SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
Current Report
Pursuant to Section 13 or 15(d) of
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) MARCH 29, 1996
WHITMAN EDUCATION GROUP, INC.
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(Exact Name of Registrant as Specified in Its Charter)
New Jersey
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(State or Other Jurisdiction of Incorporation)
1-13722 22-2246554
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(Commission File No.) (IRS Employer Identification No.)
4400 Biscayne Boulevard, 6th Floor, Miami, Florida 33137
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(Address of Principal Executive Offices) (Zip Code)
(305) 575-6534
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(Registrant's Telephone Number, Including Area Code)
WHITMAN MEDICAL CORP.
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(Former Name or Former Address, if Changed Since Last Report)
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Item 2. ACQUISITION OR DISPOSITION OF ASSETS
On March 29, 1996, Registrant completed the merger of M.D.J.B.,
Inc. ("MDJB"), the sole shareholder of Colorado Technical University, Inc.,
which operates Colorado Technical University ("Colorado Tech"), with and into
Whitman Medical Acquisition Corp. ("Buyer"), a wholly-owned subsidiary of the
Registrant. Reference is made to Registrant's Report on Form 8-K, dated
September 12, 1995, reporting on the execution by Registrant, Buyer and MDJB of
the Agreement and Plan of Merger with respect to such merger.
Colorado Tech is a regionally accredited degree granting
institution with one location in Colorado Springs, Colorado with approximately
1,600 students enrolled primarily in computer science, engineering and
management programs. Colorado Tech confers degrees at the associate's,
bachelor's, master's and doctoral levels. MDJB also operates Concept
Communications, an advertising agency which provides services to Colorado Tech
and other clients not affiliated with MDJB. For the year ended December 31,
1995, MDJB reported net revenues of $8.9 million and net income of $298,000.
In connection with the merger, the Registrant issued 1,250,000
shares of its common stock in exchange for all of the issued and outstanding
stock of MDJB. The merger consideration was determined by arms' length
negotiations between the Registrant and MDJB giving consideration to the
relative size of the companies, including assets, income and future earnings
potential and the outstanding capital stock and trading price of the
Registrant's stock. There was no prior relationship between the Registrant and
MDJB or any of their respective affiliates, officers, directors or associates
thereof. The transaction was accounted for as a pooling of interests.
Colorado Tech is a participating institution under one or more of
the student financial assistance programs of Title IV of the Higher Education
Act of 1965, as amended ("Title IV Programs"). The Title IV Programs are
administered by the U.S. Department of Education ("ED"). A change of control of
a participating institution automatically terminates the access of that
institution to most Title IV Program funds until recertification by the ED. The
closing of the subject merger terminated Colorado Tech's eligibility to
participate in Title IV Programs. An application for recertification is being
filed in order for Colorado Tech to be eligible again to participate in the
Title IV Programs. Approximately 35% of Colorado Tech's revenues are derived
from Title IV Program financial assistance. Pending recertification, Registrant
will be required to utilize working capital to fund the operation of Colorado
Tech.
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The Agreement and Plan of Merger provides that the Buyer may
rescind the transaction if within 120 days after the closing (which period may
be extended by Buyer and MDJB up to an additional 120 days), the ED advises
Buyer that it does not intend to certify Colorado Tech for participation in
Title IV Programs and if, after an appeal period, Buyer and the Registrant are
unsuccessful in securing such certification. Pending the resolution of the
recertification issue, all of the shares issuable to MDJB shareholders are being
held in escrow by the Registrant. If the termination of the merger occurs, the
Registrant must continue to fund the operations of MDJB for an additional 120
days after notice of rescission is given. All advances made by Registrant to
Colorado Tech pending recertification or during the 120 day post-rescission
period will be repaid to the Registrant on terms specifically described in the
Agreement and Plan of Merger.
If the condition subsequent is satisfied, 87,500 shares of the
1,250,000 shares issuable to the MDJB shareholders will continue to be held in
escrow to be utilized to satisfy Registrant's claims, if any, above a deductible
under the indemnification provisions of the Agreement and Plan of Merger. To the
extent that no claim has been made, the shares shall be held in escrow until the
issuance of the first independent audit report following completion of the
merger on the combined results of the Buyer and MDJB.
At the closing, Buyer entered into an agreement to employ David
O'Donnell as President of the Buyer for a period of three years at a minimum
salary of $145,000 per year plus an annual bonus of up to 50% of employee's
annual base salary, such bonus to be determined by Buyer's Board of Directors
based upon the employee's achievement of a performance plan mutually agreed upon
by Buyer and the employee for the preceding year. Pursuant to the Agreement, Mr.
O'Donnell was also granted options to purchase 75,000 shares of the Registrant's
common stock pursuant to the Registrant's Incentive Stock Option Plan.
Further information with respect to the merger is contained in
Registrant's Registration Statement (No. 33-64153) on Form S-4 filed with the
Commission on January 19, 1996, as amended.
Item 5. OTHER EVENTS
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On March 15, 1996, the Registrant filed a Certificate of
Amendment to its Certificate of Incorporation changing its name to Whitman
Education Group, Inc. The Registrant believes the new name more appropriately
describes its current and planned future operations and better reflects its
intent to operate as a group of entities dedicated to the delivery of quality
technical education and training.
Item 7. FINANCIAL STATEMENT, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
Financial Statements:
It is impracticable to provide the required financial statements
and pro forma financial information relative to the acquired business. Such
financial statements and pro forma information shall be filed under cover of
Form 8 no later than June 14, 1996.
EXHIBIT INDEX
Exhibit 2.1 - Agreement and Plan of Merger1
Exhibit 2.2 - First Amendment to Agreement and Plan of Merger2
Exhibit 3 - Certificate of Incorporation, as amended
Exhibit 10.35 - Employment Agreement dated as of March 29, 1996
by and between M.D.J.B., Inc. and David
O'Donnell.
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1 Filed as an exhibit to Registrant's Report on Form 8-K dated
September 12, 1995 and pursuant to Rule 12b-32 incorporated
herein by reference.
2 Filed as an Exhibit to Registrant's Registration Statement (No.
33-64153) on Form S-4 filed with the Commission on January 19,
1996, as amended, and pursuant to Rule 12b-32 incorporated herein
by reference.
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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 hereunto duly authorized.
WHITMAN EDUCATION GROUP, INC.
By: /s/ RANDY S. PROTO
---------------------------------
Randy S. Proto, President
Date: April ___, 1996.
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CERTIFICATE OF INCORPORATION
OF
WHITMAN MEDICAL CORP.
THIS IS TO CERTIFY THAT there is hereby organized a corporation
under and by virtue of N.J.S. 14A:1-1 et seq., the "New Jersey Business
Corporation Act."
1. The name of the corporation is WHITMAN MEDICAL CORP.
2. The address and zip code of this corporation's initial registered
office is 990 Raritan Road, Clark, New Jersey 07066 and the name of this
corporation's initial registered agent at such address is Marvin Gordon.
3. The purposes for which this corporation is organized are to
engage in any activity within the purposes for which corporations may be
organized under the "New Jersey Business Corporation Act" (N.J.S. 14A:1-1 et
seq) and, without limitation, to manufacture, sell, distribute and otherwise
deal in medical devices and products.
4. The aggregate number of shares which the corporation shall have
authority to issue is two thousand five hundred (2,500), without par value.
5. The first Board of Directors of this corporation shall consist of
two (2) directors and the name and address of each person who is to serve as
such director is:
Marvin Gordon
27 Lynnfield Drive
East Windsor, New Jersey 08520
Joseph Lichtenstein
101 Devon Road
Colonia, New Jersey 07067
<PAGE>
6. The name and address of the incorporator is:
E. Cooke Rand, Esq.
295 Madison Avenue
New York, N.Y. 10017
7. The shareholders shall have preemptive rights.
IN WITNESS WHEREOF, the incorporator, being over the age of
twenty-one years, has signed this Certificate this 5th day of March, 1979.
/s/ E. COOK RAND
----------------------------------
E. Cooke Rand
<PAGE>
CERTIFICATE OF AMENDMENT
OF
WHITMAN MEDICAL CORP.
Pursuant to the provisions of Section 14A:9-4 of the New Jersey
Business Corporation Act, the undersigned corporation adopts the following
Certificate of Amendment to its Certificate of Incorporation, which amendment
increases the number of authorized shares of the corporation and abolishes
existing preemptive rights.
1. The name of the corporation is Whitman Medical Corp.
2. The following amendment to the Certificate of Incorporation was
adopted by the shareholders of the Corporation on March 16, 1981:
(a) Section 4 of the Certificate of Incorporation is hereby
amended to read as follows:
"4. The aggregate number of shares which the Corporation
shall have authority to issue is two million (2,000,000),
without par value."
(b) The Certificate of Incorporation is hereby amended by
deleting therefrom Section 7 which read as follows:
"7. The Shareholders shall have preemptive rights."
3. The number of shares of the corporation issued and outstanding at
the time of the adoption of the amendment was two thousand five hundred (2,500);
and the number of shares entitled to vote thereon was two thousand five hundred
(2,500).
4. The holders of all of the shares outstanding and entitled to vote
on said amendment have signed a consent in writing adopting said amendment.
<PAGE>
5. The number of shares of the corporation issued and outstanding at
the time of the adoption of the amendment was two thousand five hundred (2,500),
without par value. Such issued and outstanding shares shall be divided into
333,390 shares, without par value, at the rate of 133.34 shares for each share
issued and outstanding at the time of the adoption of the amendment.
6. This amendment is to become effective upon the date of filing.
IN WITNESS WHEREOF we have hereunto set our hands the 23rd day of
March, 1981.
WHITMAN MEDICAL CORP.
By: /s/ MARVIN GORDON
-----------------------------------
Marvin Gordon, President
/s/ JOSEPH LICHTENSTEIN
-----------------------------------
Joseph Lichtenstein
Secretary
<PAGE>
CERTIFICATE OF AMENDMENT TO THE
CERTIFICATE OF INCORPORATION OF
WHITMAN MEDICAL CORP.
Pursuant to the provisions of Section 14A:9-2(4) and Section
14A:9-4(3) of the New Jersey Business Corporation Act, WHITMAN MEDICAL CORP.
adopts the following Certificate of Amendment to its Certificate of
Incorporation:
1. The name of the Corporation is WHITMAN MEDICAL CORP.
2. The following amendment to the Certificate of Incorporation was
adopted by the shareholders of the Corporation on November 24, 1987:
The Certificate of Incorporation is hereby
amended by the addition of Section 7, which shall
read as follows:
7. The Directors of the Corporation shall
not be personally liable to the Corporation or its
Shareholders for damages for breach of any duty
owed to the Corporation or its Shareholders.
Notwithstanding the foregoing, a Director shall not be
relieved from liability for any breach of duty based
upon an act or omission (a) in breach of such person's
duty of loyalty to the Corporation or its Shareholders,
(b) not in good faith or involving a knowing violation
of law, or (c) resulting in the receipt of such person of
an improper personal benefit.
3. The number of shares of the Corporation entitled to vote on the
amendment at the time of its adoption was 1,107,585, all of one class.
4. The number of shares voted for the amendment was 806,622 and the
number of shares voted against the amendment was 17,150.
<PAGE>
5. This amendment shall become effective upon the date of filing.
Dated: December ___, 1987. WHITMAN MEDICAL CORP.
By: /s/ MARVIN GORDON
-----------------------------------
Marvin Gordon, President
<PAGE>
CERTIFICATE OF AMENDMENT
OF
WHITMAN MEDICAL CORP.
Pursuant to the provisions of Section 14A:9-4 of the New Jersey
Business Corporation Act, the undersigned corporation adopts the following
Certificate of Amendment to its Certificate of Incorporation, which amendment
increases the numbers of authorized shares of the corporation.
1. The name of the corporation is Whitman Medical Corp.
2. The following amendment to the Certificate of Incorporation was
adopted by the shareholders of the Corporation on October 16, 1990: Section 4 of
the Certificate of Incorporation is hereby amended to read as follows:
"4. The aggregate number of shares which the Corporation
shall have authority to issue is four million (4,000,000),
without par value."
3. The number of shares of the corporation issued and outstanding at
the time of the adoption of the amendment was one million one hundred thirty
five thousand two hundred and nine (1,135,209); and the number of shares
entitled to vote thereon was one million one hundred thirty five thousand two
hundred and nine (1,135,209).
4. The number of shares of the corporation voting in favor of the
amendment was nine hundred nineteen thousand seven hundred and eighty two
(919,782); and the number of shares of the corporation voting against the
amendment was twenty four thousand nine hundred and fifty (24,950).
<PAGE>
5. This amendment is to become effective upon the date of filing.
IT WITNESS WHEREOF, we have hereunto set our hands the 30th day of
October, 1990.
WHITMAN MEDICAL CORP.
By: /s/ MARVIN GORDON
-----------------------------------------
Marvin Gordon, President
/s/ JOSEPH LICHTENSTEIN
-----------------------------------------
Joseph Lichtenstein, Secretary
<PAGE>
CERTIFICATE OF AMENDMENT
OF
WHITMAN MEDICAL CORP.
Pursuant to the provisions of Section 14A:9-4 of the New Jersey
Business Corporation Act, the undersigned corporation adopts the following
Certificate of Amendment to its Certificate of Incorporation, which amendment
increases the numbers of authorized shares of the corporation.
1. The name of the corporation is Whitman Medical Corp.
2. The following amendment to the Certificate of Incorporation was
adopted by the shareholders of the corporation on November 19, 1992:
Section 4 of the Certificate of Incorporation is hereby
amended to read as follows:
4. The aggregate number of shares which the
Corporation shall have authority to issue is fifty
million (50,000,000), without par value.
3. The number of shares of the corporation entitled to vote thereon
at the time of the adoption of the amendment was three million one hundred fifty
three thousand seven hundred and ten (3,153,710).
4. The number of shares of the corporation voting in favor of the
amendment was two million seven hundred and sixteen thousand nine hundred and
eighty two (2,716,982); and the number of shares of the corporation voting
against the amendment was four thousand (4,000).
<PAGE>
5. This amendment is to become effective upon the date of filing.
IN WITNESS WHEREOF, we have hereunto set our hands the 26th day of
November, 1992.
WHITMAN MEDICAL CORP.
By: /s/ MARVIN GORDON
--------------------------------------
Marvin Gordon, President
/s/ JOSEPH LICHTENSTEIN
--------------------------------------
Joseph Lichtenstein, Secretary
<PAGE>
CERTIFICATE OF AMENDMENT7
OF
WHITMAN MEDICAL CORP.
Pursuant to the provisions of Section 14A:9-4 of the New Jersey
Business Corporation Act, the undersigned corporation adopts the following
Certificate of Amendment to its Certificate of Incorporation, which amendment
changes the name of the corporation.
1. The name of the corporation is WHITMAN MEDICAL CORP.
2. The following amendment to the Certificate of Incorporation was
adopted by the shareholders of the corporation on March 8, 1996:
Section 1 of the Certificate of Incorporation is hereby amended to
read as follows:
"1. The name of the corporation is WHITMAN EDUCATION
GROUP, INC."
3. The number of shares of the corporation entitled to vote thereon
at the time of the adoption of the amendment was 4,396,762.
4. The number of shares of the corporation voting in favor of the
amendment was 3,278,637; and the number of shares of the corporation voting
against the amendment was 1,900.
5. This amendment is to become effective on the date of filing.
IN WITNESS WHEREOF, I have hereunto set my hand this 13th day of
March, 1996.
WHITMAN MEDICAL CORP.
By: /s/ RANDY S. PROTO
-----------------------------------
Randy S. Proto, President
EXHIBIT 10.35
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT made as of the 29th March, 1996 between M.D.J.B.,
INC., (FORMERLY WHITMAN MEDICAL ACQUISITION CORPORATION), a Delaware corporation
(the "Corporation"), with principal executive offices at 4400 Biscayne
Boulevard, Miami, Florida 33137, and DAVID D. O'DONNELL, residing at Colorado
Springs, Colorado (the "Employee").
W I T N E S S E T H:
WHEREAS, the Corporation, a wholly owned subsidiary of Whitman Medical
Corp., a New Jersey Corporation ("Whitman") has agreed to purchase (the
"Acquisition") all the issued and outstanding capital stock of M.D.J.B., Inc., a
Colorado corporation ("MDJB") pursuant to a certain Agreement and Plan of Merger
between Whitman, Acquisition and MDJB dated September 12, 1995, as amended, (the
"Merger Agreement"); and
WHEREAS, the Corporation deems it to be in its interests to secure and
retain the services of the Employee and the Employee desires to be employed by
the Corporation upon the terms and conditions hereinafter set forth; and
WHEREAS, this Agreement shall supersede and replace any existing
employment agreement or arrangement between the Corporation, MDJB or their
predecessors and Employee and is intended to provide for the relationship and
obligations of each of the parties hereto with respect to employment and other
matters referred to in the within agreement,
NOW, THEREFORE, in consideration of the mutual covenants and
undertakings herein contained, the parties agree as follows:
1. EMPLOYMENT, DUTIES AND ACCEPTANCE.
1.1 SERVICES. The Corporation hereby employs Employee, for the
Term (as hereinafter defined in Section 2 hereof), to render exclusive and
full-time services to the business and affairs of the Corporation as the
President of the Corporation, subject to the direction and control of the Board
of Directors of the Corporation and the President of Whitman ("Whitman
Management"), and, in connection therewith, the Employee shall be responsible
for the operations of the Corporation and performing such executive management
duties as he shall reasonably be directed or requested to perform by the Whitman
Management, to whom he shall report, and to use his best efforts, skill and
abilities to promote the interests of the Corporation, Whitman and its
subsidiaries. For so long as the Corporation operates in the Colorado area,
Employee shall not be required by the Corporation to relocate.
<PAGE>
1.2 ACCEPTANCE. Employee hereby accepts such employment and
agrees to render the services described in Section 1.1 hereof.
2. TERM OF EMPLOYMENT.
The term of Employee's employment under this Agreement (the
"Term") shall commence on the date of this Agreement and shall expire on the
third (3rd) anniversary thereof, unless (i) sooner terminated pursuant to
Section 8 of this Agreement or (ii) extended by the written agreement of the
parties hereto.
3. COMPENSATION.
A. During the Term, as full compensation for all services to
be rendered pursuant to this Agreement, the Corporation agrees to pay Employee a
salary at the annual rate of $145,000.00, payable in equal monthly or more
frequent installments, less such deductions or amounts to be withheld as shall
be required by applicable laws and regulations. Such compensation shall be
reviewed annually but shall in no event be reduced as a result of such review.
Employee understands and agrees that the Corporation is not under any obligation
to increase Employee's compensation as a result of such review.
B. Employee shall also receive, subject to termination upon
the exercise of the Rescission Right (as defined and provided in the Merger
Agreement), as of the date of this Agreement a grant of a Stock Option under
Whitman's existing Incentive Stock Option Plan to purchase 75,000 shares of the
Common Stock of Whitman (the "Option"). The Option shall have a term of (10)
years, subject to earlier termination upon Employee's termination of employment
with the Corporation, and shall vest in full at the expiration of three (3)
years from the date of grant; provided that if Employee is terminated by the
Corporation pursuant to Section 8.3 hereof, the Stock Option shall immediately
vest upon such termination. The remaining terms of the Stock Option shall be
consistent with the terms and provisions of the Whitman Stock Option Plan
pursuant to which the Stock Option will be granted. At the commencement of each
of the second and third year of employment hereunder, Employee shall be eligible
for the grant of additional stock options from Whitman's Stock Option Plan in
accordance with the Board of Directors' annual and then existing stock option
review and grant procedure.
C. Employee shall be eligible for an annual bonus, payable
within sixty (60) days after the first, second and third anniversary of this
Agreement, of up to 50% of the employee's annual base salary payable under
Section 3A hereof, which bonus shall be determined by the Board of the
Corporation based upon Employee's achievement of the performance plan mutually
agreed upon by the Corporation and Employee for such preceding year.
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4. EXPENSES.
The Corporation shall pay or reimburse Employee for all
reasonable expenses actually incurred or paid by him during the Term in the
performance of his services under this Agreement, upon presentation of expense
statements or vouchers or such other supporting information as the Corporation
may require.
5. ADDITIONAL BENEFITS.
In addition to the compensation, expenses and other benefits
to be paid under Sections 3 and 4 hereof, Employee will be entitled to all
rights and benefits, including vacation time, for which he shall be eligible
under those MDJB incentive, pension or other extra compensation or "fringe"
benefit plans now existing for the benefit of the executives or employees
generally of MDJB that the Corporation elects to continue following the
consummation of the Acquisition as well as those incentive, pension or other
extra compensation or "fringe" benefit plans of Whitman now existing or adopted
during the Term for the benefit of the executives or employees generally of
Whitman. The Corporation shall also (i) satisfy the premium on Employee's
personal life insurance policy currently maintained by MDJB by paying the gross
premium plus the income taxes attributable to Employee as a result of such
premium payment, and (ii) provide Employee with a car allowance consistent with
that provided to other executives of Whitman.
6. MDJB CREDIT FACILITIES.
The Corporation and Whitman shall use their best efforts
following the expiration of the Rescission Right (as defined and provided in the
Merger Agreement), subject to the consent and approval of Bank One, Colorado,
N.A. (the "Bank"), to substitute their guaranties for those of Employee with
respect to existing credit facilities maintained by MDJB or its subsidiaries
with the Bank (the "Credit Facility"). If the Bank will not release Employee
from his present guarantee, the Corporation and Whitman will, nevertheless,
execute and deliver their unconditional and primary guarantee to the Bank.
Commencing upon the expiration of the Rescission Right, Whitman and the
Corporation agree to hold Employee harmless and indemnify him from any claims,
losses, judgments and costs, including, without limitation, reasonable
attorney's fees and expenses arising from such guarantee of Employee. When the
Credit Facility provided by the Bank expires (on or about May 1, 1996), provided
the Rescission Right has expired, Employee may terminate his guarantee and shall
not be required to guarantee payment to any provider of a replacement or
successor credit facility.
7. INSURABILITY; RIGHT TO INSURE. Employee represents and
warrants to the Corporation that, to the best of his knowledge, on the date
hereof he is, and upon the commencement of the Term he will be, insurable at
standard premium rates. Employee agrees that the Corporation shall have the
right during the Term to insure the life of Employee by a
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<PAGE>
policy or policies of insurance in such amount or amounts as it may deem
necessary or desirable, and the Corporation shall be the beneficiary of any such
policy or policies and shall pay the premiums or other costs thereof. The
Corporation shall have the right, from time to time, to modify any such policy
or policies of insurance or to take out new insurance on the life of Employee.
Employee agrees, upon request, at any time or times prior to the commencement of
or during the Term to sign and deliver any and all documents and to submit to
any physical or other reasonable examinations which may be required in
connection with any such policy or policies of insurance or modifications
thereof.
8. TERMINATION.
8.1 DEATH. If during the Term Employee shall die, this
Agreement shall terminate as of the date of Employee's death. The compensation
or other amounts payable hereunder to or for the benefit of Employee through the
date of death, if any, shall be paid to such person or persons as Employee may
designate by notice to the Corporation from time to time or, in the absence of
such designation, to his spouse.
The Option may thereafter be exercised in accordance with the
terms of the 1992 Incentive Stock Option Plan of Whitman.
8.2 DISABILITY. Should Employee become disabled, as
hereinafter defined, during the Term hereunder, this Agreement and the
Employee's employment with the Corporation shall terminate upon written notice
from the Corporation to the Employee.
The Option may thereafter be exercised in accordance with the
terms of the 1992 Incentive Stock Option Plan of Whitman.
As used herein, the term "disabled" is hereby defined as the
inability of Employee, by reason of injury, physical or mental illness or other
similar cause, to perform a major part of his duties and responsibilities in
connection with the conduct of the business and affairs of the Corporation for a
continuous period of three (3) months or more, or for an aggregate period of
four (4) months or more in any twelve (12) month period, whether or not
continuous. In the event of a dispute as to the existence of any such
disability, Employee agrees to submit to medical and psychiatric examination
conducted by a physician mutually acceptable to the employee and the Corporation
and to be bound by any determination made by such physician.
8.3 TERMINATION WITHOUT CAUSE. The Corporation shall have the
option to terminate this Agreement without cause upon thirty days' written
notice to the Employee. In the event the Corporation does terminate this
Agreement without it being for cause (as defined in Section 8.4 hereof), the
Corporation shall pay the Employee his salary, benefits and any bonuses to which
he is entitled up to the earlier of (i) one (1) year, or (ii) the remaining
Term.
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The Option may thereafter be exercised in accordance with the
terms of the 1992 Incentive Stock Option Plan of Whitman.
8.4 TERMINATION FOR CAUSE. The Corporation may at any time
during the Term, by notice, terminate this Agreement and discharge Employee for
cause, whereupon the Corporation's obligation to pay compensation or other
amounts payable hereunder to or for the benefit of Employee shall terminate on
the date of such discharge. As used herein the term "for cause" shall be deemed
to mean and include excessive absenteeism, alcoholism, drug abuse,
misappropriation of any money or other assets or properties of the Corporation
or its subsidiaries, conviction of or plea of NOLO CONTENDERE or its equivalent
with respect to any felony that in either case in the judgment of the Board of
Directors causes or is likely to cause material economic damage to the
Corporation, its subsidiaries or affiliates or material injury to the business
reputation of the Corporation, its subsidiaries or affiliates, willful violation
of any reasonable specific and lawful written directions from Whitman Management
or the Board of Directors of the Corporation after written notice by the
Corporation to the Employee (a "Deficiency Notice") and Employee's failure to
remedy or cure such violation or undertake such direction within ten (10)
business days after receipt (as determined in accordance with Section 11 hereof)
of the Corporation's Deficiency Notice (provided, however, that the
Corporation's issuance of three (3) or more Deficiency Notices within any
eighteen (18) month period during the Term shall be deemed a "for cause"
termination event under this Section 8.4), or refusal to perform the services
required of Employee under this Agreement.
The Option may be exercised by Employee (to the extent vested)
following a termination pursuant to this Section 8.4 as permitted in accordance
with the 1992 Incentive Stock Option Plan of Whitman.
8.5 TERMINATION BY EMPLOYEE. Employee shall have the right,
upon ninety (90) days' written notice to the Corporation, to terminate this
Agreement. Any termination by Employee pursuant to this Section 8.5 shall
terminate this Agreement as of the date of termination as set forth in the
notice unless this Agreement is terminated sooner by either party, whereupon the
Corporation's obligation to pay compensation or other amounts payable hereunder
to or for the benefit of Employee shall cease on the date of termination set
forth in the notice.
The Option may thereafter be exercised in accordance with the
terms of the 1992 Incentive Stock Option Plan of Whitman.
9. PROTECTION OF CONFIDENTIAL INFORMATION. In view of the fact
that Employee's work for the Corporation will bring him into close contact with
confidential affairs thereof, and plans for future developments, Employee agrees
to the following:
9.1 SECRECY. To keep secret and retain in the strictest
confidence all confidential matters of the Corporation, including, without
limitation, trade "know how" and trade secrets, customer lists, pricing
policies, manufacturing methods, technical processes, formulae, inventions
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<PAGE>
and research projects, and other business affairs of MDJB and the Corporation,
learned by him heretofore or hereafter, and not to disclose them to anyone
inside or outside of the Corporation, except in the course of performing his
duties hereunder or with the Corporation's prior consent.
9.2 RETURN MEMORANDA, ETC. To deliver promptly to the
Corporation on termination of his employment, or at any other time the
Corporation may so request, all memoranda, notes, records, reports, manuals,
drawings, blueprints and other documents (and all copies thereof) relating to
the Corporation's business and all property associated therewith, which he may
then possess or have under his control.
9.3 NON-COMPETITION. The Employee agrees that he shall not at
any time prior to 18 months after the earlier to occur of the expiration of the
Term hereunder or earlier termination pursuant to Sections 8.2, 8.3, 8.4 or 8.5
and any voluntary termination, own, manage, operate, be a director or an
employee of, or a consultant to any business or corporation which is conducting
any business which competes with the business of the Corporation within
twenty-five (25) miles of any campus operated by the Corporation or any of its
subsidiaries. The Employee further agrees that he shall not, at any time prior
to 18 months after the earlier to occur of (i) the expiration of the Term
hereunder and (ii) any voluntary termination, assist or facilitate any such
business or corporation to hire anyone who was employed by the Corporation at
such time or at any time during the preceding twelve months. If any of the
provisions of this section, or any part thereof, is hereinafter construed to be
invalid or unenforceable, the same shall not affect the remainder of such
provision or provisions, which shall be given full effect, without regard to the
invalid portions. If any of the provisions of this section, or any part thereof,
is held to be unenforceable because of the duration of such provision, the area
covered thereby or the type of conduct restricted therein, the parties agree
that the court making such determination shall have the power to modify the
duration, geographic area and/or other terms of such provision and, as so
modified, said provision shall then be enforceable. In the event that the courts
of any one or more jurisdictions shall hold such provisions wholly or partially
unenforceable by reason of the scope thereof or otherwise, it is the intention
of the parties hereto that such determination not bar or in any way affect the
Corporation's right to the relief provided for herein in the courts of any other
jurisdictions as to breaches or threatened breaches of such provisions in such
other jurisdictions, the above provisions as they relate to each jurisdiction
being, for this purpose, severable into diverse and independent covenants.
Notwithstanding anything to the contrary contained herein, (i) if the Employee
is terminated without cause pursuant to Section 8.3 hereof, the provisions of
this Section 9.3 shall apply only for such period as Employee continues to be
paid in accordance with Section 8.3 and (ii) if the Corporation shall not offer
to continue or renew this Agreement with Employee on substantially the same
terms as existing between the parties during the final year of this Agreement
(exclusive of any Option grant which shall be subject to separate agreement, if
any, between the parties), the provisions of this Section 9.3 shall expire upon
the expiration of the Term; provided however, that the restriction on Employee
from hiring or assisting any business or corporation from hiring anyone who is
employed by the Corporation at such time, or within the preceding 12 months,
shall continue for 18 months from the expiration of the Term.
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9.4 INVENTIONS, DESIGNS AND PRODUCT DEVELOPMENTS. All
inventions, innovations, designs, processes, programs, techniques, assemblies of
information, ideas and product developments developed or conceived by Employee,
solely or jointly with others, relating to the Corporation's or any
subsidiaries' business operations, whether or not patentable or copyrightable,
at any time during the Term (collectively, the "Developments") and all of the
Employee's right, title and interest therein, shall be the exclusive property of
the Corporation. Employee hereby assigns, transfers and conveys to the
Corporation all of his right, title and interest in and to any and all such
Developments. Employee shall disclose fully, as soon as practicable and in
writing, all Developments to the Whitman Management. Employee agrees to preserve
as confidential full particulars of any matters referred to herein, and to
maintain at all times adequate current written records of all such matters which
records shall be and shall remain the property of the Corporation. At any time
and from time to time, upon the request of the Corporation, Employee shall
execute and deliver to the Corporation any and all instruments, documents and
papers, give evidence and do any and all other acts that, in the opinion of
counsel for the Corporation, are or may be necessary or desirable to document
such transfer or to enable the Corporation to file and prosecute applications
for and to acquire, maintain and enforce any and all patents, trademark
registrations or copyrights under Unites States or foreign law with respect to
any Developments or to obtain any extension, validations, reissue, continuance
or renewal of any such patent, trademark or copyright. The Corporation will be
responsible for the preparation of any such instruments, documents and papers
and for the prosecution of any such proceedings.
9.5 INJUNCTIVE RELIEF. The Employee acknowledges and agrees
that the restriction set forth in this Section 9 are reasonable and necessary to
protect the legitimate interests of the Corporation and that the Corporation
would not have entered into this Agreement in the absence of such restrictions,
and because of the unique and extraordinary nature of his services, any breach
or threatened breach of the provisions of Sections 9.1, 9.2, 9.3 or 9.4 hereof
will cause irreparable injury and incalculable harm to the Corporation, and the
Corporation shall, accordingly, be entitled to injunctive and other equitable
relief for such breach or threatened breach without the necessity of providing
actual damages and that resort by the Corporation to such injunctive or other
equitable relief shall not be deemed to waive or to limit in any respect any
right or remedy which the Corporation may have with respect to such breach or
threatened breach.
9.6 EXPENSES OF ENFORCEMENT OF COVENANTS. In the event that
any action, suit or proceeding at law or in equity is brought to enforce the
covenants contained in Section 9.1, 9.2, 9.3 or 9.4 hereof, or to obtain money
damages for the breach thereof, the party substantially prevailing in any such
action, suit or other proceeding shall be entitled upon demand to reimbursement
from the other party for all expenses (including, without limitation, reasonable
attorneys' fees and disbursements) incurred in connection therewith.
10. INDEMNIFICATION.
Except in cases of the Employee's gross negligence or wilful
misconduct, the Corporation will defend and indemnify Employee (except as
otherwise provided in the Merger
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Agreement) to the maximum extent permitted by applicable law and the by-laws of
the Corporation, against all claims, costs, charges and expenses incurred or
sustained by him in connection with any action, suit or other proceeding to
which he may be made a party by reason of his being an officer, director or
employee of the Corporation or of any subsidiary or affiliate thereof and, to
the extent of any "tail" insurance coverage maintained by the Corporation, by
reason of his being an officer, director or employee of MDJB, Inc. and Colorado
Technical University, Inc.
11. NOTICES.
All notices, requests, consents and other communications
required or permitted to be given hereunder, shall be in writing and shall be
deemed to have been duly given if delivered personally or mailed first-class,
postage prepaid, by registered or certified mail (notices mailed shall be deemed
to have been given three days after the date sent), to the parties at their
respective addresses hereinabove set forth or to such other address as either
party shall designate by notice in writing to the other in accordance herewith.
12. GENERAL.
12.1 GOVERNING LAW. This Agreement shall be governed by and
construed and enforced in accordance with the local laws of the State of New
Jersey applicable to agreements made and to be performed entirely in New Jersey.
The Employee hereby irrevocably submits to the personal jurisdiction of the
state courts of New Jersey and the United States District Court for the District
of New Jersey in connection with any suit, action or proceeding arising out of
or related to this Agreement. Effective service may be made upon Employee by
mail pursuant to Section 11 hereof.
12.2 CAPTIONS. The section headings contained herein are for
reference purposes only and shall not in any way affect the meaning or
interpretation of this Agreement.
12.3 ENTIRE AGREEMENT. This Agreement sets forth the entire
agreement and understanding of the parties relating to the subject matter
hereof, and supersedes all prior agreements, arrangements and understandings,
written or oral, relating to the subject matter hereof. No representation,
promise or inducement has been made by either party that is not embodied in this
Agreement, and neither party shall be bound by or liable for any alleged
representation, promise or inducement not so set forth.
12.4 ASSIGNABILITY. This Agreement, and Employee's rights and
obligations hereunder, may not be assigned by Employee. The Corporation may
assign its rights, but not its obligations, to any affiliate; in any event the
rights and obligations of the Corporation hereunder shall be binding on its
successors or assigns, whether by merger, consolidation or acquisition of all or
substantially all of its business or assets.
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12.5 AMENDMENT. This Agreement may be amended, modified,
superseded, canceled, renewed or extended and the terms or covenants hereof may
be waived, only by a written instrument executed by both of the parties hereto,
or in the case of a waiver, by the party waiving compliance. No superseding
instrument, amendment, modification, cancellation, renewal or extension hereof
shall require the consent or approval of any person other than the parties
hereto. The failure of either party at any time or times to require performance
of any provision hereof shall in no matter affect the right at a later time to
enforce the same. No waiver by either party of the breach of any term or
covenant contained in this Agreement, whether by conduct or otherwise, in any
one or more instances, shall be deemed to be, or construed as, a further or
continuing waiver of any such breach, or a waiver of the breach of any other
term or covenant contained in this Agreement.
12.6 COUNTERPARTS. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original, but all of which
taken together will constitute one and the same instrument.
12.7 ARBITRATION. Any dispute or controversy arising under or
in connection with this Agreement shall be settled exclusively by arbitration,
conducted before a panel of three arbitrators, in Newark, New Jersey, in
accordance with the rules of the American Arbitration Association then in
effect. Judgment may be entered on the arbitrator's award in any court having
jurisdiction; provided, however, that the Company shall be entitled to seek a
restraining order or injunction in any court of competent jurisdiction to
prevent any continuation of any violation of paragraph 9 hereof, and the
employee hereby consents that such restraining order or injunction may be
granted without the necessity of the Company posting any bond. The expense of
such arbitration shall be borne equally by the Company and the Employee.
13. REPRESENTATION OF THE EMPLOYEE. Employee represents and warrants
that he is not a party to or bound by any agreement, contract or commitment, or
subject to any restrictions, particularly (but without limitation) in connection
with any previous employment. Without limiting the foregoing, set forth on
Exhibit A hereto is a description of all currently effective employment
agreements and arrangements, confidentiality agreements or other non-competition
agreements entered into by Employee in connection with any previous employment.
14. EFFECTIVE DATE. This Agreement shall be effective as of the
"Effective Time" as defined in the Merger Agreement. If the merger contemplated
pursuant to the Merger Agreement is not consummated or if the Merger Agreement
is terminated in accordance with its terms, this Agreement shall be void and of
no further legal force or effect.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
ATTEST: M.D.J.B., INC. (FORMERLY
WHITMAN MEDICAL ACQUISITION
CORPORATION), A DELAWARE CORPORATION
By: By: /S/ RANDY S. PROTO
------------------------- -----------------------------------
Randy S. Proto
President
WITNESS: EMPLOYEE
/S/ NORMAN PALERMO /S/ DAVID O'DONNELL
- --------------------------- -------------------------------------
David O'Donnell
Whitman Medical Corp. hereby guarantees the performance of this
Agreement by Whitman Medical Acquisition Corporation; provided, however, that
the guarantee shall expire effective upon Whitman Medical Corp.'s exercise of
its Rescission Right (as defined and provided in the Merger Agreement):
WHITMAN MEDICAL CORP.
By: /S/ RANDY S. PROTO
-----------------------------------
Randy S. Proto
President
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EXHIBIT A
DISCLOSURE AS PER SECTION 13
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