Advanced Marketing Services

AMENDMENT NUMBER FIVE TO LOAN AND SECURITY AGREEMENT
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This Amendment Number Five to Loan and Security Agreement (this "Amendment") is entered into as of November 16, 2005, by and among, on the one hand, ADVANCED MARKETING SERVICES, INC., a Delaware corporation ("Parent"), PUBLISHERS GROUP WEST INCORPORATED, a California corporation ("PGWI"), and PUBLISHERS GROUP INCORPORATED, a California corporation ("PGI" and collectively, jointly and severally, with PGWI, "Borrowers"), and, on the other hand, the lenders identified on the signature pages to the Agreement (as defined below) (collectively, "Lenders"), and WELLS FARGO FOOTHILL, INC., a California corporation, as the arranger and administrative agent for the Lenders (in such capacity, "Agent"), in light of the following:


A. Borrowers and the Lender Group have previously entered into that
certain Loan and Security Agreement, dated as of April 27, 2004 (as
amended and modified, from time to time, the "Agreement").


B. Borrowers and the Lender Group desire to further amend the Agreement
as provided for and on the conditions herein.


NOW, THEREFORE, Borrowers and the Lender Group hereby amend and supplement the Agreement as follows:


1. DEFINITIONS. All initially capitalized terms used in this Amendment
shall have the meanings given to them in the Agreement unless
specifically defined herein.


2. AMENDMENTS.


(a) Section 2.11(c) of the Agreement is hereby amended and restated
in its entirety as follows:


"(c) Audit, Appraisal, and Valuation
Charges; Annual Appraisals. Audit, appraisal, and valuation fees and
charges as follows (i) a fee of $850 per day, per auditor, plus
out-of-pocket expenses for each collateral audit of a Borrower performed by
personnel employed by Agent, which collateral audits may be performed as
frequently as Agent deems necessary, provided, however that so long as no
Event of Default shall have occurred and shall be continuing, Borrowers
shall not be obligated to reimburse Agent for more than 3 collateral audits
during any calendar year (with additional collateral audits at the Agent's
expense), (ii) if implemented, a fee of $850 per day, per applicable
individual, plus out of pocket expenses for the establishment of electronic
collateral reporting systems, (iii) a fee of $1,500 per day per appraiser,
plus out-of-pocket expenses, for each appraisal of the Collateral, or any
portion thereof, performed by personnel employed by Agent, and (iv) the
reasonable charges paid or incurred by Agent if it elects to employ the
services of one or more third Persons to perform financial audits of
Borrowers or their Subsidiaries, to establish electronic collateral
reporting systems, to appraise the Collateral, or any portion thereof, or
to assess Borrowers' and their Subsidiaries' business valuation. Agent
shall have the right to have the Inventory reappraised by a qualified
appraisal company selected by Agent: (1) except as provided in clauses (2)
and (3) below, once during any year following the Closing Date for the
purpose of redetermining the Net Liquidation Percentage of the Inventory
portion of the Collateral and, as a result, redetermining the Borrowing
Base, (2) at any time following an appraisal, the results of which are not
reasonably satisfactory to Agent, and (3) at any time following the
occurrence of an Event of Default which is continuing, provided, however
that so long as no Event of Default shall have occurred and shall be
continuing, Borrowers shall not be obligated to reimburse Agent for more
than 1 reappraisal during any calendar year (with additional reappraisals
at the Agent's expense)."


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(b) Section 7.18(a) of the Agreement is hereby amended and restated
in its entirety as f ...