PAGE 1 of 67 PAGES
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
THE ARISTOTLE CORPORATION
(Name of Issuer)
Common Stock, par value $0.01 per share
(Title of Class of Securities)
040 448201
(Cusip Number)
David T. Kettig
96 Cummings Point Road Stamford,
CT 06902 (203) 358-8000
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
January 2, 1998
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule
13G to report the acquisition which is the subject of this
Schedule 13D, and is filing this schedule because of Rule 13d-1
(b)(3) or (4), check the following box [ ].
Note: Six copies of this statement, including all exhibits, should
be filed with the Commission. See Rule 13d-1(a) for other parties
to whom copies are to be sent.
*The remainder of this cover page shall be filled out for a
reporting person's initial filing on this form with respect to the
subject class of securities, and for any subsequent amendment
containing information which would alter disclosures provided in
a prior cover page.
The information required on the remainder of this cover page shall
not be deemed to be "filed" for the purpose of Section 18 of the
Securities Exchange Act of 1934 ("Act") or otherwise subject to
the liabilities of that section or the Act but shall be subject to
all other provisions of the Act (however, see the Notes).
Cusip No. 040 448201
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1. NAMES OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Geneve Corporation
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [ ]
(b) [ ]
3. SEC USE ONLY
4. SOURCE OF FUNDS*
WC
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) OR 2(e) [ ]
6. CITIZENSHIP OR PLACE OF ORGANIZATION
DELAWARE
NUMBER 7. SOLE VOTING POWER
OF SHARES 568,131 SHARES
BENEFICIALLY -------------
OWNED BY EACH 8. SHARED VOTING POWER
REPORTING 0 SHARES (See Item 5)
PERSON WITH -------------
9. SOLE DISPOSITIVE POWER
568,131 SHARES
-------------
10. SHARED DISPOSITIVE POWER
0 SHARE (See Item 5)
-------------
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
568,131 SHARES
12. CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES*
[ ]
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
33.6%
14. TYPE OF REPORTING PERSON*
CO
*SEE INSTRUCTIONS
<PAGE>
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Item 1. Security and Issuer.
-------------------
This Statement relates to the Common Stock, par value
$.01 per share ("Common Stock"), of The Aristotle
Corporation, a Delaware corporation (the "Company"), which
has its principal executive offices at 78 Olive Street,
New Haven, Connecticut 06511.
Item 2. Identity and Background.
-----------------------
This Statement is being filed by Geneve Corporation,
a Delaware corporation ("Geneve"), with principal offices at
96 Cummings Point Road, Stamford, Connecticut 06902 with
respect to its holdings of Common Stock and Series E
Convertible Preferred Stock, par value $.01 per share
("Preferred Stock"), of the Company. Geneve is a
financial services holding company. By virtue of his direct
or indirect holdings of capital stock of Geneve, Mr.
Edward Netter may be deemed to be the controlling person of
Geneve.
The (i) name, (ii) residence or business address,
(iii) present principal occupation or employment, and
(iv) name, principal business and address of any
corporation or other organization in which such employment
is conducted (except to the extent such principal business
and address is set forth in this Item 2), of each executive
officer and director of Geneve are set forth in Exhibit E
and are incorporated herein by reference. All such persons are
United States citizens.
During the last five years, neither Geneve nor any of
its executive officers or directors has been convicted in a
criminal proceeding (excluding traffic violations or similar
misdemeanors). In addition, during the last five years,
neither Geneve nor its executive officers or directors was a
party to a civil proceeding of a judicial or administrative
body of competent jurisdiction and as a result of such
proceeding was or is subject to a judgment, decree or final
order enjoining future violations of, or prohibiting or
mandating activities subject to, Federal or state securities
laws or finding any violation with respect to such laws.
Item 3. Source and Amount of Funds or Other Consideration.
-------------------------------------------------
All of the shares of Common Stock and Preferred Stock
purchased by Geneve were acquired from working capital funds.
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Item 4. Purpose of Transaction.
----------------------
On January 2, 1998, Geneve acquired from the Company
489,131 shares of Preferred Stock pursuant to that certain
Preferred Stock Purchase Agreement, dated October 22, 1997,
between the Company and Geneve (the "Preferred Stock Purchase
Agreement"). On that same date, Geneve also acquired from
the Company 30,000 shares of Common Stock pursuant to that
certain Common Stock Purchase Agreement, dated January 2, 1998,
between the Company and Geneve (the "Common Stock Purchase
Agreement"). The shares of Preferred Stock, the shares of
Common Stock acquired under the Common Stock Purchase Agreement
and the additional shares of Common Stock acquired by Geneve in
open-market transactions were acquired for investment purposes.
Geneve has the right to designate two nominees for election
to the Board of Directors of the Company for so long as Geneve or
its affiliates hold all of the issued and outstanding shares of
Preferred Stock or shares of capital stock acquired upon conversion
thereof, or not less than 30% of the issued and outstanding voting
securities of the Company. The Preferred Stock has one vote per
share with respect to matters other than the election of directors
and auditors. Messrs. Edward Netter and Steven B. Lapin are
currently serving as Geneve's representatives on the Board of
Directors of the Company.
Geneve's rights to (i) dispose of any or all of the shares
of Preferred Stock owned by it or shares of Common Stock which
it may obtain upon conversion of the Preferred Stock, (ii) acquire
additional shares of voting securities of the Company, and (iii)
exercise voting rights and privileges with respect to certain
shares of voting securities owned by Geneve are subject to the
terms of the Preferred Stock Purchase Agreement. Geneve's rights
to dispose of any or all of the shares of Common Stock purchased
pursuant to the Common Stock Purchase Agreement, are subject to
the terms of such agreement. Geneve is also party to a Registration
Rights Agreement with the Company, the terms of which generally
provide that, under certain circumstances, Geneve will be entitled
(a) at any time after October 22, 1999, but not on more than three
occasions, to request that the Company register under the Securities
Act of 1933, as amended, the shares of Common Stock purchased under
the Common Stock Purchase Agreement and/or any shares of Common Stock
obtained upon conversion of the Preferred Stock, and (b) to request
that the shares of Common Stock purchased under the Common Stock
Purchase Agreement and/or any shares of Common Stock obtained upon
conversion of the Preferred Stock be included in any underwritten
offering by the Company, subject to certain customary limitations.
The Preferred Stock is convertible into Common Stock for a
conversion price of $4.60 per share, subject to adjustment for
certain dilutive issuances of the Company's capital stock. Geneve
has the right to require the Company to repurchase the Preferred
Stock after the earlier of December 31, 2001, or upon the
occurrence of certain acceleration events, at $4.60 per share. The
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PAGES 5 of 67 PAGES
Preferred Stock is redeemable at $4.60 per share at the option of
the Company on or after December 31, 2001, and has a mandatory
redemption date of December 31, 2007.
Subject to the foregoing, Geneve reserves the right to
acquire additional shares of Common Stock and to dispose of its
shares of Preferred Stock and Common Stock (including shares of
Common Stock obtained upon conversion of the Preferred Stock) at
any time or from time to time and at prices determined by it.
Except as otherwise described above, Geneve has no plans or
proposals which relate to or would result in: (i) the acquisition
by any person of additional securities of the Company, or the
disposition of securities of the Company; (ii) an extraordinary
corporate transaction, such as a merger, reorganization or liquidation,
involving the Company or any of its subsidiaries; (iii) a sale or
transfer of a material amount of assets of the Company or any of
its subsidiaries;(iv) any change in the present Board of Directors
or management of the Company, including any plans or proposals to
change the number or term of directors or to fill any existing
vacancies on the Board; (v) any material change in the present
capitalization or dividend policy of the Company; (vi) any other
material change in the business or corporate structure of the Company;
(vii) any changes in the charter or by-laws of the Company or any
instruments corresponding thereto or other actions which may impede
the acquisition of control of the Company by any person; (viii) causing
a class of securities of the Company to be delisted from a national
securities exchange or to cease to be authorized to be quoted in an
inter-dealer quotation system of a registered national securities
association; (ix) a class of equity securities of the Company becoming
eligible for termination of registration pursuant to Section 12(g)(4)
of the Securities Exchange Act of 1934, as amended; or (x) any action
similar to any of those enumerated above.
Geneve reserves the right to change its intentions with
respect to any or all matters referred to in this Item 4.
Item 5. Interest in Securities of the Issuer.
------------------------------------
Geneve is the beneficial owner of and has the power to vote
and dispose of 79,000 shares of Common Stock and 489,131 shares of
Preferred Stock. Such shares constitute, in the aggregate, 33.6%
of the outstanding Common Stock of the Company, as of the date of
the information most recently available to Geneve, assuming conversion
of the Preferred Stock. As noted in Item 2 hereof, Mr. Edward Netter
may be deemed to be the controlling person of Geneve.
On January 2, 1998, Geneve acquired from the Company 489,131
shares of Preferred Stock at $4.60 per share. On that same date,
Geneve acquired from the Company 30,000 shares of Common Stock at
$4.50 per share.
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Pages 6 of 67 Pages
Geneve acquired the following shares of Common Stock in open-
market transactions at the prices and on the dates specified:
Price No.
Date Security Per Share of Shares
- ----------------- ------------ --------- ---------
June 16, 1994 Common Stock $4.75 32,000
November 18, 1997 Common Stock $4.9375 17,000
To the best of its knowledge, except as described herein,
neither Geneve nor any of its officers or directors beneficially
owns any Common Stock or Preferred Stock. In addition, except as
described herein, neither Geneve nor any of its officers or
directors has effected any transaction in the Common Stock or
Preferred Stock during the past sixty days.
Item 6. Contracts, Arrangements, Understandings or
Relationships with Respect to Securities of the Issuer.
------------------------------------------------------
See Item 4.
Item 7. Material to be Filed as Exhibits.
--------------------------------
A. Preferred Stock Purchase Agreement, dated October 22,
1997, between the Company and Geneve.
B. Certificate of Designation for the Series E Preferred
Stock.
C. Registration Rights Agreement, dated October 22, 1997,
between the Company and Geneve.
D. Common Stock Purchase Agreement, dated January 2, 1998,
between the Company and Geneve.
E. Officers and Directors of Geneve.
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Page 7 of 67 Pages
Signature
- ---------
After reasonable inquiry and to the best of the knowledge
and belief of the undersigned, the undersigned certifies that the
information set forth in this Statement is true, complete and
correct.
GENEVE CORPORATION
By:/s/ David T. Kettig
--------------------------
David T. Kettig, Secretary
January 9,1998
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EXHIBIT A
---------
PREFERRED STOCK PURCHASE AGREEMENT
Between
The Aristotle Corporation
and
Geneve Corporation
Dated as of October 22, 1997
<PAGE>
Page 9 of 67 Pages
PREFERRED STOCK PURCHASE AGREEMENT
----------------------------------
THIS PREFERRED STOCK PURCHASE AGREEMENT (this "Agreement"),
is dated as of this 22nd day of October, 1997 (the "Effective
Date"), between The Aristotle Corporation, a Delaware corporation
(the "Company"), and Geneve Corporation, a Delaware corporation
(the "Purchaser").
WHEREAS, the Purchaser desires to acquire and the Company is
willing to issue and sell to the Purchaser shares of Series E
Convertible Preferred Stock, $.01 par value, of the Company,
subject to the terms and conditions specified herein.
NOW, therefore, in consideration of the premises and the
mutual covenants contained in this Agreement, the parties agree
as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01 Definitions. As used in this Agreement,
references to either gender shall include the other gender, and
the following terms shall have the following meanings (such
meanings to be equally applicable to both the singular and plural
forms of the terms defined):
"Affiliate" means an affiliate as such term is used in
Rule 12b-2 of the Exchange Act.
"Agreement" means this Preferred Stock Purchase Agreement,
as amended, modified or supplemented from time to time.
"Business Day" means any day on which commercial banks are
not authorized or required by law to close in New York, New York.
"Commission" means the United States Securities and Exchange
Commission, or any other agency successor thereto.
"Company" means and shall include The Aristotle Corporation,
a Delaware corporation, and its successors and permitted assigns.
<PAGE>
Page 10 of 67 Pages
"Common Stock" means the common stock, $.01 par value per
share, of the Company.
"Convertible Securities" means any securities convertible
into, exchangeable for or exercisable for Voting Securities.
"Person" means an individual, corporation, partnership,
association, joint venture, trust, or unincorporated organization,
or a government or any agency or political subdivision thereof.
"Preferred Stock" means the shares of Series E Convertible
Preferred Stock, $.01 par value of the Company, issued pursuant
to this Agreement, having the powers, designations, preferences
and relative, participating, optional and other special rights
set forth in the form of Certificate of Designation attached
hereto as Exhibit A (the "Certificate of Designation").
"Purchaser" means and shall include Geneve Corporation, a
Delaware corporation, and its successors and permitted assigns.
"Recapitalization Event" means any stock dividend, stock
split, combination, reorganization, recapitalization, reclassi-
fication, consolidation, merger or similar event involving a
change in the Company's corporate structure.
"Securities Act" means the Securities Act of 1933, as amended,
and the rules and regulations of the Commission thereunder, all as
the same shall be in effect at the time.
"Shares" means (i) Preferred Stock and (ii) any shares of
Common Stock issued to the Purchaser in respect of the foregoing
Preferred Stock as a result of conversion or because of any
Recapitalization Event.
"Transaction Documents" shall mean this Agreement, the
Registration Rights Agreement (as defined in Section 3.01) and
any other instruments or certificates to be executed and delivered
in connection with this Agreement upon the Closing.
"Voting Securities" means any issued and outstanding shares
of (i) Common Stock, (ii) Preferred Stock, (iii) Series A Preferred
Stock, $.01 par value per share; (iv) Series B Preferred Stock, $.01
par value per share; (v) Series C Preferred Stock, $.01 par value
per share; and (vi) Series D Preferred Stock, $.01 par value per share.
<PAGE>
Page 11 of 67 Pages
ARTICLE II
PURCHASE AND SALE OF THE PREFERRED STOCK
SECTION 2.01 Purchase and Sale of the Preferred Stock.
----------------------------------------
(a) Issuance of the Preferred Stock. Subject to the terms
and conditions of this Agreement, at the Closing (as defined below)
the Company agrees to issue and sell to the Purchaser and the Purchaser
agrees to purchase from the Company, for an aggregate purchase price of
two million two hundred fifty thousand dollars ($2,250,000) (the
"Aggregate Purchase Price"), such number of shares (rounded to the
nearest whole share) of Preferred Stock equal to $2,250,000 divided by
the per share price of $4.60 per share (the "Per Share Price").
(b) Closing; Delivery of the Preferred Stock. The purchase
and sale of the Preferred Stock shall take place at a closing (the
"Closing") to be held at the offices of the Company, 78 Olive Street,
New Haven, CT 06507, at 10:00 A.M. (local time) on January 2, 1998,
or at such other location, time and date as may be mutually agreed upon
by the parties. At the Closing, subject to the terms and conditions
contained in this Agreement, the Company will provide a stock certificate
evidencing the Preferred Stock, registered in the name of the Purchaser
and dated as of the date of the Closing, against delivery of a certified
or official bank check payable to the order of the Company in New York
Clearing House or similar same day funds or against receipt of a wire
transfer of immediately available funds to an account of the Company
specified to the Purchaser, in an amount equal to two million two hundred
fifty thousand dollars ($2,250,000), in payment of the full purchase
price for the Preferred Stock.
ARTICLE III
CONDITIONS TO CLOSINGS
SECTION 3.01 Mutual Conditions to Closings. The obligation
of the Purchaser to purchase and pay for, and the obligation of the
Company to issue and sell to the Purchaser, the Preferred Stock at
the Closing are subject to the following conditions:
(i) No Injunction. No injunction or order of any
court or other governmental authority restraining the
consummation of the transactions provided for herein or
contemplated by the other Transaction Documents shall be in
effect;
(ii) No Termination. This Agreement shall not have
been terminated pursuant to the mutual agreement of the parties
hereto;
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Page 12 of 67 Pages
(iii) Registration Rights Agreement. The parties
hereto shall have entered into the Registration Rights Agreement
in substantially the form attached hereto as Exhibit B (the
"Registration Rights Agreement").
(iv) Filing of Certificate of Designation. The
Certificate of Designation shall have been filed with the
Secretary of the State of Delaware.
(v) Bank Consent and Acknowledgement. The Company
shall have received as of the date hereof a consent of BankBoston
Connecticut (the "BankBoston"), pursuant to the terms and provisions
of the certain Limited Guaranty Agreement, dated October 3, 1996,
by and between the Company and BankBoston and the acknowledgement
of BankBoston that BankBoston will not seek recourse from the
Special Account.
SECTION 3.02 Conditions to Purchaser's Obligations. The
obligation of the Purchaser to purchase and pay for the Preferred Stock
at the Closing is subject to the following additional conditions:
(i) Representations and Warranties. Each of the
representations and warranties of the Company set forth in Article
IV hereof shall be true and correct on the date of the Closing;
(ii) Executed Counterparts. The Purchaser shall have
received prior to or at the Closing counterparts of each of the
Transaction Documents, each in form and substance reasonably
satisfactory to the Purchaser, duly executed by the Company;
(iii) Delivery of Stock Certificates. The Company shall
have delivered to the Purchaser at the Closing a stock certificate
evidencing the Preferred Stock, as specified in Section 2.01(b);
(iv) Opinion of Counsel. The Purchaser shall have
received prior to or at the Closing an opinion of counsel to the
Company to the representations and warranties of the Company set
forth in sub-sections 4.01(a), (b), (c), (d), (f), (g) and (k) of
this Agreement, provided, however, that in rendering such opinion
counsel to the Company may rely on certificates and other documents
provided by the Company;
(v) Documentation at Closing. The Purchaser shall have
received, prior to or at the Closing, a certificate, executed by the
Secretary or Assistant Secretary of the Company and dated as of the
date of the Closing, together with and certifying as to (A) the
resolutions of the Board of Directors of the Company authorizing the
execution and delivery of this Agreement and the other Transaction
Documents and the performance by the Company of all transactions
contemplated hereby and thereby; (B) a copy of the Amended and
Restated Certificate of Incorporation of the Company, as
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Page 13 of 67 Pages
amended and in effect as of the date of the Closing; (C) a copy
of the By-laws of the Company, as amended and in effect as of the
date of the Closing; and (D) the names of the officers of the
Company authorized to sign the Transaction Documents together
with the true signatures of such officers;
(viii) Documents and Proceedings. All documents to
be provided to the Purchaser hereunder, and all corporate and
other proceedings taken or required to be taken in connection
with the transactions contemplated hereby and to be consummated
at or prior to the Closing, and all documents incident thereto,
shall be satisfactory in form and substance to the Purchaser or
its counsel; and
(ix) Waiver. Any condition specified in this
Section 3.02 may be waived by the Purchaser.
SECTION 3.03 Conditions to Company's Obligations. The
obligation of the Company to issue and sell the Preferred Stock
at the Closing, is subject to the following additional conditions:
(i) Representations and Warranties. Each of the
representations and warranties of the Purchaser set forth in
Article IV hereof shall be true and correct on the date of
such closing;
(ii) Executed Counterparts. The Company shall have
received prior to or at the Closing counterparts of each of the
Transaction Documents, each in form and substance reasonably
satisfactory to the Company, duly executed by the Purchaser;
(iii) Payment. The Company shall have received payment
in full for the Preferred Stock in accordance with Section 2.01;
(iv) Documentation at Closing. The Company shall have
received, prior to or at the Closing, a certificate, executed by
the Secretary or an Assistant Secretary of the Purchaser and dated
as of the date of the Closing, together with and certifying as to
(A) the resolutions of the Board of Directors of the Purchaser
authorizing the execution and delivery of this Agreement and the
other Transaction Documents and the performance by the Purchaser
of all transactions contemplated hereby and thereby; and (B) the
names of the officers of the Purchaser authorized to sign the
Transaction Documents together with the true signatures of such
officers;
(v) Documents and Proceedings. All documents to be
provided to the Company hereunder, and all corporate and other
proceedings taken or required to be taken in connection with the
transactions contemplated hereby and to be consummated at or prior
to the Closing, and all documents incident thereto, shall be
satisfactory in form and substance to the Company or its counsel; and
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Page 14 of 67 Pages
(vi) Waiver. Any condition specified in this Section 3.03
may be waived by the Company.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.01 Representations and Warranties of the Company.
The Company represents and warrants to the Purchaser as follows:
(a) Organization and Standing of the Company. Each of the
Company and its subsidiaries is a duly organized and validly existing
corporation in good standing under the laws of the state of its
incorporation and has all requisite corporate power and authority to
own and operate its assets and properties and to conduct its business
as presently conducted, except where the failure to do so would not
have a material adverse effect on the Company and its subsidiaries taken
as a whole.
(b) Corporate Action. The Company has all necessary corporate
power and has taken all corporate action required to authorize its
execution and delivery of, and its performance under, the Transaction
Documents, and the Company has all necessary corporate power and has
taken all corporate action required to authorize the issuance and sale of
the Preferred Stock and to consummate the other transactions contemplated
by the Transaction Documents.
(c) Governmental Approvals. No authorization,consent, approval,
license, exemption of or filing or registration with any court or govern-
mental department, commission, board, bureau, agency or instrumentality,
domestic or foreign, is necessary for, or in connection with, the issuance
and sale of the Preferred Stock on the date of the Closing or the execution
and delivery by the Company of, or for the performance by it of its obliga-
tions under, the Transaction Documents.
(d) Capitalization. As of the date hereof, the authorized
capital stock of the Company is: (i) 3,000,000 shares of Common Stock,
$.01 par value, of which 1,097,902 shares are issued and outstanding as of
the date hereof; and (ii) 3,000,000 shares of Preferred Stock, $.01 par
value, of which as of the date hereof, (A) 73,721 shares of Series A
Preferred Stock are issued and outstanding, (B) 26,022 shares of Series B
Preferred Stock are issued and outstanding, (C) 60,756 shares of Series C
Preferred Stock are issued and outstanding, and (D) 24, 998 shares of Series
D Preferred Stock are issued and outstanding. The Preferred Stock, when
issued against payment of the Aggregate Purchase Price set forth in Section
2.01 will be duly authorized, validly issued and fully paid and non-
assessable and not subject to any lien,
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Page 15 of 67 Pages
claims or encumbrances. As of the date hereof, except as set forth on the
Schedule of Exceptions, there are no options, warrants, convertible
securities or other rights to purchase shares of capital stock or other
securities of the Company which are authorized, issued or outstanding, nor
is the Company obligated in any other manner to issue shares of its capital
stock or other securities, and the Company has no obligation to purchase,
redeem or otherwise acquire any shares of its capital stock or any interest
therein or to pay any dividend or make any other distribution in respect
thereof, except as contemplated by the Transaction Documents. Except as set
forth on the Schedule of Exceptions or as otherwise contemplated by the
Transaction Documents, (i) no person is entitled to any preemptive right,
right of first refusal or similar right with respect to the issuance of any
capital stock of the Company, (ii) there are no restrictions on the transfer
of shares of capital stock of the Company other than those imposed by
relevant federal and state securities laws and (iii) there exists no
agreement between the Company's stockholders and to which the Company is
party with respect to the voting or transfer of the Company's capital stock
or with respect to any other aspect of the Company's affairs.
(e) Registration Rights. As of the Closing Date, no person has
demand or other rights to cause the Company to file any registration
statement under the Securities Act relating to any securities of the
Company or any right to participate in any such registration statement
except as set forth in the Schedule of Exceptions.
(f) Enforceability. The Company has duly authorized, executed
and delivered the Transaction Documents, and the Transaction Documents
constitute the legal, valid and binding obligations of the Company,
enforceable in accordance with their respective terms, except as enforcement
may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting creditors' rights generally and
to general principles of equity and limitations on availability of equitable
relief, including specific performance, and except as rights to indemnifi-
cation therein may be limited by applicable laws.
(g) Absence of Conflicts. The Company's execution, delivery
and performance of its obligations under this Agreement do not and will
not (i) contravene its Amended and Restated Certificate of Incorporation
or the Bylaws of the Company, as amended, (ii) violate any law, rule,
regulation, order, judgment or decree applicable to or binding upon the
Company or its properties, which violation would have a material adverse
effect on the Company and its subsidiaries taken as a whole, (iii)
constitute a breach or default or require any consent under any agreement
or instrument to which the Company is a party or by which the Company or
its properties is bound or affected, which breach or default, or the
absence of such consent, would have a material adverse effect on the
Company and its subsidiaries taken as a whole, or (iv) require any consent,
permit, approval, action, filing or recording except the filing of the
Certificate of Designation with the Delaware Secretary of State and the
filing of Form D with the Commission.
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Page 16 of 67 Pages
(h) Financial Statements. Attached hereto as Schedule 4.01(h)
are the financial statements, including balance sheets, income statements,
cash flows and related notes thereto, of the Company for the fiscal years
ended June 30, 1997 and 1996 (collectively, the "Financial Statements").
The Financial Statements are correct in all material respects, present
fairly the financial condition and results of operations of the Company,
as of the dates and for the periods indicated, and have been prepared in
accordance with generally accepted accounting principles consistently
applied ("GAAP").
(i) Absence of Material Adverse Change. Since June 30, 1997,
there has been no change in the assets, liabilities or financial condition
of the Company and its subsidiaries which, when taken together with all
other changes in the assets, liabilities or financial condition of the
Company and its subsidiaries, has had a material adverse effect on the
business, prospects, financial condition, operations, property or affairs
of the Company and its subsidiaries.
(j) SEC Reports.
(i) The Company has filed with the Commission all reports ("SEC
Reports") required to be filed by it during the two (2) years prior to
the date hereof under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"). All of the SEC Reports filed by the Company comply
in all material respects with the requirements of the Exchange Act. All
financial statements contained in the SEC Reports have been prepared in
accordance with GAAP consistently applied throughout the period indicated,
except that the unaudited financial statements do not contain notes and are
subject to normal audit and year-end adjustments. Each balance sheet
presents fairly in accordance with GAAP the financial position of the
Company and its subsidiaries as of the date of such balance sheet, and
each statement of operations, of stockholders' equity and of cash flows
presents fairly in accordance with GAAP the results of operations, the
stockholders' equity and the cash flows of the Company and its subsidiaries
for the periods then ended.
(ii) The SEC Reports, as of their respective dates (or, if
amended, as of the date of such amendment), and this Agreement taken
together as a whole will not, on the date of the Closing contain any
untrue statement of a material fact or omit to state any material fact
required to be stated therein, or necessary to make the statements
contained therein, in light of the circumstances under which they were
made, not misleading.
(k) Securities Laws. Based on and assuming the accuracy of
the representations and warranties of the Purchaser contained in Section
4.02 hereof, the issuance of the Preferred Stock is exempt from the
provisions of the Securities Act. All notices, filings, registrations,
or qualifications under state securities or "blue-sky" laws which are
required in connection with the offer, issue and delivery of the Shares
pursuant to this Agreement, if any, have been or will be completed by the
Company.
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Page 17 of 67 Pages
(l) Closing Date. The representations and warranties of the
Company contained in this Section 4.01 and elsewhere in this Agreement
will be true and correct on the date of the Closing as though then made,
except as affected by the transactions expressly contemplated by this
Agreement.
(m) Consents and Approvals. The Company shall have received,
and delivered copies to the Purchaser of, any necessary waivers, approvals,
authorizations, registrations, filings or consents.
SECTION 4.02 Representations and Warranties of the Purchaser. The
Purchaser represents and warrants to the Company as follows:
(a) Organization and Standing. The Purchaser is a duly organized
and validly existing corporation in good standing and has all requisite
corporate power and authority to own and operate its assets and properties
and to conduct its business as presently conducted, except where the failure
to do so would not have a material adverse effect on the Purchaser and its
subsidiaries taken as a whole.
(b) Corporate Action. The Purchaser has all necessary corporate
power and has taken all corporate action required to authorize its execution
and delivery of, and its performance under, the Transaction Documents to
which it is a party and has all necessary corporate power and has taken all
corporate action required to authorize its purchase of the Preferred Stock
and to consummate the other transactions contemplated by the Transaction
Documents.
(c) Investment Intent. The Purchaser is acquiring the Preferred
Stock on the date of the Closing for its own account for the purpose of
investment and not with a view to, or for sale in connection with, the
distribution thereof, and it has no present intention of distributing or
selling such Preferred Stock. The Purchaser understands that such Preferred
Stock has not been registered under the Securities Act, or the securities
laws of any state or other jurisdiction, and hereby agrees not to make any
sale, transfer or other disposition of such Preferred Stock unless either
(i) such Preferred Stock have been registered under the Securities Act and
all applicable state and other securities laws and any such registration
remains in effect or (ii) the Company shall have received an opinion of
counsel in form and substance satisfactory to the Company that registration
is not required under the Securities Act or under applicable state secur-
ities laws.
(d) Opportunity to Investigate. The Purchaser (i) has had the
opportunity to ask questions concerning the Company and all such questions
posed have been answered to its satisfaction; (ii) has been given the
opportunity to obtain any additional information it deems necessary to
verify the accuracy of any information obtained concerning the Company; and
(iii) has such knowledge and experience in financial and business matters
that it is able to evaluate the merits and risks of purchasing the Shares
and to make an informed investment
<PAGE>
Page 18 of 67 Pages
decision relating thereto. The Purchaser's opportunity to so investigate
the Company and information obtained therefrom shall not affect the
Company's representations and warranties set forth in this Agreement.
(e) Accredited Investor. The Purchaser is an "accredited
investor" as such term is defined in Regulation D under the Securities Act.
(f) Enforceability. The Purchaser has duly authorized, executed
and delivered the Transaction Documents to which it is a party, and such
Transaction Documents constitute the legal, valid and binding obligations
of the Purchaser, enforceable in accordance with their respective terms,
except as enforcement may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting creditors' rights
generally and to general principles of equity and limitations on avail-
ability of equitable relief, including specific performance, and except
as rights to indemnification therein may be limited by applicable laws.
(g) Closing Date. The representations and warranties of the
Purchaser contained in this Section 4.02 and elsewhere in this Agreement
will be true and correct on the date of the Closing as though then made,
except as affected by the transactions expressly contemplated by this
Agreement.
ARTICLE V
COVENANTS
SECTION 5.01 Performance. Each party shall perform all of its
obligations hereunder and shall, at or prior to the Closing, execute and
deliver the other Transaction Documents to which it is contemplated to be
a signatory.
SECTION 5.02 Cooperation. Each party shall endeavor in good faith
to perform and fulfill all conditions and obligations on their respective
parts to be fulfilled or performed hereunder or under the other Transaction
Documents, to the end that the transactions contemplated hereby and thereby
will be fully and timely consummated.
SECTION 5.03 Broker's Fee. Each of the Company and the Purchaser
hereby represents and covenants that there are no brokers or finders
entitled to compensation in connection with the sale of the Preferred Stock,
and shall indemnify each other for any such fees for which they are
responsible.
SECTION 5.04 Nomination and Designation of Directors.
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Page 19 of 67 Pages
(a) Effective upon the Closing, the Company shall cause the number of
members on the Company's Board of Directors to be increased by two (2)
and shall cause the Board of Directors to designate and elect two (2)
designated representatives of the Purchaser (each a "Purchaser Nominee")
in order to satisfy such vacancies in accordance with the terms and
provisions of Article 6 of the Company's Amended and Restated Certificate
ofIncorporation.
(b) For so long as the Purchaser or its Affiliates hold (i) all of
the shares of the Preferred Stock issued to and purchased by the Purchaser
pursuant to the terms and provisions of this Agreement or all of the shares
of any other class or series of capital stock of the Company acquired by
the Purchaser pursuant to any conversion of the Preferred Stock or (ii) not
less than thirty (30%) of the Company's outstanding Voting Securities
(calculated on a fully diluted, as converted or exercised basis), at any
time at which the stockholders of the Company have the right to vote for,
or consent in writing to, the election of directors of the Company, the
Company shall cause to be nominated for election to the Board of Directors
two (2) Purchaser Nominees.
(c) In the case of the death, resignation or removal of a director
who had been nominated for election or designated for such term in
accordance with this Section 5.04, the Company shall cause the Board of
Directors to designate and elect another Purchaser Nominee in order to
satisfy such vacancy in accordance with the terms and provisions of Article
6 of the Company's Certificate of Incorporation; provided, however, that,
at the time such vacancy occurs, the Purchaser shall be the holder of such
number of shares of the Voting Securities of the Company so as to have the
right to designate such Purchaser Nominee in accordance with the terms and
provisions of Section 5.04(b).
SECTION 5.05 Voting Agreements. Subject to the terms and provisions
of Section 6.01 below, if the Purchaser, or any of its Affiliates, acquires
any Voting Securities (other than the Acquisition of the Series E Preferred
pursuant to the terms and provisions of this Agreement or the conversion
thereof) which, when taken together with any Voting Securities then owned
by the Purchaser and its Affiliates, would, in the aggregate, exceed an
amount equal to thirty percent (30%) of the Company's then outstanding
Voting Securities (calculated on a fully diluted, as converted or exercised
basis) (such Voting Securities owned by the Purchaser or any of it Affil-
iates in excess of thirty percent (30%) referred to herein as "Excess
Shares"), the Purchaser and the Company acknowledge and agree that the
Purchaser shall exercise such voting rights and privileges of such Excess
Shares as set forth below:
(i) At any meeting of the shareholders of the Company, the Company
shall cause one preliminary calculation (each, a "Preliminary Calculation")
to be made not less than 5 minutes after the commencement of voting upon
each election, proposal or other matter (other than matters on which a class
vote is required) (each, a "Proposal") to be voted on at such meeting in
order to determine the manner in which the shares of the Voting Securities
owned by holders other than the Purchaser or any of its Affiliates ("Other
Voting Securities") will be voted at such meeting with respect to each
Proposal;
<PAGE>
Page 20 of 67 Pages
(ii) Upon completing the Preliminary Calculation and determining the
percentage of the Other Voting Securities that were voted for or against a
Proposal (and in an election, for or against the election of any person),
the Purchaser shall vote, or cause to be voted, the same percentage of the
Excess Shares for and against the Proposal as the percentage of the Other
Voting Securities in the Preliminary Calculation that were voted for and
against the Proposal.
For example, assuming the aggregate number of shares eligible to vote
on a Proposal is 100 (of which 60 are Other Voting Securities, 30 are the
Voting Securities owned by the Purchaser or its Affiliates, and 10 are
Excess Shares), for the purposes of the Preliminary Calculation only 60
shares shall be deemed to have voted (representing the 60 shares of Other
Voting Securities) with respect to the proposal and the votes attributable
to the Excess Shares would be cast in the same proportion as the votes cast
by the holders of the Other Voting Securities (e.g., if 80% of the votes
attributable to Other Voting Securities were cast in favor of the Proposal
and 20% of the votes attributable to Other Voting Securities were cast
against the Proposal, then 80% of the votes attributable to Excess Shares
would be cast in favor of the Proposal and 20% of the votes attributable to
Excess Shares would be cast against the Proposal). Upon the determination
of the votes cast in favor of and against such Proposal, votes attributable
to the Voting Securities owned by the Purchaser or its Affiliates would be
tabulated and compiled with the votes attributable to the Other Voting
Securities and the Excess Shares so as to determine whether such proposal
would be approved or disapproved.
For such purpose, the percentage of the Other Voting Securities that
were voted for or against a Proposal shall be calculated based upon (a) the
total number of outstanding shares of such series or class of Voting
Securities on the record date of the shareholders meeting, if Delaware law
or the Company's Certificate of Incorporation or By-laws requires that the
Proposal be approved by a specified percentage of all of the outstanding
shares of such series or class of Voting Securities or of the combined
voting power of all outstanding shares of Voting Securities of the Company,
or (b) the number of Voting Securities that are present (in person or by
proxy) and eligible to vote on such Proposal and voting at the meeting of
the shareholders, if subclause (a) of this Section 5.05(ii) is not
applicable; and
(d) With respect to any action proposed to be taken by the written
consent of the holders of (a) any class or series of Voting Securities of
the Company, or (b) all of the Voting Securities of the Company, the same
percentage of Excess Shares shall consent to the proposed action as the
percentage of the Other Voting Securities that have consented to such
action; for such purpose, the total number of outstanding shares of Voting
Securities eligible to vote on such matter shall be determined as of the
record date for the taking of such action.
SECTION 5.06 Proceeds Account. The Company shall not use the
proceeds (the "Proceeds") of the Aggregate Purchase Price to invest in, or
for the benefit of, The Strouse, Adler Company ("Strouse") or any other
entity in the same or similar business as Strouse, and shall ensure that
(i) no provider to Strouse of funded debt, including commercial banks, or
trade creditors, and (ii) no provider to the Company of funded debt
which is
<PAGE>
Page 21 of 67 Pages
invested in, or for the benefit of, Strouse, shall have recourse to the
Proceeds. The Company shall cause the Proceeds to be maintained with a
bank, brokerage entity or any other financial institution in one or more
specifically designated accounts (collectively, the "Special Account"),
provided, however, at no time, without the Purchaser's written consent,
shall the balance of the Special Account be less than $540,000 in cash
or cash equivalents. With regard to the Proceeds in excess of $540,000,
the Company shall have sole discretion (i) to invest the funds in the
Special Account as it deems prudent and in the best interest of the
Company and (ii) to use such funds for working capital and other general
corporate purposes, including, but not limited to, the acquisition of
business entities (other than Strouse or any other entity in the same or
similar business as Strouse) and the redemption of existing ASI, Inc.
preferred stock including that which is redeemable on January 1, 1998;
provided, however, that any funds so used shall be replaced by the
transfer to the Special Account of (i) the portion of the capital
asset or assets, if any, purchased with funds from the Special Account,
or if there are no such assets (ii) an asset or assets of the Company
of equal or greater value (determined in good faith by the Company),
including, but not limited to an unsecured promissory note of the
Company made payable to the Special Account. If at any time between
the date of this Agreement and the Closing, the Company redeems that
portion of the existing ASI, Inc. preferred stock which is redeemable on
January 1, 1998 (the "Put Payment"), an amount equal to the Put Payment
shall be deemed to have been paid from the Special Account. Nothing set
forth in this Section 5.06 or in any of the Transaction Documents
shall grant to the Purchaser a security interest or lien rights with
respect to the funds maintained in the Special Account.
SECTION 5.07 Aristotle Sub, Inc. Preferred Stock. The
Company shall cause to be taken all necessary corporate action such
that, immediately prior to the Closing, all of the then outstanding
shares of preferred stock of Aristotle Sub, Inc. shall be or become
shares of preferred stock of the Company.
ARTICLE VI
LIMITATIONS AND RESTRICTIONS
SECTION 6.01 Restrictions on Certain Actions by Purchaser.
(a) The Purchaser agrees that, commencing on the date hereof and
ending on the date which is the tenth anniversary of the Closing date,
the Purchaser will not, nor will it permit any of its Affiliates to,
acquire or offer or propose to acquire any Voting Securities or Convertible
Securities (other than the Preferred Stock purchased at the Closing) which,
when taken together with any Voting Securities and Convertible Securities
then owned by the Purchaser and its Affiliates, would, in the aggregate,
exceed an amount equal to thirty percent (30%) of the Company's then
outstanding Voting Securities, unless in any such case specifically
authorized to do so by the Board of Directors of the Company, without
giving effect to the vote of the
<PAGE>
Page 22 of 67 Pages
Purchaser Nominees, upon receipt from the Purchaser of a written request
regarding such acquisition setting forth the type, series and amount of
Voting Securities or Convertible Securities to be acquired and the
anticipated time, date and terms of such acquisition. The consent of the
Board of Directors of the Company, without giving effect to the vote of
the Purchaser Nominees, regarding such acquisition shall not be unreasonably
withheld; provided, however, that such consent may be withheld if the Board
of Directors of the Company, without giving effect to the vote of the
Purchaser Nominees, shall determine in its sole discretion that such
acquisition may have a material adverse effect upon the Company's ability
to use its accrued net operating losses; provided further that in no event
shall the Board of Directors of the Company be obligated to consent to any
acquisition of any Voting Securities or Convertible Securities of the
Company which, when taken together with any Voting Securities and
Convertible Securities then owned by the Purchaser and its Affiliates,
would, in the aggregate, exceed an amount equal to forty percent (40%) of
the Company's then outstanding Voting Securities. Notwithstanding the
foregoing, in order to insure for the Company the benefits of the
transactions contemplated in this Agreement, and the covenants set forth
in this Section 6.01, to the extent that Purchaser has acquired, or does
acquire, Voting Securities or Convertible Securities in transactions other
than those described in Article II hereof the Purchaser shall sell such
Voting Securities or Convertible Securities to the extent necessary to
permit the transactions contemplated herein to be consummated without
violation of the provisions of this Section 6.01.
(b) The Purchaser acknowledges and agrees that irreparable damage
would occur in the event that any of the provisions of this Section 6.01
were not performed in accordance with their specific terms or were otherwise
breached. It is accordingly agreed that the parties shall be entitled to
an injunction or injunctions to prevent breaches of the provisions of this
Section 6.01 and to enforce specifically the terms and provisions hereof in
any court of the United States or any state thereof having jurisdiction, in
addition to any other remedy to which they may be entitled at law or equity.
SECTION 6.02 Restrictions on Sales by Purchaser. The Purchaser
agrees that until the tenth anniversary of the Closing hereunder, it will
not, nor will it permit any of its Affiliates to, sell, solicit an offer to
sell or propose to sell, any share of Preferred Stock purchased at such
Closing except that Purchaser may transfer shares of Preferred Stock to any
of its Affiliates; provided, however, nothing set forth in this Section 6.02
shall restrict the Purchaser from selling shares of Preferred Stock to the
Company or having shares of Preferred Stock redeemed by the Company.
<PAGE>
Page 23 of 67 Pages
ARTICLE VII
MISCELLANEOUS
SECTION 7.01 Notices. All notices, requests, consents and other
communications hereunder shall be in writing, shall beaddressed to the
receiving party's address set forth below or to such other address as a
party may designate by notice hereunder, and shall be either (i) delivered
by hand, (ii) made by telecopy or facsimile transmission (receipt confirmed),
(iii) sent by international overnight or express courier, or (iv) sent by
registered mail, return receipt requested, postage prepaid.
If to the Company: The Aristotle Corporation
78 Olive Street
New Haven, Connecticut 06510
Attention: John J. Crawford
Chairman and President
Fax No.: 203-624-6129
with a copy to: Mintz, Levin, Cohn, Ferris,
Glovsky and Popeo, P.C.
One Financial Center
Boston, MA 02111
Attn: Stanford N. Goldman, Esq.
Fax No.: 617-542-2241
If to the Purchaser: Geneve Corporation
96 Cummings Point Road Stamford,
Connecticut 06902
Attn: Steven B. Lapin, President,
and David T. Kettig, Esq.
Fax No.: 203-348-3103
All notices, requests, consents and other communications hereunder
shall be deemed to have been given either (i) if by hand, at the time of
the delivery thereof to the receiving party at the address of such party
set forth above, (ii) if made by telecopy or facsimile transmission, at
the time that receipt thereof has been acknowledged by electronic
confirmation or otherwise, (iii) if sent by overnight or express courier,
on the Business Day following the day such notice is delivered to the
courier service, or (iv) if sent by registered mail, on the fifth Business
Day following the day such mailing is made.
SECTION 7.02 Legends. The Purchaser acknowledges that, until
registered under the Securities Act and any applicable state securities
laws or transferred pursuant to the
<PAGE>
Page 24 of 67 Pages
provisions of Rule 144 promulgated under the Securities Act ("Rule 144"),
each certificate representing a Share, whether upon initial issuance or
upon any transfer thereof, shall bear the following legends (and the
Company and its transfer agent shall make a notation on its books of
transfer to such effect), prominently stamped or printed thereon, in
substantially the following form:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "ACT"), OR THE SECURITIES LAWS OF ANY
APPLICABLE STATE OR OTHER JURISDICTION, HAVE BEEN
ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO
DISTRIBUTION OR RESALE AND MAY NOT BE SOLD, MORTGAGED,
PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT COVERING
SUCH SECURITIES UNDER THE ACT AND ANY SECURITIES LAWS
OF ANY APPLICABLE STATE OR OTHER JURISDICTION OR A
WRITTEN OPINION OF COUNSEL IN FORM AND SUBSTANCE
SATISFACTORY TO THE ISSUER TO THE EFFECT THAT
REGISTRATION IS NOT REQUIRED UNDER THE ACT OR UNDER
OTHER APPLICABLE SECURITIES LAWS."
"THE SHARES EVIDENCED BY THIS CERTIFICATE ARE SUBJECT
TO CERTAIN RESTRICTIONS UPON TRANSFER AS SET FORTH IN
SECTION 6.02 OF A CERTAIN PREFERRED STOCK PURCHASE
AGREEMENT DATED AS OF OCTOBER 22, 1997 BY AND AMONG
THE COMPANY AND A CERTAIN STOCKHOLDER OF THE COMPANY,
A COPY OF WHICH AGREEMENT IS AVAILABLE FOR INSPECTION
AT THE OFFICES OF THE COMPANY OR MAY BE OBTAINED FROM
THE COMPANY UPON REQUEST AND WITHOUT CHARGE."
SECTION 7.03 Entire Agreement. This Agreement embodies the entire
agreement and understanding between the parties hereto with respect to
the provisions hereof and supersedes all prior oral or written agreements
and understandings relating to the provisions hereof. No statement,
representation, warranty, covenant or agreement of any kind not expressly
set forth in this Agreement shall affect, or be used to interpret, change
or restrict, the express terms and provisions of this Agreement.
SECTION 7.04 Modifications and Amendments. The terms and provisions
of this Agreement may be modified or amended only by written agreement
executed by all parties hereto.
SECTION 7.05 Waivers and Consents. Except as other expressly
provided herein, the terms and provisions of this Agreement may be waived,
or consent for the
<PAGE>
Page 25 of 67 Pages
departure therefrom granted, only by written document executed by the
party entitled to the benefits of such terms or provisions. No such
waiver or consent shall be deemed to be or shall constitute a waiver
or consent with respect to any other terms or provisions of this
Agreement, whether or not similar. Each such waiver or consent shall be
effective only in the specific instance and for the purpose for which
it was given, and shall not constitute a continuing waiver or consent.
SECTION 7.06 Assignment. The rights and obligations under this
Agreement may not be assigned by either party hereto without the prior
written consent of the other party (which consent shall not be unreasonably
withheld, except that the Purchaser without the consent of the Company may
assign this Agreement or any of its rights or obligations to an Affiliate
of the Purchaser or to an entity with which the Purchaser shall merge or
consolidate or to which the Purchaser shall sell or assign all or sub-
stantially all of its assets, and except that the Company may without the
consent of the Purchaser assign this Agreement subsequent to the Closing
to an entity with which the Company shall merge or consolidate or to which
the Company shall sell or assign all or substantially all of its assets).
SECTION 7.07 Benefit. All statements, representations, warranties,
covenants and agreements in this Agreement shall be binding on the parties
hereto and shall inure to the benefit of the respective successors and
permitted assigns of each party hereto. Nothing in this Agreement shall be
construed to create any rights or obligations except among the parties
hereto, and no person or entity shall be regarded as a third-party
beneficiary of this Agreement.
SECTION 7.08 Governing Law. This Agreement and the rights and
obligations of the parties hereunder shall be construed in accordance
with and governed by the law of the State of Delaware, without giving
effect to the conflict of law principles thereof.
SECTION 7.09 Severability. In the event that any court of
competent jurisdiction shall determine that any provision, or any
portion thereof, contained in this Agreement shall be unenforceable
in any respect, then such provision shall be deemed limited to the
extent that such court deems it enforceable, and as so limited shall
remain in full force and effect. In the event that such court shall
deem any such provision, or portion thereof, wholly unenforceable, the
remaining provisions of this Agreement shall nevertheless remain in
full force and effect.
SECTION 7.10 Interpretation. The parties hereto acknowledge and
agree that: (i) each party and its counsel reviewed and negotiated the
terms and provisions of this Agreement and have contributed to its
revision; (ii) the rule of construction to the effect that any ambiguities
are resolved against the drafting party shall not be employed in the
interpretation of this Agreement; and (iii) the terms and provisions of
this Agreement shall be construed fairly as to all parties hereto and not
in favor of or against any party, regardless of which party was generally
responsible for the preparation of this Agreement.
<PAGE>
Page 26 of 67 Pages
SECTION 7.11 Headings and Captions. The headings and captions of
the various subdivisions of this Agreement are for convenience of reference
only and shall in no way modify, or affect the meaning or construction of,
any of the terms or provisions hereof.
SECTION 7.12 Enforcement. Each of the parties hereto acknowledges
and agrees that the rights acquired by each party hereunder are unique and
that irreparable damage would occur in the event that any of the provisions
of this Agreement to be performed by the other party were not performed in
accordance with their specific terms or were otherwise breached.
Accordingly, in addition to any other remedy to which the parties hereto
are entitled at law or in equity, each party hereto shall be entitled to
an injunction or injunctions to prevent breaches of this Agreement by the
other party.
SECTION 7.13 No Waiver of Rights, Powers and Remedies. No failure
or delay by a party hereto in exercising any right, power or remedy under
this Agreement, and no course of dealing between the parties hereto, shall
operate as a waiver of any such right, power or remedy of the party. No
single or partial exercise of any right, power or remedy under this
Agreement by a party hereto, nor any abandonment or discontinuance of steps
to enforce any such right, power or remedy, shall preclude such party from
any other or further exercise thereof or the exercise of any other right,
power or remedy hereunder. The election of any remedy by a party hereto
shall not constitute a waiver of the right of such party to pursue other
available remedies. No notice to or demand on a party not expressly
required under this Agreement shall entitle the party receiving such notice
or demand to any other or further notice or demand in similar or other
circumstances or constitute a waiver of the rights of the party giving such
notice or demand to any other or further action in any circumstances without
such notice or demand.
SECTION 7.14 Expenses. Each of the parties hereto shall pay its own
fees and expenses in connection with this Agreement and the transactions
contemplated hereby whether or not the transactions contemplated hereby
are consummated.
SECTION 7.15 Confidentiality. Each of the parties hereto agrees
that it will keep confidential and will not disclose or divulge any
confidential, proprietary or secret information that such party may
obtain from financial statements, reports and other materials
submitted by the other party to such party pursuant to this
Agreement, or pursuant to visitation or inspection rights granted
hereunder; provided, however, that either party may disclose such
information (i) as has become generally available to the public, (ii)
as may be required in any report, statement or testimony submitted to
any municipal, state or Federal regulatory body having or claiming to
have jurisdiction over such party, (iii) as may be required in
response to any summons or subpoena or in connection with any litigation,
(iv) in order to comply with any law, order, regulation or ruling
applicable to such party, (v) to the extent that such party reasonably
deems it necessary to enforce its rights under this Agreement, (vi) on a
confidential basis to its attorneys, accountants, consultants and other
professionals to the extent necessary to obtain their services in connection
with the transactions contemplated hereby, (vii) to any prospective
purchaser of any of the Preferred Stock as long as
<PAGE>
Page 27 of 67 Pages
such prospective purchaser agrees in writing to be bound by the provisions
of this Section 7.15, and (viii) to any Affiliate or partner of such party
as long as such Affiliate or partner agrees in writing to be bound by the
provisions of this Section 7.15.
SECTION 7.16 Publicity. No party shall issue any press release or
otherwise make any public statement with respect to the execution of, or
the transactions contemplated by, this Agreement without the prior written
consent of the other party, except as may be required by applicable law,
rule or regulation; provided that once such other party has consented to a
party's issuance or making of a press release or public statement, any
subsequent issuance or making of such press release or public statement by
such party shall not require the separate written consent of the other party.
However, the parties recognize that the Company is a publicly-held company
obligated under the federal securities laws to make disclosures of material
events affecting it. Consequently, if advised by counsel that such party is
required to make such announcement under Federal or state securities laws,
the Company (as the case may be) may make such announcement without the prior
written or oral consent of the other party.
SECTION 7.17 Counterparts. This Agreement may be executed in one or
more counterparts, and by different parties hereto on separate counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
IN WITNESS WHEREOF, the Company and the Purchaser have caused this
Agreement to be executed in their names by their duly authorized officers
or representatives effective as of the date first above written.
THE ARISTOTLE CORPORATION
By: /s/ John J. Crawford
--------------------
Name: John J. Crawford
Title: President
GENEVE CORPORATION
By: /s/ Steven B. Lapin
--------------------
Name: Steven B. Lapin
Title: President
<PAGE>
Page 28 of 67 Pages
EXHIBIT B
---------
Certificate of the Powers, Designations,
Preferences and Relative, Participating,
Optional and Other Special Rights of the
SERIES E CONVERTIBLE
PREFERRED STOCK
OF
THE ARISTOTLE CORPORATION
and the Qualifications, Limitations
or Restrictions Thereof, Which
Have Not Been Set Forth in the
Certificate of Incorporation
or in Any Amendment Thereto
(Pursuant to Section 151 of the General
Corporation Law of the State of Delaware)
The undersigned, John J. Crawford, President and Chief
Executive Officer of The Aristotle Corporation, a corporation
organized and existing under the laws of the State of Delaware
(hereinafter the "Corporation"), DOES HEREBY CERTIFY:
That pursuant to authority conferred upon the Board of
Directors of the Corporation by the Certificate of Incorporation
and pursuant to the provisions of Section 151 of the General
Corporation Law of the State of Delaware, the Board of Directors
of the Corporation, at a meeting duly called and held on August
28, 1997, duly authorized the following resolutions.
"RESOLVED, that, pursuant to the authority expressly
granted to and vested in the Board of Directors of the
Corporation by the provisions of its Certificate of
Incorporation, the Board of Directors of the Corporation
hereby creates a series of Preferred Stock of the Corporation
to consist of 489,131 of the 3,000,000 shares of Preferred
Stock, $.01 par value per share, which the Corporation now
has authority to issue, and the Board of Directors of the
Corporation hereby fixes the designations, powers,
preferences and relative, participating, optional and other
special rights, and the qualifications, limitations or
restrictions thereof, of the shares of such series of
Preferred Stock (in addition to the designations, powers,
preferences and relative, participating, optional and other
special rights, and the qualifications, limitations or
restrictions thereof, set forth in the Certificate of
Incorporation of the Corporation which are applicable to
Preferred Stock of all series) as follows:
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Page 29 of 67 Pages
Designation and Number. The distinctive designation of
the series shall be Series E Convertible Preferred Stock
(hereinafter, "Series E Preferred"); the number of shares
of Series E Preferred which the Corporation is authorized
to issue shall be 489,131.
1. Definitions. For purposes of this Certificate of
Designation, the following terms shall have the meanings
indicated.
(a) The term "Acceleration Event" means the occurrence at
any time of any of the following (it being understood that the
Corporation shall provide the holders of Series E Preferred with
prompt written notice thereof):
(1) the Corporation's Tangible Net Worth at the
end of any calendar month is less than $1,250,000 for
any reason whatsoever, and remains below $1,250,000 for
a period of 60 days subsequent thereto, provided,
however, that if the Corporation has not received a
written notice declaring the foregoing to be an
Acceleration Event from holders of Series E Preferred
within 90 days from the date such holders are notified
of the foregoing, then no Acceleration Event shall be
deemed to have occurred; or
(2) the Corporation's Consolidated Tangible Net Worth
at the end of any calendar month is less than
$4,000,000 as a result of actions by the Corporation
not in the ordinary course of business, and remains
below $4,000,000 for a period of 60 days subsequent
thereto, provided, however, that if the Corporation has
not received a written notice declaring the foregoing
to be an Acceleration Event from holders of the Series
E Preferred within 90 days from the date such holders
are notified of the foregoing, then no Acceleration
Event shall be deemed to have occurred; or
(3) the Corporation's failure to maintain cash or
cash equivalents of at least $540,000 against which no
provider of credit (other than trade creditors of the
Corporation in the ordinary course of business) has any
recourse; or
(4) a default in any of the covenants and provisions
of Section 5.06 of that certain Preferred Stock
Purchase Agreement dated as of October 21, 1997 between
the Corporation and Geneve Corporation; or
(5) there being fewer than two representatives of
the holders of Series E Preferred on the Corporation's
<PAGE>
Page 30 of 67 Pages
Board of Directors; or
(6) the issuance of shares of stock (other than
Excluded Shares) such that the issued and outstanding
shares of the Corporation owned by the holders of Series
E Preferred represents less than 30% of the outstanding
value of the stock of the Corporation at any testing
date; provided, however, that in the event that the
Corporation issues any Excluded Shares which would cause
the holders of Series E Preferred to have less than 30%
of the outstanding value of the stock of the Corporation
at any testing date, the holders of Series E Preferred
shall have the right to purchase, as of the testing
date, such number of shares of Common Stock from the
Corporation at the then Fair Market Value thereof so
that such holders have not less than 30% of the
outstanding value of the stock of the Corporation at
such testing date; provided further, however, that such
holders have determined, in their sole reasonable
discretion, that they are unable to purchase in the open
market such shares of Common Stock at the Fair Market
Value thereof as of the testing date (all of the
foregoing within the meaning of Section 382 of the
Internal Revenue Code of 1986 and the regulations
pertaining thereto); or
(7) the issuance of shares of stock or rights,
warrants or options entitling the holders thereof to
subscribe for or purchase shares of stock such as to
cause an ownership change (within the meaning of Section
382 of the Internal Revenue Code of 1986 and the
regulations pertaining thereto).
(b) The term "Consolidated Tangible Net Worth" means the
excess of the tangible assets (as defined under GAAP) over
the liabilities (as defined under GAAP) of the Corporation
and its subsidiaries, on a consolidated basis, excluding the
issued and outstanding shares of Series E Preferred.
(c) The term "Excluded Shares" means shares of Common Stock
issued or issuable (1) in connection with an offering by the
Corporation of shares of its Common Stock to its then current
holders of shares of Common Stock pursuant to which offering the
holders of Series E Preferred shall have an opportunity to
participate on a then pro rata basis; (2) to officers, employees
or directors of the Corporation or any of its subsidiaries
pursuant to a stock option plan approved by the shareholders of
the Corporation; (3) to directors of the Corporation in
connection with grants of shares of Common Stock as compensation;
and (4) upon conversion of any shares of Preferred Stock of the
Corporation issued and
<PAGE>
Page 31 of 67 Pages
outstanding as of October 21, 1997.
(d) The term "Fair Market Value" means the average of the
Market Prices per share of Common Stock for the ten (10)
consecutive Trading Days ending on the day before the day in
question, or if such Market Prices per share of Common Stock are
not so available, the fair market price per share of Common Stock
as determined by the Board of Directors of the Corporation, whose
determination shall be final, binding and conclusive if made in
good faith.
(e) The term "GAAP" means generally accepted accounting
principles, consistently applied.
(f) The term "Junior Stock" means the Common Stock, and all
those classes and series of preferred or special stock and
all those series of Preferred Stock which, by the terms of
the Certificate of Incorporation (as the same may hereafter
be amended) or of the instrument by which the Board of
Directors of the Corporation, acting pursuant to authority
granted in the Certificate of Incorporation (as the same may
hereafter be amended), shall designate the special rights and
limitations of each such class and series of preferred or
special stock or series of Preferred Stock, shall be
subordinate to Series E Preferred with respect to the right
of the holders thereof to receive dividends or to participate
in the assets of the Corporation distributable to
stockholders upon any liquidation, dissolution or winding-up
of the Corporation.
(g) The term "Market Prices per share of Common Stock" for
any Trading Day means (i) the closing bid price for the
Common Stock (as defined in Section 7(g) hereof) on such
Trading Day as published by the National Association of
Securities Dealers Automated Quotation System ("NASDAQ") (or,
if such prices are not so published by NASDAQ, the average of
the high and low bid prices for the Common Stock on such
Trading Day, as furnished by any New York Stock Exchange
member firm selected from time to time by the Corporation for
such purpose) or (ii) if the Common Stock is then listed or
admitted to trading on a national securities exchange, the
last sale price regular way for the Common Stock on such
Trading Day as reported in the consolidated transaction
reporting system for securities listed or traded on such
exchange, or, in case no such reported sale takes place on
such Trading Day, the reported closing bid price regular way
for the Common Stock on such Trading Day on the principal
national securities exchange on which the Common Stock is
then listed or admitted to trading.
<PAGE>
Page 32 of 67 Pages
(h) The term "Parity Stock" means Series A Preferred Stock,
Series B Preferred Stock, Series C Preferred Stock and Series
D Preferred Stock and all those classes and series of
preferred or special stock and all those series of Preferred
Stock which, by the terms of the Certificate of Incorporation
(as the same may hereafter be amended) or of the instrument
by which the Board of Directors of the Corporation, acting
pursuant to authority granted in the Certificate of
Incorporation (as the same may hereafter be amended), shall
designate the special rights and limitations of each such
class and series of preferred or special stock or series of
Preferred Stock, shall be on a
parity with Series E Preferred with respect to the right of
the holders thereof to receive dividends and to participate
in the assets of the Corporation distributable to
stockholders upon any liquidation, dissolution or windingup
of the Corporation.
(i) The term "Senior Stock" means all those classes and
series of preferred or special stock and all those series of
Preferred Stock which, by the terms of the Certificate of
Incorporation (as the same may hereafter be amended) or of
the instrument by which the Board of Directors of the
Corporation, acting pursuant to authority granted in the
Certificate of Incorporation (as the same may hereafter be
amended), shall designate the special rights and limitations
of each such class and series of preferred or special stock
or series of Preferred Stock, shall be, senior to Series E
Preferred with respect to the right of the holders thereof
to receive dividends or to participate in the assets of the
Corporation distributable to stockholders upon any
liquidation, dissolution or windingup of the Corporation.
(j) The term "Tangible Net Worth" means the total common
stockholders' equity of the Corporation on a parent company basis
(per Schedule 1 of the Corporation's Annual Report on Form 10-K)
adjusted as follows:
(i) decrease (subtract) for the recorded amount of the
direct and/or indirect investment in the equity of
The Strouse, Adler Company ("Strouse") or any
other subsidiary of the Corporation (excluding
Aristotle Sub., Inc., not including Strouse);
(ii) increase (add) for the recorded amount of minority
interest in the equity of any subsidiary of the
Corporation; and
(iii) increase (add) for the recorded amount of the
Series E Preferred,
<PAGE>
Page 33 of 67 Pages
all in accordance with GAAP. By way of example only, as at
June 30, 1997, on a pro-forma basis, the Corporation's
Tangible Net Worth is $2,551,160 computed as follows:
Corporation's total common stockholders' equity $6,510,711
Subtract indirect investment in the equity of
Strouse (6,403,576)
Add minority interest in the equity of
subsidiary 194,025
Add Series E Preferred 2,250,000
---------
$2,551,160
=========
(k) The term "Trading Day" means any day on which trading
takes place (i) in the over-the-counter market and prices
reflecting such trading are published by NASDAQ, or (ii) if
the Common Stock is then listed or admitted to trading on a
national securities exchange, on the principal national
securities exchange on which the Common Stock is then listed
or admitted to trading.
2. Dividends. (a) The holders of Series E Preferred, in
preference to the holders of Junior Stock, shall be
entitled, in conjunction with any provision then being made
for the holders of Parity Stock, to receive cumulative cash
dividends at, but not exceeding, the rate of $.3680 per
share per annum, payable when, as and if declared by the
Board of Directors of the Corporation out of any assets of
the Corporation lawfully available for the payment of
dividends, payable quarterly on the last days of March,
June, September and December in each year, commencing with
the last day of March, 1998; provided, however, in the event
that (i) the Corporation fails to pay in full dividends for
two consecutive quarters or (ii) the Corporation fails to
redeem the shares of Series E Preferred in accordance with
the provisions of Section 6 hereof, the dividend rate set
forth above shall be $.5520 per share per annum, but only
for the period or periods during which the events set forth
in (i) and/or (ii) remain unremedied. Such dividends on
Series E Preferred shall accrue and be cumulative with
respect to any shares issued on or after the date of the
initial issuance of shares of Series E Preferred, so that
the first dividend on shares of Series E Preferred, payable
on the last day of March, 1998, shall be in an amount per
share (computed to the nearest whole cent) determined by
multiplying $.3680 by a fraction, the numerator of which is
the number of days from the date of the initial issuance of
shares of Series E Preferred to March 31, 1998, and the
denominator of which is 365. Such dividends on Series E
Preferred shall accrue and be cumulative with respect to
shares issued subsequent to March 31, 1998 from the dividend
<PAGE>
Page 34 of 67 Pages
payment date next preceding the date on which such shares
are issued. Dividends shall accrue and be cumulative on a
day to day basis, whether or not earned or declared, on each
share of Series E Preferred from the date on which dividends
thereon are cumulative; it is understood, however, that
dividends shall not compound. If the stated dividends on
shares of Series E Preferred are not paid in full, shares of
Series E Preferred and all Parity Stock, if any, shall share
ratably in the payment of dividends, including accumulations
thereof, if any, on such shares in accordance with the sums
which would be payable on such shares if all dividends were
paid in full.
(b) So long as any Series E Preferred is outstanding, no
dividends whatever shall be paid or declared, nor shall any
distribution be made, on any Junior Stock, other than a
dividend or distribution payable in Junior Stock or warrants
or other rights to purchase Junior Stock, unless all
dividends on Series E Preferred for all past quarterly
dividend periods shall have been paid or declared and a sum
sufficient for the payment thereof set apart.
3. Liquidation Preference. Series E Preferred shall be preferred
as to assets over Junior Stock so that, in the event of any
liquidation, dissolution or winding up of the Corporation,
the holders of Series E Preferred shall be entitled, in
conjunction with any provision then being made for the
holders of Parity Stock, to have set apart for them or to be
paid out of the assets of the Corporation, after provision
for the holders of Senior Stock, if any, but before any
distribution is made to or set apart for the holders of
Junior Stock, upon such liquidation, dissolution or winding
up, an amount in cash equal to, and in no event more than,
$4.60 per share of Series E Preferred plus a sum of money
equal to all dividends accrued and unpaid thereon to the
date that payment is made available to the holders of Series
E Preferred. If, upon such liquidation, dissolution or
winding-up of the Corporation, the assets of the Corporation
available for distribution to the holders of its stock shall,
after provision for the holders of Senior Stock, if any, be
insufficient to permit the distribution in full of the amounts
receivable as aforesaid by the holders of Series E Preferred
and the amounts receivable by the holders of Parity Stock,
if any, then all such assets of the Corporation shall be
distributed ratably among the holders of Series E Preferred
and the holders of Parity Stock, if any, in proportion to the
amounts which each would have been entitled to receive if such
assets were sufficient to permit distribution in full as aforesaid.
Neither the consolidation nor merger of the Corporation nor the
sale, lease or transfer by the Corporation of all or any part
<PAGE>
Page 35 of 67 Pages
of its assets shall be deemed to be a liquidation, dissolution
or winding-up of the Corporation for the purposes of this
Section 4.
4. Voting Rights. (a) In addition to the rights hereinafter
specified in this Section 5 and any other rights provided by
law, a holder of Series E Preferred shall be entitled (i) to
the number of votes per share equal to the number of whole
shares of Common Stock into which each share of Series E
Preferred is convertible as of the record date for the
determination of stockholders entitled to vote, (ii) to vote
on all matters upon which the holders of Common Stock are
entitled to vote, other than the election of directors and
appointment of the Corporation's independent auditors, and
(iii) to notice of any stockholders meeting in accordance
with the By-laws of the Corporation. Fractional votes shall
not be permitted and any fractional voting rights resulting
from the above formula (after aggregating all shares of
Series E Preferred held by each holder) shall be rounded to
the nearest whole number (with one-half being rounded
upward). Except as otherwise provided in the Certificate of
Incorporation or as expressly required by law, the holders
of Series E Preferred and the holders of Common Stock shall
vote together as a single class on all matters presented to
stockholders and not as separate classes.
(b) The Corporation shall not amend, alter or repeal the
preferences, special rights or other powers of Series E Preferred
so as to affect adversely Series E Preferred or increase or
decrease the number of shares of Series E Preferred authorized
hereby, without the written consent or affirmative vote of the
holders of a majority of the then outstanding shares of Series E
Preferred, given in writing or by vote at a meeting, consenting
or voting (as the case may be) separately as a class. For this
purpose, without limiting the generality of the foregoing, (i)
the authorization of any shares of capital stock with preference
or priority over Series E Preferred as to the right to receive
either dividends or amounts distributable upon liquidation,
dissolution or winding up of the Corporation and (ii) any merger
or consolidation of the Corporation into or with another entity,
the sale or conveyance to another entity of the property of the
Corporation as an entirety or substantially as an entirety (other
than the sale of the stock or all or substantially all of the
assets of Strouse for fair value as determined by the Board of
Directors of the Corporation) or the liquidation or dissolution
of the Corporation, shall be deemed to affect adversely Series E
Preferred for purposes of this Section 5(b).
<PAGE>
Page 36 of 67 Pages
6. Redemption of Series E Preferred.
(a) Mandatory Redemption. On December 31, 2007 (the
"Maturity Date"), the holder(s) of outstanding shares of
Series E Preferred shall be entitled to receive an amount in
cash equal to $4.60 per share, subject to equitable
adjustments whenever there shall occur a stock dividend,
stock split, combination, reorganization, recapitalization,
reclassification or other similar event involving a change
in the Series E Preferred Stock (the "Redemption Price"),
plus all accrued and unpaid dividends on such shares of
Series E Preferred to the Maturity Date, whether or not
declared, out of funds legally available for the payment of
dividends, subject to the prior redemption of Series E
Preferred or the conversion of Series E Preferred at the
option of the holder at any time prior to the Maturity Date.
As of the Maturity Date, dividends on Series E Preferred
shall cease to accrue, all voting rights and privileges of
the Series E Preferred herein and all rights of the holders
thereof as stockholders of the Corporation shall cease and
such shares shall cease to be outstanding. The Corporation
shall make appropriate arrangements for the payment of cash
in respect of the Redemption Price plus an amount in cash
equal to all dividends accrued but unpaid thereon to the
date of redemption, if any, in exchange for and contingent
upon surrender of certificates representing Series E
Preferred, and the Corporation may defer the payment of the
Redemption Price or dividends on such shares of Series E
Preferred until, and make such payment contingent upon, the
surrender of such certificates representing Series E
Preferred, provided that the Corporation shall give the
holders of Series E Preferred such notice of any such
actions as the Corporation deems appropriate and upon such
surrender such holders shall be entitled to receive such
dividends declared and paid on such shares of Series E
Preferred subsequent to the Maturity Date. Amounts payable
in cash in respect of shares of Series E Preferred shall not
bear interest.
(b) Redemption at Option of the Corporation. Subject to the
provisions of Section 6(d) hereof, the Corporation, at its
option, may (except as otherwise provided in Section 7
hereof) redeem, at any time after December 31, 2001, the
whole or, from time to time, any part of Series E Preferred
at the Redemption Price, plus an amount in cash equal to all
dividends accrued but unpaid thereon to the date of
redemption.
(c) Redemption at Option of Holder. At any time after the
earlier to occur of (i) an Acceleration Event or (ii) December
31, 2001, the Corporation shall redeem, at the
<PAGE>
Page 37 of 67 Pages
option of a holder of Series E Preferred, the whole or, from
time to time, any part of Series E Preferred at the Redemption
Price, plus an amount in cash equal to all dividends accrued
but unpaid thereon to the date of redemption. If the funds of
the Corporation legally available for redemption of shares of
Series E Preferred are insufficient to redeem the total number
of shares of Series E Preferred submitted for redemption, those
funds which are legally available shall be used first to redeem
the maximum possible number of whole shares of Series E Preferred
ratably among the holders of such shares of Series E Preferred in
proportion to the full amount such holders of Series E Preferred
would otherwise be entitled to receive in redemption of such
shares and only after payment of the full amount such holders of
Series E Preferred would otherwise be entitled to receive in full
redemption of such shares shall any payment in redemption be made
to holders of any other class or series of the capital stock of
the Corporation. The shares of Series E Preferred not redeemed
shall remain outstanding and entitled to all rights and
preferences provided herein, including, but not limited to, the
accrual of dividends pursuant to Section 3 hereof. At any time
thereafter when additional funds of the Corporation are legally
available for the redemption of such shares of Series E
Preferred, such funds shall be used, at the end of the next
succeeding fiscal quarter, to redeem the balance of such shares,
or such portion thereof for which funds are then legally
available.
(d) Not less than fifteen (15) days nor more than fortyfive
(45) days prior to the date fixed for any redemption of
Series E Preferred (the "Redemption Date"), (x) pursuant to
Section 6(a) or 6(b), a notice specifying the Redemption
Date, time and place thereof shall be given by mail to the
holders of record of the shares to be redeemed at their
respective addresses as shown on the stock records of the
Corporation or (y) pursuant to Section 6(c), a notice
specifying the Redemption Date, time and place thereof shall
be given by mail to the Corporation at its principal
business address. If less than all shares of Series E
Preferred then outstanding are being redeemed, the notice of
redemption mailed to each holder of shares of Series E
Preferred to be redeemed or to the Corporation, as the case
may be, shall identify the shares of Series E Preferred held
by such holder to be redeemed. Except as provided above, no
failure to mail such notice nor any defect therein or in the
mailing thereof shall affect the validity of the proceedings
for such redemption except as to a holder (i) to whom the
Corporation has failed to mail such notice or (ii) whose
notice was defective. An affidavit of the Secretary of the
Corporation (or of a transfer agent for Series E Preferred,
<PAGE>
Page 38 of 67 Pages
if one has been appointed) that notice of redemption has
been mailed shall, in the absence of fraud, be prima facie
evidence of the facts stated therein.
(e) From and after the Redemption Date determined pursuant
to Section 6(b) or 6(c) (unless default be made by the
Corporation in providing monies for the payment of the
Redemption Price, plus an amount in cash equal to all
dividends accrued but unpaid thereon to the date of
redemption, except due to the failure of the holders of such
shares to surrender such certificates representing the
Series E Preferred to be redeemed), all dividends on shares
of Series E Preferred thereby called for redemption shall
cease to accrue, such shares shall cease to be outstanding
and all voting rights and privileges as set forth herein and
all rights of the holders thereof as stockholders of the
Corporation (except the right to receive payment of the
Redemption Price, plus an amount in cash equal to all
dividends accrued but unpaid thereon to the date of
redemption) shall cease.
(f) If the Corporation shall, with respect to shares of
Series E Preferred called for redemption, irrevocably
deposit, in trust for the account of the holders of shares
of Series E Preferred to be redeemed, a sum sufficient to
redeem such shares upon surrender of certificates therefor,
then no dividends shall accrue with respect to such shares
which have been called for redemption and such shares shall
not be deemed to be outstanding shares for the purpose of
voting or determining the total number of shares entitled to
vote on any matter on and after the date on which written
notice of redemption has been sent to holders thereof and
such deposit has been made. Any monies so deposited by the
Corporation which shall not be required for redemption
because of the exercise of any right of conversion
subsequent to the date of the deposit, and any interest
accrued on any monies so deposited, shall be repaid to the
Corporation upon request.
(g) Subject to the terms and provisions of Section 6(f), on
each Redemption Date, the Corporation shall, at the place
specified in the notice of redemption, upon presentation and
surrender to the Corporation by the holder thereof of one or
more certificates representing shares of Series E Preferred
to be redeemed, deliver or cause to be delivered to or upon
the written order of such holder a sum in cash equal to the
Redemption Price, plus an amount in cash equal to all
dividends accrued but unpaid thereon to the date of
redemption, of the shares of such holder to be redeemed on
such date, together with, if the certificate(s) presented
and surrendered by such holder represent a greater number of
<PAGE>
Page 39 of 67 Pages
shares than the number of shares to be redeemed from such
holder, one or more new certificates registered in the name
of such holder and representing the shares of Series E
Preferred not redeemed.
(h) Shares of Series E Preferred redeemed pursuant to this
Section 6 or converted pursuant to Section 7 hereof shall
thereupon be deemed retired and shall resume the status of
authorized but unissued shares of Preferred Stock (without
serial designation) and may, subject to the provisions
hereof, be reissued as shares of Series E Preferred or
shares of any other series of Preferred Stock as determined
by the Board of Directors of the Corporation.
7. Conversion.
(a) Subject to the provisions of Section 6 hereof regarding
redemption and to the terms and conditions of this Section
7, each share of Series E Preferred shall be convertible, at
the option of the holder thereof (except that, in respect of
any such shares which shall have been called for redemption
by the Corporation, such option shall terminate at the close
of business on the second full business day prior to the
date fixed for redemption unless the Corporation shall
default in the payment of the Redemption Price, plus an
amount in cash equal to all dividends accrued but unpaid
thereon to the date of redemption, unless due to the failure
of the holders of such shares to surrender such certificates
representing the Series E Preferred to be redeemed), into
the number of whole shares (calculated to the nearest whole
share with 5/10ths of a share being considered as nearer to
the next higher whole share) of fully paid and nonassessable
Common Stock as is determined by dividing $4.60 by the then
applicable conversion price fixed or determined pursuant to
the provisions of Section 7(d) hereof, by surrender of a
certificate or certificates for shares of Series E Preferred
so to be converted at the principal place of business of the
Corporation to the attention of the Secretary (or at such
other place or places, or to such other person's attention,
as may be designated by the Corporation) at any time during
usual business hours, together with written notice that the
holder elects to convert all such shares of Series E
Preferred, or a stated number of shares thereof, in
accordance with the provisions of this Section 7. Such
notice shall also state the name or names (with addresses)
in which the certificate or certificates for Common Stock
shall be issued.
(b) As promptly as practicable after exercise by any holder
of such holder's option to convert any shares of Series E
Preferred pursuant to the provisions of this Section 7, the
<PAGE>
Page 40 of 67 Pages
Corporation shall deliver or cause to be delivered to or
upon the written order of such holder one or more certifi-
cates representing the number of shares of Common Stock
issuable upon such conversion, issued in such name or names
as such holder may direct, together with, if the
certificate(s) surrendered evidence a greater number of
shares than the number of shares to be converted, one or
more certificates evidencing the shares of Series E
Preferred not to be converted. Each such conversion shall
be deemed to have been made immediately prior to the close
of business on the day the option to convert is exercised,
and all rights of the converting holder as a holder of the
shares of Series E Preferred surrendered for conversion
shall cease at such time and the person or persons in whose
name or names the certificate(s) for the shares of Common
Stock issuable upon conversion are to be issued shall be
treated for all purposes as having become the record holder
or holders thereof at such time.
(c) If the last day for the exercise of the conversion
option be, in the jurisdiction where the principal place of
business of the Corporation (or other place designated by
the Corporation as a place for conversion of shares of
Series E Preferred) is located, a Saturday, Sunday or legal
holiday, then such conversion option may be exercised, at
the conversion price in effect on such last day, upon the
next succeeding day not a Saturday, Sunday or legal holiday
in such jurisdiction.
(d) The conversion price for shares of Series E Preferred
shall be $4.60 per share, provided that, if adjustment of
the conversion price is required pursuant to Sections
7(d)(i) through 7(d)(v) hereof, the conversion price shall
be such adjusted price.
(i) In case any of the following shall occur:
(x) any reclassification or change in the
outstanding shares of Common Stock (other than a
change in par value, or from par value to no par
value, or from no par value to par value, or as a
result of a subdivision or combination); or
(y) any consolidation or merger other than
involving a subsidiary of the Corporation (other
than Strouse) to which the Corporation is a party
(other than a merger in which the Corporation is
the surviving corporation and which does not
result in any reclassification of, or change in,
the outstanding shares of Common Stock); or
<PAGE>
Page 41 of 67 Pages
(z) any sale or conveyance to an other entity
of the property of the Corporation as an entirety
or substantially as an entirety, other than a
sale/leaseback, mortgage or other similar
financing transaction,
then, in each such case, appropriate provision shall be
made, effective as of the effective date of any such
reclassification, change, consolidation, merger, sale or
conveyance, as the case may be, whereby the holders of
Series E Preferred then outstanding shall have the right to
convert such shares of Series E Preferred into the kind and
amount of shares of stock and other securities and property
which would have been receivable upon such reclassifica
tion, change, consolidation, merger, sale or conveyance by a
holder of shares of Common Stock which would have been
issuable upon conversion of the shares of Series E Preferred
immediately prior to such reclassification, change,
consolidation, merger, sale or conveyance. In connection
with any provision made pursuant to the terms of the
preceding sentence, provision shall also be made for
adjustments which shall be as nearly equivalent as may be
practicable to the adjustments provided for in this Section
7. The above provisions of this Section 7(d)(i) shall
similarly apply to successive reclassifications, changes,
consolidations, mergers, sales or conveyances.
(ii) In case the Corporation shall at any time
subdivide or combine the outstanding shares of Common
Stock issuable upon conversion of Series E Preferred,
then, in each such case, the conversion price in effect
immediately prior to such subdivision or combination
shall, effective as of the effective date of such
subdivision or combination, be proportionately
decreased in the case of subdivision or proportionately
increased in the case of combination.
(iii) In case the Corporation shall issue rights,
warrants or options entitling the holder to subscribe
for or purchase shares of Common Stock (other than
Excluded Shares), (A) at a price per share of Common
Stock less than 85% of the Fair Market Value of a share
of Common Stock on the record date mentioned below or
(B) at a price per share of Common Stock less than the
conversion price in effect on the record date mentioned
below, the conversion price shall be reduced to the
lower of the prices determined by:
(y) multiplying the conversion price in effect
immediately prior to the record date mentioned
below by a fraction, the numerator of which shall
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Page 42 of 67 Pages
be the number of shares of Common Stock
outstanding on the record date mentioned below
plus the number of shares of Common Stock which
the aggregate offering price of the total number
of shares of Common Stock so offered for
subscription or purchase would purchase at 85% of
the Fair Market Value of a share of Common Stock
on such record date, and the denominator of which
shall be the number of shares of Common Stock
outstanding on such record date plus the maximum
number of additional shares of Common Stock
offered for subscription or purchase; and
(z) multiplying the conversion price in effect
immediately prior to the record date mentioned
below by a fraction, the numerator of which shall
be the number of shares of Common Stock
outstanding on the record date mentioned below
plus the number of shares of Common Stock which
the aggregate offering price of the total number
of shares of Common Stock so offered for
subscription or purchase would purchase at the
conversion price then in effect and the
denominator of which shall be the number of shares
of Common Stock outstanding on such record date
plus the maximum number of additional shares of
Common Stock offered for subscription or purchase.
Such adjustment shall be made whenever such rights,
warrants or options are issued; and, to the extent that
such rights, warrants or options expire unexercised,
the conversion price shall be readjusted to the
conversion price which would then be in effect had the
adjustments made as of the record date for the issuance
of such rights, warrants or options been made upon the
basis of the issuance of rights, warrants or options to
subscribe for or purchase only the number of shares of
Common Stock as to which such rights, warrants or
options were actually exercised. In case the
Corporation shall issue rights, warrants or options
entitling the holder to subscribe for or purchase
securities convertible into, exchangeable for or
carrying a right to purchase shares of Common Stock
(such securities being referred to herein as
"Convertible Securities"), (A) such issuance shall be
deemed to be an issuance of rights, warrants or options
to such holders entitling them to subscribe for or
purchase Common Stock at the price per share for which
Common Stock is issuable upon conversion, exchange or
exercise of such Convertible Securities (determined by
dividing (x) the minimum aggregate consideration
<PAGE>
Page 43 of 67 Pages
payable to the Corporation upon the issuance of such
rights, warrants or options, plus the minimum aggregate
amount of additional consideration, if any, other than
such Convertible Securities, payable upon the
conversion, exchange or exercise thereof, by (y) the
total maximum number of shares of Common Stock issuable
upon the conversion, exchange or exercise of such
Convertible Securities issuable upon the exercise of
such rights, warrants or options), and (B) the total
maximum number of shares of Common Stock issuable upon
conversion, exchange or exercise of such Convertible
Securities shall be deemed to be the number of shares
of Common Stock offered for subscription or purchase.
To the extent that such Convertible Securities expire
or otherwise terminate without being converted,
exercised or exchanged, the conversion price shall be
readjusted to the conversion price which would then be
in effect had the adjustments made as of the record
date for the issuance of such rights, warrants or
options been made upon the basis of the issuance of the
number of shares of Common Stock that were actually
issued upon the conversion, exercise or exchange of
such Convertible Securities.
(iv) In case the Corporation shall pay a
dividend or make a distribution to all holders of
shares of Common Stock, as such, of shares of its
stock, evidences of its indebtedness, assets or rights,
warrants or options (excluding dividends or
distributions payable in cash out of retained earnings
of the Corporation, distributions relating to sub
divisions and combinations covered by Section 7(d)(ii)
hereof and rights, warrants or options to purchase or
subscribe for shares of Common Stock or Convertible
Securities covered by Section 7(d)(iii) hereof), then
in each such case the conversion price shall be
adjusted so that the same shall equal the price
determined by multiplying the conversion price in
effect immediately prior to the record date mentioned
below by a fraction, the numerator of which shall be
the total number of shares of Common Stock outstanding
immediately prior to such record date multiplied by the
Fair Market Value of a share of Common Stock on such
record date, less the fair market value (as determined
by the Board of Directors of the Corporation) as of
such record date of said shares of stock, evidences of
indebtedness or assets so paid or distributed or of
such rights, warrants or options, and the denominator
of which shall be the total number of shares of Common
Stock outstanding immediately prior to such record date
multiplied by the Fair Market Value of a share of Common
<PAGE>
Page 44 of 67 Pages
Stock on such record date. Such adjustment shall be
made whenever any such dividend is paid or such
distribution is made and shall become effective
immediately after the record date for the determination
of stockholders entitled to receive such dividend or
distribution.
(v) In case the Corporation shall issue
shares of Common Stock, other than Excluded Shares, (A)
at a price per share of Common Stock less than 85% of
the Fair Market Value of a share of Common Stock on the
record date mentioned below or (B) at a price per share
of Common Stock less than the conversion price in
effect on the record date mentioned below, the
conversion price shall be reduced to the lower of the
prices determined by:
(y) multiplying the conversion price in
effect immediately prior to the record date
mentioned below by a fraction, the numerator of
which shall be the number of shares of Common
Stock outstanding on the record date mentioned
below plus the number of shares of Common Stock
which the aggregate offering price of the total
number of shares of Common Stock so issued would
purchase at 85% of the Fair Market Value of a
share of Common Stock on such record date, and the
denominator of which shall be the number of shares
of Common Stock outstanding on such record date
plus the number of additional shares of Common
Stock so issued; and
(z) multiplying the conversion price in
effect immediately prior to the record date
mentioned below by a fraction, the numerator of
which shall be the number of shares of Common
Stock outstanding on the record date mentioned
below plus the number of shares of Common Stock
which the aggregate offering price of the total
number of shares of Common Stock so issued would
purchase at the conversion price then in effect,
and the denominator of which shall be the number
of shares of Common Stock outstanding on such
record date plus the number of additional shares
of Common Stock so issued.
Such adjustment shall be made whenever such shares are
issued. In case the Corporation shall issue Convertible
Securities (A) such issuance shall be deemed to be an
issuance of Common Stock at the price per share for
which Common Stock is issuable upon conversion,
<PAGE>
Page 45 of 67 Pages
exchange or exercise of such Convertible Securities
(determined by dividing (x) the minimum aggregate
consideration payable to the Corporation upon the
conversion, exchange or exercise thereof, by (y) the
total maximum number of shares of Common Stock issuable
upon the conversion, exchange or exercise of such
Convertible Securities), and (B) the total maximum
number of shares of Common Stock issuable upon
conversion, exchange or exercise of such Convertible
Securities shall be deemed to be the number of shares
of Common Stock so issued. To the extent that such
Convertible Securities expire or otherwise terminate
without being converted, exercised or exchanged, the
conversion price shall be readjusted to the conversion
price which would then be in effect had the adjustments
made as of the record date for the issuance of such
Convertible Securities been made upon the basis of the
issuance of the number of shares of Common Stock that
were actually issued upon the conversion, exercise or
exchange of such Convertible Securities.
(vi) For purposes of Sections 7(d)(iii)
through 7(d)(v) hereof, the following provisions (A) to
(D) shall also be applicable:
(A) The number of shares of Common Stock
outstanding at any given time shall include shares
of Common Stock owned or held by or for the
account of the Corporation or any of its
subsidiaries, and the issuance of rights, warrants
or options to purchase or subscribe for such
treasury shares (or securities convertible into,
exchangeable for or carrying a right to purchase
such treasury shares) or the distribution of any
such treasury shares shall not be considered an
issuance, dividend or distribution for purposes of
Sections 7(d)(iii) through (v) hereof.
(B) No adjustment of the conversion price
shall be made unless such adjustment would require
an increase or decrease of at least one percent
(1%) in such price; provided that any adjustments
which by reason of this clause (B) are not
required to be made shall be carried forward and
shall be made at the time of and together with the
next subsequent adjustment which, together with
any adjustment(s) so carried forward, shall
require an increase or decrease of at least one
percent in the conversion price then in effect
hereunder.
<PAGE>
Page 46 of 67 Pages
(C) In any case in which this Section 7(d)
shall require that an adjustment shall become
effective immediately after a record date for an
event, the Corporation may defer until the occur-
rence of such event issuing to the holder of
Series E Preferred converted after such record
date and before the occurrence of such event the
additional shares of Common Stock issuable upon
such conversion by reason of the adjustment
required by such event over and above the shares
issuable upon such conversion before giving effect
to such adjustment.
(D) Except as otherwise expressly provided
in this Section 7(d), no adjustment in the
conversion price shall be made by reason of the
issuance or sale, in exchange for cash,property
or services, of shares of Common Stock, or any
Convertible Securities.
(e) Whenever the conversion price is adjusted as provided
in this Section 7, then, in each such case, the Corporation
shall mail, or cause to be mailed, to the holders of Series
E Preferred, of record not more than ten (10) days before
the date of mailing, a notice in writing stating the
adjusted conversion price then and thereafter effective
under the provisions hereof, the method of calculating such
adjusted conversion price shown in reasonable detail, and
the facts on which such calculation is based. An affidavit
of the Secretary of the Corporation (or of a transfer agent
for the Series E Preferred, if one has been appointed) that
any such notice has been mailed shall, in the absence of
fraud, be prima facie evidence of the facts stated therein.
(f) As used in this Section 7, the term "Common Stock"
shall mean and include the Corporation's Common Stock
authorized on the date of the original issue of shares of
Series E Preferred and shall also include any capital stock
of any class of the Corporation thereafter authorized which
shall not be limited to a fixed sum or percentage in respect
of the rights of the holders thereof to participate in
dividends and in the distribution of assets upon the
voluntary or involuntary liquidation, dissolution or winding
up of the Corporation.
(g) The Corporation shall pay cash in lieu of issuing a
fractional share of Common Stock upon the conversion of any
Series E Preferred.
(h) Upon any conversion, no adjustment shall be made for
dividends on Series E Preferred surrendered for conversion
<PAGE>
Page 47 of 67 Pages
or on Common Stock delivered.
(i) The Corporation will at all times reserve and keep
available out of its authorized but unissued stock, solely
for the purpose of issue upon conversion of Series E
Preferred, as provided in this Section 7, such number of
shares of Common Stock as shall from time to time be
sufficient to effect the conversion of all outstanding
shares of Series E Preferred, and, upon the issuance thereof
upon conversion, all in accordance with the provisions
hereof, such shares of Common Stock when issued upon receipt
of certificates representing such shares of Series E
Preferred, plus any additional consideration, shall be duly
and validly issued, fully paid and nonassessable.
(j) The issuance of certificates for shares of Common Stock
shall be made without charge for any tax in respect of such
issuance. However, if any such certificate is to be issued
in a name other than that of the holder of the converted
Series E Preferred, the Corporation shall not be required to
issue or deliver any stock certificate or certificates
unless and until the holder has paid to the Corporation the
amount of any tax which may be payable in respect of any
transfer involved in such issuance or shall establish to the
satisfaction of the Corporation that such tax has been paid.
(k) In the event of (i) any taking by the Corporation of a
record of the holders of any class of securities for the
purpose of determining the holders of such securities who
are entitled to receive any dividend (other than a cash
dividend) or other distribution on Common Stock or any
right, warrant or option to subscribe for or purchase any
shares of Common Stock or any Convertible Securities, or
(ii) any reclassification or recapitalization of the capital
stock of the Corporation, any consolidation or merger of the
Corporation with or into another corporation, any transfer
of all or substantially all of the assets of the Corporation
to any other corporation, entity or person, or any voluntary
or involuntary dissolution, liquidation or winding up of the
Corporation, the Corporation shall mail to each holder of
Series E Preferred at least ten (10) days prior to the
record date, effective date, or exchange date specified in
such notice, a notice specifying (A) the date on which any
such record is to be taken for the purpose of such dividend,
distribution, rights, warrants, or options, (B) the date on
which any such reclassification, recapitalization, consolidation,
merger, transfer, dissolution, liquidation, or winding-up is
expected to become effective, and (C) the time, if any is to
be fixed, as to when the holders of record of Common Stock
(or other securities) shall be entitled to exchange their
shares of Common Stock for
<PAGE>
Page 48 of 67 Pages
securities or other property deliverable upon such
reorganization, reclassification, recapitalization,
consolidation, merger, transfer, dissolution, liquidation or
winding up.
8. General. The section headings contained in this Certificate
of Designations are for reference purposes only and shall
not affect in any way the meaning of this Certificate of
Designations.
THE UNDERSIGNED, the President and Chief Executive Officer
of The Aristotle Corporation, hereby make this certificate,
declaring and certifying that this is the duly authorized act and
deed of the Corporation and the facts herein stated are true, and
accordingly have hereunto set his hand this ___ day of _________,
1997.
THE ARISTOTLE CORPORATION
By: /s/ John S. Crawford
---------------------
Name: John S. Crawford
Title: President and Chief
Executive Officer
<PAGE>
Page 49 of 67 Pages
EXHIBIT C
---------
THE ARISTOTLE CORPORATION
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement"), made
and entered into as of the 22nd day of October, 1997, by and
among The Aristotle Corporation, a Delaware corporation (the
"Company"), and Geneve Corporation, a Delaware corporation (the
"Shareholder").
RECITALS
--------
WHEREAS, the Company is issuing up to 489,131 shares of
Series E Convertible Preferred Stock, $.01 par value, at a
purchase price of $4.60 per share to the Shareholder pursuant to
the Preferred Stock Purchase Agreement of even date herewith
among the Company and the Shareholder (the "Purchase
Agreement"); and
WHEREAS, one of the conditions to the consummation of the
transactions contemplated by the Purchase Agreement is the
execution and delivery of this Agreement to provide for
registration rights for the shares of Series E Convertible
Preferred Stock purchased by the Shareholder as set forth
herein.
NOW, THEREFORE, in consideration of the foregoing and the
mutual covenants and agreements set forth herein and in the
Plan, the parties hereto mutually agree as follows:
1. Registration Rights.
1.1 Definitions.
(a) "Common Stock" means the common stock, $.01 par value
per share, of the Company;
(b) "Holder" means any person owning or having the right
to acquire Registrable Securities; and
(c) "Form S-3," "Form S-4" and "Form S-8" mean such
respective forms under the 1933 Act as in effect on the date
hereof or any successor registration forms to Form S-3, Form S-4
and Form S-8, respectively, under the 1933 Act subsequently
adopted by the Securities and Exchange Commission ("SEC"),
regardless of its designation.
(d) "Preferred Shares" means the shares of the Series E
Convertible Preferred Stock, $.01 par value per share, of the
Company, issued pursuant to the Purchase Agreement.
<PAGE>
Page 50 of 67 Pages
(e) "Register," "registered" and "registration" refer to a
resale registration effected by preparing and filing a
registration statement in compliance with the 1933 Act and
applicable rules and regulations thereunder, and the declaration
or ordering of the effectiveness of such registration statement,
or, as the context may require, under the Exchange Act or
applicable state securities laws.
(f) "Registrable Securities" means the shares of the
Common Stock issued or issuable upon conversion of the Preferred
Shares. As to any particular Registrable Securities, such
securities will cease to be Registrable Securities when:
(1) they have been effectively registered under the 1933 Act and
disposed of in accordance with the registration statement
covering them; (2) they are transferred pursuant to Rule 144 (or
any similar provision that is in force) under the 1933 Act; or
(3) they have been otherwise transferred and new certificates
for them not bearing a restrictive legend have been delivered by
the Company;
The number of shares of Registrable Securities then
outstanding shall be determined by adding the number of shares
of Common Stock outstanding as a result of the conversion of
Preferred Shares and the number of shares of Common Stock which
are issuable upon conversion of Preferred Shares;
(g) "1933 Act" means the Securities Act of 1933, as
amended, and the rules and regulations of the SEC thereunder,
all as the same shall be in effect from time to time.
(h) "1934 Act" means the Securities Exchange Act of 1934,
as amended, and the rules and regulations of the SEC thereunder,
all as the same shall be in effect from time to time.
1.2 Request for Registration.
(a) Demand Rights. (a) At any time after the second
anniversary of the date hereof, the Holders of Registrable
Securities constituting a majority of the total shares of
Registrable Securities then outstanding may request the Company
to register under the Securities Act all or any portion of the
shares of Registrable Securities held by such requesting Holder
or Holders for sale in the manner specified in such notice;
provided that the aggregate number of shares to be registered
pursuant to such request shall be not less than 50,000.
Notwithstanding anything to the contrary contained herein, the
Company shall not be required to cause a registration pursuant
to this Subsection 1.2(a) to become effective during the period
starting with the filing of, and ending on the date which is one
hundred and eighty (180) days after the effective date of, a
registration statement filed by the Company covering a firm
commitment underwritten public offering of Common Stock under
the Securities Act.
(b) Following receipt of any notice under this Section
1.2, the Company shall immediately notify all Holders of
Registrable Securities from whom notice has not been received
and such Holders shall then be entitled within twenty (20) days
after receipt of such notice from the Company to request the
Company to include in the requested registration all or any
portion of their shares of Registrable Securities. The Company
shall use its best efforts to register under the 1933 Act, for
public sale in accordance with the method of disposition specified
in the notice from
<PAGE>
Page 51 of 67 Pages
requesting Holders described in paragraph (a) above, the number
of shares of Registrable Securities specified in such notice
(and in all notices received by the Company from other Holders
within twenty (20) days after the receipt of such notice by such
Holders). The Company shall be obligated to register the
Registrable Securities pursuant to this Section 1.2 on three (3)
occasions only; provided, however, that such obligation shall be
deemed satisfied only when a registration statement covering all
shares of Registrable Securities specified in notices received
as aforesaid (other than shares voluntarily withdrawn by the
Holder thereof), for sale in accordance with the method of
disposition specified by the requesting Holders, shall have
become effective and, if such method of disposition is a firm
commitment underwritten public offering, all such shares shall
have been sold pursuant thereto.
(c) If the Holders requesting such registration intend to
distribute the Registrable Securities covered by their request
by means of an underwriting, they shall so advise the Company as
a part of their request made pursuant to this Section 1.2 and
the Company shall include such information in the written notice
referred to in paragraph (b) above. The right of any Holder to
registration pursuant to this Section 1.2 shall be conditioned
upon such Holder's agreeing to participate in such underwriting
and to permit inclusion of such Holder's Registrable Securities
in the underwriting. If such method of disposition is an
underwritten public offering, the Holders of at least a majority
in interest of the shares of Registrable Securities to be sold
in such offering may designate the managing underwriter of such
offering, subject to the approval of the Company, which approval
shall not be unreasonably withheld or delayed. A Holder may
elect to include in such underwriting all or a part of the
Registrable Securities it holds.
(d) A registration statement filed pursuant to this
Section 1.2 may, subject to the following provisions, include
(i) shares of Common Stock for sale by the Company for its own
account, (ii) shares of Common Stock held by officers or
directors of the Company and (iii) shares of Common Stock held
by persons who by virtue of agreements with the Company are
entitled to include such shares in such registration (the "Other
Shareholders"), in each case for sale in accordance with the
method of disposition specified by the requesting Holders. If
such registration shall be underwritten, the Company, such
officers and directors and Other Shareholders proposing to
distribute their shares through such underwriting shall enter
into an underwriting agreement in customary form with the
representative of the underwriter or underwriters selected for
such underwriting
1.3 Company Registration. If at any time the Company
proposes to register (including for this purpose a registration
effected by the Company for shareholders other than the Holders)
any of its capital stock or other securities under the 1933 Act
in connection with the public offering of such securities (other
than a registration on Form S-8 relating solely to the sale of
securities to participants in a Company stock plan, or a
registration on Form S-4 or any successor form), the Company ,
at such time, promptly give each Holder written notice of such
registration. Upon the written request of any Holder given
within twenty (20) days after delivery of such notice by the
Company, the Company shall, subject to the provisions of Section
1.8, use its best efforts to cause a registration statement
covering all of the Registrable Securities that each such Holder
has requested to be registered to become effective under the
1933 Act. The Company shall be under no obligation to complete
any offering of its securities it proposes to make and shall
incur no liability to any Holder for its failure to do so.
<PAGE>
Page 52 of 67 Pages
1.4 Obligations of the Company. Whenever required under
this Section 1 to use its best efforts to effect the
registration of any Registrable Securities, the Company shall,
as expeditiously as possible:
(a) Prepare and file with the SEC a registration statement
with respect to such Registrable Securities and use its best
efforts to cause such registration statement to become
effective, and, if applicable, upon the request of the Holders
of a majority of the Registrable Securities registered
thereunder use its best efforts consistent with then applicable
restrictions of SEC registration forms to keep such registration
statement effective for up to: (i) the seventh (7th) anniversary
of the date hereof if the registration is effected on Form S-3
or (ii) nine (9) months or until the Holders have informed the
Company in writing that the distribution of their securities has
been completed if the registration is effected on a form other
than Form S-3.
(b) Prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus
used in connection with such registration statement, and use its
best efforts to cause each such amendment to become effective,
as may be necessary to comply with the provisions of the 1933
Act with respect to the disposition of all securities covered by
such registration statement.
(c) Furnish to the Holders such reasonable number of
copies of a prospectus, including a preliminary prospectus, in
conformity with the requirements of the 1933 Act, and such other
documents as they may reasonably request in order to facilitate
the disposition of Registrable Securities owned by them.
(d) Use its best efforts to register or qualify the
securities covered by such registration statement under such
other securities or Blue Sky laws of such jurisdictions as shall
be reasonably requested by the Holders provided that the Company
shall not be required in connection therewith or as a condition
thereto to qualify to do business or to file a general consent
to service of process in any such states or jurisdiction.
(e) In the event of any underwritten public offering,
enter into and perform its obligations under an underwriting
agreement, in usual and customary form with the managing
underwriter of such offering. Each Holder participating in such
underwriting shall also enter into and perform its obligations
under such an agreement, including furnishing any opinion of
counsel or entering into a lock-up agreement reasonably
requested by the managing underwriter.
(f) Notify each Holder of Registrable Securities covered
by such registration statement, at any time when a prospectus
relating thereto covered by such registration statement is
required to be delivered under the 1933 Act, of the happening of
any event as a result of which the prospectus included in such
registration statement, as then in effect, includes an untrue
statement of a material fact or omits to state a material fact
required to be stated therein or necessary to make the
statements therein not misleading in the light of the
circumstances then existing and promptly file such amendments
and supplements which may be required pursuant to subparagraph
(b) of this Section 1.4 on account of such event and use its
best efforts to cause each such amendment and supplement to
become effective.
<PAGE>
Page 53 of 67 Pages
(g) Furnish, at the request of any Holder requesting
registration of Registrable Securities pursuant to this Section
1, on the date that such Registrable Securities are delivered to
the underwriters for sale in connection with a registration
pursuant to this Section 1, if such securities are being sold
through underwriters, or, if such securities are not being sold
through underwriters on the date that the registration statement
with respect to such securities becomes effective, a letter
dated such date, from the independent certified public
accountant of the Company, in form and substance as is
customarily given by independent certified public accountants to
underwriters in an underwritten public offering, addressed to
the underwriters, if any, and to the Holders requesting
registration of Registrable Securities.
(h) Apply for listing and use its best efforts to list the
Registrable Securities being registered on any national securities
exchange on which the Common Stock is then listed or, if the
Common Stock is not then listed on a national securities exchange,
but is quoted on the automated quotation system of the National
Association of Securities Dealers, Inc., promptly file
an additional listing application with respect to the Registrable
Securities.
1.5 Furnish Information. It shall be a condition precedent
to the obligations of the Company to take any action pursuant to
this Section 1 that the selling Holders shall furnish to the
Company such information regarding themselves, the Registrable
Securities held by them, and the intended method of disposition
of such securities as shall be required to effect the
registration of their Registrable Securities.
1.6 Expenses of Registrations. All expenses other than
underwriting discounts, fees and commissions relating to
Registrable Securities incurred in connection with the
registration, filing or qualification of the Registrable
Securities pursuant to Section 1.2 and 1.3 and other than
counsel fees and expenses of the Holders and underwriter counsel
fees and expenses, including, without limitation, all
registration, filing and qualification fees, printing and
accounting fees and fees and disbursements of counsel for the
Company shall be borne by the Company; provided, however, that
the Company shall not be required to pay for any expenses of any
registration proceeding begun pursuant to Section 1.2, if the
registration request is subsequently withdrawn at any time at
the request of the Holders of a majority of the Registrable
Securities to be registered (in which case all participating
Holders shall bear such expenses).
1.7 Underwriting Requirements. In connection with any
offering involving an underwriting of securities being issued by
the Company, the Company shall not be required under Section 1.3
to include any of the Holders' securities in such underwriting
unless they accept the terms of the underwriting as agreed upon
between the Company and the underwriters selected by it, and
then, subject to the provisions of this Section 1.7, only in
such quantity, if any, as, in the opinion of the underwriters,
marketing factors permit. If the managing underwriter for the
offering shall advise the Company in writing that the total
amount of securities, including Registrable Securities requested
to be included in such offering, exceeds the amount of
securities proposed to be included in such offering that can be
successfully offered, then the Company shall include in the
offering only that number of such securities, including
Registrable Securities, which the managing underwriter believes
marketing factors permit the securities so included to be
apportioned as follows: first all shares of Common Stock held
by officers or directors (other than Registrable
<PAGE>
Page 54 of 67 Pages
Securities) of the Company or by Other Shareholders (other than
Registrable Securities or shares of Common Stock submitted for
registration pursuant to Section 1.3 of that certain Registration
Rights Agreement dated April 11, 1994) be excluded from such
registration to the extent so required by such managing underwriter,
and unless the Holders of such shares and the Company have otherwise
agreed in writing, such exclusion shall be applied first to the shares
held by the directors and officers, and if a limitation of the number
of shares is still required by such managing underwriter, then to
the shares of Common Stock of the Other Shareholders (other than
Registrable Securities or share of Common Stock submitted
for registration pursuant to Section 1.3 of that certain
Registration Rights Agreement dated April 11, 1994) to the
extent required by the managing underwriter, and if further
limitation on the number of shares to be included in the
underwriting is required, then the number of shares held by
Holders that may be included in the underwriting shall be
apportioned pro rata among the selling Holders according to the
total amount of securities requested to be registered therein
owned by each selling Holder or in such other proportions as
shall be mutually agreed to by such selling Holders; provided
however; that notwithstanding the exclusion of Registrable
Securities owned by the Holders, no shares of Common Stock
submitted for registration pursuant to Section 1.3 of that
certain Registration Rights Agreement dated April 11, 1994 shall
be excluded unless and until all shares held by Holders shall
have been excluded. In any event all securities to be sold
other than Registrable Securities and shares of Common Stock
submitted for registration pursuant to Section 1.3 of that
certain Registration Rights Agreement dated April 11, 1994 will
be excluded prior to any exclusion of Registrable Securities.
No Registrable Securities or any other security excluded from
the underwriting by reason of the underwriter's marketing
limitation shall be included in such registration. If any
Holder of Registrable Securities, officer, director or Other
Shareholder who has requested inclusion in such registration as
provided above, disapproves of the terms of the underwriting,
such Holder of securities may elect to withdraw therefrom by
written notice to the Company and the managing underwriter.
1.8 Indemnification. In the event any Registrable
Securities are included in a registration statement under this
Section 1:
(a) Company Indemnification. To the extent permitted by
law, the Company will indemnify and hold harmless each Holder,
the officers, directors, partners, agents and employees of each
Holder, any underwriter (as defined in the 1933 Act) for such
Holder, and each person, if any, who controls such Holder or
underwriter within the meaning of the 1933 Act or the 1934 Act,
against any losses, claims, damages, or liabilities (joint or
several) to which they may become subject under the 1933 Act,
the 1934 Act or other federal or state law, insofar as such
losses, claims, damages, or liabilities (or actions in respect
thereof) arise out of or are based upon any of the following
statements, omissions or violations (a "Violation"): (i) any
untrue statement or alleged untrue statement of a material fact
contained in such registration statement, including any
preliminary prospectus or final prospectus contained therein or
any amendments or supplements thereto, (ii) the omission or
alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not
misleading, or (iii) any violation or alleged violation by the
Company of the 1933 Act, the 1934 Act, any state securities law
or any rule or regulation promulgated under the 1933 Act, the
1934 Act or any state securities law. The Company will reimburse
each such Holder, officer, director, partner, agent, employee,
underwriter or controlling person for any legal or other
expenses reasonably incurred by them in connection with
<PAGE>
Page 55 of 67 Pages
investigating, defending or settling any such loss, claim,
damage, liability, or action. The indemnity agreement contained
in this Section 1.8(a) shall not apply to amounts paid in settle-
ment of any loss, claim, damage, liability, or action if such
settlement is effected without the consent of the Company which
consent shall not be unreasonably withheld, nor shall the Company
be liable to a Holder in any such case for any such loss, claim,
damage, liability, or action (i) to the extent that it arises out
of or is based upon a Violation which occurs in reliance upon and
in conformity with written information furnished (or omitted to be
furnished) expressly for use in connection with such registration
by or on behalf of such Holder, underwriter or controlling person
or (ii) in the case of a sale directly by a Holder of Registrable
Securities (including a sale of such Registrable Securities
through any underwriter retained by such Holder to engage in a
distribution solely on behalf of such Holder), if such untrue
statement or alleged untrue statement or omission or alleged
omission was contained in a preliminary prospectus and corrected
in a final or amended prospectus, and such Holder failed to
deliver a copy of the final or amended prospectus at or prior to
the confirmation of the sale of the Registrable Securities to
the person asserting any such loss, claim, damage or liability
in any case where such delivery is required by the Securities Act.
(b) Holder Indemnification. To the extent permitted by
law, each selling Holder will indemnify and hold harmless the
Company, each of its directors, each of its officers who have
signed the registration statement, each person, if any, who
controls the Company within the meaning of the 1933 Act, each
agent and any underwriter for the Company, and any other Holder
selling securities in such registration statement or any of its
directors, officers, partners, agents or employees or any person
who controls such Holder or underwriter, against any losses,
claims, damages, or liabilities (joint or several) to which the
Company or any such director, officer, controlling person, agent
or underwriter or controlling person, or other such Holder or
director, officer or controlling person may become subject,
under the 1933 Act, the 1934 Act or other federal or state law,
insofar as such losses, claims, damages or liabilities (or
actions in respect thereto) arise out of or are based upon any
Violation, in each case to the extent that such Violation occurs
in reliance upon and in conformity with information furnished
(or omitted to be furnished) by or on behalf of such Holder for
use in connection with such registration; and each such Holder
will reimburse any legal or other expenses reasonably incurred
by the Company or any such director, officer, controlling
person, officer, director, partner, agent, employee, or
controlling person in connection with investigating, defending
or settling any such loss, claim, damage, liability, or action.
The indemnity agreement contained in this Section 1.8(b) shall
not apply to amounts paid in settlement of any loss, claim,
damage, liability or action if such settlement is effected
without the consent of the Holder, which consent shall not be
unreasonably withheld nor, in the case of a sale directly by the
Company of its securities (including a sale of such securities
through any underwriter retained by the Company to engage in a
distribution solely on behalf of the Company), the Holder be
liable to the Company in any case which such untrue statement or
alleged untrue statement or omission or alleged omission was
contained in a preliminary prospectus and corrected in a final
or amended prospectus, and the Company failed to deliver a copy
of the final or amended prospectus at or prior to the
confirmation of the sale of the securities to the person
asserting any such loss, claim, damage or liability in any case
where such delivery is required by the 1933 Act.
(c) Notice, Defense and Counsel. Promptly after receipt by
an indemnified party under this Section 1.8 of notice of the
commencement of any action (including any governmental action),
such indemnified party will, if a claim in respect thereof is to
be made against any indemnifying
<PAGE>
Page 56 of 67 Pages
party under this Section 1.8, deliver to the indemnifying
party a written notice of the commencement thereof and the
indemnifying party shall have the right to participate
in, and, to the extent the indemnifying party so desires,
jointly with any other indemnifying party similarly noticed, to
assume and control the defense thereof with counsel mutually
satisfactory to the parties; provided, however, that an
indemnified party shall have the right to retain its own
counsel, with the fees and expenses to be paid by the
indemnifying party, if representation of such indemnified party
by the counsel retained by the indemnifying party would be
inappropriate due to actual or potential differing interests
between such indemnified party and any other party represented
by such counsel in such proceeding. The failure to deliver
written notice to the indemnifying party within a reasonable
time of the commencement of any such action, if prejudicial to
its ability to defend such action, shall relieve such
indemnifying party of any liability to the indemnified party
under this Section 1.8 to the extent of such prejudice, but the
omission so to deliver written notice to the indemnifying party
will not relieve it of any liability that it may have to any
indemnified party otherwise than under this Section 1.8.
(d) Survival of Rights and Obligations. The obligations of
the Company and the Holders under this Section 1.8 shall survive
the conversion, if any, of the shares of Preferred Stock, and
the completion of any offering of Registrable Securities in a
registration statement whether under this Section 1 or
otherwise.
1.9 Reports Under 1934 Act. With a view to making
available to the Holders the benefits of Rule 144 promulgated
under the 1933 Act and any other rule or regulation of the SEC
that may at any time permit a Holder to sell securities of the
Company to the public without registration, and with a view to
making it possible for Holders to register the Registrable
Securities pursuant to a registration on Form S-3, the Company
agrees to:
(a) make and keep public information available, as those
terms are understood and defined in Rule 144;
(b) file with the SEC in a timely manner all reports and
other documents required of the Company under the 1933 Act and
the 1934 Act; and
(c) furnish to any Holder, so long as the Holder owns any
Registrable Securities, forthwith upon request (i) a written
statement by the Company that it has complied with the reporting
requirements of Rule 144, the 1933 Act and the 1934 Act (at any
time after it has become subject to such reporting
requirements), (ii) a copy of the most recent annual or
quarterly report of the Company and such other reports and
documents so filed by the Company, and (iii) such other
information as may be reasonably requested in availing any
Holder of any rule or regulation of the SEC which permits the
selling of any such securities without registration or pursuant
to such form.
1.10 Lockup Agreement. Each Holder, if requested by the
Company and an underwriter of the Company's securities, shall
agree not to sell or otherwise transfer or dispose of any
Registrable Securities or other securities of the Company held
by such Holder for a specified period of time (not to exceed 180
days) following the effective date of a registration statement
pursuant to which the Company proposes to sell its securities to
the public generally, provided that all holders of at least 5%
of the Common Stock (on an as-exchanged basis) enter into
similar agreements.
<PAGE>
Page 57 of 67 Pages
1.11 Additional Grants of Registration Rights. The Company
shall not hereafter enter into any agreement with respect to its
securities which is inconsistent with the rights granted to the
Holders in this Agreement. If the Company shall hereafter grant
any registration or similar rights with respect to securities of
the Company which are more favorable than the rights granted
pursuant to this Agreement, each Holder shall immediately be
vested with such more favorable rights.
2. Miscellaneous.
2.1 Notices. All notices or other communications hereunder
shall be in writing and shall be deemed to have been given when
delivered by certified mail, return receipt requested, a
recognized overnight delivery service or hand delivery to such
party at the address set forth below or such other address as
such party may specify by notice to the other parties hereto:
If to the Holders, to their respective addresses as set
forth in Exhibit A to this Agreement.
If to the Company, to: The Aristotle Corporation
78 Olive Street
New Haven, Connecticut 06510
Attention: John J. Crawford
Its Chairman and President
2.2 Entire Agreement. This Agreement sets forth the entire
agreement and understanding of the parties with respect to the
subject matter hereof, supersedes and rescinds any prior written
or oral agreements relating to the subject matter hereof between
the parties hereto and shall not be modified except by the
execution of a written instrument signed by the parties hereto.
2.3 Binding Effect; Assignment. This Agreement shall be
binding upon and inure to the benefit of the personal
representatives, successors and assigns of the respective
parties hereto. The Company shall not have the right to assign
its rights or obligations hereunder or any interest herein
without obtaining the prior written consent of the Holders and
the Holders may not assign or transfer their rights under this
Agreement, except to an Affiliate (as such terms is used in Rule
12b-2 of the 1934 Act), without the prior written consent of the
Company.
2.4 Counterparts. This Agreement may be executed in
counterparts, all of which together shall constitute one and the
same instrument.
2.5 Governing Law. This Agreement shall be governed by,
construed and enforced in accordance with the laws and decisions
of the State of Delaware.
<PAGE>
Page 58 of 67 Pages
IN WITNESS WHEREOF, the parties have caused this Agreement
to be duly executed as of the date first above written.
THE ARISTOTLE CORPORATION
By: /s/ John J. Crawford
----------------------
Name: John J. Crawford
Title: President
GENEVE CORPORATION
By: /s/ Steven B. Lapin
----------------------
Name: Steven B. Lapin
Title: President
<PAGE>
Page 59 of 67 Pages
EXHIBIT D
---------
COMMON STOCK PURCHASE AGREEMENT
Between
The Aristotle Corporation
and
Geneve Corporation
Dated as of January 2, 1998
<PAGE>
Page 60 of 67 Pages
COMMON STOCK PURCHASE AGREEMENT
-------------------------------
THIS COMMON STOCK PURCHASE AGREEMENT (the "Agreement"), is
dated as of this 2nd day of January, 1998 (the "Effective Date"),
between The Aristotle Corporation, a Delaware corporation (the
"Company"), and Geneve Corporation, a Delaware corporation (the
"Purchaser").
WHEREAS, the Purchaser desires to acquire and the Company is
willing to issue and sell to the Purchaser shares of common stock,
par value $.01 per share (the "Common Stock"), of the Company; and
WHEREAS, the parties hereto have entered into a certain
Preferred Stock Purchase Agreement, dated as of October 22, 1997
(the "Preferred Stock Purchase Agreement"), which sets forth
certain rights and restrictions with respect to the voting and
disposition of shares of the capital stock of the Company owned
by the Purchaser.
NOW, therefore, in consideration of the premises and the
mutual covenants contained in this Agreement, the parties agree
as follows:
SECTION 1 Purchase and Sale of the Common Stock.
Issuance of the Common Stock. Subject to the terms and
conditions of this Agreement, the Company agrees to issue and
sell to the Purchaser and the Purchaser agrees to purchase from
the Company, the number of shares of Common Stock set forth on
Schedule 1.01 hereto for the aggregate purchase price (the
"Aggregate Purchase Price") set forth on Schedule 1.01 hereto.
The Company will provide a stock certificate evidencing the
Common Stock, registered in the name of the Purchaser and dated
as of the date hereof, against delivery of a certified or
official bank check payable to the order of the Company in New
York Clearing House or similar same day funds or against receipt
of a wire transfer of immediately available funds to an account
of the Company specified to the Purchaser, in an amount equal to
the Aggregate Purchase Price, in payment of the full purchase
price for the Common Stock. Upon receipt of the Aggregate
Purchase Price, the Common Stock, as and when issued in
accordance with the terms of this Agreement, will be validly
issued, fully paid and non-assessable.
SECTION 2 Representations and Warranties of the Company. The
Company represents and warrants to the Purchaser as follows:
(a) Organization and Standing of the Company. Each of the
Company and its subsidiaries is a duly organized and validly
existing corporation in good standing under the laws of the state
of its incorporation and has all requisite corporate power and
authority to own and operate its assets and properties and to
conduct its business as presently conducted, except
<PAGE>
Page 61 of 67 Pages
where the failure to do so would not have a material adverse
effect on the Company and its subsidiaries taken as a whole.
(b) Corporate Action. The Company has all necessary
corporate power and has taken all corporate action required to
authorize its execution and delivery of, and its performance
under, this Agreement, and the Company has all necessary
corporate power and has taken all corporate action required to
authorize the issuance and sale of the Common Stock and to
consummate the other transactions contemplated by this Agreement.
(c) Governmental Approvals. No authorization, consent,
approval, license, exemption of or filing or registration with
any court or governmental department, commission, board, bureau,
agency or instrumentality, domestic or foreign, is necessary
for, or in connection with, the issuance and sale of the Common
Stock on the date of the Closing or the execution and delivery by
the Company of, or for the performance by it of its obligations
under, this Agreement.
SECTION 3 Representations and Warranties of the Purchaser.
The Purchaser represents and warrants to the Company as follows:
(a) Organization and Standing. The Purchaser is a duly
organized and validly existing corporation in good standing and
has all requisite corporate power and authority to own and
operate its assets and properties and to conduct its business as
presently conducted, except where the failure to do so would not
have a material adverse effect on the Purchaser and its
subsidiaries taken as a whole.
(b) Corporate Action. The Purchaser has all necessary
corporate power and has taken all corporate action required to
authorize its execution and delivery of, and its performance
under, this Agreement to which it is a party and has all
necessary corporate power and has taken all corporate action
required to authorize its purchase of the Preferred Stock and to
consummate the other transactions contemplated by the Transaction
Documents.
<PAGE>
Page 62 of 67 Pages
(c) Investment Intent. The Purchaser is acquiring the
Common Stock on the date of the Closing for its own account for
the purpose of investment and not with a view to, or for sale in
connection with, the distribution thereof, and it has no present
intention of distributing or selling such Common Stock. The
Purchaser understands that such Common Stock has not been
registered under the Securities Act, or the securities laws of
any state or other jurisdiction, and hereby agrees not to make
any sale, transfer or other disposition of such Common Stock
(other than to an affiliate of the purchaser) unless either (i)
such disposition has been registered under the Securities Act and
all applicable state and other securities laws and any such
registration remains in effect or (ii) the Company shall have
received an opinion of counsel in form and substance satisfactory
to the Company that registration is not required under the
Securities Act or under applicable state securities laws.
(d) Opportunity to Investigate. The Purchaser (i) has had
the opportunity to ask questions concerning the Company and all
such questions posed have been answered to its satisfaction; (ii)
has been given the opportunity to obtain any additional
information it deems necessary to verify the accuracy of any
information obtained concerning the Company; and (iii) has such
knowledge and experience in financial and business matters that
it is able to evaluate the merits and risks of purchasing the
Common Stock and to make an informed investment decision relating
thereto. The Purchaser's opportunity to so investigate the
Company and information obtained therefrom shall not affect the
Company's representations and warranties set forth in this
Agreement.
(e) Accredited Investor. The Purchaser is an "accredited
investor" as such term is defined in Regulation D under the
Securities Act.
SECTION 4 Miscellaneous.
(a) Legends. The Purchaser acknowledges that, until
registered under the Securities Act and any applicable state
securities laws or transferred pursuant to the provisions of Rule
144 promulgated under the Securities Act ("Rule 144"), each
certificate representing a share of Common Stock, whether upon
initial issuance or upon any transfer thereof, shall bear the
following legends (and the Company and its transfer agent shall
make a notation on its books of transfer to such effect),
prominently stamped or printed thereon, in substantially the
following form:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"), OR THE SECURITIES LAWS OF ANY
APPLICABLE STATE OR OTHER JURISDICTION, HAVE BEEN ACQUIRED
FOR INVESTMENT AND NOT WITH A VIEW TO DISTRIBUTION OR RESALE
AND MAY NOT BE SOLD, MORTGAGED, PLEDGED, HYPOTHECATED OR
OTHERWISE TRANSFERRED (OTHER
<PAGE>
Page 63 of 67 Pages
THAN TO AN AFFILIATE OF THE HOLDER) IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT COVERING SUCH SECURITIES
UNDER THE ACT AND ANY SECURITIES LAWS OF ANY APPLICABLE
STATE OR OTHER JURISDICTION OR A WRITTEN OPINION OF COUNSEL
IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER TO THE
EFFECT THAT REGISTRATION IS NOT REQUIRED UNDER THE ACT OR
UNDER OTHER APPLICABLE SECURITIES LAWS."
(b) Entire Agreement. Except with respect to the
applicable terms and provisions of the Preferred Stock Purchase
Agreement, this Agreement embodies the entire agreement and
understanding between the parties hereto with respect to the
provisions hereof and supersedes all prior oral or written
agreements and understandings relating to the provisions hereof.
No statement, representation, warranty, covenant or agreement of
any kind not expressly set forth in this Agreement shall affect,
or be used to interpret, change or restrict, the express terms
and provisions of this Agreement.
(c) Modifications and Amendments. The terms and provisions
of this Agreement may be modified or amended only by written
agreement executed by all parties hereto.
(d) Waivers and Consents. Except as other expressly
provided herein, the terms and provisions of this Agreement may
be waived, or consent for the departure therefrom granted, only
by written document executed by the party entitled to the
benefits of such terms or provisions. No such waiver or consent
shall be deemed to be or shall constitute a waiver or consent
with respect to any other terms or provisions of this Agreement,
whether or not similar. Each such waiver or consent shall be
effective only in the specific instance and for the purpose for
which it was given, and shall not constitute a continuing waiver
or consent.
(e) Assignment. The rights and obligations under this
Agreement may not be assigned by either party hereto without the
prior written consent of the other party (which consent shall not
be unreasonably withheld, except that the Purchaser without the
consent of the Company may assign this Agreement or any of its
rights or obligations to an Affiliate of the Purchaser or to an
entity with which the Purchaser shall merge or consolidate or to
which the Purchaser shall sell or assign all or substantially all
of its assets, and except that the Company may without the
consent of the Purchaser assign this Agreement subsequent to the
Closing to an entity with which the Company shall merge or
consolidate or to which the Company shall sell or assign all or
substantially all of its assets).
(f) Benefit. All statements, representations, warranties,
covenants and agreements in this Agreement shall be binding on
the parties hereto and shall inure to the benefit of the
respective successors and permitted assigns of each party hereto.
Nothing in this Agreement shall be construed to create any rights
or obligations except among the parties hereto, and no person or
entity shall be regarded as a third-party beneficiary of this
Agreement.
<PAGE>
Page 64 of 67 Pages
(g) Governing Law. This Agreement and the rights and
obligations of the parties hereunder shall be construed in
accordance with and governed by the law of the State of Delaware,
without giving effect to the conflict of law principles thereof.
(h) Severability. In the event that any court of competent
jurisdiction shall determine that any provision, or any portion
thereof, contained in this Agreement shall be unenforceable in
any respect, then such provision shall be deemed limited to the
extent that such court deems it enforceable, and as so limited
shall remain in full force and effect. In the event that such
court shall deem any such provision, or portion thereof, wholly
unenforceable, the remaining provisions of this Agreement shall
nevertheless remain in full force and effect.
(i) Interpretation. The parties hereto acknowledge and
agree that: (i) each party and its counsel reviewed and
negotiated the terms and provisions of this Agreement and have
contributed to its revision; (ii) the rule of construction to the
effect that any ambiguities are resolved against the drafting
party shall not be employed in the interpretation of this
Agreement; and (iii) the terms and provisions of this Agreement
shall be construed fairly as to all parties hereto and not in
favor of or against any party, regardless of which party was
generally responsible for the preparation of this Agreement.
(j) Headings and Captions. The headings and captions of
the various subdivisions of this Agreement are for convenience of
reference only and shall in no way modify, or affect the meaning
or construction of, any of the terms or provisions hereof.
(k) Expenses. Each of the parties hereto shall pay its own
fees and expenses in connection with this Agreement and the
transactions contemplated hereby whether or not the transactions
contemplated hereby are consummated.
(l) Confidentiality. Each of the parties hereto agrees
that it will keep confidential and will not disclose or divulge
any confidential, proprietary or secret information that such
party may obtain from financial statements, reports and other
materials submitted by the other party to such party pursuant to
this Agreement, or pursuant to visitation or inspection rights
granted hereunder; provided, however, that either party may
disclose such information (i) as has become generally available
to the public, (ii) as may be required in any report, statement
or testimony submitted to any municipal, state or Federal
regulatory body having or claiming to have jurisdiction over
such party, (iii) as may be required in response to any summons
or subpoena or in connection with any litigation, (iv) in order
to comply with any law, order, regulation or ruling applicable to
such party, (v) to the extent that such party reasonably deems it
necessary to enforce its rights under this Agreement, (vi) on a
confidential basis to its attorneys, accountants, consultants and
other professionals to the extent necessary to obtain their
services in connection with the transactions contemplated hereby,
(vii) to any prospective purchaser of any of the Preferred Stock
as long as such prospective purchaser agrees in writing to be
bound by the provisions of this paragraph (l), and (viii) to any
Affiliate or partner of such party as long as such Affiliate or
partner agrees in writing to be bound by the provisions of this
paragraph (l).
<PAGE>
Page 65 of 67 Pages
(m) Publicity. No party shall issue any press release or
otherwise make any public statement with respect to the execution
of, or the transactions contemplated by, this Agreement without
the prior written consent of the other party, except as may be
required by applicable law, rule or regulation; provided that
once such other party has consented to a party's issuance or
making of a press release or public statement, any subsequent
issuance or making of such press release or public statement by
such party shall not require the separate written consent of the
other party. However, the parties recognize that the Company is
a publicly-held company obligated under the federal securities
laws to make disclosures of material events affecting it.
Consequently, if advised by counsel that such party is required
to make such announcement under Federal or state securities laws,
the Company (as the case may be) may make such announcement
without the prior written or oral consent of the other party.
(n) Counterparts. This Agreement may be executed in one
or more counterparts, and by different parties hereto on separate
counterparts, each of which shall be deemed an original, but all
of which together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the Company and the Purchaser have
caused this Agreement to be executed in their names by their duly
authorized officers or representatives effective as of the date
first above written.
THE ARISTOTLE CORPORATION
By: /s/ John J. Crawford
--------------------
Name: John J. Crawford
Title: President
GENEVE CORPORATION
By: /s/ Steven B. Lapin
---------------------
Name: Steven B. Lapin
Title: President
<PAGE>
Page 66 of 67 Pages
Schedule 1.01
-------------
Purchaser Number of Shares Aggregate Purchase Price
- ------------------ ---------------- ------------------------
Geneve Corporation 30,000 shares of $135,000.00
Common Stock, par
value $.01 per share
<PAGE>
PAGE 67 OF 67 PAGES
EXHIBIT E
---------
GENEVE CORPORATION
Present Principal
Name and Business Address or Occupation or
Position Held Residence Address Employment
- ------------- ---------------------- -----------------
Edward Netter 96 Cummings Point Road Chairman and Chief
Chairman and Stamford, CT 06902 Executive Officer of
Chief Executive Geneve Corporation
Officer and Director
Steven B. Lapin 96 Cummings Point Road President and Chief
President and Stamford, CT 06902 Operating Officer of
Chief Operating Geneve Corporation
Officer and Director
Roy T.K. Thung 96 Cummings Point Road Executive Vice
Executive Vice Stamford, CT 06902 President and Chief
President and Chief Financial Officer of
Financial Officer Geneve Corporation
Donald T. Netter 96 Cummings Point Road Senior VicePresident
Senior Vice Stamford, CT 06902 - Investments of
President - Geneve Corporation
Investments
William J. Petersen 96 Cummings Point Road Vice President -
Vice President - Stamford, CT 06902 Finance of
Finance Geneve Corporation
James A. Mendler 96 Cummings Point Road Controller of
Controller Stamford, CT 06902 Geneve Corporation
Brian R. Schlier 96 Cummings Point Road Director of Taxation
Director of Stamford, CT 06902 of Geneve Corporation
Taxation
David T. Kettig 96 Cummings Point Road Vice President
Vice President - Stamford, CT 06902 Legal and Secretary
Legal and Secretary of Geneve Corporation
