EXHIBIT
10.9
June 4, 2004
The Aristotle
Corporation
96 Cummings Point
Road
Stamford, Connecticut
06902
Re:
Certain Post-Closing Matters: Spectrum Note and Collateral;
October 15, 2003 Post-Closing Items Letter; Haan Crafts Real
Estate
Ladies and Gentlemen:
Reference is made to the Credit Agreement (the "Credit
Agreement") dated as of October 15, 2003 among The Aristotle
Corporation (the "Borrower"), Bank One, NA ("Bank One"), as a
lender, as LC Issuer and as agent (in such capacity, the "Agent"),
and Johnson Bank (together with Bank One, the "Lenders").
Capitalized terms used, but not defined, in this letter agreement,
have the meanings given such terms in the Credit Agreement.
Pursuant to a post-closing items letter agreement dated as of
October 15, 2003 (the "Post-Closing Letter Agreement"), the
Lenders agreed to waive satisfaction of certain conditions to the
Lenders' willingness to make Credit Extensions under the Credit
Agreement and the Borrower agreed to deliver the documents and take
the actions set forth in the Post-Closing Letter Agreement, on or
before the deadlines set forth in the Post-Closing Letter
Agreement. The Borrower has been unable to make all of such
deliveries and/or take all of such actions by the dates set forth
in the Post-Closing Letter Agreement and has requested that the
obligations set forth on the Post-Closing Letter Agreement be
modified as set forth herein.
In addition, the Credit Agreement and the Post-Closing Letter
Agreement contemplated that the existing unsecured intercompany
note dated April 3, 2001 from Spectrum (f/k/a 2001328 Ontario
Limited) to the Borrower (f/k/a Nasco International, Inc.) in the
original principal amount of 3,900,800 Canadian Dollars, payable on
demand (the "Existing Spectrum Note"), would, shortly after closing
of the Credit Agreement, be redocumented in the form of a restated
promissory note (identified in the Credit Agreement as the
"Spectrum Note"), which note would be secured by the assets of
Spectrum pursuant to a security agreement (identified in the Credit
Agreement as the "Spectrum Security Agreement"), that the Spectrum
Note and Spectrum Security Agreement would be pledged as collateral
to the Agent for the benefit of itself and the Lenders, and that,
on the basis of such documents and actions, that certain assets of
Spectrum would be included in the Borrowing Base. It has been
agreed that the Existing Spectrum Note will not be redocumented and
secured and that, accordingly, the assets of Spectrum will not be
included in the Borrowing Base. The Borrower, the Agent and the
Lenders have agreed to correspondingly modify the Credit Agreement
as set forth herein.
Further, the Borrower has informed the Agent that the Borrower
has created a subsidiary (an Indiana limited liability company
called Haan Crafts Real Estate Holdings LLC, referred to herein as
"Haan Crafts Real Estate Holdings"), which subsidiary has purchased
the real estate at 506 E. Second Street, Otterbein, Indiana 47970,
on which the Haan Crafts facility is located (the "Haan Crafts
Property"). Haan Crafts has leased the facility from Haan Crafts
Real Estate Holdings. The Borrower has requested that Haan Crafts
Real Estate Holdings guaranty the obligations of the Borrower to
the Agent and the Lenders, that Haan Crafts Real Estate Holdings
grant a security interest in its assets and mortgage the Haan
Crafts Property as collateral for such guaranty, and that the Haan
Crafts Property be included in the Borrowing Base. The Agent and
the Lenders are agreeable to such occurrences on the terms and
subject to the conditions set forth herein. The Borrower represents
and warrants to the Agent and the Lenders that the Borrower's
limited liability company interests in Haan Crafts Real Estate
Holdings are not and will not be evidenced by certificates, nor
will the Borrower permit such interests to be treated as
"securities" as defined in Article 8 of the Uniform Commercial
Code. The Borrower confirms that such limited liability company
interests constitute Collateral under the Borrower Security
Agreement. The Borrower, the Agent and the Lenders agree that the
Exhibits to the Borrower Security Agreement shall be deemed to be
supplemented to include reference to the Borrower's uncertificated
100% limited liability company interests in Haan Crafts Real Estate
Holdings.
In consideration of the foregoing, the Borrower, the Agent and
the Lenders hereby agree as follows:
1.
Post-Closing Letter Agreement .
(a)
The Agent and the Lenders hereby waive compliance with the delivery
requirements set forth in paragraphs (5), (6) and (10) of the
Post-Closing Letter Agreement.
(b)
Based upon the purchase of the Haan Crafts Property by Haan Crafts
Real Estate Holdings and mortgage in favor of the Agent, the Agent
and the Lenders waive compliance with the requirement, per
paragraph (7) of the Post-Closing Letter Agreement, that the
Borrower deliver a Collateral Access Agreement for the Haan Crafts
Property.
(c)
The Agent and the Lenders agree to extend the delivery due date for
the ALTA surveys and final title policies, commitments or
endorsements described in paragraph (8) of the Post-Closing Letter
Agreement, with respect to the Modesto, California and Ft. Collins,
Colorado real estate, to June 30, 2004.
2.
Spectrum Note and Collateral .
In light of the determination that the Existing Spectrum Note
will not be redocumented and secured, and that the assets of
Spectrum will not be included in the Borrowing Base, the Borrower,
the Agent and the Lenders agree as follows:
(a)
The Credit Agreement shall be amended as follows:
(i)
The definition of the term "Borrowing Base" shall be amended to
delete the proviso following clause (e) thereof.
(ii)
The definition of the term "Loan Parties" shall be amended to
delete the reference therein to Spectrum.
(iii) The
definitions of the terms "Spectrum Note" and "Spectrum Security
Agreement" shall be deleted and each reference to such terms in the
Credit Agreement, including in the definitions of the terms "Loan
Documents" and "Sec
