FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1997
Commission File Number 1-13722
WHITMAN EDUCATION GROUP, INC.
Florida 22-2246554
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(State of other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
4400 Biscayne Boulevard, 6th Floor, Miami, Florida 33137
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(Address of principal executive offices) (Zip Code)
(305) 575-6534
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(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
---
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
As of November 12, 1997, there were 12,918,576 shares of common stock
outstanding.
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WHITMAN EDUCATION GROUP, INC.
FORM 10-Q
SEPTEMBER 30, 1997
TABLE OF CONTENTS
PAGE
----
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements........................................ 3
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations.................................. 9
PART II - OTHER INFORMATION
Item 5. Other Information........................................... 14
Item 6. Exhibits and Reports on Form 8-K............................ 15
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PART 1 - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
WHITMAN EDUCATION GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
SEPTEMBER 30, MARCH 31,
1997 1997
--------------- ---------------
(UNAUDITED)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents.................................................... $ 1,136,992 $ 3,853,932
Restricted cash.............................................................. -- 511,927
Accounts receivable, net..................................................... 21,632,678 18,159,383
Inventories.................................................................. 1,237,901 1,084,124
Deferred income taxes........................................................ 853,267 853,267
Other current assets......................................................... 1,359,122 1,072,511
------------- ---------------
Total current assets......................................................... 26,219,960 25,535,144
Property and equipment, net.................................................. 12,100,972 10,062,815
Marketable securities........................................................ 358,125 296,250
Deferred costs............................................................... 36,504 93,567
Deposits and other assets, net .............................................. 1,286,656 1,513,553
Goodwill, net................................................................ 10,367,845 10,516,165
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$ 50,370,062 $ 48,017,494
============= ===============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable............................................................. $ 2,625,022 $ 2,390,283
Accrued expenses............................................................. 2,524,369 2,873,923
Income taxes payable......................................................... 24,561 34,816
Short-term notes payable..................................................... 1,086,017 --
Current portion of capitalized lease obligations............................. 939,536 1,040,403
Current portion of long-term debt............................................ 302,950 540,565
Deferred tuition revenue..................................................... 16,031,246 12,999,348
------------- ---------------
Total current liabilities.................................................... 23,533,701 19,879,338
Other liabilities............................................................ 822,733 921,859
Capitalized lease obligations................................................ 2,370,528 2,013,125
Long-term debt............................................................... 9,430,291 9,096,017
Commitments and contingencies
Stockholders' equity:
Common stock, no par value, authorized 100,000,000 shares, issued and
outstanding 12,678,882 shares.......................................... 20,587,202 20,584,014
Additional paid-in capital................................................ 671,536 671,536
Accumulated deficit ...................................................... (6,098,531) (4,139,122)
Treasury stock, 239,694 shares............................................ (1,009,273) (1,009,273)
Net unrealized gain on noncurrent marketable securities................... 61,875 --
------------- ---------------
Total stockholders' equity................................................... 14,212,809 16,107,155
------------- ---------------
$ 50,370,062 $ 48,017,494
============= ===============
</TABLE>
See accompanying notes to financial statements.
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WHITMAN EDUCATION GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED SEPTEMBER 30,
----------------------------------------
1997 1996
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<S> <C> <C>
Net revenues........................................... $ 14,502,007 $ 11,084,981
Costs and Expenses:
Instructional and educational support............. 9,992,729 7,255,903
Selling and promotion............................. 2,228,724 1,564,124
General and administrative........................ 2,592,573 2,784,276
-------------- ---------------
Total costs and expenses............................... 14,814,026 11,604,303
-------------- ---------------
Loss from operations................................... (312,019) (519,322)
Interest expense, net.................................. (276,567) (236,961)
-------------- ---------------
Loss before income taxes .............................. (588,586) (756,283)
Income tax benefit..................................... -- 272,216
-------------- ---------------
Net loss .............................................. $ (588,586) $ (484,067)
============== ===============
Net loss per share of common stock..................... $ (.05) $ (.04)
============== ===============
Average number of common stock and common stock
equivalent shares outstanding, excluding common
stock shares held in escrow in 1996............... 12,678,256 10,828,356
============== ===============
</TABLE>
See accompanying notes to financial statements.
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WHITMAN EDUCATION GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
FOR THE SIX MONTHS ENDED SEPTEMBER 30,
--------------------------------------
1997 1996
-------------- ---------------
<S> <C> <C>
Net revenues........................................... $ 27,942,795 $ 22,483,849
Costs and Expenses:
Instructional and educational support............. 19,483,374 14,166,150
Selling and promotion............................. 4,184,868 3,046,125
General and administrative........................ 5,727,001 5,397,458
-------------- ---------------
Total costs and expenses............................... 29,395,243 22,609,733
-------------- ---------------
Loss from operations................................... (1,452,448) (125,884)
Interest expense, net.................................. (506,961) (459,903)
-------------- ---------------
Loss before income taxes .............................. (1,959,409) (585,787)
Income tax benefit..................................... -- 177,737
-------------- ---------------
Net loss .............................................. $ (1,959,409) $ (408,050)
============== ===============
Net loss per share of common stock..................... $ (.15) $ (.04)
============== ===============
Average number of common stock and common stock
equivalent shares outstanding, excluding
common stock shares held in escrow in 1996........ 12,677,921 10,629,432
============== ===============
</TABLE>
See accompanying notes to financial statements.
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WHITMAN EDUCATION GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
FOR THE SIX MONTHS ENDED SEPTEMBER 30,
--------------------------------------
1997 1996
-------------- ---------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss ............................................... $ (1,959,409) $ (408,050)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation and amortization......................... 1,636,888 1,284,634
Bad debt expense...................................... 1,465,558 1,051,974
Deferred tax provision................................ -- (228,501)
Changes in operating assets and liabilities:
Restricted cash....................................... 511,927 (712)
Accounts receivable................................... (4,938,853) (3,868,316)
Inventories........................................... (153,777) (76,491)
Other current assets.................................. (306,443) (803,277)
Deferred costs........................................ (2,936) (6,055)
Deposits and other assets............................. (66,759) (42,686)
Accounts payable...................................... 234,739 1,622,447
Accrued expenses...................................... (349,554) 545,784
Income taxes payable.................................. 392 (189,491)
Deferred tuition revenue.............................. 3,031,898 260,010
Other................................................. (99,126) --
-------------- --------------
Net cash used in operating activities................. (995,455) (858,730)
-------------- --------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Payments into escrow for acquisition of
Sanford-Brown College................................. 16,058 (74,861)
Purchase of property and equipment...................... (2,391,304) (1,748,535)
-------------- --------------
Net cash used in investing activities................... (2,375,246) (1,823,396)
-------------- --------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from short-term notes payable.................. 1,086,017 --
Proceeds from revolving line of credit
and long-term borrowings.............................. 17,657,142 15,272,708
Principal payments on revolving line of credit,
long-term borrowings and other liability.............. (17,560,483) (14,946,473)
Principal payments on capitalized lease obligations..... (532,103) (545,651)
Proceeds from exercise of options and warrants.......... 3,188 383,633
-------------- --------------
Net cash provided by financing activities............... 653,761 164,217
-------------- --------------
Decrease in cash and cash equivalents................... (2,716,940) (2,517,909)
Cash and cash equivalents at beginning of period........ 3,853,932 2,762,141
CTU activity for the three-months ended March 31, 1996.. -- (15,423)
-------------- --------------
Cash and cash equivalents at end of period.............. $ 1,136,992 $ 228,809
============== ==============
</TABLE>
Continued on the following page.
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WHITMAN EDUCATION GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) --(CONTINUED)
<TABLE>
<CAPTION>
FOR THE SIX MONTHS ENDED SEPTEMBER 30,
--------------------------------------
1997 1996
-------------- ---------------
<S> <C> <C>
SUPPLEMENTAL DISCLOSURES OF NONCASH FINANCING
AND INVESTING ACTIVITIES:
Equipment acquired under capital leases................... $ 788,639 $ 330,613
============ ==============
Stock issued in connection with acquisition of
Sanford-Brown........................................... $ -- $ 3,750,000
============ ==============
Treasury stock issued in connection with purchase
of DFAS................................................. $ -- $ 203,000
============ ==============
Value of stock options issued for services rendered....... $ -- $ 55,036
============ ==============
Supplemental disclosures of cash flow information:
Interest paid............................................. $ 536,075 $ 450,697
============ ==============
Income taxes paid......................................... $ 1,343 $ 220,495
============ ==============
</TABLE>
See accompanying notes to financial statements.
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<PAGE>
PART I - FINANCIAL INFORMATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. GENERAL
The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with the instructions to Form 10-Q and, in the
opinion of the management of the Company, include all adjustments, which are of
a normal recurring nature, necessary for a fair presentation of financial
position and the results of operations and cash flows for the periods presented.
However, the financial statements do not include all information and footnotes
required for a presentation in accordance with generally accepted accounting
principles. These condensed consolidated financial statements should be read in
conjunction with the consolidated financial statements and the notes thereto
included or incorporated by reference in the Company's Form 10-K for the fiscal
year ended March 31, 1997. The results of operations for the interim periods are
not necessarily indicative of the results of operations to be expected for the
full year.
The accompanying financial statements include the accounts of Whitman
Education Group, Inc., and its wholly-owned subsidiaries, Ultrasound Technical
Services, Inc. ("Ultrasound Diagnostic Schools"), Sanford Brown College, Inc.
("Sanford-Brown College"), and MDJB, Inc. ("Colorado Technical University"). All
intercompany accounts and transactions have been eliminated.
The Company experiences seasonality in its quarterly results of operations
as a result of changes in the level of student enrollment. New enrollment in the
Company's schools tends to be lower in the first and second fiscal quarters
covering the summer months which are traditionally associated with recess from
school, with the greatest seasonal effect in the second quarter. Costs are
generally not significantly affected by the seasonal factors on a quarterly
basis. Accordingly, quarterly variations in net revenues will result in
fluctuations in income from operations on a quarterly basis.
2. ACQUISITION OF HURON UNIVERSITY
On December 30, 1996, Colorado Technical University acquired the South
Dakota operations and certain assets at two campuses of Huron University. The
acquisition was accounted for using the purchase method of accounting and,
accordingly, operations were included in the Company's Statement of Operations
beginning on January 1, 1997.
The following unaudited pro forma information combines the results of
operations of Whitman and Huron University for the three and six months ended
September 30, 1996 as if the transaction had occurred at April 1, 1996, after
giving effect to certain adjustments including additional rent expense and
reductions in interest and depreciation expense (amounts are in thousands,
except per share amounts).
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<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
SEPTEMBER 30, 1996 SEPTEMBER 30, 1996
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<S> <C> <C>
Net revenues........... $ 11,699 $ 23,666
Net loss .............. $ (976) $ (1,299)
Loss per common share.. $ (0.09) $ (.12)
</TABLE>
3. CONTINGENCIES
The Company is a party to routine litigation incidental to its business.
Management does not believe that an adverse result in any or all of such routine
litigation will have a material adverse effect on the Company's financial
condition or results of operations.
4. SUBSEQUENT EVENT
On October 30, 1997, a limited partnership beneficially owned by the
Chairman of the Board exercised warrants to purchase 500,000 shares at an
exercise price of $3.125 per share.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis should be read in conjunction with
the consolidated financial statements of the Company, the related notes to
consolidated financial statements and Management's Discussion and Analysis of
Financial Condition and Results of Operations included in the Company's Form
10-K for the year ended March 31, 1997 and the condensed consolidated financial
statements and the related notes to the condensed consolidated financial
statements included in Item 1 of this Quarterly Report on Form 10-Q. Except for
the historical matters contained herein, statements made in this report are
forward looking and are made pursuant to the safe harbor provisions of the
Securities Litigation Reform Act of 1995. Investors are cautioned that forward
looking statements involve risks that may affect the Company's business and
prospects, including economic, competitive, governmental, and other factors
discussed in this report and in the Company's filings with the Securities and
Exchange Commission.
RESULTS OF OPERATIONS
The following table sets forth the percentage relationship of certain
statement of operations data to net revenues for the periods indicated:
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<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
----------------------- -----------------------
1997 1996 1997 1996
---------- --------- --------- ----------
<S> <C> <C> <C> <C>
Net revenues................................ 100.0% 100.0% 100.0% 100.0%
---------- --------- --------- ----------
Costs and expenses:
Instructional and educational support.... 68.9 65.5 69.7 63.0
Selling and promotion.................... 15.4 14.1 15.0 13.6
General and administrative............... 17.9 25.1 20.5 24.0
---------- --------- --------- ----------
Total costs and expenses.................... 102.2 104.7 105.2 100.6
---------- --------- --------- ----------
Loss from operations........................ (2.2) (4.7) (5.2) (0.6)
Interest expense, net....................... (1.9) (2.1) (1.8) (2.0)
---------- --------- --------- ----------
Loss before income taxes.................... (4.1) (6.8) (7.0) (2.6)
Income tax benefit.......................... -- 2.4 -- 0.8
---------- --------- --------- ----------
Net loss.................................... (4.1)% (4.4)% (7.0)% (1.8)%
========== ========= ========= ==========
</TABLE>
THREE MONTHS ENDED SEPTEMBER 30, 1997 COMPARED TO THE THREE MONTHS ENDED
SEPTEMBER 30, 1996
Net revenues increased by $3.4 million or 30.8% to $14.5 million for the
three months ended September 30, 1997 from $11.1 million for the three months
ended September 30, 1996. The increase was primarily due to an increase in
average student enrollment and tuition increases. Student enrollment increased
20.4% overall with the University Degree Division experiencing a 24.7% increase
and the Associate Degree Division experiencing an 18.7% increase.
The increase in student enrollment in the University Degree Division
resulted in increased net revenues of $.9 million or 40.6%. This increase was
primarily due to the opening of a Colorado Technical University campus in Denver
in October 1996 and the acquisition of Huron University in December 1996.
The increase in student enrollment in the Associate Degree Division
resulted in increased net revenues of $2.5 million or 28.4%. The increased
enrollment was primarily in the medical assisting program offered by the
Ultrasound Diagnostic Schools.
Instructional and educational support increased by $2.7 million or 37.7% to
$10.0 million for the three months ended September 30, 1997 from $7.3 million
for the three months ended September 30, 1996. As a percentage of net revenues,
instructional and educational support expenses increased to 68.9% for the three
months ended September 30, 1997 as compared to 65.5% for the three months ended
September 30, 1996. These increases were primarily due to the opening and
acquisition of new campuses at the University Degree Division and the addition
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<PAGE>
of student support personnel and the upgrade of equipment and facilities at
the Associate Degree Division. As a percentage of net revenues, instructional
and educational costs increased substantially at the University Degree Division
due to the seasonality associated with the operations of Huron University, a
more traditional university that experiences a significant decline in tuition
revenues during the summer.
Selling and promotion expenses increased by $.6 million or 42.5% to $2.2
million for the three months ended September 30, 1997 from $1.6 million for the
three months ended September 30, 1996. As a percentage of net revenues, selling
and promotion expenses increased to 15.4% for the three months ended September
30, 1997 as compared to 14.1% for the three months ended September 30, 1996. The
increase in selling and promotion expenses was primarily due to an increase in
such costs at the University Degree Division related to Colorado Technical
University's new Denver campus and Huron University.
General and administrative expenses decreased by $.2 million or 6.9% to
$2.6 million for the three months ended September 30, 1997 from $2.8 million for
the three months ended September 30, 1996. As a percentage of net revenues,
general and administrative expenses were 17.9% and 25.1%, respectively, for the
three months ended September 30, 1997 and September 30, 1996. The decrease in
general and administrative expenses was due primarily to a reduction in bad debt
expense at the Associate Degree Division due to an increase in reserves recorded
at Sanford-Brown College in the prior year as a result of delays in processing
financial aid that have been subsequently corrected.
The Company reported a net loss of $589,000 and $484,000 for the three
months ended September 30, 1997 and 1996, respectively. The net loss for the
three months ended September 30, 1997 was primarily a result of operating losses
of $1 million sustained by the three new Colorado Technical University campuses
established in the past 12 months.
SIX MONTHS ENDED SEPTEMBER 30, 1997 COMPARED TO THE SIX MONTHS ENDED SEPTEMBER
30, 1996
Net revenues increased by $5.4 million or 24.3% to $27.9 million for the
six months ended September 30, 1997 from $22.5 million for the six months ended
September 30, 1996. The increase was primarily due to an increase in average
student enrollment and tuition increases. Student enrollment increased 17.1%
overall with the University Degree Division experiencing a 32.8% increase and
the Associate Degree Division experiencing a 10.8% increase.
The increase in student enrollment in the University Degree Division
resulted in increased net revenues of $2.2 million or 45.3%. This increase was
primarily due to the opening of a Colorado Technical University campus in Denver
in October 1996 and the acquisition of Huron University in December 1996.
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<PAGE>
The increase in student enrollment in the Associate Degree Division
resulted in increased net revenues of $3.3 million or 18.5%. The increased
enrollment was primarily in the medical assisting programs offered by the
Ultrasound Diagnostic Schools.
Instructional and educational support increased by $5.3 million or 37.5% to
$19.5 million for the six months ended September 30, 1997 from $14.2 million for
the six months ended September 30, 1996. As a percentage of net revenues,
instructional and educational support expenses increased to 69.7% for the six
months ended September 30, 1997 as compared to 63.0% for the six months ended
September 30, 1996. These increases were primarily due to the opening and
acquisition of new campuses at the University Degree Division and the addition
of student support personnel and the upgrade of equipment and facilities at the
Associate Degree Division. As a percentage of net revenues, instructional and
educational costs increased substantially at the University Degree Division due
to the seasonality associated with the operations of Huron University, a more
traditional university that experiences a significant decline in tuition
revenues during the summer session, which overlaps the Company's first and
second fiscal quarters.
Selling and promotion expenses increased by $1.2 million or 37.4% to $4.2
million for the six months ended September 30, 1997 from $3.0 million for the
six months ended September 30, 1996. As a percentage of net revenues, selling
and promotion expenses increased to 15.0% for the six months ended September 30,
1997 as compared to 13.6% for the six months ended September 30, 1996. The
increase in selling and promotion expenses was primarily due to an increase in
such costs at the University Degree Division related to Colorado Technical
University's new Denver campus and Huron University.
General and administrative expenses increased by $.3 million or 6.1% to
$5.7 million for the six months ended September 30, 1997 from $5.4 million for
the six months ended September 30, 1996. As a percentage of net revenues,
general and administrative expenses were 20.5% and 24.0%, respectively, for the
six months ended September 30, 1997 and September 30, 1996. The decrease in
general and administrative expenses as a percentage of net revenues was due
primarily to the Company's ability to increase revenues as a result of an
increase in student enrollment at a greater rate than the rate of increase in
administrative operating costs necessary to support the increase in enrollment.
The Company reported a net loss of $2.0 million and $.4 million for the six
months ended September 30, 1997 and 1996, respectively. The net loss for fiscal
1997 was primarily due to operating losses of $1.4 million sustained by the
campuses of Colorado Technical University established in the past 12 months.
SEASONALITY
The Company experiences seasonality in its quarterly results of operations
as a result of changes in the level of student enrollment. New enrollment in the
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Company's schools tends to be lower in the first and second fiscal quarters
covering the summer months which are traditionally associated with recess from
school, with the greatest seasonal effect in the second quarter. Costs are
generally not significantly affected by the seasonable factors on a quarterly
basis. Accordingly, quarterly variations in net revenues will result in
fluctuations in income from operations on a quarterly basis.
LIQUIDITY AND CAPITAL RESOURCES
Cash and cash equivalents at September 30, 1997 and March 31, 1997 were
$1.1 million and $3.9 million, respectively. The Company's working capital
totalled $2.7 million at September 30, 1997 and $5.7 million at March 31, 1997.
Net cash of $1.0 million was used for operating activities for the six
months ended September 30, 1997 compared to net cash of $.9 million for the six
months ended September 30, 1996.
Net cash of $2.4 million and $1.8 million was used for investing activities
for the six months ended September 30, 1997 and 1996, respectively. The increase
of $.6 million was primarily due to an increase in capital expenditures for the
upgrade and expansion of school facilities.
Net cash of $.7 million was provided by financing activities for the six
months ended September 30, 1997, an increase of $.5 million from the six months
ended September 30, 1996. The increase was primarily due to increased borrowings
necessary to fund operating losses and capital expenditures for the six months
ended September 30, 1997.
The Company has bank lines of credit of $2.0 million expiring in May 1998
and a revolving credit facility maturing in April 1999 in the amount of $7.5
million. At September 30, 1997, the Company had $7.2 million outstanding and
$2.3 million available under these facilities. Borrowings under these facilities
decreased by $.3 million from the amounts outstanding at March 31, 1997. The
amounts borrowed under the working capital facility for the six months ended
September 30, 1997 were primarily used for operations and capital expenditures.
In October 1997, the DOE removed Sanford-Brown College from the
reimbursement method of payment for Federal Pell Grant and federal campus-based
programs. Thus, Sanford-Brown College is now permitted to request these funds on
a more timely basis and without demonstrating student eligibility in advance of
such requests. While Sanford-Brown College was under the reimbursement method,
it was required to demonstrate student eligibility for disbursement of financial
aid prior to receiving payment for those students from the DOE and could only
make requests for payment on a monthly basis.
On October 30, 1997, a limited partnership beneficially owned by the
Chairman of the Board exercised warrants to purchase 500,000 shares of common
stock resulting in proceeds to the Company of approximately $1.6 million. The
proceeds from the issuance of stock have been used by the Company to repay
outstanding debt.
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PART II - OTHER INFORMATION
ITEM 5. OTHER INFORMATION
A. ANNUAL SHAREHOLDERS' MEETING
On October 17, 1997, the Company held its annual meeting of shareholders.
At that meeting, all of the nominees for directors were elected by the vote set
forth opposite their names in the table below:
FOR WITHHELD
---------- --------
Phillip Frost, M.D. 12,428,456 16,444
Richard C. Pfenniger 12,431,756 13,144
Jack R. Borsting 12,432,456 12,444
Peter S. Knight 12,200,956 243,944
Lois F. Lipsett 12,201,356 243,544
Richard M. Krasno 12,432,456 12,444
Percy A. Pierre 12,432,456 12,444
Neil Flanzraich 12,432,456 12,444
In addition, the shareholders of the Company approved the reincorporation
of the Company from New Jersey into Florida. The reincorporation was
accomplished by the merger of the Company with and into a wholly-owned Florida
subsidiary formed for purposes of the merger. Pursuant to the New Jersey
Shareholder Protection Act, the reincorporation proposal required the approval
of two-thirds of the Company's shareholders, excluding shares held by
"interested shareholders," i.e., persons holding greater than ten percent of the
Company's common stock. A total of 7,247,446 shares were voted in favor of the
reincorporation merger, 47,950 shares were voted against the reincorporation
merger, 8,150 shares abstained from the vote and 2,104,326 shares were not
voted. A total of 3,037,028 shares are held by interested shareholders and thus
not eligible to vote on the reincorporation merger under the New Jersey
Shareholders Protection Act. The merger became effective on October 28, 1997.
Finally, the shareholders of the Company approved the Whitman Education
Group Employee Stock Purchase Plan (the "Purchase Plan") pursuant to which the
Company may grant options to its employees to purchase up to 250,000 shares of
the Company's common stock at a discount to market. A total of 12,264,031 shares
were voted in favor of the Purchase Plan, 95,154 shares were voted against the
Purchase Plan, 19,050 shares abstained from the vote and 66,665 shares were not
voted.
B. SALE OF SECURITIES
On October 30, 1997, a limited partnership beneficially owned by the
Chairman of the Board exercised warrants to purchase 500,000 shares at an
exercise price of $3.125 per share. The sale was made as a private sale under
Section 4(2) of the Securities Act of 1933. The net proceeds of $1,562,500 were
utilized by the Company to repay outstanding debt.
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ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS
2.1 Plan and Agreement of Merger
3.1 Articles of Incorporation
3.2 By-Laws
10.1 Employee Stock Purchase Plan
10.2 Form of Director Indemnification Agreement
10.3 Form of Officer Indemnification Agreement
11 Computation of Net Income (Loss) Per Share of Common Stock
27 Financial Data Schedule
(b) REPORTS ON FORM 8-K
No reports on Form 8-K were filed by the Company during the quarter ended
September 30, 1997.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
WHITMAN EDUCATION GROUP, INC.
(Registrant)
Date: November 13, 1997 /S/ FERNANDO L. FERNANDEZ
---------------------------------------------
FERNANDO L. FERNANDEZ
VICE PRESIDENT - FINANCE, CHIEF FINANCIAL
OFFICER AND TREASURER
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EXHIBIT 2.1
PLAN AND AGREEMENT OF MERGER
THIS PLAN AND AGREEMENT OF MERGER, dated August 28, 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
12,678,882 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 by Frost-Nevada, Limited Partnership must approve this
Plan and Agreement of Merger before it may become effective.
G. The parties intend that this Plan and Agreement of Merger effect a
"reorganization" under Section 368 of the Internal Revenue Code of 1986, as
amended.
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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
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,
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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 creditors 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;
(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.
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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, if same shall be approved by the
shareholders of Whitman, Whitman's Employee Stock purchase Plan, and all
obligations of Whitman under such plans including the outstanding rights or
options or portions thereof granted pursuant to the plans and otherwise.
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,
delivery 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, officers or directors, to material
damages, costs, liability and other relief in
connection with the Merger or this Plan and
Agreement of Merger; and
(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.
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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 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, 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,
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, 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
/S/ BY: /S/ RICHARD C. PFENNIGER, JR.
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SECRETARY RICHARD C. PFENNIGER, JR.
CHIEF EXECUTIVE OFFICER
ATTEST: WHITMAN EDUCATION GROUP, INC.,
A NEW JERSEY CORPORATION
/S/ BY: /S/ RICHARD C. PFENNIGER, JR.
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SECRETARY RICHARD C. PFENNIGER, JR.
CHIEF EXECUTIVE OFFICER
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EXHIBIT 3.1
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 August 27, 1997.
/s/ RICHARD B. SALZMAN
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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.
/s/ RICHARD B. SALZMAN
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RICHARD B. SALZMAN
REGISTERED AGENT
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ARTICLES OF MERGER
These ARTICLES OF MERGER, dated as of October 17, 1997, provide for the
merger of Whitman Education Group Inc., a New Jersey corporation ("Whitman"),
with and into Whitman Reincorporation, Inc, a Florida corporation
("Reincorporation"), which shall be the surviving corporation.
ARTICLE I - PLAN OF MERGER
A copy of the Plan of Merger pursuant to which Whitman will be merged with
and into Reincorporation is attached hereto as Exhibit "A" and incorporated
herein by this reference. As provided in Section 4 of the Plan of Merger,
Article I of the Articles of Incorporation of Reincorporation is amended to
change the name of Reincorporation to "Whitman Education Group, Inc."
ARTICLE II - EFFECTIVE DATE
The Merger of Whitman into Reincorporation shall be effective as of the
date of filing of these Articles of Merger with the Department of State of the
State of Florida.
ARTICLE III - ADOPTION OF PLAN OF MERGER
A. The Plan of Merger was adopted by the stockholders of Whitman at a
meeting of stockholders held on October 17, 1997.
B. The Plan of Merger was adopted by the shareholder of Reincorporation
pursuant to a written consent dated August 28, 1997.
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IN WITNESS WHEREOF, these Articles of Merger have been duly executed on
behalf of Whitman and Reincorporation by their authorized officers as of the
date first written above.
WHITMAN EDUCATION GROUP, INC.,
A NEW JERSEY CORPORATION
BY: /S/ RICHARD C. PFENNIGER, JR.
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RICHARD C. PFENNIGER, JR.
CHIEF EXECUTIVE OFFICER
WHITMAN REINCORPORATION, INC.,
A FLORIDA CORPORATION
BY: /S/ RICHARD C. PFENNIGER, JR.
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RICHARD C. PFENNIGER, JR.
CHIEF EXECUTIVE OFFICER
EXHIBIT 3.2
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
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of the 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 August 28, 1997.
/S/ RICHARD B. SALZMAN
----------------------------------
RICHARD B. SALZMAN, SECRETARY
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EXHIBIT 10.1
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.
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
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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,
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.
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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").
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
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custody of the Company, the agent or nominee and will be entitled to
withdraw said shares on written request.
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.
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.
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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.
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.
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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.
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EXHIBIT 10.2
DIRECTOR INDEMNIFICATION AGREEMENT
This Agreement, dated as of __________ ___, 199__ is entered into between
Whitman Education Group, Inc., a corporation organized under the laws of the
State of Florida (the "Company"), and ______________________ (the "Director").
Recitals
A. Highly competent persons are becoming more reluctant to serve
publicly-held corporations as directors or as executive officers unless they are
provided with adequate protection through insurance or adequate indemnification
against inordinate risks of claims and actions against them arising out of their
service to, and activities on behalf of, the corporation.
B. The current impracticability of obtaining adequate insurance and the
uncertainties relating to indemnification have increased the difficulty of
attracting and retaining such persons.
C. The Bylaws of the Company presently provide, among other things, that
the Company shall indemnify its directors and officers to the full extent
permitted by law.
D. The Board has determined that the difficulty in attracting and retaining
highly competent persons is detrimental to the best interests of the Company's
shareholders and that the Company should act to assure such persons that there
will be increased certainty of protection against risks of such claims and
actions against them in the future.
E. It is reasonable, prudent, and necessary for the Company contractually
to obligate itself to indemnify such persons to the fullest extent permitted by
applicable law so that they will serve or continue to serve the Company free
from undue concern that they will not be so indemnified.
F. The Director is willing to serve or continue to serve as a director of
the Company on the condition that the Director be so indemnified.
AGREEMENT
1. DEFINITIONS. As used in this Agreement, the following terms shall have
the meanings indicated below:
(a) "Related Party" shall refer to (i) any other corporation in which the
Company has an equity interest of at least fifty percent (50%) and (ii) any
other corporation or any limited liability company, partnership, joint venture,
trust, employee benefit plan or any other enterprise or association in which the
Director has served in any Indemnified Position, at the request of the Company
or for the convenience of the Company or to represent the Company's interest.
Any entity or plan described in Section 1(a)(ii) in which the Company has any
interest or which is established in whole or in part for the benefit of the
Company or any other Related Party or the Company or Related Party's employees
shall be presumed to be a Related Party.
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(b) "Indemnified Position" shall refer to any position held by the
Director, or pursuant to which the Director acts, as an officer, director,
employee, partner, trustee, fiduciary, administrator or agent of the Company or
a Related Party.
(c) "Indemnified Event" shall mean any claim asserted against the Director,
whether civil, criminal, administrative or investigative in nature, for monetary
or other relief; or any Proceeding to which the Director is named as a party or
is a subject of or witness in, or with respect to which he or she is threatened
to be named as a party, subject or witness, brought against the Director by
reason of his or her serving or acting in any Indemnified Position or arising or
allegedly arising directly or indirectly out of, or otherwise relating to, any
action, omission, occurrence or event involving the Director in any Indemnified
Position, including any Proceeding, formal or informal or otherwise, conducted
or brought by the Securities and Exchange Commission or other governmental
agency, or The National Association of Securities Dealers, Inc., a national
stock exchange or similar organization.
(d) "Proceeding" shall mean any pending, threatened or completed action,
suit, investigation, inquiry, arbitration, alternative dispute resolution
mechanism or any other proceeding (or any appeals therefrom), whether civil,
criminal, administrative or investigative in nature and whether in a court or
arbitration, or before or involving a governmental, administrative or private
entity (including, but not limited to, an investigation initiated by the
Company, any Related Party or any affiliate thereof, or the board of directors,
fiduciaries or partners of any thereof).
(e) "Indemnification Amount" shall refer to the amount of losses, claims,
demands, costs, damages, liabilities (joint and several), judgments, fines
(including any excise tax assessed with respect to an employee benefit plan),
settlements, and other amounts (including Witness Liabilities), including
interest on any of the foregoing, which the Director is liable to pay or has
paid in connection with an Indemnified Event and amounts proposed to be paid in
settlement by the Director in connection with any Indemnified Event.
(f) "Witness Liabilities" shall mean all expenses incurred by the Director
in connection with his or her preparation to serve or service as a witness in
any Proceeding in any way relating to the Company, any Related Party or any
affiliate (as defined in Rule 405 under the Securities Act of 1933, as amended)
of any of them (a "Securities Act Affiliate"), any associate (as defined in such
Rule 405) of any of them or of any Securities Act Affiliate, or any Indemnified
Event (including, but not limited to, the investigation, defense or appeal in
connection with any such Proceeding).
(g) "Expenses" shall refer to all disbursements, costs or expenses of any
nature reasonably incurred by the Director directly or indirectly in connection
with an Indemnified Event, or Witness Liabilities, including, but not limited
to, fees and disbursements of counsel, accountants or other experts employed by
the Director in connection with any Indemnified Event, including all such
expenses, disbursements and costs of investigation in connection with or prior
to the initiation of any Proceeding relating to an Indemnified Event.
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(h) "Indemnify" or "Indemnification" shall refer to the obligation of the
Company herein to pay Expenses or Indemnification Amounts.
(i) "Change of Control" shall be deemed to have occurred if (A) any
"Person" (as that term is used in Sections 13(d) and 14(d) of the Securities
Exchange Act of 1934, as amended, but excluding the Company and any of its
wholly-owned subsidiaries, is or becomes (except in a transaction approved in
advance by the Board) the beneficial owner (as defined in Rule 13d-3 under such
Act), directly or indirectly, of securities of the Company representing 20% or
more of the combined voting power of the Company's then outstanding securities
or (B) during any period of two consecutive years, individuals who at the
beginning of such period constitute the Board cease for any reason to constitute
at least a majority thereof unless the election, or the nomination for election
by the Company's shareholders, of each new director was approved by a vote of at
least two-thirds of the directors still in office who were directors at the
beginning of the period, or (C) the shareholders of the Company should approve
any one of the following transactions: (x) any consolidation or merger of the
Company in which the company is not the surviving corporation, other than a
merger of the Company in which the holders of the Company's common stock
immediately prior to the merger have the same proportionate ownership of the
surviving corporation immediately after the merger; or (y) any sale, lease,
exchange or other transfer (in one transaction or a series of related
transactions) of all, or substantially all, the assets of the Company.
(j) "Final Disposition" shall refer to any judgment, order or award
rendered in any Proceeding after the expiration of all rights of appeal.
2. SERVICES TO THE COMPANY. The Director will serve, and/or continue to
serve, as a director of the Company, so long as he or she is duly elected and
qualified in accordance with the provisions of the Articles of Incorporation and
Bylaws of the Company, or in any other Indemnified Position, at the will of the
Company (or under separate contract, if any); provided that the Director may at
any time and for any reason resign from such Indemnified Position (subject to
any contractual obligations which the Director shall have assumed a part from
this Agreement) but the obligations provided for herein shall continue after
such termination.
3. INDEMNITY. The Company hereby agrees to indemnify the Director and hold
the Director harmless to the full extent permitted or authorized by the
provisions of current Florida legislation (including Sections 607.0850(7) and
(9) of the Florida Business Corporation Act) or future Florida legislation or,
if broader indemnification is available, by current or future judicial or
administrative decisions (but, in the case of any such future legislation or
decisions, only to the extent that it permits the Company to provide broader
indemnification rights than permitted prior to such legislation or decisions),
and such Indemnification shall be made unless prohibited by Florida law. Without
limiting the generality of the foregoing, the Company agrees to indemnify the
Director and hold the Director harmless from and against, and pay any and all,
Expenses and Indemnification Amounts, including Witness Liabilities.
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Except with respect to the indemnification specified in the second and
third sentences of Section 7 or in Section 10 or Section 13(b) of this
Agreement, the Company shall indemnify the Director in connection with a
Proceeding (or part thereof) initiated by the Director (subject to the
limitations provided above) only if authorization for the Proceeding (or part
thereof) was not denied by the Board of Directors of the Company prior to the
earlier of (i) 60 days after receipt of notice thereof from the Director and
(ii) a Change of Control.
4. PAYMENT OF EXPENSES. The Company shall advance all Expenses within
thirty (30) days after the receipt by the Company of a statement or statements
from the Director requesting such advance payment or payments from time to time.
Such statement or statements shall identify the nature and amount of the
Expenses to be advanced with reasonable specificity. The Director agrees to
repay any Expenses advanced if it shall ultimately be determined (which shall
only be made after the Final Disposition of the Proceeding related to an
Indemnified Event, as hereinafter provided) that the Director was not entitled
to reimbursement of Expenses in connection with the Indemnified Event for which
such Expenses were made.
5. INTERVAL PROTECTION. During the interval between the Company's
receipt of the Director's request for indemnification or advances and the latest
to occur of (a) payment in full to the Director of the indemnification or
advances to which he or she is entitled hereunder, or (b) a final adjudication
that the Director is not entitled to indemnification hereunder, the Company
shall provide "Interval Protection" which, for purposes of this Agreement, shall
mean the taking of the necessary steps (whether or not such steps require
expenditures to be made by the Company at that time) to stay, pending a final
determination of the Director's entitlement to indemnification (and, if the
Director is so entitled, the payment thereof), the execution, enforcement or
collection of any Indemnified Amount or Expenses or any other amounts for which
the Director may be liable (and as to which the Director has requested
indemnification hereunder) in order to avoid the Director's being or becoming in
default with respect to any such amounts (such necessary steps to include, but
not be limited to, the procurement of a surety bond to achieve such stay or the
loan to the Director (unsecured and with interest payable at the prime rate) of
amounts necessary to satisfy the Indemnified Amount or Expenses or other amounts
for which the Director may be liable and as to which a stay of execution as
aforesaid cannot be obtained, the Company by executing this Agreement having
made the judgment that, in general, such loan or similar assistance may
reasonably be expected to benefit the Company), within three days after receipt
of the Director's written request therefor, together with a written undertaking
by the Director to repay, no later than 120 days following receipt of a
statement therefor from the Company, amounts (if any) expended by the Company
for such purpose, if it is ultimately determined in a final adjudication that
the Director is not entitled to be indemnified against such Indemnified Amounts
or Expenses or other amounts.
6. INDEMNIFICATION BY COURT. Notwithstanding any other provision of
this Agreement including without limitation the fourth sentence of Section 7,
indemnification and advances shall also be made to the extent a Florida circuit
court, or another court of competent jurisdiction, or the court in which a
Proceeding was brought, shall determine that the Director, in view of all the
circumstances of the case, is fairly and reasonably entitled to indemnification
and/or advances for such Expenses as such court shall deem proper.
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<PAGE>
7. INDEMNIFICATION PROCEDURE. Any Indemnification or advance under this
Agreement (other than Interval Protection) shall be made promptly and in any
event within thirty (30) days upon the written request of the Director delivered
to the Company. The right to Indemnification or advances as granted under this
Agreement shall be enforceable by the Director in any court of competent
jurisdiction if the Company denies such request, in whole or in part, or if no
disposition thereof is made within thirty (30) days. The Director's costs and
expenses incurred in connection with successfully establishing his or her right
to indemnification or advances, in whole or in part, in any such action shall
also be indemnified by the Company. It shall be a defense to any such action
that there has been a judgment or other final adjudication adverse to the
Director which established that the Director failed to meet the standard of
conduct, if any, required for indemnification by current legislation including,
without limitation, N.J.S.A. 14A:3-5(8), or, if applicable in accordance with
Section 3 hereof, future legislation or current or future judicial or
administrative decisions, but the burden of proving such defense shall be on the
Company. Neither the failure of the Company (including the Board or any
committee thereof, its independent counsel and its shareholders) to have made a
determination prior to the commencement of such action that indemnification of
the Director is proper in the circumstances because he or she has met the
applicable standard of conduct described in the preceding sentence, if any, nor
the fact that there has been an actual determination by the Company (including
the Board or any committee thereof, its independent counsel and its
shareholders) that the Director has not met such applicable standard of conduct,
shall be a defense to the action or create a presumption that the claimant has
not met the applicable standard of conduct.
8. PRESUMPTIONS AND EFFECT OF CERTAIN PROCEEDINGS.
(a) The Director shall be presumed entitled to Indemnification hereunder
unless clearly not entitled to such Indemnification by clear and convincing
proof that such payment shall be unlawful.
(b) If the Company shall not have responded to the Director's request for
Indemnification pursuant to Section 7 hereof within thirty (30) days after
receipt by the Company of such request therefor, the Director shall be deemed to
be entitled to such Indemnification except as otherwise provided in Section 3
hereof.
(c) The termination of any Proceeding relating to an Indemnified Event or
of any claim, issue, or matter therein by judgment, order, settlement, or
conviction, or upon a plea of nolo contendere or its equivalent, shall not of
itself adversely affect the right of the Director to Indemnification or create a
presumption that the Director did not meet any applicable standard of conduct.
(d) Notwithstanding any other provision of this Agreement, the Director
shall in no event be required to repay any Expense payments advanced to the
Director and no defense can or shall be raised by the Company to a request for
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Indemnification pursuant to Section 7 to the extent the Director has been
successful on the merits or otherwise in defense of any Proceeding related to an
Indemnified Event, or in defense of any claim, issue or matter involved in any
Indemnified Event therein, whether as a result of the initial adjudication or on
appeal or the abandonment thereof by a party.
9. NON-EXCLUSIVITY; DURATION OF AGREEMENT; INSURANCE; SUBROGATION.
(a) The rights of Indemnification and to receive advancement of Expenses as
provided by this Agreement shall not be deemed exclusive of any other rights to
which the Director may at any time be entitled under applicable law, the
Articles of Incorporation, the By-Laws, any other agreement, or any vote or
consent of directors or shareholders or otherwise.
(b) This Agreement shall continue until and terminate upon the later of:
(i) ten (10) years after the date that the Director shall have ceased to serve
in any Indemnified Position; or (ii) the Final Disposition of all Indemnified
Events.
(c) This Agreement shall be binding upon the Company and its successors and
assigns and shall inure to the benefit of the Director and his or her heirs,
devisees, executors, and administrators or other legal representatives.
(d) To the extent that the Company maintains an insurance policy or
policies providing liability insurance for directors or executive officers of
the Company or for any person serving in any other Indemnified Position, the
Director shall be covered by such policy or policies in accordance with its or
their terms to the maximum extent of the coverage available for any such
director or executive officer or person serving in such position under such
policy or policies.
10. PROCEEDINGS.
(a) The parties hereto agree that except as otherwise provided for herein,
any disputes arising with respect to the interpretation or enforcement of any
provision hereof shall be submitted, at the sole election of the Director,
either to be submitted, at the sole election of the Director, either to
arbitration or to judicial determination. Any arbitration shall be conducted in
the City of Miami, Florida in accordance with the then existing rules of the
American Arbitration Association ("AAA"). In any arbitration pursuant to this
agreement, the award or decision shall be rendered by a majority of the members
of an arbitration panel consisting of three members chosen in accordance with
the then existing rules of the AAA. The award or decision of the arbitration
panel pursuant to this Section 10 shall be binding and conclusive on the
parties, provided that enforcement of such award or decision may be obtained in
any court having jurisdiction over the party against whom such enforcement is
sought. The Company hereby agrees to bear all fees, costs and expenses imposed
by the AAA, in connection with the arbitration, irrespective of the
determination thereof. The provisions of Section 10(c) shall govern with respect
to the proceedings referred to therein.
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(b) In the event that, for any reason, the Company fails to pay any
Indemnification or advance demanded, or the Company requests repayment of any
Expenses advanced, the Director shall nevertheless be entitled, at his or her
sole option, to a final judicial determination or may seek arbitration of his or
her entitlement to Indemnification hereunder in respect of such claim. In the
event the Director seeks a judicial determination, the Director shall commence
an action in a court of the State of Florida. In the event the Director seeks an
award in arbitration, (i) such arbitration shall be conducted in Miami, Florida
pursuant to Section 10(a), and (ii) the arbitrator shall notify the parties of
his or her decision within sixty (60) days following the initiation of such
arbitration (or such other period proscribed by the rules of AAA). The Company
further agrees that its execution of this Agreement shall constitute a
stipulation by which it shall be bound in any court or arbitration in which such
proceeding shall have been commenced, continued or appealed that (i) it shall
not oppose the Director's right to seek any such adjudication or award in
arbitration or any other claim by reason of any prior determination made by the
Company with respect to the Director's right to Indemnification under this
Agreement on such claim or any other claim, or, except in good faith, raise any
objections not specifically relating to the merits of the Director's claim; and
(ii) for purposes of this Agreement any such adjudication or arbitration shall
be conducted de novo and without prejudice by reason of any prior determination
that the Director is not entitled to Indemnification.
(c) Whether or not the court or arbitrators shall determine that the
Director is entitled to payment of Indemnification Amounts or has to return the
payment of Expenses or otherwise finds against the Director, the Company shall
within thirty (30) days after written request therefor (and submission of
reasonable evidence of the nature and amount thereof), and unless there is a
specific judicial finding that the Director's suit or arbitration was frivolous,
pay all Expenses incurred by the Director in connection with such adjudication
or arbitration (including, but not limited to, any appellate proceedings).
11. SEVERABILITY. If any provision or provisions of this Agreement shall be
held to be invalid, illegal, or unenforceable for any reason whatsoever: (a) the
validity, legality, and enforceability of the remaining provisions of this
Agreement (including without limitation, each portion of any Section, paragraph
or clause of this Agreement containing any such provision held to be invalid,
illegal, or unenforceable, that is not itself invalid, illegal, or
unenforceable) shall not in any way be affected or impaired thereby; and (b) to
the fullest extent possible, the provisions of this Agreement (including,
without limitation, each portion of any Section, paragraph or clause of this
Agreement containing any such provisions held to be invalid, illegal, or
unenforceable, that is not itself invalid, illegal, or unenforceable) shall be
deemed revised, and shall be construed, so as to give effect to the intent
manifested by this Agreement (including the provisions held invalid, illegal, or
unenforceable).
12. MERGER OR CONSOLIDATION OF THE COMPANY. In the event that the Company
shall be a constituent corporation in a consolidation or merger, whether or not
the Company is the resulting or surviving corporation, the Director shall stand
in the same position under this Agreement with respect to the Company if its
separate existence had continued.
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13. ENFORCEMENT.
(a) The Company unconditionally and irrevocably stipulates and agrees that
its execution of this Agreement shall also constitute a stipulation by which it
shall be bound in any court or arbitration in which a proceeding by the Director
for enforcement of his or her rights shall have been commenced, continued or
appealed, that the obligations of the Company set forth herein are unique and
special, and that failure of the Company to comply with the provisions of this
Agreement will cause irreparable and irremediable injury to the Director, for
which a remedy at law will be inadequate. As a result, in addition to any other
right or remedy he or she may have at law or in equity with respect to a
violation of this Agreement, the Director shall be entitled to injunctive or
mandatory relief directing specific performance by the Company of its
obligations under this Agreement.
(b) In the event that the Director is subject to or intervenes in any legal
action in which the validity or enforceability of this Agreement is at issue or
institutes any legal action, for specific performance or otherwise, to enforce
his or her rights under, or to recover damages for breach of, this Agreement,
the Director shall, within thirty (30) days after written request to the Company
therefor (and submission of reasonable evidence of the amount thereof), and
unless there is a specific judicial finding that the Director's suit was
frivolous, be indemnified by the Company against all Expenses incurred by him or
her in connection therewith.
14. NOTIFICATION AND DEFENSE OF CLAIM. The Director agrees to promptly
notify the Company in writing upon being served with any summons, citation,
subpoena, complaint, indictment, information or other document relating to any
Proceeding involving an Indemnification event; provided, however, that the
failure of the Director to give such notice to the Company shall not adversely
affect the Director's rights under this Agreement except to the extent the
Company shall have been materially prejudiced by such failure. Nothing in this
Agreement shall constitute a waiver of the Company's right to seek
participation, at its own expense, in any Proceeding which may give rise to
Indemnification hereunder.
15. HEADINGS. The headings of the Sections and paragraphs of this Agreement
are inserted for convenience only and shall not be deemed to constitute part of
this Agreement or to affect the construction thereof.
16. MODIFICATION AND WAIVER. No supplement, modification, or amendment of
this Agreement shall be binding unless executed in writing by both of the
parties hereto. No waiver of any of the provisions of this Agreement shall be
deemed or shall constitute a waiver of any other provisions hereof (whether or
not similar) nor shall such waiver constitute a continuing waiver.
17. NOTICES. All notices, requests, demands, and other communications
hereunder shall be in writing and shall be deemed to have been duly given if (i)
delivered by hand, or sent via telecopy or facsimile transmission, in each case
receipted for by the party to whom said notice or other communication shall have
been directed or transmitted, or (ii) mailed by certified or registered
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mail with postage prepaid, on the third business day after the date on which it
is so mailed, or (iii) delivered by overnight courier service:
(a) If to the Director, to:
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(b) If to the Company, to:
Whitman Education Group, Inc.
4400 Biscayne Boulevard
Miami, Florida 33137
Attention: Richard B. Salzman
Vice President - Legal Affairs
and General Counsel
or to such other address as may have been furnished to either party by the other
party.
18. ENTIRE AGREEMENT. All prior and contemporaneous agreements and
understandings between the parties with respect to the subject matter of this
Agreement are superseded by this Agreement, and this Agreement constitutes the
entire understanding between the parties. This Agreement may not be modified,
amended, changed or discharged except by a writing signed by the parties hereto,
and then only to the extent therein set forth.
19. NONASSIGNMENT. This Agreement may not be assigned by either of the
parties hereto.
20. GOVERNING LAW. This Agreement, including its validity, interpretation
and effect, and the relationship of the parties shall be governed by, and
construed in accordance with, the laws of the State of Florida.
-9-
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has executed this Agreement
as of the day and year first above written.
WHITMAN EDUCATION GROUP, INC.
BY:
-------------------------------------------
RICHARD C. PFENNIGER, JR.
CHIEF EXECUTIVE OFFICER
DIRECTOR
BY:
-------------------------------------------
-10-
EXHIBIT 10.3
OFFICER INDEMNIFICATION AGREEMENT
This Agreement, dated as of __________ ___, 199__ is entered into between
Whitman Education Group, Inc., a corporation organized under the laws of the
State of Florida (the "Company"), and _____________________ (the "Officer").
RECITALS
A. Highly competent persons are becoming more reluctant to serve
publicly-held corporations as directors or as executive officers unless they are
provided with adequate protection through insurance or adequate indemnification
against inordinate risks of claims and actions against them arising out of their
service to, and activities on behalf of, the corporation.
B. The current impracticability of obtaining adequate insurance and the
uncertainties relating to indemnification have increased the difficulty of
attracting and retaining such persons.
C. The Bylaws of the Company presently provide, among other things, that
the Company shall indemnify its directors and officers to the full extent
permitted by law.
D. The Board has determined that the difficulty in attracting and retaining
highly competent persons is detrimental to the best interests of the Company's
shareholders and that the Company should act to assure such persons that there
will be increased certainty of protection against risks of such claims and
actions against them in the future.
E. It is reasonable, prudent, and necessary for the Company contractually
to obligate itself to indemnify such persons to the fullest extent permitted by
applicable law so that they will serve or continue to serve the Company free
from undue concern that they will not be so indemnified.
F. The Officer is willing to serve or continue to serve as an officer of
the Company on the condition that the Officer be so indemnified.
AGREEMENT
In consideration of the recitals and the covenants contained herein, the
Company and the Officer covenant and agree as follows:
1. DEFINITIONS. As used in this Agreement the following terms shall have
the meanings indicated below:
(a) "Related Party" shall refer to (i) any other corporation in which the
Company has an equity interest of at least fifty percent (50%) and (ii) any
-1-
<PAGE>
other corporation or any limited liability company, partnership, joint
venture, trust, employee benefit plan or any other enterprise or association in
which the Officer has served in any Indemnified Position, at the request of the
Company or for the convenience of the Company or to represent the Company's
interest. Any entity or plan described in Section 1(a)(ii) in which the Company
has any interest or which is established in whole or in part for the benefit of
the Company or any other Related Party or the Company or Related Party's
employees shall be presumed to be a Related Party.
(b) "Indemnified Position" shall refer to any position held by the Officer,
or pursuant to which the Officer acts, as an officer, director, employee,
partner, trustee, fiduciary, administrator or agent of the Company or a Related
Party.
(c) "Indemnified Event" shall mean any claim asserted against the Officer,
whether civil, criminal, administrative or investigative in nature, for monetary
or other relief; or any Proceeding to which the Officer is named as a party or
is a subject of or witness in, or with respect to which he or she is threatened
to be named as a party, subject to witness, brought against the Officer by
reason or his or her serving or acting in any Indemnified Position or arising or
allegedly arising directly or indirectly out of, or otherwise relating to, any
action, omission, occurrence or event involving the Officer in any Indemnified
Position, including any Proceeding, formal or informal or otherwise, conducted
or brought by the Securities and Exchange Commission or other governmental
agency, or The National Association of Securities Dealers, Inc., a national
stock exchange or similar organization.
(d) "Proceeding" shall mean any pending, threatened or completed action,
suit, investigation, inquiry, arbitration, alternative dispute resolution
mechanism or any other proceeding (or any appeals therefrom), whether civil,
criminal, administrative or investigative in nature and whether in a court or
arbitration, or before or involving a governmental, administrative or private
entity (including, but not limited to, an investigation initiated by the
Company, any related Party or any affiliate thereof, or the board of directors,
fiduciaries or partners of any thereof).
(e) "Indemnification Amount" shall refer to the amount of losses, claims,
demands, costs, damages, liabilities (joint and several), judgments, fines
(including any excise tax assessed with respect to an employee benefit plan),
settlements, and other amounts (including Witness Liabilities), including
interest on any of the foregoing, which the Officer is liable to pay or has paid
in connection with an Indemnified Event and amounts proposed to be paid in
settlement by the Officer in connection with any Indemnified Event.
(f) "Witness Liabilities" shall mean all Indemnification Amounts incurred
by the Officer in connection with his or her preparation to serve or service as
a witness in any Proceeding in any way relating to the Company, any Related
Party or any affiliate (as defined in Rule 405 under the Securities Act of 1933,
as amended) of any of them (a "Securities Act Affiliate"), any associate (as
defined in such Rule 405) of any of them or of any Securities Act Affiliate, or
any Indemnified Event (including, but not limited to, the investigation, defense
or appeal in connection with any such Proceeding).
-2-
<PAGE>
(g) "Expenses" shall refer to all disbursements, costs or expenses of any
nature reasonably incurred by the Officer directly or indirectly in connection
with an Indemnified Event, or Witness Liabilities, including, but not limited
to, fees and disbursements of counsel, accountants or other experts employed by
the Officer in connection with any Indemnified Event, including all such
expenses, disbursements and costs of investigation in connection with or prior
to the initiation of any Proceeding relating to an Indemnified Event.
(h) "Indemnify" or "Indemnification" shall refer to the obligation of the
Company herein to pay Expenses or Indemnification Amounts.
(i) A "Change of Control" shall be deemed to have occurred if (A) any
"Person" (as that term is used in Sections 13(d) and 14(d) of the Securities
Exchange Act of 1934, as amended), but excluding the Company and any of its
wholly-owned subsidiaries, is or becomes (except in a transaction approved in
advance by the Board) the beneficial owner (a defined in Rule 13d-3 under such
Act), directly or indirectly, of securities of the Company representing 20% or
more of the combined voting power of the Company's then outstanding securities
or (B) during any period of two consecutive years, individuals who at the
beginning of such period constitute the Board cease for any reason to constitute
at least a majority thereof unless the election, or the nomination for election
by the Company's shareholders, of each new director was approved by a vote of at
least two-thirds of the directors still in office who were directors at the
beginning of the period, or (C) the shareholders of the Company should approve
any one of the following transactions: (x) any consolidation or merger of the
Company in which the Company is not the surviving corporation, other than a
merger of the Company in which the holders of the Company's common stock
immediately prior to the merger have the same proportionate ownership of the
surviving corporation immediately after the merger; or (y) any sale, lease,
exchange or other transfer (in one transaction or a series of related
transactions) of all, or substantially all, the assets of the Company.
(j) "Final Disposition" shall refer to any judgment, order or award
rendered in any Proceeding after the expiration of all rights of appeal.
2. SERVICES TO THE COMPANY. The Officer will serve, and/or continue to
serve, as an officer of the Company, so long as he or she is duly elected and
qualified in accordance with the provisions of the Articles of Incorporation and
Bylaws of the Company, or in any other Indemnified Position, at the will of the
Company (or under separate contract, if any); provided that the Officer may at
any time and for any reason resign from such Indemnified Position (subject to
any contractual obligations which the Officer shall have assumed apart from this
Agreement) but the obligations provided for herein shall continue after such
termination.
3. INDEMNITY. The Company hereby agrees to indemnify the Officer and hold
the Officer harmless to the full extent permitted or authorized by the
provisions of current Florida legislation (including Sections 607.0850(7) and
(9) of the Florida Business Corporation Act) or future Florida legislation or,
if broader indemnification is available, by current or future judicial or
administrative decisions (but, in the case of any such future legislation or
-3-
<PAGE>
decisions, only to the extent that it permits the Company to provide
broader indemnification rights than permitted prior to such legislation or
decisions), and such Indemnification shall be made unless prohibited by Florida
law. Without limiting the generality of the foregoing, the Company agrees to
indemnify the Officer and hold the Officer harmless from and against, and pay
any and all, Expenses and Indemnification Amounts, including Witness
Liabilities.
Except with respect to the indemnification specified in the second and
third sentences of Section 7 or in Section 10 or Section 13(b) of this
Agreement, the Company shall indemnify the Officer in connection with a
Proceeding (or part thereof) initiated by the Officer (subject to the
limitations provided above) only if authorization for the Proceeding (or part
thereof) was not denied by the Board of Directors of the Company prior to the
earlier of (i) 60 days after receipt of notice thereof from the Officer and (ii)
a Change of Control.
4. PAYMENT OF EXPENSES. The Company shall advance all Expenses within
thirty (30) days after the receipt by the Company of a statement or statements
from the Officer requesting such advance payment or payments from time to time.
Such statement or statement shall identify the nature and amount of the Expenses
to be advanced with reasonable specificity. The Officer agrees to repay any
Expenses advanced if it shall ultimately be determined (which shall only be made
after the Final Disposition of the Proceeding related to an Indemnified Event,
as hereinafter provided) that the Officer was not entitled to reimbursement of
Expenses in connection with the Indemnified Event for which such Expenses were
made.
5. INTERVAL PROTECTION. During the interval between the Company's receipt
of the Officer's request for indemnification or advances and the latest to occur
of (a) payment in full to the Officer of the indemnification or advances to
which he or she is entitled hereunder, or (b) a final adjudication that the
Officer is not entitled to indemnification hereunder, the Company shall provide
"Interval Protection" which, for purposes of this Agreement, shall mean the
taking of the necessary steps (whether or not such steps require expenditures to
be made by the Company at that time) to stay, pending a final determination of
the Officer's entitlement to indemnification (and, if the Officer is so
entitled, the payment thereof), the execution, enforcement or collection of any
Indemnified Amount or Expenses or any other amounts for which the Officer may be
liable (and as to which the Officer has requested indemnification hereunder) in
order to avoid the Officer's being or becoming in default with respect to any
such amounts (such necessary steps to include, but not be limited to, the
procurement of a surety bond to achieve such stay or the loan to the Officer
(unsecured and with interest payable at the prime rate) of amounts necessary to
satisfy the Indemnified Amount or Expenses or other amounts for which the
Officer maybe liable and as to which a stay of execution as aforesaid cannot be
obtained, the Company by executing this Agreement having made the judgment that,
in general, such loan or similar assistance may reasonably be expected to
benefit the Company), within three days after receipt of the Officer's written
request therefor, together with a written undertaking by the Officer to repay,
no later than 120 days following receipt of a statement therefor from the
Company, amounts (if any) expended by the Company for such purpose, if it is
ultimately determined in a final adjudication that the officer is not entitled
to be indemnified against such Indemnified Amounts or Expenses or other amounts.
-4-
<PAGE>
6. INDEMNIFICATION BY COURT. Notwithstanding any other provision of this
Agreement including without limitation the fourth sentence of Section 7,
indemnification and advances shall also be made to the extent a Florida circuit
court, or another court of competent jurisdiction, or the court in which a
Proceeding was brought, shall determine that the Officer, in view of all the
circumstances of the case, is fairly and reasonably entitled to indemnification
and/or advances for such Expenses as such court shall deem proper.
7. INDEMNIFICATION PROCEDURE. Any Indemnification or advance under this
Agreement (other than Interval Protection) shall be made promptly and in any
event within thirty (30) days upon the written request of the Officer delivered
to the Company. The right to Indemnification or advances as granted under this
Agreement shall be enforceable by the Officer in any court of competent
jurisdiction if the Company denies such request, in whole or in part, or if no
disposition thereof is made within thirty (30) days. The Officer's costs and
expenses incurred in connection with successfully establishing his or her right
to indemnification or advances, in whole or in part, in any such action shall
also be indemnified by the Company. It shall be a defense to any such action
that there has been a judgment or other final adjudication adverse to the
Officer which established that the Officer failed to meet the standard of
conduct, if any, required for indemnification by current legislation or, if
applicable in accordance with Section 3 hereof, future legislation or current or
future judicial or administrative decisions, but the burden of providing such
defense shall be on the Company. Neither the failure of the Company (including
the Board or any committee thereof, its independent counsel and its
shareholders) to have made a determination prior to the commencement of such
action that indemnification of the Officer is proper in the circumstances
because he or she has met the applicable standard of conduct described in the
preceding sentence, if any, nor the fact that there has been an actual
determination by the Company (including the Board or any committee thereof, its
independent counsel and its shareholders) that the Officer has not met such
applicable standard of conduct, shall be a defense to the action to create a
presumption that the claimant has not met the applicable standard of conduct.
8. PRESUMPTIONS AND EFFECT OF CERTAIN PROCEEDINGS.
(a) The Officer shall be presumed entitled to Indemnification hereunder
unless clearly not entitled to such Indemnification by clear and convincing
proof that such payment shall be unlawful.
(b) If the Company shall not have responded to the Officer's request for
Indemnification pursuant to Section 7 hereof within thirty (30) days after
receipt by the Company of such request therefor, the Officer shall be deemed to
be entitled to such Indemnification except as otherwise provided in Section 3
hereof.
-5-
<PAGE>
(c) The termination of any Proceeding relating to an Indemnified Event or
of any claim, issue, or matter therein by judgment, order, settlement, or
conviction, or upon a plea of nolo contendere or its equivalent, shall not of
itself adversely affect the right of the Officer to Indemnification or create a
presumption that the Officer did not meet any applicable standard of conduct.
(d) Notwithstanding any other provision of this Agreement, the Officer
shall in no event be required to repay any Expense payments advanced to the
Officer and no defense can or shall be raised by the Company to a request for
Indemnification pursuant to Section 7 to the extent the Officer has been
successful on the merits or otherwise in defense of any Proceeding related to an
Indemnified Event, or in defense of any claim, issue or matter involved in any
Indemnified Event therein, whether as a result of the initial adjudication or on
appeal or the abandonment thereof by a party.
9. NON-EXCLUSIVITY; DURATION OF AGREEMENT; INSURANCE; SUBROGATION.
(a) The rights of Indemnification and to receive advancement of Expenses as
provided by this Agreement shall not be deemed exclusive of any other rights to
which the Officer may at any time be entitled under applicable law, the Articles
of Incorporation, the Bylaws, any other agreement, or any vote or consent of
directors or shareholders or otherwise.
(b) This Agreement shall continue until and terminate upon the later of:
(i) ten (10) years after the date that the Officer shall have ceased to serve in
any Indemnified Position; or (ii) the Final Disposition of all Indemnified
events.
(c) This Agreement shall be binding upon the Company and its successors and
assigns and shall inure to the benefit of the officer and his or her heirs,
devisees, executors, and administrators or other legal representatives.
(d) To the extent that the Company maintains an insurance policy or
policies providing liability insurance for directors or executive officers of
the Company or for any person serving in any other Indemnified Position, the
Officer shall be covered by such policy or policies in accordance with its or
their terms to the maximum extent of the coverage available for any such
director or executive officer or person serving in such position under such
policy or policies.
10. PROCEEDINGS.
(a) The parties hereto agree that except as otherwise provided for herein,
any disputes arising with respect to the interpretation or enforcement of any
provision thereof shall be submitted, at the sole election of the Officer,
either to arbitration or to judicial determination. Any arbitration shall be
conducted in the City of Miami, Florida in accordance with the then existing
rules of the American Arbitration Association ("AAA"). In any arbitration
pursuant to this Agreement, the award or decision shall be rendered by a
-6-
<PAGE>
majority chosen in accordance with the then existing rules of the AAA. The
award or decision of the arbitration panel pursuant to this Section 10 shall be
binding and conclusive on the parties, provided that enforcement of such award
or decision may be obtained in any court having jurisdiction over the party
against whom such enforcement is sought. The Company hereby agrees to bear all
fees, costs and expenses imposed by the AAA, in connection with the arbitration,
irrespective of the termination thereof. The provisions of Section 10(c) shall
govern with respect to the proceedings referred to therein.
(b) In the event that, for any reason, the Company fails to pay any
Indemnification or advance demanded, or the Company requests repayment of any
Expenses advanced, the Officer shall nevertheless be entitled, at his or her
sole option, to a final judicial determination or may seek arbitration of his or
her entitlement to Indemnification hereunder in respect of such claim. In the
event the Officer seeks a judicial determination, the Officer shall commence an
action in a court of the State of Florida. In the event the Officer seeks an
award in arbitration, (i) such arbitration shall be conducted in Miami, Florida
pursuant to Section 10(a), and (ii) the arbitrator shall notify the parties of
his or her decision within sixty (60) days following the initiation of such
arbitration (or such other period proscribed by the rules of AAA). The Company
further agrees that its execution of this Agreement shall constitute a
stipulation by which it shall be bound in any court or arbitration in which such
proceeding shall have been commenced, continued or appealed that (i) it shall
not oppose the Officer's right to seek any such adjudication or award in
arbitration or any other claim by reason of any prior determination made by the
Company with respect to the Officer's right to Indemnification under this
Agreement on such claim or any other claim, or, except in good faith, raise any
objections not specifically relating to the merits of the Officer's claim; and
(ii) for purpose of this Agreement any such adjudication or arbitration shall be
conducted de novo and without prejudice by reason of any prior determination
that the Officer is not entitled to Indemnification.
(c) Whether or not the court or arbitrators shall determine that the
Officer is entitled to payment of Indemnification Amounts or has to return the
payment of Expenses or otherwise finds against the Officer, the Company shall
within thirty (30) days after written request therefor (and submission of
reasonable evidence of the nature and amount thereof), and unless there is a
specific judicial finding that the Officer's suit or arbitration was frivolous,
pay all Expenses incurred by the Officer in connection with such adjudication or
arbitration (including, but not limited to, any appellate proceedings).
11. SEVERABILITY. If any provision or provisions of this Agreement shall be
held to be invalid, illegal, or unenforceable for any reason whatsoever: (a) the
validity, legality, and enforceability of the remaining provisions of this
Agreement (including without limitation, each portion of any Section, paragraph
or clause of this Agreement containing any such provision held to be invalid,
illegal, or unenforceable, that is not itself invalid, illegal, or
unenforceable) shall not in any way be affected or impaired thereby; and (b) to
the fullest extent possible, the provisions of this Agreement (including,
without limitation, such portion of any Section, paragraph or clause of this
Agreement containing any such provisions held to be invalid, illegal, or
unenforceable, that is not itself invalid, illegal, or unenforceable) shall be
deemed revised, and shall be construed, so as to give effect to the intent
manifested by this Agreement (including the provision held invalid, illegal, or
unenforceable).
-7-
<PAGE>
12. MERGER OR CONSOLIDATION OF THE COMPANY. In the event that the Company
shall be a constituent corporation in a consolidation or merger, whether or not
the Company is the resulting or surviving corporation, the Officer shall stand
in the same position under this Agreement with respect to the Company if its
separate existence had continued.
13. ENFORCEMENT.
(a) The Company unconditionally and irrevocably stipulates and agrees that
its execution of this Agreement shall also constitute a stipulation by which it
shall be bound in any court or arbitration in which a proceeding by the Officer
for enforcement of his or her rights shall have been commenced, continued or
appealed, that the obligations of the Company set forth herein are unique and
special, and that failure of the Company to comply with the provisions of this
Agreement will cause irreparable and irremediable injury to the Officer, for
which a remedy at law will be inadequate. As a result, in addition to any other
right or remedy he or she may have at law or in equity with respect to a
violation of this Agreement, the Officer shall be entitled to injunctive or
mandatory relief directing specific performance by the Company of its
obligations under this Agreement.
(b) In the event that the Officer is subject to or intervenes in any legal
action in which the validity or enforceability of this Agreement is at issue or
institutes any legal action, for specific performance or otherwise, to enforce
his or her rights under, or to recover damages for breach of, this Agreement,
the Officer shall, within thirty (30) days after written request to the Company
therefor (and submission of reasonable evidence of the amount thereof), and
unless there is a specific judicial finding that the Officer's suit was
frivolous, be indemnified by the Company against all Expenses incurred by him or
her in connection therewith.
14. NOTIFICATION AND DEFENSE OF CLAIM. The Officer agrees to promptly
notify the Company in writing upon being served with any summons, citations,
subpoena, complaint, indictment, information or other document relating to any
Proceeding involving an Indemnification event; provided, however, that the
failure of the Officer to give such notice to the Company shall not adversely
affect the Officer's rights under this Agreement except to the extent the
Company shall have been materially prejudiced by such failure. Nothing in this
Agreement shall constitute a waiver of the Company's right to seek
participation, at its own expense, in any Proceeding which may give rise to
Indemnification hereunder.
15. HEADINGS. The headings of the Sections and paragraphs of this Agreement
are inserted for convenience only and shall be deemed to constitute part of this
Agreement or to affect the construction thereof.
16. MODIFICATION AND WAIVER. No supplement, modification, or amendment of
this Agreement shall be binding unless executed in writing by both of the
-8-
<PAGE>
parties hereto. No waiver of any of the provisions of this Agreement shall
be deemed or shall constitute a waiver of any other provision hereof (whether or
not similar) nor shall such waiver constitute a continuing waiver.
17. NOTICES. All notices, requests, demands, and other communications
hereunder shall be in writing and shall be deemed to have been duly given if (i)
delivered by hand, or sent via telecopy or facsimile transmission, in each case
receipted for by the party to whom said notice or other communication shall been
directed or transmitted, or (ii) mailed by certified or registered mail with
postage prepaid, on the third business day after the date on which it is so
mailed, or (iii) delivered by the overnight courier service:
(a) If to the Officer, to:
-------------------------
-------------------------
-------------------------
(b) If to the Company, to:
Whitman Education Group, Inc.
4400 Biscayne Boulevard, 6th Floor
Miami, Florida 33137
Attention: Richard B. Salzman
Vice President - Legal Affairs
and General Counsel
or to such other address as may have been furnished to either party by the other
party.
18. ENTIRE AGREEMENT. All prior and contemporaneous agreements and
understandings between the parties with respect to the subject matter of this
Agreement are superseded by this Agreement, and this Agreement constitutes the
entire understanding between the parties. This Agreement may not be modified,
amendment, changed or discharged except by a writing signed by the parties
hereto, and then only to the extent therein set forth.
19. NONASSIGNMENT. This Agreement may not be assigned by either of the
parties hereto.
20. GOVERNING LAW. This Agreement, including its validity, interpretation
and effect, and the relationship of the parties shall be governed by, and
construed in accordance with, the laws of the State of Florida.
-9-
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has executed this Agreement
as of the day and year first above written.
WHITMAN EDUCATION GROUP, INC.
BY:
-----------------------------------
RICHARD C. PFENNIGER, JR.
CHIEF EXECUTIVE OFFICER
OFFICER
---------------------------------------
-10-
EXHIBIT 11
WHITMAN EDUCATION GROUP, INC. AND SUBSIDIARIES
COMPUTATION OF NET (LOSS) PER SHARE OF COMMON STOCK
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED
SEPTEMBER 30,
1997 1996
-------------- -------------
<S> <C> <C>
Primary:
Average shares outstanding.................................... 12,678,256 10,828,356
Net effect of dilutive stock options and warrants
based on the treasury stock method using the
average market price..................................... -- --
Sanford-Brown shares held in escrow........................... -- --
--------------- --------------
Total ..................................................... 12,678,256 10,828,356
=============== ==============
Net (loss) ................................................... $ (588,586) $ (484,067)
Per share amount.............................................. $ (.05) $ (.04)
Fully diluted:
Average shares outstanding............................... 12,678,256 10,828,356
Net effect of stock options and warrants based on
the treasury stock method using average quarter
and quarter-end market prices............................ 1,696,165 2,336,375
Sanford-Brown shares held in escrow........................... -- 521,612
--------------- -------------
Total ..................................................... 14,374,421 13,686,343
=============== =============
Net (loss) ................................................... $ (588,586) $ (484,067)
Per share amount.............................................. $ (.04) $ (.04)
</TABLE>
Net (loss) per share of common stock for primary purposes is computed by
dividing net (loss) by the weighted average number of shares outstanding during
the period adjusted for common stock equivalents when such adjustments result in
dilution of earnings per share. The Company has considered all common stock
equivalents for purposes of calculating fully diluted earnings per share
regardless of their dilutive affect. Included as common stocks equivalents for
the three months ended September 30, 1996 for fully diluted proposes are 521,612
shares issued in connection with the acquisition of Sanford-Brown College that
remained in escrow to be disbursed to the seller or returned to the Company upon
the occurrence of, or failure to achieve certain events.
<PAGE>
WHITMAN EDUCATION GROUP, INC. AND SUBSIDIARIES
COMPUTATION OF NET (LOSS) PER SHARE OF COMMON STOCK
<TABLE>
<CAPTION>
FOR THE SIX MONTHS ENDED
SEPTEMBER 30,
1997 1996
-------------- -------------
<S> <C> <C>
Primary:
Average shares outstanding.................................... 12,677,921 10,629,432
Net effect of dilutive stock options and warrants
based on the treasury stock method using the
average market price..................................... -- --
Sanford-Brown shares held in escrow........................... -- --
-------------- --------------
Total ..................................................... 12,677,921 10,629,432
============== ==============
Net (loss) ................................................... $ (1,959,409) $ (408,050)
Per share amount.............................................. $ (.15) $ (.04)
Fully diluted:
Average shares outstanding............................... 12,677,921 10,629,432
Net effect of stock options and warrants based on
the treasury stock method using average quarter
and quarter-end market prices............................ 1,696,165 2,336,375
Sanford-Brown shares held in escrow........................... -- 521,612
--------------- --------------
Total ..................................................... 14,374,086 13,487,419
=============== ==============
Net (loss) ................................................... $ (1,959,409) $ (408,050)
Per share amount.............................................. $ (.14) $ (.03)
</TABLE>
Net (loss) per share of common stock for primary purposes is computed by
dividing net (loss) by the weighted average number of shares outstanding during
the period adjusted for common stock equivalents when such adjustments result in
dilution of earnings per share. The Company has considered all common stock
equivalents for purposes of calculating fully diluted earnings per share
regardless of their dilutive affect. Included as common stocks equivalents for
the three months ended September 30, 1996 for fully diluted proposes are 521,612
shares issued in connection with the acquisition of Sanford-Brown College that
remained in escrow to be disbursed to the seller or returned to the Company upon
the occurrence of, or failure to achieve certain events.
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAR-31-1998
<PERIOD-END> SEP-30-1997
<CASH> 1,136,992
<SECURITIES> 358,125
<RECEIVABLES> 25,939,449
<ALLOWANCES> (4,306,771)
<INVENTORY> 1,237,901
<CURRENT-ASSETS> 26,219,960
<PP&E> 19,306,038
<DEPRECIATION> (7,205,066)
<TOTAL-ASSETS> 50,370,062
<CURRENT-LIABILITIES> 23,533,701
<BONDS> 0
0
0
<COMMON> 20,587,202
<OTHER-SE> (6,374,393)
<TOTAL-LIABILITY-AND-EQUITY> 50,370,062
<SALES> 27,942,795
<TOTAL-REVENUES> 27,942,795
<CGS> 19,483,374
<TOTAL-COSTS> 29,395,243
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