ordinances or governmental rules or regulations to which each of
them is subject, including, without limitation, Environmental Laws, and will
obtain and maintain in effect all licenses, certificates, permits, franchises
and other governmental authorizations necessary to the ownership of their
respective properties or to the conduct of their respective businesses, in each
case to the extent necessary to ensure that non-compliance with such laws,
ordinances or governmental rules or regulations or failures to obtain or
maintain in effect such licenses, certificates, permits, franchises and other
governmental authorizations could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.

9.2.   Insurance.

            The Obligors will, and will cause each other Subsidiary to,
maintain, with financially sound and reputable insurers, insurance with respect
to their respective properties and businesses against such casualties and
contingencies, of such types, on such terms and in such amounts (including
deductibles, co-insurance and self-insurance, if adequate reserves are
maintained with respect thereto) as is customary in the case of entities of
established reputations engaged in the same or a similar business and similarly
situated.

9.3.   Maintenance of Properties.

            The Obligors will, and will cause each other Subsidiary to, maintain
and keep, or cause to be maintained and kept, their respective properties in
good repair, working order and condition (other than ordinary wear and tear), so
that the business carried on in connection therewith may be properly conducted
at all times, provided that this Section shall not prevent any Obligor or any
other Subsidiary from discontinuing the operation and the maintenance of any of
its properties if such discontinuance is desirable in the conduct of its
business and the Company has concluded that such discontinuance could not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.

9.4.   Payment of Taxes and Claims.

            The Obligors will, and will cause each other Subsidiary to, file all
income tax or similar tax returns required to be filed in any jurisdiction and
to pay and discharge all taxes shown to be due and payable on such returns and
all other taxes, assessments, governmental charges, or levies imposed on them or
any of their properties, assets, income or franchises, to the extent such taxes
and assessments have become due and payable and before they have become
delinquent and all claims for which sums have become due and payable that have
or might become a Lien on properties or assets of any Obligor or any other
Subsidiary, provided that neither any Obligor nor any other Subsidiary need pay
any such tax or assessment or claims if

                                       23



(i) the amount, applicability or validity thereof is contested by such Obligor
or such Subsidiary on a timely basis in good faith and in appropriate
proceedings, and an Obligor or another Subsidiary has established adequate
reserves therefor in accordance with GAAP on its books or (ii) the nonpayment of
all such taxes and assessments in the aggregate could not reasonably be expected
to have a Material Adverse Effect.

9.5.   Corporate Existence, etc.

            Subject to Sections 10.7 and 10.8, each Obligor will at all times
preserve and keep in full force and effect its corporate existence. Subject to
Sections 10.7 and 10.8, the Company will at all times preserve and keep in full
force and effect the corporate existence of each of its Subsidiaries (unless
merged into the Company or a Subsidiary) and all rights and franchises of the
Company and its Subsidiaries unless, in the good faith judgment of the Company,
the termination of or failure to preserve and keep in full force and effect such
corporate existence, right or franchise could not, individually or in the
aggregate, have a Material Adverse Effect.

9.6.   Ranking of Notes.

            The Notes and the Obligors' obligations under this Agreement will
rank at least pari passu with all of the Obligors' outstanding unsecured Senior
Debt.

9.7.   Subsidiary Guaranties.

            The Obligors will not permit any other Subsidiary to become a
borrower under, or to directly or indirectly guarantee any obligations of any
Obligor under, the Credit Agreement unless such Subsidiary, concurrently
therewith, (i) executes and delivers a guaranty in substantially the form of
Exhibit 9.7 (the "Subsidiary Guaranty"), or, if such Subsidiary Guaranty has
previously been delivered, becomes a party to the Subsidiary Guaranty and (ii)
provides an opinion of counsel to the holders of Notes that the Subsidiary
Guaranty is enforceable against such Subsidiary in accordance with its terms,
except to the extent that enforcement thereof may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws of general
application relating to or affecting the enforcement of the rights of creditors
or by equitable principles, regardless of whether enforcement is sought in a
proceeding in equity or at law.

10.    NEGATIVE COVENANTS.

            The Obligors, jointly and severally, covenant that so long as any of
the Notes are outstanding:

10.1. Consolidated Net Worth.

            The Company will not permit Consolidated Net Worth at any time to be
less than $500,000,000 plus the cumulative sum of 25% of Consolidated Net Income
(but only if a positive number) for each fiscal quarter ending after October 25,
2003.

                                       24



10.2.  Consolidated Debt.

            The Company will not permit the ratio of Consolidated Debt (as of
any date) to Consolidated Operating Cash Flow (for the Company's then most
recently completed four fiscal quarters) to be greater than 3.50 to 1.00 at any
time.

10.3.  Interest Coverage.

            The Company will not permit the ratio of Consolidated Income
Available for Interest Charges to Consolidated Interest Charges (in each case
for the Company's then most recently completed four fiscal quarters) to be less
than 2.50 to 1.00 at any time.

10.4.  Priority Debt.

            The Company will not permit Priority Debt to exceed 20% of
Consolidated Net Worth (as of the end of the Company's then most recently
completed fiscal quarter) at any time.

10.5.  Liens.

            The Company will not, and will not permit any Subsidiary to, permit
to exist, create, assume or incur, directly or indirectly, any Lien on its
properties or assets, whether now owned or hereafter acquired, except:

            (a)  Liens for taxes, assessments or governmental charges not then
       due and delinquent or the nonpayment of which is permitted by Section
       9.4;

            (b)  any attachment or judgment Lien, unless the judgment it secures
       has not, within 60 days after the entry thereof, been discharged or
       execution thereof stayed pending appeal, or has not been discharged
       within 60 days after the expiration of any such stay;

            (c)  Liens incidental to the conduct of business or the ownership of
       properties and assets (including landlords', lessors', carriers',
       warehousemen's, mechanics', materialmen's and other similar Liens) and
       Liens to secure the performance of bids, tenders, leases or trade
       contracts, or to secure statutory obligations (including obligations
       under workers compensation, unemployment insurance and other social
       security legislation), surety or appeal bonds or other Liens of like
       general nature incurred in the ordinary course of business and not in
       connection with the borrowing of money;

            (d)  encumbrances in the nature of leases, subleases, zoning
       restrictions, easements, rights of way, minor survey exceptions and other
       rights and restrictions of record on the use of real property and defects
       in title arising or incurred in the ordinary course of business, which,
       individually and in the aggregate, do not materially impair the use of
       the property or assets subject thereto by the Company or such Subsidiary
       in their business or which relate only to assets that in the aggregate
       are not Material;

            (e)  Liens securing Debt existing on property or assets of the
       Company or any Subsidiary as of the date of this Agreement that are
       described in Schedule 10.5;

                                       25



            (f)  Liens (i) existing on property at the time of its acquisition
       by the Company or a Subsidiary and not created in contemplation thereof,
       whether or not the Debt secured by such Lien is assumed by the Company or
       a Subsidiary; or (ii) on property (including (Capital Leases) created
       contemporaneously with its acquisition or within 180 days of the
       acquisition or completion of construction or improvements thereof to
       secure or provide for all or a portion of the acquisition price or cost
       of construction or improvements of such property after the date of
       Closing; or (iii) existing on property of a Person at the time such
       Person is merged or consolidated with, or becomes a Subsidiary of, or
       substantially all of its assets are acquired by, the Company or a
       Subsidiary and not created in contemplation thereof; provided that such
       Liens do not extend to additional property of the Company or any
       Subsidiary (other than property that is an improvement to or is acquired
       for specific use in connection with the subject property) and that the
       aggregate principal amount of Debt secured by each such Lien does not
       exceed the lesser of cost of acquisition or construction or the fair
       market value (determined in good faith by one or more officers of the
       Company to whom authority to enter into the transaction has been
       delegated by the board of directors of the Company) of the property
       subject thereto;

            (g)  Liens resulting from extensions, renewals or replacements of
       Liens permitted by paragraphs (e) and (f), provided that (i) there is no
       increase in the principal amount or decrease in maturity of the Debt
       secured thereby at the time of such extension, renewal or replacement,
       (ii) any new Lien attaches only to the same property theretofore subject
       to such earlier Lien and (iii) immediately after such extension, renewal
       or replacement no Default or Event of Default would exist;

            (h)  Liens securing Debt of a Subsidiary owed to the Company or to
       another Subsidiary;

            (i)  Liens arising in connection with a Contract Purchase Facility
       or a Permitted Receivables Securitization Transaction on the assets
       transferred in connection therewith, including proceeds and cash;

            (j)  Liens securing Debt not otherwise permitted by paragraphs (a)
       through (i) above, provided that, after giving effect to the incurrence
       of the Debt so secured, Priority Debt does not exceed 20% of Consolidated
       Net Worth as of the end of the Company's then most recently completed
       fiscal quarter.

10.6.  Subsidiary Debt.

            The Company will not at any time permit any Subsidiary, directly or
indirectly, to create, incur, assume, guarantee, have outstanding, or otherwise
become or remain directly or indirectly liable for, any Debt other than:

            (a)  Debt outstanding on the date hereof that is described on
       Schedule 10.6;

            (b)  Debt owed to the Company or a Wholly Owned Subsidiary;

            (c)  Debt of the Obligors outstanding under the Credit Agreement;

                                       26



            (d)  The Notes;

            (e)  Debt of a Subsidiary outstanding at the time of its acquisition
       by the Company, provided that (i) such Debt was not incurred in
       contemplation of becoming a Subsidiary, and (ii) at the time of such
       acquisition and after giving effect thereto, no Default or Event of
       Default exists or would exist;

            (f)  Debt not otherwise permitted by the preceding clauses (a)
       through (e), provided that immediately before and after giving effect
       thereto and to the application of the proceeds thereof,

                 (i)   no Default or Event of Default exists, and

                 (ii)  Priority Debt does not exceed 20% of Consolidated Net
            Worth as of the end of the Company's then most recently completed
            fiscal quarter.

10.7.  Mergers, Consolidations, etc.

            (a)  The Company will not consolidate with or merge with any other
       Person or convey, transfer, sell or lease all or substantially all of its
       assets in a single transaction or series of transactions to any Person
       unless:

                 (i)   the successor formed by such consolidation or the
            survivor of such merger or the Person that acquires by conveyance,
            transfer, sale or lease all or substantially all of the assets of
            the Company as an entirety, as the case may be, is a solvent
            corporation organized and existing under the laws of the United
            States or any state thereof (including the District of Columbia),
            and, if the Company is not such corporation, such corporation (A)
            shall have executed and delivered to each holder of any Notes its
            assumption of the due and punctual performance and observance of
            each covenant and condition of this Agreement and the Notes and (B)
            shall have caused to be delivered to each holder of any Notes an
            opinion of nationally recognized independent counsel or other
            independent counsel reasonably satisfactory to the Required Holders,
            to the effect that all agreements or instruments effecting such
            assumption are enforceable in accordance with their terms and comply
            with the terms hereof; and

                 (ii)  immediately before and after giving effect to such
            transaction, no Default or Event of Default shall have occurred and
            be continuing.

       No such conveyance, transfer, sale or lease of all or substantially all
       of the assets of the Company shall have the effect of releasing the
       Company or any successor corporation that shall theretofore have become
       such in the manner prescribed in this Section 10.7 from its liability
       under this Agreement or the Notes.

            (b)  The Company will not permit any Subsidiary that is an Obligor
       to consolidate with or merge with any other Subsidiary that is not an
       Obligor (a "Non-Obligor Subsidiary") if such Non-Obligor Subsidiary is
       the successor or survivor, or

                                       27



       convey, transfer, sell or lease all or substantially all of its assets in
       a single transaction or series of transactions to any Non-Obligor
       Subsidiary, unless:

                 (i)   such Non-Obligor Subsidiary (A) is a solvent corporation
            organized and existing under the laws of the United States or any
            state thereof (including the District of Columbia), (B) shall have
            executed and delivered to each holder of any Notes its assumption of
            the due and punctual performance and observance of each covenant and
            condition of this Agreement and the Notes and (C) shall have caused
            to be delivered to each holder of any Notes an opinion of nationally
            recognized independent counsel or other independent counsel
            reasonably satisfactory to the Required Holders, to the effect that
            all agreements or instruments effecting such assumption are
            enforceable in accordance with their terms and comply with the terms
            hereof; and

                 (ii)  immediately before and after giving effect to such
            transaction, no Default or Event of Default shall have occurred and
            be continuing.

10.8.  Sale of Assets.

            Except as permitted by Section 10.7, the Company will not, and will
not permit any Subsidiary to, make any Asset Disposition unless:

            (a)  in the good faith opinion of the Company, the Asset Disposition
       is in exchange for consideration having a fair market value at least
       equal to that of the property exchanged and is in the best interest of
       the Company or such Subsidiary;

            (b)  immediately after giving effect to the Asset Disposition, no
       Default or Event of Default would exist; and

            (c)  immediately after giving effect to the Asset Disposition, the
       Disposition Value of all property that was the subject of any Asset
       Disposition occurring in the then current fiscal year of the Company
       would not exceed 15% of Consolidated Total Assets as of the end of the
       then most recently completed fiscal year of the Company; and

If the Net Proceeds Amount for any Transfer is applied to a Debt Prepayment
Application or a Property Reinvestment Application within 365 days after such
Transfer, then such Transfer, only for the purpose of determining compliance
with paragraph (c) of this Section 10.8 as of any date, shall be deemed not to
be an Asset Disposition.

10.9.  Nature of Business.

            The Company will not, and will not permit any Subsidiary to, engage
in any business if, as a result, the general nature of the business in which the
Company and its Subsidiaries, taken as a whole, would then be engaged would be
substantially changed from the general nature of the business in which the
Company and its Subsidiaries, taken as a whole, are engaged on the date of this
Agreement as described in the Memorandum.

                                       28



10.10. Transactions with Affiliates.

            The Company will not and will not permit any Subsidiary to enter
into directly or indirectly any Material transaction or Material group of
related transactions (including without limitation the purchase, lease, sale or
exchange of properties of any kind or the rendering of any service) with any
Affiliate (other than the Company or another Subsidiary), except in the ordinary
course of the Company's or such Subsidiary's business and upon fair and
reasonable terms no less favorable to the Company or such Subsidiary than would
be obtainable in a comparable arm's-length transaction with a Person not an
Affiliate.

11.    EVENTS OF DEFAULT.

            An "Event of Default" shall exist if any of the following conditions
or events shall occur and be continuing:

            (a)  the Obligors default in the payment of any principal,
       Make-Whole Amount, if any, or LIBOR Breakage Amount, if any, on any Note
       when the same becomes due and payable, whether at maturity or at a date
       fixed for prepayment or by declaration or otherwise; or

            (b)  the Obligors default in the payment of any interest on any Note
       for more than five Business Days after the same becomes due and payable;
       or

            (c)  the Obligors default in the performance of or compliance with
       any term contained in Section 7.1(d) or in Sections 10.1 through 10.10;
       or

            (d)  the Obligors default in the performance of or compliance with
       any term contained herein (other than those referred to in paragraphs
       (a), (b) and (c) of this Section 11) and such default is not remedied
       within 30 days after the earlier of (i) a Responsible Officer obtaining
       actual knowledge of such default or (ii) the Company receiving written
       notice of such default from any holder of a Note; or

            (e)  any representation or warranty made in writing by or on behalf
       of the Obligors or by any officer of any Obligor in this Agreement or in
       any writing furnished in connection with the transactions contemplated
       hereby or thereby proves to have been false or incorrect in any material
       respect on the date as of which made; or

            (f)  (i) any Obligor or any other Subsidiary is in default (as
       principal or as guarantor or other surety) in the payment of any
       principal of or premium or make-whole amount or libor-breakage amount or
       interest on any Debt that is outstanding in an aggregate principal amount
       of at least $10,000,000 beyond any period of grace provided with respect
       thereto, or (ii) any Obligor or any other Subsidiary is in default in the
       performance of or compliance with any term of any evidence of any Debt
       that is outstanding in an aggregate principal amount of at least
       $10,000,000 or of any mortgage, indenture or other agreement relating
       thereto or any other condition exists, and as a consequence of such
       default or condition such Debt has become, or has been declared (or one
       or more Persons are entitled to declare such Debt to be), due and payable
       before its

                                       29



       stated maturity or before its regularly scheduled dates of payment, or
       (iii) as a consequence of the occurrence or continuation of any event or
       condition (other than the passage of time or the right of the holder of
       Debt to convert such Debt into equity interests), (A) any Obligor or any
       other Subsidiary has become obligated to purchase or repay Debt before
       its regular maturity or before its regularly scheduled dates of payment
       in an aggregate outstanding principal amount of at least $10,000,000 or
       (B) one or more Persons have the right to require any Obligor or any
       other Subsidiary so to purchase or repay such Debt; or

            (g)  any Obligor or any other Subsidiary (i) is generally not
       paying, or admits in writing its inability to pay, its debts as they
       become due, (ii) files, or consents by answer or otherwise to the filing
       against it of, a petition for relief or reorganization or arrangement or
       any other petition in bankruptcy, for liquidation or to take advantage of
       any bankruptcy, insolvency, reorganization, moratorium or other similar
       law of any jurisdiction, (iii) makes an assignment for the benefit of its
       creditors, (iv) consents to the appointment of a custodian, receiver,
       trustee or other officer with similar powers with respect to it or with
       respect to any substantial part of its property, (v) is adjudicated as
       insolvent or to be liquidated, or (vi) takes corporate action for the
       purpose of any of the foregoing; or

            (h)  a court or governmental authority of competent jurisdiction
       enters an order appointing, without consent by any Obligor or any other
       Subsidiary, a custodian, receiver, trustee or other officer with similar
       powers with respect to it or with respect to any substantial part of its
       property, or constituting an order for relief or approving a petition for
       relief or reorganization or any other petition in bankruptcy or for
       liquidation or to take advantage of any bankruptcy or insolvency law of
       any jurisdiction, or ordering the dissolution, winding-up or liquidation
       of any Obligor or any other Subsidiary, or any such petition shall be
       filed against any Obligor or any other Subsidiary and such petition shall
       not be dismissed within 60 days; or

            (i)  a final judgment or judgments for the payment of money
       aggregating more than $10,000,000 are rendered against one or more of the
       Obligors and any other Subsidiaries, which judgments are not, within 60
       days after entry thereof, bonded, discharged or stayed pending appeal, or
       are not discharged within 60 days after the expiration of such stay; or

            (j)  if (i) any Plan shall fail to satisfy the minimum funding
       standards of ERISA or the Code for any plan year or part thereof or a
       waiver of such standards or extension of any amortization period is
       sought or granted under section 412 of the Code, (ii) a notice of intent
       to terminate any Plan shall have been or is reasonably expected to be
       filed with the PBGC or the PBGC shall have instituted proceedings under
       ERISA section 4042 to terminate or appoint a trustee to administer any
       Plan or the PBGC shall have notified the Company or any ERISA Affiliate
       that a Plan may become a subject of any such proceedings, (iii) the
       aggregate "amount of unfunded benefit liabilities" (within the meaning of
       section 4001(a)(18) of ERISA) under all Plans determined in accordance
       with Title IV of ERISA, shall be greater than $10,000,000, (iv) the
       Company or any ERISA Affiliate shall have incurred or is reasonably
       expected to incur any liability

                                       30



       pursuant to Title I or IV of ERISA or the penalty or excise tax
       provisions of the Code relating to employee benefit plans, (v) the
       Company or any ERISA Affiliate withdraws from any Multiemployer Plan, or
       (vi) the Company or any Subsidiary establishes or amends any employee
       welfare benefit plan that provides post-employment welfare benefits in a
       manner that would increase the liability of the Company or any Subsidiary
       thereunder; and any such event or events described in clauses (i) through
       (vi) above, either individually or together with any other such event or
       events, could reasonably be expected to have a Material Adverse Effect;
       or

            (k)  any Subsidiary Guarantor defaults in the performance of or
       compliance with any term contained in the Subsidiary Guaranty or the
       Subsidiary Guaranty ceases to be in full force and effect as a result of
       acts taken by the Company or any Subsidiary Guarantor, except as provided
       in Section 22, or is declared to be null and void in whole or in material
       part by a court or other governmental or regulatory authority having
       jurisdiction or the validity or enforceability thereof shall be contested
       by any of the Company or any Subsidiary Guarantor or any of them
       renounces any of the same or denies that it has any or further liability
       thereunder.

As used in Section 11(j), the terms "employee benefit plan" and "employee
welfare benefit plan" shall have the respective meanings assigned to such terms
in Section 3 of ERISA.

12.    REMEDIES ON DEFAULT, ETC.

12.1.  Acceleration.

            (a)  If an Event of Default with respect to any Obligor described in
       paragraph (g) or (h) of Section 11 (other than an Event of Default
       described in clause (i) of paragraph (g) or described in clause (vi) of
       paragraph (g) by virtue of the fact that such clause encompasses clause
       (i) of paragraph (g)) has occurred, all the Notes then outstanding shall
       automatically become immediately due and payable.

            (b)  If any other Event of Default has occurred and is continuing,
       holders of at least 51% in principal amount of the Notes at the time
       outstanding may at any time at its or their option, by notice or notices
       to the Obligors, declare all the Notes then outstanding to be immediately
       due and payable.

            (c)  If any Event of Default described in paragraph (a) or (b) of
       Section 11 has occurred and is continuing, any holder or holders of Notes
       at the time outstanding affected by such Event of Default may at any
       time, at its or their option, by notice or notices to the Company,
       declare all the Notes held by it or them to be immediately due and
       payable.

            Upon any Notes becoming due and payable under this Section 12.1,
whether automatically or by declaration, such Notes will forthwith mature and
the entire unpaid principal amount of such Notes, plus (w) all accrued and
unpaid interest thereon, (x) any applicable Make-Whole Amount determined in
respect of such principal amount (to the full extent permitted by applicable
law), and (y) any LIBOR Breakage Amount determined in respect of such principal

                                       31



amount, shall all be immediately due and payable, in each and every case without
presentment, demand, protest or further notice, all of which are hereby waived.
The Obligors acknowledge, and the parties hereto agree, that each holder of a
Note has the right to maintain its investment in the Notes free from repayment
by the Obligors (except as herein specifically provided for) and that the
provision for payment of a Make-Whole Amount by the Obligors in the event that
the Series A Notes are prepaid or are accelerated as a result of an Event of
Default, is intended to provide compensation for the deprivation of such right
under such circumstances.

12.2.  Other Remedies.

            If any Default or Event of Default has occurred and is continuing,
and irrespective of whether any Notes have become or have been declared
immediately due and payable under Section 12.1, the holder of any Note at the
time outstanding may proceed to protect and enforce the rights of such holder by
an action at law, suit in equity or other appropriate proceeding, whether for
the specific performance of any agreement contained herein or in any Note, or
for an injunction against a violation of any of the terms hereof or thereof, or
in aid of the exercise of any power granted hereby or thereby or by law or
otherwise.

12.3.  Rescission.

            At any time after any Notes have been declared due and payable
pursuant to clause (b) or (c) of Section 12.1, the holders of at least 51% in
principal amount of the Notes then outstanding, by written notice to the
Obligors, may rescind and annul any such declaration and its consequences if (a)
the Obligors have paid all overdue interest on the Notes, all principal of and
any Make-Whole Amount and LIBOR Breakage Amount on any Notes that are due and
payable and are unpaid other than by reason of such declaration, and all
interest on such overdue principal and any Make-Whole Amount and LIBOR Breakage
Amount and (to the extent permitted by applicable law) any overdue interest in
respect of the Notes, at the Default Rate, (b) all Events of Default and
Defaults, other than non-payment of amounts that have become due solely by
reason of such declaration, have been cured or have been waived pursuant to
Section 17, and (c) no judgment or decree has been entered for the payment of
any monies due pursuant hereto or to the Notes. No rescission and annulment
under this Section 12.3 will extend to or affect any subsequent Event of Default
or Default or impair any right consequent thereon.

12.4.  No Waivers or Election of Remedies, Expenses, etc.

            No course of dealing and no delay on the part of any holder of any
Note in exercising any right, power or remedy shall operate as a waiver thereof
or otherwise prejudice such holder's rights, powers or remedies. No right, power
or remedy conferred by this Agreement or by any Note or the Subsidiary Guaranty
upon any holder thereof shall be exclusive of any other right, power or remedy
referred to herein or therein or now or hereafter available at law, in equity,
by statute or otherwise. Without limiting the obligations of the Obligors under
Section 15, the Obligors will pay to the holder of each Note on demand such
further amount as shall be sufficient to cover all costs and expenses of such
holder incurred in any enforcement or collection under this Section 12,
including, without limitation, reasonable attorneys' fees, expenses and
disbursements.

                                       32



13.    REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES.

13.1.  Registration of Notes.

            The Company shall keep at its principal executive office a register
for the registration and registration of transfers of Notes. The name and
address of each holder of one or more Notes, each transfer thereof and the name
and address of each transferee of one or more Notes shall be registered in such
register. Prior to due presentment for registration of transfer, the Person in
whose name any Note shall be registered shall be deemed and treated as the owner
and holder thereof for all purposes hereof, and the Company shall not be
affected by any notice or knowledge to the contrary. The Company shall give to
any holder of a Note that is an Institutional Investor, promptly upon request
therefor, a complete and correct copy of the names and addresses of all
registered holders of Notes.

13.2.  Transfer and Exchange of Notes.

            Upon surrender of any Note at the principal executive office of the
Company for registration of transfer or exchange (and in the case of a surrender
for registration of transfer, duly endorsed or accompanied by a written
instrument of transfer duly executed by the registered holder of such Note or
his attorney duly authorized in writing and accompanied by the address for
notices of each transferee of such Note or part thereof), the Obligors shall
execute and deliver within five Business Days, at the Obligors' expense (except
as provided below), one or more new Notes (as requested by the holder thereof)
of the same series in exchange therefor, in an aggregate principal amount equal
to the unpaid principal amount of the surrendered Note. Each such new Note shall
be payable to such Person as such holder may request and shall be substantially
in the form of Exhibit 1(a), (b), (c), (d) or (e) as appropriate. Each such new
Note shall be dated and bear interest from the date to which interest shall have
been paid on the surrendered Note or dated the date of the surrendered Note if
no interest shall have been paid thereon. The Company may require payment of a
sum sufficient to cover any stamp tax or governmental charge imposed in respect
of any such transfer of Notes. Notes shall not be transferred in denominations
of less than $100,000, provided that if necessary to enable the registration of
transfer by a holder of its entire holding of Notes, one Note may be in a
denomination of less than $100,000. Any transferee, by its acceptance of a Note
registered in its name (or the name of its nominee), shall be deemed to have
made the representation set forth in Section 6.2.

13.3.  Replacement of Notes.

            Upon receipt by the Company of evidence reasonably satisfactory to
it of the ownership of and the loss, theft, destruction or mutilation of any
Note (which evidence shall be, in the case of an Institutional Investor, notice
from such Institutional Investor of such ownership and such loss, theft,
destruction or mutilation), and

            (a)  in the case of loss, theft or destruction, of indemnity
       reasonably satisfactory to it (provided that if the holder of such Note
       is, or is a nominee for, an original Purchaser or another Institutional
       Investor holder of a Note with a minimum net

                                       33



       worth of at least $50,000,000, such Person's own unsecured agreement of
       indemnity shall be deemed to be satisfactory), or

            (b)  in the case of mutilation, upon surrender and cancellation
       thereof,

the Obligors at their own expense shall execute and deliver within five Business
Days, in lieu thereof, a new Note of the same series, dated and bearing interest
from the date to which interest shall have been paid on such lost, stolen,
destroyed or mutilated Note or dated the date of such lost, stolen, destroyed or
mutilated Note if no interest shall have been paid thereon.

14.    PAYMENTS ON NOTES.

14.1.  Place of Payment.

            Subject to Section 14.2, payments of principal, Make-Whole Amount,
if any, Libor-Breakage Amount, if any, and interest becoming due and payable on
the Notes shall be made in Chicago, Illinois at the principal office of Bank
One, NA in such jurisdiction. The Obligors may at any time, by notice to each
holder of a Note, change the place of payment of the Notes so long as such place
of payment shall be either the principal office of the Company in such
jurisdiction or the principal office of a bank or trust company in such
jurisdiction.

14.2.  Home Office Payment.

            So long as you or your nominee shall be the holder of any Note, and
notwithstanding anything contained in Section 14.1 or in such Note to the
contrary, the Obligors will pay all sums becoming due on such Note for
principal, Make-Whole Amount, if any, LIBOR Breakage Amount, if any, and
interest by the method and at the address specified for such purpose below your
name in Schedule A, or by such other method or at such other address as you
shall have from time to time specified to the Company in writing for such
purpose, without the presentation or surrender of such Note or the making of any
notation thereon, except that upon written request of the Company made
concurrently with or reasonably promptly after payment or prepayment in full of
any Note, you shall surrender such Note for cancellation, reasonably promptly
after any such request, to the Company at its principal executive office or at
the place of payment most recently designated by the Company pursuant to Section
14.1. Prior to any sale or other disposition of any Note held by you or your
nominee you will, at your election, either endorse thereon the amount of
principal paid thereon and the last date to which interest has been paid thereon
or surrender such Note to the Company in exchange for a new Note or Notes
pursuant to Section 13.2. The Obligors will afford the benefits of this Section
14.2 to any Institutional Investor that is the direct or indirect transferee of
any Note purchased by you under this Agreement and that has made the same
agreement relating to such Note as you have made in this Section 14.2.

                                       34



15.    EXPENSES, ETC.

15.1.  Transaction Expenses.

            Whether or not the transactions contemplated hereby are consummated,
the Obligors will pay all costs and expenses (including reasonable attorneys'
fees of a special counsel and, if reasonably required, local or other counsel)
incurred by you and each Other Purchaser or holder of a Note in connection with
such transactions and in connection with any amendments, waivers or consents
under or in respect of this Agreement or the Notes (whether or not such
amendment, waiver or consent becomes effective), including: (a) the costs and
expenses incurred in enforcing or defending (or determining whether or how to
enforce or defend) any rights under this Agreement or the Notes, or in
responding to any subpoena or other legal process or informal investigative
demand issued in connection with this Agreement or the Notes, or by reason of
being a holder of any Note, (b) the costs and expenses, including financial
advisors' fees, incurred in connection with the insolvency or bankruptcy of any
Obligor or any other Subsidiary or in connection with any work-out or
restructuring of the transactions contemplated hereby and by the Notes, and (c)
the costs and expenses incurred in connection with the initial filing of this
Agreement and all related documents and financial information, and all
subsequent annual and interim filings of documents and financial information
related to this Agreement, with the Securities Valuation Office of the National
Association of Insurance Commissioners or any successor organization succeeding
to the authority thereof. The Obligors will pay, and will save you and each
other holder of a Note harmless from, all claims in respect of any fees, costs
or expenses if any, of brokers and finders (other than those retained by you).

15.2.  Survival.

            The obligations of the Obligors under this Section 15 will survive
the payment or transfer of any Note, the enforcement, amendment or waiver of any
provision of this Agreement or the Notes, and the termination of this Agreement.

16.    SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT.

            All representations and warranties contained herein shall survive
the execution and delivery of this Agreement and the Notes, the purchase or
transfer by you of any Note or portion thereof or interest therein and the
payment of any Note, and may be relied upon by any subsequent holder of a Note,
regardless of any investigation made at any time by or on behalf of you or any
other holder of a Note. All statements contained in any certificate or other
instrument delivered by or on behalf of any Obligor pursuant to this Agreement
shall be deemed representations and warranties of such Obligor under this
Agreement. Subject to the preceding sentence, this Agreement and the Notes
embody the entire agreement and understanding between you and the Obligors and
supersede all prior agreements and understandings relating to the subject matter
hereof.

                                       35



17.    AMENDMENT AND WAIVER.

17.1.  Requirements.

            This Agreement, the Notes and the Subsidiary Guaranty may be
amended, and the observance of any term hereof or of the Notes may be waived
(either retroactively or prospectively), with (and only with) the written
consent of the Obligors and the Required Holders, except that (a) no amendment
or waiver of any of the provisions of Section 1, 2, 3, 4, 5, 6 or 21 hereof, or
any defined term (as it is used therein), will be effective as to you unless
consented to by you in writing, and (b) no such amendment or waiver may, without
the written consent of the holder of each Note at the time outstanding affected
thereby, (i) subject to the provisions of Section 12 relating to acceleration or
rescission, change the amount or time of any prepayment or payment of principal
of, or reduce the rate or change the time of payment or method of computation of
interest or of the Make-Whole Amount or LIBOR Breakage Amount on, the Notes,
(ii) change the percentage of the principal amount of the Notes the holders of
which are required to consent to any such amendment or waiver, or (iii) amend
any of Sections 8, 11(a), 11(b), 12, 17 or 20.

17.2.  Solicitation of Holders of Notes.

            (a)  Solicitation. The Company will provide each holder of the Notes
       (irrespective of the amount of Notes then owned by it) with sufficient
       information, sufficiently far in advance of the date a decision is
       required, to enable such holder to make an informed and considered
       decision with respect to any proposed amendment, waiver or consent in
       respect of any of the provisions hereof or of the Notes. The Company will
       deliver executed or true and correct copies of each amendment, waiver or
       consent effected pursuant to the provisions of this Section 17 to each
       holder of outstanding Notes promptly following the date on which it is
       executed and delivered by, or receives the consent or approval of, the
       requisite holders of Notes.

            (b)  Payment. The Obligors will not directly or indirectly pay or
       cause to be paid any remuneration, whether by way of supplemental or
       additional interest, fee or otherwise, or grant any security, to any
       holder of Notes as consideration for or as an inducement to the entering
       into by any holder of Notes or any waiver or amendment of any of the
       terms and provisions hereof unless such remuneration is concurrently
       paid, or security is concurrently granted, on the same terms, ratably to
       each holder of Notes then outstanding even if such holder did not consent
       to such waiver or amendment.

17.3.  Binding Effect, etc.

            Any amendment or waiver consented to as provided in this Section 17
applies equally to all holders of Notes and is binding upon them and upon each
future holder of any Note and upon the Obligors without regard to whether such
Note has been marked to indicate such amendment or waiver. No such amendment or
waiver will extend to or affect any obligation, covenant, agreement, Default or
Event of Default not expressly amended or waived or impair any right consequent
thereon. No course of dealing between the Obligors and the holder of any Note
nor any delay in exercising any rights hereunder or under any Note shall operate
as a

                                       36



waiver of any rights of any holder of such Note. As used herein, the term "this
Agreement" or "the Agreement" and references thereto shall mean this Agreement
as it may from time to time be amended or supplemented.

17.4.  Notes held by Obligors, etc.

            Solely for the purpose of determining whether the holders of the
requisite percentage of the aggregate principal amount of Notes then outstanding
approved or consented to any amendment, waiver or consent to be given under this
Agreement or the Notes, or have directed the taking of any action provided
herein or in the Notes to be taken upon the direction of the holders of a
specified percentage of the aggregate principal amount of Notes then
outstanding, Notes directly or indirectly owned by any Obligor or any of its
Affiliates shall be deemed not to be outstanding.

18.    NOTICES.

            All notices and communications provided for hereunder shall be in
writing and sent (a) by facsimile if the sender on the same day sends a
confirming copy of such notice by a recognized overnight delivery service
(charges prepaid), or (b) by registered or certified mail with return receipt
requested (postage prepaid), or (c) by a recognized overnight delivery service
(with charges prepaid). Any such notice must be sent:

                 (i)   if to you or your nominee, to you or it at the address
            specified for such communications in Schedule A, or at such other
            address as you or it shall have specified to the Company in writing,

                 (ii)  if to any other holder of any Note, to such holder at
            such address as such other holder shall have specified to the
            Company in writing, or

                 (iii) if to the Company or to the Obligors, to the Company at
            its address set forth at the beginning hereof to the attention of
            the Chief Financial Officer, or at such other address as the Company
            shall have specified to the holder of each Note in writing.

Notices under this Section 18 will be deemed given only when actually received.

19.    REPRODUCTION OF DOCUMENTS.

            This Agreement and all documents relating thereto, including,
without limitation, (a) consents, waivers and modifications that may hereafter
be executed, (b) documents received by you at the Closing (except the Notes
themselves), and (c) financial statements, certificates and other information
previously or hereafter furnished to you, may be reproduced by you by any
photographic, photostatic, microfilm, microcard, miniature photographic or other
similar process and you may destroy any original document so reproduced. The
Obligors agree and stipulate that, to the extent permitted by applicable law,
any such reproduction shall be admissible in evidence as the original itself in
any judicial or administrative proceeding (whether or not the original is in
existence and whether or not such reproduction was made by you in the regular

                                       37



course of business) and any enlargement, facsimile or further reproduction of
such reproduction shall likewise be admissible in evidence. This Section 19
shall not prohibit the Obligors or any other holder of Notes from contesting any
such reproduction to the same extent that it could contest the original, or from
introducing evidence to demonstrate the inaccuracy of any such reproduction.

20.    CONFIDENTIAL INFORMATION.

            For the purposes of this Section 20, "Confidential Information"
means information delivered to you by or on behalf of any Obligor or any other
Subsidiary in connection with the transactions contemplated by or otherwise
pursuant to this Agreement that is proprietary in nature and that was clearly
marked or labeled or otherwise adequately identified when received by you as
being confidential information of such Obligor or such Subsidiary, provided that
such term does not include information that (a) was publicly known or otherwise
known to you prior to the time of such disclosure, (b) subsequently becomes
publicly known through no act or omission by you or any person acting on your
behalf, (c) otherwise becomes known to you other than through disclosure by any
Obligor or any other Subsidiary or (d) constitutes financial statements
delivered to you under Section 7.1 that are otherwise publicly available. You
will maintain the confidentiality of such Confidential Information in accordance
with procedures adopted by you in good faith to protect confidential information
of third parties delivered to you, provided that you may deliver or disclose
Confidential Information to (i) your directors, trustees, officers, employees,
agents, attorneys and affiliates (to the extent such disclosure reasonably
relates to the administration of the investment represented by your Notes), (ii)
your financial advisors and other professional advisors who agree to hold
confidential the Confidential Information substantially in accordance with the
terms of this Section 20, (iii) any other holder of any Note, (iv) any
Institutional Investor to which you sell or offer to sell such Note or any part
thereof or any participation therein (if such Person has agreed in writing prior
to its receipt of such Confidential Information to be bound by the provisions of
this Section 20), (v) any Person from which you offer to purchase any security
of any Obligor (if such Person has agreed in writing prior to its receipt of
such Confidential Information to be bound by the provisions of this Section 20),
(vi) any federal or state regulatory authority having jurisdiction over you,
(vii) the National Association of Insurance Commissioners or any similar
organization, or any nationally recognized rating agency that requires access to
information about your investment portfolio or (viii) any other Person to which
such delivery or disclosure may be necessary or appropriate (w) to effect
compliance with any law, rule, regulation or order applicable to you, (x) in
response to any subpoena or other legal process, (y) in connection with any
litigation to which you are a party or (z) if an Event of Default has occurred
and is continuing, to the extent you may reasonably determine such delivery and
disclosure to be necessary or appropriate in the enforcement or for the
protection of the rights and remedies under your Notes and this Agreement. Each
holder of a Note, by its acceptance of a Note, will be deemed to have agreed to
be bound by and to be entitled to the benefits of this Section 20 as though it
were a party to this Agreement. On reasonable request by the Obligors in
connection with the delivery to any holder of a Note of information required to
be delivered to such holder under this Agreement or requested by such holder
(other than a holder that is a party to this Agreement or its nominee), such
holder will enter into an agreement with the Obligors embodying the provisions
of this Section 20.

                                       38



            Notwithstanding anything to the contrary set forth herein or in any
other written or oral understanding or agreement to which the parties hereto are
parties or by which they are bound, the parties acknowledge and agree that (i)
any obligations of confidentiality contained herein and therein do not apply and
have not applied from the commencement of discussions between the parties to the
tax treatment and tax structure of the Notes (and any related transactions or
arrangements), and (ii) each party (and each of its employees, representatives,
or other agents) may disclose to any and all persons, without limitation of any
kind, the tax treatment and tax structure of the Notes and all materials of any
kind (including opinions or other tax analyses) that are provided to such party
relating to such tax treatment and tax structure, all within the meaning of
Treasury Regulations Section 1.6011-4.

21.    SUBSTITUTION OF PURCHASER.

            You shall have the right to substitute any one of your Affiliates as
the purchaser of the Notes that you have agreed to purchase hereunder, by
written notice to the Obligors, which notice shall be signed by both you and
such Affiliate, shall contain such Affiliate's agreement to be bound by this
Agreement and shall contain a confirmation by such Affiliate of the accuracy
with respect to it of the representations set forth in Section 6. Upon receipt
of such notice, wherever the word "you" is used in this Agreement (other than in
this Section 21), such word shall be deemed to refer to such Affiliate in lieu
of you. In the event that such Affiliate is so substituted as a purchaser
hereunder and such Affiliate thereafter transfers to you all of the Notes then
held by such Affiliate, upon receipt by the Company of notice of such transfer,
wherever the word "you" is used in this Agreement (other than in this Section
21), such word shall no longer be deemed to refer to such Affiliate, but shall
refer to you, and you shall have all the rights of an original holder of the
Notes under this Agreement.

22.    RELEASE OF OBLIGOR OR SUBSIDIARY GUARANTOR.

            You and each subsequent holder of a Note agree to release in writing
any Obligor, other than the Company, from its obligations under this Agreement
and the Notes, or any Subsidiary Guarantor from the Subsidiary Guaranty, (i) if
such Obligor or Subsidiary Guarantor ceases to be a Subsidiary as a result of an
Asset Disposition permitted by Section 10.8 or (ii) at such time as the banks
party to the Credit Agreement release such Subsidiary Guarantor from any
Guaranties thereunder; provided, however, that you and each subsequent holder
will not be required to release a Subsidiary Guarantor from the Subsidiary
Guaranty upon such Subsidiary's release by the banks party to the Credit
Agreement if (A) a Default or Event of Default has occurred and is continuing,
(B) such Subsidiary Guarantor is to become a borrower under the Credit Agreement
or (C) such release is part of a plan of financing that contemplates such
Subsidiary Guarantor guaranteeing any other Debt of any Obligor. Your obligation
to release an Obligor, other than the Company, from its obligations under this
Agreement and the Notes or a Subsidiary Guarantor from the Subsidiary Guaranty
is conditioned upon your prior receipt of a certificate from a Senior Financial
Officer of the Company stating that none of the circumstances described in
clauses (A), (B) and (C) above are true. Upon receipt of such certificate, you
agree to provide your written release to the Company and such Obligor or
Subsidiary Guarantor.

                                       39



23.    MISCELLANEOUS.

23.1.  Successors and Assigns.

            All covenants and other agreements contained in this Agreement by or
on behalf of any of the parties hereto bind and inure to the benefit of their
respective successors and assigns (including, without limitation, any subsequent
holder of a Note) whether so expressed or not.

23.2.  Payments Due on Non-Business Days.

            Anything in this Agreement or the Notes to the contrary
notwithstanding, any payment of principal of or Make-Whole Amount or LIBOR
Breakage Amount or interest on any Note that is due on a date other than a
Business Day shall be made on the next succeeding Business Day without including
the additional days elapsed in the computation of the interest payable on such
next succeeding Business Day.

23.3.  Severability.

            Any provision of this Agreement that is prohibited or unenforceable
in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent
of such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall (to the full extent permitted by law) not invalidate or
render unenforceable such provision in any other jurisdiction.

23.4.  Construction.

            Each covenant contained herein shall be construed (absent express
provision to the contrary) as being independent of each other covenant contained
herein, so that compliance with any one covenant shall not (absent such an
express contrary provision) be deemed to excuse compliance with any other
covenant. Where any provision herein refers to action to be taken by any Person,
or which such Person is prohibited from taking, such provision shall be
applicable whether such action is taken directly or indirectly by such Person.

23.5.  Counterparts.

            This Agreement may be executed in any number of counterparts, each
of which shall be an original but all of which together shall constitute one
instrument. Each counterpart may consist of a number of copies hereof, each
signed by less than all, but together signed by all, of the parties hereto.

23.6.  Governing Law; Submission to Jurisdiction.

            This Agreement shall be construed and enforced in accordance with,
and the rights of the parties shall be governed by, the law of the State of
Illinois excluding choice-of-law principles of the law of such State that would
require the application of the laws of a jurisdiction other than such State.

                                       40



            Each Obligor irrevocably submits to the jurisdiction of the courts
of the State of Illinois and of the courts of the United States of America
having jurisdiction in the State of Illinois for the purpose of any legal action
or proceeding in any such court with respect to, or arising out of, this
Agreement or the Notes. Each Obligor consents to process being served in any
suit, action or proceeding by mailing a copy thereof by registered or certified
mail, postage prepaid, return receipt requested, to the address of such Obligor
specified in or designated pursuant to this Agreement. Each Obligor agrees that
such service upon receipt (i) shall be deemed in every respect effective service
of process upon it in any such suit, action or proceeding and (ii) shall, to the
fullest extent permitted by law, be taken and held to be valid personal service
upon and personal delivery to such Obligor.

                                       41



            If you are in agreement with the foregoing, please sign the form of
agreement on the accompanying counterpart of this Agreement and return it to the
Company, whereupon the foregoing shall become a binding agreement between you
and the Obligors.

                                        Very truly yours,

                                        PATTERSON DENTAL COMPANY


                                        By:    /s/ R. Stephen Armstrong
                                            ------------------------------------
                                        Name: R. Stephen Armstrong
                                        Title: Executive Vice President & Chief
                                               Financial Officer


                                        ABILITYONE PRODUCTS CORP.
                                        ABILITYONE CORPORATION
                                        PATTERSON DENTAL SUPPLY, INC.
                                        WEBSTER VETERINARY SUPPLY, INC.


                                        By:    /s/ R. Stephen Armstrong
                                            ------------------------------------
                                        Name: R. Stephen Armstrong
                                        Title: Vice President and Treasurer


                                        WEBSTER MANAGEMENT, LP
                                        By: WEBSTER VETERINARY SUPPLY, INC., its
                                            General Partner


                                            By: /s/ R. Stephen Armstrong
                                                --------------------------------
                                             Name: R. Stephen Armstrong
                                             Title: Vice President and Treasurer


                                       S-1



The foregoing is agreed
to as of the date thereof.

                                        METROPOLITAN LIFE INSURANCE COMPANY


                                        By:      /s/ Timothy L. Powell
                                            ------------------------------------
                                        Name:    Timothy L. Powell
                                              ----------------------------------
                                        Title:   Director
                                               ---------------------------------


                                       S-2



                                        GENERAL ELECTRIC CAPITAL ASSURANCE
                                        COMPANY


                                        By:      /s/ Morian C. Mooers
                                            ------------------------------------
                                        Name:    Morian C. Mooers
                                              ----------------------------------
                                        Title:   Vice President - Private
                                                 Investments
                                               ---------------------------------


                                       S-3



                                        HARTFORD LIFE AND ACCIDENT INSURANCE
                                        COMPANY

                                           BY

                                        HARTFORD INVESMENT SERVICES, INC.
                                        its agent and attorney in fact


                                        By:      /s/ Ronald Mendel
                                            ------------------------------------
                                        Name:    Ronald Mendel
                                              ----------------------------------
                                        Title:   Senior Vice President
                                               ---------------------------------


                                       S-4



                                        HARTFORD LIFE INSURANCE COMPANY

                                           By

                                        HARTFORD INVESTMENT SERVICES, INC.
                                        its agent and attorney in fact


                                        By:      /s/ Ronald Mendel
                                            ------------------------------------
                                        Name:    Ronald Mendel
                                              ----------------------------------
                                        Title:   Senior Vice President
                                               ---------------------------------


                                       S-5



                                        BY: PPM AMERICA, INC., AS ATTORNEY IN
                                        FACT, ON BEHALF OF JACKSON NATIONAL LIFE
                                        INSURANCE COMPANY


                                        By:      /s/ Chris Raub
                                            ------------------------------------
                                        Name:    Chris Raub
                                              ----------------------------------
                                        Title:   Senior Managing Director
                                               ---------------------------------


                                       S-6



                                        BY: PPM AMERICA, INC., AS ATTORNEY IN
                                        FACT, ON BEHALF OF JACKSON NATIONAL LIFE
                                        INSURANCE COMPANY OF NEW YORK


                                        By:      /s/ Chris Raub
                                            ------------------------------------
                                        Name:    Chris Raub
                                              ----------------------------------
                                        Title:   Senior Managing Director
                                               ---------------------------------


                                       S-7



                                        AMERITAS LIFE INSURANCE CORP.
                                        BY AMERITAS INVESTMENT ADVISORS INC.,
                                        AS AGENT


                                        By:      /s/ Andrew S. White
                                            ------------------------------------
                                        Name:    Andrew S. White
                                              ----------------------------------
                                        Title:   Vice President - Fixed Income
                                                 Securities
                                               ---------------------------------


                                       S-8



                                        PRINCIPAL LIFE INSURANCE COMPANY

                                        By:  Principal Global Investors, LLC
                                             a Delaware limited liability
                                             company, its authorized signatory


                                        By:      /s/ Christopher J. Henderson
                                            ------------------------------------
                                        Its:     Counsel
                                            ------------------------------------


                                        By:      /s/ Elizabeth D. Swanson
                                            ------------------------------------
                                        Its:     Counsel
                                            ------------------------------------


                                       S-9



                                        CALHOUN & CO., AS NOMINEE FOR COMERICA
                                        BANK & TRUST, NATIONAL ASSOCIATION,
                                        TRUSTEE TO THE TRUST CREATED BY TRUST
                                        AGREEMENT DATED OCTOBER 1, 2002


                                        By:      /s/ Tim Madigan
                                            ------------------------------------
                                        Title:   First Level Officer
                                               ---------------------------------

                                        (Scottish - Lincoln)


                                      S-10



                                        CALHOUN & CO., AS NOMINEE FOR COMERICA
                                        BANK & TRUST, NATIONAL ASSOCIATION,
                                        TRUSTEE TO THE TRUST CREATED BY TRUST
                                        AGREEMENT DATED OCTOBER 1, 2002


                                        By:      /s/ Tim Madigan
                                            ------------------------------------
                                        Title:   First Level Officer
                                               ---------------------------------

                                        (Scottish - 5YR)


                                      S-11



                                        CALHOUN & CO., AS NOMINEE FOR COMERICA
                                        BANK & TRUST, NATIONAL ASSOCIATION,
                                        TRUSTEE TO THE TRUST CREATED BY TRUST
                                        AGREEMENT DATED OCTOBER 1, 2002


                                        By:      /s/ Tim Madigan
                                            ------------------------------------
                                        Title:   First Level Officer
                                               ---------------------------------

                                        (Scottish - 1YR)


                                      S-12



                                        SCOTTISH ANNUITY & LIFE INSURANCE
                                        COMPANY (CAYMAN) LTD


                                        BY:  PRINCIPAL GLOBAL INVESTORS, LLC
                                             A DELAWARE LIMITED LIABILITY
                                             COMPANY, ITS AUTHORIZED SIGNATORY


                                        By:      /s/ Christopher J. Henderson
                                            ------------------------------------
                                        Its:     Counsel
                                            ------------------------------------


                                        By:      /s/ Elizabeth D. Swanson
                                            ------------------------------------
                                        Its:     Counsel
                                            ------------------------------------


                                      S-13



                                        RELIASTAR LIFE INSURANCE COMPANY
                                        BY: ING INVESTMENT MANAGEMENT LLC,
                                        AS AGENT


                                        By:      /s/ James V. Wittich
                                            ------------------------------------
                                        Name:    James V. Wittich
                                              ----------------------------------
                                        Title:   Senior Vice President
                                               ---------------------------------


                                      S-14



                                        ING LIFE INSURANCE AND ANNUITY COMPANY
                                        BY: ING INVESTMENT MANAGEMENT LLC,
                                        AS AGENT


                                        By:      /s/ James V. Wittich
                                            ------------------------------------
                                        Name:    James V. Wittich
                                              ----------------------------------
                                        Title:   Senior Vice President
                                               ---------------------------------


                                      S-15



                                        GOLDEN AMERICAN LIFE INSURANCE COMPANY
                                        BY: ING INVESTMENT MANAGEMENT LLC,
                                        AS AGENT


                                        By:      /s/ James V. Wittich
                                            ------------------------------------
                                        Name:    James V. Wittich
                                              ----------------------------------
                                        Title:   Senior Vice President
                                               ---------------------------------


                                      S-16



                                        PACIFIC LIFE INSURANCE COMPANY
                                        (Nominee: Mac & Co.)


                                        By:      /s/ Diane W. Dales
                                            ------------------------------------
                                        Name:    Diane W. Dales
                                              ----------------------------------
                                        Title:   Assistant Vice President
                                               ---------------------------------


                                        By:      /s/ Peter S. Fiek
                                            ------------------------------------
                                        Name:    Peter S. Fiek
                                              ----------------------------------
                                        Title:   Assistant Secretary
                                               ---------------------------------

                                      S-17



                                        MASSMUTUAL ASIA LIMITED
                                        By: David L. Babson & Company Inc.
                                        as Investment Adviser


                                        By:      /s/ Emeka O. Onukwugha
                                            ------------------------------------
                                        Name:    Emeka O. Onukwugha
                                              ----------------------------------
                                        Title:   Managing Director
                                               ---------------------------------

                                        C.M. LIFE INSURANCE COMPANY
                                        c/o MASSACHUSETTS MUTUAL LIFE
                                         INSURANCE COMPANY
                                        By: David L. Babson & Company Inc.
                                        as Investment Sub-Adviser


                                        By:      /s/ Emeka O. Onukwugha
                                            ------------------------------------
                                        Name:    Emeka O. Onukwugha
                                              ----------------------------------
                                        Title:   Managing Director
                                               ---------------------------------

                                        MASSACHUSETTS MUTUAL LIFE
                                         INSURANCE COMPANY
                                        By: David L. Babson & Company Inc.
                                        as Investment Adviser


                                        By:      /s/ Emeka O. Onukwugha
                                            ------------------------------------
                                        Name:    Emeka O. Onukwugha
                                              ----------------------------------
                                        Title:   Managing Director
                                               ---------------------------------

                                      S-18



                                        GREAT-WEST LIFE & ANNUITY INSURANCE
                                        COMPANY


                                        By:      /s/ Eve Hampton
                                            ------------------------------------
                                        Name:    Eve Hampton
                                              ----------------------------------
                                        Title:   Vice President
                                               ---------------------------------


                                        By:      /s/ B. G. Masters
                                            ------------------------------------
                                        Name:    B. G. Masters
                                              ----------------------------------
                                        Title:   Assistant Vice President
                                               ---------------------------------


                                      S-19



                                        LONDON LIFE AND CASUALTY REINSURANCE
                                        CORPORATION

                                        By: Orchard Capital Management, LLC, as
                                        Investment Advisor


                                        By:      /s/ Eve Hampton
                                            ------------------------------------
                                        Name:    Eve Hampton
                                              ----------------------------------
                                        Title:   Vice President
                                               ---------------------------------


                                        By:      /s/ J. G. Lowery
                                            ------------------------------------
                                        Name:    J. G. Lowery
                                              ----------------------------------
                                        Title:   Assistant Vice President
                                               ---------------------------------


                                      S-20



                                        ALLIED IRISH BANKS, P.L.C.
                                        (In Name of Hare & Co)


                                        By: /s/ Grace Gilligan  /s/ Conor Mallen
                                            ------------------------------------
                                        Name: Grace Gilligan  Conor Mallen
                                              ----------------------------------
                                        Title: Senior Vice President
                                               ---------------------------------


                                      S-21



                                        THE TRAVELERS INSURANCE COMPANY


                                        By:      /s/ Allen Cantrell
                                            ------------------------------------
                                        Name:    Allen Cantrell
                                              ----------------------------------
                                        Title:   Investment Officer
                                               ---------------------------------


                                      S-22



                                        CITICORP INSURANCE AND INVESTMENT TRUST


                                        By:      /s/ Allen Cantrell
                                            ------------------------------------
                                        Name:    Allen Cantrell
                                              ----------------------------------
                                        Title:   Investment Officer
                                               ---------------------------------


                                      S-23



                                        THE NORTHWESTERN MUTUAL LIFE INSURANCE
                                        COMPANY


                                        By:      /s/ Mark E. Kishler
                                            ------------------------------------
                                        Name:    Mark E. Kishler
                                              ----------------------------------
                                        Title:   Its Authorized Representative
                                               ---------------------------------


                                      S-24



                                        PHOENIX LIFE INSURANCE COMPANY


                                        By:      /s/ Christopher M. Wilkos
                                            ------------------------------------
                                        Name:    Christopher M. Wilkos
                                              ----------------------------------
                                        Title:   Senior Vice President
                                               ---------------------------------


                                      S-25



                                        PHL VARIABLE INSURANCE COMPANY


                                        By:      /s/ Christopher M. Wilkos
                                            ------------------------------------
                                        Name:    Christopher M. Wilkos
                                              ----------------------------------
                                        Title:   Senior Vice President
                                               ---------------------------------


                                      S-26



                                        UNITED OF OMAHA LIFE INSURANCE COMPANY


                                        By:      /s/ Edwin H. Garrison, Jr.
                                            ------------------------------------
                                        Name:    Edwin H. Garrison, Jr.
                                              ----------------------------------
                                        Title:   First Vice President
                                               ---------------------------------


                                      S-27



                                        AMERICAN UNITED LIFE INSURANCE COMPANY


                                        By:      /s/ Kent R. Adams
                                            ------------------------------------
                                        Name:    Kent R. Adams
                                              ----------------------------------
                                        Title:   V.P. Fixed Income Securities
                                               ---------------------------------


                                      S-28



                                        PIONEER MUTUAL LIFE INSURANCE COMPANY


                                        By:      /s/ Kent R. Adams
                                            ------------------------------------
                                        Name:    Kent R. Adams
                                              ----------------------------------
                                        Title:   V.P. Fixed Income Securities
                                               ---------------------------------


                                      S-29



                                        THE STATE LIFE INSURANCE COMPANY


                                        By:      /s/ Kent R. Adams
                                            ------------------------------------
                                        Name:    Kent R. Adams
                                              ----------------------------------
                                        Title:   V.P. Fixed Income Securities
                                               ---------------------------------


                                      S-30



                                                                      SCHEDULE B
                                                                      ----------

                                  DEFINED TERMS
                                  -------------

          As used herein, the following terms have the respective meanings set
forth below or set forth in the Section hereof following such term:

          "Adjusted LIBOR Rate" is defined in Section 1.2(a).

          "Affiliate" means, at any time, and with respect to any Person, (a)
any other Person that at such time directly or indirectly through one or more
intermediaries Controls, or is Controlled by, or is under common Control with,
such first Person, and (b) any Person beneficially owning or holding, directly
or indirectly, 10% or more of any class of voting or equity interests of the
Company or any Subsidiary or any corporation of which the Company and its
Subsidiaries beneficially own or hold, in the aggregate, directly or indirectly,
10% or more of any class of voting or equity interests. As used in this
definition, "Control" means the possession, directly or indirectly, of the power
to direct or cause the direction of the management and policies of a Person,
whether through the ownership of voting securities, by contract or otherwise.
Unless the context otherwise clearly requires, any reference to an "Affiliate"
is a reference to an Affiliate of the Company. Notwithstanding anything in the
foregoing to the contrary, a Person that (i) would be an Affiliate of the
Company solely by virtue of its ownership of voting or equity interests of the
Company and (ii) is eligible pursuant to Rule 13d-1(b) under the Exchange Act to
file a statement with the Securities and Exchange Commission on Schedule 13G,
shall not be deemed to be an Affiliate.

          "Anti-Terrorism Order" means Executive Order 13224 of September 23,
2001 Blocking Property and Prohibiting Transactions With Persons Who Commit,
Threaten to Commit, or Support Terrorism (66 Fed. Reg. 49079 (2001)).

          "Asset Disposition" means any Transfer except:

          (a)  any

               (i)   Transfer from a Subsidiary to the Company or a Wholly Owned
          Subsidiary;

               (ii)  Transfer from the Company to a Wholly Owned Subsidiary; and

               (iii) Transfer from the Company to a Subsidiary (other than a
          Wholly Owned Subsidiary) or from a Subsidiary to another Subsidiary
          (other than a Wholly Owned Subsidiary), which in either case is for
          fair market value,

     so long as immediately before and immediately after the consummation of any
     such Transfer and after giving effect thereto, no Default or Event of
     Default exists;

                                   Schedule B



          (b)  any Transfer made in the ordinary course of business; or

          (c)  any Transfer by the Company or a Subsidiary pursuant to a
     Contract Purchase Facility or as part of a Permitted Receivables
     Securitization Transaction.

          "Business Day" means (a) for the purposes of Section 8.6 only, any day
other than a Saturday, a Sunday or a day on which commercial banks in New York
City are required or authorized to be closed, and (b) for the purposes of any
other provision of this Agreement, any day other than a Saturday, a Sunday or a
day on which commercial banks in Chicago, Illinois, St. Paul, Minnesota or New
York City are required or authorized to be closed.

          "Capital Lease" means, at any time, a lease with respect to which the
lessee is required concurrently to recognize the acquisition of an asset and the
incurrence of a liability in accordance with GAAP.

          "Closing" is defined in Section 3.

          "Code" means the Internal Revenue Code of 1986, as amended from time
to time, and the rules and regulations promulgated thereunder from time to time.

          "Company" means Patterson Dental Company, a Minnesota corporation.

          "Confidential Information" is defined in Section 20.

          "Consolidated Debt" means, as of any date, the outstanding Debt of the
Company and its Subsidiaries on such date, determined on a consolidated basis in
accordance with GAAP.

          "Consolidated Income Available for Interest Charges" means, for any
period, Consolidated Net Income for such period, plus, to the extent deducted in
determining Consolidated Net Income, (i) provisions for income taxes and (ii)
Consolidated Interest Charges.

          "Consolidated Interest Charges" means, for any period, the
consolidated interest expense of the Company and its Subsidiaries for such
period (including capitalized interest and the interest component of Capital
Leases) determined on a consolidated basis in accordance with GAAP.

          "Consolidated Net Income" means, for any period, the net income or
loss of the Company and its Subsidiaries for such period (including, without
duplication, income attributed to minority interests) determined on a
consolidated basis in accordance with GAAP, provided that there shall be
excluded therefrom (i) extraordinary gains or losses and (ii) any equity
interest of the Company or any Subsidiary in the unremitted earnings of a Person
that is not a Subsidiary.

                                        2

                                   Schedule B



          "Consolidated Net Worth" means, as of any date, consolidated
stockholders' equity of the Company and its Subsidiaries on such date,
determined in accordance with GAAP.

          "Consolidated Operating Cash Flow" means, for any period, Consolidated
Net Income for such period, plus, to the extent deducted in determining
Consolidated Net Income, (i) all provisions for federal, state and other income
taxes, (ii) interest expense, and (iii) depreciation and amortization expense.
If, during the period for which Consolidated Operating Cash Flow is being
calculated, the Company or a Subsidiary has acquired or disposed of one or more
Persons (or the assets thereof), Consolidated Operating Cash Flow shall be
calculated on a pro forma basis as if all of such acquisitions and dispositions
had occurred on the first day of such period.

          "Consolidated Total Assets" means, as of any date, the total assets of
the Company and its Subsidiaries as of such date, determined on a consolidated
basis in accordance with GAAP.

          "Contract Purchase Facility" means (a) the Receivables Sale Agreement
dated as of May 10, 2002, among the originators named therein and PDC Funding
Company, LLC, as buyer and the Receivables Purchase Agreement dated as of May
10, 2002, among PDC Funding Company, LLC, the Company, Preferred Receivables
Funding Corporation, the financial institutions party thereto and Bank One, as
agent, as such agreements may be amended, restated, extended or otherwise
modified from time to time, (b) the Third Amended and Restated Contract Purchase
Agreement, dated as of June 19, 2002, among the Company, Patterson Dental
Supply, Inc., Webster Veterinary Supply, Inc., U.S. Bank National Association,
individually and as agent, and certain buyers identified therein, as such Third
Amended and Restated Contract Purchase Agreement may be amended, restated,
extended or otherwise modified from time to time, (c) any comparable additional
or replacement facility made available to the Company or any Subsidiary,
provided that any of such facilities: (i) provides for the sale by the Company
or such Subsidiary of rights to payment arising under Customer Installment
Contracts; (ii) provides for a purchase price in an amount that represents the
reasonably equivalent value of the assets subject thereto (determined as of the
date of such sale); (iii) evidences the intent of the parties that for
accounting and all other purposes, such sale is to be treated as a sale by the
Company or a Subsidiary, as the case may be, and a purchase by such
institution(s) or special purpose entity (and not as a lending transaction);
(iv) provides for the delivery of opinions of outside counsel to the effect
that, under, applicable bankruptcy, insolvency and similar laws (subject to
assumptions and qualifications customary for opinions of such type), such
transaction will be treated as a true sale and not as a lending transaction and
that the assets of any purchasing special purpose entity will not be
consolidated with the assets of the selling entity, the Company or any Affiliate
of the Company; (v) provides for the parties to such transaction to, and such
parties do, treat such transaction as a sale for all other accounting purposes;
and (vi) provides that such sale is without recourse to the Company or such
Subsidiary, except to the extent of normal and customary conditions and rights
of limited recourse that are consistent with the opinions referred to in clause
(iv) and with the treatment of such sale as a true sale for accounting purposes.

                                        3

                                   Schedule B



          "Credit Agreement" means the Credit Agreement dated as of November 25,
2003 among the Company and the other Obligors, the lenders from time to time
party thereto, Bank One, NA (Main Office Chicago), as administrative agent, and
Bank of America, N.A., as syndication agent, as such agreement may be amended,
restated, supplemented, refinanced, increased or reduced from time to time, and
any successor credit agreement or similar facility.

          "Customer Installment Contract" means a contract between the Company
or any Subsidiary and a customer providing for the installment sale, licensing
or secured financing of equipment, furnishings or computer software.

          "Debt" with respect to any Person means, at any time, without
duplication,

          (a)  its liabilities for borrowed money and its redemption obligations
     in respect of mandatorily redeemable preferred stock;

          (b)  its liabilities for the deferred purchase price of property
     acquired by such Person (excluding accounts payable and other accrued
     liabilities arising in the ordinary course of business but including all
     liabilities created or arising under any conditional sale or other title
     retention agreement with respect to any such property);

          (c)  all liabilities appearing on its balance sheet in accordance with
     GAAP in respect of Capital Leases;

          (d)  all liabilities for borrowed money secured by any Lien with
     respect to any property owned by such Person (whether or not it has assumed
     or otherwise become liable for such liabilities);

          (e)  all of its liabilities in respect of letters of credit or
     instruments serving a similar function issued or accepted for its account
     by banks and other financial institutions (whether or not representing
     obligations for borrowed money);

          (f)  Swaps of such Person;

          (g)  any recourse liability of such Person under or in connection with
     a Contract Purchase Facility or Permitted Receivables Securitization
     Transaction; and

          (h)  any Guaranty of such Person with respect to liabilities of a type
     described in any of clauses (a) through (g) hereof.

          "Debt Prepayment Application" means, with respect to any Transfer of
property, the application by the Company or a Subsidiary of cash in an amount
equal to the Net Proceeds Amount with respect to such Transfer to pay Senior
Debt other than (i) Senior Debt owing to the Company, any Subsidiary or any of
their respective Affiliates and (ii) Senior Debt in respect of any revolving
credit or similar credit facility providing the Company or any Subsidiary with
the right to obtain loans or other extensions of credit from time to time
(except

                                        4

                                   Schedule B



to the extent that in connection with such payment of Senior Debt the
availability of credit under such credit facility is permanently reduced by an
amount not less than the amount of such proceeds applied to the payment of such
extensions of credit from time to time); provided that, in the course of making
such application, the Company shall offer to prepay each outstanding Note at
par, in accordance with Section 8.2(c), in a principal amount that equals the
Ratable Portion of the holder of such Note in respect of such Transfer. If any
holder of a Note fails to accept such offer of prepayment, then, for purposes of
the preceding sentence only, the Company nevertheless will be deemed to have
paid Senior Debt in an amount equal to the Ratable Portion of the holder of such
Note in respect of such Transfer.

          "Debt Prepayment Transfer" is defined in Section 8.2(c)(i).

          "Default" means an event or condition the occurrence or existence of
which would, with the lapse of time or the giving of notice or both, become an
Event of Default.

          "Default Rate" means that rate of interest that is the greater of (i)
2% per annum above the rate of interest stated in clause (a) of the first
paragraph of the Notes or (ii) 2% over the rate of interest publicly announced
by Bank One, NA in Chicago, Illinois as its "base" or "prime" rate.

          "Disposition Value" means, at any time, with respect to any property:

          (a)  in the case of property that does not constitute Subsidiary
     Stock, the book value thereof, valued at the time of such disposition in
     good faith by the Company; and

          (b)  in the case of property that constitutes Subsidiary Stock, an
     amount equal to that percentage of book value of the assets of the
     Subsidiary that issued such stock as is equal to the percentage that the
     book value of such Subsidiary Stock represents of the book value of all of
     the outstanding capital stock of such Subsidiary (assuming, in making such
     calculations, that all securities convertible into such capital stock are
     so converted and giving full effect to all transactions that would occur or
     be required in connection with such conversion) determined at the time of
     the disposition thereof, in good faith by the Obligors.

          "Environmental Laws" means any and all Federal, state, local, and
foreign statutes, laws, regulations, ordinances, rules, judgments, orders,
decrees, permits, concessions, grants, franchises, licenses, agreements or
governmental restrictions relating to pollution and the protection of the
environment or the release of any materials into the environment, including but
not limited to those related to hazardous substances or wastes, air emissions
and discharges to waste or public systems.

          "ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the rules and regulations promulgated thereunder
from time to time in effect.

                                        5

                                   Schedule B



          "ERISA Affiliate" means any trade or business (whether or not
incorporated) that is treated as a single employer together with the Company
under section 414 of the Code.

          "Event of Default" is defined in Section 11.

          "Exchange Act" means the Securities Exchange Act of 1934, as amended.

          "GAAP" means generally accepted accounting principles as in effect
from time to time in the United States of America.

          "Governmental Authority" means

          (a)  the government of

               (i)   the United States of America or any State or other
          political subdivision thereof, or

               (ii)  any jurisdiction in which the Company or any Subsidiary
          conducts all or any part of its business, or which asserts
          jurisdiction over any properties of the Company or any Subsidiary, or

          (b)  any entity exercising executive, legislative, judicial,
     regulatory or administrative functions of, or pertaining to, any such
     government.

          "Guaranty" means, with respect to any Person, any obligation (except
the endorsement in the ordinary course of business of negotiable instruments for
deposit or collection) of such Person guaranteeing or in effect guaranteeing any
indebtedness, dividend or other obligation of any other Person in any manner,
whether directly or indirectly, including (without limitation) obligations
incurred through an agreement, contingent or otherwise, by such Person:

          (a)  to purchase such indebtedness or obligation or any property
     constituting security therefor;

          (b)  to advance or supply funds (i) for the purchase or payment of
     such indebtedness or obligation, or (ii) to maintain any working capital or
     other balance sheet condition or any income statement condition of any
     other Person or otherwise to advance or make available funds for the
     purchase or payment of such indebtedness or obligation;

          (c)  to lease properties or to purchase properties or services
     primarily for the purpose of assuring the owner of such indebtedness or
     obligation of the ability of any other Person to make payment of the
     indebtedness or obligation; or

          (d)  otherwise to assure the owner of such indebtedness or obligation
     against loss in respect thereof.

                                        6

                                   Schedule B



In any computation of the indebtedness or other liabilities of the obligor under
any Guaranty, the indebtedness or other obligations that are the subject of such
Guaranty shall be assumed to be direct obligations of such obligor.

          "Hazardous Material" means any and all pollutants, toxic or hazardous
wastes or any other substances that might pose a hazard to health or safety, the
removal of which may be required or the generation, manufacture, refining,
production, processing, treatment, storage, handling, transportation, transfer,
use, disposal, release, discharge, spillage, seepage, or filtration of which is
or shall be restricted, prohibited or penalized by any applicable law
(including, without limitation, asbestos, urea formaldehyde foam insulation and
polycholorinated biphenyls).

          "holder" means, with respect to any Note, the Person in whose name
such Note is registered in the register maintained by the Company pursuant to
Section 13.1.

          "INHAM Exemption" is defined in Section 6.2(e).

          "Institutional Investor" means (a) any original purchaser of a Note,
(b) any holder of more than $2,000,000 in aggregate principal amount of the
Notes at the time outstanding, and (c) any bank, trust company, savings and loan
association or other financial institution, any pension plan, any investment
company, any insurance company, any broker or dealer, or any other similar
financial institution or entity, regardless of legal form.

          "Interest Payment Date" means, with respect to any Series B Note, the
dates specified in Exhibit 1(c).

          "Interest Period" is defined in Section 1.2(c).

          "LIBOR" is defined in Section 1.2(a).

          "LIBOR Breakage Amount" is defined in Section 8.7.

          "Lien" means, with respect to any Person, any mortgage, lien, pledge,
charge, security interest or other encumbrance, or any interest or title of any
vendor, lessor, lender or other secured party to or of such Person under any
conditional sale or other title retention agreement or Capital Lease, upon or
with respect to any property or asset of such Person (including in the case of
stock, stockholder agreements, voting trust agreements and all similar
arrangements).

          "Make-Whole Amount" is defined in Section 8.6.

          "Material" means material in relation to the business, operations,
affairs, financial condition, assets or properties of the Company and its
Subsidiaries taken as a whole.

                                        7

                                   Schedule B



          "Material Adverse Effect" means a material adverse effect on (a) the
business, operations, affairs, financial condition, assets or properties of the
Company and its Subsidiaries taken as a whole, or (b) the ability of any Obligor
to perform its obligations under this Agreement and the Notes, or (c) the
ability of any Subsidiary Guarantor to perform its obligation under the
Subsidiary Guaranty, or (d) the validity or enforceability of this Agreement,
the Notes or the Subsidiary Guaranty.

          "Memorandum" is defined in Section 5.3.

          "Multiemployer Plan" means any Plan that is a "multiemployer plan" (as
such term is defined in section 4001(a)(3) of ERISA).

          "NAIC Annual Statement" is defined in Section 6.2(a).

          "Net Proceeds Amount" means, with respect to any Transfer of any
property by any Person, an amount equal to:

          (a)  the aggregate amount of the consideration (valued at the fair
     market value of such consideration at the time of the consummation of such
     Transfer) received by such Person in respect of such Transfer, minus

          (b)  all ordinary and reasonable out-of-pocket costs and expenses
     actually incurred by such Person in connection with such Transfer.

          "Non-Obligor Subsidiary" is defined in Section 10.7(b).

          "Notes" is defined in Section 1.

          "Obligors" means the Company and its Wholly Owned Subsidiaries,
AbilityOne Products Corp., a Delaware corporation, AbilityOne Corporation, a
Michigan Corporation, Patterson Dental Supply, Inc., a Minnesota Corporation,
Webster Veterinary Supply, Inc., a Minnesota Corporation, and Webster
Management, LP, a Minnesota Limited Partnership, and any other Subsidiary that
assumes the obligations of an Obligor pursuant to Section 10.7(b).

          "Officer's Certificate" means a certificate of a Senior Financial
Officer or of any other officer of the Company whose responsibilities extend to
the subject matter of such certificate.

          "Other Purchasers" is defined in Section 2.

          "PBGC" means the Pension Benefit Guaranty Corporation referred to and
defined in ERISA or any successor thereto.

          "Permitted Receivables Securitization Transaction" means a transaction
or series of transactions in which the Company or any Subsidiary sells
receivables, other than those

                                        8

                                   Schedule B



derived from Customer Installment Contracts, directly or indirectly to a special
purpose entity, satisfying the following criteria: (i) such sale is pursuant to
an agreement or agreements evidencing the intent of the parties that for
accounting and all other purposes, such sale is to be treated as a sale by the
Company or a Subsidiary, as the case may be, and a purchase by such special
purpose entity (and not as a lending transaction); (ii) the agreement(s)
referred to in clause (i) provide for the delivery of opinions of outside
counsel to the effect that, under, applicable bankruptcy, insolvency and similar
laws (subject to assumptions and qualifications customary for opinions of such
type), such transaction will be treated as a true sale and not as a lending
transaction and that the assets of any purchasing special purpose entity will
not be consolidated with the assets of the selling entity, the Company or any
Affiliate of the Company; (iii) the parties to such transaction shall treat such
transaction as a sale for all other accounting purposes; (iv) the purchase price
shall be an amount that represents the reasonably equivalent value of the
receivables or other assets subject thereto (determined as of the date of such
sale); (v) such sale shall be without recourse to the Company or such
Subsidiary, except to the extent of normal and customary conditions that are
consistent with the opinion referred to in clause (ii); and (vi) the aggregate
principal amount outstanding in connection with all such transactions does not
exceed $100,000,000 at any time.

          "Person" means an individual, partnership, corporation, limited
liability company, association, trust, unincorporated organization, or a
government or agency or political subdivision thereof.

          "Plan" means an "employee benefit plan" (as defined in section 3(3) of
ERISA) that is or, within the preceding five years, has been established or
maintained, or to which contributions are or, within the preceding five years,
have been made or required to be made, by the Company or any ERISA Affiliate or
with respect to which the Company or any ERISA Affiliate may have any liability.

          "Prepayment Offer" is defined in Section 8.2(c)(i).

          "Prepayment Premium" is defined in Section 8.2(b).

          "Priority Debt" means, as of any date, the sum (without duplication)
of (a) outstanding unsecured Debt of Subsidiaries not otherwise permitted by
Sections 10.6(a) through (e) and (b) Debt of the Company and its Subsidiaries
secured by Liens not otherwise permitted by Sections 10.5(a) through (i).

          "property" or "properties" means, unless otherwise specifically
limited, real or personal property of any kind, tangible or intangible, choate
or inchoate.

          "Property Reinvestment Application" means, with respect to any
Transfer of property, the application of an amount equal to the Net Proceeds
Amount with respect to such Transfer to the acquisition by the Company or any
Subsidiary of operating assets of the Company or such Subsidiary to be used in
the principal business of such Person as conducted immediately prior to such
Transfer.

                                        9

                                   Schedule B



          "Purchaser" means each purchaser listed in Schedule A.

          "QPAM Exemption" is defined in Section 6.2(d).

          "Ratable Portion" means, in respect of any holder of any Note and any
Transfer contemplated by the definition of Debt Prepayment Application, an
amount equal to the product of (x) the Net Proceeds Amount being applied to the
payment of Senior Debt in connection with such Transfer multiplied by (y) a
fraction the numerator of which is the outstanding principal amount of such Note
at the time of such Transfer and the denominator of which is the aggregate
principal amount of Senior Debt of the Company and its Subsidiaries at the time
of such Transfer determined on a consolidated basis in accordance with GAAP, but
including as Senior Debt in respect of any revolving credit or similar credit
facility providing the Company or any Subsidiary with the right to obtain loans
or other extensions of credit from time to time only the amount by which such
credit facility will be permanently reduced by such Debt Prepayment Application.

          "Required Holders" means, at any time, the holders of at least 51% in
principal amount of the Notes at the time outstanding (exclusive of Notes then
owned by any Obligor or any of its Affiliates).

          "Responsible Officer" means any Senior Financial Officer and any other
officer of the Company with responsibility for the administration of the
relevant portion of this Agreement.

          "Reuters Screen LIBO Page" is defined in Section 1.2(a).

          "Securities Act" means the Securities Act of 1933, as amended from
time to time.

          "Senior Debt" means (a) any Debt of any Obligor, other than any Debt
that is in any manner subordinated in right of payment or security in any
respect to the Notes, and (b) any Debt of any Subsidiary.

          "Senior Financial Officer" means the chief financial officer,
principal accounting officer, treasurer or comptroller of the Company.

          "Series A Notes" is defined in Section 1.1.

          "Series A-1 Notes" is defined in Section 1.1.

          "Series A-2 Notes" is defined in Section 1.1.

          "Series A-3 Notes" is defined in Section 1.1.

          "Series B Notes" is defined in Section 1.1.

                                       10

                                   Schedule B



          "Series B-1 Notes" is defined in Section 1.1.

          "Series B-2 Notes" is defined in Section 1.1.

          "Source" is defined in Section 6.2.

          "Subsidiary" means, as to any Person, any corporation, association or
other business entity in which such Person or one or more of its Subsidiaries or
such Person and one or more of its Subsidiaries owns sufficient equity or voting
interests to enable it or them (as a group) ordinarily, in the absence of
contingencies, to elect a majority of the directors (or Persons performing
similar functions) of such entity, and any partnership, limited liability
company or joint venture if more than a 50% interest in the profits or capital
thereof is owned by such Person or one or more of its Subsidiaries or such
Person and one or more of its Subsidiaries (unless such partnership, limited
liability company or joint venture can and does ordinarily take major business
actions without the prior approval of such Person or one or more of its
Subsidiaries). Unless the context otherwise clearly requires, any reference to a
"Subsidiary" is a reference to a Subsidiary of the Company.

          "Subsidiary Guarantor" means any Subsidiary of the Company that
executes and delivers, or becomes a party to, the Subsidiary Guaranty.

          "Subsidiary Guaranty" is defined in Section 9.7.

          "Subsidiary Stock" means, with respect to any Person, the capital
stock (or any options or warrants to purchase stock, shares or other securities
exchangeable for or convertible into stock or shares) of any Subsidiary of such
Person.

          "Swaps" means, with respect to any Person, payment obligations with
respect to interest rate swaps, currency swaps and similar obligations
obligating such Person to make payments, whether periodically or upon the
happening of a contingency. For the purposes of this Agreement, the amount of
the obligation under any Swap shall be the amount determined in respect thereof
as of the end of the then most recently ended fiscal quarter of such Person,
based on the assumption that such Swap had terminated at the end of such fiscal
quarter, and in making such determination, if any agreement relating to such
Swap provides for the netting of amounts payable by and to such Person
thereunder or if any such agreement provides for the simultaneous payment of
amounts by and to such Person, then in each such case, the amount of such
obligation shall be the net amount so determined.

          "this Agreement" or "the Agreement" is defined in Section 17.3.

          "Transfer" means, with respect to any Person, any transaction in which
such Person sells, conveys, transfers or leases (as lessor) any of its property,
including Subsidiary Stock. For purposes of determining the application of the
Net Proceeds Amount in respect of any Transfer, the Company may designate any
Transfer as one or more separate Transfers each

                                       11

                                   Schedule B



yielding a separate Net Proceeds Amount. In any such case, (a) the Disposition
Value of any property subject to each such separate Transfer and (b) the amount
of Consolidated Total Assets attributable to any property subject to each such
separate Transfer shall be determined by ratably allocating the aggregate
Disposition Value of, and the aggregate Consolidated Total Assets attributable
to, all property subject to all such separate Transfers to each such separate
Transfer on a proportionate basis.

          "Transfer Prepayment Date" is defined in Section 8.2(c)(i).

          "USA Patriot Act" means Public Law 107-56 of the United States of
America, United and Strengthening America by Providing Tools Required to
Intercept and Obstruct Terrorism (USA PATRIOT) Act of 2001.

          "Wholly Owned Subsidiary" means, at any time, any Subsidiary 100% of
all of the equity interests (except directors' qualifying shares) and voting
interests of which are owned by any one or more of the Company and the Company's
other Wholly Owned Subsidiaries at such time.


                                       12

                                   Schedule B



                                                                    EXHIBIT 1(a)
                                                                    ------------

                        [FORM OF SERIES A-1 SENIOR NOTE]

                            PATTERSON DENTAL COMPANY
                            ABILITYONE PRODUCTS CORP.
                             ABILITYONE CORPORATION
                          PATTERSON DENTAL SUPPLY, INC.
                         WEBSTER VETERINARY SUPPLY, INC.
                             WEBSTER MANAGEMENT, LP

                          3.14% SENIOR NOTE, SERIES A-1
                              DUE NOVEMBER 25, 2006

No. A-1R-[_____]                                                          [Date]
$[_______]                                                     PPN: 70341 @ AA 7

          FOR VALUE RECEIVED, the undersigned, PATTERSON DENTAL COMPANY, a
Minnesota corporation (the "Company"), ABILITYONE PRODUCTS CORP., a Delaware
corporation ("AbilityOne"), ABILITYONE CORPORATION, a Michigan corporation
("AbilityOne Corporation"), PATTERSON DENTAL SUPPLY, INC., a Minnesota
corporation ("PDSI"), WEBSTER VETERINARY SUPPLY, INC., a Minnesota corporation
("Webster"), and WEBSTER MANAGEMENT, LP, a Minnesota limited partnership
("Webster Management" and, collectively with the Company, AbilityOne, AbilityOne
Corporation, PDSI and Webster, the "Obligors"), jointly and severally, promise
to pay to [     ], or registered assigns, the principal sum of $[     ] on
November 25, 2006, with interest (computed on the basis of a 360-day year of
twelve 30-day months) (a) on the unpaid balance thereof at the rate of 3.14% per
annum from the date hereof, payable semiannually, on May 25 and November 25, in
each year, commencing with the May 25 or November 25 next succeeding the date
hereof, until the principal hereof shall have become due and payable, and (b) to
the extent permitted by law on any overdue payment (including any overdue
prepayment) of principal, any overdue payment of interest and any overdue
payment of any Make-Whole Amount (as defined in the Note Purchase Agreement
referred to below), payable semiannually as aforesaid (or, at the option of the
registered holder hereof, on demand), at a rate per annum from time to time
equal to the greater of (i) 5.14% or (ii) 2% over the rate of interest publicly
announced by Bank One, NA, or its successor, from time to time in Chicago,
Illinois as its "base" or "prime" rate.

          Payments of principal of, interest on and any Make-Whole Amount with
respect to this Note are to be made in lawful money of the United States of
America at the principal office of Bank One, NA in Chicago, Illinois or at such
other place as the Company shall have designated by written notice to the holder
of this Note as provided in the Note Purchase Agreement referred to below.

                                  Exhibit 1(a)



          This Note is one of a series of Senior Notes (herein called the
"Notes") issued pursuant to a Note Purchase Agreement dated as of November 15,
2003 (as from time to time amended, the "Note Purchase Agreement"), between the
Obligors and the respective Purchasers named therein and is entitled to the
benefits thereof. Each holder of this Note will be deemed, by its acceptance
hereof, (i) to have agreed to the confidentiality provisions set forth in
Section 20 of the Note Purchase Agreement and (ii) to have made the
representations set forth in Section 6.2 of the Note Purchase Agreement.

          This Note is a registered Note and, as provided in the Note Purchase
Agreement, upon surrender of this Note for registration of transfer, duly
endorsed, or accompanied by a written instrument of transfer duly executed, by
the registered holder hereof or such holder's attorney duly authorized in
writing, a new Note for a like principal amount will be issued to, and
registered in the name of, the transferee. Prior to due presentment for
registration of transfer, the Obligors may treat the person in whose name this
Note is registered as the owner hereof for the purpose of receiving payment and
for all other purposes, and the Obligors will not be affected by any notice to
the contrary.

          This Note is subject to optional prepayment, in whole or from time to
time in part, at the times and on the terms specified in the Note Purchase
Agreement but not otherwise.

          If an Event of Default, as defined in the Note Purchase Agreement,
occurs and is continuing, the principal of this Note may be declared or
otherwise become due and payable in the manner, at the price (including any
applicable Make-Whole Amount) and with the effect provided in the Note Purchase
Agreement.

                                        2

                                  Exhibit 1(a)



          This Note shall be construed and enforced in accordance with, and the
rights of the parties shall be governed by, the law of the State of Illinois
excluding choice-of-law principles of the law of such State that would require
the application of the laws of a jurisdiction other than such State.


                                        PATTERSON DENTAL COMPANY


                                        By:
                                            ------------------------------------
                                        Name: R. Stephen Armstrong
                                        Title: Executive Vice President & Chief
                                               Financial Officer


                                        ABILITYONE PRODUCTS CORP.
                                        ABILITYONE CORPORATION
                                        PATTERSON DENTAL SUPPLY, INC.
                                        WEBSTER VETERINARY SUPPLY, INC.


                                        By:
                                            ------------------------------------
                                        Name: R. Stephen Armstrong
                                        Title: Vice President and Treasurer


                                        WEBSTER MANAGEMENT, LP
                                        By: WEBSTER VETERINARY SUPPLY, INC., its
                                            General Partner


                                            By:
                                                --------------------------------
                                            Name: R. Stephen Armstrong
                                            Title: Vice President and Treasurer

                                        3

                                  Exhibit 1(a)



                                                                    EXHIBIT 1(b)
                                                                    ------------

                        [FORM OF SERIES A-2 SENIOR NOTE]

                            PATTERSON DENTAL COMPANY
                            ABILITYONE PRODUCTS CORP.
                             ABILITYONE CORPORATION
                          PATTERSON DENTAL SUPPLY, INC.
                         WEBSTER VETERINARY SUPPLY, INC.
                             WEBSTER MANAGEMENT, LP

                          3.65% SENIOR NOTE, SERIES A-2
                              DUE NOVEMBER 25, 2007

No. A-2R-[_____]                                                          [Date]
$[_______]                                                     PPN: 70341 @ AB 5

          FOR VALUE RECEIVED, the undersigned, PATTERSON DENTAL COMPANY, a
Minnesota corporation (the "Company"), ABILITYONE PRODUCTS CORP., a Delaware
corporation ("AbilityOne"), ABILITYONE CORPORATION, a Michigan corporation
("AbilityOne Corporation"), PATTERSON DENTAL SUPPLY, INC., a Minnesota
corporation ("PDSI"), WEBSTER VETERINARY SUPPLY, INC., a Minnesota corporation
("Webster"), and WEBSTER MANAGEMENT, LP, a Minnesota limited partnership
("Webster Management" and, collectively with the Company, AbilityOne, AbilityOne
Corporation, PDSI and Webster, the "Obligors"), jointly and severally, promise
to pay to [____], or registered assigns, the principal sum of $[____] on
November 25, 2007, with interest (computed on the basis of a 360-day year of
twelve 30-day months) (a) on the unpaid balance thereof at the rate of 3.65% per
annum from the date hereof, payable semiannually, on May 25 and November 25, in
each year, commencing with the May 25 or November 25 next succeeding the date
hereof, until the principal hereof shall have become due and payable, and (b) to
the extent permitted by law on any overdue payment (including any overdue
prepayment) of principal, any overdue payment of interest and any overdue
payment of any Make-Whole Amount (as defined in the Note Purchase Agreement
referred to below), payable semiannually as aforesaid (or, at the option of the
registered holder hereof, on demand), at a rate per annum from time to time
equal to the greater of (i) 5.65% or (ii) 2% over the rate of interest publicly
announced by Bank One, NA, or its successor, from time to time in Chicago,
Illinois as its "base" or "prime" rate.

          Payments of principal of, interest on and any Make-Whole Amount with
respect to this Note are to be made in lawful money of the United States of
America at the principal office of Bank One, NA in Chicago, Illinois or at such
other place as the Company shall have designated by written notice to the holder
of this Note as provided in the Note Purchase Agreement referred to below.

                                  Exhibit 1(b)



          This Note is one of a series of Senior Notes (herein called the
"Notes") issued pursuant to a Note Purchase Agreement dated as of November 15,
2003 (as from time to time amended, the "Note Purchase Agreement"), between the
Company and the respective Purchasers named therein and is entitled to the
benefits thereof. Each holder of this Note will be deemed, by its acceptance
hereof, (i) to have agreed to the confidentiality provisions set forth in
Section 20 of the Note Purchase Agreement and (ii) to have made the
representations set forth in Section 6.2 of the Note Purchase Agreement.

          This Note is a registered Note and, as provided in the Note Purchase
Agreement, upon surrender of this Note for registration of transfer, duly
endorsed, or accompanied by a written instrument of transfer duly executed, by
the registered holder hereof or such holder's attorney duly authorized in
writing, a new Note for a like principal amount will be issued to, and
registered in the name of, the transferee. Prior to due presentment for
registration of transfer, the Company may treat the person in whose name this
Note is registered as the owner hereof for the purpose of receiving payment and
for all other purposes, and the Company will not be affected by any notice to
the contrary.

          This Note is subject to optional prepayment, in whole or from time to
time in part, at the times and on the terms specified in the Note Purchase
Agreement but not otherwise.

          If an Event of Default, as defined in the Note Purchase Agreement,
occurs and is continuing, the principal of this Note may be declared or
otherwise become due and payable in the manner, at the price (including any
applicable Make-Whole Amount) and with the effect provided in the Note Purchase
Agreement.

                                        2

                                  Exhibit 1(b)



          This Note shall be construed and enforced in accordance with, and the
rights of the parties shall be governed by, the law of the State of Illinois
excluding choice-of-law principles of the law of such State that would require
the application of the laws of a jurisdiction other than such State.

                                        PATTERSON DENTAL COMPANY


                                        By:
                                            ------------------------------------
                                        Name: R. Stephen Armstrong
                                        Title: Executive Vice President & Chief
                                               Financial Officer


                                        ABILITYONE PRODUCTS CORP.
                                        ABILITYONE CORPORATION
                                        PATTERSON DENTAL SUPPLY, INC.
                                        WEBSTER VETERINARY SUPPLY, INC.


                                        By:
                                            ------------------------------------
                                        Name: R. Stephen Armstrong
                                        Title: Vice President and Treasurer


                                        WEBSTER MANAGEMENT, LP
                                        By: WEBSTER VETERINARY SUPPLY, INC., its
                                            General Partner


                                            By:
                                                --------------------------------
                                            Name: R. Stephen Armstrong
                                            Title: Vice President and Treasurer

                                        3

                                  Exhibit 1(b)



                                                                    EXHIBIT 1(c)
                                                                    ------------

                        [FORM OF SERIES A-3 SENIOR NOTE]

                            PATTERSON DENTAL COMPANY
                            ABILITYONE PRODUCTS CORP.
                             ABILITYONE CORPORATION
                          PATTERSON DENTAL SUPPLY, INC.
                         WEBSTER VETERINARY SUPPLY, INC.
                             WEBSTER MANAGEMENT, LP

                          4.14% SENIOR NOTE, SERIES A-3
                              DUE NOVEMBER 25, 2008

No. A-3R-[_____]                                                          [Date]
$[_______]                                                     PPN: 70341 @ AC 3

          FOR VALUE RECEIVED, the undersigned, PATTERSON DENTAL COMPANY, a
Minnesota corporation (the "Company"), ABILITYONE PRODUCTS CORP., a Delaware
corporation ("AbilityOne"), ABILITYONE CORPORATION, a Michigan corporation
("AbilityOne Corporation"), PATTERSON DENTAL SUPPLY, INC., a Minnesota
corporation ("PDSI"), WEBSTER VETERINARY SUPPLY, INC., a Minnesota corporation
("Webster"), and WEBSTER MANAGEMENT, LP, a Minnesota limited partnership
("Webster Management" and, collectively with the Company, AbilityOne, AbilityOne
Corporation, PDSI and Webster, the "Obligors"), jointly and severally, promise
to pay to [____], or registered assigns, the principal sum of $[_____] on
November 25, 2008, with interest (computed on the basis of a 360-day year of
twelve 30-day months) (a) on the unpaid balance thereof at the rate of 4.14% per
annum from the date hereof, payable semiannually, on May 25 and November 25, in
each year, commencing with the May 25 or November 25 next succeeding the date
hereof, until the principal hereof shall have become due and payable, and (b) to
the extent permitted by law on any overdue payment (including any overdue
prepayment) of principal, any overdue payment of interest and any overdue
payment of any Make-Whole Amount (as defined in the Note Purchase Agreement
referred to below), payable semiannually as aforesaid (or, at the option of the
registered holder hereof, on demand), at a rate per annum from time to time
equal to the greater of (i) 6.14% or (ii) 2% over the rate of interest publicly
announced by Bank One, NA, or its successor, from time to time in Chicago,
Illinois as its "base" or "prime" rate.

          Payments of principal of, interest on and any Make-Whole Amount with
respect to this Note are to be made in lawful money of the United States of
America at the principal office of Bank One, NA in Chicago, Illinois or at such
other place as the Company shall have designated by written notice to the holder
of this Note as provided in the Note Purchase Agreement referred to below.

                                  Exhibit 1(c)



          This Note is one of a series of Senior Notes (herein called the
"Notes") issued pursuant to a Note Purchase Agreement dated as of November 15,
2003 (as from time to time amended, the "Note Purchase Agreement"), between the
Obligors and the respective Purchasers named therein and is entitled to the
benefits thereof. Each holder of this Note will be deemed, by its acceptance
hereof, (i) to have agreed to the confidentiality provisions set forth in
Section 20 of the Note Purchase Agreement and (ii) to have made the
representations set forth in Section 6.2 of the Note Purchase Agreement.

          This Note is a registered Note and, as provided in the Note Purchase
Agreement, upon surrender of this Note for registration of transfer, duly
endorsed, or accompanied by a written instrument of transfer duly executed, by
the registered holder hereof or such holder's attorney duly authorized in
writing, a new Note for a like principal amount will be issued to, and
registered in the name of, the transferee. Prior to due presentment for
registration of transfer, the Obligors may treat the person in whose name this
Note is registered as the owner hereof for the purpose of receiving payment and
for all other purposes, and the Obligors will not be affected by any notice to
the contrary.

          This Note is subject to optional prepayment, in whole or from time to
time in part, at the times and on the terms specified in the Note Purchase
Agreement but not otherwise.

          If an Event of Default, as defined in the Note Purchase Agreement,
occurs and is continuing, the principal of this Note may be declared or
otherwise become due and payable in the manner, at the price (including any
applicable Make-Whole Amount) and with the effect provided in the Note Purchase
Agreement.

                                        2

                                  Exhibit 1(c)



          This Note shall be construed and enforced in accordance with, and the
rights of the parties shall be governed by, the law of the State of Illinois
excluding choice-of-law principles of the law of such State that would require
the application of the laws of a jurisdiction other than such State.

                                        PATTERSON DENTAL COMPANY


                                        By:
                                            ------------------------------------
                                        Name: R. Stephen Armstrong
                                        Title: Executive Vice President & Chief
                                               Financial Officer


                                        ABILITYONE PRODUCTS CORP.
                                        ABILITYONE CORPORATION
                                        PATTERSON DENTAL SUPPLY, INC.
                                        WEBSTER VETERINARY SUPPLY, INC.


                                        By:
                                            ------------------------------------
                                        Name: R. Stephen Armstrong
                                        Title: Vice President and Treasurer


                                        WEBSTER MANAGEMENT, LP
                                        By: WEBSTER VETERINARY SUPPLY, INC., its
                                            General Partner


                                            By:
                                                --------------------------------
                                            Name: R. Stephen Armstrong
                                            Title: Vice President and Treasurer

                                        3

                                  Exhibit 1(c)



                                                                    EXHIBIT 1(d)
                                                                    ------------

                        [FORM OF SERIES B-1 SENIOR NOTE]

                            PATTERSON DENTAL COMPANY
                            ABILITYONE PRODUCTS CORP.
                             ABILITYONE CORPORATION
                          PATTERSON DENTAL SUPPLY, INC.
                         WEBSTER VETERINARY SUPPLY, INC.
                             WEBSTER MANAGEMENT, LP

                      FLOATING RATE SENIOR NOTE, SERIES B-1
                              DUE NOVEMBER 25, 2008

No. B-1R-[_____]                                                          [Date]
$[_______]                                                     PPN: 70341 @ AD 1

          FOR VALUE RECEIVED, the undersigned, PATTERSON DENTAL COMPANY, a
Minnesota corporation (the "Company"), ABILITYONE PRODUCTS CORP., a Delaware
corporation ("AbilityOne"), ABILITYONE CORPORATION, a Michigan corporation
("AbilityOne Corporation"), PATTERSON DENTAL SUPPLY, INC., a Minnesota
corporation ("PDSI"), WEBSTER VETERINARY SUPPLY, INC., a Minnesota corporation
("Webster"), and WEBSTER MANAGEMENT, LP, a Minnesota limited partnership
("Webster Management" and, collectively with the Company, AbilityOne, AbilityOne
Corporation, PDSI and Webster, the "Obligors"), jointly and severally, promise
to pay to [____], or registered assigns, the principal sum of $[_______] on
November 25, 2008, with interest (computed on the basis of a 360-day year and
the actual number of days elapsed) (a) on the unpaid principal thereof at a
floating rate equal to the Adjusted LIBOR Rate from time to time, payable
quarterly on each February 25, May 25, August 25 or November 25, commencing with
the February 25, May 25, August 25 or November 25 next succeeding the date
hereof until the principal shall have become due and payable, and (b) to the
extent permitted by law on any overdue payment (including any overdue
prepayment) of principal, any overdue payment of interest and any overdue
payment of any LIBOR Breakage Amount at the Default Rate until paid.

          Payments of principal of, interest on and any LIBOR Breakage Amount
with respect to this Note are to be made in lawful money of the United States of
America at the principal office of Bank One, NA in Chicago, Illinois or at such
other place as the Company shall have designated by written notice to the holder
of this Note as provided in the Note Purchase Agreement referred to below.

          This Note is one of a series of Senior Notes (herein called the
"Notes") issued pursuant to a Note Purchase Agreement dated as of November 15,
2003 (as from time to time amended, the "Note Purchase Agreement"), between the
Obligors and the respective Purchasers

                                  Exhibit 1(d)



named therein and is entitled to the benefits thereof. Reference is made to the
Note Purchase Agreement for the definitions used herein and the method of
calculating the interest and other payments to be made on or in respect of this
Note. Each holder of this Note will be deemed, by its acceptance hereof, (i) to
have agreed to the confidentiality provisions set forth in Section 20 of the
Note Purchase Agreement and (ii) to have made the representations and agreement
set forth in Section 6.2 of the Note Purchase Agreement.

          This Note is a registered Note and, as provided in the Note Purchase
Agreement, upon surrender of this Note for registration of transfer, duly
endorsed, or accompanied by a written instrument of transfer duly executed, by
the registered holder hereof or such holder's attorney duly authorized in
writing, a new Note for a like principal amount will be issued to, and
registered in the name of, the transferee. Prior to due presentment for
registration of transfer, the Obligors may treat the person in whose name this
Note is registered as the owner hereof for the purpose of receiving payment and
for all other purposes, and the Obligors will not be affected by any notice to
the contrary.

          This Note is subject to optional prepayment, in whole or from time to
time in part, at the times and on the terms specified in the Note Purchase
Agreement but not otherwise.

          If an Event of Default, as defined in the Note Purchase Agreement,
occurs and is continuing, the principal of this Note may be declared or
otherwise become due and payable in the manner, at the price (including any
applicable LIBOR Breakage Amount) and with the effect provided in the Note
Purchase Agreement.

                                        2

                                  Exhibit 1(d)



          This Note shall be construed and enforced in accordance with, and the
rights of the parties shall be governed by, the law of the State of Illinois
excluding choice-of-law principles of the law of such State that would require
the application of the laws of a jurisdiction other than such State.


                                        PATTERSON DENTAL COMPANY


                                        By:
                                            ------------------------------------
                                        Name: R. Stephen Armstrong
                                        Title: Executive Vice President & Chief
                                               Financial Officer


                                        ABILITYONE PRODUCTS CORP.
                                        ABILITYONE CORPORATION
                                        PATTERSON DENTAL SUPPLY, INC.
                                        WEBSTER VETERINARY SUPPLY, INC.


                                        By:
                                            ------------------------------------
                                        Name: R. Stephen Armstrong
                                        Title: Vice President and Treasurer


                                        WEBSTER MANAGEMENT, LP
                                        By: WEBSTER VETERINARY SUPPLY, INC., its
                                            General Partner


                                            By:
                                                --------------------------------
                                            Name: R. Stephen Armstrong
                                            Title: Vice President and Treasurer

                                        3

                                  Exhibit 1(d)



                                                                    EXHIBIT 1(e)
                                                                    ------------

                        [FORM OF SERIES B-2 SENIOR NOTE]

                            PATTERSON DENTAL COMPANY
                            ABILITYONE PRODUCTS CORP.
                             ABILITYONE CORPORATION
                          PATTERSON DENTAL SUPPLY, INC.
                         WEBSTER VETERINARY SUPPLY, INC.
                             WEBSTER MANAGEMENT, LP

                      FLOATING RATE SENIOR NOTE, SERIES B-2
                              DUE NOVEMBER 25, 2010

No. B-2R-[_____]                                                          [Date]
$[_______]                                                     PPN: 70341 @ AE 9

          FOR VALUE RECEIVED, the undersigned, PATTERSON DENTAL COMPANY, a
Minnesota corporation (the "Company"), ABILITYONE PRODUCTS CORP., a Delaware
corporation ("AbilityOne"), ABILITYONE CORPORATION, a Michigan corporation
("AbilityOne Corporation"), PATTERSON DENTAL SUPPLY, INC., a Minnesota
corporation ("PDSI"), WEBSTER VETERINARY SUPPLY, INC., a Minnesota corporation
("Webster"), and WEBSTER MANAGEMENT, LP, a Minnesota limited partnership
("Webster Management" and, collectively with the Company, AbilityOne, AbilityOne
Corporation, PDSI and Webster, the "Obligors"), jointly and severally, promise
to pay to [____], or registered assigns, the principal sum of $[_______] on
November 25, 2010, with interest (computed on the basis of a 360-day year and
the actual number of days elapsed) (a) on the unpaid principal thereof at a
floating rate equal to the Adjusted LIBOR Rate from time to time, payable
quarterly on each February 25, May 25, August 25 or November 25, commencing with
the February 25, May 25, August 25 or November 25 next succeeding the date
hereof until the principal shall have become due and payable, and (b) to the
extent permitted by law on any overdue payment (including any overdue
prepayment) of principal, any overdue payment of interest and any overdue
payment of any LIBOR Breakage Amount at the Default Rate until paid.

          Payments of principal of, interest on and any LIBOR Breakage Amount
with respect to this Note are to be made in lawful money of the United States of
America at the principal office of Bank One, NA in Chicago, Illinois or at such
other place as the Company shall have designated by written notice to the holder
of this Note as provided in the Note Purchase Agreement referred to below.

          This Note is one of a series of Senior Notes (herein called the
"Notes") issued pursuant to a Note Purchase Agreement dated as of November 15,
2003 (as from time to time

                                  Exhibit 1(e)



amended, the "Note Purchase Agreement"), between the Obligors and the respective
Purchasers named therein and is entitled to the benefits thereof. Reference is
made to the Note Purchase Agreement for the definitions used herein and the
method of calculating the interest and other payments to be made on or in
respect of this Note. Each holder of this Note will be deemed, by its acceptance
hereof, (i) to have agreed to the confidentiality provisions set forth in
Section 20 of the Note Purchase Agreement and (ii) to have made the
representations and agreement set forth in Section 6.2 of the Note Purchase
Agreement.

          This Note is a registered Note and, as provided in the Note Purchase
Agreement, upon surrender of this Note for registration of transfer, duly
endorsed, or accompanied by a written instrument of transfer duly executed, by
the registered holder hereof or such holder's attorney duly authorized in
writing, a new Note for a like principal amount will be issued to, and
registered in the name of, the transferee. Prior to due presentment for
registration of transfer, the Obligors may treat the person in whose name this
Note is registered as the owner hereof for the purpose of receiving payment and
for all other purposes, and the Obligors will not be affected by any notice to
the contrary.

          This Note is subject to optional prepayment, in whole or from time to
time in part, at the times and on the terms specified in the Note Purchase
Agreement but not otherwise.

          If an Event of Default, as defined in the Note Purchase Agreement,
occurs and is continuing, the principal of this Note may be declared or
otherwise become due and payable in the manner, at the price (including any
applicable LIBOR Breakage Amount) and with the effect provided in the Note
Purchase Agreement.

                                        2

                                  Exhibit 1(e)



          This Note shall be construed and enforced in accordance with, and the
rights of the parties shall be governed by, the law of the State of Illinois
excluding choice-of-law principles of the law of such State that would require
the application of the laws of a jurisdiction other than such State.

                                        PATTERSON DENTAL COMPANY


                                        By:
                                            ------------------------------------
                                        Name: R. Stephen Armstrong
                                        Title: Executive Vice President & Chief
                                               Financial Officer


                                        ABILITYONE PRODUCTS CORP.
                                        ABILITYONE CORPORATION
                                        PATTERSON DENTAL SUPPLY, INC.
                                        WEBSTER VETERINARY SUPPLY, INC.


                                        By:
                                            ------------------------------------
                                        Name: R. Stephen Armstrong
                                        Title: Vice President and Treasurer


                                        WEBSTER MANAGEMENT, LP
                                        By: WEBSTER VETERINARY SUPPLY, INC., its
                                            General Partner


                                            By:
                                                --------------------------------
                                            Name: R. Stephen Armstrong
                                            Title: Vice President and Treasurer

                                        3

                                  Exhibit 1(e)

EX-31.1

Exhibit 31.1

CERTIFICATIONS PURSUANT TO

SECTION 302 OF THE

SARBANES-OXLEY ACT OF 2002

I, Peter L. Frechette, the Chief Executive Officer of Patterson Dental Company, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Patterson Dental Company;

2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

4. The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

b) evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the “Evaluation Date”); and

c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):

a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant’s ability to record, process, summarize and report financial data and have identified for the registrant’s auditors any material weaknesses in internal controls; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls; and

6. The registrant’s other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

Date: March 9, 2004	/s/ Peter L. Frechette
	Peter L. Frechette Chairman and Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATIONS PURSUANT TO

SECTION 302 OF THE

SARBANES-OXLEY ACT OF 2002

I, R. Stephen Armstrong, the Chief Financial Officer of Patterson Dental Company, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Patterson Dental Company;

2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

4. The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

b) evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the “Evaluation Date”); and

c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):

a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant’s ability to record, process, summarize and report financial data and have identified for the registrant’s auditors any material weaknesses in internal controls; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls; and

6. The registrant’s other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

Date: March 9, 2004	/s/ R. Stephen Armstrong
	R. Stephen Armstrong Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATIONS PURSUANT TO

SECTION 906 OF THE

SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Patterson Dental Company (the “Company”) on Form 10-Q for the quarterly period ended January 24, 2004, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Peter L. Frechette, Chief Executive Officer of the Company, certify pursuant to 18 U.S.C. ss.1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

A signed original of this written statement required by Section 906 has been provided to the Company and furnished to the Securities and Exchange Commission or its staff upon request.

Date: March 9, 2004	/s/ Peter L. Frechette
	Peter L. Frechette Chairman and Chief Executive Officer

EX-32.2

Exhibit 32.2

CERTIFICATIONS PURSUANT TO

SECTION 906 OF THE

SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Patterson Dental Company (the “Company”) on Form 10-Q for the quarterly period ended January 24, 2004, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, R. Stephen Armstrong, Chief Financial Officer of the Company, certify pursuant to 18 U.S.C. ss.1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

A signed original of this written statement required by Section 906 has been provided to the Company and furnished to the Securities and Exchange Commission or its staff upon request.

Date: March 9, 2004	/s/ R. Stephen Armstrong
	R. Stephen Armstrong Chief Financial Officer