SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF
THE SECURITIES EXCHANGE ACT OF 1934
FILED BY THE REGISTRANT |X|
FILED BY A PARTY OTHER THAN THE REGISTRANT |_|
Check the appropriate box:
|_| Preliminary Proxy Statement
|_| Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
|X| Definitive Proxy Statement
|_| Definitive Additional Materials
|_| Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
THE ARISTOTLE CORPORATION
(Name of Registrant as Specified In Its Charter)
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|X| No fee required
|_| Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
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calculated and state how it was determined):
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(5) Total fee paid:
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|_| Fee previously paid with preliminary materials.
|_| Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.
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<PAGE>
THE ARISTOTLE CORPORATION
27 Elm Street
New Haven, Connecticut 06510
(203) 867-4090
October 1, 1999
Dear Stockholder,
You are cordially invited to attend the 1999 Annual Meeting of
Stockholders of The Aristotle Corporation, a Delaware corporation ("Aristotle"),
to be held at 2:00 p.m. on November 10, 1999 at the New Haven Lawn Club, 193
Whitney Avenue, New Haven, Connecticut (including any adjournment or
postponement thereof, the "Annual Meeting").
At the Annual Meeting, you will be asked (i) to elect three persons to the
Board of Directors of Aristotle and (ii) to ratify the selection of Arthur
Andersen LLP as Aristotle's independent public accountants. The Board of
Directors recommends the approval of each of these proposals. Such other
business will be transacted as may properly come before the Annual Meeting.
It is very important that your shares of Common Stock and Preferred Stock
be represented at the Annual Meeting. Whether or not you plan to attend the
Annual Meeting, please complete the accompanying form of proxy and return such
form of proxy in the enclosed postage prepaid envelope. If you attend the Annual
Meeting, you may revoke the proxy given on such form and vote in person if you
wish, even if you have previously returned your form of proxy.
I look forward to seeing you at the meeting.
Sincerely,
/s/ Paul M. McDonald
Paul M. McDonald
Chief Financial Officer and Secretary
YOUR VOTE IS IMPORTANT.
PLEASE RETURN YOUR PROXY PROMPTLY.
<PAGE>
THE ARISTOTLE CORPORATION
NOTICE OF 1999 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON NOVEMBER 10, 1999
TO THE STOCKHOLDERS:
NOTICE IS HEREBY GIVEN that the 1999 Annual Meeting of the Stockholders of The
Aristotle Corporation ("Aristotle") will be held at 2:00 p.m. on Wednesday,
November 10, 1999 at the New Haven Lawn Club, 193 Whitney Avenue, New Haven,
Connecticut (including any adjournment or postponement thereof, the "Annual
Meeting"), for the following purpose:
1. To elect three directors for three-year terms and until their
successors are duly elected and qualified;
2. To ratify the appointment by the Board of Directors of Arthur
Andersen LLP as independent accountants of Aristotle for the
fiscal year ending June 30, 2000; and
3. To consider and take action upon any other matters that may
properly come before the Annual Meeting and any adjournments
or postponements thereof.
It is not anticipated that any other matter will be brought before the
Annual Meeting. If, however, other matters are presented, proxies will be voted
in accordance with the best judgment of the proxy holders.
The Board has fixed the close of business on September 24, 1999 as the
record date (the "Record Date") for the determination of the Stockholders
entitled to notice of and to vote at the Annual Meeting.
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE ANNUAL MEETING. WHETHER
OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, PLEASE COMPLETE, SIGN AND DATE THE
ENCLOSED PROXY CARD AND MAIL IT PROMPTLY USING THE ENCLOSED PRE-ADDRESSED,
POSTAGE-PAID, RETURN ENVELOPE. IF YOU ATTEND THE ANNUAL MEETING, YOU MAY VOTE IN
PERSON IF YOU WISH, EVEN IF YOU HAVE PREVIOUSLY RETURNED YOUR PROXY CARD. YOUR
PROMPT ATTENTION IS APPRECIATED.
By Order of the Board of Directors,
/s/ Paul M. McDonald
Paul M. McDonald
Secretary
New Haven, Connecticut
Dated: October 1, 1999
<PAGE>
THE ARISTOTLE CORPORATION
27 ELM STEET
NEW HAVEN, CONNECTICUT 06510
(203) 867-4090
PROXY STATEMENT
1999 ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON
NOVEMBER 10, 1999
GENERAL INFORMATION
This Proxy Statement is furnished in connection with the solicitation by
the Board of Directors (the "Board of Directors") of The Aristotle Corporation
("Aristotle"), a Delaware corporation, of proxies, in the accompanying form, to
be used at the 1999 Annual Meeting of Stockholders to be held at the New Haven
Lawn Club, 193 Whitney Avenue, New Haven, Connecticut on November 10, 1999 at
2:00 p.m., and at any adjournments or postponements thereof (the "Annual
Meeting").
Where the Stockholder specifies a choice on the proxy as to how his or her
shares are to be voted on a particular matter, the shares will be voted
accordingly. If no choice is specified, the shares will be voted FOR the
election of the three nominees for director named herein and FOR the
ratification of the appointment of Arthur Andersen LLP as Aristotle's
independent public accountants for the fiscal year ending June 30, 2000
(collectively, the "Proposals"). Shares represented by valid proxies in the form
enclosed, received in time for use at the Annual Meeting and not revoked at or
prior to the Annual Meeting, will be voted at the Annual Meeting.
A Stockholder may revoke his or her proxy at any time prior to its use:
(i) by delivering to the Secretary of Aristotle at or before the Annual Meeting
a signed notice of revocation or a later dated signed proxy; or (ii) by
attending the Annual Meeting, notifying the Secretary, and voting in person.
Attendance at the Annual Meeting will not in itself constitute the revocation of
a proxy.
The presence at the Annual Meeting, in person or by proxy, of the holders
of one-third of Aristotle's aggregate shares of (i) issued and outstanding
common stock, par value $.01 per share ("Common Stock"), and (ii) issued and
outstanding Series F, G and H preferred stock, par value $.01 per share (the
"Series F, G and H Preferred Stock") on the Record Date is necessary to
constitute a quorum. The holders of Aristotle's shares of issued and outstanding
Series E preferred stock, par value $.01 per share (the "Series E Preferred
Stock") are not entitled to vote on the election of directors or the
ratification of independent public accountants. The Series F, G and H Preferred
Stock and the Series E Preferred Stock are sometimes collectively referred to as
the "Preferred Stock".
All Stockholders who deliver properly executed and dated proxies to
Aristotle prior to the date of the Annual Meeting will be deemed present at the
Annual Meeting regardless of whether such proxies are marked to direct the proxy
holders to vote for or against, or to abstain from voting on, the Proposals, or
are not marked to indicate any voting direction. The approval of Proposal 1
requires an affirmative vote of a plurality of the votes cast by the holders of
Common Stock and the holders Series F, G and H Preferred Stock, voting as a
single class, at the Annual Meeting. The approval of Proposal 2 requires an
affirmative vote of a majority of the votes cast by the holders of the Common
Stock and the holders
<PAGE>
Series F, G and H Preferred Stock, voting as a single class, at the Annual
Meeting. With respect to the tabulation of votes on any matter, abstentions are
treated as votes against a proposal, while broker non-votes have no effect on
the vote.
The Board of Directors has fixed the close of business on September 24,
1999 as the record date (the "Record Date") for the determination of holders of
outstanding shares of Common Stock and Preferred Stock entitled to notice of and
to vote at the Annual Meeting. As of the Record Date, there were 1,233,118
shares of Common Stock outstanding and entitled to vote at the Annual Meeting.
Each holder of record of Common Stock on the Record Date is entitled to cast one
vote per share of Common Stock, in person or by proxy, on the Proposals. In
addition, as of the Record Date, an aggregate of 569,013 shares of Preferred
Stock were outstanding, consisting of 489,131 shares of Series E Preferred Stock
and an aggregate of 79,882 shares of Series F, G and H Preferred Stock. The
holders of Series E Preferred Stock are entitled to cast one vote per share and
to vote with the Common Stock as a single class on all matters other than the
election of directors (Proposal 1) and the appointment of accountants (Proposal
2). The holders of Series F, G and H Preferred Stock are entitled to cast one
vote per share and to vote with the Common Stock as a single class on all
matters. The Common Stock and the Preferred Stock constitute the only
outstanding capital stock of Aristotle.
The cost of soliciting proxies, including expenses in connection with
preparing and mailing this Proxy Statement, will be borne by Aristotle. In
addition, Aristotle will reimburse brokerage firms and other persons
representing beneficial owners of Common Stock and Preferred Stock of Aristotle
for their expenses in forwarding proxy material to such beneficial owners.
Solicitation of proxies by mail may be supplemented by telephone, telegram,
telex and personal solicitation by the directors or officers of Aristotle. No
additional compensation will be paid for such solicitation.
This Proxy Statement and the accompanying proxy are being mailed on or
about October 12, 1999 to all Stockholders entitled to notice of and to vote at
the Annual Meeting.
The Annual Report to Stockholders for the fiscal year ended June 30, 1999
is being mailed to the Stockholders with this Proxy Statement, but does not
constitute a part hereof.
ELECTION OF DIRECTORS
(PROPOSAL 1)
The Amended Bylaws of Aristotle (the "Amended Bylaws") provide that the
number of directors shall not be less than seven (7) nor more than fifteen (15),
as fixed by the Board of Directors. The Amended and Restated Certificate of
Incorporation and the Amended Bylaws provide that the directors be divided into
three classes, as equal in number as possible, with terms expiring in successive
years. Directors are elected by the stockholders, other than in the case of
newly created directorships, in which case a majority of the Directors then in
office appoint an individual to fill the newly created directorship. Directors
are elected for terms of three years, or, in the case of newly created
directorships, for a full term for the class of directors in which the new
directorship was created and, in any case, until their successors are elected
and qualified. At the Annual Meeting, three directors will each be elected for
2
<PAGE>
three-year terms. As of the date of the last annual meeting, there were nine (9)
directorships. As of June 30, 1999, there were nine (9) directorships.
INFORMATION AS TO NOMINEES AND CONTINUING DIRECTORS
It is the intention of the persons named in the proxy to vote the shares
represented by each properly executed proxy for the election as director of all
of the persons named below as nominees, unless contrary instructions are given
on the proxy. The Board of Directors believes that all of the nominees will
stand for election and will serve if elected. However, if any of the persons
nominated by the Board of Directors fails to stand for election or becomes
unable to accept election, the proxies will be voted for the election of such
other person or persons as a majority of the Board of Directors may recommend.
The following table sets forth the names of the Board of Director's three
nominees for election as directors. Also shown is certain other information,
some of which has been obtained from Aristotle's records and some of which has
been supplied by the nominees and continuing directors, with respect to each
nominee's or director's principal occupation or employment during the past five
years, his or her age at September 1, 1999, the periods during which he or she
has served as a director of Aristotle and the positions currently held with
Aristotle.
Director of the Positions Held with
Nominees Age Company Since the Company
-------- --- ------------- -----------
Steven B. Lapin .............. 54 1998 Director
Daniel J. Miglio ............. 59 1990 Director
John Lahey ................... 53 N/A None
Steven B. Lapin has been President, Chief Operating Officer of Geneve
Corporation, a private diversified holding company, and a director for more than
five years. Mr. Lapin is also Vice Chairman and a director of Independence
Holding Company, a holding company engaged principally in the life and health
insurance business.
Daniel J. Miglio was formerly Chairman, President and Chief Executive
Officer of Southern New England Telecommunications Corporation ("SNET"), a
publicly-held telecommunications company. He had been employed by SNET from
1962 through 1998. Mr. Miglio also serves as a director of the United
Illuminating Company.
John Lahey is the President of Quinnipiac College, a private college
located in Hamden, Connecticut. Dr. Lahey has been the President for the past 12
years. He also serves on the Board of Trustees of Yale-New Haven Hospital and on
the Board of Directors of the United Illuminating Company.
3
<PAGE>
Director of the Positions Held with
Continuing Directors Age Company Since the Company
-------------------- --- ------------- -----------
Directors with terms
expiring in 2000:
Robert Fiscus.............. 62 1991 Director
Betsy Henley Cohn.......... 46 1993 Director
John C. Warfel............. 47 1994 Director
Directors with terms
expiring in 2001:
John J. Crawford........... 54 1989 Director, President,
Chief Executive
Officer and Chairman
of the Board
Edward Netter.............. 67 1998 Director
Sharon M. Oster............ 51 1992 Director
Robert L. Fiscus is Vice Chairman and Chief Financial Officer of The
United Illuminating Company, a publicly-held electric utility company, where he
previously served as President and Chief Financial Officer. Mr. Fiscus has been
employed by The United Illuminating Company since 1972 and also serves as a
director of the United Illuminating Company.
Betsy Henley-Cohn is Chairperson of Birmingham Utilities, Inc., a water
utility in Ansonia, Connecticut, and Joseph Cohn & Son, Inc., in New Haven,
Connecticut. Ms. Henley-Cohn has been employed by Birmingham Utilities, Inc.
since 1993 and by Joseph Cohn & Son, Inc. since 1978. She also serves as a
director of The United Illuminating Company and Citizens Bank of Connecticut.
John C. Warfel has been the Senior Vice President, Administration and
Finance and Chief Financial Officer of Starter Corporation, a leading sports
apparel manufacturer since March 1995. He has been employed by Starter
Corporation since 1988.
John J. Crawford has been President and Chief Executive Officer of
Aristotle since April 1990 and Chairman of the Board since April 1993. Since
July 1994, Mr. Crawford has served Aristotle in a part-time capacity. Mr.
Crawford also serves as Chairman of Simulaids, Inc., Aristotle's wholly-owned
subsidiary. Mr. Crawford is also the Chief Executive Officer of the Regional
Water Authority, a utility located in New Haven, Connecticut. Mr. Crawford is
also a member of the Board of Directors of Webster Financial Corporation and
American Educational Products.
Edward Netter has been Chairman, Chief Executive Officer and a director of
Geneve Corporation, a private diversified holding company, for more than five
years. Mr. Netter is also Chairman, Chief Executive Officer and a director of
Independence Holding Company, a holding company engaged principally in the life
and health insurance business.
4
<PAGE>
Sharon M. Oster has been a Professor of Economics at the School of
Organization and Management, Yale University since 1982. Ms. Oster is a director
of two publicly-held companies, Health Care REIT, a real estate investment
company, and TransPro, Inc., a manufacturer of automotive/industrial-related
products
BOARD OF DIRECTORS' COMMITTEES AND NOMINATIONS BY STOCKHOLDERS
To select nominees for election as directors, the Board of Directors of
Aristotle met on September 9, 1999 and made its nominations for the Annual
Meeting. Aristotle's Amended Bylaws provide that to be eligible for nomination
as a director of Aristotle, a person must be a resident of the State of
Connecticut or have been previously a resident for at least three years. The
Amended Bylaws further provide that nominations of persons for election to the
Board of Directors may be made by the Board of Directors, or by any stockholder
entitled to vote for the election of directors at the meeting who provides
timely notice in writing to the Secretary of Aristotle and who complies with the
requirement to set forth certain information specified in Article III, Section
13 of the Amended Bylaws concerning each person the stockholder proposes to
nominate for election and the nominating stockholder. To be timely, notice must
be delivered to, or mailed to and received at, the principal executive offices
of Aristotle not less than 30 days nor more than 90 days prior to the date of
the meeting, provided that at least 45 days' notice or prior public disclosure
of the date of the meeting is given or made to stockholders. Public disclosure
of the date of the Annual Meeting was made by issuance of a press release on
September 28, 1999. No stockholder nominations for directors have been submitted
in connection with the Annual Meeting.
The Board of Directors has appointed a standing Audit Committee, which
during the year ended June 30, 1999 conducted two (2) meetings. The members of
the Audit Committee were Messrs. Fiscus, Warfel, Banducci and Lapin. The duties
of the Audit Committee include reviewing the financial statements of the Company
and the scope of the independent annual audit and internal audits. It also
reviews the independent accountants' letter to management concerning the
effectiveness of the Company's internal financial and accounting controls, and
reviews and recommends to the Board of Directors the firm to be engaged as the
Company's independent accountants. The Audit Committee may also examine and
consider such other matters relating to the financial affairs and operations of
the Company as it determines to be appropriate.
The Board of Directors of Aristotle also has appointed a Human Resources
and Stock Option Committee comprised of three directors, which during the fiscal
year ended June 30, 1999 conducted one (1) meeting. The Human Resources and
Stock Option Committee reviews the salary structure and policies of Aristotle
and its subsidiaries, administers Aristotle's 1997 Employee and Director Stock
Option Plan (the "1997 Stock Option Plan"), selects the eligible persons to whom
stock options or stock appreciation rights will be granted, and prescribes the
terms and provisions of each such option or right. The members of the Human
Resources and Stock Option Committee during the fiscal year ended June 30, 1999
were Ms. Oster and Messrs. Fiscus and Miglio.
During the fiscal year ended June 30, 1999, the Board of Directors of
Aristotle held seven (7) meetings. During fiscal 1999, none of the directors
attended less than 75% of the total number of meetings of the Board of Directors
and committees of which they were members, except for John Warfel who attended
70% of such meetings.
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<PAGE>
COMPENSATION OF DIRECTORS
Effective January 1, 1998, directors of Aristotle, other than officers,
each receive a retainer of $7,500, payable semi-annually in 50% Common Stock and
50% cash and $500 per meeting attended. The Common Stock is payable in six month
intervals and is valued based on its average market value during the ten days
preceding the payment date. In addition to the retainer, the Chairperson and the
members of board committees receive $550 or $500, respectively, for each
committee meeting attended. During the fiscal year ended June 30, 1999,
Aristotle did not pay the entire amount of the retainer. Accordingly, Aristotle
has accrued an aggregate of $137,000 for the payment of such retainers to
directors.
Non-employee directors are eligible to receive grants of stock options
under the 1997 Stock Option Plan. The 1997 Stock Option Plan provides for the
automatic grant of non-qualified options to non-employee directors of the
Company. Each non-employee director, upon first being elected to the Board of
Directors, will receive an option to purchase 2,500 shares, which will vest
after completion of one year of service on the Board of Directors. Additionally,
the 1997 Stock Option Plan provides for a grant to each non-employee director on
the date of his or her reelection (provided that the director has served as a
director since his or her initial election) of an option to purchase 1,000
shares, which vests upon completion of one year of service on the Board of
Directors.
6
<PAGE>
EXECUTIVE OFFICERS
The following table sets forth, as of September 1, 1999, the name of the
Company's current executive officer who is not a director, his age, and all
positions held with the Company. The executive officer serves at the discretion
of the Board of Directors, subject to an Employment Agreement that the Company
has entered into with the executive officer.
Name Age Position With the Company
---- --- -------------------------
Paul M. McDonald 46 Chief Financial Officer and Secretary
The principal occupations of the executive officer for the last five years
are set forth below.
Paul M. McDonald has been the Chief Financial Officer of Aristotle since
November 1994. Mr. McDonald has been the Secretary of Aristotle since April
1994. Mr. McDonald also serves as Vice Chairman, Treasurer and Secretary of
Simulaids, Inc., Aristotle's wholly-owned subsidiary. In addition, Mr. McDonald
served as the Chief Financial Officer and a Director of Strouse since 1989 and
as the Secretary of Strouse since September 1995.
EXECUTIVE COMPENSATION
The following table sets forth certain information for the periods
indicated regarding cash and other compensation paid to, earned by, or awarded
to the Company's Chief Executive Officer and certain other executive officers of
the Company (collectively, the "Named Officers") whose salary and bonus exceeded
$100,000 during the fiscal year ended June 30, 1999.
Summary Compensation Table
<TABLE>
<CAPTION>
Annual Compensation Long Term Compensation
------------------- ----------------------
Options All Other
------- ---------
Name and Principal Position Year Salary $ Bonus $ Awarded # Compensation $
--------------------------- ---- -------- ------- --------- --------------
<S> <C> <C> <C> <C> <C>
John J. Crawford......................... 1999 $100,000(1) $ 0 20,000 $ 0
President, Chief Executive Officer and 1998 80,000(1) 0 20,000 0
Chairman of the Board 1997 60,000(1) 0 0 0
Paul McDonald............................ 1999 $149,000 $ 24,213(2) 20,000 $2,622(3)
Chief Financial Officer and Secretary 1998 148,529 30,000(2) 10,000 2,019(3)
1997 108,947 20,000(2) 0 1,408(3)
</TABLE>
- ------------
(1) In fiscal 1999, salary includes $40,000 in shares of Common Stock; in
fiscal 1998, salary includes $32,000 in shares of Common Stock, and in
fiscal 1997, salary includes $20,000 in shares of Common Stock.
7
<PAGE>
(2) In fiscal 1999, the Company paid Mr. McDonald a $24,213 performance bonus
for meeting management objectives. In fiscal 1998 and 1997, the Company
paid Mr. McDonald bonuses in recognition of certain additional services
rendered to the Company.
(3) Other compensation for Mr. McDonald, is comprised of the following: in
fiscal 1999, $373 paid for term life insurance premiums and $2,249 paid as
a contribution pursuant to the SEP Plan for Mr. McDonald; in fiscal 1998,
$278 paid for term life insurance premiums and $1,741 paid as a matching
contribution pursuant to the Strouse 401K Plan for Mr. McDonald; in fiscal
1997, $120 paid for term life insurance premiums and $1,288 paid as a
matching contribution pursuant to the Strouse 401K Plan for Mr. McDonald.
Option Grants in Last Fiscal Year
The following table sets forth information regarding each stock option
granted to a Named Officer during the fiscal year ended June 30, 1999.
<TABLE>
<CAPTION>
Number of Securities % of Total Options
Underlying Options Awarded to Employees in Exercise Prices
Name Granted(1) Fiscal Year 1999 ($/share) Expiration Date
---- -------- ---------------- --------- ---------------
<S> <C> <C> <C> <C>
John J. Crawford 20,000 50% $5.875 November 17, 2008
Paul McDonald 20,000 50% $5.875 November 17, 2008
</TABLE>
- ---------
(1) All stock options were granted under the 1997 Stock Option Plan.
8
<PAGE>
Aggregated Option Exercises in Last Fiscal Year
and Fiscal Year-End Option Values
The following table sets forth certain information regarding unexercised
stock options held as of June 30, 1999, by the Named Officers. No stock options
were exercised by the Named Officers during the fiscal year ended June 30, 1999.
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money Options
Options at June 30, 1999 (#) at June 30, 1999 ($)(1)
---------------------------- -----------------------
Name Exercisable Unexercisable Exercisable Unexercisable
---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
John J. Crawford............... 42,500 30,000 $18,250(2) $11,250(3)
Paul McDonald.................. 29,139 5,000 7,633(4) 5,625(5)
</TABLE>
- -----------------
(1) The value of unexercised, "in-the-money" options at June 30, 1999 is the
difference between (a) the closing price of Common Stock on June 30, 1999
as reported by Nasdaq ($5.75) - the assumed fair market value - and (b)
the per share option exercise price, multiplied by the number of shares of
Common Stock underlying such options.
(2) Mr. Crawford holds 12,500 exerciseable options to purchase 12,500 shares
of Common Stock that have an exercise price of $10.00 per option which is
greater than the fair market value of the Common Stock as of June 30, 1999
($5.75). Such options are not "in-the-money" and their value, therefore,
is zero. The exercise price of Mr. Crawford's remaining 30,000
exerciseable options averages $5.142.
(3) Mr. Crawford holds 20,000 unexercisable options to purchase 20,000 shares
of Common Stock that have an exercise price of $5.875 per option which is
greater than the fair market value of Common Stock as of June 30, 1999
($5.75). Such options are not "in-the-money" and their value, therefore,
is zero. The exercise price of Mr.Crawford's remaining 10,000
unexercisable options is $4.625.
(4) Mr. McDonald holds 20,000 exerciseable options to purchase 20,000 shares
of Common Stock that have an exercise price of $5.875 per option which is
greater than the fair market value of the Common Stock as of June 30, 1999
($5.75). Such options are not "in-the-money" and their value, therefore,
is zero. The exercise price of Mr. McDonald's remaining 9,139 exerciseable
options averages $5.131.
(5) Mr. McDonald holds 5,000 unexercisable options to purchase 5,000 shares of
Common Stock that have an exercise price of $4.625 per option.
EMPLOYMENT AGREEMENTS
The Company entered into an Employment Agreement with Mr. McDonald on
December 1, 1998 for term expiring November 30, 2000.
9
<PAGE>
STOCK OWNED BY MANAGEMENT AND PRINCIPAL STOCKHOLDERS
The following table sets forth, as of September 1, 1999, certain
information regarding beneficial ownership of the Common Stock and the Preferred
Stock by: (i) each person who is known to Aristotle to own beneficially more
than 5% of the outstanding shares of either the Common Stock or the Preferred
Stock; (ii) each director of Aristotle; (iii) each executive officer of
Aristotle who is a Named Officer; and (iv) all executive officers and directors
of Aristotle as a group. Unless otherwise indicated, all persons listed below
have sole voting and investment power with respect to their shares and the
address for each such person is The Aristotle Corporation, 27 Elm Street, New
Haven, Connecticut. In preparing the following table, Aristotle has relied on
information furnished by such persons.
<TABLE>
<CAPTION>
Number of Shares
of Capital Stock Percent of Class and
Beneficially Owned Voting Power of Class Total
5% Stockholders, Directors Common Preferred Common Preferred Voting
and Executive Officers Stock(1) Stock Stock(2) Stock Power(3)
---------------------- -------- ----- -------- ----- --------
<S> <C> <C> <C> <C> <C> <C>
5% Stockholders:
Geneve Corporation(4)............... 141,000 512,739 10.46% 90.11% 33.98%
Directors:
Barry R. Banducci................. 10,344(5) 0 * * *
John J. Crawford.................. 88,929(6) 0 6.60% * 4.51%
Robert L. Fiscus.................. 11,644(7) 0 * * *
Betsy Henley-Cohn................. 26,684(8) 0 1.98% * 1.35%
Steven B. Lapin................... 0(9) 0 * * *
Daniel J. Miglio.................. 11,444(10) 0 * * *
Edward Netter..................... 0(11) 0 * * *
Sharon M. Oster................... 38,164(12) 0 2.83% * 1.94%
John C. Warfel.................... 8,737(13) 0 * * *
Named Officers (excluding Messr.
Crawford)
Paul McDonald..................... 32,397(14) 5,702 2.40% 1.00% 2.13%
All Executive Officers and Directors
as a group (10 persons)............. 228,343 5,702 16.94% 1.00% 12.07%
</TABLE>
- -----------------------
* Less than 1%
10
<PAGE>
1 Includes as part of the total number of issued and outstanding shares of
Common Stock those stock options which are currently exerciseable by the
individual whose share ownership percentage is being calculated, in
accordance with the applicable securities regulations.
2 Percentages are calculated by including as part of the total number of
issued and outstanding shares of Common Stock those stock options which
are currently exerciseable by the individual whose share ownership
percentage is being calculated, in accordance with the applicable
securities regulations.
3 Percentages are calculated based on the total number of shares of Common
Stock and Preferred Stock on a fully converted basis outstanding. Includes
as part of the total number of issued and outstanding shares of Common
Stock those stock options which are currently exerciseable by the
individual whose share ownership percentage is being calculated, in
accordance with the applicable securities regulations.
4 The Geneve Corporation address is 96 Cummings Point Road, Stamford,
Connecticut. Director Steven B. Lapin is the President and Chief Operating
Officer of Geneve Corporation and Director Edward Netter is the Chairman
and Chief Executive Officer of Geneve Corporation.
5 Includes 6,886 shares held by Mr. Banducci directly and stock options,
which are currently exerciseable, to purchase 3,458 shares.
6 Includes 41,799 shares held by Mr. Crawford directly; 4,580 shares held in
his wife's name; 50 shares held in the name of his daughter; and stock
options, which are currently exerciseable, to purchase 42,500 shares.
7 Includes 7,307 shares held by Mr. Fiscus directly and 400 shares held
jointly with his wife; and stock options, which are currently
exerciseable, to purchase 3,937 shares.
8 Includes 6,886 shares held by Ms. Henley-Cohn directly; 14,340 shares held
in trusts in which Mrs. Henley-Cohn has the power to vote the shares;
2,000 shares held equally by Ms. Henley-Cohn's son and daughter; and stock
options, which are currently exerciseable, to purchase 3,458 shares.
9 Does not include any shares owned by Geneve Corporation. Mr. Lapin is the
President and Chief Operating Officer of Geneve Corporation.
10 Includes 7,507 shares held by Mr. Miglio directly; and stock options,
which are currently exerciseable, to purchase 3,937 shares.
11 Does not include any shares owned by Geneve Corporation. Mr. Netter is the
Chairman and Chief Executive Officer of Geneve Corporation.
12 Includes 8,327 shares held by Ms. Oster directly and 25,900 held by Ms.
Oster's husband; and stock options, which are currently exerciseable, to
purchase 3,937 shares. Ms. Oster declines control over shares owned by her
husband.
13 Includes 5,758 shares held by Mr. Warfel directly; and stock options,
which are currently exerciseable, to purchase 2,979 shares.
14 Includes 2,806 shares held by Mr. McDonald directly; stock options, which
are currently exerciseable, to purchase 29,139 shares; 5,702 shares of
preferred stock; 452 shares held by Janney Montgomery Scott, Inc. under a
custodial agreement for Mr. McDonald's benefit. Mr. McDonald disclaims
beneficial ownership of the 810 shares held by Janney Montgomery Scott,
Inc.
CERTAIN TRANSACTIONS
On April 30, 1999, Aristotle acquired all of the outstanding stock of
Simulaids, Inc. ("Simulaids"), a private New York corporation and manufacturer
of health and education teaching aids. Simulaids has entered into a management
services agreement with an affiliate of a stockholder of Aristotle to provide
Simulaids with strategic and operational assistance. As part of this agreement,
Simulaids agreed to pay fees of $100,000 per annum. The Management Services
Agreement terminates on May 3, 2000, subject to renewal by the mutual written
agreement of both parties. In addition, in the ordinary course of its business,
Simulaids sells its products to an affiliate of such stockholder of
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Aristotle. Sales to this affiliate of the Aristotle stockholder by Simulaids
since the date of the acquisition of Simulaids were $92,000.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
Aristotle's executive officers and directors, and persons who beneficially own
more than ten percent (10%) of the Common Stock, to file with the Securities and
Exchange Commission (the "SEC") and any national securities exchange on which
Aristotle's securities are registered initial reports of beneficial ownership
and reports of changes in beneficial ownership of the Common Stock or other
equity securities of Aristotle. Executive officers, directors and greater than
ten percent (10%) beneficial owners are required by SEC regulations to furnish
Aristotle with copies of all Section 16(a) forms they file. To Aristotle's
knowledge, based solely on a review of the copies of such reports furnished to
Aristotle, all Section 16(a) filing requirements applicable to its executive
officers, directors and greater than ten percent (10%) beneficial owners were
complied with for the fiscal year ended June 30, 1999.
THE AFFIRMATIVE VOTE OF A PLURALITY OF THE VOTES CAST BY THE HOLDERS OF THE
COMMON STOCK AND THE HOLDERS OF THE SERIES F, G AND H PREFERRED STOCK, VOTING AS
A SINGLE CLASS, AT THE ANNUAL MEETING IS REQUIRED TO ELECT THE NOMINEES FOR
DIRECTOR. THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE
"FOR" THE ELECTION OF THE NOMINEES FOR DIRECTOR.
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RATIFICATION OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS
(PROPOSAL 2)
On September 9, 1999 the Board of Directors re-appointed Arthur Andersen
LLP ("Arthur Andersen") to serve as independent accountants for Aristotle for
the fiscal year ending June 30, 2000. The Board proposes that the Stockholders
ratify this appointment, although such ratification is not required under
Delaware law or Aristotle's Amended and Restated Certificate of Incorporation or
Amended Bylaws. Arthur Andersen audited Aristotle's financial statements for the
fiscal year ended June 30, 1999l. Aristotle expects that representatives of
Arthur Andersen will be present at the Annual Meeting, with the opportunity to
make a statement if they desire to do so, and will be available to respond to
appropriate questions.
In the event that ratification of Arthur Andersen as the independent
public accountants for Aristotle is not obtained at the Annual Meeting, the
Board of Directors will reconsider its appointment.
Unless otherwise indicated, properly executed proxies will be voted in
favor of ratifying the appointment of Arthur Andersen, independent certified
public accountants, to audit the books and accounts of Aristotle for the fiscal
year ending June 30, 2000.
THE AFFIRMATIVE VOTE OF A MAJORITY OF THE VOTES CAST BY THE HOLDERS OF THE
COMMON STOCK AND THE HOLDERS OF THE SERIES F, G AND H PREFERRED STOCK, VOTING AS
A SINGLE CLASS, AT THE ANNUAL MEETING IS REQUIRED TO RATIFY THE APPOINTMENT OF
THE ACCOUNTANTS. THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS
VOTE "FOR" THE RATIFICATION OF THE APPOINTMENT OF ARTHUR ANDERSEN AS INDEPENDENT
ACCOUNTANTS.
DEADLINE FOR SUBMISSION OF STOCKHOLDER
PROPOSALS TO BE PRESENTED AT 2000
ANNUAL MEETING OF STOCKHOLDERS
Any proposal intended to be presented by any stockholder for action at the
2000 Annual Meeting of Stockholders of Aristotle must be received by the
Secretary of Aristotle at 27 Elm Street, New Haven, Connecticut 06510, not later
than June 3, 2000, in order for the proposal to be considered for inclusion in
the proxy statement and proxy relating to the 2000 Annual Meeting. In addition,
Aristotle's Amended Bylaws require that notice of stockholder proposals and
nominations for director be delivered to the Secretary of Aristotle not less
than thirty (30) days nor more than ninety (90) days prior to the date of an
annual meeting, unless notice or public disclosure of the date of the meeting
occurs less than forty-five (45) days prior to the date of such meeting, in
which event stockholders may deliver such notice not later than the fifteenth
(15th) day following the day on which notice of the date of the meeting was
mailed or public disclosure thereof was made. Nothing in this paragraph shall be
deemed to require Aristotle to include in its proxy statement and proxy relating
to the 2000 Annual Meeting any stockholder proposal that does not meet all of
the requirements for inclusion established by the Securities and Exchange
Commission in effect at the time such proposal is received.
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OTHER MATTERS
As of the date of this Proxy Statement, the Board of Directors of
Aristotle does not know of any other matters to be presented for action by the
shareholders at the Annual Meeting. If, however, any other matters not now known
are properly brought before the meeting, the persons named in the accompanying
proxy will vote such proxy in their discretion.
By Order of the Board of Directors
/s/ Paul M. McDonald
Paul M. McDonald
Chief Financial Officer and Secretary
October 1, 1999
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