SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant |X|
Filed by a Party other than the Registrant |_|
Check the appropriate box:
|X| Preliminary Proxy Statement [X| Confidential, For use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
|_| 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| No fee required.
|_| Fee computed on table below per Exchange Act Rules 14a-6(i)(1) 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.
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 September 19, 1997 (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 ___________ ___, 1997.
Record holders of the Company's common stock, no par value per share
(the "Common Stock"), at the close of business on August 1, 1997 (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, ______________ 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 eight directors to serve until the 1998 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 plan
to change the Company's state of incorporation from New Jersey to Florida.
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,
relating to shares as to which a broker or nominee indicates that it does not
have discretionary authority to vote on a proposal, will not affect the outcome
of the election. The proposal to approve the plan to change the Company's state
of incorporation from New Jersey to Florida requires the affirmative vote of the
holders of two thirds of the shares of Common Stock not beneficially owned by
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<PAGE>
Interested Shareholders, as defined in the New Jersey Shareholders
Protection Act (the "Act"); accordingly, an abstention and a broker non-vote
will have the same effect as a negative vote. As of the record date, only
Frost-Nevada Limited Partnership, of which Phillip Frost, M.D., the Company's
Chairman, is the sole limited partner and sole shareholder of the general
partner, is an Interested Shareholder under the Act. The proposal to approve the
Employee Stock Purchase 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.
COSTS OF SOLICITATION
The Company will bear the costs of solicitation of proxies from its
shareholders. Solicitation of proxies may be made in person, by mail or by
telephone by officers, directors and regular employees of the Company who will
not be specially compensated in such regard. Nominees, fiduciaries and other
custodians will be requested to forward solicitation materials to the beneficial
owners and secure their voting instructions, if necessary, and will be
reimbursed for the reasonable expenses incurred in sending proxy materials to
the beneficial owners. The Company may also retain an independent proxy
soliciting firm, to aid in the solicitation of proxies and distribution of proxy
materials in the same manner as described above. If so retained, the Company
will pay the cost of the proxy solicitation and disbursement of these materials,
estimated to be approximately $_________, plus out-of-pocket expenses incurred.
PRINCIPAL SECURITY HOLDERS
The following table sets forth certain information as of June 17, 1997
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.
NAME AND ADDRESS OF NUMBER PERCENT
BENEFICIAL HOLDER OF SHARES(1) OF CLASS
- ------------------- ------------ ---------
Frost-Nevada, 5,421,528(2) 36.0%
Limited Partnership
3500 Lakeside Court
Suite 200
Reno, Nevada 89509
TRAL & CO 1,000,000 7.9%
The Travelers Indemnity Company
One Tower Square
Hartford, Connecticut 06183-1051
-2-
<PAGE>
David D. O'Donnell 884,956(3) 7.0%
Colorado Technical University
4435 N. Chestnut Street
Colorado Springs, Colorado 80907
The Marilyn O. Sullivan 649,285 5.1%
Family Trust
Colorado Technical University
4435 North Chestnut Street
Colorado, Springs, Colorado 80907
- --------------------
(1) All share amounts have been adjusted for a two-for-one stock split of
the Company's common stock effected as of May 13, 1996.
(2) Includes 237,500 shares which may be acquired pursuant to stock options
held by Dr. Frost exercisable within 60 days of June 17, 1997 and
2,150,000 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 of Frost-Nevada
Corporation, the general partner), exercisable within 60 days of June
17, 1997. Exercise of these warrants and options are subject to the
restrictions of the New Jersey Shareholders Protection Act. Dr. Frost
is the Chairman of the Board of Directors of the Company.
(3) Includes 50,000 shares which may be acquired pursuant to stock options
held by Mr. O'Donnell within 60 days of June 17, 1997 and 834,956
shares held in trust by Mr. O'Donnell for various family members.
-3-
<PAGE>
ELECTION OF DIRECTORS
(ITEM NO. 1)
BOARD OF DIRECTORS
A Board of Directors consisting of eight directors will be elected at
the Annual Meeting to hold office for one year or until their successors are
elected and qualified. The persons named below were designated by the Board of
Directors as nominees. All of the nominees are current members of the Board. Dr.
Pierre and Mr. Flanzraich were appointed to fill vacancies on the Board of
Directors in January and March 1997, respectively. 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.
JACK R. BORSTING, PH.D.
Director since 1994
Age 68
Dr. Borsting is the E. Morgan Stanley Professor of Business
Administration at the University of Southern California and
Director of its Center for 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, he 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 (aerospace), TRO Learning, Inc. (proprietary
education) and Bristol Technology (point-of- sale software and
service). Dr. Borsting is a trustee of the Institute for Defense
Analysis, the Rose Hill Foundation and the Los Angeles Orthopedic
Hospital Foundation.
NEIL FLANZRAICH
Director since 1997
Age 54
Mr. Flanzraich has been a Shareholder and Chairman of the Life
Sciences Legal Practice Group of Heller Ehrman White & McAuliffe,
Palo Alto, California, since 1995. From 1981 to 1994, Mr.
Flanzraich was Senior Vice President, General Counsel and member
of the Corporate Executive Committee of Syntex Corporation, an
international pharmaceutical company that was acquired by Roche
Holdings Ltd. Mr. Flanzraich serves as Chairman of the Board of
North American Vaccine, Inc. (vaccines).
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<PAGE>
PHILLIP FROST, M.D.
Director since 1993
Age 60
Dr. Frost has been a director of the Company since April 1992 and
Chairman of the Board of Directors since November 1992. Dr. Frost
has been Chairman of the Board of Directors and Chief Executive
Officer of IVAX Corporation (pharmaceuticals) since 1987. Dr.
Frost served as President of IVAX from 1991 until 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., Vice Chairman of
the Board of Directors of Continucare Corporation (managed health
care), Vice Chairman of the Board of Directors of Pan Am
Corporation (airline), and a director of Northrop Grumman Corp.
and American Exploration Company (oil and gas exploration and
production). He is a trustee of the University of Miami and a
member of the Board of Governors of the American Stock Exchange.
PETER S. KNIGHT
Director since 1994
Age 56
Mr. Knight is a partner in the law firm of Wunder, Knight,
Levine, Thelen & Forscey, in Washington, D.C. In 1996, Mr. Knight
took a leave of absence from his firm to serve as President
Clinton's Campaign Manager for Clinton/Gore '96. From 1989 to
1991, Mr. Knight was General Counsel and Secretary of Medicis
Pharmaceutical Corporation. From 1977 to 1989, Mr. Knight served
as the Chief of Staff to Congressman, and later Senator, Al Gore.
Mr. Knight is a director of COMSAT Corp. (an international
satellite services and digital networking company), Medicis
Pharmaceutical Corporation (a pharmaceutical company specializing
in dermatology), and the Schroder Series Trust (a mutual fund
company).
RICHARD M. KRASNO, PH.D.
Director since 1996
Age 55
Since 1983, Dr. Krasno has been President and Chief
Executive Officer of the Institute of International Education
(private not- for-profit education organization), New York City,
New York. He served as its Executive Vice President and Chief
Operating Officer from 1981 to 1983. Dr. Krasno was Deputy
Assistant Secretary of Education with the U.S. Department of
Education from 1980 to 1981.
-5-
<PAGE>
LOIS F. LIPSETT, PH.D.
Director since 1996
Age 64
Dr. Lipsett is the President of Health Education Associates,
Washington, D.C. Since 1995, Dr. Lipsett has served as a
consultant to several companies, including the Robert Wood
Johnson Foundation. Dr. Lipsett was Vice President, Scientific
and Medical Affairs, American Diabetes Association from 1992 to
1995. Prior to 1992, Dr. Lipsett founded, and was Director of,
the National Diabetes Information Clearinghouse and also was
Director for several training and career development programs at
the National Institutes of Health.
RICHARD C. PFENNIGER, JR.
Director since 1992
Age 42
Mr. Pfenniger has been Chief Executive Officer and Vice
Chairman of the Company since March 1997 and a director of the
Company since 1992. Mr. Pfenniger was Chief Operating Officer of
IVAX Corporation from May 1994 to March 1997. He served as Senior
Vice President--Legal Affairs and General 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.
(biopharmaceutical research and development), North American
Vaccine, Inc. and Pan Am Corporation.
PERCY A. PIERRE, PH.D.
Director since 1997
Age 58
Dr. Pierre has been Professor of Electrical Engineering at
the College of Engineering of Michigan State University since
1995. Prior to 1995, he was Vice President for Research and
Graduate Studies, as well as Professor of Electrical Engineering
at Michigan State University from 1990 to 1995; President of
Prairie View A & M University from 1983 to 1989; Assistant
Secretary of the Army for Research, Development and Acquisition,
Department of the U.S. Army, from 1977 to 1981; and Dean of the
School of Engineering at Howard University from 1971 to 1977. Dr.
Pierre serves as a director of CMS Energy Corp. (diversified
energy company) and a director of Old Kent Financial Corporation
(bank holding company).
DIRECTOR COMPENSATION
Each director who is not employed by the Company receives $4,800 per
year for his service as a director, $1,000 for each Board of Directors meeting
attended in person, and is reimbursed for expenses incurred in attending board
and committee meetings. Pursuant to the formula grant provision contained in the
Company's 1996 Stock Option Plan, non-employee directors automatically are
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<PAGE>
granted each year, on the first business day following the Company's annual
meeting of shareholders, non-qualified stock options to purchase 7,500 shares
(37,500 in the case of the Chairman of the Board) of the Company's common stock
at an exercise price equal to the fair market value of the common stock on the
date of the grant, and having a term of seven years. In fiscal 1997, pursuant to
that formula grant provision, options at an exercise price of $8.625 per share
were automatically granted to Dr. Frost (37,500 shares), and to Mr. Pfenniger,
Dr. Borsting, Mr. Knight, Dr. Lipsett and Dr. Krasno (7,500 shares each).
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors held five meetings during fiscal 1997 and acted
eight 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 or the committee, as applicable, except for Lois F. Lipsett, who
missed one meeting during the period she served as a director, and Peter S.
Knight. 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.
EXECUTIVE COMMITTEE. The Executive committee has the authority within
prescribed limits to act for the Board of Directors in certain matters during
intervals between meetings of the Board of Directors. The Executive Committee,
the current members of which are Mr. Pfenniger, Jr., Dr. Frost, Dr. Borsting and
Mr. Flanzraich, was constituted in May 1997, and accordingly held no meetings
during fiscal 1997.
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 current members of the Audit Committee are Dr. Borsting, Mr.
Knight, Dr. Lipsett, and Dr. Pierre. The Audit Committee held four meetings
during fiscal 1997.
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 and
stock benefit programs. The current members of the Compensation Committee are
Dr. Frost, Dr. Krasno and Mr. Flanzraich. The Compensation Committee held five
meetings during fiscal 1997.
-7-
<PAGE>
EXECUTIVE OFFICERS WHO ARE NOT NOMINEES
The Company's executive officers are elected annually at the first meeting
of the Board of Directors following each annual meeting of Shareholders. 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 39, has been President of Whitman since
1994. In March 1997, Mr. Proto also assumed the duties of Chief Operating
Officer. 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.
DAVID D. O'DONNELL. Mr. O'Donnell, age 55, has been President and
Chairman of the Board of Colorado Tech since 1986. In 1997, Mr. O'Donnell also
became Chancellor of Colorado Tech in Sioux Falls and Huron University in Huron,
South Dakota.
FERNANDO L. FERNANDEZ. Mr. Fernandez, age 36, has served as Vice
President--Finance, Treasurer and Chief Financial Officer of Whitman since 1996.
Prior to joining the Company, Mr. Fernandez, a certified public accountant,
served as Chief Financial Officer of Frost-Nevada Limited Partnership from 1991
to 1996. Previously, Mr. Fernandez served as Audit Manager for Coopers & Lybrand
in Miami.
RICHARD B. SALZMAN. Mr. Salzman, age 36, has served as Vice
President--Legal Affairs and General Counsel and Secretary of Whitman since
1996. 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.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's directors, executive officers and 10% shareholders to file initial
reports of ownership and reports of changes in ownership of the Company'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 the Company with copies of all Section
16(a) forms they file. Based on a review of the copies of such reports furnished
to the Company and written representations from the Company's directors and
executive officers that no other reports were required, the Company believes
that during fiscal 1997 the Company's directors, executive officers and 10%
shareholders complied with all Section 16(a) filing requirements applicable to
them, except that Brett Combs (former President of Sanford-Brown) and David
O'Donnell each filed one late report, in each case relating to one transaction.
-8-
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company currently occupies administrative offices in Miami, Florida
which are owned by IVAX Corporation. The lease between the Company and IVAX
Corporation provides for an annual rental of $103,999. The Chairman of the Board
of the Company is also the Chairman of the Board and a principal shareholder of
IVAX Corporation.
In April 1995, Career Master, a company 40% owned by Randy S. Proto, Chief
Operating Officer of the Company, 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 20,000
shares (10,000 shares before 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 1997, Ultrasound Diagnostic School purchased
textbooks with an aggregate purchase price of approximately $79,000 from Career
Master pursuant to this arrangement.
STOCK OWNERSHIP BY MANAGEMENT
The following table sets forth certain information as of June 20, 1997
concerning the number of shares of Common Stock beneficially owned by (i) each
director, (ii) each executive officer named below in the "Summary Compensation
Table" under "Executive Compensation" and (iii) all directors and executive
officers as a group, and the percentage such shares represent of the total
outstanding shares of common stock. Unless otherwise indicated, all shares are
owned directly by the person indicated who holds sole voting and investment
power.
NAME AND ADDRESS OF SHARES BENEFICIALLY PERCENT
BENEFICIAL HOLDER OWNED(1)(2) OF CLASS
- -------------------- ------------------- --------
Jack R. Borsting, Ph.D. 29,100(3) *
University of Southern California
School of Business
Administration, DCC-217
Los Angeles, California 90089-0871
Neil Flanzraich 0 *
Heller Ehrman White & McAuliffe
525 University Avenue
Palo Alto, California 94301-1900
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<PAGE>
Phillip Frost, M.D. 5,421,528(4) 36.0%
IVAX Corp.
4400 Biscayne Boulevard
Miami, Florida 33137
Peter S. Knight 27,500(3) *
1615 L. Street, N.W., Suite 650
Washington, D.C. 20036
Richard M. Krasno, Ph.D. 7,500(3) *
Institute of International Education
809 United Nations Plaza
New York, New York 10017-3580
Lois F. Lipsett, Ph.D. 7,700(3) *
3724 Jenifer Street, N.W.
Washington, D.C. 20015
Richard C. Pfenniger, Jr. 100,000(3) *
4400 Biscayne Boulevard
Miami, Florida 33137
Percy A. Pierre, Ph.D. 0 *
Michigan State University
College of Engineering
357 Engineering Building
East Lansing, Michigan 48824-1226
Randy S. Proto 267,200(3) 2.1%
4400 Biscayne Boulevard, 6th Floor
Miami, Florida 33137
David D. O'Donnell 884,956(5) 7.0%
Colorado Technical University
4435 N. Chestnut Street
Colorado Springs, Colorado 80907
Fernando L. Fernandez 90,000(3) *
4400 Biscayne Boulevard, 6th Floor
Miami, Florida 33137
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<PAGE>
Richard B. Salzman 25,000(3) *
4400 Biscayne Boulevard, 6th Floor
Miami, Florida 33137
All directors and executive officers
as a group (12 persons) 6,860,484(6) 43.8%
- ---------------------
* Represents beneficial ownership of less than one percent.
(1) All share amounts have been adjusted for a two-for-one stock split of
the Company'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 June 17, 1997 as follows: Dr.
Borsting (27,500); Mr. Knight (27,500); Dr. Krasno (7,500); Dr.
Lipsett (7,500); Mr. Pfenniger (97,500); Mr. Proto (265,000); Mr.
Fernandez (90,000); and Mr. Salzman (25,000).
(4) Includes 2,150,000 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 of
Frost-Nevada Corporation, the general partner), exercisable within 60
days of June 17, 1997 and 237,500 shares which may be acquired pursuant
to stock options held by Dr. Frost exercisable within 60 days of June
17, 1997. Exercise of these warrants and options are subject to the
restrictions of the New Jersey Shareholders Protection Act.
(5) Includes 50,000 shares which may be acquired pursuant to stock options
exercisable within 60 days of June 17, 1997, and 834,956 shares held in
trust by Mr. O'Donnell for various family members.
(6) Includes shares described in footnotes (2) through (5) as beneficially
owned.
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<PAGE>
EXECUTIVE COMPENSATION
The following table contains certain information regarding aggregate
compensation paid or accrued by the Company during fiscal 1997 to the Chief
Executive Officer of the Company and to each of the four most highly compensated
executive officers other than the Chief Executive Officer.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM ALL OTHER
ANNUAL COMPENSATION COMPENSATION COMPENSATION
---------------------------------- -------------- ------------
NAME AND YEAR ENDED
PRINCIPAL POSITION MARCH 31, SALARY BONUS STOCK OPTIONS
- ------------------- ---------- ------ ------ -------------
($) ($) (#)(1) ($)
<S> <C> <C> <C> <C> <C>
Richard C. Pfenniger, Jr.(2) 1997 17,187 0 300,000(3) 0
CHIEF EXECUTIVE OFFICER 1996 -- -- --(3) --
1995 -- -- --(3) --
Randy S. Proto(4) 1997 150,000 0 0 10,000(5)
PRESIDENT AND CHIEF 1996 150,000 0 0 0
OPERATING OFFICER 1995 43,269 0 550,000 0
David D. O'Donnell(6) 1997 145,325 10,000 0 31,031(7)
PRESIDENT - COLORADO 1996 -- -- 150,000 --
TECHNICAL UNIVERSITY 1995 -- -- -- --
Fernando L. Fernandez(8) 1997 120,000 0 0 0
VICE PRESIDENT - FINANCE, 1996 11,846 0 130,000 0
CFO AND TREASURER 1995 -- -- 20,000 0
Richard B. Salzman(9) 1997 120,000 0 0 0
VICE PRESIDENT - LEGAL 1996 10,000 0 100,000 0
AFFAIRS AND GENERAL COUNSEL 1995 -- -- -- --
- --------------------
<FN>
(1) All share amounts have been adjusted for a two-for-one stock split effected
as of May 13, 1996.
(2) Mr. Pfenniger's employment with the Company commenced in March 1997 and his
salary is $275,000 annually. Mr. Pfenniger has served as a director of the
Company since 1992.
(3) Excludes options to purchase 7,500 shares granted to Mr. Pfenniger in fiscal
1997 automatically pursuant to the Company's 1996 Stock Option Plan in
connection with his services as a director of the Company. Mr. Pfenniger
was also automatically granted options to purchase 10,000 shares in fiscal
1996 and options to purchase 10,000 shares in fiscal 1995 in connection with
his services as a director.
</FN>
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<PAGE>
<FN>
(4) Mr. Proto's employment with the Company commenced in November 1994.
(5) The additional compensation set forth for Mr. Proto represents taxable
relocation expenses incurred by Mr. Proto in connection with relocation
of the Company's headquarters from New Jersey to Florida.
(6) The Company entered into an employment agreement with Mr. O'Donnell on
March 29, 1996 in connection with the acquisition of Colorado Tech. The
agreement is for a three-year term ending March 28, 1999 and provides
for an annual salary of $145,000 for Mr. O'Donnell's services as
President of Colorado Tech.
(7) The additional compensation for Mr. O'Donnell consists of employee
benefits in the approximate amount of $3,200, automobile allowance in
the amount of $7,000 and the remainder as compensation for Mr.
O'Donnell's personal guarantee of certain indebtedness of Colorado
Technical University.
(8) Mr. Fernandez' employment with the Company commenced in February 1996.
(9) Mr. Salzman's employment with the Company commenced in March 1996.
</FN>
</TABLE>
The following table sets forth information concerning stock option grants
made during 1997 to the executive officers named in the "Summary Compensation
Table."
<TABLE>
<CAPTION>
STOCK OPTION GRANTS DURING THE YEAR ENDED
MARCH 31, 1997
POTENTIAL REALIZABLE
VALUE AT ASSUMED
PERCENT OF ANNUAL RATES OF
TOTAL OPTIONS STOCK PRICE APPRECIATION
NAME AND OPTIONS GRANTED TO EXERCISE EXPIRATION FOR OPTION TERM
PRINCIPAL POSITION GRANTED EMPLOYEES PRICE DATE 5% 10%
- ------------------ ------- ------------- ----------- ------------- -------- ------
(#) % $ $ $
<S> <C> <C> <C> <C> <C> <C>
Richard C. Pfenniger, Jr. 300,000(1) 40 $5.25 03/02/04 642,000 1,494,000
CHIEF EXECUTIVE OFFICER
- --------------------
<FN>
(1) Excludes options to purchase 7,500 shares granted to Mr. Pfenniger
automatically pursuant to the Company's 1996 Stock Option Plan in
connection with his services as a director of the Company. These
options were granted on October 14, 1996 at an exercise price of $8.625
and have a term of seven years.
</FN>
</TABLE>
-13-
<PAGE>
The following table sets forth information concerning stock option
exercises during fiscal 1997 by each of the executive officers named in the
"Summary Compensation Table" above and the fiscal year-end value of unexercised
options held by each such executive officer.
<TABLE>
<CAPTION>
STOCK OPTION EXERCISES IN FISCAL 1997 AND FISCAL YEAR END OPTION VALUES
VALUE OF UNEXERCISED
NUMBER OF UNEXERCISED IN-THE-MONEY OPTIONS
OPTIONS AT FISCAL YEAR-END AT FISCAL YEAR-END
--------------------------------- --------------------------------
EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
----------- ------------- ----------- -------------
(#)(1) (#)(1) ($)(1) ($)(1)(2)
<S> <C> <C> <C> <C>
Richard C. Pfenniger, Jr. 97,500 300,000 216,850 0
CHIEF EXECUTIVE OFFICER
Randy Proto 265,000 285,000 828,125 890,625
PRESIDENT AND CHIEF
OPERATING OFFICER
David D. O'Donnell 50,000 100,000 0 0
PRESIDENT - COLORADO TECH
Fernando L. Fernandez 90,000 90,000 153,300 133,650
VICE PRESIDENT - FINANCE,
CHIEF FINANCIAL OFFICER
AND TREASURER
Richard B. Salzman 25,000 75,000 14,062 42,187
VICE PRESIDENT - LEGAL
AFFAIRS AND GENERAL COUNSEL
- --------------------
<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 1997 multiplied by the difference between the
exercise price and $5.25, the closing price of the Company's common
stock at March 31, 1997.
</FN>
</TABLE>
PERFORMANCE GRAPH
The graph and table set forth below compares the cumulative total
shareholder return on the Company's Common Stock for fiscal 1993 through fiscal
1997 with the S&P 500 Index and an industry peer group index for the same
period. The industry peer group index is comprised of the following companies,
each of which was selected on the basis of the similarity of its business with
-14-
<PAGE>
that of the Company: Apollo Group, Inc., DeVry, Inc., ITT Educational Services,
Inc., Computer Learning Centers, Strayer Education, Inc., Education Management
Corp. and Educational Medical, Inc. Each of the latter three entities became
public companies during fiscal 1997. They were added to the Company's peer group
index utilized in last year's proxy statement also on the basis of the
similarity of their business with that of the Company. The graph and table
assume an investment of $100 in the Company's Common Stock and each index on
March 31, 1992 (the last trading day in fiscal 1992), and the reinvestment of
all dividends.
<TABLE>
<CAPTION>
FISCAL YEAR ENDED MARCH 31,
-------------------------------------
March 31, 1992 1993 1994 1995 1996 1997
-------------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Whitman 100 207 200 176 314 290
Industry Peer Group - Fiscal 1996 100 117 149 197 540 643
Industry Peer Group - Fiscal 1997 100 117 149 197 540 661
S&P 500 100 115 117 135 179 214
</TABLE>
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The following report of the Company's Compensation Committee shall not be
deemed to be soliciting material or incorporated by reference by any general
statement incorporating by reference this Proxy Statement into any filing under
the 1933 Act or the 1934 Act, except to the extent that the Company specifically
incorporates this information by reference, and it shall not be otherwise deemed
filed under such acts.
To the Company's Shareholders:
The Compensation Committee of the Company's Board of Directors, which is
composed of three non-employee directors, is charged with reviewing the
compensation of the Chief Executive Officer of the Company and making
recommendations with respect thereto to the Board of Directors. The Compensation
Committee also reviews and approves the compensation of the other executive
officers. 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 just 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.
-15-
<PAGE>
In light of these factors, the committee believes 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 Compensation 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 Compensation Committee believes that this approach to compensation
creates an entrepreneurial atmosphere with motivates executives to perform to
their full potential. The Compensation 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 Compensation Committee designs the compensation of
executive officers to consist of a reasonable annual salary with long-term
compensation in the form of stock options. The Compensation Committee may award
cash bonuses for superior performance during a particular year.
EXECUTIVE OFFICERS. The Chief Executive Officer, with the assistance of
other executive officers, makes salary recommendations to the Compensation
Committee for the executive officers of the Company (other than the Chief
Executive Officer 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, compensation offered
by competitors, the cost of living, and the financial performance of the
Company. 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 seven-year terms. Executives must be employed by the Company at the
time of vesting in order to exercise the options.
-16-
<PAGE>
Grants of stock options to executive officers are generally made upon the
recommendations of the Chief Executive Officer 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 Compensation
Committee on a subjective basis, with no specific weight given to any particular
factor.
In March 1997, the Company created the office of Chief Executive Officer
and appointed Mr. Richard C. Pfenniger, Jr. to this position. After negotiations
with Mr. Pfenniger, Mr. Pfenniger's base salary in fiscal 1997 was set at
$275,000 and he was awarded stock options to purchase 300,000 shares of the
Company's Common Stock at $5.25 per share, the fair market value of the
Company's Common Stock on the date of grant. The stock option has a seven-year
term and vests ratably over four years. Mr. Pfenniger's compensation package was
reviewed and approved by the Board of Directors who believe that the
compensation is fair and reasonable in light of Mr. Pfenniger's business
experience and acumen. No performance bonus award was made to Mr. Pfenniger in
fiscal 1997.
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 million 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 Committee continually evaluates 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 effect on
shareholder value.
THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
Phillip Frost, Chairman Richard M. Krasno Neil Flanzraich
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During fiscal 1997, the following directors served on the Compensation
Committee of the Board of Directors: Dr. Frost, Isaac Kaye, Mr. Pfenniger, Dr.
Borsting, and Dr. Krasno. The current members of the Compensation Committee are
Dr. Frost, Mr. Flanzraich and Dr. Krasno. No person serving as a member of the
Committee during fiscal 1997 was an executive officer of the Company at the time
of service on the Committee, and no interlocking relationships exist between
such persons and any director or executive officer of the Company. Mr. Kaye
resigned as a director of the Company effective July 1, 1996.
-17-
<PAGE>
APPROVAL OF REINCORPORATION OF THE COMPANY
FROM NEW JERSEY TO FLORIDA
(ITEM NO. 2)
INTRODUCTION
On June 13, 1997, the Board of Directors unanimously approved, and
recommends for shareholder approval, a plan to change the Company's state of
incorporation from New Jersey to Florida (the "Reincorporation"). The
Reincorporation will be effected by merging the Company into Whitman
Reincorporation, Inc., a Florida corporation ("Whitman Florida") pursuant to an
Agreement and Plan of Merger between the Company and Whitman Florida, a copy of
which appears as Exhibit A to this proxy statement (the "Merger Agreement").
Whitman Florida is a wholly-owned subsidiary of the Company recently
incorporated in Florida for purposes of effecting the Reincorporation and has
not engaged in any activities except in connection with the proposed
Reincorporation transaction.
THE MERGER
The Reincorporation will be effected by merging (the "Merger") the Company
into Whitman Florida, which will be the surviving corporation of the Merger. The
terms and conditions of the Merger are set forth in the Merger Agreement
included as Exhibit A to this proxy statement, and the summary of the terms and
conditions of the Merger set forth below is qualified by reference to the full
text of the Merger Agreement.
Upon consummation of the Merger, Whitman Florida will continue to exist in
its present form, except that it will change its name to "Whitman Education
Group, Inc.," and the Company will cease to exist. The Reincorporation will
change the legal domicile of the Company, but will not result in a change in the
name, principal office, business, management, capitalization, assets,
liabilities or net worth of the Company. By operation of law, Whitman Florida
will succeed to all of the assets and assume all of the liabilities of the
Company. After the Merger, the Board of Directors of Whitman Florida will be
comprised of the persons elected to the Board of Directors of the Company at the
Annual Meeting, and the persons who are currently serving as executive officers
of the Company will continue to serve in the same capacities for Whitman
Florida.
Upon shareholder approval of the Reincorporation, and upon approval and
acceptance for filing of a certificate of merger by the Secretary of State of
the State of New Jersey and articles of merger by the Secretary of State of the
State of Florida, the Company will be merged with and into Whitman Florida
pursuant to the Merger Agreement, resulting in a change in the Company's state
of incorporation to Florida. The Company's corporate affairs and the rights of
its shareholders will then be governed by the Florida Business Corporation Act
(the "FBCA") and by the articles of incorporation and bylaws of Whitman Florida,
instead of the New Jersey Business Corporation Act (the "NJBCA") and the
certificate of incorporation and bylaws of the Company. The material differences
between the NJBCA and the FBCA are discussed below under "Comparison of New
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<PAGE>
Jersey and Florida Corporate Law." The articles of incorporation of Whitman
Florida is identical to the certificate of incorporation of the Company in all
material respects, except as discussed below under "Comparative Provisions of
the Charter and By-Laws of the Company and Whitman Florida." The By-Laws of
Whitman Florida and of the Company contain differences attributable to the
differences between the FBCA and the NJBCA. The Company does not believe that
such differences are material to its shareholders, except as noted below in
"Comparative Provisions of the Charter and By-Laws of the Company and Whitman
Florida." Copies of each of the Articles of Incorporation and By-Laws of Whitman
Florida are set forth as Exhibits B and C, respectively, to this proxy
statement. The Certificate of Incorporation and By-Laws of the Company are
available for inspection by shareholders of the Company at the principal offices
of the Company located at 4400 Biscayne Boulevard, 6th Floor, Miami, Florida
33137.
Upon the effectiveness of the Merger, each outstanding share of the
Company's Common Stock will be automatically converted into one share of the
common stock, no par value, of Whitman Florida (the "Florida Common Stock").
Each outstanding certificate representing shares of the Company's Common Stock
will continue to represent the same number of shares of Florida Common Stock,
and such certificates will be deemed for all corporate purposes to evidence
ownership of shares of Florida Common Stock. IT WILL NOT BE NECESSARY FOR
STOCKHOLDERS TO EXCHANGE THEIR EXISTING STOCK CERTIFICATES FOR STOCK
CERTIFICATES OF WHITMAN FLORIDA. The Common Stock will continue to be listed on
the American Stock Exchange, without interruption, and such exchange will
consider the delivery of existing stock certificates of the Company as
constituting "good delivery" of shares of Whitman Florida in stock transactions
effected after the Merger.
Pursuant to the Merger Agreement, each option or right to purchase a share
of the Company's Common Stock outstanding immediately prior to the effective
time of the Merger will become an option or right to purchase a share of Florida
Common Stock upon the same terms and conditions as existed immediately prior to
the effective time of the Merger. Future options or rights, if any, granted
under the Company's 1996 Stock Option Plan or otherwise will be for shares of
Florida Common Stock.
A vote for approval and adoption of the Merger Agreement and the
Reincorporation proposal will also constitute specific approval of the Whitman
Florida Articles of Incorporation and By-Laws. In addition, a vote for approval
and adoption of the Merger Agreement and the Reincorporation proposal will
constitute approval of the assumption by Whitman Florida of the Company's 1996
Stock Option Plan and outstanding stock option agreements, and the substitution
of shares of Whitman Florida for shares of the Company's Common Stock as the
security to be received upon exercise of options, if any, granted or to be
granted under the 1996 Stock Option Plan of the Company.
-19-
<PAGE>
THE BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED AND, FOR THE REASONS
DESCRIBED BELOW UNDER "PRINCIPAL REASONS FOR THE REINCORPORATION," UNANIMOUSLY
RECOMMENDS THAT THE SHAREHOLDERS APPROVE AND ADOPT THE MERGER AGREEMENT AND THE
REINCORPORATION PROPOSAL.
PRINCIPAL REASONS FOR THE REINCORPORATION
The Company was incorporated in New Jersey in 1979 because the laws of that
state were deemed to be adequate for the conduct of its business and because the
scope of its business at that time was relatively limited in nature. In the
intervening years, however, the Company has substantially expanded its business
to include 24 business locations in 13 states, only one of which is located in
New Jersey, and has relocated the Company's headquarters to Florida where it has
three schools. For the reasons set forth below, the Board of Directors believes
it is in the best interests of the Company and its shareholders to change the
state of its incorporation of the Company from New Jersey to Florida.
The Board of Directors believes that the Reincorporation of the Company in
Florida will provide the Company with greater flexibility and more
predictability with respect to its financial and corporate legal affairs.
Although management believes that the Company has adequate capital for its
present operations, the Board of Directors believes it would be judicious for
the Company to strengthen its capital base at this time. Moreover, as the
Company continues to upgrade and enhance its existing educational facilities and
to pursue strategic acquisitions, the Company will likely require additional
capital or financing. However, the Company to date has not developed a history
of sustained profits. Accordingly, its access to capital on acceptable terms is
more limited than it otherwise would be. While Frost-Nevada, Limited Partnership
("Frost-Nevada"), the Company's principal shareholder, has facilitated such
financing on the Company's behalf in the past through the exercise of warrants
issued to Frost-Nevada and the issuance of guarantee instruments for
conventional financing arrangements, the New Jersey Shareholder Protection Act
(the "Act") provisions of the NJBCA severely limits Frost-Nevada from assisting
in additional financing for the Company. At present, Frost-Nevada holds warrants
to purchase 2,150,000 shares of the Company's common stock at an aggregate
purchase price in excess of $8,000,000; however, their exercise is subject to
the Act under which, absent the approval of the Company's shareholders as
described below, a substantial majority of the warrants may not be exercised.
In general, the Act precludes the Company from engaging in any business
combination (as defined in the Act) with an interested shareholder (a beneficial
owner of 10% or more of the Company's voting shares) for a period of five years
from the date the shareholder became interested. Although that five year period
has recently expired with respect to Frost-Nevada, following such five year
period, any proposed business combination with an interested shareholder
requires the approval of two-thirds of the Company's noninterested shareholders.
This requirement prevents Frost-Nevada from exercising additional warrants,
advancing funds to the Company on a conventional secured basis or from receiving
reasonable, arms'-length compensation in exchange for guarantees of the
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<PAGE>
Company's indebtedness given to the Company's lenders. The Act's supermajority,
disinterested shareholder approval requirement for any such business combination
with an interested stockholder may render the Company unable to complete an
arms'-length transaction with an interested stockholder, such as Frost-Nevada;
or, even where such shareholder approval can be obtained, the delay inherent in
a public company's proxy solicitation and shareholder meeting process may
adversely impact the Company's ability to timely raise capital or secure
necessary financing.
Accordingly, the Board of Directors believes that the procedural
impediments imposed under the Act substantially impairs the flexibility the
Company needs to raise capital or secure financing on a timely basis and serves
to increase the costs and uncertainty attendant with such transactions. The
Board of Directors further believes that the FBCA provides the Company the
ability to negotiate and complete arms'-length transactions with an interested
shareholder while affording the Company's shareholders the protections of the
Florida Fair Price statute which requires approval of such transactions by a
majority of the Company's disinterested directors. See "Comparison of New Jersey
and Florida Corporate Law-State Takeover Law." In the event the Reincorporation
is effected, Frost-Nevada has advised the Company that it intends to exercise at
least an additional 500,000 warrants which will provide additional capital to
the Company in excess of $1,500,000. The Board believes that at present the
infusion of capital through the exercise of the Frost-Nevada warrants presents a
viable and reasonable method to increase its capital base and is in the best
interest of shareholders. In addition, the Reincorporation would allow further
exercises of warrants held by Frost-Nevada at its discretion in the future
without the delay, expense and uncertainty associated with approving such a
transaction under the Act.
An additional reason for the Reincorporation is to conform the Company's
legal residence to that of its operating headquarters and situs of substantial
operations. Moreover, the Board believes that the FBCA presents an appropriate
balance between the rights and protections of shareholders and operating
flexibility for the Company.
The Company automatically will receive the benefits of the FBCA by virtue
of becoming a Florida-domiciled corporation pursuant to the Merger, and while
changes are being made to the Certificate of Incorporation and By-Laws of the
Company as part of the proposed Reincorporation, the Company does not deem any
of these changes to be material. See "Comparative Provisions of the Charter and
By-Laws of the Company and Whitman Florida." Accordingly, the changes in the
rights of shareholders and the rules of corporate governance affecting the
Company generally following the Merger would be those resulting from being
subject to the FBCA as discussed under "Comparison of New Jersey and Florida
Corporate Law."
DISSENTERS' RIGHTS OF APPRAISAL
Although under New Jersey law shareholders have the right, under certain
circumstances, to dissent from certain corporate reorganizations and receive
cash for their shares, New Jersey law does not provide for dissenters' rights in
connection with the Reincorporation.
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<PAGE>
FEDERAL INCOME TAX CONSEQUENCES OF THE REINCORPORATION
No gain or loss will be recognized by the holders of Common Stock as a
result of the Reincorporation. Each shareholder will have the same basis in his
shares of Whitman Florida received in the Reincorporation as in the shares of
the Company held immediately prior to the Reincorporation, and the holding
period of the shares of Whitman Florida include the period during which the
corresponding shares of the Company were held, provided such corresponding
shares were held as a capital asset at the time of the effectiveness of the
Reincorporation.
In addition, no gain or loss will be recognized by the Company or Whitman
Florida as a result of the Reincorporation, and Whitman Florida will generally
succeed, without adjustment, to the tax attributed to the Company. Because the
Company is based in Florida, it is already qualified to transact business in
Florida and pays corporate income taxes in Florida. Accordingly, changing the
state of incorporation of the Company is not expected to affect its income and
other corporate taxes.
ALTHOUGH THE COMPANY DOES NOT ANTICIPATE THAT STATE OR LOCAL INCOME TAX
CONSEQUENCES TO SHAREHOLDERS WILL VARY FROM THE FEDERAL INCOME TAX CONSEQUENCES
DESCRIBED ABOVE, STOCKHOLDERS SHOULD CONSULT THEIR OWN TAX ADVISORS AS TO THE
EFFECT OF THE REINCORPORATION UNDER APPLICABLE STATE AND LOCAL TAX LAWS.
AMENDMENT, DEFERRAL OR TERMINATION OF THE MERGER AGREEMENT
If approved by the shareholders at the Annual Meeting, it is anticipated
that the Reincorporation will become effective at the earliest practicable date.
However, the Merger Agreement provides that it may be amended, modified or
supplemented before or after approval by the shareholders of the Company; but no
such amendment, modification or supplement may be made if it would have a
material adverse effect upon the rights of the Company's shareholders unless it
has been approved by the shareholders. The Merger Agreement also provides that
the Company may terminate and abandon the Merger or defer its consummation for a
reasonable period, notwithstanding shareholder approval, if in the opinion of
the Board of Directors or, in the case of a deferral, of an authorized officer,
such action would be in the best interest of the Company and its shareholders.
The Merger Agreement provides that the consummation of the Merger is subject to
certain conditions, including the absence of pending or threatened litigation
regarding the Reincorporation, and the approval, if necessary, of the Whitman
Florida Common Stock for listing on the American Stock Exchange upon official
notice of issuance.
VOTE REQUIRED AND BOARD OF DIRECTORS' RECOMMENDATION
The Merger Agreement and the Reincorporation proposal have been approved by
the Board of Directors of the Company. In order to approve and adopt the Merger
Agreement and the Reincorporation proposal, the New Jersey Shareholder
Protection Act requires that the Merger be approved by the affirmative vote of
the holders of two-thirds of the voting stock not beneficially owned by
Frost-Nevada, Limited Partnership, which is considered an "interested
stockholder" under such Act.
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<PAGE>
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE SHAREHOLDERS VOTE
"FOR" THE APPROVAL AND ADOPTION OF THE MERGER AGREEMENT AND REINCORPORATION
PROPOSAL.
APPROVAL AND ADOPTION OF THE MERGER AGREEMENT AND THE REINCORPORATION
PROPOSAL WILL AFFECT CERTAIN RIGHTS OF SHAREHOLDERS. ACCORDINGLY, SHAREHOLDERS
ARE URGED TO READ CAREFULLY THE INFORMATION SET FORTH BELOW UNDER THE CAPTION
"COMPARISON OF NEW JERSEY AND FLORIDA CORPORATE LAW" AND "COMPARATIVE PROVISIONS
OF THE CHARTER AND BY-LAWS OF THE COMPANY AND WHITMAN FLORIDA" SET FORTH BELOW
AS WELL AS THE EXHIBITS TO THIS PROXY STATEMENT BEFORE VOTING.
COMPARISON OF NEW JERSEY AND FLORIDA CORPORATE LAW
Upon consummation of the Reincorporation, the shareholders of the Company,
a New Jersey corporation, will become shareholders of Whitman Florida, a Florida
corporation. Shareholders should note the following significant differences
between the New Jersey Business Corporation Act ("NJBCA" or "New Jersey Law")
and the Florida Business Corporation Act (the "FBCA" or "Florida Law") as they
affect the rights of shareholders. The following comparison of the NJBCA and the
Company's Certificate of Incorporation and By-Laws, on the one hand, and the
FBCA and the Whitman Florida's Articles of Incorporation and By-Laws, on the
other, is not intended to be complete and is qualified in its entirety by
reference to the Company's Certificate of Incorporation and By-Laws and Whitman
Florida's Articles of Incorporation and By-Laws. Copies of the Company's
Articles of Incorporation and By-Laws are available for inspection at the
offices of the Company and copies will be sent to holders of the Common Stock
upon request. Copies of Whitman Florida's Articles of Incorporation and By-Laws
are attached hereto as Exhibits B and C, respectively.
DISTRIBUTIONS TO SHAREHOLDERS
A New Jersey corporation may pay dividends unless after payment thereof (i)
the corporation would be unable to pay its debts as they become due in the usual
course of its business, or (ii) the corporation's total assets would be less
than its total liabilities.
A Florida corporation may pay dividends to shareholders unless after
payment thereof (i) the corporation would be unable to pay its debts as they
become due in the usual course of its business, or (ii) the corporation's total
assets would be less than the sum of its total liabilities and the amount that
would be needed if the corporation were to be dissolved at the time of the
payment of such dividend to satisfy the preferential rights upon dissolution of
shareholders whose preferential rights are superior to those receiving the
dividend. Under Florida Law, a corporation's redemption of its own capital stock
is deemed to be a distribution.
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<PAGE>
DISSENTERS' RIGHTS
New Jersey Law provides for dissenters' rights to shareholders of a
corporation which is party to (i) a plan of merger, except (a) with respect to
shares of a class or series which is listed on a national securities exchange or
is held on the record date by not less than 1,000 shareholders or (b) where
pursuant to the plan of merger such shareholder will receive (I) cash, (II)
shares which upon consummation of the merger will either be listed on a national
securities exchange or held of record by not less than 1,000 shareholders, or
(III) cash and such securities; (ii) any sale, lease, exchange or other
disposition of all or substantially all of the corporation's assets, other than
with respect to (I) such transactions duly approved by a majority of the
corporation's board of directors and a majority of the votes cast at a duly held
shareholders' meeting, (II) shares of a class or series which, at the record
date is listed on a national securities exchange or is held of record by not
less than 1,000 shareholders, or (iii) a transaction pursuant to a plan of
dissolution which provides for distribution of substantially all of the net
assets of the corporation to the shareholders within one year after the date of
the transaction, where such transaction is solely for cash, securities listed on
a national exchange or held by no less than 1,000 shareholders, or cash and such
securities.
The FBCA provides appraisal rights in connection with (i) a merger, except
that such rights are not provided when (a) no vote of the shareholders is
required for the merger or (b) shares of the corporation are listed on a
national securities exchange, traded on the Nasdaq National Market System, or
held of record by not fewer than 2,000 shareholders; (ii) a sale of
substantially all the assets of a corporation; (iii) amendments to the articles
of incorporation that may adversely affect the rights or preferences of
shareholders; and (iv) a Control Share Acquisition (as described below).
The shares of the Company's Common Stock are listed on the American Stock
Exchange.
STATE TAKEOVER LAWS
Under New Jersey Law, a corporation is prohibited from engaging in any
business combination with an interested shareholder (i.e., a beneficial owner of
10% or more of the corporation's voting shares) for a period of five years from
the date the shareholder first became an interested shareholder unless prior to
such date the board of directors approved the business combination. In addition,
a corporation is prohibited from ever engaging in any business combination with
an interested shareholder unless (i) prior to such date the board of directors
approved the business combination, (ii) subsequent to such date the business
combination is approved by 66 2/3% of the corporation's noninterested
shareholders, or (iii) the cash and fair value of other consideration to be paid
per share to all holders of voting shares equals the highest per share price
calculated pursuant to various methods set forth in Section 14A:10A-5(c) of the
NJBCA (regarding the amount of consideration to be received by noninterested
shareholders). Unless the certificate of incorporation provides otherwise, this
provision of the NJBCA does not apply to a corporation if the corporation does
not have voting shares registered or traded on a national securities exchange or
registered with the Securities and Exchange Commission under Section 12(g) of
the Securities Exchange Act of 1934, as amended.
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<PAGE>
Section 607.0901 of the FBCA, informally known as the "Fair Price Statute,"
provides that the approval of the holders of two-thirds of the voting shares of
a company, other than the shares owned by an Interested Shareholder (i.e., the
beneficial owner of more than 10% of the voting shares outstanding ) would be
required in order to effectuate certain transactions, including, without
limitation, a merger, sale of assets, sale of shares and reclassification of
securities involving a corporation and an Interested Shareholder (an "Affiliated
Transaction"). The foregoing special voting requirement is in addition to the
vote required by any other provision of the FBCA or a corporation's articles of
incorporation.
The special voting requirement does not apply in any of the following four
circumstances: (i) the Affiliated Transaction is approved by a majority of the
corporation's disinterested directors (as defined in the statute); (ii) the
Corporation has not had more than 300 shareholders of record at any time during
the three years preceding the announcement date of an Affiliated Transaction;
(iii) the Interested Shareholder has beneficially owned 80% of the corporation's
voting shares for five years; (iv) the Interested Shareholder beneficially owns
90% of the corporation's voting shares; or (v) all of the following conditions
are met: (A) the cash and fair value of other consideration to be paid per share
to all holders of voting shares equals the highest per share price calculated
pursuant to various methods set forth in Section 607.0901 of the FBCA, (B) the
consideration to be paid in the Affiliated Transaction is in the same form as
previously paid by the Interested Shareholder, and (C) during the portion of the
three years preceding the announcement date that the Interested Shareholder has
been an Interested Shareholder, except as approved by a majority of the
disinterested directors, there shall have been no default in payment of
preferred stock dividends, no decrease in common stock dividends, no increase in
the voting shares owned by the Interested Shareholder, and no benefit to the
Interested Shareholder from loans, guaranties or other financial assistance or
tax advantages provided by the corporation.
A corporation may "opt out" of the provisions of Section 607.0901 by
electing to do so in its original articles of incorporation or by adopting an
amendment to its articles of incorporation or ByLaws opting out and having such
amendment approved by the holders of a majority of the voting shares not held by
the Interested Shareholder, its affiliates or associates. The amendment will not
be effective until 18 months after such vote, and will not apply to any
Affiliated Transaction with someone who is an Interested Shareholder on or prior
to the effective date of the Amendment. Whitman Florida has not opted out of the
provisions of Section 607.0901.
A corporation also may redefine "disinterested director" for purposes of
the application of the statute to that corporation. As set forth above, the
special voting requirements to approve an Affiliated Transaction under the FBCA
do not apply in various circumstances, including where the Affiliated
Transaction is approved by a majority of the corporation's disinterested
directors. Whitman Florida has determined that pursuant to the definition of
"disinterested directors" provided in Section 607.0901(1)(h) of the FBCA, none
of its directors is currently "disinterested" under that statute. Accordingly,
as provided in Section 607.0901(1)(h) of the FBCA, Whitman Florida has redefined
the term "disinterested director" for the purposes of the application of Section
607.0901 to Affiliated Transactions which may be entered into by Whitman
Florida.
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A person who inadvertently becomes an Interested Shareholder (for example,
as a result of a corporation's repurchase of some of its shares) may promptly
divest himself of enough stock to go below the 10% threshold so that no special
vote would apply to a transaction with that shareholder, so long as such person
has not otherwise been an Interested Shareholder within the five years preceding
the first public announcement of the transaction.
Section 607.0902 of the FBCA, informally known as the "Florida Control
Share Acquisition Statute," provides that the voting rights to be accorded
Control Shares (as defined below) of a Florida corporation that has (i) 100 or
more shareholders, (ii) its principal place of business, its principal office,
or substantial assets in Florida and (iii) either (A) more than 10% of its
shareholders residing in Florida, (B) more than 10% of its shares owned by
Florida residents, or (C) 1,000 shareholders residing in Florida, must be
approved by a majority of each class of voting securities of the corporation,
excluding those shares held by interested persons, before the Control Shares
will be granted any voting rights.
"Control Shares" are defined in the FBCA to be shares acquired in a Control
Share Acquisition (as defined below) that, when added to all other shares of the
issuing corporation owned by such person, would entitle such person to exercise,
either directly or indirectly, voting power within any of the following ranges:
(a) 20% or more but less than 33% of all voting power of the corporation's
voting securities, (b) 33% or more but less than a majority of all voting power
of the corporation's voting securities, or (c) a majority or more of all of the
voting power of the corporation's voting securities. A "Control Share
Acquisition" is defined in the FBCA as an acquisition, either directly or
indirectly, by any person of ownership of, or the power to direct the exercise
of voting power with respect to, outstanding Control Shares. Section 607.0902
also states that, if provided in the articles of incorporation or by-laws of a
corporation prior to their acquisition, Control Shares may be redeemed by the
corporation for fair value in certain circumstances. Finally, unless otherwise
provided in a corporation's articles of incorporation or by-laws prior to a
Control Share Acquisition, in the event Control Shares are accorded full voting
rights and the acquiring person has acquired Control Shares with a majority or
more of all voting power, all Shareholders shall have dissenters' rights.
Neither Whitman Florida's Articles of Incorporation nor By-Laws provide
otherwise.
Section 607.0902 further provides that, in certain circumstances, an
acquisition of shares that otherwise would be governed by its provisions does
not constitute a Control Share Acquisition. Among such circumstances are
acquisitions of shares approved by the corporation's board of directors and
mergers effected in compliance with the applicable provisions of the FBCA, if
the corporation is a party to the agreement of merger.
LIABILITY OF DIRECTORS
Under New Jersey Law a director may be held personally liable for monetary
damages ensuing from such director's breach of his fiduciary duties to the
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corporation. New Jersey Law permits a corporation to limit a director's
exposure to such liability; however, a director of a New Jersey corporation
cannot be relieved of such liability for (i) breach of such director's duty of
loyalty, (ii) acts or omissions not in good faith or constituting intentional
misconduct or knowing violation of the law, or (iii) acts or omissions which
result in receipt of any improper personal benefit.
Florida Law provides that a director is not personally liable for monetary
damages to the corporation or any other person for any act or omission as a
director unless the director breached or failed to perform his statutory duties
as a director and such breach or failure (1) constitutes a violation of criminal
law, unless the director had reasonable cause to believe his conduct was lawful
or had no reasonable cause to believe his conduct was unlawful, (2) constitutes
a transaction from which the director derived an improper personal benefit, (3)
results in an unlawful distribution, (4) in a derivative action or an action by
a shareholder, constitutes conscious disregard for the best interests of the
corporation or willful misconduct, or (5) in a proceeding other than a
derivative action or an action by a shareholder, constitutes recklessness or an
act or omission which was committed in bad faith or with malicious purpose or in
a manner exhibiting wanton and willful disregard of human rights, safety or
property.
INDEMNIFICATION
Under both New Jersey Law and Florida Law, a corporation may generally
indemnify its officers, directors, employees and agents against expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement of
any proceedings (other than derivative actions), if they acted in good faith and
in a manner they reasonably believed to be in or not opposed to the best
interests of the Corporation and, with respect to any criminal action or
proceeding, had no reasonable cause to believe their conduct was unlawful. A
similar standard is applicable in derivative actions, except that
indemnification may be made only for (1) expenses (including attorneys' fees)
and certain amounts paid in settlement, and (2) in the event the person seeking
indemnification has been adjudicated liable, amounts deemed proper, fair and
reasonable by the appropriate court upon application thereto. Both New Jersey
Law and Florida Law provide that to the extent that such persons have been
successful in defense of any proceeding, they must be indemnified by the
corporation against expenses actually and reasonably incurred in connection
therewith. Florida Law also provides that, unless a corporation's articles of
incorporation provide otherwise, if a corporation does not so indemnify such
persons, they may seek, and a court may order, indemnification under certain
circumstances even if the board of directors or shareholders of the corporation
have determined that the persons are not entitled to indemnification. The
By-Laws of both the Company and Whitman Florida provide that directors and
officers will be indemnified to the fullest extent permitted by law.
DERIVATIVE ACTIONS
Under New Jersey Law, a person may not bring a derivative action unless the
person was a shareholder of the corporation at the time of the challenged
transaction or unless the person acquired the shares by operation of law from a
person who was a shareholder at such time. In any such action,
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the court, upon final disposition of the action and a finding that such action
was brought without reasonable cause, may require the plaintiff shareholder to
pay the defendant's reasonable expenses incurred in connection with the defense
of such action, including attorneys' fees. In addition, the NJBCA provides that,
in the case of a derivative suit brought by a holder of less than 5% of the
corporation's voting shares, which shares have a fair market value no greater
than $25,000.00, the corporation may require such holder to post security for
the reasonable expenses, including attorneys' fees, that may be incurred by the
defendant.
Florida Law also provides that a person may not bring a derivative action
unless the person was a shareholder of the corporation at the time of the
challenged transaction or unless the person acquired the shares by operation of
law from a person who was a shareholder at such time. The FBCA provides that a
complaint in a derivative proceeding must be verified and must allege with
particularity that a demand was made to obtain action by the board of directors
and that the demand was refused or ignored. Under the FBCA, a derivative
proceeding may be settled or discontinued only with court approval, and the
court may dismiss a derivative proceeding if the court finds that certain
independent directors (or a committee of independent persons appointed by such
directors) have determined in good faith after conducting a reasonable
investigation that the maintenance of the action is not in the best interests of
the corporation. Florida Law also provides that if an action was brought without
reasonable cause the court may require the plaintiff to pay the corporation's
reasonable expenses, and if the plaintiff is successful the court may require
the corporation to pay the reasonable expenses of the plaintiff.
SPECIAL MEETING OF SHAREHOLDERS
The NJBCA provides that a special meeting of the shareholders may be called
by the president, the board of directors, or such other officers, directors or
shareholders as the By-Laws of the corporation may provide.
The FBCA provides that a special meeting of shareholders can be called by
(i) the board of directors; (ii) the persons authorized by the articles of
incorporation or By-Laws; or (iii) the holders of not less than 10% of all votes
entitled to be cast on any issue to be considered at the proposed special
meeting. A corporation's articles of incorporation can require a higher
percentage of votes, up to a maximum of 50% to call a special meeting of
shareholders. Whitman Florida's Articles of Incorporation include a provision
requiring 50% of all votes to call a special meeting of shareholders.
VOTE REQUIRED FOR MERGERS
The NJBCA provides that the sale, lease, exchange or disposal of all, or
substantially all, of the assets of a New Jersey corporation, not in the
ordinary course of business, as well as any merger, consolidation or share
exchange, generally must be recommended by the Board of Directors and approved
by a vote of a majority of the shares of each class of the stock of the
corporation entitled to vote on such matters. Under the NJBCA, the vote of the
shareholders of a corporation surviving a merger is not required if: (i) the
articles of incorporation of the surviving corporation will not
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substantially differ from its articles before the merger; (ii) each shareholder
of the surviving corporation before the effective date will hold the same number
of shares, with identical designations, preferences, limitations and relative
rights immediately after the merger; (iii) the number of voting shares
outstanding immediately after the merger, plus the number of voting shares
issuable on conversion of other securities or on exercise of rights and warrants
issued pursuant to the merger does not exceed by more than 40% the total number
of voting shares of the surviving corporation outstanding immediately before the
merger; and (iv) the number of "Participating Shares" (as hereinafter defined)
outstanding immediately after the merger, plus the number of Participating
Shares issuable on conversion of other securities or on exercise of rights and
warrants issued pursuant to the merger does not exceed by more than 40% the
total number of Participating Shares of the surviving corporation outstanding
immediately before the merger. "Participating Shares" are those shares that
entitle the holders thereof to participate without limitation in distributions.
The FBCA provides that the sale, lease, exchange or disposal of all, or
substantially all, of the assets of a Florida corporation, not in the ordinary
course of business, as well as any merger, consolidation or share exchange,
generally must be recommended by the Board of Directors and approved by a vote
of a majority of the shares of each class of the stock of the corporation
entitled to vote on such matters. Under the FBCA, the vote of the shareholders
of a corporation surviving a merger is not required if: (i) the articles of
incorporation of the surviving corporation will not substantially differ from
its articles before the merger; and (ii) each shareholder of the surviving
corporation before the effective date will hold the same number of shares, with
identical designations, preferences, limitations and relative rights immediately
after the merger.
MERGER WITH SUBSIDIARY
Under the NJBCA, a parent corporation may merge into itself, without
shareholder approval, a subsidiary of which it owns at least 90% of the
outstanding shares of each class of stock. The FBCA permits such a merger of a
subsidiary without shareholder approval if 80% of each class of stock of the
subsidiary is owned by the parent corporation.
SHAREHOLDER INSPECTION OF BOOKS AND RECORDS
Under the NJBCA, any person who was a shareholder of a corporation for at
least six months immediately preceding his demand, or any person holding at
least 5% of the outstanding shares of any class or series of securities, upon
five days written demand, has the right for any proper purpose to examine in
person or by agent or attorney, during usual business hours, the minutes of the
proceedings of such corporation's shareholders and record of shareholders and to
make extracts therefrom. In addition, upon the written request of any
shareholder, a corporation must mail to such shareholder its balance sheet as at
the end of the preceding fiscal year, and its profit and loss and surplus
statements for such fiscal year.
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Under the FBCA, a shareholder is entitled to inspect and copy the articles
of incorporation, by-laws, certain board and shareholder resolutions, certain
written communications to shareholders, a list of the names and business
addresses of the corporation's directors and officers, and the corporation's
most recent annual report, during regular business hours if the shareholder
gives at least five business days' prior written notice to the corporation. In
addition, a shareholder of a Florida corporation is entitled to inspect and copy
other books and records of the corporation during regular business hours if the
shareholder gives at least five business days' prior written notice to the
corporation and (1) the shareholder's demand is made in good faith and for a
proper purpose, (2) the demand describes with particularity its purpose and the
records to be inspected or copied, and (3) the requested records are directly
connected with such purpose. Florida Law also provides that a corporation may
deny any demand for inspection if the demand was made for an improper purpose or
if the demanding shareholder has, within two years preceding such demand, sold
or offered for sale any list of shareholders of the corporation or any other
corporation, has aided or abetted any person in procuring a list of shareholders
for such purpose or has improperly used any information secured through any
prior examination of the records of the corporation or any other corporation.
QUORUM FOR SHAREHOLDER MEETINGS
Under both New Jersey and Florida Law, unless otherwise provided in a
corporation's articles of incorporation (but not its by-laws), a majority of
shares entitled to vote on a matter constitutes a quorum at a meeting of
shareholders. Under Florida Law, in no event may a quorum consist of less than
one-third of the shares entitled to vote on such matter.
COMPARATIVE PROVISIONS OF THE CHARTER AND
BY-LAWS OF THE COMPANY AND WHITMAN FLORIDA
The following discussion sets forth a summary of the substantive
differences between the charter and by-laws of the Company and the charter and
by-laws of Whitman Florida. This summary does not purport to be a complete
discussion of the provisions of each of the organic documents of the Company and
Whitman Florida, and shareholders are urged to refer to complete copies of the
articles of incorporation and by-laws of Whitman Florida attached hereto as
Exhibits B and C, respectively, and copies of the certificate of incorporation
and by-laws of the Company which are available for inspection at the offices of
the Company and copies of which will be provided to the Company's shareholders
upon request.
CHARTER
Other than the name of the Company and the Company's registered office, the
only substantive difference between the Company's Certificate of Incorporation
and Whitman Florida's Articles of Incorporation is contained in Article VII of
Whitman Florida's Articles of Incorporation, which requires that, in order for
any special meeting of the shareholders to be duly called by shareholders, 50%
of all of the votes entitled to be cast on any issue proposed to be considered
at such special meeting must sign, date and deliver to the corporate secretary
one or more written demands for the meeting, describing the purpose or purposes
for which it is to be held.
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BY-LAWS
RECORD DATE
Under the Company's By-Laws, the board of directors may set a record date
for any lawful purpose in connection with a shareholders' meeting, which record
date must be no more than 60 days nor less than 10 days preceding the date of
the meeting. Under Whitman Florida's By-Laws, the record date must be no more
than 70 days preceding the meeting.
CONDUCT OF BUSINESS WITHOUT MEETING BY SHAREHOLDERS
The Company's By-Laws provide that any action required or permitted to be
taken by the shareholders may be taken without a meting provided that (i)
unanimous written consent of all shareholders entitled to vote thereon is
obtained, or (ii) a majority of the shares entitled to vote on any given action
execute written consents to such action, and, no less than 10 days in advance of
the effective date of such action (or, in the case of mergers, dispositions,
sales of substantially all of the corporation's assets and similar transactions,
20 days in advance of the effective date), written notice is given to those
shareholders who were entitled to vote thereon and did not execute a written
consent thereto. Whitman Florida's By-Laws provide for shareholder action
without a meeting provided a majority of the shares entitled to vote on any
given action execute written consents to such action, and, within 10 days after
obtaining such written consent, written notice is given to those shareholders
who were entitled to vote thereon and did not execute a written consent thereto.
NUMBER OF DIRECTORS
The Company's By-Laws provide for a minimum of five and a maximum of nine
directors. Whitman Florida's By-Laws provide for a minimum of five but no
maximum number of directors.
VACANCIES OF OFFICERS
The Company's By-Laws provide that vacancies of any office shall be filled
by the board of directors. Whitman Florida's By-Laws are silent on the filling
of officer vacancies; however, the board of directors may also fill officer
vacancies under Florida law.
SHAREHOLDER INSPECTION RIGHTS
The Company's By-Laws provide that any person who has been a shareholder
for at least six months or who holds at least 5% of the Company's outstanding
shares shall be entitled to inspect the Company's records upon five days written
notice. Whitman Florida's By-Laws give such inspection rights to any
shareholder.
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APPROVAL OF THE COMPANY'S EMPLOYEE STOCK PURCHASE PLAN
(ITEM NO. 3)
The Board of Directors adopted the Whitman Education Group, Inc.
Employee Stock Purchase Plan (the "Purchase Plan") on August 11, 1997. The
Purchase Plan becomes effective October 1, 1997, subject to the approval of the
Company's stockholders. The Purchase Plan is an employee benefit plan that
offers eligible employees the opportunity to purchase shares of common stock
through regular payroll deductions. The Purchase Plan is intended to encourage
all Company employees to acquire an equity interest in the Company in order to
share in the Company's future growth and success. Funds received under the
Purchase Plan may be used for any general corporate purpose. The following
description of the Purchase Plan is only a summary and is qualified in its
entirety by reference to the full text of the Purchase Plan, which is attached
to this Proxy Statement as Exhibit D.
GENERAL
Eligibility; Available Shares; Administration; Amendment and
Termination. All employees who have been employed by the Company for at least 90
days on the first day of any offering period are eligible to participate in the
Purchase Plan, except employees who are owners of more than 5% of the common
stock of the Company. As of the Record Date, there were approximately _____
employees eligible to participate in the Purchase Plan. The Purchase Plan
authorizes the issuance of up to 250,000 shares of common stock. However, the
number of shares issuable under the Purchase Plan will be adjusted for stock
dividends, stock splits, reclassifications and other changes affecting the
Company's common stock. On the Record Date, the market value of a share of
common stock was $_______. The Purchase Plan operates pursuant to procedures and
guidelines set forth in the Purchase Plan itself. The Purchase Plan is
administered by the Compensation Committee of the Board of Directors (the
"Committee"), or in the absence of such committee, by the full Board. The Board
of Directors may, in its discretion, terminate the Purchase Plan or amend it in
any respect, except that (a) no amendment may cause the Purchase Plan to fail to
comply with Section 423 of the Internal Revenue Code of 1986, as amended (the
"Code"); and (b) if stockholder approval of any such amendment is required by
Section 423 of the Code, the amendment will become effective only upon obtaining
such approval.
STOCK PURCHASES UNDER THE PURCHASE PLAN
Payroll Deduction. At least 14 days prior to the beginning of an
offering period, each eligible employee may elect to purchase shares of common
stock by completing a payroll deduction authorization form directing the Company
to deduct from one to ten percent of the employee's compensation. Beginning on
each offering commencement date, deductions shall be made from the pay of each
eligible employee who has completed a payroll deduction authorization form in
the amount specified on such employee's form and that amount shall be allocated
to each such participating employee's account. On the last day of each offering
period, the aggregate amount allocated to each such employee's account shall be
used to purchase shares of common stock from
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the Company. The price for each share of Common Stock purchased under the Plan
will be 90% of the closing price of the common stock on the last trading day of
the offering period.
OFFERING PERIODS. There are four quarterly offering periods each year.
The offering period begin on the first trading date of January, April, July and
October every year and end on the last trading date of March, June, September
and December, respectively. The number and length of offering periods each year
is subject to amendment by the Committee.
LIMITATION ON AGGREGATE AMOUNT OF SHARES PURCHASED. No employee may
purchase in one calendar year shares of Common Stock having an aggregate fair
market value in excess of $25,000.
TERMINATION OF EMPLOYMENT. If an employee terminates employment for any
reason, retires, or dies during an offering period, no payroll deduction will be
taken from any pay due and owing to the employee and the balance in the
employee's payroll deduction account will be paid to the employee, or in the
event of the employee's death, to the employee's properly designated
beneficiary. In the absence of a designated beneficiary, the employee's payroll
deduction account will be paid to the executor or administrator of the
employee's estate, or to such other person(s) as may be designated by the
Company in accordance with the terms of the Purchase Plan.
FEDERAL INCOME TAX CONSEQUENCES
The Purchase Plan is intended to qualify as an "employee stock purchase
plan" under the provisions of Sections 421 and 423 of the Code. Under these
provisions, a participant may become liable for federal income tax upon
disposition of the shares acquired. The character of any gain or loss upon
disposition will depend upon how long the shares have been held by the
participant.
There are no federal income tax consequences to the Company by reason
of the issuance of the shares pursuant to the Purchase Plan. The Company is only
entitled to a deduction for amounts taxed as ordinary income to a participant in
the event that ordinary income must be reported by a participant upon
disposition of shares before the expiration of two years after the right to
purchase is granted or within one year after the stock is acquired (a
"disqualifying disposition"). Under a disqualifying disposition, the Company
would be able to take a tax deduction for the difference between the purchase
price and the fair market value of the stock at the date the right to purchase
is exercised. Participants are required to notify the Company of any disposition
of shares acquired under the Purchase Plan within two years from the date of
acquisition.
The foregoing discussion is not a complete description of the federal
income tax aspects of participation in the Purchase Plan. Furthermore, no
information is given with respect to state or local taxes or foreign laws that
may be applicable. Participants in the Purchase Plan are encouraged to review
applicable tax rules and regulations and consult a tax advisor.
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STOCKHOLDER APPROVAL
Approval of the Purchase Plan will require the affirmative vote of the
holders of a majority of the shares of the Company's common stock present in
person or by proxy at the Annual Meeting. If the stockholders fail to approve
the Purchase Plan, the Purchase Plan will terminate automatically with no rights
having been granted thereunder.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR
THE APPROVAL OF THE EMPLOYEE STOCK PURCHASE PLAN
INDEPENDENT AUDITORS
Ernst & Young, independent public accountants, was appointed by the Board
of Directors to audit the Company's financial statements for fiscal 1997. 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 1998 ANNUAL MEETING
Any shareholder proposals intended to be presented at the Company's 1998
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 ___________ __, 1998, in order to be considered for inclusion in
the Company's proxy statement and form of proxy card relating to such meeting.
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.
GENERAL
All properly executed proxies delivered pursuant to this solicitation and
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not revoked shall be voted at the Annual Meeting in accordance with the
directions given. In voting by proxy in regard to the election of eight
directors who shall serve until the 1998 Annual Meeting of Shareholders,
shareholders may vote in favor of each nominee or withhold their votes as to a
specific nominee. Shareholders should specify their choices on the enclosed
proxy card. With respect the Reincorporation of the Company under the laws of
Florida and the approval of the Company's Employee Stock Purchase Plan,
shareholders may vote in favor of, may vote against, or may abstain from voting
on such proposal. If no specific instructions are given the shares represented
by the proxy will be voted FOR the election of all directors, FOR the
Reincorporation of the Company under the laws of the State of Florida and FOR
approval of the Company's Employee Stock Purchase Plan.
Richard B. Salzman, Secretary
__________ ____, 1997
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EXHIBIT A
PLAN AND AGREEMENT OF MERGER
THIS PLAN AND AGREEMENT OF MERGER, dated ____________, 1997 (the
"Agreement"), is entered into between WHITMAN REINCORPORATION, INC., a Florida
corporation ("Florida") and WHITMAN EDUCATION GROUP, INC., a New Jersey
corporation ("Whitman").
RECITALS
A. Whitman is a corporation duly organized and existing under the laws of
the State of New Jersey.
B. Florida is a corporation duly organized and existing under the laws of
the State of Florida.
C. Whitman has an aggregate authorized capital of 100,000,000 shares of
Common Stock, no par value per share (the "Whitman Common Stock"), of which
___________ shares were duly issued and outstanding as of the date hereof.
D. Florida has an aggregate authorized capital stock of 100,000,000 shares
of Common Stock, no par value (the "Florida Common Stock"), of which 100 shares
were duly issued and outstanding as of the date hereof.
E. The respective Boards of Directors of Whitman and Florida have
determined that it is advisable and in the best interest of each such
corporation that Whitman merge with and into Florida upon the terms and subject
to the conditions of this Plan and Agreement of Merger for the purposes of
effecting the reincorporation of Whitman in the State of Florida.
F. The respective Boards of Directors of Whitman and Florida have, by
resolutions duly adopted, approved and adopted this Plan and Agreement of
Merger. Whitman has adopted this Plan and Agreement of Merger as the sole
stockholder of Florida and the Board of Directors of Whitman has directed that
this Plan and Agreement of Merger be submitted to a vote of its shareholders.
The affirmative vote of the holders of two-thirds of the shares of the Company's
Common Stock not held
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by Frost-Nevada, Limited Partnership must approve this Plan and Agreement of
Merger before it may become effective.
G. The parties intended that this Plan and Agreement of Merger effect a
"reorganization" under Section 368 of the Internal Revenue Code of 1986, as
amended.
AGREEMENT
In consideration of the Recitals and of the mutual agreements contained in
this Agreement, the parties hereto agree as set forth below.
1. MERGER. Whitman shall be merged with and into Florida (the "Merger").
2. EFFECTIVE DATE. The Merger shall become effective immediately upon the
later of the filing of this Agreement or a certificate of merger with the
Secretary of State of New Jersey in accordance with the New Jersey Business
Corporation Act and the filing of articles of merger with the Secretary of State
of Florida in accordance with the Florida Business Corporation Act. The time of
such effectiveness is hereinafter called the "Effective Time."
3. SURVIVING CORPORATION. Florida shall be the surviving corporation of the
Merger and shall continue to be governed by the laws of the State of Florida. On
the Effective Time, the separate corporate existence of Whitman shall cease.
4. NAME OF SURVIVING CORPORATION. On the Effective Time, the Articles of
Incorporation of Florida shall be amended to change the name of Florida to
"Whitman Education Group, Inc."
5. CERTIFICATE OF INCORPORATION. Except as provided in Section 4, the
Articles of Incorporation of Florida as it exists on the Effective Time shall be
the Articles of Incorporation of Florida following the Effective Time, unless
and until the same shall thereafter be amended or repealed in accordance with
the laws of the State of Florida.
6. BYLAWS. The Bylaws of Florida as they exist on the Effective Time shall
be the Bylaws of Florida following the Effective Time, unless and until the same
shall be amended or repealed in accordance with the provisions thereof and the
laws of the State of Florida.
7. BOARD OF DIRECTORS AND OFFICERS. The members of the Board of Directors
and the officers of Whitman immediately prior to the Effective Time shall be the
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members of the Board of Directors and the officers, respectively, of
Florida following the Effective Time, and such persons shall serve in such
offices for the terms provided by law or in the Bylaws, or until their
respective successors are elected and qualified.
8. SUCCESSION. At the Effective Time, the separate corporate existence of
Whitman shall cease, and Florida, as the surviving corporation, shall possess
all the rights, privileges, powers and franchises of a public or private nature
and shall be subject to all the restrictions, disabilities and duties of Whitman
and all the rights, privileges, powers and franchises of Whitman, and all
property, real, personal and mixed and all debts due to Whitman on whatever
account, as well as for share subscriptions and all of the things in action,
shall be vested in Florida as the surviving corporation; and all property,
rights, privileges, powers and franchises, and all and every other interest
shall be thereafter the property of Florida as the same were of Whitman, and the
title to any real estate vested by deed or otherwise shall not revert or be in
any way impaired by reason of the Merger, but all rights of creditor and liens
upon any property of Whitman shall be preserved unimpaired, and all debts,
liabilities and duties of Whitman shall thenceforth attach to Florida, as the
surviving corporation of the Merger, and may be enforced against it to the same
extent as if such debts, liabilities and duties had been incurred or contracted
by it; provided, however, that such liens upon property of Whitman shall be
limited to the property affected thereby immediately prior to the Merger. All
corporate acts, plans, policies, agreements, arrangements, approvals and
authorizations of Whitman, its shareholders, Board of Directors and committees
thereof, officers and agents which were valid and effective immediately prior to
the Effective Time, shall be taken for all purposes as the acts, plans,
policies, agreements, arrangements, approvals and authorizations of Florida, its
shareholders, Board of Directors and committees thereof, respectively, and shall
be effective and binding thereon as the same with respect to Whitman; and
Florida shall indemnify and hold harmless the officers and directors of each of
the parties hereto against all such debts, liabilities and duties and against
all claims and demands arising out of the Merger.
9. CONVERSION OF SHARES. At the Effective Time, by virtue of the Merger and
without any action on the part of the holder thereof: (a) each share of Whitman
Common Stock outstanding immediately prior to the Effective Time shall be
converted into, and shall become, one fully paid and nonassessable share of
Florida Common Stock;
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(b) the 100 shares of Florida Common Stock issued and outstanding in
the name of Whitman shall be canceled and retired, and no payment
shall be made with respect thereto, and such shares shall resume
the status of unauthorized and unissued shares of Florida Common
Stock.
10. STOCK CERTIFICATES. At and after the Effective Time, all of the
outstanding certificates which immediately prior to the Effective Time represent
shares of Whitman Common Stock shall be deemed for all purposes to evidence
ownership of, and to represent shares of, Florida Common Stock into which the
shares of Whitman Common Stock formerly represented by such certificates have
been converted as herein provided. The registered owner on the books and records
of Whitman or its transfer agent of any such outstanding stock certificates
shall, until such certificate shall have been surrendered for transfer or
otherwise accounted for to Florida, as the surviving corporation, or its
transfer agent, have and shall be entitled to exercise any voting or other
rights with respect to and to receive any dividends and other distributions upon
shares of Florida Common Stock evidenced by such outstanding certificate as
above provided. Nothing herein contained shall be deemed to require the holder
of any shares of Whitman Common Stock to surrender the certificate or
certificates representing such shares in exchange for a certificate or
certificates representing shares of Florida Common Stock.
11. STOCK OPTIONS, WARRANTS AND OTHER RIGHTS. Forthwith upon the Effective
Time, each stock option, stock warrant, convertible debt instrument and other
right to subscribe for or purchase shares of Whitman Common Stock shall be
converted into a stock option, stock warrant or other right to subscribe for or
purchase the same number of shares of Florida Common Stock, and each
certificate, agreement, note or other document representing such stock option,
stock warrant or other right to subscribe for or purchase shares of Whitman
Common Stock shall for all purposes be deemed to evidence the ownership of a
stock option, stock warrant or other right to subscribe for or purchase shares
of Florida Common Stock. As of the Effective Time, Florida hereby assumes the
Company's 1996 Stock Option Plan and all obligations of Whitman under such Plan
including the outstanding rights or options or portions thereof granted pursuant
to the Plan and otherwise.
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12. OTHER EMPLOYEE BENEFIT PLANS. As of the Effective Time, Florida, as the
surviving corporation of the Merger, hereby assumes all obligations of Whitman
under any and all employee benefit plans in effect as of the Effective Time or
with respect to which employee rights or accrued benefits are outstanding as of
the Effective Time. 13. CONDITIONS. The consummation of the Merger is subject to
satisfaction of the following conditions prior to the Effective Time: (a) the
Merger shall have received the requisite approval of the holders of Whitman
Common Stock and all necessary actions shall have been taken to authorize the
execution, deliver and performance of this Plan and Agreement of Merger by
Whitman and Florida.
(b) All approvals and consents necessary or desirable, if any, in
connection with the consummation of the Merger shall have been
obtained.
(c) no suit, action, proceeding or other litigation shall have been
commenced or threatened to be commenced which, in the opinion of
Whitman or Florida, would pose a material restriction on or
impair consummation of the Merger, performance of this Plan and
Agreement of Merger or the conduct of the business of Florida
after the Effective Time, or create a risk of subjecting Whitman
or Florida, or their respective shareholders, officer or
directors, to material damages, costs, liability and other relief
in connection with the Merger or this Plan and Agreement of
Merger.
(d) the shares of Florida Common Stock to be issued or reserved for
issuance shall, if required, have been approved for listing on
the American Stock Exchange upon official notice of issuance.
14. DEFERRAL OR ABANDONMENT. At any time prior to the Effective Time, this
Plan and Agreement of Merger may be terminated and the Merger may be abandoned
or the time of consummation of the Merger may be deferred for a reasonable time
by the Board of Directors of either Whitman or Florida or both, notwithstanding
approval of this Plan and Agreement of Merger by the shareholders of Whitman or
the stockholders of Florida, or both, if circumstances
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arise which, in the opinion of the Board of Directors of Whitman or Florida,
make the Merger inadvisable or such deferral of the time of the consummation
thereof advisable.
15. AMENDMENT. The Board of Directors of the parties hereto may amend this
Agreement at any time prior to the Effective Time; provided that an amendment
made subsequent to the approval of this Agreement by the stockholders of either
of the parties hereto shall not:
(a) change the amount or kind of shares, securities, cash, property
or rights to be received in exchange for or on conversion of all
or any of the shares of the parties hereto,
(b) change any term of the Articles of Incorporation of Florida, or
(c) change any other terms or conditions of this Agreement if such
change would adversely affect the holder of any capital stock of
either party hereto.
16. REGISTERED OFFICE. The registered office of Florida in the State of
Florida is located at 4400 Biscayne Boulevard, 6th Floor, Miami, Florida 33137,
and Richard B. Salzman is the registered agent of Florida at such address.
17. INSPECTION OF AGREEMENT. Executed copies of this Agreement will be on
file at the principal place of business of Florida at 4400 Biscayne Boulevard,
6th Floor, Miami, Florida 33137. A copy of this Agreement shall be furnished by
Florida, on request and without cost, to any stockholder of either Whitman or
Florida.
18. GOVERNING LAW. This Agreement shall in all respects be construed,
interpreted and enforced in accordance with and governed by the laws of the
State of Florida.
19. SERVICE OF PROCESS. On and after the Effective Time, Florida agrees
that it may be served with process in Florida in any proceeding for enforcement
of any obligation of Whitman or Florida arising from the Merger.
20. DESIGNATION OF NEW JERSEY SECRETARY OF STATE AS AGENT FOR SERVE OF
PROCESS. On and after the Effective Time, Florida irrevocably appoints the
Secretary of State of the State of New Jersey as its agent to accept service of
process in any suit or other proceeding to enforce the rights of any
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stockholders of Whitman or Florida arising from the Merger. The New Jersey
Secretary of State is requested to mail a copy of such process to Florida at
4400 Biscayne Boulevard, 6th Floor, Miami, Florida 33137, Attention: Richard B.
Salzman.
21. COUNTERPARTS. This Plan and Agreement of Merger may be executed in any
number of counterparts, each of which when taken alone shall constitute an
original instrument and when taken together shall constitute one and the same
Agreement.
IN WITNESS WHEREOF, each of the parties hereto, pursuant to authority duly
granted by their respective Board of Directors, has caused this Plan and
Agreement of Merger to be executed, respectively, by its President and attested
by its Secretary.
ATTEST: WHITMAN REINCORPORATION, INC.,
a Florida corporation
- ------------------------------------ By:----------------------------------
Secretary President
ATTEST: WHITMAN EDUCATION GROUP, INC.,
a New Jersey corporation
- ------------------------------------ By:----------------------------------
Secretary President
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EXHIBIT B
ARTICLES OF INCORPORATION
OF
WHITMAN REINCORPORATION, INC.
ARTICLE I - NAME
The name of the corporation is "Whitman Reincorporation, Inc."
(hereinafter called the "Corporation").
ARTICLE II - ADDRESS OF
PRINCIPAL OFFICE AND MAILING ADDRESS
The address of the principal office of the Corporation and the mailing
address of the Corporation are 4400 Biscayne Boulevard, 6th Floor, Miami,
Florida 33137.
ARTICLE III - CAPITAL STOCK
The aggregate number of shares which the Corporation shall have the
authority to issue is 100,000,000 shares of Common Stock, no par value.
ARTICLE IV - INITIAL REGISTERED AGENT
The street address of the initial registered office of the Corporation
is 4400 Biscayne Boulevard, 6th Floor, Miami, Florida 33137; and the name of the
initial registered agent of the Corporation at that address is Richard B.
Salzman, Esq.
ARTICLE V- INCORPORATOR
The name and address of the person filing these Articles of
Incorporation are Richard B. Salzman, Esq., 4400 Biscayne Boulevard, 6th Floor,
Miami, Florida 33137.
ARTICLE VI - PURPOSE
The Corporation is organized for the purpose of transacting any or all
lawful business for corporations organized under the Florida Business
Corporation Act.
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ARTICLE VII - SPECIAL MEETINGS OF SHAREHOLDERS
The shareholders of the Corporation may not call a special meeting of
shareholders unless the holders of at least fifty percent (50%) of all of the
votes entitled to be cast on any issue proposed to be considered at the proposed
special meeting sign, date and deliver to the Corporation's secretary one or
more written demands for the meeting describing the purpose or purposes for
which it is to be held.
ARTICLE VIII - AFFILIATED TRANSACTIONS
For purposes of Section 607.0901 of the Florida Business Corporation
Act pursuant to Section 607.0901(1)(h) thereof, the term "disinterested
director" shall mean a director who is not, at the time such determination is
made, an "interested shareholder" of the Corporation (as defined in Section
607.0901(1)(k)) or the spouse, parent, child or sibling of an interested
shareholder.
IN WITNESS WHEREOF, the undersigned Incorporator has executed these
Articles of Incorporation on __________ _____, 1997.
---------------------------------------------
Richard B. Salzman
Incorporator
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ACCEPTANCE OF APPOINTMENT
OF
REGISTERED AGENT
The undersigned, having been appointed as the registered agent of
Whitman Reincorporation, Inc., in the foregoing Articles of Incorporation,
accepts such appointment and acknowledges that he is familiar with, and accepts,
the obligations of such position, including those set forth in Section 607.0501
of the Florida Statutes.
---------------------------------------
Richard B. Salzman
Registered Agent
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EXHIBIT C
BYLAWS
OF
WHITMAN REINCORPORATION, INC.
A FLORIDA CORPORATION
ARTICLE I
MEETINGS OF SHAREHOLDERS
SECTION 1. ANNUAL MEETINGS. The annual meeting of the shareholders for the
election of directors and for the transaction of such other business as may
properly come before the meeting shall be held at the date and time designated
by the board of directors.
SECTION 2. SPECIAL MEETINGS. Special meetings of the shareholders shall be
called upon the written request of the chairman, the chief executive officer or
the board of directors by action at a meeting, a majority of directors acting
without a meeting, or (as provided by the Articles of Incorporation)
shareholders holding at least 50% of the Corporation's stock entitled to vote at
the meeting. The written request for the special meeting shall specify the
purpose or purposes of the meeting. Only business within the purposes described
in the notice required by Section 4 of this Article may be conducted at the
special meeting.
SECTION 3. PLACE OF MEETINGS. Meetings of the shareholders will be held at
the principal place of business of the Corporation or at such other place,
within or outside of Florida, as is designated by the board of directors.
SECTION 4. NOTICE OF MEETINGS. A written notice of each meeting of
shareholders, signed by the secretary or the persons authorized to call the
meeting, shall be mailed to each shareholder entitled to vote at the meeting at
the address as it appears on the records of the Corporation, not less than 10
nor more than 60 days before the date set for the meeting. The notice shall
state the time and place the meeting is to be held, and, if the notice relates
to a special meeting, shall also state the purposes for which the meeting is
called. The record date for determining shareholders entitled to notice of and
to vote at the meeting will be the date fixed by board of directors. A notice of
meeting shall be sufficient for the meeting and any adjournment of the meeting.
Any shareholder may waive notice of a meeting before, at or after the meeting.
SECTION 5. QUORUM. A majority of the shares entitled to vote, represented
in person or by proxy, shall constitute a quorum for the transaction of business
at a meeting of shareholders. A majority of shareholders represented in person
or by proxy at a meeting of shareholders, even if less than a quorum, may
adjourn the meeting form time to time and place to place without further notice
until a quorum is present.
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SECTION 6. SHAREHOLDER VOTING. If a quorum is present at a meeting of
shareholders, the action on a matter is approved if the votes cast in favor of
the action exceed the votes cast opposing the action, except as otherwise
provided in Section 2 of Article II, the articles of incorporation or applicable
law. Each outstanding share shall be entitled to one vote on each matter
submitted to a vote at a meeting of shareholders.
SECTION 7. RECORD DATE. The board of directors may fix a record date for
any lawful purpose, including, without limiting the generality of the foregoing,
the determination of shareholders entitled to (1) receive notice of or to vote
at any meeting of shareholders or any adjournment thereof or to express consent
to corporate action in writing without a meeting, (2) receive payment of any
dividend or other distribution or allotment of any rights, or (3) take any other
action. The record date shall not be more than 70 days preceding the date of
such meeting, the date fixed for the payment of any dividend or distribution, or
the action requiring a determination of shareholders.
SECTION 8. PROXIES. A shareholder entitled to vote at any meeting of
shareholders or any adjournment thereof (or another entitled to vote on behalf
of the shareholder as a matter of law) may vote in person or by proxy executed
in writing and signed by the shareholder or his attorney-in-fact. The
appointment of proxy will be effective when received by the Corporation's
secretary or other officer or agent authorized to tabulate votes. No proxy shall
be valid more than 11 months after the date of its execution unless a longer
term is expressly stated in the proxy.
SECTION 9. CONDUCT OF BUSINESS WITHOUT MEETING BY SHAREHOLDERS. Any action
of the shareholders may be taken without a meeting if written consents, setting
forth the action taken, are signed by at least a majority of shares entitled to
vote and are delivered to the Corporation's secretary, or other officer or agent
of the Corporation having custody of the Corporation's books within 60 days
after the date that the earliest written consent was delivered. Within 10 days
after obtaining an authorization of an action by written consent, notice shall
be given to those shareholders who have not consented in writing or who are not
entitled to vote on the action. The notice shall fairly summarize the material
features of the authorized action. If the action creates dissenters' rights, the
notice shall contain a clear statement of the right of dissenting shareholders
to be paid the fair value of their shares upon compliance with and as provided
for by the Florida Business Corporation Act. The written consents shall be filed
with the records of the meetings of shareholders.
SECTION 10. NOTICE OF NOMINATION OF DIRECTORS. Nominations for election to
the Board of Directors of the corporation at a meeting of shareholders may be
made by the Board of Directors or by any shareholder of the corporation entitled
to vote for the election of directors at such meeting who complies with the
notice procedures set forth in this Section 10. Such nominations, other than
those made by or on behalf of the Board of Directors, may be made only if notice
in writing is personally delivered to, or mailed by first class United States
mail, postage prepaid, and received by, the secretary not less than 60 days nor
more than 90 days prior to such meeting; provided, however, that if less than 70
days' notice or prior public disclosure of the date of the meeting is given to
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shareholders, such nomination shall have been mailed by first class United
States mail, postage prepaid, and received by, or personally delivered to, the
secretary not later than the close of business on the tenth (10th) day following
the day on which notice of the date of the meeting was mailed or such public
disclosure was made, whichever occurs first. Such notice shall set forth (a) as
to each proposed nominee (i) the name, age, business address and, if known,
residence address of each such nominee, (ii) the principal occupation or
employment of each such nominee, (iii) the number of shares, if any, of stock of
the corporation that are beneficially owned by each such nominee and (iv) any
other information concerning the nominee that must be disclosed in proxy
solicitations pursuant to the proxy rules of the Securities and Exchange
Commission if such person had been nominated, or was intended to be nominated,
by the Board of Directors (including such person's written consent to be named
as a nominee and to serve as a director if elected); and (b) as to the
shareholder giving the notice (i) the name and address, as it appears on the
corporation's books, of such shareholder, (ii) a representation that such
shareholder is a holder of record of shares of stock of the corporation entitled
to vote at the meeting and the class and number of shares of the corporation
which are beneficially owned by such shareholder, (iii) a representation that
such shareholder intends to appear in person or by proxy at the meeting to
nominate the person or persons specified in the notice and (iv) a description of
all arrangements or understandings between such shareholder and each nominee and
any other person or persons (naming such person or persons) pursuant to which
the nomination or nominations are to be made by such shareholder. The
corporation also may require any proposed nominee to furnish such other
information as may reasonably be required by the corporation to determine the
eligibility of such proposed nominee to serve as a director of the corporation.
The chairman of the meeting may, if the facts warrant, determine and declare to
the meeting that a nomination was not made in accordance with the foregoing
procedure, and if he should so determine, he shall so declare to the meeting,
and that the defective nomination shall be disregarded.
SECTION 11. NOTICE OF BUSINESS AT ANNUAL MEETINGS. At an annual meeting of
the shareholders, only such business shall be conducted as shall have been
properly brought before the meeting. To be properly brought before an annual
meeting, business must be (a) specified in the notice of meeting (or any
supplement thereto) given by or at the direction of the Board of Directors or (b
) otherwise properly brought before the meeting by or at the direction of the
Board of Directors or (c) otherwise properly brought before the meeting by a
shareholder. For business to be properly brought before an annual meeting by a
shareholder, if such business relates to the election of directors of the
corporation, the procedures in Section 10 of this Article I must be complied
with. If such business relates to any other matter, the shareholder must have
given timely notice thereof in writing to the secretary. To be timely, a
shareholder's notice must be personally delivered to, or mailed by first class
United States mail, postage prepaid, and received by, the secretary not less
than 60 days nor more than 90 days prior to such meeting; provided, however,
that if less than 70 days' notice or prior public disclosure of the date of the
meeting is given to shareholders, such notice, to be timely, must have been
mailed by first class United States mail, postage prepaid, and received by, or
personally delivered to, the secretary not later than the close of business on
the tenth (10th) day following the day on which notice of the date of the
meeting was mailed or such public disclosure was made, whichever occurs first. A
shareholder's notice to the secretary shall set forth as to each matter the
shareholder proposes to bring before the annual meeting (i) a brief description
of the
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business desired to be brought before the annual meeting and the reasons for
conducting such business at the annual meeting, (ii) the name and address, as
they appear on the corporation's books, of the shareholder proposing such
business, (iii) a representation that the shareholder is a holder of record of
shares of stock of the corporation entitled to vote at the meting and the class
and number of shares of the corporation which are beneficially owned by the
shareholder and (iv) any material interest of the shareholder in such business.
Notwithstanding anything in these Bylaws to the contrary, no business shall be
conducted at any annual meeting except in accordance with the procedures set
forth in this Section 11 and except that any shareholder proposal which complies
with Rule 14a-8 of the proxy rules (or any successor provision) promulgated
under the Securities Exchange Act of 1934, as amended, as is to be included in
the corporation's proxy statement for an annual meeting of shareholders shall be
deemed to comply with the requirements of this Section 11. The chairman of the
meeting may, if the facts warrant, determine and declare to the meeting that
business was not properly brought before the meeting in accordance with the
provisions of this Section 11, and if he should so determine, he shall so
declare to the meeting and the business not properly brought before the meeting
shall be disregarded.
ARTICLE II
DIRECTORS
SECTION 1. NUMBER OF DIRECTORS. The board of directors of the Corporation
shall consist of not less than one person, the exact number to be determined
from time to time by resolution adopted by the affirmative vote of a majority of
all directors of the Corporation then holding office at any special or regular
meeting. Any such resolution increasing or decreasing the number of directors
shall have the effect of creating or eliminating a vacancy or vacancies, as the
case may be, provided that no such resolution shall reduce the number of
directors below the number then holding office.
SECTION 2. ELECTION OF DIRECTORS AND CHAIRMAN AND VICE CHAIRMAN OF THE
BOARD. Directors shall be elected at the annual meeting of shareholders, but
when the annual meeting is not held or directors are not elected thereat, they
may be elected at a special meeting called and held for that purpose. Directors
shall be elected by a plurality of the votes cast by the share entitled to vote
in the election at a meeting at which a quorum is present. At the time of
election, a director must be at least 18 years of age, but need not be a
shareholder of the Corporation. The board of directors may elect from their
members a chairman and a vice chairman of the board. The chairman of the board,
if one be elected, shall preside at all meetings of the board of directors and
meetings of the shareholders and shall have such other powers and duties as may
be prescribed by the board of directors. The vice chairman, if any be elected,
shall have such powers and duties as may from time to time be assigned to him by
the board of directors or the chairman, and in the absence of the chairman,
shall preside at all meetings of the board of directors.
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SECTION 3. TERM OF OFFICE. Each director shall hold office until the annual
meeting next succeeding his election and until his successor is elected and
qualified, or until his earlier resignation, removal from office or death.
SECTION 4. REMOVAL. Any director or the entire board of directors may be
removed, with or without cause, at a meeting of shareholders, provided the
notice of the meeting states that one of the purposes of the meeting is the
removal of the director. A director may be removed only if the number of votes
cast to remove him exceeds the number of votes cast against removal.
SECTION 5. VACANCIES. Any vacancy occurring in the board of directors,
including a vacancy created by an increase in the number of directors, may be
filled by the shareholders or by the affirmative vote of a majority of the
remaining directors, though less than a quorum of the board of directors. A
director elected to fill a vacancy shall hold office only until the next
election of directors by the shareholders. If there are no remaining directors,
the vacancy shall be filled by the shareholders.
SECTION 6. QUORUM AND TRANSACTION OF BUSINESS. A majority of the number of
directors fixed pursuant to these bylaws shall constitute a quorum for the
transaction for business, except that a majority of the directors in office
shall constitute a quorum for filling a vacancy on the board. Whenever less than
a quorum is present at the time and place appointed for any meeting of the
board, a majority of those present may adjourn the meeting form time to time and
place to place, until a quorum shall be present. The act of a majority of the
directors present at a meeting at which a quorum is present shall be the act of
the board of directors.
SECTION 7. ANNUAL MEETING. Annual meetings of the board of directors shall
be held immediately following annual meetings of the shareholders or as soon
thereafter as is practicable. If no annual meeting of the shareholders is held,
or if directors are not elected thereat, then the annual meeting of the board of
directors shall be held immediately following any special meeting of the
shareholders at which directors are elected, or as soon thereafter as is
practicable.
SECTION 8. REGULAR MEETING. Regular meetings of the board of directors
shall be held at such times and places, within or without the State of Florida,
as the board of directors may, by resolution, from time to time determine. The
secretary shall give notice of each such resolution to any director who was not
present at the time the resolution was adopted, but no further notice of such
regular meeting need be given.
SECTION 9. SPECIAL MEETINGS. Special meetings of the board of directors may
be called by the chairman, the vice-chairman, the chief executive officer, the
president or any two members of the board of directors, and shall be held at
such times and places, within or without the State of Florida, as may be
specified in such call.
SECTION 10. NOTICE OF ANNUAL OR SPECIAL MEETINGS. Notice of the time and
place of each annual or special meeting shall be given to each director by the
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secretary or by the person or persons calling such meeting. Such notice
need not specify the purpose or purposes of the meeting and may be given in any
manner or method and at such time so that the director receiving it may have
reasonable opportunity to attend the meeting. Such notice shall, in all events,
be deemed to have been properly and duly given if mailed at least 48 hours prior
to the meeting and directed to the residence of each director as shown in the
secretary's records. The giving of notice shall be deemed to have been waived by
any director who shall attend and participate in such meeting and may be waived,
in writing, by any director either before or after such meeting.
SECTION 11. COMPENSATION. The directors, as such, shall be entitled to
receive such reasonable compensation for their services as may be fixed from
time to time by resolution of the board of directors. In addition, the directors
may be reimbursed for expenses of attending meetings of the board of directors
and committees thereof. Nothing herein contained shall be construed to preclude
any director from serving the Corporation in any other capacity and receiving
compensation therefor. Members of the executive committee or of any standing or
special committee of the board of directors may by resolution of the board be
allowed such compensation for their services as the board of directors may deem
reasonable and additional compensation may be allowed to directors for special
services rendered.
SECTION 12. ACTION WITHOUT A MEETING. Any action required to be taken at a
meeting of the board of directors (or a committee of the board of directors),
and any action which may be taken at a meeting of the board of directors (or a
committee of the board of directors) may be taken without a meeting if a consent
in writing, setting forth the action to be taken and signed by all of the
directors (or members of the committee), is filed in the minutes of the
proceedings of the board of directors. The action taken shall be deemed
effective when the last director signs the consent, unless the consent specifies
otherwise.
ARTICLE III
COMMITTEES
SECTION 1. EXECUTIVE COMMITTEE. The board of directors may from time to
time, by resolution passed by a majority of the whole board, create an executive
committee of three or more directors, the members of which shall be elected by
the board of directors to serve at the pleasure of the board. If the board of
directors does not designate a chairman of the executive committee, the
executive committee shall elect a chairman from its own number. Except as
otherwise provided herein and in the resolution creating an executive committee,
such committee shall, during the intervals between the meetings of the board of
directors, possess and may exercise all of the powers of the board of directors
in the management of the business and affairs of the Corporation, other than
that of filling vacancies among the directors or in any committee of the
directors and except as provided by law. The executive committee shall keep full
records and accounts of its proceedings and transactions. All action by the
executive committee shall be reported to the board of directors at its meeting
next succeeding such action and shall be subject to control, revision and
alteration by the board of directors, provided that no rights of third persons
shall be prejudicially affected thereby.
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Vacancies in the executive committee shall be filled by the directors, and the
directors may appoint one or more directors as alternate members of the
committee who may take the place of any absent member or members at any meeting.
SECTION 2. MEETINGS OF EXECUTIVE COMMITTEE. Subject to the provisions of
these bylaws, the executive committee shall fix its own rules of procedure and
shall meet as provided by such rules or by resolutions of the board of
directors, and it shall also meet at the call of the chief executive officer,
the chairman of the executive committee or any two members of the committee.
Unless otherwise provided by such rules or by such resolutions, the provisions
of Section 10 of the Article II relating to the notice required to be given for
meetings of the board of directors shall also apply to meetings of the executive
committee. A majority of the executive committee shall be necessary to
constitute a quorum.
SECTION 3. OTHER COMMITTEES. The board of directors may by resolution
provide for such other standing or special committees as it deems desirable, and
discontinue the same at its pleasure. Each such committee shall have such powers
and perform such duties, not inconsistent with law, as may be delegated to it by
the board of directors. The provisions of Section 1 and Section 2 of this
Article shall govern the appointment and action of such committee so far as
consistent, unless otherwise provided by the board of directors. Vacancies in
such committees shall be filled by the board of directors or as the board of
directors may provide.
ARTICLE IV
OFFICERS
SECTION 1. GENERAL PROVISIONS. The board of directors shall elect a senior
executive officer who shall hold the office of chief executive officer or
president or both, a senior financial officer who shall serve as a vice
president and who may also serve as treasurer, a secretary and such number of
vice presidents, if any, as the board may from time to time determine. The board
of directors may from time to time create such other offices and appoint such
other officers, subordinate officers and assistant officers as it may determine.
Any two of such offices, other than those of president and vice president, may
be held by the same person, but no officer shall execute, acknowledge or verify
an instrument in more than one capacity.
SECTION 2. TERM OF OFFICE. The officers of the Corporation shall hold
office at the pleasure of the board of directors, and, unless sooner removed by
the board of directors, until successors are chosen and qualified. The board of
directors may remove any officer at any time, with or without cause. A vacancy
in any office, however created, shall be filled by the board of directors.
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ARTICLE V
DUTIES OF OFFICERS
SECTION 1. CHIEF EXECUTIVE OFFICER, PRESIDENT AND CHIEF OPERATING OFFICER.
(A) The chief executive officer shall be the senior officer of the
corporation and, subject to the control of the board of directors, shall
exercise supervision over the management of the business of the Corporation. In
the absence of the chairman of the board, he shall preside at meetings of the
shareholders. He shall have authority to sign all certificates for shares and
all deeds, mortgages, bonds, agreement, notices, and other instruments requiring
his signature; and shall have all the powers and duties prescribed by the
Florida Business Corporation Act and such others as the board of directors may
from time to time assign to him. In the event a president is not appointed, the
chief executive officer shall also have the duties set forth in Section 1(B)
below.
(B) The president shall exercise supervision over the business of the
Corporation and over its several officers, subject, however, to the oversight of
the chief executive officer, if one be elected. In the absence of the chairman
of the board and the chief executive officer, he shall preside at meetings of
the shareholders. He shall have authority to sign all certificates for shares
and all deeds, mortgages, bonds, agreements, notices, and other instruments
requiring his signature; and shall have all the powers and duties prescribed by
the Florida Business Corporation Act and such others as the board of directors
may from time to time assign to him.
(C) The chief operating officer, if one be elected, shall exercise
supervision over the business of the Corporation and over its several officers,
subject, however, to the oversight of the chief executive officer and the
president. In the absence of the chairman of the board, chief executive officer
and president, he shall preside at meetings of the shareholders. He shall have
authority to sign all deeds, mortgages, bonds, agreements, notices, and other
instruments requiring his signature; and shall have all the powers and duties
prescribed by the Florida Business Corporation Act and such others as the board
of directors may from time to time assign to him.
SECTION 3. VICE PRESIDENT. The vice presidents shall have such powers and
duties as may from time to time be assigned to them by the board of directors,
the chief executive officer or the president. At the request of the chief
executive officer or the president, or in the case of their absence or
disability, the vice president designated by the president (or in the absence of
such designation, the vice president designated by the board) shall perform all
the duties of the president and, when so acting, shall have all the power of the
president. The authority of vice president to sign in the name of the
Corporation certificates for shares and deeds, mortgages, bonds, agreements,
notices and other instruments shall be coordinate with like authority of the
chief executive officer and the president.
SECTION 4. SECRETARY. The secretary shall, keep minutes of all the
proceedings of the shareholders and the board of directors and shall make proper
record of the same, which shall be attested by him; shall have authority to
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execute and deliver certificates as to any of such proceedings and any
other records of the Corporation; shall have authority to sign all certificates
for shares and all deeds, mortgages, bonds, agreements, notes and other
instruments to be executed by the Corporation which require his signature; shall
give notice of meetings of shareholders and directors; shall produce on request
at each meeting of shareholders a certified list of shareholders arranged in
alphabetical order; shall keep such books and records as may be required by law
or by the board of directors; and, in general, shall perform all duties incident
to the office of secretary and such other duties as may from time to time be
assigned to him by the board of directors, the chief executive officer or the
president.
SECTION 5. TREASURER. The treasurer shall have general supervision of all
finances of the Corporation; he shall be in charge of all money, bills, notes,
deeds, leases, mortgages and similar property belonging to the Corporation, and
shall do with the same as may from time to time be required by the board of
directors. He shall cause to be kept adequate and correct accounts of the
business transactions of the Corporation, including accounts of its assets,
liabilities, receipts, disbursements, gains, losses, stated capital and shares,
together with such other accounts as may be required; and he shall have such
other powers and duties as may from time to time be assigned to him by the board
of directors, the chief executive officer or the president.
SECTION 6. ASSISTANT AND SUBORDINATE OFFICERS. The board of directors may
elect such assistant and subordinate officers as it may deem desirable. Each
such officer shall hold office at the pleasure of the board of directors and
perform such duties as the board of directors or the chief executive officer or
the president may prescribe. The board of directors may, from time to time,
authorize any officer to appoint and remove subordinate officers, to prescribe
their authority and duties, and to fix their compensation.
SECTION 7. DUTIES OF OFFICERS MAY BE DELEGATED. In the absence of any
officer of the Corporation, or for any other reason the board of directors may
deem sufficient, the board of directors may delegate, for the time being, the
powers or duties, or any of them, of such officers to any other officer or to
any director.
SECTION 8. RESIGNATIONS AND REMOVALS. Any officer may resign at any time by
delivering his resignation in writing to the chairman of the board, if any, the
chief executive officer, or the secretary or to a meeting of the board of
directors. Such resignation shall be effective upon receipt unless specified to
be effective at some other time, and without in either case the necessity of its
being accepted unless the resignation shall so state. The board of directors may
at any time remove any officer either with or without cause. The board of
directors may at any time terminate or modify the authority of any agent. No
officer resigning and (except where a right to receive compensation shall be
expressly provided in a duly authorized written agreement with the Corporation)
no officer removed shall have any right to any compensation as such officer for
any period following his resignation or removal, or any right to damages on
account of such removal, whether his compensation be by the month or by the year
or otherwise; unless, in the case of a resignation, the directors, or, in the
case of removal, the body acting on the removal, shall in their or its
discretion provide for compensation.
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ARTICLE VI
INDEMNIFICATION
The Corporation shall indemnify its officers and directors, and any former
officer or director, to the full extent permitted by law.
ARTICLE VII
CERTIFICATES FOR SHARES
SECTION 1. FORM AND EXECUTION. Certificates for shares, certifying the
number of fully-paid shares owned, shall be issued to each shareholder in such
form as shall be approved by the board of directors. Such certificates shall be
signed by the chairman or vice-chairman of the board of directors or the chief
executive officer, the president or a vice president and by the secretary or an
assistant secretary or the treasurer or an assistant treasurer; provided,
however, that if such certificates are countersigned by a transfer agent and/or
registrar, the signatures of any of said officers and the seal of the
Corporation upon such certificates may be facsimiles, engraved, stamped or
printed. If any officer or officers who shall have signed, or whose facsimile
signature shall have been used, printed or stamped on any certificate or
certificates for shares, shall cease to be such officer or officers, because of
death, resignation or otherwise, before such certificate or certificates shall
have been delivered by the Corporation, such certificate or certificates, if
authenticated by the endorsement thereon of the signature of a transfer agent or
registrar, shall nevertheless be conclusively deemed to have been adopted by the
Corporation by the use and delivery thereof and shall be as effective in all
respects as though signed by a duly elected, qualified and authorized officer or
officers, and as though the person or persons who signed such certificate or
certificates, or whose facsimile signature or signatures shall have been used
thereon, had not ceased to be an officer or officers of the Corporation.
SECTION 2. REGISTRATION OF TRANSFER. Any certificate for Shares of the
Corporation shall be transferable in person or by attorney upon the surrender
thereof to the Corporation or any transfer agent therefor (for the class of
shares represented by the certificate surrendered) properly endorsed for
transfer and accompanied by such assurances as the Corporation or such transfer
agent may require as to the genuineness and effectiveness of each necessary
endorsement.
SECTION 3. LOST, DESTROYED OR STOLEN CERTIFICATES. A new share certificate
or certificates may be issued in place of any certificate theretofore issued by
the Corporation which is alleged to have been lost, destroyed or wrongfully
taken upon (1) the execution and delivery to the Corporation by the person
claiming the certificate to have been lost, destroyed or wrongfully taken of an
affidavit of the fact, specifying whether or not, at the time of such alleged
loss, destruction or taking, the certificate was endorsed, and (2) the
furnishing to the Corporation an indemnity and other assurances satisfactory to
the Corporation and to all transfer agents and registrars of the class of shares
represented by the certificate against any and all losses, damages, costs,
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expenses or liabilities to which they or any of them may be subjected by
reason of the issue and delivery of such new certificate or certificates or in
respect of the original certificate.
SECTION 4. REGISTERED SHAREHOLDERS. A person in whose name shares are of
record on the books of the Corporation shall conclusively be deemed the
unqualified owner and holder thereof for all purposes and to have capacity to
exercise all rights of ownership. Neither the Corporation nor any transfer agent
of the Corporation shall be bound to recognize any equitable interest in or
claim to such shares on the part of any other person, whether disclosed upon
such certificate or otherwise, nor shall they be obliged to see to the execution
of any trust or obligation.
ARTICLE VIII
FISCAL YEAR
The fiscal year of the Corporation shall commence on such date in each year
as shall be fixed from time to time by the board of directors.
ARTICLE IX
SEAL
The board of directors may provide a suitable seal containing the name of
the Corporation. If deemed advisable by the board of directors, duplicate seals
may be provided and kept for the purposes of the Corporation.
ARTICLE X
CORPORATE RECORDS; SHAREHOLDERS'
INSPECTION RIGHTS; FINANCIAL INFORMATION
SECTION 1. CORPORATE RECORDS.
(A) The Corporation shall keep as permanent records minutes of all meetings
of its shareholders and board of directors, a record of all actions taken by the
shareholders or board of directors without a meeting, and a record of all
actions taken by a committee of the board of directors on behalf of the
Corporation.
(B) The Corporation shall maintain accurate accounting records and a record
of its shareholders in a form that permits preparation of a list of the names
and addresses of all shareholders in alphabetical order by class of shares
showing the number and series of shares held by each.
(C) The Corporation shall keep a copy of: its articles or restated articles
of incorporation and all amendments to them currently in effect; these bylaws or
restated bylaws and all amendments currently in effect; resolutions adopted by
the board of directors creating one or more classes or series of shares and
fixing their relative rights, preferences and limitations, if shares
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issued pursuant to those resolutions are outstanding; the minutes of all
shareholders' meetings and records of all actions taken by shareholders without
a meeting for the past three years; written communications to all shareholders
generally or all shareholders of a class or series within the past three years,
including the financial statements furnished for the last three years; a list of
names and business street address of its current directors and officers; and its
most recent annual report delivered to the Department of State.
(D) The Corporation shall maintain its records in written form or in
another form capable of conversion into written form within a reasonable time.
SECTION 2. SHAREHOLDERS' INSPECTION RIGHTS. A shareholder is entitled to
inspect and copy, during regular business hours at the Corporation's principal
officer, any of the corporate records described in Section 1(C) of this Article
if the shareholder gives the Corporation written notice of the demand at least
five business days before the date on which he wishes to inspect and copy the
records.
A shareholder is entitled to inspect and copy, during regular business
hours at a reasonable location specified by the Corporation, any of the
following records of the Corporation if the shareholder gives the Corporation
written notice of his demand at least five business days before the date on
which he wishes to inspect and copy provided: (1) the demand is made in good
faith and for a purpose reasonably related to such person's interest as a
shareholder; (2) the shareholder describes with reasonable particularity the
purpose and the records he desires to inspect; and (3) the records are directly
connected with the purpose: (a) excerpts from minutes of any meeting of the
board of directors, records of any action of a committee of the board of
directors while acting in place of the board of behalf of the Corporation,
minutes of any meeting of the shareholders, and records of action taken by the
shareholders or board without a meeting (to the extent not subject to inspection
under the preceding paragraph); (b) accounting records; (c) the record of
shareholders; and (d) any other books and records of the Corporation.
The Corporation may deny any demand for inspection if the demand was made
for an improper purpose, or if the demanding shareholder has within the two
years preceding his demand, sold or offered for sale any list of shareholders of
the Corporation or of any other corporation, has aided or abetted any person in
procuring any list of shareholders for that purpose, or has improperly used any
information secured through any prior examination of the records of the
Corporation or any other corporation.
SECTION 3. FINANCIAL STATEMENTS OF SHAREHOLDERS. Unless modified by
resolution of the shareholders, within 120 days after the close of each fiscal
year, the Corporation shall furnish its shareholders with annual financial
statements which may be consolidated or combined statements of the Corporation
and one or more of its subsidiaries, as appropriate, that include a balance
sheet as of the end of the fiscal year, an income statement for that year, and a
statement of cash flows for that year. If financial statements are prepared for
the Corporation on the basis of generally accepted accounting principles, the
annual financial statements must also be prepared on that basis.
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If the annual financial statements are reported upon by a public
accountant, his report must accompany them. If not, the statements must be
accompanied by a statement of the president or the person responsible for the
Corporation's accounting records stating his reasonable belief whether the
statements were prepared on the basis of generally accepted accounting
principles and, if not, describing the basis of preparation and describing any
respects in which the statements were not prepared on a basis of accounting
consistent with the statements prepared for the preceding year.
The Corporation shall mail the annual financial statements to each
shareholder within 120 days after the close of each fiscal year or within such
additional time thereafter as is reasonably necessary to enable the Corporation
to prepare its financial statements if, for reasons beyond the Corporation's
control, it is unable to prepare its financial statements within the prescribed
period. Thereafter, on written request from a shareholder who was not mailed the
statements, the Corporation shall mail him the latest annual financial
statements.
SECTION 4. OTHER REPORTS TO SHAREHOLDERS. If the Corporation indemnifies or
advances expenses to any director, officer, employee or agent otherwise than by
court order or action by the shareholders or by an insurance carrier pursuant to
insurance maintained by the Corporation, the Corporation shall report the
indemnification or advance in writing to the shareholders with or before the
notice of the next annual shareholders' meeting, or prior to the meeting if the
indemnification or advance occurs after the giving of the notice but prior to
the time the annual meeting is held. This report shall include a statement
specifying the persons paid, the amounts paid, and the nature and status at the
time of such payment of the litigation or threatened litigation.
If the Corporation issues or authorities the issuance of shares for
promises to render services in the future, the Corporation shall report in
writing to the shareholders the number of shares authorized or issued, and the
consideration received by the Corporation, with or before the notice of the next
shareholders' meeting.
ARTICLE XI
AMENDMENTS
These bylaws may be altered, amended or repealed, and new bylaws adopted,
by the board of directors or shareholders.
I certify that the foregoing bylaws are the bylaws of Whitman
Reincorporation, Inc., a Florida corporation, as of June ___, 1997.
---------------------------------------
Richard B. Salzman, Secretary
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EXHIBIT D
WHITMAN EDUCATION GROUP, INC.
EMPLOYEE STOCK PURCHASE PLAN
EFFECTIVE OCTOBER 1, 1997
SECTION I. PURPOSE
The purpose of the Whitman Education Group, Inc. Employee Stock Purchase
Plan (the "Plan") is to provide employees of Whitman Education Group, Inc. (the
"Company") and its subsidiaries an opportunity to purchase shares of common
stock, no par value per share, of the Company (the "Common Stock") by increasing
the employees' interest in the growth and success of the Company, and encourage
such employees to remain with the Company and its subsidiaries.
"Subsidiaries" as used herein shall mean corporations 100% of the capital
stock of which is owned by the Company and such other related entities, the
employees of which would qualify for eligibility in this Plan under Section 423
of the Internal Revenue Code of 1986, as amended (the "Code"), as are designated
to participate by the Company hereafter.
SECTION II. ADMINISTRATION OF THE PLAN
The Plan will be administered for the Company by the Compensation Committee
of the Board of Directors (the "Committee"). The interpretation and decision
with regard to any question arising under the Plan made by the Committee shall,
unless overruled or modified by the Board of Directors of the Company, be final
and conclusive upon all employees of the Company and its Subsidiaries
participating in the Plan and any person claiming by or through any such
employee.
SECTION III. SHARES SUBJECT TO THE PLAN
The shares of Common Stock of the Company which may be offered under the
Plan, may be unissued stock, treasury stock or stock purchased by the Company.
The number of shares of stock to be sold under the Plan shall not exceed 250,000
shares except as such number may be adjusted pursuant to Section XI hereof. All
shares not purchased, and all shares not previously offered may be available for
subsequent offers.
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SECTION IV. EMPLOYEES' ELIGIBILITY
(a) All employees of the Company and its Subsidiaries shall be eligible to
participate in the Plan except employees who, prior to the first day of the
Purchase Period (as defined in Section V), have been employed less than 90 days.
Notwithstanding anything herein to the contrary, no employee shall be granted a
right to purchase under the Plan if such employee, immediately after the right
to purchase is granted, owns stock (including stock which may be purchased under
outstanding rights to purchase) possessing five percent (5%) or more of the
total combined voting power or value of all classes of stock of the Company or
its Subsidiaries. For the foregoing purposes, the rules of Section 424(d) of the
Code shall apply in determining stock ownership. Nor shall any employee be
granted a right to purchase which permits his rights to purchase stock under all
Employee Stock Purchase Plans of the Company and its Subsidiaries to accrue at a
rate which exceeds twenty-five thousand dollars ($25,000.00) of the fair market
value of such stock (determined at the time such right to purchase is granted)
for each calendar year in which such right to purchase is outstanding at any
time.
(b) For purposes of participation in the Plan, a person on leave of absence
shall be deemed to be an employee for the first 90 days of such leave of absence
and such employee's employment shall be deemed to have terminated at the close
of business on the 90th day of such leave of absence unless such employee shall
have returned to full-time or part-time employment (as the case may be) prior to
the close of business on such 90th day. Termination by the Company of any
employee's leave of absence, other than termination of such leave of absence on
return to full-time or part-time employment, shall terminate an employee's
employment for all purposes of the Plan and shall terminate such employee's
participation in the Plan and ability to exercise any purchase right.
SECTION V. PURCHASE PERIODS
Purchase Periods shall commence on each January 1, April 1, July 1 and
October 1, or such other dates as the Committee or the Board of Directors of the
Company may determine. Each Purchase Period shall consist of three (3) months,
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or such shorter or longer period as is determined by the Committee or the
Board of Directors. At the commencement of the Purchase Period, the Company
shall, subject to and within the limits of the Plan, make shares of Common Stock
available under the Plan. Except as provided in Section IV of the Plan, all
employees participating in an offering shall have the same rights and privileges
to purchase Common Stock under the Plan.
SECTION VI. PARTICIPATION
Each eligible employee, at the commencement of each Purchase Period, shall
be granted a right to purchase, which right shall provide that such employee may
purchase as many full shares of the Common Stock as may be purchased in an
amount not less than one percent (1%) or more than ten percent (10%) of the
amount received as covered compensation by the employee during the Purchase
Period. Covered compensation, as used herein, shall be the employee's base pay,
commissions, overtime and all bonuses, except that an employee may elect, in
accordance with procedures established by the Committee, to exclude from covered
compensation any bonus paid to them. Notwithstanding the foregoing provisions,
covered compensation shall not include income resulting from the exercise of
stock options or stock appreciation rights; expense allowances, relocation
payments, any amounts paid as severance pay; and any amounts not paid to the
employee by the Company in cash.
SECTION VII. PAYROLL DEDUCTIONS
The shares of the Common Stock purchased under the Plan shall be paid for
by payroll deductions, without the right of prepayment, during each applicable
Purchase Period. Each eligible employee shall execute and deliver to the Company
a Payroll Deduction Authorization in the form designated by the Committee at
least 14 days prior to the commencement of any Purchase Period directing payroll
deductions between one percent (1%) and ten percent (10%) of such employee's
covered compensation, as defined in Section VI, for the Purchase Period, which
authorization shall not be changed during the Purchase Period. No interest shall
accrue on the amounts deducted. Employee payroll deductions will be maintained
in a segregated employee payroll deduction account (the "Payroll Deduction
Account").
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Balances remaining in an Employee's Payroll Deduction Account (being less
than the purchase price for one whole share) will be carried forward into the
next Purchase Period in the event the employee elects to participate in the
subsequent Purchase Period; otherwise such balances will be returned to the
employee. Such balances, in amounts of $10.00 or more at the termination of the
Plan, may be supplemented by the employee to complete the purchase of an
additional share of stock. Balances of less than $10.00 in an employee's Payroll
Deduction Account at the termination of the Plan will be automatically refunded.
SECTION VIII. PRICE
The purchase price for a share of the Common Stock at the end of each
Purchase Period shall be 90% of the fair market value of the Common Stock at the
time the right to purchase is exercised. "Fair market value" shall mean, with
respect to the value of the Common Stock, the closing price of the Common Stock
as traded on the American Stock Exchange on the Purchase Date or on the last
trading date preceding a Purchase Date. If the Common Stock of the Company is
not admitted to trading on any of the aforesaid dates for which such prices of
the Common Stock are to be determined, then reference shall be made to the fair
market value of the Common Stock on that date, as determined on such basis as
shall be established or specified for the purpose by the Committee.
SECTION IX. EXERCISE OF RIGHT TO PURCHASE AND ISSUANCE OF SHARES
A participant shall be deemed to have exercised his right to purchase and
have paid for his shares to the extent of his payroll deductions on the last day
of any Purchase Period for which the employee has elected to participate, and
such shares so purchased shall be issued to him as of such date and delivered to
him as soon as practicable after such date. Only upon the issuance of such
shares shall the participant have, with respect to such shares of stock, any
rights as a stockholder of the Company. The Committee may, in its discretion,
adopt a procedure pursuant to which shares purchased under the Plan are issued
in the name of the Plan, a designated agent or the nominee of such agent in lieu
of delivering shares purchased to participating employees at the end of each
Purchase Period. In such case, employees will be fully vested with respect to
all shares purchased by them notwithstanding the fact that the shares are in the
custody of the Company, the agent or nominee and will be entitled to withdraw
said shares on written request.
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SECTION X. NON-ASSIGNABILITY
The rights of the participant shall not be transferable by him otherwise
than by will or by the laws of descent and distribution, and such rights will be
exercisable during his lifetime only by him.
SECTION XI. ADJUSTMENT BY REASON OF CHANGES IN COMMON STOCK STRUCTURE
If, after the effective date of the Plan, there shall be any changes in the
Common Stock structure of the Company by reason of the declaration of stock
dividends, recapitalization resulting in stock split-ups, or combinations or
exchanges of shares by reason of merger, consolidation, or by any other means,
then the number of shares available for right to purchase and the shares subject
to any such rights shall be equitably and appropriately adjusted by the Board of
Directors of the Company as in its sole and uncontrolled discretion shall seem
just and reasonable in the light of all the circumstances pertaining thereto.
SECTION XII. TERMINATION OF EMPLOYMENT
In the event of a participating employee's termination of employment prior
to the last business day of a Purchase Period (whether as a result of the
employee's voluntary or involuntary termination, retirement, death or
otherwise), no payroll deduction will be taken from any pay due and owing to the
employee and the balance in the employee's payroll deduction account will be
paid to the employee or, in the event of the employee's death, (a) to a
beneficiary previously designated in a revocable notice signed by the employee
(with any spousal consent required under state law) or (b) in the absence of
such a designated beneficiary, to the executor or administrator of the
employee's estate or (c) if no such executor or administrator has been appointed
to the knowledge of the Company, to such other person(s) as the Committee may,
in its discretion, designate. If, prior to the last business day of a Purchase
Period, the Subsidiary by which an employee is employed will cease to be a
subsidiary of the Company, or if the employee is transferred to a subsidiary of
the Company that is not a designated Subsidiary under this Plan, the employee
will be deemed to have terminated his employment for the purposes of this Plan.
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SECTION XIII. RIGHT TO TERMINATE EMPLOYMENT
The Plan shall not confer upon any employee any right with respect to being
continued in the employ of the Company and its Subsidiaries or to interfere in
any way with the right of the Company and its Subsidiaries to terminate his or
her employment at any time, nor shall it interfere in any way with the
employee's right to terminate his or her employment.
SECTION XIV. TERM
The Plan shall be in effect through the Purchase Period ending September
30, 2002 and no right to purchase may be exercised after termination of the
Plan. While it is intended that the Plan remain in effect for the period
specified, the Board of Directors of the Company may terminate the Plan at any
time in its discretion. If at any time the number of shares of stock authorized
for purposes of the Plan is not sufficient to meet all unfilled purchase
requirements, the Committee shall terminate payroll deductions and apportion the
remaining available shares among participating employees for purchase under the
Plan in such manner as it may deem equitable. Balances in employee payroll
deduction accounts thereafter shall be refunded promptly and the Plan
terminated.
SECTION XV. AMENDMENT TO THE PLAN
The Board may at any time, and from time to time, amend this Plan in any
respect, except that (a) if the approval of any such amendment by the
stockholders of the Company is required by Code Section 423, such amendment will
not be effected without such approval, and (b) in no event may any amendment be
made which would cause the Plan to fail to comply with Code Section 423.
SECTION XVI. AUTHORIZATION
The Plan shall not become effective unless it is approved by a majority of
the shareholders of Common Stock of the Company.
SECTION XVII. LISTING; GOVERNMENTAL APPROVALS
The Company's obligation to sell and deliver Common Stock under this Plan
is subject to listing on a national stock exchange and the approval of all
governmental authorities required in connection with the authorization, issuance
or sale of such stock.
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SECTION XVIII.NOTIFICATION UPON SALE OF SHARES
Each employee agrees, by participating in the Plan, to promptly give the
Company notice of any disposition of shares purchased under the Plan where such
disposition occurs within two years after the date of grant of the right
pursuant to which such shares were purchased or one year after the transfer of
such shares to the employee, so that the Company may take appropriate income tax
deductions with respect to such transfer and otherwise comply with applicable
federal, state and local income tax laws.
SECTION XIX. COSTS OF PLAN
The Company will pay all costs of administering the Plan, including the
costs of brokerage fees, commissions and expenses, if any, for acquiring shares
to be purchased under the Plan. All costs related to the employee's sale of
shares acquired under the Plan will be borne by the employee.
SECTION XX. GOVERNING LAW; VENUE; LIMITATIONS PERIOD
The law of the State of Florida will govern all matters relating to this
Plan except to the extent it is superseded by the laws of the United States. Any
legal action or proceeding hereunder may be brought only within a period of
three years from the date the claim was incurred, unless other applicable law
would permit a longer period of time within which to bring an action. Any such
legal action or proceeding may be initiated only in Dade County, Florida or the
county in which the employer of the employee has its principal place of
business. By participating in the Plan, the employee irrevocably (a) agrees to
submit to the jurisdiction of the courts of Dade County, Florida, or of such
other jurisdiction where the employer of the employee has its principal place of
business, for the purposes of resolving any disputes with the Company, the
Committee, or any other party relating to this Plan or any transaction
contemplated hereby and (b) waives, to the fullest extent permitted by law, any
objection which the employee may now hold or hereafter may have to the bringing
of any suit, action or other proceeding arising out of or relating to this Plan
in the aforementioned venue including, without limitation, any claim that Dade
County, Florida, or the county in which the employer of the employee has its
principal of business, is an inconvenient forum for bringing any such suit.
-7-
