SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE
SECURITIES EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by Registrant [x]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2) )
[x] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
WHITMAN EDUCATION GROUP, INC.
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[x] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE>
WHITMAN EDUCATION GROUP, INC.
PHILLIP FROST, M.D.
Chairman of the Board
September 9, 1996
Dear Fellow Shareholder:
You are cordially invited to attend the 1996 annual meeting of
Shareholders of Whitman Education Group, Inc. (the "Company"). The meeting
will be held at 10:00 a.m. on Friday, October 11, 1996, at 4400 Biscayne
Boulevard, 12th Floor, Miami, Florida.
The enclosed notice and proxy statement contain details concerning the
business to be considered at the meeting. The Board of Directors of the
Company recommends a vote "FOR" the election of the six directors to serve
until the 1997 annual meeting of the shareholders and "FOR" the proposal to
approve the Company's Stock Option Plan, to be called the Whitman Education
Group, Inc. 1996 Stock Option Plan.
We sincerely hope that you will be present at the annual meeting. Whether
or not you plan to attend, please complete, sign, date and return the
accompanying proxy card in the enclosed envelope to ensure that your shares
will be represented at the meeting.
A copy of the Company's 1996 Annual Report to Shareholders is also
enclosed.
Sincerely,
/s/ PHILLIP FROST, M.D.
-----------------------
Phillip Frost, M.D.
<PAGE>
WHITMAN EDUCATION GROUP, INC.
- -----------------------------------------------------------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD OCTOBER 11, 1996
- -----------------------------------------------------------------------------
To the Shareholders of
Whitman Education Group, Inc.:
The annual shareholders meeting of Whitman Education Group, Inc. (the
"Company") will be held at 4400 Biscayne Boulevard, 12th Floor, Miami,
Florida on Friday, October 11, 1996, at 10:00 a.m., local time, for the
following purposes:
(1) to elect six directors to serve until the 1997 annual meeting of
shareholders;
(2) to consider approval of the Company's Stock Option Plan, to be
called the Whitman Education Group, Inc. 1996 Stock Option Plan,
whereby the Company shall have the right to grant both Incentive
Stock Options pursuant to Section 422 of the Internal Revenue Code
and Non-Qualified Stock Options as the Company deems advisable to
key employees and non-employees of the Company to purchase up to
1,500,000 of the Company's common shares; and
(3) to transact such other business as may properly come before the
meeting.
Only shareholders of record at the close of business on August 30, 1996
are entitled to notice of and to vote at the meeting or any adjournments
thereof. A list of such shareholders will be available for inspection during
normal business hours at the offices of the Company located at 4400 Biscayne
Boulevard, 6th Floor, Miami, Florida during the 10 days preceding the
meeting.
By Order of the Board of Directors
/s/ RICHARD B. SALZMAN
----------------------
Richard B. Salzman
SECRETARY
Miami, Florida
September 9, 1996
YOU ARE URGED TO COMPLETE, SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD
PROMPTLY, WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING.
<PAGE>
WHITMAN EDUCATION GROUP, INC.
4400 BISCAYNE BOULEVARD, 6TH FLOOR
MIAMI, FLORIDA 33137
(305) 575-6534
- -----------------------------------------------------------------------------
PROXY STATEMENT
- -----------------------------------------------------------------------------
This proxy statement is furnished by the Board of Directors of Whitman
Education Group, Inc., a New Jersey corporation (the "Company"), in
connection with its solicitation of proxies for use at the annual meeting of
shareholders to be held on October 11, 1996 (the "Annual Meeting"), at the
time and place set forth in the accompanying Notice of Annual Meeting of
Shareholders, and at any adjournments thereof. Mailing of the proxy statement
and the accompanying proxy card to shareholders will commence on or about
September 9, 1996.
Record holders of common stock, no par value per share (the "Common
Stock"), at the close of business on August 30, 1996 (the "Record Date") are
entitled to one vote for each share held on all matters to be considered at
the Annual Meeting. On the Record Date, 11,893,108 shares of Common Stock
were outstanding and entitled to vote.
VOTING
All properly executed proxies delivered pursuant to this solicitation and
not revoked will be voted in accordance with the directions given and, in
connection with any other business that may properly come before the Annual
Meeting, in the discretion of the persons named in the proxy. With respect to
the proposal to elect six directors to serve until the 1997 annual meeting,
shareholders may vote in favor of all nominees or withhold their votes as to
all or any specific nominees. With respect to the other proposals to be voted
upon, shareholders may vote in favor of the proposal or against the proposal
or may abstain from voting. If no direction is given on a proxy, it will be
voted for the election of all director nominees and for the proposal to
approve the Whitman Education Group, Inc. 1996 Stock Option Plan.
A proxy delivered pursuant to this solicitation is revocable at any time
prior to its exercise by giving written notice to the Secretary of the
Company, by delivering a later dated proxy, or by voting in person at the
Annual Meeting. Attendance at the Annual Meeting will not, in itself,
constitute revocation of a proxy.
A majority of the outstanding shares of Common Stock, represented in
person or by proxy, constitutes a quorum for transaction of business at the
Annual Meeting. The election of directors will require the affirmative vote
of a plurality of the shares of Common Stock voting in person or by proxy at
the Annual Meeting; accordingly, votes that are withheld and broker non-votes
will not affect the outcome of the election. The proposal to approve the
Whitman Education Group, Inc. 1996 Stock Option Plan requires the affirmative
vote of a majority of the shares of Common Stock voting in person or by proxy
at the Annual Meeting; accordingly, an abstention will have the same effect
as a negative vote, but because shares held by brokers will not be considered
entitled to vote on matters as to which the brokers withhold authority,
broker non-votes will have no effect on the vote.
<PAGE>
PRINCIPAL SECURITY HOLDERS
The following table sets forth certain information as of August 30, 1996
concerning stock ownership of all persons known by the Company to own
beneficially in excess of five percent of the Company's Common Stock. Except
as otherwise indicated, all shares are beneficially owned and the sole
investment and voting power is held by each person set forth herein.
<TABLE>
<CAPTION>
NAME AND ADDRESS NUMBER PERCENT
OF BENEFICIAL HOLDER OF SHARES(1) OF CLASS
- -------------------------------------- --------------- -----------
<S> <C> <C>
Frost-Nevada, Limited Partnership ... 5,289,628(2) 37.1%
3500 Lakeside Court
Suite 200
Reno, Nevada 89509
Azure Limited ........................ 1,200,000(3) 10.1%
c/o Charter Management Limited
P.O. Box 134
Town Mills
Trinity Square
St. Peter Fort
Guernsey Channel Islands
David D. O'Donnell ................... 846,958(4) 7.1%
Colorado Technical University
4435 N. Chestnut Street
Colorado Springs, Colorado 80907
The Marilyn O. Sullivan Family Trust 800,112 6.7%
Colorado Technical University
4435 North Chestnut Street
Colorado Springs, Colorado 80907
<FN>
- --------
* Represents beneficial ownership of less than five percent.
(1) All share amounts have been adjusted for a two-for-one stock split of
Whitman's common stock effected as of May 13, 1996.
(2) Includes 200,000 shares which may be acquired pursuant to stock options
held by Dr. Frost exercisable within 60 days of August 30, 1996, 850,000
shares which may be acquired pursuant to stock purchase warrants held by
Frost-Nevada, Limited Partnership (of which Dr. Frost is the sole limited
partner, and sole shareholder, an officer and a director of Frost-Nevada
Corporation, the general partner), and 1,300,000 shares which may be
acquired pursuant to stock purchase warrants held by Dr. Frost
exercisable within 60 days of August 30, 1996. Exercise of these warrants
and options is subject to the restrictions of the New Jersey Shareholders
Protection Act. Dr. Frost is the Chairman of the Board of Directors of
Whitman.
(3) Azure Limited holds the shares as trustee for Charter Trust Company, the
trustee of the I. Kaye Family Trust, created by Mr. Isaac Kaye in 1988.
Mr. Kaye is a former director of Whitman.
(4) Includes 394,765 shares held in various trusts for the benefit of family
members of Mr. O'Donnell for which Mr. O'Donnell serves as trustee.
</FN>
</TABLE>
2
<PAGE>
ELECTION OF DIRECTORS
(ITEM NO. 1)
BOARD OF DIRECTORS
The Board of Directors set the number of directors constituting the Board
at six directors. The persons named below were designated by the Board of
Directors as nominees for election as directors to hold office until the next
annual meeting of Shareholders or until their successors are elected and
qualified. All of the nominees are current members of the Board. Dr. Krasno
and Dr. Lipsett were appointed to fill vacancies on the Board of Directors in
August 1996. Although management does not anticipate that any nominee will be
unable or unwilling to serve as a director, in the event of such an
occurrence, proxies may be voted in the discretion of the persons named in
the proxy for a substitute designated by the Board of Directors, unless the
Board of Directors determines to reduce the number of directors constituting
the Board.
<TABLE>
<CAPTION>
<S> <C>
Dr. JACK R. BORSTING Dr. Borsting is the E. Morgan Stanley Professor of Business Administration
Director since 1994 at the University of Southern California and of its Center for
Age 67 Telecommunication Management. From 1988 to 1994, Dr. Borsting was Dean
of the University of Southern California School of Business Administration,
and from 1983 to 1988 was Dean of the University of Miami School of Business
Administration. Dr. Borsting, a former Assistant Secretary of Defense
(Comptroller), is a director of Northrop Grumman Corporation and of TRO
Learning. Dr. Borsting is a member of the National Research Council Committee
on Military Enlistment Standards and a trustee of the Institute for Defense
Analysis, of the Rose Hill Association and of the Los Angeles Orthopedic
Hospital Foundation.
PHILLIP FROST, M.D. Dr. Frost has served as Chairman of the Board of Directors since 1992.
Director since 1992 Dr. Frost has been Chairman of the Board of Directors and Chief Executive
Age 59 Officer of IVAX Corporation since 1987. Dr. Frost served as President of
IVAX from 1990 until January 1995. Dr. Frost was Chairman of the Board
of Directors of Key Pharmaceuticals, Inc. from 1972 to 1986. Dr. Frost
is Vice Chairman of the Board of Directors of North American Vaccine, Inc.,
a director of American Exploration Company, Northrop Grumman Corporation
and NaPro Biotherapeutics, Inc. Dr. Frost was Chairman of the Department
of Dermatology at Mt. Sinai Medical Center of Greater Miami from 1972 to
1990. Dr. Frost is a trustee of the University of Miami and a member of
the Board of Governors of the American Stock Exchange, Inc.
PETER S. KNIGHT Mr. Knight, an attorney, is a member of the law firm of Wunder, Diefenderfer,
Director since 1994 Cannon & Thelen. He is currently on leave from his firm to be President
Age 45 Clinton's Campaign Manager at Clinton/Gore '96. Mr. Knight was Chairman
of the Vice Presidential Campaign for Clinton/Gore in 1992, was Deputy
Director of Personnel in the Clinton/Gore presidential transition and a
Consultant to the Office of Presidential Personnel. From 1989 to 1991,
Mr. Knight was General Counsel and Secretary to Medicis Pharmaceutical
Corporation. Mr. Knight is a director of COMSAT and Wertheim Schroeder
Investment Services.
3
<PAGE>
DR. RICHARD KRASNO Dr. Krasno has been President and Chief Executive Officer of the Institute
Director since 1996 of International Education, the largest international educational exchange
Age 54 organization in the United States, since 1983, and served as its Executive
Vice President and Chief Operating Officer from 1981-1983. Dr. Krasno was
Deputy Assistant Secretary of Education with the U.S. Department of Education
from 1980-1981.
DR. LOIS F. LIPSETT Dr. Lipsett has been the Deputy Director, Minority Medical Faculty Development
Director since 1996 Program at The Robert Wood Johnson foundation since February 1996. Dr.
Age 63 Lipsett was Vice President, Scientific and Medical Affairs, American Diabetes
Association from 1992-1995. Prior to 1992, Dr. Lipsett founded and was
Director of the National Diabetes Information Clearing House and also was
Director for several training and career development programs at the National
Institutes of Health.
RICHARD C. PFENNIGER, JR. Mr. Pfenniger has been Chief Operating Officer of IVAX Corporation since
Director since 1992 May 1994. He served as Senior Vice President--Legal Affairs and General
Age 40 Counsel of IVAX from 1989 to May 1994, and as Secretary from 1990 to 1994.
Prior to joining IVAX, Mr. Pfenniger was engaged in private law practice.
Mr. Pfenniger is a director of NaPro Biotherapeutics, Inc. and North American
Vaccine, Inc.
</TABLE>
DIRECTOR COMPENSATION
The Company's directors receive a $400 monthly fee for their service as
directors and $1,000 for each directors meeting attended. In addition, the
Company's Directors and Consultants Stock Option Plan provides that once a
year members of the Company's Board of Directors who are not employees of the
Company automatically receive stock options in accordance with a formula
award. In fiscal 1996, pursuant to that provision, options at an exercise
price of $6.375 per share ($3.187 after adjustment for the two-for-one stock
split effected as of May 13, 1996) were automatically granted to Dr. Frost
(50,000 shares after adjustment for the stock split), and to Mr. Pfenniger,
Dr. Borsting and Mr. Knight (10,000 shares each after adjustment for the
stock split). The Company's 1996 Stock Option Plan provides for an automatic
annual grant of 7,500 options to each non-employee director and 37,500
options to the Chairman of the Board.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors held five meetings during fiscal 1996 and acted
five times by written consent. All directors attended at least 75% of the
meetings of the Board of Directors and committees of the Board of Directors
on which they served during the period in which they were a member of the
Board of Directors. The Board of Directors has three standing committees,
described below. The Board of Directors does not have a nominating committee,
and the usual functions of such a committee are performed by the entire Board
of Directors.
AUDIT COMMITTEE. The principal functions of the Audit Committee include
reviewing the adequacy of the Company's internal systems of accounting
controls, recommending to the Board of Directors the appointment of
independent auditors, conferring with independent auditors and internal
auditors concerning the scope of their examinations of the books and records
of the Company and their independence, reviewing the financial statements of
the Company and management's disclosures, reviewing the independent auditors'
findings and recommendations, and considering other appropriate matters
regarding the financial affairs of the Company. The Audit Committee, the
current members of which are Messrs. Pfenniger and Knight, and Dr. Borsting,
held three meetings during fiscal 1996.
4
<PAGE>
COMPENSATION COMMITTEE. The principal functions of the Compensation
Committee are to approve or recommend to the Board of Directors remuneration
arrangements and compensation plans involving the Company's directors and
executive officers and to review with management the Company's employee
benefit programs. The Compensation Committee, the current members of which
are Dr. Frost and Mr. Pfenniger, was formed on February 6, 1996, and held no
meetings during fiscal 1996.
STOCK OPTION COMMITTEE. The principal function of the Stock Option
Committee, the current members of which are Dr. Frost and Mr. Pfenniger, are
to administer the Company's stock option plans and to recommend to the Board
of Directors remuneration arrangements involving stock options for the
Company's directors and executive officers.
EXECUTIVE OFFICERS WHO ARE NOT NOMINEES
Set forth below is a summary of the background and business experience of
the executive officers of the Company who are not nominees for director.
RANDY S. PROTO. Mr. Proto, age 38, has been President of Whitman since
November 25, 1994. For seven years prior thereto, Mr. Proto was Chief
Executive Officer and had ownership interests in eleven proprietary schools
in four states. For eight years prior thereto, Mr. Proto was employed by
Computer Processing Institute. Among the positions he held at that
institution were Vice President and School Director, Director of Admissions
and Marketing, Director of Finance and Financial Aid, Director of Placement
and Director of Education.
FERNANDO L. FERNANDEZ. Mr. Fernandez, age 35, joined Whitman as Vice
President--Finance, Treasurer and Chief Financial Officer in February, 1996.
Prior to joining the Company, Mr. Fernandez, a certified public accountant,
served as Chief Financial Officer of Frost-Nevada, Limited Partnership since
1991. Previously, Mr. Fernandez served as Audit Manager for Coopers & Lybrand
in Miami.
RICHARD B. SALZMAN. Mr. Salzman, age 35, joined Whitman as Vice
President--Legal Affairs and General Counsel in March, 1996. Mr. Salzman also
serves as Secretary of Whitman. For approximately ten years prior to joining
Whitman, Mr. Salzman was engaged in private law practice in Miami, Florida,
primarily with the firm of Homer & Bonner, P.A.
BRETT COMBS. Mr. Combs, age 37, has been President of Sanford-Brown
College since the Company's acquisition in December 1994. Mr. Combs also
serves as President and a director of Sanford Brown College, Inc. From 1987
through 1994, Mr. Combs was employed by Sanford-Brown in various capacities
including Executive Vice President of Operations, Director of the Des Peres
Campus and Vice President of Marketing.
DAVID O'DONNELL. Mr. O'Donnell, age 54, has been President of Colorado
Tech since March 1986 and Chairman of the Board of Colorado Tech since April
1986. Mr. O'Donnell also served as President of MDJB, Inc., the parent of
Colorado Tech, from April 1986 through the merger of MDJB, Inc. with and into
a subsidiary of Whitman. On April 18, 1996, Mr. O'Donnell was appointed
President of the successor MDJB, Inc., the wholly-owned subsidiary of
Whitman.
WILLIAM LICHTENSTEIN. Mr. Lichtenstein, age 36, has served as President of
Ultrasound Technical Services, Inc. since January 1995 and as a director
since March 1996. From 1991 through 1995, Mr. Lichtenstein served as the
Director of Operations of Ultrasound Technical Services, Inc. For two years
prior thereto, Mr. Lichtenstein was a marketing representative for CSC
Healthcare Systems, Inc.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires Whitman's
directors, executive officers and 10% shareholders to file initial reports of
ownership and reports of changes in ownership of
5
<PAGE>
Whitman's common stock and other equity securities with the Securities and
Exchange Commission and the American Stock Exchange. Directors, executive
officers and 10% shareholders are required to furnish Whitman with copies of
all Section 16(a) forms they file. Based on a review of the copies of such
reports furnished to Whitman and written representations from Whitman's
directors and executive officers that no other reports were required, Whitman
believes that during 1996 Whitman's directors, executive officers and 10%
shareholders complied with all Section 16(a) filing requirements applicable
to them, except that Fernando Fernandez filed late his initial report of
ownership of shares of Whitman's common stock upon becoming an executive
officer of Whitman.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Whitman currently occupies administrative offices in Miami, Florida which
are owned by IVAX Corporation. A lease between Whitman and IVAX Corporation
is currently being negotiated. Certain directors of Whitman are also
directors and executive officers of IVAX Corporation. In addition, Dr. Frost
is a principal shareholder of IVAX Corporation.
In April 1995, Career Master, a company 40% owned by Randy S. Proto,
entered into an agreement with Ultrasound Diagnostic School pursuant to which
Career Master would implement at Ultrasound Diagnostic School its system of
organizing and operating job placement departments for use at the Ultrasound
Diagnostic School teaching facilities. In addition to paying a small fee for
the service, Ultrasound Diagnostic School agreed to purchase, over a two year
period, approximately $160,000 in text books and related materials from
Career Master to be resold to Ultrasound Diagnostic School students. In
connection with the transaction, options to purchase 10,000 shares (20,000
shares after giving effect to the two-for-one stock split effected as of May
13, 1996) were granted to a principal of Career Master who is not related to
Mr. Proto. In fiscal 1996, Ultrasound Diagnostic School purchased $66,621 in
textbooks from Career Master pursuant to this arrangement.
In fiscal 1996, Ultrasound Diagnostic School paid rent totalling $70,800
for the premises in which Ultrasound Diagnostic School operates its Pompano
Beach, Florida facility to a partnership in which Joseph Lichtenstein is a
partner. Joseph Lichtenstein is the father of William Lichtenstein, the
president of Ultrasound Technical Services, Inc. Mr. Joseph Lichtenstein is
also a principal in the company that manages that building. Also in fiscal
1996, Ultrasound Diagnostic School purchased approximately $202,600 in
medical equipment and supplies from a medical supply distributor owned by
William Lichtenstein's mother at prices at least as favorable as Ultrasound
Diagnostic School would have paid to third parties. This same distributor is
the exclusive licensee of Whitman's change-in-temperature indicator utilized
in the transportation and storage of blood. Royalties received by Whitman in
connection with this license are not significant.
In fiscal 1995, in connection with the acquisition of Sanford-Brown,
Frost-Nevada, Limited Partnership, a company beneficially owned by Dr.
Phillip Frost, agreed to guaranty for the benefit of Whitman an $8,500,000
credit facility consisting of a $6,000,000 term loan and $2,500,000 revolving
credit loan. In fiscal 1996, Frost-Nevada was issued warrants to purchase
650,000 shares of Whitman's common stock at a price of $8.50 per share
(1,300,000 shares at a price of $4.25 per share as adjusted for the
two-for-one stock split effected as of May 13, 1996) in consideration of
Frost-Nevada's renewal of its guarantee of that indebtedness in connection
with the extension of that credit facility. The number of warrants
exercisable by Frost-Nevada at any time is subject to the restrictions of the
New Jersey Shareholders Protection Act.
James Combs, the beneficial owner of the company from which Sanford-Brown
was acquired and the father of Brett Combs, the President of Sanford Brown
College, Inc., is the beneficial owner of three buildings occupied by
Sanford-Brown under lease agreements. In fiscal 1996, Sanford-Brown paid Mr.
Combs rent totalling $428,982.
STOCK OWNERSHIP OF MANAGEMENT
The following table indicates, as of August 30, 1996, the number of shares
of Common Stock beneficially owned by each director (all of whom are also
nominees for director), each executive officer
6
<PAGE>
named in the "Summary Compensation Table" under "Executive Compensation"
below, and by all directors and executive officers as a group, and the
percentage such shares represent of the total outstanding shares of Common
Stock. All shares were owned directly with sole voting and investment power
unless otherwise indicated.
<TABLE>
<CAPTION>
NAME AND ADDRESS SHARES BENEFICIALLY PERCENT
OF BENEFICIAL OWNER OWNED(1)(2) OF CLASS
- ------------------------------------------- -------------------- -----------
<S> <C> <C>
Jack R. Borsting .......................... 20,600(3) *
University of Southern California
School of Business Administration, DCC-217
Los Angeles, California 90089-0871
Phillip Frost, M.D. ....................... 5,289,628(4) 37.1%
IVAX Corp.
4400 Biscayne Boulevard
Miami, Florida 33137
Peter S. Knight ........................... 20,000(3) *
1615 L. Street, N.W., Suite 650
Washington, D.C. 20036
Richard M. Krasno ......................... 0 *
809 United Nations Plaza
New York, New York 10017
Lois F. Lipsett ........................... 200 *
3724 Jenifer Street, N.W.
Washington, D.C. 20015
Richard C. Pfenniger, Jr. ................. 90,000(3) *
IVAX Corp.
4400 Biscayne Boulevard
Miami, Florida 33137
Randy S. Proto ............................ 170,200(3) 1.4%
4400 Biscayne Boulevard
Miami, Florida 33137
All directors and executive officers
as a group (12 persons) ................. 6,622,068(5) 45.1%
<FN>
- --------
* Represents beneficial ownership of less than one percent.
(1) All share amounts have been adjusted for a two-for-one stock split of
Whitman's common stock effected as of May 13, 1996.
(2) For purposes of this table, beneficial ownership is computed pursuant to
Rule 13d-3 under the Securities Exchange Act of 1934; the inclusion of
shares as beneficially owned should not be construed as an admission that
such shares are beneficially owned for purposes of Section 16 of the
Securities Exchange Act of 1934.
(3) Includes shares which may be acquired pursuant to stock options
exercisable within 60 days of August 30, 1996 as follows: Dr. Borsting
(20,000); Mr. Knight (20,000); Mr. Pfenniger (90,000); and Mr. Proto
(170,000).
(4) Includes 850,000 and 1,300,000 shares which may be acquired pursuant to
stock purchase warrants held by Frost-Nevada, Limited Partnership (of
which Dr. Frost is the sole limited partner, and sole shareholder, an
officer and a director of Frost-Nevada Corporation, the general partner),
and Dr. Frost, respectively, exercisable within 60 days of August 30,
1996 and 200,000 shares which may be acquired pursuant to stock options
held by Dr. Frost exercisable within 60 days of August 30, 1996. Exercise
of these warrants and options is subject to the restrictions of the New
Jersey Shareholders Protection Act.
(5) Includes shares described in footnotes (3) and (4) above which may be
acquired by the individuals indicated and 50,000 additional shares which
may be acquired pursuant to stock options exercisable within 60 days of
August 30, 1996.
</FN>
</TABLE>
7
<PAGE>
EXECUTIVE COMPENSATION
The following table contains certain information regarding aggregate
compensation paid or accrued by the Company during fiscal 1996 to the Chief
Executive Officer.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION(1) COMPENSATION
------------------------- ----------------
YEAR ENDED SALARY STOCK OPTIONS
NAME AND PRINCIPAL POSITION MARCH 31, ($) (#)
- ---------------------------- ------------- ---------- ----------------
<S> <C> <C> <C>
Randy Proto, 1996 150,000 0
President 1995 43,269 550,000(2)
1994 0 0
<FN>
--------
(1) No other executive officer of the Company received compensation from the
Company in excess of $100,00 during fiscal 1996.
(2) Adjusted for a two-for-one stock split effected as of May 13, 1996.
</FN>
</TABLE>
Randy S. Proto receives an annual salary of $150,000. He has no employment
agreement with Whitman. In consideration of Mr. Proto's agreement to enter
the employ of Whitman and become its President in November 1994, Mr. Proto
was granted options to purchase 550,000 (adjusted for the two-for-one stock
split effected as of May 13, 1996) of Whitman's Common Stock at a price of
$2.125 per share (as adjusted for the split). The options granted to Mr.
Proto vest over a period of five years. The first portion of those options
(170,000 shares, adjusted for the stock split) vested on November 25, 1995.
STOCK OPTION EXERCISES IN FISCAL YEAR 1996 AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF VALUE OF UNEXERCISED
UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
AT MARCH 31, 1996 AT MARCH 31, 1996(2)
-------------------------------- --------------------------------
EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
NAME AND PRINCIPAL POSITION (#)(1) (#)(1) ($) ($)
- ---------------------------- -------------- ---------------- -------------- ----------------
<S> <C> <C> <C> <C>
RANDY PROTO, PRESIDENT .... 170,000 380,000 606,050 1,354,700
- --------
<FN>
(1) All share amounts have been adjusted for a two-for-one stock split
effected as of May 13, 1996.
(2) The value of unexercised in-the-money options represents the number of
options held at year-end 1996 multiplied by the difference between the
exercise price and $5.69, the closing price of Whitman's common stock at
March 31, 1996 after adjustment for the two-for-one stock split effected
as of May 13, 1996.
</FN>
</TABLE>
8
<PAGE>
PERFORMANCE GRAPH
The graph and table set forth below compares the cumulative total
shareholder return on the Common Stock for fiscal 1991 through fiscal 1995
with the S&P 500 Index and an industry index for the same period. The
industry index is comprised of the following companies which were selected on
the basis of the similar nature of their respective businesses: Apollo Group,
Inc., Devry, Inc., ITT Educational Services, Inc. and Computer Learning
Centers, Inc. The graph and table assume an investment of $100 in the Common
Stock and each index on March 29, 1991 (the last trading day in fiscal 1991),
and the reinvestment of all dividends.
[INSERT GRAPH ATTACHED]
<TABLE>
<CAPTION>
FISCAL YEAR ENDED MARCH 31,
-------------------------------------------
MARCH 29,
1991 1992 1993 1994 1995 1996
------------ ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Whitman ........ 100 128 255 247 217 387
Industry Group 100 195 228 291 284 720
S&P 500 ........ 100 108 120 119 134 172
</TABLE>
9
<PAGE>
REPORT OF THE COMPENSATION AND STOCK OPTION COMMITTEES
The compensation of the Company's executive officers is determined by the
Compensation and Stock Option Committees of the Board of Directors, each of
which is composed of two non-employee directors. The Compensation Committee
determines executive officers' salary and bonus compensation levels whereas
the Stock Option Committee determines long-term stock option compensation.
The committees' compensation policies are based on a desire to enhance
long-term shareholder value. To achieve this goal, the committees recognize
that they must adopt compensation policies which will attract, retain and
motivate qualified and experienced executive officers. In attracting and
retaining executives, the committees recognize that the Company must compete
for the services of executives with many other companies which possess
significantly greater financial resources than the Company and have available
more comprehensive compensation plans and arrangements than are presently
utilized by the Company. To adequately motivate executives in view of the
goal of enhancing shareholder value, the committees recognize that they must
design compensation policies which align the financial interests of the
Company's executive officers with those of its shareholders.
In light of these factors, the committees believe that the best manner
presently available to the Company to attract, retain and motivate talented
executives is through the award of significant long-term compensation in the
form of stock options at the time the executive joins the Company and
periodically thereafter. The Stock Option Committee believes that providing
executives with opportunities to acquire significant stakes in the growth and
prosperity of the Company through the grant of stock options will enable the
Company to attract and retain qualified and experienced executive officers.
In addition, the Stock Option Committee believes that this approach to
compensation creates an entrepreneurial atmosphere which motivates executives
to perform to their full potential. The Stock Option Committee believes that
dependence on stock options for a significant portion of executive
compensation more closely aligns the executives' interests with those of the
Company's shareholders, since the ultimate value of such compensation is
directly dependent on the stock price.
Accordingly, the committees design the compensation of executive officers
to consist of a reasonable annual salary, additional long-term compensation
in the form of stock options and, in certain limited circumstances, cash
bonuses for superior performance during a particular year.
EXECUTIVE OFFICERS. The President, with the assistance of other executive
officers, makes salary recommendations to the Compensation Committee for the
executive officers of the Company (other than the President whose salary
determination is set forth below). Such recommendations are reviewed and
approved by the Compensation Committee with any modifications deemed
appropriate. In reviewing and approving salary recommendations, the
Compensation Committee considers several factors, including individual
performance, the executive's responsibilities, the cost of living, and the
financial performance of the Company, including the Company's revenues, net
income and earnings per share. The Company has not, however, established
specific performance goals or tied executive compensation to the achievement
of specific performance goals. The compensation determination is largely
subjective, and no specific weight is given to any particular factor. The
Compensation Committee may, in certain circumstances, recommend that a cash
bonus be paid to executives whose individual performance during a particular
year was outstanding, in the subjective opinion of the Compensation
Committee. The amount of any bonus is based upon the recommendation of the
President. The Company has not set specific goals for executives or tied the
payment of bonuses to specific goals.
Stock options represent a significant portion of total compensation for
the Company's executive officers. Options are generally awarded to executive
officers at the time that they join the Company and periodically thereafter.
Stock options are granted at the prevailing market price on the date of
grant, and will only have value if the value of the Company's stock price
increases from that date. Generally, grants vest in equal amounts over a
four-year period and have ten year terms. Executives must be employed by the
Company at the time of vesting in order to exercise the options. Grants of
stock
10
<PAGE>
options to executive officers are generally made upon the recommendation of
the President based on the level of the executive's position with the
Company, an evaluation of the executive's past and expected performance, the
number of outstanding and previously granted options, and discussions with
the executive. The determination of the timing and number of stock options
granted to the executive officers is made by the Stock Option Committee on a
subjective basis, with no specific weight given to any particular factor.
PRESIDENT. Randy S. Proto was retained as President of the Company in
November 1994. At that time, the Company did not have a Compensation
Committee and the functions of such committee were performed by the entire
Board of Directors. At that time, the Board established Mr. Proto's base
salary of $150,000 for fiscal 1995, and also granted to Mr. Proto options to
purchase 550,000 (as adjusted for the stock split) shares of Common Stock, on
the basis of the magnitude of the responsibilities he would undertake on
behalf of the Company and his valuable experience in the postsecondary
education industry. The determination of his compensation package was
subjective, with no specific weight given to any particular factor. In light
of the fact that Mr. Proto joined the Company late in fiscal 1995, no change
in Mr. Proto's compensation was made for fiscal 1996 and no additional
options were granted to Mr. Proto. The stock options granted to Mr. Proto
have a term of ten years, vest over five years, and have an exercise price
equal to the fair market value of the Common Stock on the date of grant.
TAX MATTERS. Section 162(m) of the Internal Revenue Code of 1986, as
amended, generally disallows a deduction for federal income tax purposes to
public companies for compensation over $1,000,000 paid in any taxable year to
the Company's Chief Executive Officer or to any of the four other most highly
compensated executive officers of the Company. Qualifying performance-based
compensation is not subject to the limitation if certain requirements are
satisfied. Based upon applicable regulations, the Company believes that
compensation expenses relating to options granted under its stock option
plans will not be subject to the Section 162(m) limitations.
The Compensation and Stock Option Committees continually evaluate the
Company's compensation policies and procedures with respect to its executive
officers in light of the overall financial performance of the Company and its
affect on shareholder value.
COMPENSATION COMMITTEE:
Phillip Frost, M.D.
Richard C. Pfenniger, Jr.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During fiscal 1996, Whitman's Compensation Committee of the Board of
Directors consisted of Dr. Frost and Isaac Kaye, a former director. Neither
Dr. Frost nor Mr. Kaye is or has been an executive officer or employee of
Whitman or any of its subsidiaries and no interlocking relationship exists
between either individual and the directors and executive officers of
Whitman.
11
<PAGE>
APPROVAL OF THE COMPANY'S 1996 STOCK OPTION PLAN
(ITEM NO. 2)
On July 31, 1996, the Board of Directors of the Company adopted, subject
to shareholder approval at the Annual Meeting, the Company's 1996 Stock
Option Plan (the "1996 Plan"). The purpose of the 1996 Plan is to provide the
Company with an effective means to attract and retain highly qualified
personnel as well as to provide additional incentive to employees and others
who provide services to the Company and who can contribute significantly to
the Company's success. The Stock Option Committee and the Board of Directors
believe that the 1996 Plan is necessary for the Company to remain competitive
in the recruitment, motivation and retention of employees and other key
persons, and recommends that the shareholders approve the 1996 Plan.
DESCRIPTION OF THE 1996 PLAN
The complete text of the 1996 Plan is attached as Exhibit A to this proxy
statement, and the following summary of the 1996 Plan is qualified in its
entirety by reference to such text.
The 1996 Plan is designed to comply with the requirements of Section 16(b)
of the Securities Exchange Act of 1934, as amended, and the Company intends
that options granted under the 1996 Plan qualify for an exception to the
disallowance rule of Section 162(m) of the Internal Revenue Code (the
"Code"). An aggregate of 1,500,000 shares of Common Stock are available for
issuance under the 1996 Plan. No employee may receive stock options under the
1996 Plan in any given year to purchase a number of shares greater than one
percent of the number of shares of Common Stock outstanding as of the date
the 1996 Plan was adopted. If a stock option expires, terminates or becomes
unexercisable for any reason without being exercised in full, the unpurchased
shares which were subject to such stock option shall be available for further
grant under the 1996 Plan. No options may be granted under the 1996 Plan
after July 25, 2006.
The 1996 Plan is administered by the Stock Option Committee of the Board
of Directors (the "Committee"), which, under the terms of the 1996 Plan, must
consist of at least two directors who are "Non-Employee Directors" within the
meaning of Rule 16b-3, as amended, promulgated under the Securities Exchange
Act of 1934 and who are "outside directors" as defined for purposes of
Section 162(m) of the Code. The Committee has the authority to interpret the
provisions of the 1996 Plan and to make all determinations deemed necessary
or advisable for its administration.
The 1996 Plan provides for the issuance of options intended to be
incentive stock options within the meaning of Section 422 of the Code and
non-qualified stock options not intended to meet the requirements of Section
422 of the Code. Incentive stock options may be granted only to employees of
the Company and its subsidiaries, and non-qualified options may be granted to
employees, directors, independent contractors and agents of the Company and
its subsidiaries. Subject to the provisions of the 1996 Plan, the Committee
determines the persons to whom grants are made and the vesting, timing,
amounts and other terms of such grants. Incentive stock options which first
become exercisable in any calendar year for shares with a fair market value
on the date of grant in excess of $100,000 are treated as non-qualified stock
options to the extent of such excess.
The exercise price of options may not be less than the fair market value
of the Common Stock on the date of grant, except with respect to substitute
options issued in connection with certain corporate transactions and except
that the exercise price of any incentive stock option granted to the holder
of more than 10% of the outstanding Common Stock may not be less than 110% of
the fair market value of the Common Stock on the date of grant. The term of
each option may not exceed ten years, except the term of any incentive stock
option granted to a holder of more than 10% of the outstanding Common Stock
may not exceed five years. The option price may be paid in cash or by check
or such other consideration as the Committee shall determine. In general, all
outstanding options granted to an employee terminate 12 months after the
optionee ceases to be an employee, except that such options terminate (i)
immediately (unless otherwise determined by the Committee) if the optionee's
12
<PAGE>
employment is terminated for deliberate, willful or gross misconduct and (ii)
36 months after retirement. Options granted under the 1996 Plan are not
assignable or transferable other than by will or by the laws of descent and
distribution, or, in the case of non-qualified stock options, pursuant to a
qualified domestic relations order, and, during the optionee's lifetime, the
options may be exercised only by the optionee.
The 1996 Plan provides for an automatic grant of non-qualified stock
options to acquire 7,500 shares of Common Stock to non-employee directors of
the Company and 37,500 shares to the Chairman of the Board of Directors each
year on the first business day following the Company's annual meeting of
shareholders. The exercise price of such options is equal to the fair market
value of the Common Stock on the date of the grant, and such options have a
term of ten years.
The number of shares of Common Stock covered by outstanding options, the
number of shares of Common Stock available for issuance under the 1996 Plan,
the number of shares of Common Stock to be granted to non-employee directors,
the maximum number of shares of Common Stock with respect to which options
may be granted to any employee in any given year, and the exercise price per
share of outstanding options, are proportionately adjusted for any increase
or decrease in the number of issued shares of Common Stock resulting from a
stock split or stock dividend.
The Committee may amend or terminate the 1996 Plan, except that
shareholder approval is required to increase the number of shares of Common
Stock subject to the 1996 Plan, to change the class of persons eligible to
participate in the 1996 Plan, to materially increase the benefits accruing to
participants under the 1996 Plan, or to increase the maximum number of shares
of Common Stock with respect to which options may be granted to any employee
in any year. No amendment or termination of the 1996 Plan will affect
previously granted awards without the optionee's consent unless the Committee
determines that such amendment is in the best interest of the shareholders or
optionees.
The 1996 Plan is subject to approval by the affirmative vote of a majority
of the shares of Common Stock voting in person or by proxy at the Annual
Meeting. If the 1996 Plan is so approved, it will become effective as of the
date of its adoption by the Board of Directors. The 1996 Plan and any options
granted thereunder will terminate and become null and void if the 1996 Plan
is not approved by the shareholders within 12 months after the date of its
adoption by the Board of Directors.
FEDERAL INCOME TAX CONSEQUENCES
INCENTIVE STOCK OPTIONS. The grant of an incentive stock option has no
immediate federal income tax consequences to the optionee or to the Company.
The exercise of an incentive stock option while the optionee is an employee
or within three months after termination of employment generally has no
immediate tax consequences to the Company or to the optionee. If the optionee
is subject to the alternative minimum tax, however, the exercise of an
incentive stock option would result in an increase in the optionee's
alternative minimum taxable income equal to the excess of the fair market
value of the shares at the time of exercise over the exercise price. If an
optionee holds the shares acquired pursuant to the exercise of an incentive
stock option for the required holding period, the optionee generally
recognizes long-term capital gain or loss upon a subsequent sale of the
shares in the amount of the difference between the amount realized upon the
sale and the exercise price of the shares. In such a case, the Company is not
entitled to a deduction in connection with the grant or exercise of the
incentive stock option or the sale of shares acquired pursuant to such
exercise. If, however, an optionee exercises an incentive stock option more
than three months after termination of employment or disposes of the shares
prior to the expiration of the required holding period, the optionee
generally recognizes ordinary income equal to the excess of the fair market
value of the shares on the date of exercise (or the proceeds of disposition,
if less) over the exercise price, and the Company is entitled to a
corresponding deduction if the compensation constitutes an ordinary and
necessary business expense, the limitations of Section 162(m) of the Code do
not apply, and applicable withholding requirements are satisfied. If the
amount realized upon such a disposition exceeds the fair market value of the
shares on the date of exercise, the excess generally would be treated as
long-term or short-term capital gain. The
13
<PAGE>
required holding period is the longer of two years from the date the option
was granted and one year after the date of issuance of the shares upon
exercise of the option.
NON-QUALIFIED STOCK OPTIONS. The grant of a non-qualified stock option has
no immediate federal income tax consequences to the optionee or the Company.
Upon the exercise of a non-qualified stock option, the optionee recognizes
ordinary income (subject to wage withholding and employment taxes) in an
amount equal to the excess of the fair market value of the shares on the date
of exercise over the exercise price, and the Company is entitled to a
corresponding deduction if the compensation constitutes an ordinary and
necessary business expense, the limitations of Section 162(m) of the Code do
not apply, and applicable withholding requirements are satisfied. The
optionee's tax basis in the shares is the exercise price plus the amount of
ordinary income recognized by the optionee, and the optionee's holding period
will commence on the date the shares are received. Upon a subsequent sale of
the shares, any difference between the optionee's tax basis in the shares and
the amount realized on the sale generally is treated as long-term or
short-term capital gain or loss.
OPTIONS GRANTED AND SHARES ELIGIBLE FOR GRANT UNDER THE 1996 PLAN
To date, no options have been granted under the 1996 Plan. Except for the
automatic grants to non-employee directors of the Company, it is not possible
to identify the persons who will be granted options under the 1996 Plan, the
number of shares subject to any option, or the terms and conditions of any
option, because these matters will be determined by the Stock Option
Committee in the future. As of August 30, 1996, six non-employee directors,
approximately 650 employees, and an indeterminate number of independent
contractors and agents were eligible to receive stock options under the 1996
Plan.
RECOMMENDATION OF THE BOARD OF DIRECTORS
The Board of Directors believes that approval of the 1996 Plan is
necessary to enable the Company to compete for qualified personnel, to retain
such personnel in the employ of the Company, and to motivate such personnel
and align their long-term interests with those of the shareholders.
Accordingly, the Board of Directors believes that the best interests of the
Company and its shareholders will be served by the approval of the 1996 Plan.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE PROPOSAL TO APPROVE THE
1996 PLAN.
INDEPENDENT AUDITORS
Ernst & Young, LLP, independent public accountants, was appointed by the
Board of Directors to audit the Company's financial statements for 1996. This
firm has acted as independent public accountants for the Company since 1992.
Representatives of Ernst & Young are expected to attend the Annual Meeting
and will have an opportunity to make a statement if they desire and to
respond to appropriate questions raised by shareholders.
OTHER INFORMATION
SHAREHOLDER PROPOSALS FOR 1997 ANNUAL MEETING
Any shareholder proposals intended to be presented at the Company's 1997
annual meeting of shareholders must be received by the Secretary, Whitman
Education Group, Inc., 4400 Biscayne Boulevard, 6th Floor, Miami, Florida
33137, no later than May 14, 1997, in order to be considered for inclusion in
the Company's proxy statement and form of proxy card relating to such
meeting.
EXPENSES OF SOLICITATION
The cost of this solicitation will be borne by the Company. In addition to
the use of the mail, regular employees of the Company may solicit proxies
personally or by telephone or facsimile. The
14
<PAGE>
Company will reimburse brokers, banks, and other custodians, nominees and
fiduciaries for their reasonable expenses in forwarding solicitation
materials to beneficial owners of Common Stock.
OTHER BUSINESS
As of the date of this proxy statement, the Board of Directors knows of no
business to be presented at the Annual Meeting other than as set forth in
this proxy statement. If other matters properly come before the meeting, the
persons named as proxies will vote on such matters in their discretion.
September 9, 1996
15
<PAGE>
WHITMAN EDUCATION GROUP, INC.
1996 STOCK OPTION PLAN
1. PURPOSES.
The purposes of this 1996 Stock Option Plan (the "Plan") are to attract
and retain the best available personnel for positions of substantial
responsibility, to provide additional incentive to the Employees of the
Company or its Subsidiaries as well as other individuals who perform services
for the Company or its Subsidiaries, and to promote the success of the
Company's business. Options granted hereunder may be either Incentive Stock
Options or Non-Qualified Stock Options, at the discretion of the Committee
and as reflected in the terms of the written option agreement.
2. DEFINITIONS.
As used herein, the following definitions shall apply:
"CODE" shall mean the Internal Revenue Code of 1986, as amended.
"COMMON STOCK" shall mean the common stock, no par value per share, of the
Company.
"COMPANY" shall mean Whitman Education Group, Inc., a New Jersey
corporation.
"COMMITTEE" shall mean the committee appointed by the Board of Directors
in accordance with Section 4(a) of the Plan.
"CONTINUOUS STATUS AS AN EMPLOYEE" shall mean the absence of any
interruption or termination of service as an Employee. Service as an Employee
shall not be considered interrupted for purposes of the Plan, in the case of
sick leave, military leave, or any other bona fide leave of absence approved
by the Committee.
"DISABLED" or "DISABILITY" shall mean a physical or mental disability as
defined in Section 22(e)(3) of the Code.
"EMPLOYEE" shall mean any person, including officers and directors,
employed by the Company or any Parent or Subsidiary. The payment of a
director's fee by the Company shall not be sufficient to constitute the
recipient an "employee" of the Company.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as amended.
"INCENTIVE STOCK OPTION" shall mean a stock option intended to qualify as
an "incentive stock option" within the meaning of Section 422 of the Code.
"NON-QUALIFIED STOCK OPTION" shall mean a stock option not intended to
qualify as an "incentive stock option" within the meaning of Section 422 of
the Code.
"OPTION" shall mean a stock option granted pursuant to the Plan.
"OPTIONED STOCK" shall mean the Common Stock subject to an Option.
"OPTIONEE" shall mean the recipient of an Option.
"PARENT" shall mean a "parent corporation" of the Company, whether now or
hereafter existing, as defined in Section 424(e) of the Code.
"RULE 16B-3" shall mean Rule 16b-3 promulgated by the Securities and
Exchange Commission under the Exchange Act or any successor rule.
A-1
<PAGE>
"SHARE" shall mean a share of Common Stock, as adjusted in accordance with
Section 13 of the Plan.
"SUBSIDIARY" shall mean a "subsidiary corporation" of the Company, whether
now or hereafter existing, as defined in Section 424(f) of the Code.
3. STOCK.
Subject to the provisions of Section 13 of the Plan, the maximum aggregate
number of Shares which may be issued under the Plan is 1,500,000. If an
Option should expire or become unexercisable for any reason without having
been exercised in full, the unpurchased Shares which were subject thereto
shall, unless the Plan shall have been terminated, become available for
further grant under the Plan.
4. ADMINISTRATION.
(a) COMMITTEE. The Plan at all times shall be administered by a Committee
appointed by the Company's Board of Directors. The Committee shall consist of
not less than two members of the Board of Directors, each of whom is a
"non-employee director" as defined in Rule 16b-3 and an "outside director" as
defined for purposes of Section 162(m) of the Code.
(b) POWERS OF THE COMMITTEE. Subject to the provisions of the Plan, the
Committee shall have the authority, in its discretion: (i) to grant Incentive
Stock Options or Non-Qualified Stock Options; (ii) to determine the fair
market value of the Common Stock; (iii) to determine the exercise price per
Share of Options to be granted; (iv) to determine the persons to whom, and
the time or times at which, Options shall be granted and the number of Shares
to be represented by each Option; (v) to determine the vesting schedule of
Options to be granted; (vi) to prescribe, amend and rescind rules and
regulations relating to the Plan; (vii) to determine the terms and provisions
of each Option granted under the Plan (which need not be identical); (viii)
to accelerate the exercise date of any Option; (ix) to authorize any person
to execute on behalf of the Company any instrument required to effectuate the
grant of an Option previously granted by the Committee; (x) subject to the
provisions of the Plan and subject to such additional limitations and
restrictions as the Committee may impose, to delegate to specific members of
management or to a committee of management personnel the authority to
determine: (a) the persons to whom, and the time and times at which, Options
shall be granted and the number of Shares to be represented by each Option;
(b) the vesting schedule of Options; (c) the term of Options, and (d) other
terms and conditions of any Options; provided that the Committee shall not
have the authority to delegate such matters with respect to awards to be
granted to any person subject to Section 16 of the Exchange Act or any
"covered employee" under Section 162(m) of the Code; and (xi) to interpret
the Plan and make all other determinations deemed necessary or advisable for
the administration of the Plan. The Committee may require the voluntary
surrender of all or any portion of any Option granted under the Plan as a
condition precedent to a grant of a new Option to such Optionee. Subject to
the provisions of the Plan, such new Option shall be exercisable at the
price, during the period and on such other terms and conditions as are
specified by the Committee at the time the new Option is granted. Upon
surrender, the Options surrendered shall be unexercisable and the Shares
previously subject to such Options shall be available for the grant of other
Options.
(c) EFFECT OF THE COMMITTEE'S DECISION. All decisions, determinations and
interpretations of the Committee shall be final and binding on all Optionees.
5. ELIGIBILITY.
Incentive Stock Options may be granted only to Employees. Non-Qualified
Stock Options may be granted to Employees, non-Employee directors (in
accordance with the provisions of Section 8 of the Plan), independent
contractors and agents. Any person who has been granted an Option may, if he
is otherwise eligible, be granted an additional Option or Options. Subject to
the provisions of Section 15
A-2
<PAGE>
of the Plan, the maximum number of Shares with respect to which Options may
be granted under the Plan to any Employee in any calendar year is 1% of the
authorized and outstanding Shares of Common Stock on the date of adoption of
the Plan.
6. DOLLAR LIMITATION.
Except as otherwise provided under the Code, to the extent that the
aggregate fair market value of stock for which Incentive Stock Options (under
all stock option plans of the Company and of any Parent or Subsidiary) are
exercisable for the first time by an Employee during any calendar year
exceeds $100,000, such Options shall be treated as Non-Qualified Stock
Options. For purposes of this limitation, (a) the fair market value of stock
is determined as of the time the Option is granted; (b) the limitation is
applied by taking into account Options in the order in which they were
granted, and (c) Incentive Stock Options granted before 1987 are not to be
taken into account.
7. RIGHTS OF OPTIONEES.
The Plan shall not confer upon any Optionee any right with respect to
continuation of employment by the Company, nor shall it interfere in any way
with his right or the Company's right to terminate his employment at any
time.
8. AUTOMATIC GRANT OF OPTION TO NON-EMPLOYEE DIRECTORS.
Subject to Section 3 of the Plan, each person who is a non-Employee
director of the Company on the first business day following any annual
meeting of shareholders of the Company and who is not a common law employee
of the Company or of any Subsidiary shall automatically receive on such date
an Option to acquire 7,500 Shares and the person who is serving as the
Chairman of the Board of Directors on such day following any annual meeting
and who is not a common law employee of the Company or any Subsidiary shall
automatically be granted options to acquire 37,500 Shares, as adjusted in
accordance with Section 15 of the Plan. The exercise price for the Shares to
be issued pursuant to Options granted under this Section 8 shall be as set
forth in Section 11(a)(ii) of the Plan. The Options granted pursuant to this
Section 8 shall have a term of ten years from the date of grant. The
foregoing formula may not be amended more than once every six months other
than to comport with changes in the Code, the Employee Retirement Income
Security Act of 1974, as amended, or the rules thereunder. Non-Employee
directors shall have the right, if they so wish, to decline receipt of any
Options to be granted under this Section 8.
9. TERM OF PLAN.
The Plan shall become effective upon its adoption by the Board of
Directors of the Company; provided that, if the Plan is not approved by the
shareholders of the Company in accordance with Section 20 of the Plan within
12 months after the date of adoption by the Board of Directors, the Plan and
any Options granted thereunder shall terminate and become null and void. The
Plan shall continue in effect until July 25, 2006 unless sooner terminated in
accordance with Section 17 of the Plan.
10. TERM OF OPTION.
The term of each Option shall be ten years from the date of grant thereof
or, except for Options granted pursuant to Section 8 of the Plan, such
shorter term as may be determined by the Committee. However, in the case of
an Incentive Stock Option granted to an Employee who, immediately before the
Incentive Stock Option is granted, owns stock representing more than 10% of
the voting power of all classes of stock of the Company or any Parent or
Subsidiary, the term of the Incentive Stock Option shall be five years from
the date of grant thereof or such shorter time as may be determined by the
Committee.
A-3
<PAGE>
11. EXERCISE PRICE AND CONSIDERATION.
(a) The per Share exercise price of the Shares to be issued pursuant to
exercise of an Option shall be such price as is determined by the Committee,
but shall be subject to the following:
(i) In the case of an Incentive Stock Option: (A) granted to an Employee
who, immediately before the grant of such Incentive Stock Option, owns stock
representing more than 10% of the voting power of all classes of stock of the
Company or any Parent or Subsidiary, the per Share exercise price shall be no
less than 110% of the fair market value per Share on the date of grant; and
(B) granted to any other Employee, the per share exercise price shall be no
less than the fair market value per Share on the date of grant.
(ii) In the case of a Non-Qualified Stock Option, the per Share exercise
price shall be no less than the fair market value per Share on the date of
grant and, with respect to Options granted to non-Employee directors as
provided in Section 8 of the Plan, shall be equal to the fair market value
per Share on the date of the grant.
(b) Notwithstanding Section 11(a) of the Plan, in the event the Company
substitutes an Option for a stock option issued by another corporation in
connection with a corporate transaction, such as a merger, consolidation,
acquisition of property or stock, separation (including a spin-off or other
distribution of stock or property), reorganization (whether or not such
reorganization comes within the definition of such term in Section 368 of the
Code) or partial or complete liquidation involving the Company and such other
corporation, the exercise price of such substituted Option shall be as
determined by the Committee in its discretion (subject to the provisions of
Section 424(a) of the Code in the case of a stock option that was intended to
qualify as an "incentive stock option") to preserve, on a per share basis
immediately after such corporate transaction, the same ratio of fair market
value per option share to exercise price per share which existed immediately
prior to such corporate transaction under the option issued by such other
corporation.
(c) The fair market value per Share shall be determined by the Committee
in its discretion; provided, however, that if the Common Stock is listed on a
stock exchange, the fair market value per Share shall be the closing price on
such exchange on the date of grant of the Option, as reported in the Wall
Street Journal.
(d) The consideration to be paid for the Shares to be issued upon exercise
of an Option shall consist of cash or check in an amount equal to the
aggregate exercise price of the Shares as to which said Option shall be
exercised or such other consideration as the Committee shall determine.
Payment may also be made, in the discretion of the Committee, by delivery
(including by facsimile) to the Company or its designated agent of an
executed irrevocable option exercise form together with irrevocable
instructions to a broker-dealer designated by the Company to sell (or margin)
a sufficient portion of the Shares and deliver the sale (or margin loan)
proceeds directly to the Company to pay for the exercise price; provided that
Optionees subject to Section 16 of the Exchange Act shall not be entitled to
make payment by such method until either the holders of a majority of the
outstanding shares of the Company entitled to vote have approved an amendment
to the Plan permitting payment by such method or counsel to the Company has
advised the Committee that such approval is not required by Rule 16b-3. For
purposes of this Section 11(d), the exercise date of such Option shall be the
date on which such documents have been delivered to the Company or its
designated agent.
12. EXERCISE OF OPTION.
(a) PROCEDURE FOR EXERCISE. Any Option granted hereunder shall be
exercisable at such times and under such conditions as determined by the
Committee, including performance criteria with respect to the Company and/or
the Optionee, and as shall be permissible under the terms of the Plan. An
Option may not be exercised for a fraction of a Share. An Option shall be
deemed to be exercised when written notice of such exercise has been given to
the Company in accordance with the terms of the Option by
A-4
<PAGE>
the person entitled to exercise the Option and full payment for the Shares
with respect to which the Option is exercised has been received by the
Company. Full payment may, as authorized by the Committee, consist of any
consideration and method of payment allowable under Section 11(d) of the
Plan.
(b) RIGHTS AS A SHAREHOLDER. Until the issuance, which in no event (except
as provided in Section 18 of the Plan) will be delayed more than 30 days from
the date of the exercise of the Option, of the stock certificate evidencing
such Shares (as evidenced by the appropriate entry on the books of the
Company or of a duly authorized transfer agent of the Company), no right to
vote or receive dividends or any other rights as a shareholder shall exist
with respect to the Optioned Stock, notwithstanding the exercise of the
Option. No adjustment will be made for a dividend or other right for which
the record date is prior to the date the stock certificate is issued, except
as provided in the Plan. Exercise of an Option in any manner shall result in
a decrease in the number of Shares which thereafter may be available, both
for purposes of the Plan and for sale under the Option, by the number of
Shares as to which the Option is exercised.
13. TERMINATION OF EMPLOYMENT.
(a) TERMINATION OF STATUS AS AN EMPLOYEE. If an Employee ceases to be in
Continuous Status as an Employee, other than (i) by reason of retirement or
(ii) as a result of a termination by the Company for deliberate, willful or
gross misconduct, any Option held by such Employee shall be exercisable
within twelve (12) months after the date he ceases to be in Continuous Status
as an Employee (or such shorter or longer time as may be determined by the
Committee) to the extent the Employee was entitled to exercise such Option as
of the date of his termination of employment.
(b) RETIREMENT OF OPTIONEE. If any Employee ceases to be in Continuous
Status as an Employee by reason of such Employee's retirement, any Option
held by such Employee shall be exercisable within 36 months after the date he
ceases to be in Continuous Status as an Employee to the extent that he was
entitled to exercise such Option as of the date of his retirement. For
purposes of the Plan, "retirement" means termination of services as an
Employee at or after age 65 other than as a result of deliberate, willful or
gross misconduct.
(c) DEATH OR DISABILITY OF OPTIONEE. Subject to the provisions of the
Plan, any Option held by an Optionee at the time of his death may be
exercised subsequently by the legal representative of the Optionee's estate
or by the person or persons who acquired the right to exercise the Option by
bequest or inheritance, but only to the extent the Optionee was entitled to
exercise such Option as of the date of his death. In the event of the death
or disability of an Optionee during the time period specified in Section
13(a) or 13(b), as applicable, the Option may be exercised, at any time
within three months following the date of his death or disability, by the
Optionee, or, in the case of death, by the legal representative of the
Optionee's estate or by a person or persons who acquired the right to
exercise the option by bequest or inheritance, but only to the extent the
Optionee was entitled to exercise such Option as of the date of his death or
disability.
(d) TERMINATION FOR MISCONDUCT. If any Employee ceases to be in Continuous
Status as an Employee as a result of a termination by the Company for
deliberate, willful or gross misconduct, any Option held by such Employee
shall terminate immediately and automatically on the date of his termination
as an Employee unless otherwise determined by the Committee.
(e) EXPIRATION OF OPTIONS. None of the events described above in this
Section 13 shall extend the period of exercisability of the Option beyond the
expiration date thereof. To the extent that an Optionee was not entitled to
exercise an Option on the date he ceased to be in Continuous Status as an
Employee or the date of the Optionee's death, or if he does not exercise such
Option (which he was entitled to exercise) within the time period specified
in this Section 13, the Option shall terminate and become null and void.
Notwithstanding the provisions of Section 13(a), 13(b) or 13(d) of the Plan,
no Options shall be exercisable after an Optionee ceases to be in Continuous
Status as an Employee in the
A-5
<PAGE>
event the Optionee shall have during the time period in which his Options are
exercisable, engaged in deliberate action which, as determined by the
Committee, causes substantial harm to the interests of the Company or
constitutes a breach of any obligation of the Optionee to the Company. In
such event, the Optionee shall forfeit all rights to any unexercised Option
as of the date of such deliberate action.
14. NON-TRANSFERABILITY OF OPTIONS.
An Option may not be sold, pledged, assigned, hypothecated, transferred,
or disposed of in any manner other than by will or by the laws of descent and
distribution or, in the case of a Non-Qualified Stock Option, pursuant to a
qualified domestic relations order as defined in the Code or Title I of the
Employee Retirement Income Security Act of 1974, as amended, or the rules
thereunder, and, except with respect to a qualified domestic relations order
as aforesaid, may be exercised, during the lifetime of the Optionee, only by
the Optionee.
15. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION; CHANGE IN CONTROL;
DISSOLUTION.
(a) Subject to any required action by the shareholders of the Company,
each of (i) the number of shares of Common Stock covered by each outstanding
Option, (ii) the number of shares of Common Stock which have been authorized
for issuance under the Plan but as to which no Options have yet been granted
or which have been returned to the Plan upon cancellation or expiration of an
Option, (iii) the price per share of Common Stock covered by each such
outstanding Option, (iv) the number of shares of Common Stock to be granted
to non-Employee directors pursuant to Section 8 of the Plan, and (v) the
maximum number of Shares with respect to which Options may be granted to any
Employee, shall be proportionately adjusted for any increase or decrease in
the number of issued shares of Common Stock resulting from a stock split or
the payment of a stock dividend with respect to the Common Stock or any other
increase or decrease in the number of issued shares of Common Stock effected
without receipt of consideration by the Company; provided, however, that (a)
each such adjustment with respect to an Incentive Stock Option shall comply
with the rules of Section 424(a) of the Code (or any successor provision) and
(b) in no event shall any adjustment be made which would render any Incentive
Stock Option granted hereunder other than an "incentive stock option" as
defined in Section 422 of the Code; and provided further, however, that
conversion of any convertible securities of the Company shall not be deemed
to have been "effected without receipt of consideration." Such adjustment
shall be made by the Committee, whose determination in that respect shall be
final, binding and conclusive. Except as expressly provided herein, no
issuance by the Company of shares of stock of any class, or securities
convertible into shares of stock of any class, shall affect, and no
adjustment by reason thereof shall be made with respect to, the number or
price of shares of Common Stock subject to an Option.
(b) In the event of the proposed dissolution or liquidation of the
Company, all outstanding Options will terminate immediately prior to the
consummation of such proposed action, unless otherwise provided by the
Committee.
16. TIME FOR GRANTING OPTIONS.
The date of grant of an Option shall be the date on which the Committee
makes the determination granting such Option or such later date as the
Committee may specify. Notice of the determination shall be given to each
Employee to whom an Option is so granted within a reasonable time after the
date of such grant.
17. AMENDMENT AND TERMINATION OF THE PLAN.
(a) Subject to the limitations set forth in Section 8 of the Plan, the
Committee may terminate or amend the Plan from time to time in such respects
as the Committee may deem advisable; provided that, the following revisions
or amendments shall require approval of the Company's shareholders in
A-6
<PAGE>
accordance with Section 20 of the Plan: (i) any increase in the number of
Shares subject to the Plan, other than in connection with an adjustment under
Section 15 of the Plan; (ii) any change in the designation of the class of
persons eligible to be granted Options; (iii) any material increase in the
benefits accruing to participants under the Plan; or (iv) any increase in the
maximum number of Shares with respect to which Options may be granted to any
Employee.
(b) EFFECT OF AMENDMENT OR TERMINATION. No amendment or termination or
modification of the Plan shall in any manner affect any Option theretofore
granted without the consent of the Optionee, except that the Committee may
amend or modify the Plan in a manner that does affect Options theretofore
granted upon a finding by the Committee that such amendment or modification
is in the best interest of shareholders or Optionees.
18. CONDITIONS UPON ISSUANCE OF SHARES.
Shares shall not be issued pursuant to the exercise of an Option unless
the exercise of such Option and the issuance and delivery of such Shares
pursuant thereto shall comply with all relevant provisions of law, including,
without limitation, the Securities Act of 1933, as amended, the Exchange Act,
the rules and regulations promulgated thereunder, and the requirements of any
stock exchange upon which the Shares may then be listed, and shall be further
subject to the advice of counsel for the Company with respect to such
compliance. As a condition to the exercise of an Option, the Company may
require the person exercising such Option to represent and warrant at the
time of any such exercise that the Shares are being purchased only for
investment and without any present intention to sell or distribute such
Shares if, in the opinion of counsel for the Company, such a representation
is required by law.
19. OPTION AGREEMENTS.
Options shall be evidenced by written option agreements in such form as
the Committee shall approve. Such agreements shall contain such provisions,
including, without limitation, restrictions upon the exercise of the option,
as the Committee shall determine.
20. SHAREHOLDER APPROVAL.
The effectiveness of the Plan shall be subject to approval by the
shareholders of the Company, in a separate vote, within twelve months after
the date the Plan is adopted. The approval of such shareholders of the
Company shall be solicited substantially in accordance with Section 14(a) of
the Exchange Act and the rules and regulations promulgated thereunder, and
shall be obtained, at a duly held shareholders' meeting, by the affirmative
vote of the holders of a majority of the outstanding shares of the Company
present or represented and entitled to vote thereon.
21. INDEMNIFICATION OF COMMITTEE MEMBERS.
In addition to such other rights of indemnification as they may have as
Directors, the members of the Committee shall be indemnified by the Company
against the reasonable expenses, including attorneys' fees actually and
necessarily incurred in connection with the defense of any action, suit or
proceeding, or in connection with any appeal therein, to which they or any of
them may be a party by reason of any action taken or failure to act under or
in connection with the Plan or any Option granted thereunder, and against all
amounts paid by them in settlement thereof (provided such settlement is
approved to the extent required by and in the manner provided by the Articles
of Incorporation or Bylaws of the Company), or paid by them in satisfaction
of a judgment in any such action, suit or proceeding, except in relation to
matters as to which it shall be adjudged in such action, suit or proceeding
that such Committee member did not act in good faith and in a manner he
reasonably believed to be in and not opposed to the best interests of the
Company; provided that within 60 days after institution of any such action,
suit or proceeding a Committee member shall in writing offer the Company the
opportunity, at its own expense, to handle and defend the same.
A-7
<PAGE>
22. OTHER COMPENSATION PLANS.
The adoption of the Plan shall not affect any other stock option or
incentive or other compensation plans in effect for the Company or any
Subsidiary, nor shall the Plan preclude the Company from establishing any
other forms of incentive or other compensation for employees and directors of
the Company or any Subsidiary.
23. HEADINGS.
Headings of Articles and Sections hereof are inserted for convenience and
reference; they constitute no part of the Plan.
24. WITHHOLDING.
The Company and any Subsidiary may, to the extent permitted by law, deduct
from any payments or transfers of any kind due to an Optionee the amount of
any federal, state, local or foreign taxes required by any governmental
regulatory authority to be withheld or otherwise deducted with respect to the
Options or the Optioned Stock.
25. GOVERNING LAW.
The Plan, the Options granted hereunder and all related matters shall be
governed by, and construed and enforced in accordance with, the laws of the
State of New Jersey.
26. COMPLIANCE WITH RULE 16B-3.
It is the intent of the Company that this plan comply in all respects to
Rule 16b-3, as amended (or any successor rule), in connection with any Option
granted to a person who is subject to Section 16 of the Exchange Act.
Accordingly, any provision of this Plan or any Option agreement that does not
comply with the requirements of Rule 16b-3 (or any successor rule) as then
applicable to any such person shall be construed or deemed amended to the
extent necessary to conform to such requirements, except that such automatic
amendment shall not apply to any other participant in the Plan who is not (at
the time of such application) subject to Section 16 of the Exchange Act. Any
action taken by the Committee pursuant to the Plan that does not comply with
the requirements of Rule 16b-3 (or any successor rule) shall be null and
void.
27. RESERVATION OF SHARES
The Company shall, during the term of the Plan and any Option granted
hereunder, reserve and keep available a number of Shares as shall be
sufficient to satisfy the requirements of the Plan.
A-8
<PAGE>
WHITMAN EDUCATION GROUP, INC.
4400 BISCAYNE BOULEVARD, MIAMI, FLORIDA 33137
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Randy S. Proto, Fernando Fernandez and
Richard B. Salzman, and each of them severally, as proxies of the
undersigned, each with the power to appoint his substitute, and hereby
authorizes each of them to vote as designated below, all the shares of Common
Stock of WHITMAN EDUCATION GROUP, INC. (the "Company") held of record by the
undersigned at the close of business on August 30, 1996, at the Annual
Meeting of Shareholders to be held on Friday, October 11, 1996 at 10:00 a.m.
Eastern Time, and at any adjournment of such meeting, and, in their
discretion, to vote such shares upon such other business as may properly come
before the meeting.
1. ELECTION OF DIRECTORS.
<TABLE>
<CAPTION>
<S> <C>
[ ] FOR EACH NOMINEE LISTED [ ] WITHHOLD AUTHORITY
(EXCEPT AS MARKED TO THE CONTRARY) TO VOTE FOR ALL NOMINEES LISTED
</TABLE>
NOMINEES: Jack R. Borsting; Phillip Frost, M.D.; Peter S. Knight; Richard M.
Krasno; Lois F. Lipsett; and Richard C. Pfenniger, Jr.
_____________________________________________________________________________
(INSTRUCTION: To withhold authority to vote for any individual nominee, write
that nominee's name in the space provided above)
2. APPROVAL OF THE COMPANY'S 1996 STOCK OPTION PLAN.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
(CONTINUED AND TO BE SIGNED ON THE OTHER SIDE)
<PAGE>
(CONTINUED FROM THE OTHER SIDE)
WHEN PROPERLY EXECUTED AND RETURNED, THIS PROXY WILL BE VOTED IN THE MANNER
DIRECTED BY THE UNDERSIGNED, IF NO DIRECTION IS INDICATED, THIS PROXY WILL BE
VOTED "FOR" THE ELECTION OF ALL DIRECTOR NOMINEES AND "FOR" THE PROPOSAL TO
APPROVE THE COMPANY'S 1996 STOCK OPTION PLAN.
The undersigned acknowledges receipt of the accompanying Notice of Annual
Meeting of Shareholders and Proxy Statement for the meeting to be held on
October 11, 1996.
Dated: ____________________, 1996
_________________________________
(Signature)
_________________________________
(Signature, if held jointly)
(Please sign exactly as name or
names appear hereon. Full title
of one signing in representative
capacity should be clearly designated
after signature. Names of all joint
holders should be written even if one.)
PLEASE COMPLETE, SIGN AND DATE THIS PROXY, AND MAIL IT PROMPTLY IN THE
ENCLOSED ENVELOPE.
Postage is not necessary if mailed in the United States.
