<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
CONCORDE CAREER COLLEGES, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
-------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------------
(5) Total fee paid:
-------------------------------------------------------------------------
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
-------------------------------------------------------------------------
(3) Filing Party:
-------------------------------------------------------------------------
(4) Date Filed:
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Notes:
<PAGE>
CONCORDE CAREER COLLEGES, INC.
City Center Square
1100 Main Street
Post Office Box 26610
Kansas City, Missouri 64196
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 29, 1998
TO ALL STOCKHOLDERS:
Notice is hereby given that the Annual Meeting of the Stockholders (the
"Annual Meeting") of Concorde Career Colleges, Inc., a Delaware corporation (the
"Company"), will be held on Friday, May 29, 1998, at 9:00 a.m., Central Time, at
City Center Square, Suite 202, 1100 Main Street, Kansas City, Missouri, for the
following purposes:
(1) To elect the members of the Board of Directors for the ensuing year or
until their successors are duly elected and qualified;
(2) To approve the 1998 Employee Stock Purchase Plan;
(3) To approve the 1998 Long-Term Executive Compensation Plan;
(4) To ratify the appointment of independent public accountants for the
Company for 1998; and
(5) To transact such other business as may properly come before the Annual
Meeting or any adjournment or postponement thereof.
The Board of Directors has fixed the close of business on April 10 as the
record date for the determination of the stockholders entitled to notice of and
to vote at the Annual Meeting or any adjournment or postponement thereof.
BY THE BOARD OF DIRECTORS
Lisa M. Henak
Secretary
Dated: April 17, 1998
IMPORTANT - YOUR PROXY IS ENCLOSED
You are urged to sign, date and mail your proxy even though you may plan to
attend the Annual Meeting. No postage is required if mailed in the United States
using the enclosed envelope. If you attend the Annual Meeting, you may vote by
proxy or you may withdraw your proxy and vote in person. By returning your proxy
promptly, a quorum will be better assured at the Annual Meeting, which will
prevent costly follow-up and delays.
<PAGE>
CONCORDE CAREER COLLEGES, INC.
City Center Square
1100 Main Street
Post Office Box 26610
Kansas City, Missouri 64196
------------------------------------
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 29, 1998
------------------------------------
PROXY STATEMENT
The proposals in the accompanying proxy are solicited by the Board of
Directors of Concorde Career Colleges, Inc. (the "Company") for use at its
Annual Meeting of Stockholders ("Annual Meeting") to be held on Friday, May 29,
1998, at 9:00 a.m., Central Time, at City Center Square, Suite 202, 1100 Main
Street, Kansas City, Missouri, and any adjournment or postponement thereof.
Shares of the Company's common stock, par value $0.10 per share ("Common Stock")
and Class B Voting Convertible Preferred Stock, par value $0.10 per share
("Voting Preferred Stock") represented by duly executed proxies received prior
to the Annual Meeting will be voted at the Annual Meeting. If a holder of Common
Stock or Voting Preferred Stock ("Stockholder") specifies a choice on the form
of proxy with respect to any matter to be acted upon, its, his or her shares
will be voted in accordance with the recommendations made therein with respect
to the proposals described in this Proxy Statement. None of the proposals are
related to or conditioned upon the approval of any other proposal. Any
Stockholder giving a proxy has the power to revoke it at any time before it is
exercised by giving written notice to the Secretary of the Company prior to its
use.
The Company will bear all the costs of solicitation of proxies. In addition
to the use of the mails, proxies may be solicited by personal contact,
telephone, facsimile or telegraph by the persons named in the accompanying form
of proxy, and the Company may reimburse brokers or other persons holding Common
Stock or Voting Preferred Stock in their names or in the names of nominees for
their expenses in sending proxy soliciting material to beneficial owners. This
Proxy Statement and the accompanying form of proxy are being mailed or given to
Stockholders on or about April 17, 1998.
Only Stockholders of record at the close of business on April 10, 1998 (the
"Record Date") will be entitled to notice of, and to vote at, the Annual
Meeting. On the Record Date, the Company had 7,190,176 shares of Common Stock
and 55,147 shares of Voting Preferred Stock issued and outstanding and entitled
to vote at the Annual Meeting. Each outstanding share of Common Stock is
entitled to one vote and each outstanding share of Voting Preferred Stock is
entitled to twenty (20) votes on each matter brought to a vote. Provided a
quorum is present, the affirmative vote of a (a) plurality of the shares of
Common Stock and Voting Preferred Stock voting together as a class is required
for the election of each nominee for director and (b) a majority of the votes
cast by the holders of Common Stock and Voting Preferred Stock present in person
or represented by proxy at the Annual Meeting and entitled to vote on the
subject matter is required for: (i) the approval of the 1998 Employee Stock
Purchase Plan, (ii) the approval of the 1998 Long-
Proxy Statement - 1
<PAGE>
Term Executive Compensation Plan and (iii) the ratification of the appointment
of independent public accountants for the Company for 1998. Stockholders do not
have any dissenters' rights regarding any of the above matters.
Votes that are cast against the proposals are counted both for purposes of
determining the presence or absence of a quorum for the transaction of business
and for purposes of determining the total number of votes cast on a given
proposal. Abstentions will be counted for purposes of determining both the
presence or absence of a quorum for the transaction of business and the total
number of votes cast on a given proposal, and therefore will have the same
effect as a vote against a given proposal. Broker non-votes (i.e., a proxy card
returned by a holder on behalf of its beneficial owner that is not voted on a
particular matter because voting instructions have not been received and the
broker has no discretionary authority to vote) are not counted for purposes of
determining the number of shares present or represented with respect to a
particular proposal for which there is no authorization to vote and will not be
considered as votes cast and thus will not affect the outcome of voting.
Management does not know of any matter, other than those referred to in the
accompanying Notice of Annual Meeting, which is to come before the Annual
Meeting. If any other matters are properly presented for action at the Annual
Meeting, it is intended that the persons named in the accompanying form of
proxy, or their substitutes, will vote in accordance with their judgment of the
best interests of the Company on such matters.
(The remainder of this page was left blank intentionally.)
Proxy Statement - 2
<PAGE>
STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT
The Company has two classes of voting securities, Common Stock and
Voting Preferred Stock (collectively, the "Voting Securities"). The Voting
Preferred Stock votes with the Common Stock, as a single class, on all matters
brought before a vote of the holders of Common Stock. Each share of Voting
Preferred Stock is convertible into twenty (20) shares of Common Stock and has
voting rights equal to twenty (20) shares of Common Stock (whether or not
converted). The following table sets forth the respective voting rights of the
outstanding shares of Voting Securities as of April 10, 1998.
<TABLE>
<CAPTION>
Outstanding Voting
Shares Rights %
------------------- ------------------ -----------------
<S> <C> <C> <C>
Common Stock 7,190,176 7,190,176 87%
Voting Preferred Stock 55,147 1,102,940 13%
------------------ ---
Total Voting Rights 8,293,176 100%
</TABLE>
The following table sets forth with respect to Voting Securities (i)
the only persons known to be beneficial owners of more than five percent (5%) of
the Voting Securities, (ii) the shares of Voting Securities beneficially owned
by all directors and named executive officers of the Company and nominees for
director, and (iii) the shares of Voting Securities beneficially owned by
directors and executive officers as a group, as of April 10, 1998.
<TABLE>
<CAPTION>
===================================================================================================================
Common Stock Voting Preferred Stock Total Voting Securities
------------------------------------------------------------------------------------
Name of Beneficial Owner Amount/(2)/ % of Class/(3)/ Amount/(2)/ % of Class/(3)/ Voting Rights (%)
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Robert F. Brozman Trust/(1)/ 2,485,324 34.6% --- --- 30.0%
Cahill, Warnock Strategic/(1)/ 500,000/(4)/ 7.0 53,309/(4)/ 96.7% 18.9
Partners Fund, L.P.
Nelson Obus/(1)/ 598,790/(5)/ 8.3 --- --- 7.2
Jack L. Brozman/(1)/ 3,417,048/(6)/ 43.0 --- --- 37.7
David A. Nichols 62,000/(7)/ * --- --- *
Robert R. Roehrich 230,000/(8)/ 3.1 --- --- 2.7
James R. Seward 20,000/(9)/ * 1,838/(9)/ 3.3 *
Thomas K. Sight 1,730/(10)/ * * --- *
David L. Warnock/(1)/ 500,000/(4)/ 7.0% 53,309/(4)/ 96.7% 18.9%
============================== ================ ===================== =============================
</TABLE>
Proxy Statement - 3
<PAGE>
<TABLE>
<CAPTION>
=======================================================================================================================
Common Stock Voting Preferred Stock Total Voting Securities
-----------------------------------------------------------------------------------------
Name of Beneficial Owner Amount/(2)/ % of Class/(3)/ Amount/(2)/ % of Class/(3)/ Voting Rights (%)
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Gregg Gimlin 38,000(11) * --- --- *
All Directors and Executive 4,268,778(12) 52.0 55,147 100 57.7
Officers as a Group
(7 persons)
=======================================================================================================================
</TABLE>
* Less than one percent (1%)
(1) Addresses: Robert F. Brozman Trust, 1100 Main Street, Kansas City,
Missouri 64105; Cahill, Warnock Strategic Partners Fund, L.P., One South
Street, Suite 2150, Baltimore, Maryland 21202; Nelson Obus, One Penn
Plaza, Suite 4720, New York, New York 10119-0002; Jack L. Brozman, 1100
Main Street, Kansas City, Missouri 64105; and David L. Warnock, One South
Street, Suite 2150, Baltimore, Maryland 21202.
(2) Unless otherwise indicated by footnote, nature of beneficial ownership of
securities is direct, and beneficial ownership as shown in the table
arises from sole voting and investment power.
(3) The percentage of class is calculated pursuant to Rule 13d-3(d) of the
Securities Exchange Act of 1934 ("Exchange Act").
(4) Includes 500,000 shares of Common Stock, 50,414 shares of Voting Preferred
Stock owned by Cahill, Warnock Strategic Partners Fund, L.P. and 2,895
shares of Voting Preferred Stock owned by Strategic Associates, L.P. These
Voting Securities have a total of 1,566,180 voting rights.
(5) Includes 70,000 shares held jointly with Eve E. Coulson, the spouse of Mr.
Obus, 350,790 shares owned by Wynnefield Partners Small Cap Value, L.P.,
149,000 shares owned by Channel Partnership II, L.P., and 29,000 shares
owned by Wynnefield Partners Small Cap Off Shore, L.P. Mr. Obus is general
partner of these partnerships.
(6) Includes 2,485,324 shares held by the Robert F. Brozman Trust, of which
Jack L. Brozman is trustee, 171,724 shares held directly and 760,000
shares exercisable pursuant to options.
(7) Includes 22,000 shares held directly and 40,000 shares held in the Joyce
A. Nichols Trust of which Mr. Nichols is a beneficiary.
(8) Includes 230,000 shares exercisable pursuant to options.
(9) These Voting Securities have a combined total of 56,760 voting rights.
(10) Held jointly with Fay Sight, Mr. Sight's spouse.
(11) Includes 3,000 shares held jointly with Terri Gimlin, Mr. Gimlin's spouse,
and 35,000 shares exercisable pursuant to options.
(12) Includes 1,025,000 shares which are exercisable pursuant to options. For
purpose of this table and pursuant to Rule 13d-3(d) of the Exchange Act,
shares underlying options are deemed beneficially owned if such options
are exercisable within 60 days of April 1, 1998.
(The remainder of this page was left blank intentionally)
Proxy Statement - 4
<PAGE>
PROPOSAL ONE - ELECTION OF DIRECTORS
The number of directors constituting the Company's Board of Directors
has been fixed in the Bylaws of the Company at six. The shares of Voting
Securities represented by the enclosed proxy will be voted, unless otherwise
indicated, for the election of the six nominees for director named below. The
directors to be elected at the Annual Meeting will serve for one year or until
their successors are duly elected and qualified. In the unanticipated event
that any nominee for director should become unavailable, the Board of Directors,
at its discretion, may designate a substitute nominee, in which event such
shares will be voted for such substitute nominee.
<TABLE>
<CAPTION>
Name of Nominee Served Principal Occupation for Last Five Years
for Director Since Age and Directorships
------------ ----- --- -----------------
<S> <C> <C> <C>
Jack L. Brozman 1986 48 Chairman of the Board and Treasurer of the
Company and CenCor, Inc. ("CenCor") since June
1991. President and Chief Executive Officer of
the Company from June 1991 until April 1, 1997.
Mr. Brozman was Chairman of the Board,
President, and Treasurer of La Petite Academy,
Inc. from October 1991 until July 1993.
Chairman of the Board of Sound Distributions,
Inc. since May 1971. Vice Chairman of the Board
of Sight and Sound Distributions, Inc. from
October 1997 to present and Chairman of the
Board from February 1996 to October 1997. Mr.
Brozman has also been a director of CenCor since
1979.
David A. Nichols 1988 67 President and Director of Midwest Bank
(1)(2) Management, Inc. from 1978 to 1997, a private
banking management service firm located in
Kansas City, Missouri. Advisory Director of
Central Bank of Kansas City, Missouri since
1993. Director (since 1990) and Chairman of the
Board (since 1994) of First State Bank, Kansas
City, Kansas. Mr. Nichols is also a private
consultant providing services to other banking
entities.
Dr. Robert R. Roehrich 1997 51 President and Chief Executive Officer of the
Company since April 1, 1997. Vice President
Academic Affairs for DeVry, Inc. from January
1984 until March 1997, a public company which
operates private, degree granting post-secondary
educational institutions, head-quartered in
Oakbrook Terrace, Illinois.
</TABLE>
Proxy Statement - 5
<PAGE>
<TABLE>
Name of Nominee Served Principal Occupation for Last Five Years
for Director Since Age and Directorships
------------ ----- --- -----------------
<S> <C> <C> <C>
James R. Seward 1997 45 Executive Vice President and Chief Financial
(1)(2) Officer of Seafield Capital Corporation from
1990 to 1997, a public holding company located
in Kansas City, Missouri. President and Chief
Executive Officer of the SLH Corporation since
1997, a public holding company located in
Shawnee Mission, Kansas. Mr. Seward is a
director of Lab One Inc., Response Oncology,
Inc., and SLH Corporation, each a public company.
Thomas K. Sight 1989 47 President of Bob Sight Lincoln Mercury for more
(1)(2) than the prior five years, an automobile
dealership located in Overland Park, Kansas.
Chief Executive Officer of Bob Sight Ford since
January, 1992 located in Lee's Summit, Missouri.
David L. Warnock 1997 40 Managing Member of Cahill, Warnock & Company,
(1)(2) LLC and a general partner of Cahill, Warnock
Strategic Partners, L.P. from July 1995 to
present, each is located in Baltimore, Maryland.
Vice President, T. Rowe Price Associates from
July 1983 to July 1995. Mr. Warnock is a
director of Environmental Safeguards, Inc. and
Children's Comprehensive Services, Inc., each a
public company.
</TABLE>
__________
(1) Member of Compensation Committee.
(2) Member of Audit Committee.
"THE BOARD OF DIRECTORS RECOMMEND THAT YOU VOTE "FOR" THE
NOMINEES SET FORTH ABOVE."
Proxy Statement - 6
<PAGE>
The Board of Directors of the Company held two meetings and acted by
unanimous written consent on 10 occasions in 1997. The Compensation Committee
held one meeting in 1997. The Compensation Committee reviews salaries of
certain officers and bonuses of executive officers, administers the Company's
stock option plans and generally administers the Company's compensation program.
The Audit Committee, which is responsible for oversight of the Company's
financial reports, held one meeting last year. The Company's Board of Directors
does not have a nominating committee. Last year, each director attended at
least 75% of the Board meetings (and at least 75% of the meetings of committees
on which he served) during the period for which he was a director (or committee
member).
Certain stockholders of the Company have agreed to vote the Voting
Securities held by them in favor of certain directors. See "Certain
Transactions".
(The remainder of this page was left blank intentionally.)
Proxy Statement - 7
<PAGE>
EXECUTIVE OFFICERS
In addition to Jack L. Brozman and Robert R. Roehrich, the following
persons served as executive officers of the Company in 1997.
<TABLE>
<CAPTION>
Name of
Executive Officer Age Principal Occupation for Last Five Years
----------------- --- ----------------------------------------
<S> <C> <C>
Michael S. Savely 58 Employed by the Company from December 1985 to July, 1997,
serving in various capacities. From August 1989 to March,
1996, was the Vice President-Operations and, from March 1996
to July, 1997, Senior Vice President-Operations
M. Gregg Gimlin 51 Employed by the Company since July 1993, serving as Vice
President and Chief Financial Officer. Consultant to CenCor
from January 1993 until employed by CenCor as Special Projects
Coordinator from March through June 1993. Formerly employed
by Simon-RO, a manufacturing company, from October 1988
through November 1992 as a director (from March 1990) and Vice
President-Finance, Treasurer and Assistant Secretary (from
June 1991).
Patrick J. Debold 46 Employed by the Company from November 1989 to February, 1998,
serving as School Director of Education, National Director of
Education, and, from July 1993 to February 1998, Vice
President of Education.
Asa E. Johnson 55 Employed by the Company since January 1989, serving as School
Director, Director of Admissions, Regional Director, National
Director of Admissions and Marketing, National Director of
Field Operations and, since March 1996, Vice
President-Operations. Mr. Johnson ceased full time employment
with the Company in December, 1997, and has since served the
Company in a part-time capacity in the Company's marketing and
admissions departments.
Vickey S. Cook 43 Employed by the Company since 1988, serving as Regional
Compliance Administrator, National Compliance Administrator,
Operations Manager-SCI, Special Projects Coordinator, National
Director Financial Aid and Compliance, and since May 1996,
Vice President Compliance and Financial Aid.
</TABLE>
(The remainder of this page was left blank intentionally.)
Proxy Statement - 8
<PAGE>
EXECUTIVE COMPENSATION AND OTHER INFORMATION
Summary
The following table provides certain summary information concerning
compensation paid or accrued by the Company to or on behalf of the Chief
Executive Officer of the Company and the other most highly compensated executive
officers affiliated with the Company whose salary and bonus exceeded $100,000
(determined as of the end of last fiscal year) for the years ended December 31,
1997, 1996, and 1995.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Compensation Long Term Compensation
Name and All Other
Principal Position Year Salary ($) Bonus Options Compensation
------------------ ---- ---------- ----- ------- ($)
---
<S> <C> <C> <C> <C> <C>
Jack L. Brozman, 1997 145,000 19,000 80,000(2) 0
Chairman of the Board and Treasurer 1996 135,000 36,000 150,000(3) 0
of the Company(1) 1995 135,000 51,000 150,000(3) 0
Dr. Robert R. Roehrich, 1997 167,000 40,000 115,000(4) 0
President and Chief Executive Officer
Michael S. Savely(5) 1997 67,000 7,000 0 52,000
Sr. Vice President-Operations 1996 104,000 28,000 0 0
1995 98,000 42,000 0 0
M. Gregg Gimlin 1997 * * 0 0
Vice President, Chief Financial 1996 79,000 23,000 0 0
Officer 1995 75,000 33,000 0 0
</TABLE>
__________
* Salary and bonus did not exceed $100,000.
(1) Mr. Brozman also received compensation as CEO of CenCor in 1997, 1996 and
1995, which compensation is not reflected in the above Summary Compensation
Table. Mr. Brozman devotes approximately 50% of his time on Company
matters.
(2) On February 25, 1997, the Company's Compensation Committee granted to Mr.
Brozman an option to purchase 400,000 shares of the Company's Common Stock
under the 1994 Incentive Stock Option Plan (the "1994 Plan"), of which
80,000 shares vested in 1997. See Option Grants, Exercises and Holdings.
(3) On February 3, 1994, the Company's Compensation Committee granted to Mr.
Brozman an option to purchase 750,000 shares of Common Stock under the
Company's 1994 Plan. Options for 600,000 shares have vested and options
for 150,000 shares have lapsed and were returned to the 1994 Plan for
reissuance. See, "Option Grants, Exercises and Holdings" and "Compensation
Committee Report on Executive Compensation - Chairman and CEO Compensation
- Chairman and CEO Compensation - Option Grant."
(4) On April 1, 1997, the Compensation Committee granted to Dr. Roehrich an
option to purchase 575,000 shares of Common Stock under the 1994 Plan, of
which 115,000 shares vested in 1997. See, "Option Grants, Exercises and
Holdings."
(5) Mr. Savely resigned from the Company in July 1997 and was paid severance
compensation in the amount of $52,000.
Proxy Statement - 9
<PAGE>
Option Grants, Exercises and Holdings
- -------------------------------------
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
Potential realizable value
at assumed annual rates of
Individual Grants stock price appreciation
for option term*
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Number of Percent of total
securities options/SARs
underlying granted to Exercise or
Options/SARs employees in base Expiration
Name granted(#)/1/(2) fiscal year price($/Sh) Date 5% ($) 10% ($)
(a) (b) (c) (d) (e) (f) (g)
- ------------------------------------------------------------------------------------------------------------------------------
Jack L. Brozman, 400,000 39.2% $1.09 2/25/2002 69,000 202,000
Chairman of the
Board and
Treasurer
Dr. Robert R. 575,000 56.3% $1.00(2) 4/1/2007 540,000 1,303,000
Roehrich, President
and Chief Executive
Officer
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* The dollar amounts set forth under those columns are the result of
calculations of the 5% and 10% rates set by the Securities and Exchange
Commission and are not intended to forecast possible future appreciation.
(1) On February 25, 1997, Mr. Brozman was granted an option to purchase 400,000
shares of the Company's Common Stock, of which 80,000 Shares vested in
1997.
(2) On April 1, 1997, Dr. Roehrich was granted an option to purchase 575,000
shares of the Company Common Stock. 115,000 shares vested in 1997 and have
an exercise price of $1.00. The remaining 460,000 options vest 115,000 per
year in each of 4/1/98, 4/1/99, 4/1/2000 and 4/1/2001 at an exercise price
of $1.375.
The following table provides information with respect to the named
executive officers concerning options exercised during 1997 and unexercised
options held as of the end of the Company's last fiscal year:
Proxy Statement - 10
<PAGE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
LAST FISCAL YEAR END OPTION VALUES
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Value of Unexercised
Number of Unexercised In-the-Money Options
Shares Options at FY-End (#) at FY-End ($)(1)
Acquired on Value
Name Exercise (#) Realized($) Exercisable/Unexercisable Exercisable/Unexercisable
- ----------------------------------------------------------------------------------------------------------------------
Jack L. Brozman, 0 0 680,000/320,000 925,000/171,000
Chairman of the
Board and Treasurer
- ----------------------------------------------------------------------------------------------------------------------
Dr. Robert R. 0 0 115,000/460,000 72,000/115,000
Roehrich, Chief
Executive Officer
- ----------------------------------------------------------------------------------------------------------------------
M. Gregg Gimlin, 0 0 35,000/0 53,000/0
Vice President and
Chief Financial Officer
- ----------------------------------------------------------------------------------------------------------------------
Michael S. Savely 75,000 $116,000 0/0 0/0
Sr. Vice President -
Operations
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Based on the difference between the mean of the closing bid and asked
prices of the Company's Common Stock on December 31, 1997 ($ 1.625) and the
exercise price of the options.
Compensation of Directors
Each non-officer director is paid a retainer fee of $2,500 annually, and a
director's fee of $250 for meetings of the Board of Directors and Committees
which he attends. Officer-directors do not receive fees for attendance at
meetings. The Company paid a total of $12,500 in Director fees during 1997.
Employment Contract, Termination of Employment and Change in Control
Arrangements
The Company entered into an employment agreement (the "Employment
Agreement") with Dr. Robert R. Roehrich effective April 1, 1997. The Employment
Agreement has no stated term and provides that Dr. Roehrich would receive a
$200,000 base salary, adjusted annually, for serving as the Company's President
and Chief Executive Officer. Dr. Roehrich would receive annual bonus payments of
at least $40,000 based on the Company's achievement of performance-based
objectives, and options to purchase 575,000 shares of Common Stock which vest in
115,000 increments each year until 2001. The Agreement also provides that Dr.
Roehrich would receive certain benefits including medical, dental and life
insurance benefits provided under the Company standard benefit plans, four weeks
of paid vacation per year and a leased Company car. The Employment Agreement
also provides that in the event that Dr. Roehrich is terminated by the Company
other than for cause, or if Dr. Roehrich should decide to leave employment with
the Company prior to October 1, 1998, the Company would pay Dr. Roehrich
severance pay equal to one year of his base salary.
Compensation Committee Interlocks and Insider Participation
Proxy Statement - 11
<PAGE>
The Compensation Committee consists entirely of non-employee directors
of the Company and there are no Compensation Committee interlocks with other
companies.
Compensation Committee Report on Executive Compensation
The Compensation Committee of the Board of Directors is comprised of David
A. Nichols, Thomas K. Sight, James R. Seward and David L. Warnock. On an annual
basis, the Compensation Committee reviews the salaries and bonuses of the
executive officers and other employees, administers the 1988 Stock Option Plan,
1994 Incentive Stock Option Plan (the "Stock Option Plans"), and any non-
qualified stock options, and oversees the administration of the Company's
compensation program.
In accordance with Securities and Exchange Commission rules designed to
enhance disclosure of companies' policies toward executive compensation, the
following report is submitted by the above listed committee members in their
capacity as the Board's Compensation Committee. The report addresses the
Company's compensation policy as it related to the executive officers for 1997.
General Compensation Policy. The Compensation Committee of the Board of
Directors was, and continues to be, guided by a belief that executive
compensation should reflect the profitability and appreciation in the value of
the Company (as reflected by the Company's net income or loss and market value
of Common Stock, respectively), while at the same time considering surrounding
economic pressures, individual performance and retention of key executive
officers. The Compensation Committee has not yet adopted a policy with respect
to the $1,000,000 limitation on deductibility of executive compensation under
Section 162(m) of the Internal Revenue Code of 1986, as amended (the "Code"),
since current compensation levels fall significantly below that amount.
The Compensation Committee believes that the following are the important
qualitative considerations in setting executive compensation:
. Compensation should reflect the overall performance of the Company and
the executive officer and his or her contribution to the Company's
profitability;
. Compensation should correlate to measurable performance criteria;
. Compensation should attract and retain valued executive officers; and
. Compensation should reflect the executive officers' abilities to
effectively direct the Company during difficult economic conditions.
Calendar 1997 Compensation. To accomplish this compensation policy in
1997, the Company's executive compensation integrated: (i) annual base salary,
(ii) bonuses based upon individual agreements utilizing various objective
performance goals, and (iii) stock option grants or vesting under the Company's
Stock Option Plans. The compensation policies, as implemented, endeavor to
enhance the profitability of the Company (and, thus, stockholder value) by tying
the financial interests of the management with those of the Company.
Proxy Statement - 12
<PAGE>
Base Salary. As a general matter, an executive officer's base salary is
subjectively positioned so as to reflect the experience and performance of such
executive officer and the performance of the Company. The Compensation Committee
initially determines the amount of base salary on factors such as prior level of
pay, quality of experience, and responsibilities of position. Thereafter, the
Compensation Committee grants raises subjectively based on overall Company
performance (net income or loss, earnings per share and market value of Common
Stock) and the executive officer's individual performance based on performance
reviews.
The amount of raises to the executive officer's base salaries was
subjectively determined by the Chairman of the Board, Mr. Brozman, prior to Dr.
Roehrich's arrival, with the approval of the Compensation Committee. The
decision to raise the base salary was, in part, based on Mr. Brozman's
subjective evaluation of each officer's performance. Such raises in base
salaries ranged from approximately 2% to 5% of their previous year's base
salary.
Bonuses. The Company has certain bonus agreements in place with executive
officers which couple objective corporate performance criteria, based on such
officer's area of responsibilities, with annual cash compensation. Under such
bonus agreements, the named executive officers receive a specified percentage of
the pre-tax net income of the Company. Based upon the pre-arranged formula
contained in each officer's agreement, the Company granted bonuses to certain of
its executive officers in 1997.
The performance criteria in the bonus agreements of the executive officers
differ depending on the amount of responsibility for such executive officers.
Incentive Stock Option Awards. The Board of Directors and Compensation
Committee also award stock options to executive officers, as well as school
management personnel, under the Stock Option Plans. The Committee believes that
stock options are an effective incentive for executives to create value for
stockholders since the value of an option bears a direct relationship to
appreciation in the Company's stock price. Obviously, when stockholder value
decreases, stock options granted to management either decrease in value or have
no value. Conversely, when stock prices increase, the stock option becomes more
valuable.
The determination of whether to grant stock options to executive officers,
whether on an aggregate or individual basis, is in the sole discretion of the
Compensation Committee. In making the determination, the Committee examines: (i)
the Company's performance, as determined by its operating and net income (loss),
earnings per share and the market price of the Common Stock, (ii) the relations
of long-term compensation to short-term (cash) compensation, (iii) the number
and exercise price of options held by each executive officer, (iv) the total
stock holdings of the executive officer, (v) the individual performance of the
executive (subjectively determined by Mr. Brozman and other executives), and
(vi) the potential contribution of the executive to the Company. The
Compensation Committee does not separately weigh such criteria, but rather
subjectively and informally views the mix of information with respect to each
executive officer.
With respect to such criteria, especially stock options previously granted,
the Compensation Committee decided not to grant additional option to any
officers of Directors except to the Chairman of the Board and Chief Executive
Officer.
Proxy Statement - 13
<PAGE>
The options previously granted were incentive stock options under the Code,
which means that the officers will not have to pay taxes, and the Company will
not receive a tax deduction upon exercise of the options.
See also Proposal Three, Approval of Concorde Career Colleges, Inc. 1998
Long-Term Executive Compensation Plan, for a description of an incentive stock
option plan under which executive officer will be eligible for participation
subject to such Plan's approval by stockholders.
Chairman Compensation. Jack L. Brozman, Chairman of the Company, is subject
to the same general compensation package as the other executives.
For 1997, Mr. Brozman was granted a 7.4% increase in his base annual
salary. The Compensation Committee believes that the continuing success of the
Company is a direct result of Mr. Brozman's excellent leadership and commitment
level. The Committee specifically recognized the following: (i) the Company's
securing new capital financing, (ii) the strong cash position, and (iii) the
hiring of a CEO/President.
Chairman Option Grant. The Compensation Committee, on February 25, 1997,
awarded Mr. Brozman the option to purchase 400,000 shares of Common Stock in
recognition of his efforts to secure new capital financing for the Company. Part
of the option, 80,000 shares, was fully vested on February 25, 1997. The option
for the remaining shares vests ratably on the anniversary of the grant date over
the next four years. All of the options were granted at $1.09 or 110% of the
fair market price on the date of the grant.
Chief Executive Officer Option Grant. The Compensation Committee, on April
1, 1997, awarded Dr. Robert R. Roehrich the option to purchase 575,000 shares of
Common Stock. Part of the option, 115,000 shares, were granted at $1.00 per
share and fully vested on that date. The option for the remaining shares was
granted at the fair market price on the date of the grant, which was $1.375, and
vests ratably on the anniversary of the grant date over the next four years.
Summary. The Compensation Committee believes that the executive officers of
the Company are dedicated to achieving significant improvements in long-term
financial performance and that the compensation policies and programs contribute
to achieving this senior management focus. The Compensation Committee believes
that the compensation levels during 1997 adequately reflect the Company's
compensation goals and policies
The Compensation Committee report is submitted by:
David A. Nichols, Thomas K. Sight, David L. Warnock and James R. Seward
PROPOSAL TWO - Approval of Concorde Career Colleges, Inc.
1998 Employee Stock Purchase Plan
Introduction
On February 25, 1998 the Board of Director unanimously adopted, subject to
stockholder approval, the Concorde Career Colleges, Inc. 1998 Employee Stock
Purchase Plan (the "Employee
Proxy Statement - 14
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Plan"). The Board of Directors believes the Employee Plan will be effective in
attracting and retaining productive employees to Concorde Career Colleges, Inc.
and its subsidiary corporations (collectively, the "Company") by providing them
with an opportunity to acquire a proprietary interest in the Company and reward
those employees responsible for the continued growth of the Company through the
purchase of shares of the Company's common stock, par value $.10 (the "Common
Stock"). Approximately 380 employees of the Company and its subsidiaries would
be eligible to participate in the Employee Plan. The Board also believes that
the Employee Plan will provide a form of incentive that aligns the economic
interests of the Company's employees with those of its stockholders.
The following discussion summarizes the material features of the Employee
Plan. Such discussion is, however, qualified in its entirety by reference to the
full text of the Employee Plan, which is attached to this proxy statement as
Exhibit A.
Material Features of the Employee Plan
Administration. The Employee Plan will be administrated by the Compensation
Committee of the Board of Directors of the Company (the "Committee"). Members of
the Committee are not eligible to participate in the Employee Plan. Subject to
the express provisions of the Employee Plan, the Committee shall have plenary
authority in its discretion to interpret and construe any and all provisions of
the Employee Plan, to adopt, amend and rescind rules and regulations for
administering the Employee Plan, and to make all other determinations deemed
necessary or advisable for administering the Employee Plan. The Committee may
also correct any defect or omission or reconcile any inconsistency in the
Employee Plan, in the manner and to the extent it shall deem desirable. The
Committee will also have authority to determine, within the limits of the
express provisions of the Employee Plan, the individuals to whom options to
purchase Common Shares will be granted and the conditions for receiving such
options.
Shares Subject to the Employee Plan. An aggregate of 250,000 shares of
Common Stock of the Company are subject to the Employee Plan and are reserved
for issuance under such Plan. Options to purchase 50,000 shares of Common Stock
of the Company are to be offered to participants for purchase in the first plan
year (commencing October 1, 1998 and ending September 30, 1999) and each of the
four succeeding plan years (the "Offering Term"). Shares offered for sale during
any plan year (or during any plan quarterly or semi-annual period within such
plan year, provided the Committee chooses such period) within the Offering Term
(each an "Offering Period"), as aforesaid, but not actually issued (as a result,
for example, of the failure of a participant to subscribe to purchase or an
participant's failure to purchase due to termination) will be made available to
participants for purchase in a subsequent Offering Period within such plan year
or within a subsequent plan year during the Offering Term.
Options for the purchase of up to 50,000 shares of Common Stock may be
issued during each plan year Offering Period (plus any unsold shares of Common
Stock carried over from a prior Offering Period). The number of options
outstanding at any one time may be limited by the Committee on a prorated basis
during any plan year Offering Period, the number of options outstanding at any
one time depending upon whether a quarterly or semi-annual month prorated period
has been chosen.
Proxy Statement - 15
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Eligible Employees. Under the Employee Plan, an employee may become
eligible to become a participant after completing one (1) year of employment
with the Company, provided that he is employed by the Company on such date,
effective for any Offering Period commencing thereafter. An eligible employee
signifies his participation in the Employee Plan by completing an authorization
for a payroll deduction on a form to be provided by the Company and by filing it
with the Treasurer of the Company on or before the commencement of an Offering
(which may be on October 1st of a plan year within the Offering Period or the
first day of a month in which a prorated Offering Period commences, as the
Committee directs). The Committee shall extend eligibility to any employee of
the Company or any of its direct or indirect subsidiary corporations who
satisfies the above service conditions and are customarily employed on a full-
time or part-time basis and regularly scheduled to work more than 25 hours per
week. However, certain highly compensated employees and certain employees whose
aggregate Company shareholdings or Company shareholdings acquired under the
Employee Plan could or would exceed specified statutory thresholds will not be
entitled to become or remain participants.
Stock Purchases. Eligible participants receive an option to purchase shares
of Common Stock of the Company from payroll deductions accumulated during an
Offering Period. At the time a participant files his authorization for payroll
deduction, he shall elect to have deductions made on each payday during the
Offering Period at the rate of 1%, 5% or 10% of his base pay (as either in
effect on October 1st of the plan year Offering Period or in effect on the first
day of the quarterly or semi-annual Offering Period, as the Committee directs).
Payroll deductions for a participant shall commence on the applicable Offering
Commencement Date when his authorization for a payroll deduction becomes first
effective and shall end on the associated Offering Termination Date, unless
sooner terminated by the participant. All payroll deductions made for a
participant shall be credited to his account under the Employee Plan. A
participant may not make any separate cash payment into such account, except
when on leave of absence and then only under specific conditions set out in the
Employee Plan.
At the commencement of each Offering Period, a participant shall have the
option to purchase during the plan year in which such Period comprises (or
falls, if a shorter Offering Period applies) up to a maximum number of shares of
the Company's Common Stock. This maximum is the lesser of (a) the number of
shares which does not exceed $5,000 in value on the first day of the Offering
Period, or (b) the number of shares equal in value to (i) that percentage of the
participant's base pay which he has elected to have withheld (but not in any
case in excess of 10%) multiplied by (ii) the participant's base pay as of
October 1st or the first day of the Offering Period, as the Committee shall
direct), (iii) divided by 95% of the market value of the Common Stock of the
Company.
Unless a participant gives written notice to the Company, his option to
purchase Common Stock with payroll deductions made during any Offering Period
will be deemed to have been exercised automatically on the Offering Termination
Date applicable to such Offering Period, for the purchase of the number of full
shares of stock which the accumulated payroll deductions in his account at that
time will purchase at the applicable option price (but not in excess of the
number of shares for which options have been granted to the employee pursuant to
the Employee Plan). Subsequent to the Offering Termination Date for each
Offering Period, the Company will deliver to each participant, as appropriate,
the Common Stock purchased with respect to such Period.
Proxy Statement - 16
<PAGE>
Purchase Price. The option price for Common Stock purchased with payroll
deductions made during an Offering Period shall be the lower of (a) 95% of the
closing price of the stock on the first day of the Offering Period on the OTC
Bulletin Board, or (b) 95% of the closing price of the stock on the last day of
the Offering Period on the OTC Bulletin Board.
Assignability. No right to purchase Common Stock granted pursuant to the
Employee Plan shall be transferable or assignable by a participant other than by
will or the laws of descent and distribution.
Anti-Dilution Protection. In the event of any changes in the capital
structure of the Company, including a change resulting from stock split (but not
from a stock dividend, which is specially defined within the Employee Plan), or
combination or reclassification of shares, the Committee shall make such
equitable adjustments with respect to awards or any provisions of the Employee
Plan as it deems necessary and appropriate. If the Company dissolves or
liquidates, or if it reorganizes, merges or consolidates with another
corporation and is not the surviving corporation, or if it sells substantially
all of its property or stock to another corporation, each participant then
holding an option then outstanding under the Employee Plan will be entitled to
receive at the end of the Offering Period upon his exercise of such option the
approximate amount of cash, securities and/or property which an actual holder of
the same number of shares of Common Stock was entitled to receive upon and at
the time of such transaction.
Market Value Restrictions. The purchase price for Company Common Stock is
based on its fair market value at a specified point in time, as described above.
The purchase price will be subject to adjustment pursuant to the anti-dilution
protections of the Employee Plan described above. On April 8, 1998, the last
reported sale price of the Company's Common Stock on the OTC Bulletin Board was
$2.09 per share.
Amendments and Termination. The Board of Directors may at any time
terminate or amend the Employee Plan, provided that no such action may be taken
that adversely affects any options, rights or obligations with respect to any
Common Stock theretofore made under the Employee Plan without the consent of the
participant. No amendment may be made that would increase the maximum number of
shares of Common Stock that may be issued under the Employee Plan (unless such
increase is a result of a change in the capital structure of the Company),
change the Employee Plan's eligibility requirements, or permit members of the
Committee to purchase stock under the Employee Plan. No offers to purchase
Common Stock may be made under the Employee Plan after September 30, 2003, on
which date such Plan shall terminate, except as to rights then outstanding
thereunder. All outstanding awards under the Employee Plan will expire no later
than September 30, 2003.
Federal Income Tax Consequences. The Company has been advised by its
counsel that the federal income tax consequences of the exercise of options and
the purchase of Common Stock under the Employee Plan are as described below. The
following information is not a definitive explanation of the federal tax
consequences of receipt or exercise of these options or the purchase, ownership
or disposition of the underlying Common Stock. Participants should consult with
their own tax advisors with respect to
Proxy Statement - 17
<PAGE>
the federal and state tax consequences inherent in the receipt, ownership and
exercise of options to purchase Common Stock or the purchase, ownership and/or
disposition of such Common Stock.
Receipt and Exercise of Options and Common Stock Purchases. So long as the
Employee Plan meets the requirements of Section 423 of the Code, a participant
will not recognize income when he receives or exercises an option to purchase
Common Stock, or when Common Stock is purchased or distributed to him pursuant
to the Employee Plan.
However, if a participant has severed his employment relationship more than
three months before the Common Stock is purchased for him under the Employee
Plan, or if for any reason the option or the underlying Common Stock is not
deemed received, held, exercised, or purchased under an employee stock purchase
plan described in Section 423 of the Code, a participant will recognize
compensation income under Section 83 of the Code (taxable as ordinary income) at
the time when he receives the Common Stock to the extent of the difference
between the Stock's then fair market value and his purchase price. Any
subsequent gain or loss upon a participant's disposition of Stock acquired in a
taxable transfer will normally be capital in nature.
Common Stock Disposition. If the Common Stock was purchased and received
under an employee stock purchase plan described in Section 423 of the Code, the
federal tax treatment of its subsequent taxable disposition will depend in the
first instance upon whether such disposition occurred within the statutory
holding period set out in Section 423 of the Code. The statutory holding period
is the later of two years after the Company's granting of the option and one
year from the date the Common Stock is transferred to the participant.
If the participant's disposition of the Common Stock occurs before the
statutory holding period has expired, his gain on the sale (viz, the excess of
his sales proceeds over his tax basis for the Common Stock, which will generally
be his purchase price) will be recognized as compensation income (taxable as
ordinary income) in the year of disposition.
If the participant's disposition of the Common Stock occurs after the
statutory holding period has expired, his gain recognized in the year of the
sale may have two components. One component will be compensation income taxed as
ordinary income. Where, as here, a participant may purchase Common Stock for
less than 100% of its then fair market value, at the time of sale or other
disposition of the Common Stock (or upon the participant's death if he dies
while owning the Common Stock), this compensatory amount will be the lesser of
(a) the amount, if any, by which the fair market value of the Common Stock when
the option was granted exceeds the participant's purchase price, or (b) the
amount, if any, by which the Common Stock's fair market value at the time of its
disposition (or the participant's death) exceeds the participant's purchase
price. The balance of the participant's gain, if any, will be taxed as capital
gains.
Impact upon the Company. The Company cannot take a deduction with respect
to its granting of options or a participant's exercise of such options pursuant
to the Employee Plan. Nor may the Company deduct the difference between the fair
market value of Common Stock and its purchase price when a participant exercises
an option under the Employee Plan. However, if (a) the option is not granted or
exercised or the Common Stock is not purchased under an employee stock purchase
plan described in Section 423 of the Code, (b) the participant does not satisfy
the statutory holding period requirements (summarized above) applicable to
Common Stock purchased under such a plan, or (c) the participant has to treat
all or a portion of his gain upon sale or disposition of
Proxy Statement - 18
<PAGE>
Common Stock as compensation due to his purchase of it for less than 100% of its
then fair market value, the Company will be entitled to a compensation deduction
for federal income tax purposes. This deduction will equal to the amount that
the participant includes in as compensation income and will be allowed for the
Company's taxable year in which, or within which, the participant's taxable year
(in which the disqualifying event occurs) ends.
Tax Withholding by the Company. The Employee Plan authorizes the Company,
as a condition of a participant's exercise of an option, to require the
participant, at the discretion of the Committee, to (a) agree to pay to the
Company no later than the date of exercise of the Option, any federal, state,
local or foreign taxes of any kind required by law to be withheld ("Withholding
Tax") upon the exercise of the Option or (b) agree to pay to the Company no
later than thirty (30) days from the date of sale or other disposition of any
Common Stock purchased pursuant to this Plan, any Withholding Tax upon the sale
or disposition of such Common Stock, (c) authorize the Company to retain or sell
without notice, or to demand surrender of, shares of Common Stock with a fair
market value sufficient to pay any such Withholding Tax or (d) authorize the
Company to withhold an amount sufficient to pay any such Withholding Tax from
any payment of any kind otherwise due to the participant.
Effective Date. The Employee Plan shall become effective as of October 1,
1998, if approved before then by the stockholders of the Company.
Vote Required. The affirmative vote of the holders of a majority of the
shares of the Common Stock represented and entitled to vote on this proposal at
the annual meeting of stockholders will constitute their approval of the
Employee Plan.
Employee Plan Benefits.
The benefits or amounts that will be received or allocated to any
individual under the Employee Plan are not determinable at this time because the
price of such shares of Common Stock will not be determined until a later date,
and because benefits to be received depend upon an eligible employees' decision
to participate. The last recorded sales price of the Common Stock as of April 8,
1998 was $2.09 as reported by the OTC Bulletin Board.
The Board of Directors believes that the adoption of the Employee Plan will
promote the interests of the Company and its stockholders and enable the Company
to continue to attract, retain and reward persons important to the Company's
success. The Employee Plan is designed to enhance the identity of the interests
of the recipients of awards with the interests of the Company's stockholders. As
such, the Board of Directors believes that the approval of the Employee Plan is
in the best interests of the Company and its stockholders.
"THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR"
APPROVAL OF THE 1998 EMPLOYEE STOCK PURCHASE PLAN."
Proxy Statement - 19
<PAGE>
PROPOSAL THREE - Approval of Concorde Career Colleges, Inc.
1998 Long-Term Executive Compensation Plan
Introduction
On February 25, 1998, the Board of Directors unanimously adopted, subject
to stockholder approval, the Concorde Career Colleges, Inc. 1998 Long-Term
Executive Compensation Plan (the "Plan"). The Board of Directors believes that
the Plan will be effective in attracting executives and key employees to
Concorde Career Colleges, Inc. and its subsidiary corporations (collectively,
the "Company") and in providing long-term incentives and rewards to those
executives and key employees responsible for the continued growth of the
Company. Approximately 100 persons would be considered "key employees",
including all of the Company's executive officers, and would be eligible to
participate in the Plan. The Board also believes that stock options, incentive
stock options and other awards granted under the Plan will provide a form of
incentive that aligns the economic interests of management and other key
employees with those of the Company's stockholders.
The substantial majority of the awards to be granted under the Plan will be
incentive stock options ("ISOs") meeting the requirements of Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code"). Section 422 of the Code
specifically requires that, in order for an option to qualify as an ISO, such
option must be granted within ten years from the date the applicable stock
option plan is adopted, or the date such plan is approved by the stockholders,
whichever is earlier. No ISOs may be granted under the Plan after February 25,
2008.
The following discussion summarizes the material features of the Plan. Such
discussion is, however, qualified in its entirety by reference to the full text
of the Plan, which is attached to this proxy statement as Exhibit B.
The Plan provides that awards may be granted thereunder at any time prior
to February 25, 2008, on which date such Plan will terminate except as to awards
then outstanding.
Material Features of the Plan
Administration. The Plan will be administrated by the Compensation
Committee of the Board of Directors of the Company (the "Committee"). Members of
the Committee who are also employees of the Company are eligible to participate
in the Plan. The Committee will have authority to determine, within the limits
of the express provisions of the Plan, the individuals to whom awards will be
granted, the nature, amount and terms of such awards and the objectives and
conditions for earning such awards.
Types of Awards. Awards under the Plan may include shares of Common Stock
of the Company ("Common Stock"), restricted shares of Common Stock ("Restricted
Shares"), nonqualified stock options, ISOs, stock appreciation rights ("SARs"),
performance shares, performance units, as well as other types of awards that the
Committee in its discretion may determine are consistent with the objectives and
limitations of the Plan. Restricted Shares are shares of Common Stock issued to
a recipient subject to such terms and conditions, including, without limitation,
forfeiture or resale to the Company, and to such restrictions against sale,
transfer or other
Proxy Statement - 20
<PAGE>
disposition, as the Committee may determine at the time of issuance. A SAR is
the right to receive cash, Common Stock, or both based on the increase of the
market value of the shares of Common Stock covered by such SAR from the initial
date of the performance period for such SAR to the date of exercise. A
"performance share" is the right to receive, upon satisfying designated
performance goals within a performance period, cash, Common Stock or both, based
on the market value of shares of Common Stock covered by such performance shares
at the close of the performance period. A "performance unit" is the right to
receive cash, Common Stock or both upon satisfying designated performance goals
within a performance period.
The Committee may determine that all or a portion of an award may be
deferred, that it may be vested at such times and upon such terms as the
Committee may select, or that a recipient must be an employee at the time the
award is paid or exercised. An employee may be granted multiple awards covering
any number of shares of Common Stock under the Plan. The Plan provides that ISOs
may be granted to a recipient during a calendar year only if the aggregate fair
market value (determined as of the time an ISO is granted) of Common Stock with
respect to which ISOs are exercisable for the first time by such recipient
during any calendar year under the Plan and any other "incentive stock option
plans" maintained by the Company does not exceed the sum of $100,000. No ISO
will be exercisable later than ten years after the date it is granted.
Neither the Company nor any subsidiary corporation shall receive any
consideration from the recipient of an award at the time that the award is
granted.
Eligible Employees. The Committee may grant awards to any officer or key
employee of the Company or any of its direct or indirect subsidiary
corporations. The employees who will be participants in the Plan have not yet
been determined by the Committee. It is estimated that, as of the date of the
Company's annual meeting, approximately 100 employees will be eligible to
participate in the Plan if such Plan were currently in effect. No ISO may be
granted to an employee who owns stock possessing more than 10% of the combined
voting power of all classes of stock of the Company.
Awards to be Granted under the Plan. The exact types and amounts of any
awards to be made by the Committee to any eligible employees pursuant to the
Plan are not presently determinable. As a result of the discretionary nature of
the Plan, it is not possible to state who the participants in such Plan will be
in the future, the numbers of options or other awards to be received by any
person or group, or the benefits or amounts to be received by certain persons or
groups under the Plan. The Compensation Committee presently expects that awards
of ISOs will be made if the Plan is approved by the stockholders, but the
eligible employees to whom such ISOs will be granted and the number of shares to
be subject to such ISOs are not yet determinable. In the exercise of its
discretion under the Plan, the Committee may choose to grant other types of
awards under such Plan or may choose to grant no awards under such Plan.
Assignability. No award granted pursuant to the Plan shall be transferable
or assignable by its recipient other than by will or the laws of descent and
distribution.
Shares Subject to the Plan. An aggregate of 500,000 shares of Common Stock
is reserved for issuance under the Plan. All of such shares may be issued in
connection with the exercise of ISOs. Shares of Common Stock not actually issued
(as a result, for example, of the lapse of an option, the failure of a recipient
to earn an award or the payment of an award in cash or a
Proxy Statement - 21
<PAGE>
combination of cash and Common Stock) are available for additional grants.
Shares of Common Stock to be delivered or purchased under the Plan may be either
authorized by unissued Common Stock or treasury shares.
Anti-Dilution Protection. In the event of any changes in the capital
structure of the Company, including a change resulting from a stock dividend or
stock split, or combination or reclassification of shares, the Board of
Directors shall make such equitable adjustments with respect to awards or any
provisions of the Plan as it deems necessary and appropriate, including, if
necessary, any adjustment in the maximum number of shares of Common Stock
subject to the Plan or the number of shares of Common Stock subject to an
outstanding award.
Market Value Restrictions. The amounts of certain awards are based on the
market value of a share of Common Stock at a specified point in time. The
exercise price per share of Common Stock under each nonqualified stock option or
ISO granted under the Plan, which is paid to the Company at the time of
exercise, shall be determined by the Committee, but shall not be less than the
market value of such Common Stock on the day of grant of such option. The
exercise price for each option will remain constant during the life of the
option, subject to adjustment pursuant to the anti-dilution provisions of the
Plan described above. The market value of a share of Common Stock on the date an
SAR is granted shall be the base value of such SAR. On April 8, 1998, the last
reported sale price of the Company's Common Stock on the OTC Bulletin Board was
$2.09 per share.
Amendments and Termination. The Board of Directors may at any time
terminate or amend the Plan, provided that no such action may be taken that
adversely affects any rights or obligations with respect to any awards
theretofore made under the Plan without the consent of the recipient. No
amendment may be made that would increase the maximum number of shares of Common
Stock that may be issued under the Plan (unless such increase is a result of a
change in the capital structure of the Company), change the termination date of
the Plan, or delete or amend the market value restrictions contained in the Plan
on the stock option exercise price or the base value of an SAR without the prior
approval of the holders of a majority of the outstanding shares of Common Stock
represented in person or by proxy at a duly constituted meeting of stockholders.
No awards may be made under the Plan after February 25, 2008, on which date such
Plan shall terminate, except as to awards then outstanding thereunder. All
outstanding awards under the Plan will expire no later than February 25, 2018.
Federal Income Tax Consequences.
The Company has been advised by its counsel that the federal income tax
consequences of the issuance and/or exercise of awards under the Plan are as
described below. The following information is not a definitive explanation of
the tax consequences of the awards. Recipients should consult with their own tax
advisors with respect to the tax consequences inherent in the ownership and/or
exercise of the awards, and the ownership and disposition of any underlying
securities.
Proxy Statement - 22
<PAGE>
Common Stock Awards. The recipient of a Common Stock award will recognize
ordinary income for federal income tax purposes at the time of receipt of Common
Stock in an amount equal to the fair market value of the Common Stock received.
The Company will be entitled to a deduction for such amount as and when the
ordinary income is recognized by the recipient. Upon disposition of any Common
Stock received, the recipient will recognize long-term or short-term capital
gain or loss, depending upon the period during which such recipient has held the
shares, in an amount equal to the difference between the selling price and the
fair market value of such shares on the date of receipt.
Restricted Shares. A recipient will not be taxed at the date of an award of
Restricted Shares, but will be taxed at ordinary income rates on the fair market
value of any Restricted Shares as of the date that the restrictions lapse (less
the amount, if any, the recipient paid for the Restricted Shares), unless the
recipient, within 30 days after transfer of such Shares to the recipient, elects
under Section 83(b) of the Code to include in income the fair market value of
the Restricted Shares as of the date of such transfer (less the amount, if any,
the recipient paid for the Restricted Shares). The Company will be entitled to a
corresponding deduction. Any disposition of shares after restrictions lapse will
be subject to the regular rules governing long-term and short-term capital gains
and losses, with the tax basis for this purpose equal to the fair market value
of the shares at the end of the restricted period (or the date of the transfer
of the restricted shares, if the employee elects to be taxed on the fair market
value upon such transfer). Dividends received by a recipient during the
restricted period will be taxable to the recipient at ordinary income tax rates
and will be deductible by the Company as compensation expense unless the
recipient has elected to be taxed on the fair market value of the restricted
shares upon transfer, in which case they will thereafter be taxable to the
employee as dividends and will not be deductible by the Company.
Incentive Stock Options. A recipient who is granted an ISO will not
recognize any taxable income for federal income tax purposes, either on the
grant or exercise of the ISO. However, the excess of the fair market value of
the Common Stock received upon the exercise of the ISO over the exercise price
will be an adjustment to the recipient's alternative minimum taxable income and
may be subject to alternative minimum tax ("AMT"). For AMT purposes only, the
basis of the Common Stock acquired upon the exercise of the ISO is increased by
the amount of such excess ("AMT Basis").
If the recipient disposes of the shares purchased pursuant to the ISO more
than two years after the date of grant and more than one year after the transfer
of the shares to him (the required statutory "holding period"), (a) the
recipient will recognize long-term capital gain or loss, as the case may be,
equal to the difference between the selling price and the exercise price; and
(b) the Company will not be entitled to a deduction with respect to the shares
of stock so issued. For AMT purposes, the gain will be the difference between
the sales price and the AMT Basis.
If the holding period requirements are not met, any gain realized upon
disposition will be taxed to the recipient as ordinary income to the extent of
the excess of the lesser of (i) the fair market value of the shares at the time
of exercise, or (ii) the amount, if any, realized on the disposition over the
exercise price. The Company will be entitled to a deduction in the year of
disposition in an amount equal to the ordinary income recognized by the
recipient. Any additional gain will be taxed as short-term or long-term capital
gain, depending upon the holding period for the stock.
Proxy Statement - 23
<PAGE>
Nonqualified Stock Options. The recipient of a nonqualified stock option
under the Plan will not recognize any income for federal income tax purposes on
the grant of the option. Generally, on the exercise of the option, the recipient
will recognize taxable ordinary income equal to the difference between the fair
market value of the shares on the exercise date and the exercise price for the
shares. The Company generally will be entitled to a deduction on the date of
exercise in an amount equal to the ordinary income recognized by the recipient.
Upon disposition of the shares purchased pursuant to the stock option, the
recipient will recognize long-term or short-term capital gain or loss, as the
case may be, equal to the difference between the amount previously recognized by
the recipient as ordinary income.
Stock Appreciation Rights. A recipient who is granted stock appreciation
rights will not recognize any taxable income on the receipt of the SARs. Upon
the exercise of an SAR, (a) the recipient will recognize ordinary income equal
to the amount received (the increase in the fair market value of one share of
the Company's Common Stock from the date of grant of the SAR to the date of
exercise), and (b) the Company will be entitled to a deduction on the date of
exercise in an amount equal to the ordinary income recognized by the recipient.
Performance Shares and Performance Units. A recipient of performance shares
or performance units will not recognize any income or federal income tax
purposes on the date of the grant of the right to receive performance shares or
units. The recipient will recognize ordinary income for federal tax purposes at
the time of receipt of cash and/or Common Stock with respect to the performance
shares or units in an amount equal to the excess, if any, of the fair market
value of the performance shares or units on the date received over the price of
the performance shares or units on the date of grant. The Company will be
entitled to a deduction on the date of receipt of the performance shares by the
recipient in an amount equal to the ordinary income recognized by the recipient.
Upon disposition of any stock received, the recipient will recognize long-term
or short-term gain or loss depending upon the period for which he or she has
held the stock in an amount equal to the difference between the selling price
and the fair market value of the stock on the date of receipt.
Tax Withholding by the Company. The Plan authorizes the Company to deduct
from any awards under the Plan paid in cash any required withholding of federal,
state, local or foreign taxes with respect to such awards (the "Taxes"). The
Plan further provides that awards made under the Plan payable in shares of
Common Stock may provide the recipient with an election to have the Company
withhold shares of Common Stock to satisfy all or part of any obligations to
withhold Taxes, with the value of such withheld shares based upon their fair
market value on the date the tax withholding is required to be made.
Alternative Minimum Tax. In addition to the federal income tax consequences
described above, a recipient may be subject to the AMT, which is payable only to
the extent that it exceeds the recipient's regular tax liability. The AMT is
assessed on the recipient's alternative minimum taxable income in excess of an
exemption amount that varies by filing status. For purposes of computing the
AMT, the alternative minimum taxable income is equal to taxable income (a)
increased by tax preference items, and (b) increased or reduced by certain AMT
"adjustments" (for an example, see the above discussion under "Federal Income
Tax Consequences - Incentive Stock Options). The exemption amount must be
reduced by 25% of the amount by which the alternative minimum taxable income
exceeds certain specified dollar amounts. In no event shall the exemption
Proxy Statement - 24
<PAGE>
amount be reduced below zero. Federal law currently provides for a minimum tax
credit that may be applied against the recipient's regular tax liability in
years following a year in which the recipient is subject to AMT. The minimum tax
credit is limited to the excess, if any, of the regular tax over the tentative
AMT for the year. Any credit not used because of the limitation may be carried
forward indefinitely.
Effective Date. The Plan shall be effective immediately on the date of its
approval by the stockholders of the Company.
Vote Required. The affirmative vote of the holders of a majority of the
shares of the Common Stock represented and entitled to vote on this proposal at
the annual meeting of stockholders will constitute their approval of the Plan.
Plan Benefits. The exact types and amounts of awards granted under the Plan
will be made at the discretion of the Committee, and, accordingly are not yet
determinable. In addition, as a result of the discretionary nature of the Plan,
it is not possible to state who the participants in such Plan will be in the
future, the number options or other awards to be received by any person or
group, or the benefits or amounts to be received by certain persons or groups
under the Plan. Consequently, it is not possible to determine the benefits that
might be received by participants in the Plan. The last recorded sales price of
the Common Stock as of April 8, 1998 was $2.09 as reported by the OTC Bulletin
Board.
The Board of Directors believes that he adoption of the Plan will promote
the interests of the Company and its stockholders and enable the Company to
continue to attract, retain and reward persons important to the Company's
success. The Plan is designed to enhance the identity of the interests of the
recipients of awards with the interests of the Company's stockholders. As such,
the Board of Directors believes that the approval of the Plan is in the best
interests of the Company and its stockholders.
"THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" THE APPROVAL OF
THE 1998 LONG-TERM EXECUTIVE COMPENSATION PLAN."
CERTAIN TRANSACTIONS
Cahill Transaction.
On February 25, 1997, the Company entered into agreements, which soon
thereafter closed, with Cahill, Warnock Strategic Partners Fund, L.P. and
Strategic Associates, L.P., affiliated Baltimore-based venture capital funds
("Cahill-Warnock"), for the issuance by the Company and purchase by Cahill-
Warnock of (i) 55,147 shares of the Company's new Class B Voting Convertible
Preferred Stock ("Voting Preferred Stock") for $1.5 million and (ii) 5%
Debentures due 2003 ("New Debentures") for $3.5 million (collectively, the
"Cahill Transaction"). Cahill-Warnock subsequently assigned (with the Company's
consent) its rights and obligations to acquire 1,838 shares of Voting Preferred
Stock to James Seward, a Director of the Company, and Mr. Seward purchased such
shares for their purchase price of approximately $50,000. The New Debentures
have nondetachable warrants ("Warrants") for approximately 2,573,529 shares of
Common Stock, exercisable beginning August 25, 1998 at an exercise price of
$1.36 per share of Common Stock.
Proxy Statement - 25
<PAGE>
The Voting Preferred Stock has the right to vote, as a class with the
Common Stock (with each share of Voting Preferred Stock having the equivalent
voting power of 20 shares of Common Stock), on all matters presented to holders
of Common Stock. Each share of Voting Preferred Stock is convertible into 20
shares of Common Stock at the election of the holder for no additional
consideration. The Voting Preferred Stock is entitled to a 12% annual dividend
beginning February 25, 2001, and a 15% annual dividend beginning February 25,
2003. The Voting Preferred Stock is mandatorily convertible into Common Stock
upon the successful completion by the Company of a common equity offering
greater than $20 million at a price greater than $4 per share of Common Stock.
Cahill-Warnock also has certain preemptive rights in future issuance's of stock
by the Company. The Voting Preferred Stock has an increasing dividend rate,
therefore the Voting Preferred Stock's carrying value has been discounted. This
discount is being amortized over the period from issuance until the perpetual
dividends are payable in 2003 to yield a constant dividend rate of 15%. The
amortization is recorded as a charge against retained earnings and as a credit
to the carrying amount of the Voting Preferred Stock. The amortization for the
year ended December 31, 1997, was $105,000.
The New Debentures bear an interest rate of 5% per annum, payable
quarterly, with principal due in February 2003, when the attached Warrants
expire. The Warrants are not exercisable until August 25, 1998, subject to
earlier conversion (at the holder's election) in the event of the successful
completion by the Company of a common equity offering greater than $20 million
at a price grater than $4 per share of Common Stock.
The Voting Preferred Stock held by Cahill-Warnock and New Debenture
are also entitled to certain registration rights for the underlying Common
Stock.
As part of the Cahill transaction, the Board of Directors of the
Company was increased from three to six members, with Cahill-Warnock having the
right to nominate two Directors. The sixth Director is Dr. Robert Roehrich, the
Company's President and Chief Executive Officer effective April 1, 1997.
Pursuant to a Stockholders' Agreement among Cahill-Warnock, Messrs.
Brozman and Seward, the Robert F. Brozman Trust (who at the time of this
agreement, together, held an aggregate of 52.8% of the outstanding Voting
Securities and options to purchase 1,000,000 shares of Common Stock) and the
Company, such holders have agreed to certain restrictions on the transfer of
Voting Securities held by them.
In connection with these transactions, the Company incurred $118,000
of stock and debt issuance costs. Stock issuance costs of $59,000 were applied
against the stock proceeds and the remainder was deferred and is being amortized
over the term of the debt.
Pursuant to the December 1996 amendment with CenCor, the Company used
approximately $4.4 million of the funds from the Cahill Transaction to redeem
260,385 outstanding shares of its Class A Preferred Stock and $438,000 of
accumulated dividends and its $2.4 million debenture principal, accrued
interest, and certain unsecured obligations which were held by CenCor (the
"CenCor Repayment").
Proxy Statement - 26
<PAGE>
Mr. Brozman's Relationship with CenCor.
To the extent certain officers, directors or beneficial holders of 5%
of the Company's voting securities hold positions as officers of CenCor, or own
more than 5% of CenCor's voting securities, these individuals have an indirect
interest in the various transactions between the Company and CenCor. Jack L.
Brozman, who is Chairman of the Board and Treasurer and held voting rights for
more than 5% of the Company's voting securities (by virtue of his position as
trustee of the R.F. Brozman trust, respectively), is also Chairman of the Board,
President and Treasurer of CenCor and beneficially owns more than 5% of the
voting securities of CenCor.
The Restructuring Agreement discussed below was effective for the
period between October 30, 1992 and February 25, 1997.
Effective October 30, 1992, the Company and CenCor entered into a
Restructuring, Security and Guaranty Agreement ("Restructuring Agreement")
pursuant to which the Company was released for its obligations relating to
assumed subordinated indebtedness issued by CenCor. As consideration for the
release, the Company issued CenCor the Old Debenture in the original principal
amount of $5,422,307, representing the full principal amount of the assumed
subordinated debt and accrued interest through October 30, 1992. Interest on the
Old Debenture accrued from October 30, 1992. The first principal and interest
payment was made June 30, 1996. In addition to compounded quarterly interest,
initially at 1% over the effective rate charged by the Company's bank lender, at
July 31, 1997 CenCor was entitled to an amount equal to 25% of the amount by
which the "market capitalization" of the Company exceeded $3,500,000
("Additional Payment"). The Restructuring Agreement was amended in December
1993, November 1994 and December 1996. The Additional Payment was reduced to $10
in the December 1996 amendment to the Restructuring Agreement.
As a result of the Cahill Transaction entered into on February 25,
1997, discussed above, all obligations due CenCor were paid, redeemed, or
otherwise satisfied on that date, except for a continuing obligation to convey
written-off receivables in connection with interest discharged in the 1993 and
1994 amendments. The balance due CenCor at December 31, 1997, was $11,000. The
remaining balance was fulfilled in January 1998.
Except as otherwise provided above, to the extent any interest of Jack
L. Brozman in the transactions between the Company and CenCor arose solely from
his position as an officer of CenCor and his attributed ownership of more than
5% equity ownership in CenCor, a value cannot be assigned to such indirect
interest.
There can be no assurance that other potential conflicts will not
arise among the Company and CenCor as a result of their sharing certain
personnel, namely Jack L. Brozman (in the positions described above), and Lisa
M. Henak who is Secretary and Assistant Treasurer of both companies. The
resolution of any such conflicts will be through negotiation among the Company
and CenCor, based upon the conflicting needs of the two companies, the financial
condition of the Company, if relevant, and overall fairness to each of the
parties. Management believes that the terms of the arrangements between the
Company and CenCor described have been fair and reasonable to the Company.
(The remainder of this page was left blank intentionally.)
Proxy Statement - 27
<PAGE>
COMPANY PERFORMANCE
The following graph shows a comparison of cumulative total returns for
the Company, broad market Nasdaq index and a Peer Group (defined below) since
the close of business on December 31, 1992.
COMPARE 5-YEAR CUMULATIVE TOTAL RETURN
AMONG CONCORDE CAREER COLLEGES, INC.,
NASDAQ INDEX AND PEER GROUP
[GRAPH APPEARS HERE]
COMPARISON OF CUMULATIVE TOTAL RETURN
OF COMPANY, INDUSTRY INDEX AND BROAD MARKET
<TABLE>
<CAPTION>
FISCAL YEAR ENDING
COMPANY 1992 1993 1994 1995 1996 1997
<S> <C> <C> <C> <C> <C> <C>
CONCORDE CAREER COLLEGES 100 297.87 574.47 1329.79 1927.66 3457.45
INDUSTRY INDEX 100 129.50 130.60 565.24 1044.91 1553.68
BROAD MARKET 100 119.95 125.94 163.35 202.99 248.30
</TABLE>
THE INDUSTRY INDEX CHOSEN WAS:
SIC CODE 8221 - COLLEGES, UNIVERSITIES, & PROFESSIONAL SCHOOLS
THE BROAD MARKET INDEX CHOSEN WAS:
NASDAQ MARKET INDEX
THE CURRENT COMPOSITION OF THE INDUSTRY INDEX IS AS FOLLOWS:
APOLLO GROUP INC CL A
CONCORDE CAREER COLLEGES
EDUCATIONAL MEDICAL INC
EDUTREK INTERNAT INC CLA
STRAYER EDUCATION INC
WHITMAN EDUCATION GROUP
SOURCE: MEDIA GENERAL FINANCIAL SERVICES
P.O. BOX 85333
RICHMOND, VA 23293
PHONE: 1-(800) 446-7922
FAX: 1-(804) 649-6826
ASSUMES $100 INVESTED ON JAN. 1, 1993
ASSUMES DIVIDEND REINVESTED
FISCAL YEAR ENDING DEC. 31, 1997
The Peer Group (as defined below) consists of the following companies:
Apollo Group, Inc., Educational Medical Inc., Edutrek International, Inc.,
Strayer Education, Inc. and Whitman Education Group (the "Peer Group"). The
Company believes that the Peer Group provides a more accurate comparison since
the SIC Code Index used in prior years had only one competitor available for
comparison. The total return of the SIC Code Index was $133 compared to $1,554
for the Peer Group. The total cumulative return on investment (change in the
year end stock price plus reinvested dividends) for each of the periods for the
Company, broad based Nasdaq index and a peer group is based on the stock prices
at the close of business on December 31, 1992, assuming a $100 investment. The
return for the Company is based on a December 31, 1992 per share price of $0.047
and a December 31, 1997 per share price of $1.625. The above performance graph,
prepared by Media General Financial Services, Inc., compares the annual
performance of the Company with that of the broad market Nasdaq index and a Peer
Group with investment weighted on market capitalization.
Proxy Statement-28
<PAGE>
PROPOSAL FOUR - RATIFICATION OF INDEPENDENT PUBLIC ACCOUNTANTS
For 1997, Price Waterhouse LLP examined the financial statements of the
Company and its subsidiaries, including reports to Stockholders, the Securities
and Exchange Commission and other.
The Board of Directors has selected and appointed Price Waterhouse LLP as
the independent public accountants for the Company for the year 1998.
The following resolution will be offered at the Annual Meeting:
"RESOLVED, the action of the Board of Directors in appointing Price
Waterhouse LLP as the independent public accountants of the Company for
1998 is hereby ratified."
It is not anticipated that representatives of Price Waterhouse LLP
will attend the Annual Meeting. If, however, representatives are present at the
Annual Meeting, there will be an opportunity for them to make a statement and be
available to respond to questions by Stockholders.
"THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" THE
RATIFICATION OF PRICE WATERHOUSE LLP AS THE COMPANY'S PUBLIC ACCOUNTANTS FOR
1998."
SECTION 16(a) BENEFICIAL OWNERSHIP
REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's directors, executive officers and holders of more than 10% of the
Company's common stock to file with the Securities and Exchange Commission
reports of their respective beneficial ownership, and changes in such beneficial
ownership, in the Company's common stock, and the Company is required to
identify any of those persons who fail to file such reports on a timely basis.
Based solely upon a review of Forms 3, 4 and 5 and amendments thereto furnished
to the Company with respect to the Company's last fiscal year, all required
filings were filed on a timely basis except that with respect to one
transaction, Thomas K. Sight, a director of the Company, reported such
transaction on a year-end Form 5 report rather than on a month-end Form 4 report
as required.
STOCKHOLDER PROPOSALS
In the event any Stockholder intends to present a proposal at the
Annual Meeting of Stockholders to be held in 1999, such proposal must be
received by the Company, in writing, on or before December 19, 1998, to be
considered for inclusion in the Company's next Proxy Statement for such meeting.
Proxy Statement-29
<PAGE>
VOTING PROXIES AND OTHER MATTERS
Proxies will be voted in accordance with the choices specified on the
form of proxy. If no choice is specified, shares will be voted: (i) "FOR" the
nominees for director listed on the proxy and in this Proxy Statement; (ii)
"FOR" approval of the 1998 Employee Stock Purchase Plan; (iii) "FOR" approval of
the 1998 Long-Term Executive Compensation Plan; (iv) "FOR" ratification of the
appointment of Price Waterhouse LLP as the independent public accountants for
the Company for 1998.
Management of the Company does not intend to present any business to
the Annual Meeting except as indicated herein and presently knows of no other
business to be presented at the Annual Meeting. Should any other business come
before the Annual Meeting, the persons named in the accompanying form of proxy
will vote the proxy in accordance with their judgment of the best interests of
the Company on such matters.
WHETHER OR NOT YOU EXPECT TO BE PRESENT AT THE ANNUAL MEETING, PLEASE
COMPLETE, SIGN, DATE AND RETURN TO THE COMPANY THE ACCOMPANYING PROXY. IF YOU
ARE PRESENT AT THE ANNUAL MEETING, YOU MAY WITHDRAW YOUR PROXY AND VOTE YOUR
SHARES IN PERSON.
BY THE BOARD OF DIRECTORS
Lisa M. Henak, Secretary
April 17, 1998
Proxy Statement-30
<PAGE>
EXHIBIT A
---------
CONCORDE CAREER COLLEGES, INC.
EMPLOYEE STOCK PURCHASE PLAN
PURPOSE
-------
1.01. Purpose.
The Concorde Career Colleges, Inc. Employee Stock Purchase Plan (the
"Plan") is intended to provide a method whereby employees of Concorde Career
Colleges, Inc. and its subsidiary corporations (hereinafter referred to, unless
the context otherwise requires, as the "Company") will have an opportunity to
acquire a proprietary interest in the Company through the purchase of shares of
the Company's Common Stock, par value $.10 (the "Common Stock"). It is the
intention of the Company to have the Plan qualify as an "employee stock purchase
plan" under (S) 423 of the Internal Revenue Code of 1986, as amended, and the
Treasury Regulations issued thereunder (collectively, the "Code"). The
provisions of the Plan shall be construed so as to extend and limit
participation in a manner consistent with the requirements of that section of
the Code, and any provisions required to be included in the Plan under (S) 423
of the Code are hereby included as fully as though set forth in the Plan at
length.
DEFINITIONS
-----------
2.01. Base Pay.
"Base Pay" shall mean regular straight-time earnings excluding payments for
overtime, shift premium, bonuses and other special payments, commissions and
other marketing incentive payments.
2.02. Committee.
"Committee" shall mean the individuals described in Article XI.
2.03. Employee.
"Employee" means any person who is customarily employed on a full-time or
part-time basis by the Company and is regularly scheduled to work more than 25
hours per week.
2.04. Subsidiary Corporation.
"Subsidiary Corporation" shall mean any present or future corporation which
(i) would be a "subsidiary corporation" of the Company as that term is defined
in (S) 424 of the Code and (ii) is designated as a participant in the Plan by
the Committee.
<PAGE>
ELIGIBILITY AND PARTICIPATION
-----------------------------
3.01. Initial Eligibility.
Any employee who shall have completed at least one (1) year's employment
and who shall be employed by the Company on the date his participation in the
Plan is to become effective shall be eligible to participate in Offerings under
the Plan which commence on or after such one year period has concluded.
3.02. Leave of Absence.
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 regular 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 right to exercise any option.
3.03. Restrictions on Participation.
Notwithstanding any provisions of the Plan to the contrary, no employee
shall be granted an option to participate in the Plan:
(a) if, immediately after the grant, such employee would own stock,
and/or hold outstanding options to purchase stock, possessing 5% or more of the
total combined voting power or value of all classes of stock of the Company (for
purposes of this paragraph, the rules of (S) 424(d) of the Code shall apply in
determining stock ownership of any employee); or
(b) which permits his rights to purchase stock under all employee stock
purchase plans of the Company (as defined in (S) 423(b)(8) of the Code) to
accrue at a rate which exceeds $25,000 in fair market value of the stock
(determined at the time such option is granted) for each calendar year in which
such option is outstanding; or
(c) if the employee is, at the time of the grant, a "highly compensated
employee" of the Company within the meaning of (S) 414(q) of the Code.
3.04. Commencement of Participation.
An eligible employee may become a participant by completing an
authorization for a payroll deduction on the form provided by the Company and
filing it with the office of the Treasurer of the Company on or before the date
set therefor by the Committee, which date shall be prior to the Offering
Commencement Date for the Offering (as such terms are defined below). Payroll
deductions for a participant shall commence on the applicable Offering
Commencement Date when his authorization for a payroll deduction becomes
effective and shall end on the Offering
<PAGE>
Termination Date of the Offering to which such authorization is applicable
unless sooner terminated by the participant as provided in Article VIII.
OFFERINGS
---------
4.01. Annual Offerings.
The Plan will be implemented by five annual offerings of the Company's
Common Stock (the "Offerings") beginning on the 1st day of October (the
"Offering Commencement Date") in each of the years 1998, 1999, 2000, 2001 and
2002, each offering terminating on September 30 of the next calendar year (the
"Offering Termination Date"), provided, however, that each annual Offering may,
in the discretion of the Committee exercised prior to the commencement thereof,
be divided into either (a) four three-month Offerings commencing, respectively,
on October 1, January 1, April 1 and July 1 of such plan year and terminating on
December 31, March 31, June 30 and September 30 of the plan year, respectively,
or (b) two six-month Offerings commencing, respectively, on October 1 and April
1 of the plan year and terminating on March 31 and September 30 of the plan
year, respectively. The maximum number of shares issued in the respective years
shall be:
. From October 1, 1998 to September 30, 1999: 50,000 shares.
. From October 1, 1999 to September 30, 2000: 50,000 shares plus unissued
shares from the prior Offerings, whether offered or not.
. From October 1, 2000 to September 30, 2001: 50,000 shares plus unissued
shares from the prior Offerings, whether offered or not.
. From October 1, 2001 to September 30, 2002: 50,000 shares plus unissued
shares from the prior Offerings, whether offered or not.
. From October 1, 2002 to September 30, 2003: 50,000 shares plus unissued
shares from the prior Offerings, whether offered or not.
If a three-month Offering is made, the maximum number of shares to be
issued shall be 1/4 of the number of shares set forth for the annual period in
which the three-month Offering falls, plus, if the Offering is an October 1 to
December 31, January 1 to March 31, April 1 to June 30, or a July 1 to September
30 Offering, unissued shares, whether offered to not, from the immediately
three-month Offering(s) expiring earlier during such plan year. As used in the
Plan for this purpose, "Offering Commencement Date" means the October 1, January
1, April 1 or July 1, as the case may be, on which the particular three-month
Offering begins and "Offering Termination Date" means the December 31, March 31,
June 30, or September 30, as the case may be, on which the particular three-
month Offering terminates.
If a six-month Offering is made, the maximum number of shares to be issued
shall be 1/2 of the number of shares set forth for the annual period in which
the six-month Offering falls, plus, if the Offering is a April 1 to September 30
Offering, unissued shares, whether offered to not, from the immediately
preceding six-month Offering. As used in the Plan for this purpose, "Offering
Commencement Date" means the October 1 or April 1, as the case may be, on which
the particular
<PAGE>
six-month Offering begins and "Offering Termination Date" means the March 31 or
September 30, as the case may be, on which the particular six-month Offering
terminates.
PAYROLL DEDUCTIONS
------------------
5.01. Amount of Deduction.
At the time a participant files his authorization for payroll deduction, he
shall elect to have deductions made from his pay on each payday during the time
he is a participant in an Offering at the rate of 1, 5 or 10% of his base pay in
effect at the Offering Commencement Date of such Offering. In lieu of making a
separate election for payroll deduction for each of multiple Offerings during a
plan year, the Committee may require that a participant make and file a single
election for payroll deductions with his authorization for the initial Offering
for such plan year, which election shall cover payroll deductions for all
Offerings made during such plan year and which deductions shall be set with
reference to a single percentage of the participant's base pay as in effect at
the initial Offering Commencement Date for such plan year. In the case of a
part-time hourly employee, such employee's base pay during an Offering shall be
determined by multiplying such employee's hourly rate of pay in effect on the
Offering Commencement Date by the number of regularly scheduled hours of work
for such employee during such Offering.
5.02. Participant's Account.
All payroll deductions made for a participant shall be credited to his
account under the Plan. A participant may not make any separate cash payment
into such account, except when on leave of absence and then only as provided in
(S) 5.04.
5.03. Changes in Payroll Deductions.
A participant may discontinue his participation in the Plan as provided in
Article VIII, but no other change can be made during an Offering and,
specifically, a participant may not alter the amount of his payroll deductions
for that Offering.
5.04. Leave of Absence.
If a participant goes on a leave of absence, such participant shall have
the right to elect: (a) to withdraw the balance in his or her account pursuant
to (S) 7.02, without interest, (b) to discontinue contributions to the Plan but
remain a participant in the Plan, or (c) remain a participant in the Plan during
such leave of absence, authorizing deductions to be made from payments by the
Company to the participant during such leave of absence and undertaking to make
cash payments to the Plan at the end of each payroll period to the extent that
amounts payable by the Company to such participant are insufficient to meet such
participant's authorized Plan deductions.
GRANTING OF OPTION
------------------
6.01. Number of Option Shares.
On the Offering Commencement Date, a participating employee shall be deemed
to have been granted an option to purchase during such plan year a maximum
number of shares of the Common Stock of the Company equal to the lesser of (a)
the number of shares which does not
<PAGE>
exceed $5,000 in value on the applicable Offering Commencement Date, or (b) the
number of shares equal in value to (i) that percentage of the employee's base
pay which he has elected to have withheld (but not in any case in excess of 10%)
multiplied by (ii) the employee's base pay during the period of the Offering
(iii) divided by 95% of the market value of the Common Stock of the Company. The
market value of the Company's Common Stock shall be determined as provided in
paragraphs (a) and (b) of (S) 6.02 below. An employee's base pay during the
period of an Offering shall be determined by multiplying, in the case of a one-
year Offering, his normal weekly rate of pay (as in effect on the last day prior
to the Commencement Date of the particular offering) by 52 or the hourly rate by
2,080 or, in the case of a three-month Offering by 13 or 520, as the case may
be, or in the case of a six-month Offering, by 26 or 1040, as the case may be,
provided that, in the case of a part time hourly employee, the employee's base
pay during the period of an Offering shall be determined by multiplying such
employee's hourly rate by the number of regularly scheduled hours of work for
such employee during such Offering.
6.02. Option Price.
The option price of Common Stock purchased with payroll deductions made
during such annual, semi-annual or calendar-quarterly Offering for a participant
therein shall be the lower of:
(a) 95% of the closing price of the Common Stock on the Offering
Commencement Date or the nearest prior business day on which trading occurred on
the OTC Bulletin Board Market System; or
(b) 95% of the closing price of the Common Stock on the Offering
Termination Date or the nearest prior business day on which trading occurred on
the OTC Bulletin Board Market System. If the Common Stock of the Company is not
admitted to trading on any of the aforesaid dates for which closing 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.
Notwithstanding any provision of the Plan to the contrary, no determination
with respect to the fair market value of the Company's Common Stock shall be
inconsistent with (S) 423 of the Code.
EXERCISE OF OPTION
------------------
7.01. Automatic Exercise.
Unless a participant gives written notice to the Company as hereinafter
provided, his option for the purpose of Common Stock with payroll deductions
made during any offering will be deemed to have been exercised automatically on
the Offering Termination Date applicable to such Offering, for the purchase of
the number of full shares of Common Stock which the accumulated payroll
deductions in his account at that time will purchase at the applicable option
price (but not in excess of the number of shares for which options have been
granted to the employee pursuant to (S) 6.01), and any excess in his account at
that time will be retained in his account until the close of the plan year, at
which time any remaining excess will be returned to him, without interest
thereon.
7.02. Withdrawal of Account.
<PAGE>
By written notice to the Treasurer of the Company, at any time prior to the
Offering Termination Date applicable to any Offering, a participant may elect to
withdraw all the accumulated payroll deductions in his account at such time,
without interest thereon.
7.03. Fractional Shares.
Fractional shares will not be issued under the Plan and any accumulated
payroll deductions which would have been used to purchase fractional shares will
be returned to any employee promptly following the close of the plan year
covered by an Offering, without interest thereon.
7.04. Transferability of Option.
During a participant's lifetime, options held by such participant shall be
exercisable only by that participant.
7.05. Delivery of Stock.
As promptly as practicable after the Offering Termination Date of each
Offering, the Company will deliver to each participant, as appropriate, the
stock purchased upon exercise of his option.
WITHDRAWAL
----------
8.01. In General.
As indicated in (S) 7.02, a participant may withdraw payroll deductions
credited to his account under the Plan at any time by giving written notice to
the Treasurer of the Company. All of the participant's payroll deductions
credited to his account will be paid to him, without interest thereon, promptly
after receipt of his notice of withdrawal, and no further payroll deductions
will be made from his pay during such Offering. The Company may, at its option,
treat any attempt to borrow by an employee on the security of his accumulated
payroll deductions as an election under (S) 7.02 to withdraw such deductions.
8.02. Effect on Subsequent Participation.
A participant's withdrawal from any Offering will not have any effect upon
his eligibility to participate in any succeeding Offering or in any similar plan
which may hereafter be adopted by the Company.
8.03. Termination of Employment.
Upon termination of the participant's employment for any reason, including
retirement (but excluding death while in the employ of the Company or
continuation of a leave of absence for a period beyond 90 days), the payroll
deductions credited to his account will be returned to him, or, in the case of
his death subsequent to the termination of his employment, to the person or
persons entitled thereto under (S) 12.01, without interest thereon.
8.04. Termination of Employment Due to Death.
<PAGE>
Upon termination of the participant's employment because of his death, his
beneficiary (as defined in (S) 12.01) shall have the right to elect, by written
notice given to the Treasurer of the Company prior to the earlier of the
Offering Termination Date or the expiration of a period of sixty (60) days
commencing with the date of the death of the participant, either:
(a) to withdraw all of the payroll deductions credited to the
participant's account under the Plan, without interest thereon, or
(b) to exercise the participant's option for the purchase of Common Stock
on the Offering Termination Date next following the date of the participant's
death for the purchase of the number of full shares of stock which the
accumulated payroll deductions in the participant's account at the date of the
participant's death will purchase at the applicable option price, and any excess
in such account will be returned to said beneficiary, without interest thereon.
In the event that no such written notice of election shall be duly received
by the Treasurer of the Company, the beneficiary shall automatically be deemed
to have elected, pursuant to paragraph (b), to exercise the participant's
option.
8.05. Leave of Absence.
A participant on leave of absence shall, subject to the election made by
such participant pursuant to (S) 5.04, continue to be a participant in the Plan
so long as such participant is on continuous leave of absence. A participant who
has been on leave of absence for more than 90 days, and who therefore is not an
employee for the purpose of the Plan, shall not be entitled to participate in
any offering commencing after the 90th day of such leave of absence.
Notwithstanding any other provisions of the Plan, unless a participant on leave
of absence returns to regular full time or part time employment with the Company
at the earlier of: (a) the termination of such leave of absence or (b) three
months from the 90th day of such leave of absence, such participant's
participation in the Plan shall terminate on whichever of such dates first
occurs.
INTEREST
--------
9.01. No Payment of Interest.
No interest will be paid or allowed on any money paid into the Plan or
credited to the account of any participant employee.
STOCK
-----
10.01. Maximum Shares.
The maximum number of shares which shall be issued under the Plan, subject
to adjustment upon changes in capitalization of the Company as provided in (S)
12.04, shall be 50,000 shares in each annual Offering (12,500 shares in each
three-month Offering or 25,000 shares in each six-month Offering, as the case
may be) plus in each Offering all unissued shares from prior Offerings, whether
offered or not, not to exceed 250,000 shares for all Offerings. If the total
number of shares for which options are exercised on any Offering Termination
Date in accordance with Article VI exceeds the maximum number of shares for the
applicable offering, the Company shall make a pro
<PAGE>
rata allocation of the shares available for delivery and distribution in as
nearly a uniform manner as shall be practicable and as it shall determine to be
equitable, and the balance of payroll deductions credited to the account of each
participant under the Plan shall be returned to him as promptly as possible.
10.02. Participant's Interest in Option Stock.
The participant will have no interest in stock covered by his option until
such option has been exercised.
10.03. Registration of Stock.
Stock to be delivered to a participant under the Plan will be registered in
the name of the participant, or, if the participant so directs by written notice
to the Treasurer of the Company prior to the Offering Termination Date
applicable thereto, in the names of the participant and one such other person as
may be designated by the participant, as joint tenants with rights of
survivorship or as tenants by the entireties, to the extent permitted by
applicable law.
10.04. Restrictions on Exercise.
The Board of Directors may, in its discretion, require as conditions to the
exercise of any option that the shares of Common Stock reserved for issuance
upon the exercise of the option shall have been duly listed, upon official
notice of issuance, upon a stock exchange, and that either:
(a) a Registration Statement under the Securities Act of 1933, as amended,
with respect to said shares shall be effective, or
(b) the participant shall have represented at the time of purchase, in
form and substance satisfactory to the Company, that it is his intention to
purchase the shares for investment and not for resale or distribution.
ADMINISTRATION
--------------
11.01. Appointment of Committee.
The Board of Directors shall appoint its regularly-appointed Compensation
Committee (the "Committee") to administer the Plan. No member of the Committee
shall be eligible to purchase stock under the Plan.
11.02. Authority of Committee.
Subject to the express provisions of the Plan, the Committee shall have
plenary authority in its discretion to interpret and construe any and all
provisions of the Plan, to adopt, amend and rescind rules and regulations for
administering the Plan, and to make all other determinations deemed necessary or
advisable for administering the Plan. The Committee's determination on the
foregoing matters shall be conclusive.
11.03. Rules Governing the Administration of the Committee.
<PAGE>
The Board of Directors may from time to time appoint members of the
Committee in substitution for or in addition to members previously appointed and
may fill vacancies, however caused, in the Committee. The Committee may select
one of its members as its Chairman and shall hold its meetings at such times and
places as it shall deem advisable and may hold telephonic meetings. A majority
of its members shall constitute a quorum. All determinations of the Committee
shall be made by a majority of its members. The Committee may correct any defect
or omission or reconcile any inconsistency in the Plan, in the manner and to the
extent it shall deem desirable. Any decision or determination reduced to writing
and signed by a majority of the members of the Committee shall be as fully
effective as if it had been made by a majority vote at a meeting duly called and
held. The Committee may appoint a secretary and shall make such rules and
regulations for the conduct of its business as it shall deem advisable.
MISCELLANEOUS
-------------
12.01. Designation of Beneficiary.
A participant may file a written designation of a beneficiary who is to
receive any stock and/or cash. Such designation of beneficiary may be changed by
the participant at any time by written notice to the Treasurer of the Company.
Upon the death of a participant and upon receipt by the Company of proof of
identity and existence at the participant's death of a beneficiary validly
designated by him under the Plan, the Company shall deliver such stock and/or
cash to such beneficiary. In the event of the death of a participant and in the
absence of a beneficiary validly designated under the Plan who is living at the
time of such participant's death, the Company shall deliver such stock and/or
cash to the executor or administrator of the estate of the participant, or if no
such executor or administrator has been appointed (to the knowledge of the
Company), the Company, in its discretion, may deliver such stock and/or cash to
the spouse or to any one or more dependents of the participant as the Company
may designate. No beneficiary shall, prior to the death of the participant by
whom he has been designated, acquire any interest in the Common Stock or cash
credited to the participant under the Plan.
12.02. Transferability.
Neither payroll deductions credited to a participant's account nor any
rights with regard to the exercise of an option or to receive stock under the
Plan may be assigned, transferred, pledged, or otherwise disposed of in any way
by the participant other than by will or the laws of descent and distribution.
Any such attempted assignment, transfer, pledge or other disposition shall be
without effect, except that the Company may treat such act as an election to
withdraw funds in accordance with (S) 7.02.
12.03. Use of Funds.
All payroll deductions received or held by the Company under this Plan may
be used by the Company for any corporate purpose, and the Company shall not be
obligated to segregate such payroll deductions.
12.04. Adjustment Upon Changes in Capitalization.
<PAGE>
(a) If, while any options are outstanding, the outstanding shares of
Common Stock of the Company have increased, decreased, changed into, or been
exchanged for a different number or kind of shares or securities of the Company
through reorganization, merger, recapitalization, reclassification, stock split,
reverse stock split or similar transaction, appropriate and proportionate
adjustments may be made by the Committee in the number and/or kind of shares
which are subject to purchase under outstanding options and on the option
exercise price or prices applicable to such outstanding options. In addition, in
any such event, the number and/or kind of shares which may be offered in the
Offerings described in Article IV hereof shall also be proportionately adjusted.
No adjustments shall be made for stock dividends. For the purposes of this
Paragraph, any distribution of shares to shareholders in an amount aggregating
20% or more of the outstanding shares shall be deemed a stock split and any
distributions of shares aggregating less than 20% of the outstanding shares
shall be deemed a stock dividend.
(b) Upon the dissolution or liquidation of the Company, or upon a
reorganization, merger or consolidation of the Company with one or more
corporations as a result of which the Company is not the surviving corporation,
or upon a sale of substantially all of the property or stock of the Company to
another corporation, the holder of each option then outstanding under the Plan
will thereafter be entitled to receive at the next Offering Termination Date
upon the exercise of such option for each share as to which such option shall be
exercised, as nearly as reasonably may be determined, the cash, securities
and/or property which a holder of one share of the Common Stock was entitled to
receive upon and at the time of such transaction. The Board of Directors shall
take such steps in connection with such transactions as the Board shall deem
necessary to assure that the provisions of this (S) 12.04 shall thereafter be
applicable, as nearly as reasonably may be determined, in relation to the said
cash, securities and/or property as to which such holder of such option might
thereafter be entitled to receive.
12.05. Amendment and Termination.
The Board of Directors shall have complete power and authority to terminate
or amend the Plan; provided, however, that the Board of Directors shall not,
without the approval of the stockholders of the Corporation (i) increase the
maximum number of shares which may be issued under any Offering (except pursuant
to (S) 12.04); (ii) amend the requirements as to the class of employees eligible
to purchase Common Stock under the Plan or permit the members of the Committee
to purchase Common Stock under the Plan; or (iii) make any change or effect a
change to the Plan which are inconsistent with (S) 423 of the Code. No
termination, modification, or amendment of the Plan may, without the consent of
an employee then having an option under the Plan to purchase Common Stock,
adversely affect the rights of such employee under such option.
12.06. Effective Date.
The Plan shall become effective as of October 1, 1998, subject to approval
by the holders of the majority of the Common Stock present and represented at a
special or annual meeting of the shareholders held on or before September 30,
1998. If the Plan is not so approved, the Plan shall not become effective.
12.07. No Employment Rights.
<PAGE>
The Plan does not, directly or indirectly, create any right for the benefit
of any employee or class of employees to purchase any shares under the Plan, or
create in any employee or class of employees any right with respect to
continuation of employment by the Company, and it shall not be deemed to
interfere in any way with the Company's right to terminate, or otherwise modify,
an employee's employment at any time.
12.08. Withholding Taxes.
As a condition of exercise of an option hereunder, the participant shall be
required, at the discretion of the Committee, to (a) agree to pay to the Company
no later than the date of exercise of an option, any federal, state, local or
foreign taxes of any kind required by law to be withheld ("Withholding Tax")
upon the exercise of the option or (b) agree to pay to the Company no later than
thirty (30) days from the date of sale or other disposition of any Common Stock
purchased pursuant to this Plan, any Withholding Tax upon the sale or
disposition of such Common Stock, (c) authorize the Company to retain or sell
without notice, or to demand surrender of, shares of Common Stock with a fair
market value sufficient to pay any such Withholding Tax, or (d) authorize the
Company to withhold an amount sufficient to pay any such Withholding Tax from
any payment of any kind otherwise due to the participant.
12.09. Rights as a Shareholder.
No participant shall have any rights as a shareholder of the Company unless
and until certificates for shares of Common Stock are issued to him.
12.10. Effect of Plan.
The provisions of the Plan shall, in accordance with its terms, be binding
upon, and inure to the benefit of, all successors of each employee participating
in the Plan, including, without limitation, such employee's estate and the
executors, administrators or trustees thereof, heirs and legatees, and any
receiver, trustee in bankruptcy or representative of creditors of such employee.
12.11. Governing Law.
The law of the State of Missouri will govern all matters relating to this
Plan except to the extent it is superseded by the laws of the United States,
including, but not limited to, (S) 423 of the Code.
<PAGE>
EXHIBIT B
---------
CONCORDE CAREER COLLEGES, INC.
1998 LONG-TERM EXECUTIVE COMPENSATION PLAN
1. Purposes. The purposes of this 1998 Long-Term Executive Compensation
Plan are to provide incentives and rewards to those employees largely
responsible for the success and growth of Concorde Career Colleges, Inc., and
its subsidiary corporations and to assist all such corporations in attracting
and retaining executives and other key employees with experience and ability.
2. Definitions.
(a) Award means one or more of the following: shares of Common Stock,
Restricted Shares, Stock Options, Incentive Stock Options, Stock Appreciation
Rights, Performance Shares, Performance Units and any other rights which may be
granted to a Recipient under the Plan.
(b) Common Stock means the Common Stock, $0.10 par value, of the Company.
(c) Company means Concorde Career Colleges, Inc., a Delaware corporation,
and, unless the context otherwise requires, includes its subsidiary corporations
and their respective divisions, departments and subsidiaries and the respective
divisions, departments and subsidiaries of such subsidiaries.
(d) Incentive Stock Option means a Stock Option which meets all of the
requirements of an "incentive stock option" as defined in Section 422(b) of the
Internal Revenue Code of 1986, as now in effect or hereafter amended (the
"Internal Revenue Code").
(e) Performance Period means that period of time specified by the
Committee during which a Recipient must satisfy any designated performance goals
in order to receive an Award.
(f) Performance Share means the right to receive, upon satisfying
designated performance goals within a Performance Period, shares of Common
Stock, cash, or a combination of cash and shares of Common Stock, based on the
market value of shares of Common Stock covered by such Performance Shares at the
close of the Performance Period.
(g) Performance Unit means the right to receive, upon satisfying
designated performance goals within a Performance Period, shares of Common
Stock, cash, or a combination of cash and shares of Common Stock.
(h) Plan means this 1998 Long-Term Executive Compensation Plan, as the
same may be amended from time to time.
(i) Recipient means an employee of the Company who has been granted an
Award under the Plan.
<PAGE>
(j) Restricted Share means a share of Common Stock issued to a Recipient
hereunder subject to such terms and conditions, including, without limitation,
forfeiture or resale to the Company, and to such restrictions against sale,
transfer or other disposition, as the Committee may determine at the time of
issuance.
(k) Stock Appreciation Right means the right to receive, upon exercise of
a Stock Appreciation Right granted under this Plan, shares of Common Stock,
cash, or a combination of cash and shares of Common Stock, based on the increase
in the market value of the shares of Common Stock covered by such Stock
Appreciation Right from the initial day of the Performance Period for such Stock
Appreciation Right to the date of exercise.
(1) Stock Option means the right to purchase, upon exercise of a Stock
Option granted under this Plan, shares of the Company's Common Stock.
3. Administration of the Plan. The Plan shall be administered by a
Compensation Committee (the "Committee") consisting of directors of the Company,
to be appointed by and to serve at the pleasure of the Board of Directors of the
Company. A majority of the Committee members shall constitute a quorum and the
acts of a majority of the members present at any meeting at which a quorum is
present, or acts approved in writing by a majority of the Committee, shall be
valid acts of the Committee, however designated, or the Board of Directors of
the Company if the Board has not appointed a Committee.
The Committee shall have full power and authority to construe, interpret
and administer the Plan and, subject to the powers herein specifically reserved
to the Board of Directors and subject to the other provisions of this Plan, to
make determinations which shall be final, conclusive and binding upon all
persons including, without limitation, the Company, the shareholders of the
Company, the Board of Directors, the Recipients and any persons having any
interest in any Awards which may be granted under the Plan. The Committee shall
impose such additional conditions upon the grant and exercise of Awards under
this Plan as may from time to time be deemed necessary or advisable, in the
opinion of counsel to the Company, to comply with applicable laws and
regulations. The Committee from time to time may adopt rules and regulations for
carrying out the Plan and written policies for implementation of the Plan. Such
policies may include, but need not be limited to, the type, size and terms of
Awards to be made to Recipients and the conditions for payment of such Awards.
4. Absolute Discretion. The Committee may, in its sole and absolute
discretion (subject to the Committee's power to delegate certain authority in
accordance with the second paragraph of this Section 4), at any time and from
time to time during the continuance of the Plan, (i) determine which employees
of the Company shall be granted Awards under the Plan, (ii) grant to any
employee so selected such an Award, (iii) determine the type, size and terms of
Awards to be granted (subject to Sections 6, 10 and 11 hereof, as hereafter
amended), (iv) establish objectives and conditions for receipt of Awards, (v)
place conditions or restrictions on the payment or exercise of Awards, and (vi)
do all other things necessary and proper to carry out the intentions of this
Plan; provided, however, that, in each and every case, those Awards which are
Incentive Stock Options shall contain and be subject to those requirements
specified in Section 422 of the Internal Revenue Code and shall be granted only
to those employees eligible thereunder to receive the same.
<PAGE>
The Committee may at any time and from time to time delegate to the Chief
Executive Officer of the Company authority to take any or all of the actions
that may be taken by the Committee as specified in this Section 4 or in other
sections of the Plan in connection with the determination of Recipients, types,
sizes, terms and conditions of Awards under the Plan and the grant of any such
Awards, provided that any authority so delegated (a) shall apply only to Awards
to employees of the Company that are not officers of Company under Regulation
Section 240.16a-1(f) promulgated pursuant to Section 16 of the Securities
Exchange Act of 1934, and (b) shall be exercised only in accordance with the
Plan and such rules, regulations, guidelines, and limitations as the Committee
shall prescribe.
5. Eligibility. Awards may be granted to any employee of the Company. No
member of the Committee (other than any ex officio member) shall be eligible for
grants of Awards under the Plan. An employee may be granted multiple forms of
Awards under the Plan. Incentive Stock Options may be granted under the Plan to
a Recipient during any calendar year only if the aggregate fair market value
(determined as of the date the Incentive Stock Option is granted) of Common
Stock with respect to which Incentive Stock Options are exercisable for the
first time by such Recipient during any calendar year under the Plan and any
other "incentive stock option plans" (as defined in the Internal Revenue Code)
maintained by the Company does not exceed the sum of $100,000.
6. Stock Subject to the Plan. The total number of shares of Common Stock
issuable under this Plan may not at any time exceed 500,000 shares, subject to
adjustment as provided herein. All of such shares may be issued or issuable in
connection with the exercise of Incentive Stock Options. Shares of Common Stock
not actually issued pursuant to an Award shall be available for future Awards.
Shares of Common Stock to be delivered or purchased under the Plan may be either
authorized but unissued Common Stock or treasury shares.
7. Awards.
(a) Awards under the Plan may include, but need not be limited to, shares
of Common Stock, Restricted Shares, Stock Options, Incentive Stock Options,
Stock Appreciation Rights, Performance Shares and Performance Units. The amount
of each Award may be based upon the market value of a share of Common Stock. The
Committee may make any other type of Award which it shall determine is
consistent with the objectives and limitations of the Plan.
(b) The Committee may establish performance goals to be achieved within
such Performance Periods as may be selected by it using such measures of the
performance of the Company as it may select as a condition to the receipt of any
Award.
8. Vesting Requirements. The Committee may determine that all or a
portion of an Award or a payment to a Recipient pursuant to an Award, in any
form whatsoever, shall be vested at such times and upon such terms as may be
selected by it.
9. Deferred Payments and Dividend and Interest Equivalents.
(a) The Committee may determine that the receipt of all, or a portion,
of an Award or a
<PAGE>
payment to a Recipient pursuant to an Award, in any form whatsoever, shall be
deferred. Deferrals shall be for such periods and upon such terms as the
Committee may determine.
(b) The Committee may provide, in its sole and absolute discretion, that a
Recipient to whom an Award is payable in whole or in part at a future time in
shares of Common Stock shall be entitled to receive an amount per share equal in
value to the cash dividends paid per share on issued and outstanding shares as
of the dividend record dates occurring during the period from the date of the
Award to the date of delivery of such share to the Recipient. The Committee may
also authorize, in its sole and absolute discretion, payment of an amount which
a Recipient would have received in interest on (i) any Award payable at a future
time in cash during the period from the date of the Award to the date of
payment, and (ii) any cash dividends paid on issued and outstanding shares as of
the dividend record dates occurring during the period from the date of an Award
to the date of delivery of shares pursuant to the Award. Any amounts provided
under this subsection shall be payable in such manner at such time or times, and
subject to such terms and conditions as the Committee may determine in its sole
and absolute discretion.
10. Stock Option Price. The purchase price per share of Common Stock under
each Stock Option shall be determined by the Committee, but shall not be less
than, market value (as determined by the Committee) of one share of Common Stock
on the date the Stock Option or Incentive Stock Option is granted. Payment for
exercise of any Stock Option granted hereunder shall be made (a) in cash, or (b)
by delivery of Common Stock having a market value equal to the aggregate option
price, or (c) by a combination of payment of cash and delivery of Common Stock
in amounts such that the amount of cash plus the market value of the Common
Stock equals the aggregate option price.
11. Stock Appreciation Right Value. The base value per share of Common
Stock covered by an Award in the form of a Stock Appreciation Right shall be the
market value of one share of Common Stock on the date the Award is granted.
12. Continuation of Employment. The Committee shall require that a
Recipient be an employee of the Company at the time an Award is paid or
exercised. The Committee may provide for the termination of an outstanding Award
if a Recipient ceases to be an employee of the Company and may establish such
other provisions with respect to the termination or disposition of an Award on
the death or retirement of a Recipient as it, in its sole discretion, deems
advisable. The Committee shall have the sole power to determine the date of any
circumstances which shall constitute a cessation of employment and to determine
whether such cessation is the result of retirement, death or any other reason.
13. Registration of Stock. Each Award shall be subject to the requirement
that, if at any time the Committee shall determine that qualification or
registration under any state or federal law of the shares of Common Stock,
Restricted Shares, Stock Options, Incentive Stock Options, or other securities
thereby covered or the consent or approval of any governmental regulatory body
is necessary or desirable as a condition of or in connection with the granting
of such Award or the purchase of shares thereunder, the Award may not be paid or
exercised in whole or in part unless and until such qualification, registration,
consent or approval shall have been effected or obtained free of any conditions
the Committee, in its discretion, deems unacceptable.
<PAGE>
14. Employment Status. No Award shall be construed as imposing upon the
Company the obligation to continue the employment of a Recipient. No employee or
other person shall have any claim or right to be granted an Award under the
Plan.
15. Assignability. No Award granted pursuant to the Plan shall be
transferable or assignable by the Recipient other than by will or the laws of
descent and distribution and during the lifetime of the Recipient shall be
exercisable or payable only by or to him or her.
16. Dilution or Other Adjustments. In the event of any changes in the
capital structure of the Company, including but not limited to a change
resulting from a stock dividend or split-up, or combination or reclassification
of shares, the Board of Directors shall make such equitable adjustments with
respect to Awards or any provisions of this Plan as it deems necessary and
appropriate, including if necessary, any adjustment in the maximum number of
shares of Common Stock subject to the Plan the maximum number of shares that may
be subject to one or more Awards granted to any one Recipient during a calendar
year, or the number of shares of Common Stock subject to an outstanding Award.
17. Merger, Consolidation, Reorganization, Liquidation, Etc. If the
Company shall become a party to any corporate merger, consolidation, major
acquisition of property for stock, reorganization, or liquidation, the Board of
Directors shall make such arrangements it deems advisable with respect to
outstanding Awards, which shall be binding upon the Recipients of outstanding
Awards, including, but not limited to, the substitution of new Awards for any
Awards then outstanding, the assumption of any such Awards and the termination
of or payment for such Awards.
18. Withholding Taxes. The Company shall have the right to deduct from all
Awards hereunder paid in cash any federal, state, local or foreign taxes
required by law to be withheld with respect to such Awards and, with respect to
Awards paid in other than cash, to require the payment (through withholding from
the Recipient's salary or otherwise) of any such taxes. Subject to such
conditions as the Committee may establish, Awards under the Plan payable in
shares of Common Stock may provide that the Recipients thereof may elect, in
accordance with any applicable regulations, to have the Company withhold shares,
of Common Stock to satisfy all or part of any such tax withholding obligations,
with the value of such withheld shares of Common Stock based upon their fair
market value on the date the tax withholding is required to be made.
19. Costs and Expenses. The cost and expenses of administering the Plan
shall be borne by the Company and not charged to any Award nor to any Recipient.
20. Funding of Plan. The Plan shall be unfunded. The Company shall not be
required to establish any special or separate fund or to make any other
segregation of assets to assure the payment of any Award under the Plan.
21. Award Contracts. The Committee shall have the power to specify the
form of Award contracts to be granted from time to time pursuant to and in
accordance with the provisions of the Plan and such contracts shall be final,
conclusive and binding upon the Company, the shareholders of the Company and the
Recipients. No Recipient shall have or acquire any rights under the Plan except
such as are evidenced by a duly executed contract in the form thus specified.
<PAGE>
No Recipient shall have any rights as a holder of Common Stock with respect to
Awards hereunder unless and until certificates for shares of Common Stock car
Restricted Shares are issued to the Recipient.
22. Guidelines. The Board of Directors of the Company shall have the power
to provide guidelines for administration of the Plan by the Committee and to
make any changes in such guidelines as from time to time the Board deems
necessary.
23. Amendment and Discontinuance. The Board of Directors of the Company
shall have the right at any time during the continuance of the Plan to amend,
modify, supplement, suspend or terminate the Plan, provided that in the absence
of the approval of the holders of a majority of the shares of Common Stock of
the Company present in person or by proxy at a duly constituted meeting of
shareholders of the Company, no such amendment, modification or supplement shall
(i) increase the aggregate number of shares which may be issued under the Plan,
unless such increase is by reason of any change in capital structure referred to
in Section 16 hereof, (ii) change the termination date of the Plan provided in
Section 24, or (iii) delete or amend the market value restrictions contained in
Sections 10 and 11 hereof, and provided further, that no amendment, modification
or termination of the Plan shall in any manner affect any Award of any kind
theretofore granted under the Plan without the consent of the Recipient of the
Award, unless such amendment, modification or termination is by reason of any
change in capital structure referred to in Section 16 hereof or unless the same
is by reason of the matters referred to in Section 17 hereof.
24. Termination. The Committee may grant Awards at any time prior to
February 25, 2008, on which date this Plan will terminate except as to Awards
then outstanding hereunder, which Awards shall remain in effect until they have
expired according to their terms or until February 25, 2018, whichever first
occurs. No Incentive Stock Option shall be exercisable later than 10 years
following the date it is granted.
25. Approval. This Plan shall take effect upon due approval by the
shareholders of the Company.
<PAGE>
CONCORDE CAREER COLLEGES, INC.
ANNUAL MEETING OF STOCKHOLDERS
MAY 29, 1998
THIS PROXY AND EACH OF THE PROPOSALS ARE SOLICITED ON BEHALF OF THE BOARD OF
DIRECTORS
The undersigned hereby appoints Jack L. Brozman and Lisa M. Henak, jointly
and individually, as Proxies with full power of substitution and hereby
authorizes them to represent and to vote, as designated below, all the shares of
Common Stock of Concorde Career Colleges, Inc., which the undersigned would be
entitled to vote if personally present at the Annual Meeting of Stockholders to
be held on May 29, 1998 or any adjournment or postponement thereof.
1. Election of Directors.
[_] FOR ALL NOMINEES LISTED BELOW [_] WITHHOLD AUTHORITY
(except as marked to the to vote for all nominees
contrary below) listed below
(INSTRUCTION: To withhold authority to vote for any individual nominee,
strike a line through the nominees name.)
JACK L. BROZMAN, DAVID A. NICHOLS, ROBERT R. ROEHRICH,
JAMES R. SEWARD, THOMAS K. SIGHT, AND DAVID L. WARNOCK
2. Approval of the 1998 Employee Stock Purchase Plan.
[_] FOR [_] AGAINST [_] ABSTAIN
3. Approval of the 1998 Long-Term Executive Compensation Plan.
[_] FOR [_] AGAINST [_] ABSTAIN
4. Ratification of the appointment of Price Waterhouse LLP as the independent
public accountants for 1998.
[_] FOR [_] AGAINST [_] ABSTAIN
5. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
(Please see reverse side.)
(See reverse side for matters to be voted on.)
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED STOCKHOLDERS. NONE OF THE PROPOSALS ARE RELATED TO OR
CONDITIONED ON THE APPROVAL OF ANY OTHER PROPOSAL. IF NO DIRECTION IS GIVEN,
THIS PROXY WILL BE VOTED "FOR" THE NOMINEES SET FORTH IN PROPOSAL 1 AND "FOR"
PROPOSALS 2, 3, AND 4.
Please date, sign and return this Proxy card by mail, postage prepaid.
Dated: , 1998
---------------------------------------
Signature:
-----------------------------------------
Signature if held jointly:
-------------------------
(Please sign exactly as name appears to the left.
When stock is registered jointly, all owners must
sign. When signing as attorney, executor,
administrator, trustee or guardian, please give full
title as such. If a corporation, please sign in full
corporate name by the President or other authorized
officer. If a partnership, please sign in
partnership name by an authorized person.)
<PAGE>
CONCORDE CAREER COLLEGES, INC.
ANNUAL MEETING OF STOCKHOLDERS
MAY 29, 1998
THIS PROXY AND EACH OF THE PROPOSALS ARE SOLICITED ON BEHALF OF THE BOARD OF
DIRECTORS
The undersigned hereby appoints Jack L. Brozman and Lisa M. Henak, jointly
and individually, as Proxies with full power of substitution and hereby
authorizes them to represent and to vote, as designated below, all the shares of
Class B Voting Convertible Preferred Stock of Concorde Career Colleges, Inc.,
which the undersigned would be entitled to vote if personally present at the
Annual Meeting of Stockholders to be held on May 29, 1998 or any adjournment or
postponement thereof.
1. Election of Directors.
[_] FOR ALL NOMINEES LISTED BELOW [_] WITHHOLD AUTHORITY
(except as marked to the to vote for all nominees
contrary below) listed below
(INSTRUCTION: To withhold authority to vote for any individual nominee,
strike a line through the nominee's name.)
JACK L. BROZMAN, DAVID A. NICHOLS, ROBERT R. ROEHRICH,
JAMES R. SEWARD, THOMAS K. SIGHT, AND DAVID L. WARNOCK
2. Approval of the 1998 Employee Stock Purchase Plan.
[_] FOR [_] AGAINST [_] ABSTAIN
3. Approval of the 1998 Long-Term Executive Compensation Plan.
[_] FOR [_] AGAINST [_] ABSTAIN
4. Ratification of the appointment of Price Waterhouse LLP as the independent
public accountants for 1998.
[_] FOR [_] AGAINST [_] ABSTAIN
5. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED STOCKHOLDERS. NONE OF THE PROPOSALS ARE RELATED TO OR
CONDITIONED ON THE APPROVAL OF ANY OTHER PROPOSAL. IF NO DIRECTION IS GIVEN,
THIS PROXY WILL BE VOTED "FOR" THE NOMINEES SET FORTH IN PROPOSAL 1 AND "FOR"
PROPOSALS 2, 3, AND 4.
Please date, sign and return this Proxy card by mail, postage prepaid.
Dated: , 1998
---------------------------------------
Signature:
-----------------------------------------
Signature if held jointly:
-------------------------
(Please sign exactly as name appears to the left.
When stock is registered jointly, all owners must
sign. When signing as attorney, executor,
administrator, trustee or guardian, please give full
title as such. If a corporation, please sign in full
corporate name by the President or other authorized
officer. If a partnership, please sign in
partnership name by an authorized person.)
