SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant [x]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[x] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
[ ] Confidential, For Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
NEW HORIZONS WORLDWIDE, INC.
(Name of Registrant as Specified in Its Charter)
NEW HORIZONS WORLDWIDE, INC.
(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 the table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.
(1) Amount previously paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE>
NEW HORIZONS
---------------
WORLDWIDE, INC.
NOTICE OF ANNUAL STOCKHOLDERS' MEETING
TO BE HELD MAY 5, 1998
TO OUR STOCKHOLDERS:
The Annual Meeting of Stockholders (the "Meeting") of New Horizons
Worldwide, Inc. (the "Company") will be held at the Oyster Point Hotel, 146
Bodman Place, Red Bank, New Jersey, on Tuesday, May 5, 1998, at 10:00 a.m., EDT,
to consider and act upon the following:
1. The election of two Directors whose three-year term of office
will expire in 2001;
2. A proposal to approve and adopt the Company's 1997 Outside
Directors Elective Stock Option Plan;
3. A proposal to approve and adopt the Company's Omnibus Equity
Plan; and
4. The transaction of such other business as may properly come
before the Meeting or any adjournments thereof.
Holders of Common Stock of record at the close of business on March 27,
1998 are entitled to notice of and to vote at the Meeting.
Whether or not you expect to be personally present at the Meeting,
please be sure that the enclosed proxy is properly marked, signed and dated, and
returned without delay in the enclosed prepaid envelope. Such action will not
limit your right to vote in person or to attend the Meeting, but will ensure
your representation if you cannot attend.
By Order of the Board of Directors,
/S/ STUART O. SMITH
-----------------------------------
Stuart O. Smith
SECRETARY
April 1998
<PAGE>
NEW HORIZONS WORLDWIDE, INC.
500 CAMPUS DRIVE, SUITE 200
MORGANVILLE, NJ 07751
PROXY STATEMENT
MAILED ON APRIL 9, 1998
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 5, 1998
Proxies in the form enclosed with this Proxy Statement are solicited by
the Board of Directors of New Horizons Worldwide, Inc., a Delaware corporation
(the "Company"), for use at the Annual Meeting of Stockholders to be held on
Tuesday, May 5, 1998, and any adjournments thereof. The time, place and purposes
of the Annual Meeting are stated in the Notice of Annual Meeting which
accompanies this Proxy Statement.
Only stockholders of record as of March 27, 1998 will be entitled to
vote at the Meeting or any adjournments thereof. As of that date, 7,177,331
shares of Common Stock, par value $.01 per share (the "Common Stock"), of the
Company were issued and outstanding. Each share of Common Stock outstanding as
of the record date will be entitled to one vote, and stockholders may vote in
person or by proxy. The Company's Certificate of Incorporation (the
"Certificate") does not provide for cumulative voting rights. Execution of a
proxy will not in any way affect a stockholder's right to attend the Meeting and
vote in person. Any stockholder has the right to revoke a proxy by written
notice to the Secretary of the Company at any time before it is exercised,
including by executing another proxy, bearing a later date, or by attending the
Meeting and voting in person.
A properly executed proxy returned in time to be cast at the meeting
will be voted in accordance with the instructions contained thereon, if it is
returned duly executed and is not revoked. If no choice is specified on the
proxy, it will be voted "FOR" the election of all of the individuals nominated
by the Board of Directors and "FOR" the other proposals set forth in the Notice
of Annual Meeting.
At the Annual Meeting, in accordance with the Delaware General
Corporation Law and the Company's Certificate of Incorporation, the inspectors
of election appointed by the Board of Directors for the Annual Meeting will
determine the presence of a quorum and will tabulate the results of stockholder
voting. Pursuant to the Company's By-Laws, at the Annual Meeting the holders of
a majority of the outstanding shares of the Company's Common Stock entitled to
vote at the meeting, present in person or by proxy, constitute a quorum. The
shares represented at the Annual Meeting by proxies which are marked, with
respect to the election of Directors, as "withheld" or, with respect to any
other proposal, "abstain," will be counted as shares present for purposes of
determining whether a quorum is present.
Under the rules of the New York Stock Exchange, brokers who hold shares
in street name for beneficial owners have the authority to vote on certain items
when they have not received instructions from such beneficial owners. Under
applicable Delaware law, if a broker returns a proxy and has not voted on a
certain proposal, such broker non-votes will count for purposes of determining
whether a quorum is present.
Pursuant to the Company's By-Laws, at the Annual Meeting, a plurality
of the votes cast is sufficient to elect a nominee as a Director. In the
election of Directors, votes may be cast in favor or withheld; votes that are
withheld or broker non-votes will have no effect on the outcome of the election
of Directors.
<PAGE>
Pursuant to the Company's By-Laws, all other questions and matters
brought before the meeting will be decided by the vote of the holders of a
majority of the outstanding shares entitled to vote thereon present in person or
by proxy at the meeting, unless otherwise provided by law or by the Certificate.
In voting on matters other than the election of Directors, votes may be cast in
favor, against or abstained. Abstentions will count as present for purposes of
the proposal on which the abstention is noted and will have the effect of a vote
against the proposal. Broker non-votes, however, are not counted as present and
entitled to vote for purposes of determining whether a proposal has been
approved and will have no effect on the outcome of such proposal.
The cost of soliciting proxies in the form accompanying this Proxy
Statement will be borne by the Company. In addition to solicitation by mail,
proxies may be solicited by Directors, officers and regular employees of the
Company in person or by mail, telephone, telegraph, facsimile or electronic
mail, following the original solicitation.
2
<PAGE>
SHARE OWNERSHIP OF PRINCIPAL HOLDERS AND MANAGEMENT
The following table sets forth information with respect to Common Stock
owned on March 27, 1998 by each person known by the Company to own beneficially
more than 5% of the Company's outstanding Common Stock at such date, the number
of shares owned by each such person and the percentage of the outstanding shares
represented thereby. The table also lists beneficial ownership of Common Stock
by each of the Company's Directors, each nominee for election as a Director,
each executive officer named in the summary compensation table set forth in this
proxy statement, and all Directors and executive officers as a group.
<TABLE>
<CAPTION>
NAME AND ADDRESS OF SHARES BENEFICIALLY PERCENT OF
BENEFICIAL OWNER OWNED CLASS
---------------- ----- -----
<S> <C> <C>
Curtis Lee Smith, Jr. ................................... 1,183,475 15.6%
500 Campus Drive
Morganville, NJ 07751
Stuart O. Smith ........................................ 1,595,600 21.0%
500 Campus Drive
Morganville, NJ 07751
Thomas J. Bresnan(1) .................................... 334,625 4.4%
David A. Goldfinger(2)................................... 61,565 *
Richard L. Osborne(3) ................................... 12,250 *
William H. Heller(4)..................................... 17,000 *
Scott R. Wilson(5)....................................... 16,000 *
Charles G. Kinch(6)...................................... 11,375 *
Robert S. McMillan(7).................................... 5,000 *
John T. St. James........................................ - -
Palisade Capital Management, L.L.C.(8)................... 449,000 5.9%
One Bridge Plaza, Suite 695
Fort Lee, New Jersey 07024
Dimensional/Fund Advisor, Inc.(9)........................ 376,750 5.0%
1299 Ocean Avenue, 11th Floor
Santa Monica, California 90401
All Directors and Executive Officers
as a Group (11 persons)................................ 3,236,890 42.7%
</TABLE>
- ----------
*Less than 1%.
(1) Mr. Bresnan's ownership figure includes 327,000 shares which may be
acquired upon the exercise of immediately exercisable stock options.
(2) Mr. Goldfinger's ownership figure includes 10,000 shares which may be
acquired upon the exercise of immediately exercisable stock options.
(3) Mr. Osborne's ownership figure includes 12,250 shares which may be
acquired upon the exercise of immediately exercisable stock options.
(4) Mr. Heller's ownership figure includes 15,000 shares which may be
acquired upon the exercise of immediately exercisable stock options.
(5) Mr. Wilson's ownership figure includes 15,000 shares which may be
acquired upon the exercise of immediately exercisable stock options.
(6) Mr. Kinch's ownership figure includes 11,000 shares which may be
acquired upon the exercise of immediately exercisable stock options.
(7) Mr. McMillan's ownership figure includes 5,000 shares which may be
acquired upon the exercise of immediately exercisable stock options.
(8) Based solely upon information in a Schedule 13-G filed with the
Securities and Exchange Commission on January 26, 1998.
(9) Based solely upon information in a Schedule 13-G filed with the
Securities and Exchange Commission on February 6, 1998.
3
<PAGE>
ELECTION OF DIRECTORS
The Company's Board of Directors consists of seven members divided into
three classes. Each class of Directors is elected to a three-year term. At the
Annual Meeting, two Class III Directors will be elected to a three-year term
ending at the Annual Meeting to be held in 2001.
Unless otherwise directed, the persons named in the accompanying proxy
will vote for the election of the two nominees set forth in the table below as
Class III Directors of the Company for a three-year term. In the event of the
death or inability to act of any of the nominees, the proxies will be voted for
the election of such other person as the Board of Directors may recommend. The
Board of Directors has no reason, however, to anticipate that this will occur.
In no event will the accompanying proxy be voted for more than three nominees or
for persons other than those named below and any such substitute nominee for any
of them.
The following table lists the nominees for election at the Meeting, the
Directors who will continue in office subsequent to the Meeting, and certain
other information with respect to each individual.
NOMINEES FOR ELECTION FOR A THREE-YEAR TERM ENDING IN 2001
NAME AGE PRINCIPAL OCCUPATION AND HISTORY
---- --- --------------------------------
DAVID A. GOLDFINGER (1) 62 DIRECTOR
Mr. Goldfinger has served as a Director of
the Company since July 1986. Mr. Goldfinger
served as President of U.S. Consolidated,
Inc., a Cleveland, Ohio-based manufacturers'
representative agency, from 1966 to 1991.
From January 1992 to the present, Mr.
Goldfinger has served as President of
M.S.C.I. Holdings, Inc., a Tavernier,
Florida-based private consulting and
investment corporation. Mr. Goldfinger has
served as a member of the Company's
Compensation Committee and Audit Committee
during the term of his directorship.
RICHARD L. OSBORNE (1) 60 DIRECTOR
Mr. Osborne has served as a consultant to
the Company since July 1986, and was elected
to the Company's Board of Directors in
January 1989. He has served as the Executive
Dean of the Weatherhead School of
Management, Case Western Reserve University,
Cleveland, Ohio, since 1971. Mr. Osborne is
also a management consultant, and serves on
the Board of Directors of Ohio Savings
Financial Corporation, a Cleveland,
Ohio-based savings bank holding company,
Myers Industries, Inc., an Akron, Ohio-based
manufacturer of plastic and rubber parts for
the automotive and other industries, NCS
HealthCare, Inc., a Cleveland, Ohio-based
provider of pharmacy services to long-term
care institutions and several privately held
corporations. Mr. Osborne has served as a
member of the Company's Compensation
Committee and Audit Committee during the
term of his directorship.
4
<PAGE>
DIRECTORS CONTINUING IN OFFICE
NAME AGE PRINCIPAL OCCUPATION AND HISTORY
---- --- --------------------------------
CURTIS LEE SMITH, JR. (2)(4) 70 CHAIRMAN OF THE BOARD,
CHIEF EXECUTIVE OFFICER AND DIRECTOR
Mr. Smith has served as the Company's
Chairman of the Board and Chief Executive
Officer and as a Director since July 1986,
and had the additional title and duties of
President from August 1989 through July
1992. Mr. Smith served as President of
National Copper & Smelting Co., a Cleveland,
Ohio-based manufacturer and distributor of
copper products, from 1962 to 1985, and as
President of NCS Holdings Corporation
("NCS"), a Cleveland, Ohio-based holding
company which operated a copper tubing
importing and fabricating business, from
1985 to 1988. Mr. Smith also serves as a
Director of Dental Care Alliance and
Strategic Diagnostics Inc., both public
companies.
WILLIAM H. HELLER (2) 59 DIRECTOR
Mr. Heller was formerly a partner with the
public accounting firm of KPMG Peat Marwick
LLP from February 1971 until December 1991,
and currently manages his own asset
management firm, William H. Heller &
Associates. He was elected as a Director on
July 1, 1992. Mr. Heller also serves as a
Director of Ohio Savings Financial
Corporation, a Cleveland, Ohio-based savings
and loan holding company, The New Organics
Company, a Boston, Massachusetts-based
producer of organic food products and Telarc
International, Inc., a Cleveland, Ohio-based
distributor of compact discs and tapes. Mr.
Heller has served as a member of the
Company's Audit Committee during the term of
his directorship and is currently serving on
its Compensation Committee.
STUART O. SMITH (3)(4) 65 VICE CHAIRMAN OF THE BOARD, SECRETARY AND
DIRECTOR
Mr. Smith has served as a Director of the
Company since July 1986, as the Company's
Secretary since February 1989 and as Vice
Chairman of the Board since August 1992. Mr.
Smith served as a Vice President from July
1986 to August 1992. Mr. Smith also served
as Vice President of National Copper &
Smelting Co. from 1962 to 1985 and as Vice
President of NCS from 1985 to 1988.
THOMAS J. BRESNAN (3) 45 PRESIDENT, CHIEF OPERATING OFFICER AND
DIRECTOR
Mr. Bresnan joined the Company in August
1992 and has served as the Company's
President and Chief Operating Officer since
that time. Mr. Bresnan has served as the
Chairman and Chief Executive Officer of New
Horizons Education Corporation since its
acquisition by the Company in August 1994.
Prior to joining the Company, Mr. Bresnan
served in various executive, marketing,
financial and administrative positions for
Capitol American Life Insurance
5
<PAGE>
NAME AGE PRINCIPAL OCCUPATION AND HISTORY
---- --- --------------------------------
Company, a Cleveland, Ohio-based specialty
insurance provider, from 1984 to 1991. Mr.
Bresnan served as President and Chief
Operating Officer of Capitol American Life
Insurance Company during 1991. From January
to August 1992, Mr. Bresnan was President
and Chief Executive Officer of Glenbrook
Group, Inc., a Cleveland, Ohio-based company
seeking acquisition opportunities. Mr.
Bresnan was elected a Director in May 1993.
SCOTT R. WILSON (3) 46 DIRECTOR
Mr. Wilson has served as principal outside
legal counsel to the Company since July
1986. Mr. Wilson has been with the law firm
of Calfee, Halter & Griswold LLP, Cleveland,
Ohio, since 1977, and has been a partner in
such firm since 1985. His practice focuses
on mergers and acquisitions and general
corporate law. He was elected a Director in
May 1991.
(1) Term as Director expires in 1998; nominee for a three-year term expiring in
2001.
(2) Term as Director expires in 1999.
(3) Term as Director expires in 2000.
(4) Curtis Lee Smith, Jr., and Stuart O. Smith are brothers.
6
<PAGE>
BOARD OF DIRECTORS AND COMMITTEES
The Board of Directors has two standing Committees: the Audit Committee
and the Compensation Committee.
The Audit Committee, of which Messrs. David A. Goldfinger, Richard L.
Osborne and William H. Heller are members, oversees the accounting functions of
the Company, including matters related to the appointment and activities of the
Company's auditors. The Audit Committee met three times during the year ended
December 31, 1997.
During 1997 and until March 20, 1998, the Compensation Committee
consisted of Messrs. Curtis Lee Smith, Jr., David A. Goldfinger and Richard L.
Osborne. This Committee reviewed and made recommendations, as well as certain
decisions concerning executive salaries, bonuses and the Company's Stock Option
Plans. Subsequent to September 19, 1996, the Board of Directors, upon
recommendations from the Compensation Committee, administered the Company's
Stock Option Plans. The Compensation Committee met three times during the year
ended December 31, 1997.
Effective as of March 20, 1998, William H. Heller replaced Curtis Lee
Smith, Jr. as a member of the Compensation Committee. The Committee will
continue to review and make recommendations as well as certain decisions
concerning executive salaries and bonuses. It will also administer the Company's
Omnibus Equity Plan approved by the Board of Directors at its meeting on March
20, 1998 and submitted for approval by the stockholders of the Company at the
Annual Meeting. See "Proposal to Approve and Adopt the Omnibus Equity Plan."
The Board of Directors of the Company held 11 meetings during 1997. All
of the Directors attended at least 75% of the meetings of the Board of Directors
and each Committee on which each served.
During 1997 the Company paid a quarterly retainer of $1,000, plus
$1,000 per Board meeting attended, $1,000 for each Committee meeting not held in
conjunction with a Board meeting and $250 for each meeting held via telephone to
all Directors who are not employees of the Company. At the meeting of the Board
of Directors held on October 28, 1997, it was determined to replace this fee
arrangement for 1998 with an annual fee of $20,000. Such fee is payable
quarterly and is intended to compensate the Directors for all Board and
Committee meetings. At the meeting of the Board held on November 26, 1997, the
1997 Outside Directors Elective Stock Option Plan was approved. Pursuant to this
plan each non-employee Director is permitted to elect to take one-half or all of
his fees in options by electing to do so at a date specified in the plan and
prior to January 1 of the year for which fees would be payable. At that meeting,
Messrs. Osborne, Goldfinger and Heller elected to take all of their 1998 fees in
options and Mr. Wilson elected to take half. As a result, Messrs. Osborne,
Goldfinger and Heller received options to acquire 20,000 shares and Mr. Wilson
received options to acquire 10,000 shares. All of the options have an exercise
price of $15.63 per share, become exercisable on November 26, 1998 and expire on
November 26, 2002. All such options are subject to stockholder approval of the
1997 Outside Directors Elective Stock Option Plan at the Annual Meeting. See
"Proposal to Approve and Adopt the 1997 Outside Directors Elective Stock Option
Plan."
In January 1989, the Compensation Committee granted Mr. Osborne and Mr.
Goldfinger options to acquire 6,250 shares of Common Stock and 12,500 shares of
Common Stock, respectively, under the Company's Outside Directors Stock Option
Plan. These options became exercisable on July 9, 1989 at an option price of
$11.20 per share. In 1992, Messrs. Wilson and Heller each were granted
immediately exercisable options to acquire 5,000 shares of Common Stock at an
option price of $6.50 per share. As of March 27, 1998, options granted to
individuals pursuant to the Outside Directors Plan were outstanding to purchase
12,250 shares of Common Stock at an average price of $7.36 per share. In
addition, on September 19, 1996, options to purchase an aggregate of 40,000
shares of Common Stock were granted to non-employee Directors of the Company.
The award was approved by the Company's stockholders at the May 6, 1997 Annual
Meeting of Stockholders.
7
<PAGE>
COMPENSATION OF EXECUTIVE OFFICERS
The table below shows information concerning the annual and long-term
compensation for services in all capacities to the Company for each of the past
three fiscal years, of all those persons, who were, (i) the Chief Executive
Officer, and (ii) the other five most highly compensated executive officers of
the Company (the "Named Officers") during 1997:
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION LONG-TERM
------------------- COMPENSATION ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS(1) OTHER(1) OPTIONS/SARS COMPENSATION(2)
--------------------------- ---- ------ -------- -------- ------------ ---------------
<S> <C> <C> <C> <C> <C> <C>
Curtis Lee Smith, Jr. 1997 $168,626 $ - $ - - $10,601
Chairman of the Board, Chief 1996 162,031 - - - 10,601
Executive Officer and Director 1995 153,847 - - - 10,601
Stuart O. Smith 1997 162,957 - - - 4,414
Vice Chairman of the Board, 1996 151,092 - - - 4,414
Secretary and Director 1995 144,231 - - - 4,414
Thomas J. Bresnan 1997 231,658 45,000 - - -
President, Chief Operating Officer 1996 224,486 70,000 - - 4,750
and Director 1995 216,346 35,000 - 25,000 4,629
John T. St. James (3) 1997 121,593 73,750 - - -
Vice President, Chief Financial 1996 154,603 25,000 - - 4,750
Officer and Treasurer 1995 146,096 - - - 2,337
Robert S. McMillan (4) 1997 149,100 3,500 - 25,000 -
Vice President, Chief Financial 1996 132,100 3,500 - - -
Officer and Treasurer 1995 26,051 4,500 - - -
Charles G. Kinch 1997 190,000 - - 55,000 -
President, Chief Operating Officer 1996 174,011 - - - -
New Horizons Computer Learning 1995 81,681 36,396 - - -
Centers, Inc.
</TABLE>
- ----------
(1) No Named Officer received perquisites or other personal benefits having a
value exceeding the lesser of 10% of such executive's salary and bonus for
1997, 1996, and 1995 or $50,000. Pursuant to the terms of Mr. Bresnan's
employment agreement, he received an interest free loan from the Company in
the amount of $250,000 payable on September 30, 1997. Had the loan carried a
market interest rate, Mr. Bresnan would have paid $7,482 in interest in
1997, $13,976 during 1996 and $16,655 during 1995. In 1997, 1996 and 1995,
the Company, in the form of a bonus, forgave $45,000, $45,000 and $35,000
respectively, of Mr. Bresnan's loan. Mr. Bresnan paid off the loan in
September 1997. In 1997, the Company paid Mr. St. James a bonus of $73,750.
(2) Amounts of All Other Compensation reported for Curtis Lee Smith, Jr., and
Stuart O. Smith represent premiums paid by the Company on insurance policies
for the benefit of such persons. Amounts of All Other Compensation reported
for Messrs. Bresnan and St. James represent the Company's matching
contribution under its 401(k) Profit Sharing Plan. Through the end of 1996,
the Company matched participating employee's contributions to the Plan to
the extent of 50% of the participant's salary reduction up to the maximum
allowable under the Internal Revenue Code.
(3) Replaced by Robert S. McMillan, August 23, 1997. Mr. St. James left active
employment of the Company in November 1997, and resigned all other offices
effective December 31, 1997.
(4) Succeeded John T. St. James, August 23, 1997.
8
<PAGE>
OPTION EXERCISES AND YEAR-END VALUES
The table below shows information with respect to the unexercised
options to purchase the Company's Common Stock granted under the Company's Key
Employees Stock Option Plan (the "Employees Plan") to the Named Officers and
held by them at December 31, 1997.
<TABLE>
<CAPTION>
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
OPTIONS HELD AT IN-THE-MONEY OPTIONS AT
DECEMBER 31, 1997 DECEMBER 31, 1997*
----------------- -----------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Curtis Lee Smith, Jr....................... - - $ - $ -
Stuart O. Smith............................ - - - -
Thomas J. Bresnan.......................... 327,000 98,000 2,190,875 634,750
John T. St. James.......................... - - - -
Charles G. Kinch........................... - 55,000 - 58,250
Robert S. McMillan......................... - 25,000 - 26,625
</TABLE>
- ----------
*Based on the difference between the exercise price of such options and the
closing price of a share of the Company's Common Stock on the NASDAQ National
Market System on December 31, 1997 ($14.375).
OPTION AWARDS
The table below shows additional information on the stock options
granted in 1997 under the Employees Plan to Named Officers, which are reflected
in the Summary Compensation Table.
<TABLE>
<CAPTION>
PERCENTAGE
OF TOTAL
OPTIONS POTENTIAL REALIZABLE VALUE
GRANTED TO AT ASSUMED ANNUAL RATES OF
OPTIONS EMPLOYEES IN EXERCISE EXPIRATION STOCK PRICE APPRECIATION FOR
NAME GRANTED (1) IN 1997 PRICE DATE OPTION TERM
---- ----------- ------- ----- ---- -----------
5% 10%
-- ---
<S> <C> <C> <C> <C> <C> <C>
Curtis Lee Smith, Jr....... - - - - - -
Stuart O. Smith............ - - - - - -
Thomas J. Bresnan.......... - - - - - -
John T. St. James.......... - - - - - -
Charles G. Kinch........... 50,000 31.3% $13.310 01/08/03 $297,500 $608,000
5,000 3.1% $13.375 01/13/03 $ 29,425 $ 60,450
Robert S. McMillan......... 25,000 15.6% $13.310 01/08/03 $148,750 $304,000
</TABLE>
- ----------
(1) Represents options awarded under the Employees Plan. With the exception of
certain options previously awarded to Mr. Bresnan, all options outstanding
under the Employee Plan vest at the rate of 20% per year commencing on the
first anniversary of the grant date. All outstanding options have been
awarded at an exercise price equal to the fair market value of a share of
Common Stock on the date of grant, and expire between the sixth to the tenth
anniversary of the date of grant. In general, employees may exercise vested
options awarded under the Employees Plan for a period of three months
following the date of the cessation of their employment with the Company.
9
<PAGE>
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
COMPENSATION PHILOSOPHY
The Company's compensation programs are intended to provide
its executive officers with a mix of salary, benefits and incentive compensation
arrangements that are: (i) consistent with the interests of stockholders; (ii)
competitive with the arrangements provided by other companies in the industry;
(iii) commensurate with each executive's performance, experience and
responsibilities; and (iv) sufficient to attract and retain highly qualified
executives. In making its recommendations concerning adjustments to salaries and
awards under the other compensation plans, the Committee considers the financial
condition and performance of the Company during the prior year and the Company's
success in achieving financial, operational and other strategic objectives. The
Committee also makes an assessment of the contributions of the individual
executive officer to the Company's performance and to the achievement of its
objectives, as well as the success of the executive in achieving objectives
which may have been set for such individual. In assessing individual
performance, the Committee also seeks to recognize individual contributions
during periods when the Company experienced adverse business or financial
conditions.
For purposes of determining whether the Company's compensation packages
are competitive, the companies with which the Company compares itself are those
included in the peer group index set forth in the Stockholder Return Performance
Presentation contained elsewhere in this proxy statement. While the Committee
does not establish a targeted range for the Company's overall executive
compensation within the peer group, its review of publicly available information
for the years 1993 through 1996 indicates that the compensation level of the
Company's Chief Executive Officer has historically been significantly below the
average compensation paid to Chief Executive Officers of peer group companies.
Such information also indicates that the base salary levels for the Company's
other executive officers have been generally comparable with those provided to
similar executives at peer group companies, while the overall amount of bonuses
paid to other executives by the Company have been equal to or lower than the
bonuses paid to peer group executives. Option awards to peer group executives
vary widely from company to company and from year to year, although the
Company's option awards to its executive officers are generally lower than
awards by members of the peer group.
Each component of an executive's compensation package is intended to
assist in attaining one or more of the objectives outlined above. The Company
attempts to provide its executives with base salaries and benefits that are
competitive with those of comparable companies and commensurate with the
performance, experience and responsibilities of each executive. Through salary
adjustments and bonuses, the Company also seeks to provide its executives with
incentives to improve the Company's financial and operational performance by
providing a method for rewarding individual performance. Finally, the Company's
Key Employees' Stock Option Plan has been used to provide executive officers
with an opportunity to acquire a proprietary interest in the Company, thereby
providing these individuals with increased incentive to promote the long-term
interests of the Company's stockholders. The Omnibus Equity Plan, which has been
submitted for approval of the stockholders of the Company at the Annual Meeting,
is also intended to further these objectives. See "Proposal to Approve and Adopt
the Omnibus Equity Plan."
While the Committee seeks to assure that the Company's compensation
programs further the objectives described above and considers the various
factors outlined above in making compensation decisions, it does not take a
highly formalized or objective approach to determining compensation. Instead,
the Committee gives consideration to these various factors in subjectively
evaluating the compensation of each individual executive. While the subjective
nature of the Committee's decisions made it difficult to specifically identify
the relative importance of each of these various factors, in making compensation
decisions for 1997, the Committee generally gave greater weight to the Company's
performance, as measured by net income, and its subjective assessment of
individual performance, than to other factors.
In 1993, Congress adopted Section 162(m) of the Internal Revenue Code,
Section 162(m) limits the ability of public companies to deduct compensation in
excess of $1,000,000 paid to certain executive officers, unless such
compensation is "performance based" within the meaning of Section 162(m).
Section
10
<PAGE>
162(m) also imposes certain requirements on the composition of compensation
committees. With the substitution of William H. Heller for Curtis Lee Smith, Jr.
as of March 20, 1998, the Compensation Committee of the Company will satisfy
such requirements.
1997 COMPENSATION DECISIONS
BASE SALARY AND BENEFITS. The base salaries and benefits provided to
executive officers who were not parties to employment contracts with the Company
for 1997 were established by the Committee in accordance with the compensation
philosophy discussed above. The Committee determined to make individual salary
adjustments with respect to certain executive officers of the Company, based on
the Committee's subjective evaluation of the executive's performance and the
contribution to the Company.
BONUSES. After considering the Company's performance and the various
other factors discussed above, the Committee forgave $45,000 of Mr. Bresnan's
loan in the form of a bonus. The Committee also granted Mr. St. James a cash
bonus of $73,750 in conjunction with his role in the sale of the company's
environmental segment.
STOCK OPTIONS. During the 1997 fiscal year, the Company awarded 160,000
stock options to employees of the Company.
CHIEF EXECUTIVE OFFICER COMPENSATION
Curtis Lee Smith, Jr.'s compensation is determined on the basis of the
Committee's subjective assessment of his performance, measured by the Company's
financial condition, results of operations and success in achieving strategic
objectives. The Committee also considers the responsibilities associated with
Mr. Smith's position and the level of compensation provided to Chief Executive
Officers of other companies in the industry. Mr. Smith does not participate in
the Committee's actions with respect to his compensation.
Although the Committee reviews Mr. Smith's compensation on an annual
basis, no adjustments were made to Mr. Smith's salary during 1997. Mr. Smith's
base salary was last adjusted in December 1990, at which time the Committee
voted (with Mr. Smith abstaining) to increase his salary from $175,000 to
$200,000. Mr. Smith declined this salary increase. In June 1992, Mr. Smith
voluntarily reduced his salary from $175,000 to $160,000 in connection with a
restructuring in the Company's business and related cost-cutting measures. The
Committee determined not to pay Mr. Smith a bonus during 1997.
Mr. Smith is the beneficial owner of approximately 15.6% of the issued
and outstanding Common Stock. As a consequence of his significant ownership
interest in the Company, Mr. Smith elected, at the time of the Company's initial
public offering, to renounce any rights that he might otherwise have to
participate in the Company's stock option plans. Accordingly, Mr. Smith did not
receive any option awards during 1997.
THE 1997 COMPENSATION COMMITTEE OF THE
BOARD OF DIRECTORS
Richard L. Osborne
David A. Goldfinger
Curtis Lee Smith, Jr.
11
<PAGE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During 1997, the Compensation Committee of the Board of Directors
included Curtis Lee Smith, Jr., the Company's Chairman and Chief Executive
Officer.
During 1995 and 1996 Mr. Curtis Lee Smith, Jr. obtained loans from the
Company at interest rates equivalent to the Company's cost of borrowing money.
The principal amounts on these loans totaled $624,981 at December 31, 1997.
These loans are evidenced by demand notes and are secured by the proceeds from
certain life insurance policies on Mr. Curtis Lee Smith, Jr.
Richard L. Osborne, a member of the Compensation Committee of the Board
of Directors, provides certain consulting services to the Company. Mr. Osborne
received $30,000 in consulting fees from the Company during 1997. At the meeting
of the Board of Directors held on March 20, 1998, William H. Heller replaced
Curtis Lee Smith, Jr. as a member of the Compensation Committee. During 1997,
Mr. Heller received $24,000 in consulting fees from the Company.
The Company believes that these transactions were on terms no less
favorable than would have been available in similar transactions with
unaffiliated third parties.
12
<PAGE>
STOCKHOLDER RETURN PERFORMANCE PRESENTATION
Set forth below are two line graphs reflecting cumulative
stockholder return on the Company's Common Stock. Two graphs are included
because the Company has decided to compare its stock performance against a peer
group of homogenous competitors rather than a SIC Code Index based peer group as
it did last year. The Company believes a more accurate view of the Company's
stock performance will result by comparing its stock performance to the
performance of this discreetly defined peer group of direct competitors that
deliver similar services and have similar organizational structures. In its
proxy statement for the 1997 Annual Meeting of Stockholders, the Company
compared its performance to an SIC Code Index. The SIC Code Index used contained
a variety of companies, some of which were in different industries and delivered
different services or products than the Company. The Company believes that the
more discreetly defined peer group will give stockholders a more accurate view
of the Company's stock performance.
The first graph compares the yearly percentage changes in the
cumulative stockholder return on the Company's Common Stock against the
cumulative total return of the NASDAQ Market Index (U.S.) and a
Company-determined peer group for the period commencing January 1, 1993 and
ended December 31, 1997. The peer group companies are primarily involved in the
instructor-led delivery of technology training. The companies in the peer group
are: Canterbury Information Technology, Inc.; Learning Tree International, Inc.;
Mastering, Inc.; and Wave Technologies International, Inc. The Company believes
this peer group represents its industry and marketplace. The graph assumes that
the value of the investment in the Company's Common Stock and each index was
$100 at January 1, 1993 and that all dividends, if any, were reinvested.
<TABLE>
<CAPTION>
GRAPH 1
- ------------------------------------------------------------------------------------------------------------
1/1/93 12/31/93 12/31/94 12/31/95 12/31/96 12/31/97
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
NEW HORIZONS WORLDWIDE, INC. 100 86 96 59 160 164
PEER GROUP INDEX 100 80 45 40 105 105
NASDAQ MARKET INDEX 100 120 126 163 203 248
- ------------------------------------------------------------------------------------------------------------
</TABLE>
ASSUMES $100 INVESTED ON JAN. 1, 1993
ASSUMES DIVIDEND REINVESTED
FISCAL YEAR ENDING DEC. 31, 1997
13
<PAGE>
The second graph compares the yearly percentage changes in the
cumulative stockholder return on the Company's Common Stock against the
cumulative total return of the NASDAQ Market Index (U.S.) and the companies in
the Schools and Educational Services SIC Code Index for the period commencing
January 1, 1993 and ended December 31, 1997. The same SIC Code Index was used in
the proxy statement for last year's Annual Meeting of Stockholders. However, the
Company believes the use of the peer group presentation used in the first graph
gives a more accurate comparison for stockholders. The graph assumes that the
value of the investment in the Company's Common Stock and each index was $100 at
January 1, 1993 and that all dividends, if any, were reinvested.
<TABLE>
<CAPTION>
GRAPH 2
1/1/93 12/31/93 12/31/94 12/31/95 12/31/96 12/31/97
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
NEW HORIZONS WORLDWIDE, INC. 100 86 96 59 160 164
PEER GROUP INDEX 100 90 98 125 163 205
NASDAQ MARKET INDEX 100 120 126 163 203 248
</TABLE>
ASSUMES $100 INVESTED ON JAN. 1, 1993
ASSUMES DIVIDEND REINVESTED
FISCAL YEAR ENDING DEC. 31, 1997
14
<PAGE>
PROPOSAL TO APPROVE AND ADOPT
1997 OUTSIDE DIRECTORS ELECTIVE STOCK OPTION PLAN
BACKGROUND
At the Annual Meeting, the stockholders will be asked to vote on a
proposal to approve and adopt the New Horizons Worldwide, Inc. 1997 Outside
Directors Elective Stock Option Plan (the "Directors Plan"). The Board of
Directors adopted the Directors Plan at its meeting on November 26, 1997,
subject to approval by the stockholders of the Company.
If the stockholders approve the Directors Plan, any Director of the
Company who neither is employed by the Company or any of its subsidiaries nor
owns beneficially ten percent or more of the shares of Common Stock (an "Outside
Director") will have the opportunity to elect to receive options to purchase
Common Stock of the Company in lieu of other consideration which would be paid
to such Outside Director for services to the Company. The purpose of the
Directors Plan is to provide the Outside Directors with greater incentive to
serve and promote the interest of the Company and its stockholders. If the
Outside Directors acquire a proprietary interest in the business of the Company
or increase such proprietary interest as they may already hold, the incentive of
such Outside Directors to work toward the Company's continued success will be
commensurately increased. Accordingly, the Board of Directors and management
believe that approval of the Directors Plan is in the best interests of the
Company and recommend that stockholders vote in favor of the proposal.
The affirmative vote of the holders of a majority of the outstanding
shares of Common Stock entitled to vote, present in person or by proxy at the
meeting, is required for the adoption of the Directors Plan. Thus, stockholders
who vote to abstain will in effect be voting against the proposal. Brokers who
hold shares of Common Stock as nominees will have discretionary authority to
vote such shares if they have not received voting instructions from the
beneficial owners by the tenth day before the meeting, provided that this Proxy
Statement is transmitted to the beneficial owners at least 15 days before the
meeting. Broker non-votes, however, are not counted as present and entitled to
vote, for determining whether this proposal has been approved and have no effect
on its outcome.
THE BOARD RECOMMENDS A VOTE FOR THE ADOPTION OF THE NEW HORIZONS
WORLDWIDE, INC. 1997 OUTSIDE DIRECTORS ELECTIVE STOCK OPTION PLAN.
The following is a summary of the material features of the Directors
Plan and is qualified in its entirety by reference to it. A copy of the
Directors Plan is attached hereto as Exhibit A.
GENERAL
The Directors Plan permits Outside Directors of the Company to elect to
be issued options to purchase the Company's Common Stock, in lieu of the
consideration which would otherwise be paid to such Outside Directors for
services rendered to the Company. The maximum number of shares of Common Stock
which may be subject to options issued pursuant to the Directors Plan is
300,000. There are presently four eligible Outside Directors, Messrs. David A.
Goldfinger, William H. Heller, Richard L. Osborne and Scott R. Wilson. Except
with respect to options previously outstanding, the Directors Plan will
terminate on January 2, 2000, and no options will thereafter be issued
thereunder. A committee of the Board of Directors consisting of members of the
Board other than the Outside Directors (the "Committee") will administer the
Directors Plan.
ELECTION TO RECEIVE OPTIONS
No later than the December 1 prior to the beginning of the years 1998,
1999, and 2000, each Outside Director may irrevocably elect to have issued to
him, in lieu of payment of either one-half or all of his director fees for such
year, an option to purchase one share of Common Stock for each dollar of
15
<PAGE>
director fees for which such election is made, subject to the availability of
shares of Common Stock authorized under the Directors Plan.
EXERCISE OF OPTIONS
Each option granted under the Directors Plan will become exercisable on
the first anniversary of the date the option was granted. Options granted for
1998 have a grant date of November 26, 1997; options for 1999 and 2000 will have
a grant date of the December 1 immediately preceding such years. All options
granted will have an exercise price equal to the fair market value on the date
of grant (calculated by reference to the closing price of the Common Stock on
such date). On November 26, 1997, such fair market value was $15.63. Each option
granted under the Directors Plan will expire on the fifth anniversary of the
date the option was granted.
Except as otherwise provided in the event of an Outside Director's
death, only the Outside Director may exercise an option, provided that a
guardian or other legal representative who has been duly appointed for such
Outside Director also may exercise an option on behalf of the Outside Director.
Upon satisfaction of all conditions, the option may be exercised in whole or in
part at any time until expiration of the right to exercise the option. Options
may be exercised by the Outside Director giving written notice to the Company of
the Outside Director's exercise of the option accompanied by full payment of the
purchase price either by such type of check or other means of funds transfer as
is acceptable to the Company or, with the consent of the Committee, in other
consideration (including shares of Common Stock) having a fair market value, as
defined in the Directors Plan, on the date the option is exercised equal to that
portion of the purchase price for which payment in immediately available funds
is not made. In the event of a Change in Control, as defined in the Directors
Plan, an Outside Director will have the immediate and nonforfeitable right to
irrevocably exercise his option with respect to all shares of Common Stock which
are covered by the option.
INITIAL AWARDS
In accordance with the terms of the Directors Plan, Richard L. Osborne,
David A. Goldfinger and William H. Heller have each elected to receive all
$20,000 of his 1998 fees for services as a Director in options to acquire shares
of Common Stock and Scott R. Wilson has elected to receive one-half of such fees
in options. As a result, subject to approval of the Directors Plan by the
stockholders of the Company, Messrs. Osborne, Goldfinger and Heller were awarded
options to acquire 20,000 shares of Common Stock and Mr. Wilson was awarded
options to acquire 10,000 shares on November 26, 1997. All of the options have
an exercise price of $15.63 per share, become exercisable on November 26, 1998
and expire on November 26, 2002.
<TABLE>
<CAPTION>
NEW PLAN BENEFITS
1997 OUTSIDE DIRECTORS ELECTIVE STOCK OPTION PLAN
-------------------------------------------------
NAME AND POSITION DOLLAR VALUE NUMBER OF UNITS
----------------- ------------ ---------------
<S> <C> <C>
Non-Executive Director Group (1) $70,000 70,000
</TABLE>
- ----------
(1) Executives and other employees, including those serving as Directors, are
not eligible to participate in this Plan.
SECURITIES SUBJECT TO THE DIRECTORS PLAN
Not more than 300,000 shares of Common Stock of the Company may be
issued pursuant to the Directors Plan, except that in the event of stock splits,
stock dividends, combinations, exchanges of shares or similar capital
adjustments, an appropriate adjustment in the number of shares of Common Stock
subject to the Directors Plan will be made. If any option lapses, expires or is
terminated without having been fully exercised, the shares with respect to which
such option has not been exercised may be made available for further options.
16
<PAGE>
TERMINATION OF DIRECTORSHIP
If an Outside Director ceases to be a Director of the Company for any
reason prior to the first day of a year in respect of which he was granted an
option, such option shall be canceled. If an Outside Director ceases to be a
Director of the Company for any reason during a year in respect of which the
Outside Director was granted an option and before such option has become
exercisable, the option will be canceled with respect to a number of shares
equal to the product of (a) the total number of shares subject to the option
granted in respect of such year, and (b) a fraction, the numerator of which is
the number of full calendar quarters of such year during which the Outside
Director was not a Director of the Company, and the denominator of which is
four. If any option is exercisable following the Outside Director's death, then
that option may be exercisable by the person to whom the option was transferred
by the Outside Director's Last Will and Testament or by the applicable laws of
descent and distribution.
INCOME TAX TREATMENT
The Company has been advised that under current law certain of the
income tax consequences under the laws of the United States to Outside Directors
and the Company of options granted under the Directors Plan generally should be
as set forth in the following summary. The summary only addresses income tax
consequences for Outside Directors and the Company.
The options granted under the Directors Plan shall be non-qualified
options for federal income tax purposes. An Outside Director to whom an option
is granted will not recognize income at the time of grant of such option. When
such Outside Director exercises such non-qualified option, the Outside Director
will recognize ordinary compensation income equal to the difference, if any,
between the exercise price paid and the fair market value of the shares the
Outside Director receives. The tax basis of such shares to such Outside Director
will be equal to the exercise price paid, and the Outside Director's holding
period for such shares will commence on the day on which the Outside Director
recognized taxable income in respect of such shares. Subject to applicable
provisions of the Internal Revenue Code and regulations thereunder, the Company
generally will be entitled to a federal income tax deduction in respect of
non-qualified options in an amount equal to the ordinary compensation income
recognized by the Outside Director.
The discussion set forth above does not purport to be a complete
analysis of all potential tax consequences relevant to recipients of options or
the Company or to describe tax consequences based on particular circumstances.
It is based on United States federal income tax law and interpretational
authorities as of the date of this Proxy Statement, which are subject to change
at any time. The discussion does not address state or local income tax
consequences or income tax consequences for taxpayers who are not subject to
taxation in the United States.
PROPOSAL TO APPROVE AND ADOPT THE OMNIBUS EQUITY PLAN
BACKGROUND
At the Annual Meeting, the stockholders will be asked to vote on a
proposal to approve and adopt the New Horizons Worldwide, Inc. Omnibus Equity
Plan (the "Omnibus Plan"). The Board of Directors adopted the Omnibus Plan on
March 20, 1998, subject to approval by the stockholders of the Company.
If the stockholders approve the Omnibus Plan, the Company will have
additional opportunities to provide eligible recipients with an equity-based
incentive to maintain and enhance the performance and profitability of the
Company. Further, the Omnibus Plan has been designed to permit the granting of
awards that will constitute performance based compensation as described in
Section 162(m) of the Internal Revenue Code of 1986, as amended (the "Code"),
and regulations promulgated thereunder. Accordingly, the Board of Directors and
management believe that approval of the Omnibus Plan is in the best interests of
the Company and recommend that stockholders vote in favor of the proposal.
17
<PAGE>
The affirmative vote of the holders of a majority of the outstanding
shares of Common Stock entitled to vote, present in person or by proxy at the
meeting, is required for the adoption of the Omnibus Plan. Thus, stockholders
who vote to abstain will in effect be voting against the proposal. Brokers who
hold shares of Common Stock as nominees will have discretionary authority to
vote such shares if they have not received voting instructions from the
beneficial owners by the tenth day before the meeting, provided that this Proxy
Statement is transmitted to the beneficial owners at least 15 days before the
meeting. Broker non-votes, however, are not counted as present and entitled to
vote, for determining whether this proposal has been approved and have no effect
on its outcome.
THE BOARD RECOMMENDS A VOTE FOR THE ADOPTION OF THE NEW HORIZONS
WORLDWIDE, INC. OMNIBUS EQUITY PLAN.
The following is a summary of the material features of the Omnibus Plan
and is qualified in its entirety by reference to it. A copy of the Omnibus Plan
is attached hereto as Exhibit B.
GENERAL
The Omnibus Plan allows the Compensation Committee of the Board of
Directors (the "Committee"), which administers the Plan, broad flexibility in
designing stock-based incentives. The Committee may select from among three
categories of incentive awards: stock options, stock appreciation rights, and
restricted stock awards. No awards have yet been made under the Omnibus Plan.
The Omnibus Plan will terminate on March 20, 2008, unless earlier terminated by
resolution of the Board of Directors.
PERSONS ELIGIBLE FOR AWARDS
Officers and executive, managerial or professional employees of the
Company or its Affiliates, and individuals (including the Company's directors)
who provide significant services for the benefit of the Company or its
Affiliates may be selected by the Committee to receive benefits under the
Omnibus Plan. Subject to the terms of the Omnibus Plan, the Committee has the
discretion to determine the terms of each award granted under the Omnibus Plan
and to interpret the Omnibus Plan and all related documents and agreements.
SECURITIES SUBJECT TO THE OMNIBUS PLAN
The number of shares of the Company's Common Stock (the "Shares") with
respect to which awards may be granted under the Plan is equal to the excess, if
any, of 1,000,000 Shares over (i) the number of Shares subject to outstanding
awards; (ii) the number of Shares in respect of which options and stock
appreciation rights have been exercised; and (iii) the number of Shares issued
subject to forfeiture restrictions which have lapsed. No participant may receive
awards representing more than 300,000 Shares during any one calendar year, or
more than 500,000 Shares in the aggregate. These limits are subject to
adjustments as provided in the Omnibus Plan for stock splits, stock dividends,
recapitalizations and other similar transactions or events. Shares issued under
the Omnibus Plan may be authorized but unissued Shares, Treasury Shares or other
Shares that have been reacquired by the Company.
GRANTS OF OPTIONS AND STOCK APPRECIATION RIGHTS
The Committee may grant stock options that entitle the optionee to
purchase Shares at a price that is less than, equal to or greater than fair
market value of the Company's Common Stock on the date of grant. Stock options
granted under the Omnibus Plan may be options that are intended to qualify as
"incentive stock options" within the meaning of Section 422 of the Code, or
"nonqualified stock options" that are not intended to so qualify. No Option
which is intended to qualify as an incentive stock option may be
18
<PAGE>
granted at a price that is less than the fair market value of the Company's
Common Stock on the date of grant.
The option may specify that the option price is payable (i) in cash;
(ii) by certified or official bank check or, in the Committee's discretion, by
personal check; (iii) by the transfer to the Company of previously acquired
Shares, (iv) by withholding Shares otherwise issuable upon exercise of the
option; (v) by a full recourse, interest-bearing promissory note or (vi) by any
combination of the foregoing methods of payment. Any grant of a stock option may
provide for deferred payment of the option price from the proceeds of sale
through a broker of some or all of the Shares to which the option relates. No
stock option may be exercised more than ten years from the date of grant.
The Committee may grant "related" stock appreciation rights in
connection with an option granted under the Omnibus Plan or "unrelated" stock
appreciation rights unrelated to any option. Stock appreciation rights entitle
the holder to receive an amount equal to the excess of the fair market value of
the Shares over a specified "appreciation base" determined by the Committee at
the time of grant. With respect to related stock appreciation rights, the
"appreciation base" may not be less than the exercise price under the related
option. Any grant of stock appreciation rights may be paid in cash, Shares or
any combination thereof, as the Committee shall determine.
In connection with a Change in Control of the Company (as such term is
defined in the Omnibus Plan), the Committee, in its discretion, may accelerate
the vesting of any option or stock appreciation right, terminate any option or
stock appreciation right not exercised prior to or in connection with such
Change in Control, or provide for the successor entity or parent of the
successor entity in the Change in Control to assume the options or stock
appreciation rights or to substitute therefor substantially equivalent options
or stock appreciation rights.
RESTRICTED STOCK AWARDS
A restricted stock award involves the transfer by the Company to a
participant of ownership of a specific number of Shares in consideration of the
performance of services. In the discretion of the Committee, the transfer may be
made without monetary consideration from the participant, and the participant
may be entitled immediately to voting, dividend and other ownership rights in
such Shares. The vesting of a restricted stock award may be conditioned upon the
completion of a specified period of employment with the Company or any
Affiliate, upon the attainment of specified performance goals, and/or upon such
other criteria as the Committee may determine. Restricted shares must be subject
to a "substantial risk of forfeiture" within the meaning of Section 83 of the
Code. To enforce these forfeiture provisions, the transferability of restricted
shares will be prohibited or restricted in a manner and to the extent prescribed
by the Committee for the period during which the forfeiture provisions are to
continue. The Committee may provide for a shorter period during which the
forfeiture provisions are to apply in the event of a Change in Control of the
Company or similar event.
TRANSFERABILITY OF AWARDS
Except as provided below, no award under the Omnibus Plan may be
transferred by a participant other than by will or the laws of descent and
distribution, and stock options and stock appreciation rights may be exercised
during the participant's lifetime only by the participant or, in the event of
the participant's legal incapacity, the guardian or legal representative acting
on behalf of the participant. The Committee may expressly provide in a
nonqualified stock option agreement (or amendment thereto) that the participant
may transfer the option to a spouse or lineal descendant, a trust for the
exclusive benefit of the participant and/or such family members, a partnership
or other entity in which all the beneficial owners are the participant and/or
such family members, or any other entity affiliated with the participant that
the Committee may approve.
19
<PAGE>
AMENDMENT OF THE OMNIBUS PLAN
The Omnibus Plan may be amended from time to time by the Board of
Directors, but without further approval by the Stockholders of the Company no
such amendment may increase the aggregate number of Shares in respect of which
awards may be made, increase the maximum number of Shares in respect of which
awards may be made in any calendar year, modify the designation of the classes
of persons eligible to receive awards under the Omnibus Plan, or extend the term
of the Plan beyond March 20, 2008.
INCOME TAX TREATMENT
The Company has been advised that under current law certain of the
income tax consequences under the laws of the United States to recipients and
the Company of awards granted under the Omnibus Plan generally should be as set
forth in the following summary. The summary only addresses income tax
consequences for recipients of awards and the Company.
In general, an optionee will not recognize income at the time a
nonqualified stock option is granted. At the time of exercise, the optionee will
recognize ordinary income in an amount equal to the difference between the
exercise price paid for the Shares and the fair market value of the Shares on
the date of exercise. The optionee's holding period starts on the date of
exercise. At the time of sale of Shares acquired pursuant to the exercise of a
nonqualified stock option, any appreciation (or depreciation) in the value of
the Shares after the date of exercise generally will be treated as capital gain
(or loss).
An optionee generally will not recognize income upon the grant or
exercise of an incentive stock option. If Shares issued to an optionee upon the
exercise of an incentive stock option are not disposed of in a disqualifying
disposition within two years after the date of grant or within one year after
the exercise of the option, then upon the sale of the Shares any amount realized
in excess of the option price generally will be taxed to the optionee as capital
gain income and any loss sustained will be a capital loss. If Shares acquired
upon the exercise of an incentive stock option are disposed of in a
disqualifying disposition prior to the expiration of either holding period
described above, the optionee generally will recognize ordinary income in the
year of disposition in an amount equal to any excess of the fair market value of
the Shares at the time of exercise (or, if less, the amount realized on the
disposition of the Shares) over the exercise price paid for the Shares. Any
further gain (or loss) realized by the optionee generally will be taxed as
short-term or long-term capital gain (or loss) depending on the holding period.
For federal income tax purposes, long-term capital gains are taxed at a maximum
rate of 28% if the shares were owned, at the time of sale, for more than one
year but not more than eighteen months, and at a maximum rate of 20% if the
shares were owned, at the time of sale, for more than eighteen months.
Subject to certain exceptions for death or disability, if an optionee
exercises an incentive stock option more than three months after termination of
employment, the exercise of the option will be taxed as the exercise of a
nonqualified stock option. In addition, if an optionee is subject to federal
"alternative minimum tax," the exercise of an incentive stock option will be
treated essentially the same as a nonqualified stock option for purposes of the
alternative minimum tax.
A recipient of restricted shares generally will be subject to tax at
ordinary income rates on the fair market value of the restricted shares (reduced
by any amount paid by the recipient) at such time as the Shares are no longer
subject to a substantial risk of forfeiture or restrictions on transfer for
purposes of Section 83 of the Code. However, a recipient who so elects under
Section 83(b) of the Code within 30 days of the date of transfer of the
restricted shares will recognize ordinary income on the date of transfer of the
Shares equal to the excess of the fair market value of the restricted shares
(determined without regard to the risk of forfeiture or restrictions on
transfer) over any purchase price paid for the Shares. If a Section 83(b)
election has not been made, any dividends received with respect to restricted
shares that are subject at that time to a substantial risk of forfeiture or
restrictions on transfer generally will be treated as compensation that is
taxable as ordinary income to the recipient.
20
<PAGE>
To the extent that a participant recognizes ordinary income in the
circumstances described above, the Company or subsidiary for which the
participant performs services will be entitled to a corresponding deduction,
provided that, among other things, the income meets the test of reasonableness,
is an ordinary and necessary business expense, is not an "excess parachute
payment" within the meaning of Section 280G of the Code and is not disallowed by
the $1 million limitation on certain executive compensation under Section 162(m)
of the Code.
The discussion set forth above does not purport to be a complete
analysis of all potential tax consequences relevant to recipients of options or
the Company or to describe tax consequences based on particular circumstances.
It is based on United States federal income tax law and interpretational
authorities as of the date of this Proxy Statement, which are subject to change
at anytime. The discussion does not address state or local income tax
consequences or income tax consequences for taxpayers who are not subject to
taxation in the United States.
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INDEPENDENT AUDITORS
On September 8, 1997, KPMG Peat Marwick LLP ("KPMG") was terminated as
the independent auditors of the Company. Such termination was recommended by the
Audit Committee of the Company and approved by its Board of Directors. The
reports on the Company's financial statements issued by KPMG for the preceding
two fiscal years did not contain any adverse opinion or disclaimer of opinion
and were not qualified or modified as to uncertainty, audit scope or accounting
principles. During such two year period and the interim period thereafter, there
were no disagreements between the Company and KPMG regarding any matter of the
Company's accounting principles or practices, financial statement disclosure, or
auditing scope or procedure, which disagreement, if not resolved to the
satisfaction of KPMG, would have caused KPMG to make reference to the subject
matter of the disagreement in connection with its reports on the Company's
financial statements.
Upon the recommendation of the Audit Committee, the Board of Directors
retained Deloitte & Touche LLP to succeed KPMG as independent auditors of the
Company, and such firm has issued the report with respect to the financial
statements of the Company for the year ended December 31, 1997. It is expected
that a member of the firm will be present at the Annual Meeting either in person
or by means of conference telephone, will have an opportunity to make a
statement if he should so desire and will be available to respond to appropriate
questions from stockholders.
OTHER MATTERS
The Board of Directors is not aware of any matter to come before the
Meeting other than those identified in the Notice of Annual Meeting of
Stockholders. If other matters, however, properly come before the Meeting, it is
the intention of the persons named in the accompanying proxy to vote in
accordance with their best judgment on such matters insofar as the proxies are
not limited to the contrary.
Any stockholder who wishes to submit a proposal for inclusion in the
proxy materials to be distributed by the Company in connection with its Annual
Meeting of Stockholders to be held in 1999 must do so no later than December 11,
1998. To be eligible for inclusion in the 1999 proxy materials of the Company,
proposals must conform to the requirements set forth in Regulation 14A under the
Securities Exchange Act of 1934.
Upon the receipt of a written request from any stockholder, the Company
will mail, at no charge to the stockholder, a copy of the Company's Annual
Report on Form 10-K, including financial statements and schedules required to be
filed with the Securities and Exchange Commission pursuant to Rule 13a-1 under
the Securities Exchange Act of 1934, for the Company's most recent year. Written
requests for such report should be directed to:
Investor Relations Department
New Horizons Worldwide, Inc.
500 Campus Drive, Suite 200
Morganville, NJ 07751
You are urged to sign and return your proxy promptly in the enclosed
return envelope to make certain your shares will be voted at the Meeting.
By Order of the Board of Directors,
/S/ STUART O. SMITH
-----------------------------------
Stuart O. Smith
Secretary
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EXHIBIT A
NEW HORIZONS WORLDWIDE, INC.
1997 OUTSIDE DIRECTORS ELECTIVE STOCK OPTION PLAN
-------------------------------------------------
New Horizons Worldwide, Inc. hereby adopts a stock option plan for the
benefit of certain persons and subject to the terms and provisions set forth
below.
1. Definitions. The following terms shall have the meanings set
forth below whenever used in this document:
(a) "Affiliate" shall mean any Person which controls, is
controlled by, or is under common control with, the
Company.
(b) "Applicable Year" shall mean, as the context shall
require, calendar year 1998, 1999 or 2000.
(c) "Board" shall mean the Board of Directors of the
Company.
(d) "Change of Control" shall mean any transaction or
series of transactions where any Person, or any two
or more Persons acting as a group, and all Affiliates
of such Person, who prior to such time owned less
than five percent (5%) of the then outstanding
Shares, acquires such additional Shares in one or
more transaction, or series of transactions, such
that following such transaction or transactions, such
Person or group and Affiliates beneficially own fifty
percent (50%) or more of the Shares.
(e) "Code" shall mean the United States Internal Revenue
Code (Title 26 of the United States Code).
(f) "Committee" shall mean a committee of the Board
consisting of all members of the Board other than the
Outside Directors.
(g) "Company" shall mean New Horizons Worldwide, Inc., a
Delaware corporation, and any successor thereto which
shall maintain the Plan.
(h) "Director Fees" shall mean the regular fees scheduled
to be paid to an Outside Director for his services as
a member of the Board during an Applicable Year.
(i) "Disability" shall mean an Optionee's inability, due
to a physical or mental condition, to continue to
serve as a member of the Board, as determined by the
Committee pursuant to written certification of such
Disability from a physician acceptable to the
Committee.
(j) "Fair Market Value" shall mean, in respect of the
Shares, either:
(i) if the Shares are publicly traded on a
national securities exchange, the closing
price on the date Fair market Value is being
determined; or
(ii) if the Shares are publicly traded over the
counter, the average of the closing bid and
ask prices on the date the Fair Market Value
is being determined; or
(iii) if the Shares are not publicly traded, the
value determined in accordance with policies
adopted by the Committee.
<PAGE>
(k) "Issue Date" shall mean in respect of any Option for
which an Outside Director's election is made under
Section 7 hereof:
(i) November 26, 1997 for Applicable Year 1998;
and
(ii) the December 1 which immediately precedes
Applicable Years 1999 and 2000.
(l) "Option" shall mean, subject to all of the terms and
conditions of this Plan, the right and option of an
Outside Director to purchase Shares.
(m) "Optionee" shall mean any Outside Director to whom an
Option has been issued pursuant to the Plan.
(n) "Option Price" shall mean the price at which a Share
may be acquired upon the exercise of an Option.
(o) "Outside Director" shall mean a member of the Board
who neither (i) is employed by the Company or a
Subsidiary nor (ii) owns beneficially ten percent
(10%) or more of the Shares.
(p) "Person" shall mean a natural person or a legal
entity, including, without limitation, corporations,
partnerships, trusts, and limited liability
companies.
(q) "Personal Representative" shall mean, following an
Optionee's death, the Person who shall have acquired,
by Will or by the laws of descent and distribution,
the right to exercise any Option.
(r) "Plan" shall mean this document, the New Horizons
Worldwide, Inc. 1997 Outside Directors Elective Stock
Option Plan, as it is originally adopted and as it
may be amended hereafter.
(s) "Shares" shall mean shares of the $.01 par value
common stock of the Company.
(t) "Subsidiary" shall mean any corporation or other
legal entity at least 50% of the common stock (or
comparable equity ownership interest) of which is
owned directly or indirectly by the Company.
2. PURPOSE OF THE PLAN. The purpose of the Plan is to provide the
Outside Directors with greater incentive to serve and promote the interests of
the Company and its stockholders. The premise of the Plan is that, if such
Outside Directors acquire a proprietary interest in the business of the Company
or increase such proprietary interest as they may already hold, then the
incentive of such Outside Directors to work toward the Company's continued
success will be commensurately increased. Accordingly, the Company will, in
respect of each Applicable Year, offer each Outside Director the opportunity to
elect to receive Options in lieu of other consideration which would be paid the
Outside Director for services to the Company.
3. EFFECTIVE DATE OF THE PLAN. The Plan shall become effective on
November 26, 1997, subject to approval by holders of a majority of the
outstanding Shares. In the event the Plan is not so approved within twelve (12)
months after the date the Plan is adopted, the Plan and any Options issued
hereunder shall be null and void. If, however, the Plan is so approved, subject
to the provisions of Section 9, no further stockholder approval shall be
required with respect to the issue of any Options pursuant to the Plan.
4. ADMINISTRATION OF THE PLAN. The Plan shall be administered by the
Committee. A majority of the Committee 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 members, shall be acts
of the Committee. Subject to the terms and conditions of the Plan, the Committee
shall have full and final authority in its absolute discretion:
2
<PAGE>
(a) to prescribe the form of the option agreements which
shall be executed by Optionees and which shall
evidence Options issued under the Plan;
(b) To adopt, amend and rescind such rules and
regulations as, in the Committee's opinion, may be
advisable in the administration of the Plan; and
(c) To construe and interpret the Plan, the rules and
regulations and the instruments evidencing Options
issued under the Plan and to make all other
determinations deemed necessary or advisable for the
administration of the Plan.
Any decision made or action taken by the Committee in connection with the
administration, interpretation, and implementation of the Plan and of its rules
and regulations, shall, to the extent permitted by law, be conclusive and
binding upon all Optionees and upon any Person claiming under or through an
Optionee. Neither the Committee nor any of its members shall be liable for any
act taken by the Committee pursuant to the Plan. No member of the Committee
shall be liable for the act of any other member.
5. PERSONS ELIGIBLE FOR OPTIONS. Every Outside Director shall be
eligible to elect to be issued Options under the Plan as provided in Section 7.
6. MAXIMUM NUMBER OF SHARES IN RESPECT OF WHICH OPTIONS MAY BE ISSUED.
The aggregate number of Shares for which Options may be issued under the Plan
shall be Three Hundred Thousand (300,000) Shares. Either treasury or authorized
and unissued Shares, or both, in such numbers, within the maximum limit of the
Plan, as the Committee shall from time to time determine, may be so issued. All
Shares which are the subject of any lapsed, expired or terminated Options may be
made available for reoffering under the Plan. In the event that subsequent to
the date of adoption of the Plan by the Board, the outstanding Shares are, as a
result of a stock split, stock dividend, combination or exchange of shares,
exchange for other securities, reclassification, reorganization, redesignation,
merger, consolidation, recapitalization, spin-off, split-off, split-up or other
such change (including, without limitation, any transaction described in Section
424(a) of the Code) or a special dividend or other distribution to the Company's
shareholders, increased or decreased or changed into or exchanged for a
different number or kind of shares of stock or other securities of the Company,
then (i) there shall automatically be substituted for each Share subject to an
unexercised Option and each Share available for additional issues of Options
under the Plan the number and kind of shares of stock or other securities into
which each outstanding Share shall be exchanged, (ii) the Option Price shall be
increased or decreased proportionately so that the aggregate purchase price for
the securities subject to the Option shall remain the same as immediately prior
to such event, and (iii) the Committee shall make such other adjustments to the
securities subject to Options, the provisions of the Plan, and option agreements
as may be appropriate, equitable and in compliance with the provisions of
Section 424(a) of the Code to the extent applicable and any such adjustment
shall be final, binding and conclusive as to each Optionee. Any such adjustment
may, in the discretion of the Committee, provide for the elimination of
fractional Shares.
7. ELECTION TO RECEIVE OPTION IN LIEU OF DIRECTOR FEES. Subject to the
availability of Shares under Section 6, pursuant to uniform rules and procedures
prescribed by the Committee, no later than the December 1 which immediately
precedes an Applicable Year, an Outside Director may elect to have issued to
him, in lieu of payment of either one-half (1/2) or all of his Director Fees for
the Applicable Year, an Option to purchase one Share for each dollar of Director
Fees for which the election is made. Any such election shall be irrevocable.
8. OPTION PROVISIONS.
(a) OPTION PRICE. The Option Price shall be Fair Market Value
determined on the Issue Date.
(b) TERM OF OPTION. Except as otherwise provided herein, each
Option shall be exercisable through the fifth anniversary of its Issue Date.
(c) EXERCISABILITY OF OPTION -- IN GENERAL. Subject to
subsections (d) and (e) below, an Outside Director may exercise an Option at any
time from the first anniversary of the Option's Issue Date through the remaining
term of the Option.
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<PAGE>
(d) CANCELLATION OF OPTION.
(i) In the event an Outside Director who was issued
an Option hereunder resigns from the Board for any reason other than Disability
prior to the first anniversary of the Option's Issue Date, such Option shall be
cancelled.
(ii) If an Outside Director ceases to be a member of
the Board for any reason during an Applicable Year in respect of which the
Outside Director was issued an Option pursuant to Section 7, then the Option
shall be cancelled with respect to a number of Shares equal to (A) MULTIPLIED BY
(B) below where:
(A) equals the number of Shares subject to
the Option issued in respect of the Applicable Year pursuant to Section
7; and
(B) equals a fraction, the NUMERATOR of
which equals the number of full calendar quarters in the Applicable
Year during which the Outside Director was not a member of the Board,
and the DENOMINATOR of which equals four.
(e) CHANGE OF CONTROL, DISSOLUTION, LIQUIDATION AND CERTAIN
MERGERS. Upon the occurrence of a Change of Control, or immediately prior to a
dissolution or liquidation of the Company (but only if the distributee of
substantially all of the Company's assets upon the liquidation of the Company
was not, immediately prior to the liquidation, an Affiliate) or a merger or
consolidation in which the Company is the surviving corporation (but only if the
corporation which is the surviving corporation in such merger or consolidation
was not, immediately prior to the merger or consolidation, an Affiliate), the
Optionee shall have the immediate and nonforfeitable right to exercise the
Option with respect to all Shares covered by the Option, and any such exercise
shall be irrevocable. The Optionee shall be entitled to exercise the Option as
provided in the immediately preceding sentence regardless of whether the other
corporation which is the surviving corporation in a merger or consolidation
shall adopt and maintain the Plan. In the event the Option becomes exercisable
pursuant to this subsection (e), the Company shall notify the Optionee of his
right to exercise the Option.
(f) LIMITATION ON EXERCISE AND TRANSFER OF OPTION. Except as
otherwise provided in the event of an Optionee's death, only the Optionee may
exercise an Option, provided that a guardian or other legal representative who
has been duly appointed for such Optionee may exercise an Option on behalf of
the Optionee. No Option issued hereunder shall be transferable other than by the
Last Will and Testament of the Optionee or, if the Optionee dies intestate, by
the applicable laws of descent and distribution. No Option issued hereunder may
be pledged or hypothecated, nor shall any such Option be subject to execution,
attachment or similar process. In the event of an Optionee's death, the Option,
to the extent exercisable at the time of his death, may be exercised during its
remaining term by the deceased Optionee's Personal Representative.
(g) CONDITIONS GOVERNING EXERCISE OF OPTION. An Option may be
exercised in whole or in part at any time during its term, but this right of
exercise shall be limited to whole Shares. Options shall be exercised by the
Optionee giving written notice to the Company of the Optionee's exercise of the
Option accompanied by full payment of the purchase price for the Shares, unless
other arrangements satisfactory to the Company for prompt payment of such amount
are made. Payments shall be made by such type of check or other means of funds
transfer as is acceptable to the Company or, with the consent of the Committee,
in whole or in part in Shares having a Fair Market Value on the date the Option
is exercised equal to that portion of the purchase price for which payment in
immediately available funds is not made. A dissolution or liquidation of the
Company or, unless the surviving corporation assumes said options, a merger or
consolidation in which the Company is not the surviving corporation, shall cause
each outstanding Option to terminate, provided that during the option period
each Optionee shall have the right prior to such dissolution or liquidation, or
merger or consolidation in which the Company is not the surviving corporation,
to exercise his Option in whole or in part.
10. AMENDMENTS TO THE PLAN. The Committee is authorized to interpret
the Plan and from time to time adopt any rules and regulations for carrying out
the Plan that it may deem advisable. Subject to the approval of the Board, the
Committee may at any time amend, modify, suspend or terminate the Plan. In no
event, however, without the approval of the Company's shareholders, shall any
action of the Committee or the
4
<PAGE>
Board result in:
(a) Amending, modifying or altering the eligibility
requirements;
(b) Increasing or decreasing, except as provided in
Section 6 hereof, the maximum number of Shares for
which Options may be issued;
(c) Decreasing the minimum Option Price, as provided in
Section 8(a) hereof;
(d) Extending either the maximum period during which an
Option is exercisable as provided in Section 8(b)
hereof or the date on which the Plan shall terminate
as provided in Section 12 hereof; or
(e) Changing the authority of the Committee;
except as necessary to conform the Plan and the option agreements to changes in
the Code or other governing law.
11. INVESTMENT REPRESENTATION, APPROVALS AND LISTING. The Committee may
condition its issue of any Option hereunder upon receipt of an investment
representation from the Optionee which shall be substantially similar to the
following:
Optionee agrees that any shares of common stock of
New Horizons Worldwide, Inc. which he may acquire by virtue of
the exercise of this option shall be acquired for investment
purposes only and not with a view to distribution or resale;
provided, however, that this restriction shall become
inoperative in the event the shares of common stock of New
Horizons Worldwide, Inc. which are subject to this option
shall be registered under the Securities Act of 1933, as
amended, or in the event New Horizons Worldwide, Inc. is
otherwise satisfied that the offer or sale of the shares of
common stock of New Horizons Worldwide, Inc. which are subject
to this option may lawfully be made without registration under
the Securities Act of 1933, as amended.
The Company shall not be required to issue any certificates for Shares upon the
exercise of an Option prior to (i) obtaining any approval from any governmental
agency which the Committee shall, in its sole discretion, determine to be
necessary or advisable, (ii) the admission of such Shares to listing on any
national securities exchange on which the Shares may be listed, (iii) completion
of any registration or other qualification of the Shares under any state or
federal law or ruling or regulations of any governmental body which the
Committee shall, in its sole discretion, determine to be necessary or advisable,
or the determination by the Committee, in its sole discretion, that any
registration or other qualification of the Shares is not necessary or advisable,
and (iv) obtaining an investment representation from the Optionee in the form
set forth above or in such other form as the Committee, in its sole discretion,
shall determine to be adequate.
12. GENERAL PROVISIONS.
(a) OPTION AGREEMENTS. Each Option issued pursuant to the Plan
shall be evidenced by an option agreement in such form as shall be prescribed by
the Committee.
(b) NO RIGHT TO CONTINUE AS AN OUTSIDE DIRECTOR OR INDEPENDENT
CONSULTANT. Nothing in the Plan or in any option agreement shall confer upon any
Outside Director any right to continue to serve as a member of the Board, or to
be entitled to receive any remuneration or benefits not set forth in the Plan or
such option agreement, or to interfere with or limit the right of the
shareholders of the Company to remove him as a member of the Board with or
without cause. Nothing in the Plan or in any option agreement shall confer upon
any Outside Director any right to continue to provide services to the Company or
any Subsidiary as an independent consultant.
(c) OPTIONEE DOES NOT HAVE RIGHTS OF SHAREHOLDER. Nothing
contained in the Plan or in any option agreement shall be construed as entitling
any Optionee to any rights of a shareholder as a result of the issue of an
Option until such time as Shares are actually issued to such Optionee pursuant
to the exercise
5
<PAGE>
of the Option.
(d) SUCCESSORS IN INTEREST. The Plan shall be binding upon the
successors and assigns of the Company.
(e) NO LIABILITY UPON DISTRIBUTION OF SHARES. The liability of
the Company under the Plan and any distribution of Shares made hereunder is
limited to the obligations set forth herein with respect to such distribution
and no term or provision of the Plan shall be construed to impose any liability
on the Company or the Committee in favor of any Person with respect to any loss,
cost or expense which the Person may incur in connection with or arising out of
any transaction in connection with the Plan.
(f) USE OF PROCEEDS. The cash proceeds received by the Company
from the issuance of Shares pursuant to the Plan will be used for general
corporate purposes.
(g) EXPENSES. The expenses of administering the Plan shall be
borne by the Company.
(h) CAPTIONS. The captions and section numbers appearing in
the Plan are inserted only as a matter of convenience. They do not define,
limit, construe or describe the scope or intent of the provisions of the Plan.
(i) NUMBER. The use of the singular or plural herein shall not
be restrictive as to number and shall be interpreted in all cases as the context
may require.
(j) GENDER. The use of the feminine, masculine or neuter
pronoun shall not be restrictive as to gender and shall be interpreted in all
cases as the context may require.
(k) NONQUALIFIED OPTIONS. All Options issued under the Plan
shall, for purposes of the federal income tax, be nonqualified stock options
governed by Section 83 of the Code and regulations promulgated thereunder.
(l) TIME PERIODS; DATES. Any action required to be taken under
the Plan within a certain number of days shall be taken within that number of
calendar days; PROVIDED, however, that if the last day for taking such action
falls on a weekend or a holiday, the period during which such action may be
taken shall be automatically extended to the next business day. If a date
specified for taking any action under the Plan falls on a weekend or a holiday,
such date shall automatically become the next business day.
(m) WITHHOLDING. The right to exercise any Option shall be
conditioned upon the Optionee making appropriate provision, as the Company may
reasonably prescribe, for tax withholding with respect to the exercise of the
Option.
(n) GOVERNING LAW. The Plan shall be governed by and construed
in accordance with the laws of the State of Delaware and any applicable federal
law.
13. TERMINATION OF THE PLAN. The Plan shall terminate at 12:01 a.m. on
January 2, 2000, and thereafter no Options shall be issued under the Plan. All
Options outstanding at the time of termination of the Plan shall continue in
full force and effect in accordance with the terms of the option agreements
governing such Options and the terms and conditions of the Plan.
6
<PAGE>
IN WITNESS WHEREOF, NEW HORIZONS WORLDWIDE, INC., by its
appropriate officers duly authorized, has executed this document as of November
26, 1997.
NEW HORIZONS WORLDWIDE, INC.
By:
/S/ CURTIS LEE SMITH, JR., CHAIRMAN
-----------------------------------
And:
/S/ T. J. BRESNAN
-----------------------------------
7
<PAGE>
EXHIBIT B
NEW HORIZONS WORLDWIDE, INC.
OMNIBUS EQUITY PLAN
ARTICLE 1. GENERAL
1.1 PURPOSE. The purpose of the New Horizons Worldwide, Inc.
Omnibus Equity Plan (the "Plan") is to provide certain officers, directors and
key personnel, as defined in Section 1.3, of New Horizons Worldwide, Inc. (the
"Company") and its Affiliates (see below), and individuals who provide
significant services for the benefit of the Company and certain of its
Affiliates, with an equity-based incentive to maintain and enhance the
performance and profitability of the Company. It is the further purpose of this
Plan to permit the granting of awards that will constitute performance-based
compensation for certain executive officers, as described in Section 162(m) of
the Internal Revenue Code of 1986, as amended (the "Code"), and regulations
promulgated thereunder.
1.2 ADMINISTRATION.
(a) The Plan shall be administered by the Compensation
Committee (the "Committee") of the Board of Directors of the Company (the
"Board"), which Committee shall consist of two or more directors. It is intended
that the directors appointed to serve on the Committee shall be "Disinterested
Persons" (within the meaning of Rule 16b-3 promulgated under the Securities
Exchange Act of 1934 (the "Act")) and "Outside Directors" (within the meaning of
Code Section 162(m)), so long as satisfaction of such classifications is
required for the exemptions set forth in such Rule and Section; PROVIDED,
however, that the mere fact that a Committee member shall fail to qualify under
either of these requirements shall not invalidate any award made by the
Committee which award is otherwise validly made under the Plan. The members of
the Committee shall be appointed by, and may be changed at any time and from
time to time in the discretion of, the Board.
(b) The determination of the Committee on all matters relating
to the Plan or any Plan Agreement (see below) shall be conclusive.
(c) No member of the Committee shall be liable for any action
or determination made in good faith with respect to the Plan or any award
hereunder.
(d) Notwithstanding anything to the contrary contained herein,
the Board may, in its sole discretion, at any time and from time to time,
resolve to administer the Plan, in which case, the term Committee as used herein
shall be deemed to mean the Board.
(e) For purposes of grants of awards to members of the Board
who are not employed by the Company or an Affiliate, the Board shall serve as
the Committee.
(f) The Company shall bear all costs, including attorneys' and
accountants' fees and expenses, of administering the Plan.
1.3 PERSONS ELIGIBLE FOR AWARDS. Awards under the Plan may be
made to such officers and executive, managerial or professional employees of the
Company or its Affiliates, and individuals (including, without limitation, the
Company's directors) who provide significant services for the benefit of the
Company or its Affiliates, as the Committee shall from time to time in its sole
discretion select; PROVIDED, that officers who are neither employees nor
directors of the Company or any of its Affiliates shall not be eligible to
receive awards under the Plan.
1
<PAGE>
1.4 TYPES OF AWARDS UNDER PLAN.
(a) Awards may be made under the Plan in the form of (i) stock
Options ("Options"), (ii) stock appreciation rights ("Stock Appreciation
Rights") which may be either (A) related to an Option ("Related Stock
Appreciation Rights"), or (B) not related to an Option ("Unrelated Stock
Appreciation Rights"), and (iii) restricted stock awards ("Restricted Stock
Awards"), all as more fully set forth in Sections 2 and 3.
(b) Options granted under the Plan may be either (i)
nonqualified stock options subject to the provisions of Code Section 83
("Nonqualified Stock Options") or (ii) Options intended to qualify for incentive
stock option treatment described in Code Section 422 ("Incentive Stock
Options").
(c) All Options when granted are intended to be Nonqualified
Stock Options, unless the applicable Plan Agreement explicitly states that the
Option is intended to be an Incentive Stock Option. If an Option is intended to
be an Incentive Stock Option, and if for any reason such Option (or any portion
thereof) shall not qualify as an Incentive Stock Option, then, to the extent of
such nonqualification, such Option (or portion) shall be regarded as a
Nonqualified Stock Option appropriately granted under the Plan, provided that
such Option (or portion) otherwise meets the Plan's requirements relating to
Nonqualified Stock Options.
1.5 SHARES AVAILABLE FOR AWARDS.
(a) Subject to Section 4.5 (relating to adjustments upon
changes in capitalization), as of any date the total number of Shares with
respect to which awards may be granted under the Plan, shall equal the excess
(if any) of 1,000,000 Shares, over (i) the number of Shares subject to
outstanding awards, (ii) the number of Shares in respect of which Options and
Stock Appreciation Rights have been exercised, and (iii) the number of Shares
issued subject to forfeiture restrictions which have lapsed. In accordance with
(and without limitation upon) the preceding sentence, awards may be granted in
respect of Shares covered by previously granted awards that have expired,
terminated or been canceled for any reason whatsoever (other than by reason of
exercise or vesting) and with respect to which Shares a grantee has received no
benefits of ownership (other than voting rights and dividends that were
forfeited on such expiration, termination or cancellation).
(b) The aggregate number of Shares which may be the subject of
awards under the Plan in respect of any person shall not, in respect of any
calendar year, exceed 300,000 Shares and shall not, in the aggregate, exceed
500,000 Shares.
(c) Shares that shall be subject to issuance pursuant to the
Plan shall be authorized and unissued, or treasury or reacquired Shares, or any
combination thereof.
(d) Without limiting the generality of the foregoing, the
Committee may, with the grantee's consent, cancel any award under the Plan and
issue a new award in substitution therefor; PROVIDED, that the substituted award
shall satisfy all applicable Plan requirements as of the date such new award is
made. The foregoing is not intended to prevent equitable adjustment of awards
upon the occurrence of certain events as herein provided, including, without
limitation, adjustments pursuant to Section 4.5.
1.6 DEFINITIONS OF CERTAIN TERMS.
(a) The term "Affiliate" means any person or entity which, at
the time of reference, directly, or indirectly through one or more
intermediaries, controls, is controlled by, or is under common control with, the
Company.
(b) The term "Change in Control" means:
(i) The acquisition by any individual, entity or
group (within the meaning of Section
13(d)(3) or 14(d)(2) of the Act (a "Person")
of beneficial ownership (within the meaning
of Rule 13d-3 promulgated under the Act) of
30% or
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more of the then outstanding Shares;
PROVIDED, that for this purpose any Shares
owned or acquired by Curtis Lee Smith, Jr.
and/or Stuart O. Smith shall be ignored;
PROVIDED, further, that for purposes of this
subsection (i), the following acquisitions
shall not constitute a Change of Control:
(A) any acquisition directly from the
Company; or
(B) any acquisition by the Company; or
(C) any acquisition by any employee
benefit plan (or related trust)
sponsored or maintained by the
Company or any corporation
controlled by the Company; or
(D) any acquisition by any corporation
pursuant to a transaction which
complies with clauses (A)(i) and
(A)(ii) of subsection (iii) hereof;
or
(ii) Individuals who, as of the date of the most
recent amendment hereof, constitute the
Board (the "Incumbent Board") cease for any
reason to constitute at least a majority of
the Board; PROVIDED, however, that any
individual becoming a director subsequent to
the date of the most recent amendment hereof
whose election, or nomination for election
by the Company's stockholders, was approved
by a vote of at least a majority of the
directors then comprising the Incumbent
Board shall be considered as though such
individual were a member of the Incumbent
Board, but excluding, for this purpose, any
such individual whose initial assumption of
office occurs as a result of an actual or
threatened election contest with respect to
the election or removal of directors or
other actual or threatened solicitation of
proxies or consents by or on behalf of a
person or entity other than the Board; or
(iii) Consummation of a reorganization, merger or
consolidation involving the Company or any
Affiliate or sale or other disposition of
all or substantially all of the assets of
the Company (a "Business Combination"), in
each case, unless, following such Business
Combination, (A) either (1) all or
substantially all of the individuals and
entities who were the beneficial owners,
respectively, of the Shares immediately
prior to such Business Combination
beneficially own, directly or indirectly,
more than 50% of, respectively, the then
outstanding Shares and the combined voting
power of the then outstanding voting
securities entitled to vote generally in the
election of directors, as the case may be,
of the corporation resulting from such
Business Combination (including, without
limitation, a corporation which as a result
of such transactions owns the Company or all
or substantially all of the Company's assets
either directly or through one or more
subsidiaries) in substantially the same
proportions as their ownership immediately
prior to such Business Combination of the
Shares or (2) at least a majority of the
members of the board of directors of the
corporation resulting from such Business
Combination were members of the Incumbent
Board at the time of the execution of the
initial agreement, or at the time of the
action of the Board providing for such
Business Combination, and (B) no person
(excluding any corporation resulting from
such Business Combination or any employee
benefit plan or related trust of the Company
or such corporation resulting from such
Business Combination) beneficially owns,
directly or indirectly, 30% or more of,
respectively, the then outstanding shares of
common stock of the corporation resulting
from such Business Combination or the
combined voting power of the then
outstanding voting securities of such
corporation except to the extent that such
ownership existed prior to the Business
Combination; or
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(iv) A complete liquidation or dissolution of the
Company.
(c) The term "Code" means the Internal Revenue Code of 1986,
as amended, and any successor statute.
(d) The term "Fair Market Value" means, in respect of a Share,
its fair market value as determined in the reasonable judgment of the Committee
at any time.
(e) The term "Shares" means shares of the $.01 par value
common stock of the Company, or any security into which such shares may be
converted by reason of any transaction or event of the type referred to in
Section 4.5 of this Plan.
1.7 AGREEMENTS EVIDENCING AWARDS.
(a) Options, Stock Appreciation Rights and Restricted Stock
Awards granted under the Plan shall be evidenced by written agreements. Any such
written agreements shall (i) contain such provisions not inconsistent with the
terms of the Plan as the Committee may in its sole discretion deem necessary or
desirable and (ii) be referred to herein as "Plan Agreements".
(b) Each Plan Agreement shall set forth the number of Shares
subject to the award granted thereby.
(c) Each Plan Agreement with respect to the granting of a
related stock appreciation right shall set forth the number of Shares subject to
the related Option which shall also be subject to the related stock appreciation
right granted thereby.
(d) Each Plan Agreement with respect to the granting of an
Option shall set forth the amount payable by the grantee to the Company in
connection with the exercise of the Option evidenced thereby (the "Option
Exercise Price").
(e) Each Plan Agreement with respect to a stock appreciation
right shall set forth the amount (the "Appreciation Base") over which
appreciation will be measured upon exercise of the stock appreciation right
evidenced thereby. The Appreciation Base per Share subject to a Stock
Appreciation Right shall not, in the case of a Related Stock Appreciation Right,
be less than the Option Exercise Price per Share under the related Option.
ARTICLE 2. STOCK OPTIONS AND STOCK APPRECIATION RIGHTS
2.1 GRANT OF STOCK OPTIONS. The Committee may grant Options to
purchase Shares in such amounts and subject to such terms and conditions as the
Committee shall from time to time in its sole discretion determine, subject to
the terms of the Plan.
2.2 GRANT OF STOCK APPRECIATION RIGHTS.
(a) RELATED STOCK APPRECIATION RIGHTS. The Committee may grant
a Related Stock Appreciation Right in connection with all or any part of an
Option granted under the Plan, either at the time the related Option is granted
or any time thereafter prior to the exercise, termination or cancellation of
such Option, and subject to such terms and conditions as the Committee shall
from time to time in its sole discretion determine, consistent with the terms of
the Plan. The grantee of a Related Stock Appreciation Right shall, subject to
the terms of the Plan and the applicable Plan Agreement, have the right to
surrender to the Company for cancellation all or a portion of the related Option
granted under the Plan, but only to the extent that such Option is then
exercisable, and to be paid therefor an amount equal to the excess (if any) of
(i) the aggregate Fair Market Value of the Shares subject to such Option or
portion thereof (determined as of the date of exercise of such Stock
Appreciation Right), over (ii) the aggregate Appreciation Base of the Shares
subject to such Stock Appreciation Right or portion thereof.
(b) UNRELATED STOCK APPRECIATION RIGHTS. The Committee may
grant an Unrelated Stock Appreciation Right in such amount and subject to such
terms and conditions as the Committee shall
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from time to time in its sole discretion determine, consistent with the terms of
the Plan. The grantee of an Unrelated Stock Appreciation Right shall, subject to
the terms of the Plan and the applicable Plan Agreement, have the right to
surrender to the Company for cancellation all or a portion of such Stock
Appreciation Right, but only to the extent that such Stock Appreciation Right is
then exercisable, and to be paid therefor an amount equal to the excess (if any)
of: (i) the aggregate Fair Market Value of the Shares subject to such Stock
Appreciation Right or portion thereof (determined as of the date of exercise of
such Stock Appreciation Right), over (ii) the aggregate Appreciation Base of the
Shares subject to such Stock Appreciation Right or portion thereof.
2.3 EXERCISABILITY OF OPTIONS AND STOCK APPRECIATION RIGHTS.
Subject to the other provisions of the Plan:
(a) EXERCISABILITY DETERMINED BY PLAN AGREEMENT. Each Plan
Agreement shall set forth the period during which and the conditions subject to
which the Option or Stock Appreciation Right evidenced thereby shall be
exercisable, as determined by the Committee in its discretion.
(b) EXERCISE OF RELATED STOCK APPRECIATION RIGHT. Unless the
applicable Plan Agreement otherwise provides, a Related Stock Appreciation Right
shall be exercisable at any time during the period that the related Option may
be exercised.
(c) PARTIAL EXERCISE PERMITTED. Unless the applicable Plan
Agreement otherwise provides, an Option or Stock Appreciation Right granted
under the Plan may be exercised from time to time as to all or part of the full
number of Shares as to which such Option or Stock Appreciation Right shall then
be exercisable.
(d) NOTICE OF EXERCISE; EXERCISE DATE.
(i) An Option or Stock Appreciation Right shall
be exercisable by the filing of a written
notice of exercise with the Company, on such
form and in such manner as the Committee
shall in its sole discretion prescribe, and
by payment in accordance with Section 2.6.
(ii) Unless the applicable Plan Agreement
otherwise provides, or the Committee in its
sole discretion otherwise determines, the
date of exercise of an Option or Stock
Appreciation Right shall be the date the
Company receives such written notice of
exercise and payment.
2.4 EXERCISE OF OPTIONS.
(a) TENDER DUE UPON NOTICE OF EXERCISE. Unless the applicable
Plan Agreement otherwise provides or the Committee in its sole discretion
otherwise determines, any notice of exercise of an Option shall be accompanied
by payment of the full purchase price for the Shares being purchased.
(b) MANNER OF PAYMENT. Payment of the Option Exercise Price
shall be made in any combination of the following:
(i) by certified or official bank check payable
to the Company (or the equivalent thereof
acceptable to the Committee);
(ii) by personal check (subject to collection),
which may in the Committee's discretion be
deemed conditional;
(iii) if and to the extent provided in the
applicable Plan Agreement or with the
consent of the Committee in its sole
discretion, by delivery of previously
acquired Shares owned by the grantee for at
least six months (or such other period as
the Committee may prescribe) having a Fair
Market Value (determined as of the Option
exercise date) equal to the portion of the
Option exercise price being paid thereby,
provided that the Committee
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<PAGE>
may require the grantee to furnish an
opinion of counsel acceptable to the
Committee to the effect that such delivery
would not result in the grantee incurring
any liability under Section 16 of the Act
and does not require any Consent (see
below);
(iv) if and to the extent provided in the
applicable Plan Agreement or with the
consent of the Committee in its sole
discretion, by withholding Shares from the
Shares otherwise issuable pursuant to the
exercise of the Option, where the amount
attributable to any Share so withheld shall
be equal to the difference between the Fair
Market Value of the Share (determined as of
the Option exercise date) and the Option
Exercise Price; and
(v) with the consent of the Committee in its
sole discretion, by the full recourse
promissory note and agreement of the grantee
providing for payment with interest on the
unpaid balance accruing at a rate not less
than that needed to avoid the imputation of
income under terms of the Code and upon such
terms and conditions as the Committee may
determine.
(c) CASHLESS EXERCISE. Payment in accordance with Section
2.6(b) may be deemed to be satisfied, if and to the extent provided in the
applicable Plan Agreement or with the consent of the Committee in its sole
discretion, by delivery to the Company of an assignment of a sufficient amount
of the proceeds from the sale of Shares acquired upon exercise to pay for all of
the Shares acquired upon exercise and an authorization to the broker or selling
agent to pay that amount to the Company, which sale shall be made at the
grantee's direction at the time of exercise; PROVIDED, that the Committee may
require the grantee to furnish an opinion of counsel acceptable to the Committee
to the effect that such delivery would not result in the grantee incurring any
liability under Section 16 of the Act and does not require any Consent.
(d) ISSUANCE OF SHARES. As soon as practicable after receipt
of full payment, the Company shall, subject to the provisions of Section 4.2,
deliver to the grantee one or more certificates for the Shares so purchased,
which certificates may bear such legends as the Company may deem appropriate
concerning restrictions on the disposition of the Shares in accordance with
applicable securities laws, rules and regulations or otherwise.
2.5 EXERCISE OF RELATED STOCK APPRECIATION RIGHTS.
(a) Payment due to the grantee upon exercise of a Stock
Appreciation Right shall be made in cash and/or in Shares (valued at the Fair
Market Value thereof as of the date of exercise) as determined by the Committee
in its sole discretion.
(b) Upon any exercise of a Related Stock Appreciation Right or
any portion thereof, the number of Shares subject to the related Option shall be
reduced by the number of Shares in respect of which such Stock Appreciation
Right shall have been exercised.
2.6 TERMINATION OF EMPLOYMENT. Subject to the other provisions
of the Plan and unless the applicable Plan Agreement otherwise provides, all
Options and Stock Appreciation Rights granted to a grantee shall terminate upon
the grantee's ceasing to perform services (whether as an employee or otherwise)
for the Company and all Affiliates.
2.7 SPECIAL ISO REQUIREMENTS. In order for a grantee to
receive special tax treatment with respect to stock acquired under an Option
intended to be an Incentive Stock Option, the grantee of such Option must be, at
all times during the period beginning on the date of grant and ending on the day
three months before the date of exercise of such Option, an employee of the
Company or any of the Company's parent or subsidiary corporations (within the
meaning of Code Section 424(f)), or of a corporation or a parent or subsidiary
corporation of such corporation issuing or assuming a stock option in a
transaction to which Code Section 424(a) applies. Notwithstanding any other
provision of the Plan, no Plan Agreement shall permit an Incentive Stock Option
to be exercisable more than ten years after the date
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<PAGE>
of grant. The aggregate Fair Market Value (as of the effective date of grant of
Incentive Stock Options) of Shares with respect to which Incentive Stock Options
granted to a grantee under the Plan are exercisable for the first time by such
grantee during any calendar year shall not exceed $100,000. If an Option granted
under the Plan is intended to be an Incentive Stock Option, and if the grantee,
at the time of grant, owns stock possessing more than ten percent (10%) of the
total combined voting power of all classes of stock of the grantee's employer
corporation or of its parent or subsidiary corporation, then (i) the Option
Exercise Price shall in no event be less than one hundred ten percent (110%) of
the Fair Market Value on the date of such grant and (ii) such Option shall not
be exercisable after the expiration of five years after the date such Option is
granted.
ARTICLE 3. AWARDS OTHER THAN STOCK OPTIONS
AND STOCK APPRECIATION RIGHTS
3.1 RESTRICTED STOCK AWARDS.
(a) GRANT OF AWARDS. The Committee may grant Restricted Stock
Awards under the Plan, alone or in tandem with other awards, in such amounts and
subject to such terms and conditions as the Committee shall from time to time in
its sole discretion determine. The vesting of a Restricted Stock Award granted
under the Plan may be conditioned upon the completion of a specified period of
employment with the Company or any Affiliate, upon the attainment of specified
performance goals, and/or upon such other criteria as the Committee may
determine in its sole discretion.
(b) PAYMENT. Each Plan Agreement with respect to a Restricted
Stock Award shall set forth the amount (if any) to be paid by the grantee with
respect to such award. If a grantee makes any payment in respect of a Restricted
Stock Award which does not vest, appropriate payment may be made to the grantee
following the forfeiture of such Restricted Stock Award on such terms and
conditions as the Committee may determine.
(c) FORFEITURE UPON TERMINATION OF EMPLOYMENT. Unless the
applicable Plan Agreement otherwise provides or the Committee otherwise
determines, (i) if a grantee's employment or other provision of service
terminates for any reason (including death) before all of his Restricted Stock
Awards have vested, the unvested portion of such Restricted Stock Awards shall
terminate and expire upon such termination, and (ii) in the event any condition
to the vesting of Restricted Stock Awards is not satisfied within the period of
time permitted therefor, such unvested Shares shall be returned to the Company.
(d) ISSUANCE OF SHARES. The Committee may provide that one or
more Share certificates representing Restricted Stock Awards shall, on the date
of the Restricted Stock Award, be registered in the grantee's name and bear an
appropriate legend specifying that such Shares are not transferable and are
subject to the terms and conditions of the Plan and the applicable Plan
Agreement, or that no such Share certificate shall be issued by the Company on
behalf of the grantee until such Shares vest, all on such terms and conditions
as the Committee may determine. Unless the applicable Plan Agreement otherwise
provides, no Share issued pursuant to a Restricted Stock Award may be assigned,
transferred, otherwise encumbered or disposed of by the grantee until such Share
has vested in accordance with the terms of the applicable Plan Agreement.
Subject to the provisions of Section 4.2, as soon as practicable after any
Restricted Stock Award shall vest, the Company shall issue or reissue to the
grantee (or to the grantee's designated beneficiary in the event of the
grantee's death) one or more certificates for the Shares represented by such
Restricted Stock Award.
(e) GRANTEES' RIGHTS REGARDING RESTRICTED STOCK. Unless the
applicable Plan Agreement otherwise provides, in respect of a Restricted Stock
Award for which a certificate for Shares was registered in the grantee's name,
(i) the grantee may vote and receive dividends on such Shares; and (ii) any
Shares distributed with respect to such Shares shall be subject to the same
restrictions as such Shares, as set forth in the applicable Plan Agreement.
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ARTICLE 4. MISCELLANEOUS
4.1 AMENDMENT OF THE PLAN; MODIFICATION OF AWARDS.
(a) PLAN AMENDMENTS. The Board may, without stockholder
approval, at any time and from time to time, suspend, discontinue or amend the
Plan in any respect whatsoever, except that no such amendment shall impair any
rights under any award theretofore made under the Plan without the consent of
the grantee of such award. Furthermore, except as and to the extent otherwise
permitted by this Plan, no such amendment shall, without stockholder approval:
(i) materially increase the benefits accruing to
grantees under the Plan;
(ii) increase beyond the amounts set forth in
Section 1.5 the number of Shares in respect
of which awards may be issued under the
Plan;
(iii) increase beyond the amounts set forth in
Section 1.5 the maximum number of Shares
which may he made subject to awards to an
individual;
(iv) modify the designation in Section 1.3 of the
classes of persons eligible to receive
awards under the Plan;
(v) extend the term of the Plan beyond the
period set forth in Section 4.14.
(b) AWARD MODIFICATIONS. Subject to the terms and conditions
of the Plan, the Committee may amend an outstanding Plan Agreement with a
grantee, including, without limitation, any amendment which would (i) accelerate
the time or times at which an award may vest or become exercisable and/or (ii)
extend the scheduled termination or expiration date of the award and/or defer
the delivery of cash or Shares upon exercise of an Option or Stock Appreciation
Right, with delivery to be made later in the form of either installments or a
single delivery; PROVIDED, however, that no modification having a material
adverse effect upon the interest of a grantee in respect of an award shall be
made without the consent of such grantee.
4.2 RESTRICTIONS.
(a) CONSENT REQUIREMENTS. If the Committee shall at any time
determine that any Consent (as hereinafter defined) is necessary or desirable as
a condition of, or in connection with, the granting of any award under the Plan,
the acquisition, issuance or purchase of Shares or other rights hereunder or the
taking of any other action hereunder (each such action being hereinafter
referred to as a "Plan Action"), then such Plan Action shall not be taken, in
whole or in part, unless and until such Consent shall have been effected or
obtained to the full satisfaction of the Committee.
(b) CONSENT DEFINED. The term "Consent" as used herein with
respect to any Plan Action means (i) any and all listings, registrations or
qualifications in respect thereof upon any securities exchange or other
self-regulatory organization or under any federal, state or local law, rule or
regulation, (ii) the expiration, elimination or satisfaction of any
prohibitions, restrictions or limitations under any federal, state or local law,
rule or regulation or the rules of any securities exchange or other
self-regulatory organization, (iii) any and all written agreements and
representations by the grantee with respect to the disposition of Shares, or
with respect to any other matter, which the Committee shall deem necessary or
desirable to comply with the terms of any such listing, registration or
qualification or to obtain an exemption from the requirement that any such
listing, qualification or registration be made, and (iv) any and all consents,
clearances and approvals in respect of a Plan Action by any governmental or
other regulatory bodies or any parties to any loan agreements or other
contractual obligations of the Company or any Affiliate.
4.3 TRANSFERABILITY.
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(a) Except as provided in this Section 4.3, no award granted
under this Plan shall be transferable by a grantee other than by will or the
laws of the descent and distribution, and Options and Stock Appreciation Rights
shall be exercisable during a grantee's lifetime only by the grantee or, in the
event of the grantee's legal incapacity, by his guardian or legal representative
acting in a fiduciary capacity on behalf of the grantee under state law.
(b) The Committee may expressly provide in a Plan Agreement or
other written form of consent that a grantee may transfer a Nonqualified Stock
Option to his spouse or lineal descendants ("Family Members"), or a trust for
the exclusive benefit of Family Members, or a partnership or other entity
affiliated with the grantee that may be approved by the Committee. Subsequent
transfers of any such Nonqualified Stock Option shall be prohibited except in
accordance with this Section 4.3(b). All terms and conditions of any such
Nonqualified Stock Option, including provisions relating to the termination of
the grantee's employment or service with the Company and its Affiliates, shall
continue to apply following a transfer made in accordance with this Section
4.3(b).
(c) Any award made under this Plan may provide that all or any
part of the Shares that are to be issued or transferred by the Company upon the
exercise of Options or Stock Appreciation Rights, or upon the vesting of Shares
issued pursuant to a Restricted Stock Award, may be subject to further
restrictions upon transfer.
4.4 WITHHOLDING TAXES.
(a) Whenever Shares are to be delivered pursuant to an award,
the Committee may require as a condition of delivery that the grantee remit an
amount sufficient to satisfy all federal, state and other governmental
withholding tax requirements related thereto. Whenever cash is to be paid under
the Plan (whether upon the exercise of a Stock Appreciation Right or otherwise),
the Company may, as a condition of its payment, deduct therefrom, or from any
salary or other payments due to the grantee, an amount sufficient to satisfy all
federal, state and other governmental withholding tax requirements related
thereto or to the delivery of any Shares under the Plan.
(b) Without limiting the generality of the foregoing, (i) a
grantee may elect to satisfy all or part of the foregoing withholding
requirements by delivery of unrestricted Shares owned by the grantee for at
least six months (or such other period as the Committee may determine) having a
Fair Market Value (determined as of the date of such delivery) equal to all or
part of the amount to be so withheld; PROVIDED, that the Committee may require,
as a condition of accepting any such delivery, the grantee to furnish an opinion
of counsel acceptable to the Committee to the effect that such delivery would
not result in the grantee incurring any liability under Section 16 of the Act
and (ii) the Committee may permit any such delivery to be made by withholding
Shares from the Shares otherwise issuable pursuant to the award giving rise to
the tax withholding obligation (in which event the date of delivery shall be
deemed the date such withholding obligation arose.
4.5 ADJUSTMENTS UPON CHANGES IN CAPITALIZATION. If and to the
extent specified by the Committee, the number of Shares which may be issued
pursuant to awards under the Plan, the maximum number of Shares subject to
awards which may be granted to any one person in any calendar year, the number
of Shares subject to any award, the Option Exercise Price and Appreciation Base
in respect of awards previously granted under the Plan, and the amount payable
by a grantee in respect of an award, shall be appropriately adjusted (as the
Committee may determine) for any change in the number of issued Shares resulting
from the subdivision or combination of Shares or other capital adjustments, or
the payment of a stock dividend after the effective date of the Plan, or other
change in such Shares effected without receipt of consideration by the Company;
PROVIDED, that any awards covering fractional Shares resulting from any such
adjustment shall be eliminated; and PROVIDED, further, that each Incentive Stock
Option granted under the Plan shall not be adjusted in a manner that would cause
such Option to fail to continue to qualify as an Incentive Stock Option within
the meaning of Code Section 422. Adjustments under this Section 4.5 shall be
made by the Committee, whose determination as to what adjustments shall be made,
and the extent thereof, shall be final, binding and conclusive.
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4.6 RIGHT OF DISCHARGE RESERVED. Nothing in the Plan or in any
Plan agreement shall confer upon any person the right to continue in the
employment of the Company or an Affiliate or affect any right which the Company
or an Affiliate may have to terminate the employment of such person.
4.7 NO RIGHTS AS A STOCKHOLDER. No grantee or other person
shall have any of the rights of a stockholder of the Company with respect to
Shares subject to an award until the issuance of a stock certificate to him for
such Shares. Except as otherwise provided in Section 4.5, no adjustment shall be
made for dividends, distributions or other rights (whether ordinary or
extraordinary, and whether in cash, securities or other property) for which the
record date is prior to the date such stock certificate is issued.
4.8 NATURE OF PAYMENTS.
(a) Any and all awards or payments hereunder shall be granted,
issued, delivered or paid, as the case may be, in consideration of services
performed by the grantee for the Company or its Affiliates.
(b) No such awards and payments shall be, unless otherwise
agreed to by the Company, taken into account in computing the grantee's salary
or compensation for the purposes of determining any benefits under (i) any
pension, retirement, life insurance or other benefit plan of the Company or any
Affiliate or (ii) any agreement between the Company or any Affiliate and the
grantee.
(c) By accepting an award under the Plan, the grantee shall
thereby waive any claim to continued exercise or vesting of an award or to
damages or severance entitlement related to non-continuation of the award beyond
the period provided herein or in the applicable Plan Agreement, notwithstanding
any contrary provision in any written employment contract with the grantee,
whether any such contract is executed before or after the date of the award.
4.9 NON-UNIFORM DETERMINATIONS. The Committee's determinations
under the Plan need not be uniform and may be made by it selectively among
persons who receive, or are eligible to receive, awards under the Plan (whether
or not such persons are similarly situated). Without limiting the generality of
the foregoing, the Committee shall be entitled, among other things, to make
non-uniform and selective determinations, and to enter into non-uniform and
selective Plan Agreements, as to (a) the persons to receive awards under the
Plan, (b) the terms and provisions of awards under the Plan, and (c) the
exercise by the Committee of its discretion in respect of paying either cash or
Shares upon the exercise of Stock Appreciation Rights pursuant to the terms of
the Plan.
4.10 OTHER PAYMENTS OR AWARDS. Nothing contained in the Plan
shall be deemed in any way to limit or restrict the Company, any Affiliate, or
the Committee from making any award or payment to any person under any other
plan, arrangement or understanding, whether now existing or hereafter in effect.
4.11 EFFECT OF CHANGE IN CONTROL.
(a) In the event of a Change in Control, or in the event that
the Board shall propose that the Company enter into a transaction that would
result in a Change in Control, the Committee may in its discretion, by written
notice to a grantee, provide that any one or more of the following conditions
shall apply: (a) the Options or Stock Appreciation Rights shall become
immediately exercisable by any grantees and/or that such Options or Stock
Appreciation Rights shall terminate if not exercised prior or in connection with
the Change in Control or within some other prescribed period of time, (b) such
Options or Stock Appreciation Rights shall be assumed by the successor entity or
parent of such successor entity, or (c) substantially equivalent options or
stock appreciation rights shall be substituted by the successor entity or a
parent of such successor entity. The Committee may also, in its discretion, by
written notice to a grantee provide that all or some of the restrictions on any
of the grantee's awards shall lapse in the event of a Change in Control and upon
such terms and conditions as the Committee may determine.
(b) Whenever deemed appropriate by the Committee, the actions
referred to in Section 4.1l(a) may be made conditional upon the consummation of
the Change in Control.
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4.12 SECTION HEADINGS. The section headings contained herein
are for the purposes of convenience only and are not intended to define or limit
the contents of said sections.
4.13 GOVERNING LAW. The Plan shall be governed by the laws of
the State of Delaware without giving effect to any choice of laws provisions.
4.14 EFFECTIVE DATE AND TERM OF PLAN.
(a) The Plan shall be deemed adopted and become effective upon
the approval thereof by the Board or such other date as the Board shall
determine, subject to approval of the stockholders of the Company at the next
Annual Meeting of Stockholders. The Committee may grant awards subject to the
condition that this Plan shall be approved by the stockholders of the Company as
set forth in the preceding sentence.
(b) The Plan shall terminate upon the earlier of (i) ten years
after the earlier of the date on which it becomes effective or is approved by
the Company's stockholders, and (ii) such date as the Board shall determine, and
no awards shall thereafter be made under the Plan. Notwithstanding the
foregoing, all awards made under the Plan prior to such termination date shall
remain in effect until such awards have been satisfied or terminated in
accordance with the terms and provisions of the Plan and the applicable Plan
Agreement.
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PROXY NEW HORIZONS WORLDWIDE,INC. PROXY
500 CAMPUS DRIVE, SUITE 200
MORGANVILLE, NJ 07751
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned shareholder hereby appoints each of Curtis Lee Smith,
Jr., Stuart O. Smith and Thomas J. Bresnan, as proxy, each with the power to
appoint his substitute, and hereby authorizes each of them to represent and to
vote as designated below, all shares of Common Stock of the Company held of
record by the undersigned on March 27, 1998, at the Annual Meeting of
Stockholders to be held on May 5, 1998, or any adjournment thereof.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR PROPOSALS 1, 2 AND 3.
(CHANGE OF ADDRESS)
PLEASE MARK, SIGN, DATE, DETACH AND ____________________________
RETURN THE PROXY CARD USING THE ENCLOSED ENVELOPE. ____________________________
____________________________
(CONTINUED AND TO BE SIGNED ON REVERSE SIDE.) (If you have written in the
above space, please mark the
corresponding oval on the
reverse side of this card.)
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<PAGE>
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY. [X]
1. ELECTION OF DIRECTORS-
NOMINEES: David A. Goldfinger For Withhold For All
Richard L. Osborne All All Except
[ ] [ ] [ ]
For, except vote withheld from the following nominee:
_____________________________________________________
2. Approve and adopt 1997 Outside Directors For Against Abstain
Elective Stock Option Plan. [ ] [ ] [ ]
3. Approve and adopt Omnibus Equity Plan. For Against Abstain
[ ] [ ] [ ]
4. In their discretion, each proxy is authorized to vote upon such other
business as may properly come before the meeting.
Change of address. [ ]
Attend Meeting [ ]
Dated:__________________________, 1998
Signature(s)____________________________________________________________________
________________________________________________________________________________
NOTE: Please sign exactly as name appears hereon. When shares are held by joint
tenants, both should 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 President or other authorized officer, if a
partnership, please sign in partnership name by authorized person.
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FOLD AND DETACH HERE
YOUR VOTE IS IMPORTANT.
PLEASE MARK, SIGN, DATE, DETACH AND RETURN THE PROXY CARD
USING THE ENCLOSED ENVELOPE.
