________________________________________________________________
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
Annual Report Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934 (fee required)
For the Year Ended December 31, 1996
Commission file number 0-3417
CENCOR, INC.
(Exact name of registrant as specified in its charter)
1100 Main Street, City Center Square, Suite 416A
P.O. Box 26098
Kansas City, MO 64196-6098
Telephone (816) 221-5833
Incorporated in the State of Delaware
43-0914033
(I.R.S. Employer
Identification No.)
Securities registered pursuant to Section 12(g) of the Act:
TITLE OF CLASS
Regular Common Stock, $1.00 par value
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the Registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No ___
<PAGE>
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein,
and will not be contained, to the best of registrant's knowledge,
in definitive proxy or information statements incorporated
by references in Part III of this Form 10-K or any amendment to
this Form 10-K.{}
Yes X No ___
Indicate by check mark whether the registrant has filed all
documents and reports required to be filed by Section 12, 13 or
15(d), of the Securities Exchange Act of 1934 subsequent to
distribution of securities under a plan confirmed by a court:
Yes X No ___
Indicate the number of shares outstanding of each of the
issuer's classes of Common Stock, as of March 10, 1997.
1,453,617 Shares of Common Stock, $1.00 par value
Market value at March 10, 1997 was $10,720,425
Documents incorporated by reference--None
_________________________________________________________________
<PAGE>
CENCOR, INC.
FORM 10-K
YEAR ENDED DECEMBER 31, 1996
INDEX
Item Page
PART I 3
Item 1. Business 3
Item 2. Properties 3
Item 3. Legal Proceedings 3
Item 4. Submission of Matters to a Vote of Security Holders 4
PART II 5
Item 5. Market for Registrant's Common Stock and Related
Stockholder Matters 5
Item 6. Selected Financial Data 6
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations 7
Item 8. Financial Statements and Supplementary Data 12
Item 9. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure 27
PART III 28
Item 10. Directors and Executive Officers
of the Registrant 28
Item 11. Executive Compensation 29
Item 12. Security Ownership of Certain
Beneficial Owners and Management 32
Item 13. Certain Relationships and Related Transactions 33
PART IV 35
Item 14. Exhibits, Financial Statements
Schedules, and Reports on Form 8-K 35
<PAGE>
PART 1
Item 1. Business
CenCor, Inc. was incorporated under the laws of Delaware on May
27, 1968. Prior to June 30, 1995, CenCor, was engaged in the
consumer finance business through its wholly-owned subsidiary,
Century Acceptance Corporation ("Century"). As used herein, the
term "the Company" refers to CenCor and Century collectively.
Effective June 30, 1995, substantially all of the assets of
Century were sold. For additional information regarding the sale
of Century, see "Management's Discussion and Analysis of
Financial Condition and Results of Operations--Financial
Conditions--Sale of Century".
The Company has not conducted on-going operations since the sale
of its consumer finance business and is in the process of
liquidation. On September 12, 1996, the Company's stockholders
approved a Plan of Dissolution and Liquidation (the "Plan of
Liquidation") which the Board of Directors submitted for
stockholder approval at the Company's annual meeting of
stockholders. CenCor is expected to be fully liquidated by
October 1999. See "Management's Discussion and Analysis of
Financial Condition and Results of Operation--Financial Condition--
Plan of Liquidation".
<PAGE>
As of December 31, 1995, CenCor's liabilities included
outstanding non-interest bearing Convertible Notes payable July
1, 1999 (the "Convertible Notes") in the principal amount of
$11,449,771. Effective April 1, 1996, CenCor converted these
Convertible Notes into shares of CenCor's common stock at a ratio
of one share of common stock for each $20 principal amount of
Convertible Notes. As a result of this conversion, the holders
of the Convertible Notes were entitled to be issued 572,554
shares of CenCor common stock upon surrender of their Convertible
Notes. As of March 10, 1997, 537,760 shares have been issued and
are outstanding as a result of the surrender of Convertible
Notes. Except for the cover page of this report, which reflects
the fact that 1,453,617 shares have actually been issued, the
issued and outstanding share amounts reflected in this report and
in the December 31, 1996 and December 31, 1995 financial
statements included herein are treated as though all 572,554
shares have been issued and are outstanding as a result of the
conversion of the Convertible Notes.
Item 2. Properties
Since the sale of its consumer finance business, the Company's
need for office space has decreased significantly. The Company
currently subleases approximately 800 sq. feet of office space on
a month to month basis (see "Certain Relationships and Related
Transactions"). The Company believes that its office space is
adequate for its needs.
Item 3. Legal Proceedings
As more fully discussed in the Company's Annual Report on Form
10-K for the year ended December 31, 1995, Century was a
defendant in two Alabama state-wide class action lawsuits. While
Century denied any wrong-doing and believed that the claims of
the plaintiffs in these separate actions were without merit,
Century settled these matters to avoid the time, expense and
uncertainty of litigation.
<PAGE>
In Princess Nobels vs. Associates Corporation of North America,
et al., Century agreed to refund to all class members who did not
opt-out of the settlement 1 1/2 times the premiums received in
payment of non-filing insurance. Class members consist of all
persons who, from on or after May 15, 1990 to July 20, 1996,
entered into loan agreements with Century within the State of
Alabama which were secured by goods and who were charged non-
filing insurance in connection therewith. Century has
established a fund containing approximately $150,000 for
distributions pursuant to the settlement.
In Dorothy McCurdy, et al. vs. American General Finance, Inc.,
Century has agreed to refund to all class members who did not
opt-out of the settlement 40% of all credit property insurance
premiums received from such persons. Class members consist of
all persons who from on or after April 13, 1991 through August
23, 1996, entered into loan agreements with Century within
Alabama under which Century imposed a charge for credit property
insurance. Century has established a fund containing
approximately $95,000 for distributions pursuant to the
settlement.
Century also agreed to pay approximately $50,000 toward the
administrative costs of the settlements.
Pursuant to both settlements, class members who do not opt-out
will be barred from seeking further relief on any of the claims.
Class members who opt-out may pursue their claims individually.
While the Company is unable to predict the extent to which class
members who opt-out will pursue their own claims, the Company
does not believe that the aggregate effect of the individual
claims will be material to the Company's consolidated financial
statements.
Item 4. Submission of Matters to a Vote of Security Holders
No matter was submitted to a vote of security holders during the
fourth quarter of the registrant's fiscal year ended December 31,
1996.
(The remainder of this page is intentionally blank.)
<PAGE>
PART II
Item 5. Market for Registrant's Common Stock and Related
Stockholder Matters
CenCor's common stock is quoted on the OTC Bulletin Board under
the symbol CNCR. The range of high and low sales price as quoted
on the OTC Bulletin Board for each quarter of 1995 and 1996 is as
follows:
<TABLE>
<CAPTION>
1995 1996
Quarter Ended High Low High Low
<S> <C> <C> <C> <C>
March 31 5/8 5/8 3 3
June 30 3 3 6 6
September 30 4-3/8 4-3/8 6-1/2 6-1/2
December 31 3-1/2 3-1/2 6-5/8 6-5/8
</TABLE>
The quotations from the OTC Bulletin Board reflect inter-dealer
prices without retail mark-up, mark-down, or commission and may
not represent actual transactions.
On March 10, 1997, the quoted bid price of the common stock on
the OTC Bulletin Board was $7.375.
At March 10, 1997, CenCor had approximately 1,034 shareholders of
record. No dividends have been paid on the common stock.
(The remainder of this page is intentionally blank.)
<PAGE>
Item 6. Selected Financial Data
<TABLE>
December 31, December 31,
1996 1995
<S> <C> <C>
Net Assets in Liquidation:
Cash and cash equivalents $ 14,513,000 $ 22,439,000
Other assets 10,320,000 11,933,000
Total Assets 24,833,000 34,372,000
Accounts payable and
accrued liabilities 648,000 3,200,000
Income taxes payable 1,110,000 759,000
Long-term debt 5,681,000 12,303,000
Total Liabilities 7,439,000 16,262,000
Net assets in liquidation $17,394,000 $ 18,110,000
Number of common shares
outstanding 1,488,411 1,488,411
Net assets in liquidation per $ 11.69 $12.17
Change in Net Assets in
Liquidation for the year
ended December 31, 1996*:
Income from liquidating
activities $ 2,635,000
Expenses from liquidating
activities 3,351,000
Decrease in net assets in
liquidation $ (716,000)
</TABLE>
______________
*As discussed in PART 1, Item 1, "Business," the Company adopted
liquidation basis accounting as of December 31, 1995 and
therefore prior year operating results are not comparable
<PAGE>
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Financial Condition
Sale of Century
Effective June 30, 1995, Century consummated the sale of its
consumer finance business to Fidelity Acceptance Corporation, a
subsidiary of the Bank of Boston Corporation.
Under the terms of the sale, Century received $128.7 million for
substantially all of its assets. In accordance with the
provisions of the sales agreement, $5 million of the sale
proceeds were placed in escrow to secure certain indemnification
obligations of the Company that expire on July 1, 1998. As of
March 10, 1997 the buyer has made one claim for $40,000 against
the escrow and has notified the Company of other claims which may
be asserted against the escrow balance. Management does not
believe the amount of the other claims, if any, will be material
to the consolidated financial statements.
Conversion of Convertible Notes and Retired Stock
On December 31, 1995, CenCor had outstanding non-interest
bearing convertible notes due July 1, 1999 (the "Convertible
Notes") in the principal amount of $11,449,771. Effective April
1, 1996, CenCor converted these Convertible Notes into shares of
CenCor's common stock at a ratio of one share of common stock for
each $20 principal amount of Convertible Notes. As a result of
this conversion, the holders of the Convertible Notes were
entitled to be issued 572,554 shares of CenCor common stock upon
surrender of their Convertible Notes. As of March 10, 1997,
537,760 shares have been issued and are outstanding as a result
of the surrender of Convertible Notes.
In May 1996 CenCor received into its treasury 324,641 shares of
CenCor common stock in settlement of a claim against the Estate
of Robert F. Brozman and the related Robert F. Brozman Trust.
The issued and outstanding share amounts reflected in the
accompanying financial statements reflect the receipt and
retirement of these shares.
<PAGE>
Long - Term Debt
On August 19, 1996 CenCor offered to redeem all of its
outstanding Non-Convertible Notes due July 1, 1999 at a cash
price equal to 74% of their principal amount. Prior to the
offer, the principal balance of the Non-Convertible Notes was
$17,174,656. CenCor redeemed outstanding Non-Convertible Notes in
the principal amount of $9,965,425 as of the November 18, 1996
offer expiration date at a cost of $7,374,415. The Non-
Convertible Notes not tendered by the noteholders remain
outstanding and are expected to be paid in full at the stated
maturity date of July 1, 1999. However, there can be no
assurance that intervening events will not affect CenCor's
ability to fully discharge this obligation at that time.
Plan of Liquidation
With the sale of its consumer finance business, CenCor's business
purpose no longer exists. For that reason, CenCor's Board of
Directors adopted a resolution on January 22, 1996 that CenCor be
liquidated and that the Plan of Liquidation be submitted to the
stockholders for approval. The Company's stockholders approved
the Plan of Liquidation at the Company's annual meeting of
stockholders held on September 12, 1996 and a Certificate of
Dissolution was subsequently filed with the State of Delaware.
Under Delaware Law, CenCor will continue as a corporate entity
for three years after the effective date of the dissolution
(October 1, 1996) or for such longer period as the Delaware Court
of Chancery directs in its own discretion, for the purpose of
prosecuting and defending suits by or against CenCor and winding
up the business and affairs of CenCor, but not for the purpose of
continuing the business of CenCor.
The Plan of Liquidation provides that the implementation of the
plan is intended to be completed by October 1, 1999. During this
three year period, CenCor will not engage in any business
activities, except for preserving the value of its assets,
adjusting and winding up its business and affairs, and
distributing its assets in accordance with the Plan of
Liquidation. CenCor's debts and liabilities, whether fixed,
conditioned or contingent, will either be paid as they become due
or provided for.
<PAGE>
At such time as the Board has determined that all claims and
liabilities have been identified and paid or provided for, which
CenCor does not expect to occur prior to 1999, CenCor will
distribute all funds resulting from CenCor's liquidation to the
stockholders in accordance with the respective rights of each.
The proportionate interests of the respective stockholders in the
assets of CenCor will be fixed on the basis of their ownership
of the outstanding shares of CenCor on a record date to be
determined by the Board.
During the period of liquidation, CenCor's directors and officers
are authorized to implement and carry out the provisions of the
Plan of Liquidation and to receive compensation for their
services.
Assuming CenCor had fully liquidated and distributed its assets
by December 31, 1996 and assuming further that the Company's
actual realizable value of its assets and liabilities is
identical to the Company's estimated realized value of these
items, CenCor's stockholders would have received $17,394,000 in
distributions or approximately $11.69 per share, less costs to
liquidate. The actual amount to be received upon complete
liquidation may be adversely affected by claims arising from the
indemnification obligations resulting from the sale of Century's
assets, unanticipated tax liabilities, or other unforeseen
factors.
Concorde Career Colleges, Inc. Agreements
At December 31, 1996, the Company held a junior secured debenture
(the "Debenture") of Concorde Career Colleges, Inc. ("Concorde")
in the principal amount of approximately $2.4 million and 260,385
shares of Concorde's cumulative preferred stock (the "Preferred
Stock"). Further, the Company held an unsecured debt of Concorde
in the principal amount of approximately 190,000 (the "Unsecured Debt").
<PAGE>
The Debenture, which was to have matured on July 31, 1997, called
for principal and interest payments commencing June 30, 1996
based on a 10-year amortization schedule. Interest on the
Debenture compounded and accrued quarterly at a variable rate not
to exceed 12%. The Debenture further called for an additional
contingent payment at the maturity of the Debenture in an amount
equal to 25% of the amount by which the "market capitalization"
of Concorde exceeded $3.5 million on August 31, 1997. The Preferred
Stock, $.10 par value, had a per share liquidation preference of
$10.00 per share. Cumulative quarterly dividends accrued at a rate
equal to 73% of the then current interest rate on the Debenture.
Dividends were to have accrued until such time as the Debenture
was paid in full. While Concorde could redeem the Preferred Stock
in whole or in part at liquidation value plus accrued cumulative
dividends, the Preferred Stock did not provide for mandatory
redemption.
On December 30, 1996, CenCor and Concorde amended the
Restructuring, Security and Guaranty Agreement (the "Fourth
Amendment") between the parties to facilitate the early
redemption of the Preferred Stock and payment in full of all of the
obligations of Concorde to CenCor. The Fourth Amendment provided
that if CenCor received a "repayment price" of approximately $4.8
million prior to February 28, 1997, inclusive of any Preferred
Stock redemption payments and debt service payments on the
Debenture subsequent to September 30, 1996, that Debenture and
the Unsecured Debt would be retired and the Preferred Stock
redeemed in full.
In February 1997, CenCor retired in full of all of
Concorde's debt obligations to CenCor and redeemed in full of
all of the remaining shares of Preferred Stock in accordance with the
terms of the Fourth Amendment. In exchange,
CenCor agreed to release Concorde from all liabilities and
obligations, except its continuing obligation to convey written-
off receivables in connection with discharged interest, as
described below.
During 1996, CenCor received $452,498 from Concorde in redemption
of 39,615 shares of Preferred Stock and $411,890 in payments from
Concorde on the Debenture.
<PAGE>
In 1993 and 1994, Concorde agreed to assign certain charged-off
receivables to CenCor in full payment of the accrued interest due
on the Junior Secured Debenture through December 31, 1993 and
1994, respectively. The receivables, which consist of account
and notes receivable from students who attended schools operated
by Concorde or its subsidiaries, were assigned to CenCor without
recourse with CenCor assuming all risk of non-payment of the
receivables. The agreement with Concorde grants CenCor limited
rights of substitution until such time as it collects full
payment of the accrued interest, exclusive of out-of-pocket
collection fees and expenses paid to third parties. CenCor has
engaged a collection agent to pursue recovery of such receivables
assigned to the Company. As of December 31, 1996, CenCor has
collected approximately $672,000 of the total $1,057,000
discharged interest due from the charged-off receivables.
Collections in 1996 and 1995 were approximately $334,000 and
$338,000 (inclusive of $50,000 received in 1994), respectively.
Assets and Liabilities During the Liquidation Period
Following the sale of its consumer finance business, the
Company's assets consist primarily of cash and cash equivalents,
the Concorde Debenture, Preferred Stock and Unsecured Debt, (as
previously discussed, the Concorde assets were liquidated on
February 25, 1997), certain previously charged-off receivables
received in payment of accrued interest on the Debenture, and the
escrow account established to secure the indemnification
obligations of the Company to the buyer of the consumer finance
business.
The Company's remaining liabilities consist primarily of the
amounts due to the holders of its non-tendered Non-Convertible
Notes, accounts payable, and other accrued liabilities, including
accrued income taxes. As a result of being in the process of
liquidation, the Company is required to adopt the liquidation
basis of accounting. Generally accepted accounting principles
require the adjustment of assets and liabilities to estimated
fair value under the liquidation basis of accounting. For
information concerning the estimated fair values given these
items by the Company and the methods and assumptions used to
arrive at such values, see the Company's Financial Statements and
the notes thereto.
<PAGE>
Results of Operations
During the year ended December 31, 1996, the Company's sources of
income consisted primarily of investment income, interest income
on the Debenture, and collections from the Concorde charged-off
receivables received in payment of accrued interest on the
Debenture. CenCor also recognized a loss from early retirement
of a portion of its long-term debt and a gain on the redemption
of the Concorde Preferred Stock.
The Company's expenses during the year ended December 31, 1996
consisted mainly of salaries, accretion of interest on the
Company's long-term debt, professional and consulting fees, and
other liquidating expenses. The Company recorded an income tax
expense as a result of the taxable gain from the retirement of
CenCor's Non-Convertible Notes as previously discussed and an
increase in taxable income due to a reduction the Company's net
operating loss ("NOL") carryforward. See "Liquidity and Capital
Resources - Internal Revenue Service Examinations and Potential
California Sales Tax Assessment" for a further discussion of the
NOL carryforward.
Activities During Liquidation Period
The Company's activities during the period of liquidation will
focus on the collection of various amounts owed to it, including
the previously charged-off Concorde receivables received in
payment of accrued interest. The Company will also closely
monitor claims rising from indemnification obligations to the
buyer of Century in order to maximize the value of the escrow
fund established as a result of the sale. Until the Company's
long-term debt becomes payable and distributions are made to
stockholders, management expects to invest the available proceeds
from the sale of Century and the Company's other cash in short-
term government or government agency instruments.
The Company's expenses during the period of liquidation are
expected to consist mostly of salaries, professional fees,
stockholder communication expenses, income taxes and other
liquidating expenses.
<PAGE>
The Company will be required to satisfy the balance of the non-
tendered Non-Convertible Notes together with all other
liabilities prior to any distribution on its outstanding common
stock.
Regulation During the Liquidation
Because of the sale of Century's consumer finance business,
CenCor may be an "investment company" as defined in the
Investment Company Act of 1940 (the "1940 Act"). The 1940 Act
generally requires investment companies to register with the
Securities and Exchange Commission after which their capital
structure, securities issuances, investments and transactions
with affiliates, along with numerous other activities would
become subject to extensive regulation. The 1940 Act does not,
however, require an investment company to register if its only
activities are those "merely incidental to its dissolution".
CenCor believes that in light of the dissolution exception from
registration under the 1940 Act, CenCor is not required to
register under such act.
Surrender of Certificates for Common Stock
At such time as the respective interest of the stockholders are
fixed on the basis of the ownership of their outstanding shares
of common stock of the Corporation on a record date determined by
the Board (the "Record Date"), it is anticipated that the stock
transfer books of CenCor will be closed, no further transfers
will be recorded on CenCor's books and no further stock
certificates will be issued, other than replacement certificates.
All distributions from CenCor on or after the Record Date will be
made to stockholders according to their stockholdings as of the
Record Date. As soon as practicable after the determination of
the Record Date, stockholders will be advised of the procedures
for surrendering certificates representing their shares of common
stock. Stockholders should not forward their stock certificates
before receiving those instructions. Distributions for
stockholders who have not surrendered their stock certificate may
be held for such stockholders, without interest, until the
surrender of their certificates (subject to the laws relating to
unclaimed property).
<PAGE>
Liquidity and Capital Resources
Capital Obligations
The Company has no significant obligations for capital purchases.
Defaults on Long-Term Debt
The Company believes that it is in compliance with all covenants
and terms under the indenture for the Non-Convertible Notes.
Internal Revenue Service Examination and Potential California
Sales Tax Assessment
The Company's 1990, 1991, and 1992 federal income tax returns
have been examined by the IRS. The IRS has proposed adjustments
to increase taxable income in 1991 which the Company is in the
process of appealing. Management believes that an adequate
reserve has been provided at December 31, 1996 and therefore the
ultimate disposition of the IRS examination will not have a
material effect on the financial position of the Company.
Charter Equipment Leasing Corp. ("Charter"), a former subsidiary
of CenCor, sold substantially all of its assets in 1992 and
dissolved in 1994. In connection with the sale of Charter's
assets, the California Board of Equalization (the "Board of
Equalization") issued a Notice of Determination in April 1996
(revising a Notice of Determination previously issued in January
1996) for sales tax, interest and penalties in the amount of
$5,362. In March 1997, the Company settled the sales tax
assessment for approximately $6,000. However, the Board of
Equalization may still attempt to assert a claim against the
buyer of Charter's assets based upon successor liability for
sales taxes from the 1992 transaction. If the buyer is assessed
sales taxes, the buyer may attempt to assert an indemnification
claim against CenCor.
(The remainder of this page is intentionally blank.)
<PAGE>
Item 8. Financial Statements and Supplementary Data
INDEX TO FINANCIAL STATEMENTS
Page
CenCor, Inc.
Report of Independent Auditors 13
Audited Consolidated Financial Statements
Consolidated Statement of Net Assets in Liquidation 14
Consolidated Statement of Changes in Net
Assets in Liquidation 15
Consolidated Statement of Operations 16
Consolidated Statement of Stockholders' Equity 17
Consolidated Statement of Cash Flows 18
Notes to Consolidated Financial Statements 20
<PAGE>
Report of Independent Auditors
The Board of Directors and Stockholders
CenCor, Inc.
We have audited the accompanying consolidated statements of net
assets in liquidation of CenCor, Inc. (the Company) as of
December 31, 1996 and 1995, the related statement of changes in
net assets in liquidation for the year ended December 31, 1996,
and the related consolidated statements of operations,
stockholders' equity and cash flows for the year ended December
31, 1995. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
As described in Note 1 to the financial statements, as a result
of the Board of Directors' intent to liquidate effective December
31, 1995, the Company changed its basis of accounting from the
going-concern basis to the liquidation basis.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the net assets in
liquidation of CenCor, Inc. as of December 31, 1996 and 1995, the
changes in net assets in liquidation for the year ended December
31, 1996 and the consolidated results of its operations and its
cash flows for the year ended December 31, 1995, in conformity
with generally accepted accounting principles applied on the
basis described in the preceding paragraph.
Ernst & Young LLP
March 12, 1997
Kansas City, Missouri
<PAGE>
<TABLE>
<CAPTION>
CenCor, Inc.
(In Process of Liquidation)
Consolidated Statement of Net Assets in Liquidation
December 31, December 31,
1996 1995
<S> <C> <C>
Assets:
Cash and cash equivalents $ 14,513,000 $ 22,439,000
Other assets 10,320,000 11,933,000
Total assets 24,833,000 34,372,000
Liabilities:
Accounts payable and accrued
liabilities 648,000 3,200,000
Income taxes payable 1,110,000 759,000
Long-term debt 5,681,000 12,303,000
Total liabilities 7,439,000 16,262,000
Net assets in liquidation $ 17,394,000 $ 18,110,000
Number of common shares
outstanding 1,488,411 1,488,411
Net assets in liquidation
per share $ 11.69 $12.17
See accompanying notes.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CenCor, Inc.
(In Process of Liquidation)
Consolidated Statement of Changes in Net Assets in Liquidation
For the Year Ended December 31, 1996
<S> <C>
Net assets in liquidation, December 31, 1995 $18,110,000
Income from liquidating activities:
Investment income 1,655,000
Other interest income 903,000
Gain on extinguishment of
debt 208,000
Loss on liquidation of other
assets (131,000)
2,635,000
Expenses from liquidating activities:
Salaries and related benefits 457,000
Interest expense 1,052,000
Professional fees 242,000
Other expenses 325,000
Income tax 1,275,000
3,351,000
Decrease in net assets in liquidation (716,000)
Net assets in liquidation, December 31, 1996 $ 17,394,000
See accompanying notes.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CenCor, Inc.
(In Process of Liquidation)
Consolidated Statement of Operations
For the Year Ended December 31, 1995
<S> <C>
Income $ 1,220,000
Expenses:
Salaries and other expenses 2,822,000
Interest expense, net 2,260,000
Operating loss (3,862,000)
Non-operating income 3,087,000
Loss before discontinued operations (775,000)
Discontinued operations:
Loss from operations, net of $0 taxes (5,330,000)
Gain on disposal, net of $1,100,000 taxes 24,047,000
Income from discontinued operations 18,717,000
Net income $ 17,942,000
Weighted average common and common
equivalent shares outstanding 1,813,052
Earnings per share of common stock and
common equivalent shares of stock:
Loss per share before discontinued operations $ (0.43)
Earnings per share from discontinued
operations 10.33
Earnings per share from net income $ 9.90
See accompanying notes.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CenCor, Inc.
(In Process of Liquidation)
Consolidated Statement of Stockholders' Equity
Retained Net Assets
Paid-in Earnings in Liqui-
Shares Amount Capital (Deficit) dation Total
<S> <C> <C> <C> <C> <C> <C>
Balance at
December 31,
1994 1,240,498 $1,241,000 $2,805,000 $(11,273,000) $ -- (7,277,000)
Net income -- -- -- 17,942,000 -- 17,942,000
Shares re-
ceived in
settlement (324,641) (325,000) (734,000) (1,428,000) -- (2,487,000)
Balance at
December 31,
1995 prior
to adoption
of liquida-
tion basis
of
accounting 915,857 916,000 2,071,000 5,241,000 -- 8,228,000
Adoption of
liquidation
basis of
accounting 572,544 (916,000) (2,071,000) (5,241,000) 18,110,000 9,882,000
Net assets in
liquidation
at December
31, 1995 1,488,411 $ -- $ -- $ -- $18,110,000 $18,110,000
See accompanying notes.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CenCor, Inc.
(In Process of Liquidation)
Consolidated Statement of Cash Flows
For the Year Ended December 31, 1995
<S> <C>
Operating activities:
Net income $ 17,942,000
Adjustment to reconcile net income to net
Cash used in operating activities:
Gain on disposal (24,047,000)
Cash used in discontinued operations 4,561,000
Other changes in assets and
liabilities, net 1,370,000
Total adjustments (18,116,000)
Net cash used in operating activities (174,000)
Investing and other activities:
Proceeds from sale of discontinued
operations 123,710,000
Capital expenditures, net (35,000)
Net cash provided by investing and
other activities 123,675,000
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CenCor, Inc.
(In Process of Liquidation)
Consolidated Statement of Cash Flows (continued)
For the Year Ended December 31,1995
Financing activities:
<S> <C>
Payments of long-term debt $(102,095,000)
Net cash used in financing activities (102,095,000)
Net increase in cash and cash equivalents 21,406,000
Cash and cash equivalents at beginning of
year 1,033,000
Cash and cash equivalents at end of year $ 22,439,000
Supplemental disclosures of cash flow
information:
Cash paid during the year for:
Interest $ 5,698,000
Income taxes $ 356,000
See accompanying notes.
</TABLE>
<PAGE>
Notes to Consolidated Financial Statements
December 31, 1996 and 1995
1. Summary of Significant Accounting Policies
Basis of Presentation and Plan of Liquidation
The accompanying consolidated financial statements include
accounts of CenCor, Inc. and its wholly-owned subsidiary Century
Acceptance Corporation ("Century") (collectively, "the Company").
Effective June 30, 1995, the Company sold substantially all of
the assets of Century its then only operating subsidiary. Since
the date of the sale of Century, the Company has had no ongoing
operations. As a result, the Company has changed its basis of
accounting from going concern basis to liquidation basis.
On September 12, 1996, the Company's stockholders approved a Plan
of Dissolution and Liquidation (the "Plan of Liquidation") which
the Company's Board of Directors submitted for stockholder
approval at the company's annual meeting of stockholders. In
connection with the Plan of Liquidation, the officers and
directors of CenCor are authorized to (i) dissolve CenCor,
including the execution and filing of a Certificate of
Dissolution with the Secretary of State of the State of Delaware,
(ii) wind up CenCor's affairs, including satisfaction of all
liabilities and long-term debt of CenCor and (iii) liquidate
CenCor's assets on a pro rata basis in accordance with the
respective interests of its common stockholders. CenCor is
expected to be fully liquidated by October 1999.
Generally accepted accounting principles require the adjustment
of assets and liabilities to estimated fair value under the
liquidation basis of accounting. Accordingly, the statements of
net assets in liquidation at December 31, 1996 and 1995, reflect
assets and liabilities on this basis. Adjustments for changes in
estimated liquidation value are recognized currently. Estimated
costs of liquidation have not been provided since such costs are
not able to be estimated.
<PAGE>
Use of Estimates
The preparation of financial statements in conformity with
generally accepted accounting principles under the liquidation
basis of accounting requires management to make estimates and
assumptions that affect the amounts reported in the financial
statements and accompanying notes. Actual results could differ
significantly from those estimates.
Cash and Cash Equivalents
Cash and cash equivalents include cash, money market accounts,
and short-term government or government agency instruments.
Fair Values of Assets and Liabilities
The following methods and assumptions were used by the Company in
estimating the liquidation value of its assets and liabilities:
Cash and cash equivalents: The carrying amounts reported in
the statement of net assets in liquidation for cash and cash
equivalents approximate their fair value.
Concorde Career Colleges, Inc. ("Concorde") Securities:
Other assets at December 31, 1996 include the fair value of
CenCor's investments in Concorde which is based upon the terms of
repayment as defined in the December 30, 1996 agreement (the
"Fourth Amendment") with Concorde. See Note 4. At December 31,
1995 the Concorde investments are valued using discounted cash
flow analysis, based on an estimated discount rate commensurate
with the associated risks.
Other Assets: The fair value of the Company's other assets,
excluding CenCor's investment in Concorde, is estimated using
discounted cash flow analysis, based on an estimated discount
rate commensurate with the associated risks.
<PAGE>
1. Summary of Significant Accounting Policies (continued)
Accounts Payable and Accrued Liabilities: The carrying
amount reported in the statement of net assets in liquidation for
accounts payable and accrued liabilities approximates their fair
value.
Income Tax Payable: The carrying amount reported in the
statement of net assets in liquidation approximates the fair
value of taxes currently payable.
Long-Term Debt: The fair value of the Company's long-term
debt is estimated using discounted cash flow analyses, based on
the Company's current incremental borrowing rates for similar
types of borrowing arrangements (10% at December 31, 1996 and
December 31, 1995). The fair value reflects a conversion of the
convertible notes in accordance with the bankruptcy plan (see
Note 5).
Reclassifications
Certain amounts in the 1995 financial statements have been
reclassified to conform with the 1996 presentation.
2. Discontinued Operations
Effective June 30, 1995, the Company sold substantially all of
the assets of Century. The gross cash proceeds from the sale of
Century were approximately $128,710,000. In accordance with the
provisions of the sales agreement, $5,000,000 of the purchase
price was placed in escrow to secure certain indemnification
obligations of the Company to the buyer that run through July 1,
1998.
Century was able to redeem all of its outstanding secured notes
held by its lenders for a purchase price equal to the principal
amount of the secured notes (approximately $102 million) together
with interest, but without the payment of substantial prepayment
premiums payable under the secured notes. The lenders also
surrendered for cancellation outstanding warrants which would
have allowed them to acquire up to 30% of Century.
<PAGE>
2. Discontinued Operations (continued)
The loss from operations, net of applicable income taxes, for
Century is segregated as discontinued operations in the
accompanying consolidated statement of operations for the year
ended December 31, 1995. The net loss from discontinued
operations is as follows:
<TABLE>
December 31,
1995
<S> <C>
Revenues $ 15,714,000
Expenses (20,988,000)
Other loss (56,000)
Loss from discontinued operations
before income taxes (5,330,000)
Income taxes applicable to discon-
tinued operations -----
Net loss from discontinued operations $ (5,330,000)
</TABLE>
3. Litigation and Contingencies
Century was a defendant, along with a number of other consumer
finance companies, in two class action lawsuits in the State of
Alabama. The suits were filed by certain alleged borrowers of
the defendant creditor/lenders and assert various violations.
While Century denied the allegations, Century has settled the
claims, in order to avoid time, expense, and uncertainty of
litigation by agreeing to pay the class-action plaintiffs
$295,000, which includes certain administrative costs of the
settlements of the claims.
4. Other Assets
At December 31, 1996, the Company held a junior secured debenture
(the "Debenture") of Concorde Career Colleges, Inc. ("Concorde")
in the principal amount of approximately $2.4 million and 260,385
shares of Concorde's cumulative preferred stock (the "Preferred
Stock"). Further, the Company held an unsecured debt of Concorde
in the principal amount of approximately $190,000 (the "Unsecured
Debt").
<PAGE>
The Debenture, which was to have matured on July 31, 1997, called
for principal and interest payments commencing June 30, 1996
based on a 10-year amortization schedule. Interest on the
Debenture compounded and accrued quarterly at a variable rate not
to exceed 12%. The Debenture further called for an additional
contingent payment at the maturity of the Debenture in an amount
equal to 25% of the amount by which the "market capitalization"
of Concorde exceeded $3.5 million. The Preferred Stock, $.10 par
value, had a per share liquidation preference of $10.00 per
share. Cumulative quarterly dividends accrued at a rate equal to
73% of the then current interest rate on the Debenture.
Dividends were to have accrued until such time as the Debenture
was paid in full. While Concorde could redeem the Preferred Stock
in whole or in part at liquidation value plus accrued cumulative
dividends, the Preferred Stock did not provide for mandatory
redemption.
On December 30, 1996, CenCor and Concorde amended the
Restructuring, Security and Guaranty Agreement (the "Fourth
Amendment") between the parties to facilitate the early
redemption of the Preferred Stock and payment in full all of the
obligations of Concorde to CenCor. The Fourth Amendment provided
that if CenCor received a "repayment price" of approximately $4.8
million prior to February 28, 1997, inclusive of any Preferred
Stock redemption payments and debt service payments on Debenture
subsequent to September 30, 1996, that Debenture and the
Unsecured Debt would be retired and the Preferred Stock redeemed
in full.
In February 1997, CenCor retired in full of all of
Concorde's debt obligations to CenCor and redeemed in full of
all of the remaining shares of Preferred Stock in accordance with
the terms of the Fourth Amendment. In exchange,
CenCor agreed to release Concorde from all liabilities and
obligations, except its continuing obligation to convey written-
off receivables in connection with discharged interest, as
described below.
During 1996, CenCor received $452,498 from Concorde in redemption
of 39,615 shares of Preferred Stock and $411,890 in payments from
Concorde on the Debenture.
<PAGE>
In 1993 and 1994, Concorde agreed to assign certain charged-off
receivables to CenCor in full payment of the accrued interest due
on the Junior Secured Debenture through December 31, 1993 and
1994, respectively. The receivables, which consist of account
and notes receivable from students who attended schools operated
by Concorde or its subsidiaries, were assigned to CenCor without
recourse with CenCor assuming all risk of non-payment of the
receivables. The agreement with Concorde grants CenCor limited
rights of substitution until such time as it collects full
payment of the accrued interest, exclusive of out-of-pocket
collection fees and expenses paid to third parties. CenCor has
engaged a collection agent to pursue recovery of such receivables
assigned to the Company. As of December 31, 1996, CenCor has
collected approximately $672,000, of the total $1,057,000
discharged interest due from the charged-off receivables.
Collections in 1996 and 1995 were approximately $337,000 and
$338,000 (inclusive of $50,000 received in 1994), respectively.
The estimated liquidation value of the Debenture, Preferred
Stock, Unsecured Debt, and discharged interest was $5,092,000 at
December 31, 1995.
Also included in other assets at December 31, 1995 are
receivables relating to a fidelity bond claim arising from a loss
on fraudulent automobile contracts in 1991 and a claim against a
third party. In March 1996, the Company received $875,000 from
the third party in payment of the claim. In April 1996, the
Company received $750,000 in payment of the fidelity bond claim.
In addition, an escrow account was established in accordance with
the provisions of the agreement pertaining to the sale of
Century's assets. Such amount, including accrued interest
($5,277,000 and $5,028,000 at December 31, 1996 and December 31,
1995, respectively), is included in other assets. The escrow was
established in order to secure certain indemnification
obligations of Century and CenCor to the buyer that run through
July 1, 1998. Management believes that any potential liability
pertaining to these obligations would be immaterial to the
accompanying financial statement.
<PAGE>
5. Long-Term Debt
Pursuant to a 1993 plan of reorganization, CenCor's noteholders
received the following securities for each $1,000 aggregate
amount of principal and accrued but unpaid interest at December
31, 1992:
(i) $600 principal amount of non-interest bearing Non-
Convertible Notes
(ii) $400 principal amount of non-interest bearing Convertible
Notes
(iii) 5.2817 shares of CenCor common stock, par value of $1
per share
The Non-Convertible Notes are non-interest bearing and will
mature on July 1, 1999. On August 19, 1996, CenCor offered to
retire all of its outstanding Non-Convertible Notes due July 1,
1999 at a cash price equal to 74% of their principal amount. As
of December 31, 1995 and prior to the offer, the principal
balance of the Non-Convertible Notes was $17,174,656. CenCor
purchased and retired outstanding Non-Convertible Notes in the
principal amount of $9,965,425 as of the November 18, 1996 offer
expiration date at a cost of $7,374,415. At December 31, 1996,
the fair value of the non-tendered Non-Convertible Notes was
$5,680,770. The Notes (Convertible and Non-Convertible) were
assigned a fair value of $12,303,000 at December 31, 1995.
On December 31, 1995, CenCor had outstanding non-interest
bearing convertible notes due July 1, 1999 (the "Convertible
Notes") in the principal amount of $11,449,771. Effective April
1, 1996, CenCor converted these Convertible Notes into shares of
CenCor's common stock at a ratio of one share of common stock for
each $20 principal amount of Convertible Notes. As a result of
this conversion, the holders of the Convertible Notes are
entitled to be issued 572,554 shares of CenCor common stock upon
surrender of their Convertible Notes. As of March 10, 1997,
537,760 shares have been issued and are outstanding as a result
of the surrender of Convertible Notes. The conversion of these
notes in satisfaction of $11,449,771 principal amount of the
obligation is reflected in the financial statements and the
number of outstanding shares at December 31, 1996 and 1995.
<PAGE>
6. Other Income
The Company and the Estate of Robert F. Brozman and the related
Trust of Robert F. Brozman (collectively the "Brozman Estate")
entered into a settlement agreement pursuant to which the claims
of the Company against the Brozman Estate, including claims
arising from CenCor's loss of goodwill, would be settled. Under
the settlement agreement, CenCor released the Brozman Estate of
all liability upon receipt of $600,000 in cash plus the transfer
of shares of common stock held by the Brozman Estate in the
amount of $2,487,000. In March of 1995, CenCor received the
$600,000 in cash from the Brozman Estate. The Company, with the
assistance of its independent financial advisor, and the Brozman
Estate agreed to a value of the stock of $7.66 per share which
resulted in 324,641 shares of stock being transferred to the
Company. The transfer in satisfaction of the settlement agreement
and the subsequent retirement of the stock is reflected in the
December 31, 1995 financial statements.
7. Per Share Information
The number of common shares outstanding was increased under the
assumption that all 572,554 common stock shares issuable as a
result of the conversion of the Convertible Notes were
outstanding during the year ended December 31, 1996 and December
31, 1995.
Net assets in liquidation per common share was computed by
dividing net assets in liquidation by the outstanding shares of
common stock at December 31, 1996 and 1995 respectively.
Earnings per common share and common equivalent shares were
computed by dividing net income by the average outstanding shares
of stock during the year ended December 31, 1995.
8. Income Taxes
The Company files a consolidated federal income tax return. A
provision for income taxes of $1,275,000 was recorded during the
year ended December 31, 1996.
<PAGE>
The Company's 1990, 1991 and 1992 federal income tax returns have been
examined by the Internal Revenue Service (IRS). The IRS has proposed
adjustments to increase taxable income in 1991 which the Company is in
the process of appealing. Management believes that the ultimate
disposition of the IRS examination will not have a material effect
on the financial position of the Company.
9. Stock Option Plan
In 1993, CenCor granted 90,000 phantom share options to certain
officers of CenCor. For each option exercised, the holders were
granted the right to receive a cash payment equal to the excess,
if any, over $1.00 per share of the greater of (i) the closing
price of the Common Stock on the NASDAQ National Market (as
determined on the date the option is exercised), (ii) the
stockholders' equity of CenCor at the end of its most recent
fiscal quarter, or (iii) the aggregate distributions per share
received by CenCor's stockholders in the event CenCor is
liquidated. For the purposes of the phantom share option
agreement, a merger or consolidation in which CenCor is not the
surviving party or a transaction in which the CenCor stockholders
receive cash or securities of another company in exchange for
their CenCor shares shall be deemed to be a liquidation. The
options automatically terminate (a) five years after such officer
or director resigns, or is removed, or (b) on the date that said
officer or director engages in certain misconduct under his
employment agreement. The Company recorded a liability in the
amount of $1,010,000 at December 31, 1995 for this obligation.
During 1996, 65,000 phantom share options were exercised by the
holders at a per share value of $11.17. The per share value
represented the difference between the Company's estimated net
assets in liquidation per share at December 31, 1995 and $1.00
per share. A liability for $ 287,600 has been recorded at
December 31, 1996 for the remaining 25,000 phantom share options.
<PAGE>
The Company had 50,000 Stock Appreciation Rights (SARs)
outstanding to certain officers of the Company at December 31,
1995. The SARs permit the holders to receive a cash payment of
the excess of the fair value of Century's stock at the date of
exercise over the fair value of Century's stock as of the date of
grant. As a result of the sale of Century during 1995, the
holders of the SARs became entitled to payment. The fair market
value of Century's stock has been determined as the net proceeds
from the sale less liabilities retained by Century. $505,500 of
the payment due on the SARs was disbursed in January of 1996 and
an additional $105,000 was disbursed in July of 1996. The
remaining liability is scheduled to be paid in installments
through July of 1998. The liability related to the SARs was
$98,000 and $701,505 at December 31, 1996 and December 31, 1995
respectively.
10. Employee Benefit Plan
The Company had a Profit Sharing Plan and 401(k) Retirement
Savings Plan (the Plan). The Company terminated its Plan on
September 30, 1995. No contributions were made by the Company to
the Plan in 1995. At termination the account of each participant
of the Plan became fully vested and nonforfeitable. On October
23, 1996 the Company received a favorable determination letter
from the IRS to terminate the Plan and distribute Plan assets.
The Plan assets will be distributed to the participants as
indicated by the terms of the Plan.
(The remainder of this page is intentionally blank.)
<PAGE>
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure
None.
(The remainder of this page is intentionally blank.)
<PAGE>
PART III
Item 10. Directors and Executive Officers of the Registrant
The following tables set forth the names of the directors of
the registrant and certain related information as of December 31,
1996. Each of the directors has been elected to serve until the
next annual meeting of stockholders or until his successor is duly
elected and qualified.
<TABLE>
<CAPTION>
Name of Served Principal Occupation for
Director Since Age Last Five Years and Directorships<F1>
<S> <C> <C> <C>
Jack L. Brozman<F1> 1979 46 Chairman of the Board, President and Chief
Executive Officer of CenCor and Concorde
since June 1991. Chief Executive
Officer of Century from July
1991 to August 1992. Chairman of the Board
and Treasurer, from June 1991 until
July 23, 1993, and President and Director,
for more than five years prior to July 23,
1993, of La Petite Academy, Inc. Director
of Century and Concorde.
Edward G. Bauer,
Jr.<F2><F3> 1991 68 Vice President and General
Counsel of Philadelphia
Electric Company for more
than the five-year period
prior to August 1988.
Retired from this position
at the end of August 1988.
<PAGE>
George L.
Bernstein <F2><F3> 1991 64 Chief Financial and Administrative
Officer of Howard Fischer Associates,
Inc. (executive search firm)
since October 1994. Chief Operating
Officer of Dilworth, Paxson, Kalish
& Kauffman, Philadelphia,
Pennsylvania (law firm) from
November 1991 to September
1994. Director of R & B,
Inc. (distributor of automotive parts).
Director of Century effective
April 8, 1993.
Marvin S.
Riesenbach<F2><F3> 1991 67 Executive Vice President and Chief
Financial Officer of Subaru of America,
Inc. for more than the five years
prior to October 1990. Retired from
this position at the end of October 1990.
<FN>
<F1> Jack L. Brozman is the sole executor of the Estate of Robert
F. Brozman.
<F2> Director effective July 1, 1991.
<F3> Member of Special and Audit Committees beginning July 1,
1991. Elected to Executive Compensation Committee on August
21, 1991.
</FN>
</TABLE>
<PAGE>
The Board of Directors of CenCor held five meetings and acted
by unanimous written consent on one occasion during the last
fiscal year. Standing committees, consisting of the Special
Committee and the Audit Committee, held one meeting during the
last fiscal year. The Executive Compensation Committee makes
salary and bonus recommendations for certain executive officers.
The Audit Committee oversees the work of CenCor's independent
auditors. CenCor's Board of Directors does not have a nominating
committee. The Special Committee has the final authority to
thoroughly investigate and report to the Board of Directors on
certain matters concerning the misappropriation of CenCor's assets
by CenCor's previous chairman of the board, Robert F. Brozman, or
certain of his affiliated privately held companies. The Special
Committee also has the power and authority to consider the
adequacy of CenCor's internal controls and procedures and to
investigate and report upon such other matters as the Special
Committee considers appropriate. The Special Committee, the
Executive Compensation Committee, and the Audit Committee are
composed of Messrs. Bauer, Bernstein and Riesenbach.
In addition to Jack L. Brozman, the following person also
serves as an executive officer of the Company as of December 31,
1996.
<TABLE>
Name Age Principal Occupation for Last Five Years
<S> <C> <C>
Terri Rinne 29 Vice President CenCor since July 1, 1995.
Controller of CenCor from April 1994 through
June 1995. Tax manager of CenCor and
Century from August 1993 through
March 1994. Accountant with
Arthur Andersen, LLP from October
1989 through August 1993.
</TABLE>
<PAGE>
Disclosure of Delinquent Files
Except as described below, the Company believes, based on
information filed with the Company, that all reports required to
be filed for the past two years with the Securities and Exchange
Commission under Section 16 by the Company's executive officers,
directors, and ten percent stockholders have been filed in
compliance with applicable rules.
The Estate of Robert F. Brozman and Jack L. Brozman failed to timely
file Form 4's with respect to the transfer shares of CenCor
common stock to CenCor. See "Certain Relationships and Related
Transactions". A Form 5 reflecting this transaction has been
filed.
Item 11. Executive Compensation.
Summary Compensation Table
The following table sets forth information as to the
compensation of the Chief Executive Officer and each of the other
executive officers of CenCor and Century whose total annual salary
and bonus exceeded $100,000, during the year ended December 31,
1996 for services in all capacities to CenCor and its subsidiaries
in 1994, 1995, and 1996.
<PAGE>
<TABLE>
<CAPTION>
Long-Term
Compensation
Annual All Other
Compensation Awards Compensation
Other Annual
Name and Principal Salary Bonus Compensation Options/SARs
Position Year ($) ($) ($) #
<S> <C> <C> <C> <C> <C> <C>
Jack L. Brozman, 1996 $201,900<F1> $753,900<F2> $279,250<F3>
Chairman of the
Board and Chief
Executive Officer
1995 $178,300<F1> 15,000<F4>
1994 $134,800<F1> $25,000<F5>
<FN>
<F1> Mr. Brozman also received compensation as an executive
officer of Concorde.
<F2> Consists of (i) installment payments received during 1996
with respect to payout received on 30,000 units of stock
appreciation rights (SARs) deemed exercised during 1996 in the
amount of $427,000 but payable beginning in 1996 and ending in
1998 and (ii) payout received on the exercise of phantom share
options with respect to 35,000 shares of CenCor common stock.
See "Executive Compensation--Option/SAR Grants in Last Fiscal
Year".
<F3> Represents the dollar value of in-the-money phantom share
options. See "Option Exercises and Fiscal Year-End Option Value
Table".
<PAGE>
<F4> See "Executive Compensation -- Option Exercises and Fiscal
Year End Option Value Table".
<F5> Mr. Brozman was also awarded and paid a cash bonus in 1994 of
$25,000 in recognition of his excellent performance in 1993.
</FN>
</TABLE>
<PAGE>
Option Exercises and Fiscal Year-End Option Value Table
The following table provides information with respect to the
named executive officers concerning options exercised during 1996
and unexercised options held as of December 31, 1996.
<TABLE>
<CAPTION>
Value # of Securities Underlying Value of Unexercised In-the-
Options Realized Unexercised Options Money Options
Name Exercised ($) at FY-End at FY-End ($)
Exercisable Unexercisable Exercisable Unexercisable
<S> <C> <C> <C> <C> <C> <C>
Jack L. Brozman, 35,000<F1> $390,950<F2> 25,000<F3> N/A $279,250<F4> N/A
CEO
<FN>
<F1> Consists of phantom share options relating to CenCor common
stock.
<F2> Excludes $362,950 received during 1996 in installment
payments with respect to SAR units deemed exercised during
1995 but payable in subsequent years.
<F3> Consists of phantom share options relating to 25,000 shares
of CenCor common stock which were not exercised until January
1997.
<F4> Represents amount of payout received in January 1997 upon the
exercise of 25,000 phantom share options.
</FN>
</TABLE>
Compensation of Directors
Each non-officer/director of CenCor is paid an annual
retainer of $25,000 plus a fee (based on time spent on corporate
matters, including attendance at board and committee meetings) and
expenses.
<PAGE>
Item 12. Security Ownership of Certain Beneficial Owners and Management
The following table sets forth, with respect to CenCor common
stock (the only class of voting securities), the only persons
known to be a beneficial owner of more than five percent (5%) of
any class of CenCor voting securities as of March 10, 1997.
<TABLE>
Names and Addresses Number of Shares and
of Beneficial Owners Nature of Beneficial Ownership<F1> Percent of Class
<S> <C> <C>
Jack L. Brozman, Trustee 272,423<F1> 18%
Robert F. Brozman Trust
1100 Main St.
Kansas City, Missouri
64105
A. Baron Cass III 134,392 9%
5005 LBJ Freeway
Suite 1130, LB 119
Dallas, Texas 75244
<FN>
<F1> Nature of ownership of securities is direct. Beneficial
ownership as shown in the table arises from sole voting power
and sole investment power.
<F2> Does not include 34,344 shares held by Jack L. Brozman or
20,025 shares held by or for the benefit of Robert F.
Brozman's other children, in which the Robert F. Brozman
Trust disclaims any beneficial interest.
</FN>
</TABLE>
<PAGE>
The following table sets forth, with respect to CenCor common
stock (the only class of voting securities), (i) shares
beneficially owned by all directors of the Company and nominees
for director, and (ii) total shares beneficially owned by
directors and officers as a group, as of March 10, 1997.
<TABLE>
Number of Shares and
Name and Address Nature of Beneficial
of Beneficial Owner Ownership<F1> Percent of Class
<S> <C> <C>
Jack L. Brozman 306,767<F2> 21%
Edward G. Bauer, Jr. 6,000 *
George L. Bernstein --- ---
Marvin S. Riesenbach --- ---
Directors and Officers as a Group 312,767<F2> 21%
*Less than 1%
<FN>
<F1> Nature of ownership of securities is indirect. Beneficial
ownership as shown in the table arises from sole voting power
and sole investment power.
<F2> Includes 34,344 shares held by Jack L. Brozman and 272,423
shares held by the Robert F. Brozman Trust. Does not include
20,025 shares held by or for the benefit of Robert F. Brozman's
other children, in which the Robert F. Brozman Trust disclaims
any beneficial interest. Jack L. Brozman is the sole trustee and
is also one of the beneficiaries of the Robert F. Brozman Trust.
</FN>
</TABLE>
Item 13. Certain Relationships and Related Transactions
A significant portion of the Company's assets, as of December
31, 1996, consisted of debt and equity securities issued by
Concorde, a business in which Jack L. Brozman holds an interest.
<PAGE>
On February 25, 1997, CenCor, Inc. (the "Company") received
the final payment on a $4.8 million repayment price retiring
in full of all of Concorde's debt obligations owed to the Company and
redeeming in full of the Concorde Preferred Stock held
by the Company. In exchange, the Company released
Concorde from all liabilities and obligations under its
agreements with Concorde. See "Management's Discussion and Analysis
of Financial Condition and Results of Operations--Financial Condition--
Concorde Career Colleges, Inc. Agreements."
The payments were received pursuant to a recently amended
Restructuring, Security and Guaranty Agreement (the "Fourth
Amendment") with Concorde which was negotiated by the Company's
Special Committee, consisting of its outside directors.
<PAGE>
CenCor continues to hold approximately $23.4 million in
previously charged-off Concorde receivables which it received in
payment of accrued interest on the Debenture. Concorde assigned
to CenCor the previously charged off receivables (primarily
student loan promissory notes) in payment of accrued interest on
the Debenture through December 31, 1994 of approximately $1
million. Provided that CenCor undertakes reasonable steps to
collect the charged off receivables, CenCor has a right to
substitute receivables as to which collection efforts have been
made for new Concorde receivables until such time as CenCor
receives cash equal to the accrued interest. Any amounts
collected in excess of the accrued interest amount, apply first to
reimbursing Concorde for its professional fees and then to
interest and principal on the Debenture. The February 1997
release does not relieve Concorde from providing substitute
student receivables received in exchange of accrued interest of
which approximately $385,000 is currently outstanding.
The Company currently subleases its approximately 800 sq.
feet office space from Concorde on a month to month basis. The
Company pays rent of $927 per month for the space.
Jack L. Brozman, who is Chairman of the Board of CenCor and
Century, is Chairman of the Board of Concorde. Mr. Brozman owns
171,724 shares of Concorde (2.5% of the outstanding class). As
sole fiduciary for the Estate of Robert F. Brozman (the "Brozman
Estate") and the Robert F. Brozman Trust (he is one of the
beneficiaries of the estate and the trust), he owns 2,435,324
shares of Concorde common stock (36% of the outstanding class).
<PAGE>
The Company and the Brozman Estate have settled the claims of
the Company against the Brozman Estate arising from the CIKC
Loans. The Company released the Brozman Estate from all liability
in exchange for $600,000 in cash plus the transfer to the Company
on May 16, 1996 of 324,641 shares of CenCor common stock
previously held by the Brozman Estate. Pursuant to the terms of
the settlement agreement between the Company and the Brozman
Estate, the shares transferred represent the number of shares of
common stock which equal the aggregate of $400,000 plus one-half
the amount by which the December 31, 1995 fair market value of the
stock held by the Brozman Estate exceeds $400,000. The Special
Committee, with the assistance of its independent financial
advisor, determined that the fair market value of the CenCor
common stock on December 31, 1995, for the purposes of the
settlement, was $7.66 per share.
<PAGE>
PART IV
Item 14. Exhibits, Financial Statements, Schedules, and Reports
on Form 8-K.
(a) The following documents are filed as part of this Annual
Report on Form 10-K.
The following Consolidated Financial Statements of CenCor,
Inc. and Subsidiaries are included in Item 8:
Consolidated Statement of Net Assets in Liquidation.
Consolidated Statement of Changes in Net Assets in
Liquidation.
Consolidated Statement of Operations.
Consolidated Statement of Stockholders' Equity.
Consolidated Statement of Cash Flows.
Notes to Consolidated Financial Statements.
(i) Consolidated Financial Statement Schedules of
CenCor, Inc. and subsidiaries have been omitted as not
applicable or not required under the instructions
contained in Regulations S-X, or the information is
included elsewhere in the financial statements or notes
thereto.
(ii) Exhibits.
Exhibit
Number Description
2.1 Plan of Dissolution and Liquidation.
3.1 Certificate of Incorporation and all
Amendments thereto through August 31, 1990.
(Incorporated by reference--Exhibit 3(a) to
the Company's Annual Report on Form 10-K for
the year ended December 31, 1990.)
3.2 Bylaws amended through July 29, 1991.
(Incorporated by reference--Exhibit 3(a) to
the Company's Annual Report on Form 10-K for
the year ended December 31, 1991.)
4.1 Specimen common stock certificate.
(Incorporated by reference--Exhibit 4(a) to
the Company's Annual Report on Form 10-K for
the year ended December 31, 1990.)
4.2 Certificate of Incorporation and all
Amendments and Amended and Restated Bylaws.
(Incorporated by reference--Exhibit 3(a) to
the Company's Annual Report on Form 10-K for
the year ended December 31, 1990 and included
as Exhibit 3(b) hereto.)
4.3 Indentures between CenCor, Inc. and Commercial
National Bank of Kansas City, N.A. dated April
27, 1993 with respect to notes due 1999.
(Incorporated by reference--Exhibit T3C to
Company's Application on Form T-3; SEC file
#22-24246.)
10.1 Restructuring, Security and Guaranty Agreement
dated October 30, 1992 between Dental
Assistants, Inc., United Health Careers
Institute, Inc., Southern California College
of Medical and Dental Assistants, Inc.,
Concorde Careers--Florida, Inc., Colleges of
Dental and Medical Assistants, Inc. and
Computer Career Institute, inc. (Incorporated
by reference -- Exhibit 100) to Company's
Annual Report on Form 10-K for the year ended
December 31, 1992.)
10.2 First Amendment to Restructuring, Security and
Guarantee Agreement between CenCor, Concorde,
Minnesota Institute of Medical and Dental
Assistance, Texas College of Medical and
Dental Assistants, Texas College of Medical
and Dental Assistants, Inc., United Health
Careers Institute, Inc., Southern California
College of Medical and Dental Assistants,
Inc., Concorde Careers--Florida, Inc., College
of Dental and Medical Assistants, Inc. and
Computer Career Institute, Inc. dated December
30, 1993. (Incorporated by reference--Exhibit
10(i) to the Company's Annual Report on Form
10-K for the year ended December 31, 1993.)
10.3 Stock Appreciation Agreement with Jack Brozman
dated October 4, 1994. (Incorporated by
reference--Exhibit 10(j) to the Company's
Annual Report on Form 10-K for the year ended
December 31, 1994.)
10.4 Minutes of Compensation Committee dated
February 7, 1995 relating to amendments to
Stock Appreciation Agreements. (Incorporated
by reference--exhibit 10(k) to the Company's
Annual Report on Form 10-K for the year ended
December 31, 1994.
10.5 Mutual Release between First Portland
Corporation, FP Holdings, Inc. and Leonard and
Sharlene Ludwig, Arthur and Phyllis Levinson,
CEL-CEN Corp. and CenCor, Inc. dated February
14, 1995. (Incorporated by reference--Exhibit
10(l) to the Company's Annual Report on Form
10-K for the year ended December 31, 1994.)
10.6 Second Amendment to the Restructuring,
Security and Guaranty Agreement between
CenCor, Concorde, Minnesota Institute of
Medical and Dental Assistance, Texas College
of Medical and Dental Assistants, Texas
College of Medical and Dental Assistants,
Inc., United Health Careers Institute, Inc.,
Southern California College of Medical and
Dental Assistants, Inc. and Computer Career
Institute, Inc. dated November 15, 1994.
(Incorporated by reference--Exhibit 10(m) to
the Company's Annual Report on Form 10-K for
the year ended December 31, 1994.)
10.7 Settlement Agreement dated March 27, 1995
among CenCor, Inc., Century Acceptance
Corporation, Jack L. Brozman, Executor, and
Jack L. Brozman, Trustee. (Incorporated by
reference--Exhibit 10(o) to the Company's
Annual Report on Form 10-K for the year ended
December 31, 1994.)
10.8 Purchase Agreement dated May 19, 1995 by and
among CenCor, Century and Fidelity Acceptance
Corporation. (Incorporated by reference--
Exhibit 10.13 to the Company's Annual report
on Form 10-K for the year ended December 31,
1995.)
10.9 Employment Agreement dated July 3, 1995
between CenCor and Jack Brozman. (Incorporated
by reference--Exhibit 10.14 to the Company's
Annual report on Form 10-K for the year ended
December 31, 1995.)
10.10 Third Amendment to the Restructuring, Security
and Guaranty Agreement.
10.11 Fourth Amendment to the Restructuring Security
and Guaranty Agreement.
21 Subsidiaries of the Registrant.
27 Financial Data Schedule.
(b) Reports on Form 8-K:
No reports on Form 8-K were filed during the quarter
ending December 31, 1996.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 159d) of the
Securities Exchange Act of 1934, the Registrant has duly caused
this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
CENCOR, INC.
By: /s/ Jack L. Brozman
Jack L. Brozman
Chairman of the Board
Date: March 31, 1997
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons
on behalf of Registrant and in the capacities and on the dates
indicated.
By: /s/ Jack L. Brozman March 31, 1997
Jack L. Brozman
(Chairman of the Board,
Chief Executive Officer
and Director)
By: /s/ Terri L. Rinne March 31, 1997
Terri L. Rinne
(Vice President and
Chief Financial Officer)
<PAGE>
By: /s/ Edward G. Bauer, Jr. March 31, 1997
Edward G. Bauer, Jr.
(Director)
By: /s/ George L. Bernstein March 31, 1997
George L. Bernstein
(Director)
By: /s/ Marvin S. Riesenbach March 31, 1997
Marvin S. Riesenbach
(Director)
EX-2.1
PLAN OF DISSOLUTION AND LIQUIDATION OF CENCOR, INC.
This PLAN OF DISSOLUTION AND LIQUIDATION (the "Plan") is for
the purpose of effecting (i) the complete voluntary dissolution of
CenCor, Inc., a Delaware corporation (the "Corporation"), in
accordance with the applicable provisions of the Delaware General
Corporation Law, as amended (the "DGCL") and (ii) the liquidation
of the Corporation's assets pursuant to Section 331 of the
Internal Revenue code of 1986, as amended (the "Code"), in
substantially the following manner:
1. Authorization and Approval of the Plan. This Plan
shall be submitted to the stockholders (the "Stockholders") of the
Corporation, in accordance with the requirements of Section 275 of
the DGCL, for authorization and approval at an annual meeting (the
"Annual Meeting") of the Stockholders. This Plan shall be
considered authorized and approved by the Corporation and shall
become effective when the holders of a majority of the outstanding
shares of common stock, par value $1.00 per share (the "Common
Stock"), of the Corporation authorize and approve the dissolution
and liquidation of the Corporation in accordance with the Plan and
the requirements of Section 275(b) of the DGCL.
2. Filings. After the Stockholders have authorized and
approved this Plan, the officers and directors of the Corporation
are authorized to take all steps necessary or appropriate to (i)
dissolve the Corporation in accordance with the applicable
provisions of the DGCL, including, but not limited to, the prompt
execution and filing of a Certificate of Dissolution with the
Secretary of State of the state of Delaware, (ii) wind up the
Corporation's affairs and (iii) liquidate the Corporation's assets
in accordance with the applicable provisions of the Code,
including, but not limited to, the execution and filing of any tax
returns, certificates, documents and information returns required
to be filed with the Internal Revenue Service, and any other
appropriate authority due to the dissolution of the Corporation
and the liquidation of its assets.
<PAGE>
3. Effective Date. The Effective Date shall be October 1,
1996.
4. Payment and Distribution to Claimants. Commencing on
the Effective Date the officers and directors of the Corporation,
in the discretion of the board of directors of the Corporation
then in office (the "Board"), shall (i) pay or make reasonable
provision to pay all claims and obligations of the Corporation as
they become due, including the Corporation's notes due July 1,
1999 and all contingent, conditional, or unmatured contractual
claims known to the Corporation, and (ii) make such provision as
will be reasonably likely to be sufficient to provide compensation
for claims that have not been made known to the Corporation, are
likely to arise or to become known to the Corporation prior to the
expiration of the applicable statutes of limitation. All claims
of the Corporation shall be paid in full and any such provision
for payment made shall be made in full if there are sufficient
funds pursuant to the requirements of Section 4(i) and (ii) of
this Plan. If there are insufficient funds, such claims and
obligations of the Corporation shall be paid or provided for
according to their priority and, among claims of equal priority,
ratably to the extent of funds legally available therefor.
5. Distribution to Stockholders. Upon the satisfactory
completion of the requirements of Sections 4(i) and (ii) of this
Plan, the officers and directors of the Corporation shall
distribute in one or a series of distributions, at any time or
from time to time, and in any manner that the Board, in its
discretion, may determine, all funds resulting from the Corpora-
tion's liquidation of its assets on a pro rata basis in accordance
with the respective interests of the Stockholders in the
Corporation. The respective interests of the Stockholders shall
be fixed on the basis of the ownership of their outstanding shares
of Common Stock of the Corporation on a record date to be
determined by the Board.
<PAGE>
6. Cessation of Business. Promptly after the Effective
Date, the Corporation shall withdraw from all jurisdictions in
which the Corporation is qualified to do business and shall not
engage in any business activities, other than to wind up the
Corporation's business and affairs under the applicable provisions
of the DGCL and in accordance with this Plan. The Board and, at
the pleasure of the Board, the officers, shall continue in office
for that purpose and shall receive such compensation for their
services as the Board shall determine.
7. Authority of Officers and Directors. The officers and
directors of the Corporation shall have the authority to carry out
and implement the provisions of this Plan, including, but not
limited to, the authority to:
(i) sell, exchange, lease or otherwise dispose of any
assets, other than cash, of the Corporation to any person or
persons to the extent such transaction can be accomplished
for consideration and upon terms and conditions deemed by the
Board to be in the best interests of the Corporation and the
Stockholders;
(ii) do, on behalf of the Corporation, all acts
required to be done by the Corporation under this Plan or the
applicable provisions of the DGCL and the Code;
(iii) provide for one or more liquidating trustees or
receivers for the benefit of the Corporation's creditors and
stockholders, including but not limited to trustees under a
liquidating trust agreement and transferring to them (A) any
assets the retention of which may be advisable to meet claims
or expenses, and (B) any assets held on behalf of
Stockholders who cannot be located; and
(iv) adopt all resolutions, execute all documents, file
all papers and take all other actions deemed necessary or
appropriate to effect the dissolution of the Corporation and
the complete liquidation of its business, assets and affairs;
it being understood that nothing contained in this Section 7
shall be construed to permit the officers or directors of the
Corporation to take any action which is inconsistent with the
requirements of the DGCL or with Sections 332 or 337 of the
Code.
<PAGE>
8. Authority of the Board. Pursuant to the authority
granted to the Board by Section 275(e) of the DGCL, notwith-
standing the authorization or consent of the Stockholders to the
Plan (or the authorization and approval of the Plan by
Stockholders), the Board may abandon this Plan and the proposed
dissolution of the Corporation at any time without further action
by the Stockholders.
9. Completion of Dissolution and Liquidation. It is
intended that the implementation of this Plan be completed within
three (3) years of the Effective Date.
Ex-10.10
THIRD AMENDMENT
TO THE
RESTRUCTURING, SECURITY AND GUARANTY AGREEMENT
THIS AGREEMENT, made and entered into as of the 30th day of
July, 1996 (the "Third Amendment"), by and among CENCOR, INC., a
Delaware corporation ("CenCor"); CONCORDE CAREER COLLEGES, INC.,
a Delaware corporation ("Concorde"); MINNESOTA INSTITUTE OF
MEDICAL AND DENTAL ASSISTANTS, INC., a Minnesota corporation
("Minnesota"); TEXAS COLLEGE OF MEDICAL AND DENTAL ASSISTANTS,
INC., a Texas corporation ("Texas"); UNITED HEALTH CAREERS
INSTITUTE, INC., a California corporation ("United"); SOUTHERN
CALIFORNIA COLLEGE OF MEDICAL AND DENTAL ASSOCIATES, INC., a
California corporation ("Southern California"); CONCORDE
CAREERS - FLORIDA, INC., a Florida corporation ("Florida");
COLLEGES OF DENTAL AND MEDICAL ASSISTANTS, INC., an Oregon
corporation ("Dental"); and COMPUTER CAREER INSTITUTE, INC., an
Oregon corporation ("Computer") (Minnesota, Texas, United,
Southern California, Florida, Dental, and Computer being
hereinafter referred to collectively as "Guarantors" and each
individually as a "Guarantor") amends that certain
Restructuring, Security and Guaranty Agreement between the
parties dated as of October 30, 1992, as previously amended by
written agreements dated as of December 30, 1993 and November 15,
1994 (collectively, the "Agreement").
RECITALS
(i) Pursuant to the Agreement entered into by CenCor,
Concorde and the Guarantors, Concorde issued a debenture to
CenCor in the principal amount of $5,422,307, dated
October 30, 1992 (the "Debenture").
(ii) Pursuant to the terms of the November 15, 1994,
amendment (the "Second Amendment"), Concorde exchanged
300,000 shares of its Class A Redeemable Preferred Stock,
$.10 par value (the "Preferred Stock") for $3,000,000 of the
principal amount of the Debenture; reduced the outstanding
principal amount of the Debenture to $2,442,307, and amended
the Debenture to reflect such.
<PAGE>
(iii) The Mark Twain liabilities have been paid in
full by Concorde and are no longer outstanding.
(iv) Concorde desires to sell substantially all of the
assets (the "San Jose Assets") of the career college it
operates at 1290 N. 1st Street, San Jose, California, known
as Concorde Career Institute (the "San Jose Institute")
pursuant to a certain Asset Purchase Agreement, dated
July 11, 1996, between Concorde and Corinthian Schools, Inc.
(the "San Jose Agreement"), a true and correct copy of which
has been delivered to CenCor by Concorde.
(v) Concorde desires to cause its wholly-owned
subsidiary, Person/Wolinsky Associates, Inc., a New York
corporation ("P/W"), to sell substantially all of its assets
(the "P/W Assets") pursuant to a certain Asset Purchase
Agreement, dated July 10, 1996, among P/W, Concorde and DGZ
Associates, Inc. (the "P/W Agreement"), a true and correct
copy of which has been delivered to CenCor by Concorde.
(vi) CenCor holds a security interest in substantially
all of the assets of Concorde and the Guarantors, securing
the payment of the principal amount of the Debenture and the
Agreement prohibits the sale of assets by Concorde,
including the San Jose Assets or P/W, including the P/W
Assets, without the consent of CenCor.
(vii) CenCor has agreed to the sale of the San Jose
Assets pursuant to the terms of the San Jose Agreement (the
"San Jose Sale") and the sale of the P/W Assets pursuant to
the terms of the P/W Agreement (the "P/W Sale") and to the
release of its security interest in such assets, subject to
Concorde's agreement to use a certain portion of the
proceeds received by it and/or P/W pursuant to the San Jose
Sale and the P/W Sale to redeem outstanding shares of
Preferred Stock held by CenCor, and thereafter to retire the
Debenture, all as set forth herein.
(viii) Concorde and CenCor wish to amend the
Agreement to provide for such sale of assets and such
redemption and retirement.
<PAGE>
(ix) The Guarantors, each a wholly-owned subsidiary of
Concorde, wish to reduce the amount of their guaranteed
obligations through such retirement and thus consent to the
amendment of the Agreement to provide for such.
AGREEMENT
In consideration of the premises and the mutual covenants
and agreements herein contained, CenCor, Concorde and Guarantors
agree as follows:
ARTICLE I
Definitions
1.1 Certain Defined Terms. The following terms used herein
shall have the meanings set forth in this Article and in the
other parts of this Agreement referred to in this Article, and
such meanings shall apply to both the singular and plural forms
of such terms.
(a) "Allocated Proceeds" means that portion of
proceeds from the San Jose Sale or the P/W Sale identified
on Exhibit A, attached hereto and incorporated herein,
actually received by Concorde and/or P/W.
(b) "Preferred Stock" means the Class A Redeemable
Preferred Stock, $.10 par value, of Concorde.
(c) "Redemption Price" means the redemption of shares
of Preferred Stock by Concorde pursuant to the provisions of
Section 2.2, herein.
(d) "Redemption Price" means the per share redemption
price set forth in the Certificate of Designations filed
with the Secretary of State of Delaware with respect to the
Preferred Stock, of $10.00 per share, plus all accrued but
unpaid dividends thereon, calculated on the basis set forth
in Section (1)(iii) of such Certificate of Designations.
<PAGE>
(e) "Retirement" means the full or partial retirement
of the Debenture by Concorde pursuant to the provisions of
Section 2.3 herein.
(f) "Third Amendment" means this Third Amendment to
the Restructuring, Security and Guaranty Agreement, dated
October 30, 1992, as previously amended by written
agreements dated as of December 30, 1993 and November 15,
1994.
1.2 Other Terms. All capitalized terms used herein, not
defined in Section 1. 1 or elsewhere in this Third Amendment,
shall have the meanings and be as defined in the Second
Amendment, and if not therein defined, as defined in the First
Amendment, and if not therein defined, as defined in the original
provisions of the Agreement.
ARTICLE II
The Exchange
2.1 Application of Proceeds. Concorde hereby agrees that,
upon the closing of the San Jose Sale and/or the P/W Sale and the
receipt by Concorde or P/W of proceeds therefrom, it shall apply,
or cause to be applied, the Allocated Proceeds, as follows:
(a) first, to the redemption of shares of Preferred
Stock (the "Redemption"), and, upon the Redemption of all of
the Preferred Stock,
(b) second, to the retirement of the Debenture (the
"Retirement").
<PAGE>
2.2 Redemption of the Preferred Stock. Promptly upon the
receipt of Allocated Proceeds, Concorde shall redeem that number
of whole shares of Preferred Stock held by CenCor (or its
assigns) equal to the amount of such Allocated Proceeds divided
by the Redemption Price. Any Allocated Proceeds remaining that
would have been applied but for the requirement that only whole
shares be redeemed, shall be retained by Concorde and aggregated
with subsequently received Allocated Proceeds for future
Redemptions/Retirements.
2.3 Retirement of Debenture. Following the Redemption of
all outstanding shares of Preferred Stock, promptly upon receipt
of Allocated Proceeds, Concorde shall pay such Allocated Proceeds
to CenCor with respect to the Debenture, pursuant to the terms of
the Agreement, first to be applied to the payment of any then
accrued but unpaid interest on the Debenture and next to the
principal amount of the Debenture.
2.4 Date of Redemption/Retirement. Except as otherwise
provided for in Section 2.2, above, the date of Redemption or
Retirement with respect to any Allocated Proceeds shall be:
(a) the closing date of the respective asset sales,
with respect to Allocated Proceeds received by Concorde
and/or P/W on such closing dates, and
(b) on or before three (3) business days from the date
of the receipt of good funds with respect to Allocated
Proceeds received by Concorde and/or P/W after such closing
dates.
It is agreed that if Allocated Proceeds are not received by the
Scheduled Date designated on Exhibit A, Concorde and P/W shall
promptly notify CenCor and take all reasonably prudent steps
necessary to collect such funds. Notwithstanding anything herein
to the contrary, Concorde shall have no obligation to effect a
Redemption or Retirement unless and until its receipt of
Allocated Proceeds.
<PAGE>
2.5 Procedures. In connection with:
(a) any Redemption or Retirement, Concorde shall
provide CenCor with an accounting of the calculation of the
then current Redemption Price; and
(b) a Redemption, (i) Concorde shall provide CenCor
with a calculation of the application the of Allocated
Proceeds and any carryover thereof; (ii) CenCor shall submit
its stock certificate representing the Preferred Stock,
fully endorsed for transfer, and (iii) Concorde shall
reissue a new stock certificate to CenCor representing the
remaining shares of Preferred Stock not being so redeemed,
if any.
2.6 Payment in Full. Upon the Redemption of all
outstanding shares of Preferred Stock owned by CenCor (or its
assigns) and the Retirement of the entire Debenture (including
accrued interest thereon), Concorde shall be entitled to retain
any remaining Allocated, Proceeds and CenCor has had no further
rights or interest in such Allocated Proceeds.
ARTICLE III
Consent and Release of Collateral
3.1 Consent to Sale. CenCor hereby consents to the San
Jose Sale pursuant to the San Jose Agreement and to the P/W Sale
pursuant to the terms of the P/W Agreement, and waives any
restrictions set forth in Section 7.1 or elsewhere in the
Agreement with respect thereto.
3.2 Release of Collateral. CenCor hereby agrees:
(a) to release its security interest in the San Jose
Assets, effective upon the closing of the San Jose Sale, and
agrees to promptly execute, obtain and furnish to Concorde
any and all termination statements, releases or other UCC
documentation or other documents or materials as Concorde
may reasonably request in order to so release such
Collateral;
<PAGE>
(b) that upon such releases, the San Jose Assets shall
no longer constitute Collateral pursuant to Article IV of
the Agreement; and
(c) that in the event Concorde determines to dissolve
and liquidate P/W after the closing of the P/W Sale, CenCor
shall (i) release its security interest in the stock of P/W
owned by Concorde, (ii) return the Pledged Stock of P/W
which CenCor holds pursuant to Section 4.7 of the Agreement
with respect thereto; and (iii) consent to such dissolution
and liquidation.
3.3 Undertaking. Concorde agrees to execute any security
agreements, UCC-1 financing--statements and other documents
reasonably requested by CenCor to grant a security interest in
all of the assets of Concorde and the Guarantors which are not
being sold pursuant to the San Jose Agreement or the P/W
Agreement. Concorde will not agree to any amendment, delay or
waiver of its rights or P/W's right to receive any of the
Allocated Proceeds on the dates set forth on Exhibit A without
CenCor's written consent.
ARTICLE IV
Miscellaneous
4.1 Obligations of P/W. In consideration of CenCor's
agreement to the terms of this Third Amendment and its consent to
the P/W Sale, P/W has agreed to guarantee the obligation of
Concorde to apply the Allocated Proceeds from the P/W Sale to the
Redemption arid/or Retirement as provided for herein and has
executed Exhibit 4.1 hereto in evidence of such guarantee.
4.2 Mark Twain Liabilities. Mark Twain has executed the
confirmation, attached hereto as Exhibit 4.2, acknowledging the
payment in full of the Mark Twain Liabilities.
<PAGE>
4.3 Attorneys' Fees. Notwithstanding anything in the
Agreement or herein to the contrary, Concorde shall pay to CenCor
in cash one-half of CenCor's attorneys' fees and expenses
incurred in connection with the negotiation of this Third
Amendment and the consummation of the transactions contemplated
thereby, within ten (10) business days after receiving an invoice
from CenCor with supporting documentation, which the parties
agree shall not exceed $5,000.00 in the aggregate.
4.4 Ratification. All provisions of the Agreement not
specifically amended in this Third Amendment are hereby ratified
and reaffirmed.
4.5 Governing Law. Except as otherwise provided by express
reference to the Uniform Commercial Code, this Third Amendment
shall be construed in accordance with and governed by the laws,
statutes and decisions of the State of Missouri, to the non-
exclusive jurisdiction of whose courts, state and federal,
Concorde and Guarantors irrevocably agree to submit.
4.6 Incorporation. The recitals and exhibits hereto are
hereby incorporated herein by reference.
4.7 Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be deemed an original
and all of which together shall constitute one and the same
instrument.
4.8 Further Assurances. The parties hereto agree to
execute all additional documents reasonably necessary to
effectuate the transactions contemplated herein, including
without limitation those documents necessary to release the Liens
with respect to the San Jose Assets and the P/W Assets on a
timely basis.
4.9 Benefit and Burden. This Agreement shall be binding
upon and inure to the benefit of the successors of CenCor,
Concorde and P/W. CenCor may assign its rights hereunder,
including without limitation to a liquidating trust.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Third Amendment to the Agreement to be executed by their
respective duly authorized officers as of the day and year first
above written.
Oral agreements or commitments to loan money, extend credit
or to forbear from enforcing repayment of a debt including
promises to extend or renew such debt are not enforceable. To
protect the debtor and creditor from misunderstanding or
disappointment, any agreements we reach covering such matters are
contained in this writing, which is the complete and exclusive
statement of the agreement between us, except as we may later
agree in writing to modify it.
CENCOR, INC.
ATTEST:
By: Terri Rinne
Terri Rinne
Lisa M. Henak Vice President
Secretary
ACKNOWLEDGMENT
STATE OF MISSOURI )
) ss.
COUNTY OF JACKSON )
BE IT REMEMBERED, that on this 30th day of July, 1996,
before me, the undersigned, a notary public in and for said
state, came Terri Rine, Vice President of CenCor, Inc., a
Delaware corporation, to me personally known to be such officer
and the same person who executed as such officer the foregoing
instrument on behalf of said corporation, and such person duly
acknowledged the execution of the same to be the act and deed of
said corporation.
<PAGE>
IN WITNESS WHEREOF, I have hereunto set my hand and affixed
my official seal at my office in Kansas City, Missouri, the day
and year last above mentioned.
Lisa M. Henak
Notary Public in and for
said County and State
My commission expires:
September 7, 1996
<PAGE>
CONCORDE CAREER COLLEGES, INC.
ATTEST:
By: M. Gregg Gimlin
M. Gregg Gimlin
Lisa M. Henak Vice President
Secretary
ACKNOWLEDGMENT
STATE OF MISSOURI )
) ss.
COUNTY OF JACKSON )
BE IT REMEMBERED, that on this 30th day of July, 1996,
before me, the undersigned, a notary public in and for said
state, came M. Gregg Gimlin, Vice President of Concorde Career
Colleges, Inc., a Delaware corporation, to me personally known to
be such officer and the same person who executed as such officer
the foregoing instrument on behalf of said corporation, and such
person duly acknowledged the execution of the same to be the act
and deed of said corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed
my official seal at my office in Kansas City, Missouri, the day
and year last above mentioned.
Lisa M. Henak
Notary Public in and for
said County and State
My commission expires:
September 7, 1996
<PAGE>
MINNESOTA INSTITUTE OF MEDICAL
AND DENTAL ASSISTANTS, INC.
ATTEST:
By: A. Eugene Johnson
A. Eugene Johnson
Lisa M. Henak President
Secretary
ACKNOWLEDGMENT
STATE OF MISSOURI )
) ss.
COUNTY OF JACKSON )
BE IT REMEMBERED, that on this 30th day of July, 1996,
before me, the undersigned, a notary public in and for said
state, came A. Eugene Johnson, President of Minnesota Institute
of Medical and Dental Assistants, Inc., a Minnesota corporation,
to me personally known to be such officer and the same person who
executed as such officer the foregoing instrument on behalf of
said corporation, and such person duly acknowledged the execution
of the same to be the act and deed of said corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed
my official seal at my office in Kansas City, Missouri, the day
and year last above mentioned.
Lisa M. Henak
Notary Public in and for
said County and State
My commission expires:
September 7, 1996
<PAGE>
TEXAS COLLEGE OF MEDICAL AND
AND DENTAL ASSISTANTS, INC.
ATTEST:
By: A. Eugene Johnson
A. Eugene Johnson
Lisa M. Henak President
Secretary
ACKNOWLEDGMENT
STATE OF MISSOURI )
) ss.
COUNTY OF JACKSON )
BE IT REMEMBERED, that on this 30th day of July, 1996,
before me, the undersigned, a notary public in and for said
state, came A. Eugene Johnson, President of Texas College of
Medical and Dental Assistants, Inc., a Texas corporation, to me
personally known to be such officer and the same person who
executed as such officer the foregoing instrument on behalf of
said corporation, and such person duly acknowledged the execution
of the same to be the act and deed of said corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed
my official seal at my office in Kansas City, Missouri, the day
and year last above mentioned.
Lisa M. Henak
Notary Public in and for
said County and State
My commission expires:
September 7, 1996
<PAGE>
UNITED HEALTH CAREERS
INSTITUTE, INC.
ATTEST:
By: A. Eugene Johnson
A. Eugene Johnson
Lisa M. Henak President
Secretary
ACKNOWLEDGMENT
STATE OF MISSOURI )
) ss.
COUNTY OF JACKSON )
BE IT REMEMBERED, that on this 30th day of July, 1996,
before me, the undersigned, a notary public in and for said
state, came A. Eugene Johnson, President of United Health Careers
Institute, Inc., a California corporation, to me personally known
to be such officer and the same person who executed as such
officer the foregoing instrument on behalf of said corporation,
and such person duly acknowledged the execution of the same to be
the act and deed of said corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed
my official seal at my office in Kansas City, Missouri, the day
and year last above mentioned.
Lisa M. Henak
Notary Public in and for
said County and State
My commission expires:
September 7, 1996
<PAGE>
SOUTHERN CALIFORNIA COLLEGE OF
MEDICAL AND DENTAL ASSISTANTS,
INC.
ATTEST:
By: A. Eugene Johnson
A. Eugene Johnson
Lisa M. Henak President
Secretary
ACKNOWLEDGMENT
STATE OF MISSOURI )
) ss.
COUNTY OF JACKSON )
BE IT REMEMBERED, that on this 30th day of July, 1996,
before me, the undersigned, a notary public in and for said
state, came A. Eugene Johnson, President of Southern California
College of Medical and Dental Assistants, Inc., a California
corporation, to me personally known to be such officer and the
same person who executed as such officer the foregoing instrument
on behalf of said corporation, and such person duly acknowledged
the execution of the same to be the act and deed of said
corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed
my official seal at my office in Kansas City, Missouri, the day
and year last above mentioned.
Lisa M. Henak
Notary Public in and for
said County and State
My commission expires:
September 7, 1996
<PAGE>
COLLEGES OF DENTAL AND
MEDICAL ASSISTANTS, INC.
ATTEST:
By: A. Eugene Johnson
A. Eugene Johnson
Lisa M. Henak President
Secretary
ACKNOWLEDGMENT
STATE OF MISSOURI )
) ss.
COUNTY OF JACKSON )
BE IT REMEMBERED, that on this 30th day of July, 1996,
before me, the undersigned, a notary public in and for said
state, came A. Eugene Johnson, President of Colleges of Dental
and Medical Assistants, Inc., a California corporation, to me
personally known to be such officer and the same person who
executed as such officer the foregoing instrument on behalf of
said corporation, and such person duly acknowledged the execution
of the same to be the act and deed of said corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed
my official seal at my office in Kansas City, Missouri, the day
and year last above mentioned.
Lisa M. Henak
Notary Public in and for
said County and State
My commission expires:
September 7, 1996
<PAGE>
COMPUTER CAREER INSTITUTE,
INC.
ATTEST:
By: A. Eugene Johnson
A. Eugene Johnson
Lisa M. Henak President
Secretary
ACKNOWLEDGMENT
STATE OF MISSOURI )
) ss.
COUNTY OF JACKSON )
BE IT REMEMBERED, that on this 30th day of July, 1996,
before me, the undersigned, a notary public in and for said
state, came A. Eugene Johnson, President of Computer Career
Institute, Inc., an Oregon corporation, to me personally known to
be such officer and the same person who executed as such officer
the foregoing instrument on behalf of said corporation, and such
person duly acknowledged the execution of the same to be the act
and deed of said corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed
my official seal at my office in Kansas City, Missouri, the day
and year last above mentioned.
Lisa M. Henak
Notary Public in and for
said County and State
My commission expires:
September 7, 1996
<PAGE>
CONCORDE CAREERS -
FLORIDA, INC.
ATTEST:
By: A. Eugene Johnson
A. Eugene Johnson
Lisa M. Henak President
Secretary
ACKNOWLEDGMENT
STATE OF MISSOURI )
) ss.
COUNTY OF JACKSON )
BE IT REMEMBERED, that on this 30th day of July, 1996,
before me, the undersigned, a notary public in and for said
state, came A. Eugene Johnson, President of Concorde Careers-
Florida, Inc., a Florida corporation, to me personally known to
be such officer and the same person who executed as such officer
the foregoing instrument on behalf of said corporation, and such
person duly acknowledged the execution of the same to be the act
and deed of said corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed
my official seal at my office in Kansas City, Missouri, the day
and year last above mentioned.
Lisa M. Henak
Notary Public in and for
said County and State
My commission expires:
September 7, 1996
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT A
Funds to be Applied to
Retirement of Preferred Stock
and
Redemption of Debenture
Allocated
Scheduled Aggregate Proceeds/
Source Date of Receipt<F1> Amount Percentage
<S> (C> <C> <C>
San Jose Sale SJ Closing Date <F2> $150,000 $ 75,000/50%
- -Purchase Price
P/W Sale P/W Closing Date <F3> $705,000<F4> $352,500/50%
- -Purchase Price
P/W Sale 12/15/96<F5> $ 75,000 $ 75,000/100%
- -Noncompete
San Jose Sale 12/31/96 $200,000 $100,000/50%
- -Purchase Price
P/W Sale 12/15/97<F5> $ 75,000 $ 75,000/100%
- -Noncompete
P/W Sale 3/1/98-07<F6> <F6> <F6>/50%
- -Profit
Participation
______________________________
<FN>
<F1> Subject to the actual closing of the respective sales of
assets.
<F2> The San Jose Sale is currently scheduled to close on July
31, 1996.
<F3> The P/W Sale is currently scheduled to close on August 2,
1996.
<PAGE>
<F4> Fee of 6% has been deducted from closing proceeds of the P/W
Sale.
<F5> It is agreed that in the event such proceeds are not paid
pursuant to the Noncompetition Agreement under the P/W Agreement,
Concord and/or P/W shall apply the next funds received by either
of them under the P/W Agreement for the Redemption/Retirement, up
to the amount of such failed payment.
<F6> "Profit Participation", up to a cumulative maximum amount of
$1,500,000, is due annually based upon the actual "Net Profit",
as defined in Exhibit 2.3 of the P/W Agreement, of the purchaser
of the P/W Assets for the fiscal years ended December 31, 1997
through December 31, 2006 and is payable on or before March 1 of
each of the following years (1998-2007). The amount to be paid
in any given year, is any, is not currently ascertainable. One
half of the monies so received, if any, shall be allocated
Proceeds.
</FN>
</TABLE>
<PAGE>
EXHIBIT 4.1
IN CONFIRMATION OF THE OBLIGATIONS SET FORTH IN SECTIONS 2.4 and
4.1, above:
PERSON/WOLINSKY ASSOCIATES, INC.
ATTEST:
By: Jack L. Brozman
Jack L. Brozman
Lisa M. Henak Chairman of the Board
Secretary
ACKNOWLEDGMENT
STATE OF MISSOURI )
) ss.
COUNTY OF JACKSON )
BE IT REMEMBERED, that on this 30th day of July, 1996,
before me, the undersigned, a notary public in and for said
state, came Jack L. Brozman, Chairman of the Board of
Person/Wolinsky Associates, Inc., a New York corporation, to me
personally known to be such officer and the same person who
executed as such officer the foregoing instrument on behalf of
said corporation, and such person duly acknowledged the execution
of the same to be the act and deed of said corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed
my official seal at my office in Kansas City, Missouri, the day
and year last above mentioned.
Lisa M. Henak
Notary Public in and for
said County and State
My commission expires:
September 7, 1996
<PAGE>
EXHIBIT B
CONFIRMATION
The undersigned, Mark Twain Kansas City Bank, a Missouri
banking corporation, hereby confirms that it has been paid in
full with respect to all obligations owed to it under the Mark
Twain Agreement and that any conditions in the Agreement
requiring the subordination to, the consent of, or notice to Mark
Twain Kansas City Bank are null and void.
Dated: July 30, 1996
MARK TWAIN KANSAS CITY BANK
By: Mark Degner
Mark Degner, its
Senior Vice President
EX-10.11
FOURTH AMENDMENT
TO THE
RESTRUCTURING, SECURITY AND GUARANTY AGREEMENT
THIS AGREEMENT, made and entered into as of the 30th day of
December, 1996, (the "Fourth Amendment") by and among CENCOR,
INC., a Delaware corporation ("CenCor"); CONCORDE CAREER
COLLEGES, INC., a Delaware corporation ("Concorde"); UNITED
HEALTH CAREERS INSTITUTE, INC., a California corporation
("United"); SOUTHERN CALIFORNIA COLLEGE OF MEDICAL AND DENTAL
ASSISTANTS, INC., a California corporation ("Southern
California"); CONCORDE CAREERS - FLORIDA, INC., a Florida
corporation ("Florida"); COLLEGES OF DENTAL AND MEDICAL
ASSISTANTS, INC., a California corporation ("Dental"); COMPUTER
CAREER INSTITUTE, INC., an Oregon corporation ("Computer"); and
CAREER ASSISTANCE, INC., a Delaware corporation ("Career")
(United, Southern California, Florida, Dental, Computer, Career,
Minnesota Institute of Medical and Dental Assistants, Inc., a
Minnesota corporation ("Minnesota"), and Texas College of Medical
and Dental Assistants, Inc., a Texas corporation ("Texas"), being
hereinafter referred to collectively as "Guarantors" and each
individually as a "Guarantor") amends that certain Restructuring,
Security and Guaranty Agreement between the parties dated as of
October 30, 1992, as previously amended by written agreements
dated as of December 30, 1993, November 15, 1994 and July 30,
1996 (collectively, the "Agreement").
RECITALS
(i) Pursuant to the Agreement entered into by CenCor,
Concorde and the Guarantors, Concorde issued a debenture to
CenCor in the principal amount of $5,422,307, dated October
30, 1992 (the "Debenture").
<PAGE>
(ii) Pursuant to the terms of the November 15, 1994
amendment (the "Second Amendment"), Concorde exchanged
300,000 shares of its Class A Redeemable Preferred Stock,
$.10 par value (the "Class A Preferred Stock") for
$3,000,000 of the principal amount of the Debenture; reduced
the outstanding principal amount of the Debenture to
$2,442,307, and amended the Debenture to reflect such.
(iii) The Mark Twain liabilities have been paid in full
by Concorde and are no longer outstanding.
(iv) Concorde is the successor-in-interest by merger of
two of the Guarantors, Minnesota and Texas.
(v) Pursuant to the terms of the Agreement, Concorde
has made quarterly payments of principal and accrued
interest on the Debenture on June 30, 1996, of $69,554.05
and $72,683.95, respectively, and on September 30, 1996, of
$69,554.01 and $66,119.79, respectively, thereby reducing
the current outstanding principal amount of the Debenture to
$2,643,052.56, and is scheduled to make a quarterly payment
of principal and accrued interest ($69,554.01 and
$64,424.40, respectively) on the Debenture on December 31,
1996 (the "12/96 Debenture Payment").
(vi) Pursuant to the terms of the Agreement, Concorde
has redeemed a total of 39,615 shares of Class A Preferred
Stock, and the accrued dividends thereon, thereby reducing
the number of shares of Class A Preferred Stock currently
outstanding to 260,385 shares.
(vii) Due to modifications of the terms of the San Jose
sale made prior to its closing on August 31, 1996, the
amount and payment date of the second installment of the San
Jose Sale purchase price was modified to be $300,000 on
February 28, 1997, of which 50% is scheduled to be paid by
Concorde to CenCor.
<PAGE>
(viii) Career is a newly formed subsidiary of Concorde
and, pursuant to the provisions of Section 7.4 of the
Agreement, (A) Concorde has pledged its shares of stock of
Career to CenCor and (B) by execution of this Fourth
Amendment, Career hereby agrees to become a Guarantor
subject to all the provisions of the Agreement applicable to
Guarantors and to pledge its assets as security to CenCor.
(ix) Concorde is currently seeking to raise additional
capital and to obtain a new bank credit facility
(collectively, the "Refinancing") which will enable it to
(a) redeem all outstanding shares of Class A Preferred Stock
and pay all accrued but unpaid dividends thereon; (b) retire
the Debenture by the repayment in full of the outstanding
principal thereof and all accrued but unpaid interest
thereon and the Additional Payment; and (c) repay in full
the Unsecured Debt, with all accrued but unpaid interest
thereon (collectively, the "Repayment").
(x) In order to facilitate the Refinancing and in
consideration of Concorde's agreement that it will use the
proceeds from the Refinancing to make the Repayment, the
parties hereto have agreed to the terms of the Repayment and
related matters, all as set forth herein.
(xi) Concorde and CenCor wish to amend the Agreement to
provide for the Repayment.
(xii) The Guarantors wish to eliminate their guaranteed
obligations through the Repayment and thus consent to the
amendment of the Agreement to provide for such.
AGREEMENT
In consideration of the premises and the mutual covenants
and agreements herein contained, CenCor, Concorde and Guarantors
agree as follows:
<PAGE>
Definitions
1.1 Certain Defined Terms. The following terms used herein
shall have the meanings set forth in this Article and in the
other parts of this Agreement referred to in this Article, and
such meanings shall apply to both the singular and plural forms
of such terms.
(a) "Class A Preferred Stock" means the Class A
Redeemable Preferred Stock, $.10 par value, of Concorde, as
currently existing pursuant to the Certificate of
Designations filed with the Secretary of State of Delaware
on November 16, 1994.
(b) "Class B Preferred Stock" means the Class B
Preferred Stock, that may be authorized by Concorde's Board
of Directors pursuant to a Certificate of Designations to be
filed with the Secretary of State of Delaware and issued
solely pursuant to the Refinancing in connection with a new
equity investment in Concorde.
(c) "Class A-1 Preferred Stock" means the Class A-1
Preferred Stock, that shall be authorized by Concorde's
Board of Directors pursuant to a Certificate of
Designations, substantially in the form of Exhibit A hereto
(the "Class A-1 Certificate of Designation"), to be filed
with the Secretary of State of Delaware and issued to CenCor
in exchange for the outstanding Class A Preferred Stock
pursuant to Section 5.3, hereof in the event the Repayment
does not occur by February 28, 1997.
(d) "Closing" means the closing of the Repayment, as
set forth in Section 2.2 and as scheduled in Section 2.3,
herein.
(e) "Fourth Amendment" means this Fourth Amendment,
dated December 30, 1996, to the Restructuring, Security and
Guaranty Agreement, dated October 30, 1992, as previously
amended by written agreements dated as of December 30, 1993,
November 15, 1994, and July 30, 1996.
<PAGE>
(f) "Michigan Allocated Proceeds" means that portion
of proceeds from the sale of Concorde's Michigan real
property identified in Section 3.5 hereof, actually received
by Concorde that shall be applied to the redemption of
outstanding Class A Preferred Stock.
(g) "Obligations" means the aggregate of (i) the
Redemption Price of the Class A Preferred Stock (including
accrued dividends) outstanding on the Closing Date, and (ii)
the principal and accrued interest on the Debenture and the
Unsecured Debt outstanding on the Closing Date and all
amounts owing with respect to the Additional Payment
pursuant to the Agreement, all of which shall be paid in
fall at Closing.
(h) "Post 9/30/96 Payments" means the cumulative
amount of any (i) Redemption Price paid by Concorde with
respect to the retirement of Class A Preferred Stock;
(ii) payment of principal on the Debenture made by Concorde
and (iii) repayments of principal on the Unsecured Debt made
by Concorde, that were paid on or after September 30, 1996
but prior to the Closing Date.
(i) "Refinancing" means the infusion by investors of a
minimum of $5,000,000 in capital into Concorde and
Concorde's securing of new bank credit facilities in the
minimum amount of $3,000,000.
(j) "Repayment" means Concorde's repayment of all its
then existing financial obligations owed to CenCor,
including (i) the redemption of all its outstanding shares
of Class A Preferred Stock and the payment of all accrued
but unpaid dividends thereon; (ii) the retirement of the
Debenture, with the repayment in full of the outstanding
principal thereof and all accrued but unpaid interest
thereon; (iii) the retirement of the Unsecured Debt, with
the repayment in full of the outstanding principal thereof
and all accrued but unpaid interest thereon; and (iv) the
payment of the Additional Payment.
<PAGE>
(k) "Repayment Price" means the total amount of
consideration, as adjusted, to be paid by Concorde to CenCor
in connection with the Repayment, as set forth in Section
2.4 herein.
(l) "Unsecured Debt" means the unsecured debt of
Concorde owed to CenCor represented by Concorde's promissory
note dated February 26, 1993, which as of December 16, 1996
totals $189,285.24 in principal, and $55,499.45 in accrued -
but unpaid interest.
1.2 Other Terms. All capitalized terms used herein, not
defined in Section 1.1 or elsewhere in this Fourth Amendment,
shall have the meanings and be as defined in the Third Amendment,
and if not therein defined, as defined in the Second Amendment,
and if not therein defined, as defined in the First Amendment,
and if not therein defined, as defined in the original provisions
of the Agreement.
The Repayment
2.1 Agreement to Repay. Subject to the terms and
conditions herein, Concorde hereby agrees that, contingent upon
it obtaining the Refinancing, it will pay the Repayment Price to
CenCor in repayment in full of the Obligations. Subject to the
terms and conditions herein, CenCor hereby agrees to accept the
Repayment Price from Concorde as redemption, in full, of its
Class A Preferred Stock and as payment in full of all of
Concorde's debt obligations owed to CenCor pursuant to the
Debenture and the Unsecured Debt. The parties hereto agree that
the closing of the Refinancing and Concorde's receipt of the
proceeds thereof is a condition precedent to the Repayment.
Concorde undertakes that it will use the proceeds of the
Refinancing for the Repayment.
2.2 Closing of the Repayment. At the Closing of the
Repayment (the "Closing"), Concorde shall deliver to CenCor, by
wire transfer pursuant to CenCor's instructions, cash in an
amount equal to the Repayment Price in exchange for CenCor's
delivery to Concorde of:
<PAGE>
(a) certificates representing all of the then
outstanding shares of Class A Preferred Stock,
duly endorsed for transfer to Concorde and
cancellation;
(b) the Debenture, marked "paid in full";
(c) the promissory note, representing the Unsecured
Debt, marked "paid in full";
(d) properly executed releases and/or cancellations of
all mortgages, and other Liens, including releases
of all UCC filings, held by CenCor with respect to
the assets of Concorde or any of the Restricted
Subsidiaries, all in such form as may be required
for filing and recordation with the appropriate
governmental agencies or offices;
(e) fully executed cancellations of the guaranties
issued by the Guarantors pursuant to original
terms of the Agreement; and
(f) such other documents and/or certificates deemed
necessary or advisable by Concorde's counsel in
order to effectuate the full release of Concorde,
the Restricted Subsidiaries and the Guarantors
from all liabilities or other obligations owed to
CenCor, other than those regarding substitution of
receivables specifically set forth in Section 4.1,
herein.
2.3 Closing Date. The Closing shall occur at 10:00 a.m.,
on December 31, 1996, at the office of Bryan Cave LLP, 3500 One
Kansas City Place, 1200 Main Street, Kansas City, Missouri 64105,
unless extended at Concorde's option to such later date as may be
required to completed the Refinancing (as may be so extended, the
"Closing Date"), provided however, the date of Closing may not be
extended beyond February 28, 1997, without the written consent of
CenCor. In any event, the Closing Date shall not be extended to
a date beyond the closing date of the Refinancing.
<PAGE>
2.4 Repayment Price. Subject to adjustment as set forth
herein, the Repayment Price to be paid by Concorde to CenCor at
Closing shall be an amount equal to $4,868,006, minus the
cumulative amount of any Post 9/30/96 Payments. Notwithstanding
the foregoing, the amount of the Repayment Price shall be
increased by an amount equal to the product of (a) the number of
days the actual Closing Date extends beyond December 20, 1996
multiplied by (b) a per them adjustment of $1,333.
2.5 Allocation of Repayment Price. The Repayment Price
shall be allocated among the Obligations as follows:
(a) first, to the principal of the Debenture;
(b) second, to the accrued interest on the Debenture;
(c) third, to the principal of the Unsecured Debt;
(d) fourth, to the accrued interest on the Unsecured
Debt;
(e) fifth, to the Additional Payment; and
(f) sixth, to the Redemption Price.
2.6 Waiver of Breaches Resulting from Refinancing. In
addition to any waivers heretofore granted by CenCor to Concorde
in writing, CenCor hereby waives any and all breaches of the
Agreement that have occurred or may occur as a result of the
implementation of the Refinancing, including the issuance of
Class B Preferred Stock and/or the grant of security interests in
the assets of Concorde and/or the Restricted Subsidiaries (which,
prior to Closing, shall continue to be subordinate to the
security interest of CenCor).
<PAGE>
Obligations Pending Closing
3.1 Continuing Duties of Payment. Concorde shall continue
to be obligated to make quarterly payments of principal and
interest pursuant to Section 2.3(a) of the Agreement and Section
2.3(a) of the Agreement shall be amended to provide that the
obligation to make such quarterly payments shall continue through
maturity of the Debenture on January 1, 1998. Additionally,
Concorde shall continue to be obligated to make scheduled
redemptions of the Class A Preferred Stock, pursuant to the
provisions of the Third Amendment to the Agreement.
3.2 Extension of Maturity Dates.
(a) Sections 2.3(a) and 2.3(c) of the Agreement shall
be amended to provide that the Debenture shall
bear a maturity date of January 1, 1998.
(b) Section 2.3(b) of the Agreement shall be amended
to provide that required annual prepayments made
with respect to Excess Cash Flow shall continence
on March 30, 1998, with respect to Concorde's
fiscal year ending December 31, 1997.
(c) The promissory note representing the Unsecured
Debt shall be amended to provide that the
principal and interest thereon shall not become
due and payable until January 1, 1998.
3.3 Additional Payment. Section 2.5 of the Agreement shall
be amended to provide that the Additional Payment due at Closing
shall be $10.00, however if Closing does not occur as scheduled,
the Additional Payment shall be calculated as currently provided.
3.4 Waiver of Breaches. In addition to any waivers
heretofore granted by CenCor to Concorde in writing, CenCor
hereby waives any and all breaches of the Agreement that have
occurred or may occur as a result of the execution of that
certain lease dated July 31, 1996, with respect to Concorde's
North Hollywood, California School and the implementation of the
leasehold improvements of $900,000 related thereto.
<PAGE>
3.5 Consent to Sale. Subject to the terms and conditions
herein, CenCor hereby (a) consents to the sale (the "Michigan
Sale") of the real property located in Warren, Michigan (the
"Michigan Property"), owned by Concorde Career Colleges, Inc.;
(b) waives any restrictions set forth in Section 7.1 or elsewhere
in the Agreement with respect thereto; and (c) agrees to release
its mortgage with respect to the Michigan Property and any other
Liens it has related thereto in connection with the closing of
the Michigan Sale. In the event the Michigan Property is sold
prior to Closing, fifty percent (50%) of the proceeds, net of
brokerage commissions, costs of sale, and taxes (the "Michigan
Allocated Proceeds"), shall be applied to the retirement of Class
A Preferred Stock or the Class A-1 Preferred Stock, whichever is
then outstanding. Promptly upon the receipt of the Michigan
Allocated Proceeds, Concorde shall redeem that number of whole
shares of Class A Preferred Stock, or Class A-1 Preferred Stock,
held by CenCor (or its assigns) equal to the amount of such
Michigan Allocated Proceeds divided by the Redemption Price. Any
Allocated Proceeds remaining that would have been applied but for
the requirement that only whole shares be redeemed, shall be
retained by Concorde and aggregated with subsequently received
Allocated Proceeds for future Redemptions/Retirements.
(a) Following the Redemption of all outstanding shares
of Class A Preferred Stock or Class A-1 Preferred
Stock, Concorde shall pay any remaining Michigan
Allocated Proceeds to CenCor with respect to the
Debenture, pursuant to the terms of the Agreement,
first to be applied to the payment of any then
accrued but unpaid interest on the Debenture and
next to the principal amount of the Debenture.
(b) Except as otherwise provided for in this Section
3.5, the date of Redemption or Retirement with
respect to any Michigan Allocated Proceeds shall
not occur prior to three (3) business days from
the date of the receipt of good funds with respect
to the Michigan Allocated Proceeds received by
Concorde. Notwithstanding anything herein to the
contrary, Concorde shall have no obligation to
effect a Redemption or Retirement unless and until
its receipt of Michigan Allocated Proceeds
<PAGE>
(c) The procedures for Redemption or Retirement under
this Section 3.5 shall be in accordance with
Section 2.5 of the Third Amendment. Upon the
Redemption of all outstanding shares of Class A
Preferred Stock owned by CenCor (or its assigns)
and the Retirement of the entire Debenture
(including accrued interest thereon), Concorde
shall be entitled to retain any remaining Michigan
Allocated Proceeds and CenCor has no further
rights or interest in such Michigan Allocated
Proceeds.
Post-Closing Obligations
4.1 Continuation of Right of Substitution. Following the
Closing, and not withstanding the cancellation of all of the
Obligations upon receipt of the Repayment Price, CenCor's Right
of Substitution, set forth in Article V of The Second Amendment
to the Agreement, shall continue in full force and effect with
respect to the 1994 Receivables. All uncollected 1994
Receivables will be reassigned to Concorde at such time as the
amount of the interest payments, for which the 1994 Receivables
were assigned to CenCor, has been fully funded.
4.2 Indemnification with Respect to Assumed Subordinated
Indebtedness. In lieu of the protections previously provided
Concorde by Section 2.6 of the Agreement, in the event Concorde,
as a result of an action before a court of competent
jurisdiction, to which Concorde has presented a reasonable
defense, makes any future payments, to CenCor or any other
Person, on account of the Assumed Subordinated Indebtedness, from
which it has been released pursuant to the terms of the
Agreement, Concorde shall be entitled to indemnification from
CenCor in the amount of such payments.
4.3 Further Assurances. The parties hereto agree to
undertake such further actions and execute such further documents
as necessary, pre-Closing or post-Closing, to effectuate the-
purposes of this Fourth Amendment, including but not limited to
the Repayment and the cancellation of the Obligations.
<PAGE>
4.4 Termination. Following the Closing, all other
provisions of the Agreement, other than as set forth in this
Article IV or as necessary to effectuate the intent and
provisions hereof, shall be terminated and of no further force
and effect.
Obligations in the Event Closing Fails to Occur
5.1 Failure to Close. In the event Concorde fails to
timely obtain the Refinancing and therefore the Closing does not
occur by February 28, 1997, or by such later date as mutually
agreed to in writing by CenCor and Concorde, the provisions of
the Agreement, as amended by this Fourth Amendment, shall
continue in full force and effect, except that the terms and
provisions of Article II, above, shall be and become null and
void. In addition to the provisions set forth above, in the
event Closing fails to occur, the Agreement shall be further
amended to provide as set forth in this Article V. The provisions
of this Article V shall be of no force and effect unless and
until the Closing fails to occur by February 28, 1997, or by such
later date as mutually agreed to in writing by CenCor and
Concorde.
5.2 Increase in Quarterly Payments of Principal. Section
2.3(a) of the Agreement shall be amended to provide that the
scheduled quarterly payments of principal on -the Debenture shall
be increased from $69,554 to $100,000, commencing with the
payment due March 31, 1997. Quarterly payments of accrued
interest shall continue to be payable as currently provided.
<PAGE>
5.3 Exchange of Class A Preferred Stock. In the event the
Closing has not occurred, promptly after February 28, 1997, or
such later Closing Date subsequently agreed to by CenCor and
Concorde, the Board of Directors shall adopt the Class A-1
Certificate of Designation, substantially in the form of Exhibit
A attached hereto, and shall file such Class A-1 Certificate of
Designation with the Secretary of State of Delaware to authorize
the Class A-1 Preferred Stock. Thereafter, upon the written
request of CenCor, Concorde and CenCor shall promptly effect a
one-for-one exchange of all outstanding shares of Class A
Preferred Stock for a like number of shares of Class A-1
Preferred Stock, as a result of which CenCor shall become the
holder of all of the issued and outstanding shares of Class A-1
Preferred Stock, and all of the previously outstanding shares of
Class A Preferred Stock shall be redeemed by Concorde and no
longer be outstanding.
(a) As set forth in the Class A-1 Certificate of
Designation, the Class A-1 Preferred Stock shall
have all of the rights and preferences of the
Class A Preferred Stock, and additionally, the
Class A-1 Preferred Stock (i) shall have all the
contractual rights afforded to Class A Preferred
Stock under the Agreement; (ii) shall have voting
rights on all matters submitted to a vote of the
holders of Concorde's common stock, with each
share of Class A-1 Preferred Stock having eight
(8) votes for each vote accorded to a share of
Concorde's common stock, and (iii) shall be
convertible, at the holder's option, into Concorde
common stock, on a one-for-eight basis.
<PAGE>
(b) Additionally, Concorde hereby agrees that CenCor,
or its assigns, shall have piggyback registration
rights with respect to any shares of Concorde
common stock issued or issuable as a result of the
exercise of the conversion right associated with
the Class A-1 Preferred Stock (the "Registerable
Shares"), provided such Registerable Shares of
Concorde common stock are not then immediately
saleable pursuant to Rule 144 (or other successor
exemption from the registration requirements)
under the Securities Act of 1933, as amended (the
"Securities Act"). Such piggyback rights:
(i) shall attach to any registration of equity
securities under the Securities Act made by
Concorde on Forms S-1, S-2, S-3, or similar
registration form (but shall not attach to
registrations on Forms S-4, S-8, or similar
purpose registrations forms);
(ii) may be exercised by CenCor, or its assigns,
with respect to some or all of the
Registerable Shares;
(iii) shall be subject to the holder of such
Registerable Shares agreeing: to be bound by
the terms of the underwriting agreement
entered into in connection with the
registration, including any indemnification,
standstill or lock-up provisions required of
Concorde or other selling stockholders; to
accept the pricing of the offering as agreed
to by Concorde with respect to the shares of
common stock being sold by Concorde pursuant
to the registration; and to pay its pro rata
share of registration fees and underwriting
commissions and discounts;
<PAGE>
(iv) shall be subject to standard discretionary
curtailment, pro rata amongst all selling
stockholders, by the underwriter, if in its
opinion the market cannot support the total
number of shares requested to be registered
so that inclusion of all such shares would be
detrimental to the offering taken as a whole,
and
(v) may be waived by CenCor as to any
underwriting if CenCor does not agree with
the terms of such underwriting, without
forfeiture of piggyback rights as to any
subsequent underwritings by Concorde.
<PAGE>
(c) Concorde hereby agrees that CenCor, or its
assigns, shall have one cumulative demand
registration right with respect to all
Registerable Shares collectively held by CenCor
and its assigns. Upon receipt of a written
request for such registration (of all or part of
such Registerable Shares), Concorde will: as soon
as practicable, use its diligent best efforts to
effect all such registrations, qualifications and
compliances (including, without limitation, the
execution of an undertaking to file post-effective
amendments, appropriate qualifications under the
applicable blue sky or other state securities laws
and appropriate compliance with exemptive
regulations issued under the Securities Act and
any other governmental requirements or
regulations) as may be so requested and as would
permit or facilitate the sale and distribution of
all or such portion of Registerable Shares as are
specified in such request; provided that Concorde
shall not be obligated to take any action to
effect such registration, qualification or
compliance pursuant to this Section 53(c), after
Concorde has effected one such registration
pursuant to this Section 5.3(c) and such
registration has been declared or ordered
effective. Notwithstanding anything herein, this
<PAGE>
demand right shall terminate at such time as all
Registerable Shares are freely tradeable in the
public market, pursuant to Rule 144 under the
Securities Act, or otherwise. (To be "freely
tradeable" the Registerable Shares must be
immediately saleable without regard to any trickle
out limitations under Rule 144.)
Subject to the foregoing, Concorde shall file a
registration statement covering the Registerable
Shares so requested to be registered as soon as
practical, but in any event within ninety days,
after receipt of the request or requests of
CenCor; provided, however, that if Concorde shall
furnish to CenCor a certificate signed by the
President of Concorde stating that in the good
faith judgment of the Board of Directors it would
be seriously detrimental to Concorde and its
stockholders for such registration statement to be
filed at the date filing would be required and it
is therefore essential to defer the filing of such
registration statement, Concorde shall have an
additional period of not more than ninety (90)
days from the expiration of the foregoing ninety
(90) day period within which to file such
registration statement.
(i) If CenCor intends to distribute the
Registerable Shares covered by its request by
means of an underwriting, it shall so advise
Concorde as a part of its request made
pursuant to Section 5.3(c). In such event,
if so requested in writing by Concorde,
CenCor shall negotiate with an underwriter
selected by Concorde with regard to the
underwriting of such requested registration;
provided, however, that if CenCor has not
agreed with such underwriter as to the terms
and conditions of such underwriting within
twenty days (20) following commencement of
such negotiations, CenCor may select an
underwriter of its own choice. Concorde
shall enter into an underwriting agreement in
<PAGE>
customary form with the underwriter or
underwriters selected for such underwriting
by CenCor.
(ii) All out-of-pocket expenses incurred in
connection with any registration pursuant to
this Section 5.3(c) shall be borne by CenCor.
(d) In the case of registration pursuant to either
Sections 5.3(b) or (c), Concorde will keep CenCor
advised in writing as to the initiation of each
registration, qualification and compliance and as
to the completion thereof. Concorde will:
(i) keep such registration, qualification or
compliance pursuant to Sections 5.3(b) or (c)
effective for a period of 120 days or until a
distribution contemplated in the registration
statement has been completed; provided,
however that (i) such 120-day period shall be
extended for a period of time equal to the
period CenCor refrains from selling
securities included in such registration at
the request of an underwriter of common stock
(or other securities) of Concorde; and
(ii) in the case of any registration of
Registerable Shares on Form S-3 which are
intended to be offered on a continuous or
delayed basis, such 120-day period shall be
extended, if necessary, to keep the
registration effective until all such
Registerable Shares are sold, provided that
Rule 145, or any successor rule under the
Securities Act, permits an offering on a
continuous or delayed basis, and provided
further that applicable rules under the
Securities Act governing the obligation to
file a post-effective amendment permit, in
lieu of filing a post-effective amendment
which (i) includes any prospectus required by
Section 10(a)(3) of the Securities Act or
(ii) reflects facts or events representing a
<PAGE>
material or fundamental change in the
information set forth in the registration
statement, the incorporation by reference of
information required to be included in (i)
and (ii) above to be contained in periodic
reports filed pursuant to section 13 or 15(d)
of the Securities Exchange Act of 1934, as
amended ("1934 Act") and registration
statement; and
(ii) furnish such number of prospectuses and other
documents incident thereto as CenCor from
time to time may reasonably request.
(e) Concorde will indemnify CenCor, each of CenCor's
officers and directors, and each person
controlling CenCor within the meaning of the
Securities Act, with respect to such registration,
qualification, or compliance effected pursuant to
Sections 5.3(b) or (c), and each underwriter, if
any, and each person who controls any underwriter
of the Registerable Shares against all claims,
losses, damages, and liabilities (or actions in
respect thereto) arising out of or based on any
untrue statement (or alleged untrue statement) of
a material fact contained in any prospectus,
offering circular or other document (including any
related registration statement, notification or
the like) incident to any such registration,
qualification, or compliance, or based on any
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 any violation by Concorde of any
rule or regulation promulgated under the
Securities Act applicable to Concorde and relating
to action or inaction required of Concorde in
connection with any such registration,
qualification or compliance, and will reimburse
CenCor, each of CenCor's officers and directors,
and each person controlling CenCor, each such
underwriter and each person who controls any such
underwriter, for any legal and any other expenses
<PAGE>
reasonably incurred in connection with
investigating or defending any such claim, loss,
damage, liability or action, provided that
Concorde will not be liable in any such case to
the extent that any such claim, loss, damage or
liability arises out of or is (i) based on any
untrue statement or omission based upon written
information furnished to Concorde by an instrument
duly executed by CenCor or underwriter
specifically for use therein or (ii) relating to
action or inaction required of CenCor or any such
underwriter under any rule or regulation
promulgated under the Securities Act.
CenCor will, if Registerable Shares held by or
issuable to CenCor are included in the securities
as to which such registration, qualification, or
compliance is being effected, indemnify Concorde,
each of Concorde's officers and directors, and
each person controlling Concorde within the
meaning of the Securities Act, with respect to
such registration, qualification, or compliance
effected pursuant to Sections 5.3(b) or (c), and
each underwriter, if any, and each person who
controls any underwriter of the Registerable
Shares against all claims, losses, damages, and
liabilities (or actions in respect thereto)
arising out of or based on any untrue statement
(or alleged untrue statement) of a material fact
contained in any such prospectus, offering
circular, or other document (including any related
registration statement, notification or the like)
incident to any such registration, qualification,
or compliance, or based on any 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 any
violation by CenCor of any rule or regulation
promulgated under the Securities Act applicable to
CenCor and relating to action or inaction required
of CenCor in connection with any such
registration, qualification or compliance, and
will reimburse Concorde, each of Concorde's offi-
<PAGE>
cers and directors, and each person controlling
Concorde, each such underwriter and each person
who controls any such underwriter, for any legal
or any other expenses reasonably incurred in
connection with investigating or defending any
such claim, loss, damage, liability, or action, in
each case to the extent, but only to the extent,
(x) that such untrue statement (or alleged untrue
statement) or omission (or alleged omission) is
made in such registration statement, prospectus,
offering circular, or other document in reliance
upon and in conformity with written information
famished to Concorde by an instrument duly
executed by CenCor specifically for use therein or
(y) that such violation was due to an action or
inaction required of CenCor.
Each party entitled to indemnification under this
Section 5.3(e) (the Indemnified Party) shall give
notice to the party required to provide
indemnification (the Indemnifying Party) promptly
after such Indemnified Party has actual knowledge
of any claim as to which indemnity may be sought,
and shall permit the Indemnifying Party to assume
the defense of any such claim or any litigation
resulting therefrom, provided that counsel for the
Indemnifying Party, who shall conduct the defense
of such claim or litigation, shall be approved by
the Indemnified Party (whose approval shall not be
unreasonably withheld), and the Indemnified Party
may participate in such defense at such party's
expenses, and provided further that the failure of
any Indemnified Party to give notice as provided
herein shall not relieve the Indemnifying Party of
its obligations under this Section 5.3(e). No
Indemnifying Party, in the defense of any such
claim or litigation, shall, except with the
consent of each Indemnified Party, consent to
entry of any judgment or enter into any settlement
which does not include as an unconditional term
thereof the giving by the claimant or plaintiff to
such Indemnified Party of a release from all
liability in respect to such claim or litigation.
<PAGE>
(f) CenCor shall furnish to Concorde such written
information regarding it and the distribution
proposed by it as Concorde may request in writing
and as shall be required in connection with any
registration, qualification, or compliance
referred to in this Section 5.3.
(g) With a view to making available to CenCor the
benefits of certain rules and regulations of the
Securities and Exchange Commission ("SEC") which
may permit the sale of the securities of Concorde
to the public without registration or pursuant to
a registration on Form S-3, Concorde agrees to:
(i) make and keep public information available,
as those terms are understood and defined in
SEC Rule 144;
(ii) use its best efforts to file with the SEC in
a timely manner all reports and other
documents required of Concorde under the
Securities Act and the 1934 Act; and
(iii) so long as CenCor owns any Class A Preferred
Stock, Class A-1 Preferred Stock, or
Registerable Shares, to furnish to CenCor
forthwith upon its request a written
statement by Concorde as to its compliance
with the reporting requirements of said Rule
144, and of the Act and the 1934 Act, a copy
of the most recent annual or quarterly report
of the company, and such other reports and
documents so filed by Concorde as CenCor may
reasonably request in availing itself of any
rule or regulation of the SEC allowing you to
sell any such securities without
registration.
<PAGE>
(h) The rights to cause Concorde to register the
Registerable Shares granted to CenCor by Concorde
under Sections 5.3(b) and (c) may be assigned by
CenCor to a transferee or assignee of any of the
Registerable Shares, provided, that Concorde is
given written notice by CenCor at the time of or
within a reasonable time after said transfer,
stating the name and address of said transferee or
assignee and identifying the securities with
respect to which such registration rights are
being assigned.
(i) CenCor shall furnish to Concorde such written
information regarding it and the distribution
proposed by it as Concorde may request in writing
and as shall be required in connection with any
registration, qualification, or compliance
referred to in Section 5.3(b) or (c).
Representations, Warranties and Covenants of the Parties
6.1 Corporate Authority. Concorde hereby represents and
warrants to CenCor that Concorde and the Guarantors have obtained
all necessary corporate and other approvals and consents to enter
into this Fourth Amendment and to take all actions contemplated
herein. The Board of Directors of Concorde has approved this
Fourth Amendment and all actions to be taken pursuant to this
Fourth Amendment, including without limitation, the filing of the
Class A-1 Certificate of Designation in the event the Repayment
does not occur by February 28, 1997, or such later date as may be
mutually agreed to in writing by CenCor and Concorde.
<PAGE>
6.2 Stock. Concorde hereby represents and warrants to
CenCor that (a) it does not own an interest in any entity other
than its interest in the Guarantors and (b) all of the stock it
owns in Guarantors has been or is hereby pledged as collateral
for the Debenture Liabilities. Concorde and Guarantors hereby
jointly and severally represent and warrant that the attached
Exhibit "B" is a complete list of all stock issued by Guarantors
and acknowledge that all such stock certificates have been
delivered to CenCor.
6.3 Registration Rights. Concorde hereby represents and
warrants that, except in connection with the issuance of Class B
Preferred Stock pursuant to the Refinancing (the "Class B
Registration Rights") or as otherwise provided for in this Fourth
Amendment, it has not granted, or agreed to grant, any
registration rights, including piggyback rights, to any person or
entity. Furthermore, Concorde covenants that (a) prior to
Closing, it will not grant or agree to grant any such rights to
any person or entity other than CenCor, except for the Class B
Registration Rights and (b) in the event the Closing does not
occur by February 28, 1997, or by such later date as mutually
agreed to in writing by CenCor and Concorde, Concorde will not
grant or agree to grant any such rights to any person or entity
other than CenCor.
6.4 Career. Career hereby guarantees to CenCor payment
when due of all Debenture Liabilities and shall be deemed a
Guarantor as defined in the Agreement. To secure this guaranty,
Career hereby mortgages, pledges, conveys and assigns to CenCor,
and grants CenCor a continuing security interest in all personal
property of the following types which is now owned or hereafter
shall be owned or acquired by Career, and all Proceeds of such
property:
All Equipment, Farm Products, Consumer Goods,
Inventory, Fixtures, Accounts, Contract Rights, General
Intangibles, Instruments, Documents, Chattel Paper and
money (including money in bank accounts).
<PAGE>
If the Repayment does not occur by February 28, 1997, or by such
other later date as may be mutually agreed to in writing by
CenCor and Concorde, Career will execute any and all documents
reasonably requested by CenCor to bind Career to all of the same
obligations to CenCor as the Guarantors and all financing
statements deemed necessary by CenCor to perfect CenCor's
security interest in the above assets of Career.
6.5 CenCor's Corporate Authority. CenCor hereby represents
and warrants to Concorde that it has obtained all necessary
corporate and other approvals and consents to enter into this
Fourth Amendment and to take all actions contemplated herein.
The Board of Directors of CenCor has approved this Fourth
Amendment and all actions to be taken pursuant to this Fourth
Amendment, including without limitation, the cancellation of all
the Obligations pursuant to the Repayment.
Miscellaneous
7.1 Attorneys' Fees. Notwithstanding anything in the
Agreement or herein to the contrary, Concorde shall pay to CenCor
in cash one-half of CenCor's attorneys' fees and expenses
incurred in connection with the negotiation of this Fourth
Amendment and the consummation of the transactions contemplated
thereby, within ten (10) business days after receiving an invoice
from CenCor with supporting documentation, which payment the
parties agree shall not exceed $5,000 in the aggregate.
7.2 Ratification. All provisions of the Agreement not
specifically amended in this Fourth Amendment are hereby ratified
and reaffirmed.
7.3 Governing Law. Except as otherwise provided by express
reference to the Uniform Commercial Code, this Fourth Amendment
shall be construed in accordance with and governed by the laws,
statutes and decisions of the State of Missouri, to the
nonexclusive jurisdiction of whose courts, state and federal,
Concorde and Guarantors irrevocably agree to submit.
7.4 Incorporation. The recitals and exhibits hereto are
hereby incorporated herein by reference.
<PAGE>
7.5 Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be deemed an original
and all of which together shall constitute one and the same
instrument.
7.6 Further Assurances. The parties hereto agree to
execute all additional documents reasonably necessary to
effectuate the transactions contemplated herein, including
without limitation those documents necessary to release the Liens
on a timely basis.
7.7 Benefit and Burden. This Agreement shall be binding
upon and inure to the benefit of the successors of CenCor,
Concorde and the Restricted Subsidiaries. CenCor may assign its
rights hereunder, including without limitation to a liquidating
trust.
IN WITNESS WHEREOF, the parties hereto have caused this
Fourth Amendment to the Agreement to be executed by their
respective duly authorized officers as of the day and year first
above written.
Oral agreements or commitments to loan money, extend credit
or to forbear from enforcing repayment of a debt including
promises to extend or renew such debt are not enforceable. To
protect the debtor and creditor from misunderstanding or
disappointment, any agreements we reach covering such matters are
contained in this writing, which is the complete and exclusive
statement of the agreement between us, except as we may later
agree in writing to modify it.
<PAGE>
CENCOR, INC.
ATTEST:
/s/ :Lisa M. Henak By: /s/ Terri Rinne
Secretary Terri Rinne
Vice President
ACKNOWLEDGMENT
STATE OF MISSOURI )
) ss.
COUNTY OF JACKSON )
BE IT REMEMBERED, that on this 30th day of December, 1996,
before me, the undersigned, a notary public in and for said
state, came Terri Rinne, Vice President of CenCor, Inc., a
Delaware corporation, to me personally known to be such officer
and the same person who executed as such officer the foregoing
instrument on behalf of said corporation, and such person duly
acknowledged the execution of the same to be the act and deed of
said corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed
my official seal at my office in Kansas City, Missouri, the day
and year last above mentioned.
/s/ Lisa M. Henak
Notary Public in and for
said County and State
My commission expires:
9/7/2000
<PAGE>
CONCORDE CAREER COLLEGES, INC.
ATTEST:
/s/ Lisa M. Henak By: /s/ Gregg Gimlin
Secretary M. Gregg Gimlin
Vice President
ACKNOWLEDGMENT
STATE OF MISSOURI )
) ss.
COUNTY OF JACKSON )
BE IT REMEMBERED, that on this 30th day of December, 1996,
before me, the undersigned, a notary public in and for said
state, came M. Gregg Gimlin, Vice President of Concorde Career
Colleges, Inc., a Delaware corporation, to me personally known to
be such officer and the same person who executed as such officer
the foregoing instrument on behalf of said corporation, and such
person duly acknowledged the execution of the same to be the act
and deed of said corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed
my official seal at my office in Kansas City, Missouri, the day
and year last above mentioned.
/s/ Lisa M. Henak
Notary Public in and for
said County and State
My commission expires:
9/7/2000
<PAGE>
MINNESOTA INSTITUTE OF MEDICAL
AND DENTAL ASSISTANTS, INC.
ATTEST:
/s/ Lisa M. Henak By: /s/ A. Eugene Johnson
Secretary A. Eugene Johnson
President
ACKNOWLEDGMENT
STATE OF MISSOURI )
) ss.
COUNTY OF JACKSON )
BE IT REMEMBERED, that on this 30th day of December, 1996,
before me, the undersigned, a notary public in and for said
state, came A. Eugene Johnson, President of Minnesota Institute
of Medical and Dental Assistants, Inc., a Minnesota corporation,
to me personally known to be such officer and the same person who
executed as such officer the foregoing instrument on behalf of
said corporation, and such person duly acknowledged the execution
of the same to be the act and deed of said corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed
my official seal at my office in Kansas City, Missouri, the day
and year last above mentioned.
/s/ Lisa M. Henak
Notary Public in and for
said County and State
My commission expires:
9/7/2000
<PAGE>
TEXAS COLLEGE OF MEDICAL AND DENTAL
ASSISTANTS, INC.
ATTEST:
/s/ Lisa M. Henak By: /s/ A. Eugene Johnson
Secretary A. Eugene Johnson
President
ACKNOWLEDGMENT
STATE OF MISSOURI )
) ss.
COUNTY OF JACKSON )
BE IT REMEMBERED, that on this 30th day of December, 1996,
before me, the undersigned, a notary public in and for said
state, came A. Eugene Johnson, President of Texas College of
Medical and Dental Assistants, Inc., a Texas corporation, to me
personally known to be such officer and the same person who
executed as such officer the foregoing instrument on behalf of
said corporation, and such person duly acknowledged the execution
of the same to be the act and deed of said corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed
my official seal at my office in Kansas City, Missouri, the day
and year last above mentioned.
/s/ Lisa M. Henak
Notary Public in and for
said County and State
My commission expires:
9/7/2000
<PAGE>
UNITED HEALTH CAREERS
INSTITUTE, INC.
ATTEST:
/s/ Lisa M. Henak By: /s/ A. Eugene Johnson
Secretary A. Eugene Johnson
President
ACKNOWLEDGMENT
STATE OF MISSOURI )
) ss.
COUNTY OF JACKSON )
BE IT REMEMBERED, that on this 30th day of December, 1996,
before me, the undersigned, a notary public in and for said
state, came A. Eugene Johnson, President of United Health Careers
Institute, Inc., a California corporation, to me personally known
to be such officer and the same person who executed as such
officer the foregoing instrument on behalf of said corporation,
and such person duly acknowledged the execution of the same to be
the act and deed of said corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed
my official seal at my office in Kansas City, Missouri, the day
and year last above mentioned.
/s/ Lisa M. Henak
Notary Public in and for
said County and State
My commission expires:
9/7/2000
<PAGE>
SOUTHERN CALIFORNIA COLLEGE OF
MEDICAL AND DENTAL ASSISTANTS,
INC.
ATTEST:
/s/ Lisa M. Henak By: /s/ A. Eugene Johnson
Secretary A. Eugene Johnson
President
ACKNOWLEDGMENT
STATE OF MISSOURI )
) ss.
COUNTY OF JACKSON )
BE IT REMEMBERED, that on this 30th day of December, 1996,
before me, the undersigned, a notary public in and for said
state, came A. Eugene Johnson, President of Southern California
College of Medial and Dental Assistants, Inc., a California
corporation, to me personally known to be such officer and the
same person who executed as such officer the foregoing instrument
on behalf of said corporation, and such person duly acknowledged
the execution of the same to be the act and deed of said
corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed
my official seal at my office in Kansas City, Missouri, the day
and year last above mentioned.
/s/ Lisa M. Henak
Notary Public in and for said
County and State
My commission expires:
9/7/2000
<PAGE>
CONCORDE CAREERS-FLORIDA, INC.
ATTEST:
/s/ Lisa M. Henak By: /s/ A. Eugene Johnson
Secretary A. Eugene Johnson
President
ACKNOWLEDGMENT
STATE OF MISSOURI )
) ss.
COUNTY OF JACKSON )
BE IT REMEMBERED, that on this 30th day of December, 1996,
before me, the undersigned, a notary public in and for said
state, came A. Eugene Johnson, President of Concorde Careers-
Florida, Inc., a Florida corporation, to me personally known to
be such officer and the same person who executed as such officer
the foregoing instrument on behalf of said corporation, and such
person duly acknowledged the execution of the same to be the act
and deed of said corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed
my official seal at my office in Kansas City, Missouri, the day
and year last above mentioned.
/s/ Lisa M. Henak
Notary Public in and for said
County and State
My commission expires:
9/7/2000
<PAGE>
COLLEGES OF DENTAL AND
MEDICAL ASSISTANTS, INC.
ATTEST:
/s/ Lisa M. Henak By: /s/ A. Eugene Johnson
Secretary A. Eugene Johnson
President
ACKNOWLEDGMENT
STATE OF MISSOURI )
) ss.
COUNTY OF JACKSON )
BE IT REMEMBERED, that on this 30th day of December, 1996,
before me, the undersigned, a notary public in and for said
state, came A. Eugene Johnson, President of Colleges of Dental
and Medial Assistants, Inc., a California corporation, to me
personally known to be such officer and the same person who
executed as such officer the foregoing instrument on behalf of
said corporation, and such person duly acknowledged the execution
of the same to be the act and deed of said corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed
my official seal at my office in Kansas City, Missouri, the day
and year last above mentioned.
/s/ Lisa M. Henak
Notary Public in and for
said County and State
My commission expires:
9/7/2000
<PAGE>
COMPUTER CAREER INSTITUTE, INC.
ATTEST:
/s/ Lisa M. Henak By: /s/ A. Eugene Johnson
Secretary A. Eugene Johnson
President
ACKNOWLEDGMENT
STATE OF MISSOURI )
) ss.
COUNTY OF JACKSON )
BE IT REMEMBERED, that on this 30th day of December, 1996,
before me, the undersigned, a notary public in and for said
state, came A. Eugene Johnson, President of Computer Career
Institute, Inc., an Oregon corporation, to me personally known to
be such officer and the same person who executed as such officer
the foregoing instrument on behalf of said corporation, and such
person duly acknowledged the execution of the same to be the act
and deed of said corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed
my official seal at my office in Kansas City, Missouri, the day
and year last above mentioned.
/s/ Lisa M. Henak
Notary Public in and for
said County and State
My commission expires:
9/7/2000
<PAGE>
CAREER ASSISTANCE, INC.
ATTEST:
/s/ Lisa M. Henak By: /s/ A. Eugene Johnson
Secretary A. Eugene Johnson
President
ACKNOWLEDGMENT
STATE OF MISSOURI )
) ss.
COUNTY OF JACKSON )
BE IT REMEMBERED, that on this 30th day of December, 1996,
before me, the undersigned, a notary public in and for said
state, came Patrick J. Debold, President of Career Assistance,
Inc., a Delaware corporation, to me personally known to be such
officer and the same person who executed as such officer the
foregoing instrument on behalf of said corporation, and such
person duly acknowledged the execution of the same to be the act
and deed of said corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed
my official seal at my office in Kansas City, Missouri, the day
and year last above mentioned.
/s/ Lisa M. Henak
Notary Public in and for
said County and State
My commission expires:
9/7/2000
<PAGE>
EXHIBIT A
CONCORDE CAREER COLLEGES, INC.
Certificate of Designations of the
Class A-1 Convertible Redeemable
Voting Preferred Stock
Par Value 0.10 Per Share
Liquidation Value $10.00 Per Share
_________________
Pursuant to Section 151 of the
General Corporation Law of the State of Delaware
The undersigned, the President of Concorde Career Colleges,
Inc., a Delaware corporation (hereinafter called the
"Corporation"), DOES HEREBY CERTIFY that:
I. The following resolution has been duly adopted by the
Board of Directors of the Corporation (the "Board of Directors"):
RESOLVED, that pursuant to the authority expressly granted
to and vested in the Board of Directors of the Corporation by the
provisions of the Restated Certificate of Incorporation, as
amended, and the Amended and Restated Bylaws, the Board of
Directors hereby authorizes the issuance of a series of the
preferred stock (the "Preferred Stock") of the Corporation which
shall consist of (260,385) shares of the Corporation's
Preferred Stock and hereby fixes the designations, preferences
and relative, participating, optional or other special rights,
and qualifications, limitations or restrictions thereof of the
shares of such series as follows:
A. Designation. The designation of said series of
the Preferred Stock shall be Class A-1 Convertible Redeemable
Voting Preferred Stock (the "Class A-1 Preferred Stock"). The
number of shares of Class A-1 Preferred Stock shall be
(260,385) . The liquidation value of the Class A-1 Preferred
Stock shall be $10.00 per share. The shares of Class A-1
Preferred Stock shall be issued as full shares.
<PAGE>
B. Dividends. The shares of Class A-1 Preferred
Stock shall be entitled to receive cumulative dividends, as
declared by the Board of Directors or a duly authorized committee
thereof (an "Authorized Board Committee"), out of funds legally
available for the payment of dividends, (the "Dividends") and at
a variable annual rate, all as set forth in this Section (ii).
(a) For so long as the Corporation's junior secured
debenture, dated October 30, 1992 and issued in the original
principal amount of $5,422,307 (the "Debenture"), or any
portion of the principal amount thereof, is outstanding, the
annual rate of the Dividend shall be equal to 73% of the
current interest rate on the Debenture, as of the first day
of calendar quarter during which the Dividend is earned, as
calculated based on the liquidation value of the Class A-1
Preferred Stock set forth in Section (v), below;
(b) commencing upon the retirement, in full, of the
Debenture (the "Debenture Repayment Date"), the annual rate
of the Dividend shall be equal to 2% above the prime rate
charged, as of the first day of the calendar quarter during
which the Dividend is earned, by Mercantile Bank of Kansas
City, N.A., as calculated based on the liquidation value of
the Class A-1 Preferred Stock set forth in Section (v),
below;
(c) provided that, notwithstanding the foregoing, the
annual rate of the Dividends shall not exceed 12% of the per
share liquidation value of the Class A-1 Preferred Stock, as
set forth in Section (v), below ($1.20 per share).
<PAGE>
Dividends shall be earned from date of original issue
of a share of Class A-1 Preferred Stock, however they shall not
be paid, but rather accrued until the Debenture Repayment Date
(the "Initial Accrued Dividends"). Upon the Debenture Repayment
Date, future earned Dividends shall be payable in cash,
commencing on the last day of the calendar quarter which occurs
following the Debenture Repayment Date (the "Initial Dividend
Payment Date") with respect to the period commencing on the
Debenture Repayment Date and ending the day prior to the Initial
Dividend Payment Date, and thereafter quarterly on March 31, June
30, September 30 and December 31 in each year (the "Dividend
Payment Dates") with respect to the quarterly period ending on
the March 30, June 29, September 29 and December 30,
respectively, next preceding such Dividend Payment Date, to
stockholders of record on the record date, not exceeding sixty
days preceding the Initial Dividend Payment Date or such Dividend
Payment Date, respectively, fixed for the purpose by the Board of
Directors or an Authorized Board Committee in advance of each
particular dividend. The amount of dividends payable on shares
of Class A-1 Preferred Stock, for each full quarterly dividend
period, shall be computed by dividing by four the annual rate per
share set forth in this Section (ii).
The Initial Accrued Dividends shall be paid ratably
over 12 calendar quarters, commencing with the calendar quarter
which ends immediately after the Debenture Repayment Date.
Payment of the Initial Accrued Dividends shall be made on the
Initial Dividend Payment Date and the following 11 Dividend
Payment Dates, to stockholders of record on the respective record
dates for such Dividend Payment Dates.
Notice of the current rate of Dividends, which shall
detail the basis for such determination, shall be given by the
Corporation on a quarterly basis to the holders of record of the
shares of Class A-1 Preferred Stock as of the record date for
such Dividends, at their respective addresses appearing on the
books of the Corporation. Such notice shall be given on each
Dividend Payment Date (including the Initial Dividend Payment
Date), and, prior to the Debenture Repayment Date, shall be given
each December 31, March 31, June 30 and September 30.
<PAGE>
Notice of the Debenture Repayment Date shall be given
by the Corporation, promptly upon its determination, to the
holders of record of the shares of Class A-1 Preferred Stock on
such date, at their respective addresses appearing on the books
of the Corporation.
Dividends payable on the Class A-1 Preferred Stock for
the initial dividend period and for any other period which is
less than a full quarterly period shall be computed on the basis
of a 360-day year of twelve 30-day months.
(iii) Right of Conversion. Any holder of Class A-1
Preferred Stock at any time, and from time to time, may at its
option convert all, or any number less than all, of the shares of
Class A-1 Preferred Stock into shares of the Corporation's common
stock, $.10 par value (the "Common Stock") on the basis of one
(1) share of Class A-1 Preferred Stock for eight (8) shares of
Common Stock. In the event of a merger, consolidation,
recapitalization or other reorganization, including any stock
splits, reverse stock splits, or stock dividends, affecting the
Common Stock (the "Reorganization") the right to convert the
Class A-1 Preferred Stock shall be automatically modified to
provide that each share of Class A-1 Preferred Stock shall be
convertible into such reciprocally adjusted number of shares of
Common Stock, or such other consideration as a holder of eight
(8) shares of Common Stock would be entitled to receive as a
result of any such Reorganization.
<PAGE>
Any holder desiring to effect such a conversion shall
provide notice to the Corporation of the conversion by delivering
stock certificates representing the shares of Class A-1 Preferred
Stock to be converted to the Corporation, duly endorsed, with an
instruction -letter requesting conversion. The effective date of
any such conversion shall be the date the Corporation actually
receives such notice and certificate(s) duly endorsed (the
"Conversion Date"). Upon such receipt, the Corporation shall
promptly transmit instructions to its transfer agent to issue to
such holder certificate(s) representing the Common Stock, as of
the Conversion Date. In the event less than all the shares of
Class A-1 Preferred Stock represented by the tendered certificate
are to be converted, the Corporation will cause a new
certificate, representing the unconverted shares of Class A-1
Preferred Stock, to be issued to such holder.
All shares of Class A-1 Preferred Stock which shall at
any time have been converted shall, after such conversion, have
the status of authorized but unissued shares of Preferred Stock,
without designation as to series until such shares are once more
designated as part of a particular series by the Board of
Directors or an Authorized Board Committee.
<PAGE>
(iv) Optional Redemption. The Corporation at any time
and from time to time may at its option redeem all, or any number
less than all, of the outstanding shares of Class A-1 Preferred
Stock. Any redemption of shares of Class A-1 Preferred Stock
shall be effected at a redemption price of $10.00 per share plus,
in each case, an amount equal to all dividends (whether or not
earned or declared) accrued and unpaid on such share of Class A-1
Preferred Stock to the date fixed for redemption. Notice of any
proposed redemption of shares of Class A-1 Preferred Stock shall
be given by the Corporation by mailing a copy of such notice no
less than 20 days nor more than 60 days prior to the date fixed
for such redemption to holders of record of the shares of Class
A-1 Preferred Stock to be redeemed at their respective addresses
appearing on the books of the Corporation. Said notice shall
specify the shares called for redemption, the redemption price
and the place at which and date on which the shares called for
redemption will, upon presentation and surrender of the
certificates of stock evidencing such shares, be redeemed and the
redemption price therefor paid. In the case of the redemption of
less than all the outstanding shares of Class A-1 Preferred
Stock, such redemption shall be of full shares selected by lot
among all then outstanding Class A-1 Preferred Stock in such
manner as may be prescribed by the Board of Directors. From and
after the date fixed in any such notice as the date of redemption
of shares of Class A-1 Preferred Stock, unless default shall be
made by the Corporation in providing monies at the time and place
specified for the payment of the redemption price pursuant to
such notice, all dividends on the Class A-1 Preferred Stock
thereby called for redemption shall cease to accrue and all
rights of the holders thereof as stockholders of the Corporation,
except the right to receive the redemption price, shall cease and
terminate.
All shares of Class A-1 Preferred Stock which shall at
any time have been redeemed shall, after such redemption, have
the status of authorized but unissued shares of Preferred Stock,
without designation as to series until such shares are once more
designated as part of a particular series by the Board of
Directors or an Authorized Board Committee.
<PAGE>
(v) Priority of Class A-1 Preferred Stock. The shares
of Class A-1 Preferred Stock shall be preferred as to assets over
the shares of the Common Stock or any other capital stock of the
Corporation ranking junior to the Class A-1 Preferred Stock upon
liquidation, dissolution or winding up of the Corporation so that
in the event of any liquidation, dissolution or winding up of the
Corporation, whether voluntary or involuntary, the holders of the
Class A-1 Preferred Stock shall be entitled to receive out of the
assets of the Corporation available for distribution to its
stockholders, whether from capital, surplus or earnings, after
distribution and payment in full to the holders of any capital
stock of the Corporation ranking prior to the Class A-1 Preferred
Stock upon liquidation, dissolution or winding up of the
Corporation of the preferential amounts and dividends payable
thereon, and before any distribution is made to holders of shares
of the Common Stock or any other capital stock of the Corporation
ranking junior to the Class A-1 Preferred Stock upon liquidation,
dissolution or winding up of the Corporation, an amount equal to
$10.00 per share plus an amount equal to all dividends (whether
or not earned or declared) accrued and unpaid on such share of
Class A-1 Preferred Stock to the date of final distribution. If,
upon any liquidation, dissolution or winding up of the
Corporation, the assets of the Corporation, or proceeds thereof,
distributable among the holders of shares of Class A-1 Preferred
Stock or any capital stock ranking on a par with the Class A-1
Preferred Stock upon liquidation, dissolution or winding up of
the Corporation, shall be insufficient to pay in full the
preferential amounts to which such stock would be entitled, then
such assets, or the proceeds thereof, shall be distributable
among such holders ratably in accordance with the respective
amounts which would be payable on such shares if all amounts
payable thereof were payable in full. For the purposes hereof,
neither a consolidation nor a merger of the Corporation with one
or more other corporations, nor a sale or a transfer of all or
substantially all of the assets of the Corporation, shall be
deemed to be a liquidation, dissolution or winding up, voluntary
or involuntary, of the Corporation.
<PAGE>
(vi) Voting Rights.
Each share of Class A-1 Preferred Stock shall be
entitled to vote on all matters presented to the stockholders of
the Corporation and shall be entitled to eight (8) votes for each
vote afforded to a share of Common Stock. In the event of a
recapitalization of the Corporation that would result in the
multiplication or division of the voting power of the outstanding
Common Stock (i.e., through a stock split, reverse stock split,
or otherwise), the proportionate voting power of the Class A-1
Preferred Stock shall be reciprocally adjusted upward or downward
as the case may be.
Additionally, notwithstanding anything herein to the
contrary, so long as any shares of the Class A-1 Preferred Stock
remain outstanding, the Corporation will not, either directly or
indirectly or through merger or consolidation with any other
corporation, without the affirmative unanimous vote at a meeting,
or the written consent with or without a meeting, of the holders
of the shares of Class A-1 Preferred Stock then outstanding,
amend, alter or repeal any of the provisions of the Certificate
of Designations of the Class A-1 Preferred Stock or the
certificate of Incorporation of the Corporation, or authorize any
reclassification of the Class A-1 Preferred Stock, so as in any
such case to affect adversely the preferences, special rights or
powers of the Class A-1 Preferred Stock, including but not
limited to the super voting rights afforded pursuant to the first
paragraph of this Section (vi), or authorize or issue any capital
stock of the Corporation ranking, either as to payment of
dividends or upon liquidation, dissolution or winding up of the
Corporation, prior to or on par with the Class A-1 Preferred
Stock.
<PAGE>
Additionally, notwithstanding anything herein to the
contrary, so long as any shares of the Class A-1 Preferred Stock
remain outstanding, the Corporation will not, either directly or
indirectly or through merger or consolidation with any other
corporation, without the affirmative unanimous vote at a meeting,
or the written consent with or without a meeting, of the holders
of the shares of Class A-1 Preferred Stock then outstanding,
increase the authorized number of shares of Class A-1 Preferred
Stock, increase the authorized number of shares of Preferred
Stock or create, or increase the authorized number of shares of,
any other class of capital stock of the Corporation ranking on a
parity with the Class A-1 Preferred Stock either as to payment of
dividends or upon liquidation, dissolution or winding up of the
Corporation.
No consent of holders of the Class A-1 Preferred Stock
shall be required for (a) the creation of any indebtedness of any
kind of the Corporation, or (b) the issuance of any class of
capital stock of the Corporation ranking junior to the Class A-1
Preferred Stock in payment of dividends and upon liquidation,
dissolution or winding up of the Corporation.
(vii) Amendment. The Board of Directors reserves the
right by subsequent amendment of this resolution from time to
time to decrease the number of shares which constitute the Class
A-1 Preferred Stock (but not below the number of shares thereof
then outstanding) and, subject to anything to the contrary set
forth in the Restated Certificate of Incorporation, as amended,
of the Corporation applicable to the Preferred Stock, to
subdivide the number of shares, the par value per share and the
liquidation value per share of the Class A-1 Preferred Stock, and
in other respects to amend, within the limitations provided by
law, this resolution and the Restated Certificate of
Incorporation, as amended, of the Corporation.
<PAGE>
IN WITNESS WHEREOF, the Corporation has caused this Certificate
to be duly executed on its behalf by its undersigned President
and attested to by its Secretary this ______ day of December,
1996.
_________________________________
Jack L. Brozman, President
[Corporate Seal]
ATTEST:
_____________________________
___________________, Secretary
<PAGE>
EXHIBIT B
CenCor, Inc.
Concorde Career Colleges, Inc.
Stock Certificate Holdings
1. United Health Careers Institute, Inc. - California - 120 shares
2. Southern California College of Medical and Dental Assistants,
Inc. - California - 100 shares
3. Southern California College of Medical and Dental Assistants,
Inc. - California - 180 shares
4. Concorde Careers - Florida, Inc. - Florida - 1,000 shares
5. Colleges of Dental & Medical Assistants, Inc. - California -
180 shares *
6. Computer Career Institute, Inc. - Oregon - 250 shares
7. Career Assistance, Inc. - Missouri - 250,000 shares
* CERTIFICATE STILL NEEDS TO BE DELIVERED TO CENCOR
EX-21
CENCOR, INC. AND SUBSIDIARIES
SUBSIDIARIES OF THE REGISTRANT
Century Acceptance Corporation, 100% owned
The Company is in the process of dissolving Century's
subsidiaries. Although the following subsidiaries were inactive
during 1996, they remain incorporated at December 31, 1996:
Name State of Incorporation
Century Finance Company of Colorado Colorado
Century Finance Company of Missouri Missouri
Century Finance Company of Omaha, Inc Nebraska
Century Finance Company of Oklahoma, Inc. Oklahoma
Century Finance Company of Tennessee Tennessee
Century Acceptance Corporation of Texas Texas
Century Finance Company of Utah Utah
<TABLE> <S> <C>
<ARTICLE> 5
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<PERIOD-TYPE> YEAR
<CASH> $14,513,000
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 10,320,000
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 24,833,000
<CURRENT-LIABILITIES> 1,758,000
<BONDS> 5,681,000
<COMMON> 1,488,411
0
0
<OTHER-SE> 15,905,589
<TOTAL-LIABILITY-AND-EQUITY> 24,833,000
<SALES> 0
<TOTAL-REVENUES> 2,635,000
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 1,024,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,052,000
<INCOME-PRETAX> (716,000)
<INCOME-TAX> 1,275,000
<INCOME-CONTINUING> (716,000)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (716,000)
<EPS-PRIMARY> $(.48)
<EPS-DILUTED> $(.48)
</TABLE>
