EXHIBIT 10.27
AMENDED AND RESTATED SECURITY AGREEMENT
THIS AMENDED AND RESTATED SECURITY AGREEMENT, dated as of June 27, 2002
(as modified from time to time, this "SECURITY AGREEMENT"), made by The
Aristotle Corporation., a Delaware corporation (the "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 Parent and the Agent have entered into that certain Security
Agreement, dated as of March 31, 2000 (the "EXISTING SECURITY AGREEMENT"), and
the parties hereto wish to amend and restate such Existing Security Agreement as
set forth in this Security Agreement.
WHEREAS, it is a condition precedent to the extensions of credit unler the
Credit Agreements that the Grantor enter into this Security Agreement to, among
other things, grant to the Agent a continuing security interest in the
Collateral, and, in connection with and to supplement this Security Agreement,
enter into the Agreement (Patent), Agreement (Trademark) and Agreement
(Copyright) (the "SUPPLEMENTS");
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 Grantor from time to time pursuant to the Credit
Agreements and in order to amend and restate the Existing Security Agreement,
the Grantor hereby agrees with the Agent, for its benefit and the ratable
benefit of each Lender Party, as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. 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:
(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 the
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 all copyrights and all semi-conductor chip
product mask works of the Grantor, whether statutory or common law, registered
or unregistered, now or hereafter in force throughout the world including,
without limitation, all of the 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 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 sue 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.
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"CREDIT AGREEMENTS" is defined in the RECITALS.
"GRANTOR" is defined in the PREAMBLE.
"INTELLECTUAL PROPERTY COLLATERAL" means, collectively, 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:
(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 sue third parties for past, present or future infringements of
any patent or patent application, including any patent 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 any and all Accounts, Chattel Paper, Commercial Tort
Claims, Documents, General Intangibles, Instruments and Letter of Credit Rights
of the Grantor.
"RELATED CONTRACT" means all rights of the 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.
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"SUPPLEMENTS" is defined in the RECITALS.
"TRADEMARK COLLATERAL" means:
(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 the 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.
"TRADE SECRETS COLLATERAL" means 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
the 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 sue 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.
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ARTICLE II
SECURITY INTEREST
SECTION 2.1. CONFIRMATION AND GRANT OF SECURITY INTEREST. The 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 the
Grantor's (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;
(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 the 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).
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The Collateral shall not include any of the Non-Pledged Assets. The Non-Pledged
Assets shall be held in the accounts indicated on SCHEDULE VI or such other
accounts as the Grantor may notify to the Agent in writing from time to time.
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. The 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 Grantor 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 the 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
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 shall terminate and all rights to the Collateral shall
revert to the Grantor. Upon any such termination, the Agent will, at the
Grantor's sole expense, execute and deliver to the Grantor such documents as the
Grantor shall reasonably request to evidence such termination.
SECTION 2.4. GRANTOR REMAINS LIABLE. Anything herein to the contrary
notwithstanding,
(a) the 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 the 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
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perform any of the obligations or duties of the 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. The 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 the 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 the Grantor and the offices) where the 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 the
Grantor on the signature page hereof. The Grantor has no trade names other than
the name listed in the RECITALS. The Grantor has not been known by any legal
name different from the one set forth on the signature page hereto. None of the
Receivables is evidenced by a promissory note or other instrument. The 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. The 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 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. The Grantor has exclusive
possession and control of the Equipment and Inventory.
SECTION 3.1.4. NEGOTIABLE DOCUMENTS, INSTRUMENTS AND CHATTEL PAPER. The
Grantor has previously delivered to the Agent possession of all originals of all
negotiable documents, instruments and chattel paper currently owned or held by
the 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 the 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;
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(c) the 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) the 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) the 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.
The 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 the Grantor's
business. The Schedules hereto contain true and complete listings and
descriptions of all of the 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 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 the Grantor of the security interest granted
hereby or for the execution, delivery and performance of this Security
Agreement by the 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. The 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 the Grantor or the value of the Collateral or the
worth of the Collateral as collateral security.
ARTICLE IV
COVENANTS
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SECTION 4.1. CERTAIN COVENANTS. The Grantor covenants and agrees that, so
long as any portion of the Obligations shall remain unpaid, the 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. The 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 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) The 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, the 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 the
Grantor designated by the 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,
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other than proceeds of Collateral, will be paid to the lock boxes. The
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 the Grantor pursuant to
this CLAUSE (C) of this SECTION 4.1.2, all proceeds of Collateral received
by the Grantor shall be delivered in kind to the Agent for deposit to a
deposit account (the "COLLATERAL ACCOUNT") of the Grantor maintained with
the Agent, and the 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, the 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 the Grantor any or all of such collected funds. The Agent
may at any time transfer to the 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) The 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 the Grantor of the
revocation of such power and authority the 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 the 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
the 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 the 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, the Grantor will, at its own
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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 the
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) The Grantor shall not, unless the 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 the 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.
(b) The Grantor shall not, and the Grantor shall not permit any of
its licensees to, unless the 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 the 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) The Grantor shall not, unless the 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 the 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
11
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) The 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 the 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 the 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 the Grantor relating thereto or represented thereby.
(f) The 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) The Grantor shall, contemporaneously herewith, execute and
deliver to the Agent an Agreement (Patent), an Agreement (Trademark) and
an Agreement (Copyright) in the forms of EXHIBIT A, EXHIBIT B and EXHIBIT
C hereto, respectively, amending and restating, in their entirety,
respectively, each of the Supplements, 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. The 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 the Grantor in accordance with this Section. Without limiting the foregoing,
the Grantor further agrees as follows:
(a) Each policy for property insurance shall show the Agent as a
loss payee.
12
(b) Each policy for liability insurance shall show the Agent as an
additional insured.
(c) With respect to each life insurance policy, the 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.
(e) The 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 and if there shall
be no Collateral Account shall be paid to the Grantor.
SECTION 4.1.6. TRANSFERS AND OTHER LIENS. The 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) The Grantor will defend the right, title and interest of the
Agent in and to any of the 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. The 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. The 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 the Grantor shall have given the Agent at least 90 days'
prior written notice thereof or shall have delivered to the Agent (i)
acknowledgement 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
13
United States Copyright Office, as applicable necessary to reflect such name
change.
SECTION 4.1.9. FURTHER ASSURANCES, ETC. The Grantor agrees that, from time
to time at its own expense, the 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 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, the Grantor will
(a) mark 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,
the 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 the 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.
The Grantor agrees to take all necessary action to permit the Agent to
identify the Non-Pledged Assets and to avoid commingling Non-Pledged Assets with
Collateral.
ARTICLE V
THE AGENT
SECTION 5.1. AGENT APPOINTED ATTORNEY-IN-FACT. The Grantor hereby
irrevocably appoints the Agent the Grantor's attorney-in-fact, with full
authority in the place and stead of the Grantor and in the name of the 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:
14
(a) to ask, demand, collect, sue 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;
(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 the Grantor
hereunder (including all obligations of the Grantor pursuant to SECTION
4.1.7).
The 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 the Grantor fails 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 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 the Grantor reasonably requests 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 Grantor to, and the Grantor hereby
agrees that it will, at its expense and upon request of the Agent
forthwith, assemble all or part of the
15
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 Grantor agrees that, to
the extent notice of sale shall be required by law, at least ten
days' prior notice to the Grantor 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 Grantor 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 Grantor 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 Grantor, 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 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 Grantor 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
Grantor. Unless the Collateral is
16
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
Grantor agrees 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 the Grantor if it
has signed after default a statement renouncing or modifying any right to
notification of sale or other intended disposition. The Grantor further agrees
to waive and agrees not to assert any rights or privileges which it 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 any Security Agreement Supplements, 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 the Grantor in connection with the same or similar goods and
services, Trademark Collateral, now owned or hereafter acquired by the 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
the 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 the 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 the
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
contained in such trademark license or other agreements, including without
limitation, restrictions on the right to sub-license, as the case may be.
SECTION 6.2. INDEMNITY AND EXPENSES.
(a) The 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.
17
(b) The 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 the 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 Security Agreement and the security
interest granted thereunder shall be deemed 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 Grantor 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 Grantor, mailed or telegraphed or delivered to it, addressed to
it at the address set forth below its 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,
18
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]
19
IN WITNESS WHEREOF, the Grantor has caused this Security Agreement to be
duly executed and delivered by its officer thereunto duly authorized as of the
date first above written.
THE ARISTOTLE CORPORATION
By:/s/ Steven B. Lapin
--------------------
Title: President and Chief Operating Officer
Address: 96 Cummings Point Road
Stamford, Connecticut 06902
Attention: Steven B. Lapin
President
Telecopier No.: 203-348-3103
Copy to:
The Aristotle Corporation
96 Cummings Point Road
Stamford, Connecticut 06902
Telecopier No.: 203-348-3103
Attention: Paul McDonald
Chief Financial Officer
Additional Copy to:
Nasco Division
901 Janesville Avenue
Fort Atkinson, Wisconsin
53538-0901
Attention: Dean T. Johnson
Telecopier No.: 414-563-0234
S-1
ACCEPTED:
BANK OF AMERICA, N.A., as Agent
By: /S/ DAVID JOHANSON
Title: Vice President
Address: 231 South LaSalle Street
Chicago, Illinois 60697
Attention: David Johanson
Telecopier No.: 877-206-8410
S-2
AMENDED AND RESTATED SECURITY AGREEMENT
Schedule I - Location of Collateral
Schedule II - Patents
Schedule III - Trademarks
Schedule IV - Copyrights
Schedule V - Trade Secrets
Schedule VI - Accounts
EXHIBIT A
to
Security Agreement
AMENDED AND RESTATED AGREEMENT (PATENT)
THIS AMENDED AND RESTATED AGREEMENT (PATENT), dated as of June 27, 2002
(as modified from time to time, this "AGREEMENT"), made by The Aristotle
Corporation, a Delaware corporation (the "COMPANY"), 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 Parent and the Agent have entered into that certain Agreement
(Patent), dated as of March 31, 2000 (the "EXISTING AGREEMENT (PATENT)"), and
the parties hereto wish to amend and restate such Existing Agreement (Patent) 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 Patent
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
A-1
Existing Agreement (Patent), 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, the 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 Patent Collateral, as defined herein.
The 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 "PATENT
COLLATERAL"):
(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 ATTACHMENT 1 hereto;
(b) all patent licenses, including each patent license
referred to in ITEM B of ATTACHMENT 1 hereto;
(c) all reissues, divisions, continuations,
continuations-in-part, extensions, renewals and reexaminations of any of
the items described in the foregoing 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 sue third parties for past, present or future
infringements of any patent or patent application, including any patent or
patent application referred to in ITEM A of ATTACHMENT 1 hereto, and for
breach or enforcement of any patent license, including any patent license
referred to in ITEM B of ATTACHMENT 1 hereto, and all rights corresponding
thereto throughout the world.
SECTION 3. SECURITY AGREEMENT. This Agreement has been executed and
delivered by the Grantor for the purpose of, among other things, ratifying and
confirming the grant of the Patent 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 Patent
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 granted to the Agent for its benefit and
the benefit of each Lender Party under
A-2
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 Grantor's expense, execute and deliver to
the Grantor all instruments and other documents as may be necessary or proper to
release the lien on and security interest in the Patent Collateral which has
been granted hereunder.
SECTION 5. ACKNOWLEDGMENT. The Grantor does hereby further acknowledge and
affirm that the rights and remedies of the Agent with respect to the security
interest in the Patent 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 Agreements and shall (unless otherwise expressly
indicated herein) be construed, administered and applied in accordance with the
terms and provisions of the Credit Agreements.
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.
A-3
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.
The Aristotle Corporation
By:
--------------------
Title:
Address: 96 Cummings Point Road
Stamford, Connecticut 06902
Attention: Steven B. Lapin
President
Telecopier No.: 203-348-3103
Copy to:
The Aristotle Corporation
96 Cummings Point Road
Stamford, Connecticut 06902
Telecopier No.: 203-348-3103
Attention: Paul McDonald
Chief Financial Officer
Additional Copy to:
Nasco Division
901 Janesville Avenue
Fort Atkinson, Wisconsin
53538-0901
Attention: Dean T. Johnson
Telecopier No.: 414-563-0234
A-4
Accepted:
BANK OF AMERICA, N.A., as Agent
By:
------------------
Title:
-
Address: 231 South LaSalle Street
Chicago, Illinois 60697
Attention: David Johanson
Telecopier No.: 877-206-8410
A-5
EXHIBIT B
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 The Aristotle
Corporation, a Delaware corporation (the "COMPANY"), 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 Parent and the Agent have entered into that certain Agreement
(Trademark), dated as of March 31, 2000 (the "EXISTING AGREEMENT (TRADEMARK)"),
and the parties hereto 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
B-1
Parent from time to time pursuant to the Credit Agreements and in order to amend
and restate the 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, the 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. The 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 the 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
B-2
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.
SECTION 3. SECURITY AGREEMENT. This Agreement has been executed and
delivered by the Grantor 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 Grantor's expense, execute and deliver to
the 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. The Grantor does hereby further acknowledge and
affirm that the rights and remedies of the Agent with respect to the security
interes| 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 Agreements.
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.
B-3
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.
The Aristotle Corporation
By:
--------------------
Title:
Address: 96 Cummings Point Road
Stamford, Connecticut 06902
Attention: Steven B. Lapin
President
Telecopier No.: 203-348-3103
Copy to:
The Aristotle Corporation
96 Cummings Point Road
Stamford, Connecticut 06902
Telecopier No.: 203-348-3103
Attention: Paul McDonald
Chief Financial Officer
Additional Copy to:
Nasco Division
901 Janesville Avenue
Fort Atkinson, Wisconsin
53538-0901
Attention: Dean T. Johnson
Telecopier No.: 414-563-0234
B-4
Accepted:
BANK OF AMERICA, N.A., as Agent
By:
------------------
Title:
---------------
Address: 231 South LaSalle Street
Chicago, Illinois 60697
Attention: David Johanson
Telecopier No.: 877-206-8410
B-5
EXHIBIT C
to
Security Agreement
AMENDED AND RESTATED AGREEMENT (COPYRIGHT)
THIS AMENDED AND RESTATED AGREEMENT (COPYRIGHT), dated as of June 27, 2002
(as modified from time to time, this "AGREEMENT"), made by The Aristotle
Corporation, a Delaware corporation (the "COMPANY"), 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 Parent and the Agent have entered into that certain Agreement
(Copyright), dated as of March 31, 2000 (the "EXISTING AGREEMENT (COPYRIGHT)"),
and the parties hereto wish to amend and restate such Existing Agreement
(Copyright) 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 Copyright
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
C-1
Parent from time to time pursuant to the Credit Agreements and in order to amend
and restate the Existing Agreement (Copyright), 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. GRANT OF SECURITY INTEREST. For good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
Grantor hereby confirms that pursuant to the Existing Agreement (Copyright), the
Grantor has pledged and assigned 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 Copyright Collateral, as defined therein. The 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 "COPYRIGHT COLLATERAL"): all
copyrights and all semi-conductor chip product mask works of the Grantor,
whether statutory or common law, registered or unregistered, now or hereafter in
force throughout the world including, without limitation, all of the 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
including, without limitation, the copyrights and mask works referred to in ITEM
A of ATTACHMENT 1 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 ATTACHMENT 1 attached hereto, the right to sue 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.
SECTION 3. SECURITY AGREEMENT. This Agreement has been executed and
delivered by the Grantor for the purpose of, among other things, ratifying and
confirming the grant of the Copyright 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 Copyright
Collateral with the United States Copyright 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 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 Grantor's expense, execute and deliver to
the Grantor all instruments and other
C-2
documents as may be necessary or proper to release the lien on and security
interest in the Copyright Collateral which has been granted hereunder.
SECTION 5. ACKNOWLEDGMENT. The Grantor does hereby further acknowledge and
affirm that the rights and remedies of the Agent with respect to the security
interest in the Copyright 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 Agreements and shall (unless otherwise expressly
indicated herein) be construed, administered and applied in accordance with the
terms and provisions of the Credit Agreements.
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.
C-3
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.
THE ARISTOTLE CORPORATION
By:
-------------------
Title:
Address: 96 Cummings Point Road
Stamford, Connecticut 06902
Attention: Steven B. Lapin
President
Telecopier No.: 203-348-3103
Copy to:
The Aristotle Corporation
96 Cummings Point Road
Stamford, Connecticut 06902
Telecopier No.: 203-348-3103
Attention: Paul McDonald
Chief Financial Officer
Additional Copy to:
Nasco Division
901 Janesville Avenue
Fort Atkinson, Wisconsin
53538-0901
Attention: Dean T. Johnson
Telecopier No.: 414-563-0234
C-4
Accepted:
BANK OF AMERICA, N.A., as Agent
By:
------------------
Title:
Address: 231 South LaSalle Street
Chicago, Illinois 60697
Attention: David Johanson
Telecopier No.: 877-206-8410
C-5