Exhibit 10.7
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▇▇▇▇▇▇ Resource Partners
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▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Inc. Custodian f/b/o ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
C. ▇▇▇▇▇ ▇▇▇▇▇▇▇
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September 15, 1997
Aristotle Sub, Inc. The Aristotle Corporation The ▇▇▇▇▇▇▇, ▇▇▇▇▇ Company
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Re: Amendment Agreement
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Gentlemen:
Reference is made to (a) the Pledge and Escrow Agreement dated as of April
11, 1994 (the "Original Pledge Agreement") by and among ▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇▇▇
▇▇▇▇▇▇▇ (together, the "Pledgees") in their capacity as collateral agent for
▇▇▇▇▇▇ Resource Partners, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, C. ▇▇▇▇▇ ▇▇▇▇▇▇▇, Trustee, ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Inc., custodian f/b/o ▇▇▇▇ ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ (the
Shareholders") and Aristotle Sub, Inc. ("Newco"), as amended by a letter dated
June 27, 1995 from the Pledgees to Newco and The Aristotle Corporation
("Aristotle"), and as further amended by a letter dated October 27, 1995 from
the Waiver Group (as defined in the Original Pledge Agreement) to Newco and
Aristotle (the Original Pledge Agreement, together with such letter amendments,
being hereinafter referred to as the "Pledge Agreement"); (b) the Security
Agreement dated as of April 11, 1994 among The ▇▇▇▇▇▇▇ ▇▇▇▇▇ Company
("▇▇▇▇▇▇▇"), and ▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ in their capacity as
collateral agent for the Shareholders (the "Security Agreement"); (c) the
several Stock Purchase Warrants Series A (the "Preferred Warrants") issued to
each of the Shareholders; (d) the several Stock Purchase Warrants Series B (the
"Common Warrants") issued to each of the Shareholders; (e) the several Term
Promissory Notes made by each of the Shareholders in favor of Aristotle (each, a
"Note" and collectively, the "Notes"); (f) the Registration Rights Agreement
dated as of April 11, 1994 among Aristotle and the Shareholders (the
"Registration Rights Agreement"); (g) the Pension Escrow Agreement dated as of
April 11, 1994 among ▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ in their
capacity as collateral agent for the Shareholders, and the escrow agent named
therein (the Escrow Agreement"); and (h) the Capital Contribution Agreement
dated as of November 19, 1993 among Aristotle, Newco, ▇▇▇▇▇▇▇ and the
Shareholders (the "Capital
Contribution Agreement"). Capitalized terms used herein and not otherwise
defined herein shall have the meaning assigned to them in the Pledge Agreement,
the Security Agreement, the Preferred Warrants, the Common Warrants, the Notes,
the Registration Rights Agreement, the Escrow Agreement and the Capital
Contribution Agreement, as applicable.
The undersigned do hereby agree as follows:
1. The Pledge Agreement is hereby amended by adding the following sentence
at the end of Section 7 thereof:
Notwithstanding the foregoing sentence, the Pledgor shall have the
right to sell, assign, transfer or otherwise dispose of any of, grant an
option with respect to, or pledge or otherwise encumber or restrict any of
the Stock or any interest therein if its pays or deposits in the Account
the amount required to satisfy all of its obligations under the Put Right
and mandatory redemption obligations under its Certificate of Incorporation
then in effect with respect to the then outstanding shares of its Series A,
B and C Preferred Stock, in which event the Pledgees shall return the Stock
to the Pledgeor together with stock powers executed in blank required for
the transfer of the Stock to the Pledgor.
2. The Pledge Agreement is hereby amended by deleting the last sentence of
Section 10 thereof and substituting the following in its place:
The funds in the Account shall be available to the Pledgor to be used
solely to make payments pursuant to Put Rights then being exercised as
follows: (a) on or after January 1, 1998, $400,000 of the funds in the
Account shall be returned to the Pledgor, (b) on or after January 1, 1999,
up to an additional $200,000 of the funds in the Account shall be returned
to the Pledgor, (c) on or after January 1, 2000, up to an additional
$100,000 of the funds in the Account shall be returned to the Pledgor, and
(d) on April 11, 2001, any remaining funds in the Account shall be returned
to the Pledgor; in each case, unless an Indemnity Notice or Dispute Notice
is then outstanding with respect to said funds, in which event the funds in
the Account shall be distributed in accordance with Mutual Instructions or
an Award.
3. The Security Agreement is hereby amended by adding the following
sentence at the end of Section 3(b) thereof:
Notwithstanding the foregoing sentence, the Debtor shall have the right
to sell or otherwise dispose of any of the Collateral or any interest
therein if, in lieu of pledging substitute collateral, Aristotle or Newco
pays or deposits in the Account (as defined in the Pledge and Escrow
Agreement dated April 11, 1994 between the Collateral Agent and Sub, as
amended)the amount required to satisfy all of Newco's obligations under the
Put Right and mandatory redemption obligations under Newco's Certificate of
Incorporation then in effect with respect to the then outstanding shares of
its Series A, B and C Preferred Stock, in which event this Agreement and
the security interest in the Collateral created hereby shall terminate, and
the Secured Parties shall promptly execute and deliver
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to the Debtor such UCC-3 termination statements, certificates and other
documents or instruments as may be necessary to enable the Debtor to
terminate the security interest in the Collateral granted hereby.
4. Each Shareholder agrees that the number of Stock Units which may be
purchased on exercise of such Shareholder's Preferred Warrants as set forth of
the first page of such Shareholder's Preferred Warrants certificate and in the
definition of "Warrants" in Section 1 thereof shall be amended such that the
number of Stock Units which such Shareholder shall be entitled to purchase shall
be the number set forth opposite such Shareholder's name below:
Number of
Holder Stock Units
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▇▇▇▇▇▇ Resource Partners 50,000
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ 13,617
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ 0
▇▇▇▇ ▇▇▇▇▇▇▇▇ 5,702
▇.▇. ▇▇▇▇▇, Inc. Custodian f/b/o 0
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ 4,616
C. ▇▇▇▇▇ ▇▇▇▇▇▇▇ 2,420
▇▇▇▇▇ ▇▇▇▇▇▇▇ 2,420
▇▇▇▇▇ ▇▇▇▇▇ 1,724
▇▇▇▇ ▇▇▇▇▇▇▇▇ 0
The Amendment in this Paragraph 4 shall be null and void if Newco does not make
the payments on January 1, 1998 to redeem certain shares of Series A, B and C
Series Preferred Stock of Newco held by the Shareholders.
5. Each Shareholder agrees that such Shareholder's certificate for
Preferred Warrants is hereby amended by deleting the definition of "Preferred
Stock Exercise Rate" in Section 1 thereof and substituting the following in its
place:
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"Preferred Stock Exercise Rate" shall mean the number of shares of
Common Stock of the Company into which each share of Newco Series A, B and
C Preferred Stock may be exchanged; the initial Preferred Stock Exercise
Rate shall be 1.6666667, and such initial Preferred Stock Exercise Rate
shall be subject to the adjustments described herein.
6. Each Shareholder agrees that such Shareholder's certificate for
Preferred Warrants is hereby amended by deleting the last sentence of Section
2(a) thereof and substituting the following in its place:
As used herein, "Exercise Consideration" initially means one share of
Series A, B or C Preferred Stock of Newco (excluding the Redemption Shares,
as defined in the Restated Certificate of Incorporation of Newco) for each
1.6666667 Stock Units (the "initial Preferred Stock Exercise Rate") and
thereafter means the Preferred Stock Exercise Rate.
7. Each Shareholder agrees that such Shareholder's certificate for
Preferred Warrants is hereby amended by deleting the definition of "Exercise
Right Commencement Date" in Section 1 thereof and substituting the following in
its place:
"Exercise Right Commencement Date" shall mean (i) the earlier of the
occurrence of an Acceleration Event or (ii) January 1, 1999 with respect to
exercises as to which Series A or B Preferred Stock is the exercise
consideration and January 1, 2000 with respect to exercises as to which
Series C Preferred Stock is the exercise consideration.
8. [INTENTIONALLY OMITTED.]
9. Each Shareholder listed below surrenders for cancellation the number of
shares of Series A and/or B Preferred Stock to Newco set forth opposite such
Shareholders name below in exchange for a reduction in the principle amount of
such Shareholder's Note in the amount set forth opposite such Shareholder's name
below.
Series A Series B
Preferred Stock Preferred Stock Principle New Principle
Shareholder Surrendered Surrendered Reduction Balance of Note
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▇▇▇▇▇▇ ▇▇▇▇▇▇▇ 0 5,706 $57,060 $92,119
▇▇▇▇ ▇▇▇▇▇▇▇▇ 1,957 1,574 $35,310 $57,020
▇▇▇▇▇ ▇▇▇▇▇ O 763 $ 7,630 $12,338
In addition, each such Shareholder agrees that such Shareholder's Note is hereby
amended such that one-half of the principal amount (as reduced pursuant to the
preceding sentence) of such Note shall be due and payable on January 1, 1999 and
one-half of the principal amount (as
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reduced pursuant to the preceding sentence) of such Note shall be due and
payable on January 1, 2000.
10. The Registration Rights Agreement is hereby amended by deleting the
date "April 11, 1996" as it appears in the second line of Section 1.2(a) thereof
and substituting the date "January 1, 1999" in its place.
11. The Escrow Agreement is hereby amended by deleting subpart (iv) of
Section 7 thereof and substituting the following in its place:
(iv) September 15, 1997.
12. Each Shareholder agrees to surrender such Shareholder's certificate
for Preferred Warrants to Aristotle in exchange for a new certificate for
Preferred Warrants incorporating the amendments set forth in Paragraphs 4
through 7 of this letter agreement within ten calendar days of the execution
hereof; provided, however, that such amendments shall be effective
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notwithstanding the failure of any Shareholder to surrender such Shareholder's
certificate for Preferred Warrants to Aristotle or the failure of Aristotle to
issue a new certificate for Preferred Warrants in exchange therefore.
13. Each Shareholder agrees to surrender such Shareholder's certificate
for Common Warrants to Aristotle in exchange for a new certificate for Common
Warrants incorporating the amendment set forth in Paragraph 8 of this letter
agreement within ten calendar days of the execution hereof; provided, however,
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that such amendment shall be effective notwithstanding the failure of any
Shareholder to surrender such Shareholder's certificate for Common Warrants to
Aristotle or the failure of Aristotle to issue a new certificate for Common
Warrants in exchange therefore.
14. Each Shareholder agrees to surrender such Shareholder's certificates
for Newco Series A, B and C Preferred Stock to Newco so that Newco can reissue
certificates for such shares with appropriate legends reflecting the amendments
to Newco's Restated Certificate of Incorporation approved by Newco's
stockholders pursuant to an Action by Stockholders Without a Meeting dated
September 15, 1997 (the "Restated Certificate of Incorporation") by identifying
the Put Right Commencement Date assigned to each share and designating certain
shares of Series A, B, and C Preferred Stock as the Redemption Shares (as
defined in Newco's Restated Certificate of Incorporation), within ten calendar
days of the execution hereof; provided, however, that such amendments to Newco's
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Restated Certificate of Incorporation shall be effective and binding upon the
Shareholders and Newco notwithstanding the failure of any Shareholder to
surrender such Shareholder's certificates for Series A, B and C Preferred Stock
to Newco or the failure of Newco to issue new certificates in exchange
therefore.
15. Each Shareholder agrees to execute and deliver to Aristotle a new Note
in exchange for the cancellation of such Shareholder's original Note, such new
Note to incorporate the amendments set forth in Paragraph 9 of this letter
agreement, within ten calendar days of the execution hereof; provided, however,
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that such amendments shall be effective notwithstanding
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the failure of any Shareholder to execute and deliver to Aristotle a new Note in
exchange for the cancellation of such Shareholder's original Note.
16. Each Shareholder agrees that Aristotle and Newco shall have the right
to restructure such corporations such that the Shareholder's equity interest in
Newco shall become an equity interest in Aristotle and hereby consents to such
restructuring; provided that such restructuring qualifies as a tax free
reorganization under federal income tax rules in which the Shareholders will not
recognize any gain on the disposition at their equity interest in Newco and that
following any such restructuring such Shareholders shall be in the same position
as shareholders of Aristotle with respect to dividends, liquidation preference
and put rights and such other powers, preferences and relative, participating,
optional and other special rights and the qualifications, limitations,
restrictions and other distinguishing characteristics as they were in as holders
of the Series A, B and C Preferred Stock of Newco. The Shareholders covenant
and agree to execute and deliver such additional agreements and instruments and
take all such further action as shall be necessary or expedient to give effect
to the foregoing.
17. For purposes of Section 4.9 of the Capital Contribution Agreement, the
execution of this letter agreement by the undersigned members of the Waiver
Group shall be deemed to be the consent of or waiver from the Waiver Group with
respect to the amendments effected in the Restated Certificate of Incorporation
and the other covenants and agreements of the Shareholders set forth above.
18. Aristotle will use its reasonable best efforts to file as
expeditiously as possible with the Securities and Exchange Commission a Form S-3
registration statement covering all shares of Aristotle Common Stock which may
be received by the Shareholders on exercise of Common Warrants or Preferred
Warrants.
Except as expressly provided herein, none of the other provisions of the
Pledge Agreement, the Security Agreement, the Preferred Warrants, the Common
Warrants, the Notes, the Registration Rights Agreement, the Escrow Agreement or
the Capital Contribution Agreement are amended or waived, and the Pledge
Agreement, the Security Agreement, the Preferred Warrants, the Common Warrants,
the Notes, the Registration Rights Agreement, the Escrow Agreement and the
Capital Contribution Agreement are and remain in full force and effect.
Please indicate your agreement to the foregoing by executing this letter
agreement in the space provided below. This letter may be executed in one or
more counterparts and the facsimile of the signature of any party shall
constitute an original signature of such party. The failure by any one or more
of the Shareholders to execute this letter will not affect the validity or
enforceability of this letter against the other Shareholders who execute this
letter.
Very truly yours,
▇▇▇▇▇▇ Resource Partners
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/s/ ▇▇▇▇▇ ▇▇▇▇▇▇
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By: ▇▇▇▇▇ ▇▇▇▇▇▇
Its: General Partner
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
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▇▇▇▇▇▇ ▇▇▇▇▇▇▇, individually and as
collateral agent under the Pledge Agreement
and Security Agreement
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
/s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇
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▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Inc. Custodian
f/b/o ▇▇▇▇ ▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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By: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Its:
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
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▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
/s/ C. ▇▇▇▇▇ ▇▇▇▇▇▇▇
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C. ▇▇▇▇▇ ▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
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▇▇▇▇▇ ▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇▇▇▇▇
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▇▇▇▇▇ ▇▇▇▇▇
/s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇
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▇▇▇▇ ▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇
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▇▇▇▇▇ ▇▇▇▇▇▇, as collateral agent under the
Pledge Agreement, the Security Agreement and
the Escrow Agreement
Acknowledged and Agreed to:
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ARISTOTLE SUB, INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
President
THE ▇▇▇▇▇▇▇, ▇▇▇▇▇ COMPANY
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇
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THE ARISTOTLE CORPORATION
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
President
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