EXHIBIT 10.25
AMENDED AND RESTATED SUBSIDIARY SECURITY AGREEMENT
THIS AMENDED AND RESTATED SUBSIDIARY SECURITY AGREEMENT, dated as of June
27, 2002 (as modified from time to time, this "SECURITY AGREEMENT"), made by
AMERICAN EDUCATIONAL PRODUCTS LLC, a Colorado limited liability company (the
"COMPANY"), EACH SUBSIDIARY OF THE COMPANY LISTED ON THE SIGNATURE PAGES HEREOF,
EACH OTHER PERSON OR ENTITY WHICH FROM TIME TO TIME BECOMES A PARTY HERETO
(collectively, including the Company, the "GRANTORS" and individually each a
"GRANTOR"), in favor of BANK OF AMERICA, N.A., as administrative agent (together
with any successor(s) thereto in such capacity, the "AGENT") for each of the
various financial institutions (individually a "LENDER" and collectively the
"LENDERS") which are or may from time to time become, parties to the Credit
Agreements (as defined below).
W I T N E S S E T H:
WHEREAS, the parties or their predecessors have entered into that certain
First Amendment to Amended and Restated Credit Agreement (Five Year) and
Consent, dated as of June 17, 2002 which amends the Amended and Restated Credit
Agreement (Five Year), dated as of May 29, 2001 (as amended, supplemented and
otherwise modified, the "CREDIT AGREEMENT (FIVE YEAR)"), among Nasco
International, Inc., a Wisconsin corporation (the "PARENT"), the lenders parties
thereto and the Agent; and
WHEREAS, the parties or their predecessors have entered into that certain
Second Amendment to Amended and Restated Credit Agreement (364 Days) and
Consent, dated as of June 17, 2002 which amends the Amended and Restated Credit
Agreement (364 Days), dated as of May 29, 2001 (as amended, supplemented and
otherwise modified, the "CREDIT AGREEMENT (364 DAYS)" and together with the
Credit Agreement (Five Year), the "CREDIT AGREEMENTS"), among the Parent, the
lenders party thereto and the Agent; and
WHEREAS, the parties or their predecessors have entered into that certain
Subsidiary Security Agreement, dated as of August 20, 2001 (the "EXISTING
SUBSIDIARY SECURITY AGREEMENT"), and wish to amend and restate such Existing
Subsidiary Security Agreement as set forth in this Security Agreement.
WHEREAS, in connection with the extension of credit under the Credit
Agreements, the parties or their predecessors have agreed that the Grantors
shall enter into this Security Agreement to grant to the Agent a continuing
security interest in all of the "Collateral" identified herein, and, in
connection with and to supplement this Security Agreement, enter into the
Agreement (Trademark) (the "SUPPLEMENT");
NOW, THEREFORE, for good and valuable consideration the receipt of which is
hereby acknowledged, in order to induce the Lenders to make Loans (including the
initial Loans) to the Parent from time to time pursuant to the Credit Agreements
and in order to amend and restate the Existing Security Agreement, the Grantors
hereby agree with the Agent, for its benefit and the ratable benefit of each
Lender Party, as follows:
ARTICLE I
DEFINITIONS
CERTAIN TERMS. When used herein, (a) capitalized terms used but not defined
herein shall have the meanings given to them in the Credit Agreements and (b)
the following terms shall have the following meanings (such definitions to be
equally applicable to the singular and plural forms thereof):
"AGENT" is defined in the PREAMBLE.
"COLLATERAL" is defined in SECTION 2.1.
"COLLATERAL ACCOUNT" is defined in CLAUSE (C) of SECTION 4.1.2.
"COMMITMENTS" means the "Commitments", as defined in the Credit Agreement
(Five Year) and the Credit Agreement (364 Day).
"COMPUTER HARDWARE AND SOFTWARE COLLATERAL" means, with respect to any
Grantor:
(a) all computer and other electronic data processing hardware,
integrated computer systems, central processing units, memory units,
display terminals, printers, features, computer elements, card readers,
tape drives, hard and soft disk drives, cables, electrical supply hardware,
generators, power equalizers, accessories and all peripheral devices and
other related computer hardware;
(b) all software programs, data and databases (including both
source code, object code and all related applications and data files),
whether now owned, licensed or leased or hereafter acquired by such
Grantor, designed for use on the computers and electronic data processing
hardware described in CLAUSE (A) above;
(c) all firmware associated therewith;
(d) all documentation (including flow charts, logic diagrams,
manuals, guides and specifications) with respect to such hardware, software
and firmware described in the preceding CLAUSES (A) through (C); and
(e) all rights with respect to all of the foregoing, including,
without limitation, any and all copyrights, licenses, options, warranties,
service contracts, program services, test rights, maintenance rights,
support rights, improvement rights, renewal rights and indemnifications and
any substitutions, replacements, additions or model conversions of any of
the foregoing.
"COPYRIGHT COLLATERAL" means, with respect to any Grantor, all copyrights
and all semi-conductor chip product mask works of such Grantor, whether
statutory or common law, registered or unregistered, now or hereafter in force
throughout the world including, without limitation, all of such Grantor's right,
title and interest in and to all copyrights and mask works registered in the
United States Copyright Office or anywhere else in the world and also
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including, without limitation, the copyrights and mask works referred to in ITEM
A of SCHEDULE IV attached hereto, and all applications for registration thereof,
whether pending or in preparation, all copyright and mask work licenses,
including each copyright and mask work license referred to in ITEM B of SCHEDULE
IV attached hereto, the right to ▇▇▇ for past, present and future infringements
of any thereof, all rights corresponding thereto throughout the world, all
extensions and renewals of any thereof and all proceeds of the foregoing,
including, without limitation, licenses, royalties, income, payments, claims,
damages and proceeds of suit.
"CREDIT AGREEMENTS" is defined in the RECITALS.
"GRANTOR" is defined in the PREAMBLE.
"INTELLECTUAL PROPERTY COLLATERAL" means, collectively, with respect to any
Grantor, the Computer Hardware and Software Collateral, the Copyright
Collateral, the Patent Collateral, the Trademark Collateral and the Trade
Secrets Collateral.
"LENDER" is defined in the PREAMBLE.
"LENDER PARTY" means, as the context may require, any Lender or the Agent
and each of its respective successors, transferees and assigns.
"LENDERS" is defined in the PREAMBLE.
"LOAN DOCUMENTS" means "Loan Documents" as defined in the Credit Agreement
(Five Year) and "Loan Documents" as defined in the Credit Agreement (364 Day).
"NOTES" means the "Notes" as defined in the Credit Agreement (Five Year)
and "Notes" as defined in the Credit Agreement (364 Day).
"OBLIGATIONS" means "Obligations" as defined in the Credit Agreement (Five
Year) and "Obligations" as defined in the Credit Agreement (364 Day).
"PATENT COLLATERAL" means, with respect to any Grantor:
(a) all letters patent and applications for letters patent
throughout the world, including all patent applications in preparation for
filing anywhere in the world and including each patent and patent
application referred to in ITEM A of SCHEDULE II attached hereto;
(b) all patent licenses, including each patent license referred to
in ITEM B of SCHEDULE II attached hereto;
(c) all reissues, divisions, continuations, continuations-in-part,
extensions, renewals and reexaminations of any of the items described in
clauses (a) and (b); and
(d) all proceeds of, and rights associated with, the foregoing
(including license royalties and proceeds of infringement suits), the right
to ▇▇▇ third parties for past, present or future infringements of any
patent or patent application, including any patent
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or patent application referred to in ITEM A of SCHEDULE II attached hereto,
and for breach or enforcement of any patent license, including any patent
license referred to in ITEM B of SCHEDULE II attached hereto, and all
rights corresponding thereto throughout the world.
"RECEIVABLE" means, with respect to any Grantor, any and all Accounts,
Chattel Paper, Commercial Tort Claims, Documents, General Intangibles,
Instruments and Letter of Credit Rights of such Grantor.
"RELATED CONTRACT" means, with respect to any Grantor, all rights of such
Grantor now or hereafter existing in and to all security agreements, guaranties,
leases and other contracts securing or otherwise relating to any Collateral.
"SECURITY AGREEMENT" is defined in the PREAMBLE.
"SUPPLEMENTS" is defined in the RECITALS.
"TRADEMARK COLLATERAL" means, with respect to any Grantor:
(a) all trademarks, trade names, corporate names, company names,
business names, fictitious business names, trade styles, service marks,
certification marks, collective marks, logos, other source of business
identifiers, prints and labels on which any of the foregoing have appeared
or appear, designs and general intangibles of a like nature (all of the
foregoing items in this CLAUSE (A) being collectively called a
"TRADEMARK"), now existing anywhere in the world or hereafter adopted or
acquired, whether currently in use or not, all registrations and recordings
thereof and all applications in connection therewith, whether pending or in
preparation for filing, including registrations, recordings and
applications in the United States Patent and Trademark Office or in any
office or agency of the United States of America or any State thereof or
any foreign country, including those referred to in ITEM A of SCHEDULE III
attached hereto;
(b) all Trademark licenses, including each Trademark license
referred to in ITEM B of SCHEDULE III attached hereto;
(c) all reissues, extensions or renewals of any of the items
described in CLAUSES (A) and (B);
(d) all of the goodwill of the business connected with the use of,
and symbolized by the items described in, CLAUSES (A) and (B); and
(e) all proceeds of, and rights associated with, the foregoing,
including any claim by such Grantor against third parties for past, present
or future infringement or dilution of any Trademark, Trademark registration
or Trademark license, including any Trademark, Trademark registration or
Trademark license referred to in ITEM A and ITEM B of SCHEDULE III attached
hereto, or for any injury to the goodwill associated with the use of any
such Trademark or for breach or enforcement of any Trademark license.
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"TRADE SECRETS COLLATERAL" means, with respect to any Grantor, common law
and statutory trade secrets and all other confidential or proprietary or useful
information and all know-how obtained by or used in or contemplated at any time
for use in the business of such Grantor (all of the foregoing being collectively
called a "TRADE SECRET"), whether or not such Trade Secret has been reduced to a
writing or other tangible form, including all documents and things embodying,
incorporating or referring in any way to such Trade Secret, all Trade Secret
licenses, including each Trade Secret license referred to in SCHEDULE V attached
hereto, and including the right to ▇▇▇ for and to enjoin and to collect damages
for the actual or threatened misappropriation of any Trade Secret and for the
breach or enforcement of any such Trade Secret license.
"UCC" means the Uniform Commercial Code, as in effect in the State of
Illinois.
SECTION 1.2. UCC DEFINITIONS. Unless otherwise defined herein or the
context otherwise requires, terms for which meanings are provided in the UCC are
used in this Security Agreement, including its preamble and recitals, with such
meanings.
ARTICLE II
SECURITY INTEREST
SECTION 2.1. CONFIRMATION AND GRANT OF SECURITY INTEREST. Each Grantor
hereby pledges, assigns and grants, to the Agent for its benefit and the ratable
benefit of each of the Lender Parties, and hereby grants to the Agent for its
benefit and the ratable benefit of each of the Lender Parties, a continuing
security interest in, whether now or hereafter existing or acquired all of such
Grantor's (with respect to any Grantor, the "COLLATERAL"):
(a) Accounts;
(b) Chattel Paper;
(c) Commercial Tort Claims;
(d) Deposit Accounts;
(e) Documents;
(f) General Intangibles;
(g) Goods (including all Equipment, Fixtures and Inventory), and
all accessions, additions, attachments, improvements, substitutions and
replacements thereto and therefore;
(h) Instruments;
(i) Intellectual Property Collateral;
(j) Investment Property;
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(k) Letter of Credit Rights and letters of credit (as such term is
defined in Article 5 of the UCC);
(l) to the extent not included in the foregoing, all books,
records, writings, data bases, information and other property relating to,
used or useful in connection with, evidencing, embodying, incorporating or
referring to, any of the foregoing in this SECTION 2.1;
(m) other property and rights of every kind and description and
interests therein, including all rights in any bank or other accounts and
in all monies from time to time therein; and
(n) to the extent not included in the foregoing, all Proceeds,
products, offspring, rents, issues, profits, returns, and income of and
from any and all of the foregoing Collateral (including proceeds which
constitute property of the types described in CLAUSES (A) through (M)
above, proceeds deposited from time to time in the Collateral Account and
in any lock boxes of such Grantor, and, to the extent not otherwise
included, all payments under insurance (whether or not the Agent is the
loss payee thereof), or any indemnity, warranty or guaranty, payable by
reason of loss or damage to or otherwise with respect to any of the
foregoing Collateral).
Notwithstanding the foregoing, the Agent shall not enforce the security interest
granted pursuant to this Security Agreement in rights arising under contracts as
to which such enforcement would constitute a violation of a valid and
enforceable restriction thereon, unless any required consents shall have been
obtained or such restriction shall have become or be rendered ineffective by
reason of law, court proceedings or otherwise. Each Grantor agrees to use its
best efforts to obtain any such required consent.
SECTION 2.2. SECURITY FOR OBLIGATIONS. This Security Agreement secures the
payment of all Obligations now or hereafter existing under the Credit
Agreements, the Notes and each other Loan Document (including this Security
Agreement) to which the Parent is or may become a party, whether for principal,
interest, costs, fees, expenses or otherwise.
SECTION 2.3. CONTINUING SECURITY INTEREST; TRANSFER OF NOTES. This Security
Agreement shall create a continuing security interest in the Collateral and
shall
(a) remain in full force and effect until payment in full of all
Obligations and the termination of all Commitments,
(b) be binding upon each Grantor, its successors, transferees and
assigns, and
(c) inure, together with the rights and remedies of the Agent
hereunder, to the benefit of the Agent and each other Lender Party.
Without limiting the generality of the foregoing CLAUSE (C), any Lender may
assign or otherwise transfer (in whole or in part) any Note or Loan held by it
to any other Person or entity, and such other Person or entity shall thereupon
become vested with all the rights and benefits in respect thereof granted to
such Lender under any Loan Document (including this Security Agreement) or
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otherwise, subject, however, to any contrary provisions in such assignment or
transfer, and to the provisions of Section 10.11 and Article IX of either Credit
Agreement. Upon the final payment in full of all Obligations, the security
interest granted herein by each Grantor shall terminate and all rights to the
Collateral shall revert to the Grantors. Upon any such termination, the Agent
will, execute and deliver to any Grantor such documents as such Grantor shall
reasonably request to evidence such termination at such Grantor's sole expense.
SECTION 2.4. GRANTORS REMAINS LIABLE. Anything herein to the contrary
notwithstanding, each Grantor agrees that:
(a) such Grantor shall remain liable under the contracts and
agreements included in the Collateral to the extent set forth therein, and
shall perform all of its duties and obligations under such contracts and
agreements to the same extent as if this Security Agreement had not been
executed,
(b) the exercise by the Agent of any of its rights hereunder shall
not release such Grantor from any of its duties or obligations under any
such contracts or agreements included in the Collateral, and
(c) neither the Agent nor any other Lender Party shall have any
obligation or liability under any such contracts or agreements included in
the Collateral by reason of this Security Agreement, nor shall the Agent or
any other Lender Party be obligated to perform any of the obligations or
duties of such Grantor thereunder or to take any action to collect or
enforce any claim for payment assigned hereunder.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.1. REPRESENTATIONS AND WARRANTIES. Each Grantor represents and
warrants unto each Lender Party as set forth in this Article.
SECTION 3.1.1. LOCATION OF COLLATERAL, ETC. All of the Equipment and
Inventory of such Grantor are located at the places specified in ITEM A and ITEM
B, respectively, of SCHEDULE I hereto. None of the Equipment and Inventory has,
within the four months preceding the date of this Security Agreement, been
located at any place other than the places specified in ITEM A and ITEM B,
respectively, of SCHEDULE I hereto. The place(s) of business and chief executive
office of such Grantor and the offices) where such Grantor keeps its records
concerning the Receivables, and all originals of all chattel paper which
evidence Receivables, are located at the address set forth below the name of
such Grantor on the signature page hereof. Such Grantor does not operate under a
trade name that is different from its legal name. None of the Receivables is
evidenced by a promissory note or other instrument. Such Grantor is not a party
to any Federal, state or local government contract, although it does sell
materials to various municipalities from time to time on ordinary trade terms.
SECTION 3.1.2. OWNERSHIP, NO LIENS, ETC. Such Grantor owns the Collateral
free and clear of any Lien, security interest, charge or encumbrance except for
the security interest created by this Security Agreement and except as permitted
by the Credit Agreements. No effective
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financing statement or other instrument similar in effect covering all or any
part of the Collateral is on file in any recording office, except such as may
have been filed in favor of the Agent relating to this Security Agreement and
the Credit Agreements.
SECTION 3.1.3. POSSESSION AND CONTROL. Such Grantor has exclusive
possession and control of the Equipment and Inventory.
SECTION 3.1.4. NEGOTIABLE DOCUMENTS, INSTRUMENTS AND CHATTEL PAPER. Such
Grantor has previously delivered to the Agent possession of all originals of all
negotiable documents, instruments and chattel paper currently owned or held by
such Grantor (duly endorsed in blank, if requested by the Agent).
SECTION 3.1.5. INTELLECTUAL PROPERTY COLLATERAL. With respect to any
Intellectual Property Collateral the loss, impairment or infringement of which
might have a materially adverse effect on the financial condition, operation,
assets, business, properties or prospects of such Grantor:
(a) such Intellectual Property Collateral is subsisting and has not
been adjudged invalid or unenforceable, in whole or in part;
(b) such Intellectual Property Collateral is valid and enforceable;
(c) such Grantor has made all necessary filings and recordations to
protect its interest in such Intellectual Property Collateral, including,
without limitation, recordations of all of its interests in the Patent
Collateral and Trademark Collateral in the United States Patent and
Trademark Office and in corresponding offices throughout the world and its
claims to the Copyright Collateral in the United States Copyright Office
and in corresponding offices throughout the world;
(d) such Grantor is the exclusive owner of the entire and
unencumbered right, title and interest in and to such Intellectual Property
Collateral and no claim has been made that the use of such Intellectual
Property Collateral does or may violate the asserted rights of any third
party; and
(e) such Grantor has performed and will continue to perform all
acts and has paid and will continue to pay all required fees and taxes to
maintain each and every item of Intellectual Property Collateral in full
force and effect throughout the world, as applicable.
Such Grantor owns directly or is entitled to use by license or otherwise, all
patents, Trademarks, Trade Secrets, copyrights, mask works, licenses,
technology, know-how, processes and rights with respect to any of the foregoing
used in, necessary for or of importance to the conduct of such Grantor's
business. The Schedules hereto contain true and complete listings and
descriptions of all of such Grantor's trademarks, trademark licenses, patents,
patent licenses, copyrights, copyright licenses and trade secrets.
SECTION 3.1.6. VALIDITY, ETC. This Security Agreement creates a valid first
priority security interest in the Collateral, securing the payment of the
Obligations, and all filings and
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other actions necessary or desirable to perfect and protect such security
interest have been duly taken.
SECTION 3.1.7. AUTHORIZATION, APPROVAL, ETC. No authorization, approval or
other action by, and no notice to or filing with, any governmental authority or
regulatory body is required either
(a) for the grant by such Grantor of the security interest granted
hereby or for the execution, delivery and performance of this Security
Agreement by such Grantor, or
(b) for the perfection of or the exercise by the Agent of its rights
and remedies hereunder.
SECTION 3.1.8. COMPLIANCE WITH LAWS. Such Grantor is in compliance with the
requirements of all applicable laws, rules, regulations and orders of every
governmental authority, the non-compliance with which might materially adversely
affect the business, properties, assets, operations, condition (financial or
otherwise) or prospects of such Grantor or the value of the Collateral or the
worth of the Collateral as collateral security.
ARTICLE IV
COVENANTS
SECTION 4.1. CERTAIN COVENANTS. Each Grantor covenants and agrees that, so
long as any portion of the Obligations shall remain unpaid, such Grantor will,
unless the Required Lenders shall otherwise consent in writing, perform the
obligations set forth in this Section.
SECTION 4.1.1. AS TO EQUIPMENT AND INVENTORY. Such Grantor hereby agrees
that it shall
(a) keep all the Equipment and Inventory (other than Inventory sold
in the ordinary course of business) at the places therefor specified in
Section 3.1.1 or, upon 30 days' prior written notice to the Agent, at such
other places in a jurisdiction where all representations and warranties set
forth in ARTICLE III (including SECTION 3.1.6) shall be true and correct,
and all action required pursuant to the FIRST SENTENCE of SECTION 4.1.7
shall have been taken with respect to the Equipment and Inventory;
(b) cause the Equipment to be maintained and preserved in the same
condition, repair and working order as when new, ordinary wear and tear
excepted, and in accordance with any manufacturer's manual; and forthwith,
or in the case of any loss or damage to any of the Equipment, as quickly as
practicable after the occurrence thereof, make or cause to be made all
repairs, replacements and other improvements in connection therewith which
are necessary or desirable to such end; and promptly furnish to the Agent a
statement respecting any loss or damage to any of the Equipment; and
(c) pay promptly when due all property and other taxes, assessments
and governmental charges or levies imposed upon, and all claims (including
claims for labor, materials and supplies) against, the Equipment and
Inventory, except to the extent the
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validity thereof is being contested in good faith by appropriate
proceedings and for which adequate reserves in accordance with GAAP have
been set aside.
SECTION 4.1.2. AS TO RECEIVABLES AND INVESTMENT PROPERTY.
(a) Such Grantor shall keep its place(s) of business and chief
executive office and the offices) where it keeps its records concerning the
Receivables, and all originals of all chattel paper which evidenced
Receivables, located at the address set forth in SECTION 3.1.1, or, upon 30
days' prior written notice to the Agent, at such other locations in a
jurisdiction where all actions required by the first sentence of SECTION
4.1.7 shall have been taken with respect to the Receivables; not change its
name except upon 30 days' prior written notice to the Agent; hold and
preserve such records and chattel paper; and permit representatives of the
Agent at any time during normal business hours to inspect and make
abstracts from such records and chattel paper.
(b) Promptly upon the written request of the Agent, such Grantor
will direct all obligors under any Receivables to make all payments to one
or more lock boxes. Each lock box will be maintained only pursuant to a
lock box agreement which is in all respects satisfactory to the Agent and
which provides, among other things, that (i) until the lock box bank shall
have received written notice to the contrary from the Agent, the lock box
bank will make all payments from the lock box to those accounts of such
Grantor designated by such Grantor, and, after any such notice, the lock
box bank will make all payments from the lock box to the Agent for credit
to the Collateral Account, (ii) the lock box bank (if other than the Agent
or a Lender) waives all set off rights, and (iii) such lock box agreement
may not be amended without the written consent of the Agent. The Agent will
not give the notice referred to in the preceding CLAUSE (I) unless it has
given, or is contemporaneously giving, notice pursuant to CLAUSE (C) of
this SECTION 4.1.2. No funds, other than proceeds of Collateral, will be
paid to the lock boxes. Such Grantor will not open any new lock box, or
terminate any existing lock box, except upon 10 days' prior written notice
to the Agent.
(c) Upon written notice by the Agent to such Grantor pursuant to
this CLAUSE (C) of this SECTION 4.1.2, all proceeds of Collateral received
by such Grantor shall be delivered in kind to the Agent for deposit to a
deposit account (the "COLLATERAL ACCOUNT") of such Grantor maintained with
the Agent, and such Grantor shall not commingle any such proceeds, and
shall hold separate and apart from all other property, all such proceeds in
express trust for the benefit of the Agent until delivery thereof is made
to the Agent. The Agent will not give the notice referred to in the
preceding sentence unless there shall have occurred and be continuing a
Default. No funds, other than proceeds of Collateral, will be deposited in
the Collateral Account.
(d) The Agent shall have the right to apply any amount in the
Collateral Account to the payment of any Obligations which are due and
payable or payable upon demand, or to the payment of any Obligations at any
time that an Event of Default shall exist. Subject to the rights of the
Agent, such Grantor shall have the right, with respect to and to the extent
of collected funds in the Collateral Account, as long as there shall be no
Default, to require the Agent to permit to be transferred upon the
direction of such
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Grantor any or all of such collected funds. The Agent may at any time
transfer to such Grantor's general demand deposit accounts any or all of
the collected funds in the Collateral Account; PROVIDED, HOWEVER, that any
such transfer shall not be deemed to be a waiver or modification of any of
the Agent's rights under CLAUSE (D) of this SECTION 4.1.2.
(e) Such Grantor will, at the Agent's request, enter into such
agreements and cause any securities intermediary to enter into such
agreements as may be necessary to provide the Agent control of all
investment property.
SECTION 4.1.3. AS TO COLLATERAL.
(a) Until such time as the Agent shall notify such Grantor of the
revocation of such power and authority such Grantor (i) may in the ordinary
course of its business, at its own expense, sell, lease or furnish under
the contracts of service any of the Inventory normally held by such Grantor
for such purpose, and use and consume, in the ordinary course of its
business, any raw materials, work in process or materials normally held by
such Grantor for such purpose, (ii) will, at its own expense, endeavor to
collect, as and when due, all amounts due with respect to any of the
Collateral, including the taking of such action with respect to such
collection as the Agent may reasonably request or, in the absence of such
request, as such Grantor may deem advisable, and (iii) may grant, in the
ordinary course of business, to any party obligated on any of the
Collateral, any rebate, refund or allowance to which such party may be
lawfully entitled, and may accept, in connection therewith, the return of
goods, the sale or lease of which shall have given rise to such Collateral.
The Agent, however, may, at any time, after the occurrence and during the
continuance of a Default, whether before or after any revocation of such
power and authority or the maturity of any of the Obligations, notify any
parties obligated on any of the Collateral to make payment to the Agent of
any amounts due or to become due thereunder and enforce collection of any
of the Collateral by suit or otherwise and surrender, release or exchange
all or any part thereof, or compromise or extend or renew for any period
(whether or not longer than the original period) any indebtedness
thereunder or evidenced thereby. Upon request of the Agent, such Grantor
will, at its own expense, notify any parties obligated on any of the
Collateral to make payment to the Agent of any amounts due or to become due
thereunder.
(b) The Agent is authorized to endorse, in the name of such
Grantor, any item, howsoever received by the Agent, representing any
payment on or other proceeds of any of the Collateral.
SECTION 4.1.4. AS TO INTELLECTUAL PROPERTY COLLATERAL.
(a) Such Grantor shall not, unless such Grantor shall either (i)
reasonably and in good faith determine (and notice of such determination
shall have been delivered to the Agent) that any of the Patent Collateral
is of negligible economic value to such Grantor, or (ii) have a valid
business purpose to do otherwise, do any act, or omit to do any act,
whereby any of the Patent Collateral may lapse or become abandoned or
dedicated to the public or unenforceable.
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(b) Such Grantor shall not, and such Grantor shall not permit any
of its licensees to, unless such Grantor shall either (i) reasonably and in
good faith determine (and notice of such determination shall have been
delivered to the Agent) that any of the Trademark Collateral is of
negligible economic value to such Grantor, or (ii) have a valid business
purpose to do otherwise,
(i) fail to continue to use any of the Trademark Collateral
in order to maintain all of the Trademark Collateral in full force
free from any claim of abandonment for non-use,
(ii) fail to maintain as in the past the quality of products
and services offered under all of the Trademark Collateral,
(iii) fail to employ all of the Trademark Collateral
registered with any Federal or state or foreign authority with an
appropriate notice of such registration,
(iv) adopt or use any other Trademark which is confusingly
similar or a colorable imitation of any of the Trademark Collateral,
(v) use any of the Trademark Collateral registered with any
Federal or state or foreign authority except for the uses for which
registration or application for registration of all of the Trademark
Collateral has been made, and
(vi) do or permit any act or knowingly omit to do any act
whereby any of the Trademark Collateral may lapse or become invalid or
unenforceable.
(c) Such Grantor shall not, unless such Grantor shall either
(i) reasonably and in good faith determine (and notice of
such determination shall have been delivered to the Agent) that any of
the Copyright Collateral or any of the Trade Secrets Collateral is of
negligible economic value to such Grantor, or
(ii) have a valid business purpose to do otherwise, do or
permit any act or knowingly omit to do any act whereby any of the
Copyright Collateral or any of the Trade Secrets Collateral may lapse
or become invalid or unenforceable or placed in the public domain
except upon expiration of the end of an unrenewable term of a
registration thereof.
(d) Such Grantor shall notify the Agent immediately if it knows, or
has reason to know, that any application or registration relating to any
material item of the Intellectual Property Collateral may become abandoned
or dedicated to the public or placed in the public domain or invalid or
unenforceable, or of any adverse determination or development (including
the institution of, or any such determination or development in, any
proceeding in the United States Patent and Trademark Office, the United
States Copyright Office or any foreign counterpart thereof or any court)
regarding such
12
Grantor's ownership of any of the Intellectual Property Collateral, its
right to register the same or to keep and maintain and enforce the same.
(e) In no event shall such Grantor or any of its agents, employees,
designees or licensees file an application for the registration of any
Intellectual Property Collateral with the United States Patent and
Trademark Office, the United States Copyright Office or any similar office
or agency in any other country or any political subdivision thereof, unless
it informs the Agent in writing at least 30 days prior to the intended
making of such filing, and upon request of the Agent, executes and delivers
any and all agreements, instruments, documents and papers as the Agent may
reasonably request to evidence the Agent's security interest in such
Intellectual Property Collateral and the goodwill and general intangibles
of such Grantor relating thereto or represented thereby.
(f) Such Grantor shall take all necessary steps, including in any
proceeding before the United States Patent and Trademark Office, the United
States Copyright Office or any similar office or agency in any other
country or any political subdivision thereof, to maintain and pursue any
application (and to obtain the relevant registration) filed with respect
to, and to maintain any registration of, the Intellectual Property
Collateral, including the filing of applications for renewal, affidavits of
use, affidavits of incontestability and opposition, interference and
cancellation proceedings and the payment of fees and taxes (except to the
extent that dedication, abandonment or invalidation is permitted under the
foregoing CLAUSES (A), (B) and (C)).
(g) Such Grantor shall, contemporaneously herewith, execute and
deliver to the Agent an Agreement (Trademark) in the form of EXHIBIT A
hereto, amending and restating, in its entirety, the Supplement, and shall
execute and deliver to the Agent any other document required to acknowledge
or register or perfect the Agent's interest in any part of the Intellectual
Property Collateral.
SECTION 4.1.5. INSURANCE. Such Grantor will maintain or cause to be
maintained with responsible insurance companies insurance with respect to the
Equipment and Inventory against such casualties and contingencies and of such
types and in such amounts as is customary in the case of similar businesses and
will, upon the request of the Agent, furnish a certificate of a reputable
insurance broker setting forth the nature and extent of all insurance maintained
by such Grantor in accordance with this Section. Without limiting the foregoing,
such Grantor further agrees as follows:
(a) Each policy for property insurance shall show the Agent as a
loss payee.
(b) Each policy for liability insurance shall show the Agent as an
additional insured.
(c) With respect to each life insurance policy, such Grantor shall
execute and deliver to the Agent a collateral assignment, notice of which
has been acknowledged in writing by the insurer.
(d) Each insurance policy shall provide that at least 30 days'
prior written notice of cancellation or of lapse shall be given to the
Agent by the insured.
13
(e) Such Grantor shall, if so requested by the Agent, deliver to
the Agent a copy of each insurance policy.
(f) All payments in respect of property insurance and life
insurance shall be deposited to the Collateral Account of such Grantor and
if there shall be no Collateral Account of such Grantor shall be paid to
such Grantor.
SECTION 4.1.6. TRANSFERS AND OTHER LIENS. Such Grantor shall not:
(a) sell, assign (by operation of law or otherwise) or otherwise
dispose of any of the Collateral, except Inventory in the ordinary course
of business or as permitted by the Credit Agreements; or
(b) create or suffer to exist any Lien or other charge or
encumbrance upon or with respect to any of the Collateral to secure
Indebtedness of any Person or entity, except for the security interest
created by this Security Agreement and except as permitted by the Credit
Agreements.
(c) Such Grantor will defend the right, title and interest of the
Agent in and to any of such Grantor's rights under the Related Contracts
and to the Inventory and Equipment and all other Collateral and in and to
the Proceeds and products thereof against the claims and demands of all
persons whomsoever.
SECTION 4.1.7. NOTICES. Such Grantor will, upon obtaining knowledge
thereof, advise the Agent promptly, in reasonable detail, (a) of any lien,
security interest, encumbrance or claims made or asserted against any of the
Collateral, (b) of any material change in the value of the Collateral, and (c)
of the occurrence of any other event which would have a Materially Adverse
Effect on the aggregate value of the Collateral or on the security interests
created hereunder.
SECTION 4.1.8. CONTINUOUS PERFECTION. Such Grantor will not change its
name, identity or corporate structure in any manner which might make any
financing or continuation statement filed hereunder seriously misleading within
the meaning of Section 9-506 of the UCC (or any other then applicable provision
of the UCC) unless such Grantor shall have given the Agent at least 90 days'
prior written notice thereof or shall have delivered to the Agent (i)
acknowledgment copies of UCC-3 financing statements duly executed and duly filed
in each jurisdiction in which UCC filings were required in order to perfect the
security interest granted by this Agreement in the Collateral and shall have
taken all action (or made arrangements to take such action substantially
simultaneously with such change if it is impossible to take such action in
advance) necessary or reasonably requested by the Agent to amend such financing
statement or continuation statement so that it is not seriously misleading, and
(ii), with respect to the Patent Collateral, Trademark Collateral and Copyright
Collateral, make all filings necessary in the United States Patent and Trademark
Office and the United States Copyright Office, as applicable necessary to
reflect such name change.
SECTION 4.1.9. FURTHER ASSURANCES, ETC. Such Grantor agrees that, from time
to time at its own expense, such Grantor will promptly execute and deliver all
further instruments and documents, and take all further action, that may be
necessary or desirable, or that the Agent may request, in order to perfect,
preserve and protect any security interest granted or purported to be
14
granted hereby or to enable the Agent to exercise and enforce its rights and
remedies hereunder with respect to any Collateral. Without limiting the
generality of the foregoing, such Grantor will
(a) ▇▇▇▇ conspicuously each document included in the Inventory,
each chattel paper included in the Receivables and each Related Contract
and, at the request of the Agent, each of its records pertaining to the
Collateral with a legend, in form and substance satisfactory to the Agent,
indicating that such document, chattel paper, Related Contract or
Collateral is subject to the security interest granted hereby;
(b) if any Receivable shall be evidenced by a promissory note or
other instrument, negotiable document or chattel paper, deliver and pledge
to the Agent hereunder such promissory note, instrument, negotiable
document or chattel paper duly endorsed and accompanied by duly executed
instruments of transfer or assignment, all in form and substance
satisfactory to the Agent;
(c) execute and file such financing or continuation statements, or
amendments thereto, and such other instruments or notices, as may be
necessary or desirable, or as the Agent may request, in order to perfect
and preserve the security interests and other rights granted or purported
to be granted to the Agent hereby; and
(d) furnish to the Agent, from time to time at the Agent's request,
statements and schedules further identifying and describing the Collateral
and such other reports in connection with the Collateral as the Agent may
reasonably request, all in reasonable detail.
With respect to the foregoing and the grant of the security interest hereunder,
such Grantor hereby authorizes the Agent to file one or more financing or
continuation statements, and amendments thereto, relative to all or any part of
the Collateral without the signature of such Grantor where permitted by law. A
carbon, photographic or other reproduction of this Security Agreement or any
financing statement covering the Collateral or any part thereof shall be
sufficient as a financing statement where permitted by law.
ARTICLE V
THE AGENT
SECTION 5.1. AGENT APPOINTED ATTORNEY-IN-FACT. Each Grantor hereby
irrevocably appoints the Agent as such Grantor's attorney-in-fact, with full
authority in the place and stead of such Grantor and in the name of such Grantor
or otherwise, from time to time in the Agent's discretion, to take any action
and to execute any instrument which the Agent may deem necessary or advisable to
accomplish the purposes of this Security Agreement, including, without
limitation:
(a) to ask, demand, collect, ▇▇▇ for, recover, compromise, receive
and give acquittance and receipts for moneys due and to become due under or
in respect of any of the Collateral;
15
(b) to receive, endorse, and collect any drafts or other
instruments, documents and chattel paper, in connection with CLAUSE (A
above;
(c) to file any claims or take any action or institute any
proceedings which the Agent may deem necessary or desirable for the
collection of any of the Collateral or otherwise to enforce the rights of
the Agent with respect to any of the Collateral; and
(d) to perform the affirmative obligations of such Grantor
hereunder (including all obligations of such Grantor pursuant to SECTION
4.1.7).
Each Grantor hereby acknowledges, consents and agrees that the power of attorney
granted pursuant to this Section is irrevocable and coupled with an interest.
SECTION 5.2. AGENT MAY PERFORM. If any of the Grantors fail to perform any
agreement contained herein, the Agent may itself perform, or cause performance
of, such agreement, and the expenses of the Agent incurred in connection
therewith shall be payable by the applicable Grantor pursuant to SECTION 6.2.
SECTION 5.3. AGENT HAS NO DUTY. In addition to, and not in limitation of,
SECTION 2.4, the powers conferred on the Agent hereunder are solely to protect
its interest (on behalf of the Lender Parties) in the Collateral and shall not
impose any duty on it to exercise any such powers. Except for reasonable care of
any Collateral in its possession and the accounting for moneys actually received
by it hereunder, the Agent shall have no duty as to any Collateral or as to the
taking of any necessary steps to preserve rights against prior parties or any
other rights pertaining to any Collateral.
SECTION 5.4. REASONABLE CARE. The Agent is required to exercise reasonable
care in the custody and preservation of any of the Collateral in its possession;
PROVIDED, HOWEVER, the Agent shall be deemed to have exercised reasonable care
in the custody and preservation of any of the Collateral, if it takes such
action for that purpose as any of the Grantors reasonably request in writing at
times other than upon the occurrence and during the continuance of any Event of
Default, but failure of the Agent to comply with any such request at any time
shall not in itself be deemed a failure to exercise reasonable care.
ARTICLE VI
REMEDIES
SECTION 6.1. CERTAIN REMEDIES. (a) If any Event of Default shall have
occurred and be continuing:
(i) The Agent may exercise in respect of the Collateral, in
addition to other rights and remedies provided for herein or otherwise
available to it, all the rights and remedies of a secured party on
default under the UCC (whether or not the UCC applies to the affected
Collateral) and also may
(A) require the Grantors to, and the Grantors hereby
agrees that it will, at its expense and upon request of the
Agent forthwith, assemble all
16
or part of the Collateral as directed by the Agent and make it
available to the Agent at a place to be designated by the Agent
which is reasonably convenient to both parties and
(B) without notice except as specified below, sell the
Collateral or any part thereof in one or more parcels at public
or private sale, at any of the Agent's offices or elsewhere,
for cash, on credit or for future delivery, and upon such other
terms as the Agent may deem commercially reasonable. The
Grantors agrees that, to the extent notice of sale shall be
required by law, at least ten days' prior notice to the
Grantors of the time and place of any public sale or the time
after which any private sale is to be made shall constitute
reasonable notification. The Agent shall not be obligated to
make any sale of Collateral regardless of notice of sale having
been given. The Agent may adjourn any public or private sale
from time to time by announcement at the time and place fixed
therefor, and such sale may, without further notice, be made at
the time and place to which it was so adjourned.
(ii) All cash proceeds received by the Agent in respect of
any sale of, collection from, or other realization upon all or any
part of the Collateral may, in the discretion of the Agent, be held by
the Agent as collateral for, and/or then or at any time thereafter
applied (after payment of any amounts payable to the Agent pursuant to
SECTION 6.2) in whole or in part by the Agent for the ratable benefit
of the Lender Parties against, all or any part of the Obligations in
such order as the Agent shall elect. Any surplus of such cash or cash
proceeds held by the Agent and remaining after final payment in full
of all the Obligations shall be paid over to the Grantors or to
whomsoever may be lawfully entitled to receive such surplus.
(b) In furtherance of, and not in limitation of, the foregoing, the
Agent, without demand of performance or other demand, advertisements or
notice of any kind (except the notice specified below of time and place of
public or private sale) to or upon the Grantors or any other Person (all
and each of which demands, advertisements and/or notices are hereby
expressly waived), may, whenever an Event of Default shall have occurred
and be continuing, in a commercially reasonable manner, forthwith collect,
receive, appropriate and realize upon the Collateral, or any part thereof,
and/or may forthwith sell, assign, give option or options to purchase,
contract to sell or otherwise dispose of and deliver said Collateral, or
any part thereof, in one or more parcels at public or private sale or
sales, at any exchange, broker's board or at any of the Agent's offices or
elsewhere upon such terms and conditions as it may deem advisable and at
such prices as it may deem best, for cash or on credit or for future
delivery without assumption of any credit risk, with the right to the Agent
upon any such sale or sales, public or private, to purchase the whole or
any part of said Collateral so sold, free of any right or equity of
redemption in the Grantors, which right or equity is hereby expressly
waived or released. The Agent shall apply the net proceeds of any such
collection, recovery, receipt, appropriation, realization or sale, after
deducting all reasonable costs and expenses of every kind incurred therein
or incidental to the care, safekeeping or otherwise of any and
17
all of the Collateral or in any way relating to the rights of the Agent
hereunder, including reasonable attorneys' fees and legal expenses, to the
payment in whole or in part of the Obligations in such order as the Agent
may elect, the Grantors remaining liable for any deficiency remaining
unpaid after such application and all fees and expenses incurred by the
Agent in collecting such deficiency, and only after so paying over such net
proceeds and after the payment by the Agent of any other amount required by
any provision of law, including, without limitation, Section 9-615 of the
UCC, need the Agent account for the surplus, if any, to the Grantors.
Unless the Collateral is perishable or threatens to decline speedily in
value or is of a type customarily sold on a recognized market, in which
event no notification is required, the Grantors agree that the Agent need
not give more than ten days' notice of the time and place of any public
sale or of the time after which a private sale or other intended
disposition is to take place and that such notice is reasonable
notification of such matters. No notification need be given to any Grantors
if such Grantor has signed after default a statement renouncing or
modifying any right to notification of sale or other intended disposition.
The Grantors further agree to waive and agree not to assert any rights or
privileges which they may acquire under Section 9-615 of the UCC.
For the purpose of enabling the Agent to exercise rights and remedies under
this Agreement and the Security Agreement Supplement, at such time as the Agent
shall be lawfully entitled to exercise such rights and remedies, and for no
other purpose, but as a supplement to and not in limitation of any and all other
rights and remedies available to the Agent and to the extent the Agent chooses
to avail itself of the following, the grants, to the extent not prohibited by
applicable law or existing licenses granted in the ordinary course of business
(unless and until appropriate consents have been obtained), to the Agent an
irrevocable, non-exclusive license (exercisable without payment of royalty or
other compensation to the Borrower), which license shall be exercisable by the
Agent upon and subject to the occurrence and during the continuance of an Event
of Default, to use, license or sublicense and to enhance, alter or otherwise
modify any Patent Collateral, Copyright Collateral and, subject the maintenance
of quality standards comparable to those heretofore maintained by each Grantor
in connection with the same or similar goods and services, Trademark Collateral,
now owned or hereafter acquired by such Grantor (including, in the case of a
license with respect to Copyright Collateral, reasonable access to all media in
which any of the licensed items may be recorded or stored and to all computer
hardware used for the compilation, storage or printout thereof); PROVIDED,
HOWEVER, that (i) to the extent such Patent Collateral consists of patent
licenses or other agreements that provide such Grantor with the right to use
patented technology, the non-exclusive license granted hereby to the Agent shall
be subject to the terms and conditions contained in such patent licenses or such
other agreements, including without limitation restrictions on the right to
sub-license, (ii) to the extent such Copyright Collateral consists of copyright
and/or mask work licenses or other agreements that provide such Grantor with the
right to use any of the types of items referred to in CLAUSE (I) of the
definition of "Copyright Collateral", the non-exclusive license granted hereby
to the Agent shall be subject to the terms and conditions contained in such
copyright and/or mask work licenses or such other agreements, including without
limitation restrictions on the right to sub-license, as the case may be, and
(iii) to the extent such Trademark Collateral consists of trademark licenses or
other agreements that provide such Grantor with the right to use any of the
types of items referred to in CLAUSE (I) of the definition of "Trademark
Collateral", the non-exclusive license granted hereby to the Agent shall be
subject to the terms and conditions
18
contained in such trademark license or other agreements, including without
limitation, restrictions on the right to sub-license, as the case may be.
SECTION 6.1.2. INDEMNITY AND EXPENSES.
(a) Each Grantor agrees to indemnify the Agent from and against any
and all claims, losses and liabilities arising out of or resulting from
this Security Agreement (including, without limitation, enforcement of this
Security Agreement), except claims, losses or liabilities resulting from
the Agent's gross negligence or wilful misconduct.
(b) Each Grantor will upon demand pay to the Agent the amount of
any and all reasonable expenses, including the reasonable fees and
disbursements of its counsel and of any experts and agents, which the Agent
may incur in connection with
(i) the administration of this Security Agreement,
(ii) the custody, preservation, use or operation of, or the
sale of, collection from, or other realization upon, any of the
Collateral,
(iii) the exercise or enforcement of any of the rights of the
Agent or the Lender Parties hereunder, and
(iv) the failure by such Grantor to perform or observe any of
the provisions hereof.
ARTICLE VII
MISCELLANEOUS PROVISIONS
SECTION 7.1. LOAN DOCUMENT. This Security Agreement is a Loan Document
executed pursuant to the Credit Agreements and shall (unless otherwise expressly
indicated herein) be construed, administered and applied in accordance with the
terms and provisions thereof (including as to the WAIVER OF JURY TRIAL with
respect to any litigation relating to or arising out of any matter herein).
SECTION 7.2. CONTINUATION OF SECURITY INTEREST. This Security Agreement is
an amendment and restatement of the Existing Subsidiary Security Agreement and
the security interest granted thereunder shall be deemed to be continued
hereunder.
SECTION 7.3. AMENDMENTS; ETC. No amendment to or waiver of any provision of
this Security Agreement nor consent to any departure by the Grantors herefrom,
shall in any event be effective unless the same shall be in writing and signed
by the Agent, and then such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given.
SECTION 7.4. ADDRESSES FOR NOTICES. All notices and other communications
provided for hereunder shall be in writing (including telegraphic communication)
and, if to the Grantors, mailed or telegraphed or delivered to each Grantor,
addressed to each Grantor at the address set
19
forth below each Grantor's signature hereto, if to the Agent, mailed or
delivered to it, addressed to it at the address of the Agent specified in the
Credit Agreements, or as to either party at such other address as shall be
designated by such party in a written notice to each other party complying as to
delivery with the terms of this Section. All such notices and other
communications shall, when mailed or telegraphed, respectively, be effective
when deposited in the mails or delivered to the telegraph company, respectively,
addressed as aforesaid.
SECTION 7.5. SECTION CAPTIONS. Section captions used in this Security
Agreement are for convenience of reference only, and shall not affect the
construction of this Security Agreement.
SECTION 7.6. SEVERABILITY. Wherever possible each provision of this
Security Agreement shall be interpreted in such manner as to be effective and
valid under applicable law, but if any provision of this Security Agreement
shall be prohibited by or invalid under such law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
Security Agreement.
SECTION 7.7. GOVERNING LAW, ENTIRE AGREEMENT, ETC. THIS SECURITY AGREEMENT
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE
STATE OF ILLINOIS, EXCEPT TO THE EXTENT THAT THE VALIDITY OR PERFECTION OF THE
SECURITY INTEREST HEREUNDER, OR REMEDIES HEREUNDER, IN RESPECT OF ANY PARTICULAR
COLLATERAL ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF
ILLINOIS. THIS SECURITY AGREEMENT AND THE OTHER LOAN DOCUMENTS CONSTITUTE THE
ENTIRE UNDERSTANDING AMONG THE PARTIES HERETO WITH RESPECT TO THE SUBJECT MATTER
HEREOF AND SUPERSEDE ANY PRIOR AGREEMENTS, WRITTEN OR ORAL, WITH RESPECT
THERETO.
[SIGNATURES TO FOLLOW]
20
IN WITNESS WHEREOF, the Grantors have caused this Security Agreement to be
duly executed and delivered by its officer thereunto duly authorized as of the
date first above written.
AMERICAN EDUCATIONAL PRODUCTS LLC
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------
Title: Vice President
Address: ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
General Manager
Telecopier No.: ▇▇▇-▇▇▇-▇▇▇▇
Copy to: The Aristotle Corporation
▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇
Chief Financial Officer
Telecopier No.: ▇▇▇-▇▇▇-▇▇▇▇
Copy to: Nasco Division
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Chief Financial Officer
Telecopier No.: ▇▇▇-▇▇▇-▇▇▇▇
S-1 AMENDED AND RESTATED SUBSIDIARY
SECURITY AGREEMENT
▇▇▇▇▇ RESOURCES LLC
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------
Title: Vice President
Address: ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
General Manager
Telecopier No.: ▇▇▇-▇▇▇-▇▇▇▇
Copy to: The Aristotle Corporation
▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇
Chief Financial Officer
Telecopier No.: ▇▇▇-▇▇▇-▇▇▇▇
Copy to: Nasco Division
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Chief Financial Officer
Telecopier No.: ▇▇▇-▇▇▇-▇▇▇▇
S-2 AMENDED AND RESTATED SUBSIDIARY
SECURITY AGREEMENT
▇▇▇▇▇▇▇ SCIENTIFIC LLC
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------
Title: Vice President
Address: ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
General Manager
Telecopier No.: ▇▇▇-▇▇▇-▇▇▇▇
Copy to: The Aristotle Corporation
▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇
Chief Financial Officer
Telecopier No.: ▇▇▇-▇▇▇-▇▇▇▇
Copy to: Nasco Division
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Chief Financial Officer
Telecopier No.: ▇▇▇-▇▇▇-▇▇▇▇
S-3 AMENDED AND RESTATED SUBSIDIARY
SECURITY AGREEMENT
ACCEPTED:
BANK OF AMERICA, N.A., as Agent
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
------------------
Title: Vice President
Address: ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopier No.: ▇▇▇-▇▇▇-▇▇▇▇
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S-4 AMENDED AND RESTATED SUBSIDIARY
SECURITY AGREEMENT
SCHEDULES TO AMENDED AND RESTATED SUBSIDIARY SECURITY AGREEMENT
Schedule I - Location of Collateral
Schedule II - Patenets
Schedule III - Trademarks
Schedule IV - Copyrights
Schedule V - Trade Secrets
EXHIBIT A
to Security Agreement
AMENDED AND RESTATED AGREEMENT (TRADEMARK)
THIS AMENDED AND RESTATED AGREEMENT (TRADEMARK), dated as of June 27, 2002
(as modified from time to time, this "AGREEMENT"), made by AMERICAN EDUCATIONAL
PRODUCTS LLC, a Colorado limited liability company (the "COMPANY"), EACH
SUBSIDIARY OF THE COMPANY LISTED ON THE SIGNATURE PAGES HEREOF, EACH OTHER
PERSON OR ENTITY WHICH FROM TIME TO TIME BECOMES A PARTY HERETO (collectively,
including the Company, the "GRANTORS" and individually each a "GRANTOR"), in
favor of BANK OF AMERICA, N.A., as administrative agent (together with any
successor(s) thereto in such capacity, the "AGENT") for each of the financial
institutions (individually a "LENDER" and collectively the "LENDERS") which are
or may from time to time become, parties to the Credit Agreements referred to
below.
W I T N E S S E T H
WHEREAS, the parties or their predecessors have entered into that certain
First Amendment to Amended and Restated Credit Agreement (Five Year) and
Consent, dated as of June 17, 2002 which amends the Amended and Restated Credit
Agreement (Five Year), dated as of May 29, 2001 (as amended, supplemented and
otherwise modified, the "CREDIT AGREEMENT (FIVE YEAR)"), among Nasco
International, Inc., a Wisconsin corporation (the "PARENT"), the lenders parties
thereto and the Agent; and
WHEREAS, the parties or their predecessors have entered into that certain
Second Amendment to Amended and Restated Credit Agreement (364 Days) and
Consent, dated as of June 17, 2002 which amends the Amended and Restated Credit
Agreement (364 Days), dated as of May 29, 2001 (as amended, supplemented and
otherwise modified, the "CREDIT AGREEMENT (364 DAYS)" and together with the
Credit Agreement (Five Year), the "CREDIT AGREEMENTS"), among the Parent, the
lenders party thereto and the Agent; and
WHEREAS, the parties or their predecessors have entered into that certain
Agreement (Trademark), dated as of August 20, 2001 (the "EXISTING AGREEMENT
(TRADEMARK)"), and wish to amend and restate such Existing Agreement (Trademark)
as set forth in this Agreement.
WHEREAS, it is a condition precedent to any extension of credit under the
Credit Agreements, that the Grantors enter into the Security Agreement to grant
to the Agent a continuing security interest in all of the "Collateral"
identified therein, and, in connection with and to supplement the Security
Agreement, enter into this Agreement, to, among other things, confirm and ratify
its grant to the Agent of a continuing security interest in the Trademark
Collateral;
NOW, THEREFORE, for good and valuable consideration the receipt of which is
hereby acknowledged, in order to induce the Lenders to make Loans (including the
initial Loans) to the Parent from time to time pursuant to the Credit Agreements
and in order to amend and restate the
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Existing Agreement (Trademark), the Grantors hereby agrees with the Agent, for
its benefit and the ratable benefit of each Lender Party, as follows:
SECTION 1. DEFINITIONS. Unless otherwise defined herein or the context
otherwise requires, terms used in this Agreement, including its preamble and
recitals, have the meanings provided in the Security Agreement.
SECTION 2. _______CONFIRMATION AND GRANT OF SECURITY INTEREST. For good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, each Grantor hereby pledges and assigns to the Agent, for its
benefit and the ratable benefit of the Lender Parties, and granted to the Agent,
for its benefit and the ratable benefit of the Lender Parties, a continuing
security interest in and to, all of the Trademark Collateral, as defined
therein. Each Grantor hereby ratifies and restates such pledge, assignment and
grant, and with greater specificity hereby assigns and pledges to the Agent for
its benefit and the ratable benefit of each of the Lender Parties, and does
hereby grant, mortgage, pledge and hypothecate to the Agent for its benefit and
the ratable benefit of each of the Lender Parties, a continuing security
interest in and to all of the following, whether now or hereafter existing or
acquired (the "TRADEMARK COLLATERAL"):
(a) all trademarks, trade names, corporate names, company names,
business names, fictitious business names, trade styles, service marks,
certification marks, collective marks, logos, other source of business
identifiers, prints and labels on which any of the foregoing have appeared
or appear, designs and general intangibles of a like nature (all of the
foregoing items in this CLAUSE (A) being collectively called a
"TRADEMARK"), now existing anywhere in the world or hereafter adopted or
acquired, whether currently in use or not, all registrations and recordings
thereof and all applications in connection therewith, whether pending or in
preparation for filing, including registrations, recordings and
applications in the United States Patent and Trademark Office or in any
office or agency of the United States of America or any State thereof or
any foreign country, including those referred to in ITEM A of ATTACHMENT 1
hereto;
(b) all Trademark licenses, including each Trademark license
referred to in ITEM B of ATTACHMENT 1 hereto;
(c) all reissues, extensions or renewals of any of the items
described in CLAUSES (A) and (B);
(d) all of the goodwill of the business connected with the use of,
and symbolized by the items described in, CLAUSES (A) and (B); and
(e) all proceeds of, and rights associated with, the foregoing,
including any claim by such Grantor against third parties for past,
present, or future infringement or dilution of any Trademark, Trademark
registration or Trademark license, including any Trademark, Trademark
registration or Trademark license referred to in ITEM A and ITEM B of
ATTACHMENT 1 hereto, or for any injury to the goodwill associated with the
use of any Trademark or for breach or enforcement of any Trademark license.
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SECTION 3. SECURITY AGREEMENT. This Agreement has been executed and
delivered by the Grantors for the purpose of, among other things, ratifying and
confirming the grant of the Trademark Collateral to the Agent for the benefit of
the Lender Parties and registering (and confirming the recordation pursuant to
the Security Agreement of) the security interest of the Agent in the Trademark
Collateral with the United States Patent and Trademark Office and corresponding
offices in other countries of the world. The security interest confirmed and
granted hereby has been confirmed and granted as a supplement to, and not in
limitation of, the security interest confirmed and granted to the Agent for its
benefit and the benefit of each Lender Party under the Security Agreement. The
Security Agreement (and all rights and remedies of the Agent and each Lender
Party thereunder) shall remain in full force and effect in accordance with its
terms.
SECTION 4. RELEASE OF SECURITY INTEREST. Upon payment in full of all
Obligations, the Agent shall, at the Grantors' expense, execute and deliver to
each Grantor all instruments and other documents as may be necessary or proper
to release the lien on and security interest in the Trademark Collateral which
has been granted hereunder.
SECTION 5. ACKNOWLEDGMENT. Each Grantor does hereby further acknowledge and
affirm that the rights and remedies of the Agent with respect to the security
interest in the Trademark Collateral granted and confirmed hereby are more fully
set forth in the Security Agreement, the terms and provisions of which
(including the remedies provided for therein) are incorporated by reference
herein as if fully set forth herein.
SECTION 6. LOAN DOCUMENT, ETC. This Agreement is a Loan Document executed
pursuant to the Credit Agreement and shall (unless otherwise expressly indicated
herein) be construed, administered and applied in accordance with the terms and
provisions of the Credit Agreement.
SECTION 7. COUNTERPARTS. This Agreement may be executed by the parties
hereto in several counterparts, each of which shall be deemed to be an original
and all of which shall constitute together but one and the same agreement.
[SIGNATURES TO FOLLOW]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their respective officers thereunto duly
authorized as of the day and year first above written.
AMERICAN EDUCATIONAL PRODUCTS LLC
By:
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Title:
Address: ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
General Manager
Telecopier No.: ▇▇▇-▇▇▇-▇▇▇▇
Copy to: The Aristotle Corporation
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▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇
Chief Financial Officer
Telecopier No.: ▇▇▇-▇▇▇-▇▇▇▇
Copy to: Nasco Division
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Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Chief Financial Officer
Telecopier No.: ▇▇▇-▇▇▇-▇▇▇▇
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▇▇▇▇▇ RESOURCES LLC
By:
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Title:
Address: ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
General Manager
Telecopier No.: ▇▇▇-▇▇▇-▇▇▇▇
Copy to: The Aristotle Corporation
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▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇
Chief Financial Officer
Telecopier No.: ▇▇▇-▇▇▇-▇▇▇▇
Copy to: Nasco Division
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▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Chief Financial Officer
Telecopier No.: ▇▇▇-▇▇▇-▇▇▇▇
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▇▇▇▇▇▇▇ SCIENTIFIC LLC
By:
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Title:
Address: ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
General Manager
Telecopier No.: ▇▇▇-▇▇▇-▇▇▇▇
Copy to: The Aristotle Corporation
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▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇
Chief Financial Officer
Telecopier No.: ▇▇▇-▇▇▇-▇▇▇▇
Copy to: Nasco Division
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▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Chief Financial Officer
Telecopier No.: ▇▇▇-▇▇▇-▇▇▇▇
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ACCEPTED:
BANK OF AMERICA, N.A., as Agent
By:
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Title:
Address: ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopier No.: ▇▇▇-▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
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EXHIBIT A to
Agreement (Trademark)
FORM OF JOINDER
---------------
Reference is made to the Agreement (Trademark), dated as of _________ __,
2002 (as amended and restated, modified supplemented or renewed from time to
time the "AGREEMENT") made by __________, a corporation in favor of Bank of
America, N.A., as agent.
All capitalized terms used in this Joinder which are defined in the
Agreement shall have the meanings set forth therein unless otherwise defined or
the context otherwise requires.
Each of the undersigned hereby agrees that effective the date hereof, it
shall be a Grantor under the Agreement. Each of the undersigned agrees to be
bound by the terms and conditions of the Agreement as a Grantor.
[In connection herewith, each of the undersigned shall deliver all of the
information required to update Attachment 1 to the Agreement.]
IN WITNESS WHEREOF, the undersigned have executed this Joinder this ___ day
of __________, ___ 2002.
[NAME OF SUBSIDIARY]
By: _________________________________
Title:___________________________
ACKNOWLEDGED AND
CONSENTED TO:
BANK OF AMERICA, N.A.
By: ____________________________________
Title:______________________________
BANK ONE, WISCONSIN
By: ____________________________________
Title:______________________________
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