FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1996
Commission File Number 1-13722
WHITMAN EDUCATION GROUP, INC.
NEW JERSEY 22-2246554
------------------------------- -------------------
(State of other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
4400 BISCAYNE BOULEVARD, 6TH FLOOR, MIAMI, FLORIDA 33137
----------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(305) 575-6534
--------------
(Registrant's telephone number, including area code)
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 [ ]
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
AS OF OCTOBER 25, 1996, THERE WERE 12,896,676 SHARES OF COMMON STOCK
OUTSTANDING.
<PAGE>
WHITMAN EDUCATION GROUP, INC.
FORM 10-Q
SEPTEMBER 30, 1996
TABLE OF CONTENTS
PAGE
----
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements................................... 3
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.................. 11
PART II - OTHER INFORMATION
Item 1. Legal Proceedings...................................... 17
Item 5. Other Information...................................... 17
Item 6. Exhibits and Reports on Form 8-K....................... 17
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<PAGE>
<TABLE>
<CAPTION>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
WHITMAN EDUCATION GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, MARCH 31,
1996 1996
------------- --------------
(UNAUDITED)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents ........................................................ $ 228,809 $ 2,762,141
Restricted cash .................................................................. 343,158 363,314
Accounts receivable, less allowance for doubtful accounts of $2,318,000
at September 30, 1996 and $1,315,000 at March 31, 1996 18,069,447 15,619,237
Inventories ...................................................................... 868,521 795,350
Deferred income tax asset ........................................................ 853,267 515,041
Other current assets ............................................................. 1,772,760 805,137
------------- --------------
Total current assets ................................................................ 22,135,962 20,860,220
------------- --------------
Property and equipment, net ......................................................... 8,118,283 7,017,181
Marketable securities - related party ............................................... 487,500 776,250
Deferred costs, net ................................................................. 132,793 553,929
Deposits and other assets, net ...................................................... 1,092,777 1,025,633
Goodwill, net ....................................................................... 2,560,475 2,529,693
Restricted cash - escrow ............................................................ 6,388,860 2,563,999
------------- --------------
$ 40,916,650 $ 35,326,905
============= ==============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable ................................................................. $ 2,822,155 $ 1,549,494
Accrued expenses ................................................................. 2,022,338 1,537,216
Income taxes payable ............................................................. 57,265 348,851
Current portion of capitalized lease obligations ................................. 927,846 919,050
Current portion of long-term debt ................................................ 242,333 --
Deferred tuition revenue ......................................................... 11,995,134 11,705,521
------------- --------------
Total current liabilities ........................................................... 18,067,071 16,060,132
------------- --------------
Other liabilities ................................................................... 349,382 387,453
Capitalized lease obligations ....................................................... 1,564,220 1,994,035
Long-term debt ...................................................................... 9,583,903 9,500,000
Commitments and contingencies
Stockholders' equity:
Common stock, no par value, authorized 100,000,000 shares,
issued and outstanding, excluding shares held in escrow, 11,135,070
shares at September 30, 1996 and 10,311,782 shares at
March 31, 1996 ................................................................. 12,161,926 7,590,793
Additional paid-in capital ....................................................... 671,536 616,500
Retained earnings (deficit) ...................................................... (183,815) 62,040
Treasury stock, 239,694 shares at September 30, 1996 and
232,714 at March 31, 1996 ....................................................... (1,009,273) (774,773)
Net unrealized loss on noncurrent marketable securities .......................... (288,300) (109,275)
------------- --------------
Total stockholders' equity .......................................................... 11,352,074 7,385,285
------------- --------------
$ 40,916,650 $ 35,326,905
============= ==============
</TABLE>
See accompanying notes.
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<PAGE>
WHITMAN EDUCATION GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
FOR THE THREE MONTHS ENDED
SEPTEMBER 30,
1996 1995
------------- ------------
REVENUES
Tuition...................................... $10,023,845 $8,496,859
Other educational materials.................. 975,108 753,414
Other........................................ 90,738 203,724
------------- -----------
Total revenues............................... 11,089,691 9,453,997
------------- -----------
COSTS AND EXPENSES
Cost of educational services................. 7,358,972 5,884,131
Student services and administrative expense.. 3,545,688 3,023,299
Bad debt expense............................. 704,323 552,353
------------ -----------
Total costs and expenses..................... 11,608,983 9,459,783
------------ -----------
Loss from operations......................... (519,292) (5,786)
Interest income.............................. 24,320 7,310
Interest expense............................. (261,311) (298,691)
------------ ------------
Loss before income tax (benefit) provision... (756,283) (297,167)
Income tax (benefit) provision............... (272,216) 141,121
----------- -----------
Net loss..................................... $ (484,067) $(438,288)
=========== ============
Net loss per share of common stock........... $ (.04) $ (.04)
============ ============
Average number of common stock and common stock
equivalent shares outstanding, excluding common
stock shares held in escrow............... 10,828,356 10,209,366
=========== ============
See accompanying notes.
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<PAGE>
WHITMAN EDUCATION GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
FOR THE SIX MONTHS ENDED
SEPTEMBER 30,
1996 1995
------------ -----------
REVENUES
Tuition...................................... $20,471,791 $16,225,264
Other educational materials.................. 1,725,289 1,433,360
Other........................................ 274,963 347,981
------------ -----------
Total revenues............................... 22,472,043 18,006,605
------------ -----------
COSTS AND EXPENSES
Cost of educational services................. 14,362,745 11,216,473
Student services and administrative expense.. 7,187,386 5,871,592
Bad debt expense............................. 1,047,769 1,158,711
------------ -----------
Total costs and expenses..................... 22,597,900 18,246,776
------------ -----------
Loss from operations......................... (125,857) (240,171)
Interest income.............................. 53,686 20,559
Interest expense............................. (513,616) (614,226)
------------ ------------
Loss before income tax (benefit) provision... (585,787) (833,838)
Income tax (benefit) provision............... (177,737) 250,826
------------ -----------
Net loss..................................... $ (408,050) $(1,084,664)
============ ============
Net loss per share of common stock........... $ (.04) $ (.11)
============ ============
Average number of common stock and common stock
equivalent shares outstanding, excluding common
stock shares held in escrow............... 10,629,432 10,209,366
============ ===========
See accompanying notes.
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<PAGE>
<TABLE>
<CAPTION>
WHITMAN EDUCATION GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
(UNAUDITED)
NET
UNREALIZED
LOSS ON
COMMON ADDITIONAL RETAINED NONCURRENT
SHARES COMMON PAID-IN EARNINGS TREASURY MARKETABLE
OUTSTANDING STOCK CAPITAL (DEFICIT) STOCK SECURITIES TOTAL
----------- ---------- ---------- --------- ---------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at April 1, 1996 ......... 10,311,782 $7,590,793 $ 616,500 62,040 ($774,773) ($109,275) $7,385,285
Shares issued for exercise
of options ..................... 330,268 821,133 -- -- -- -- 821,133
Value of stock options issued
for services rendered .......... -- -- 55,036 -- -- -- 55,036
Shares issued, previously escrowed
in connection with purchase
of SBC ......................... 500,000 3,750,000 -- -- -- -- 3,750,000
Shares repurchased in connection
with exercise of options ....... (46,980) -- -- -- (437,500) -- (437,500)
Shares issued in connection with
purchase of DFAS ............... 40,000 -- -- -- 203,000 -- 203,000
Net unrealized loss on non-
current marketable
securities ..................... -- -- -- -- -- (179,025) (179,025)
Net income of Colorado Tech
for the three months ended
March 31, 1996 ................. -- -- -- 162,195 -- -- 162,195
Net loss for the six months
ended September 30, 1996 ....... -- -- -- (408,050) -- -- (408,050)
----------- ---------- ---------- --------- ---------- ----------- -----------
Balance at September 30, 1996 .... 11,135,070 $12,161,926 $ 671,536 $(183,815) $(1,009,273) $(288,300) $11,352,074
=========== =========== ========== ========== ============ ========== ============
</TABLE>
See accompanying notes.
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<PAGE>
<TABLE>
<CAPTION>
WHITMAN EDUCATION GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
FOR THE SIX MONTHS ENDED
SEPTEMBER 30,
1996 1995
------------ -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss ............................................................ $ (408,050) $ (1,084,664)
Adjustments to reconcile net loss to net cash (used in)
provided by operating activities:
Depreciation and amortization .................................... 1,284,634 755,139
Bad debt expense ................................................. 1,047,769 1,158,711
Deferred tax benefit ............................................. (228,501) --
Loss on sale of equipment ........................................ -- 26,425
Changes in operating assets and liabilities:
Restricted cash ............................................... (712) (81,276)
Accounts receivable ........................................... (3,484,047) (224,860)
Inventories ................................................... (76,491) (317,833)
Other current assets .......................................... (803,277) 217,886
Deferred costs ................................................ (6,055) (4,878)
Deposits and other assets ..................................... (21,709) (197,610)
Accounts payable .............................................. 1,255,960 (515,002)
Accrued expenses .............................................. 486,540 114,057
Income taxes payable .......................................... (189,491) 101,926
Deferred tuition revenue ...................................... 260,010 603,222
------------ -----------
Net cash (used in) provided by operating activities ................. (883,420) 551,243
------------ -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment ................................. (1,748,535) (645,500)
Payments into escrow related to acquisition
of Sanford-Brown ................................................. (74,861) --
------------ -----------
Net cash used in investing activities ............................... (1,823,396) (645,500)
------------ -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from revolving line of credit and long-term
borrowings ........................................................ 14,534,601 3,850,000
Principal payments on revolving line of credit,
long-term borrowings and other liability .......................... (14,208,366) (4,183,621)
Principal payments on capitalized lease obligations ................. (520,961) (354,931)
Proceeds from exercise of options ................................... 383,633 20,638
Principal payments on note to former stockholder .................... -- (306,000)
Proceeds from sale of common stock .................................. -- 24,895
------------ -----------
Net cash provided by (used in) financing activities$ ................ $ 188,907 $ (949,019)
------------ -----------
</TABLE>
Continued on the following page.
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<PAGE>
<TABLE>
<CAPTION>
WHITMAN EDUCATION GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
(UNAUDITED)
FOR THE SIX MONTHS ENDED
1996 1995
=========== ===========
<S> <C> <C>
Decrease in cash and cash equivalents ........................... $(2,517,909) $(1,043,276)
Cash and cash equivalents at beginning of year .................. 2,762,141 1,787,281
Net Colorado Tech activity for the three months
ended March 31, 1996 ........................................ (15,423) --
----------- -----------
Cash and cash equivalents at end of period ...................... $ 228,809 $ 744,005
=========== ===========
SUPPLEMENTAL DISCLOSURES OF NONCASH FINANCING
AND INVESTING ACTIVITIES:
Exchange of stock held in escrow for cash held in
escrow related to the Sanford-Brown acquisition................ $ 3,750,000 --
=========== ===========
Equipment acquired under capital leases ......................... $ 130,472 $ 1,235,679
=========== ===========
Equipment subject to financing .................................. $ 200,141 --
=========== ===========
Treasury stock issued in connection with purchase
of DFAS ....................................................... $ 203,000 --
=========== ===========
Note issued in connection with purchase of
treasury stock ................................................ -- $ 40,000
=========== ===========
Stock options issued for value of services rendered ............. $ 55,036 --
=========== ===========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Interest paid ................................................... $ 448,909 $ 541,408
=========== ===========
Income taxes paid ............................................... $ 220,495 $ 123,389
=========== ===========
</TABLE>
See accompanying notes.
-8-
<PAGE>
WHITMAN EDUCATION GROUP, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. GENERAL
The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with the instructions to Form 10-Q and, in the opinion of
the management of the Company, include all adjustments, which are of a normal
recurring nature, necessary for a fair presentation of financial position and
the results of operations and cash flows for the periods presented. However, the
financial statements do not include all information and footnotes required for a
presentation in accordance with generally accepted accounting principles. These
condensed consolidated financial statements should be read in conjunction with
the consolidated financial statements and the notes thereto included or
incorporated by reference in the Company's Form 10-K for the fiscal year ended
March 31, 1996. The results of operations for the interim periods are not
necessarily indicative of the results of operations to be expected for the full
year.
The accompanying financial statements include the accounts of Whitman Education
Group, Inc., and its wholly-owned subsidiaries, which consist of Ultrasound
Technical Services, Inc. ("UDS School"), Sanford-Brown College, Inc.
("Sanford-Brown") and MDJB, Inc. ("Colorado Tech"). In August 1996, the Company
acquired Diversified Financial Aid Services, Inc. ("DFAS"), a school consulting
and software development company. The acquisition did not have a material effect
on the financial position and operating results of the Company. All intercompany
accounts and transactions have been eliminated.
Certain September 30, 1995 balances have been reclassified to conform to the
current year's presentation.
Pursuant to the Financial Accounting Standards Board No. 123, "Accounting for
Stock-Based Compensation", the Company has elected to continue to account for
the issuance of stock options and other equity instruments under Accounting
Principles Board Opinion No. 25 "Accounting for Stock Issued to Employees."
New and continuing enrollment at the Company's post-secondary institutions is
typically strongest during the fall and winter terms, i.e., October through
December and January through March, respectively. Consequently, revenues would
normally be strongest during the Company's third and fourth quarters. The
Company has significant fixed costs and incurs its sales and marketing costs in
advance of its enrollment. Consequently, the Company would expect earnings to be
weakest during the spring and summer terms, i.e., its first and second quarters,
with the greatest effect in the second quarter.
-9-
<PAGE>
2. MERGER WITH COLORADO TECH
On March 29, 1996, the Company completed the merger with Colorado Tech which was
accounted for using the pooling of interests method of accounting. Accordingly,
the Company's consolidated financial statements have been restated to include
the accounts and operations of Colorado Tech for all periods prior to the
merger.
The Company reports its financial results on a fiscal year basis ending March
31, whereas Colorado Tech had reported its financial results on a calendar year
basis. The consolidated financial statements for the three and six month periods
ended September 30, 1996 have been adjusted to conform Colorado Tech's year end
with that of the Company. The effect arising from the exclusion of net income of
Colorado Tech of $162,195 for the three month period ended March 31, 1996 in the
accompanying consolidated statements of operations for the three and six month
periods ended September 30, 1996 and cash flows for the six month period ended
September 30, 1996, is presented in the accompanying condensed consolidated
statement of changes in stockholders' equity as an adjustment to retained
earnings for the change in fiscal year of Colorado Tech. The consolidated
financial statements for all periods prior to fiscal 1997 have not been restated
for the change in fiscal year of Colorado Tech. Accordingly, the consolidated
financial statements for the periods ending on or prior to March 31, 1996
include the operating results of the Company on a March 31 fiscal year basis and
of Colorado Tech on a calendar year basis. If the condensed consolidated
financial statements for the three and six month periods ended September 30,
1995 had been adjusted to conform Colorado Tech's year end with that of the
Company, the net effect would have resulted in a reduction of net income of
approximately $299,000 and $369,000, respectively.
3. RESTRICTED CASH - ESCROW
In August 1996, the sole shareholder of the dissolved corporation SBC
Liquidating, Inc., with the consent of Sanford Brown College, Inc., sold
500,000 shares of the Company's common stock then held in escrow in connection
with the Company's acquisition of Sanford-Borwn College to an unaffiliated
investor. The sale proceeds of $3,750,000 were placed in the escrow account in
lieu of the shares sold and are subject to the terms and provisions of the
excrow agreement.
4. LONG-TERM DEBT
In August 1996, the bank line of credit of $1.0 million expiring in May 1997 was
increased to $1.3 million and the expiration date was extended to May 1998. Also
in August 1996, the Company entered into a three year financing agreement of
$1,035,000 with scheduled repayments commencing in March 1997. In September of
1996, the Company entered into a $1.0 million bank loan expiring in January
2000.
5. CONTINGENCIES
The schools operated by the Company participate in various student financial aid
programs. These programs are subject to respective periodic review by the United
States Department of Education ("DOE"). Disbursements under each program are
subject to disallowance and repayment by the schools. In fiscal 1995, the DOE
conducted a program review on Sanford-Brown's Title IV activity for the award
years 1992 through 1994. To date, no report has been issued in that program
review. Accordingly, no determination as to whether a liability exists or the
amount of liability, should one exist, can be made, and therefore, no
contingency is reflected. The asset purchase agreement with Sanford-Brown
provides for the indemnification of the Company for any material liability that
may exist in connection with the open program review. UDS School and Colorado
Tech have no known liabilities under program reviews related to their Title IV
programs. Should the schools be limited, suspended or terminated from
participation in Title IV programs, from which UDS
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<PAGE>
School, Colorado Tech and Sanford-Brown receive approximately 66%, 32% and 76%
of their funding, respectively, it would have a material negative impact on the
results of operations, liquidity and net worth of the Company.
The action which was pending against the Company's wholly-owned subsidiary,
Ultrasound Technical Services, Inc. ("UTS"), operator of the UDS School, in the
Circuit Court, Fourth Judicial Circuit, Duval County, Florida, has been resolved
for an amount that is not material to the Company. Accordingly, in September
1996, that action was dismissed. The Company is a party to other routine
litigation incidental to its business. Management does not believe that the
resolution of any or all of such other routine litigation will have a material
adverse effect on the Company's financial condition or results of operations.
6. SUBSEQUENT EVENT
On October 17, 1996, the Company completed a private placement of 1,000,000
shares of its common stock with an unaffiliated institutional investor for $6.5
million. The shares are restricted securities in that they have not been
registered under the Securities Act of 1933. The investor received certain
rights to have the shares registered by the Company.
In October 1996, the Company made a $3.0 million principal reduction to its
$6.0 million term note. The remaining $3.0 million balance was replaced by a
$3.0 million revolver note, which was then combined with the Company's $2.5
million revolver note, into a $5.5 million revolver note which matures on April
14, 1999.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis should be read in conjunction with the
consolidated financial statements of the Company, the related notes to
consolidated financial statements and Management's Discussion and Analysis of
Financial Condition and Results of Operations included in the Company's Form
10-K for the year ended March 31,1996 and the condensed consolidated financial
statements and the related notes to the condensed consolidated financial
statements included in Item 1 of this Quarterly Report on Form 10-Q.
Colorado Tech is presented on a calendar year basis for the three and six month
periods ended September 30, 1995. If Colorado Tech's operations had been
combined to conform to the Company's fiscal year, the net effect would have
resulted in a reduction of revenues of $481,000 and $589,000 for the three and
six month periods ended September 30, 1995, respectively, and an increase in
expenses of $38,000 and a decrease of $28,000, respectively. Accordingly, losses
from operations for the three and six months ended September 30, 1995 would have
been $524,000 and $801,000, respectively, as compared to losses from operations
of $519,000 and $126,000 for the three and six months ended September 30, 1996,
respectively.
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<PAGE>
THREE MONTHS ENDED SEPTEMBER 30, 1996 COMPARED TO THE THREE MONTHS ENDED
SEPTEMBER 30, 1995
The following table sets forth the Company's revenues by subsidiary for the
three months ended September 30, 1996 and September 30, 1995 (in thousands):
THREE MONTHS ENDED SEPTEMBER 30,
-------------------------------------------------------
1996 1995
-------------------------- --------------------------
TUITION OTHER TUITION OTHER
REVENUES REVENUES TOTAL REVENUES REVENUES TOTAL
UDS School $ 4,626 $ 253 $4,879 $2,974 $ 185 $3,159
Sanford-Brown 3,490 494 3,984 3,655 377 4,032
Colorado Tech 1,908 319 2,227 1,868 395 2,263
-------- ----- -------- ------- ---- ------
$10,024 $1,066 $11,090 $8,497 $957 $9,454
======= ====== ======= ====== ==== ======
Tuition revenues increased by $1.5 million or 18.0% to $10.0 million for the
three months ended September 30, 1996 from $8.5 million for the three months
ended September 30, 1995. The increase of $1.7 million for the UDS School was
primarily due to an increase in student enrollments in the Cardiovascular
Technology ("CVT") and Medical Assisting ("MA") programs. The increase in
student enrollments in the CVT and MA programs for the three months ended
September 30, 1996 as compared to the three months ended September 30, 1995
generated an increase in revenues from such programs of approximately $675,000
and $1.3 million, respectively.
Other revenues increased by $109,000 or 11.4% to $1.1 million for the three
months ended September 30, 1996 from $957,000 for the three months ended
September 30, 1995 primarily due to an increase in sales of books and uniforms
for the UDS School as a result of the increased student enrollments.
The following table sets forth the Company's operating expenses by subsidiary
for the three months ended September 30, 1996 and September 30, 1995 (in
thousands):
<TABLE>
<CAPTION>
EDUCATIONAL STUDENT SERVICES
SERVICES AND ADMINISTRATIVE BAD DEBT TOTAL
----------- ------------------ -------- -----
THREE MONTHS ENDED SEPTEMBER 30, 1996
- -------------------------------------
<S> <C> <C> <C> <C>
UDS School $3,287 $ 1,475 $240 $ 5,002
Sanford-Brown 2,442 1,109 464 4,015
Colorado Tech 1,630 612 -- 2,242
Corporate -- 350 -- 350
------- ------- ------- -------
$ 7,359 $ 3,546 $ 704 $ 11,609
======= ======== ======= =========
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<PAGE>
THREE MONTHS ENDED SEPTEMBER 30, 1995
- -------------------------------------
UDS School $2,383 $ 1,128 $148 $ 3,659
Sanford-Brown 2,134 1,125 384 3,643
Colorado Tech 1,367 595 20 1,982
Corporate -- 176 -- 176
------- -------- ------- ------
$5,884 $3,024 $552 $ 9,460
====== ====== ======= ========
</TABLE>
Cost of educational services increased by $1.5 million or 25.1% to $7.4 million
for the three months ended September 30, 1996 from $5.9 million for the three
months ended September 30, 1995. The increase of $904,000 for the UDS School was
primarily due to an increase in faculty and administrative salaries, an increase
in printing expenses and office supplies, and an increase in occupancy costs.
Such an increase was primarily due to the costs incurred to support the increase
in student enrollments in the CVT and MA programs. The increases of $308,000 for
Sanford-Brown and $263,000 for Colorado Tech were primarily due to increases in
faculty salaries and depreciation.
Student services and administrative expenses increased by $522,000 or 17.3% to
$3.5 million for the three months ended September 30, 1996 from $3.0 million for
the three months ended September 30, 1995. The increase of $347,000 for the UDS
School was primarily due to the additional administrative support for the
increase in student enrollments in the CVT and MA programs and consisted of
increases in general and administrative salaries, and other administrative
expenses. Corporate expenses increased by $174,000 due to an increase in
salaries and professional fees.
Bad debt expense increased by $152,000 for the second quarter ended
September 30, 1996
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<PAGE>
primarily due to increases in student receivable balances at the UDS School and
Sanford-Brown resulting from delays in processing financial aid at the beginning
of the new award year June 1, 1996.
Net interest expense decreased by $54,000 or 18.6% for the three months ended
September 30, 1996, to $237,000 from $291,000 for the three months ended
September 30, 1995. The decrease was due to lower interest rates and a reduction
in the amortization of deferred interest expense.
The Company reported a net loss of $484,000 and a net loss of $438,000 for the
three months ended September 30, 1996 and 1995, respectively.
SIX MONTHS ENDED SEPTEMBER 30, 1996 COMPARED TO THE SIX MONTHS ENDED SEPTEMBER
30, 1995
The following table sets forth the Company's revenues by subsidiary for the six
months ended September 30, 1996 and September 30, 1995 (in thousands):
SIX MONTHS ENDED SEPTEMBER 30,
-------------------------------------------------------
1996 1995
--------------------------- --------------------------
TUITION OTHER TUITION OTHER
REVENUES REVENUES TOTAL REVENUES REVENUES TOTAL
UDS School $ 9,281 $ 430 $9,711 $5,089 $ 275 $5,364
Sanford-Brown 7,089 835 7,924 7,295 713 8,008
Colorado Tech 4,102 735 4,837 3,841 794 4,635
-------- ----- -------- ------- ---- -------
$20,472 $2,000 $22,472 $16,225 $1,782 $18,007
======= ====== ======= ======= ====== =======
Tuition revenues increased by $4.2 million or 26.2% to $20.4 million for the six
months ended September 30, 1996 from $16.2 million for the six months ended
September 30, 1995. The increase of $4.2 million for the UDS School was
primarily due to an increase in student enrollments in the CVT and MA programs.
The increase in student enrollments in the CVT and MA programs for the six
months ended September 30, 1996 as compared to the six months ended September
30, 1995 generated an increase in revenues from such programs of approximately
$1.4 million and $3.0 million, respectively.
Other revenues increased by $218,000 or 12.2% to $2.0 million for the six months
ended September 30, 1996 from $1.8 million for the six months ended September
30, 1995 primarily due to an increase in the sale of books and uniforms for the
UDS School as a result of the increased student enrollments.
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The following table sets forth the Company's operating expenses by subsidiary
for the six months ended September 30, 1996 and September 30, 1995 (in
thousands):
EDUCATIONAL STUDENT SERVICES
SERVICES AND ADMINISTRATIVE BAD DEBT TOTAL
----------- ------------------ -------- -----
SIX MONTHS ENDED SEPTEMBER 30, 1996
- -----------------------------------
UDS School $6,412 $3,007 $375 $ 9,794
Sanford-Brown 4,813 2,153 650 7,616
Colorado Tech 3,138 1,303 23 4,464
Corporate -- 724 -- 724
------- -------- ------- -------
$14,363 $ 7,187 $1,048 $ 22,598
======= ======== ======= ========
SIX MONTHS ENDED SEPTEMBER 30, 1995
- -----------------------------------
UDS School $4,315 $1,964 $269 $ 6,548
Sanford-Brown 4,155 2,231 870 7,256
Colorado Tech 2,746 1,262 20 4,028
Corporate -- 415 -- 415
-------- -------- ------- -------
$11,216 $5,872 $1,159 $18,247
======= ======== ======= =======
Cost of educational services increased by $3.2 million or 28.1% to $14.4 million
for the six months ended September 30, 1996 from $11.2 million for the six
months ended September 30, 1995. The increase of $2.1 million for the UDS School
was primarily due to increases in faculty and administrative salaries, supplies
and printing expenses, and occupancy costs. Such increases were primarily due to
the costs incurred to support the increase in student enrollments in the CVT and
MA programs. The increase of $658,000 for Sanford-Brown was primarily due to
increases in faculty salaries and depreciation. The increase of $392,000 for
Colorado Tech was primarily due to increases in salaries, professional fees, and
depreciation and amortization.
Student services and administrative expenses increased by $1.3 million or 22.4%
to $7.2 million for the six months ended September 30, 1996 from $5.9 million
for the six months ended September 30, 1995. The increase of $1.0 million for
the UDS School was primarily due to the additional administrative support for
the increase in student enrollments in the CVT and MA programs. Such an increase
consisted primarily of increases in general and administrative salaries,
professional fees, and depreciation expense. Corporate expenses increased by
$309,000 due to an increase in salaries and professional fees.
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Bad debt expense decreased by $111,000 for the first six months ended September
30, 1996 primarily due to a decrease in bad debt expense for Sanford-Brown of
$220,000. The decrease for Sanford-Brown was primarily due to an increase in bad
debt expense incurred in the six months ended September 30, 1995 in connection
with student balances that were not funded under Title IV programs as a result
of the length of time that elapsed before Title IV eligibility was reinstated in
connection with the acquisition of Sanford-Brown and its related change in
ownership process.
Net interest expense decreased by $134,000 or 22.6% for the six months ended
September 30, 1996 to $460,000 from $594,000 for the six months ended September
30, 1995. The decrease was due to lower interest rates and a reduction in the
amortization of deferred interest expense.
The Company reported a net loss of $408,000 and a net loss of $1,085,000 for the
six months ended September 30, 1996 and 1995, respectively. The decrease in the
net loss of $677,000 was primarily due to a decrease of $797,000 in the net
losses at the UDS School from $890,000 for the six months ended September 30,
1995 to $93,000 for the six months ended September 30, 1996 as a result of the
increases in student enrollments in the CVT and MA programs.
LIQUIDITY AND CAPITAL RESOURCES
Cash and cash equivalents at September 30, 1996 and March 31, 1996 were $229,000
and $2.8 million, respectively. The Company's working capital totalled $4.1
million at September 30, 1996 and $4.8 million at March 31, 1996. In accordance
with Department of Education regulations, the Company maintained $343,000 and
$363,000 in restricted cash at September 30, 1996 and March 31, 1996,
respectively, for funds to be available for student refunds.
Net cash of $883,000 was used for operating activities for the six months ended
September 30, 1996 compared to net cash of $551,000 generated from operations
for the six months ended September 30, 1995. The $1.4 million increase in cash
utilized in operations was primarily due to increases in student receivables
resulting from processing delays in the receipt of Title IV funds at both the
UDS School and Sanford-Brown.
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Net cash of $1.8 million and $646,000 was used for investing activities in the
six months ended September 30, 1996 and 1995, respectively. The increase of $1.2
million was primarily due to an increase in capital expenditures.
Net cash of $189,000 was provided by financing activities in the six months
ended September 30, 1996, an increase of $1.1 million from the six months ended
September 30, 1995. The increase was primarily due to the timing of principal
payments on long-term borrowings and the revolving line of credit, and a
$363,000 increase in proceeds from the exercise of options during the six
months, ended September 30, 1996.
The Company has bank lines of credit of $1.3 million expiring in May 1998 and a
working capital facility expiring in October 1997 in the amount of $2.5 million.
At September 30, 1996, the Company had $151,000 outstanding and $1.1 million
available under its line of credit and $2.3 million outstanding and $200,000
available under its working capital facility. Borrowings under these facilities
decreased by $1.0 million from the amounts outstanding at March 31, 1996. The
amounts borrowed under the working capital facility for the six months ended
September 30, 1996 were primarily used for operations and capital expenditures.
The Company believes that with its working capital, its cash flow from
operations and its lines of credit and working capital facility it will have
sufficient resources to cover its ongoing operational requirements.
In October 1996, the Company made a $3.0 million principal reduction to its $6.0
million term note. The remaining $3.0 million balance was replaced by a $3.0
million revolver note, which was then combined with the Company's $2.5 million
revolver note, into a $5.5 million revolver note which matures on April 14,
1999.
On October 17, 1996, the Company completed a private placement of 1,000,000
shares of its common stock with an unaffiliated institutional investor for
$6,500,000. The majority of the proceeds from the sale of stock have been used
by the Company to repay outstanding debt.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The action which was pending against the Company's wholly-owned
subsidiary, Ultrasound Technical Services, Inc. ("UTS"), operator of the UDS
School, in the Circuit Court, Fourth Judicial Circuit, Duval County, Florida,
has been resolved for an amount that is not material to the Company.
Accordingly, in September 1996, that action was dismissed. The Company is a
party to other routine litigation incidental to its business. Management does
not believe that the resolution of any or all of such routine litigation will
have a material adverse effect on the Company's financial condition or results
of operations.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
a. EXHIBITS:
10.1 Form of Indemnification Agreement for Officers of Whitman
Education Group, Inc.
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10.2 Form of Indemnification Agreement for Directors of Whitman
Education Group, Inc.
10.3 Amendment No. 2 to Credit Agreement by and between Whitman
Education Group, Inc. and Barnett Bank of South Florida, N.A.
10.4 Amended, Restated and Consolidated Renewal Revolver Note in
the amount of $5,500,000 in favor of Barnett Bank of South
Florida, N.A..
10.5 Revolver Note in the amount of $3,000,000 in favor of Barnett
Bank of South Florida, N.A.
11 Computation of Net Loss Per Share of Common Stock
27 Financial Data Schedule
b. REPORTS ON FORM 8-K:
No reports on Form 8-K were filed during the quarter ended September
30, 1996.
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SIGNATURES
Pursuant to the requirements 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.
WHITMAN EDUCATION GROUP, INC
--------------------------------
(Registrant)
Date: November ___, 1996 /S/ RANDY S. PROTO
--------------------------------
Randy S. Proto, President
Date: November ___, 1996 /S/ FERNANDO L. FERNANDEZ
--------------------------------
Fernando L. Fernandez, Chief Financial Officer
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EXHIBIT 10.1
OFFICER INDEMNIFICATION AGREEMENT
This Agreement, dated as of _____________ ____, 199___, is entered into
between Whitman Education Group, Inc., a corporation organized under the laws of
the State of New Jersey (the "Company"), and ____________________________ (the
"Officer").
RECITALS
A. Highly competent persons are becoming more reluctant to serve
publicly-held corporations as directors or as executive officers unless they are
provided with adequate protection through insurance or adequate indemnification
against inordinate risks of claims and actions against them arising out of their
service to, and activities on behalf of, the corporation.
B. The current impracticability of obtaining adequate insurance and the
uncertainties relating to indemnification have increased the difficulty of
attracting and retaining such persons.
C. The Bylaws of the Company presently provide, among other things, that
the Company shall indemnify its directors and officers to the full extent
permitted by law.
D. The Board has determined that the difficulty in attracting and
retaining highly competent persons is detrimental to the best interests of the
Company's shareholders and that the Company should act to assure such persons
that there will be increased certainty of protection against risks of such
claims and actions against them in the future.
E. It is reasonable, prudent, and necessary for the Company contractually
to obligate itself to indemnify such persons to the fullest extent permitted by
applicable law so that they will serve or continue to serve the Company free
from undue concern that they will not be so indemnified.
F. The Officer is willing to serve or continue to serve as an officer of
the Company on the condition that the Officer be so indemnified.
AGREEMENT
In consideration of the recitals and the covenants contained herein, the
Company and the Officer covenant and agree as follows:
1. DEFINITIONS. As used in this Agreement the following terms shall have
the meanings indicated below:
(a) "Related Party" shall refer to (i) any other corporation in
which the Company
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has an equity interest of at least fifty percent (50%) and (ii) any other
corporation or any limited liability company, partnership, joint venture, trust,
employee benefit plan or any other enterprise or association in which the
Officer has served in any Indemnified Position, at the request of the Company or
for the convenience of the Company or to represent the Company's interest. Any
entity or plan described in Section 1(a)(ii) in which the Company has any
interest or which is established in whole or in part for the benefit of the
Company or any other Related Party or the Company or Related Party's employees
shall be presumed to be a Related Party.
(b) "Indemnified Position" shall refer to any position held by the
Officer, or pursuant to which the Officer acts, as an officer, director,
employee, partner, trustee, fiduciary, administrator or agent of the Company or
a Related Party.
(c) "Indemnified Event" shall mean any claim asserted against the
Officer, whether civil, criminal, administrative or investigative in nature, for
monetary or other relief; or any Proceeding to which the Officer is named as a
party or is a subject of or witness in, or with respect to which he or she is
threatened to be named as a party, subject to witness, brought against the
Officer by reason or his or her serving or acting in any Indemnified Position or
arising or allegedly arising directly or indirectly out of, or otherwise
relating to, any action, omission, occurrence or event involving the Officer in
any Indemnified Position, including any Proceeding, formal or informal or
otherwise, conducted or brought by the Securities and Exchange Commission or
other governmental agency, or The National Association of Securities Dealers,
Inc., a national stock exchange or similar organization.
(d) "Proceeding" shall mean any pending, threatened or completed
action, suit, investigation, inquiry, arbitration, alternative dispute
resolution mechanism or any other proceeding (or any appeals therefrom), whether
civil, criminal, administrative or investigative in nature and whether in a
court or arbitration, or before or involving a governmental, administrative or
private entity (including, but not limited to, an investigation initiated by the
Company, any related Party or any affiliate thereof, or the board of directors,
fiduciaries or partners of any thereof).
(e) "Indemnification Amount" shall refer to the amount of losses,
claims, demands, costs, damages, liabilities (joint and several), judgments,
fines (including any excise tax assessed with respect to an employee benefit
plan), settlements, and other amounts (including Witness Liabilities), including
interest on any of the foregoing, which the Officer is liable to pay or has paid
in connection with an Indemnified Event and amounts proposed to be paid in
settlement by the Officer in connection with any Indemnified Event.
(f) "Witness Liabilities" shall mean all Indemnification Amounts
incurred by the Officer in connection with his or her preparation to serve or
service as a witness in any Proceeding in any way relating to the Company, any
Related Party or any affiliate (as defined in Rule 405 under the Securities Act
of 1933, as amended) of any of them (a "Securities Act Affiliate"), any
associate (as defined in such Rule 405) of any of them or of any Securities Act
Affiliate, or any Indemnified Event (including, but not limited to, the
investigation, defense or appeal in connection with any such
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Proceeding).
(g) "Expenses" shall refer to all disbursements, costs or expenses
of any nature reasonably incurred by the Officer directly or indirectly in
connection with an Indemnified Event, or Witness Liabilities, including, but not
limited to, fees and disbursements of counsel, accountants or other experts
employed by the Officer in connection with any Indemnified Event, including all
such expenses, disbursements and costs of investigation in connection with or
prior to the initiation of any Proceeding relating to an Indemnified Event.
(h) "Indemnify" or "Indemnification" shall refer to the obligation
of the Company herein to pay Expenses or Indemnification Amounts.
(i) A "Change of Control" shall be deemed to have occurred if (A)
any "Person" (as that term is used in Sections 13(d) and 14(d) of the Securities
Exchange Act of 1934, as amended), but excluding the Company and any of its
wholly-owned subsidiaries, is or becomes (except in a transaction approved in
advance by the Board) the beneficial owner (a defined in Rule 13d-3 under such
Act), directly or indirectly, of securities of the Company representing 20% or
more of the combined voting power of the Company's then outstanding securities
or (B) during any period of two consecutive years, individuals who at the
beginning of such period constitute the Board cease for any reason to constitute
at least a majority thereof unless the election, or the nomination for election
by the Company's shareholders, of each new director was approved by a vote of at
least two-thirds of the directors still in office who were directors at the
beginning of the period, or (C) the shareholders of the Company should approve
any one of the following transactions: (x) any consolidation or merger of the
Company in which the Company is not the surviving corporation, other than a
merger of the Company in which the holders of the Company's common stock
immediately prior to the merger have the same proportionate ownership of the
surviving corporation immediately after the merger; or (y) any sale, lease,
exchange or other transfer (in one transaction or a series of related
transactions) of all, or substantially all, the assets of the Company.
(j) "Final Disposition" shall refer to any judgment, order or award
rendered in any Proceeding after the expiration of all rights of appeal.
2. SERVICES TO THE COMPANY. The Officer will serve, and/or continue to
serve, as an officer of the Company, so long as he or she is duly elected and
qualified in accordance with the provisions of the Articles of Incorporation and
Bylaws of the Company, or in any other Indemnified Position, at the will of the
Company (or under separate contract, if any); provided that the Officer may at
any time and for any reason resign from such Indemnified Position (subject to
any contractual obligations which the Officer shall have assumed apart from this
Agreement) but the obligations provided for herein shall continue after such
termination.
3. INDEMNITY. The Company hereby agrees to indemnify the Officer and hold
the Officer harmless to the full extent permitted or authorized by the
provisions of current New Jersey legislation (including Section 14A:3-5 of the
New Jersey Business Corporation Act) or future New
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Jersey legislation or, if broader indemnification is available, by current or
future judicial or administrative decisions (but, in the case of any such future
legislation or decisions, only to the extent that it permits the Company to
provide broader indemnification rights than permitted prior to such legislation
or decisions), and such Indemnification shall be made unless prohibited by New
Jersey law. Without limiting the generality of the foregoing, the Company agrees
to indemnify the Officer and hold the Officer harmless from and against, and pay
any Expenses and Indemnification Amounts, including Witness Liabilities;
provided, however, that notwithstanding the foregoing:
(a) in the case of any Proceeding by or in the right of the Company
to procure a judgment in its favor against the Officer by reason of his being or
having been an Officer of the Company, the Company shall have the power to
indemnify the Officer against his expenses in connection with any such
Proceeding if he acted in good faith and in a manner he reasonably believed to
be in or not opposed to the best interest of the Company; provided further,
however, that in such Proceeding by or in the right of the Company, no
indemnification shall be provided with respect to any claim, issue or matter as
to which the Officer shall have been adjudged to be liable to the Company,
unless and only to the extent that the Superior Court or the court in which such
Proceeding was brought shall determine upon application that despite the
adjudication of liability, but in view of all circumstances of the case, the
Officer is fairly and reasonably entitled to Indemnity for such expenses as the
Superior Court or such other court shall deem proper; and
(b) no indemnification shall be made to or on behalf of the Officer
if a judgment or other final adjudication adverse to the Officer establishes
that his acts or omissions (i) were in breach of his duty of loyalty to the
Company or its shareholders, as defined in subsection 3 of N.J.S.A. 14A:2-7,
(ii) were not in good faith or involved a knowing violation of law or (iii)
resulted in receipt by the Officer of and improper personal benefit.
Except with respect to the indemnification specified in the second
and third sentences of Section 7 or in Section 10 or Section 13(b) of this
Agreement, the Company shall indemnify the Officer in connection with a
Proceeding (or part thereof) initiated by the Officer (subject to the
limitations provided above) only if authorization for the Proceeding (or part
thereof) was not denied by the Board of Directors of the Company prior to the
earlier of (i) 60 days after receipt of notice thereof from the Officer and (ii)
a Change of Control.
4. PAYMENT OF EXPENSES. The Company shall advance all Expenses within
thirty (30) days after the receipt by the Company of a statement or statements
from the Officer requesting such advance payment or payments from time to time.
Such statement or statement shall identify the nature and amount of the Expenses
to be advanced with reasonable specificity. The Officer agrees to repay any
Expenses advanced if it shall ultimately be determined (which shall only be made
after the Final Disposition of the Proceeding related to an Indemnified Event,
as hereinafter provided) that the Officer was not entitled to reimbursement of
Expenses in connection with the Indemnified Event for which such Expenses were
made.
5. INTERVAL PROTECTION. During the interval between the Company's receipt
of the
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Officer's request for indemnification or advances and the latest to occur of (a)
payment in full to the Officer of the indemnification or advances to which he or
she is entitled hereunder, or (b) a final adjudication that the Officer is not
entitled to indemnification hereunder, the Company shall provide "Interval
Protection" which, for purposes of this Agreement, shall mean the taking of the
necessary steps (whether or not such steps require expenditures to be made by
the Company at that time) to stay, pending a final determination of the
Officer's entitlement to indemnification (and, if the Officer is so entitled,
the payment thereof), the execution, enforcement or collection of any
Indemnified Amount or Expenses or any other amounts for which the Officer may be
liable (and as to which the Officer has requested indemnification hereunder) in
order to avoid the Officer's being or becoming in default with respect to any
such amounts (such necessary steps to include, but not be limited to, the
procurement of a surety bond to achieve such stay or the loan to the Officer
(unsecured and with interest payable at the prime rate) of amounts necessary to
satisfy the Indemnified Amount or Expenses or other amounts for which the
Officer maybe liable and as to which a stay of execution as aforesaid cannot be
obtained, the Company by executing this Agreement having made the judgment that,
in general, such loan or similar assistance may reasonably be expected to
benefit the Company), within three days after receipt of the Officer's written
request therefor, together with a written undertaking by the Officer to repay,
no later than 120 days following receipt of a statement therefor from the
Company, amounts (if any) expended by the Company for such purpose, if it is
ultimately determined in a final adjudication that the officer is not entitled
to be indemnified against such Indemnified Amounts or Expenses or other amounts.
6. INDEMNIFICATION BY COURT. Notwithstanding any other provision of this
Agreement including without limitation the fourth sentence of Section 7,
indemnification and advances shall also be made to the extent a New Jersey
circuit court, or another court of competent jurisdiction, or the court in which
a Proceeding was brought, shall determine that the Officer, in view of all the
circumstances of the case, is fairly and reasonably entitled to indemnification
and/or advances for such Expenses as such court shall deem proper.
7. INDEMNIFICATION PROCEDURE. Any Indemnification or advance under this
Agreement (other than Interval Protection) shall be made promptly and in any
event within thirty (30) days upon the written request of the Officer delivered
to the Company. The right to Indemnification or advances as granted under this
Agreement shall be enforceable by the Officer in any court of competent
jurisdiction if the Company denies such request, in whole or in part, or if no
disposition thereof is made within thirty (30) days. The Officer's costs and
expenses incurred in connection with successfully establishing his or her right
to indemnification or advances, in whole or in part, in any such action shall
also be indemnified by the Company. It shall be a defense to any such action
that there has been a judgment or other final adjudication adverse to the
Officer which established that the Officer failed to meet the standard of
conduct, if any, required for indemnification by current legislation, including
without limitation N.J.S.A. 14A:3-5(8) or, if applicable in accordance with
Section 3 hereof, future legislation or current or future judicial or
administrative decisions, but the burden of providing such defense shall be on
the Company. Neither the failure of the Company (including the Board or any
committee thereof, its independent counsel and its shareholders) to have made a
determination prior to the commencement of such action that indemnification of
the Officer
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is proper in the circumstances because he or she has met the applicable standard
of conduct described in the preceding sentence, if any, nor the fact that there
has been an actual determination by the Company (including the Board or any
committee thereof, its independent counsel and its shareholders) that the
Officer has not met such applicable standard of conduct, shall be a defense to
the action to create a presumption that the claimant has not met the applicable
standard of conduct.
8. PRESUMPTIONS AND EFFECT OF CERTAIN PROCEEDINGS.
(a) The Officer shall be presumed entitled to Indemnification
hereunder unless clearly not entitled to such Indemnification by clear and
convincing proof that such payment shall be unlawful.
(b) If the Company shall not have responded to the Officer's request
for Indemnification pursuant to Section 7 hereof within thirty (30) days after
receipt by the Company of such request therefor, the Officer shall be deemed to
be entitled to such Indemnification except as otherwise provided in Section 3
hereof.
(c) The termination of any Proceeding relating to an Indemnified
Event or of any claim, issue, or matter therein by judgment, order, settlement,
or conviction, or upon a plea of nolo contendere or its equivalent, shall not of
itself adversely affect the right of the Officer to Indemnification or create a
presumption that the Officer did not meet any applicable standard of conduct.
(d) Notwithstanding any other provision of this Agreement, the
Officer shall in no event be required to repay any Expense payments advanced to
the Officer and no defense can or shall be raised by the Company to a request
for Indemnification pursuant to Section 7 to the extent the Officer has been
successful on the merits or otherwise in defense of any Proceeding related to an
Indemnified Event, or in defense of any claim, issue or matter involved in any
Indemnified Event therein, whether as a result of the initial adjudication or on
appeal or the abandonment thereof by a party.
9. NON-EXCLUSIVITY; DURATION OF AGREEMENT; INSURANCE; SUBROGATION.
(a) The rights of Indemnification and to receive advancement of
Expenses as provided by this Agreement shall not be deemed exclusive of any
other rights to which the Officer may at any time be entitled under applicable
law, the Articles of Incorporation, the Bylaws, any other agreement, or any vote
or consent of directors or shareholders or otherwise.
(b) This Agreement shall continue until and terminate upon the later
of: (i) ten (10) years after the date that the Officer shall have ceased to
serve in any Indemnified Position; or (ii) the Final Disposition of all
Indemnified events.
(c) This Agreement shall be binding upon the Company and its
successors and
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assigns and shall inure to the benefit of the officer and his or her heirs,
devisees, executors, and administrators or other legal representatives.
(d) To the extent that the Company maintains an insurance policy or
policies providing liability insurance for directors or executive officers of
the Company or for any person serving in any other Indemnified Position, the
Officer shall be covered by such policy or policies in accordance with its or
their terms to the maximum extent of the coverage available for any such
director or executive officer or person serving in such position under such
policy or policies.
10. PROCEEDINGS.
(a) The parties hereto agree that except as otherwise provided for
herein, any disputes arising with respect to the interpretation or enforcement
of any provision thereof shall be submitted, at the sole election of the
Officer, either to arbitration or to judicial determination. Any arbitration
shall be conducted in the City of Miami, Florida in accordance with the then
existing rules of the American Arbitration Association ("AAA"). In any
arbitration pursuant to this Agreement, the award or decision shall be rendered
by a majority chosen in accordance with the then existing rules of the AAA. The
award or decision of the arbitration panel pursuant to this Section 10 shall be
binding and conclusive on the parties, provided that enforcement of such award
or decision may be obtained in any court having jurisdiction over the party
against whom such enforcement is sought. The Company hereby agrees to bear all
fees, costs and expenses imposed by the AAA, in connection with the arbitration,
irrespective of the termination thereof. The provisions of Section 10(c) shall
govern with respect to the proceedings referred to therein.
(b) In the event that, for any reason, the Company fails to pay any
Indemnification or advance demanded, or the Company requests repayment of any
Expenses advanced, the Officer shall nevertheless be entitled, at his or her
sole option, to a final judicial determination or may seek arbitration of his or
her entitlement to Indemnification hereunder in respect of such claim. In the
event the Officer seeks a judicial determination, the Officer shall commence an
action in a court of the State of Florida. In the event the Officer seeks an
award in arbitration, (i) such arbitration shall be conducted in Miami, Florida
pursuant to Section 10(a), and (ii) the arbitrator shall notify the parties of
his or her decision within sixty (60) days following the initiation of such
arbitration (or such other period proscribed by the rules of AAA). The Company
further agrees that its execution of this Agreement shall constitute a
stipulation by which it shall be bound in any court or arbitration in which such
proceeding shall have been commenced, continued or appealed that (i) it shall
not oppose the Officer's right to seek any such adjudication or award in
arbitration or any other claim by reason of any prior determination made by the
Company with respect to the Officer's right to Indemnification under this
Agreement on such claim or any other claim, or, except in good faith, raise any
objections not specifically relating to the merits of the Officer's claim; and
(ii) for purpose of this Agreement any such adjudication or arbitration shall be
conducted de novo and without prejudice by reason of any prior determination
that the Officer is not entitled to Indemnification.
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(c) Whether or not the court or arbitrators shall determine that the
Officer is entitled to payment of Indemnification Amounts or has to return the
payment of Expenses or otherwise finds against the Officer, the Company shall
within thirty (30) days after written request therefor (and submission of
reasonable evidence of the nature and amount thereof), and unless there is a
specific judicial finding that the Officer's suit or arbitration was frivolous,
pay all Expenses incurred by the Officer in connection with such adjudication or
arbitration (including, but not limited to, any appellate proceedings).
11. SEVERABILITY. If any provision or provisions of this Agreement shall
be held to be invalid, illegal, or unenforceable for any reason whatsoever: (a)
the validity, legality, and enforceability of the remaining provisions of this
Agreement (including without limitation, each portion of any Section, paragraph
or clause of this Agreement containing any such provision held to be invalid,
illegal, or unenforceable, that is not itself invalid, illegal, or
unenforceable) shall not in any way be affected or impaired thereby; and (b) to
the fullest extent possible, the provisions of this Agreement (including,
without limitation, such portion of any Section, paragraph or clause of this
Agreement containing any such provisions held to be invalid, illegal, or
unenforceable, that is not itself invalid, illegal, or unenforceable) shall be
deemed revised, and shall be construed, so as to give effect to the intent
manifested by this Agreement (including the provision held invalid, illegal, or
unenforceable).
12. MERGER OR CONSOLIDATION OF THE COMPANY. In the event that the Company
shall be a constituent corporation in a consolidation or merger, whether or not
the Company is the resulting or surviving corporation, the Officer shall stand
in the same position under this Agreement with respect to the Company if its
separate existence had continued.
13. ENFORCEMENT.
(a) The Company unconditionally and irrevocably stipulates and
agrees that its execution of this Agreement shall also constitute a stipulation
by which it shall be bound in any court or arbitration in which a proceeding by
the Officer for enforcement of his or her rights shall have been commenced,
continued or appealed, that the obligations of the Company set forth herein are
unique and special, and that failure of the Company to comply with the
provisions of this Agreement will cause irreparable and irremediable injury to
the Officer, for which a remedy at law will be inadequate. As a result, in
addition to any other right or remedy he or she may have at law or in equity
with respect to a violation of this Agreement, the Officer shall be entitled to
injunctive or mandatory relief directing specific performance by the Company of
its obligations under this Agreement.
(b) In the event that the Officer is subject to or intervenes in any
legal action in which the validity or enforceability of this Agreement is at
issue or institutes any legal action, for specific performance or otherwise, to
enforce his or her rights under, or to recover damages for breach of, this
Agreement, the Officer shall, within thirty (30) days after written request to
the Company therefor (and submission of reasonable evidence of the amount
thereof), and unless there
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<PAGE>
is a specific judicial finding that the Officer's suit was frivolous, be
indemnified by the Company against all Expenses incurred by him or her in
connection therewith.
14. NOTIFICATION AND DEFENSE OF CLAIM. The Officer agrees to promptly
notify the Company in writing upon being served with any summons, citations,
subpoena, complaint, indictment, information or other document relating to any
Proceeding involving an Indemnification event; provided, however, that the
failure of the Officer to give such notice to the Company shall not adversely
affect the Officer's rights under this Agreement except to the extent the
Company shall have been materially prejudiced by such failure. Nothing in this
Agreement shall constitute a waiver of the Company's right to seek
participation, at its own expense, in any Proceeding which may give rise to
Indemnification hereunder.
15. HEADINGS. The headings of the Sections and paragraphs of this
Agreement are inserted for convenience only and shall be deemed to constitute
part of this Agreement or to affect the construction thereof.
16. MODIFICATION AND WAIVER. No supplement, modification, or amendment of
this Agreement shall be binding unless executed in writing by both of the
parties hereto. No waiver of any of the provisions of this Agreement shall be
deemed or shall constitute a waiver of any other provision hereof (whether or
not similar) nor shall such waiver constitute a continuing waiver.
17. NOTICES. All notices, requests, demands, and other communications
hereunder shall be in writing and shall be deemed to have been duly given if (i)
delivered by hand, or sent via telecopy or facsimile transmission, in each case
receipted for by the party to whom said notice or other communication shall been
directed or transmitted, or (ii) mailed by certified or registered mail with
postage prepaid, on the third business day after the date on which it is so
mailed, or (iii) delivered by the overnight courier service:
(a) If to the Officer, to:
------------------------------------
(Name)
------------------------------------
(Address)
(b) If to the Company, to:
Whitman Education Group, Inc.
4400 Biscayne Boulevard, 6th Floor
Miami, Florida 33137
Attention: Richard B. Salzman
Vice President - Legal Affairs and General Counsel
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<PAGE>
or to such other address as may have been furnished to either party by the other
party.
18. ENTIRE AGREEMENT. All prior and contemporaneous agreements and
understandings between the parties with respect to the subject matter of this
Agreement are superseded by this Agreement, and this Agreement constitutes the
entire understanding between the parties. This Agreement may not be modified,
amendment, changed or discharged except by a writing signed by the parties
hereto, and then only to the extent therein set forth.
19. NONASSIGNMENT. This Agreement may not be assigned by either of the
parties hereto.
20. GOVERNING LAW. This Agreement, including its validity, interpretation
and effect, and the relationship of the parties shall be governed by, and
construed in accordance with, the laws of the State of New Jersey.
IN WITNESS WHEREOF, each of the parties hereto has executed this Agreement
as of the day and year first above written.
WHITMAN EDUCATION GROUP, INC.
By:______________________________________
Randy S. Proto
President
OFFICER
By:______________________________________
(Name)
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Exhibit 10.2
DIRECTOR INDEMNIFICATION AGREEMENT
This Agreement, dated as of ______________ ___, 199___, is entered into
between Whitman Education Group, Inc., a corporation organized under the laws of
the State of New Jersey (the "Company"), and __________________________________
(the "Director").
Recitals
A. Highly competent persons are becoming more reluctant to serve
publicly-held corporations as directors or as executive officers unless they are
provided with adequate protection through insurance or adequate indemnification
against inordinate risks of claims and actions against them arising out of their
service to, and activities on behalf of, the corporation.
B. The current impracticability of obtaining adequate insurance and the
uncertainties relating to indemnification have increased the difficulty of
attracting and retaining such persons.
C. The Bylaws of the Company presently provide, among other things, that
the Company shall indemnify its directors and officers to the full extent
permitted by law.
D. The Board has determined that the difficulty in attracting and
retaining highly competent persons is detrimental to the best interests of the
Company's shareholders and that the Company should act to assure such persons
that there will be increased certainty of protection against risks of such
claims and actions against them in the future.
E. It is reasonable, prudent, and necessary for the Company contractually
to obligate itself to indemnify such persons to the fullest extent permitted by
applicable law so that they will serve or continue to serve the Company free
from undue concern that they will not be so indemnified.
F. The Director is willing to serve or continue to serve as a director of
the Company on the condition that the Director be so indemnified.
AGREEMENT
1. DEFINITIONS. As used in this Agreement, the following terms shall have
the meanings indicated below:
(a) "Related Party" shall refer to (i) any other corporation in
which the Company has an equity interest of at least fifty percent (50%) and
(ii) any other corporation or any limited liability company, partnership, joint
venture, trust, employee benefit plan or any other enterprise or
<PAGE>
association in which the Director has served in any Indemnified Position, at the
request of the Company or for the convenience of the Company or to represent the
Company's interest. Any entity or plan described in Section 1(a)(ii) in which
the Company has any interest or which is established in whole or in part for the
benefit of the Company or any other Related Party or the Company or Related
Party's employees shall be presumed to be a Related Party.
(b) "Indemnified Position" shall refer to any position held by the
Director, or pursuant to which the Director acts, as an officer, director,
employee, partner, trustee, fiduciary, administrator or agent of the Company or
a Related Party.
(c) "Indemnified Event" shall mean any claim asserted against the
Director, whether civil, criminal, administrative or investigative in nature,
for monetary or other relief; or any Proceeding to which the Director is named
as a party or is a subject of or witness in, or with respect to which he or she
is threatened to be named as a party, subject or witness, brought against the
Director by reason of his or her serving or acting in any Indemnified Position
or arising or allegedly arising directly or indirectly out of, or otherwise
relating to, any action, omission, occurrence or event involving the Director in
any Indemnified Position, including any Proceeding, formal or informal or
otherwise, conducted or brought by the Securities and Exchange Commission or
other governmental agency, or The National Association of Securities Dealers,
Inc., a national stock exchange or similar organization.
(d) "Proceeding" shall mean any pending, threatened or completed
action, suit, investigation, inquiry, arbitration, alternative dispute
resolution mechanism or any other proceeding (or any appeals therefrom), whether
civil, criminal, administrative or investigative in nature and whether in a
court or arbitration, or before or involving a governmental, administrative or
private entity (including, but not limited to, an investigation initiated by the
Company, any Related Party or any affiliate thereof, or the board of directors,
fiduciaries or partners of any thereof).
(e) "Indemnification Amount" shall refer to the amount of losses,
claims, demands, costs, damages, liabilities (joint and several), judgments,
fines (including any excise tax assessed with respect to an employee benefit
plan), settlements, and other amounts (including Witness Liabilities), including
interest on any of the foregoing, which the Director is liable to pay or has
paid in connection with an Indemnified Event and amounts proposed to be paid in
settlement by the Director in connection with any Indemnified Event.
(f) "Witness Liabilities" shall mean all expenses incurred by the
Director in connection with his or her preparation to serve or service as a
witness in any Proceeding in any way relating to the Company, any Related Party
or any affiliate (as defined in Rule 405 under the Securities Act of 1933, as
amended) of any of them (a "Securities Act Affiliate"), any associate (as
defined in such Rule 405) of any of them or of any Securities Act Affiliate, or
any Indemnified Event (including, but not limited to, the investigation, defense
or appeal in connection with any such Proceeding).
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<PAGE>
(g) "Expenses" shall refer to all disbursements, costs or expenses
of any nature reasonably incurred by the Director directly or indirectly in
connection with an Indemnified Event, or Witness Liabilities, including, but not
limited to, fees and disbursements of counsel, accountants or other experts
employed by the Director in connection with any Indemnified Event, including all
such expenses, disbursements and costs of investigation in connection with or
prior to the initiation of any Proceeding relating to an Indemnified Event.
(h) "Indemnify" or "Indemnification" shall refer to the obligation
of the Company herein to pay Expenses or Indemnification Amounts.
(i) "Change of Control" shall be deemed to have occurred if (A) any
"Person" (as that term is used in Sections 13(d) and 14(d) of the Securities
Exchange Act of 1934, as amended, but excluding the Company and any of its
wholly-owned subsidiaries, is or becomes (except in a transaction approved in
advance by the Board) the beneficial owner (as defined in Rule 13d-3 under such
Act), directly or indirectly, of securities of the Company representing 20% or
more of the combined voting power of the Company's then outstanding securities
or (B) during any period of two consecutive years, individuals who at the
beginning of such period constitute the Board cease for any reason to constitute
at least a majority thereof unless the election, or the nomination for election
by the Company's shareholders, of each new director was approved by a vote of at
least two-thirds of the directors still in office who were directors at the
beginning of the period, or (C) the shareholders of the Company should approve
any one of the following transactions: (x) any consolidation or merger of the
Company in which the company is not the surviving corporation, other than a
merger of the Company in which the holders of the Company's common stock
immediately prior to the merger have the same proportionate ownership of the
surviving corporation immediately after the merger; or (y) any sale, lease,
exchange or other transfer (in one transaction or a series of related
transactions) of all, or substantially all, the assets of the Company.
(j) "Final Disposition" shall refer to any judgment, order or award
rendered in any Proceeding after the expiration of all rights of appeal.
2. SERVICES TO THE COMPANY. The Director will serve, and/or continue to
serve, as a director of the Company, so long as he or she is duly elected and
qualified in accordance with the provisions of the Articles of Incorporation and
Bylaws of the Company, or in any other Indemnified Position, at the will of the
Company (or under separate contract, if any); provided that the Director may at
any time and for any reason resign from such Indemnified Position (subject to
any contractual obligations which the Director shall have assumed a part from
this Agreement) but the obligations 0.provided for herein shall continue after
such termination.
3. INDEMNITY. The Company hereby agrees to indemnify the Director and hold
the Director harmless to the full extent permitted or authorized by the
provisions of current New Jersey legislation (including Section 14A:3-5 of the
New Jersey Business Corporation Act) or future New Jersey legislation or, if
broader indemnification is available, by current or future judicial or
administrative decisions (but, in the case of any such future legislation or
decisions, only to the
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<PAGE>
extent that it permits the Company to provide broader indemnification rights
than permitted prior to such legislation or decisions), and such Indemnification
shall be made unless prohibited by New Jersey law. Without limiting the
generality of the foregoing, the Company agrees to indemnify the Director and
hold the Director harmless from and against, and pay any and all, Expenses and
Indemnification Amounts, including Witness Liabilities; provided, however, that
notwithstanding the foregoing:
(a) in the case of any Proceeding by or in the right of the Company
to procure a judgment in its favor against the Director by reason of his being
or having been a Director of the Company, the Company shall have the power to
indemnify the Director against his expenses in connection with any such
Proceeding if he acted in good faith and in a manner he reasonably believed to
be in or not opposed to the best interest of the Company; provided further,
however, that in such Proceeding by or in the right of the Company, no
indemnification shall be provided with respect to any claim, issue or matter a
to which the Director shall have been adjudged to be liable to the Company,
unless and only to the extent that the Superior Court or the court in which such
Proceeding was brought shall determine upon application that despite the
adjudication of liability, but in view of all circumstances of the case, the
Director is fairly and reasonably entitled to Indemnity for such expenses as the
Superior Court or such other court shall deem proper; and
(b) no indemnification shall be made to or on behalf of the director
if a judgment or other final adjudication adverse to the director established
that his acts or omissions (i) were in breach of his duty of loyalty to the
Company or its shareholders, as defined in subsection 3 of N.J.S.A. 14A:2-7,
(ii) were not in good faith or involved a knowing violation of law or (iii)
resulted in receipt by the Director of and improper personal benefit.
Except with respect to the indemnification specified in the second
and third sentences of Section 7 or in Section 10 or Section 13(b) of this
Agreement, the Company shall indemnify the Director in connection with a
Proceeding (or part thereof) initiated by the Director (subject to the
limitations provided above) only if authorization for the Proceeding (or part
thereof) was not denied by the Board of Directors of the Company prior to the
earlier of (i) 60 days after receipt of notice thereof from the Director and
(ii) a Change of Control.
4. PAYMENT OF EXPENSES. The Company shall advance all Expenses within
thirty (30) days after the receipt by the Company of a statement or statements
from the Director requesting such advance payment or payments from time to time.
Such statement or statements shall identify the nature and amount of the
Expenses to be advanced with reasonable specificity. The Director agrees to
repay any Expenses advanced if it shall ultimately be determined (which shall
only be made after the Final Disposition of the Proceeding related to an
Indemnified Event, as hereinafter provided) that the Director was not entitled
to reimbursement of Expenses in connection with the Indemnified Event for which
such Expenses were made.
5. INTERVAL PROTECTION. During the interval between the Company's receipt
of the Director's request for indemnification or advances and the latest to
occur of (a) payment in full to
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<PAGE>
the Director of the indemnification or advances to which he or she is entitled
hereunder, or (b) a final adjudication that the Director is not entitled to
indemnification hereunder, the Company shall provide "Interval Protection"
which, for purposes of this Agreement, shall mean the taking of the necessary
steps (whether or not such steps require expenditures to be made by the Company
at that time) to stay, pending a final determination of the Director's
entitlement to indemnification (and, if the Director is so entitled, the payment
thereof), the execution, enforcement or collection of any Indemnified Amount or
Expenses or any other amounts for which the Director may be liable (and as to
which the Director has requested indemnification hereunder) in order to avoid
the Director's being or becoming in default with respect to any such amounts
(such necessary steps to include, but not be limited to, the procurement of a
surety bond to achieve such stay or the loan to the Director (unsecured and with
interest payable at the prime rate) of amounts necessary to satisfy the
Indemnified Amount or Expenses or other amounts for which the Director may be
liable and as to which a stay of execution as aforesaid cannot be obtained, the
Company by executing this Agreement having made the judgment that, in general,
such loan or similar assistance may reasonably be expected to benefit the
Company), within three days after receipt of the Director's written request
therefor, together with a written undertaking by the Director to repay, no later
than 120 days following receipt of a statement therefor from the Company,
amounts (if any) expended by the Company for such purpose, if it is ultimately
determined in a final adjudication that the Director is not entitled to be
indemnified against such Indemnified Amounts or Expenses or other amounts.
6. INDEMNIFICATION BY COURT. Notwithstanding any other provision of this
Agreement including without limitation the fourth sentence of Section 7,
indemnification and advances shall also be made to the extent a New Jersey
circuit court, or another court of competent jurisdiction, or the court in which
a Proceeding was brought, shall determine that the Director, in view of all the
circumstances of the case, is fairly and reasonably entitled to indemnification
and/or advances for such Expenses as such court shall deem proper.
7. INDEMNIFICATION PROCEDURE. Any Indemnification or advance under this
Agreement (other than Interval Protection) shall be made promptly and in any
event within thirty (30) days upon the written request of the Director delivered
to the Company. The right to Indemnification or advances as granted under this
Agreement shall be enforceable by the Director in any court of competent
jurisdiction if the Company denies such request, in whole or in part, or if no
disposition thereof is made within thirty (30) days. The Director's costs and
expenses incurred in connection with successfully establishing his or her right
to indemnification or advances, in whole or in part, in any such action shall
also be indemnified by the Company. It shall be a defense to any such action
that there has been a judgment or other final adjudication adverse to the
Director which established that the Director failed to meet the standard of
conduct, if any, required for indemnification by current legislation including,
without limitation, N.J.S.A. 14A:3-5(8), or, if applicable in accordance with
Section 3 hereof, future legislation or current or future judicial or
administrative decisions, but the burden of proving such defense shall be on the
Company. Neither the failure of the Company (including the Board or any
committee thereof, its independent counsel and its shareholders) to have made a
determination prior to the commencement of such action that
-5-
<PAGE>
indemnification of the Director is proper in the circumstances because he or she
has met the applicable standard of conduct described in the preceding sentence,
if any, nor the fact that there has been an actual determination by the Company
(including the Board or any committee thereof, its independent counsel and its
shareholders) that the Director has not met such applicable standard of conduct,
shall be a defense to the action or create a presumption that the claimant has
not met the applicable standard of conduct.
8. PRESUMPTIONS AND EFFECT OF CERTAIN PROCEEDINGS.
(a) The Director shall be presumed entitled to Indemnification
hereunder unless clearly not entitled to such Indemnification by clear and
convincing proof that such payment shall be unlawful.
(b) If the Company shall not have responded to the Director's
request for Indemnification pursuant to Section 7 hereof within thirty (30) days
after receipt by the Company of such request therefor, the Director shall be
deemed to be entitled to such Indemnification except as otherwise provided in
Section 3 hereof.
(c) The termination of any Proceeding relating to an Indemnified
Event or of any claim, issue, or matter therein by judgment, order, settlement,
or conviction, or upon a plea of nolo contendere or its equivalent, shall not of
itself adversely affect the right of the Director to Indemnification or create a
presumption that the Director did not meet any applicable standard of conduct.
(d) Notwithstanding any other provision of this Agreement, the
Director shall in no event be required to repay any Expense payments advanced to
the Director and no defense can or shall be raised by the Company to a request
for Indemnification pursuant to Section 7 to the extent the Director has been
successful on the merits or otherwise in defense of any Proceeding related to an
Indemnified Event, or in defense of any claim, issue or matter involved in any
Indemnified Event therein, whether as a result of the initial adjudication or on
appeal or the abandonment thereof by a party.
9. NON-EXCLUSIVITY; DURATION OF AGREEMENT; INSURANCE; SUBROGATION.
(a) The rights of Indemnification and to receive advancement of
Expenses as provided by this Agreement shall not be deemed exclusive of any
other rights to which the Director may at any time be entitled under applicable
law, the Articles of Incorporation, the By-Laws, any other agreement, or any
vote or consent of directors or shareholders or otherwise.
(b) This Agreement shall continue until and terminate upon the later
of: (i) ten (10) years after the date that the Director shall have ceased to
serve in any Indemnified Position; or (ii) the Final Disposition of all
Indemnified Events.
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<PAGE>
(c) This Agreement shall be binding upon the Company and its
successors and assigns and shall inure to the benefit of the Director and his or
her heirs, devisees, executors, and administrators or other legal
representatives.
(d) To the extent that the Company maintains an insurance policy or
policies providing liability insurance for directors or executive officers of
the Company or for any person serving in any other Indemnified Position, the
Director shall be covered by such policy or policies in accordance with its or
their terms to the maximum extent of the coverage available for any such
director or executive officer or person serving in such position under such
policy or policies.
10. PROCEEDINGS.
(a) The parties hereto agree that except as otherwise provided for
herein, any disputes arising with respect to the interpretation or enforcement
of any provision hereof shall be submitted, at the sole election of the
Director, either to be submitted, at the sole election of the Director, either
to arbitration or to judicial determination. Any arbitration shall be conducted
in the City of Miami, Florida in accordance with the then existing rules of the
American Arbitration Association ("AAA"). In any arbitration pursuant to this
agreement, the award or decision shall be rendered by a majority of the members
of an arbitration panel consisting of three members chosen in accordance with
the then existing rules of the AAA. The award or decision of the arbitration
panel pursuant to this Section 10 shall be binding and conclusive on the
parties, provided that enforcement of such award or decision may be obtained in
any court having jurisdiction over the party against whom such enforcement is
sought. The Company hereby agrees to bear all fees, costs and expenses imposed
by the AAA, in connection with the arbitration, irrespective of the
determination thereof. The provisions of Section 10(c) shall govern with respect
to the proceedings referred to therein.
(b) In the event that, for any reason, the Company fails to pay any
Indemnification or advance demanded, or the Company requests repayment of any
Expenses advanced, the Director shall nevertheless be entitled, at his or her
sole option, to a final judicial determination or may seek arbitration of his or
her entitlement to Indemnification hereunder in respect of such claim. In the
event the Director seeks a judicial determination, the Director shall commence
an action in a court of the State of Florida. In the event the Director seeks an
award in arbitration, (i) such arbitration shall be conducted in Miami, Florida
pursuant to Section 10(a), and (ii) the arbitrator shall notify the parties of
his or her decision within sixty (60) days following the initiation of such
arbitration (or such other period proscribed by the rules of AAA). The Company
further agrees that its execution of this Agreement shall constitute a
stipulation by which it shall be bound in any court or arbitration in which such
proceeding shall have been commenced, continued or appealed that (i) it shall
not oppose the Director's right to seek any such adjudication or award in
arbitration or any other claim by reason of any prior determination made by the
Company with respect to the Director's right to Indemnification under this
Agreement on such claim or any other claim, or, except in good faith, raise any
objections not specifically relating to the merits of the Director's claim; and
(ii) for purposes of this Agreement any such adjudication or arbitration shall
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<PAGE>
be conducted de novo and without prejudice by reason of any prior determination
that the Director is not entitled to Indemnification.
(c) Whether or not the court or arbitrators shall determine that the
Director is entitled to payment of Indemnification Amounts or has to return the
payment of Expenses or otherwise finds against the Director, the Company shall
within thirty (30) days after written request therefor (and submission of
reasonable evidence of the nature and amount thereof), and unless there is a
specific judicial finding that the Director's suit or arbitration was frivolous,
pay all Expenses incurred by the Director in connection with such adjudication
or arbitration (including, but not limited to, any appellate proceedings).
11. SEVERABILITY. If any provision or provisions of this Agreement shall
be held to be invalid, illegal, or unenforceable for any reason whatsoever: (a)
the validity, legality, and enforceability of the remaining provisions of this
Agreement (including without limitation, each portion of any Section, paragraph
or clause of this Agreement containing any such provision held to be invalid,
illegal, or unenforceable, that is not itself invalid, illegal, or
unenforceable) shall not in any way be affected or impaired thereby; and (b) to
the fullest extent possible, the provisions of this Agreement (including,
without limitation, each portion of any Section, paragraph or clause of this
Agreement containing any such provisions held to be invalid, illegal, or
unenforceable, that is not itself invalid, illegal, or unenforceable) shall be
deemed revised, and shall be construed, so as to give effect to the intent
manifested by this Agreement (including the provisions held invalid, illegal, or
unenforceable).
12. MERGER OR CONSOLIDATION OF THE COMPANY. In the event that the Company
shall be a constituent corporation in a consolidation or merger, whether or not
the Company is the resulting or surviving corporation, the Director shall stand
in the same position under this Agreement with respect to the Company if its
separate existence had continued.
13. ENFORCEMENT.
(a) The Company unconditionally and irrevocably stipulates and
agrees that its execution of this Agreement shall also constitute a stipulation
by which it shall be bound in any court or arbitration in which a proceeding by
the Director for enforcement of his or her rights shall have been commenced,
continued or appealed, that the obligations of the Company set forth herein are
unique and special, and that failure of the Company to comply with the
provisions of this Agreement will cause irreparable and irremediable injury to
the Director, for which a remedy at law will be inadequate. As a result, in
addition to any other right or remedy he or she may have at law or in equity
with respect to a violation of this Agreement, the Director shall be entitled to
injunctive or mandatory relief directing specific performance by the Company of
its obligations under this Agreement.
(b) In the event that the Director is subject to or intervenes in
any legal action in which the validity or enforceability of this Agreement is at
issue or institutes any legal action, for
-8-
<PAGE>
specific performance or otherwise, to enforce his or her rights under, or to
recover damages for breach of, this Agreement, the Director shall, within thirty
(30) days after written request to the Company therefor (and submission of
reasonable evidence of the amount thereof), and unless there is a specific
judicial finding that the Director's suit was frivolous, be indemnified by the
Company against all Expenses incurred by him or her in connection therewith.
14. NOTIFICATION AND DEFENSE OF CLAIM. The Director agrees to promptly
notify the Company in writing upon being served with any summons, citation,
subpoena, complaint, indictment, information or other document relating to any
Proceeding involving an Indemnification event; provided, however, that the
failure of the Director to give such notice to the Company shall not adversely
affect the Director's rights under this Agreement except to the extent the
Company shall have been materially prejudiced by such failure. Nothing in this
Agreement shall constitute a waiver of the Company's right to seek
participation, at its own expense, in any Proceeding which may give rise to
Indemnification hereunder.
15. HEADINGS. The headings of the Sections and paragraphs of this
Agreement are inserted for convenience only and shall not be deemed to
constitute part of this Agreement or to affect the construction thereof.
16. MODIFICATION AND WAIVER. No supplement, modification, or amendment of
this Agreement shall be binding unless executed in writing by both of the
parties hereto. No waiver of any of the provisions of this Agreement shall be
deemed or shall constitute a waiver of any other provisions hereof (whether or
not similar) nor shall such waiver constitute a continuing waiver.
17. NOTICES. All notices, requests, demands, and other communications
hereunder shall be in writing and shall be deemed to have been duly given if (i)
delivered by hand, or sent via telecopy or facsimile transmission, in each case
receipted for by the party to whom said notice or other communication shall have
been directed or transmitted, or (ii) mailed by certified or registered mail
with postage prepaid, on the third business day after the date on which it is so
mailed, or (iii) delivered by overnight courier service:
(a) If to the Director, to:
------------------------------------
(Name)
------------------------------------
(Address)
(b) If to the Company, to:
Whitman Education Group, Inc.
4400 Biscayne Boulevard, 6th Floor
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<PAGE>
Miami, Florida 33137
Attention: Richard B. Salzman
Vice President - Legal Affairs and General Counsel
or to such other address as may have been furnished to either party by the other
party.
18. ENTIRE AGREEMENT. All prior and contemporaneous agreements and
understandings between the parties with respect to the subject matter of this
Agreement are superseded by this Agreement, and this Agreement constitutes the
entire understanding between the parties. This Agreement may not be modified,
amended, changed or discharged except by a writing signed by the parties hereto,
and then only to the extent therein set forth.
19. NONASSIGNMENT. This Agreement may not be assigned by either of the
parties hereto.
20. GOVERNING LAW. This Agreement, including its validity, interpretation
and effect, and the relationship of the parties shall be governed by, and
construed in accordance with, the laws of the State of New Jersey.
IN WITNESS WHEREOF, each of the parties hereto has executed this Agreement
as of the day and year first above written.
WHITMAN EDUCATION GROUP, INC.
By:___________________________________________
Randy S. Proto
President
DIRECTOR
By:___________________________________________
(Name)
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EXHIBIT 10.3
SECOND AMENDMENT
TO CREDIT AGREEMENT
This Second Amendment To Credit Agreement (the "Amendment")is entered into
this ___ day of October, 1996, by and among BARNETT BANK, N.A., a national
banking corporation ("Bank"); WHITMAN EDUCATION GROUP, INC., f/k/a Whitman
Medical Corp., a New Jersey corporation ("Borrower" or "You"); and PHILLIP
FROST, M.D., an individual, (hereinafter referred to as the "Guarantor").
WHEREAS, the parties hereto entered into a Credit Agreement dated April
11, 1996, as amended by amendment dated August 14th, 1996 (collectively the
"Credit Agreement"), pursuant to which the Bank provided to You a Term Loan in
the principal amount of $6,000,000.00 to refinance existing obligations and a
Revolving Loan in the principal amount of $2,500,000.00 to finance working
capital and for general corporate purposes; and
WHEREAS, the parties hereto wish to amend certain provisions of the Credit
Agreement effective as of ______________, 1996;
NOW, THEREFORE, the parties hereto hereby agree as follows:
1. Any capitalized terms not defined herein shall have the same meaning as
given those terms in the Credit Agreement.
2. Section 1. of the Credit Agreement, DEFINITIONS AND ACCOUNTING
MATTERS, is hereby amended as follows:
"REVOLVER NOTE" shall mean that certain Amended,
Restated and Consolidated Renewal Revolver Note from the Borrower to the Bank in
the principal amount of $5,500,000.00, which renews and consolidates a Revolver
Note dated April 11, 1996 in the principal amount of $2,500,000 and a Revolver
Note of even date herewith in the principal amount of $3,000,000.
3. Section 2.1(b) of the Credit Agreement, REVOLVING LOAN, is hereby
amended in its entirety and shall read as follows:
(i) PRINCIPAL. $5,500,000.00, which shall be evidenced
by a promissory note in like amount in substantially the form attached to this
Agreement (the "Amended and Restated Revolver Note").
(ii) INTEREST. Interest shall accrue on the Revolving
Loan from the date of the first advance until repayment in full. Interest shall
be paid monthly in arrears commencing one month from the date of the first
advance. The applicable interest rate per annum shall be selected by Borrower on
the date of each advance from the following two options.
<PAGE>
PRIME RATE OPTION:
a) The Prime Rate, changing when and as the Prime
Rate changes, minus 125 basis points; or
LIBOR RATE OPTION:
b) The LIBOR Rate, plus 150 basis points.
The basis for determining the interest rate with respect to any Loan may be
changed from time to time pursuant to Section 2.4(c) hereinafter.
(iii) PURPOSE. The proceeds of the Revolving Loan shall
be used for general corporate purposes and to finance working capital. Provided
no Event of Default has occurred and is continuing, the Borrower may borrow,
repay and reborrow up to an amount not to exceed at any time and from time to
time $5,500,000.00 until April 14, 1999.
(iv) REPAYMENT. The Borrower agrees to pay the principal
indebtedness evidenced by and outstanding under the Revolver Note in full on or
before April 14, 1999.
4. Section 2.4(a)(v) of the Credit Agreement, LIBOR RATE LOANS,is hereby
amended and shall read as follows:
(v) no Interest Period for a Revolver Loan shall extend
beyond April 14, 1999, no Interest Period for the Term Loan shall extend beyond
April 14, 1999;
5. Section 6.5(a) of the Credit Agreement, INDEBTEDNESS, is hereby
deleted in its entirety.
6. Section 6.5(b) of the Credit Agreement, LIENS AND ENCUMBRANCES, is
hereby amended by deleting section (iv) thereof in its entirety.
7. Exhibit B to the Credit Agreement is hereby amended and substituted
by Exhibit B attached hereto.
8. Except as otherwise provided herein, all other terms and conditions of
the Credit Agreement are hereby restated, affirmed and incorporated by reference
in their entirety.
9. This Amendment shall be governed by and interpreted in accordance
with the laws of the State of Florida.
10. This Amendment may be executed by one or more of the parties to this
Amendment in any number of separate counterparts and all of said counterparts
taken together shall be deemed to constitute one and the same instrument.
2
<PAGE>
11. In consideration of the amendment to the Credit Agreement contemplated
hereby, Borrower shall pay the reasonable fees and expenses of Coll Davidson
Carter Smith Salter & Barkett, P.A., Florida counsel to the Bank, incurred in
connection with the preparation of this Amendment, contemporaneously with the
execution thereof.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed and delivered by the proper and duly authorized officers as of the
day and year first above written.
BANK:
BARNETT BANK, N.A.
By:
---------------------------------------
Guillermo Castillo
Vice President
BORROWER:
WHITMAN EDUCATION GROUP, INC.
By:
--------------------------------------
Randy S. Proto
President
GUARANTOR hereby acknowledges and agrees that the Continuing Unlimited
Guarantee, dated April 23, 1996, executed by Guarantor for the benefit of Bank,
extends to the Credit Agreement, as amended hereby, and all indebtedness now or
hereafter outstanding under the Amended, Restated and Consolidated Renewal
Revolver Note dated October ____, 1996.
GUARANTOR:
-----------------------------
PHILLIP FROST, M.D.
3
EXHIBIT 10.4
AMENDED, RESTATED AND CONSOLIDATED
RENEWAL REVOLVER NOTE
$5,500,000.00 October __, 1996
FOR VALUE RECEIVED, WHITMAN EDUCATION GROUP, INC., f/k/a Whitman
Medical Corp., a New Jersey corporation ("Borrower"), promises to pay to the
order of
BARNETT BANK, N.A.
a national banking corporation ("Lender") (successor by merger and name change
to Barnett Bank of South Florida, N.A.), the principal sum of
FIVE MILLION FIVE HUNDRED THOUSAND DOLLARS
and the Borrower further promises to pay to the Lender interest monthly, on the
___ day of each month, until repaid in full, on the principal amount evidenced
hereby and from time to time outstanding at a rate per annum determined in
accordance with the Credit Agreement (as defined below). The rate of interest to
be applied and the amount of interest to be paid on the daily outstanding
balance of principal evidenced hereby shall be calculated on an assumed year of
360 days for the number of days actually elapsed.
The Borrower agrees to pay the outstanding principal indebtedness
evidence by this note in full on April 14, 1999. All advances made hereunder by
the Lender to the Borrower and all payments made on account of principal hereof
shall be recorded by the Lender and, prior to transfer hereof, endorsed on the
grid attached hereto.
The Borrower further promises and agrees that:
1. This Note is the "Revolver Note" referred to in, and is entitled
to the benefits of, that certain Credit Agreement, dated as of April 11, 1996,
as amended by amendment dated August 14, 1996, and as amended by amendment of
even date herewith (collectively, the "Credit Agreement") among the Lender, the
Borrower and the Guarantor, the terms of which are incorporated herein by this
reference as if fully set forth herein. Provided no Event of Default has
occurred and is continuing, the Borrower may borrow, prepay and reborrow
provided the aggregate principal amount outstanding from time to time and at any
time does not exceed $5,500,000.00.
2. This Borrower shall be in default under the terms of this note
upon the occurrence and continuation of an Event of Default as defined and
described in the Credit Agreement.
3. At any time after the occurrence and continuation of any Event
of Default, the indebtedness evidenced by this note
<PAGE>
and/or any note(s) or other obligation(s) which may be taken in renewal,
extension, substitution, or modification of all or any part of the indebtedness
evidenced thereby and all other Obligations of the Borrower to the Lender,
howsoever created and existing under the Credit Agreement, that certain Term
Note, dated April 11, 1996 from the Borrower to the Lender or otherwise, shall
immediately become due and payable without demand upon or notice to the
Borrower, and the Lender shall be entitled to exercise the other remedies set
forth in the Credit Agreement or as otherwise provided at law or in equity.
4. Upon the occurrence and during the continuance of any Event of
Default, the Lender is authorized, without further notice to the Borrower (the
giving of notice being expressly waived by the Borrower) to set off and apply
any indebtedness owing by the Lender to the Borrower against the indebtedness
evidenced by this note, although then contingent or unmatured. The Lender agrees
to notify the Borrower after any such setoff and application; PROVIDED, HOWEVER,
the failure to give such notice shall not affect the validity of such setoff and
application. The rights of the Lender under this Paragraph 4 are in addition to
any other rights and remedies which the Lender may have.
5. The Lender may transfer this note and the transferee(s) shall
thereupon become vested with all the powers, rights, and obligations herein
given to the Lender with respect thereto; and the Lender shall thereafter be
forever relieved and fully discharged from any liability or responsibility in
the matter.
6. The Borrower hereby waives presentment for payment, demand,
notice of dishonor and protest and agrees that (i) any right of setoff securing
any indebtedness evidenced by this note may, from time to time, in whole or in
part, be exchanged or released, and any person liable on or with respect tot he
indebtedness evidenced by this note may be released -- all without notice to or
further reservations of rights against the Borrower, any indorser, surety or
guarantor and all without in any way affecting or releasing the liability of the
Borrower, any indorser, surety or guarantor; and (ii) none of the terms or
provisions of this note may be waived, altered, modified or amended except as
the Lender may consent thereto in writing.
7. In the event of any litigation involving this note, the
prevailing party shall be entitled to collect reasonable attorneys' fees,
out-of-pocket expenses, and court costs. As used in this note, the term,
"attorneys' fees", shall mean reasonable charges and expenses for legal services
at the trial and/or appellate level and/or in pre- and post-judgment or
bankruptcy proceedings.
2
<PAGE>
8. Both principal and interest of this note shall be payable in
lawful currency of the United States of America to the Lender at 701 Brickell
Avenue, Miami, Florida 33131 or at such other place or to such other person as
may be designated in writing by the Lender, in immediately available (same day)
funds without deduction for or on account of any present or future taxes levied
or imposed on this note, the proceeds hereof, or on the Borrower or holder
hereof by any government, or any instrumentality, authority or political
subdivision thereof. The Borrower agrees, upon the request of the Lender, to pay
all such taxes (other than taxes on or measured by net income of the holder
hereof) in addition to the principal and interest evidenced by this note.
9. Any installment of principal and/or interest evidenced by this
note which is not paid on the day when such payment is scheduled to be made,
regardless of whether or not the Lender has accelerated payment of any or all
sums outstanding under this note, shall bear interest from the day when due
(including any grace period) until said amount is paid in full, payable on
demand, at a rate per annum equal at all times to the sum of (i) the rate
otherwise applicable hereunder plus (ii) four percent (4%).
10. This note shall be deemed to have been made under and shall be
governed by the laws of the State of Florida in all respects [except as to
interest rates and other terms of lending which, by virtue of a federal
preemption or, at the election of the Lender, are or may be governed by the laws
of the United States], including matters of construction, validity, and
performance. If any provision of this note shall be deemed unenforceable under
applicable law, such provision shall be ineffective, but only to the extent of
such unenforceability, without invalidating the remainder of such provision or
the remaining provisions of this note. If more than one person signs this note
as a maker, each shall be jointly and severally liable hereunder. All of the
terms and provisions of this note shall be applicable to and be binding upon
each and every maker, indorser, surety, guarantor, all other persons who are or
may become liable for the payment hereof and their heirs, personal
representatives, successors or assigns.
11. This note amends, restates, consolidates and renews (a) that
Revolver Note dated April 11, 1996, in the principal amount of $2,500,000.00,
executed by Borrower to the order of Barnett Bank of South Florida, N.A., and
(b) that certain Revolver Note of even date herewith in the principal amount of
$3,000,000, executed by Borrower to the order of Lender.
12. THE BORROWER, AND THE LENDER IN ACCEPTING DELIVERY OF THIS
NOTE, HEREBY KNOWINGLY, VOLUNTARILY, AND INTENTIONALLY
3
<PAGE>
WAIVE THE RIGHT EITHER MAY HAVE TO TRIAL BY JURY IN RESPECT TO ANY LITIGATION
BASED ON THIS NOTE OR THE CREDIT AGREEMENT OR ARISING OUT OF, UNDER OR IN
CONNECTION WITH THIS NOTE, THE CREDIT AGREEMENT OR ANY OTHER AGREEMENT SIGNED OR
CONTEMPLATED TO BE SIGNED IN CONJUNCTION HEREWITH, OR ANY COURSE OF CONDUCT,
COURSE OF DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN) OR ACTIONS OF EITHER
PARTY OR THE DIRECTORS, OFFICERS, EMPLOYEES OR AGENTS THEREOF. THE INCLUDING OF
THIS PROVISION IS A MATERIAL INDUCEMENT TO THE LENDER TO EXTEND CREDIT TO THE
BORROWER.
WHITMAN EDUCATION GROUP, INC.
By:________________________
Title:_____________________
STATE OF _______ )
)SS.
COUNTY OF ______ )
The foregoing Amended, Restated and Consolidated Renewal Revolver
Note was acknowledged was before me this _____ day of October, 1996, by
_______________________, as ______________________________ of WHITMAN EDUCATION
GROUP, INC., a New Jersey____________ corporation. He/She:
______ is personally known to me, or
______ produced _________________ as identification.
------------------------------
NOTARY PUBLIC
My Commission Expires: Printed Name of Notary:
4
EXHIBIT 10.5
REVOLVER NOTE
$3,000,000.00 October __, 1996
FOR VALUE RECEIVED, WHITMAN EDUCATION GROUP, INC., f/k/a Whitman
Medical Corp., a New Jersey corporation ("Borrower"), promises to pay to the
order of
BARNETT BANK, N.A.
a national banking corporation ("Lender") (successor by merger and name change
to Barnett Bank of South Florida, N.A.), the principal sum of
THREE MILLION DOLLARS
and the Borrower further promises to pay to the Lender interest monthly, on the
___ day of each month, until repaid in full, on the principal amount evidenced
hereby and from time to time outstanding at a rate per annum determined in
accordance with the Credit Agreement (as defined below). The rate of interest to
be applied and the amount of interest to be paid on the daily outstanding
balance of principal evidenced hereby shall be calculated on an assumed year of
360 days for the number of days actually elapsed.
The Borrower agrees to pay the outstanding principal indebtedness
evidence by this note in full on April 14, 1999. All advances made hereunder by
the Lender to the Borrower and all payments made on account of principal hereof
shall be recorded by the Lender and, prior to transfer hereof, endorsed on the
grid attached hereto.
The Borrower further promises and agrees that:
1. This Note is executed pursuant to, and is entitled to the
benefits of, that certain Credit Agreement, dated as of April 11, 1996, as
amended by amendment dated August 14, 1996, and as amended by amendment of even
date herewith (collectively, the "Credit Agreement") among the Lender, the
Borrower and the Guarantor, the terms of which are incorporated herein by this
reference as if fully set forth herein. Provided no Event of Default has
occurred and is continuing, the Borrower may borrow, prepay and reborrow
provided the aggregate principal amount outstanding from time to time and at any
time does not exceed $3,000,000.00.
2. This Borrower shall be in default under the terms of this note
upon the occurrence and continuation of an Event of Default as defined and
described in the Credit Agreement.
3. At any time after the occurrence and continuation of any Event
of Default, the indebtedness evidenced by this note and/or any note(s) or other
obligation(s) which may be taken in
<PAGE>
renewal, extension, substitution, or modification of all or any part of the
indebtedness evidenced thereby and all other Obligations of the Borrower to the
Lender, howsoever created and existing under the Credit Agreement, that certain
Term Note, dated April 11, 1996 from the Borrower to the Lender or otherwise,
shall immediately become due and payable without demand upon or notice to the
Borrower, and the Lender shall be entitled to exercise the other remedies set
forth in the Credit Agreement or as otherwise provided at law or in equity.
4. Upon the occurrence and during the continuance of any Event of
Default, the Lender is authorized, without further notice to the Borrower (the
giving of notice being expressly waived by the Borrower) to set off and apply
any indebtedness owing by the Lender to the Borrower against the indebtedness
evidenced by this note, although then contingent or unmatured. The Lender agrees
to notify the Borrower after any such setoff and application; provided, however,
the failure to give such notice shall not affect the validity of such setoff and
application. The rights of the Lender under this Paragraph 4 are in addition to
any other rights and remedies which the Lender may have.
5. The Lender may transfer this note and the transferee(s) shall
thereupon become vested with all the powers, rights, and obligations herein
given to the Lender with respect thereto; and the Lender shall thereafter be
forever relieved and fully discharged from any liability or responsibility in
the matter.
6. The Borrower hereby waives presentment for payment, demand,
notice of dishonor and protest and agrees that (i) any right of setoff securing
any indebtedness evidenced by this note may, from time to time, in whole or in
part, be exchanged or released, and any person liable on or with respect tot he
indebtedness evidenced by this note may be released -- all without notice to or
further reservations of rights against the Borrower, any indorser, surety or
guarantor and all without in any way affecting or releasing the liability of the
Borrower, any indorser, surety or guarantor; and (ii) none of the terms or
provisions of this note may be waived, altered, modified or amended except as
the Lender may consent thereto in writing.
7. In the event of any litigation involving this note, the
prevailing party shall be entitled to collect reasonable attorneys' fees,
out-of-pocket expenses, and court costs. As used in this note, the term,
"attorneys' fees", shall mean reasonable charges and expenses for legal services
at the trial and/or appellate level and/or in pre- and post-judgment or
bankruptcy proceedings.
2
<PAGE>
8. Both principal and interest of this note shall be payable in
lawful currency of the United States of America to the Lender at 701 Brickell
Avenue, Miami, Florida 33131 or at such other place or to such other person as
may be designated in writing by the Lender, in immediately available (same day)
funds without deduction for or on account of any present or future taxes levied
or imposed on this note, the proceeds hereof, or on the Borrower or holder
hereof by any government, or any instrumentality, authority or political
subdivision thereof. The Borrower agrees, upon the request of the Lender, to pay
all such taxes (other than taxes on or measured by net income of the holder
hereof) in addition to the principal and interest evidenced by this note.
9. Any installment of principal and/or interest evidenced by this
note which is not paid on the day when such payment is scheduled to be made,
regardless of whether or not the Lender has accelerated payment of any or all
sums outstanding under this note, shall bear interest from the day when due
(including any grace period) until said amount is paid in full, payable on
demand, at a rate per annum equal at all times to the sum of (i) the rate
otherwise applicable hereunder plus (ii) four percent (4%).
10. This note shall be deemed to have been made under and shall be
governed by the laws of the State of Florida in all respects [except as to
interest rates and other terms of lending which, by virtue of a federal
preemption or, at the election of the Lender, are or may be governed by the laws
of the United States], including matters of construction, validity, and
performance. If any provision of this note shall be deemed unenforceable under
applicable law, such provision shall be ineffective, but only to the extent of
such unenforceability, without invalidating the remainder of such provision or
the remaining provisions of this note. If more than one person signs this note
as a maker, each shall be jointly and severally liable hereunder. All of the
terms and provisions of this note shall be applicable to and be binding upon
each and every maker, indorser, surety, guarantor, all other persons who are or
may become liable for the payment hereof and their heirs, personal
representatives, successors or assigns.
11. THE BORROWER, AND THE LENDER IN ACCEPTING DELIVERY OF THIS NOTE,
HEREBY KNOWINGLY, VOLUNTARILY, AND INTENTIONALLY WAIVE THE RIGHT EITHER MAY HAVE
TO TRIAL BY JURY IN RESPECT TO ANY LITIGATION BASED ON THIS NOTE OR THE CREDIT
AGREEMENT OR ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS NOTE, THE CREDIT
AGREEMENT OR ANY OTHER AGREEMENT SIGNED OR CONTEMPLATED TO BE SIGNED IN
CONJUNCTION HEREWITH, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS
(WHETHER ORAL OR WRITTEN) OR ACTIONS OF EITHER PARTY OR THE DIRECTORS, OFFICERS,
EMPLOYEES OR AGENTS
3
<PAGE>
THEREOF. THE INCLUDING OF THIS PROVISION IS A MATERIAL INDUCEMENT TO THE
LENDER TO EXTEND CREDIT TO THE BORROWER.
WHITMAN EDUCATION GROUP, INC.
By:________________________
Title:_____________________
STATE OF _______ )
)SS.
COUNTY OF ______ )
The foregoing Revolver Note was acknowledged was before me this
_____ day of October, 1996, by _______________________, as
______________________________ of WHITMAN EDUCATION GROUP, INC., a New
Jersey____________ corporation. He/She:
______ is personally known to me, or
______ produced _________________ as identification.
------------------------------
NOTARY PUBLIC
My Commission Expires: Printed Name of Notary:
4
WHITMAN EDUCATION GROUP, INC. AND SUBSIDIARIES
COMPUTATION OF NET LOSS PER SHARE OF COMMON STOCK
FOR THE THREE MONTHS ENDED
SEPTEMBER 30, 1996 SEPTEMBER 30, 1995
------------------ -------------------
Primary:
Average shares outstanding.......... 10,828,356 10,209,366
Net effect of dilutive stock options and
warrants based on the treasury stock
method using the average market price -- --
Sanford-Brown shares held in escrow. -- --
------------ -----------
Total............................... 10,828,356 10,209,366
============ ===========
Net loss............................ $(484,067) $( 438,288)
Per share amount.................... $ (.04) $ (.04)
Fully diluted:
Average shares outstanding.......... 10,828,356 10,209,366
Net effect of stock options and warrants
based on the treasury stock method
using quarter-end market price... 2,336,375 679,458
Sanford-Brown shares held in escrow. 521,612 1,021,612
------------ -----------
Total............................... 13,686,343 11,910,436
============ ===========
Net loss............................ $ (484,067) $ ( 438,288)
Per share amount.................... $ (.04) $ (.04)
Net loss per share of common stock for primary purposes is computed by
dividing net loss by the weighted average number of shares outstanding during
the period adjusted for common stock equivalents when such adjustments result in
dilution of earnings per share. The Company has considered all common stock
equivalents for purposes of calculating fully diluted earnings per share
regardless of their anti-dilutive effect. Included as common stock equivalents
for the six months ended September 30, 1996 for fully diluted purposes are
521,612 shares issued in connection with the acquisition of Sanford-Brown
College that remain in escrow to be disbursed to the seller or returned to the
Company upon the occurrence of, or failure to achieve, certain events.
<PAGE>
WHITMAN EDUCATION GROUP, INC. AND SUBSIDIARIES
COMPUTATION OF NET LOSS PER SHARE OF COMMON STOCK
FOR THE SIX MONTHS ENDED
SEPTEMBER 30, 1996 SEPTEMBER 30, 1995
------------------ -------------------
Primary:
Average shares outstanding.......... 10,629,432 10,209,366
Net effect of dilutive stock options and
warrants based on the treasury stock
method using the average market price -- --
Sanford-Brown shares held in escrow. -- --
------------ -----------
Total............................... 10,629,432 10,209,366
============ ===========
Net loss............................ $ (408,050) $ (1,084,664)
Per share amount.................... $ (.04) $ (.11)
Fully diluted:
Average shares outstanding.......... 10,629,432 10,209,366
Net effect of stock options and warrants
based on the treasury stock method
using quarter-end market price... 2,336,375 679,458
Sanford-Brown shares held in escrow. 521,612 1,021,612
------------- -----------
Total............................... 13,487,419 11,910,436
============ ===========
Net loss............................ $ (408,050) $(1,084,664)
Per share amount.................... $ (.03) $ (.09)
Net loss per share of common stock for primary purposes is computed by
dividing net loss by the weighted average number of shares outstanding during
the period adjusted for common stock equivalents when such adjustments result in
dilution of earnings per share. The Company has considered all common stock
equivalents for purposes of calculating fully diluted earnings per share
regardless of their anti-dilutive effect. Included as common stock equivalents
for the six months ended September 30, 1996 for fully diluted purposes are
521,612 shares issued in connection with the acquisition of Sanford-Brown
College that remain in escrow to be disbursed to the seller or returned to the
Company upon the occurrence of, or failure to achieve, certain events.
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAR-31-1997
<PERIOD-START> JUN-30-1996
<PERIOD-END> SEP-30-1996
<CASH> 571,967
<SECURITIES> 487,500
<RECEIVABLES> 20,387,447
<ALLOWANCES> (2,318,000)
<INVENTORY> 868,521
<CURRENT-ASSETS> 22,135,962
<PP&E> 13,309,351
<DEPRECIATION> (5,191,068)
<TOTAL-ASSETS> 40,916,650
<CURRENT-LIABILITIES> 18,067,071
<BONDS> 0
0
0
<COMMON> 12,161,926
<OTHER-SE> (809,852)
<TOTAL-LIABILITY-AND-EQUITY> 40,916,650
<SALES> 22,472,043
<TOTAL-REVENUES> 22,472,043
<CGS> 14,362,745
<TOTAL-COSTS> 22,597,900
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 459,930
<INCOME-PRETAX> (585,787)
<INCOME-TAX> (177,737)
<INCOME-CONTINUING> (408,050)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (408,050)
<EPS-PRIMARY> (.04)
<EPS-DILUTED> (.04)
</TABLE>
