Document:

Exhibit 4.13

                 [FORM OF AMENDED AND RESTATED TRUST AGREEMENT]
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                      AMENDED AND RESTATED TRUST AGREEMENT

                                      among

                              OLD NATIONAL BANCORP,

                                  as Depositor,

                           BANK ONE TRUST COMPANY, NA,

                              as Property Trustee,

                            BANK ONE DELAWARE, INC.,

                               as Delaware Trustee

                                       and

                               the Administrators

                                       and

                   the several Holders of the Trust Securities

                                  dated as of ,

                              ONB CAPITAL TRUST II

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<PAGE>

                Certain Sections of this Trust Agreement Relating
                        to Section 310 through 318 of the
                          Trust Indenture Act of 1939:

Trust Indenture                                     Sections of this
Act Section                                         Trust Agreement

Section 310(a)(1)....................................   8.7(a)
(a)(2)...............................................   8.7(a)
(a)(3)...............................................   8.9(b)
(a)(4)...............................................   8.5, 2.7(a)(ii)(E)
(b)..................................................   8.8
Section 311(a).......................................   8.13
(b)..................................................   8.13
Section 312(a).......................................   5.8
(b)..................................................   5.8
(c)..................................................   5.8
Section 313(a).......................................   8.14(a)
(b)..................................................   8.14(a)
(c)..................................................   8.14(a), 10.8
Section 314(a).......................................   8.15
(b)..................................................   Not Applicable
(c)(1)...............................................   8.16
(c)(2)...............................................   8.16
(c)(3)...............................................   Not Applicable
(d)..................................................   Not Applicable
(e)..................................................   1.1, 8.16
Section 315(a).......................................   8.1(a), 8.1(d), 8.3(a)
(b)..................................................   8.2, 10.8
(c)..................................................   8.1(d)
(d)..................................................   8.1
(e)..................................................   Not Applicable
Section 316(a).......................................   Not Applicable
(a)(1)(A)............................................   Not Applicable
(a)(1)(B)............................................   Not Applicable
(a)(2)...............................................   Not Applicable
(b)..................................................   5.13
(c)..................................................   6.7
Section 317(a).......................................   Not Applicable
(b)..................................................   5.10, 8.2
Section 318(a).......................................   10.10

Note: This reconciliation and tie sheet shall not, for any purpose, be deemed to
be a part of the Trust Agreement and shall not affect the interpretation of any
of its terms or provisions.

<PAGE>

<TABLE>
<CAPTION>
                                                    TABLE OF CONTENTS

                                                         ARTICLE I

<S>                                                                                                          <C>
                                                        DEFINED TERMS

Section 1.1.   Definitions.....................................................................................1

                                                        ARTICLE II

                                                ESTABLISHMENT OF THE TRUST

Section 2.1.   Name...........................................................................................10
Section 2.2.   Office of the Delaware Trustee; Principal Place of Business of the Trust.......................11
Section 2.3.   Initial Contribution of Trust Property; Organizational Expenses................................11
Section 2.4.   Issuance of the Preferred Securities...........................................................11
Section 2.5.   Issuance of the Common Securities; Subscription and Purchase of Debentures.....................11
Section 2.6.   Declaration of Trust...........................................................................12
Section 2.7.   Authorization to Enter into Certain Transactions...............................................12
Section 2.8.   Assets of Trust................................................................................16
Section 2.9.   Title to Trust Property........................................................................16

                                                        ARTICLE III

                                                      PAYMENT ACCOUNT

Section 3.1.   Payment Account................................................................................17

                                                        ARTICLE IV

                                           CERTAIN TERMS OF THE TRUST SECURITIES

Section 4.1.   Distributions..................................................................................17
Section 4.2.   Redemption.....................................................................................18
Section 4.3.   Subordination of Common Securities.............................................................20
Section 4.4.   Payment Procedures.............................................................................21
Section 4.5.   Tax Returns and Reports........................................................................21
Section 4.6.   Payments Under Indenture or Pursuant to Direct Actions.........................................21

                                                         ARTICLE V

                                               TRUST SECURITIES CERTIFICATES

Section 5.1.   Initial Ownership..............................................................................22
Section 5.2.   The Trust Securities Certificates..............................................................22
Section 5.3.   Execution and Delivery of Trust Securities Certificates........................................22
Section 5.4.   Book-Entry Preferred Securities................................................................23
Section 5.5.   Registration of Transfer and Exchange of Preferred Securities Certificates.....................24
Section 5.6.   Mutilated, Destroyed, Lost or Stolen Trust Securities Certificates.............................25
Section 5.7.   Persons Deemed Holders.........................................................................26
Section 5.8.   Access to List of Holders' Names and Addresses.................................................26
Section 5.9.   Maintenance of Office or Agency................................................................26
Section 5.10.  Appointment of Paying Agent....................................................................26

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Section 5.11.  Ownership of Common Securities by Depositor....................................................27
Section 5.12.  Notices to Clearing Agency.....................................................................27
Section 5.13.  Rights of Holders..............................................................................27

                                                         ARTICLE VI

                                             ACTS OF HOLDERS; MEETINGS; VOTING

Section 6.1.   Limitations on Voting Rights...................................................................30
Section 6.2.   Notice of Meetings.............................................................................31
Section 6.3.   Meetings of the Holders of Preferred Securities................................................31
Section 6.4.   Voting Rights..................................................................................32
Section 6.5.   Proxies, Etc...................................................................................32
Section 6.6.   Holder Action by Written Consent...............................................................32
Section 6.7.   Record Date for Voting and Other Purposes......................................................32
Section 6.8.   Acts of Holders................................................................................33
Section 6.9.   Inspection of Records..........................................................................34

                                                        ARTICLE VII

                                              REPRESENTATIONS AND WARRANTIES

Section 7.1.   Representations and Warranties of the Issuer Trustees..........................................34
Section 7.2.   Representations and Warranties of Depositor....................................................35

                                                       ARTICLE VIII

                                          THE ISSUER TRUSTEES; THE ADMINISTRATORS

Section 8.1.   Certain Duties and Responsibilities............................................................36
Section 8.2.   Certain Notices................................................................................38
Section 8.3.   Certain Rights of Property Trustee.............................................................38
Section 8.4.   Not Responsible for Recitals or Issuance of Securities.........................................40
Section 8.5.   May Hold Securities............................................................................41
Section 8.6.   Compensation; Indemnity; Fees..................................................................41
Section 8.7.   Corporate Property Trustee Required; Eligibility of Issuer Trustees and Administrators.........42
Section 8.8.   Conflicting Interests..........................................................................42
Section 8.9.   Co-Trustees and Separate Trustee...............................................................43
Section 8.10.  Resignation and Removal of Issuer Trustees, Appointment of Successor...........................44
Section 8.11.  Acceptance of Appointment by Successor.........................................................45
Section 8.12.  Merger, Conversion, Consolidation or Succession to Business....................................46
Section 8.13.  Preferential Collection of Claims Against Depositor or Trust...................................46
Section 8.14.  Reports by the Property Trustee................................................................46
Section 8.15.  Reports to the Property Trustee................................................................46
Section 8.16.  Evidence of Compliance with Conditions Precedent...............................................46
Section 8.17.  Number of Issuer Trustees......................................................................47
Section 8.18.  Delegation of Power by Administrators..........................................................47
Section 8.19.  Appointment and Removal of Administrators......................................................47

                                       ii
<PAGE>

                                                        ARTICLE IX

                                            TERMINATION, LIQUIDATION AND MERGER

Section 9.1.   Termination Upon Expiration Date...............................................................48
Section 9.2.   Early Termination..............................................................................48
Section 9.3.   Termination....................................................................................48
Section 9.4.   Liquidation....................................................................................49
Section 9.5.   Mergers, Consolidations, Conversions, Amalgamations or Replacements of the Trust...............50

                                                         ARTICLE X

                                                 MISCELLANEOUS PROVISIONS

Section 10.1.     Limitation of Rights of Holders.............................................................51
Section 10.2.     Amendment...................................................................................51
Section 10.3.     Separability................................................................................52
Section 10.4.     Governing Law...............................................................................53
Section 10.5.     Payments Due on Non-Business Day............................................................53
Section 10.6.     Successors..................................................................................53
Section 10.7.     Headings....................................................................................54
Section 10.8.     Reports, Notices and Demands................................................................54
Section 10.9.     Agreement Not to Petition...................................................................54
Section 10.10.    Trust Indenture Act; Conflict with Trust Indenture Act......................................55
Section 10.11.    Acceptance of Terms of Trust Agreement, Guarantee and Indenture.............................55
Section 10.12.    Counterparts................................................................................55

EXHIBITS
--------

Exhibit A         Form of Common Security Certificate
Exhibit B         Form of Preferred Security Certificate
</TABLE>

                                      iii
<PAGE>

     AMENDED AND RESTATED TRUST AGREEMENT, dated as of , , among (i) Old
National Bancorp, a financial holding company organized under the laws of the
State of Indiana (including any successors or assigns, the "Depositor"), (ii)
Bank One Trust Company, NA, a national banking association organized under the
laws of the United States, as property trustee (the "Property Trustee" and, in
its separate corporate capacity and not in its capacity as Property Trustee, the
"Bank"), (iii) Bank One Delaware, Inc., a Delaware corporation, as Delaware
trustee (the "Delaware Trustee") (the Property Trustee and the Delaware Trustee
referred to collectively as the "Issuer Trustees") and (iv) the several Holders,
as hereinafter defined.

                              W I T N E S S E T H:

     WHEREAS, the Depositor and the Delaware Trustee have heretofore duly
declared and established a business trust pursuant to the Delaware Business
Trust Act by entering into a Trust Agreement, dated as of September 15, 1999
(the "Original Trust Agreement"), and by the execution and filing with the
Secretary of State of the State of Delaware of the Certificate of Trust, filed
on September 15, 1999 with the Securities and Exchange Commission as Exhibit 4.4
to the Depositor's shelf registration statement (No. 333-87573) ; and

     WHEREAS, the Depositor and the Issuer Trustees desire to amend and restate
the Original Trust Agreement in its entirety as set forth herein to provide for,
among other things, (i) the issuance of the Common Securities by the Trust to
the Depositor, (ii) the issuance and sale of the Preferred Securities by the
Trust pursuant to the Underwriting Agreement, (iii) the acquisition by the Trust
from the Depositor of all of the right, title and interest in the Debentures and
(iv) the appointment of the Administrators;

     NOW THEREFORE, in consideration of the agreements and obligations set forth
herein and for other good and valuable consideration, the sufficiency of which
is hereby acknowledged, each party, for the benefit of the other parties and for
the benefit of the Holders, hereby amends and restates the Original Trust
Agreement in its entirety and agrees as follows:

                                    ARTICLE I

                                  DEFINED TERMS

Section 1.1. Definitions.

     For all purposes of this Trust Agreement, except as otherwise expressly
provided or unless the context otherwise requires:

          (a) the terms defined in this Article have the meanings assigned to
     them in this Article and include the plural as well as the singular;

          (b) all other terms used herein that are defined in the Trust
     Indenture Act, either directly or by reference therein, have the meanings
     assigned to them therein;

<PAGE>

          (c) all accounting terms used but not defined herein have the meanings
     assigned to them in accordance with United States generally accepted
     accounting principles;

          (d) unless the context otherwise requires, any reference to an
     "Article" or a "Section" refers to an Article or a Section, as the case may
     be, of this Trust Agreement; and

          (e) the words "herein," "hereof" and "hereunder" and other words of
     similar import refer to this Trust Agreement as a whole and not to any
     particular Article, Section or other subdivision.

     "1940 Act" means the Investment Company Act of 1940, as amended.

     "Act" has the meaning specified in Section 6.8

     "Additional Amounts" has the meaning specified in Section 10.6 of the
Indenture.

     "Additional Interest" means, with respect to Trust Securities of a given
Liquidation Amount or a given period, the amount of Additional Interest (as
defined in the Indenture) paid by the Depositor on a Like Amount of Debentures
for such period.

     "Administrator" means each Person appointed in accordance with Section 8.19
solely in such Person's capacity as Administrator of the Trust created and
continued hereunder and not in such Person's individual capacity, or such
Administrator's successor in interest in such capacity, or any successor
administrator appointed as herein provided.

     "Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.

     "Applicable Procedures" means, with respect to any transfer or transaction
involving a Book-Entry Preferred Security, the rules and procedures of the
Clearing Agency for such Book-Entry Preferred Security, in each case to the
extent applicable to such transaction and as in effect from time to time.

     "Bank" has the meaning specified in the preamble to this Trust Agreement.

     "Bankruptcy Event" means, with respect to any Person:

          (a) the entry of a decree or order by a court having jurisdiction in
     the premises judging such Person a bankrupt or insolvent, or approving as
     properly filed a petition seeking reorganization, arrangement, adjudication
     or composition of or in respect of such Person under any applicable federal
     or state bankruptcy, insolvency, reorganization or other similar law, or
     appointing a receiver, liquidator, assignee, trustee, sequestrator (or

                                       2
<PAGE>

     other similar official) of such Person or of any substantial part of its
     property or ordering the winding up or liquidation of its affairs, and the
     continuance of any such decree or order unstayed and in effect for a period
     of 60 consecutive days; or

          (b) the institution by such Person of proceedings to be adjudicated a
     bankrupt or insolvent, or the consent by it to the institution of
     bankruptcy or insolvency proceedings against it, or the filing by it of a
     petition or answer or consent seeking reorganization or relief under any
     applicable federal or state bankruptcy, insolvency, reorganization or other
     similar law, or the consent by it to the filing of any such petition or to
     the appointment of a receiver, liquidator, assignee, trustee, sequestrator
     (or similar official) of such Person or of any substantial part of its
     property, or the making by it of an assignment for the benefit of
     creditors, or the admission by it in writing of its inability to pay its
     debts generally as they become due and its willingness to be adjudicated a
     bankrupt, or the taking of corporate action by such Person in furtherance
     of any such action.

     "Bankruptcy Laws" has the meaning specified in Section 10.9.

     "Book-Entry Preferred Securities Certificates" means a Preferred Security,
the ownership and transfers of which shall be made through book entries by a
Clearing Agency as described in Section 5.4.

     "Business Day" means a day other than (a) a Saturday or Sunday, (b) a day
on which banking institutions in The City of New York are authorized or required
by law, regulation or executive order to remain closed, or (c) a day on which
the Property Trustee's Corporate Trust Office or the corporate trust office of
the Indenture Trustee is closed for business.

     "Clearing Agency" means an organization registered as a "clearing agency"
pursuant to Section 17A of the Securities Exchange Act of 1934, as amended. The
Depository Trust Company will be the initial Clearing Agency.

     "Clearing Agency Participant" means a broker, dealer, bank, other financial
institution or other Person for whom from time to time a Clearing Agency effects
book-entry transfers and pledges of securities deposited with the Clearing
Agency.

     "Closing Date" has the meaning specified in the Underwriting Agreement.

     "Code" means the Internal Revenue Code of 1986, as amended.

     "Commission" means the Securities and Exchange Commission, as from time to
time constituted, created under the Securities Exchange Act of 1934, as amended,
or, if at any time after the execution of this instrument such Commission is not
existing and performing the duties now assigned to it under the Trust Indenture
Act, then the body performing such duties at such time.

     "Common Securities Certificate" means a certificate evidencing ownership of
Common Securities, substantially in the form attached as Exhibit A.

                                       3
<PAGE>

     "Common Security" means an undivided beneficial ownership interest in the
Trust Property, having a Liquidation Amount of $25, having a term of thirty
years ending on and having the rights provided therefor in this Trust Agreement,
including the right to receive Distributions and a Liquidation Distribution as
provided herein.

     "Corporate Trust Office" means the office of the Property Trustee at which
this Trust Agreement shall, at any particular time, be principally administered,
which office shall at all times be located in the United States and at the date
of execution of this Trust Agreement is located at 1 Bank One Plaza, Chicago,
Illinois 60670, Attention: Corporate Trust Administration, or such other address
in the United States as the Property Trustee may designate from time to time by
notice to the Holders and the Depositor.

     "Debenture Event of Default" means an "Event of Default" as defined in the
Indenture.

     "Debenture Redemption Date" means, with respect to any Debentures to be
redeemed under the Indenture, the date fixed for redemption under the Indenture;
provided, that any such redemption prior to the stated maturity of the
Debentures shall be subject to the prior approval of the Regulator if required
under its then-applicable capital guidelines or policies.

     "Debentures" means the Depositor's % Junior Subordinated Debentures issued
pursuant to the Indenture.

     "Definitive Preferred Securities Certificates" means either or both (as the
context requires) of (a) Preferred Securities Certificates issued as Global
Preferred Securities as provided in Section 5.4(c) and (b) Preferred Securities
Certificates issued in certificated, fully registered form as provided in
Section 5.4 and 5.5.

     "Delaware Business Trust Act" means Chapter 38 of Title 12 of the Delaware
Code, 12 Del. C. Section 3801, et seq., as it may be amended from time to time.

     "Delaware Trustee" means the Person identified as the "Delaware Trustee" in
the preamble to this Trust Agreement solely in its capacity as Delaware Trustee
of the Trust created and continued hereunder and not in its individual capacity,
or its successor in interest in such capacity, or any successor Delaware trustee
appointed as herein provided.

     "Depositor" has the meaning specified in the preamble to this Trust
Agreement.

     "Distribution Date" has the meaning specified in Section 4.1(a).

     "Distributions" means amounts payable in respect of the Trust Securities as
provided in Section 4.1.

     "DTC" means the Depository Trust Company.

     "DTC Letter of Representations" means a letter executed by the Trust, the
Property Trustee and DTC and required to be submitted to DTC in order for the
global Preferred Securities Certificate to be eligible for deposit at DTC.

                                       4
<PAGE>

     "ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.

     "Event of Default" means any one of the following events (whatever the
reason for such Event of Default and whether it shall be voluntary or
involuntary or be effected by operation of law or pursuant to any judgment,
decree or order of any court or any order, rule or regulation of any
administrative or governmental body):

          (a) the occurrence of an Event of Default with respect to a Debenture;
     or

          (b) for so long as no Interest Payment Deferral Period is continuing,
     a default by the Trust in the payment of any Distribution when it becomes
     due and payable, and continuation of such default for a period of 30 days;
     or

          (c) a default by the Trust in the payment of any Redemption Price of
     any Trust Security when it becomes due and payable; or

          (d) a default in the performance, or breach, in any material respect,
     of any covenant or warranty of the Issuer Trustees in this Trust Agreement
     (other than a covenant or warranty a default in the performance or breach
     of which is dealt with in clause (b) or (c) above) and continuation of such
     default or breach for a period of 90 days after there has been given, by
     registered or certified mail, to the defaulting Issuer Trustee or Trustees
     by the Holders of at least 25% in aggregate Liquidation Amount preference
     of the Outstanding Preferred Securities a written notice specifying such
     default or breach and requiring it to be remedied and stating that such
     notice is a "Notice of Default" hereunder; or

          (e) the occurrence of a Bankruptcy Event with respect to the Property
     Trustee and the failure by the Depositor to appoint a successor Property
     Trustee within 60 days thereof.

     "Expiration Date" has the meaning specified in Section 9.1.

     "Global Preferred Security" means a Preferred Securities Certificate
evidencing ownership of Book-Entry Preferred Securities.

     "Guarantee" means the Guarantee Agreement dated as of , between the
Depositor and Bank One Trust Company, NA, as guarantee trustee, for the benefit
of the Holders of the Trust Securities, as amended from time to time.

     "Holder" means a Person in whose name a Trust Security or Trust Securities
is registered in the Securities Register, any such Person being a beneficial
owner within the meaning of the Delaware Business Trust Act.

     "Indemnified Person" has the meaning set forth in Section 8.6(c).

     "Indenture" means the Indenture, dated as of March 14, 2000, between the
Depositor and the Indenture Trustee relating to the Debentures, as amended or
supplemented from time to time.

                                       5
<PAGE>

     "Indenture Trustee" means Bank One Trust Company, NA, as trustee under the
Indenture and any successor thereto.

     "Interest Payment Deferral Period" shall have the meaning specified in
Section 4.1.

     "Issuer Trustees" has the meaning specified in the preamble to this Trust
Agreement.

     "Investment Company Event" means the receipt by the Trust of an Opinion of
Counsel experienced in such matters to the effect that, as a result of the
occurrence of a change in law or regulation or a change in interpretation or
application of law or regulation by any legislative body, court, governmental
agency or regulatory authority that becomes or would become effective on or
after the date of original issuance of the Preferred Securities, there is more
than an insubstantial risk that the Trust is or will be considered an
"investment company" that is required to be registered under the 1940 Act.

     "Lien" means any lien, pledge, charge, encumbrance, mortgage, deed of
trust, adverse ownership interest, hypothecation, assignment, security interest
or preference, priority or other security agreement or preferential arrangement
of any kind or nature whatsoever.

     "Like Amount" means (a) with respect to a redemption of Trust Securities,
Trust Securities having an aggregate Liquidation Amount equal to the principal
amount of Debentures to be contemporaneously redeemed in accordance with the
Indenture, allocated to the Common Securities and the Preferred Securities based
upon the relative aggregate Liquidation Amounts of such classes and the proceeds
of which will be used to pay the Redemption Price of such Trust Securities, (b)
with respect to a distribution of Debentures to Holders of Trust Securities in
connection with a dissolution or liquidation of the Trust, Debentures having a
principal amount equal to the aggregate Liquidation Amount of the Trust
Securities of the Holder to whom such Debentures are distributed and (c) with
respect to any distribution of any Additional Interest to Holders of Trust
Securities, Debentures having a principal amount equal to the aggregate
Liquidation Amount of the Trust Securities in respect of which such Distribution
is made.

     "Liquidation Amount" means $25 per Trust Security.

     "Liquidation Date" means the date on which Debentures, if any, are to be
distributed to Holders of Trust Securities in connection with a termination and
liquidation of the Trust pursuant to Sections 9.3 and 9.4(a).

     "Liquidation Distribution" has the meaning specified in Section 9.4(d).

     "Ministerial Action" means the taking of an action, such as filing a form
or making an election, or pursuing some other similar reasonable measure that
will have no adverse effect on the Trust, the Depositor or the Holders of the
Trust Securities and will involve no material cost.

     "Officer" means the Chairman of the Board, the President, any Senior Vice
President, any Vice President, the Treasurer or any Assistant Treasurer, the
Secretary or any Assistant Secretary of the Depositor.

                                       6
<PAGE>

     "Officers' Certificate" means a certificate signed by two Officers of the
Depositor and delivered to the appropriate Issuer Trustee. One of the officers
signing an Officers' Certificate given pursuant to Section 8.16 shall be the
principal executive, financial or accounting officer of the Depositor. Any
Officers' Certificate delivered with respect to compliance with a condition or
covenant provided for in this Trust Agreement shall include:

          (a) a statement that each officer signing the Officers' Certificate
     has read the covenant or condition and the definitions relating thereto;

          (b) a brief statement of the nature and scope of the examination or
     investigation undertaken by each officer in rendering the Officers'
     Certificate;

          (c) a statement that each such officer has made such examination or
     investigation as, in such officer's opinion, is necessary to enable such
     officer to express an informed opinion as to whether or not such covenant
     or condition has been complied with; and

          (d) a statement as to whether, in the opinion of each such officer,
     such condition or covenant has been complied with.

     "Opinion of Counsel" means a written opinion of counsel who may be an
employee of or, counsel for the Trust, the Property Trustee or the Depositor, or
any of their respective Affiliates, and who shall be reasonably acceptable to
the Property Trustee.

     "Original Trust Agreement" has the meaning specified in the recitals to
this Trust Agreement.

     "Outstanding," when used with respect to Trust Securities, means, as of the
date of determination, all Trust Securities represented by Trust Securities
Certificates theretofore executed and delivered under this Trust Agreement,
except:

          (a) Trust Securities represented by Trust Securities Certificates
     theretofore cancelled by the Property Trustee or delivered to the Property
     Trustee for cancellation;

          (b) Trust Securities for whose payment or redemption money in the
     necessary amount has been theretofore deposited with the Property Trustee
     or any Paying Agent for the Holders of such Trust Securities; provided,
     that, if such Trust Securities are to be redeemed, notice of such
     redemption has been duly given pursuant to this Trust Agreement; and

          (c) Trust Securities which have been paid or Trust Securities
     represented by Trust Securities Certificates in exchange for or in lieu of
     which other Trust Securities Certificates have been executed and delivered
     pursuant to Article V;

provided, however, that, in determining whether the Holders of the requisite
Liquidation Amount of the Outstanding Preferred Securities have given any
request, demand, authorization, direction, notice, consent or waiver hereunder,
Preferred Securities owned by the Depositor, any Issuer Trustee, any

                                       7
<PAGE>

Administrator or any Affiliate of the Depositor, any Issuer Trustee or any
Administrator shall be disregarded and deemed not to be Outstanding, except that
(a) in determining whether any Issuer Trustee or Administrator shall be
protected in relying upon any such request, demand, authorization, direction,
notice, consent or waiver, only Preferred Securities that such Issuer Trustee or
Administrator, as the case may be, knows to be so owned shall be so disregarded
and (b) the foregoing shall not apply at any time when all of the Outstanding
Preferred Securities are owned by the Depositor, one or more of the Issuer
Trustees, one or more of the Administrators and/or any such Affiliate. Preferred
Securities so owned which have been pledged in good faith may be regarded as
Outstanding if the pledgee establishes to the satisfaction of the Administrators
the pledgee's right so to act with respect to such Preferred Securities and that
the pledgee is not the Depositor or any Affiliate of the Depositor.

     "Owner" means each Person who is the beneficial owner of a Book-Entry
Preferred Security as reflected in the records of the Clearing Agency or, if a
Clearing Agency Participant is not the Owner, then as reflected in the records
of a Person maintaining an account with such Clearing Agency (directly or
indirectly, in accordance with the rules of such Clearing Agency).

     "Paying Agent" means any paying agent or co-paying agent appointed pursuant
to Section 5.10 and shall initially be the Bank.

     "Payment Account" means a segregated non-interest-bearing corporate trust
account maintained by the Property Trustee in its trust department for the
benefit of the Holders in which all amounts paid in respect of the Debentures
will be held and from which the Property Trustee shall make payments to the
Holders in accordance with Sections 4.1 and 4.2.

     "Person" means any individual, corporation, partnership, joint venture,
association, joint stock company, trust, limited liability company or
corporation, unincorporated organization or government or any agency or
political subdivision thereof.

     "Preferred Securities Certificate" means a certificate evidencing ownership
of Preferred Securities, substantially in the form attached as Exhibit B.

     "Preferred Security" means an undivided beneficial ownership interest in
the assets of the Trust, having a Liquidation Amount of $25 and having the
rights provided therefor in this Trust Agreement, including the right to receive
Distributions and a Liquidation Distribution as provided herein.

     "Property Trustee" means the commercial bank or trust company identified as
the "Property Trustee" in the preamble to this Trust Agreement, solely in its
capacity as Property Trustee of the Trust heretofore created and continued
hereunder and not in its individual capacity, or its successor in interest in
such capacity, or any successor property trustee appointed as herein provided.

     "Redemption Date" means, with respect to any Trust Security to be redeemed,
the date fixed for such redemption by or pursuant to this Trust Agreement;
provided, that each Debenture Redemption Date and the stated maturity of the
Debentures shall be a Redemption Date for a Like Amount of Trust Securities.

                                       8
<PAGE>

     "Redemption Price" means, with respect to any Trust Security, the
Liquidation Amount of such Trust Security, plus accrued but unpaid Distributions
to the Redemption Date, plus the related amount of the premium, if any, paid by
the Depositor upon the concurrent redemption of a Like Amount of Debentures,
allocated on a pro rata basis (based on aggregate Liquidation Amounts) among the
Trust Securities.

     "Regulator" means the Board of Governors of the Federal Reserve System or
the primary federal banking regulator of the Depositor.

     "Regulatory Capital Event" means a determination by the Depositor, based on
an Opinion of Counsel experienced in such matters, to the effect that, as a
result of: (i) any amendment to, clarification of or change in applicable laws
or regulations or official interpretations thereof or policies with respect
thereto, or (ii) any official administrative pronouncement or judicial decision
interpreting or applying such laws or regulations, in each case which amendment,
clarification or change is effective or which pronouncement or decision is
announced on or after the date of original issuance of the Preferred Securities,
there is more than an insubstantial risk that the Preferred Securities will no
longer constitute Tier 1 capital of the Depositor or any bank holding company or
financial holding company of which the Depositor is a subsidiary for purposes of
the capital adequacy guidelines or policies of the Regulator..

     "Relevant Trustee" has the meaning specified in Section 8.10.

     "Securities Register" and "Securities Registrar" have the respective
meanings specified in Section 5.5.

     "Settlement Date" has the meaning specified in the Underwriting Agreement.

     "Series" means a series of securities or the securities of the series
issued under the Indenture.

     "Special Event" means any of a Tax Event, an Investment Company Event or a
Regulatory Capital Event.

     "Successor Securities" has the meaning specified in Section 9.4.

     "Tax Event" means the receipt by the Trust of an Opinion of Counsel
experienced in such matters to the effect that, as a result of (a) any amendment
to or change (including any announced prospective change) in the laws or any
regulations thereunder of the United States or any political subdivision or
taxing authority thereof or therein, or (b) any judicial decision or any
official administrative pronouncement (including any private letter ruling,
technical advice, memorandum or field service advice) interpreting or applying
such laws or regulations (an "Administrative Action"), regardless of whether
such judicial decision or Administrative Action is issued to or in connection
with a proceeding involving the Depositor or the Trust and whether or not
subject to review or appeal, which amendment, change, Administrative Action or
decision is enacted, effective, promulgated or announced, in each case, on or
after the date of original issuance of the Preferred Securities, there is more
than an insubstantial risk that (i) the Trust is, or will be within 90 days of
the date of such opinion, subject to United States federal income tax

                                       9
<PAGE>

with respect to income received or accrued on the Debentures, (ii) the interest
payable by the Depositor is not, or within 90 days of the date of such opinion,
will not be deductible by the Depositor , in whole or in part, for United States
federal income tax purposes, or (iii) the Trust is, or will be within 90 days of
the date of such opinion, subject to more than a de minimis amount of other
taxes, duties or other governmental charges.

     "Time of Delivery" has the meaning specified in the Underwriting Agreement.

     "Trust" means the Delaware business trust created and continued hereby and
identified on the cover page to this Trust Agreement.

     "Trust Agreement" means this Amended and Restated Trust Agreement, as the
same may be modified, amended or supplemented in accordance with the applicable
provisions hereof, including all exhibits hereto, including, for all purposes of
this Trust Agreement and any such modification, amendment or supplement, the
provisions of the Trust Indenture Act that are deemed to be a part of and govern
this Trust Agreement and any such modification, amendment or supplement,
respectively.

     "Trust Indenture Act" means the Trust Indenture Act of 1939 as in force at
the date as of which this instrument was executed; provided, however, that in
the event the Trust Indenture Act of 1939 is amended after such date, "Trust
Indenture Act" means, to the extent required by any such amendment, the Trust
Indenture Act of 1939 as so amended.

     "Trust Property" means (a) the Debentures, (b) any cash on deposit in, or
owing to, the Payment Account and (c) all proceeds and rights in respect of the
foregoing and any other property and assets for the time being held or deemed to
be held by the Property Trustee pursuant to the terms of this Trust Agreement.

     "Trust Securities Certificate" means any one of the Common Securities
Certificates or the Preferred Securities Certificates.

     "Trust Security" means any one of the Common Securities or the Preferred
Securities.

     "Underwriting Agreement" means the Underwriting Agreement, dated as of ,
among the Trust, the Depositor and the underwriters named therein.

                                   ARTICLE II

                           ESTABLISHMENT OF THE TRUST

     Section 2.1. Name

     The Trust continued hereby shall be known as "ONB CAPITAL TRUST II," as
such name may be modified from time to time by the Administrators following
written notice to the Holders of Trust Securities and the Issuer Trustees, in
which name the Administrators and the Issuer Trustees may conduct the business
of the Trust, make and execute contracts and other instruments on behalf of the
Trust and sue and be sued.

                                       10
<PAGE>

     Section 2.2. Office of the Delaware Trustee; Principal Place of Business of
the Trust.

     The address of the Delaware Trustee in the State of Delaware is Three
Christiana Center 201 North Walnut Street, Wilmington, DE 19801, Attention:
Legal Dept./First USA, or such other address in the State of Delaware as the
Delaware Trustee may designate by written notice to the Holders and the
Depositor. The principal executive office of the Trust is c/o Old National
Bancorp, 420 Main Street, Evansville, Indiana 47708.

     Section 2.3. Initial Contribution of Trust Property; Organizational
Expenses.

     The Property Trustee acknowledges receipt from the Depositor in connection
with the Original Trust Agreement of the sum of $10, which constituted the
initial Trust Property. The Depositor shall pay organizational expenses of the
Trust as they arise or shall, upon request of any Issuer Trustee, promptly
reimburse such Issuer Trustee for any such expenses paid by such Issuer Trustee.
The Depositor shall make no claim upon the Trust Property for the payment of
such expenses.

     Section 2.4. Issuance of the Preferred Securities.

     On ________, the Depositor, on its own behalf and on behalf of the Trust
and pursuant to the Original Trust Agreement, executed and delivered the
Underwriting Agreement. Contemporaneously with the execution and delivery of
this Trust Agreement, an Administrator, on behalf of the Trust, shall execute in
accordance with Section 5.2 and the Property Trustee shall deliver to the
Underwriters named in the Underwriting Agreement, Preferred Securities
Certificates, registered in the name of the nominee of the initial Clearing
Agency, representing ________ Preferred Securities having an aggregate
Liquidation Amount of $________, against receipt of such aggregate purchase
price of such Preferred Securities of $________, by the Property Trustee. In the
event and to the extent any over-allotment option granted by the Trust and the
Depositor pursuant to the Underwriting Agreement is exercised by the
underwriters named therein, on the Closing Date or any Settlement Date, an
Administrator, on behalf of the Trust, shall execute in accordance with Section
5.2 and the Property Trustee shall deliver to the underwriters named therein
additional Preferred Securities Certificates, registered in the name of the
nominee of the initial Clearing Agency, representing up to ________ Preferred
Securities having an aggregate Liquidation Amount of up to $________, against
receipt of the purchase price per Preferred Security of $25 by the Property
Trustee.

     Section 2.5. Issuance of the Common Securities; Subscription and Purchase
of Debentures.

     Contemporaneously with the execution and delivery of this Trust Agreement,
an Administrator, on behalf of the Trust, shall execute in accordance with
Section 5.2 and deliver to the Depositor Common Securities Certificates,
registered in the name of the Depositor, representing ________ Common Securities
having an aggregate Liquidation Amount of $________ against payment by the
Depositor of such amount to the Property Trustee. Contemporaneously therewith,
an Administrator, on behalf of the Trust, shall subscribe to and purchase from
the Depositor Debentures, registered in the name of the Property Trustee, on
behalf of the Trust and having an aggregate principal amount equal to $________,
and, in satisfaction of the purchase price

                                       11
<PAGE>

for such Debentures, the Property Trustee, on behalf of the Trust, shall deliver
to the Depositor the sum of $________. In the event and to the extent any
over-allotment option granted by the Trust and the Depositor pursuant to the
Underwriting Agreement is exercised by the underwriters named therein, on each
Closing Date after the date hereof, (a) an Administrator, on behalf of the
Trust, shall execute in accordance with Section 5.2 and deliver to the Depositor
Common Securities Certificates, registered in the name of the Depositor,
representing an aggregate of up to ________ Common Securities having an
aggregate Liquidation Amount of up to $________, against receipt of the purchase
price per Common Security of $25 by the Property Trustee; and (b) an
Administrator, on behalf of the Trust, shall subscribe to and purchase from the
Depositor additional Debentures, registered in the name of the Property Trustee,
on behalf of the Trust and having an aggregate principal amount of up to
$________, and, in satisfaction of the purchase price for such additional
Debentures, the Property Trustee, on behalf of the Trust, shall deliver to the
Depositor an amount equal to the aggregate principal amount of the additional
Debentures being purchased.

     Section 2.6. Declaration of Trust.

     The exclusive purposes and functions of the Trust are (a) to issue and sell
Preferred Securities and Common Securities and use the proceeds from such sale
to acquire the Debentures, and (b) to engage in those activities necessary,
convenient or incidental thereto. The Depositor hereby appoints the Issuer
Trustees as trustees of the Trust, to have all the rights, powers and duties to
the extent set forth herein, and the Issuer Trustees hereby accept such
appointment. The Property Trustee hereby declares that it will hold the Trust
Property upon and subject to the conditions set forth herein for the benefit of
the Trust and the Holders.

     Section 2.7. Authorization to Enter into Certain Transactions.

     (a) The Issuer Trustees and the Administrators shall conduct the affairs of
the Trust in accordance with the terms of this Trust Agreement. Subject to the
limitations set forth in paragraph (b) of this Section and Article VIII, and in
accordance with the following provisions (i) and (ii), the Issuer Trustees and
the Administrators shall have the authority to enter into all transactions and
agreements determined by the Issuer Trustees or the Administrators to be
appropriate in exercising the authority granted to the Issuer Trustees or the
Administrators, as the case may be, under this Trust Agreement, and to perform
all acts in furtherance thereof, including without limitation, the following:

          (i) Each Administrator shall have the power, duty and authority to act
     on behalf of the Trust with respect to the following matters in accordance
     with the terms of this Trust Agreement:

               (A) the issuance and sale of the Preferred Securities and the
          Common Securities;

               (B) to acquire the Debentures with the proceeds of the sale of
          the Preferred Securities and the Common Securities; provided, however,
          that the Administrators shall cause legal title to the Debentures to
          be held of record in the name of the Property Trustee for the benefit
          of the Holders of the Trust Securities;

                                       12
<PAGE>

               (C) the execution of the Trust Securities on behalf of the Trust
          in accordance with this Trust Agreement;

               (D) the negotiation of the terms, and execution and delivery, for
          and on behalf of the Trust, of the Underwriting Agreement providing
          for the sale of the Preferred Securities;

               (E) to cause the Trust to enter into, and to execute, deliver,
          file and perform on behalf of the Trust, the DTC Letter of
          Representations and such other agreements as may be necessary or
          desirable in connection with the purposes and function of the Trust;

               (F) assisting in the registration of the Preferred Securities
          under the Securities Act of 1933, as amended, and under state
          securities or blue sky laws, and the qualification of this Trust
          Agreement as a trust indenture under the Trust Indenture Act;

               (G) assisting in the listing of the Preferred Securities upon
          such securities exchange or exchanges as shall be determined by the
          Depositor and the registration of the Preferred Securities under the
          Securities Exchange Act of 1934, as amended, and the preparation and
          filing of all periodic and other reports and other documents pursuant
          to the foregoing;

               (H) assisting in the sending of notices (other than notices of
          default) and other information regarding the Trust Securities and the
          Debentures to the Holders in accordance with this Trust Agreement;

               (I) the appointment of a Paying Agent, authenticating agent and
          Securities Registrar in accordance with this Trust Agreement;

               (J) unless otherwise determined by the Property Trustee or the
          Holders of at least a majority in aggregate Liquidation Amount of the
          Preferred Securities or as otherwise required by the Delaware Business
          Trust Act or the Trust Indenture Act, the execution on behalf of the
          Trust (either acting alone or together with any or all of the
          Administrators) of any documents that the Administrators have the
          power to execute pursuant to this Trust Agreement;

               (K) entering into such agreements and arrangements and taking any
          action incidental to the foregoing as the Issuer Trustees may from
          time to time determine is necessary or advisable to give effect to the
          terms of this Trust Agreement; and

               (L) providing the Issuer Trustees with prompt written notice of
          the occurrence of a Special Event.

                                       13
<PAGE>

          The Administrators shall have only those ministerial duties set forth
     herein with respect to accomplishing the purposes of the Trust and shall
     not be trustees or, to the fullest extent permitted by law, fiduciaries
     with respect to the Trust or the Holders. Unless otherwise determined by
     the Administrators, any Administrator is authorized to execute on behalf of
     the Trust any documents which the Administrators have the power and
     authority to execute pursuant to this Trust Agreement.

          (ii) The Property Trustee shall have the power, duty and authority to
     act on behalf of the Trust with respect to the following matters in
     accordance with the terms of this Trust Agreement:

               (A) the establishment and maintenance of the Payment Account;

               (B) the receipt of the Debentures;

               (C) the collection of interest, principal and any other payments
          made in respect of the Debentures in the Payment Account;

               (D) the distribution of amounts from the Payment Account owed to
          the Holders in respect of the Trust Securities;

               (E) the exercise of all of the rights, powers and privileges of a
          holder of the Debentures;

               (F) the sending of notices of default and other information
          regarding the Trust Securities and the Debentures to the Holders in
          accordance with this Trust Agreement;

               (G) the distribution of the Trust Property;

               (H) winding up the affairs of and liquidation of the Trust and
          the preparation, execution and filing of the certificate of
          cancellation with the Secretary of State of the State of Delaware;

               (I) after an Event of Default, the taking of any action
          incidental to the foregoing as the Property Trustee may from time to
          time determine is necessary or advisable to give effect to the terms
          of this Trust Agreement and protect and conserve the Trust Property
          for the benefit of the Holders (without consideration of the effect of
          any such action on any particular Holder); and

               (J) engaging in such Ministerial Activities as shall be
          necessary, appropriate, convenient or incidental to effect the
          repayment of the Preferred Securities and the Common Securities to the
          extent the Debentures mature or are redeemed.

          (iii) The Property Trustee shall have the power and authority to act
     on behalf of the Trust with respect to any of the duties, liabilities,
     powers or authority of the Administrators set forth in Section
     2.7(a)(i)(H), (I) and (K) herein, but shall not have a

                                       14
<PAGE>

     duty to do any such act unless specifically requested to do so in writing
     by the Depositor, and shall then be fully protected in acting pursuant to
     such written request; and in the event of a conflict between the action of
     the Administrators and the action of the Property Trustee, the action of
     the Property Trustee shall prevail. The Property Trustee shall not transfer
     or assign its rights, title and interest in and to the Debentures to the
     Administrators or to the Delaware Trustee (if the Property Trustee does not
     also act as Delaware Trustee).

          (iv) Except as otherwise required by the Delaware Business Trust Act,
     the Delaware Trustee shall not be entitled to exercise any powers, nor
     shall the Delaware Trustee have any of the duties and responsibilities, of
     the Property Trustee, the Issuer Trustees or the Administrators set forth
     herein. The Delaware Trustee shall be one of the trustees of the Trust for
     the sole and limited purpose of fulfilling the requirements of Section
     3807(a) of the Delaware Business Trust Act.

     (b) So long as this Trust Agreement remains in effect, the Trust (or the
Issuer Trustees or Administrators acting on behalf of the Trust) shall not
undertake any business, activities or transaction except as expressly provided
herein or contemplated hereby. In particular, neither the Issuer Trustees nor
the Administrators shall cause the Trust to (i) acquire any investments or
engage in any activities not authorized by this Trust Agreement, (ii) sell,
assign, transfer, exchange, mortgage, pledge, set-off or otherwise dispose of
any of the Trust Property or interests therein, including to Holders, except as
expressly provided herein, (iii) take any action that would cause the Trust to
fail or cease to qualify as a "grantor trust" for United States Federal income
tax purposes, (iv) take or consent to any action that would cause the Debentures
to be treated as other than indebtedness of the Corporation for United States
federal income tax purposes, (v) incur any indebtedness for borrowed money or
issue any other debt or (vi) take or consent to any action that would result in
the placement of a Lien on any of the Trust Property. The Administrators shall
defend all claims and demands of all Persons at any time claiming any Lien on
any of the Trust Property adverse to the interest of the Trust or the Holders in
their capacity as Holders.

     (c) In connection with the issuance and sale of the Preferred Securities,
the Depositor shall have the right, duty and responsibility to assist the Trust
with respect to, or effect on behalf of the Trust, the following (and any
actions taken by the Depositor in furtherance of the following prior to the date
of this Trust Agreement are hereby ratified and confirmed in all respects):

          (i) the preparation and filing by the Trust with the Commission and
     the execution on behalf of the Trust of a registration statement on the
     appropriate form in relation to the Preferred Securities, including any
     amendments thereto, and the taking of any action necessary or desirable to
     sell the Preferred Securities in a transaction or series of transactions
     pursuant thereto;

          (ii) the determination of the states in which to take appropriate
     action to qualify or register for sale all or part of the Preferred
     Securities and the determination of any and all such acts, other than
     actions which must be taken by or on behalf of the Trust, and the advice to
     the Issuer Trustees of actions they must take on behalf of the Trust, and

                                       15
<PAGE>

     the preparation for execution and filing of any documents to be executed
     and filed by the Trust or on behalf of the Trust, as the Depositor deems
     necessary or advisable in order to comply with the applicable laws of any
     such States in connection with the sale of the Preferred Securities;

          (iii) the preparation for filing by the Trust and execution on behalf
     of the Trust of an application to the New York Stock Exchange or any other
     national stock exchange or the Nasdaq National Market for listing upon
     notice of issuance of any Preferred Securities;

          (iv) the preparation for filing by the Trust with the Commission and
     the execution on behalf of the Trust of a registration statement on Form
     8-A relating to the registration of the Preferred Securities under Section
     12(b) or 12(g) of the Securities Exchange Act of 1934, as amended,
     including any amendments thereto;

          (v) the negotiation of the terms of, and the execution and delivery
     of, the Underwriting Agreement providing for the sale of the Preferred
     Securities; and

          (vi) the taking of any other actions deemed by the Depositor necessary
     or desirable to carry out any of the foregoing activities.

     (d) Notwithstanding anything herein to the contrary, the Administrators and
the Issuer Trustees are authorized and directed to conduct the affairs of the
Trust and to operate the Trust so that the Trust will not be deemed to be an
"investment company" required to be registered under the 1940 Act, or taxed as a
corporation for United States federal income tax purposes and so that the
Debentures will be treated as indebtedness of the Depositor for United States
federal income tax purposes. In this connection, each Administrator, the
Property Trustee or the Holders of at least a majority in aggregate Liquidation
Amount of the Common Securities are authorized to take any action, not
inconsistent with applicable law, the Certificate of Trust or this Trust
Agreement, that such Administrator, the Property Trustee or such Holders of
Common Securities determine in their discretion to be necessary or desirable for
such purposes, as long as such action does not adversely affect in any material
respect the interests of the Holders of the Outstanding Preferred Securities. In
no event shall the Administrator take any action pursuant to the preceding
sentence or any other provision herein that would constitute discretionary
control over the assets of the Trust for purposes of Section 3(21) of ERISA. In
no event shall the Administrators or the Issuer Trustees be liable to the Trust
or the Holders for any failure to comply with this Section that results from a
change in law or regulation or in the interpretation thereof.

     Section 2.8. Assets of Trust.

     The assets of the Trust shall consist of the Trust Property.

     Section 2.9. Title to Trust Property.

     Legal title to all Trust Property shall be vested at all times in the
Property Trustee (in its capacity as such) and shall be held and administered by
the Property Trustee for the benefit of the Trust and the Holders in accordance
with this Trust Agreement.

                                       16
<PAGE>

                                   ARTICLE III

                                 PAYMENT ACCOUNT

     Section 3.1. Payment Account.

     (a) On or prior to the Closing Date, the Property Trustee shall establish
the Payment Account. The Property Trustee and any agent of the Property Trustee
shall have exclusive control and sole right of withdrawal with respect to the
Payment Account for the purpose of making deposits in and withdrawals from the
Payment Account in accordance with this Trust Agreement. All monies and other
property deposited or held from time to time in the Payment Account shall be
held by the Property Trustee in the Payment Account for the exclusive benefit of
the Holders and for distribution as herein provided, including (and subject to)
any priority of payments provided for herein.

     (b) The Property Trustee shall deposit in the Payment Account, promptly
upon receipt, all payments of principal of or interest on, and any other
payments or proceeds with respect to, the Debentures. Amounts held in the
Payment Account shall not be invested by the Property Trustee pending
distribution thereof.

                                   ARTICLE IV

                      CERTAIN TERMS OF THE TRUST SECURITIES

     Section 4.1. Distributions.

     The term "Distributions" as used in this Trust Agreement includes such cash
distributions and any such accumulated amounts, including Additional Interest
and Additional Amounts, that are payable unless otherwise stated.

     (a) The Trust Securities represent undivided beneficial ownership interests
in the Trust Property, and, as a practical matter, the Distributions on the
Preferred Securities shall be payable at the rates and on the dates that
payments of interest are made on the Debentures. Accordingly:

          (i) Distributions on the Trust Securities shall be cumulative, and
     will accumulate whether or not there are funds of the Trust available for
     the payment of Distributions. Distributions shall accrue from and shall be
     payable quarterly in arrears on , , and of each year, commencing on ,
     except as provided below. If any date on which a Distribution is otherwise
     payable on the Trust Securities is not a Business Day, then the payment of
     such Distribution shall be made on the next succeeding day that is a
     Business Day (and without any interest or other payment in respect of any
     such delay) except that, if such Business Day is in the next succeeding
     calendar year, payment of such Distribution shall be made on the
     immediately preceding Business Day, in each case with the same force and
     effect as if made on such date (each date on which distributions are
     payable in accordance with this Section 4.1(a), a "Distribution Date").

                                       17
<PAGE>

          (ii) Unless a Debenture Event of Default shall have occurred and be
     continuing, the Depositor has the right under the Indenture to defer
     payments of interest by extending the interest payment period from time to
     time on the Debentures for a period of up to five years and not extending,
     in the aggregate, beyond the maturity date of the Debentures (each, an
     "Interest Payment Deferral Period"). During any such Interest Payment
     Deferral Period, no interest shall be due and payable on the Debentures. As
     a consequence of such deferral, Distributions on the Preferred Securities
     and the Common Securities will also be deferred and shall not be due and
     payable hereunder. During such Interest Payment Deferral Period, quarterly
     Distributions will accrue Additional Interest (to the extent permitted by
     applicable law).

          (iii) The Trust Securities and any Distributions in arrears for more
     than one quarter will accrue and compound interest at a rate of % per annum
     of the Liquidation Amount and the amount of accrued but unpaid
     Distributions, respectively. The amount of Distributions payable for any
     period less than a full period shall be computed on the basis of a 360-day
     year consisting of twelve 30-day months and will include the first day but
     exclude the last day of such period. Distributions payable for each full
     Distribution period will be computed by dividing the rate per annum by
     four.

          (iv) Distributions on the Trust Securities shall be made by the
     Property Trustee from the Payment Account and shall be payable on each
     Distribution Date only to the extent that the Trust has funds then on hand
     and available in the Payment Account for the payment of such Distributions.

     (b) Distributions on the Trust Securities with respect to a Distribution
Date shall be payable to the Holders thereof as they appear on the Securities
Register for the Trust Securities on the relevant record date, which with
respect to Book-Entry Preferred Securities shall be one Business Day prior to
the relevant Distribution Date, and, with respect to Preferred Securities not in
book-entry-only form, the date 15 days prior to the relevant Distribution Date
or, in the case of an Interest Payment Deferral Period as described in subclause
(a)(ii) above, on the first record date after the end of the Interest Payment
Deferral Period.

     Section 4.2. Redemption.

     (a) On each Debenture Redemption Date and on the stated maturity of the
Debentures, the Trust will be required to redeem a Like Amount of Trust
Securities at the Redemption Price.

     (b) Notice of redemption shall be given by the Property Trustee by
first-class mail, postage prepaid, mailed not less than 30 nor more than 60 days
prior to the Redemption Date to each Holder of Trust Securities to be redeemed,
at such Holder's address appearing in the Security Register. All notices of
redemption shall identify the Trust Securities being redeemed and state:

          (i) the Redemption Date;

          (ii) the Redemption Price;

                                       18
<PAGE>

          (iii) the CUSIP number(s) of the Preferred Securities affected;

          (iv) if less than all the Outstanding Trust Securities are to be
     redeemed, the identification and the total Liquidation Amount of the
     particular Trust Securities to be redeemed;

          (v) that, on the Redemption Date, the Redemption Price will become due
     and payable upon each such Trust Security to be redeemed and that
     distributions thereon will cease to accrue on and after said date; and

          (vi) the place where the Trust Securities are to be surrendered for
     the payment of the Redemption Price.

     (c) The Preferred Securities and, subject to Section 9.5, the Common
Securities redeemed on each Redemption Date shall be redeemed at the Redemption
Price with the proceeds from the contemporaneous redemption of Debentures.
Redemptions of the Trust Securities shall be made and the Redemption Price shall
be payable on each Redemption Date only to the extent that the Trust has funds
then on hand and available in the Payment Account for the payment of such
Redemption Price.

     (d) If the Property Trustee gives a notice of redemption in respect of any
Trust Securities, then, by 12:00 noon, New York City time, on the Redemption
Date, subject to Section 4.2(c), the Property Trustee will, with respect to
Book-Entry Preferred Securities, irrevocably deposit with the Clearing Agency
for such Book-Entry Preferred Securities, to the extent available, funds
sufficient to pay the applicable Redemption Price and will give such Clearing
Agency irrevocable instructions and authority to pay the Redemption Price to the
Holders thereof. If any Preferred Securities are not in book-entry form, the
Property Trustee, subject to Section 4.2(c), will irrevocably deposit with the
Paying Agent, to the extent available, funds sufficient to pay the applicable
Redemption Price and will give the Paying Agent irrevocable instructions and
authority to pay the Redemption Price to the Holders thereof upon surrender of
their Preferred Securities Certificates. Notwithstanding the foregoing,
Distributions payable on or prior to the Redemption Date for any Trust
Securities called for redemption shall be payable to the Holders of such Trust
Securities as they appear on the Register for the Trust Securities on the
relevant record dates for the related Distribution Dates. If notice of
redemption shall have been given and funds deposited as required, then
immediately prior to the close of business on the date of such deposit, all
rights of Holders holding Trust Securities so called for redemption will cease,
except the right of such Holders to receive the Redemption Price and any
Distribution payable on or prior to the Redemption Date, but without interest,
and such Securities will cease to be outstanding. In the event that any date on
which any Redemption Price is payable is not a Business Day, then payment of the
Redemption Price payable on such date will be made on the next succeeding day
that is a Business Day (and without any interest or other payment in respect of
any such delay), except that, if such Business Day falls in the next calendar
year, such payment will be made on the immediately preceding Business Day, in
each case, with the same force and effect as if made on such date. In the event
that payment of the Redemption Price in respect of any Trust Securities called
for redemption is improperly withheld or refused and not paid either by the
Trust or by the Depositor pursuant to the Guarantee, Distributions on such Trust
Securities will continue to accrue, at the then applicable rate, from the
Redemption Date

                                       19
<PAGE>

originally established by the Trust for such Trust Securities to the date such
Redemption Price is actually paid, in which case the actual payment date will be
the date fixed for redemption for purposes of calculating the Redemption Price.

     (e) Payment of the Redemption Price on the Trust Securities shall be made
to the recordholders thereof as they appear on the Securities Register for the
Trust Securities on the relevant record date, which with respect to Book-Entry
Preferred Securities shall be one Business Day prior to the relevant Redemption
Date, and, with respect to Preferred Securities not in book-entry-only form, the
date 15 days prior to the relevant Redemption Date.

     (f) Subject to Section 4.3(a) and 9.5, if less than all the Outstanding
Trust Securities are to be redeemed on a Redemption Date, then the aggregate
Liquidation Amount of Trust Securities to be redeemed shall be allocated on a
pro rata basis (based on Liquidation Amounts) between the Common Securities and
the Preferred Securities. The particular Preferred Securities to be redeemed
shall be selected on a pro rata basis (based upon Liquidation Amounts) not more
than 60 days prior to the Redemption Date by the Property Trustee from the
Outstanding Preferred Securities not previously called for redemption. The
Property Trustee shall promptly notify the Securities Registrar in writing of
the Preferred Securities selected for redemption and, in the case of any
Preferred Securities selected for partial redemption, the Liquidation Amount
thereof to be redeemed. For all purposes of this Trust Agreement, unless the
context otherwise requires, all provisions relating to the redemption of
Preferred Securities shall relate, in the case of any Preferred Securities
redeemed or to be redeemed only in part, to the portion of the aggregate
Liquidation Amount of Preferred Securities that has been or is to be redeemed.

     (g) If, at any time, a Special Event shall occur and be continuing, the
Depositor, upon not less than 30 nor more than 60 days' notice, shall have the
right, subject to the prior approval of the Regulator if required under its
then-applicable capital guidelines or policies, to redeem the Debentures, in
whole but not in part, for cash within 90 days following the occurrence of such
Special Event, and, following such redemption, a Like Amount of Preferred
Securities and Common Securities shall be redeemed by the Trust at the
Redemption Price on a pro rata basis; provided, however, that if at the time
there is available to the Depositor or the Trust the opportunity to eliminate,
within such 90-day period, the Special Event by taking Ministerial Action, such
as filing a form or making an election or pursuing some other similar reasonable
measure that will have no adverse effect on the Trust, the Depositor or the
Holders of the Trust Securities, then the Depositor or the Trust will pursue
such measure in lieu of redemption.

     Section 4.3. Subordination of Common Securities.

     (a) Payment of Distributions on, the Redemption Price of, and the
Liquidation Distribution in respect of, the Trust Securities, as applicable,
shall be made, subject to Section 4.2(f), pro rata among the Common Securities
and the Preferred Securities based on the aggregate Liquidation Amount of the
Trust Securities; provided, however, that if on any Distribution Date or
Redemption Date any Event of Default resulting from a Debenture Event of Default
shall have occurred and be continuing, no payment of any Distribution on, or
Redemption Price of, any Common Security, and no other payment on account of the
redemption, liquidation or other acquisition of Common Securities, shall be made
unless payment in full in cash of all accrued and unpaid Distributions on all
Outstanding Preferred

                                       20
<PAGE>

Securities for all Distribution periods terminating on or prior thereto, or in
the case of payment of the Redemption Price the full amount of such Redemption
Price on all Outstanding Preferred Securities, shall have been made or provided
for, and all funds immediately available to the Trust shall first be applied to
the payment in full in cash of all Distributions on, or the Redemption Price of,
Preferred Securities then due and payable.

     (b) In the case of the occurrence of any Event of Default resulting from
any Debenture Event of Default, the Holder of Common Securities will be deemed
to have waived any right to act with respect to any such Event of Default under
this Trust Agreement until the effect of all such Events of Default with respect
to the Preferred Securities have been cured, waived or otherwise eliminated.
Until any such Event of Default under this Trust Agreement with respect to the
Preferred Securities has been so cured, waived or otherwise eliminated, the
Property Trustee shall act solely on behalf of the Holders of the Preferred
Securities and not the Holder of the Common Securities, and only the Holders of
the Preferred Securities will have the right to direct the Property Trustee to
act on their behalf.

     Section 4.4. Payment Procedures.

     Payments in respect of the Preferred Securities shall be made by check
mailed to the address of the Person entitled thereto as such address shall
appear on the Securities Register or, if the Preferred Securities are held by a
Clearing Agency, such Distributions shall be made to the Clearing Agency in
immediately available funds, which shall credit the relevant Persons' accounts
at such Clearing Agency on the applicable Distribution Dates. Payments in
respect of the Common Securities shall be made in such manner as shall be
mutually agreed between the Property Trustee and the Holder of the Common
Securities.

     Section 4.5. Tax Returns and Reports.

     The Administrators shall prepare (or cause to be prepared), at the
Depositor's expense, and file all United States federal, state and local tax and
information returns and reports required to be filed by or in respect of the
Trust. In this regard, the Administrators shall (a) prepare and file (or cause
to be prepared and filed) the appropriate Internal Revenue Service form required
to be filed in respect of the Trust in each taxable year of the Trust and (b)
prepare and furnish (or cause to be prepared and furnished) to each Holder the
appropriate Internal Revenue Service form required to be provided or the
information required to be provided on such form. The Administrators shall
provide the Depositor and each Issuer Trustee with a copy of all such returns
and reports promptly after such filing or furnishing. The Trust and the
Administrators shall comply with United States federal withholding and backup
withholding tax laws and information reporting requirements with respect to any
payments to Holders under the Trust Securities.

     Section 4.6. Payments Under Indenture or Pursuant to Direct Actions.

     Any amount payable hereunder to any Holder of Preferred Securities (and any
Owner with respect thereto) shall be reduced by the amount of any corresponding
payment such Holder (and Owner) has directly received pursuant to Section 5.8 of
the Indenture or this Article IV or Section 5.13 of this Trust Agreement.

                                       21
<PAGE>

                                    ARTICLE V

                          TRUST SECURITIES CERTIFICATES

     Section 5.1. Initial Ownership.

     Upon the creation of the Trust and the contribution by the Depositor
pursuant to Section 2.3 and until the issuance of the Trust Securities, and at
any time during which no Trust Securities are Outstanding, the Depositor shall
be the sole beneficial owner of the Trust.

     Section 5.2. The Trust Securities Certificates.

     (a) The Preferred Securities Certificates shall be issued in minimum
denominations of $25 and integral multiples of $25 in excess thereof, and the
Common Securities Certificates shall be issued in denominations of $25 and
integral multiples of $25 in excess thereof. The Trust Securities Certificates
shall be executed on behalf of the Trust by manual signature of at least one
Administrator. Trust Securities Certificates bearing the manual signatures of
individuals who were, at the time when such signatures shall have been affixed,
authorized to sign on behalf of the Trust, shall be validly issued and entitled
to the benefits of this Trust Agreement, notwithstanding that such individuals
or any of them shall have ceased to be so authorized prior to the delivery of
such Trust Securities Certificates or did not hold such offices at the date of
delivery of such Trust Securities Certificates. A transferee of a Trust
Securities Certificate shall become a Holder, and shall be entitled to the
rights and subject to the obligations of a Holder hereunder, upon due
registration of such Trust Securities Certificate in such transferee's name
pursuant to Sections 5.4, 5.5 and 5.11.

     (b) Upon their original issuance, Preferred Securities Certificates shall
be issued in the form of one or more Global Preferred Securities registered in
the name of The Depository Trust Company, as Clearing Agency, or its nominee and
deposited with The Depository Trust Company or a custodian for The Depository
Trust Company for credit by The Depository Trust Company to the respective
accounts of the Owners thereof (or such other accounts as they may direct).

     (c) A single Common Securities Certificate representing the Common
Securities shall be issued to the Depositor in the form of a definitive Common
Securities Certificate.

     Section 5.3. Execution and Delivery of Trust Securities Certificates.

     At the Closing Date and any Settlement Date, at least one Administrator
shall cause Trust Securities Certificates, in an aggregate Liquidation Amount as
provided in Sections 2.4 and 2.5, to be executed on behalf of the Trust and
delivered to or upon the written order of the Depositor, signed by an authorized
Officer thereof, without further corporate action by the Depositor, in
authorized denominations.

                                       22
<PAGE>

     Section 5.4. Book-Entry Preferred Securities.

     (a) Each Global Preferred Security issued under this Agreement shall be
registered in the name of the Clearing Agency or a nominee thereof and delivered
to such Clearing Agency or a nominee thereof or custodian therefor, and each
such Global Preferred Security shall constitute a single Preferred Securities
Certificate for all purposes of this Agreement.

     (b) Notwithstanding any other provision in this Trust Agreement, no Global
Preferred Security may be exchanged in whole or in part for Preferred Securities
Certificates registered, and no transfer of a Global Preferred Security in whole
or in part may be registered, in the name of any Person other than the Clearing
Agency for such Global Preferred Security or a nominee thereof unless (i) the
Clearing Agency advises the Property Trustee in writing that the Clearing Agency
is no longer willing or able to properly discharge its responsibilities with
respect to the Global Preferred Security, and the Property Trustee is unable to
locate a qualified successor, (ii) the Trust at its option advises the
Depositary in writing that it elects to terminate the book-entry system through
the Clearing Agency, or (iii) a Debenture Event of Default has occurred and is
continuing. Upon the occurrence of any event specified in clause (i), (ii) or
(iii) above, the Administrators shall notify the Clearing Agency and instruct
the Clearing Agency to notify all Owners of Book-Entry Preferred Securities, the
Delaware Trustee and the Administrators of the occurrence of such event and of
the availability of the Definitive Preferred Securities Certificates to Owners
of the Preferred Securities requesting the same.

     (c) If any Global Preferred Security is to be exchanged for other Preferred
Securities Certificates or canceled in part, or if any other Preferred
Securities Certificate is to be exchanged in whole or in part for Book-Entry
Preferred Securities represented by a Global Preferred Security, then either (i)
such Global Preferred Security shall be so surrendered for exchange or
cancellation as provided in this Article V or (ii) the aggregate Liquidation
Amount represented by such Global Preferred Security shall be reduced, subject
to Section 5.2, or increased by an amount equal to the Liquidation Amount
represented by that portion of the Global Preferred Security to be so exchanged
or canceled, or equal to the Liquidation Amount represented by such other
Preferred Securities Certificates to be so exchanged for Book-Entry Preferred
Securities represented thereby, as the case may be, by means of an appropriate
adjustment made on the records of the Securities Registrar, whereupon the
Property Trustee, in accordance with the Applicable Procedures, shall instruct
the Clearing Agency or its authorized representative to make a corresponding
adjustment to its records. Upon surrender to the Administrators or the
Securities Registrar of the Global Preferred Security or Securities by the
Clearing Agency, accompanied by registration instructions, the Administrators,
or any one of them, shall execute the Definitive Preferred Securities
Certificates in accordance with the instructions of the Clearing Agency. None of
the Securities Registrar, the Issuer Trustees or the Administrators shall be
liable for any delay in delivery of such instructions and may conclusively rely
on, and shall be fully protected in relying on, such instructions. Upon the
issuance of Definitive Preferred Securities Certificates, the Issuer Trustees
and Administrators shall recognize the Holders of the Definitive Preferred
Securities Certificates as Holders. The Definitive Preferred Securities
Certificates shall be printed, lithographed or engraved or may be produced in
any other manner as is reasonably acceptable to the Administrators, as evidenced
by the execution thereof by the Administrators or any one of them.

                                       23
<PAGE>

     (d) Every Preferred Securities Certificate executed and delivered upon
registration or transfer of, or in exchange for or in lieu of, a Global
Preferred Security or any portion thereof, whether pursuant to this Article V or
Article IV or otherwise, shall be executed and delivered in the form of, and
shall be, a Global Preferred Security, unless such Preferred Securities
Certificate is registered in the name of a Person other than the Clearing Agency
for such Global Preferred Security or a nominee thereof.

     (e) The Clearing Agency or its nominee, as registered owner of a Global
Preferred Security, shall be the Holder of such Global Preferred Security for
all purposes under this Agreement and the Global Preferred Security, and Owners
with respect to a Global Preferred Security shall hold such interests pursuant
to the Applicable Procedures. The Securities Registrar and the Property Trustee
shall be entitled to deal with the Clearing Agency for all purposes of this
Trust Agreement relating to the Global Preferred Securities (including the
payment of the aggregate Liquidation Amount of and Distributions or directions
by Owners of Book-Entry Preferred Securities represented thereby) as the sole
Holder of the Book-Entry Preferred Securities represented thereby and shall have
no obligations to the Owners thereof. Neither of the Property Trustee nor the
Securities Registrar shall have any liability in respect of any transfers
effected by the Clearing Agency.

     The rights of the Owners of the Book-Entry Preferred Securities shall be
exercised only through the Clearing Agency and shall be limited to those
established by law, the Applicable Procedures and agreements between such Owners
and the Clearing Agency and/or the Clearing Agency Participants; provided, that,
solely for the purpose of determining whether the Holders of the requisite
amount of Preferred Securities have voted on any matter provided for in this
Trust Agreement, so long as Definitive Preferred Security Certificates have not
been issued, the Issuer Trustees may conclusively rely on, and shall be fully
protected in relying on, any written instrument (including a proxy) delivered to
the Property Trustee by the Clearing Agency setting forth the Owners' votes or
assigning the right to vote on any matter to any other Persons either in whole
or in part. Pursuant to the DTC Letter of Representations, unless and until
Definitive Preferred Securities Certificates are issued pursuant to Section
5.4(b), the initial Clearing Agency will make book-entry transfers among the
Clearing Agency Participants and receive and transmit payments on the Preferred
Securities to such Clearing Agency Participants, and none of the Depositor, the
Administrators or the Issuer Trustees shall have any responsibility or
obligation with respect thereto.

     Section 5.5. Registration of Transfer and Exchange of Preferred Securities
Certificates.

     (a) The Property Trustee shall keep or cause to be kept, at its Corporate
Trust Office, a register or registers for the purpose of registering Trust
Securities Certificates and transfers and exchanges of Preferred Securities
Certificates (the "Securities Register") in which, the registrar designated by
the Depositor (the "Securities Registrar"), subject to such reasonable
regulations as it may prescribe, shall provide for the registration of Preferred
Securities Certificates and Common Securities Certificates (subject to Section
5.11 in the case of the Common Securities Certificates) and registration of
transfers and exchanges of Preferred Securities Certificates as herein provided.
The Property Trustee is hereby appointed Securities Registrar for the purpose of
registering Preferred Securities Certificates and (subject to Section 5.11)
Common Securities Certificates and transfers and exchanges thereof as provided
therein.

                                       24
<PAGE>

     Upon surrender for registration of transfer of any Preferred Securities
Certificate at the office or agency maintained pursuant to Section 5.9, the
Administrators or any one of them shall execute and deliver to the Property
Trustee, and the Property Trustee shall deliver in the name of the designated
transferee or transferees, one or more new Preferred Securities Certificates in
authorized denominations of a like aggregate Liquidation Amount dated the date
of execution by such Administrator.

     The Securities Registrar shall not be required to register the transfer of
any Preferred Securities that have been called for redemption. At the option of
a Holder, Preferred Securities Certificates may be exchanged for other Preferred
Securities Certificates in authorized denominations of the same class and of a
like aggregate Liquidation Amount upon surrender of the Preferred Securities
Certificates to be exchanged at the Corporate Trust Office.

     Every Preferred Securities Certificate presented or surrendered for
registration of transfer or exchange shall be accompanied by a written
instrument of transfer in form satisfactory to the Securities Registrar duly
executed by the Holder or his attorney duly authorized in writing. Each
Preferred Securities Certificate surrendered for registration of transfer or
exchange shall be cancelled and subsequently disposed of by the Property Trustee
in accordance with its customary practice.

     No service charge shall be made for any registration of transfer or
exchange of Preferred Securities Certificates, but the Trust may require payment
of a sum sufficient to cover any tax or governmental charge that may be imposed
in connection with any transfer or exchange of Preferred Securities
Certificates.

     (b) Notwithstanding any other provision of this Agreement, transfers and
exchanges of Preferred Securities Certificates and beneficial interests in a
Global Preferred Security of the kinds specified in this Section 5.4 shall be
made only in accordance with this Section 5.4.

     Section 5.6. Mutilated, Destroyed, Lost or Stolen Trust Securities
Certificates.

     If (a) any mutilated Trust Securities Certificate shall be surrendered to
the Securities Registrar, or if the Securities Registrar shall receive evidence
to its satisfaction of the destruction, lose or theft of any Trust Securities
Certificate and (b) there shall be delivered to the Securities Registrar and the
Administrators such security or indemnity as may be required by them to save
each of them harmless, then in the absence of notice that such Trust Securities
Certificate shall have been acquired by a bona fide purchaser, the
Administrators, or any one of them, on behalf of the Trust, shall execute and
make available for delivery, in exchange for or in lieu of any such mutilated,
destroyed, lost or stolen Trust Securities Certificate, a new Trust Securities
Certificate of like class, tenor and denomination. In connection with the
issuance of any new Trust Securities Certificate under this Section, the
Administrators or the Securities Registrar may require the payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection therewith. Any duplicate Trust Securities Certificate issued pursuant
to this Section shall constitute conclusive evidence of an undivided beneficial
ownership interest in the Trust Property, as if originally issued, whether or
not the lost, stolen or destroyed Trust Securities Certificate shall be found at
any time.

                                       25
<PAGE>

     Section 5.7. Persons Deemed Holders.

     The Issuer Trustees, the Administrators and the Securities Registrar shall
each treat the Person in whose name any Trust Securities Certificate shall be
registered in the Securities Register as the owner of such Trust Securities
Certificate for the purpose of receiving distributions and for all other
purposes whatsoever, and none of the Issuer Trustees, the Administrators or the
Securities Registrar shall be bound by any notice to the contrary.

     Section 5.8. Access to List of Holders' Names and Addresses.

     At any time when the Property Trustee is not also acting as the Securities
Registrar, the Administrators or the Depositor shall furnish or cause to be
furnished to each Issuer Trustee promptly upon request (a), a list, in such form
as the Property Trustee may reasonably require, of the names and addresses of
the Holders as of the most recent relevant record date (as set forth in Section
4.1(b)) and (b) such other information as such Issuer Trustee may reasonably
require in order to enable such Issuer Trustee to discharge its obligations
under this Trust Agreement, in each case to the extent such information is in
the possession or control of the Administrators or the Depositor and is not
identical to a previously supplied list or has not otherwise been received by
the Issuer Trustees. The rights of Holders to communicate with other Holders
with respect to their rights under this Trust Agreement or under the Trust
Securities, and the corresponding rights of the Property Trustee shall be as
provided in the Trust Indenture Act. Each Holder, by receiving and holding a
Trust Securities Certificate, and each Owner shall be deemed to have agreed not
to hold the Depositor, the Property Trustee or the Administrators accountable by
reason of the disclosure of its name and address, regardless of the source from
which such information was derived.

     Section 5.9. Maintenance of Office or Agency.

     The Property Trustee shall designate, with the consent of the
Administrators (which shall not be unreasonably withheld), an office or offices
or agency or agencies where Trust Securities Certificates may be surrendered for
registration of transfer or exchange and where notices and demands to or upon
the Issuer Trustees in respect of the Trust Securities Certificates may be
served. The Property Trustee initially designates the Corporate Trust Office,
Attn: Corporate Trust Administration, as its principal corporate trust office
for such purposes. The Property Trustee shall give prompt written notice to the
Depositor and to the Holders of any change in the location of the Securities
Register or any such office or agency.

     Section 5.10. Appointment of Paying Agent.

     The Paying Agent shall make distributions to Holders from the Payment
Account and shall report the amounts of such distributions to the Property
Trustee and the Administrators. Any Paying Agent shall have the revocable power
to withdraw funds from the Payment Account for the purpose of making the
distributions referred to above. The Property Trustee may revoke such power and
remove the Paying Agent if it determines in its sole discretion that the Paying
Agent shall have failed to perform its obligations under this Trust Agreement in
any material respect. The Paying Agent shall initially be the Property Trustee.
Any Person acting as Paying Agent shall be permitted to resign as Paying Agent
upon 30 days written notice to the Property

                                       26
<PAGE>

Trustee and the Depositor. In the event that the Property Trustee shall no
longer be the Paying Agent or a successor Paying Agent shall resign or its
authority to act be revoked, the Property Trustee shall appoint a successor that
is reasonably acceptable to the Administrators to act as Paying Agent (which
shall be a bank or trust company). Such successor Paying Agent or any additional
Paying Agent shall execute and deliver to the Issuer Trustees an instrument in
which such successor Paying Agent or additional Paying Agent shall agree with
the Issuer Trustees that as Paying Agent, such successor Paying Agent or
additional Paying Agent will hold all sums, if any, held by it for payment to
the Holders in trust for the benefit of the Holders entitled thereto until such
sums shall be paid to such Holders. The Paying Agent shall return all unclaimed
funds to the Property Trustee and upon removal of a Paying Agent such Paying
Agent shall also return all funds in its possession to the Property Trustee. The
provisions of Sections 8.1, 8.3 and 8.6 herein shall apply, to the extent
applicable, to any other paying agent appointed hereunder. Any reference in this
Agreement to the Paying Agent shall include any co-paying agent unless the
context requires otherwise.

     Section 5.11. Ownership of Common Securities by Depositor.

     At each Closing Date, the Depositor shall acquire and retain beneficial and
record ownership of the Common Securities. To the fullest extent permitted by
law, other than transactions permitted by Section 10.5 of the Indenture, any
attempted transfer of the Common Securities shall be void. The Administrators
shall cause each Common Securities Certificate issued to the Depositor to
contain a legend stating "THIS COMMON SECURITY HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS OR ANY OTHER
APPLICABLE SECURITIES LAWS AND MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE
TRANSFERRED EXCEPT PURSUANT TO AN EXEMPTION FROM REGISTRATION. THIS CERTIFICATE
IS NOT TRANSFERABLE OTHER THAN IN ACCORDANCE WITH THE TRUST AGREEMENT (AS
DEFINED BELOW)."

     Section 5.12. Notices to Clearing Agency.

     To the extent that a notice or other communication to the Owners is
required under this Trust Agreement, for so long as Preferred Securities are
represented by a Global Preferred Security, the Administrators and the Issuer
Trustees shall give all such notices and communications specified herein to be
given to Owners to the Clearing Agency, and shall have no obligations to the
Owners.

     Section 5.13. Rights of Holders.

     (a) The legal title to the Trust Property is vested exclusively in the
Property Trustee (in its capacity as such) in accordance with Section 2.9, and
the Holders shall not have any right or title therein other than the undivided
beneficial ownership interests in the Trust Property conferred by their Trust
Securities and they shall have no right to call for any partition or division of
property, profits or rights of the Trust except as described below. The Trust
Securities shall be personal property giving only the rights specifically set
forth therein and in this Trust Agreement. By acceptance of a beneficial
interest in the Trust Securities, Holders agree to treat the Debentures as
indebtedness for all United States tax purposes. By its acceptance and holding

                                       27
<PAGE>

of a beneficial interest in the Preferred Securities or the Common Securities,
each Holder will be deemed to have represented that either (x) it is not an
employee benefit plan (within the meaning of Section 3(3) of ERISA) subject to
ERISA, a plan (within the meaning of Section 4975(e)(1) of the Code) subject to
Section 4975 of the Code, a plan subject to provisions under applicable federal,
state, local, non-U.S. or other laws or regulations that are similar to the
provisions of Title I of ERISA or Section 4975 of the Code ("Similar Laws"), or
any entity whose underlying assets include "plan assets" by reason of any such
employee benefit plan's or plan's investment in the entity and is not purchasing
and holding such Preferred Securities or Common Securities or interest therein
on behalf of or with "plan assets" of any such employee benefit plan or plan or
(y) its purchase, holding and disposition of the Preferred Securities or Common
Securities or interest therein (and accompanying interests in, and potential
transactions involving, the Debentures and the Guarantee) (i) is eligible for
the exemptive relief available under Prohibited Transaction Class Exemption
96-23, 95-60, 91-38, 90-1 or 84-14 (or some other applicable class or individual
exemption) or (ii) will not result in a prohibited transaction under ERISA or
the Code or its equivalent under applicable Similar Laws. The Trust Securities
shall have no preemptive or similar rights and when issued and delivered to
Holders against payment of the purchase price therefor will be fully paid and
nonassessable by the Trust. The Holders of the Trust Securities, in their
capacities as such, shall be entitled to the same limitation of personal
liability extended to stockholders of private corporations for profit organized
under the General Corporation Law of the State of Delaware.

     (b) For so long as any Preferred Securities remain Outstanding, if, upon a
Debenture Event of Default, the Indenture Trustee fails or the holders of not
less than 25% in aggregate principal amount of the outstanding Debentures fail
to declare the principal of all of the Debentures to be immediately due and
payable, the Holders of at least 25% in aggregate Liquidation Amount of the
Preferred Securities then Outstanding shall have such right by a notice in
writing to the Depositor and the Indenture Trustee; and upon any such
declaration such principal amount of and the accrued interest on all of the
Debentures shall become immediately due and payable; provided, that the payment
of principal and interest on such Debentures shall remain subordinated to the
extent provided in the Indenture. At any time after such a declaration of
acceleration with respect to the Debentures has been made and before a judgment
or decree for payment of the money due has been obtained by the Indenture
Trustee as provided in the Indenture, the Holders of a majority in aggregate
Liquidation Amount of the Preferred Securities, by written notice to the
Depositor and the Indenture Trustee, may rescind and annul such declaration and
its consequences if:

          (i) the Depositor has paid or deposited with the Indenture Trustee a
     sum sufficient to pay:

               (A) all overdue interest on all of the Debentures,

               (B) the principal of (and premium, if any, on) any Debentures
          which have become due otherwise than by such declaration of
          acceleration and interest thereon at the rate or rates prescribed
          therefor in the Debentures, and

               (C) to the extent that payment of such interest is lawful,
          Additional Interest, and

                                       28
<PAGE>

               (D) all sums paid or advanced by the Indenture Trustee under the
          Indenture and the reasonable compensation, expenses, disbursements and
          advances of the Indenture Trustee, its agents and counsel; and

          (ii) such rescission would not conflict with any judgment or decree of
     any governmental or regulatory authority; and

          (iii) all Events of Default with respect to the Debentures, other than
     the non-payment of the principal of or the interest on the Debentures which
     have become due solely by such declaration of acceleration, have been cured
     or waived as provided in Section 5.13 of the Indenture.

     The Holders of a majority in aggregate Liquidation Amount of the Preferred
Securities may, on behalf of the Holders of all the Preferred Securities, waive
any past default under the Indenture, except a default in the payment of
principal or interest (unless such default has been cured and a sum sufficient
to pay all matured installments of interest and principal due otherwise than by
acceleration has been deposited with the Indenture Trustee) or a default in
respect of a covenant or provision which under the Indenture cannot be modified
or amended without the consent of the holder of each outstanding Debenture
affected. No such waiver or rescission shall affect any subsequent default or
impair any right consequent thereon. Upon receipt by the Property Trustee of
written notice declaring such an acceleration, or rescission and annulment
thereof, by Holders of the Preferred Securities all or part of which is
represented by Book-Entry Preferred Securities Certificates, a record date shall
be established for determining Holders of Outstanding Preferred Securities
entitled to join in such notice, which record date shall be at the close of
business on the day the Property Trustee receives such notice. The Holders on
such record date, or their duly designated proxies, and only such Persons, shall
be entitled to join in such notice, whether or not such Holders remain Holders
after such record date; provided, that, unless such declaration of acceleration,
or rescission and annulment, as the case may be, shall have become effective by
virtue of the requisite percentage having joined in such notice prior to the day
which is 90 days after such record date, such notice of declaration of
acceleration, or rescission and annulment, as the case may be, shall
automatically and without further action by any Holder be canceled and of no
further effect. Nothing in this paragraph shall prevent a Holder, or a proxy of
a Holder, from giving, after expiration of such 90-day period, a new written
notice of declaration of acceleration, or rescission and annulment thereof, as
the case may be, that is identical to a written notice which has been canceled
pursuant to the proviso to the preceding sentence, in which event a new record
date shall be established pursuant to the provisions of this Section 5.13(b).

     (c) For so long as any Preferred Securities remain Outstanding, to the
fullest extent permitted by law and subject to the terms of this Trust Agreement
and the Indenture, upon a Debenture Event of Default specified in Section 5.1(a)
or 5.1(b) of the Indenture, any Holder of Preferred Securities shall have the
right to institute a proceeding directly against the Depositor, pursuant to the
Indenture, for enforcement of payment when due to such Holder of the principal
amount of and interest on Debentures having a principal amount equal to the
aggregate Liquidation Amount of the Preferred Securities of such Holder (a
"Direct Action"). In connection with any such Direct Action, the Holder of the
Common Securities will be subrogated to the rights of any Holder of the
Preferred Securities to the extent of any payment

                                       29
<PAGE>

made by the Depositor to such Holder of Preferred Securities as a result of such
Direct Action. Except as set forth in subsection (b) of this Section 5.13 and
this subsection (c), the Holders of Preferred Securities shall have no right to
exercise directly any right or remedy available to the holders of, or in respect
of, the Debentures.

     (d) Except as otherwise provided in subsections (a), (b) and (c) of this
Section 5.13, the Holders of at least a majority in aggregate Liquidation Amount
of the Preferred Securities may, on behalf of the Holders of all the Preferred
Securities, waive any past default or Event of Default and its consequences.
Upon such waiver, any such default or Event of Default shall cease to exist, and
any default or Event of Default arising therefrom shall be deemed to have been
cured, for every purpose of this Trust Agreement, but no such waiver shall
extend to any subsequent or other default or Event of Default or impair any
right consequent thereon.

                                   ARTICLE VI

                        ACTS OF HOLDERS; MEETINGS; VOTING

     Section 6.1. Limitations on Voting Rights.

     (a) Except as provided in this Trust Agreement and in the Indenture and as
otherwise required by law, no Holder of Preferred Securities shall have any
right to vote or in any manner otherwise control the administration, operation
and management of the Trust or the obligations of the parties hereto, nor shall
anything herein set forth, or contained in the terms of the Trust Securities
Certificates, be construed so as to constitute the Holders from time to time as
partners or members of an association.

     (b) So long as any Debentures are held by the Property Trustee, the Issuer
Trustees shall not (i) direct the time, method and place of conducting any
proceeding for any remedy available to the Indenture Trustee, or executing any
trust or power conferred on the Property Trustee with respect to such
Debentures, (ii) waive any past default which is waivable under Section 5.13 of
the Indenture, (iii) exercise any right to rescind or annul a declaration that
the principal of all the Debentures shall be due and payable or (iv) consent to
any amendment or modification under Section 10.2 or termination of the Indenture
or any amendment, modification or termination of the Debentures, where such
consent shall be required, without, in each case, obtaining the prior approval
of the Holders of at least a majority in aggregate Liquidation Amount of all
Outstanding Preferred Securities; provided, however, that where a consent under
the Indenture would require the consent of each Holder of Debentures affected
thereby, no such consent shall be given by the Property Trustee without the
prior written consent of each Holder of Preferred Securities. The Property
Trustee shall not revoke any action previously authorized or approved by a vote
of the Holders of Preferred Securities, except by a subsequent vote of the
Holders of Preferred Securities. The Property Trustee shall notify all Holders
of the Preferred Securities of any notice of default received from the Indenture
Trustee with respect to the Debentures. In addition to obtaining the foregoing
approvals of the Holders of the Preferred Securities, prior to taking any of the
foregoing actions, the Issuer Trustees shall, at the expense of the Depositor,
obtain an Opinion of Counsel experienced in such matters to the effect that the
Trust will not be classified as an association taxable as a corporation for
United States Federal income tax purposes on account of such action.

                                       30
<PAGE>

     (c) If any proposed amendment to the Trust Agreement provides for, or the
Issuer Trustees otherwise propose to effect, (i) any action that would adversely
affect in any material respect the powers, preferences or special rights of the
Preferred Securities, whether by way of amendment to the Trust Agreement or
otherwise, or (ii) the dissolution, winding-up or termination of the Trust,
other than pursuant to the terms of this Trust Agreement, then the Holders of
Outstanding Preferred Securities as a class will be entitled to vote on such
amendment or proposal and such amendment or proposal shall not be effective
except with the approval of the Holders of at least a majority in aggregate
Liquidation Amount of the Outstanding Preferred Securities. Notwithstanding any
other provision of this Trust Agreement, no amendment to this Trust Agreement
may be made if, as a result of such amendment, the Trust would be classified as
an association taxable as a corporation for United States federal income tax
purposes.

     Section 6.2. Notice of Meetings.

     Notice of all meetings of the Holders of Preferred Securities, stating the
time, place and purpose of the meeting, shall be given by the Property Trustee
pursuant to Section 10.8 to each Holder of Preferred Securities of record, at
his registered address, at least 15 days and not more than 90 days before the
meeting. At any such meeting, any business properly before the meeting may be so
considered whether or not stated in the notice of the meeting. Any adjourned
meeting may be held as adjourned without further notice.

     Section 6.3. Meetings of the Holders of Preferred Securities.

     No annual meeting of Holders is required to be held. The Property Trustee,
however, shall call a meeting of Holders to vote on any matter upon the written
request of the Holders of record of 25% in aggregate Liquidation Amount of the
Preferred Securities and the Administrators or the Property Trustee may, at any
time in their discretion, call a meeting of Holders of Preferred Securities to
consider and act on any matters as to which Holders of Preferred Securities are
entitled to act under the terms of this Trust Agreement or the rules of any
national stock exchange on which the Preferred Securities are listed or admitted
for trading.

     Unless the Delaware Business Trust Act, this Trust Agreement, the Trust
Indenture Act or the listing rules of any national stock exchange on which the
Preferred Securities are then listed or trading require otherwise, the
Administrators, in their sole discretion, shall establish all provisions, other
than those specifically provided for in this Trust Agreement, relating to
meetings of Holders of Trust Securities, including notice of the time, place or
purpose of any meeting at which any matter is to be voted on by any Holder of
Trust Securities, waiver of any such notice, action by consent without a
meeting, the establishment of a record date, quorum requirements, voting in
person or by proxy or any other matter with respect to the exercise of any such
right to vote.

     The Holders of record of 50% of the Outstanding Preferred Securities (based
upon their Liquidation Amount), present in person or by proxy, shall constitute
a quorum at any meeting of Holders of the Preferred Securities.

                                       31
<PAGE>

     If a quorum is present at a meeting, an affirmative vote by the Holders of
record present, in person or by proxy, holding a majority of the Preferred
Securities (based upon their Liquidation Amount) held by the Holders of record
present, either in person or by proxy, at such meeting shall constitute the
action of the Holders, unless this Trust Agreement requires a greater number of
affirmative votes.

     Section 6.4. Voting Rights.

     Holders shall be entitled to one vote for each $25 of Liquidation Amount
represented by their Outstanding Trust Securities in respect of any matter as to
which such Holders are entitled to vote.

     Section 6.5. Proxies, Etc.

     At any meeting of Holders, each Holder may authorize any Person to act for
it by proxy on all matters in which a Holder is entitled to participate,
including, without limitation, waiving notice of any meeting, or voting or
participating at a meeting provided that no proxy shall be voted at any meeting
unless it shall have been placed on file with the Administrators, or with such
other officer or agent of the Trust as the Administrators may direct, for
verification prior to the time at which such vote shall be taken. Pursuant to a
resolution of the Property Trustee, proxies may be solicited in the name of the
Property Trustee or one or more Officers of the Property Trustee. Only Holders
of record and their proxies shall be entitled to vote. When Trust Securities are
held jointly by several persons, any one of them may vote at any meeting in
person or by proxy in respect of such Trust Securities, but if more than one of
them shall be present at such meeting in person or by proxy, and such joint
owners or their proxies so present disagree as to any vote to be cast, such vote
shall not be received in respect of such Trust Securities. A proxy purporting to
be executed by or on behalf of a Holder shall be deemed valid unless challenged
at or prior to its exercise, and the burden of proving invalidity shall rest on
the challenger. No proxy shall be valid more than three years after its date of
execution. Except as otherwise provided herein, all matters relating to the
giving, voting or validity of proxies shall be governed by the General
Corporation Law of the State of Delaware relating to proxies, and judicial
interpretations thereunder, as if the Trust were a Delaware corporation and the
Holders were stockholders of a Delaware corporation.

     Section 6.6. Holder Action by Written Consent.

     Any action which may be taken by Holders at a meeting may be taken without
a meeting, without a vote and without prior notice if Holders holding a majority
of all Outstanding Trust Securities (based upon their Liquidation Amount)
entitled to vote in respect of such action (or such larger proportion thereof as
shall be required by any express provision of this Trust Agreement) shall
consent to the action in writing.

     Section 6.7. Record Date for Voting and Other Purposes.

     For the purposes of determining the Holders who are entitled to notice of
and to vote at any meeting or by written consent, or to participate in any
distribution on the Trust Securities in respect of which a record date is not
otherwise provided for in this Trust Agreement, or for the purpose of any other
action, the Administrators may from time to time fix a date, not more than

                                       32
<PAGE>

90 days prior to the date of any meeting of Holders or the payment of a
distribution or other action, as the case may be, as a record date for the
determination of the identity of the Holders of record for such purposes.

     Section 6.8. Acts of Holders.

     Any request, demand, authorization, direction, notice, consent, waiver or
other action provided or permitted by this Trust Agreement to be given, made or
taken by Holders may be embodied in and evidenced by one or more substantially
similar instruments signed by such Holders in person or by an agent duly
appointed in writing; and, except as otherwise expressly provided herein, such
action shall become effective when such instrument or instruments are delivered
to the Property Trustee. Such instrument or instruments (and the action embodied
therein and evidenced thereby) are herein sometimes referred to as the "Act" of
the Holders signing such instrument or instruments. Proof of execution of any
such instrument or of a writing appointing any such agent shall be sufficient
for any purpose of this Trust Agreement and (subject to Section 8.1) conclusive
in favor of the Issuer Trustee and the Administrators, if made in the manner
provided in this Section.

     The fact and date of the execution by any Person of any such instrument or
writing may be proved by the affidavit of a witness of such execution or by a
certificate of a notary public or other officer authorized by law to take
acknowledgments of deeds, certifying that the individual signing such instrument
or writing acknowledged to him the execution thereof. Where such execution is by
a signer acting in a capacity other than his individual capacity, such
certificate or affidavit shall also constitute sufficient proof of his
authority. The fact and date of the execution of any such instrument or writing,
or the authority of the Person executing the same, may also be proved in any
other manner which any Trustee receiving the same deems sufficient.

     The ownership of Trust Securities shall be proved by the Securities
Register.

     Any request, demand, authorization, direction, notice, consent, waiver or
other Act of the Holder of any Trust Security shall bind every future Holder of
the same Trust Security and the Holder of every Trust Security issued upon the
registration of transfer thereof or in exchange therefor or in lieu thereof in
respect of anything done, omitted or suffered to be done by the Issuer Trustees,
the Administrators or the Trust in reliance thereon, whether or not notation of
such action is made upon such Trust Security.

     Without limiting the foregoing, a Holder entitled hereunder to take any
action hereunder with regard to any particular Trust Security may do so with
regard to all or any part of the Liquidation Amount of such Trust Security or by
one or more duly appointed agents each of which may do so pursuant to such
appointment with regard to all or any part of such Liquidation Amount.

     If any dispute shall arise among the Holders, the Administrators and the
Issuer Trustees with respect to the authenticity, validity or binding nature of
any request, demand, authorization, direction, consent, waiver or other Act of
such Holder, Administrator or Issuer Trustee under this Article VI, then the
determination of such matter by the Property Trustee shall be conclusive with
respect to such matter.

                                       33
<PAGE>

     Section 6.9. Inspection of Records.

     Upon reasonable notice to the Administrators and the Property Trustee, the
records of the Trust shall be open to inspection by Holders during normal
business hours for any purpose reasonably related to such Holder's interest as a
Holder.

                                   ARTICLE VII

                         REPRESENTATIONS AND WARRANTIES

     Section 7.1. Representations and Warranties of the Issuer Trustees.

     The Property Trustee and the Delaware Trustee, each severally on behalf of
and as to itself, hereby represents and warrants for the benefit of the
Depositor and the Holders that:

     (a) the Property Trustee is a national banking association duly organized,
validly existing and in good standing under the laws of the United States with
trust powers;

     (b) the Property Trustee meets the applicable eligibility requirements set
forth in Section 8.7, has full corporate and trust power, authority and legal
right to execute, deliver and perform its obligations under this Trust Agreement
and has taken all necessary action to authorize the execution, delivery and
performance by it of this Trust Agreement;

     (c) the Delaware Trustee is a Delaware corporation duly organized, validly
existing and in good standing in the State of Delaware;

     (d) the Delaware Trustee meets the applicable eligibility requirements set
forth in Section 8.7, has full corporate power, authority and legal right to
execute, deliver and perform its obligations under this Trust Agreement and has
taken all necessary action to authorize the execution, delivery and performance
by it of this Trust Agreement;

     (e) this Trust Agreement has been duly authorized, executed and delivered
by the Issuer Trustees and constitutes the valid and legally binding agreement
of each of the Issuer Trustees enforceable against each of them in accordance
with its terms, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability relating to
or affecting creditors' rights and to general equity principles;

     (f) the execution, delivery and performance of this Trust Agreement have
been duly authorized by all necessary corporate or other action on the part of
the Issuer Trustees and do not require any approval of stockholders of the
Property Trustee and the Delaware Trustee and such execution, delivery and
performance will not (i) violate the charter or by-laws of either Issuer
Trustee, (ii) violate any provision of, or constitute, with or without notice or
lapse of time, a default under, or result in the creation or imposition of, any
Lien on any properties included in the Trust Property pursuant to the provisions
of, any indenture, mortgage, credit agreement, license or other agreement or
instrument to which either Issuer Trustee is a party or by which it is bound, or
(iii) violate any law, governmental rule or regulation of the United States or
the State of Delaware, as the case may be, governing the corporate, banking,
trust or general powers of the

                                       34
<PAGE>

Property Trustee or the Delaware Trustee (as appropriate in context) or any
order, judgment or decree applicable to the Property Trustee or the Delaware
Trustee;

     (g) neither the authorization, execution or delivery by the Property
Trustee or the Delaware Trustee of this Trust Agreement nor the consummation of
any of the transactions by the Property Trustee or the Delaware Trustee, as the
case may be, contemplated herein or therein requires the consent or approval of,
the giving of notice to, the registration with or the taking of any other action
with respect to any governmental authority or agency under any existing Federal
law governing the banking, trust or general powers of the Property Trustee or
the Delaware Trustee (as appropriate in context) or under the laws of the United
States or the State of Delaware; and

     (h) there are no proceedings pending or, to the best of each of the
Property Trustee's and the Delaware Trustee's knowledge, threatened against or
affecting the Property Trustee or the Delaware Trustee in any court or before
any governmental authority, agency or arbitration board or tribunal which,
individually or in the aggregate, would materially and adversely affect the
Trust or would question the right, power and authority of the Property Trustee
or the Delaware Trustee, as the case may be, to enter into or perform its
obligations as one of the Issuer Trustees under this Trust Agreement.

     Section 7.2. Representations and Warranties of Depositor.

     The Depositor hereby represents and warrants for the benefit of the Holders
that:

     (a) the Trust Securities Certificates issued at each Closing Date on behalf
of the Trust have been duly authorized and will have been, duly and validly
executed, issued and delivered by at least one Administrator pursuant to the
terms and provisions of, and in accordance with the requirements of, this Trust
Agreement, and the Holders will be, as of each such date, entitled to the
benefits of this Trust Agreement; and

     (b) there are no taxes, fees or other governmental charges payable by the
Trust (or the Issuer Trustees on behalf of the Trust) under the laws of the
State of Delaware or any political subdivision thereof in connection with the
execution, delivery and performance by the Property Trustee or the Delaware
Trustee, as the case may be, of this Trust Agreement.

                                       35
<PAGE>

                                  ARTICLE VIII

                     THE ISSUER TRUSTEES; THE ADMINISTRATORS

     Section 8.1. Certain Duties and Responsibilities.

     (a) The duties and responsibilities of the Issuer Trustees and the
Administrators shall be as provided by this Trust Agreement and, in the case of
the Property Trustee, subject to the Trust Indenture Act. Notwithstanding the
foregoing, no provision of this Trust Agreement shall require any of the Issuer
Trustees or the Administrators to expend or risk their own funds or otherwise
incur any financial liability in the performance of any of their duties
hereunder, or in the exercise of any of their rights or powers, if they shall
have reasonable grounds for believing that repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured to it.
Whether or not therein expressly so provided, every provision of this Trust
Agreement relating to the conduct or affecting the liability of or affording
protection to the Issuer Trustees or the Administrators shall be subject to the
provisions of this Section. Nothing in this Trust Agreement shall be construed
to release an Issuer Trustee or an Administrator from liability for its own
gross negligent action, its own gross negligent failure to act, or its own
willful misconduct. To the extent that, at law or in equity, an Administrator or
Issuer Trustee has duties (including fiduciary duties) and liabilities relating
thereto to the Trust or to the Holders, such Administrator or the Issuer Trustee
shall not be liable to the Trust or to any Holder for its good faith reliance on
the provisions of this Trust Agreement. The provisions of this Trust Agreement,
to the extent that they restrict the duties and liabilities of the
Administrators or Issuer Trustees otherwise existing at law or in equity, are
agreed by the Depositor and the Holders to replace such other duties and
liabilities of the Administrators and Issuer Trustees.

     (b) All payments made by the Property Trustee or a Paying Agent in respect
of the Trust Securities shall be made only from the revenue and proceeds from
the Trust Property and only to the extent that there shall be sufficient revenue
or proceeds from such Trust Property to enable the Property Trustee or a Paying
Agent to make payments in accordance with the terms hereof. Each Holder, by its
acceptance of a Trust Security, agrees that it will look solely to the revenue
and proceeds from the Trust Property to the extent legally available for
distribution to it as herein provided and that none of the Administrators or the
Issuer Trustees are personally liable to it for any amount distributable in
respect of any Trust Security or for any other liability in respect of any Trust
Security. This Section 8.1(b) does not limit the liability of the Issuer
Trustees or the Administrators expressly set forth elsewhere in this Trust
Agreement and, in the case of the Property Trustee, in the Trust Indenture Act.

     (c) If an Event of Default has occurred and is continuing, the Property
Trustee shall enforce this Trust Agreement for the benefit of the Holders.

     (d) The Property Trustee, before the occurrence of any Event of Default and
after the curing of all Events of Default that may have occurred, shall
undertake to perform only such duties as are specifically set forth in this
Trust Agreement (including pursuant to Section 10.10), and no implied covenants
shall be read into this Trust Agreement against the Property Trustee. If an
Event of Default has occurred (that has not been cured or waived pursuant to
Section 5.13), the Property Trustee shall exercise such of the rights and powers
vested in it by this Trust

                                       36
<PAGE>

Agreement and use the same degree of care and skill in its exercise thereof as a
prudent person would exercise or use under the circumstances in the conduct of
his or her own affairs.

     (e) No provision of this Trust Agreement shall be construed to relieve the
Property Trustee from liability for its own negligent action or its own
negligent failure to act, except that:

          (i) the Property Trustee shall not be liable for any error of judgment
     made in good faith by an authorized officer of the Property Trustee, unless
     it shall be proved that the Property Trustee was negligent in ascertaining
     the pertinent facts;

          (ii) the Property Trustee shall not be liable with respect to any
     action taken or omitted to be taken by it in good faith in accordance with
     the direction of the Holders of not less than a majority in aggregate
     Liquidation Amount of the Preferred Securities relating to the time, method
     and place of conducting any proceeding for any remedy available to the
     Property Trustee, or exercising any trust or power conferred upon the
     Property Trustee under this Trust Agreement;

          (iii) the Property Trustee's sole duty with respect to the custody,
     safe keeping and physical preservation of the Debentures and the Payment
     Account shall be to deal with such Property in similar manner as the
     Property Trustee deals with similar property for its own account, subject
     to the protections and limitations on liability afforded to the Property
     Trustee under this Trust Agreement and the Trust Indenture Act;

          (iv) the Property Trustee shall not be liable for any interest on any
     money received by it except as it may otherwise agree with the Depositor;
     and money held by the Property Trustee need not be segregated from other
     funds held by it except in relation to the Payment Account maintained by
     the Property Trustee pursuant to Section 3.1 and except to the extent
     otherwise required by law;

          (v) the Property Trustee shall not be responsible for monitoring the
     compliance by the Delaware Trustee, the Administrators or the Depositor
     with their respective duties under this Trust Agreement, nor shall the
     Property Trustee be liable for the default or misconduct of the Delaware
     Trustee, the Administrators or the Depositor;

          (vi) prior to the occurrence of any Event of Default and after the
     curing or waiving of all such Events of Default that may have occurred:

               (A) the duties and obligations of the Property Trustee shall be
          determined solely by the express provisions of this Trust Agreement
          (including pursuant to Section 10.10), and the Property Trustee shall
          not be liable except for the performance of such duties and
          obligations as are specifically set forth in this Trust Agreement
          (including pursuant to Section 10.10); and

               (B) in the absence of bad faith on the part of the Property
          Trustee, the Property Trustee may conclusively rely, as to the truth
          of the statements and the correctness of the opinions expressed
          therein, upon any certificates or opinions furnished to the Property
          Trustee and conforming to the

                                       37
<PAGE>

          requirements of this Trust Agreement; but in the case of any such
          certificates or opinions that by any provision hereof or of the Trust
          Indenture Act are specifically required to be furnished to the
          Property Trustee, the Property Trustee shall be under a duty to
          examine the same to determine whether or not they conform to the
          requirements of this Trust Agreement; and

          (vii) subject to Section 8.1(c), no provision of this Trust Agreement
     shall require the Property Trustee to expend or risk its own funds or
     otherwise incur personal financial liability in the performance of any of
     its duties or in the exercise of any of its rights or powers, if the
     Property Trustee shall have reasonable grounds for believing that the
     repayment of such funds or liability is not reasonably assured to it under
     the terms of the Trust Agreement or indemnity reasonably satisfactory to it
     against such risk or liability is not reasonably assured to it.

     (f) The Administrators shall not be responsible for monitoring the
compliance by the Issuer Trustees or the Depositor with their respective duties
under this Trust Agreement, nor shall either Administrator be liable for the
default or misconduct of any other Administrator, the Issuer Trustees or the
Depositor.

     (g) No provision of this Trust Agreement shall be deemed to impose any duty
or obligation on any Issuer Trustee or Administrator to perform any act or acts
or exercise any right, power, duty or obligation conferred or imposed on it, in
any jurisdiction in which it shall be illegal, or in which such Person shall be
unqualified or incompetent in accordance with applicable law, to perform any
such act or acts, or to exercise any such right, power, duty or obligation. No
permissive power or authority available to any Issuer Trustee or Administrator
shall be construed to be a duty.

     Section 8.2. Certain Notices.

     Within 90 days after the occurrence of any Event of Default actually known
to the Property Trustee, the Property Trustee shall transmit, in the manner and
to the extent provided in Section 10.8, notice of such Event of Default to the
Holders, the Administrators and the Depositor, unless such Event of Default
shall have been cured or waived.

     Within five Business Days after the receipt of notice of the Depositor's
exercise of its right to defer the payment of interest on the Debentures
pursuant to the Indenture, the Property Trustee shall transmit, in the manner
and to the extent provided in Section 10.8, notice of such exercise to the
Holders and the Administrators, unless such exercise shall have been revoked.

     Section 8.3. Certain Rights of Property Trustee.

     Subject to the provisions of Section 8.1:

     (a) the Property Trustee may rely and shall be protected in acting or
refraining from acting in good faith upon any resolution, Opinion of Counsel,
certificate, written representation of a Holder or transferee, certificate of
auditors or any other certificate, statement, instrument, opinion, report,
notice, request, consent, order, appraisal, bond, debenture, note, other
evidence

                                       38
<PAGE>

of indebtedness or other paper or document believed by it to be genuine and to
have been signed or presented by the proper party or parties;

     (b) if (i) in performing its duties under this Trust Agreement, the
Property Trustee is required to decide between alternative courses of action or
(ii) in construing any of the provisions of this Trust Agreement, the Property
Trustee finds the same ambiguous or inconsistent with any other provisions
contained herein or (iii) the Property Trustee is unsure of the application of
any provision of this Trust Agreement, then, except as to any matter as to which
the Holders of Preferred Securities are entitled to vote under the terms of this
Trust Agreement, the Property Trustee shall deliver a notice to the Depositor
requesting written instructions of the Depositor as to the course of action to
be taken and the Property Trustee shall take such action, or refrain from taking
such action, as the Property Trustee shall be instructed in writing to take, or
to refrain from taking, by the Depositor; provided, however, that if the
Property Trustee does not receive such instructions of the Depositor within ten
Business Days after it has delivered such notice, or such reasonably shorter
period of time set forth in such notice (which to the extent practicable shall
not be less than two Business Days), it may, but shall be under no duty to, take
or refrain from taking such action not inconsistent with this Trust Agreement as
it shall deem advisable and in the best interests of the Holders, in which event
the Property Trustee shall have no liability except for its own bad faith,
negligence or willful misconduct;

     (c) any direction or act of the Depositor contemplated by this Trust
Agreement shall be sufficiently evidenced by an Officers Certificate;

     (d) any direction or act of an Administrator contemplated by this Trust
Agreement shall be sufficiently evidenced by a certificate executed by such
Administrator and setting forth such direction or act;

     (e) the Property Trustee shall have no duty to see to any recording, filing
or registration of any instrument (including any financing or continuation
statement or any filing under tax or securities laws) or any rerecording,
refiling or reregistration thereof;

     (f) the Property Trustee may consult with counsel (which counsel may be
counsel to the Depositor or any of its Affiliates, and may include any of its
employees) and the advice of such counsel shall be full and complete
authorization and protection in respect of any action taken, suffered or omitted
by it hereunder in good faith and in reliance thereon and in accordance with
such advice; the Property Trustee shall have the right at any time to seek
instructions concerning the administration of this Trust Agreement from any
court of competent jurisdiction;

     (g) the Property Trustee shall be under no obligation to exercise any of
the rights or powers vested in it by this Trust Agreement at the request or
direction of any of the Holders pursuant to this Trust Agreement, unless such
Holders shall have offered to the Property Trustee reasonable security or
indemnity against the costs, expenses and liabilities which might be incurred by
it in compliance with such request or direction; provided, that nothing
contained in this Section 8.3(g) shall be taken to relieve the Property Trustee,
upon the occurrence of an Event of Default, of its obligation to exercise the
rights and powers vested in it by this Trust Agreement;

                                       39
<PAGE>

     (h) the Property Trustee shall not be bound to make any investigation into
the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, consent, order, approval, bond,
debenture, note or other evidence of indebtedness or other paper or document,
unless requested in writing to do so by one or more Holders, but the Property
Trustee may make such further inquiry or investigation into such facts or
matters as it may see fit;

     (i) the Property Trustee may execute any of the trusts or powers hereunder
or perform any duties hereunder either directly or by or through its agents or
attorneys, provided, that the Property Trustee shall be responsible for its own
negligence or recklessness with respect to selection of any agent or attorney
appointed by it hereunder;

     (j) whenever in the administration of this Trust Agreement the Property
Trustee shall deem it desirable to receive instructions with respect to
enforcing any remedy or right or taking any other action hereunder the Property
Trustee (i) may request instructions from the Holders of the Trust Securities
which instructions may only be given by the Holders of the same proportion in
aggregate Liquidation Amount of the Trust Securities as would be entitled to
direct the Property Trustee under the terms of the Trust Securities in respect
of such remedy, right or action, (ii) may refrain from enforcing such remedy or
right or taking such other action until such instructions are received and (iii)
shall be protected in acting in accordance with such instructions; and

     (k) except as otherwise expressly provided by this Trust Agreement, the
Property Trustee shall not be under any obligation to take any action that is
discretionary under the provisions of this Trust Agreement.

     No provision of this Trust Agreement shall be deemed to impose any duty or
obligation on the Property Trustee to perform any act or acts or exercise any
right, power, duty or obligation conferred or imposed on it, in any jurisdiction
in which it shall be illegal, or in which the Property Trustee shall be
unqualified or incompetent in accordance with applicable law, to perform any
such act or acts, or to exercise any such right, power, duty or obligation. No
permissive power or authority available to the Property Trustee shall be
construed to be a duty.

     Section 8.4. Not Responsible for Recitals or Issuance of Securities.

     The recitals contained herein and in the Trust Securities Certificates
shall be taken as the statements of the Depositor, and none of the Issuer
Trustees and the Administrators assume any responsibility for their correctness.
The Issuer Trustees and the Administrators shall not be accountable for the use
or application by the Depositor of the proceeds of the Debentures.

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<PAGE>

     Section 8.5. May Hold Securities.

     Any Administrator, any Issuer Trustee or any other agent of any Trustee or
the Trust, in its individual or any other capacity, may become the owner or
pledgee of Trust Securities and, subject to Sections 8.8 and 8.13 and except as
provided in the definition of the term "Outstanding" in Article I, may otherwise
deal with the Trust with the same rights it would have if it were not an
Administrator, Issuer Trustee or such other agent.

     Section 8.6. Compensation; Indemnity; Fees.

     Pursuant to the Indenture, the Depositor, as borrower, hereby agrees:

     (a) to pay to each Issuer Trustee and Paying Agent from time to time such
reasonable compensation for all services rendered by it hereunder as may be
agreed by the Depositor and each Issuer Trustee and Paying Agent, as applicable,
from time to time (which compensation shall not be limited by any provision of
law in regard to the compensation of a trustee of an express trust);

     (b) except as otherwise expressly provided herein, to reimburse each Issuer
Trustee upon its written request for all documented reasonable expenses,
disbursements and advances incurred or made by such Issuer Trustee in accordance
with any provision of this Trust Agreement (including the reasonable
compensation and the expenses and disbursements of its agents and counsel),
except any such expense, disbursement or advance as may be attributable to its
negligence or bad faith; and

     (c) to the fullest extent permitted by applicable law, to indemnify and
hold harmless (i) each Issuer Trustee, (ii) each Administrator, (iii) each
Paying Agent, (iv) any Affiliate of any Issuer Trustee, (v) any officer,
director, shareholder, employee, representative or agent of any Issuer Trustee,
and (vi) any employee or agent of the Trust (referred to herein as an
"Indemnified Person") from and against any loss, damage, liability, tax,
penalty, expense or claim of any kind or nature whatsoever incurred by such
Indemnified Person by reason of the creation, operation or termination of the
Trust or any act or omission performed or omitted by such Indemnified Person in
good faith on behalf of the Trust and in a manner such Indemnified Person
reasonably believed to be within the scope of authority conferred on such
Indemnified Person by this Trust Agreement, except that no Indemnified Person
shall be entitled to be indemnified in respect of any loss, damage or claim
incurred by such Indemnified Person by reason of gross negligence, bad faith or
willful misconduct with respect to such acts or omissions.

     (d) to the fullest extent permitted by applicable law, to advance expenses
(including legal fees) incurred by an Indemnified Person in defending any claim,
demand, action, suit or proceeding, from time to time, prior to the final
disposition of such claim, demand, action, suit or proceeding upon receipt by
the Depositor of (i) a written affirmation by or on behalf of the Indemnified
Person of its or his good faith belief that it or he has met the standard of
conduct set forth in this Section 8.6 and (ii) an undertaking by or on behalf of
the Indemnified Person to repay such amount if it shall be determined that the
Indemnified Person is not entitled to be indemnified as authorized in the
preceding subsection.

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<PAGE>

     The provisions of this Section 8.6 shall survive the termination of this
Trust Agreement or the resignation or removal of any Issuer Trustee.

     No Issuer Trustee or Paying Agent may claim any lien or charge on any Trust
Property as a result of any amount due pursuant to this Section 8.6.

     In the event that the Property Trustee is also acting as Paying Agent or
Securities Registrar hereunder, the rights and protections afforded to the
Property Trustee pursuant to this Article VIII shall also be afforded to such
Paying Agent or Securities Registrar.

     Section 8.7. Corporate Property Trustee Required; Eligibility of Issuer
Trustees and Administrators.

     (a) There shall at all times be a Property Trustee hereunder with respect
to the Trust Securities. The Property Trustee shall be a Person that is eligible
pursuant to the Trust Indenture Act to act as such and has a combined capital
and surplus of at least $50,000,000. If any such Person publishes reports of
condition at least annually, pursuant to law or to the requirements of its
supervising or examining authority, then for the purposes of this Section, the
combined capital and surplus of such Person shall be deemed to be its combined
capital and surplus as set forth in its most recent report of condition so
published. If at any time the Property Trustee with respect to the Trust
Securities shall cease to be eligible in accordance with the provisions of this
Section, it shall resign immediately in the manner and with the effect
hereinafter specified in this Article.

     (b) There shall at all times be one or more Administrators hereunder with
respect to the Trust Securities. Each Administrator shall be either a natural
person who is at least 21 years of age or a legal entity that shall act through
one or more persons authorized to bind that entity.

     (c) There shall at all times be a Delaware Trustee with respect to the
Trust Securities. The Delaware Trustee shall either be (i) a natural person who
is at least 21 years of age and a resident of the State of Delaware or (ii) a
legal entity with its principal place of business in the State of Delaware and,
in either case, a Person that satisfies for the Trust the requirements of
Section 3807(a) of the Business Trust Act..

     Section 8.8. Conflicting Interests.

     If the Property Trustee has or shall acquire a conflicting interest within
the meaning of the Trust Indenture Act, the Property Trustee shall either
eliminate such interest or resign, to the extent and in the manner provided by,
and subject to the provisions of, the Trust Indenture Act and this Trust
Agreement. The Depositor, any Administrator, any Paying Agent and any Issuer
Trustee may engage in or possess an interest in other business ventures of any
nature or description, independently or with others, similar or dissimilar to
the business of the Trust, and the Trust and the Holders of Trust Securities
shall have no rights by virtue of this Trust Agreement in and to such
independent ventures or the income or profits derived therefrom, and the pursuit
of any such venture, even if competitive with the business of the Trust, shall
not be deemed wrongful or improper. None of the Depositor, any Administrator,
any Paying Agent nor any Issuer Trustee shall be obligated to present any
particular investment or other opportunity to the Trust even if such opportunity
is of a character that, if presented to the Trust, could be taken by the Trust,
and the Depositor, any Administrator, any Paying Agent or any Issuer Trustee
shall

                                       42
<PAGE>

have the right to take for its own account (individually or as a partner or
fiduciary) or to recommend to others any such particular investment or other
opportunity. Any Issuer Trustee or any Paying Agent may engage or be interested
in any financial or other transaction with the Depositor or any Affiliate of the
Depositor, or may act as depository for, trustee or agent for, or act on any
committee or body of holders of, securities or other obligations of the
Depositor or its Affiliates.

     Section 8.9. Co-Trustees and Separate Trustee.

     Unless an Event of Default shall have occurred and be continuing, at any
time or times, for the purpose of meeting the legal requirements of the Trust
Indenture Act or of any jurisdiction in which any part of the Trust Property may
at the time be located, the Property Trustee shall have power to appoint, and
upon the written request of the Property Trustee the Depositor and the
Administrators shall for such purpose join with the Property Trustee in the
execution, delivery and performance of all instruments and agreements necessary
or proper to appoint, one or more Persons either to act as co-trustee jointly
with the Property Trustee of all or any part of such Trust Property or, to the
extent required by law, to act as separate trustee of any such property, in
either case with such powers as may be provided in the instrument of
appointment, and to vest in such Person or Persons in the capacity aforesaid,
any property, title, right or power deemed necessary or desirable, subject to
the other provisions of this Section. Any co-trustee or separate trustee
appointed pursuant to this Section shall either be (i) a natural person who is
at least 21 years of age and a resident of the United States or (ii) a legal
entity with its principal place of business in the United States that shall act
through one or more persons authorized to bind such entity.

     Should any written instrument from the Depositor be required by any
co-trustee or separate trustee so appointed for more fully confirming to such
co-trustee or separate trustee such property, title, right, or power, any and
all such instruments shall, on request, be executed, acknowledged and delivered
by the Depositor.

     Every co-trustee or separate trustee shall, to the extent permitted by law,
but to such extent only, be appointed subject to the following terms, namely:

     (a) The Trust Securities shall be executed by one or more Administrators
and delivered and all rights, powers, duties, and obligations hereunder in
respect of the custody of securities, cash and other personal property held by,
or required to be deposited or pledged with, the Property Trustee specified
hereunder, shall be exercised, solely by the Property Trustee and not by such
co-trustee or separate trustee.

     (b) The rights, powers, duties and obligations hereby conferred or imposed
upon the Property Trustee in respect of any property covered by such appointment
shall be conferred or imposed upon and exercised or performed by the Property
Trustee or by the Property Trustee and such co- trustee or separate trustee
jointly, as shall be provided in the instrument appointing such co-trustee or
separate trustee, except to the extent that under any law of any jurisdiction in
which any particular act is to be performed, the Property Trustee shall be
incompetent or unqualified to perform such act, in which event such rights,
powers, duties and obligations shall be exercised and performed by such
co-trustee or separate trustee.

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<PAGE>

     (c) The Property Trustee at any time, by an instrument in writing executed
by it, with the written concurrence of the Depositor, may accept the resignation
of or remove any co-trustee or separate trustee appointed under this Section,
and, in case a Debenture Event of Default has occurred and is continuing, the
Property Trustee shall have power to accept the resignation of, or remove, any
such co-trustee or separate trustee without the concurrence of the Depositor.
Upon the written request of the Property Trustee, the Depositor shall join with
the Property Trustee in the execution, delivery and performance of all
instruments and agreements necessary or proper to effectuate such resignation or
removal. A successor to any co-trustee or separate trustee so resigned or
removed may be appointed in the manner provided in this Section.

     (d) No co-trustee or separate trustee hereunder shall be personally liable
by reason of any act or omission of the Property Trustee or any other trustee
hereunder.

     (e) The Property Trustee shall not be liable by reason of any act of a
co-trustee or separate trustee.

     (f) Any Act of Holders delivered to the Property Trustee shall be deemed to
have been delivered to each such co-trustee and separate trustee.

     Section 8.10. Resignation and Removal of Issuer Trustees, Appointment of
Successor.

     No resignation or removal of any Issuer Trustee (the "Relevant Trustee")
and no appointment of a successor Issuer Trustee pursuant to this Article shall
become effective until the acceptance of appointment by the successor Issuer
Trustee in accordance with the applicable requirements of Section 8.11.

     Subject to the immediately preceding paragraph, the Relevant Trustee may
resign at any time by giving written notice thereof to the Holders and by
appointing a successor Issuer Trustee meeting the applicable requirements
hereunder. If the instrument of acceptance by the successor Issuer Trustee
required by Section 8.11 shall not have been delivered to the Relevant Trustee
within 30 days after the giving of such notice of resignation, the Relevant
Trustee may petition (pursuant to the Indenture, at the expense of the
Depositor), any court of competent jurisdiction for the appointment of a
successor Issuer Trustee.

     Subject to this Section 8.10, prior to the issuance of any Trust Securities
hereunder and, thereafter, unless a Debenture Event of Default shall have
occurred and be continuing, any Issuer Trustee may be removed at any time by Act
of the Depositor. After the issuance of the Preferred Securities and if a
Debenture Event of Default shall have occurred and be continuing, the Property
Trustee or the Delaware Trustee, or both of them, may be removed at such time by
Act of the Holders of a majority in aggregate Liquidation Amount of the
Preferred Securities, delivered to the Relevant Trustee (in its individual
capacity and on behalf of the Trust).

     If either Issuer Trustee shall resign, be removed or become incapable of
acting as Property Trustee or Delaware Trustee, as the case may be, or if a
vacancy shall occur in the office of any Issuer Trustee for any cause, at a time
when no Debenture Event of Default shall have occurred and be continuing, the
Depositor, by written consent delivered to the Relevant Trustee, shall promptly
appoint a successor Issuer Trustee or Trustees, and the Relevant Trustee shall
comply with the applicable requirements of Section 8.11. If either Issuer
Trustee shall

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<PAGE>

resign, be removed or become incapable of continuing to act as the Property
Trustee or the Delaware Trustee, as the case may be, at a time when a Debenture
Event of Default shall have occurred and be continuing, the Holders of the
Preferred Securities, by Act of the Holders of a majority in aggregate
Liquidation Amount of the Preferred Securities then Outstanding delivered to the
retiring Relevant Trustee, shall promptly appoint a successor Relevant Trustee
or Trustees, and such successor Trustee shall comply with the applicable
requirements of Section 8.11.

     The Property Trustee shall give notice of each resignation and each removal
of an Issuer Trustee and each appointment of a successor Issuer Trustee to all
Holders in the manner provided in Section 10.8 and shall give notice to the
Depositor and the Administrators. Each notice shall include the name of the
successor Relevant Trustee and the address of its Corporate Trust Office if it
is the Property Trustee.

     Notwithstanding the foregoing or any other provision of this Trust
Agreement, in the event a Delaware Trustee who is a natural person dies or
becomes, in the opinion of the Depositor, incompetent or incapacitated, the
vacancy created by such death, incompetence or incapacity may be filled by the
Property Trustee (with the successor in each case being a Person who satisfies
the eligibility requirement for Delaware Trustee set forth in Section 8.7).

     Section 8.11. Acceptance of Appointment by Successor.

     In case of the appointment hereunder of a successor Relevant Trustee, the
retiring Relevant Trustee and each successor Relevant Trustee with respect to
the Trust Securities shall execute and deliver an amendment hereto wherein each
successor Relevant Trustee shall accept such appointment and which (a) shall
contain such provisions as shall be necessary or desirable to transfer and
confirm to, and to vest in, each successor Relevant Trustee all the rights,
powers, trusts and duties of the retiring Relevant Trustee with respect to the
Trust Securities and the Trust and (b) shall add to or change any of the
provisions of this Trust Agreement as shall be necessary to provide for or
facilitate the administration of the Trust by more than one Relevant Trustee, it
being understood that nothing herein or in such amendment shall constitute such
Relevant Trustees co-trustees and upon the execution and delivery of such
amendment the resignation or removal of the retiring Relevant Trustee shall
become effective to the extent provided therein and each such successor Relevant
Trustee, without any further act, deed or conveyance, shall become vested with
all the rights, powers, trusts and duties of the retiring Relevant Trustee; but,
on request of the Trust or any successor Relevant Trustee such retiring Relevant
Trustee shall duly assign, transfer and deliver to such successor Relevant
Trustee all Trust Property, all proceeds thereof and money held by such retiring
Relevant Trustee hereunder with respect to the Trust Securities and the Trust.

     Upon request of any such successor Relevant Trustee, the Trust shall
execute any and all instruments for more fully and certainly vesting in and
confirming to such successor Relevant Trustee all such rights, powers and trusts
referred to in the first or second preceding paragraph, as the case may be.

     No successor Relevant Trustee shall accept its appointment unless at the
time of such acceptance such successor Relevant Trustee shall be qualified and
eligible under this Article.

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<PAGE>

     Section 8.12. Merger, Conversion, Consolidation or Succession to Business.

     Any corporation into which the Property Trustee or the Delaware Trustee may
be merged or converted or with which it may be consolidated, or any corporation
resulting from any merger, conversion or consolidation to which such Relevant
Trustee shall be a party, or any corporation succeeding to all or substantially
all the corporate trust business of such Relevant Trustee, shall be the
successor of such Relevant Trustee hereunder, provided such corporation shall be
otherwise qualified and eligible under this Article, without the execution or
filing of any paper or any further act on the part of any of the parties hereto.

     Section 8.13. Preferential Collection of Claims Against Depositor or Trust.

     If and when the Property Trustee or the Delaware Trustee shall be or become
a creditor of the Depositor or the Trust (or any other obligor upon the
Debentures or the Trust Securities), the Property Trustee or the Delaware
Trustee, as the case may be, shall be subject to and shall take all actions
necessary in order to comply with the provisions of the Trust Indenture Act
regarding the collection of claims against the Depositor or Trust (or any such
other obligor).

     Section 8.14. Reports by the Property Trustee.

     (a) The Property Trustee shall transmit to Holders such reports concerning
the Property Trustee and its actions under this Trust Agreement as may be
required pursuant to the Trust Indenture Act at the times and in the manner
provided pursuant thereto. If required by Section 313(a) of the Trust Indenture
Act, the Property Trustee shall, within sixty days after each May 15, commencing
in , deliver to Holders a brief report, dated as of such May 15, which complies
with the provisions of such Section 313(a).

     (b) A copy of each such report shall, at the time of such transmission to
Holders, be filed by the Property Trustee with each national stock exchange, the
NASDAQ National Market or such other interdealer quotation system or
self-regulatory organization upon which the Trust Securities are listed or
traded, with the Commission and with the Depositor.

     Section 8.15. Reports to the Property Trustee.

     The Depositor and the Administrators on behalf of the Trust shall provide
to the Property Trustee such documents, reports and information as required by
Section 314 of the Trust Indenture Act (if any) and the compliance certificate
required by Section 314(a) of the Trust Indenture Act in the form, in the manner
and at the times required by Section 314 of the Trust Indenture Act, but in no
event later than 120 days after the end of each calendar year.

     Section 8.16. Evidence of Compliance with Conditions Precedent.

     Each of the Depositor and the Administrators on behalf of the Trust shall
provide to the Property Trustee such evidence of compliance with any conditions
precedent, if any, provided for in this Trust Agreement that relate to any of
the matters set forth in Section 314(c) of the Trust Indenture Act. Any
certificate or opinion required to be given by an officer pursuant to Section
314(c)(1) of the Trust Indenture Act shall be given in the form of an Officers'
Certificate.

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<PAGE>

     Section 8.17. Number of Issuer Trustees.

     (a) Subject to Section 8.9, the number of Issuer Trustees shall be two,
provided that the Property Trustee and the Delaware Trustee may be the same
Person, subject to the applicable eligibility requirements set forth herein.

     (b) If an Issuer Trustee ceases to hold office for any reason, or if the
number of Issuer Trustees is increased or decreased in accordance with the
proviso in Section 8.17(a), a vacancy shall occur. The vacancy shall be filled
with an Issuer Trustee appointed in accordance with Section 8.10.

     (c) The death, resignation, retirement, removal, bankruptcy, incompetence
or incapacity to perform the duties of an Issuer Trustee shall not operate to
annul, dissolve or terminate the Trust.

     Section 8.18. Delegation of Power by Administrators.

     (a) Any Administrator may, by power of attorney consistent with applicable
law, delegate to any other natural person over the age of 21 his or her power
for the purpose of executing any documents contemplated in Section 2.7(a),
including any registration statement or amendment thereto filed with the
Commission, or making any other governmental filing; and

     (b) The Administrators shall have power to delegate from time to time to
such of their number or to the Depositor the doing of such things and the
execution of such instruments either in the name of the Trust or the names of
the Administrators or otherwise as the Administrators may deem expedient, to the
extent such delegation is not prohibited by applicable law or contrary to the
provisions of this Trust Agreement, as set forth herein.

     Section 8.19. Appointment and Removal of Administrators.

     (a) The Administrators shall initially be James Risinger, John Poelker and
Thomas Clayton, and their successors shall be appointed by the Holders of a
majority in aggregate Liquidation Amount of the Common Securities and may resign
or be removed by the Holders of a majority in aggregate Liquidation Amount of
the Common Securities at any time. Upon any resignation or removal, the
Depositor shall appoint a successor Administrator. Each Administrator shall sign
an agreement, or a counterpart to this Trust Agreement, agreeing to comply with
the terms of this Trust Agreement. If at any time there is no Administrator, the
Property Trustee or any Holder who has been a Holder of Trust Securities for at
least six months may petition any court of competent jurisdiction for the
appointment of one or more Administrators.

     (b) Whenever a vacancy in the number of Administrators shall occur, until
such vacancy is filled by the appointment of an Administrator in accordance with
this Section 8.19, the Administrators in office, regardless of their number (and
notwithstanding any other provision of this Agreement), shall have all the
powers granted to the Administrators and shall discharge all the duties imposed
upon the Administrators by this Trust Agreement.

                                       47
<PAGE>

     (c) Notwithstanding the foregoing or any other provision of this Trust
Agreement, if any Administrator who is a natural person dies or becomes, in the
opinion of the Holder of a majority in aggregate Liquidation Amount of the
Common Securities, incompetent or incapacitated, the vacancy created by such
death, incompetence or incapacity may be filled by the unanimous act of the
remaining Administrators, if there were at least two of them prior to such
vacancy, and by the Depositor, if there were not at least two such
Administrators immediately prior to such vacancy (with the successor being a
Person who satisfies the eligibility requirement for Administrators set forth in
Section 8.7).

                                   ARTICLE IX

                       TERMINATION, LIQUIDATION AND MERGER

     Section 9.1. Termination Upon Expiration Date.

     Unless earlier terminated, the Trust shall automatically dissolve on (the
"Expiration Date"). Thereafter, the Trust Property shall be distributed in
accordance with Section 9.4.

     Section 9.2. Early Termination.

     The first to occur of any of the following events is an "Early Termination
Event," the occurrence of which shall cause a dissolution of the Trust:

     (a) the occurrence of a Bankruptcy Event in respect of, or the dissolution
or liquidation of, the Depositor in its capacity as Holder of the Common
Securities;

     (b) the written direction to the Property Trustee from the Depositor at any
time (which direction is optional and wholly within the discretion of the
Depositor subject to the receipt of any necessary approvals by the Regulator
that may then be required under applicable capital guidelines, rules,
regulations or policies of the Regulator) to dissolve the Trust and distribute
Debentures to Holders in exchange for the Preferred Securities;

     (c) the redemption of all of the Preferred Securities in connection with
the redemption of all of the Debentures; and

     (d) the entry of an order for dissolution of the Trust by a court of
competent jurisdiction.

     Section 9.3. Termination.

     The respective obligations and responsibilities of the Issuer Trustees, the
Administrators and the Trust created and continued hereby shall terminate upon
the latest to occur of the following: (a) the distribution by the Property
Trustee to Holders of all amounts required to be distributed hereunder upon the
liquidation of the Trust pursuant to Section 9.4, or upon the redemption of all
of the Trust Securities pursuant to Section 4.2; (b) the payment of all expenses
owed by the Trust; and (c) the discharge of all administrative duties of the
Administrators,

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<PAGE>

including the performance of any tax reporting obligations with respect to the
Trust or the Holders.

     Section 9.4. Liquidation.

     (a) If an Early Termination Event specified in clause (a), (b) or (d) of
Section 9.2 occurs or upon the Expiration Date, the Trust shall be liquidated by
the Property Trustee as expeditiously as the Property Trustee determines to be
possible by distributing, after satisfaction of liabilities to creditors of the
Trust as provided by applicable law, and subject to Section 4.3(a) and 9.4(d),
to each Holder a Like Amount of Debentures. Notice of liquidation shall be given
by the Property Trustee by first-class mail, postage prepaid mailed not later
than 30 nor more than 60 days prior to the Liquidation Date to each Holder of
Trust Securities at such Holder's address appearing in the Securities Register.
All notices of liquidation shall:

          (i) state the Liquidation Date;

          (ii) state that from and after the Liquidation Date, the Trust
     Securities will no longer be deemed to be Outstanding and any Trust
     Securities Certificates not surrendered for exchange will be deemed to
     represent a Like Amount of Debentures; and

          (iii) provide such information with respect to the mechanics by which
     Holders may exchange Trust Securities Certificates for Debentures, or if
     Section 9.4(d) applies receive a Liquidation Distribution, as the Property
     Trustee (after consultation with the Administrators) shall deem
     appropriate.

     (b) Except where Section 9.2(c) or 9.4(d) applies, in order to effect the
liquidation of the Trust and distribution of the Debentures to Holders, the
Property Trustee shall establish a record date for such distribution (which
shall be not more than 45 days prior to the Liquidation Date) and, either itself
acting as exchange agent or through the appointment of a separate exchange
agent, shall establish such procedures as it shall deem appropriate to effect
the distribution of Debentures in exchange for the Outstanding Trust Securities
Certificates.

     (c) Except where Section 9.2(c) or 9.4(d) applies, after the Liquidation
Date, (i) the Trust Securities will no longer be deemed to be Outstanding, (ii)
certificates representing a Like Amount of Debentures will be issued to Holders
of Trust Securities Certificates, upon surrender of such certificates to the
Administrators or their agent for exchange, (iii) the Depositor shall use its
best efforts to have the Debentures listed on the New York Stock Exchange or on
such other exchange, interdealer quotation system or self-regulatory
organization as the Preferred Securities are then listed, (iv) any Trust
Securities Certificates not so surrendered for exchange will be deemed to
represent a Like Amount of Debentures, accruing interest at the rate provided
for in the Debentures from the last Distribution Date on which a Distribution
was made on such Trust Securities Certificates until such certificates are so
surrendered (and until such certificates are so surrendered, no payments of
interest or principal will be made to Holders of Trust Securities Certificates
with respect to such Debentures) and (v) all rights of Holders holding Trust
Securities will cease, except the right of such Holders to receive Debentures
upon surrender of Trust Securities Certificates.

                                       49
<PAGE>

     (d) In the event that, upon the Expiration Date or the occurrence of an
Early Termination Event, notwithstanding the other provisions of this Section
9.4, whether because of an order for dissolution entered by a court of competent
jurisdiction or otherwise, distribution of the Debentures in the manner provided
herein is determined by the Property Trustee not to be practical, the Trust
Property shall be liquidated, and the Trust shall be wound-up by the Property
Trustee in such manner as the Property Trustee determines. In such event,
Holders will be entitled to receive out of the assets of the Trust available for
distribution to Holders, after satisfaction of liabilities to creditors of the
Trust as provided by applicable law, an amount equal to the Liquidation Amount
per Trust Security plus accumulated and unpaid Distributions thereon to the date
of payment (such amount being the "Liquidation Distribution"). If, upon any such
winding-up, the Liquidation Distribution can be paid only in part because the
Trust has insufficient assets available to pay in full the aggregate Liquidation
Distribution, then, subject to the next succeeding sentence, the amounts payable
by the Trust on the Trust Securities shall be paid on a pro rata basis (based
upon Liquidation Amounts). The Holder of the Common Securities will be entitled
to receive Liquidation Distributions upon any such winding-up pro rata
(determined as aforesaid) with Holders of Preferred Securities, except that, if
a Debenture Event of Default has occurred and is continuing, the Preferred
Securities shall have a priority over the Common Securities.

     (e) Upon the completion of the liquidation of the Trust, the Property
Trustee shall file a certificate of cancellation with the Secretary of State in
the State of Delaware and the Trust shall terminate.

     Section 9.5. Mergers, Consolidations, Conversions, Amalgamations or
Replacements of the Trust.

     The Trust may not merge with or into, consolidate, convert into,
amalgamate, be replaced by, or convey, transfer or lease its properties and
assets substantially as an entirety to any Person, except pursuant to this
Section 9.5 or Section 9.4. At the request of the Holders of at least a majority
in aggregate Liquidation Amount of the Common Securities, with the consent of
the Holders of at least a majority in aggregate Liquidation Amount of the
Preferred Securities but without the consent of the Issuer Trustees, the Trust
may merge with or into, consolidate, amalgamate, be replaced by or convey,
transfer or lease its properties and assets substantially as an entirety to a
trust organized as such under the laws of the State of Delaware; provided, that
(a) such successor entity either (i) expressly assumes all of the obligations of
the Trust with respect to the Preferred Securities or (ii) substitutes for the
Preferred Securities other securities having substantially the same terms as the
Preferred Securities (the "Successor Securities") so long as the Successor
Securities rank the same as the Preferred Securities rank in priority with
respect to distributions and payments upon liquidation, redemption and
otherwise, (b) the Depositor expressly appoints a trustee of such successor
entity possessing the same powers and duties as the Property Trustee as the
holder of the Debentures, (c) the Successor Securities are listed or traded, or
any Successor Securities will be listed upon notification of issuance, on any
national securities exchange or other organization on which the Preferred
Securities are then listed or traded, if any, (d) such merger, consolidation,
amalgamation, replacement, conveyance, transfer or lease does not cause the
Preferred Securities (including any Successor Securities) to be downgraded by
any nationally recognized statistical rating organization, (e) such merger,
consolidation, amalgamation, replacement, conveyance, transfer or lease does not
adversely

                                       50
<PAGE>

affect the rights, preferences and privileges of the Holders of the Preferred
Securities (including any Successor Securities) in any material respect, (f)
such successor entity has a purpose substantially similar to that of the Trust,
(g) prior to such merger, consolidation, amalgamation, replacement, conveyance,
transfer or lease, the Property Trustee has received an Opinion of Counsel
experienced in such matters to the effect that (i) such merger, consolidation,
amalgamation, replacement, conveyance, transfer or lease does not adversely
affect the rights, preferences and privileges of the Holders of the Preferred
Securities (including any Successor Securities) in any material respect, (ii)
following such merger, consolidation, amalgamation, replacement, conveyance,
transfer or lease, neither the Trust nor such successor entity will be required
to register as an investment company under the 1940 Act and (iii) the proposed
action will not cause the Trust or such successor entity to be classified as an
association that is taxable as a corporation for U.S. federal income tax
purposes, and (h) the Depositor owns all of the common securities of such
successor entity and guarantees the obligations of such successor entity under
the Successor Securities at least to the extent provided by the Guarantee.
Notwithstanding the foregoing, the Trust shall not, except with the consent of
Holders of 100% in aggregate Liquidation Amount of the Preferred Securities,
consolidate, amalgamate, merge with or into, convert into, be replaced by or
convey, transfer or lease its properties and assets substantially as an entirety
to any other Person or permit any other entity to consolidate, amalgamate, merge
with or into, or replace it if such consolidation, amalgamation, merger,
replacement, conveyance, transfer or lease would cause the Trust or the
successor entity to be classified as other than a grantor trust for United
States federal income tax purposes.

                                    ARTICLE X

                            MISCELLANEOUS PROVISIONS

     Section 10.1. Limitation of Rights of Holders.

     The death, incapacity, dissolution, bankruptcy or termination of any Person
having an interest, beneficial or otherwise, in Trust Securities shall not
operate to terminate this Trust Agreement nor dissolve, terminate or annul the
Trust nor entitle the legal representatives or heirs of such Person or any
Holder for such person, to claim an accounting, take any action or bring any
proceeding in any court for a partition or winding-up of the arrangements
contemplated hereby, nor otherwise affect the rights, obligations and
liabilities of the parties hereto or any of them.

     Section 10.2. Amendment.

     (a) This Trust Agreement may be amended from time to time by the Property
Trustee and the Depositor, without the consent of the Holders of the Preferred
Securities, (i) to cure any ambiguity, correct or supplement any provision
herein which may be inconsistent with any other provision herein, or to make any
other provisions with respect to matters or questions arising under this Trust
Agreement, which shall not be inconsistent with the other provisions of this
Trust Agreement, or (ii) to modify, eliminate or add to any provisions of this
Trust Agreement to such extent as shall be necessary to ensure that the Trust
will be classified for United States federal income tax purposes as a grantor
trust at all times that any Trust Securities are outstanding or to ensure that
the Trust will not be required to register as an investment company

                                       51
<PAGE>

under the 1940 Act; provided, however, that, in either case, such action shall
not adversely affect in any material respect the interests of any Holder.

     (b) Except as provided in Section 6.1(c) or Section 10.2(c) hereof, any
provision of this Trust Agreement may be amended by the Property Trustee and the
Depositor with (i) the consent of Holders representing not less than a majority
(in aggregate Liquidation Amount) of the Preferred Securities then Outstanding
and (ii) receipt by the Property Trustee of an Opinion of Counsel experienced in
such matters to the effect that such amendment or the exercise of any power
granted to the Issuer Trustees in accordance with such amendment will not affect
the Trust's status as a grantor trust for United States federal income tax
purposes or the Trust's exemption from status of an investment company under the
1940 Act.

     (c) In addition to and notwithstanding any other provision in this Trust
Agreement, without the consent of each affected Holder, this Trust Agreement may
not be amended to (i) change the amount or timing of any Distribution on the
Trust Securities or otherwise adversely affect the amount of any Distribution
required to be made in respect of the Trust Securities as of a specified date or
(ii) restrict the right of a Holder to institute suit against the Depositor for
the enforcement of any such Distribution on or after such date; notwithstanding
any other provision herein, without the unanimous consent of the Holders, this
paragraph (c) of this Section 10.2 may not be amended.

     (d) Notwithstanding any other provisions of this Trust Agreement, no Issuer
Trustee shall enter into or consent to any amendment to this Trust Agreement
which would cause the Trust to fail or cease to qualify for the exemption from
status of an investment company under the 1940 Act or fail or cease to be
classified as a grantor trust for United States federal income tax purposes.

     (e) Notwithstanding anything in this Trust Agreement to the contrary,
without the consent of the Depositor and the Administrators, this Trust
Agreement may not be amended in a manner which imposes any additional obligation
on the Depositor or the Administrators.

     (f) In the event that any amendment to this Trust Agreement is made, the
Administrators shall promptly provide to the Depositor a copy of such amendment,
and the Property Trustee shall promptly provide to the Holders a copy of such
amendment.

     (g) Neither the Property Trustee nor the Delaware Trustee shall be required
to enter into any amendment to this Trust Agreement which affects its own
powers, rights, duties or immunities under this Trust Agreement, and any
proposed amendment to such effect shall be without force or effect until the
affected Issuer Trustee has given its affirmative approval thereto in writing.
The Property Trustee shall be entitled to receive an Opinion of Counsel and an
Officers' Certificate stating that any amendment to this Trust Agreement is in
compliance with this Trust Agreement.

     Section 10.3. Separability.

     In case any provision in this Trust Agreement or in the Trust Securities
Certificates, or the application of such provision to any person or
circumstance, shall be invalid, illegal or

                                       52
<PAGE>

unenforceable, the validity, legality
and enforceability of the remaining provisions shall not in any way be affected
or impaired thereby.

     Section 10.4. Governing Law.

     THIS TRUST AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF EACH OF THE HOLDERS,
THE TRUST, THE DEPOSITOR, THE ISSUER TRUSTEES AND THE ADMINISTRATORS SHALL BE
GOVERNED BY AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE
AND ALL RIGHTS AND REMEDIES SHALL BE GOVERNED BY SUCH LAWS WITHOUT REGARD TO THE
PRINCIPLES OF CONFLICT OF LAWS OF THE STATE OF DELAWARE OR ANY OTHER
JURISDICTION THAT WOULD CALL FOR THE APPLICATION OF THE LAW OF ANY OTHER
JURISDICTION OTHER THAN THE STATE OF DELAWARE; PROVIDED, HOWEVER, THAT THERE
SHALL NOT BE APPLICABLE TO THE HOLDERS, THE TRUST, THE DEPOSITOR, THE TRUSTEES
OR THIS TRUST AGREEMENT ANY PROVISION OF THE LAWS (STATUTORY OR COMMON) OF THE
STATE OF DELAWARE PERTAINING TO TRUSTS THAT RELATE TO OR REGULATE, IN A MANNER
INCONSISTENT WITH THE TERMS HEREOF (A) THE FILING WITH ANY COURT OR GOVERNMENT
BODY OR AGENCY OF TRUSTEE ACCOUNTS OR SCHEDULES OF TRUSTEE FEES AND CHARGES, (B)
AFFIRMATIVE REQUIREMENTS TO POST BONDS FOR TRUSTEES, OFFICERS, AGENTS OR
EMPLOYEES OF A TRUST, (C) THE NECESSITY FOR OBTAINING COURT OR OTHER
GOVERNMENTAL APPROVAL CONCERNING THE ACQUISITION, HOLDING OR DISPOSITION OF REAL
OR PERSONAL PROPERTY, (D) FEES OR OTHER SUMS PAYABLE TO TRUSTEES, OFFICERS,
AGENTS OR EMPLOYEES OF A TRUST, (E) THE ALLOCATION OF RECEIPTS AND EXPENDITURES
TO INCOME OR PRINCIPAL, (F) RESTRICTIONS OR LIMITATIONS ON THE PERMISSIBLE
NATURE, AMOUNT OR CONCENTRATION OF TRUST INVESTMENTS OR REQUIREMENTS RELATING TO
THE TITLING, STORAGE OR OTHER MANNER OF HOLDING OR INVESTING TRUST ASSETS OR (G)
THE ESTABLISHMENT OF FIDUCIARY OR OTHER STANDARDS OF RESPONSIBILITY OR
LIMITATIONS ON THE ACTS OR POWERS OF TRUSTEES THAT ARE INCONSISTENT WITH THE
LIMITATIONS OR LIABILITIES OR AUTHORITIES AND POWERS OF THE TRUSTEES AS SET
FORTH OR REFERENCED IN THIS TRUST AGREEMENT. SECTION 3540 OF TITLE 12 OF THE
DELAWARE CODE SHALL NOT APPLY TO THE TRUST.

     Section 10.5. Payments Due on Non-Business Day.

     If the date fixed for any payment on any Trust Security shall be a day that
is not a Business Day, then such payment need not be made on such date but may
be made on the next succeeding day that is a Business Day (except as otherwise
provided in Sections 4.1(a) and 4.2(d)), with the same force and effect as
though made on the date fixed for such payment, and no interest shall accrue
thereon for the period after such date.

     Section 10.6. Successors.

     This Trust Agreement shall be binding upon and shall inure to the benefit
of any successor to the Depositor, the Trust, the Administrators or the Relevant
Trustee, including any

                                       53
<PAGE>

successor by operation of law. Except in connection with transactions permitted
under Article V of the Indenture and pursuant to which the assignee agrees in
writing to perform the Depositor's obligations hereunder, the Depositor shall
not assign its obligations hereunder.

     Section 10.7. Headings.

     The Article and Section headings are for convenience only and shall not
affect the construction of this Trust Agreement.

     Section 10.8. Reports, Notices and Demands.

     Any report, notice, demand or other communication which by any provision of
this Trust Agreement is required or permitted to be given or served to or upon
any Holder or the Depositor may be given or served in writing by deposit
thereof, first-class postage prepaid, in the United States mail, hand delivery
or facsimile transmission, in each case, addressed, (a) in the case of a Holder
of Preferred Securities, to such Holders of Preferred Securities as such
Holder's name and address may appear on the Securities Register; and (b) in the
case of the Holder of the Common Securities or the Depositor, to Old National
Bancorp, 420 Main Street, Evansville, Indiana 47708, Attention: Corporate
Secretary, facsimile no.: 812-464-1567. Such notice, demand or other
communication to or upon a Holder shall be deemed to have been sufficiently
given or made, for all purposes, upon hand delivery, mailing or transmission.
Such notice, demand or other communication to or upon the Depositor shall be
deemed to have been sufficiently given or made only upon actual receipt of the
writing by the Depositor.

     Any notice, demand or other communication which by any provision of this
Trust Agreement is required or permitted to be given or served to or upon the
Trust, the Property Trustee, the Delaware Trustee or the Administrators shall be
given in writing addressed (until another address is published by the Trust) as
follows: (a) with respect to the Property Trustee to Bank One Trust Company, NA,
Attention: Corporate Trust Administration; (b) with respect to the Delaware
Trustee, to Bank One Delaware, Inc., Attention: Legal Dept./First USA; and (c)
with respect to the Administrators, to them at the address above for notices to
the Depositor, marked "Attention Administrators of ONB Capital Trust II." Such
notice, demand or other communication to or upon the Trust or the Property
Trustee shall be deemed to have been sufficiently given or made only upon actual
receipt of the writing by the Trust or the Property Trustee.

     Section 10.9. Agreement Not to Petition.

     Each of the Issuer Trustees and the Depositor agree for the benefit of the
Holders that, until at least one year and one day after the Trust has been
terminated in accordance with Article IX, they shall not file, or join in the
filing of, a petition against the Trust under any bankruptcy, insolvency,
reorganization or other similar law (including, without limitation, the United
States Bankruptcy Code) (collectively, "Bankruptcy Laws") or otherwise join in
the commencement of any proceeding against the Trust under any Bankruptcy Law.
In the event the Depositor takes action in violation of this Section 10.9, the
Property Trustee agrees, for the benefit of Holders, that at the expense of the
Depositor, it shall file an answer with the bankruptcy court or otherwise
properly contest the filing of such petition by the Depositor against the Trust
or the

                                       54
<PAGE>

commencement of such action and raise the defense that the Depositor has agreed
in writing not to take such action and should be stopped and precluded therefrom
and such other defenses, if any, as counsel for the Issuer Trustee or the Trust
may assert. The provisions of this Section 10.9 shall survive the termination of
this Trust Agreement.

     Section 10.10. Trust Indenture Act; Conflict with Trust Indenture Act.

     (a) This Trust Agreement is subject to the provisions of the Trust
Indenture Act that are required to be part of this Trust Agreement in order for
this Trust Agreement to be qualified and shall, to the extent applicable, be
governed by such provisions.

     (b) The Property Trustee shall be the only Issuer Trustee which is a
trustee for the purposes of the Trust Indenture Act.

     (c) If any provision hereof limits, qualifies or conflicts with the duties
imposed by Sections 310 through 317, inclusive, of the Trust Indenture Act
through the operation of Section 318(c) thereof, such imposed duties shall
control. If any provision of this Trust Agreement modifies or excludes any
provision of the Trust Indenture Act which may be so modified or excluded, the
latter provision shall be deemed to apply to this Trust Agreement as so modified
or excluded, as the case may be.

     (d) The application of the Trust Indenture Act to this Trust Agreement
shall not affect the nature of the Trust Securities as equity securities
representing undivided beneficial ownership interests in the Trust Property.

     Section 10.11. Acceptance of Terms of Trust Agreement, Guarantee and
Indenture.

     THE RECEIPT AND ACCEPTANCE OF A TRUST SECURITY OR ANY INTEREST THEREIN BY
OR ON BEHALF OF A HOLDER OR ANY BENEFICIAL OWNER, WITHOUT ANY SIGNATURE OR
FURTHER MANIFESTATION OF ASSENT, SHALL CONSTITUTE THE UNCONDITIONAL ACCEPTANCE
BY THE HOLDER AND ALL OTHERS HAVING A BENEFICIAL OWNERSHIP INTEREST IN SUCH
TRUST SECURITY OF ALL THE TERMS AND PROVISIONS OF THIS TRUST AGREEMENT AND, TO
THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, AGREEMENT TO THE SUBORDINATION
PROVISIONS AND OTHER TERMS OF THE GUARANTEE AND THE INDENTURE, AND SHALL
CONSTITUTE THE AGREEMENT OF THE TRUST, SUCH HOLDER AND SUCH OTHERS THAT THE
TERMS AND PROVISIONS OF THIS TRUST AGREEMENT SHALL BE BINDING, OPERATIVE AND
EFFECTIVE AS BETWEEN THE TRUST AND SUCH HOLDER AND SUCH OTHERS.

     Section 10.12. Counterparts.

     This Trust Agreement may contain more than one counterpart of the signature
page and this Trust Agreement may be executed by the affixing of the signature
of each of the Issuer Trustees, the Depositor and Administrators to any of such
counterpart signature pages. All of such counterpart signature pages shall be
read as though one, and they shall have the same force and effect as though all
of the signers had signed a single signature page.

                                       55
<PAGE>

IN WITNESS WHEREOF, the undersigned have caused these presents to be executed as
of the day and year first above written.

                                                BANK ONE DELAWARE, INC.,
                                                     as Delaware Trustee

                                                By: ___________________________
                                                      Name:
                                                      Title:

                                                 BANK ONE TRUST COMPANY, NA,
                                                     as Property Trustee

                                                By: ___________________________
                                                      Name:
                                                      Title:

                                                OLD NATIONAL BANCORP,
                                                     as Depositor

                                                By: ___________________________
                                                      Name:
                                                      Title:

Attest:    By: ___________________________
                 Name:
                 Title:

                                                By: ___________________________
                                                      Name: James Risinger
                                                      Administrator

                                                By: ___________________________
                                                      Name: John Poelker
                                                      Administrator

                                                By: ___________________________
                                                      Name: Thomas Clayton
                                                      Administrator

                                       56
<PAGE>

                                    EXHIBIT A

                       FORM OF COMMON SECURITY CERTIFICATE

         THIS COMMON SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS OR ANY OTHER APPLICABLE
SECURITIES LAWS AND MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED
EXCEPT PURSUANT TO AN EXEMPTION FROM REGISTRATION. THIS CERTIFICATE IS NOT
TRANSFERABLE OTHER THAN IN ACCORDANCE WITH THE TRUST AGREEMENT (AS DEFINED
BELOW).

Certificate Number                                 Number Of Common Securities:
[      ]                                           [        ]

                    Certificate Evidencing Common Securities

                                       of

                              ONB Capital Trust II

                                         % Common Securities
                  (Liquidation Amount $25 Per Common Security)

     ONB Capital Trust II, a statutory business trust created under the laws of
the State of Delaware (the "Trust"), hereby certifies that Old National Bancorp
(the "Holder") is the registered owner of [ ] ($[ ]) common securities of the
Trust representing undivided beneficial ownership interests of the Trust and
designated the % Common Securities (liquidation amount $25 per Common Security)
(the "Common Securities"). To the extent set forth in Section 5.11 of the Trust
Agreement (as defined below) the Common Securities are not transferable and any
attempted transfer hereof shall be null and void ab initio. The designations,
rights, privileges, restrictions, preferences and other terms and provisions of
the Common Securities are set forth in, and this certificate and the Common
Securities represented hereby are issued pursuant to, and shall in all respects
be subject to the terms and provisions of, the Amended and Restated Trust
Agreement of the Trust dated as of , among the Administrators named therein,
Bank One Delaware, Inc., as Delaware Trustee, Bank One Trust Company, NA, as
Property Trustee, the Holder, as Depositor, and the Holders from time to time of
the Trust Securities, as the same may be amended, supplemented or restated from
time to time (the "Trust Agreement") including the designation of the terms of
the Common Securities as set forth therein. The Trust will furnish a copy of the
Trust Agreement to the Holder without charge upon written request to the Trust
at its principal place of business or registered office. Capitalized terms used
but not defined herein shall have the meanings assigned to such terms in the
Trust Agreement.

     By acceptance of this certificate, the Holder agrees to treat, for United
States federal income tax purposes, the Debentures as indebtedness.

                                      A-1
<PAGE>

     Upon receipt of this certificate, the Holder is bound by the Trust
Agreement and is entitled to the benefits thereunder.

     This certificate and the Common Securities shall be governed by and
interpreted in accordance with the laws of the State of Delaware (without regard
to principles of conflict of laws).

     IN WITNESS WHEREOF, one of the Administrators of the Trust has executed
this certificate this     day of     .

                           ONB Capital Trust II

                           By: _____________________________________
                                    Name:
                                    Administrator

                                      A-2
<PAGE>

                                    EXHIBIT B

                     FORM OF PREFERRED SECURITY CERTIFICATE

         Insert the first paragraph only if this is a global security:

     THIS PREFERRED SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE
TRUST AGREEMENT HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF THE
DEPOSITORY TRUST COMPANY (THE "DEPOSITORY") OR A NOMINEE OF THE DEPOSITORY. THIS
PREFERRED SECURITY IS EXCHANGEABLE FOR PREFERRED SECURITIES REGISTERED IN THE
NAME OF A PERSON OTHER THAN THE DEPOSITORY OR ITS NOMINEE ONLY IN THE LIMITED
CIRCUMSTANCES DESCRIBED IN THE TRUST AGREEMENT AND NO TRANSFER OF THIS PREFERRED
SECURITY (OTHER THAN A TRANSFER OF THIS PREFERRED SECURITY AS A WHOLE BY THE
DEPOSITORY TO A NOMINEE OF THE DEPOSITORY OR BY A NOMINEE OF THE DEPOSITORY TO
THE DEPOSITORY OR ANOTHER NOMINEE OF THE DEPOSITORY) MAY BE REGISTERED EXCEPT IN
THE LIMITED CIRCUMSTANCES DESCRIBED IN THE TRUST AGREEMENT.

     UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY (55 WATER STREET, A NEW YORK CORPORATION ("DTC")) TO
THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND
ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER
NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS
MADE TO CEDE & CO., OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC) ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

Certificate Number:                            Number Of Preferred Securities:
[       ]                                      [       ]

                                               CUSIP No.

                   Certificate Evidencing Preferred Securities

                                       of

                              ONB Capital Trust II

                                         % Preferred Securities

                 (Liquidation Amount $25 Per Preferred Security)

     ONB Capital Trust II, a statutory business trust created under the laws of
the State of Delaware (the "Trust"), hereby certifies that Cede & Co. (the
"Holder") is the registered owner of [     ] ($[     ]) preferred securities of
the Trust representing non-voting,

                                      B-1
<PAGE>

cumulative, preferred undivided beneficial ownership interests in the Trust
Property of the Trust and designated the ONB Capital Trust II    % Preferred
Securities (liquidation amount $25 per security) (the "Preferred Securities").
The Preferred Securities are transferable on the books and records of the Trust,
in person or by a duly authorized attorney, upon surrender of this certificate
duly endorsed and in proper form for transfer as provided in Section 5.4 of the
Trust Agreement. The designations, rights, privileges, restrictions, preferences
and other terms and provisions of the Preferred Securities are set forth in, and
this certificate and the Preferred Securities represented hereby are issued
pursuant to, and shall in all respects be subject to the terms and provisions
of, the Amended and Restated Trust Agreement of the Trust dated as of , among
the Administrators named therein, Bank One Delaware Inc., as Delaware Trustee,
Bank One Trust Company, NA, as Property Trustee, Old National Bancorp, as
Depositor, and the Holders from time to time of the Trust Securities, as the
same may be amended, supplemented or restated from time to time (the "Trust
Agreement"), including the designation of the terms of Preferred Securities as
set forth therein. The Holder is entitled to the benefits of the Guarantee
Agreement entered into by Old National Bancorp, an Indiana corporation, and Bank
One Trust Company, NA, as guarantee trustee, dated as of      , as the same may
be amended from time to time (the "Guarantee"), to the extent provided therein.
The Trust will furnish a copy of the Trust Agreement and the Guarantee to the
Holder without charge upon written request to the Trust at its principal place
of business or registered office. Capitalized terms used but not defined herein
shall have the meanings assigned to such terms in the Trust Agreement.

     By acceptance of this certificate, the Holder agrees to treat, for United
States federal income tax purposes, the Debentures as indebtedness.

     Upon receipt of this certificate, the Holder is bound by the Trust
Agreement and is entitled to the benefits thereunder.

     This certificate and the Preferred Securities shall be governed by and
interpreted in accordance with the laws of the State of Delaware (without regard
to principles of conflict of laws).

     Upon receipt of this certificate, the Holder is bound by the Trust
Agreement and is entitled to the benefits thereunder.

     In Witness Whereof, one of the Administrators of the Trust has executed
this certificate this day of .

                              ONB Capital Trust II

                              By: _____________________________________
                                      Name:
                                      Administrator

                                      B-2
<PAGE>

                                   ASSIGNMENT

For Value Received, the undersigned assigns and transfers this Preferred
Security to:

          ---------------------------------------------------------------

          ---------------------------------------------------------------

          ---------------------------------------------------------------
                       (Insert assignee's social security
                          or tax identification number)

          ---------------------------------------------------------------

          ---------------------------------------------------------------

          ---------------------------------------------------------------
                    (Insert address and zip code of assignee)

and irrevocably appoints

          ---------------------------------------------------------------

          ---------------------------------------------------------------

          ---------------------------------------------------------------

agent to transfer this Preferred Security Certificate on the books of the Trust.
The agent may substitute another to act for him or her.

Date:

Signature:
          ---------------------------------------------------------------
              (Sign exactly as your name appears on the other side
                     of this Preferred Security Certificate)

-------------------------------------------------------------------------

The signature(s) should be guaranteed by an eligible guarantor institution
(banks, stockbrokers, savings and loan associations and credit unions with
membership in an approved signature guarantee medallion program), pursuant to
S.E.C. Rule 17Ad-15.

                                      B-3<PAGE>

                                                                    Exhibit 10.8
                                                                  EXECUTION COPY

                                U.S. $51,000,000

                AMENDED AND RESTATED CREDIT AGREEMENT (FIVE YEAR)

                                      among

                           NASCO INTERNATIONAL, INC.,

                                as the Borrower,

                                       and

                         VARIOUS FINANCIAL INSTITUTIONS
                        NOW OR HEREAFTER PARTIES HERETO,

                                 as the Lenders,

                              BANK ONE, WISCONSIN,

                             as Documentation Agent

                                       and

                              BANK OF AMERICA, N.A.

                   as the Administrative Agent for the Lenders

                         BANC OF AMERICA SECURITIES LLC

                   as Sole Lead Arranger and Sole Book Manager

<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                            PAGE
<S>                                                                         <C>
ARTICLE I      DEFINITIONS AND ACCOUNTING TERMS ............................   1

   SECTION 1.1       Defined Terms .........................................   1
   SECTION 1.2       Use of Defined Terms ..................................  19
   SECTION 1.3       Cross-References ......................................  19
   SECTION 1.4       Accounting and Financial Determinations ...............  20

ARTICLE II     COMMITMENTS, BORROWING PROCEDURES AND NOTES .................  20

   SECTION 2.1       Commitments. ..........................................  20
   SECTION 2.1.1     Commitment of Each Lender .............................  20
   SECTION 2.2       Reduction of Commitment Amount ........................  20
   SECTION 2.2.1     Optional ..............................................  20
   SECTION 2.2.2     [Mandatory]. [Reserved]. ..............................  20
   SECTION 2.3       Borrowing Procedure. ..................................  20
   SECTION 2.3.1     Borrowings ............................................  20
   SECTION 2.3.2     All Borrowings ........................................  20
   SECTION 2.4       Continuation and Conversion Elections .................  21
   SECTION 2.5       Funding ...............................................  21
   SECTION 2.6       Notes .................................................  21

ARTICLE III    REPAYMENTS, PREPAYMENTS, INTEREST AND FEES ..................  22

   SECTION 3.1       Repayments and Prepayments. ...........................  22
   SECTION 3.1.1     Repayment of Loans ....................................  22
   SECTION 3.1.2     Prepayment of Loans ...................................  22
   SECTION 3.2       Interest Provisions ...................................  23
   SECTION 3.2.1     Rates .................................................  23
   SECTION 3.2.2     Default Rates .........................................  24
   SECTION 3.2.3     Payment Dates .........................................  24
   SECTION 3.3       Fees ..................................................  24
   SECTION 3.4       Agent's Fee ...........................................  24

ARTICLE IV     CERTAIN EURODOLLAR RATE AND OTHER PROVISIONS ................  25

   SECTION 4.1       Eurodollar Rate Lending Unlawful ......................  25
   SECTION 4.2       Deposits Unavailable ..................................  25
   SECTION 4.3       Increased Costs, etc ..................................  25
   SECTION 4.4       Funding Losses ........................................  26
   SECTION 4.5       Increased Capital Costs ...............................  26
   SECTION 4.6       Taxes .................................................  26
   SECTION 4.7       Payments, Computations, etc ...........................  27
   SECTION 4.8       Sharing of Payments ...................................  28
   SECTION 4.9       Setoff ................................................  28
   SECTION 4.10      Use of Proceeds .......................................  29

ARTICLE V      CONDITIONS TO EFFECTIVENESS AND BORROWINGS ..................  29
</TABLE>

                                       i

<PAGE>

<TABLE>
<S>                                                                           <C>
   SECTION 5.1       Effectiveness .........................................  29
   SECTION 5.1.1     Resolutions, etc ......................................  29
   SECTION 5.1.2     Delivery of Notes .....................................  29
   SECTION 5.1.3     Credit Agreements .....................................  29
   SECTION 5.1.4     Confirmation ..........................................  29
   SECTION 5.1.5     Satisfaction with Tax Sharing Agreement ...............  30
   SECTION 5.1.6     Opinions of Counsel ...................................  30
   SECTION 5.1.7     Closing Fees, Expenses, etc ...........................  30
   SECTION 5.1.8     No Materially Adverse Effect ..........................  30
   SECTION 5.1.9     Compliance with Warranties, No Default, etc ...........  30
   SECTION 5.1.10    Satisfactory Legal Form ...............................  31
   SECTION 5.2       All Borrowings ........................................  31
   SECTION 5.2.1     Compliance with Warranties, No Default, etc ...........  31
   SECTION 5.2.2     Borrowing Request .....................................  31
   SECTION 5.2.3     Satisfactory Legal Form ...............................  32
   SECTION 5.2.4     Consummation of AMEP Acquisition ......................  32

ARTICLE VI     REPRESENTATIONS AND WARRANTIES ..............................  32

   SECTION 6.1       Organization, etc .....................................  32
   SECTION 6.2       Due Authorization, Non-Contravention, etc .............  32
   SECTION 6.3       Government Approval, Regulation, etc ..................  33
   SECTION 6.4       Validity, etc .........................................  33
   SECTION 6.5       Financial Information .................................  33
   SECTION 6.6       No Material Adverse Change ............................  34
   SECTION 6.7       Litigation, Labor Controversies, etc ..................  34
   SECTION 6.8       Subsidiaries ..........................................  34
   SECTION 6.9       Ownership of Properties ...............................  34
   SECTION 6.10      Taxes .................................................  34
   SECTION 6.11      Pension and Welfare Plans .............................  35
   SECTION 6.12      Environmental Warranties ..............................  35
   SECTION 6.13      Regulations U and X ...................................  36
   SECTION 6.14      Real Property; Mortgage, etc ..........................  36
   SECTION 6.15      The Collateral Documents ..............................  36
   SECTION 6.16      Accuracy of Information ...............................  37
   SECTION 6.17      Subordinated Debt .....................................  37
   SECTION 6.18      Intellectual Property .................................  37

ARTICLE VII    COVENANTS ...................................................  38

   SECTION 7.1       Affirmative Covenants .................................  38
   SECTION 7.1.1     Financial Information, Reports, Notices, etc ..........  38
   SECTION 7.1.2     Compliance with Laws, etc .............................  39
   SECTION 7.1.3     Maintenance of Properties .............................  40
   SECTION 7.1.4     Insurance .............................................  40
   SECTION 7.1.5     Books and Records .....................................  40
   SECTION 7.1.6     Environmental Covenant ................................  40
   SECTION 7.1.7     Fourth Amendment to Mortgage ..........................  41
   SECTION 7.1.8     Modesto Property ......................................  42
</TABLE>

                                       ii

<PAGE>

<TABLE>
<S>                                                                                     <C>
   SECTION 7.1.9     AMEP Property ...................................................  42
   SECTION 7.1.10    Subsidiary Pledge Agreement and Subsidiary Security Agreement ...  43
   SECTION 7.1.11    Further Assurances ..............................................  43
   SECTION 7.2       Negative Covenants ..............................................  44
   SECTION 7.2.1     Business Activities .............................................  44
   SECTION 7.2.2     Indebtedness ....................................................  44
   SECTION 7.2.3     Liens ...........................................................  45
   SECTION 7.2.4     Financial Condition .............................................  45
   SECTION 7.2.5     Investments .....................................................  46
   SECTION 7.2.6     Restricted Payments, etc ........................................  47
   SECTION 7.2.7     Capital Expenditures, etc .......................................  47
   SECTION 7.2.8     Take or Pay Contracts ...........................................  47
   SECTION 7.2.9     Consolidation, Merger, etc ......................................  48
   SECTION 7.2.10    Asset Dispositions, etc .........................................  48
   SECTION 7.2.11    Modification of Tax Sharing Agreement and Subordinated Debt .....  48
   SECTION 7.2.12    Transactions with Affiliates ....................................  48
   SECTION 7.2.13    Inconsistent Agreements .........................................  49
   SECTION 7.2.14    Negative Pledges, Restrictive Agreements, etc ...................  49
   SECTION 7.2.15    Management Fees .................................................  49
   SECTION 7.2.16    Tax Sharing Payments ............................................  49
   SECTION 7.2.17    Use of Proceeds .................................................  50

ARTICLE VIII  EVENTS OF DEFAULT ......................................................  50

   SECTION 8.1       Listing of Events of Default ....................................  50
   SECTION 8.1.1     Non-Payment of Obligations ......................................  50
   SECTION 8.1.2     Breach of Warranty ..............................................  50
   SECTION 8.1.3     Non-Performance of Certain Covenants and Obligations ............  50
   SECTION 8.1.4     Non-Performance of Other Covenants and Obligations ..............  50
   SECTION 8.1.5     Default on Other Indebtedness ...................................  50
   SECTION 8.1.6     Judgments .......................................................  50
   SECTION 8.1.7     Pension Plans ...................................................  51
   SECTION 8.1.8     Control of the Borrower .........................................  51
   SECTION 8.1.9     Bankruptcy, Insolvency, etc .....................................  51
   SECTION 8.1.10    Impairment of Security, etc .....................................  52
   SECTION 8.2       Action if Bankruptcy ............................................  52
   SECTION 8.3       Action if Other Event of Default ................................  52
   SECTION 8.4       Cumulative Remedies .............................................  52

ARTICLE IX    THE AGENT ..............................................................  52

   SECTION 9.1       Actions .........................................................  52
   SECTION 9.2       Funding Reliance, etc ...........................................  53
   SECTION 9.3       Exculpation .....................................................  53
   SECTION 9.4       Successor .......................................................  53
   SECTION 9.5       Loans by Bank of America ........................................  54
   SECTION 9.6       Credit Decisions ................................................  54
   SECTION 9.7       Copies, etc .....................................................  54
   SECTION 9.8       Action Through Agent ............................................  54
</TABLE>

                                      iii

<PAGE>

<TABLE>
<S>                                                                             <C>
   SECTION 9.9       Documentation Agents ....................................  54
   SECTION 9.10      Collateral Matters ......................................  55

ARTICLE X     MISCELLANEOUS PROVISIONS .......................................  55

   SECTION 10.1      Waivers, Amendments, etc ................................  55
   SECTION 10.2      Notices .................................................  56
   SECTION 10.3      Payment of Costs and Expenses ...........................  56
   SECTION 10.4      Indemnification .........................................  57
   SECTION 10.5      Survival ................................................  58
   SECTION 10.6      Severability ............................................  58
   SECTION 10.7      Headings ................................................  58
   SECTION 10.8      Execution in Counterparts ...............................  58
   SECTION 10.9      Governing Law; Entire Agreement .........................  59
   SECTION 10.10     Successors and Assigns ..................................  59
   SECTION 10.11     Sale and Transfer of Loans and Notes; Participations
                     in Loans and Notes ......................................  59
   SECTION 10.11.1   Assignments .............................................  59
   SECTION 10.11.2   Participations ..........................................  60
   SECTION 10.11.3   Information and Assistance ..............................  61
   SECTION 10.12     Other Transactions ......................................  61
   SECTION 10.13     Maximum Interest. .......................................  61
   SECTION 10.14     Forum Selection and Consent to Jurisdiction .............  63
   SECTION 10.15     Waiver of Jury Trial ....................................  63
</TABLE>

SCHEDULES

SCHEDULE I       Disclosure Schedule
SCHEDULE II      Pricing Schedule

EXHIBITS

EXHIBIT A        Form of Note
EXHIBIT B        Form of Borrowing Request
EXHIBIT C        Form of Continuation/Conversion Notice
EXHIBIT D        Copy of Pledge Agreement
EXHIBIT E        Copy of Security Agreement
EXHIBIT F        Form of Subsidiary Pledge Agreement
EXHIBIT G        Form of Subsidiary Security Agreement
EXHIBIT H        Form of Opinion of Counsel
EXHIBIT I        Form of Lender Assignment Agreement
EXHIBIT J        Form of Confirmation

                                       iv

<PAGE>

                AMENDED AND RESTATED CREDIT AGREEMENT (FIVE YEAR)

          THIS AMENDED AND RESTATED CREDIT AGREEMENT (FIVE YEAR), dated as of
May 29, 2001, among NASCO INTERNATIONAL, INC., a Wisconsin corporation (the
"Borrower"), the various financial institutions which are now, or in accordance
 --------
with Section 10.11.1 hereafter become, parties hereto (collectively, the
     ---------------
"Lenders"), BANK ONE, WISCONSIN, as Documentation Agent (in such capacity, the
 -------
"Documentation Agent"), and BANK OF AMERICA, N.A., as administrative agent (in
 -------------------
such capacity, the "Agent") for the Lenders.
                    -----

                              W I T N E S S E T H:

WHEREAS, the Borrower, various financial institutions and the Agent have entered
into a Credit Agreement dated as of March 31, 2000 (the "Existing Credit
                                                         ---------------
Agreement");
---------

          WHEREAS, the parties hereto have agreed to amend and restate the
Existing Credit Agreement so as to, among other things, increase the amount of
the facility and amend certain covenants and various other provisions of the
Existing Credit Agreement;

          WHEREAS, proceeds of the Loans will be used to finance the AMEP
Acquisition and to refinance the Existing Credit Agreement;

          WHEREAS, the parties hereto intend that this Agreement and the
documents executed in connection herewith not effect a novation of the
obligations of the Borrower under the Existing Credit Agreement, but merely a
restatement of and, where applicable, an amendment to the terms governing such
obligations;

          NOW, THEREFORE, in consideration of the premises and the mutual
agreements and covenants herein contained, the parties agree as follows:

                                   ARTICLE I.

                        DEFINITIONS AND ACCOUNTING TERMS

          SECTION 1.1 Defined Terms. The following terms (whether or not
                      -------------
underscored) when used in this Agreement, including its preamble and recitals,
shall, except where the context otherwise requires, have the following meanings
(such meanings to be equally applicable to the singular and plural forms
thereof):

          "Acquired Companies" means AMEP and Spectrum.
           ------------------

          "Acquisition Agreements" means the AMEP Acquisition Agreement and the
           ----------------------
Spectrum Acquisition Agreement.

          "Acquisitions" means the AMEP Acquisition and the Spectrum
           ------------
Acquisition.

                                        1

<PAGE>

          "Affiliate" of any Person means (a) any other Person which, directly
           ---------
or indirectly, controls, is controlled by or is under common control with such
Person (excluding any trustee under, or any committee with responsibility for
administering, any Plan) and (b) any Person who is a general partner, director
or officer of such Person or of any Person described in the foregoing clause
                                                                      ------
(a). A Person shall be deemed to be "controlled by" any other Person if such
---
other Person possesses, directly or indirectly, power

               (a)  to vote 10% or more of the securities (on a fully diluted
          basis) having ordinary voting power for the election of directors or
          managing general partners; or

               (b)  to direct or cause the direction of the management and
          policies of such Person whether by contract or otherwise.

          "Agent" is defined in the preamble and includes each other Person
           -----                    --------
which shall have subsequently been appointed as the successor Agent pursuant to
Section 9.4.
-----------

          "Agent's Fee Letter" means that certain Appendix A to the Summary of
           ------------------
Terms and Conditions dated May 29, 2001 regarding fees.

          "Agreement" means this Amended and Restated Credit Agreement (Five
           ---------
Year) as the same may thereafter from time to time be further amended,
supplemented, amended and restated or otherwise modified in accordance with the
terms hereof.

          "AMEP" means American Educational Products, Inc.
           ----

          "AMEP Acquisition" means the acquisition by the Borrower of AMEP
           ----------------
pursuant to the AMEP Acquisition Agreement, which shall be comprised of (i) the
purchase by the Borrower of the common stock of AMEP from the public, (ii) the
refinancing of a note payable to Geneve, (iii) the payment of a dividend to
Holdings and (iv) the refinancing of the existing credit facility between U.S.
Bank and AMEP.

          "AMEP Acquisition Agreement" means the Agreement and Plan of Merger
           --------------------------
between G.C. Associates Holdings Corp. and American Educational Products, Inc.,
dated August 14, 2000 (as amended) in the form previously delivered to the
Agent.

          "AMEP Mortgage" means that certain Mortgage executed and delivered by
           -------------
the Borrower pursuant to Section 7.1.9, as amended, supplemented, restated,
                         -------------
extended, renewed, partially released or otherwise modified from time to time.

          "AMEP Property" means the Property (as such term is defined in the
           -------------
AMEP Mortgage).

          "Applicable Margin" means the rate per annum determined pursuant to
           -----------------
Schedule II.
-----------

          "Assignee Lender" is defined in Section 10.11.1.
           ---------------                ---------------

                                        2

<PAGE>

          "Authorized Officer" means, relative to the Borrower, those of its
           ------------------
officers whose signatures and incumbency shall have been certified to the Agent
and the Lenders pursuant to Section 5.1.1.
                            -------------

          "Bank of America" means Bank of America, N.A.
           ---------------

          "Base Rate" means a fluctuating rate per annum equal to the higher of
           ---------
(a) the Federal Funds Rate plus 1/2 of 1% and, (b) the rate of interest in
effect for such day as publicly announced from time to time by Bank of America
as its "prime rate." Such rate is a rate set by Bank of America based upon
various factors including Bank of America's costs and desired return, general
economic conditions and other factors, and is used as a reference point for
pricing some loans, which may be priced at, above, or below such announced rate.
Any change in such rate announced by Bank of America shall take effect at the
opening of business on the day specified in the public announcement of such
change.

          "Base Rate Loan" means a Loan bearing interest at a fluctuating rate
           --------------

determined by reference to the Base Rate.

          "Borrower" is defined in the preamble.
           --------                    --------

          "Borrowing" means the Loans of the same type and, in the case of
           ---------
Eurodollar Rate Loans, having the same Interest Period made by all Lenders on
the same Business Day and pursuant to the same Borrowing Request in accordance
with Section 2.1.
     -----------

          "Borrowing Request" means a loan request and certificate duly executed
           -----------------
by an Authorized Officer of the Borrower, substantially in the form of Exhibit B
                                                                       ---------
hereto.

          "Business Day" means
           ------------

                  (a)  any day which is neither a Saturday or Sunday nor a legal
          holiday on which banks are authorized or required to be closed in New
          York, New York, Chicago, Illinois or Ft. Atkinson, Wisconsin; and

                  (b)  relative to the making, continuing, prepaying or repaying
          of any Eurodollar Rate Loans, including with respect to the giving of
          notices required under this Agreement therefor, any day described in
          the foregoing clause (a) which is also a day on which dealings in
                        ----------
          Dollars are carried on in the London interbank market.

          "Business Plan" means the business plan for the Borrower entitled
           -------------
"Nasco International, Inc. Consolidated Business Plan for Year Ended December
31, 2001", heretofore delivered to the Lenders.

          "Capital Expenditures" means, for any period, the sum of
           --------------------

                  (a)  the aggregate amount of all expenditures of the Borrower
          and its Subsidiaries for fixed or capital assets made during such
          period which, in accordance

                                        3

<PAGE>

     with GAAP, would be classified as capital expenditures and, without
     duplication, all amounts expended under Section 7.2.9(b);
                                             ----------------

          (b)  and the aggregate amount of all Capitalized Lease Liabilities
     incurred during such period.

     "Capitalized Lease Liabilities" means all monetary obligations of the
      -----------------------------
Borrower or any of its Subsidiaries under any leasing or similar arrangement
which, in accordance with GAAP, would be classified as capitalized leases, and,
for purposes of this Agreement and each other Loan Document, the amount of such
obligations shall be the capitalized amount thereof, determined in accordance
with GAAP, and the stated maturity thereof shall be the date of the last payment
of rent or any other amount due under such lease prior to the first date upon
which such lease may be terminated by the lessee without payment of a penalty.

     "Cash Equivalent Investment" means, at any time:
      --------------------------

          (a)  any evidence of Indebtedness issued or guaranteed by the United
     States Government;

          (b)  commercial paper, maturing not more than nine months from the
     date of issue, which is issued by

               (i)  a corporation (other than an Affiliate of the Borrower)
          organized under the laws of any state of the United States or of the
          District of Columbia and rated at least A-l by Standard & Poor's
          Ratings Services or P-l by Moody's Investors Service, Inc., or

               (ii) any Lender (or its holding company);

          (c)  any certificate of deposit or bankers acceptance, maturing not
     more than one year after such time, which is issued by either

               (i)  a commercial banking institution that is a member of the
          Federal Reserve System and has a combined capital and surplus and
          undivided profits of not less than $500,000,000, or

               (ii) any Lender; or

          (d)  any repurchase agreement entered into with any Lender, any other
     commercial banking institution of the stature referred to in clause (c)(i)
                                                                  -------------
     or any investment banking firm or broker which (directly or through a
     parent or subsidiary corporation) issues commercial paper maturing not more
     than nine months from the date of issue with a rating of at least A-1 by
     Standard & Poor's Ratings Group or P-1 by Moody's Investors Service, Inc.,
     which repurchase agreement

                                        4

<PAGE>

                           (i)   is secured by a fully perfected security
                  interest in any obligation of the type described in any of
                  clauses (a) through (c), and
                  -----------         ---

                           (ii)  has a market value at the time such repurchase
                  agreement is entered into of not less than 100% of the
                  repurchase obligation of such Lender (or other commercial
                  banking institution) thereunder.

          "CERCLA" means the Comprehensive Environmental Response, Compensation
           ------
and Liability Act of 1980, as amended.

          "CERCLIS" means the Comprehensive Environmental Response Compensation
           -------
Liability Information System List.

          "Change in Control" means
           -----------------

                  (a)  at any time when the aggregate principal amount of
          Indebtedness outstanding hereunder exceeds $10,000,000, Edward Netter
          and members of his family shall cease to own and control, individually
          or in the aggregate, directly or through corporations controlled by
          Edward Netter and members of his family, for any reason, free and
          clear of all Liens, options or other encumbrances or rights (other
          than any pledge of capital stock of Geneve granted in favor of a
          commercial lender securing Indebtedness, which Indebtedness may not
          exceed $10,000,000 in principal amount unless and until the
          outstanding principal amount of all Loans is equal to or less than
          $10,000,000, it being understood and agreed that foreclosure upon such
          Lien shall constitute a "Change in Control"), at least 51% of the
          outstanding shares of capital stock having ordinary voting power for
          the election of directors of Geneve on a fully diluted basis, other
          than by reason of death or legal incapacity, in which case a "Change
          in Control" shall not be deemed to occur until the date which is six
          months after such death or legal incapacity; or

                  (b)  the failure of Geneve to own and control, directly (or
          indirectly through no more than one intermediate corporation) and free
          and clear of all Liens, options or other encumbrances or rights, at
          least 80% of the outstanding shares of capital stock having ordinary
          voting power for the election of directors of the Borrower on a fully
          diluted basis.

          "Code" means the Internal Revenue Code of 1986, as amended, reformed
           ----
or otherwise modified from time to time.

          "Collateral Documents" means, collectively, the Pledge Agreement, the
           --------------------
Security Agreement, the Mortgage, the Modesto Mortgage, the Fourth Amendment to
Mortgage, the Second Amendment to Modesto Mortgage, the AMEP Mortgage, the
Subsidiary Pledge Agreement, the Subsidiary Security Agreement and any other
agreement, document or instrument executed and delivered in connection
therewith.

          "Commitment" means, relative to any Lender, such Lender's obligation
           ----------
to make Loans pursuant to Section 2.1.1; collectively, for all the Lenders, the
                          -------------
"Commitments".
 -----------

                                        5

<PAGE>

          "Commitment Amount" means, on the date hereof, $51,000,000, as such
           -----------------
amount may be reduced from time to time pursuant to Section 2.2.
                                                    -----------

          "Commitment Termination Event" means
           ----------------------------

                  (a)   he occurrence of any Default described in clauses (a)
                                                                  -----------
          through (d) of Section 8.1.9 with respect to the
                  ---    -------------
          Borrower or any Significant Subsidiary; or

                  (b)   the occurrence and continuance of any other Event of
          Default and either

                        (i)   the declaration of the Loans to be due and payable
                  pursuant to Section 8.3, or
                              -----------

                        (ii)  in the absence of such declaration, the giving of
                  notice by the Agent, acting at the direction of the Required
                  Lenders, to the Borrower that the Commitments have been
                  terminated.

          "Confirmation" means the Confirmation, executed and delivered by the
           ------------
Borrower pursuant to Section 5.1.4, substantially in the form of Exhibit J
                     -------------                               ---------
hereto, as amended, supplemented, amended and restated or otherwise modified
from time to time.

          "Consolidated Current Assets" means, as of the close of any month in
           ---------------------------
each Fiscal Year, all amounts which, in accordance with GAAP consistently
applied, would be included as current assets on a consolidated balance sheet of
the Borrower and each of its Subsidiaries at such time, but in any event not
including any cash or Cash Equivalent Investments.

          "Consolidated Current Assets Level" means, as of the last day of any
           ---------------------------------
Fiscal Quarter, the sum of (i) 80% of all amounts which, in accordance with GAAP
consistently applied, would be included as gross accounts receivable on a
consolidated balance sheet of the Borrower and each of its Subsidiaries at such
time plus (ii) 60% of all amounts which, in accordance with GAAP consistently
     ----
applied, would be included as gross inventory on a consolidated balance sheet of
the Borrower and each of its Subsidiaries at such time.

          "Consolidated Current Liabilities" means, as of the close of any month
           --------------------------------
in each Fiscal Year, all amounts which, in accordance with GAAP consistently
applied, would be included as current liabilities on a consolidated balance
sheet of the Borrower and each of its Subsidiaries at such time, but shall
exclude the current portion of long-term Indebtedness.

          "Consolidated Current Ratio" means, as of the close of any month in
           --------------------------
each Fiscal Year, the ratio of Consolidated Current Assets to Consolidated
Current Liabilities at such time.

          "Consolidated Debt Service Coverage Ratio" means, as of the close of
           ----------------------------------------
any Fiscal Quarter, the ratio of:

                                       6

<PAGE>

                 (a)   EBITDA computed for the four consecutive Fiscal Quarters
          ending on the computation date

          to
          --

                 (b)   the sum of

                       (i)   Consolidated Interest Expense computed for the four
                 consecutive Fiscal Quarters ending on the computation date,

          plus
          ----

                       (ii)  Required Principal Payments as of such computation
                 date.

          "Consolidated Funded Debt" means, as of the date of any determination
           ------------------------
thereof, the aggregate outstanding principal amount of all Indebtedness of the
Borrower and each of its Subsidiaries of the nature referred to in clauses (a),
                                                                   -----------
(b), (c) and (f) of the definition of "Indebtedness".
---  ---     ---                       ------------

          "Consolidated Interest Expense" means, for any Fiscal Quarter, the
           -----------------------------
aggregate interest expense of the Borrower and each of its Subsidiaries for such
Fiscal Quarter, as determined in accordance with GAAP consistently applied,
including, without limitation, all commissions, discounts and other fees and
charges owed with respect to letters of credit and banker's acceptances and net
costs under interest rate swap or exchange agreements and the portion of any
obligation under capital leases allocable to interest expense but excluding in
any event any amounts payable under the Agent's Fee Letter.

          "Consolidated Net Income" means, for any period, all amounts which, in
           -----------------------
conformity with GAAP consistently applied, would be included under net income on
a consolidated income statement of the Borrower and each of its Subsidiaries for
such period.

          "Consolidated Net Worth" means, at any time, all amounts which, in
           ----------------------
accordance with GAAP consistently applied, would be included under shareholders'
equity on a consolidated balance sheet of the Borrower and each of its
Subsidiaries at such time; provided that, in any event, such amounts are to be
                           --------
net of amounts carried on the books of the Borrower and each of its Subsidiaries
for treasury stock.

          "Contingent Liability" means any agreement, undertaking or arrangement
           --------------------
by which any Person guarantees, endorses or otherwise becomes or is contingently
liable upon (by direct or indirect agreement, contingent or otherwise, to
provide funds for payment, to supply funds to, or otherwise to invest in, a
debtor, or otherwise to assure a creditor against loss) the indebtedness,
obligation or any other liability of any other Person (other than by
endorsements of instruments in the course of collection), or guarantees the
payment of dividends or other distributions upon the shares of any other Person.
The amount of any Person's obligation under any Contingent Liability shall
(subject to any limitation set forth therein) be deemed to be the outstanding

                                        7

<PAGE>

principal amount (or maximum principal amount, if larger) of the debt,
obligation or other liability guaranteed thereby.

          "Continuation/Conversion Notice" means a notice of continuation or
           ------------------------------
conversion and certificate duly executed by an Authorized Officer of the
Borrower, substantially in the form of Exhibit C hereto.

          "Controlled Group" means all members of a controlled group of
           ----------------
corporations and all members of a controlled group of trades or businesses
(whether or not incorporated) under common control which, together with the
Borrower, are treated as a single employer under Section 414(b) or 414(c) of the
Code or section 4001 of ERISA.

          "Credit Agreement (364 Days)" means the Amended and Restated Credit
           ---------------------------
Agreement (364 Days) of the Borrower dated the date hereof providing for loans
in the principal amount of up to $2,500,000, as the same may thereafter from
time to time be amended, supplemented, amended and restated or otherwise
modified in accordance with the terms thereof.

          "Default" means any Event of Default or any condition, occurrence or
           -------
event which, after notice or lapse of time or both, would constitute an Event of
Default.

          "Disclosure Schedule" means the Disclosure Schedule attached hereto as
           -------------------
Schedule I, as it may be amended, supplemented or otherwise modified from time
----------
to time by the Borrower with the written consent of the Agent and the Required
Lenders.

          "Dollar" and the sign "$" mean lawful money of the United States.
           ------                -

          "Domestic Office" means, relative to any Lender, the office of such
           ---------------
Lender designated as such below its signature hereto or designated in the Lender
Assignment Agreement or such other office of a Lender (or any successor or
assign of such Lender) within the United States as may be designated from time
to time by notice from such Lender to each other Person party hereto.

          "EBITDA" means, for any period, Consolidated Net Income for such
           ------
period plus to the extent deducted in determining such Consolidated Net Income,
       ----
Consolidated Interest Expense, income tax expense, depreciation and amortization
for such period; provided that for purposes of calculating EBITDA for any
                 --------
Period, the consolidated net income of any Person acquired by the Borrower or
any Subsidiary during such period (plus, to the extent deducted in determining
such consolidated net income, interest expense, income tax expense, depreciation
and amortization of such Person) shall be included on a pro forma basis for such
                                                        --- -----
period (assuming the consummation of each such acquisition and the incurrence or
assumption of any Indebtedness in connection therewith occurred on the first day
of such period, but adjusted to add back non-recurring expenses (such as owner
compensation) to the extent disclosed to and approved by the Required Lenders)
based upon (a) to the extent available, (i) the audited consolidated balance
sheet of such acquired Person and its consolidated Subsidiaries as at the end of
the fiscal year of such Person preceding the acquisition of such Person and the
related audited consolidated statements of income, stockholders' equity and cash
flows for such fiscal year and (ii) any subsequent unaudited financial
statements for such Person for the period prior to the acquisition of such

                                       8

<PAGE>

Person so long as such statements were prepared on a basis consistent with the
audited financial statements referred to above or (b) to the extent the items
listed in clause (a) are not available, such historical financial statements and
          ----------
other information as is disclosed to, and approved by, the Required Lenders.

          "Effective Date" is defined in Section 5.1.
           --------------

          "Environmental Laws" means all applicable federal, state or local
           ------------------
statutes, laws, ordinances, codes, rules, regulations and guidelines (including
consent decrees and administrative orders) relating to public health and safety
and protection of the environment.

          "ERISA" means the Employee Retirement Income Security Act of 1974, as
           -----
amended, and any successor statute of similar import, together with the
regulations thereunder, in each case as in effect from time to time. References
to sections of ERISA also refer to any successor sections.

          "Eurodollar Office" means, relative to any Lender, the office of such
           -----------------
Lender designated as such below its signature hereto or designated in the Lender
Assignment Agreement or such other office of a Lender (or any successor or
assign of such Lender) as may be designated from time to time by notice from
such Lender to the Borrower and the Agent, whether or not outside the United
States, which shall be making or maintaining Eurodollar Rate Loans of such
Lender hereunder.

          "Eurodollar Rate" means for any Interest Period with respect to any
           ---------------
Eurodollar Rate Loan, a rate per annum determined by Agent pursuant to the
following formula:

          Eurodollar Rate =     Eurodollar Base Rate
                                --------------------

                                1.00 - Eurodollar Reserve Percentage

          Where,

          "Eurodollar Base Rate" means, for such Interest Period:
           --------------------

                  (a)  the rate per annum (carried out to the fifth decimal
         place) equal to the rate determined by Agent to be the offered rate
         that appears on the page of the Telerate Screen that displays an
         average British Bankers Association Interest Settlement Rate for
         deposits in Dollars (for delivery on the first day of such Interest
         Period) with a term equivalent to such Interest Period, determined as
         of approximately 11:00 a.m. (London time) two Business Days prior to
         the first day of such Interest Period, or

                  (b)  in the event the rate referenced in the preceding
         subsection (a) does not appear on such page or service or such page or
         service shall cease to be available, the rate per annum (carried out to
         the fifth decimal place) equal to the rate determined by Agent to be
         the offered rate on such other page or other service that displays an
         average British Bankers Association Interest Settlement Rate for
         deposits in Dollars (for delivery on the

                                        9

<PAGE>

         first day of such Interest Period) with a term equivalent to such
         Interest Period, determined as of approximately 11:00 a.m. (London
         time) two Business Days prior to the first day of such Interest Period,
         or

                 (c)  in the event the rates referenced in the preceding
         subsections (a) and (b) are not available, the rate per annum
         determined by Agent as the rate of interest at which Dollar deposits
         (for delivery on the first day of such Interest Period) in same day
         funds in the approximate amount of the applicable Eurodollar Rate Loan
         and with a term equivalent to such Interest Period would be offered by
         its London Branch to major banks in the Offshore Dollar market at their
         request at approximately 11:00 a.m. (London time) two Business Days
         prior to the first day of such Interest Period.

         "Eurodollar Reserve Percentage" means, for any day during any Interest
          -----------------------------
 Period, the reserve percentage (expressed as a decimal, rounded upward to the
 next 1/100th of 1%) in effect on such day, whether or not applicable to any
 Bank, under regulations issued from time to time by the Board of Governors of
 the Federal Reserve System for determining the maximum reserve requirement
 (including any emergency, supplemental or other marginal reserve requirement)
 with respect to Eurocurrency funding (currently referred to as "Eurocurrency
 liabilities"). The Eurodollar Rate for each outstanding Eurodollar Rate Loan
 shall be adjusted automatically as of the effective date of any change in the
 Eurodollar Reserve Percentage.

          The determination of the Eurodollar Reserve Percentage and the
Eurodollar Base Rate by Agent shall be conclusive in the absence of manifest
error.

         "Eurodollar Rate Loan" means a Loan bearing interest, at all times
          --------------------
during an Interest Period applicable to such Loan, at a fixed rate of interest
determined by reference to the Eurodollar Rate.

         "Event of Default" is defined in Section 8.1.
          ----------------                -----------

         "Excess Cash Flow" means, for any period, the remainder of
          ----------------

                 (a)  Consolidated Net Income for such period,

         plus
         ----

                 (b)  to the extent deducted in determining such Consolidated
         Net Income, income tax expense, depreciation and amortization for such
         period,

         plus
         ----

                 (c)  any decrease in working capital during such period,

         plus
         ----

                 (d)  any non-cash charges

                                       10

<PAGE>

          less
          ----

                 (e)  the sum, without duplication of

                      (i)    scheduled repayments of the Loans made during such
          period pursuant to Section 3.1.1,
                             -------------

          plus
          ----

                      (ii)   voluntary prepayments of the Loans pursuant to
          Section 3.1.2 during such period,
          -------------

          plus
          ----

                      (iii)  cash payments made in such period with respect to
          Capital Expenditures,

          plus
          ----

                      (iv)   all federal, state, local and foreign income taxes
          paid by the Borrower and its Subsidiaries  during such period,

          plus
          ----

                      (v)    any increases in working capital during such
          period.

          "Existing Credit Agreement" is defined in the recitals.
           -------------------------                    --------

          "Existing Note" means any promissory note of the Borrower payable to
           -------------
the initial Lender, executed and delivered by the Borrower in favor of such
Lender pursuant to the Existing Credit Agreement, evidencing the aggregate
Indebtedness of the Borrower to such Lender resulting from the Loans made to the
Borrower under the Existing Credit Agreement.

          "Federal Funds Rate" means, for any period, a fluctuating interest
           ------------------
rate per annum equal for each day during such period to

                  (a) the weighted average of the rates on overnight federal
          funds transactions with members of the Federal Reserve System arranged
          by federal funds brokers, as published for such day (or, if such day
          is not a Business Day, for the next preceding Business Day) by the
          Federal Reserve Bank of New York; or

                  (b) if such rate is not so published for any day which is a
          Business Day, the average of the quotations for such day on such
          transactions received by Bank of America from three federal funds
          brokers of recognized standing selected by it.

                                       11

<PAGE>

          "Fiscal Quarter" means any quarter of a Fiscal Year.
           --------------

          "Fiscal Year" means any period of twelve consecutive calendar months
           -----------
ending on December 31; references to a Fiscal Year with a number corresponding
to any calendar year (e.g., the "2001 Fiscal Year") refer to the Fiscal Year
                      ---
ending on December 31 occurring during such calendar year.

          "Fourth Amendment to Mortgage" means the Fourth Amendment to Mortgage
           ----------------------------
executed and delivered by the Borrower pursuant to Section 7.1.7, in form
                                                   -------------
satisfactory to the Agent, as amended, supplemented, restated, extended,
renewed, partially released or otherwise modified from time to time.

          "F.R.S. Board" means the Board of Governors of the Federal Reserve
           ------------
System or any successor thereto.

          "GAAP" is defined in Section 1.4.
           ----                -----------

          "Geneve" means Geneve Corporation, a Delaware corporation which
           ------
directly owns 80% of the voting stock of Holdings and, indirectly through such
ownership interest, owns 80% of the voting stock of the Borrower.

          "Hazardous Material" means
           ------------------

                 (a)  any "hazardous substance", as defined by CERCLA;

                 (b)  any "hazardous waste", as defined by the Resource
          Conservation and Recovery Act, as amended;

                 (c)  any petroleum product; or

                 (d)  any pollutant or contaminant or hazardous, dangerous or
          toxic chemical, material or substance within the meaning of any other
          applicable federal, state or local law, regulation, ordinance or
          requirement (including consent decrees and administrative orders)
          relating to or imposing liability or standards of conduct concerning
          any hazardous, toxic or dangerous waste, substance or material, all as
          amended or hereafter amended.

          "Hedging Obligations" means, with respect to any Person, all
           -------------------
liabilities of such Person under interest rate swap agreements, interest rate
cap agreements and interest rate collar agreements, and all other agreements or
arrangements designed to protect such Person against fluctuations in interest
rates or currency exchange rates.

          "herein", "hereof", "hereto", "hereunder" and similar terms contained
           ------    ------    ------    ---------
in this Agreement or any other Loan Document refer to this Agreement or such
other Loan Document, as the case may be, as a whole and not to any particular
Section, paragraph or provision of this Agreement or such other Loan Document.

                                       12

<PAGE>

          "Highest Lawful Rate" means, with respect to any indebtedness owed to
           -------------------
any Lender hereunder or under any other Loan Document, the maximum nonusurious
interest rate, if any, that at any time or from time to time may be contracted
for, taken, reserved, charged or received by such Lender with respect to such
indebtedness under applicable law.

          "Holdings" means NASCO Holdings, Inc., a Wisconsin corporation.
           --------

          "Impermissible Qualification" means, relative to the opinion or
           ---------------------------
certification of any independent public accountant as to any financial statement
of the Borrower, any qualification or exception to such opinion or certification

                 (a)  which is of a "going concern" or similar nature;

                 (b)  which relates to the limited scope of examination of
          matters relevant to such financial statement; or

                 (c)  which relates to the treatment or classification of any
          item in such financial statement and which, as a condition to its
          removal, would require an adjustment to such item the effect of which
          would be to cause the Borrower to be in default of any of its
          obligations under Section 7.2.4.
                            -------------

          "including" means including without limiting the generality of any
           ---------
description preceding such term, and, for purposes of this Agreement and each
other Loan Document, the parties hereto hereby agree that the rule of ejusdem
                                                                      -------
generis shall not be applicable to limit a general statement, which is followed
-------
by or referable to an enumeration of specific matters, to matters similar to the
matters specifically mentioned.

          "Indebtedness" of any Person means, without duplication:
           ------------

                 (a)  all obligations of such Person for borrowed money and all
          obligations of such Person evidenced by bonds, debentures, notes or
          other similar instruments;

                 (b)  all obligations, contingent or otherwise, relative to the
          face amount of all letters of credit, whether or not drawn, and
          banker's acceptances issued for the account of such Person;

                 (c)  all obligations of such Person as lessee under leases
          which have been or should be, in accordance with GAAP, recorded as
          Capitalized Lease Liabilities;

                 (d)  all other items which, in accordance with GAAP, would be
          included as liabilities on the liability side of the balance sheet of
          such Person as of the date at which Indebtedness is to be determined;

                 (e)  net liabilities of such Person under all Hedging
          Obligations;

                                       13

<PAGE>

                 (f)  whether or not so included as liabilities in accordance
          with GAAP, all obligations of such Person to pay the deferred purchase
          price of property or services, and indebtedness (excluding prepaid
          interest thereon) secured by a Lien on property owned or being
          purchased by such Person (including indebtedness arising under
          conditional sales or other title retention agreements), whether or not
          such indebtedness shall have been assumed by such Person or is limited
          in recourse; and

                 (g)  all Contingent Liabilities of such Person in respect of
          any of the foregoing.

          For all purposes of this Agreement, the Indebtedness of any Person
shall include the Indebtedness of any partnership or joint venture in which such
Person is a general partner or a joint venturer.

          "Indemnified Liabilities" is defined in Section 10.4.
           -----------------------                ------------

          "Indemnified Parties" is defined in Section 10.4.
           -------------------                ------------

          "Insignificant Subsidiary" means Nasco Exports.
           ------------------------

          "Interest Period" means, relative to any Eurodollar Rate Loans, the
           ---------------
period beginning on (and including) the date on which such Eurodollar Rate Loan
is made or continued as, or converted into, a Eurodollar Rate Loan pursuant to
Section 2.3 or 2.4 and shall end on (but exclude) the day which numerically
-----------    ---
corresponds to such date one, two, three or, if available (as determined in the
sole discretion of the Lenders), six months thereafter (or, if such month has no
numerically corresponding day, on the last Business Day of such month), as the
Borrower may select in its relevant notice pursuant to Section 2.3 or 2.4;
                                                       -----------    ---
provided, however, that
--------  -------

                 (a)  the Borrower shall not be permitted to select Interest
          Periods to be in effect at any one time which have expiration dates
          occurring on more than five different dates;

                 (b)  if such Interest Period would otherwise end on a day which
          is not a Business Day, such Interest Period shall end on the next
          following Business Day unless such next following Business Day is the
          first Business Day of a calendar month, in which case such Interest
          Period shall end on the Business Day next preceding such numerically
          corresponding day;

                 (c)  Interest Periods shall be selected in a manner such that
          principal amounts of the Notes required to be repaid pursuant to
          Section 3.1.2(b) hereof shall not require the breakage of any Interest
          ----------------
          Periods;

                 (d)  the Borrower may not select any Interest Period, if after
          giving effect to such selection, the aggregate principal amount of the
          all Loans having Interest Periods ending after any date on which an
          installment of principal of the Loans is scheduled to be paid pursuant
          to Section 3.1.1 would be greater than the aggregate principal amount
             -------------
          of the Loans permitted to be outstanding after payment of such
          installment; and

                                       14

<PAGE>

                 (e)  no Interest Period may end later than the Stated Maturity
          Date.

          "Investment" means, relative to any Person,
           ----------

                 (a)  any loan or advance made by such Person to any other
          Person (excluding commission, travel and similar advances to officers
          and employees made in the ordinary course of business);

                 (b)  any Contingent Liability of such Person; and

                 (c)  any ownership or similar interest held by such Person in
          any other Person.

The amount of any Investment shall be the original principal or capital amount
thereof less all returns of principal or equity thereon (and without adjustment
by reason of the financial condition of such other Person) and shall, if made by
the transfer or exchange of property other than cash, be deemed to have been
made in an original principal or capital amount equal to the fair market value
of such property.

          "Lead Arranger" means Banc of America Securities LLC, as sole lead
           -------------
arranger and sole book manager.

          "Lender Assignment Agreement" means a Lender Assignment Agreement
           ---------------------------
substantially in the form of Exhibit I hereto.
                             ---------

          "Lenders" is defined in the preamble.
           -------                    --------

          "Lien" means any security interest, mortgage, pledge, hypothecation,
           ----
assignment, deposit arrangement, encumbrance, lien (statutory or otherwise),
charge against or interest in property to secure payment of a debt or
performance of an obligation or other priority or preferential arrangement of
any kind or nature whatsoever.

          "Loan" is defined in Section 2.1.1.
           ----                -------------

          "Loan Documents" means, collectively, this Agreement, the Notes, the
           --------------
Collateral Documents, the Confirmation and any other document executed in
connection or pursuant hereto or thereto from time to time which sets forth that
it constitutes a "Loan Document", in each case as amended, supplemented, amended
and restated or otherwise modified from time to time.

          "Materially Adverse Effect" means, relative to any occurrence of
           -------------------------
whatever nature (including, without limitation, any adverse determination in any
litigation, arbitration, or governmental investigation or proceeding), a
materially adverse effect on:

                 (a)  the consolidated business, assets, revenues, financial
          condition, operations, or prospects of the Borrower and its
          Subsidiaries; or

                                       15

<PAGE>

                 (b)  the ability of the Borrower to perform any of its payment
          or other material obligations under this Agreement, the Notes, the
          Mortgage, any other Collateral Document or any other Loan Document.

          "Modesto Mortgage" means Deed of Trust, Security Agreement, Assignment
           ----------------
of Rents and Leases and Fixture Filing dated as of August 5, 1997, as amended,
supplemented, restated, extended, reviewed, partially released or otherwise
modified from time to time.

          "Modesto Property" means lots 3 and 4 of Landmark Business Center, as
           ----------------
per map thereof, recorded October 4, 1988 in Book 33, page 31, Stanislaus
County, California Records.

          "Monthly Payment Date" means the last day of each calendar month or,
           --------------------
if any such day is not a Business Day, the next succeeding Business Day.

          "Mortgage" means the Original Mortgage, as amended by the Fourth
           --------
Amendment to Mortgage, and as amended, supplemented, restated, extended,
renewed, partially released or otherwise modified from time to time.

          "Mortgaged Collateral" means the Collateral (as such term is defined
           --------------------
in the Mortgage).

          "Mortgaged Real Property" means the Property (as such term is defined
           -----------------------
in the Mortgage).

          "Nasco Exports" means Nasco Exports, Inc., a Wisconsin corporation and
           -------------
a direct, wholly-owned Subsidiary of the Borrower.

          "Note" means a promissory note of the Borrower payable to any Lender,
           ----
executed and delivered by the Borrower in accordance with this Agreement,
substantially in the form of Exhibit A hereto (as such promissory note may be
                             ---------
amended, endorsed or otherwise modified from time to time), evidencing the
aggregate Indebtedness of the Borrower to such Lender resulting from outstanding
Loans, and also means all other promissory notes accepted from time to time in
substitution therefor or renewal thereof.

          "Obligations" means all obligations (monetary or otherwise) of the
           -----------
Borrower arising under or in connection with this Agreement, the Notes, the
Mortgage, each other Collateral Document and each other Loan Document.

          "Organic Document" means, relative to the Borrower, its certificate of
           ----------------
incorporation, its by-laws and all shareholder agreements, voting trusts and
similar arrangements applicable to any of its authorized shares of capital
stock.

          "Original Credit Agreement" means the Third Amended and Restated
           -------------------------
Credit Agreement dated as of January 2, 1996 among the Borrower, certain Lenders
and Bank of America, N.A., as agent.

                                       16

<PAGE>

          "Original Credit Agreement (364 Days)" means the Credit Agreement (364
           ------------------------------------
Days) dated as of March 31, 2000 among the Borrower, certain Lenders, Bank One,
Wisconsin, as co-agent and Bank of America, N.A., as agent.

          "Original Mortgage" means that certain Mortgage (and Security
           -----------------
Agreement) executed and delivered by the Borrower pursuant to the Original
Credit Agreement, dated as of June 25, 1992, as amended, supplemented, amended
and restated and otherwise modified through the date hereof.

          "Participant" is defined in Section 10.11.
           -----------                -------------

          "PBGC" means the Pension Benefit Guaranty Corporation and any entity
           ----
succeeding to any or all of its functions under ERISA.

          "Pension Plan" means a "pension plan", as such term is defined in
           ------------
section 3(2) of ERISA, which is subject to Title IV of ERISA (other than a
multiemployer plan as defined in section 4001(a)(3) of ERISA), and to which the
Borrower or any corporation, trade or business that is, along with the Borrower,
a member of a Controlled Group, may have liability, including any liability by
reason of having been a substantial employer within the meaning of section 4063
of ERISA at any time during the preceding five years, or by reason of being
deemed to be a contributing sponsor under section 4069 of ERISA.

          "Percentage" means, relative to any Lender, the percentage set forth
           ----------
opposite its signature hereto or set forth in the Lender Assignment Agreement,
as such percentage may be adjusted from time to time pursuant to Lender
Assignment Agreement(s) executed by such Lender and its Assignee Lender(s) and
delivered pursuant to Section 10.11.
                      -------------

          "Person" means any natural person, corporation, partnership, limited
           ------
liability company, firm, association, trust, government, governmental agency or
any other entity, whether acting in an individual, fiduciary or other capacity.

          "Plan" means any Pension Plan or Welfare Plan.
           ----

          "Pledge Agreement" means the Pledge Agreement, executed and delivered
           ----------------
by the Borrower, a copy of which is attached as Exhibit D hereto, as amended,
                                                ---------
supplemented, amended and restated or otherwise modified from time to time.

          "Principal Repayment Date" is defined in Section 3.1.1.
           ------------------------                -------------

          "Quarterly Payment Date" means the last day of each March, June,
           ----------------------
September and December or, if any such day is not a Business Day, the next
succeeding Business Day.

          "Release" means a "release", as such term is defined in CERCLA.
           -------

          "Required Lenders" means, at any time prior to the Effective Date,
           ----------------
Lenders having at least 66 2/3% of the Commitments and, from and after the
Effective Date, Lenders holding at

                                       17

<PAGE>

least 66 2/3% of the then aggregate outstanding principal amount of the Notes
then held by the Lenders, or, if no such principal amount is then outstanding,
Lenders having at least 66 2/3% of the Commitments.

          "Required Principal Payments" means the principal amount of the
           ---------------------------
scheduled repayments set forth in Section 3.1.1 for the four consecutive Fiscal
                                  -------------
Quarters following the date on which such payments are computed.

          "Resource Conservation and Recovery Act" means the Resource
           --------------------------------------
Conservation and Recovery Act, 42 U.S.C. Section 690, et seq., as in effect from
                                                      ------
time to time.

          "Second Amendment to Modesto Mortgage" means the Second Amendment to
           ------------------------------------
the Modesto Mortgage executed and delivered by Borrower pursuant to Section
                                                                    -------
7.1.8, in form satisfactory to the Agent, as amended, supplemented, restated,
-----
extended, renewed, partially released or otherwise modified from time to time.

          "Security Agreement" means the Security Agreement, executed and
           ------------------
delivered by the Borrower, a copy of which is attached as Exhibit E hereto,
                                                          ---------
together with the intellectual property agreements relating thereto, as amended,
supplemented, amended and restated or otherwise modified from time to time.

          "Senior Debt" means the remainder of (a) Consolidated Funded Debt
           -----------
minus (b) Subordinated Debt.

          "Senior Debt to EBITDA Ratio" means, at any date, the ratio of (a)
           ---------------------------
Senior Debt as of such date to (b) EBITDA for such period of four consecutive
Fiscal Quarters then most recently ended. For purposes of calculating the Senior
Debt to EBITDA Ratio as at any date, EBITDA shall be calculated on a pro forma
                                                                     --- -----
basis (as certified by the Borrower to the Agent) assuming all acquisitions
made, and all divestitures completed, during the four consecutive Fiscal
Quarters then most recently ended had been made on the first day of such period
(but without adjustment for expected cost savings or other synergies).

          "Significant Subsidiaries" means all Subsidiaries of the Borrower
           ------------------------
other than the Insignificant Subsidiary.

          "Spectrum" means the group of companies known as Spectrum Educational
           --------
Supplies Limited.

          "Spectrum Acquisition" means the acquisition by the Borrower of
           --------------------
Spectrum pursuant to the Spectrum Acquisition Agreement with the proceeds of
loans made to the Borrower under the Original Credit Agreement (364 Days).

          "Spectrum Acquisition Agreement" means the Share Purchase Agreement
           ------------------------------
dated as of March 21, 2001 among 2001328 Ontario Limited, John B. West and
Shirley West, and Spectrum Educational Supplies Limited, SI Manufacturing
Limited, and Morgan Moulds Ltd., in the form previously delivered to the Agent.

                                       18

<PAGE>

          "Stated Maturity Date" means March 31, 2006.
           --------------------

          "Subordinated Debt" means unsecured Indebtedness of the Borrower for
           -----------------
money borrowed which is subordinated, upon terms satisfactory to the Agent and
the Required Lenders in their sole discretion, in right of payment to the
payment in full in cash of all Obligations.

          "Subsidiary" means, with respect to any Person, any corporation of
           ----------
which more than 50% of the outstanding capital stock having ordinary voting
power to elect a majority of the board of directors of such corporation
(irrespective of whether at the time capital stock of any other class or classes
of such corporation shall or might have voting power upon the occurrence of any
contingency) is at the time directly or indirectly owned by such Person, by such
Person and one or more other Subsidiaries of such Person, or by one or more
other Subsidiaries of such Person.

          "Subsidiary Pledge Agreement" means, the Subsidiary Pledge Agreement,
           ---------------------------
executed and delivered by the Borrower, pursuant to Section 7.1.10,
                                                    --------------
substantially in the form of Exhibit F hereto, as amended, supplemented, amended
                             ---------
and restated or otherwise modified from time to time.

          "Subsidiary Security Agreement" means, the Subsidiary Security
           -----------------------------
Agreement, executed and delivered by the Borrower, pursuant to Section 7.1.10,
                                                               --------------
substantially in the form of Exhibit G hereto, as amended, supplemented, amended
                             ---------
and restated or otherwise modified from time to time.

          "Taxes" is defined in Section 4.6.
           -----                -----------

          "Type" means, relative to any Loan, the portion thereof, if any, being
           ----
maintained as a Base Rate Loan or a Eurodollar Rate Loan.

          "United States" or "U.S." means the United States of America, its
           -------------      ---
fifty States and the District of Columbia.

          "Welfare Plan" means a "welfare plan", as such term is defined in
           ------------
section 3(1) of ERISA.

          SECTION 1.2 Use of Defined Terms. Unless otherwise defined or the
                      --------------------
context otherwise requires, terms for which meanings are provided in this
Agreement shall have such meanings when used in the Disclosure Schedule and in
each Note, Borrowing Request, Continuation/Conversion Notice, Loan Document,
notice and other communication delivered from time to time in connection with
this Agreement or any other Loan Document.

          SECTION 1.3 Cross-References. Unless otherwise specified, references
                      ----------------
in this Agreement and in each other Loan Document to any Article or Section are
references to such Article or Section of this Agreement or such other Loan
Document, as the case may be, and, unless otherwise specified, references in any
Article, Section or definition to any clause are references to such clause of
such Article, Section or definition.

                                       19

<PAGE>

     SECTION 1.4 Accounting and Financial Determinations. Unless otherwise
                 ---------------------------------------
specified, all accounting terms used herein or in any other Loan Document shall
be interpreted, all accounting determinations and computations hereunder or
thereunder (including under Section 7.2.4) shall be made, and all financial
                            -------------
statements required to be delivered hereunder or thereunder shall be prepared,
in accordance with those generally accepted accounting principles ("GAAP")
                                                                    ----
applied in the preparation of the financial statements referred to in Section
                                                                      -------
6.5.
---

                                   ARTICLE II.

                   COMMITMENTS, BORROWING PROCEDURES AND NOTES

     SECTION 2.1 Commitments.
                 -----------

     SECTION 2.1.1 Commitment of Each Lender. On the terms and subject to the
                   -------------------------
conditions of this Agreement (including Article V), each Lender severally agrees
                                        ---------
to make term loans ( the "Loans") to the Borrower in an amount not to exceed
                          -----
such Lender's Percentage of the Commitment Amount provided that no Lender shall
                                                  --------
be permitted or required to make any Loan if, after giving effect thereto, the
aggregate outstanding principal amount of all Loans of all Lenders would exceed
the Commitment Amount. The commitment of each Lender described in this Section
                                                                       -------
2.1.1 is herein referred to as its "Commitment". Each Lender shall make only two
-----                               ----------
Loans, the first on or before May 31, 2001 and the second on or before July 31,
2001.

     SECTION 2.2 Reduction of Commitment Amount. The Commitment Amount is
                 ------------------------------
subject to reduction from time to time pursuant to this Section 2.2.
                                                        -----------

     SECTION 2.2.1 Optional. The Borrower may, from time to time on any Business
                   --------
Day occurring after the time of the initial Borrowing hereunder, voluntarily
reduce the Commitment Amount; provided, however, that all such reductions shall
                              --------  -------
be irrevocable and shall require at least three Business Days' prior notice to
the Agent and be permanent, and any partial reduction of the Commitment Amount
shall be in a minimum amount of $500,000 and in an integral multiple of
$250,000.

     SECTION 2.2.2 [Mandatory]. [Reserved].
                    ---------

     SECTION 2.3 Borrowing Procedure.
                 -------------------

     SECTION 2.3.1 Borrowings. By delivering a Borrowing Request to the Agent on
                   ----------
or before 9:00 a.m., Chicago time, on a Business Day subsequent to the date of
the initial Borrowing hereunder, the Borrower may from time to time irrevocably
request, on not less than three nor more than five Business Days notice, that a
Borrowing be made in a minimum amount of $1,000,000 and an integral multiple of
$500,000, or in the unused amount of the Commitments.

     SECTION 2.3.2 All Borrowings. On the terms and subject to the conditions of
                   --------------
this Agreement, each such Borrowing pursuant to Sections 2.3.1 and 2.3.2 shall
                                                --------------     -----
be comprised of the type of Loans specified in the Borrowing Request and shall
be made on the Business Day

                                       20

<PAGE>

specified in such Borrowing Request. On or before 10:00 a.m. (Chicago time), on
such Business Day, each Lender shall deposit with the Agent same day funds in an
amount equal to such Lender's Percentage of the requested Borrowing. Such
deposit will be made to an account which the Agent shall specify from time to
time by notice to the Lenders. To the extent funds are received from the
Lenders, the Agent shall make such funds available to the Borrower by wire
transfer to the account the Borrower shall have specified in its Borrowing
Request. No Lender's obligation to make any Loan shall be affected by any other
Lender's failure to make any Loan.

     SECTION 2.4 Continuation and Conversion Elections. By delivering a
                 -------------------------------------
Continuation/ Conversion Notice to the Agent on or before 9:00 a.m., Chicago
time, on a Business Day, the Borrower may from time to time irrevocably elect,
on not less than three nor more than five Business Days' notice, that all, or
any portion in an aggregate minimum amount of $500,000 and an integral multiple
of $250,000, of any Loans be, in the case of Base Rate Loans, converted into
Eurodollar Rate Loans or, in the case of Eurodollar Rate Loans, be converted
into a Base Rate Loan (in the absence of delivery of a Continuation/Conversion
Notice with respect to any Eurodollar Rate Loan at least three Business Days
before the last day of the then current Interest Period with respect thereto,
such Eurodollar Rate Loan shall, on such last day, automatically convert to a
Base Rate Loan); provided, however, that (a) each such conversion or
                 --------  -------
continuation shall be prorated among the applicable outstanding Loans of all
Lenders, and (b) no portion of the outstanding principal amount of any Loans may
be continued as, or be converted into, Eurodollar Rate Loans when any Default
has occurred and is continuing.

     SECTION 2.5 Funding. Each Lender may, if it so elects, fulfill its
                 -------
obligation to make, continue or convert Eurodollar Rate Loans hereunder by
causing one of its foreign branches or Affiliates (or an international banking
facility created by such Lender) to make or maintain such Eurodollar Rate Loan;
provided, however, that such Eurodollar Rate Loan shall nonetheless be deemed to
have been made and to be held by such Lender, and the obligation of the Borrower
to repay such Eurodollar Rate Loan shall nevertheless be to such Lender for the
account of such foreign branch, Affiliate or international banking facility. In
addition, the Borrower hereby consents and agrees that, for purposes of any
determination to be made for purposes of Section 4.1, 4.2, 4.3 or 4.4, it shall
                                         ------- ---  ---  ---    ---
be conclusively assumed that each Lender elected to fund all Eurodollar Rate
Loans by purchasing, as the case may be, Dollar certificates of deposit in the
U.S. or Dollar deposits in its Eurodollar Office's interbank eurodollar market.

     SECTION 2.6 Notes. Each Lender's Loans under its Commitment shall be
                 -----
evidenced by a Note payable to the order of such Lender in a maximum principal
amount equal to such Lender's Percentage (as of the Effective Date) of the
Commitment Amount. The Note issued hereunder and as of the Effective Date shall
be issued in substitution and exchange for, and not in satisfaction or payment
of, the Existing Notes and the Indebtedness (together with the obligation to pay
accrued interest thereon) originally evidenced by the Existing Notes which is
now to be evidenced by the replacement Notes delivered pursuant to this
Agreement shall be (and the Borrower hereby acknowledges and agrees that such
Indebtedness is) a continuing Indebtedness, and nothing herein contained shall
be construed to deem such Existing Notes paid, or to release or terminate any
Lien or security interest given to secure such Existing Notes, which Liens and
security interests shall continue to secure such Indebtedness as evidenced by
such Notes. The Borrower hereby irrevocably authorizes each Lender to make (or
cause to be made) appropriate notations on the grid attached to such Lender's
Note (or on any continuation of such

                                       21

<PAGE>

grid), which notations, if made, shall evidence, inter alia, the date of, the
                                                 ----- ----
outstanding principal of, and the interest rate and Interest Period applicable
to the Loans evidenced thereby. Such notations shall be conclusive and binding
on the Borrower absent manifest error; provided, however, that the failure of
                                       --------  -------
any Lender to make any such notations shall not limit or otherwise affect any
Obligations of the Borrower. Interest Periods in respect of Eurodollar Rate
Loans outstanding under the Existing Notes as of the Effective Date shall be
carried forward under the Notes issued hereunder as of the Effective Date.

                                 ARTICLE III.

                   REPAYMENTS, PREPAYMENTS, INTEREST AND FEES

     SECTION 3.1    Repayments and Prepayments.
                    --------------------------

     SECTION 3.1.1  Repayment of Loans. The Borrower shall, on each date set
                    ------------------
forth below (each such date, a "Principal Repayment Date"), make a scheduled
                                ------------------------
repayment of the aggregate outstanding principal amount of the Loans, in the
principal amounts set forth opposite such Principal Repayment Date:

                 Principal Repayment Date        Amount
                 ------------------------        ------

              September 30, 2001              $3,500,000
              December 31, 2001               $3,500,000
              September 30, 2002              $4,000,000
              December 31, 2002               $4,000,000
              September 30, 2003              $4,500,000
              December 31, 2003               $4,500,000
              September 30, 2004              $4,500,000
              December 31, 2004               $4,500,000
              September 30, 2005              $4,500,000
              December 31, 2005               $4,500,000
              March 31, 2006                  $9,000,000

     SECTION 3.1.2  Prepayment of Loans. Prior to the repayment by the Borrower
                    -------------------
of the entire principal amount of all outstanding Loans, the Borrower

          (a)  may, from time to time on any Business Day, make a voluntary
     prepayment, in whole or in part, of the outstanding principal amount of any
     Loans; provided, however, that
            --------  -------

               (i)  any such prepayment shall be made pro rata among Loans of
          the same type and, if applicable, having the same Interest Period of
          all Lenders,

               (ii) no such prepayment of any Eurodollar Rate Loan may be made
          on any day other than the last day of the Interest Period for such
          Loan,

                                       22

<PAGE>

               (iii) all such voluntary prepayments shall require at least three
          but no more than five Business Days' prior written notice to the
          Agent, and

               (iv)  all such voluntary partial prepayments shall be in an
          aggregate minimum amount of $100,000 and an integral multiple of
          $50,000 in excess thereof; and

          (b) shall, on each date when any reduction in the Commitment Amount
     shall become effective, including pursuant to Section 2.2, make a mandatory
                                                   -----------
     prepayment of all Loans equal to the excess, if any, of the aggregate,
     outstanding principal amount of all Loans over the Commitment Amount as so
     reduced;

          (c) shall, on April 30 of each year, commencing April 30, 2002, make a
     mandatory prepayment of all Loans in an amount equal to 50% of the Excess
     Cash Flow for the preceding Fiscal Year;

          (d) shall, within 30 days after the Effective Date, make a mandatory
     prepayment of all Loans in the amount of $2,000,000 which shall result in a
     reduction of the scheduled repayment due on September 30, 2001 pursuant to
     Section 3.1.1; and
     -------------

          (e) shall, immediately upon any acceleration of the Stated Maturity
     Date of any Loans pursuant to Section 8.2 or Section 8.3, repay all such
                                   -----------    -----------
     Loans so accelerated.

Each prepayment of any Loans made pursuant to this Section shall be without
premium or penalty, except as may be required by Section 4.4. Except as
                                                 -----------
specifically required hereunder, any prepayment of the Loans shall be applied to
the unpaid installments thereof in the order of the maturity of such
installments; provided, however, that any prepayment of the Loans pursuant to
              --------  -------
clause (c) of this Section 3.1.2 shall be applied to the unpaid installments
---------          -------------
thereof in the inverse order of the maturity of such installments. Loans which
are prepaid may not be reborrowed.

     SECTION 3.2 Interest Provisions. Interest on the outstanding principal
                 -------------------
amount of Loans shall accrue and be payable in accordance with this Section 3.2.
                                                                    -----------

     SECTION 3.2.1 Rates. Pursuant to an appropriately delivered Borrowing
                   -----
Request or Continuation/Conversion Notice, the Borrower may elect that Loans
accrue interest at a rate per annum:

          (a) on that portion maintained from time to time as a Base Rate Loan,
     equal to the sum of the Base Rate plus the Applicable Margin from time to
     time in effect; and

          (b) on that portion maintained as a Eurodollar Rate Loan, during each
     Interest Period applicable thereto, equal to the sum of the Eurodollar Rate
     for such Interest Period plus the Applicable Margin.

     All Eurodollar Rate Loans shall bear interest from and including the first
day of the applicable Interest Period to (but not including) the last day of
such Interest Period at the interest rate determined as applicable to such
Eurodollar Rate Loan. All Base Rate Loans shall bear

                                       23

<PAGE>

interest from and including the date such Loans are made to (but not including)
the day such Loans are repaid or converted into Eurodollar Rate Loans.

     SECTION 3.2.2  Default Rates. So long as any Event of Default shall have
                    -------------
occurred and be continuing hereunder, interest on the unpaid principal amount of
the Loans outstanding shall be paid on demand at a rate per annum equal to the
Base Rate plus the Applicable Margin for Base Rate Loans plus 2%, and after the
date any principal amount of any Loan has become due and payable (whether on the
Stated Maturity Date, upon acceleration or otherwise), or after any other
monetary Obligation of the Borrower shall have become due and payable, the
Borrower shall pay interest (after as well as before judgment) on demand on all
of such amounts at a rate per annum equal to the Base Rate plus the Applicable
Margin for Base Rate Loans plus 2%.

     SECTION 3.2.3  Payment Dates. Interest accrued on each Loan shall be
                    -------------
payable, without duplication:

          (a) upon payment in full thereof;

          (b) on that portion of the Loans being paid or prepaid, on the date of
     any such payment or prepayment;

          (c) with respect to Base Rate Loans, on each Monthly Payment Date
     occurring after the Effective Date;

          (d) with respect to Eurodollar Rate Loans, the last day of each
     applicable Interest Period (and, if such Interest Period shall exceed three
     months, on the day three months after the commencement of such Interest
     Period);

          (e) with respect to any Base Rate Loans converted into Eurodollar Rate
     Loans on a day when interest would not otherwise have been payable pursuant
     to clause (c), on the date of such conversion; and
        ---------

          (f) on that portion of any Loans the Stated Maturity Date of which is
     accelerated pursuant to Section 8.2 or Section 8.3, immediately upon such
                             -----------    -----------
     acceleration.

Interest accrued on Loans or other monetary Obligations arising under this
Agreement or any other Loan Document after the date such amount is due and
payable (whether on the Stated Maturity Date, upon acceleration or otherwise)
shall be payable upon demand.

     SECTION 3.3  Fees. The Borrower agrees to pay the fees set forth in this
                  ----
Section 3.3. All such fees shall be non-refundable.
-----------

     SECTION 3.3.1  Agent's Fee. The Borrower agrees to pay to the Agent for its
                    -----------
own account on or prior to the occurrence of the Effective Date the fees set
forth in the Agent's Fee Letter.

                                       24

<PAGE>

                                  ARTICLE IV.

                  CERTAIN EURODOLLAR RATE AND OTHER PROVISIONS

     SECTION 4.1 Eurodollar Rate Lending Unlawful. If any Lender shall determine
                 --------------------------------
(which determination shall, upon notice thereof to the Borrower and the Lenders,
be conclusive and binding on the Borrower) that the introduction of or any
change in or in the interpretation of any law makes it unlawful, or any central
bank or other governmental authority asserts that it is unlawful, for such
Lender to make, continue or maintain any Loan as, or to convert any Loan into, a
Eurodollar Rate Loan of a certain type, the obligations of all Lenders to make,
continue, maintain or convert any such Loans shall, upon such determination,
forthwith be suspended until such Lender shall notify the Agent that the
circumstances causing such suspension no longer exist, and all Eurodollar Rate
Loans of such type shall automatically convert into Base Rate Loans at the end
of the then current Interest Periods with respect thereto or sooner, if required
by such law or assertion.

     SECTION 4.2 Deposits Unavailable. If the Agent shall have determined that
                 --------------------

          (a) Dollar certificates of deposit or Dollar deposits, as the case may
     be, in the relevant amount and for the relevant Interest Period are not
     available to Bank of America in its relevant market; or

          (b) by reason of circumstances affecting Bank of America's relevant
     market, adequate means do not exist for ascertaining the interest rate
     applicable hereunder to Eurodollar Rate Loans of such type,

then, upon notice from the Agent to the Borrower and the Lenders, the
obligations of all Lenders under Section 2.3 and Section 2.4 to make or continue
                                 -----------     -----------
any Loans as, or to convert any Loans into, Eurodollar Rate Loans of such type
shall forthwith be suspended until the Agent shall notify the Borrower and the
Lenders that the circumstances causing such suspension no longer exist.

     SECTION 4.3 Increased Costs, etc. The Borrower agrees to reimburse each
                 --------------------
Lender, upon demand, for any increase in the cost to such Lender of, or any
reduction in the amount of any sum receivable by such Lender, in respect of
making, continuing or maintaining (or of its obligation to make, continue or
maintain) any Loans as, or of converting (or of its obligation to convert) any
Loans into, Eurodollar Rate Loans (including without limitation by reason of any
increase in any reserve requirements or taxes).

     Each Lender shall promptly notify the Borrower in writing of the occurrence
of any such event, such notice to state, in reasonable detail, the reasons
therefor and the additional amount required fully to compensate such Lender for
such increased cost or reduced amount. Such additional amounts shall be payable
by the Borrower directly to such Lender within five days of its receipt of such
notice, and such notice shall, in the absence of manifest error, be conclusive
and binding on the Borrower. Such Lender will use such method of allocation as
it deems reasonable and appropriate.

                                       25

<PAGE>

     SECTION 4.4 Funding Losses. In the event any Lender shall incur any loss or
                 --------------
expense (including any loss or expense incurred by reason of the liquidation or
reemployment of deposits or other funds acquired by such Lender to make,
continue or maintain any portion of the principal amount of any Loan as, or to
convert any portion of the principal amount of any Loan into, a Eurodollar Rate
Loan) as a result of

          (a) any conversion or repayment or prepayment of the principal amount
     of any Eurodollar Rate Loan on a date other than the scheduled last day of
     the Interest Period applicable thereto, whether pursuant to Section 3.1 or
                                                                 -----------
     otherwise;

          (b) any Loans not being made as Eurodollar Rate Loans in accordance
     with the Borrower's request therefor; or

          (c) any Loans not being continued as, or converted into, Eurodollar
     Rate Loans in accordance with the Continuation/Conversion Notice therefor,

then, upon the written notice of such Lender to the Borrower (with a copy to the
Agent), the Borrower shall, within five days of its receipt thereof, pay
directly to such Lender such amount as will (in the reasonable determination of
such Lender) reimburse such Lender for such loss or expense. Such written notice
(which shall include calculations in reasonable detail) shall, in the absence of
manifest error, be conclusive and binding on the Borrower.

     SECTION 4.5 Increased Capital Costs. If any change in, or the introduction,
                 -----------------------
adoption, effectiveness, interpretation, reinterpretation or phase-in of, any
law or regulation, directive, guideline, decision or request (whether or not
having the force of law) of any court, central bank, regulator or other
governmental authority affects or would affect the amount of capital required or
expected to be maintained by any Lender or any Person controlling such Lender,
and such Lender determines (in its sole and absolute discretion) that the rate
of return on its or such controlling Person's capital as a consequence of its
Commitment or the Loans made by such Lender is reduced to a level below that
which such Lender or such controlling Person could have achieved but for the
occurrence of any such circumstance, then, in any such case upon notice from
time to time by such Lender to the Borrower, the Borrower shall immediately pay
directly to such Lender additional amounts sufficient to compensate such Lender
or such controlling Person for such reduction in rate of return. A statement of
such Lender as to any such additional amount or amounts (including calculations
thereof in reasonable detail) shall, in the absence of manifest error, be
conclusive and binding on the Borrower. In determining such amount, such Lender
may use any method of averaging and attribution that it (in its sole and
absolute discretion) shall deem applicable.

     SECTION 4.6 Taxes. All payments by the Borrower of principal of, and
                 -----
interest on, the Loans and all other amounts payable hereunder shall be made
free and clear of and without deduction for any present or future income,
excise, stamp or franchise taxes and other taxes, fees, duties, withholdings or
other charges of any nature whatsoever imposed by any taxing authority, but
excluding franchise taxes and taxes imposed on or measured by any Lender's net
income or receipts (such non-excluded items being called "Taxes"). In the event
                                                          -----
that any withholding or deduction from any payment to be made by the Borrower
hereunder is required in respect of any Taxes pursuant to any applicable law,
rule or regulation, then the Borrower will

                                       26

<PAGE>

          (a) pay directly to the relevant authority the full amount required to
     be so withheld or deducted;

          (b) promptly forward to the Agent an official receipt or other
     documentation satisfactory to the Agent evidencing such payment to such
     authority; and

          (c) pay to the Agent for the account of the Lenders such additional
     amount or amounts as is necessary to ensure that the net amount actually
     received by each Lender will equal the full amount such Lender would have
     received had no such withholding or deduction been required.

Moreover, if any Taxes are directly asserted against the Agent or any Lender
with respect to any payment received by the Agent or such Lender hereunder, the
Agent or such Lender may pay such Taxes and the Borrower will promptly pay such
additional amounts (including any penalties, interest or expenses) as is
necessary in order that the net amount received by such person after the payment
of such Taxes (including any Taxes on such additional amount) shall equal the
amount such person would have received had not such Taxes been asserted.

     If the Borrower fails to pay any Taxes when due to the appropriate taxing
authority or fails to remit to the Agent, for the account of the respective
Lenders, the required receipts or other required documentary evidence, the
Borrower shall indemnify the Lenders for any incremental Taxes, interest or
penalties that may become payable by any Lender as a result of any such failure.
For purposes of this Section 4.6, a distribution hereunder by the Agent or any
                     -----------
Lender to or for the account of any Lender shall be deemed a payment by the
Borrower.

     Upon the request of the Borrower or the Agent, each Lender that is
organized under the laws of a jurisdiction other than the United States shall,
prior to the due date of any payments under the Notes, execute and deliver to
the Borrower and the Agent, on or about the first scheduled repayment date in
each Fiscal Year, one or more (as the Borrower or the Agent may reasonably
request) United States Internal Revenue Service Forms W-8BEN or Forms W-8ECI or
such other forms of documents (or successor forms or documents), appropriately
completed, as may be applicable to establish the extent, if any, to which a
payment to such Lender is exempt from withholding or deduction of Taxes.

     SECTION 4.7 Payments, Computations, etc. Unless otherwise expressly
                 ---------------------------
provided, all payments by the Borrower pursuant to this Agreement, the Notes or
any other Loan Document shall be made by the Borrower to the Agent for the pro
rata account of the Lenders entitled to receive such payment. All such payments
required to be made to the Agent shall be made, without setoff, deduction or
counterclaim, not later than 10:00 a.m., Chicago time, on the date due, in same
day or immediately available funds, to such account as the Agent shall specify
from time to time by notice to the Borrower. Funds received after that time
shall be deemed to have been received by the Agent on the next succeeding
Business Day. The Agent shall promptly remit in same day funds to each Lender
its share, if any, of such payments received by the Agent for the account of
such Lender. The Borrower hereby authorizes the Agent to charge any account
maintained by the Borrower with the Agent or Bank of America for any amount due
and payable under this Agreement as and when so due and payable. All interest
and fees shall be

                                       27

<PAGE>

computed on the basis of the actual number of days (including the first day but
excluding the last day) occurring during the period for which such interest or
fee is payable over a year comprised of 360 days. Whenever any payment to be
made shall otherwise be due on a day which is not a Business Day, such payment
shall (except as otherwise required by clause (c) of the definition of the term
                                       ---------
"Interest Period" with respect to Eurodollar Rate Loans) be made on the next
 ---------------
succeeding Business Day and such extension of time shall be included in
computing interest and fees, if any, in connection with such payment.

     SECTION 4.8 Sharing of Payments. If any Lender shall obtain any payment or
                 -------------------
other recovery (whether voluntary, involuntary, by application of setoff or
otherwise) on account of any Loan (other than pursuant to the terms of Sections
                                                                       --------
4.3, 4.4 and 4.5) in excess of its pro rata share of payments then or therewith
---  ---     ---
obtained by all Lenders, such Lender shall purchase from the other Lenders such
participations in Loans made by them as shall be necessary to cause such
purchasing Lender to share the excess payment or other recovery ratably with
each of them; provided, however, that if all or any portion of the excess
              --------  -------
payment or other recovery is thereafter recovered from such purchasing Lender,
the purchase shall be rescinded and each Lender which has sold a participation
to the purchasing Lender shall repay to the purchasing Lender the purchase price
to the ratable extent of such recovery together with an amount equal to such
selling Lender's ratable share (according to the proportion of

          (a) the amount of such selling Lender's required repayment to the
     purchasing Lender

to

          (b) the total amount so recovered from the purchasing Lender)

of any interest or other amount paid or payable by the purchasing Lender in
respect of the total amount so recovered. The Borrower agrees that any Lender so
purchasing a participation from another Lender pursuant to this Section may, to
the fullest extent permitted by law, exercise all its rights of payment
(including pursuant to Section 4.9) with respect to such participation as fully
                       -----------
as if such Lender were the direct creditor of the Borrower in the amount of such
participation. If under any applicable bankruptcy, insolvency or other similar
law, any Lender receives a secured claim in lieu of a setoff to which this
Section applies, such Lender shall, to the extent practicable, exercise its
rights in respect of such secured claim in a manner consistent with the rights
of the Lenders entitled under this Section to share in the benefits of any
recovery on such secured claim.

     SECTION 4.9 Setoff. Each Lender shall, upon the occurrence of any Default
                 ------
described in clauses (a) through (d) of Section 8.1.9 or, with the consent of
             ----------          ---    -------------
the Required Lenders, upon the occurrence of any other Event of Default, have
the right to appropriate and apply to the payment of the Obligations owing to it
(whether or not then due), and (as security for such Obligations) the Borrower
hereby grants to each Lender a continuing security interest in, any and all
balances, credits, deposits, accounts or moneys of the Borrower then or
thereafter maintained with or otherwise held by such Lender; provided, however,
                                                             --------  -------
that any such appropriation and application shall be subject to the provisions
of Section 4.8. Each Lender agrees promptly to notify the
   -----------

                                       28

<PAGE>

Borrower and the Agent after any such setoff and application made by such
Lender; provided, however, that the failure to give such notice shall not affect
        --------  -------
the validity of such setoff and application. The rights of each Lender under
this Section are in addition to other rights and remedies (including other
rights of setoff under applicable law or otherwise) which such Lender may have.

     SECTION 4.10 Use of Proceeds. The Borrower shall apply the proceeds of the
                  ---------------
Loans in accordance with the recitals; provided that, in no event shall the
                                       --------
proceeds of the Loans be used by the Borrower or any of its Subsidiaries to
acquire all or any portion of the ownership or assets of any other Person or
entity except as otherwise permitted by this Agreement.

                                   ARTICLE V.

                           CONDITIONS TO EFFECTIVENESS
                                 AND BORROWINGS

     SECTION 5.1 Effectiveness. This Agreement shall become effective, and all
                 -------------
loans outstanding under the Existing Credit Agreement shall be deemed to be
loans hereunder, on the date (the "Effective Date") that each of the conditions
                                   --------------
precedent set forth in this Section 5.1 have been satisfied.
                            -----------

     SECTION 5.1.1 Resolutions, etc. The Agent shall have received from the
                   -----------------
Borrower a certificate, dated the date hereof, of its Secretary or Assistant
Secretary as to

          (a)  resolutions of its Board of Directors then in full force and
     effect authorizing the execution, delivery and performance of this
     Agreement, the Notes, each Collateral Document and each other Loan Document
     executed or to be executed by it; and

          (b)  the incumbency and signatures of those of its officers authorized
     to act with respect to this Agreement, the Notes, each Collateral Document
     and each other Loan Document executed or to be executed by it,

upon which certificate the Agent and each Lender may conclusively rely until the
Agent shall have received a further certificate of the Secretary of the Borrower
canceling or amending such prior certificate, which further certificate shall be
reasonably satisfactory to the Agent.

     SECTION 5.1.2 Delivery of Notes. The Agent shall have received from the
                   -----------------
Borrower, for the account of each Lender, a duly executed Note, dated as of the
date hereof.

     SECTION 5.1.3 Credit Agreements. The Agent shall have received executed
                   -----------------
counterparts of this Agreement and the Credit Agreement (364 Days), dated as of
the date hereof, duly executed by the Borrower, the Agent, and each of the
Lenders.

     SECTION 5.1.4 Confirmation. The Agent shall have received executed
                   ------------
counterparts of the Confirmation, dated as of the date hereof, duly executed by
the Borrower.

                                       29

<PAGE>

     SECTION 5.1.5 Satisfaction with Tax Sharing Agreement. The Agent and the
                   ---------------------------------------
Lenders shall have received true copies (as certified by an authorized officer
of the Borrower) of, and reviewed and become satisfied with the provisions of,
any tax sharing agreement to which the Borrower has become a party since March
31, 2000.

     SECTION 5.1.6 Opinions of Counsel. The Agent shall have received opinions,
                   -------------------
dated the date hereof and addressed to the Agent and each Lender, from Steven B.
Lapin, general counsel to the Borrower, substantially in the form of Exhibit H
                                                                     ---------
hereto.

     SECTION 5.1.7 Closing Fees, Expenses, etc. The Agent shall have received
                   ---------------------------
for its own account all fees, and all costs and expenses for which invoices have
been provided, due and payable pursuant to Sections 3.3 and 10.3.
                                           ------------     ----

     SECTION 5.1.8 No Materially Adverse Effect. No events have occurred which,
                   ----------------------------
as reasonably determined by the Agent, individually or in the aggregate,
comprise a Materially Adverse Effect since December 31, 2000.

     SECTION 5.1.9 Compliance with Warranties, No Default, etc. Both before and
                   -------------------------------------------
after the Effective Date, the following statements shall be true and correct:

          (a)  the representations and warranties set forth in Article VI
                                                               ----------
     (excluding, however, those contained in Section 6.7) of this Agreement,
                                             -----------
     Article III of the Pledge Agreement, Article III of the Security Agreement,
     and Article I of the Mortgage shall be true and correct in all material
     respects with the same effect as if then made (unless stated to relate
     solely to an earlier date, in which case such representations and
     warranties shall be true and correct as of such earlier date);

          (b)  except as disclosed by the Borrower to the Agent and the Lenders
     pursuant to Section 6.7,
                 -----------

               (i)  no labor controversy, litigation, arbitration or
     governmental investigation or proceeding shall be pending or, to the
     knowledge of the Borrower, threatened against the Borrower or any of its
     Subsidiaries which might have a Materially Adverse Effect or which purports
     to affect the legality, validity or enforceability of this Agreement, the
     Notes, any Collateral Document or any other Loan Document, and

               (ii) no development shall have occurred in any labor controversy,
          litigation, arbitration or governmental investigation or proceeding
          disclosed pursuant to Section 6.7 which might have a Materially
                                -----------
          Adverse Effect; and

          (c)  no Default shall have then occurred and be continuing, and
     neither the Borrower nor any of its Subsidiaries shall be in violation of
     any law or governmental regulation or court order or decree, the violation
     of which could have a Materially Adverse Effect.

                                       30

<PAGE>

     SECTION 5.1.10 Satisfactory Legal Form. All documents executed or submitted
                    -----------------------
pursuant hereto by the Borrower or on behalf of the Borrower or any of its
Subsidiaries shall be satisfactory in form and substance to the Agent and its
counsel; the Agent and its counsel shall have received all information,
approvals, opinions, documents or instruments as the Agent or its counsel may
reasonably request.

     SECTION 5.2 All Borrowings. The obligation of each Lender to fund any Loan
                 --------------
on the occasion of any Borrowing shall be subject to the satisfaction of each of
the conditions precedent set forth in this Section 5.2.
                                           -----------

     SECTION 5.2.1 Compliance with Warranties, No Default, etc. Both before and
                   -------------------------------------------
after giving effect to any Borrowing (but, if any Default of the nature referred
to in Section 8.1.5 shall have occurred with respect to any other Indebtedness,
      -------------
without giving effect to the application, directly or indirectly, of the
proceeds thereof) the following statements shall be true and correct

          (a)  the representations and warranties set forth in Article VI
                                                               ----------
     (excluding, however, those contained in Section 6.7) of this Agreement,
                                             -----------
     Article III of the Pledge Agreement, Article III of the Security Agreement
     and Article I of the Mortgage shall be true and correct with the same
     effect as if then made (unless stated to relate solely to an earlier date,
     in which case such representations and warranties shall be true and correct
     as of such earlier date);

          (b)  except as disclosed by the Borrower to the Agent and the Lenders
     pursuant to Section 6.7
                 -----------

               (i)  no labor controversy, litigation, arbitration or
          governmental investigation or proceeding shall be pending or, to the
          knowledge of the Borrower, threatened against the Borrower or any of
          its Subsidiaries which might have a Materially Adverse Effect or which
          purports to affect the legality, validity or enforceability of this
          Agreement, the Notes, any Collateral Document or any other Loan
          Document; and

               (ii) no development shall have occurred in any labor controversy,
          litigation, arbitration or governmental investigation or proceeding
          disclosed pursuant to Section 6.7 which might have a Materially
                                -----------
          Adverse Effect; and

          (c) no Default shall have then occurred and be continuing, and neither
     the Borrower nor any of its Subsidiaries shall be in violation of any law
     or governmental regulation or court order or decree, the violation of which
     could have a Materially Adverse Effect.

     SECTION 5.2.2 Borrowing Request. The Agent shall have received a Borrowing
                   -----------------
Request for such Borrowing. Each of the delivery of a Borrowing Request and the
acceptance by the Borrower of the proceeds of such Borrowing shall constitute a
representation and warranty by the Borrower that on the date of such Borrowing
(both immediately before and after

                                       31

<PAGE>

giving effect to such Borrowing and the application of the proceeds thereof) the
statements made in Section 5.2.1 are true and correct.
                   -------------

     SECTION 5.2.3 Satisfactory Legal Form. All documents executed or submitted
                   -----------------------
pursuant hereto by the Borrower or any of its Subsidiaries shall be satisfactory
in form and substance to the Agent and its counsel; the Agent and its counsel
shall have received all information, approvals, opinions, documents or
instruments as the Agent or its counsel may reasonably request.

     SECTION 5.2.4 Consummation of AMEP Acquisition. The Agent shall have
                   --------------------------------
received satisfactory evidence on or before the date of the second Borrowing
Request of the consummation of the AMEP Acquisition in substantially the form
provided for in the AMEP Acquisition Agreement.

                                   ARTICLE VI

                         REPRESENTATIONS AND WARRANTIES

In order to induce the Lenders and the Agent to enter into this Agreement and to
make Loans hereunder, the Borrower represents and warrants unto the Agent and
each Lender as set forth in this Article VI.
                                 ----------

     SECTION 6.1 Organization, etc. The Borrower and each of its Subsidiaries is
                 -----------------
a corporation validly organized and existing and in good standing under the laws
of the State of its incorporation, is duly qualified to do business and is in
good standing as a foreign corporation in each jurisdiction where the nature of
its business requires such qualification (except where the failure to be so
qualified would not have a Materially Adverse Effect), and has full power and
authority and holds all requisite governmental licenses, permits and other
approvals to enter into and perform its Obligations under this Agreement, the
Notes, the Fourth Amendment to Mortgage, the Second Amendment to Modesto
Mortgage, each Collateral Document and each other Loan Document and to own and
hold under lease its property and to conduct its business substantially as
currently conducted by it.

     SECTION 6.2 Due Authorization, Non-Contravention, etc. The execution,
                 -----------------------------------------
delivery and performance by the Borrower of this Agreement, the Notes, the
Fourth Amendment to Mortgage, the Second Amendment to Modesto Mortgage, each
other Collateral Document and each other Loan Document executed or to be
executed by it are within the Borrower's corporate powers, have been duly
authorized by all necessary corporate action, and do not

          (a)  contravene the Borrower's Organic Documents;

          (b)  contravene any contractual restriction, law or governmental
     regulation or court decree or order binding on or affecting the Borrower;
     or

          (c)  result in, or require the creation or imposition of, any Lien on
     any of the Borrower's properties (except pursuant to the Loan Documents).

                                       32

<PAGE>

     SECTION 6.3 Government Approval, Regulation, etc. No authorization or
                 -------------------------------------
approval or other action by, and no notice to or filing with, any governmental
authority or regulatory body or other Person is required for the due execution,
delivery or performance by the Borrower of this Agreement, the Notes, the Fourth
Amendment to Mortgage, the Second Amendment to Modesto Mortgage, any other
Collateral Document or any other Loan Document. The Borrower is not an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended, or a "holding company", or a "subsidiary company" of a "holding
company", or an "affiliate" of a "holding company" or of a "subsidiary company"
of a "holding company", within the meaning of the Public Utility Holding Company
Act of 1935, as amended. Neither the Borrower nor any of its Subsidiaries is in
violation of any provision of the Investment Company Act of 1940, as amended, or
the Public Utility Holding Company Act of 1935, as amended, and, without
limiting the generality of the foregoing, neither the Borrower nor any of its
Subsidiaries has performed, or has omitted to perform, any action which,
pursuant to any provision of either such Act, would result in the Borrower being
incapable of performing any of its obligations or agreements hereunder or under
the Notes, the Fourth Amendment to Mortgage, the Second Amendment to Modesto
Mortgage, any other Collateral Document or any other Loan Document executed in
connection with or pursuant hereto.

     SECTION 6.4 Validity, etc. This Agreement and each Original Collateral
                 --------------
Document constitutes, and the Notes, the Fourth Amendment to Mortgage, the
Second Amendment to Modesto Mortgage, each other Collateral Document and each
other Loan Document executed by the Borrower will, on the due execution and
delivery thereof, constitute, the legal, valid and binding obligations of the
Borrower enforceable in accordance with their respective terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency or similar
laws applying to creditors' rights generally or general equitable principles.

     SECTION 6.5 Financial Information. (a) The consolidated and consolidating
                 ---------------------
balance sheets of the Borrower and each of its Subsidiaries as of December 31,
2000 for the Fiscal Year then ended and the related consolidated statements of
earnings and cash flow and the related consolidating statement of earnings of
the Borrower and each of its Subsidiaries, copies of which have been furnished
to the Agent and each Lender, have been prepared in accordance with GAAP
consistently applied, and present fairly the consolidated or consolidating, as
applicable, financial condition of the corporation(s) covered thereby as at the
date thereof and the results of their operations for the period then ended.
Neither the Borrower nor any of its Subsidiaries has any material liability,
contingent liability, liability for taxes, long-term leases or forward or
long-term commitments which are not reflected in the foregoing financial
statements (including the footnotes thereto).

     (b) The consolidated and consolidating balance sheets of AMEP and each of
its Subsidiaries as of December 31, 2000 for the Fiscal Year then ended and the
related consolidated statements of earnings and cash flow and the related
consolidating statement of earnings of AMEP and each of its Subsidiaries, copies
of which have been furnished to the Agent and each Lender, have been prepared in
accordance with GAAP consistently applied, and present fairly the consolidated
or consolidating, as applicable, financial condition of the corporation(s)
covered thereby as at the date thereof and the results of their operations for
the period then ended. Neither AMEP nor any of its Subsidiaries has any material
liability,

                                       33

<PAGE>

contingent liability, liability for taxes, long-term leases or forward or
long-term commitments which are not reflected in the foregoing financial
statements (including the footnotes thereto).

     (c) The consolidated and consolidating balance sheets of Spectrum and each
of its Subsidiaries as of June 30, 2000 for the Fiscal Year then ended and
January 31, 2001 for the seven months then ended and the related consolidated
statements of earnings and cash flow and the related consolidating statement of
earnings of Spectrum and each of its Subsidiaries, copies of which have been
furnished to the Agent and each Lender, have been prepared in accordance with
GAAP consistently applied, and present fairly the consolidated or consolidating,
as applicable, financial condition of the corporation(s) covered thereby as at
the date thereof and the results of their operations for the period then ended.
Neither Spectrum nor any of its Subsidiaries has any material liability,
contingent liability, liability for taxes, long-term leases or forward or
long-term commitments which are not reflected in the foregoing financial
statements (including the footnotes thereto).

     SECTION 6.6 No Material Adverse Change. Since the respective dates of the
                 --------------------------
financial statements described in Section 6.5, there has been no material
                                  -----------
adverse change on a consolidated basis in the financial condition, operations,
assets, business, properties or prospects of the Borrower and its Significant
Subsidiaries or in the ability of the Borrower to repay the Obligations when due
in accordance with the terms thereof.

     SECTION 6.7 Litigation, Labor Controversies, etc. There is no pending or,
                 ------------------------------------
to the knowledge of the Borrower, threatened litigation, action, proceeding, or
labor controversy affecting the Borrower or any of its Significant Subsidiaries,
or any of their respective properties, businesses, assets or revenues, which has
any reasonable likelihood of having a Materially Adverse Effect or which
purports to affect the legality, validity or enforceability of this Agreement,
the Notes, any Collateral Document or any other Loan Document.

     SECTION 6.8 Subsidiaries. The Borrower has no Subsidiaries, except those
                 ------------
Subsidiaries

          (a)  which are identified in Item 6.8 ("Existing Subsidiaries") of the
                                       --------
     Disclosure Schedule and/or

          (b)  which are permitted to have been acquired after the Effective
     Date, if any, in accordance with Section 7.2.5 or 7.2.9.
                                      -------------    -----

     SECTION 6.9 Ownership of Properties. The Borrower and each of its
                 -----------------------
Subsidiaries has good and marketable title to all of the properties and assets,
real and personal, tangible and intangible, of any nature whatsoever (including
patents, trademarks, trade names, service marks and copyrights) that it owns,
and a valid leasehold interest in all of such property which it leases, free and
clear of all Liens, charges or claims (including infringement claims with
respect to patents, trademarks, copyrights and the like) except as permitted
pursuant to Section 7.2.3.
            -------------

     SECTION 6.10 Taxes. Each of the Borrower and its Significant Subsidiaries
                  -----
has filed all tax returns and reports required by law to have been filed by it
and has paid all taxes and governmental charges thereby shown to be owing,
except any such taxes or charges which are

                                       34

<PAGE>

being contested in good faith by appropriate action and for which adequate
reserves in accordance with GAAP shall have been set aside on its books.

     SECTION 6.11 Pension and Welfare Plans. During the twelve-consecutive-month
                  -------------------------
period prior to the initial closing date of the Original Credit Agreement and
since such time through and including the date of the occurrence of the
Effective Date, no steps have been taken to terminate any Pension Plan, and no
contribution failure has occurred with respect to any Pension Plan sufficient to
give rise to a Lien under section 302(f) of ERISA. No condition exists or event
or transaction has occurred with respect to any Pension Plan which might result
in the incurrence by the Borrower or any member of the Controlled Group of any
material liability, fine or penalty. Except as disclosed in Item 6.11
("Post-Retirement Benefits") of the Disclosure Schedule, neither the Borrower
nor any member of the Controlled Group has any contingent liability with respect
to any post-retirement benefit under a Welfare Plan, other than liability for
continuation coverage described in Part 6 of Title I of ERISA.

     SECTION 6.12 Environmental Warranties. Except as set forth in Item 6.12
                  ------------------------                         ---------
("Environmental Matters") of the Disclosure Schedule:

          (a) all facilities and property (including underlying groundwater)
     owned or leased or operated by the Borrower or any of its Subsidiaries have
     been, and continue to be, owned or leased by the Borrower and its
     Subsidiaries in material compliance with all Environmental Laws;

          (b) there have been no past, and there are no pending or, to the best
     of the Borrower's knowledge, threatened

               (i)  claims, complaints, notices or requests for information
          received by the Borrower or any of its Subsidiaries with respect to
          any alleged violation of any Environmental Law, or

               (ii) complaints, notices or inquiries to the Borrower or any of
          its Subsidiaries regarding potential liability under any Environmental
          Law;

          (c) there have been no Releases of Hazardous Materials at, on or under
     any property now or previously owned or leased or operated by the Borrower
     or any of its Subsidiaries that, singly or in the aggregate, have, or may
     reasonably be expected to have, a Materially Adverse Effect;

          (d) the Borrower and its Subsidiaries have been issued and are in
     material compliance with all permits, certificates, approvals, licenses and
     other authorizations relating to environmental matters and appropriate for
     their businesses;

          (e) no property now or previously owned or leased by the Borrower or
     any of its Subsidiaries is listed or, to the best of the Borrower's
     knowledge, proposed for listing (with respect to owned property only) on
     the National Priorities List pursuant to CERCLA, on the CERCLIS or on any
     similar state list of sites requiring investigation or clean-up;

                                       35

<PAGE>

          (f) there are no underground storage tanks, active or abandoned,
     including petroleum storage tanks, on or under any property now or
     previously owned or leased or operated by the Borrower or any of its
     Subsidiaries that, singly or in the aggregate, have, or may reasonably be
     expected to have, a Materially Adverse Effect;

          (g) neither the Borrower nor any of its Subsidiaries has directly
     transported or directly arranged for the transportation of any Hazardous
     Material to any location which is listed or, to the best of the Borrower's
     knowledge, proposed for listing on the National Priorities List pursuant to
     CERCLA, on the CERCLIS or on any similar state list or which is the subject
     of federal, state or local enforcement actions or other investigations
     which may lead to claims that, singly or in the aggregate, would be
     material against the Borrower or any of its Significant Subsidiaries for
     any remedial work, damage to natural resources or personal injury,
     including claims under CERCLA;

          (h) there are no polychlorinated biphenyls or friable asbestos present
     at any property now or previously owned or leased or operated by the
     Borrower or any of its Subsidiaries that, singly or in the aggregate, have,
     or may reasonably be expected to have, a Materially Adverse Effect; and

          (i) no conditions exist at, on or under any property now or previously
     owned or leased or operated by the Borrower which, with the passage of
     time, or the giving of notice or both, would give rise to liability which
     would have, or may reasonably be expected to have, singly or in the
     aggregate, a Materially Adverse Effect under any Environmental Law.

     SECTION 6.13 Regulations U and X. The Borrower is not engaged in the
                  -------------------
business of extending credit for the purpose of purchasing or carrying margin
stock, and no proceeds of any Loans will be used for a purpose which violates,
or would be inconsistent with, F.R.S. Board Regulation U or X. Less than 25% of
the assets of the Borrower and the consolidated assets of the Borrower and its
Subsidiaries consist of margin stock. Terms for which meanings are provided in
F.R.S. Board Regulation U or X or any regulations substituted therefor, as from
time to time in effect, are used in this Section with such meanings.

     SECTION 6.14 Real Property; Mortgage, etc. The Mortgaged Real Property, the
                  -----------------------------
Modesto Property and the AMEP Property constitute all of the real property in
which the Borrower or any of its Subsidiaries (including the Acquired Companies
and their Subsidiaries) has an ownership interest with a book value in excess of
$50,000.

     SECTION 6.15 The Collateral Documents. The provisions of the Collateral
                  ------------------------
Documents executed by the Borrower or any of its Subsidiaries in favor of Bank
of America, as agent for the benefit of the Lenders, are effective to create, in
favor of the Lenders, securing the Notes and all other Obligations from time to
time outstanding, a legal, valid and enforceable security interest in all right,
title and interest of the Borrower and such Subsidiaries in any and all of the
collateral described therein, and all appropriate filings and recordings having
been made or appropriately provided for, each of such Collateral Documents
constitutes a fully perfected security interest in all right, title and interest
of the Borrower and such Subsidiaries in such collateral superior in right to
any liens, existing or future, which the Borrower or any such Subsidiary or any
creditors

                                       36

<PAGE>

of or purchasers from, or any other Person, may have against such collateral or
interests therein, except to the extent, if any, otherwise provided therein.

     SECTION 6.16 Accuracy of Information. All factual information heretofore or
                  -----------------------
contemporaneously furnished by or on behalf of the Borrower in writing to the
Agent or any Lender for purposes of or in connection with this Agreement or any
transaction contemplated hereby (including the Business Plan, true and complete
copies of which were furnished to the Agent and each Lender in connection with
its execution and delivery hereof) is, and all other such factual information
hereafter furnished by or on behalf of the Borrower to the Agent or any Lender
will be, true and accurate in every material respect on the date as of which
such information is dated or certified and, as to information (other than
financial statements but, subject to the proviso below; including the Business
Plan) provided prior to the Effective Date, as of the Effective Date, and such
information is not, or shall not be, as the case may be, incomplete by omitting
to state any material fact necessary to make such information not misleading;
provided that projections contained in the Business Plan or other materials
--------
furnished by the Borrower to the Agent or the Lenders were prepared in good
faith by the Borrower in a manner consistent with GAAP (as applied in the
financial statements referred to in Section 6.5) and represent the Borrower's
                                    -----------
reasonable estimates, as of the respective dates thereof, of the Borrower's
reasonably expected future performance. The Borrower has furnished the Lenders a
true and complete copy of each tax sharing agreement to which it has become a
party to since March 31, 2000.

     SECTION 6.17 Subordinated Debt. Notwithstanding any bankruptcy, insolvency,
                  -----------------
reorganization, moratorium or similar proceeding in respect of the Borrower, at
all times, (a) the subordination provisions of any Subordinated Debt will be
enforceable by the Lender with respect to the Obligations, (b) all Obligations,
including the Obligations to pay principal of and interest on the Loans and fees
in connection therewith, constitute "Senior Indebtedness" under any Subordinated
Debt, and all such Obligations will be entitled to the benefits of subordination
created by any Subordinated Debt, and (c) all payments of principal of or
interest on any Subordinated Debt made by the Borrower or from the liquidation
of its property will be subject to such subordination provisions. The Borrower
acknowledges that the Lenders are entering into this Agreement, and making the
Loans, in reliance upon the subordination provisions contained in all
Subordinated Debt. The Borrower shall have furnished to the Lenders a true and
complete copy of the proposed documents for any proposed Subordinated Debt at
least ten Business Days prior to the issuance thereof.

     SECTION 6.18 Intellectual Property. The Borrower has no patents, trademarks
                  ---------------------
or copyrights except those listed on the Annexes to the Security Agreement.

                                       37

<PAGE>

                                  ARTICLE VII.

                                    COVENANTS

     SECTION 7.1 Affirmative Covenants. The Borrower agrees with the Agent and
                 ---------------------
each Lender that, so long as the Commitments are outstanding and, thereafter,
until all Obligations have been paid and performed in full, the Borrower will
perform the obligations set forth in this Section 7.1.
                                          -----------

     SECTION 7.1.1 Financial Information, Reports, Notices, etc. The Borrower
                   ---------------------------------------------
will furnish, or will cause to be furnished, to each Lender and the Agent copies
of the following financial statements, reports, notices and information:

          (a) as soon as available and in any event within 60 days after the end
     of each of the first three Fiscal Quarters of each Fiscal Year of the
     Borrower, consolidated and consolidating balance sheets of the Borrower and
     its Subsidiaries as of the end of such Fiscal Quarter, consolidated
     statements of earnings and cash flow of the Borrower and its Subsidiaries
     for such Fiscal Quarter and for the period commencing at the end of the
     previous Fiscal Year and ending with the end of such Fiscal Quarter and a
     consolidating statement of earnings of the Borrower and its Subsidiaries
     for such Fiscal Quarter and for the period commencing at the end of the
     previous Fiscal Year and ending with the end of such Fiscal Quarter,
     certified by the chief financial Authorized Officer of the Borrower;

          (b) as soon as available and in any event within 120 days after the
     end of each Fiscal Year of the Borrower, an appropriately updated business
     plan substantially in the form of, and containing the same scope of
     information as, the Business Plan and a copy of the annual audit report for
     such Fiscal Year for the Borrower and its Subsidiaries including therein
     consolidated and consolidating balance sheets of the Borrower and its
     Subsidiaries as of the end of such Fiscal Year, consolidated statements of
     earnings and cash flow of the Borrower and its Subsidiaries for such Fiscal
     Year and consolidating statements of earnings of the Borrower and its
     Subsidiaries for such Fiscal Year, in each case certified (without any
     Impermissible Qualification) in a manner acceptable to the Agent and the
     Required Lenders by KPMG LLP or other independent public accountants of
     recognized standing acceptable to the Agent and the Required Lenders,
     together with (i) a certificate from such accountants containing a
     computation of, and showing compliance with, each of the financial ratios
     and restrictions contained in Section 7.2.4 and to the effect that, in
     making the examination necessary for the signing of such annual report by
     such accountants, they have not become aware of any Default that has
     occurred and is continuing, or, if they have become aware of such Default,
     describing such Default and the steps, if any, being taken to cure it, and
     (ii) unaudited consolidated and consolidating financial statements for the
     Borrower and its Subsidiaries prepared on the basis of, and with figures
     used in the preparation of, such audited financial statements and comprised
     of balance sheets and statements of earnings and cash flow;

          (c) as soon as available and in any event within 60 days after the end
     of each Fiscal Quarter, a certificate, executed by the chief financial
     Authorized Officer of the Borrower, showing (in reasonable detail and with
     appropriate calculations and

                                       38

<PAGE>

     computations in all respects satisfactory to the Agent) compliance with the
     financial covenants set forth in Section 7.2.4 and with the provisions of
                                      -------------
     Sections 7.2.6, 7.2.7 and 7.2.10 and also showing the amount of any
     --------------  -----     ------
     inter-company advances by the Borrower to any of its Subsidiaries (broken
     out by Subsidiary);

          (d) as soon as possible and in any event within three Business Days
     after the occurrence of each Default, a statement of the chief financial
     Authorized Officer of the Borrower setting forth details of such Default
     and within four Business Days thereafter, the action which the Borrower has
     taken and proposes to take with respect thereto;

          (e)  as soon as possible and in any event within five Business Days
     after (x) the occurrence of any adverse development with respect to any
     litigation, action, proceeding or labor controversy described in Section
                                                                      -------
     6.7, or (y) the commencement of any labor controversy, litigation, action,
     ---
     proceeding of the type described in Section 6.7, notice thereof and copies
                                         -----------
     of all documentation relating thereto;

          (f)  promptly after the sending or filing thereof, copies of any
     reports and registration statements which the Borrower or any of its
     Subsidiaries may file with the Securities and Exchange Commission or any
     national securities exchange or pursuant to the Investment Company Act of
     1940, as amended, or the Public Utility Holding Company Act of 1935, as
     amended, and promptly after the receipt of any communication from any
     governmental authority or agency administering either of such Acts, copies
     thereof, as well as copies of any reports the Borrower furnishes to its
     securityholders which the Borrower reasonably determines to be material to
     the Lender or the Obligations;

          (g)  immediately upon and in any event within five Business Days of
     becoming aware of the institution of any steps by the Borrower or any other
     Person to terminate any Pension Plan, or the failure to make a required
     contribution to any Pension Plan if such failure is sufficient to give rise
     to a Lien under section 302(f) of ERISA, or the taking of any action with
     respect to a Pension Plan which could result in the requirement that the
     Borrower furnish a bond or other security to the PBGC or such Pension Plan,
     or the occurrence of any event with respect to any Pension Plan which could
     result in the incurrence by the Borrower of any material liability, fine or
     penalty, or any material increase in the contingent liability of the
     Borrower with respect to any post-retirement Welfare Plan benefit, notice
     thereof and copies of all documentation relating thereto; and

          (h)  such other information respecting the condition or operations,
     financial or otherwise, of the Borrower or any of its Subsidiaries as any
     Lender through the Agent may from time to time reasonably request.

     SECTION 7.1.2 Compliance with Laws, etc. Other than with respect to the
                   --------------------------
Mortgaged Real Property (as to which the provisions of the Mortgage shall govern
and control), the Borrower will, and will cause each of its Subsidiaries to,
comply in all material respects with all applicable laws, rules, regulations and
orders, such compliance to include (without limitation):

                                       39

<PAGE>

          (a) the maintenance and preservation of its corporate existence and
     qualification as a foreign corporation (except where the failure to be so
     qualified would not have a material adverse effect on the consolidated
     financial condition, operations, assets, business, properties or prospects
     of the Borrower and its Significant Subsidiaries); and

          (b) the payment, before the same become delinquent, of all taxes,
     assessments and governmental charges imposed upon it or upon its property
     except to the extent being contested in good faith by appropriate action
     and for which adequate reserves in accordance with GAAP shall have been set
     aside on its books.

     SECTION 7.1.3 Maintenance of Properties. Other than with respect to the
                   -------------------------
Mortgaged Real Property (as to which the provisions of the Mortgage shall govern
and control), the Borrower will, and will cause each of its Significant
Subsidiaries to, maintain, preserve, protect and keep its properties in good
repair, working order and condition, and make necessary and proper repairs,
renewals and replacements so that its business carried on in connection
therewith may be properly conducted in all material respects at all times unless
the Borrower determines in good faith that the continued maintenance of any of
its properties is no longer economically desirable.

     SECTION 7.1.4 Insurance. Other than with respect to the Mortgaged Real
                   ---------
Property (as to which the provisions of the Mortgage shall govern and control),
the Borrower will, and will cause each of its Significant Subsidiaries to,
maintain or cause to be maintained with responsible insurance companies
insurance with respect to its properties and business (including business
interruption insurance) 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 request of the Agent, furnish to each Lender at reasonable intervals
a certificate of an Authorized Officer of the Borrower setting forth the nature
and extent of all insurance maintained by the Borrower and its Subsidiaries in
accordance with this Section.

     SECTION 7.1.5 Books and Records. The Borrower will, and will cause each of
                   -----------------
its Significant Subsidiaries to, keep books and records which accurately reflect
all of its material business affairs and transactions and permit the Agent and
each Lender or any of their respective representatives, at reasonable times and
intervals, to visit all of its offices, to discuss its financial matters with
its officers and independent public accountant (and the Borrower hereby
authorizes such independent public accountant to discuss the Borrower's
financial matters with each Lender or its representatives whether or not any
representative of the Borrower is present) and to examine (and, at the expense
of the Borrower, photocopy extracts from) any of its books or other corporate
records. The Borrower shall pay any fees of such independent public accountant
incurred in connection with the Agent's or any Lender's exercise of its rights
pursuant to this Section.

     SECTION 7.1.6 Environmental Covenant. The Borrower will, and will cause
                   ----------------------
each of its Subsidiaries to,

          (a)  use and operate all of its facilities and properties in material
     compliance with all Environmental Laws, keep all necessary permits,
     approvals, certificates, licenses

                                       40

<PAGE>

     and other authorizations relating to environmental matters in effect and
     remain in material compliance therewith, and handle all Hazardous Materials
     in material compliance with all applicable Environmental Laws;

          (b) immediately and in any event within five Business Days notify the
     Agent and provide copies upon receipt of all written claims, complaints,
     notices or inquiries relating to the condition of its facilities and
     properties or compliance with Environmental Laws, and shall promptly take
     all action to seek to cure and have dismissed with prejudice to the
     satisfaction of the relevant governmental authorities and agencies any
     actions and proceedings relating to compliance with Environmental Laws; and

          (c) provide such information and certifications which the Agent may
     reasonably request from time to time to evidence compliance with this
     Section 7.1.6.

     SECTION 7.1.7 Fourth Amendment to Mortgage. No later than 90 days after the
                   ----------------------------
date hereof, the Borrower shall deliver to the Agent executed counterparts of
the Fourth Amendment to Mortgage duly executed by the Borrower, together with

          (a) evidence of the completion (or satisfactory arrangements for the
     completion) of all recordings and filings (including fixture filings) of
     the Fourth Amendment to Mortgage as may be necessary or desirable, in the
     reasonable opinion of the Agent and its counsel, to create (and continue) a
     valid, perfected first priority mortgage or deed of trust Lien, of record,
     against the properties purported to be covered thereby;

          (b) a mortgagee's title insurance policy endorsement in favor of the
     Agent and the Lenders in amounts and in form and substance and issued by
     issuers, in each case reasonably satisfactory to the Agent, with respect to
     the Mortgaged Real Property, insuring that title to such Mortgaged Real
     Property is marketable and that the interest created by the Mortgage
     constitutes a valid, perfected first mortgage Lien, of record, on the title
     to such property free and clear of all defects and encumbrances other than
     as approved by the Agent, and such policy shall also include such
     endorsements as the Agent shall request and shall be accompanied by
     evidence of the payment in full of all premiums thereon;

          (c) an opinion of Wisconsin counsel, dated a date satisfactory to the
     Agent, addressed to the Agent and each Lender, in form of satisfactory to
     the Agent and each Lender and

          (d) evidence reasonably satisfactory to the Agent that the Borrower
     has in effect the insurance with respect to the Mortgaged Real Property
     required to be carried by the Borrower pursuant to the terms of the
     Mortgage, such evidence to include, without limitation (i) a loss payable
     endorsement, in form satisfactory to the Agent, naming the Agent, as agent
     for the Lenders, as a loss payee with respect to all casualty insurance
     policies and (ii) an endorsement naming the Agent, as agent for the
     Lenders, as an additional insured with respect to all liability insurance
     policies.

                                       41

<PAGE>

     SECTION 7.1.8 Modesto Property. No later than 90 days after the date
                   ----------------
hereof, the Borrower shall deliver to the Agent executed counterparts of the
Second Amendment to Modesto Mortgage, duly executed by the Borrower, together
with

          (a)  evidence of the completion (or satisfactory arrangements for the
     completion) of all recordings and filings (including fixture filings) of
     the Second Amendment to Modesto Mortgage as may be necessary or desirable,
     in the reasonable opinion of the Agent and its counsel, to create (and
     continue) a valid, perfected first priority mortgage or deed of trust Lien,
     of record, against the properties purported to be covered thereby;

          (b)  a mortgagee's title insurance policy endorsement in favor of the
     Agent and the Lenders in amounts and in form and substance and issued by
     issuers, in each case reasonably satisfactory to the Agent, with respect to
     the Modesto Property, insuring that title to such Modesto Property is
     marketable and that the interest created by the Modesto Mortgage
     constitutes a valid, perfected first mortgage Lien, of record, on the title
     to such property free and clear of all defects and encumbrances other than
     as approved by the Agent, and such policy shall also include such
     endorsements as the Agent shall request and shall be accompanied by
     evidence of the payment in full of all premiums thereon;

          (c)  an opinion of California counsel, dated a date satisfactory to
     the Agent, addressed to the Agent and each Lender, in form of satisfactory
     to the Agent and each Lender and

          (d)  evidence reasonably satisfactory to the Agent that the Borrower
     has in effect the insurance with respect to the Modesto Property required
     to be carried by the Borrower pursuant to the terms of the Modesto
     Mortgage, such evidence to include, without limitation (i) a loss payable
     endorsement, in form satisfactory to the Agent, naming the Agent, as agent
     for the Lenders, as a loss payee with respect to all casualty insurance
     policies and (ii) an endorsement naming the Agent, as agent for the
     Lenders, as an additional insured with respect to all liability insurance
     policies.

     SECTION 7.1.9 AMEP Property. No later than 90 days after the date hereof,
                   -------------
the Borrower shall deliver to the Agent executed counterparts of the AMEP
Mortgage, duly executed by the Borrower, together with

          (a)  evidence of the completion (or satisfactory arrangements for the
     completion) of all recordings and filings (including fixture filings) of
     the AMEP Mortgage as may be necessary or desirable, in the reasonable
     opinion of the Agent and its counsel, to create (and continue) a valid,
     perfected first priority mortgage or deed of trust Lien, of record, against
     the properties purported to be covered thereby;

          (b)  a mortgagee's title insurance policy endorsement in favor of the
     Agent and the Lenders in amounts and in form and substance and issued by
     issuers, in each case reasonably satisfactory to the Agent, with respect to
     the AMEP Property, insuring that title to such AMEP Property is marketable
     and that the interest created by the AMEP Mortgage constitutes a valid,
     perfected first mortgage Lien, of record, on the title to such

                                       42

<PAGE>

     property free and clear of all defects and encumbrances other than as
     approved by the Agent, and such policy shall also include such endorsements
     as the Agent shall request and shall be accompanied by evidence of the
     payment in full of all premiums thereon;

          (c)  an opinion of local counsel, dated a date satisfactory to the
     Agent, addressed to the Agent and each Lender, in form of satisfactory to
     the Agent and each Lender and

          (d)  evidence reasonably satisfactory to the Agent that the Borrower
     has in effect the insurance with respect to the AMEP Property required to
     be carried by the Borrower pursuant to the terms of the AMEP Mortgage, such
     evidence to include, without limitation (i) a loss payable endorsement, in
     form satisfactory to the Agent, naming the Agent, as agent for the Lenders,
     as a loss payee with respect to all casualty insurance policies and (ii) an
     endorsement naming the Agent, as agent for the Lenders, as an additional
     insured with respect to all liability insurance policies.

     SECTION 7.1.10 Subsidiary Pledge Agreement and Subsidiary Security
                    ---------------------------------------------------
Agreement. No later than 60 days after the date of the consummation of the AMEP
---------
Acquisition, the Borrower shall deliver the following documents to the Agent:

     (a)  executed counterparts of (i) the Subsidiary Pledge Agreement executed
by the Borrower, together with the certificates evidencing all of the issued and
outstanding shares of capital stock and promissory notes with respect to the
acquired subsidiaries of AMEP pledged pursuant to the Subsidiary Pledge
Agreement, which certificates evidencing shares of capital stock shall in each
case be accompanied by undated stock powers duly executed in blank and which
promissory notes shall be duly endorsed in blank and (ii) the Subsidiary
Security Agreement executed by the Borrower with respect to the acquired
subsidiaries of AMEP; and

     (b)  an opinion addressed to the Agent and each Lender, from Steven B.
Lapin, general counsel to the Borrower, in form and substance reasonably
satisfactory to the Agent and counsel to the Agent, with respect to certain
matters relating to the execution and delivery of the Subsidiary Pledge
Agreement and the Subsidiary Security Agreement.

     SECTION 7.1.11 Further Assurances. Promptly upon the written request of the
                    ------------------
Agent, or the Required Lenders, the Borrower shall, and shall cause each
Subsidiary to, execute, acknowledge, deliver, record, re-record, file, re-file,
register and re-register, any and all such further acts, deeds, conveyances,
security agreements, mortgages, assignments, estoppel certificates, financing
statements and continuations thereof, termination statements, notices of
assignment, transfers, certificates, assurances and other instruments the Agent
or the Required Lenders as the case may be, may reasonably request from time to
time in order (a) to ensure that (i) the Obligations are secured by
substantially all assets of the Borrower and (ii) the Obligations are secured by
substantially all of the assets of each Subsidiary (including, promptly upon the
acquisition or creation thereof, any Subsidiary created or acquired after the
date hereof), (b) to perfect and maintain the validity, effectiveness and
priority of any of the Loan Documents and the Liens intended to be created
thereby, and (c) to better assure, convey, grant, assign, transfer, preserve,
protect and confirm to the Agent and the Lenders the rights granted or now or
hereafter intended to be granted to the Agent and the Lenders under any Loan
Documents or under any

                                       43

<PAGE>

other document executed in connection therewith. Contemporaneously with the
execution and delivery of any document referred to above, the Borrower shall,
and shall cause each Subsidiary to, deliver all resolutions, opinions and
corporate documents as the Agent or the Required Lenders may reasonably request
to confirm the enforceability of such document and the perfection of the
security interest created thereby, if applicable.

     SECTION 7.2 Negative Covenants. The Borrower agrees with the Agent and each
                 ------------------
Lender that, so long as the Commitments shall be outstanding and, thereafter,
until all Obligations have been paid and performed in full, the Borrower will
perform the obligations set forth in this Section 7.2.
                                          -----------

     SECTION 7.2.1 Business Activities. The Borrower will not, and will not
                   -------------------
permit any of its Subsidiaries to, engage in any business activity, other than
the business of selling, primarily through mail order and electronic means,
teaching aids and equipment to educators and specialized equipment and supplies
to farmers, ranchers, laboratories, hospitals and emergency services, and in the
financial services business and such activities as may be incidental or directly
related thereto.

     SECTION 7.2.2 Indebtedness. The Borrower will not, and will not permit any
                   ------------
of its Subsidiaries to, create, incur, assume or suffer to exist or otherwise
become or be liable in respect of any Indebtedness, other than, without
duplication, the following:

          (a)  Indebtedness in respect of the Loans and other Obligations;

          (b)  unsecured Indebtedness incurred in the ordinary course of
     business (including open accounts extended by suppliers on normal trade
     terms in connection with purchases of goods and services, but excluding
     Indebtedness incurred through the borrowing of money and Contingent
     Liabilities);

          (c)  Indebtedness of the Borrower and its Subsidiaries in respect of
     Capitalized Lease Liabilities to the extent permitted in Section 7.2.7;
                                                              -------------

          (d)  Indebtedness under the Credit Agreement (364 Days);

          (e)  Indebtedness of the Borrower comprising reimbursement obligations
     in respect of letters of credit issued to support imported merchandise
     purchased from time to time by the Borrower, provided that the aggregate
                                                  --------
     amount of all such letters of credit and, in turn, of all such
     reimbursement obligations, shall not exceed $500,000; and

          (f)  Indebtedness of the Borrower incurred in connection with the
     Guaranty, dated as of April 16, 2001 in favor of J-Star Industries, Inc.
     pursuant to which the Borrower has guaranteed the obligations of NHI, LLC
     under the Environmental Remediation and Indemnification Agreement, dated as
     of April 16, 2001, by and between NHI, LLC and J-Star Industries, Inc. and
     the Environmental Escrow Agreement, dated as of April 16, 2001, by and
     between NHI, LLC and J-Star Industries, Inc.

                                       44

<PAGE>

     SECTION 7.2.3 Liens. The Borrower will not, and will not permit any of its
                   -----
Subsidiaries to, create, incur, assume or suffer to exist any Lien upon any of
its property, revenues or assets, whether now owned or hereafter acquired,
except:

          (a)  Liens securing payment of the Obligations and the "Obligations"
     under the Credit Agreement (364 Days), granted pursuant to any Loan
     Document;

          (b)  Other than with respect to the Mortgaged Real Property and the
     Modesto Property (as to which the provisions of the Mortgage and the
     Modesto Mortgage shall govern and control), liens for taxes, assessments or
     other governmental charges or levies not at the time delinquent or
     thereafter payable without penalty or being contested in good faith by
     appropriate action and for which adequate reserves in accordance with GAAP
     shall have been set aside on its books;

          (c)  Liens of carriers, warehousemen, mechanics, materialmen and
     landlords incurred in the ordinary course of business for sums not overdue
     or being contested in good faith by appropriate action and for which
     adequate reserves in accordance with GAAP shall have been set aside on its
     books;

          (d)  Liens incurred in the ordinary course of business in connection
     with worker's compensation, unemployment insurance or other forms of
     governmental insurance or benefits, or to secure performance of tenders,
     statutory obligations, leases and contracts (other than for borrowed money)
     entered into in the ordinary course of business or to secure obligations on
     surety or appeal bonds;

          (e)  judgment Liens in existence less than 15 days after the entry
     thereof or with respect to which execution has been stayed or the payment
     of which is covered in full (subject to a customary deductible) by
     insurance maintained with responsible insurance companies;

          (f)  Liens to secure the reimbursement obligations permitted under
     Section 7.2.2(e) on the merchandise financed with the letters of credit
     ----------------
     described therein; and

          (g)  Permitted Encumbrances (as defined in the Mortgage) with respect
     to the Mortgaged Real Property and Modesto Property.

     SECTION 7.2.4 Financial Condition. The Borrower hereby covenants and agrees
                   -------------------
as set forth below:

          (a)  Current Ratio. The Borrower will not permit its Consolidated
               -------------
     Current Ratio, as of the end of any month during any Fiscal Year, to be
     less than 2.0 to 1.

          (b)  Consolidated Net Worth. The Borrower will not permit its
               ----------------------
     Consolidated Net Worth, at any time during any Fiscal Year, to be less than
     an amount equal to the sum of (i) $8,000,000 plus (ii) an amount equal to
                                                  ----
     50% of Consolidated Net Income for the period from the date hereof to the
     date of determination thereof (if positive).

                                       45

<PAGE>

          (c)  Consolidated Current Assets Levels. The Borrower will not permit
               ----------------------------------
     its Consolidated Current Assets Level, as of the last day of any Fiscal
     Quarter of any Fiscal Year, to be less than the amounts set forth below:

               Fiscal Quarter                           Amount
               --------------                           ------

               March 31                               $27,000,000
               June 30                                $31,000,000
               September 30                           $34,000,000
               December 31                            $25,000,000

          (d)  Consolidated Debt Service Coverage Ratio. The Borrower will not
               ----------------------------------------
     permit its Consolidated Debt Service Coverage Ratio to be less than (x)
     1.25 to 1 from the Effective Date through September 29, 2001, (y) 1.50 to 1
     from September 30, 2001 through December 30, 2001 and (z) 1.75 to 1
     thereafter.

     SECTION 7.2.5 Investments. The Borrower will not, and will not permit any
                   -----------
of its Subsidiaries to, make, incur, assume or suffer to exist any Investment in
any other Person, except:

          (a)  Cash Equivalent Investments;

          (b)  without duplication, Investments permitted as Indebtedness
     pursuant to Section 7.2.2;
                 -------------

          (c)  without duplication, Investments permitted as Capital
     Expenditures pursuant to Section 7.2.7; and
                              -------------

          (d)  (i) Investments made prior to the Effective Date in its
     Subsidiaries, (ii) from and after the Effective Date and in the ordinary
     course of business, Investments by the Borrower in its Subsidiaries in an
     aggregate amount not to exceed $3,000,000 at any one time outstanding, or
     by any such Subsidiary in any of its Subsidiaries, by way of contributions
     to capital or loans or advances and (iii) from and after the Effective
     Date, Investments by the Borrower in Geneve in an aggregate amount not to
     exceed $3,000,000 at any one time outstanding (provided, that all such
                                                    --------
     Investments shall be by way of loans to Geneve made by the Borrower and
     evidenced by one or more promissory notes (each such promissory note to be
     in form and substance reasonably satisfactory to the Agent) duly executed
     and delivered in pledge to the Agent;

          (e) Investments in the Acquired Companies and each of their respective
     Subsidiaries;

provided, however, that
--------  -------

          (f)  any Investment which when made complies with the requirements of
     the definition of the term "Cash Equivalent Investment" may continue to be
                                 --------------------------
     held

                                       46

<PAGE>

     notwithstanding that such Investment if made thereafter would not comply
     with such requirements; and

          (g) no Investment otherwise permitted by clause (b), (c) or (d) shall
                                                   ----------  ---    ---
     be permitted to be made if, immediately before or after giving effect
     thereto, any Default shall have occurred and be continuing.

     SECTION 7.2.6 Restricted Payments, etc. On and at all times after the
                   -------------------------
Effective Date:

          (a) the Borrower will not declare, pay or make any dividend or
     distribution (in cash, property or obligations) on any shares of any class
     of capital stock (now or hereafter outstanding) of the Borrower or on any
     warrants, options or other rights with respect to any shares of any class
     of capital stock (now or hereafter outstanding) of the Borrower (other than
     dividends or distributions payable in its common stock or warrants to
     purchase its common stock or splitups or reclassifications of its stock
     into additional or other shares of its common stock), or apply, or permit
     any of its Subsidiaries to apply, any of its funds, property or assets to
     the purchase, redemption, sinking fund or other retirement of, or agree or
     permit any of its Subsidiaries to purchase or redeem, any shares of any
     class of capital stock (now or hereafter outstanding) of, the Borrower, or
     warrants, options or other rights with respect to any shares of any class
     of capital stock (now or hereafter outstanding) of the Borrower;

          (b) the Borrower will not prepay any other Indebtedness or prepay or
     repay any Subordinated Debt, except as expressly permitted under clause (d)
                                                                      ----------
     of Section 7.2.2; and
        -------------

          (c) the Borrower will not, and will not permit any Subsidiary to, make
     any deposit for any of the foregoing purposes;

provided, however, that, (i) the Borrower may pay a dividend of up to $1,800,000
--------  -------
to Holdings from the date hereof to December 31, 2001 and (ii) each year
thereafter the Borrower may pay a dividend up to an amount equal to 50% of the
Excess Cash Flow for the preceding Fiscal Year (so long as the Borrower has
first made the mandatory prepayment due pursuant to Section 3.1.2 (d)).
                                                    ------------------

     SECTION 7.2.7 Capital Expenditures, etc. The Borrower will not, and will
                   --------------------------
not permit any of its Subsidiaries to, make or commit to make Capital
Expenditures in any Fiscal Year in excess of $2,700,000 in the aggregate.

     SECTION 7.2.8 Take or Pay Contracts. The Borrower will not, and will not
                   ---------------------
permit any of its Subsidiaries to, enter into or be a party to any arrangement
for the purchase of materials, supplies, other property or services if such
arrangement by its express terms requires that payment be made by the Borrower
or such Subsidiary regardless of whether such materials, supplies, other
property or services are delivered or furnished to it, unless the aggregate
amount payable under all such arrangements shall not exceed $100,000 in any
calendar year.

                                       47

<PAGE>

     SECTION 7.2.9 Consolidation, Merger, etc. The Borrower will not, and will
                   ---------------------------
not permit any of its Subsidiaries to, liquidate or dissolve, consolidate with,
or merge into or with, any other corporation, or purchase or otherwise acquire
all or substantially all of the assets of any Person (or of any division
thereof) except

          (a)  any such Subsidiary may liquidate or dissolve voluntarily into,
     and may merge with and into, the Borrower or any wholly-owned Subsidiary,
     and the assets or stock of any Subsidiary may be purchased or otherwise
     acquired by the Borrower or any wholly-owned Subsidiary; and

          (b)  so long as no Default has occurred and is continuing or would
     occur after giving effect thereto, the Borrower or any of its Subsidiaries
     may purchase all or substantially all of the assets of any Person, or
     acquire such Person by merger, if permitted (without duplication) by
     Section 7.2.7 to be made as a Capital Expenditure (provided that any
     -------------                                      --------
     amounts so expended shall count as Capital Expenditures for purposes of
     Section 7.2.7).
     -------------

     SECTION 7.2.10 Asset Dispositions, etc. The Borrower will not, and will not
                    ------------------------
permit any of its Subsidiaries to, sell, transfer, lease, contribute or
otherwise convey, or grant options, warrants or other rights with respect to,
all or any part of its assets (including accounts receivable and capital stock
of Subsidiaries) to any Person, other than the sale of inventory in the ordinary
course of business, unless (a) permitted by Section 7.2.6 or 7.2.9 or (b) in
                                            -------------    -----
addition to the exceptions provided in the foregoing clause (a), the net book
                                                     ----------
value of such assets, together with the net book value of all other assets sold,
transferred, leased, contributed or conveyed by the Borrower or any of its
Subsidiaries pursuant to this clause (b) since the Effective Date, does not
                              ----------
exceed $250,000.

     SECTION 7.2.11 Modification of Tax Sharing Agreement and Subordinated Debt.
                    -----------------------------------------------------------
The Borrower will not consent to any amendment, supplement or other modification
of any of the terms or provisions contained in, or applicable to, the tax
sharing agreement delivered to the Lenders pursuant to this Agreement or, after
the issuance thereof, the terms or provisions of any Subordinated Debt.

     SECTION 7.2.12 Transactions with Affiliates. The Borrower will not, and
                    ----------------------------
will not permit any Significant Subsidiary to, enter into, or cause, suffer or
permit to exist:

          (a)  any arrangement or contract with any of its other Affiliates of a
     nature customarily entered into by Persons which are Affiliates of each
     other for tax or financial reporting purposes (including, without
     limitation, management or similar contracts or arrangements relating to the
     allocation of revenues, taxes and expenses or otherwise) unless such
     arrangement or contract is fair and equitable to the Borrower or such
     Significant Subsidiary; or

          (b)  any other transaction, arrangement or contract with any of its
     other Affiliates which would not be entered into by a prudent Person in the
     position of the Borrower or such Significant Subsidiary with, or which is
     on terms which are less favorable than are obtainable from, any Person
     which is not one of its Affiliates.

                                       48

<PAGE>

     SECTION 7.2.13 Inconsistent Agreements. The Borrower will not enter into
                    -----------------------
any agreement containing any provision which would be violated or breached by
any borrowing by the Borrower made hereunder or by the performance by the
Borrower of its obligations hereunder or under any instrument executed pursuant
hereto.

     SECTION 7.2.14 Negative Pledges, Restrictive Agreements, etc. The Borrower
                    ----------------------------------------------
will not, and will not permit any of its Subsidiaries to, enter into any
agreement (excluding this Agreement and any other Loan Document) prohibiting

          (a) the creation or assumption of any Lien upon its properties,
     revenues or assets, whether now owned or hereafter acquired, or the ability
     of the Borrower to amend or otherwise modify this Agreement or any other
     Loan Document; or

          (b) the ability of any Subsidiary to make any payments, directly or
     indirectly, to the Borrower by way of dividends, advances, repayments of
     loans or advances, reimbursements of management and other intercompany
     charges, expenses and accruals or other returns on investments, or any
     other agreement or arrangement which restricts the ability of any such
     Subsidiary to make any payment, directly or indirectly, to the Borrower.

     SECTION 7.2.15 Management Fees. The Borrower will not, and will not permit
                    ---------------
any of its Subsidiaries to, pay management or similar fees to any Affiliate
(other than payments by any of the Borrower's Subsidiaries to the Borrower)
without the written approval of the Required Lenders which, when aggregated with
all other management fees paid by the Borrower and its Subsidiaries in any
Fiscal Year, would exceed the amounts set forth below opposite such Fiscal Year:

               Fiscal Year                    Amount
               -----------                    ------
                   2001                     $1,611,624
                   2002                     $1,708,321
                   2003                     $1,810,821
                   2004                     $1,919,470
                   2005                     $2,034,638
                   2006                     $2,156,716

provided that, in any event and at all times, no management fees may be paid
--------
when any Default has occurred and is continuing or would occur after giving
effect thereto.

     SECTION 7.2.16 Tax Sharing Payments. The Borrower will not, and will not
                    --------------------
permit any of its Subsidiaries to, make any tax sharing payments to Holdings
which, when aggregated with all other tax sharing payments made by the Borrower
and its Subsidiaries in any Fiscal Quarter, would exceed the estimated quarterly
tax sharing payments required to be made pursuant to the tax sharing agreement
heretofore delivered to the Lenders pursuant to this Agreement; provided that,
                                                                --------
in any event and at all times, no tax sharing payment may be paid when any
Default has occurred and is continuing or would occur after giving effect
thereto.

                                       49

<PAGE>

     SECTION 7.2.17 Use of Proceeds. The Borrower will not use the proceeds of
                    ---------------
the Loans for any purpose that is not set forth in the recitals, provided,
                                                       --------  --------
however, that the Borrower may use the proceeds of the Loans for working capital
-------
and the payment of a dividend to Holdings in accordance with Section 7.2.6.
                                                             -------------

                                  ARTICLE VIII.

                                EVENTS OF DEFAULT

     SECTION 8.1 Listing of Events of Default. Each of the following events or
                 ----------------------------
occurrences described in this Section 8.1 shall constitute an "Event of
                              -----------                      --------
Default".
-------

     SECTION 8.1.1 Non-Payment of Obligations. The Borrower shall default in the
                   --------------------------
payment or prepayment when due of any principal of any Loan, or the Borrower
shall default (and such default shall continue unremedied for a period of five
days) in the payment when due of any interest on any Loan or any other
Obligation.

     SECTION 8.1.2 Breach of Warranty. Any representation or warranty of the
                   ------------------
Borrower or any of its Affiliates made or deemed to be made hereunder or in any
other Loan Document or in any other writing or certificate furnished by or on
behalf of the Borrower or any of its Affiliates to the Agent or any Lender for
the purposes of or in connection with this Agreement or any such other Loan
Document (including any certificates delivered pursuant to Article V) is or
                                                           ---------
shall be incorrect when made in any material respect.

     SECTION 8.1.3 Non-Performance of Certain Covenants and Obligations. The
                   ----------------------------------------------------
Borrower shall default in the due performance and observance of any of its
obligations under Section 7.2.1 through 7.2.16.
                  -------------         ------

     SECTION 8.1.4 Non-Performance of Other Covenants and Obligations. The
                   --------------------------------------------------
Borrower shall default in the due performance and observance of any other
agreement contained herein or in any other Loan Document (other than the
Mortgage), and such default shall continue unremedied for a period of 30 days
after notice thereof shall have been given to the Borrower by the Agent or an
Event of Default shall occur under (and as defined in) the Mortgage.

     SECTION 8.1.5 Default on Other Indebtedness. A default shall occur in the
                   -----------------------------
payment when due (subject to any applicable grace period), whether by
acceleration or otherwise, of any Indebtedness (other than the Loans) equal to
or in excess of $1,000,000 of the Borrower or any of the Borrower's Significant
Subsidiaries, or a default shall occur in the performance or observance of any
obligation or condition with respect to such Indebtedness if the effect of such
default is to accelerate the maturity of any such Indebtedness or such default
shall continue unremedied for any applicable period of time sufficient to permit
the holder or holders of such Indebtedness, or any trustee or agent for such
holders, to cause such Indebtedness to become due and payable prior to its
expressed maturity.

     SECTION 8.1.6 Judgments. Any judgment or order for the payment of money in
                   ---------
excess of $250,000 shall be rendered against the Borrower or any of its
Significant Subsidiaries

                                       50

<PAGE>

and there shall be any period of 30 consecutive days during which a stay of
enforcement of such judgment or order, by reason of a pending appeal or
otherwise, shall not be in effect or, during such 30 day period, enforcement
proceedings shall have been commenced by any creditor and not stayed or
withdrawn.

     SECTION 8.1.7 Pension Plans. Any of the following events shall occur with
                   -------------
respect to any Pension Plan

          (a)  the institution of any steps by the Borrower, any member of its
     Controlled Group or any other Person to terminate a Pension Plan if, as a
     result of such termination, the Borrower or any such member could be
     required to make a contribution to such Pension Plan, or could reasonably
     expect to incur a liability or obligation to such Pension Plan, in excess
     of $250,000; or

          (b)  a contribution failure occurs with respect to any Pension Plan
     sufficient to give rise to a Lien under section 302(f) of ERISA.

     SECTION 8.1.8 Control of the Borrower. Any Change in Control shall occur.
                   -----------------------
     SECTION 8.1.9 Bankruptcy, Insolvency, etc. The Borrower or any of its
                   ----------------------------
Significant Subsidiaries shall

          (a)  become insolvent or generally fail to pay, or admit in writing
     its inability or unwillingness to pay, debts as they become due;

          (b)  apply for, consent to, or acquiesce in, the appointment of a
     trustee, receiver, sequestrator or other custodian for the Borrower or any
     of its Significant Subsidiaries or any property of any thereof, or make a
     general assignment for the benefit of creditors;

          (c)  in the absence of such application, consent or acquiescence,
     permit or suffer to exist the appointment of a trustee, receiver,
     sequestrator or other custodian for the Borrower or any of its Significant
     Subsidiaries or for a substantial part of the property of any thereof, and
     such trustee, receiver, sequestrator or other custodian shall not be
     discharged within 60 days, provided that the Borrower and each Significant
     Subsidiary hereby expressly authorizes the Agent and each Lender to appear
     in any court conducting any relevant proceeding during such 60-day period
     to preserve, protect and defend their rights under the Loan Documents;

          (d)  permit or suffer to exist the commencement of any bankruptcy,
     reorganization, debt arrangement or other case or proceeding under any
     bankruptcy or insolvency law, or any dissolution, winding up or liquidation
     proceeding, in respect of the Borrower or any of its Significant
     Subsidiaries, and, if any such case or proceeding is not commenced by the
     Borrower or such Significant Subsidiary, such case or proceeding shall be
     consented to or acquiesced in by the Borrower or such Significant
     Subsidiary or shall result in the entry of an order for relief or shall
     remain for 60 days undismissed, provided that the Borrower and each
     Significant Subsidiary hereby expressly authorizes the Agent and each
     Lender to appear in any court conducting any such case or proceeding

                                       51

<PAGE>

     during such 60-day period to preserve, protect and defend their rights
     under the Loan Documents; or

          (e) take any action authorizing, or in furtherance of, any of the
     foregoing.

     SECTION 8.1.10 Impairment of Security, etc. Any Collateral Document or any
                    ---------------------------
other Loan Document, or any Lien granted thereunder, shall (except in accordance
with its terms), in whole or in part, terminate, cease to be effective or cease
to be the legally valid, binding and enforceable obligation of any Obligor party
thereto; the Borrower, any other Obligor or any other party shall, directly or
indirectly, contest in any manner such effectiveness, validity, binding nature
or enforceability; or any Lien securing any Obligation shall, in whole or in
part, cease to be a perfected first priority Lien.

     SECTION 8.2 Action if Bankruptcy. If any Event of Default described in
                 --------------------
clauses (a) through (d) of Section 8.1.9 shall occur, the outstanding principal
-----------         ---    -------------
amount of all outstanding Loans and all other Obligations shall automatically be
and become immediately due and payable, and the Commitments shall automatically
be terminated, without notice or demand.

     SECTION 8.3 Action if Other Event of Default. If any Event of Default
                 --------------------------------
(other than any Event of Default described in clauses (a) through (d) of Section
                                              -----------         ---    -------
8.1.9) shall occur for any reason, whether voluntary or involuntary, and be
------
continuing, the Agent, upon the direction of the Required Lenders, shall by
notice to the Borrower declare the Commitments to be terminated and all or any
portion of the outstanding principal amount of the Loans and other Obligations
to be due and payable, whereupon the full unpaid amount of such Loans and other
Obligations which shall be so declared due and payable shall be and become
immediately due and payable, without further notice, demand or presentment.

     SECTION 8.4 Cumulative Remedies. The remedies provided herein are
                 -------------------
cumulative and not exclusive of any remedies provided by law.

                                   ARTICLE IX.

                                    THE AGENT

     SECTION 9.1 Actions. Each Lender hereby appoints Bank of America as its
                 -------
Agent under and for purposes of this Agreement, the Notes, each Collateral
Document and each other Loan Document. Each Lender authorizes the Agent to act
on behalf of such Lender under this Agreement, the Notes, each Collateral
Document and each other Loan Document and, in the absence of other written
instructions from the Required Lenders received from time to time by the Agent
(with respect to which the Agent agrees that it will comply, except as otherwise
provided in this Section or as otherwise advised by counsel), to exercise such
powers hereunder and thereunder as are specifically delegated to or required of
the Agent by the terms hereof and thereof, together with such powers as may be
reasonably incidental thereto. Each Lender hereby indemnifies (which indemnity
shall survive any termination of this Agreement) the Agent, pro rata according
                                                            --- ----
to such Lender's Percentage, from and against any and all liabilities,
obligations, losses, damages, claims, costs or expenses of any kind or nature
whatsoever which may at any

                                       52

<PAGE>

time be imposed on, incurred by, or asserted against, the Agent in any way
relating to or arising out of this Agreement, the Notes, any Collateral Document
and any other Loan Document, including reasonable attorneys' fees, and as to
which the Agent is not reimbursed by the Borrower; provided, however, that no
                                                   --------  -------
Lender shall be liable for the payment of any portion of such liabilities,
obligations, losses, damages, claims, costs or expenses which are determined by
a court of competent jurisdiction in a final proceeding to have resulted solely
from the Agent's gross negligence or willful misconduct. The Agent shall not be
required to take any action hereunder, under the Notes, under any Collateral
Document or under any other Loan Document, or to prosecute or defend any suit in
respect of this Agreement, the Notes, any Collateral Document or any other Loan
Document, unless it is indemnified hereunder to its satisfaction. If any
indemnity in favor of the Agent shall be or become, in the Agent's
determination, inadequate, the Agent may call for additional indemnification
from the Lenders and cease to do the acts indemnified against hereunder until
such additional indemnity is given.

        SECTION 9.2 Funding Reliance, etc. Unless the Agent shall have been
                    ---------------------
notified by telephone, confirmed in writing, by any Lender by 4:00 p.m., Chicago
time, on the day prior to the date of any proposed Borrowing that such Lender
will not make available the amount which would constitute its Percentage of the
Loans of such proposed Borrowing, the Agent may assume that such Lender has made
such amount available to the Agent and, in reliance upon such assumption, make
available to the Borrower a corresponding amount. If and to the extent that such
Lender shall not have made such amount available to the Agent, such Lender and
the Borrower severally agree to repay the Agent forthwith on demand such
corresponding amount together with interest thereon, for each day from the date
the Agent made such amount available to the Borrower to the date such amount is
repaid to the Agent, at the interest rate applicable at the time to Loans.

        SECTION 9.3 Exculpation. Neither the Agent nor any of its directors,
                    -----------
officers, employees or agents shall be liable to any Lender for any action taken
or omitted to be taken by it under this Agreement, the Notes, any Collateral
Document or any other Loan Document, or in connection herewith or therewith,
except for its own wilful misconduct or gross negligence, nor responsible for
any recitals or warranties herein or therein, nor for the effectiveness,
enforceability, validity or due execution of this Agreement, the Notes, any
Collateral Document or any other Loan Document, nor for the creation, perfection
or priority of any Liens purported to be created by any of the Loan Documents,
or the validity, genuineness, enforceability, existence, value or sufficiency of
any collateral security, nor to make any inquiry respecting the performance by
the Borrower of its obligations hereunder or under the Notes, any Collateral
Document or any other Loan Document. Any such inquiry which may be made by the
Agent shall not obligate it to make any further inquiry or to take any action.
The Agent shall be entitled to rely upon advice of counsel concerning legal
matters and upon any notice, consent, certificate, statement or writing which
the Agent believes to be genuine and to have been presented by a proper Person.

        SECTION 9.4. Successor. The Agent may resign as such at any time upon at
                     ---------
least 30 days' prior notice to the Borrower and all Lenders. If the Agent at any
time shall resign, the Required Lenders may appoint another Lender as a
successor Agent which shall thereupon become the Agent hereunder. If no
successor Agent shall have been so appointed by the Required Lenders, and shall
have accepted such appointment, within 30 days after the retiring

                                       53

<PAGE>

Agent's giving notice of resignation, then the retiring Agent may, on behalf of
the Lenders, appoint a successor Agent, which shall be one of the Lenders or a
commercial banking institution organized under the laws of the U.S. (or any
State thereof) or a U.S. branch or agency of a commercial banking institution,
and having a combined capital and surplus of at least $500,000,000. Upon the
acceptance of any appointment as Agent hereunder by a successor Agent, such
successor Agent shall be entitled to receive from the retiring Agent such
documents of transfer and assignment as such successor Agent may reasonably
request, and shall thereupon succeed to and become vested with all rights,
powers, privileges and duties of the retiring Agent, and the retiring Agent
shall be discharged from its duties and obligations under this Agreement. After
any retiring Agent's resignation hereunder as the Agent, the provisions of

                (a) this Article IX shall inure to its benefit as to any actions
                         ----------
        taken or omitted to be taken by it while it was the Agent under this
        Agreement; and

                (b) Section 10.3 and Section 10.4 shall continue to inure to its
                    ------------     ------------
        benefit.

        SECTION 9.5 Loans by Bank of America. Bank of America shall have the
                    ------------------------
same rights and powers with respect to (x) the Loans made by it or any of its
Affiliates, and (y) the Notes held by it or any of its Affiliates as any other
Lender and may exercise the same as if it were not the Agent. Bank of America
and its Affiliates may accept deposits from, lend money to, and generally engage
in any kind of business with the Borrower or any Subsidiary or Affiliate of the
Borrower as if Bank of America were not the Agent hereunder.

        SECTION 9.6 Credit Decisions. Each Lender acknowledges that it has,
                    ----------------
independently of the Agent and each other Lender, and based on such Lender's
review of the financial information of the Borrower, this Agreement, the other
Loan Documents (the terms and provisions of which being satisfactory to such
Lender) and such other documents, information and investigations as such Lender
has deemed appropriate, made its own credit decision to extend its Commitment.
Each Lender also acknowledges that it will, independently of the Agent and each
other Lender, and based on such other documents, information and investigations
as it shall deem appropriate at any time, continue to make its own credit
decisions as to exercising or not exercising from time to time any rights and
privileges available to it under this Agreement or any other Loan Document.

        SECTION 9.7 Copies, etc. The Agent shall give prompt notice to each
                    -----------
Lender of each notice or request required to be given by the Agent to the
Lenders pursuant to the terms of this Agreement (unless concurrently delivered
to the Lenders by the Borrower). The Agent will distribute to each Lender each
document or instrument received for the account of the Lenders and copies of all
other communications received by the Agent from the Borrower for distribution to
the Lenders by the Agent in accordance with the terms of this Agreement.

        SECTION 9.8 Action Through Agent. All actions taken with respect to any
                    --------------------
collateral security or guaranties provided under the Loan Documents shall be
taken solely by the Agent, and no Lender shall have any right to take any
actions individually with respect thereto.

        SECTION 9.9 Documentation Agents. None of the Lenders identified on the
                    --------------------
facing page or signature pages of this Agreement as a "documentation agent"
shall have any right,

                                       54

<PAGE>

power, obligation, liability, responsibility or duty under this Agreement other
than those applicable to all Lenders as such. Each Lender acknowledges that it
has not relied, and will not rely, on any of the Lenders so identified in
deciding to enter into this Agreement or in taking or not taking action
hereunder.

        SECTION 9.10 Collateral Matters. (a) The Agent is authorized on behalf
                     ------------------
of all the Lenders, without the necessity of any notice to or further consent
from the Lenders, from time to time to take any action with respect to any
Collateral or the Collateral Documents which may be necessary to perfect and
maintain perfected the security interest in and Liens upon the Collateral
granted pursuant to the Collateral Documents.

        (b) The Lenders irrevocably authorize the Agent, at its option and in
its discretion, to release any Lien granted to or held by the Agent upon any
Collateral (i) upon termination of the Commitments and payment in full of all
Loans and all other Obligations known to the Agent and payable under this
Agreement or any other Loan Document; (ii) constituting property sold or to be
sold or disposed of as part of or in connection with any disposition permitted
hereunder; (iii) constituting property in which the Borrower or any Subsidiary
owned no interest at the time the Lien was granted or any time thereafter; (iv)
constituting property leased to the Borrower or any Subsidiary under a lease
which has expired or been terminated in a transaction permitted under this
Agreement or is about to expire and which has not been, and is not intended by
the Borrower or such Subsidiary to be, renewed or extended;(v) consisting of an
instrument evidencing Indebtedness or other debt instrument, if the indebtedness
evidenced thereby has been paid in full; or (vi) if approved, authorized or
ratified in writing by the Required Lenders or all of the Lenders, as the case
may be, as provided in subsection 10.1(d). Upon request by the Agent at any
                       ------------------
time, the Lenders will confirm in writing the Agent's authority to release
particular types or items of Collateral pursuant to this subsection 9.10(a),
                                                         ------------------
provided that the absence of any such confirmation for whatever reason shall not
--------
affect the Agent's rights under this Section 9.11.
                                     ------------

        (c) Each Lender agrees with and in favor of each other (which agreement
shall not be for the benefit of the Borrower or any Subsidiary) that the
Borrower's obligation to such Lender under this Agreement and the other Loan
Documents is not and shall not be secured by any real property collateral now or
hereafter acquired by such Lender other than the Mortgaged Real Property and the
Modesto Property.

                                   ARTICLE X

                            MISCELLANEOUS PROVISIONS

        SECTION 10.1 Waivers, Amendments, etc. The provisions of this Agreement
                     ------------------------
and of each other Loan Document may from time to time be amended, modified or
waived, if such amendment, modification or waiver is in writing and consented to
by the Borrower and the Required Lenders; provided, however, that no such
                                          --------  -------
amendment, modification or waiver which would:

                                       55

<PAGE>

                (a) modify any requirement hereunder that any particular action
        be taken by all the Lenders or by the Required Lenders shall be
        effective unless consented to by each Lender;

                (b) modify this Section 10.1, change the definition of "Required
                                ------------                            --------
        Lenders", increase the Commitment Amount or the Percentage of any
        -------
        Lender, reduce any fees described in Article III, or release any
                                             -----------
        collateral security, except as otherwise specifically provided or
        contemplated in this Agreement or in any Loan Document, shall be made
        without the consent of each Lender and each holder of a Note;

                (c) extend the due date for, or reduce the amount of, any
        scheduled repayment or prepayment of principal of or interest on any
        Loan (or reduce the principal amount of or rate of interest on any Loan)
        shall be made without the consent of the holder of that Note evidencing
        such Loan; or

                (d) affect adversely the interests, rights or obligations of the
        Agent in its capacity as the Agent shall be made without consent of the
        Agent.

No failure or delay on the part of the Agent, any Lender or the holder of any
Note in exercising any power or right under this Agreement or any other Loan
Document shall operate as a waiver thereof, nor shall any single or partial
exercise of any such power or right preclude any other or further exercise
thereof or the exercise of any other power or right. No notice to or demand on
the Borrower in any case shall entitle it to any notice or demand in similar or
other circumstances. No waiver or approval by the Agent, any Lender or the
holder of any Note under this Agreement or any other Loan Document shall, except
as may be otherwise stated in such waiver or approval, be applicable to
subsequent transactions. No waiver or approval hereunder shall require any
similar or dissimilar waiver or approval thereafter to be granted hereunder.

        SECTION 10.2 Notices. All notices and other communications provided to
                     -------
any party hereto under this Agreement or any other Loan Document shall be in
writing or by facsimile and addressed, delivered or transmitted to such party at
its address or facsimile number set forth below its signature hereto or set
forth in the Lender Assignment Agreement or at such other address or facsimile
number as may be designated by such party in a notice to the other parties. Any
notice, if mailed and properly addressed with postage prepaid or if properly
addressed and sent by pre-paid courier service, shall be deemed given when
received; any notice, if transmitted by facsimile, shall be deemed given when
transmitted (upon receipt of electronic confirmation of transmission).

        SECTION 10.3 Payment of Costs and Expenses. The Borrower agrees to pay
                     -----------------------------
on demand all expenses of the Agent and the Lead Arranger (including the fees
and out-of-pocket expenses of counsel to the Agent and the Lead Arranger
(including the reasonable allocated cost of internal legal services and all
disbursements of internal counsel) and of local counsel, if any, who may be
retained by counsel to the Agent and the Lead Arranger) in connection with

                (a) the negotiation, preparation, execution and delivery of this
        Agreement, the Notes, each Collateral Document and of each other Loan
        Document, including schedules and exhibits, and any amendments, waivers,
        consents, supplements or other modifications to this Agreement, the
        Notes, any Collateral Document or any other Loan Document as

                                       56

<PAGE>

     may from time to time hereafter be required or requested, whether or not
     the transactions contemplated hereby or thereby are consummated;

        (b) the filing, recording, refiling or rerecording of the Fourth
     Amendment to Mortgage, the Second Amendment to Modesto Mortgage, the Pledge
     Agreement and the Security Agreement and/or any Uniform Commercial Code
     financing statements relating thereto and all amendments, supplements and
     modifications to any thereof and any and all other documents or instruments
     of further assurance required to be filed or recorded or refiled or
     rerecorded by the terms hereof or of the Mortgage, the Pledge Agreement or
     the Security Agreement;

        (c) the preparation and review of the form of any document or instrument
     relevant to this Agreement, the Notes, any Collateral Document or any other
     Loan Document; and

        (d) the administration of this Agreement, the Notes, the Collateral
     Documents and the other Loan Documents and the consideration of legal
     questions relevant hereto and thereto.

The Borrower further agrees to pay, and to hold the Agent, the Lead Arranger and
the Lenders harmless from all liability for, any stamp or other taxes which may
be payable in connection with the execution or delivery of this Agreement, the
borrowings hereunder, or the issuance of the Notes or any other Loan Documents.
The Borrower also agrees to reimburse the Agent, the Lead Arranger and each
Lender upon demand for all reasonable out-of-pocket expenses (including
reasonable attorneys' fees and legal expenses) incurred by the Agent or the Lead
Arranger or such Lender in connection with (x) the negotiation of any
restructuring or "work-out", whether or not consummated, of any Obligations, and
(y) the enforcement of any Obligations.

     SECTION 10.4 Indemnification. In consideration of the execution and
                  ---------------
delivery of this Agreement by each Lender and the extension of the Commitments,
the Borrower hereby indemnifies, exonerates and holds the Agent and each Lender
and each of their respective officers, directors, employees and agents
(collectively, the "Indemnified Parties") free and harmless from and against any
                    -------------------
and all actions, causes of action, suits, losses, costs, liabilities and
damages, and expenses incurred in connection therewith (irrespective of whether
any such Indemnified Party is a party to the action for which indemnification
hereunder is sought), including reasonable attorneys' fees and disbursements
(collectively, the "Indemnified Liabilities"), incurred by the Indemnified
                    -----------------------
Parties or any of them as a result of, or arising out of, or relating to

        (a) any transaction financed or to be financed in whole or in part,
     directly or indirectly, with the proceeds of any Loan;

        (b) the entering into and performance of this Agreement and any other
     Loan Document by any of the Indemnified Parties (including any action
     brought by or on behalf of the Borrower as the result of any determination
     by the Required Lenders pursuant to Article V not to fund any Loans);
                                         ---------

                                       57

<PAGE>

        (c) any investigation, litigation or proceeding related to any
     acquisition or proposed acquisition by the Borrower or any of its
     Subsidiaries of all or any portion of the stock or assets of any Person,
     whether or not the Agent or such Lender is party thereto;

        (d) any investigation, litigation or proceeding related to any
     environmental cleanup, audit, compliance or other matter relating to the
     protection of the environment or the Release by the Borrower or any of its
     Subsidiaries of any Hazardous Material; and

        (e) the presence on or under, or the escape, seepage, leakage, spillage,
     discharge, emission, discharging or releases from, any real property owned
     or operated by the Borrower or any Subsidiary thereof of any Hazardous
     Material (including any losses, liabilities, damages, injuries, costs,
     expenses or claims asserted or arising under any Environmental Law),
     regardless of whether caused by, or within the control of, the Borrower or
     such Subsidiary,

except for any such Indemnified Liabilities arising for the account of a
particular Indemnified Party by reason of the relevant Indemnified Party's gross
negligence or wilful misconduct. If and to the extent that the foregoing
undertaking may be unenforceable for any reason, the Borrower hereby agrees to
make the maximum contribution to the payment and satisfaction of each of the
Indemnified Liabilities which is permissible under applicable law.

     SECTION 10.5 Survival. The obligations of the Borrower under Sections 4.3,
                  --------                                        ------------
4.4, 4.5, 4.6, 10.3 and 10.4, and the obligations of the Lenders under Section
---  ---  ---  ----     ----                                           -------
9.1, shall in each case survive any termination of this Agreement, the payment
---
in full of all Obligations and the termination of all Commitments. The
representations and warranties made by the Borrower in this Agreement and in
each other Loan Document shall survive the execution and delivery of this
Agreement and each such other Loan Document.

     SECTION 10.6 Severability. Any provision of this Agreement, the Notes, any
                  ------------
Collateral Document or any other Loan Document which is prohibited or
unenforceable in any jurisdiction shall, as to such provision and such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions of this
Agreement, the Notes, any Collateral Document or such Loan Document or affecting
the validity or enforceability of such provision in any other jurisdiction.

     SECTION 10.7 Headings. The various headings of this Agreement and of each
                  --------
other Loan Document are inserted for convenience only and shall not affect the
meaning or interpretation of this Agreement or such other Loan Document or any
provisions hereof or thereof.

     SECTION 10.8 Execution in Counterparts. This Agreement may be executed by
                  -------------------------
the parties hereto in several counterparts, each of which shall be executed by
the Borrower and the Agent and be deemed to be an original and all of which
shall constitute together but one and the same agreement.

                                       58

<PAGE>

     SECTION 10.9  Governing Law; Entire Agreement. THIS AGREEMENT, THE NOTES,
                   -------------------------------
EACH COLLATERAL DOCUMENT AND EACH OTHER LOAN DOCUMENT SHALL EACH BE DEEMED TO BE
A CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF
ILLINOIS, EXCEPT AS TO ANY COLLATERAL DOCUMENT WHICH EXPRESSLY SPECIFIES THAT
THE LAWS OF ANOTHER STATE SHALL GOVERN SUCH DOCUMENT. This Agreement, the Notes,
the Collateral Documents 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.

     SECTION 10.10 Successors and Assigns. This Agreement shall be binding upon
                   ----------------------
and shall inure to the benefit of the parties hereto and their respective
successors and assigns; provided, however, that:
                        --------  -------

               (a) the Borrower may not assign or transfer its rights or
     obligations hereunder without the prior written consent of the Agent and
     all Lenders; and

               (b) the rights of sale, assignment and transfer of the Lenders
     are subject to Section 10.11.
                    -------------

     SECTION 10.11 Sale and Transfer of Loans and Notes; Participations in Loans
                   -------------------------------------------------------------
and Notes. Each Lender may assign, or sell participations in, its Loans and
---------
Commitment to one or more other Persons in accordance with this Section 10.11.
                                                                -------------

     SECTION 10.11.1 Assignments. Any Lender, with notice to the Borrower and
                     -----------
the Agent, but without the consent of the Borrower or the Agent, may assign and
delegate to any of its Affiliates or any other Lender, or with the consent of
the Borrower and the Agent one or more commercial banks or other financial
institutions or funds (each such Affiliate, Lender, commercial bank, financial
institution or fund described as being the Person to whom such assignment and
delegation is to be made, being hereinafter referred to as an "Assignee
                                                               --------
Lender"), all or any fraction of such Lender's total Loans (which assignment and
------
delegation shall be of a constant, and not a varying, percentage of all the
assigning Lender's Loans) in a minimum aggregate amount of $2,500,000; provided,
                                                                       --------
however, that any such Assignee Lender will comply, if applicable, with the
-------
provisions contained in the last sentence of Section 4.6 and further, provided,
                                             -----------     -------  --------
however, that the Borrower and the Agent shall be entitled to continue to deal
-------
solely and directly with such Lender in connection with the interests so
assigned and delegated to an Assignee Lender until

               (a) written notice of such assignment and delegation, together
     with payment instructions, addresses and related information with respect
     to such Assignee Lender, shall have been given to the Borrower and the
     Agent by such Lender and such Assignee Lender;

               (b) such Assignee Lender shall have executed and delivered to the
     Borrower and the Agent a Lender Assignment Agreement, accepted by the
     Agent; and

               (c) the processing fees described below shall have been paid.

                                       59

<PAGE>

From and after the date that the Agent accepts such Lender Assignment Agreement,
(x) the Assignee Lender thereunder shall be deemed automatically to have become
a party hereto and to the extent that rights and obligations hereunder have been
assigned and delegated to such Assignee Lender in connection with such Lender
Assignment Agreement, shall have the rights and obligations of a Lender
hereunder and under the other Loan Documents, (y) the assignor Lender, to the
extent that rights and obligations hereunder have been assigned and delegated by
it in connection with such Lender Assignment Agreement, shall be released from
its obligations hereunder and under the other Loan Documents and (z) the
assignor Lender and the Assignee Lender shall have the respective Percentages
set forth in the Lender Assignment Agreement. Within five Business Days after
its receipt of notice that the Agent has received an executed Lender Assignment
Agreement, the Borrower shall execute and deliver to the Agent (for delivery to
the relevant Assignee Lender) a new Note evidencing such Assignee Lender's
assigned Loans and, if the assignor Lender has retained Loans hereunder, a
replacement Note in the principal amount of the Loans retained by the assignor
Lender hereunder (such Note to be in exchange for, but not in payment of, that
Note then held by such assignor Lender). Each such Note shall be dated the date
of the predecessor Note. The assignor Lender shall mark the predecessor Note
"exchanged" and deliver it to the Borrower. Accrued interest on that part of the
predecessor Note evidenced by the new Note, and accrued fees, shall be paid as
provided in the Lender Assignment Agreement. Accrued interest on that part of
the predecessor Note evidenced by the replacement Note shall be paid to the
assignor Lender. Accrued interest and accrued fees shall be paid at the same
time or times provided in the predecessor Note and in this Agreement. Unless
otherwise agreed to by the Agent, such assignor Lender or such Assignee Lender
must also pay a processing fee to the Agent upon delivery of any Lender
Assignment Agreement in the amount of $5,000. Any attempted assignment and
delegation not made in accordance with this Section 10.11.1 shall be null and
                                            ---------------
void.

     SECTION 10.11.2 Participations. Any Lender may at any time sell to one or
                     --------------
more commercial banks or other Persons (each of such commercial banks and other
Persons being herein called a "Participant") participating interests in any of
                               -----------
the Loans or other interests of such Lender hereunder; provided, however, that
                                                       --------  -------

               (a) no participation contemplated in this Section 10.11 shall
                                                         -------------
     relieve such Lender from its other obligations hereunder or under any other
     Loan Document;

               (b) such Lender shall remain solely responsible for the
     performance of such other obligations;

               (c) the Borrower and the Agent shall continue to deal solely and
     directly with such Lender in connection with such Lender's rights and
     obligations under this Agreement and each of the other Loan Documents;

               (d) no Participant, unless such Participant is an Affiliate of
     such Lender, or is itself a Lender, shall be entitled to require such
     Lender to take or refrain from taking any action hereunder or under any
     other Loan Document, except that such Lender may agree with any Participant
     that such Lender will not, without such Participant's consent, take any
     actions of the type described in clause (b) or (c) of Section 10.1; and
                                      ----------    ---    ------------

                                       60

<PAGE>

               (e) the Borrower shall not be required to pay any amount under
     Section 4.6 that is greater than the amount which it would have been
     -----------
     required to pay had no participating interest been sold.

The Borrower acknowledges and agrees that each Participant, for purposes of
Sections 4.3, 4.4, 4.5, 4.6, 4.8, 4.9, 10.3 and 10.4, shall be considered a
------------  ---  ---  ---  ---  ---  ----     ----
Lender.

     SECTION 10.11.3 Information and Assistance. The Borrower hereby agrees to
                     --------------------------
provide prompt and reasonable assistance with respect to any contemplated or
proposed assignments or participations, and hereby further agrees that any
information supplied to a Lender pursuant hereto may be supplied by such Lender
to any bona fide potential assignee or participant.

     SECTION 10.12 Other Transactions. Nothing contained herein shall preclude
                   ------------------
the Agent or any other Lender from engaging in any transaction, in addition to
those contemplated by this Agreement or any other Loan Document, with the
Borrower or any of its Affiliates in which the Borrower or such Affiliate is not
restricted hereby from engaging with any other Person.

     SECTION 10.13 Maximum Interest. It is the intention of the parties hereto
                   ----------------
that each Lender shall conform strictly to usury laws applicable to it.
Accordingly, the parties hereto stipulate and agree that none of the terms and
provisions contained in the Notes, this Agreement, any Collateral Document or
any other Loan Document shall ever be construed to create a contract to pay to
any Lender for the use, forbearance, or retention of money at a rate in excess
of the Highest Lawful Rate applicable to such Lender, and that for purposes
hereof, "interest" shall include the aggregate of all charges or other
consideration which constitute interest under applicable law and are contracted
for, taken, reserved, charged, or received under any of this Agreement, the
Notes, the Collateral Documents or the other Loan Documents or otherwise in
connection with the transactions contemplated by this Agreement. Further, if the
transactions contemplated hereby would be usurious as to any Lender under laws
applicable to it, then, in that event, notwithstanding anything to the contrary
in the Notes, this Agreement, any Collateral Document or in any other Loan
Document or agreement entered into in connection with or as security for the
Notes, it is agreed as follows: the aggregate of all consideration which
constitutes interest under law applicable to each such Lender that is contracted
for, taken, reserved, charged, or received by such Lender under the Notes, this
Agreement, or under any of the other aforesaid Loan Documents or agreements or
otherwise in connection with the Notes shall under no circumstances exceed the
maximum amount allowed by the law applicable to such Lender, and any excess
shall be credited by such Lender on the principal amount of the Indebtedness of
the Borrower owed to such Lender (or, if the principal amount of such
Indebtedness shall have been paid in full, to the extent such interest has been
received by a Lender it shall be refunded by such Lender to the Borrower). The
provisions of this Section 10.13(a) shall control over all other provisions of
                   ----------------
this Agreement, the Notes, the Collateral Documents and the other Loan Documents
which may be in apparent conflict herewith. The parties further stipulate and
agree that, without limitation on the foregoing, all calculations of the rate or
amount of interest contracted for, taken, reserved, charged or received under
any of this Agreement, the Notes, the Collateral Documents and the other Loan
Documents which are made for the purpose of determining whether such rate or
amount exceed the Highest Lawful Rate

                                       61

<PAGE>

shall be made, to the extent permitted by applicable law, by amortizing,
prorating, allocating, and spreading during the period of the full stated term
of the Indebtedness, and if longer and if permitted by applicable law, until
payment in full, all interest at any time so contracted for, taken, reserved,
charged, or received.

     (b) If at any time the effective rate of interest which would otherwise
apply to any Indebtedness hereunder or evidenced by any Lender's Notes would
exceed the Highest Lawful Rate applicable to such Lender (taking into account
the interest rate applicable to such Indebtedness pursuant to the other
provisions of this Agreement, plus all additional charges and consideration
which have been contracted for, taken, reserved, charged, or received under this
Agreement, such Lender's Notes, the Collateral Documents, and the other Loan
Documents, or any of them, and which additional charges or consideration (the
"Additional Charges") constitute interest with respect to such Indebtedness),
 ------------------
the effective interest rate to apply to such Indebtedness made by such Lender
shall be limited to the Highest Lawful Rate, but any subsequent reductions in
the interest rate applicable to such Indebtedness owed to such Lender shall not
reduce the effective interest rate to apply to such Indebtedness owed to such
Lender below the Highest Lawful Rate applicable to such Lender until the total
amount of interest accrued on such Indebtedness equals the amount of interest
which would have accrued if the interest rate from time to time applicable to
such Indebtedness owed to such Lender had at all times been in effect with
respect to such Indebtedness pursuant to the other provisions of this Agreement
and the other Loan Documents and if the Lenders had collected all Additional
Charges called for under this Agreement, the Notes, the Collateral Documents and
the other Loan Documents. If at maturity or final payment of such Lender's
Obligations the total amount of interest paid to any Lender hereunder and under
the other Loan Documents (including amounts designated as "interest" plus any
Additional Charges which constitute interest with respect to such Lenders, and
taking into account the limitations of the first sentence of this Section
                                                                  -------
10.13(b)) is less than the total amount of such "interest" which would have been
--------
paid if all amounts were paid as required by this Agreement (without giving
effect to this Section 10.13) and the other Loan Documents (the amount of the
               -------------
difference described above, the "Deficiency"), then the Borrower agrees, to the
                                 ----------
fullest extent permitted by the laws applicable to such Lender, to pay to such
Lender an amount equal to the lesser of (i) the difference between (1) the
amount of such "interest" which would have accrued on such Lender's Notes if the
Highest Lawful Rate had at all times been in effect, and (2) the amount of
interest actually paid on such Lender's Notes (including amounts designated as
"interest" plus any Additional Charges which constitute interest with respect to
such Lender's Notes) and (ii) the amount of the Deficiency.

     (c) Notwithstanding anything to the contrary contained above in this
Section 10.13, it is understood and agreed that (i) all representations and
-------------
warranties contained in this Agreement, in the Collateral Documents and in the
other Loan Documents have been made without reliance upon, or giving effect to,
the provisions of Section 10.13(a) and (ii) that the Lenders have relied upon
                  ----------------
the accuracy of such representations and warranties. Furthermore, the Borrower
acknowledges and agrees that each Lender shall, to the fullest extent permitted
by law, be entitled to recover damages from the Borrower in the event of a
material misrepresentation by the Borrower.

                                       62

<PAGE>

     SECTION 10.14 Forum Selection and Consent to Jurisdiction. ANY LITIGATION
                   -------------------------------------------
BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS AGREEMENT,
THE NOTES, ANY COLLATERAL DOCUMENT OR ANY OTHER LOAN DOCUMENT, OR ANY COURSE OF
CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN) OR ACTIONS OF
THE AGENT, THE LENDERS OR THE BORROWER SHALL BE BROUGHT AND MAINTAINED
EXCLUSIVELY IN THE COURTS OF THE STATE OF ILLINOIS OR IN THE UNITED STATES
DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS; PROVIDED, HOWEVER, THAT
                                                      --------  -------
ANY SUIT SEEKING ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY BE
BROUGHT, AT THE AGENT'S OPTION, IN THE COURTS OF ANY JURISDICTION WHERE SUCH
COLLATERAL OR OTHER PROPERTY MAY BE FOUND. THE BORROWER HEREBY EXPRESSLY AND
IRREVOCABLY SUBMITS TO THE JURISDICTION OF THE COURTS OF THE STATE OF ILLINOIS
AND OF THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS
FOR THE PURPOSE OF ANY SUCH LITIGATION AS SET FORTH ABOVE AND IRREVOCABLY AGREES
TO BE BOUND BY ANY JUDGMENT RENDERED THEREBY IN CONNECTION WITH SUCH LITIGATION.
THE BORROWER FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS BY
REGISTERED MAIL, POSTAGE PREPAID, OR BY PERSONAL SERVICE WITHIN OR WITHOUT THE
STATE OF ILLINOIS. THE BORROWER HEREBY EXPRESSLY AND IRREVOCABLY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY HAVE OR HEREAFTER
MAY HAVE TO THE LAYING OF VENUE OF ANY SUCH LITIGATION BROUGHT IN ANY SUCH COURT
REFERRED TO ABOVE AND ANY CLAIM THAT ANY SUCH LITIGATION HAS BEEN BROUGHT IN AN
INCONVENIENT FORUM. TO THE EXTENT THAT THE BORROWER HAS OR HEREAFTER MAY ACQUIRE
ANY IMMUNITY FROM JURISDICTION OF ANY COURT OR FROM ANY LEGAL PROCESS (WHETHER
THROUGH SERVICE OR NOTICE, ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN AID OF
EXECUTION OR OTHERWISE) WITH RESPECT TO ITSELF OR ITS PROPERTY, THE BORROWER
HEREBY IRREVOCABLY WAIVES SUCH IMMUNITY IN RESPECT OF ITS OBLIGATIONS UNDER THIS
AGREEMENT, THE NOTES, THE COLLATERAL DOCUMENTS AND THE OTHER LOAN DOCUMENTS.

     SECTION 10.15 Waiver of Jury Trial. THE AGENT, THE LENDERS AND THE BORROWER
                   --------------------
HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHTS THEY MAY HAVE
TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF,
UNDER, OR IN CONNECTION WITH, THIS AGREEMENT, THE NOTES, ANY COLLATERAL DOCUMENT
OR ANY OTHER LOAN DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING,
STATEMENTS (WHETHER ORAL OR WRITTEN) OR ACTIONS OF THE AGENT, THE LENDERS OR THE
BORROWER. THE BORROWER ACKNOWLEDGES AND AGREES THAT IT HAS RECEIVED FULL AND
SUFFICIENT CONSIDERATION FOR THIS PROVISION (AND EACH OTHER PROVISION OF EACH
OTHER LOAN DOCUMENT TO WHICH IT IS A PARTY) AND THAT THIS PROVISION IS A
MATERIAL INDUCEMENT FOR THE

                                       63

<PAGE>

AGENT AND THE LENDERS ENTERING INTO THIS AGREEMENT AND EACH SUCH COLLATERAL
DOCUMENT AND EACH SUCH OTHER LOAN DOCUMENTS.

                                       64

<PAGE>

          IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their respective officers thereunto duly authorized as of the day
and year first above written.

                                                     NASCO INTERNATIONAL, INC.

                                       By: /s/ Dean T. Johnson
                                          --------------------------------------
                                          Title: Chief Financial Officer

                                       Address:    901 Janesville Avenue
                                                   Fort Atkinson, WI  53538-0901

                                       Telecopier No.: 920-563-0234

                                       Attention:  Dean T. Johnson
                                                   Chief Financial Officer

                                       Copy to:

                                       Geneve Corporation
                                       96 Cummings Point Road
                                       Stamford, Connecticut 06902

                                       Telecopier No.: 203-348-3103

                                       Attention:  Theresa Herbert,
                                                   Vice President

                                       BANK OF AMERICA, N.A.
                                         as Agent

                                       By: /s/ Gary R. Peet
                                          --------------------------------------
                                          Title:  Managing Director

                                       Address:    231 South LaSalle Street
                                                   Chicago, Illinois  60697

                                       Telecopier No.: 312-987-0889

                                       Attention:  Debra Basler
                                                   Vice President

                                       65

<PAGE>

         PERCENTAGE                 LENDERS
         ----------                 -------

         53.2710%                   BANK OF AMERICA, N.A.

                                    By: /s/ Gary R. Peet
                                       -----------------------------
                                     Title: Managing Director

                                    Domestic
                                    Office:       231 South LaSalle Street
                                                  Chicago, Illinois  60697

                                    Telecopy No.: 312-987-0889

                                    Attention:    Debra Basler
                                                  Vice President

                                    Eurodollar
                                    Office:       231 South LaSalle Street
                                                  Chicago, Illinois  60697

         46.7290%                   BANK ONE, WISCONSIN

                                    By: /s/ Paul C. Fuerst
                                      -------------------------------
                                    Title: Senior Vice President

                                    Domestic
                                    Office:       111 East Wisconsin Avenue
                                                  Mail Code WI1-2032
                                                  Milwaukee, Wisconsin 53202

                                    Telecopy No.: (414) 765-2176

                                    Attention:     Mark Bruss

                                       66

<PAGE>

                                                                       EXHIBIT A

                                      NOTE

$23,831,790.00                                               Date:  May 29, 2001

         FOR VALUE RECEIVED, Nasco International, Inc., a Wisconsin corporation
 (the "Borrower") hereby unconditionally promises to pay to the order of
 BankOne, Wisconsin (the "Lender"):

                   (1)     prior to or on the Stated Maturity Date the principal
                           amount of Twenty-three million eight hundred
                           thirty-one thousand seven hundred ninety Dollars
                           ($23,831,790.00), or, if less, the aggregate unpaid
                           principal amount of Loans advanced by the Lender to
                           such Borrower pursuant to the Amended and Restated
                           Credit Agreement (Five Year) dated as of May 29, 2001
                           (as amended and in effect from time to time, the
                           "Credit Agreement"), among the Borrower, BankOne,
                           Wisconsin, as Documentation Agent, Bank of America,
                           N.A. as Administrative Agent, and the various
                           financial institutions (including the Lender) which
                           are, or may from time to time become parties thereto;
                           and

                   (2)     interest on the principal balance hereof from time to
                           time outstanding from the Effective Date (as defined
                           in the Credit Agreement) through and including the
                           maturity date hereof at the times and at the rates
                           provided in the Credit Agreement.

         This Note evidences borrowings under and has been issued by the
 Borrower in accordance with the terms of the Credit Agreement. The Lender and
 any holder hereof is entitled to the benefits of the Credit Agreement and the
 other Loan Documents, and may enforce the agreements of the Borrower contained
 therein, and any holder hereof may exercise the respective remedies provide for
 thereby or otherwise available in respect thereof, all in accordance with the
 respective terms thereof. All capitalized terms used in this Note and not
 otherwise defined herein shall have the same meanings herein as in the Credit
 Agreement.

         The Borrower irrevocably authorizes the Lender to make or cause to be
 made, at or about the date of any Loan made to such Borrower or at the time of
 receipt of any payment of principal of this Note, an appropriate notation on
 the grid attached to this Note, or the continuation of such grid, or any other
 similar record, including computer records, reflecting the making of such Loan
 or (as the case may be) the receipt of such payment. The outstanding amount of
 the Loans set forth on the grid attached to this Note, or the continuation of
 such grid, or any other similar record including computer records, maintained
 by the Lender with respect to any Loans made to the Borrower shall be prima
                                                                       ------
 facie evidence of the principal amount thereof owing and unpaid by the Borrower
 -----
 to the Lender, but the failure to record, or any error is so recording, any
 such amount on any such grid, continuation or other record shall not limit or

                                  Exhibit A-1

<PAGE>

 otherwise affect the obligation of the Borrower hereunder or under the Credit
 Agreement to make payments of principal and of interest on this Note when due.

         The Borrower has the right in certain circumstances and the obligation
 under certain other circumstances to prepay the whole or part of the principal
 of this Note severally owing by the Borrower on the terms and conditions
 specified in the Credit Agreement.

         If any one or more of the Events of Default shall occur and be
 continuing with respect to the Borrower, the entire unpaid principal amount of
 this Note owing by such Borrower and all of the unpaid interest accrued thereon
 may become or be declared due and payable in the manner and with the effect
 provided in the Credit Agreement.

         No delay or omission on the part of the Lender or any holder hereof in
 exercising any right hereunder shall operate as a waiver of such right or of
 any other rights of the Lender or such holder, nor shall any delay, omission or
 waiver on any one occasion be deemed a bar or waiver of the same or any other
 right on any further occasion.

         Except to the extent otherwise provided in the Credit Agreement, the
 Borrower hereby waives presentment, demand, notice, protest and all other
 demands and notices in connection with the delivery, acceptance, performance,
 default or enforcement of this Note, and assents to any extension or
 postponement of time of payment or any other indulgence, to any substitution,
 exchange or release of collateral and to the addition or release of any other
 party or person primarily or secondarily liable.

         THIS NOTE AND THE OBLIGATIONS OF THE BORROWER HEREUNDER SHALL FOR ALL
 PURPOSES BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE
 OF ILLINOIS.

         IN WITNESS WHEREOF, the undersigned has caused this Note to be executed
as of the day and year first above written.

                                                  NASCO INTERNATIONAL, INC.

                                                  By: /s/ Dean T. Johnson
                                                     ---------------------------
                                                  Title: Chief Financial Officer

                                  Exhibit A-2

<PAGE>

                                                                       EXHIBIT A

                                      NOTE

$27,168,210.00                                               Date:  May 29, 2001

         FOR VALUE RECEIVED,  Nasco International, Inc., a Wisconsin corporation
 (the "Borrower") hereby unconditionally promises to pay to the order of Bank of
 America, N.A. (the "Lender"):

                  (a) prior to or on the Stated Maturity Date the principal
          amount of Twenty-seven million one hundred sixty-eight thousand two
          hundred ten Dollars ($27,168,210.00), or, if less, the aggregate
          unpaid principal amount of Loans advanced by the Lender to such
          Borrower pursuant to the Amended and Restated Credit Agreement (Five
          Year) dated as of May 29, 2001 (as amended and in effect from time to
          time, the "Credit Agreement"), among the Borrower, Bank of America,
          N.A., as Documentation Agent, Bank of America, N.A. as Administrative
          Agent, and the various financial institutions (including the Lender)
          which are, or may from time to time become parties thereto; and

                  (b) interest on the principal balance hereof from time to time
          outstanding from the date of this Loan through and including the
          maturity date hereof at the times and at the rates provided in the
          Credit Agreement.

         This Note evidences borrowings under and has been issued by the
 Borrower in accordance with the terms of the Credit Agreement. The Lender and
 any holder hereof is entitled to the benefits of the Credit Agreement and the
 other Loan Documents, and may enforce the agreements of the Borrower contained
 therein, and any holder hereof may exercise the respective remedies provide for
 thereby or otherwise available in respect thereof, all in accordance with the
 respective terms thereof. All capitalized terms used in this Note and not
 otherwise defined herein shall have the same meanings herein as in the Credit
 Agreement.

         The Borrower irrevocably authorizes the Lender to make or cause to be
 made, at or about the date of any Loan made to such Borrower or at the time of
 receipt of any payment of principal of this Note, an appropriate notation on
 the grid attached to this Note, or the continuation of such grid, or any other
 similar record, including computer records, reflecting the making of such Loan
 or (as the case may be) the receipt of such payment. The outstanding amount of
 the Loans set forth on the grid attached to this Note, or the continuation of
 such grid, or any other similar record including computer records, maintained
 by the Lender with respect to any Loans made to the Borrower shall be prima
                                                                       -----
 facie evidence of the principal amount thereof owing and unpaid by the Borrower
 -----
 to the Lender, but the failure to record, or any error is so recording, any
 such amount on any such grid, continuation or other record shall not limit or
 otherwise affect the obligation of the Borrower hereunder or under the Credit
 Agreement to make payments of principal and of interest on this Note when due.

                                  Exhibit A-3

<PAGE>

         The Borrower has the right in certain circumstances and the obligation
 under certain other circumstances to prepay the whole or part of the principal
 of this Note severally owing by the Borrower on the terms and conditions
 specified in the Credit Agreement.

         If any one or more of the Events of Default shall occur and be
 continuing with respect to the Borrower, the entire unpaid principal amount of
 this Note owing by such Borrower and all of the unpaid interest accrued thereon
 may become or be declared due and payable in the manner and with the effect
 provided in the Credit Agreement.

         No delay or omission on the part of the Lender or any holder hereof in
 exercising any right hereunder shall operate as a waiver of such right or of
 any other rights of the Lender or such holder, nor shall any delay, omission or
 waiver on any one occasion be deemed a bar or waiver of the same or any other
 right on any further occasion.

         Except to the extent otherwise provided in the Credit Agreement, the
 Borrower hereby waives presentment, demand, notice, protest and all other
 demands and notices in connection with the delivery, acceptance, performance,
 default or enforcement of this Note, and assents to any extension or
 postponement of time of payment or any other indulgence, to any substitution,
 exchange or release of collateral and to the addition or release of any other
 party or person primarily or secondarily liable.

         THIS NOTE AND THE OBLIGATIONS OF THE BORROWER HEREUNDER SHALL FOR ALL
 PURPOSES BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE
 OF ILLINOIS.

         IN WITNESS WHEREOF, the undersigned has caused this Note to be executed
as of the day and year first above written.

                                                  NASCO INTERNATIONAL, INC.

                                                  By: /s/ Dean T. Johnson
                                                     ---------------------------
                                                  Title: Chief Financial Officer

                                  Exhibit A-4

<PAGE>

                                                                       EXHIBIT B

                            FORM OF BORROWING REQUEST

Bank of America, N.A., as Administrative Agent
231 S. LaSalle Street
Chicago, IL  60697

Attention:   [Name]
             [Title]

Ladies and Gentlemen:

     This Borrowing Request is delivered to you pursuant to Section 2.3 of the
                                                            -----------
Amended and Restated Credit Agreement (Five Year), dated as of May 29, 2001
(together with all amendments, if any, from time to time made thereto, the
"Credit Agreement"), among Nasco International, Inc., a Wisconsin corporation
 ----------------
(the "Borrower"), certain financial institutions which are, or may from time to
      --------
time become parties thereto, Bank One, Wisconsin, as documentation agent and
Bank of America, N.A., as administrative agent (the "Agent"). Unless otherwise
                                                     -----
defined herein or the context otherwise requires, terms used herein have the
meanings provided in the Credit Agreement.

     The Borrower hereby requests that a Loan be made in the aggregate principal
amount of $_______ on _______, 200__ as a [Eurodollar Rate Loan having an
Interest Period of ___] [Base Rate Loan].

     The Borrower hereby acknowledges that, pursuant to Section 5.2.2 of the
                                                        -------------
Credit Agreement, each of the delivery of this Borrowing Request and the
acceptance by the Borrower of the proceeds of the Loans requested hereby
constitute a representation and warranty by the Borrower that, on the date of
such Loans, and before and after giving effect thereto and to the application of
the proceeds therefrom, all statements set forth in Section 5.2.1 are true and
                                                    -------------
correct in all material respects.

     The Borrower agrees that if prior to the time of the Borrowing requested
hereby any matter certified to herein by it will not be true and correct at such
time as if then made, it will immediately so notify the Agent. Except to the
extent, if any, that prior to the time of the Borrowing requested hereby the
Agent shall receive written notice to the contrary from the Borrower, each
matter certified to herein shall be deemed once again to be certified as true
and correct at the date of such Borrowing as if then made.

     Please transfer the proceeds of the Borrowing to the accounts of the
following persons at the financial institutions indicated:

                                  Exhibit B-1

<PAGE>

                     Person to be Paid

  Amount to be     Name          Account No.   Name, Address, etc. of Transferee
  Transferred                                               Lender

$_____________   _________      _____________  _________________________________
                                               _________________________________
                                               Attention:_______________________

$_____________   _________      _____________  _________________________________
                                               _________________________________
                                               Attention:_______________________

Balance of       The Borrower   _____________  _________________________________
such proceeds                                  _________________________________
                                               Attention:_______________________

     The Borrower has caused this Borrowing Request to be executed and
delivered, and the certification and warranties contained herein to be made, by
its duly Authorized Officer this ___ day of _______________, 200__.

                                                NASCO INTERNATIONAL, INC.

                                                By:
                                                   Title:

                                  Exhibit B-2

<PAGE>

                                                                       EXHIBIT C

                     FORM OF CONTINUATION/CONVERSION NOTICE

Bank of America, N.A., as Administrative Agent
231 S. LaSalle Street
Chicago, IL  60697

Attention:    [Name]
              [Title]

Ladies and Gentlemen:

     This Continuation/Conversion Notice is delivered to you pursuant to Section
                                                                         -------
2.4 of the Amended and Restated Credit Agreement (Five Year), dated as of May
---
29, 2001 (together with all amendments, if any, from time to time made thereto,
the "Credit Agreement"), among Nasco International, Inc., a Wisconsin
     ----------------
corporation (the "Borrower"), certain financial institutions which are, or may
                  --------
from time to time become parties thereto, Bank One, Wisconsin, as documentation
agent and Bank of America, N.A., as administrative agent, (the "Agent"). Unless
                                                                -----
otherwise defined herein or the context otherwise requires, terms used herein
have the meanings provided in the Credit Agreement.

     The Borrower hereby requests that on_________, 200__,

          (1) $_____ of the presently outstanding principal amount of the Loans
     originally made on _____, 200__ [and $______ of the presently outstanding
     principal amount of the originally made on _____, 200__],

          (2) and all presently being maintained as */[Base Rate Loans]
                                                    -
     [Eurodollar Rate Loans],

          (3) be [converted into] [continued as],

          (4) [Eurodollar Rate Loans having an Interest Period of ____ months]
     [Base Rate Loans].

The Borrower hereby:

_____________________
*/   Select appropriate interest rate option.
-

                                   Exhibit C-1

<PAGE>

          (a) certifies and warrants that no Default has occurred and is
     continuing; and

          (b) agrees that if prior to the time of such continuation or
     conversion any matter certified to herein by it will not be true and
     correct at such time as if then made, it will immediately so notify the
     Agent.

Except to the extent, if any, that prior to the time of the continuation or
conversion requested hereby the Agent shall receive written notice to the
contrary from the Borrower, each matter certified to herein shall be deemed to
be certified at the date of such continuation or conversion as if then made.

     The Borrower has caused this Continuation/Conversion Notice to be executed
and delivered, and the certification and warranties contained herein to be made,
by its Authorized Officer this ___ day of ________, 200__.

                                              NASCO INTERNATIONAL, INC.

                                              By:
                                              Title:

                                  Exhibit C-2

<PAGE>

                                                                       EXHIBIT D

                                PLEDGE AGREEMENT
                                ----------------

     THIS PLEDGE AGREEMENT, dated as of March 31, 2000 (as modified from time to
time, this " Pledge Agreement") made by NASCO INTERNATIONAL, INC., a Wisconsin
             ----------------
corporation (the "Pledgor"), in favor of BANK OF AMERICA N.A. (together with any
                  -------
successor(s) thereto in such capacity, the "Agent") for 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 referred
below.

                                   WITNESSETH
                                   ----------

     WHEREAS, pursuant to that certain Third Amended and. Restated Credit
Agreement, dated as of January 2, 1996 (as heretofore amended, supplemented arid
otherwise modified to the date hereof, the "Existing Credit Agreement"), among
                                            -------------------------
the Grantor, the lenders parties thereto and Bank of America Illinois
(predecessor to Bank of America, N .A.), as agent, the lenders have extended
loans to the Grantor; and

     WHEREAS, as a condition precedent to any extension of credit under the
Existing Credit Agreement, the Grantor was required to execute and deliver the
Pledge Agreement (the "Existing Pledge Agreement") pursuant to which the Grantor
granted to the Agent a continuing pledge of and security interest in, among
other. things, the certificates representing all of the outstanding shares of
capital stock of each of the Pledgor's subsidiaries, and all proceeds thereof,
to secure, among other things, all of the Pledgor's obligations under the
Existing Credit Agreement;

     WHEREAS, the Grantor has requested that the Lenders make certain credit
available, in part to refinance all indebtedness under the Existing Credit
Agreement, pursuant to a Credit Agreement (Five Year) dated March 31, 2000 among
the Grantor, certain lenders, Bank One) Wisconsin, as co-agent and Bank of
America, N.A., as administrative agent (as amended, supplemented, amended and
restated or otherwise modified from time to time, being referred to as the
"Credit Agreement (Five Year)" and a Credit Agreement (364 Day) dated March 31,
2000 among the Grantor, certain lenders, Bank One, Wisconsin, as co-agent and
Bank of America, N.A., as administrative agent (as amended, supplemented,
amended and restated or otherwise modified from time to time, being referred to
as the "Credit Agreement (364 Day)" and together with the Credit Agreement (Five
Year), the "Credit Agreements"); and

     WHEREAS, it is a condition precedent to such extensions of credit that the
Pledgor enter into this Pledge Agreement to grant to the Agent a continuing
pledge of and security interest in all of the outstanding shares of capital
stock of each subsidiary of the Pledgor;

     NOW, THEREFORE, for good and valuable consideration the receipt of which is
hereby acknowledged, and in order to induce the Lenders to make Loans (including
the initial Loans) to the Pledgor from time to time pursuant to the Credit
Agreements, in part to refinance the indebtedness under the Existing Credit
Agreement, the Pledgor hereby agrees with the Agent, for its benefit and the
ratable benefit of each Lander Party, as follows:

                                  Exhibit D-1

<PAGE>

                                   ARTICLE I

                                   DEFINITIONS

     SECTION 1.1 Certain Terms. The following terms (whether or not underscored)
                 -------------
when used in this Pledge Agreement, including its preamble and recitals, 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, Documents" means the "Collateral Documents" defined in
      ---------------------
the Credit Agreement (5 Year) and "Collateral Documents," as defined in the
Credit Agreement (364 Days).

     "Credit Agreement" is defined in the third recital.
      ----------------                    -------------

     "Default" means "Default" as defined in the Credit Agreement (5 Year) and
      -------
"Default" as defined in the Credit Agreement (364 Days).

     "Distributions" means all stock dividends, liquidating dividends, shares of
      -------------
stock resulting from (or in connection with the exercise of) stock splits,
reclassifications, warrants, options, non-cash dividends, mergers,
consolidations, and all other distributions (whether similar or dissimilar to
the foregoing) on or with respect to any Pledged Shares or other shares of
capital stock constituting Collateral, but shall not include Dividends.

     "Dividends" means cash dividends and cash distributions with respect to any
      ---------
Pledged shares or other Pledged Property made in the ordinary course of business
and not a liquidating dividend.

     "Event of Default" means an "Event of Default" as defined in the Credit
      ----------------
Agreement (Five Year) and "Event of Default" as defined in the Credit Agreement
(364 Days).

     "Existing Credit Agreement" is defined in the preamble.
      -------------------------

     "Existing Pledge Agreement" is defined in the preamble.
      -------------------------

     "Lender" is defined in the preamble.
      ------                    --------

     "Lender Party" means, as the context may require, any Lender or the Agent
      ------------
and each of their 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 Days).

                                  Exhibit D-2

<PAGE>

     "Notes" mean "Notes" as defined in the Credit Agreement (Five Year) and
      -----
"Notes" as defined in the Credit Agreement (364 Days).

     "Obligations" means "Obligations" as defined in the Credit Agreement (Five
      -----------
Year) and "Ob1igations" as defined in the Credit Agreement (364 Days).

     "Pledge Agreement" is defined in the preamble.
      ----------------                    --------

     "Pledged Note Issuer" means each Person identified in Item B of Attachment
      -------------------                                  ------    ----------
1 hereto as the issuer of the Pledged Note identified opposite the name of such
-
Person.

     "Pledged Notes" means all promissory notes of any Pledged Note Issuer in
      -------------
the form or substantially the form of Exhibit A hereto which are delivered by
                                      ---------
the Pledgor to the Agent as Pledged Property hereunder, as such promissory
notes, in accordance with Section 4.5, are amended, modified or supplemented
                          -----------
from time to time and together with any promissory note of any Pledged Note
Issuer taken in extension or renewal thereof or substitution there for.

     "Pledged Property" means all Pledged Shares, all Pledged Notes, and all
      ----------------
other pledged shares of capital stock or promissory notes, all other securities,
all assignments of any amounts due or to become due, all other instruments which
are now being delivered by the Pledgor to the Agent or may from time to time
hereafter be delivered by the Pledgor to the Agent for the purpose of pledge
under this Pledge Agreement or any other Loan Document, and all proceeds of any
of the foregoing.

     "Pledged Share Issuer" means each Person identified in Item A of Attachment
      --------------------                                  ------    ----------
1 hereto as the issuer of the Pledged Shares identified opposite the name of
-
such Person.

     "Pledged Shares" means all shares of capital stock of any Pledged Share
      --------------
Issuer.

     "Pledgor" is defined in the preamble.
      -------                    --------

     "Secured Obligations" is defined in Section 2.2.
      -------------------                -----------

     "U.C.C." means the Uniform Commercial Code, as in effect in the State of
      ------
Illinois.

     SECTION 1.2 U.C.C. DEFINITIONS. Un1ess otherwise defined herein or the
                 ------------------
context otherwise, requires, terms for which meanings are provided in the U.C.C.
are used, in this Pledge Agreement, including its preamble and recitals, with
such meanings.

                                   ARTICLE II

                                     PLEDGE

     SECTION 2.1 Confirmation and Grant of Security Interest and Pledge. The
                 ------------------------------------------------------
Pledgor hereby pledges, hypothecates, assigns, charges, mortgages, delivers, and
transfers to the Agent for its benefit and the ratable benefit of the Lender
Parties, and hereby grants to the Agent, for its benefit and the ratable benefit
of the Lender Parties, a continuing pledge and security interest in and to, all
of the following property (the "Collateral"):
                                ----------

                                   Exhibit D-3

<PAGE>

                (a)  all issued and outstanding shares of capital stock of each
        Pledged Share Issuer identified in Item A of Attachment 1 hereto;
                                           ------    ------------

                (b)  all other Pledged Shares issued from time to time;

                (c)  all promissory notes of each Pledged Note Issuer
        identified in Item B of Attachment 1 hereto;
                      ------    ------------

                (d)  all other Pledged Notes issued from time to time;

                (e)  all other Pledged Property, whether now or hereafter
        delivered to the Agent in connection with this Pledge Agreement;

                (f)  all Dividends, Distributions, interest, and other payments
        and rights with respect to any Pledged Property; and

                (g)  all proceeds of any and all of the foregoing.

        SECTION 2.2 Security for Obligations. This Pledge Agreement secures the
                    ------------------------
payment in full of all Obligations now or hereafter existing under the Credit
Agreements, the Notes, the Collateral Documents and each other Loan Document
(including this Pledge Agreement) to which the Pledgor is or may become a party,
whether for principal, interest, costs, fees, expenses or otherwise.

        SECTION 2.3 Delivery of Pledged Property. All certificates or
                    ----------------------------
instruments representing or evidencing any Collateral, including all Pledged
Shares and all Pledged Notes, shall be delivered to and held by or on behalf of
(and, in the case of the Pledged Notes, endorsed to the order of) the Agent
pursuant hereto, shall be in suitable form for transfer by delivery, and shall
be accompanied by all necessary instruments of transfer or assignment, duly
executed in blank, and all other necessary and appropriate action and approvals
shall have been taken or received to grant to the Agent a first priority fully
perfected security interest in such Collateral.

        SECTION 2.4 Dividends on Pledged Shares and Payments on Pledged Notes.
                    ---------------------------------------------------------
In the event that any Dividend is to be paid on any Pledged Share or any payment
of principal or interest is to be made on any Pledged Note at a time when (x) no
Default of the nature referred to in Section 8.1.9 of either Credit Agreement
has occurred and is continuing, and no (y) Event of Default has occurred and is
continuing, such Dividend or payment may be paid directly to and retained by the
Pledgor. If any such Default or Event of Default has occurred and is continuing,
then any such Dividend or payment shall be paid directly to the Agent (and if
for any reason the Pledgor shall receive such Dividend or payment in such
circumstances, the Pledgor shall hold the same segregated and in trust for the
Agent until paid to the Agent in accordance with Section 4.4 hereof).
                                                 -----------

        SECTION 2.5 Continuing Security Interest; Transfer of Note. This Pledge
                    ----------------------------------------------
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,

                                  Exhibit D-4

<PAGE>

                (b)   be binding upon the Pledgor and 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 foregoing c1ause (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 Pledge 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 each 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 Pledgor. Upon any such
termination, the Agent will, at the Pledgor's sole expense, deliver to the
Pledgor, without any representations, warranties or recourse of any kind
whatsoever, all certificates and instruments representing or evidencing all
Pledged Shares, and all Pledged Notes, together with all other Collateral held
by the Agent hereunder, and execute and deliver to the Pledgor such documents as
the Pledgor shall reasonably request to evidence such termination.

                                  ARTICLE III

                         REPRESENTATIONS AND WARRANTIES

        SECTION 3.1 Warranties, etc. The Pledgor represents and warrants unto
                    ---------------
each Lender Party, as at the date of each pledge and delivery hereunder
(including each pledge and delivery of Pledged Shares and each pledge and
delivery of a Pledged Note) by the Pledgor to the Agent of any Collateral, as
set forth in this Article.

        SECTION 3.1.1 Ownership, No Liens, etc. The Pledgor is the legal and
                      ------------------------
beneficial owner of, and has good and marketable title to (and has full right
and authority to pledge and assign) such Collateral, free and clear of all
liens, security interests, options, or other charges or encumbrances, except any
lien or security interest granted pursuant hereto in favor of the Agent.

        SECTION 3.1.2 Valid Security Interest. The delivery of such Collateral
                      -----------------------
to the Agent is effective to create a valid, perfected, first priority security
interest in such Collateral and all proceeds thereof, securing the Obligations.
No filing or other action will be necessary to perfect or protect such security
interest.

        SECTION 3.1.3 As to Pledged Shares. In the case of any Pledged Shares
                      --------------------
constituting such Collateral, all of such Pledged Shares are duly authorized
arid validly issued, fully paid, and non-assessable, and constitute all of the
issued and outstanding shares of capital stock of each Pledged Share Issuer. The
Pledgor has no Subsidiary other than the Pledged Share Issuers.

        SECTION 3.1.4 As to Pledged Notes. In the case of each Pledged Note, all
                      -------------------
of such Pledged Notes have been duly authorized, executed, endorsed, issued and
delivered, and are the legal, valid and binding obligation of the issuers
thereof, and are not in default.

                                  Exhibit D-5

<PAGE>

        SECTION 3.1.5 Authorization, Approval, etc. No authorization, approval,
                      ----------------------------
or other action by, and no notice to or filing with, any governmental authority,
regulatory body or any other Person is required either

                (a)   for the pledge by the Pledgor of any Collateral pursuant
        to this Pledge Agreement or for the execution, delivery, and
        performance of this Pledge Agreement by the Pledgor, or

                (b)   for the exercise by the Agent of the voting or other
        rights provided for in this Pledge Agreement, or, except with respect to
        any Pledged Shares, as may be required in connection with a depository
        of such Pledged Shares by laws affecting the offering and sale of
        securities generally, the remedies in respect of the Collateral pursuant
        to this Pledge Agreement.

        SECTION 3.1.6 Compliance with Laws. The Pledgor is in compliance with
                      --------------------
the requirements of all applicable laws, rules, regulations and orders of every
governmental authority, the noncompliance with which might materially adversely
affect the business, properties, assets, operations, condition (financial or
otherwise) or prospects of the Pledgor or the value of the Collateral or the
worth of the Collateral as collateral security.

                                   ARTICLE IV

                                    COVENANTS

        SECTION 4.1 Protect Collateral; Further Assurances, etc. The Pledgor
                    -------------------------------------------
will not sell, assign, transfer, pledge or encumber in any other manner the
Collateral (except in favor of the Agent hereunder). The Pledgor will warrant
and defend the right and title herein granted unto the Agent in and to the
Collateral (and all right, title and interest represented by the Collateral)
against the claims and demands of all Persons whomsoever. The Pledgor agrees
that at any time, and from time to times at the expense of the Pledgor, the
Pledgor will promptly execute and deliver all further instruments, and take all
further action, that may be necessary or desirable, or that the Agent may,
reasonably request, in order to perfect 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.

        SECTION 4.2 Stock Powers, etc. The Pledgor agrees that all Pledged
                    -----------------
Shares (and all other shares of capital stock constituting Collateral) delivered
by the Pledgor pursuant to this Pledge Agreement will be accompanied by duly
executed undated blank stock powers, or other equivalent instruments of transfer
acceptable to the Agent. The Pledgor will, from time to time upon the request of
the Agent, promptly deliver to the Agent such stock powers, instruments, and
similar documents, satisfactory in form and substance to the Agent, with respect
to the Collateral as the Agent may reasonably request and will, from time to
time upon the request of the Agent after the occurrence of any Event of Default,
promptly transfer any Pledged Shares or other shares of common stock
constituting Collateral Into the name of any nominee designated by the Agent.

                                  Exhibit D-6

<PAGE>

        SECTION 4.3 Continuous Pledge. Subject to Section 2.4, the Pledgor will,
                    -----------------
at all times, keep pledged to the Agent pursuant hereto all Pledged Shares and
all other shares of capital stock constituting Collateral, all Dividends and
Distributions with respect thereto, all Pledged Notes, all interest, principal
and other proceeds received by the Agent with respect to the Pledged Notes, and
all other Collateral arid other securities, instruments, proceeds, and rights
from time to time received by or distributable to the Pledgor in respect of any.
Collateral, and will not permit any Pledged Share Issuer to issue any capital
stock which shall not have been immediately duly pledged hereunder on a first
perfected basis.

        SECTION 4.4 Voting Rights; Dividends, etc. The Pledgor agrees:
                    -----------------------------

                (a)   after any Default of the nature referred to in Section
                                                                     -------
        8.1.9 of either Credit Agreement or an Event of Default shall have
        -----
        occurred and be continuing, promptly upon receipt thereof by the Pledgor
        and without any request therefore by the Agent, to deliver (properly
        endorsed where required hereby or requested by the Agent) to the Agent
        all Dividends, Distributions, all interest, all principal, all other
        cash payments, and all proceeds of the Collateral, all of which shall be
        held by the Agent as additional Collateral for use in accordance with
        Section 6.3 and
        -----------

                (b)   after any Event of Default shall have occurred and be
        continuing and the Agent has notified the Pledgor of the Agent's
        intention to exercise its voting power under this clause (b) of Section
                                                                        -------
        4.4
        ---

                      (i)   the Agent may exercise (to the exclusion of the
                Pledgor) the voting power and all other incidental rights of
                ownership with respect to any Pledged Shares or other shares of
                capital stock constituting Collateral and the Pledgor hereby
                grants the Agent an irrevocable proxy, exercisable under such
                circumstances, to vote the Pledged Shares and such other
                Collateral; and

                      (ii)  promptly to deliver to the Agent such additional
                proxies and other documents as may be necessary to allow the
                Agent to exercise such voting power.

All Dividends, Distributions, interest, principal, cash payments and proceeds
which may at any time and from time to time be held by the Pledgor but which the
Pledgor is then obligated to deliver to the Agent, shall, until delivery to the
Agent, be held by the Pledgor separate and apart from its other property in
trust for the Agent. The Agent agrees that unless an Event of Default shall have
occurred and be continuing and the Agent shall have given the notice referred to
in clause (b) of Section 4.4, the Pledgor shall have the exclusive voting power
   ----------    -----------
with respect to any shares of capital stock (including any of the Pledged
Shares) constituting Collateral and the Agent shall, upon the written request of
the Pledgor, promptly deliver such proxies and other documents, if any, as shall
be reasonably requested by the Pledgor which are necessary to allow the Pledgor
to exercise voting power with respect to any such share of capital stock
(including any of the Pledged Shares) constituting Collateral; provided,
however, that no vote shall be cast, or consent, waiver or ratification given,
or action taken by the Pledgor that would impair any Collateral or be
inconsistent with or violate any provision of the Credit Agreement or any other
Loan Document (including this Pledge Agreement).

                                  Exhibit D-7

<PAGE>

        SECTION 4.5   Additional Undertakings. The Pledgor will not, without the
                      -----------------------
prior written consent of the Agent;

                (a)   enter into any agreement amending, supplementing, or
        waiving any provision of any Pledged Note (including any underlying
        instrument pursuant to which such Pledged Note is issued) or
        compromising or releasing or extending the time for payment of any
        obligation of the maker thereof;

                (b)   take or omit to take any action the taking or the omission
        of which would result in any impairment or alteration of any obligation
        of the maker of any Pledged Note or other instrument constituting
        Collateral; or

                (c)   make any demand under any Pledged Note at any time when a
        Default of the nature referred to in Section 8.1.9 of either Credit
                                             -------------
        Agreement, or any Event of Default, has occurred arid is continuing.

                                   ARTICLE V

                                   THE AGENT

        SECTION 5.1   Agent Appointed Attorney-in-Fact. The Pledgor hereby
                      --------------------------------
irrevocably appoints the Agent the Pledgor's attorney-in-fact, with full
authority in the place and stead of the Pledgor and in the name of the Pledgor
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 Pledge Agreement, including without limitation;

                (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; and

                (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.

The Pledgor 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 Pledgor 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 Pledgor pursuant to Section 6.4.
                                                      -----------

        SECTION 5.3   Agent Has No Duty. 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

                                  Exhibit D-8

<PAGE>

in its possession and the accounting for moneys actually received by it
hereunder, the Agent shall have no duty as to any Collateral or responsibility
for (a) ascertaining or taking action with respect to calls, conversions,
exchanges, maturities, tenders or other matters relative to any Pledged
Property, whether or not the Agent has or is deemed to have knowledge of such
matters, or (b) taking 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 Pledgor 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. If any Event of Default shall have
                     ----------------
occurred and be continuing:

                (a)   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 U.C.C. (whether or not the U.C.C. applies to the
        affected Collateral) and also may, without notice except as specified
        below, nil 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 Pledgor agrees that, to the
        extent notice of sale shall be required by law, at least ten days' prior
        notice to the Pledgor 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 therefore, and such sale may,
        without further notice, be made at the time and place to which it was so
        adjourned.

                (b)   The Agent may

                      (i)   transfer all or any part of the Collateral into the
                name of the Agent or its nominee, with or without disclosing
                that such Collateral is subject to the lien and security
                interest hereunder,

                      (ii)  notify the parties obligated on any of the
                Collateral to make payment to the Agent of any amount due or to
                become due thereunder,

                      (iii) 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

                                  Exhibit D-9

<PAGE>

                renew for any period (whether or not longer than the original
                period) any obligations of any nature of arty party with respect
                thereto,

                        (iv) endorse any checks, drafts or other writings in the
                Pledgor's name to allow collection of the Collateral,

                        (v)  take control of any proceeds of the Collateral, and

                        (vi) execute (in the name, place and, stead of the
                Pledgor) endorsements, assignments, stock powers and other
                instruments of conveyance or transfer with respect to all or any
                of the Collateral.

        SECTION 6.2   Compliance with Restrictions. The Pledgor agrees that in
                      ----------------------------
any sale of any of the Collateral whenever an Event of Default shall have
occurred and be continuing, the Agent is hereby authorized to comply with any
limitation or restriction in connection with such sale as it may be advised by
counsel is necessary in order to avoid any violation of applicable law
(including compliance with such procedures as may restrict the number of
prospective bidders and purchasers, require that such prospective bidders and
purchasers have certain qualifications, and restrict such prospective bidders
and purchasers to persons who will represent and agree that they are purchasing
for their own account for investment and not with a view to the distribution or
resale of such Collateral), or in order to obtain any required approval of the
sale or of the purchaser by any governmental regulatory authority or official,
and the Pledgor further agrees that such compliance shall not result in such
sale being considered or deemed not to have been made in a commercially
reasonable manner, nor shall the Agent be liable nor accountable to the Pledgor
for any discount allowed by the reason of the fact that such Collateral is sold
in compliance with any such limitation or restriction.

        SECTION 6.3 Application of Proceeds. 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 additional collateral security for, or then or at any time
thereafter be applied (after payment of any amounts payable to the Agent
pursuant to Section 10.3 of each Credit Agreement and Section 6.4) in whole or
            ------------                              -----------
in part by the Agent 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, and the
termination of all Commitments, shall be paid over to the Pledgor or to
whomsoever may be lawfully entitled to receive such surplus.

        SECTION 6.4 Indemnity and Expense. The Pledgor hereby indemnifies and
                    ---------------------
holds harmless the Agent from and against any and all claims, losses and
liabilities arising out of or resulting from this Pledge Agreement (including
enforcement of this Pledge Agreement), except claims, losses or liabilities
resulting from the Agent's gross negligence or willful misconduct, Upon demand,
the Pledgor will pay to the Agent the amount of any and all reasonable expenses,
including the reasonable fees and disbursements of its counsel (including the
reasonable allocated cost of internal legal services and, all disbursements of
internal counsel) and of any experts and agents, which the Agent may incur in
connection with:

                                  Exhibit D-10

<PAGE>

          (a)  the administration of this Pledge Agreement, the Credit Agreement
     and each other Loan Document;

          (b)  the custody, preservation, use or operation of, or the sale of,
     collection from or other realization upon, any of the Collateral;

          (c)  the exercise or enforcement of any of the rights of the Agent
     hereunder; or

          (d)  the failure by the Pledgor to perform or observe any of the
     provisions hereof.

                                  ARTICLE VII

                            MISCELLANEOUS PROVISIONS

     SECTION 7.1 Loan Document. This Pledge 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 ANY JURY TRIAL with
respect to any litigation relating to or arising out of any matter herein).

     SECTION 7.2 Amendments, etc. No amendment to or waiver of any provision of
                 ---------------
this Pledge Agreement nor consent to any departure by the Pledgor 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 it is given.

     SECTION 7.3 Protection of Collateral. The Agent may from time to time, at
                 ------------------------
its option, perform any act which the Pledgor agrees hereunder to perform and
which the Pledgor shall fail to perform after being requested in writing so to
perform (it being understood that no such request need be given after the
occurrence and during the continuance of any Event of Default) and the Agent may
from time to time take any other action which the Agent reasonably deems
necessary for the maintenance, preservation or protection of any of the
Collateral or of its security interest therein.

     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 Pledgor, mailed, or telegraphed or delivered 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
Agreement 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 Pledge
                 ----------------
Agreement are for convenience of reference only, and shall not affect the
construction of this Pledge Agreement.

                                  Exhibit D-11

<PAGE>

     SECTION 7.6 Severability. Wherever possible each provision of this Pledge
                 ------------
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Pledge 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 Pledge Agreement.

     SECTION 7.7 Governing Law, Entire Agreement, etc. THIS PLEDGE 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 OP ANY PARTICULAR
COLLATERAL ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF
NEW YORK. THIS PLEDGE 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.

                                  Exhibit D-12

<PAGE>

     IN WITNESS WHEREOF, the parties hereto have caused this Pledge Agreement to
be duly executed and delivered by their respective officers thereunto duly
authorized as of the day and year first above written.

                                        NASCO INTERNATIONAL, INC.

                                        By: /s/ Dean T. Johnson
                                            ------------------------------------
                                            Title: Chief Financial Officer

                                            Address:   901 Janesville Avenue
                                                       Fort Atkinson, WI
                                                       53538-0901

                                            Telecopy No.: 414-563-0234

                                            Attention: Dean T. Johnson
                                                       Chief Financial Officer

                                        Copy to:

                                            Geneve Corporation
                                            96 Cummings Point Road
                                            Stamford, Connecticut 06902

                                            Telecopy No.: 203-348-3103

                                            Attention: William J. Peterson
                                                       Chief Financial Officer

                                  Exhibit D-13

<PAGE>

                                        ACCEPTED:

                                        BANK OF AMERICA LA., as Agent

                                        By: /s/ Debra Basler
                                            ------------------------------------
                                            Title: Vice President
                                            Address:   231 South LaSalle Street
                                                       Chicago, Illinois 60697

                                            Telecopy No.: 312-987-0889

                                            Attention: Debra Basler

                                  Exhibit D-14

<PAGE>

                                                                    ATTACHMENT I
                                                             to Pledge Agreement

                                   Description
                                   -----------

Item A. Pledged Shares
        --------------

Pledged Share Issuer                             Common Stock
--------------------                             ------------

                                   Authorized     Outstanding     % of Shares
                                     Shares          Shares         Pledged

Nasco Export, Inc.                   50,000          2,500            100%

Nasco Preferred Corporation           1,000            100            100%

Nasco Subsidiary Corporation          1,000            100            100%

Triarco Arts & Crafts, Inc.          44,000             50            100%

Item B. Pledged Notes
        -------------

None

                                  Exhibit D-15

<PAGE>

                                                                       EXHIBIT E

                               SECURITY AGREEMENT

          THIS SECURITY AGREEMENT, dated as of March 31, 2000 (as modified from
time to time, this "Security Agreement"), made by NASCO INTERNATIONAL, INC., a
                    ------------------
Wisconsin 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 referred to below,

          WHEREAS, pursuant to that certain Third Amended and Restated Credit
Agreement, dated as of January 2, 1996 (as heretofore amended, supplemented and
otherwise modified to the date hereof, the "Existing Credit Agreement"), among
                                            -------------------------
the Grantor, the lenders parties thereto and Bank of America Illinois
(predecessor to Bank of America, N.A.), as agent, the lenders have extended
loans to the Grantor; and

          WHEREAS, as a condition precedent to any extension of credit under the
Existing Credit Agreement, the Grantor was required to execute and deliver the
Security Agreement (the "Existing Security Agreement") pursuant to which the
Grantor granted to the Agent a continuing security interest in all of the
"Collateral" identified therein, and, in connection with and to supplement the
Existing Security Agreement, the Grantor entered into the Agreement (Patent),
the Agreement (Trademark) and the Agreement (Copyright) (collectively referred
to herein as the "Supplements"); and
                  -----------

          WHEREAS, the Grantor has requested that the Lenders make certain
credit available, in part to refinance all indebtedness under the Existing
Credit Agreement, pursuant to a Credit Agreement (Five Year) dated March 31,
2000 among the Grantor, certain lenders, Bank One, Wisconsin as co-agent and
Bank of America, N.A., as administrative agent (as amended, supplemented,
amended and restated or otherwise modified from time to time, being referred to
as the "Credit Agreement (Five Year)" and a Credit Agreement (364 Day) dated
March 31, 2000 among the Grantor, certain lenders, Bank One, Wisconsin as
co-agent and Bank of America, N.A., as administrative agent (as amended,
supplemented, amended and restated or otherwise modified from time to time,
being referred to as the "Credit Agreement (364 Day)" and together with the
Credit Agreement (Five Year), the "Credit Agreements"); and

          WHEREAS, it is a condition precedent to such extensions of credit that
the Grantor enter into this Security Agreement to, among other things, confirm
and ratify its grant to the Agent of a continuing security interest in the
Collatera1 (including, without limitation, the Copyright Collateral, the Patent
Collateral and the Trademark Collateral, as defined therein and in the
Supplements);

          NOW, THEREFORE, for good and valuable consideration the receipt of
which is hereby acknow1edged, and in order to induce the Lenders to make Loans
(including the initial Loans) to

                                  Exhibit E-1

<PAGE>

the Grantor from time to time pursuant to the Credit Agreements, in part to
refinance the indebtedness under the Existing Credit 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. The following terms (whether or not underscored)
                 -------------
when used in this Security Agreement, including its preamble and recitals, 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 termina1s, printers, features, computer elements, card readers,
     tape drives, hard and soft disk drives, cables, electrical supply hardware,
     generators, power equa1izers, 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 1eased 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, 1icenses, options, warranties,
     service contracts, program services, test rights, maintenance rights,
     support rights, improvement rights, renewal rights and indemnifications
     arid 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

                                  Exhibit E-2

<PAGE>

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.

         "Credit Agreement" is defined in the third recital.
          ----------------                    -----

         "Equipment" is defined in clause (a) of Section 2.1.
          ---------                ---------     -----------

         "Existing Credit Agreement" is defined in the first recital.
          -------------------------                    -------------

          "Existing Security Agreement: is defined in the preamble.
           ---------------------------                    --------

         "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.

         "Inventory" is defined in clause (b) of Section 2.1.
          ---------                ---------     -----------

         "Lender" is defined in the preamble.
          ------                    --------

         "Lender Party: means, as the context may require, any Lender or the
          ------------
Agent and each of its respective successor, 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

                                   Exhibit E-3

<PAGE>

          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.

         "Receivables" is defined in clause (c) of Section 2.1.
          -----------                ---------     -----------

         "Related Contracts: is defined in clause (c) of Section 2.1.
          -----------------                ----------    -----------

         "Security Agreement" is defined in the preamble.
          ------------------                    --------

         "Supplements" is defined in the second recital.
          -----------                    --------------

         "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;
                              ------    ------------

                   (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
                -

                                  Exhibit E-4

<PAGE>

               (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.

     "U.C.C." means the Uniform Commercial Code, as in effect in the State of
      ------
Illinois.

     SECTION 1.2 U.C.C. Definitions. Unless otherwise defined herein or the
                 ------------------
context otherwise requires, terms for which meanings are provided in the U.C.C.
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. 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 and to all of the following, whether now or hereafter
existing or acquired (the "Collateral"):
                           ----------

          (a) all equipment in all of its forms of the Grantor, wherever
     located, and all parts thereof and all accessions, additions, attachments,
     improvements, substitutions and replacements thereto and therefor (any and
     all of the foregoing being the "Equipment");
                                     ---------

          (b) all inventory in all of its forms of the Grantor, wherever
     located, including

              (i)   all raw materials and work in progress therefor, finished
          goods thereof, and materials used or consumed in the manufacture or
          production thereof,

              (ii)  all goods in which the Grantor has an interest in mass or a
          joint or other interest or right of any kind (including goods in which
          the Grantor has an interest or right as consignee), and

              (iii) all goods which are returned to or repossessed by the
          Grantor; and

                                   Exhibit E-5

<PAGE>

               (iv) live specimens including frogs

     and all accessions thereto, products thereof and documents therefor (any
     and all such inventory, materials, goods, accessions, products and
     documents being the "Inventory");
                          ---------

          (c) all accounts, contracts, contract rights, chattel paper, documents
     and general intangibles of the Grantor, whether or not arising out of or in
     connection with the sale or lease of goods or the rendering of services,
     and 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 such accounts, contracts, contract rights,
     chattel paper, documents, instruments, and general intangibles (any and all
     such accounts, contracts, contract rights, chattel paper, documents,
     instruments, and general intangibles being the "Receivables", and any and
                                                     -----------
     all such security agreements, guaranties, leases and other contracts being
     the "Related Contracts");
          ------- ---------

          (d) all Intellectual Property Collateral of the Grantor;

          (e) all certificated securities;

          (f) all investment property and financial assets;

          (g) 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;
     -----------

          (h) all of the Grantor's 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

          (i) all products, offspring, rents, issues, profits, returns, income
     and proceeds of and from any and all of the foregoing Collateral (including
     proceeds which constitute property of the types described in clauses (a),
                                                                  ----------
     (b), (c), (d), (e), (f), (g), and (h), 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).

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

                                  Exhibit E-6

<PAGE>

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 an 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 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

                                   Exhibit E-7

<PAGE>

     SECTION 3.1   Representation 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 the Security Agreement, been
located at any place other than the place 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 or the Grantor's office in Modesto,
California. The Grantor has no trade names other than Nasco, Nasco West and
Nasco Plastics. The Grantor has not been known by any legal name different from
the one set forth on the signature page hereto, nor has the Grantor been the
subject of any merger or other corporate reorganization. The Grantor is not a
"retail merchant" within the meaning of Section 9102 of the Uniform Commercial
Code - Secured Transactions of the State of California. 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 Agreement. 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.

     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, contemporaneously herewith, 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 or invalid or unenforceable, in whole or in part;

          (b) such Intellectual Property Collateral is valid and enforceable;

          (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

                                   Exhibit E-8

<PAGE>

     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 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

                                  Exhibit E-9

<PAGE>

     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 office(s) 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

                                  Exhibit E-10

<PAGE>

     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. 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

                                  Exhibit E-11

<PAGE>

     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) debtedness thereunder or evidenced thereby. Upon
     request of the Agent, the 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 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

                                  Exhibit E-12

<PAGE>

               (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 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)

                                  Exhibit E-13

<PAGE>

     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.

          (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 Agreement; 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 Agreement.

          (c)  The Grantor will defend the right, title and interest of the
     Collateral 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.

                                  Exhibit E-14

<PAGE>

     SECTION 4.1.7  Notices. The Grantor will, upon obtaining knowledge thereof,
                    -------
advise the Collateral 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 9-402(7) of the U.C.C. (or any other then applicable provision of the
U.C.C.) unless the Grantor shall have given the Collateral Agent at least 90
days' prior written notice thereof or shall have delivered to the Collateral
Agent (i) acknowledgement copies of UCC-3 financing statements duly executed and
duly filed in each jurisdiction in which U.C.C. 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 Collateral 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. 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

                                  Exhibit E-15

<PAGE>

          (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.

                                   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:

          (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

                                  Exhibit E-16

<PAGE>

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 U.C.C. (whether or not the U.C.C. 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 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 require 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

                                  Exhibit E-17

<PAGE>

     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
Collateral 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 Collateral 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 Collateral 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 Collateral 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 Collateral
Agent hereunder, including reasonably attorneys' fees and legal expenses, to the
payment in whole or in part of the Obligations in such order as the Collateral
Agent may elect, the Grantor remaining liable for any deficiency remaining
unpaid after such application and all fees and expenses incurred by the
Collateral Agent of any other amount required by any provision of law,
including, without limitation, Section 9-504(1)(c) of the U.C.C., need the
Collateral Agent account for the surplus, if any, to the Grantor. 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 no notification is
required, the Grantor agrees that the Collateral 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 not to assert any rights or privileges which it may
acquire under Section 9-112 of the U.C.C.

     For the purpose of enabling the Collateral Agent to exercise rights and
remedies under this Agreement and any Security Agreement Supplements, at such
time as the Collateral 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 Collateral
Agent and to the extent the Collateral 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 Collateral Agent an
irrevocable, non-exclusive license (exercisable without payment of royalty or
other compensation to the Borrower), which license shall be exercisable by the
Collateral

                                  Exhibit E-18

<PAGE>

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 Collateral
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 Collateral 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 Collateral 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 willful misconduct.

     (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 this
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

                                  Exhibit E-19

<PAGE>

             (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 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 7.3 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, 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 7.4 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 7.5 Severibility. 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 7.6 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 THE
JURISDICTION OTHER THAN THE STATE OF ILLINOIS. THIS SECURITY AGREEMENT AND THE
OTHER LOAN DOCUMENTS CONSTITUTE THE ENTIRE UNDERSTANDING AMONG THE PARTIES

                                  Exhibit E-20

<PAGE>

HERETO WITH RESPECT TO THE SUBJECT MATTER HEREOF AND SUPERSEDE ANY PRIOR
AGREEMENTS, WRITTEN OR ORAL, WITH RESPECT THERETO.

                                  Exhibit E-21

<PAGE>

     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.

                                       NASCO INTERNATIONAL, INC.

                                       By: /s/ Dean T. Johnson
                                           -------------------------------------
                                           Title: Chief Financial Officer

                                           Address:   901 Janesville Avenue
                                                      Fort Atkinson, Wisconsin
                                                      53538-0901

                                           Attention: Dean T. Johnson
                                                      Chief Financial Officer

                                           Telecopier No:. 414-563-0234

                                       Copy to:

                                           Geneve Corporation
                                           96 Cummings Point Road
                                           Stamford, Connecticut 06902

                                           Telecopier No.:  203-348-3103

                                           Attention: William J. Peterson
                                                      Chief Financial Officer

                                       ACCEPTED:

                                       BANK OF AMERICA, N.A., as Agent

                                       By: /s/ Debra Basler
                                           -------------------------------------
                                           Title: Vice President

                                           Address:   231 South LaSalle Street
                                                      Chicago, Illinois 60697

                                           Attention: Debra Basler

                                           Telecopier No.: 312-987-0889

                                  Exhibit E-22

<PAGE>

                                                                      SCHEDULE I
                                                                              to
                                                              Security Agreement

Item A.  Location of Equipment
         ---------------------

     Description                               Location
     -----------                               --------

1.   Equipment used in Nasco Division          901 Janesville Avenue
     mail order operation                      Fort Atkinson, WI 53538

2.   Equipment used in Nasco West              4825 Stoddard Road
     mail order operation                      Modesto, CA 95352

3.   Plastics Mfg.                             1409 Larson Road
                                               Fort Atkinson, WI 53538

Item B.  Location of Inventory
         ---------------------

     Description                               Location
     -----------                               --------

1.   Inventory of Nasco Division               901 Janesville Avenue
     mail order operation                      Fort Atkinson, WI 53538

2.   Inventory of Nasco Division               4825 Stoddard Road
     mail order operation                      Modesto, CA 95352

3.   Plastics Mfg.                             1409 Larson Road
                                               Fort Atkinson, WI 53538

                                  Exhibit E-23

<PAGE>

                                                                     SCHEDULE II
                                                                              to
                                                              Security Agreement

Item A. Patents
        -------
                                 Issued Patents
                                 --------------

   County    Patent No.   Issue Date    Inventor(s)             Title
   ------    ----------   ----------    -----------             -----

   U.S.A.    5,180,229     1/19/93     William Phillip        Sampling Bag
                                       Niemeyer               With Enclosed
                                                              Wire Ends
   Canada     971,090      7/15/75     Ernest M. Risgaard     Sealing Means &
                                                              Methods
                                                              (Whirl-Pak)

                           Pending Patent Application
                           --------------------------

    County   Serial No.   Filing Date   Inventor(s)             Title
    ------   ----------   -----------   -----------             -----

    U.S.A.   08/879,346    6/20/97     Daniel C.              Infant Simulation
                                       Christianson,          Devise
                                       Judith M. Johnson      and Method
                                       Roger E. Lidicker      Therefore

                        Patent Application in Preparation
                        ---------------------------------

    County   Docket No.   Expected      Inventor(s)             Title
    ------   ----------   --------      -----------             -----
                         Filing Date
                         -----------
    U.S.A.   714-00068     5/1/00      Daniel C.              Auscultation
                                       Christianson           Simulation
                                                              System

Item B. Patent Licenses
        ---------------

    County   Licensor.     Licensee     Effective    Expiration Date    Subject
    ------   ---------     --------     ---------    ---------------    -------
                                           Date                          Matter
                                           ----                          ------
    U.S.A.   Phyllis R.     Nasco        7/27/87     Expiration of       Algebra
             Steinmann                               Licensed Patent     Models

                                  Exhibit E-24

<PAGE>

                                                                    SCHEDULE III
                                                                              to
                                                              Security Agreement

Item A.  Trademarks

                              Registered Trademarks
                              ---------------------

  Country         Trademark          Registration No.           Registration
  -------         ---------          ----------------           ------------
                                                                     Date
                                                                     ----

U.S.A.          Life/form                 950,342                  01/09/73
U.S.A.          Life/Form                 951,902                  01/30/73
U.S.A.          Sludge Judge            1,120,894                  06/26/79
U.S.A.          Nasco                     886,960                  03/03/70
U.S.A.          Thio-Bag                1,262,085                  12/27/84
U.S.A.          Whirl-Pak                 852,990                  07/23/68
U.S.A.          Nasco Guard               864,758                  02/18/69
U.S.A.          CPaRlene                1,562,034                  10/24/89
U.S.A.          TRANS-PAK               1,644,334                  05/14/91
U.S.A.          Pro-Sect                1,682,924                  04/14/92
U.S.A.          Artist Cards            1,735,864                  11/24/92
Australia       Whirl-Pak                A248,142                  05/06/78
Canada          Whirl-Pak                 160,680                  01/24/69
Canada          Life Form                 192,601                  07/13/73
Canada          Nasco                     193,591                  08/24/73
Canada          Seal-Pak                  336,009
New             Whirl-Pak                 96,6444                  04/14/71
Zealand
U.S.A.          SciQuest                1,888,237                  04/11/95
U.S.A.          BioQuest                1,844,361                  07/12/94
U.S.A.          ChemQuest               1,881,897                  03/07/95
U.S.A.          Speci-Sponge            2,038,404                  02/18/97
U.S.A.          Classroom               2,020,675                  12/03/96
U.S.A.          Challenger
U.S.A.          Paper-Fer-Shapen        2,220,604                  01/26/99

                         Pending Trademark Applications
                         ------------------------------

  Country         Trademark           Serial No.                Filing Date
  -------         ---------           ----------                -----------

  U.S.A.       Ready-or-Not Tot       75/306,817                 07/06/97

                                  Exhibit E-25

<PAGE>

                      Trademark Applications in Preparation
                      -------------------------------------

   Country      Trademark      Docket No.      Expected       Products/
   -------      ---------      ----------      --------       ---------
                                               Filing Date    Services
                                               -----------    --------

Item B.         Trademark Licenses

   Country      Trademark      Licensor    Licensee     Effective    Expiration
   -------      ---------      --------    --------     ---------    ----------
                                                          Date          Date
                                                          ----          ----

                                  Exhibit E-26

<PAGE>

                                                                     SCHEDULE IV
                                                                              to
                                                              Security Agreement

Item A.  Copyrights/Mask Work
         --------------------

                        Registered Copyrights/Mask Works
                        --------------------------------

     County      Registration       Registration     Author(s)        Title
     ------      ------------       ------------     ---------        -----
                      No.              Date
                      ---              ----
     U.S.A.       VA457,542          03/22/91        Grant        Artist Cards
                                                     Cummings     Impressionist
                                                                  Painter
                                                                  Portraits
     U.S.A.       VA457,544          03/22/91        Grant        Artist Cards
                                                     Cummings     Impressionist
                                                                  Series
     Canada        385,697           01/20/89        Grant        Nasco Sampling
                                                     Cummings     Equipment
                                                                  Catalog
     Canada        385,698           01/20/89        James        Six
                                                     Stummeier    Photographs

              Copyright/Mask Work Pending Registration Applications
              -----------------------------------------------------

      County       Serial No.     Filing Date      Author(s)       Title
      ------       ----------     -----------      ---------       -----

      Copyright/Mask Work Pending Registration Applications in Preparation
      --------------------------------------------------------------------

      County       Docket No.       Expected       Authors(s)      Title
      ------       ----------       --------       ----------      -----
                                  Filing Date
                                  -----------

Item B.  Copyright/Mask Work Licenses
         ----------------------------

      County       Licensor   Licensee   Effective   Expiration Date    Subject
      ------       --------   --------   ---------   ---------------    -------
   or Territory                             Date                        Matter
   ------------                             ----                        ------

                                  Exhibit E-27

<PAGE>

                                                                      SCHEDULE V

                                                                              to
                                                              Security Agreement

                        Trade Secret or Know-How Licenses
                        ---------------------------------

  County        Licensor     Licensee     Effective    Expiration Date   Matter
  ------        --------     --------     ---------    ---------------   ------
or Territory                                Date                         Subject
------------                                ----                         -------

                                  Exhibit E-28

<PAGE>

                                    AGREEMENT
                                    ---------
                                   (Trademark)

     THIS AGREEMENT (TRADEMARK), dated as of March 31, 2000 ( as modified from
time to time, this "Agreement", made by NASCO INTERNATIONAL, INC., a Wisconsin
                    ---------
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 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;

                                   WITNESSETH:
                                   ----------

     WHEREAS, pursuant to that certain Third Amended and Restated Credit
Agreement, dated as of January 2, 1996 (as heretofore amended, supplemented and
otherwise modified to the date hereof, the "Existing Credit Agreement"), among
                                            -------------------------
the Grantor, the lenders parties thereto and Bank of America Illinois
(predecessor to Bank of America, N.A.), as agent, the lenders have extended
loans to the Grantor; and

     WHEREAS, as a condition precedent to any extension of credit under the
Existing Credit Agreement, the Grantor was required to execute and deliver the
Security Agreement (the "Existing Security Agreement") pursuant to which the
Grantor granted to the Agent a continuing security interest in all of the
"Collateral" identified therein, and, in connection with and to supplement the
Existing Security Agreement, the Grantor entered into the Agreement (Patent),
the Agreement (Trademark) and the Agreement (Copyright) (collectively referred
to herein as the "Supplements"); and
                  -----------

     WHEREAS, the Grantor has requested that the Lenders make certain credit
available, in part to refinance all indebtedness under the Existing Credit
Agreement, pursuant to a Credit Agreement (Five Year) dated March 31, 2000 among
the grantor, certain lenders, Bank One, Wisconsin, as co-agent and Bank of
America, N.A., as administrative agent (as amended, supplemented, amended and
restated or otherwise modified from time to time, being referred to as the
"Credit Agreement (Five Year)" and a Credit Agreement (364 Day) dated March 31,
2000 among the Grantor, certain lenders, Bank One, Wisconsin, as co-agent and
Bank of America, N.A., as administrative agent (as amended, supplemented,
amended and restated or otherwise modified form time to time, being referred to
as the "Credit Agreement (364 Day)" and together with the Credit Agreement (Five
Year), the "Credit Agreements"); and

     WHEREAS, it is a condition precedent to such extensions of credit that the
Grantor enter into this Agreement (Trademark) to, among other things, confirm
and ratify its grant to the Agent of a continuing security interest in the
Trademark Collateral (as defined in the Security Agreement dated the date hereof
of the Grantor (as amended, supplemented, amended and restated or otherwise
modified form time to time, being referred to as the "Security Agreement");

     NOW, THEREFORE, for good and valuable consideration the receipt of which is
hereby acknowledged, and in order to induce the Lenders to make Loans (including
the initial Loans) to

                                  Exhibit E-29

<PAGE>

the Grantor form time to time pursuant to the Credit Agreements, in part to
refinance the indebtedness under the Existing Credit Agreement, the Grantor
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 and
      ---------
     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 all
     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 licenses referred
     to in Item B of Attachment 1 hereto;
           ------    ------------

          (c) all reissues, divisions, continuations, continuations-in-part,
     extension s, renewals and reexaminations of any of the items described in
     the foregoing clauses (a) and (b);
                   -----------     ---
          (d) all of the goodwill of 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 or Trademark
     registration or Trademark license, including any

                                  Exhibit E-30

<PAGE>

          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.

                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 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 in the
          Trademark Collateral which has been granted hereunder.

                SECTION 5. Acknowledgement. The 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 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.

                                  Exhibit E-31

<PAGE>

      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.

                               NASCO INTERNATIONAL, INC.

                               By: /s/ Dean T. Johnson
                                   ----------------------
                                Title: Chief Financial Officer

                               Address:          901 Janesville Avenue
                                                 Fort Atkinson, Wisconsin
                                                 53538-0901

                               Attention:        Dean T. Johnson
                                                 Chief Financial Officer

                               Telecopier No.:   414-563-0234

                               Copy to:          Geneve Corporation
                                                 96 Cummings Point Road
                                                 Stamford, Connecticut 06902

                               Attention:        William J. Petersen
                                                 Chief Financial Officer

                               Telecopier No.:   203-348-3103

                                  Exhibit E-32

<PAGE>

                                 Accepted:

                                 BANK OF AMERICA, N.A., as Agent

                                 By: /s/ Debra J. Basler
                                     ----------------------
                                 Title: Vice President

                                 Address:          231 South LaSalle Street
                                                   Chicago, Illinois  60697

                                 Telecopier No.:   312-987-0889

                                 Attention:        Debra Basler

                                  Exhibit E-33

<PAGE>

                                                                 ATTACHMENT 1 to
                                                           Agreement (Trademark)
Item A. Trademarks
        ----------
                              Registered Trademarks
                              ---------------------

Country            Trademark          Registration No.      Registration Date
-------            ---------          ---------------       -----------------

U.S.A.          Life/form                     950,342             01/09/73
U.S.A.          Life/Form                     951,902             01/30/73
U.S.A.          Sludge Judge                1,120,894             06/26/79
U.S.A.          Nasco                         886,960             03/03/70
U.S.A.          Thio-Bag                    1,262,085             12/27/84
U.S.A.          Whirl-Pak                     852,990             07/23/68
U.S.A.          Nasco Guard                   864,758             02/18/69
U.S.A.          CPaRlene                    1,562,034             10/24/89
U.S.A.          TRANS-PAK                   1,644,334             05/14/91
U.S.A.          Pro-Sect                    1,682,924             04/14/92
U.S.A.          Artist Cards                1,735,864             11/24/92
Australia       Whirl-Pak                    A248,142             05/06/78
Canada          Whirl-Pak                     160,680             01/24/69
Canada          Life Form                     192,601             07/13/73
Canada          Nasco                         193,591             08/24/73
Canada          Seal-Pak                      336,009
New             Whirl-Pak                     96,6444             04/14/71
Zealand
U.S.A.          SciQuest                    1,888,237             04/11/95
U.S.A.          BioQuest                    1,844,361             07/12/94
U.S.A.          ChemQuest                   1,881,897             03/07/95
U.S.A.          Speci-Sponge                2,038,404             02/18/97
U.S.A.          Classroom                   2,020,675             12/03/96
U.S.A.          Challenger
U.S.A.          Paper-Fer-Shapen            2,220,604             01/26/99

                         Pending Trademark Applications
                         ------------------------------

Country           Trademark              Serial No.             Filing Date
-------           ---------              ----------             -----------

U.S.A.         Ready-or-Not Tot         75/306,817                07/06/97

                      Trademark Applications in Preparation
                      -------------------------------------

Country           Trademark        Docket No.       Expected      Products/
-------           ---------        ----------     Filing Date     Services
                                                  -----------     --------

                                  Exhibit E-34

<PAGE>

Item B. Trademark Licenses
        ------------------

Country     Trademark       Licensor     Licensee      Effective     Expiration
-------     ---------       --------     --------        Date           Date
                                                         ----           ----

                                  Exhibit E-35

<PAGE>

                                    AGREEMENT
                                    ---------
                                    (Patent)

         THIS AGREEMENT (PATENT), dated as of March 31, 2000 ( as modified from
time to time, this "Agreement", made by NASCO INTERNATIONAL, INC., a Wisconsin
                    ---------
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 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;

                                   WITNESSETH:
                                   -----------

         WHEREAS, pursuant to that certain Third Amended and Restated Credit
Agreement, dated as of January 2, 1996 ( as heretofore amended, supplemented and
otherwise modified to the date hereof, the "Existing Credit Agreement"), among
                                            -------------------------
the Grantor, the lenders parties thereto and Bank of America Illinois
(predecessor to Bank of America, N.A.), as agent, the lenders have extended
loans to the Grantor; and

         WHEREAS, as a condition precedent to any extension of credit under the
Existing Credit Agreement, the Grantor was required to execute and deliver the
Security Agreement (the "Existing Security Agreement") pursuant to which the
Grantor granted to the Agent a continuing security interest in all of the
"Collateral" identified therein, and, in connection with and to supplement the
Existing Security Agreement, the Grantor entered into the Agreement (Patent),
the Agreement (Trademark) and the Agreement (Copyright) (collectively referred
to herein as the "Supplements"); and
                  -----------

         WHEREAS, the Grantor has requested that the Lenders make certain credit
available, in part to refinance all indebtedness under the Existing Credit
Agreement, pursuant to a Credit Agreement (Five Year) dated March 31, 2000 among
the grantor, certain lenders, Bank One, Wisconsin, as co-agent and Bank of
America, N.A., as administrative agent (as amended, supplemented, amended and
restated or otherwise modified from time to time, being referred to as the
"Credit Agreement (Five Year)" and a Credit Agreement (364 Day) dated March 31,
2000 among the Grantor, certain lenders, Bank One, Wisconsin, as co-agent and
Bank of America, N.A., as administrative agent (as amended, supplemented,
amended and restated or otherwise modified form tiem to time, being referred to
as the "Credit Agreement (364 Day)" and together with the Credit Agreement (Five
Year), the "Credit Agreements"); and

         WHEREAS, it is a condition precedent to such extensions of credit that
the Grantor enter into this Agreement (Patent) to, among other things, confirm
and ratify its grant to the Agent of a continuing security interest in the
Patent Collateral (as defined in the Security Agreement dated the date hereof of
the Grantor (as amended, supplemented, amended and restated or otherwise
modified form time to time, being referred to as the "Security Agreement");

         NOW, THEREFORE, for good and valuable consideration the receipt of
which is hereby acknowledged, and in order to induce the Lenders to make Loans
(including the initial Loans) to the Grantor form time to time pursuant to the
Credit Agreements, in part to refinance the

                                  Exhibit E-36

<PAGE>

indebtedness under the Existing Credit Agreement, the Grantor 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 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 "Patent
                                                                          ------
Collateral"):
----------

          (a) all letters patent and applications fro letter 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 licenses 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 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

                                  Exhibit E-37

<PAGE>

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 in the Patent Collateral which has been granted
hereunder.

     SECTION 5. Acknowledgement. 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.

                                  Exhibit E-38

<PAGE>

      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.

                                   NASCO INTERNATIONAL, INC.

                                   By: /s/ Dean T. Johnson
                                       ----------------------
                                   Title: Chief Financial Officer

                                    Address: 901 Janesville Avenue
                                            Fort Atkinson, Wisconsin 53538-0901

                                    Attention: Dean T. Johnson
                                              Chief Financial Officer

                                    Telecopier No.: 414-563-0234

                                   Copy to:

                                    Geneve Corporation
                                    96 Cummings Point Road
                                    Stamford, Connecticut 06902

                                    Telecopier No.:   203-348-3103

                                    Attention: William J. Petersen
                                               Chief Financial Officer

                                  Exhibit E-39

<PAGE>

                                      Accepted:

                                      BANK OF AMERICA, N.A., as Agent

                                      By: /s/ Debra J. Basler
                                          ----------------------
                                      Title: Vice President

                                      Address: 231 South LaSalle Street
                                              Chicago, Illinois 60697

                                      Attention: Debra Basler

                                      Telecopier No.: 312-987-0889

                                  Exhibit E-40

<PAGE>

                                                                 ATTACHMENT 1 to
                                                              Agreement (Patent)
Item A.  Patents
         -------

<TABLE>
<CAPTION>
                                 Issued Patents
                                 --------------

   County       Patent No.      Issue Date             Inventor(s)               Title
   ------       ----------      ----------             -----------               -----
<S>             <C>            <C>               <C>                     <C>
   U.S.A.        5,180,229        1/19/93        William Philip            Sampling Bag
                                                 Niemeyer                  With Enclosed
                                                                           Wire Ends

   Canada          971,090        7/15/75        Ernest M. Risgaard        Sealing Means &
                                                                           Methods
                                                                           (Whirl-Pak)

                           Pending Patent Application
                           --------------------------

   County       Serial No.     Filing Date             Inventor(s)               Title
   ------       ----------     -----------             -----------               -----
   U.S.A.       08/879,346        6/20/97        Daniel C. Christianson,   Infant Simulation
                                                 Judith M. Johnson         Devise and Method
                                                 Roger E. Lidicker         Therefore

                        Patent Application in Preparation
                        ---------------------------------

                                 Expected
   County       Docket No.     Filing Date             Inventor(s)               Title
   ------       ----------     -----------             -----------               -----
   U.S.A.        714-00068        5/1/00         Daniel C. Christianson,   Auscultation
                                                 Judith M. Johnson         Simulation System
                                                 Roger E. Lidicker

Item B.  Patent Licenses
         ---------------
                                                                                                     Subject
    County       Licensor.       Licensee            Effective Date         Expiration Date          Matter
    ------       ---------       --------            --------------         ---------------          ------
    U.S.A.      Phyllis R.         Nasco                 7/27/87         Expiration of Licensed      Algebra
                Steinmann                                                Patent                      Models
</TABLE>

                                  Exhibit E-41

<PAGE>

                                    AGREEMENT

                                   (Copyright)

         THIS AGREEMENT (COPYRIGHT), dated as of March 31, 2000 (as modified
from time to time, this "Agreement", made by NASCO INTERNATIONAL, INC., a
                         ---------
Wisconsin 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 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;

                                   WITNESSETH:

         WHEREAS, pursuant to that certain Third Amended and Restated Credit
Agreement, dated as of January 2, 1996 (as heretofore otherwise amended,
supplemented and otherwise modified to the date hereof, the "Existing Credit
                                                             ---------------
Agreement"), among the Grantor, the lenders parties thereto and Bank of America
---------
Illinois (predecessor to Bank of America, N.A.), as agent, the lenders have
extended loans to the Grantor; and

         WHEREAS, as a condition precedent to any extension of credit under the
Existing Credit Agreement, the Grantor was required to execute and deliver the
Security Agreement (the "Existing Security Agreement") pursuant to which the
Grantor granted to the Agent a continuing security interest in all of the
"Collateral" identified therein, and, in connection with and to supplement the
Existing Security Agreement, the Grantor entered into the Agreement (Patent),
the Agreement (Trademark) and the Agreement (Copyright) (collectively referred
to herein as the "Supplements"); and
                  -----------

         WHEREAS, the Grantor has requested that the Lenders make certain credit
available, in part to refinance all indebtedness under the Existing Credit
Agreement, pursuant to a Credit Agreement (Five Year) dated March 31, 2000 among
the grantor, certain lenders, Bank One, Wisconsin, as co-agent and Bank of
America, N.A., as administrative agent (as amended, supplemented, amended and
restated or otherwise modified from time to time, being referred to as the
"Credit Agreement (Five Year)" and a Credit Agreement (364 Day) dated March 31,
2000 among the Grantor, certain lenders, Bank One, Wisconsin, as co-agent and
Bank of America, N.A., as administrative agent (as amended, supplemented,
amended and restated or otherwise modified form time to time, being referred to
as the "Credit Agreement (364 Day)" and together with the Credit Agreement (Five
Year), the "Credit Agreements"); and

         WHEREAS, it is a condition precedent to such extensions of credit that
the Grantor enter into this Agreement (Copyright) to, among other things,
confirm and ratify its grant to the Agent of a continuing security interest in
the Copyright Collateral (as defined in the Security Agreement dated the date
hereof of the Grantor (as amended, supplemented, amended and restated or
otherwise modified form time to time, being referred to as the "Security
Agreement");

                                  Exhibit E-42

<PAGE>

     NOW, THEREFORE, for good and valuable consideration the receipt of which is
hereby acknowledged, and in order to induce the Lenders to make Loans (including
the initial Loans) to the Grantor form time to time pursuant to the Credit
Agreements, in part to refinance the indebtedness under the Existing Credit
Agreement, the Grantor 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 hereinafter
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 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 Copyright
Collateral with the United States Copyright 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 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

                                  Exhibit E-43

<PAGE>

other documents as may be necessary or proper to release the lien on and
security in the Copyright Collateral which has been granted hereunder.

        SECTION 5. Acknowledgement. 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.

                                  Exhibit E-44

<PAGE>

      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.

                                   NASCO INTERNATIONAL, INC.

                                   By: /s/ Dean T. Johnson
                                       --------------------------
                                   Title: Chief Financial Officer

                                    Address: 901 Janesville Avenue
                                             Fort Atkinson, Wisconsin 53538-0901

                                    Attention: Dean T. Johnson
                                               Chief Financial Officer

                                    Telecopier No.: 414-563-0234

                                   Copy to:

                                    Geneve Corporation
                                    96 Cummings Point Road
                                    Stamford, Connecticut 06902

                                    Telecopier No.: 203-348-3103

                                    Attention: William J. Petersen
                                               Chief Financial Officer

                                  Exhibit E-45

<PAGE>

                                       Accepted:

                                       BANK OF AMERICA, N.A., as Agent

                                       By: /s/ Debra J. Basler
                                           ----------------------
                                       Title: Vice President

                                        Address: 231 South LaSalle Street
                                                 Chicago, Illinois  60697

                                        Attention:           Debra Basler

                                        Telecopier No.:      312-987-0889

                                  Exhibit E-46

<PAGE>

                                                                 ATTACHMENT 1 to
                                                           Agreement (Copyright)
Item A.  Copyrights/Mask Work
         --------------------

<TABLE>
<CAPTION>
                     Registered Copyrights/Mask
                     --------------------------
                                Works
                                -----

                 Registration      Registration
     Country          No.              Date         Author(s)         Title
     -------          ---              ----         ---------         -----
<S>              <C>               <C>              <C>          <C>
      U.S.A.       VA457,542         03/22/91         Grant        Artist Cards
                                                    Cummings      Impressionist
                                                                     Painter
                                                                    Portraits
      U.S.A.       VA457,544         03/22/91         Grant       Artist Cards
                                                    Cummings      Impressionist
                                                                      Series
     Canada         385,697          01/20/89         Grant      Nasco Sampling
                                                    Cummings        Equipment
                                                                     Catalog
     Canada         385,698          01/20/89         James            Six
                                                    Stummeier      Photographs

              Copyright/Mask Work Pending Registration Applications
              -----------------------------------------------------

     Country      Serial No.        Filing Date     Author(s)         Title
     -------      ----------        -----------     ---------         -----

          Copyright/Mask Work Registration Applications in Preparation
          ------------------------------------------------------------

                                      Expected
     Country      Docket No.        Filing Date     Author(s)         Title
     -------      ----------        -----------     ---------         -----

Item B.  Copyright/Mask Work Licenses
         ----------------------------

    County or                                       Effective   Expiration  Subject
    Territory      Licensor           Licensee         Date        Date     Matter
    ---------      --------           --------         ----        ----     ------
</TABLE>

                                  Exhibit E-47

<PAGE>

                                                                       EXHIBIT F

                           SUBSIDIARY PLEDGE AGREEMENT
                           ---------------------------

     THIS SUBSIDIARY PLEDGE AGREEMENT, dated as of August 20, 2001 (as modified
from time to time, this ("Pledge Agreement") made by AMERICAN EDUCATIONAL
PRODUCTS, INC., a Colorado corporation (the "Pledgor"), in favor of BANK OF
AMERICA N.A. (together with any successor(s) thereto in such capacity, the
"Agent") for the various financial institutions (individually a "Lender" and
collectively the "Lenders") which are or may from time to time become, parties
to the Credit Agreement referred below.

                              W I T N E S S E T H:

     WHEREAS, pursuant to that certain Amended and Restated Credit Agreement
(Five Year), dated as of May 29, 2001 (as heretofore amended, supplemented and
otherwise modified to the date hereof, the "Credit Agreement"), among Nasco
International, Inc., a Wisconsin corporation (the "Parent"), the lenders parties
thereto, Bank One, Wisconsin, as documentation agent and Bank of America N.A.,
as agent, the lenders have extended loans to the Parent, in part to finance the
AMEP Acquisition and to refinance the Existing Credit Agreement; and

     WHEREAS, in connection with the extension of credit under the Credit
Agreement, the Parent has agreed that the Pledgor shall enter into this Pledge
Agreement to grant to the Agent a continuing pledge of and security interest in,
among other things, the certificates representing all of the outstanding shares
of capital stock of each of the Pledgor's subsidiaries, and all proceeds
thereof, to secure, among other things, all of the Parent's obligations under
the Credit Agreement;

     NOW, THEREFORE, for good and valuable consideration the receipt of which is
hereby acknowledged, and in order to induce the Lenders to make Loans (including
the initial Loans) to the Parent pursuant to the Credit Agreement, in part to
refinance the indebtedness under the Existing Credit Agreement, the Pledgor
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 Agreement
and (b) the following terms shall have the following meanings (such definitions
to be equally applicable to the singular and plural forms thereof):

     "Collateral" is defined in Section 2.1.
      ----------                -----------

                                  Exhibit F-1

<PAGE>

     "Distributions" means all stock dividends, liquidating dividends, shares of
      -------------
stock resulting from (or in connection with the exercise of) stock splits,
reclassifications, warrants, options, non-cash dividends, mergers,
consolidations, and all other distributions (whether similar or dissimilar to
the foregoing) on or with respect to any Pledged Shares or other shares of
capital stock constituting Collateral, but shall not include Dividends.

     "Dividends" means cash dividends and cash distributions with respect to any
      ---------
Pledged Shares or other Pledged Property made in the ordinary course of business
and not a liquidating dividend.

     "Lender Party" means, as the context may require, any Lender or the Agent
      ------------
and each of their respective successors, transferees and assigns.

     "Pledged Note Issuer" means each Person identified in Item B of Attachment
      -------------------
1 hereto as the issuer of the Pledged Note identified opposite the name of such
Person.

     "Pledged Notes" means all promissory notes of any Pledged Note Issuer in
      -------------
the form or substantially the form of Exhibit A hereto which are delivered by
                                      ---------
the Pledgor to the Agent as Pledged Property hereunder, as such promissory
notes, in accordance with Section 4.5, are amended, modified or supplemented
from time to time and together with any promissory note of any Pledged Note
Issuer taken in extension or renewal thereof or substitution therefor.

     "Pledged Property" means all Pledged Shares, all Pledged Notes, and all
      ----------------
other pledged shares of capital stock or promissory notes, all other securities,
all assignments of any amounts due or to become due, all other instruments which
are now being delivered by the Pledgor to the Agent or may from time to time
hereafter be delivered by the Pledgor to the Agent for the purpose of pledge
under this Pledge Agreement or any other Loan Document, and all proceeds of any
of the foregoing.

     "Pledged Share Issuer" means each Person identified in Item A of Attachment
      --------------------                                  ------    ----------
1 hereto as the issuer of the Pledged Shares identified opposite the name of
-
such Person.

     "Pledged Shares" means all shares of capital stock of any Pledged Share
      --------------
Issuer.

     "Secured Obligations" is defined in Section 2.2.
      -------------------                -----------

     "U.C.C." means the Uniform Commercial Code as in effect in the State of
      ------
Illinois.

     SECTION 1.2 U.C.C. Definitions. Unless otherwise defined herein or the
                 ------------------
context otherwise requires, terms for which meanings are provided in the U.C.C.
are used in this Pledge Agreement, including its preamble and recitals, with
such meanings.

                                   ARTICLE II

                                     PLEDGE

     SECTION 2.1 Confirmation and Grant of Security Interest and Pledge. The
                 ------------------------------------------------------
Pledgor hereby pledges, hypothecates, assigns, charges, mortgages, delivers, and
transfers to the Agent,

                                  Exhibit F-2

<PAGE>

for its benefit and the ratable benefit of the Lender Parties, and hereby grants
to the Agent, for its benefit and the ratable benefit of the Lender Parties, a
continuing pledge and security interest in and to, all of the following property
(the "Collateral"):

          (a)  all issued and outstanding shares of capital stock of each
     Pledged Share Issuer identified in Item A of Attachment 1 hereto;

          (b)  all other Pledged Shares issued from time to time;

          (c)  all promissory notes of each Pledged Note Issuer identified in
     Item B of Attachment 1 hereto;

          (d)  all other Pledged Notes issued from time to time;

          (e)  all other Pledged Property, whether now or hereafter delivered to
     the Agent in connection with this Pledge Agreement;

          (f)  all Dividends, Distributions, interest, and other payments and
     rights with respect to any Pledged Property; and

          (g)  all proceeds of any and all of the foregoing.

     SECTION 2.2 Security for Obligations. This Pledge Agreement secures the
                 ------------------------
payment in full of all Obligations now or hereafter existing under the Credit
Agreement, the Notes, the Collateral Documents and each other Loan Document
(including this Pledge Agreement) to which the Parent is or may become a party,
whether for principal, interest, costs, fees, expenses or otherwise.

     SECTION 2.3 Delivery of Pledged Property. All certificates or instruments
                 ----------------------------
representing or evidencing any Collateral, including all Pledged Shares and all
Pledged Notes, shall be delivered to and held by or on behalf of (and, in the
case of the Pledged Notes, endorsed to the order of) the Agent pursuant hereto,
shall be in suitable form for transfer by delivery, and shall be accompanied by
all necessary instruments of transfer or assignment, duly executed in blank, and
all other necessary and appropriate action and approvals shall have been taken
or received to grant to the Agent a first priority fully perfected security
interest in such Collateral.

     SECTION 2.4 Dividends on Pledged Shares and Payments on Pledged Notes. In
                 ---------------------------------------------------------
the event that any Dividend is to be paid on any Pledged Share or any payment of
principal or interest is to be made on any Pledged Note at a time when (x) no
Default of the nature referred to in Section 8.1.9 of the Credit Agreement has
occurred and is continuing, and no (y) Event of Default has occurred and is
continuing, such Dividend or payment may be paid directly to and retained by the
Pledgor. If any such Default or Event of Default has occurred and is continuing,
then any such Dividend or payment shall be paid directly to the Agent (and if
for any reason the Pledgor shall receive such Dividend or payment in such
circumstances, the Pledgor shall hold the same segregated and in trust for the
Agent until paid to the Agent in accordance with Section 4.4).
                                                 -----------

                                  Exhibit F-3

<PAGE>

     SECTION 2.5 Continuing Security Interest; Transfer of Note. This Pledge
                 ----------------------------------------------
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,

          (b)  be binding upon the Pledgor and 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 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 Pledge 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 the 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 Pledgor. Upon any such
termination, the Agent will, at the Pledgor's sole expense, deliver to the
Pledgor, without any representations, warranties or recourse of any kind
whatsoever, all certificates and instruments representing or evidencing all
Pledged Shares, and all Pledged Notes, together with all other Collateral held
by the Agent hereunder, and execute and deliver to the Pledgor such documents as
the Pledgor shall reasonably request to evidence such termination.

                                  ARTICLE III

                         REPRESENTATIONS AND WARRANTIES

     SECTION 3.1 Warranties, etc. The Pledgor represents and warrants unto each
                 ---------------
Lender Party, as at the date of each pledge and delivery hereunder (including
each pledge and delivery of Pledged Shares and each pledge and delivery of a
Pledged Note) by the Pledgor to the Agent of any Collateral, as set forth in
this Article.

     SECTION 3.1.1   Ownership, No Liens, etc. The Pledgor is the legal and
                     ------------------------
beneficial owner of, and has good and marketable title to (and has full right
and authority to pledge and assign) such Collateral, free and clear of all
liens, security interests, options, or other charges or encumbrances, except any
lien or security interest granted pursuant hereto in favor of the Agent.

     SECTION 3.1.2   Valid Security Interest. The delivery of such Collateral to
                     -----------------------
the Agent is effective to create a valid, perfected, first priority security
interest in such Collateral and all proceeds thereof, securing the Obligations.
No filing or other action will be necessary to perfect or protect such security
interest.

     SECTION 3.1.3   As to Pledged Shares. In the case of any Pledged Shares
                     --------------------
constituting such Collateral, all of such Pledged Shares are duly authorized and
validly issued, fully paid, and non-assessable, and constitute all of the issued
and outstanding shares of capital

                                  Exhibit F-4

<PAGE>

stock of each Pledged Share Issuer. The Pledgor has no Subsidiary other than the
Pledged Share Issuers.

     SECTION 3.1.4   As to Pledged Notes. In the case of each Pledged Note, all
                     -------------------
of such Pledged Notes have been duly authorized, executed, endorsed, issued and
delivered, and are the legal, valid and binding obligation of the issuers
thereof, and are not in default.

     SECTION 3.1.5   Authorization, Approval, etc. No authorization, approval,
                     ----------------------------
or other action by, and no notice to or filing with, any governmental authority,
regulatory body or any other Person is required either

          (a)  for the pledge by the Pledgor of any Collateral pursuant to this
     Pledge Agreement or for the execution, delivery, and performance of this
     Pledge Agreement by the Pledgor, or

          (b)  for the exercise by the Agent of the voting or other rights
     provided for in this Pledge Agreement, or, except with respect to any
     Pledged Shares, as may be required in connection with a disposition of such
     Pledged Shares by laws affecting the offering and sale of securities
     generally, the remedies in respect of the Collateral pursuant to this
     Pledge Agreement.

     SECTION 3.1.6   Compliance with Laws. The Pledgor 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 Pledgor or the value of the Collateral or the
worth of the Collateral as collateral security.

                                   ARTICLE IV

                                    COVENANTS

     SECTION 4.1 Protect Collateral; Further Assurances, etc. The Pledgor will
                 -------------------------------------------
not sell, assign, transfer, pledge or encumber in any other manner the
Collateral (except in favor of the Agent hereunder). The Pledgor will warrant
and defend the right and title herein granted unto the Agent in and to the
Collateral (and all right, title and interest represented by the Collateral)
against the claims and demands of all Persons whomsoever. The Pledgor agrees
that at any time, and from time to time, at the expense of the Pledgor, the
Pledgor will promptly execute and deliver all further instruments, and take all
further action, that may be necessary or desirable, or that the Agent may
reasonably request, in order to perfect 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.

     SECTION 4.2 Stock Powers, etc. The Pledgor agrees that all Pledged Shares
                 -----------------
(and all other shares of capital stock constituting Collateral) delivered by the
Pledgor pursuant to this Pledge Agreement will be accompanied by duly executed
undated blank stock powers, or other equivalent instruments of transfer
acceptable to the Agent. The Pledgor will, from time to time upon the request of
the Agent, promptly deliver to the Agent such stock powers, instruments, and
similar documents, satisfactory in form and substance to the Agent, with respect
to the Collateral

                                  Exhibit F-5

<PAGE>

as the Agent may reasonably request and will, from time to time upon the request
of the Agent after the occurrence of any Event of Default, promptly transfer any
Pledged Shares or other shares of common stock constituting Collateral into the
name of any nominee designated by the Agent.

     SECTION 4.3 Continuous Pledge. Subject to Section 2.4, the Pledgor will, at
                 -----------------             -----------
all times, keep pledged to the Agent pursuant hereto all Pledged Shares and all
other shares of capital stock constituting Collateral, all Dividends and
Distributions with respect thereto, all Pledged Notes, all interest, principal
and other proceeds received by the Agent with respect to the Pledged Notes, and
all other Collateral and other securities, instruments, proceeds, and rights
from time to time received by or distributable to the Pledgor in respect of any
Collateral, and will not permit any Pledged Share Issuer to issue any capital
stock which shall not have been immediately duly pledged hereunder on a first
perfected basis.

     SECTION 4.4 Voting Rights; Dividends, etc. The Pledgor agrees:
                 ------------------------------

          (a)  after any Default of the nature referred to in Section 8.1.9 of
     the Credit Agreement or an Event of Default shall have occurred and be
     continuing, promptly upon receipt thereof by the Pledgor and without any
     request therefor by the Agent, to deliver (properly endorsed where required
     hereby or requested by the Agent) to the Agent all Dividends,
     Distributions, all interest, all principal, all other cash payments, and
     all proceeds of the Collateral, all of which shall be held by the Agent as
     additional Collateral for use in accordance with Section 6.3; and
                                                      -----------

          (b)  after any Event of Default shall have occurred and be continuing
     and the Agent has notified the Pledgor of the Agent's intention to exercise
     its voting power under this clause (b) of Section 4.4
                                               -----------

               (i)  the Agent may exercise (to the exclusion of the Pledgor) the
          voting power and all other incidental rights of ownership with respect
          to any Pledged Shares or other shares of capital stock constituting
          Collateral and the Pledgor hereby grants the Agent an irrevocable
          proxy, exercisable under such circumstances, to vote the Pledged
          Shares and such other Collateral; and

               (ii) promptly to deliver to the Agent such additional proxies and
          other documents as may be necessary to allow the Agent to exercise
          such voting power.

All Dividends, Distributions, interest, principal, cash payments and proceeds
which may at any time and from time to time be held by the Pledgor but which the
Pledgor is then obligated to deliver to the Agent, shall, until delivery to the
Agent, be held by the Pledgor separate and apart from its other property in
trust for the Agent. The Agent agrees that unless an Event of Default shall have
occurred and be continuing and the Agent shall have given the notice referred to
in clause (b) of Section 4.4, the Pledgor shall have the exclusive voting power
                 -----------
with respect to any shares of capital stock (including any of the Pledged
Shares) constituting Collateral and the Agent shall, upon the written request of
the Pledgor, promptly deliver such proxies and other documents, if any, as shall
be reasonably requested by the Pledgor which are necessary to allow the Pledgor
to exercise voting power with respect to any such share of capital stock
(including

                                  Exhibit F-6

<PAGE>

any of the Pledged Shares) constituting Collateral; provided, however, that no
vote shall be cast, or consent, waiver or ratification given, or action taken by
the Pledgor that would impair any Collateral or be inconsistent with or violate
any provision of the Credit Agreement or any other Loan Document (including this
Pledge Agreement).

     SECTION 4.5 Additional Undertakings. The Pledgor will not, without the
                 -----------------------
prior written consent of the Agent:

          (a)  enter into any agreement amending, supplementing, or waiving any
     provision of any Pledged Note (including any underlying instrument pursuant
     to which such Pledged Note is issued) or compromising or releasing or
     extending the time for payment of any obligation of the maker thereof;

          (b)  take or omit to take any action the taking or the omission of
     which would result in any impairment or alteration of any obligation of the
     maker of any Pledged Note or other instrument constituting Collateral; or

          (c)  make any demand under any Pledged Note at any time when a Default
     of the nature referred to in Section 8.1.9 of the Credit Agreement, or any
     Event of Default, has occurred and is continuing.

                                   ARTICLE V

                                    THE AGENT

     SECTION 5.1 Agent Appointed Attorney-in-Fact. The Pledgor hereby
                 --------------------------------
irrevocably appoints the Agent the Pledgor's attorney-in-fact, with full
authority in the place and stead of the Pledgor and in the name of the Pledgor
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 Pledge Agreement, including without limitation:

          (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; and

          (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.

The Pledgor 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 Pledgor fails to perform any
                 -----------------
agreement contained herein, the Agent may itself perform, or cause performance
of, such agreement, and

                                  Exhibit F-7

<PAGE>

the expenses of the Agent incurred in connection therewith shall be payable by
the Pledgor pursuant to Section 6.4.
                        -----------

     SECTION 5.3 Agent Has No Duty. 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 responsibility for (a) ascertaining or taking
action with respect to calls, conversions, exchanges, maturities, tenders or
other matters relative to any Pledged Property, whether or not the Agent has or
is deemed to have knowledge of such matters, or (b) taking 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 Pledgor 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. If any Event of Default shall have occurred
                 ----------------
and be continuing:

          (a)  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
     U.C.C. (whether or not the U.C.C. applies to the affected Collateral) and
     also may, 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 Pledgor agrees that, to the extent notice of sale shall be
     required by law, at least ten days' prior notice to the Pledgor 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.

          (b)  The Agent may

                                  Exhibit F-8

<PAGE>

               (i)   transfer all or any part of the Collateral into the name of
          the Agent or its nominee, with or without disclosing that such
          Collateral is subject to the lien and security interest hereunder,

               (ii)  notify the parties obligated on any of the Collateral to
          make payment to the Agent of any amount due or to become due
          thereunder,

               (iii) 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 obligations of any nature of any party
          with respect thereto,

               (iv)  endorse any checks, drafts or other writings in the
          Pledgor's name to allow collection of the Collateral,

               (v)   take control of any proceeds of the Collateral, and

               (vi)  execute (in the name, place and stead of the Pledgor)
          endorsements, assignments, stock powers and other instruments of
          conveyance or transfer with respect to all or any of the Collateral.

     SECTION 6.2 Compliance with Restrictions. The Pledgor agrees that in any
                 ----------------------------
sale of any of the Collateral whenever an Event of Default shall have occurred
and be continuing, the Agent is hereby authorized to comply with any limitation
or restriction in connection with such sale as it may be advised by counsel is
necessary in order to avoid any violation of applicable law (including
compliance with such procedures as may restrict the number of prospective
bidders and purchasers, require that such prospective bidders and purchasers
have certain qualifications, and restrict such prospective bidders and
purchasers to persons who will represent and agree that they are purchasing for
their own account for investment and not with a view to the distribution or
resale of such Collateral), or in order to obtain any required approval of the
sale or of the purchaser by any governmental regulatory authority or official,
and the Pledgor further agrees that such compliance shall not result in such
sale being considered or deemed not to have been made in a commercially
reasonable manner, nor shall the Agent be liable nor accountable to the Pledgor
for any discount allowed by the reason of the fact that such Collateral is sold
in compliance with any such limitation or restriction.

     SECTION 6.3 Application of Proceeds. 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 additional collateral security for, or then or at any time
thereafter be applied (after payment of any amounts payable to the Agent
pursuant to Section 10.3 of the Credit Agreement and Section 6.4) in whole or in
                                                     -----------
part by the Agent 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, and the termination of all
Commitments, shall be paid over to the Pledgor or to whomsoever may be lawfully
entitled to receive such surplus.

                                  Exhibit F-9

<PAGE>

     SECTION 6.4 Indemnity and Expenses. The Pledgor hereby indemnifies and
                 ----------------------
holds harmless the Agent from and against any and all claims, losses and
liabilities arising out of or resulting from this Pledge Agreement (including
enforcement of this Pledge Agreement), except claims, losses or liabilities
resulting from the Agent's gross negligence or willful misconduct. Upon demand,
the Pledgor will pay to the Agent the amount of any and all reasonable expenses,
including the reasonable fees and disbursements of its counsel (including the
reasonable allocated cost of internal legal services and all disbursements of
internal counsel) and of any experts and agents, which the Agent may incur in
connection with:

          (a)  the administration of this Pledge Agreement, the Credit Agreement
     and each other Loan Document;

          (b)  the custody, preservation, use or operation of, or the sale of,
     collection from or other realization upon, any of the Collateral;

          (c)  the exercise or enforcement of any of the rights of the Agent
     hereunder; or

          (d)  the failure by the Pledgor to perform or observe any of the
     provisions hereof.

                                  ARTICLE VII

                            MISCELLANEOUS PROVISIONS

     SECTION 7.1 Loan Document. This Pledge 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 thereof (including as to the WAIVER OF ANY JURY TRIAL with
respect to any litigation relating to or arising out of any matter herein).

     SECTION 7.2 Amendments, etc. No amendment to or waiver of any provision of
                 ---------------
this Pledge Agreement nor consent to any departure by the Pledgor 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 it is given.

     SECTION 7.3 Protection of Collateral. The Agent may from time to time, at
                 ------------------------
its option, perform any act which the Pledgor agrees hereunder to perform and
which the Pledgor shall fail to perform after being requested in writing so to
perform (it being understood that no such request need be given after the
occurrence and during the continuance of an Event of Default) and the Agent may
from time to time take any other action which the Agent reasonably deems
necessary for the maintenance, preservation or protection of any of the
Collateral or of its security interest therein.

     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 Pledgor, mailed or telegraphed or delivered 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

                                  Exhibit F-10

<PAGE>

Credit Agreement 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 Pledge
                 ----------------
Agreement are for convenience of reference only, and shall not affect the
construction of this Pledge Agreement.

     SECTION 7.6 Severability. Wherever possible each provision of this Pledge
                 ------------
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Pledge 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 Pledge Agreement.

     SECTION 7.7 Governing Law, Entire Agreement, etc. THIS PLEDGE 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
NEW YORK. THIS PLEDGE 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.

                                  Exhibit F-11

<PAGE>

     IN WITNESS WHEREOF, the parties hereto have caused this Pledge 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, INC.

                                  By: /s/ Dean T. Johnson
                                      --------------------------------------
                                          Title: Chief Financial Officer

                                  Address:     401 Hickory Street
                                               Fort Collins, Colorado 80522

                                  Attention:   Michael Anderson
                                               General Manager

                                  Telecopier No.: 970-484-3733

                                  Copy to:     Nasco International, Inc.
                                               901 Janesville Avenue
                                               Fort Atkinson, Wisconsin
                                               53528-0901

                                  Attention:   Dean T. Johnson
                                               Chief Financial Officer

                                  Telecopier No.: 414-563-0234

                                  ACCEPTED:

                                  BANK OF AMERICA, N.A., as Agent

                                  By: /s/ Debra Basler
                                     -------------------------------
                                     Title:

                                  Address: 231 South LaSalle Street
                                           Chicago, Illinois 60697

                                  Telecopier No.: 312-987-0889

                                  Attention: Debra Basler
                                             Vice President

                                  Exhibit F-12

<PAGE>

                                                                   SCHEDULE I
                                                                       to
                                                                Pledge Agreement

Item A.    Pledged Shares
        --------------------------
                                        Authorized   Outstanding    % of Shares
           Pledged Share Issuer         Shares       Shares         Pledged
        --------------------------      ------       ------         -------

        Hubbard Scientific, Inc.       100,000,000      100            100%
        Scott Resources, Inc.               50,000    1,000            100%

Item B.    Pledged Notes
        --------------------------
           NONE

                                  Exhibit F-13

<PAGE>

                                                                       EXHIBIT G

                          SUBSIDIARY SECURITY AGREEMENT
                          -----------------------------

     THIS SUBSIDIARY SECURITY AGREEMENT, dated as of August 20, 2001 (as
modified from time to time, this "Security Agreement"), made by AMERICAN
                                  ------------------
EDUCATIONAL PRODUCTS, INC., a Colorado corporation (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 Agreement
referred to below.

                              W I T N E S S E T H:
                              -------------------

     WHEREAS, pursuant to that certain Amended and Restated Credit Agreement
(Five Year), dated as of May 29, 2001 (as heretofore amended, supplemented and
otherwise modified to the date hereof, the "Credit Agreement"), among Nasco
                                            ----------------
International, Inc., a Wisconsin corporation (the "Parent"), the lenders parties
thereto, Bank One Wisconsin, as documentation agent and Bank of America, N.A.,
as agent, the lenders have extended loans to the Parent, in part to finance the
AMEP Acquisition and to refinance the Existing Credit Agreement; and

     WHEREAS, in connection with the extension of credit under the Credit
Agreement, the Parent has 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, and in order to induce the Lenders to make Loans (including
the initial Loans) to the Parent from time to time pursuant to the Credit
Agreement, in part to refinance the indebtedness under the Existing Credit
Agreement, the Grantors hereby agree 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 Agreement
and (b) the

                                  Exhibit G-1

<PAGE>

following terms shall have the following meanings (such definitions to be
equally applicable to the singular and plural forms thereof):

     "Collateral" is defined in Section 2.1.
      ----------                -----------

     "Collateral Account" is defined in clause (c) of Section 4.1.2.
      ------------------                ----------    -------------

     "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 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 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.

                                  Exhibit G-2

<PAGE>

     "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.

     "Inventory" is defined in clause (b) of Section 2.1.
      ---------                ----------    -----------

     "Lender Party" means, as the context may require, any Lender or the Agent
      ------------
and each of its respective successors, transferees and assigns.

     "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 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.

     "Receivables" is defined in clause (c) of Section 2.1.
      -----------                ----------    -----------

     "Related Contracts" is defined in clause (c) of Section 2.1.
      -----------------                ----------    -----------

     "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;

                                  Exhibit G-3

<PAGE>

          (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 icense 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 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 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.

     "U.C.C." means the Uniform Commercial Code, as in effect in the State of
      ------
Illinois.

     SECTION 1.2 U.C.C. Definitions. Unless otherwise defined herein or the
                 ------------------
context otherwise requires, terms for which meanings are provided in the U.C.C.
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 and to all of the following, whether now or hereafter
existing or acquired (with respect to any Grantor, the "Collateral"):
                                                        ----------

          (a)  all equipment in all of its forms of such Grantor, wherever
     located, and all parts thereof and all accessions, additions, attachments,
     improvements, substitutions and

                                  Exhibit G-4

<PAGE>

     replacements thereto and therefor (any and all of the foregoing being, with
     respect to any Grantor, the "Equipment");
                                  ---------

          (b)  all inventory in all of its forms of such Grantor, wherever
     located, including

               (i)    all raw materials and work in process therefor, finished
                      goods thereof, and materials used or consumed in the
                      manufacture or production thereof,

               (ii)   all goods in which such Grantor has an interest in mass or
                      a joint or other interest or right of any kind (including
                      goods in which the Grantor has an interest or right as
                      consignee), and

               (iii)  all goods which are returned to or repossessed by such
                      Grantor, and

               (iv)   live specimens including frogs

and all accessions thereto, products thereof and documents therefor (any and all
such inventory, materials, goods, accessions, products and documents, with
respect to any Grantor, being the "Inventory");
                                   ---------

          (c)  all accounts, contracts, contract rights, chattel paper,
     documents and general intangibles of such Grantor, whether or not arising
     out of or in connection with the sale or lease of goods or the rendering of
     services, and 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 such accounts, contracts, contract rights,
     chattel paper, documents, instruments, and general intangibles (any and all
     such accounts, contracts, contract rights, chattel paper, documents,
     instruments, and general intangibles being the "Receivables", and any and
                                                     -----------
     all such security agreements, guaranties, leases and other contracts being,
     with respect to any Grantor, the "Related Contracts");
                                       -----------------

          (d)  all Intellectual Property Collateral of such Grantor;

          (e)  all certificated securities;

          (f)  all investment property and financial assets;

          (g)  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;
     -----------

          (h)  all of such Grantor's 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

                                  Exhibit G-5

<PAGE>

          (i)  all products, offspring, rents, issues, profits, returns, income
     and proceeds of and from any and all of the foregoing Collateral (including
     proceeds which constitute property of the types described in clauses (a),
                                                                  -----------
     (b), (c), (d), (e), (f), (g) and (h), 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 Agreement,
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
otherwise, subject, however, to any contrary provisions in such assignment or
transfer, and to the provisions of Section 10.11 and Article IX of the 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 Grantors. Upon any such termination, the Agent will, at the
Grantor's sole expense, 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

                                  Exhibit G-6

<PAGE>

     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. Such Grantor has not been
known by any legal name different from the one set forth on the signature page
hereto for such Grantor. Such Grantor is not a "retail merchant" within the
meaning of Section 9102 of the Uniform Commercial Code - Secured Transactions of
the State of California. 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 Agreement. 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.

     SECTION 3.1.3 Possession and Control. Such Grantor has exclusive possession
                   ----------------------
and control of the Equipment and Inventory.

                                  Exhibit G-7

<PAGE>

     SECTION 3.1.4 Negotiable Documents, Instruments and Chattel Paper. Such
                   ---------------------------------------------------
Grantor has, contemporaneously herewith, 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 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

                                  Exhibit G-8

<PAGE>

          (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 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
                                                      -------

                                  Exhibit G-9

<PAGE>

     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
     ----------         -------------
     the 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 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.

                                  Exhibit G-10

<PAGE>

     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.

          (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,

                                  Exhibit G-11

<PAGE>

               (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 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

                                  Exhibit G-12

<PAGE>

     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 (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. 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.

          (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:
                   -------------------------

                                  Exhibit G-13

<PAGE>

          (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 Agreement; 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 Agreement.

          (c)  Such Grantor will defend the right, title and interest of the
     Collateral 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. Such Grantor will, upon obtaining knowledge thereof,
                   -------
advise the Collateral 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 9-402(7) of the U.C.C. (or any other then applicable provision of the
U.C.C.) unless such Grantor shall have given the Collateral Agent at least 90
days' prior written notice thereof or shall have delivered to the Collateral
Agent (i) acknowledgment copies of UCC-3 financing statements duly executed and
duly filed in each jurisdiction in which U.C.C. 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 Collateral 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 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)  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

                                  Exhibit G-14

<PAGE>

     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 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, 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

                                  Exhibit G-15

<PAGE>

          (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 U.C.C. (whether or not the U.C.C. 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 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

                                  Exhibit G-16

<PAGE>

                     (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
     Collateral 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
     Collateral 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 Collateral 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 Collateral 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 Collateral 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 Collateral Agent may elect,
     the Grantors remaining liable for any deficiency

                                  Exhibit G-17

<PAGE>

     remaining unpaid after such application and all fees and expenses incurred
     by the Collateral Agent in collecting such deficiency, and only after so
     paying over such net proceeds and after the payment by the Collateral Agent
     of any other amount required by any provision of law, including, without
     limitation, Section 9-504(1)(c) of the U.C.C., need the Collateral 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 Collateral 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
     agrees not to assert any rights or privileges which it may acquire under
     Section 9-112 of the U.C.C.

     For the purpose of enabling the Collateral Agent to exercise rights and
remedies under this Agreement and any Security Agreement Supplements, at such
time as the Collateral 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 Collateral
Agent and to the extent the Collateral 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 Collateral Agent an
irrevocable, non-exclusive license (exercisable without payment of royalty or
other compensation to the Borrower), which license shall be exercisable by the
Collateral 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 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
Collateral 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 Collateral 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 Collateral 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.

                                  Exhibit G-18

<PAGE>

     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 willful 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 Agreement 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 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 7.3 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 it, addressed to
each Grantor at the address set 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 Agreement, 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.

                                  Exhibit G-19

<PAGE>

     SECTION 7.4 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 7.5 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 7.6 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.

                                  Exhibit G-20

<PAGE>

     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, INC.

                                      By: /s/ Dean T. Johnson
                                          ---------------------------------
                                       Title: Chief Financial Officer

                                      Address:      401 Hickory Street
                                                    Fort Collins, Colorado 80522

                                      Attention:    Michael Anderson
                                                    General Manager

                                      Telecopier No.: 970-484-3733

                                      Copy to:      Nasco International, Inc.
                                                    901 Janesville Avenue
                                                    Fort Atkinson, Wisconsin
                                                    53538-0901

                                      Attention:    Dean T. Johnson
                                                    Chief Financial Officer

                                      Telecopier No.: 414-563-0234

                                  Exhibit G-21

<PAGE>

                                      SCOTT RESOURCES, INC.

                                      By: /s/ Dean T. Johnson
                                          -----------------------------
                                       Title: Chief Financial Officer

                                      Address:      401 Hickory Street
                                                    Fort Collins, Colorado 80522

                                      Attention:    Michael Anderson
                                                    General Manager

                                      Telecopier No.: 970-484-3733

                                      Copy to:      Nasco International, Inc.
                                                    901 Janesville Avenue
                                                    Fort Atkinson, Wisconsin
                                                    53538-0901

                                      Attention:    Dean T. Johnson
                                                    Chief Financial Officer

                                      Telecopier No.: 414-563-0234

                                  Exhibit G-22

<PAGE>

                                        HUBBARD SCIENTIFIC, INC.

                                        By: /s/ Dean T. Johnson
                                            ----------------------------------
                                         Title: Chief Financial Officer

                                        Address:      1120 Halbleib Road
                                                      Chippewa Falls, Wisconsin
                                                      54729

                                        Attention:    Thomas C. Halbleib
                                                      General Manager

                                        Telecopier No.: 715-723-8021

                                        Copy to:      Nasco International, Inc.
                                                      901 Janesville Avenue
                                                      Fort Atkinson, Wisconsin
                                                      53538-0901

                                        Attention:    Dean T. Johnson
                                                      Chief Financial Officer

                                        Telecopier No.: 414-563-0234

                                  Exhibit G-23

<PAGE>

                                        ACCEPTED:

                                        BANK OF AMERICA, N.A., as Agent

                                        By: /s/ Debra Basler
                                            -----------------------------
                                           Title:

                                        Address:    231 South LaSalle Street
                                                    Chicago, Illinois 60697

                                        Telecopier No.: 312-987-0889

                                        Attention:  Debra Basler
                                                    Vice President

                                  Exhibit G-24

<PAGE>

                                                                       EXHIBIT A
                                                                              to
                                                              Security Agreement

                                    AGREEMENT
                                    ---------
                                   (Trademark)

      THIS AGREEMENT (TRADEMARK), dated as of August 20, 2001 (as modified from
time to time, this "Agreement"), made by AMERICAN EDUCATIONAL PRODUCTS, INC., a
                    ---------
Colorado corporation (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 Agreement referred to below.

                               W I T N E S S E T H
                               -------------------

      WHEREAS, pursuant to that certain Amended and Restated Credit Agreement
(Five Year), dated as of May 29, 2001 (as heretofore amended, supplemented and
otherwise modified to the date hereof, the "Credit Agreement"), among Nasco
                                            ----------------
International, Inc., a Wisconsin corporation (the "Parent") the lenders parties
thereto, Bank One Wisconsin as documentation agent, and Bank of America, N.A.,
as agent, the lenders have extended loans to the Parent, in part to finance the
AMEP Acquisition and to refinance the Existing Credit Agreement; and

      WHEREAS, it is a condition precedent to any extension of credit under the
Credit Agreement, 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, and in order to induce the Lenders to make Loans
(including the initial Loans) to the Parent from time to time pursuant to the
Credit Agreement, in part to refinance the indebtedness under the Existing
Credit Agreement, 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

                                  Exhibit G-25

<PAGE>

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.

      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

                                  Exhibit G-26

<PAGE>

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.

                                  Exhibit G-27

<PAGE>

      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, INC.

                                By: /s/ Dean T. Johnson
                                    ----------------------
                                Title: Chief Financial Officer

                                Address:           401 Hickory Street
                                                   Fort Collins, Colorado 80522

                                Attention:         Michael Anderson
                                                   General Manager

                                Telecopier No.:    970-484-3733

                                Copy to:           Nasco International, Inc.
                                                   901 Janesville Avenue
                                                   Fort Atkinson, Wisconsin
                                                   53538-0901

                                Attention:         Dean T. Johnson
                                                   Chief Financial Officer

                                Telecopier No.:    414-563-0234

                                  Exhibit G-28

<PAGE>

                                 SCOTT RESOURCES, INC.

                                 By: /s/ Dean T. Johnson
                                     ----------------------
                                 Title: Chief Financial Officer

                                 Address:           401 Hickory Street
                                                    Fort Collins, Colorado 80522

                                 Attention:         Michael Anderson
                                                    General Manager

                                                    Telecopier No.: 970-484-3733

                                 Copy to:           Nasco International, Inc.
                                                    901 Janesville Avenue
                                                    Fort Atkinson, Wisconsin
                                                    53538-0901

                                 Attention:         Dean T. Johnson
                                                    Chief Financial Officer

                                 Telecopier No.:    414-563-0234

                                  Exhibit G-29

<PAGE>

                               HUBBARD SCIENTIFIC, INC.

                               By: /s/ Dean T. Johnson
                                   ----------------------
                               Title: Chief Financial Officer

                               Address:          1120 Halbleib Road
                                                 Chippewa Falls, Wisconsin 54729

                               Attention:        Thomas C. Halbleib
                                                 General Manager

                                                 Telecopier No.: 715-723-8021

                               Copy to:          Nasco International, Inc.
                                                 901 Janesville Avenue
                                                 Fort Atkinson, Wisconsin
                                                 53538-0901

                               Attention:        Dean T. Johnson
                                                 Chief Financial Officer

                               Telecopier No.:   414-563-0234

                                  Exhibit G-30

<PAGE>

                                     ACCEPTED:

                                     BANK OF AMERICA, N.A., as Agent

                                     By: /s/ Debra Basler
                                        -----------------------------
                                        Title:

                                     Address:           231 South LaSalle Street
                                                        Chicago, Illinois 60697

                                     Telecopier No.:    312-987-0889

                                     Attention:         Debra Basler
                                                        Vice President

                                  Exhibit G-31

<PAGE>

                                                                       EXHIBIT H

                           FORM OF OPINION OF COUNSEL

                                             __________, 2001

Bank of America, N.A.
  as Administrative Agent
231 South LaSalle Street
Chicago, Illinois  60697

        -and-

The Lenders from time
  to time parties to the
  Credit Agreement referred
  to below.

Re:  Amended and Restated Credit Agreement (Five Year) (herein referred to as
     the "Credit Agreement (Five Year)") among Nasco International, Inc., a
          ---------------------------
     Wisconsin corporation (the "Borrower"), the financial institutions from
                                 --------
     time to time parties thereto (the "Lenders"), Bank One, Wisconsin, as
                                        -------
     documentation agent and Bank of America, N.A., as administrative agent for
     the Lenders (in such capacity, the "Five Year Agreement Agent") and the
                                         -------------------------
     Amended and Restated Credit Agreement (364 Days) (herein referred to as the
     "Credit Agreement (364 Days) and together with the Credit Agreement (Five
      ----------------
     Years) as the "Credit Agreements") among the Borrower, the financial
                    -----------------
     institutions from time to time parties thereto, Bank One, Wisconsin, as
     documentation agent and Bank of America, N.A. as administrative agent (in
     such capacity, the "364 Day Agent" and in both its capacities as the Five
     Year Agent and the 364 Day Agent, the "Agent").
                                            -----

Ladies and Gentlemen:

     I am the General Counsel of the Borrower and this letter is being furnished
to you as a condition to the occurrence on the date hereof of the Effective
Dates (as defined in the Credit Agreements).

     I have examined executed counterparts of (a) the Credit Agreements, (b) the
Notes delivered on the Effective Date to the Agent for the account of Bank One,
Wisconsin and Bank of America, N.A. under the Credit Agreements and (c)
originals or copies certified to my satisfaction of all such corporate records
of the Borrower and agreements and other instruments and certificates of public
officials and officers and representatives of the Borrower, and I have made such
other investigations, reviewed such other documents and considered such
questions of

                                  Exhibit H-1

<PAGE>

law, as in each case I have deemed necessary or appropriate in connection with
the opinions hereinafter expressed.

     Based on the foregoing, I am of the opinion that:

     1.   The Borrower is a corporation duly organized, validly existing and in
          good standing under the laws of the State of Wisconsin and is duly
          qualified to do business and in good standing as a foreign corporation
          in each jurisdiction where the nature of its business makes such
          qualification necessary and where the failure to so qualify might have
          a Materially Adverse Effect (as defined in each Credit Agreement).

     2.   The Borrower has full power, authority and legal right to conduct its
          business substantially as presently conducted by it and to own its
          properties, to execute and deliver the Credit Agreements and the
          Notes, to borrow under the Credit Agreements, and to perform and
          observe its obligations under, and the terms and provisions of, the
          Credit Agreements.

     3.   The execution and delivery by the Borrower of the  Credit Agreements
          and the Notes and the performance and observance by it of its
          obligations under, and the terms and provisions of, and the borrowings
          by it under and the grant of the security interests and other Liens
          (as defined in each Credit Agreement) under, the Credit Agreements and
          the Notes, have been duly authorized by all necessary corporate
          action, require no governmental registrations, filings, consents or
          approvals, and do not violate or contravene or require any consent
          under (i) any provision of the certificate of incorporation or by-laws
          of the Borrower, (ii) any law or governmental regulation, (iii) any
          order or decree of any court or governmental agency, or (iv) any
          indenture, agreement or other instrument, in each case to which the
          Borrower is a party or which is binding upon any of its properties,
          and will not result in the creation or imposition of any security
          interest in or other Lien on any of its properties pursuant to the
          provisions of any agreement (excluding, however, the Credit Agreements
          and any instrument executed pursuant thereto) or other instrument
          binding upon or applicable to it.

     4.   The Credit Agreements and the Notes have been duly executed and
          delivered on behalf of the Borrower, and the Credit Agreements and the
          Notes constitute the legal, valid and binding obligations of the
          Borrower enforceable against the Borrower in accordance with their
          respective terms, subject, as to enforcement only, to bankruptcy,
          insolvency, reorganization, moratorium or similar laws at the time in
          effect affecting the enforceability of rights of creditors generally.

     5.   Neither the Borrower nor any Significant Subsidiary (as defined in
          each Credit Agreement) is in default (including after giving effect to
          the execution and delivery of the Credit Agreements and the making of
          the initial Loans and the consummation of the other transactions
          contemplated therein) under any agreement or instrument governing any
          Indebtedness which would cause an Event of Default under Section 8.1.5
          of either Credit Agreement or is in default under any law or
          governmental regulation or court decree or order the default

                                  Exhibit H-2

<PAGE>

          under which would have a Materially Adverse Effect, nor am I aware of
          any facts or circumstances which would give rise to any such default.

     6.   No litigation, labor controversy, arbitration or governmental
          investigation or proceeding of the character referred to in Section
          6.7 of either Credit Agreement is pending, or, to the best of my
          knowledge (after due inquiry), threatened.

     I am a member of the Bar of the State of New York and I do not express any
opinions herein concerning any laws other than the State of New York. I note
that the Loan Documents are governed by Illinois law. For the purpose of the
opinion set forth in paragraph 4, however, I have assumed that New York law was
applicable.

                                                     Very truly yours,

                                                     Steven B. Lapin

                                  Exhibit H-3

<PAGE>

                                                                       EXHIBIT I

FORM OF LENDER ASSIGNMENT AGREEMENT

To:      Nasco International, Inc.
         901 Janesville Avenue
         Fort Atkinson, Wisconsin 53538

To:      Bank of America, N.A., as Agent
         231 South LaSalle Street
         Chicago, Illinois 60697

                            NASCO INTERNATIONAL, INC.
                            -------------------------

Ladies and Gentlemen:

     We refer to clause (b) of Section 10.11.1 of the Amended and Restated
Credit Agreement (Five Year), dated as of May 29, 2001 (together with all
amendments and other modifications, if any, from time to time thereafter made
thereto, the "Credit Agreement"), among Nasco International, Inc., a Wisconsin
              ----------------
corporation (the "Borrower"), the various financial institutions which are, or
                  --------
shall from time to time become, parties thereto (the "Lenders"), Bank One,
                                                      -------
Wisconsin as documentation agent and Bank of America, N.A. as administrative
agent (in such capacity, the "Agent") for the Lenders. Unless otherwise defined
                              -----
herein or the context otherwise requires, terms used herein have the meanings
provided in the Credit Agreement.

     This agreement is delivered to you pursuant to clause (b) of Section
10.11.1 of the Credit Agreement and also constitutes notice to each of you,
pursuant to Section 10.11.1 of the Credit Agreement, of the assignment and
delegation to_________________________________ (the "Assignee") of __ % of the
                                                     --------
Loans and Commitment of________________ (the "Assignor") outstanding under the
                                              --------
Credit Agreement on the date hereof and of all related rights and obligations
under the Credit Agreement and the other Loan Documents. After giving effect to
the foregoing assignment and delegation, the Assignor's and the Assignee's
Percentages for the purposes of the Credit Agreement are set forth opposite such
Person's name on the signature pages hereof.

     [Add paragraph dealing with accrued interest and any fees with respect to
Loans assigned.]

     The Assignee hereby acknowledges and confirms that it has received and
reviewed to its satisfaction a copy of the Credit Agreement and the exhibits
related thereto, together with copies of the documents which were required to be
delivered under the Credit Agreement as a condition to the making of the Loans
thereunder. The Assignee further confirms and agrees that in becoming a Lender
and in making its Commitment and Loans under the Credit Agreement, such

                                  Exhibit I-1

<PAGE>

actions have and will be made without recourse to, or representation or warranty
by, the Agent or the Assignor, and expressly confirms for the benefit of the
Agent each of the provisions set forth in Article IX of the Credit Agreement.

     Except as otherwise provided in the Credit Agreement, effective as of the
date of acceptance hereof by the Agent

          (a)  the Assignee

               (i)    shall be deemed automatically to have become a party to
          the Credit Agreement, have all the rights and obligations of a
          "Lender" under the Credit Agreement and the other Loan Documents as if
          it were an original signatory thereto to the extent specified in the
          second paragraph hereof; and

               (ii)   agrees to be bound by the terms and conditions set forth
          in the Credit Agreement and the other Loan Documents as if it were an
          original signatory thereto; and

          (b)  the Assignor shall be released from its obligations under the
     Credit Agreement and the other Loan Documents to the extent specified in
     the second paragraph hereof.

     The Assignor and the Assignee hereby agree that the [Assignor] [Assignee]
will pay to the Agent the processing fee referred to in Section 10.11.1 of the
Credit Agreement upon the delivery hereof.

     The Assignee hereby advises each of you of the following administrative
details with respect to the assigned Loans and Commitment and requests the Agent
to acknowledge receipt of this document:

          (A)  Address for Notices:

               Domestic Office:

               Address:

               Attention:

               Telephone:

               Facsimile:

               Eurodollar Office

               Address:

               Attention:

               Telephone:

                                  Exhibit I-2

<PAGE>

               Facsimile:

          (B)  Payment Instructions:

     The Assignee agrees to furnish the tax form required by the last paragraph
of Section 4.6. (if so required) of the Credit Agreement no later than the date
of acceptance hereof by the Agent.

                                  Exhibit I-3

<PAGE>

     This Agreement may be executed by the Assignor and Assignee and accepted by
the Agent in separate counterparts, each of which when so executed and delivered
shall be deemed to be an original and all of which taken together shall
constitute one and the same agreement, and shall be governed by the internal
laws of the State of Illinois.

Adjusted Percentage                                [ASSIGNOR]
-------------------

Commitment                  ______%                By:__________________________
and Loans:                                            Title:

Adjusted Percentage                                [ASSIGNEE]
-------------------

Commitment                  ______%                By:__________________________
and Loans:                                            Title:

Accepted and Acknowledged
this  ___ day of __________, 200_

Bank of America, N.A. as Agent

By: _____________________________
         Title:

                                  Exhibit I-4

<PAGE>

                                                                       EXHIBIT J

                                  CONFIRMATION

                          Dated as of _______ ___, 2001

To:  Bank of America, N.A., individually and as administrative agent (in such
     capacity, the "Administrative Agent"), and the other financial institutions
     party to the Restated Credit Agreement referred to below

     Please refer to the following:

          (a)  the Amended and Restated Credit Agreement dated as of the date
     hereof (the "Restated Credit Agreement") among NASCO International, Inc.
     (the "Borrower"), certain lenders, Bank One, Wisconsin, as documentation
     agent and the Agent;

          (b)  the Pledge Agreement dated as of March 31, 2000 (as amended, the
     "Pledge Agreement") between Borrower and the Agent;

          (c)  the Security Agreement dated as of March 31, 2000 (as amended,
     the "Security Agreement") between the Borrower and the Agreement;
          ------------------

          (d)  the Original Mortgage dated as of June 25, 1992 executed by the
     Borrower in favor of the Agent; and

          (e)  the Modesto Mortgage dated as of August 5, 1997 executed by the
     Borrower in favor of the Agent.

Each document referred to in items (b) through (e) above is called a "Credit
                             ---------         ---                    ------
Document". Capitalized terms used but not defined herein shall have the meanings
--------
set forth in the Restated Credit Agreement;

     The Borrower hereby confirms to the Lenders (as defined in the Restated
Credit Agreement) and the Agent that each Credit Document to which the Borrower
is a party continues in full force and effect on the date hereof after giving
effect to this Confirmation and is the legal, valid and binding obligation of
the Borrower, enforceable against the Borrower in accordance with its terms.

                                  Exhibit J-1

<PAGE>

     IN WITNESS WHEREOF, the Borrower has executed this Confirmation to be duly
executed and delivered by its officer thereunto duly authorized as the date
first above written.

                                    NASCO INTERNATIONAL, INC.

                                    By:________________________________
                                           Title:

                                    Address: 901 Janesville Avenue
                                             Fort Atkinson, Wisconsin 53538-0901

                                             Attention: Dean T. Johnson
                                                        Chief Financial Officer

                                copy to:
                                           Geneve Corporation
                                           96 Cummings Point Road
                                           Stamford, Connecticut 06902

                                             Telecopier No.  203-348-3103

                                             Attention: Theresa Herbert
                                                        Vice President

Accepted and Agreed as of ______________________ , 2001

BANK OF AMERICA, N.A.

By: _______________________________
         Title:

                                  Exhibit J-2

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