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FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[ X ] QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1999
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OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from Not Applicable to
----------------------- --------------------
Commission File Number 0-17840
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NEW HORIZONS WORLDWIDE, INC.
(Exact name of registrant as specified in its charter)
Delaware 22-2941704
- --------------------------------- -------------------
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
500 Campus Drive, Morganville, New Jersey 07751
(Address of principal executive offices)
(Zip Code)
(732) 536-8501
(Registrant's telephone number, including area code)
_____________________________________________________________
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months or for such shorter period that the registrant was
required to file such reports, and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
--- ---
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Number of shares of common stock outstanding at March 31, 1999: 7,540,028
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PART I: FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheets
New Horizons Worldwide, Inc. and Subsidiaries
March 31, 1999 and December 31, 1998
(Dollars in thousands)
March 31, December 31,
1999 1998
---------- ------------
Assets (unaudited)
Current assets:
Cash and cash equivalents ..................... $ 11,216 $ 6,873
Investments ................................... 8,439 15,821
Accounts receivable, net ...................... 16,869 16,538
Inventories ................................... 1,017 784
Prepaid expenses .............................. 1,387 1,039
Deferred income tax assets .................... 2,202 2,202
Other current assets .......................... 797 773
--------- ---------
Total current assets ...................... 41,927 44,030
Property, plant and equipment, net ................. 14,769 13,818
Excess of cost over net assets of
acquired companies, net of accumulated
amortization ...................................... 28,747 25,225
Cash surrender value of life
insurance ......................................... 863 863
Other assets ....................................... 2,804 2,810
--------- ---------
Total Assets ....................................... $ 89,110 $ 86,746
========= =========
See accompanying notes to condensed consolidated financial statements
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Condensed Consolidated Balance Sheets
New Horizons Worldwide, Inc. and Subsidiaries
March 31, 1999 and December 31, 1998
(Dollars in thousands)
March 31, December 31,
1999 1998
---------- ------------
(unaudited)
Liabilities and Stockholders' Equity
Current liabilities:
Notes payable and current portion of long-term
obligations ................................... $ 867 $ 3,910
Accounts payable .................................. 3,795 2,391
Income taxes payable .............................. 947 354
Other current liabilities ......................... 17,296 16,424
-------- --------
Total current liabilities ..................... 22,905 23,079
Long-term obligations, excluding current portion ....... 181 267
Deferred income tax liabilities ........................ 981 981
Deferred rent .......................................... 650 658
Other long term liabilities ............................ 197 192
-------- --------
Total liabilities ............................. 24,914 25,177
-------- --------
Stockholders' equity:
Preferred stock, without par value,
2,000,000 shares authorized, no
shares issued ................................. -- --
Common stock, $.01 par value,
15,000,000 shares authorized;
issued and outstanding
7,725,028 shares in 1999
and 7,683,825 shares in 1998 .................. 77 77
Additional paid-in capital ........................ 34,201 33,220
Retained earnings ................................. 31,136 29,517
Treasury stock at cost - 185,000
shares in 1999 and 1998 ....................... (1,298) (1,298)
Accumulated other comprehensive income ............ 80 53
-------- --------
Total stockholders' equity ............................. 64,196 61,569
-------- --------
Total Liabilities and Stockholders' Equity .. $ 89,110 $ 86,746
======== ========
See accompanying notes to condensed consolidated financial statements
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Condensed Consolidated Statements of Earnings
New Horizons Worldwide, Inc. and Subsidiaries
Three Months ended March 31, 1999 and March 31, 1998
(Unaudited)
(Dollars in thousands except Earnings Per Share)
Three Months Three Months
Ended Ended
March 31, 1999 March 31, 1998
-------------- --------------
Revenues
Franchising
Franchise fees ........................ $ 388 $ 173
Royalties ............................. 4,732 3,593
Other ................................. 580 404
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Total franchising revenues ............ 5,700 4,170
Company-owned training centers ............. 16,402 10,515
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Total revenues ........................ 22,102 14,685
Cost of revenues .............................. 9,751 6,951
Selling, general and administrative expenses .. 9,941 6,661
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Operating income .............................. 2,410 1,073
Investment income, net ........................ 197 234
------- -------
Income before income taxes .................... 2,607 1,307
Provision for income taxes .................... 988 496
------- -------
Net income .................................... $ 1,619 $ 811
======= =======
Basic Earnings Per Share ...................... $ 0.22 $ 0.11
======= =======
Diluted Earnings Per Share .................... $ 0.20 $ 0.11
======= =======
See accompanying notes to condensed consolidated financial statements
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Condensed Consolidated Statements of Cash Flows
New Horizons Worldwide, Inc. and Subsidiaries
Three Months ended March 31, 1999 and March 31, 1998
(Unaudited)
(Dollars in thousands)
Three Months Three Months
Ended Ended
March 31, March 31,
1999 1998
------------ ------------
Cash flows from operating activities
Net income .......................................... $ 1,619 $ 811
Adjustments to reconcile net income to net cash
provided by operating activities (net of
acquisitions):
Depreciation and amortization .................. 1,183 933
Deferred compensation .......................... 158 --
Cash provided (used) from the change in:
Accounts receivable .......................... (66) 715
Inventories .................................. (204) 46
Prepaid expenses and other current assets .... (358) 166
Other assets ................................. 6 (320)
Accounts payable ............................. 1,332 (69)
Other current liabilities .................... 313 1,835
Income taxes payable/refundable .............. 601 (930)
Deferred rent ................................ (8) 81
-------- --------
Net cash provided by operating activities . 4,576 3,268
-------- --------
Cash flows from investing activities
Purchase of marketable securities ................ (169) (20,786)
Redemption of marketable securities .............. 7,578 19,201
Additions to property, plant and equipment ....... (1,702) (647)
Cash paid for acquired companies, net of cash
received ...................................... (2,762) --
-------- --------
Net cash provided (used) by investing activities 2,945 (2,232)
-------- --------
Cash flows from financing activities
Proceeds from issuance of common stock ........... 25 302
Proceeds from debt obligations ................... (2,859) 46
Principal payments on debt obligations ........... (344) (1,278)
-------- --------
Net cash used by financing activities .......... (3,178) (930)
-------- --------
Net increase in cash and cash equivalents ........... 4,343 106
Cash and cash equivalents at beginning of period .... 6,873 3,129
-------- --------
Cash and cash equivalents at end of period .......... $ 11,216 $ 3,235
======== ========
Supplemental disclosure of cash flow information
Cash was paid for:
Interest ....................................... $ 22 $ 71
======== ========
Income taxes ................................... $ 280 $ 1,296
======== ========
See accompanying notes to condensed consolidated financial statements
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Condensed Consolidated Statements of Cash Flows
New Horizons Worldwide, Inc. and Subsidiaries
Three Months ended March 31, 1999
(Unaudited)
(Dollars in thousands)
Supplemental Disclosure of Noncash Transactions -
On March 1, 1999, the Company acquired the Albuquerque, New Mexico franchise in
a transaction summarized as follows (Note 3):
Fair value of assets acquired .. $ 4,261
Short term payable incurred .... (138)
Value of stock issued .......... (791)
Cash paid, net of cash acquired (2,762)
------
Liabilities assumed ............ $ 570
=======
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Notes to Condensed Consolidated Financial Statements
New Horizons Worldwide, Inc. and Subsidiaries
For the Three Months Ended March 31, 1999 and March 31, 1998
(Unaudited)
(Dollars in thousands except Earnings Per Share)
Note 1 In the opinion of management, the accompanying unaudited condensed
consolidated financial statements contain all adjustments (all of
which are normal and recurring) necessary to present fairly the
financial position of the Company at March 31, 1999 and the results of
operations for the three month periods ended March 31, 1999 and March
31, 1998. The statements and notes should be read in conjunction with
the financial statements and notes thereto included in the Company's
annual report for the year ended December 31, 1998.
Note 2 The investments consist of tax-exempt bonds and municipal funds. The
Company's investments are presented at their aggregate fair value.
Unrealized gains and losses are included as a component of
stockholders' equity, net of tax, until realized.
Note 3 On March 1, 1999, the Company, purchased the assets of its franchise
in Albuquerque, New Mexico, and will operate the center as a
company-owned location. The consideration paid included $2,762 in
cash, net of cash acquired, and 38,953 shares of the Company's common
stock. The selling shareholders will receive additional consideration,
in cash and stock, if certain performance targets are achieved.
If the results from the acquired location had been included in the
results of operations for the first three months of 1999 and 1998, the
Company's revenue, net income, and earnings per share would have
approximated the following:
Three Months Three Months
Ended Ended
March 31, 1999 March 31, 1998
--------------- --------------
Revenue ..................... $ 22,803 $ 15,253
Net Income .................. $ 1,650 $ 659
Basic Earnings Per Share .... $ 0.22 $ 0.09
Diluted Earnings Per Share .. $ 0.21 $ 0.09
Note 4 On April 1, 1999, the Company purchased the assets of its franchise
in Charlotte, North Carolina. The consideration paid included $3,200,
net of cash acquired, and 40,088 shares of the Company's common stock.
Based upon the closing price of the New Horizons stock as of April 1,
1999 ($19.94 per share) the acquisition is valued at approximately
$4.0 million. The selling shareholders will receive additional
consideration, in cash and stock, if certain performance targets are
achieved.
On April 1, 1999, the Company purchased the assets of its franchises
in Sacramento and Stockton, California. The consideration paid was
$3,115, net of cash acquired. The selling shareholder will receive
additional cash consideration if certain performance targets are
achieved.
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On May 6, 1999, the Company purchased the assets of its franchise in
San Antonio, Texas. Per the terms of the Asset Purchase Agreement the
effective date of the transaction was May 1, 1999. The consideration
paid included $4.0 million in cash and 50,595 shares of the Company's
common stock. Based upon the closing price of the New Horizons stock
as of May 6, 1999 ($20.50 per share) the acquisition is valued at
approximately $5.0 million. The selling shareholder will receive
additional consideration, in cash and stock, if certain performance
targets are achieved.
Note 5 On May 4, 1999, a five-for-four split of the Company's common stock
was approved. The stock split will be effected in the form of a stock
dividend and will be payable to stockholders of record on May 18,
1999. Shares resulting from the split will be issued on or about June
8, 1999.
Note 6 Effective January 1, 1998, the Company adopted SFAS No. 130
"Reporting Comprehensive Income." The Company's comprehensive income
for the three months ended March 31, 1999 and 1998 is presented below:
Three Months Three Months
Ended Ended
March 31, 1999 March 31, 1998
--------------- --------------
Net income .................... $1,619 $ 811
Other comprehensive income, net
of tax:
Unrealized holding gains/
(losses) on available for
sale securities arising
during the year ........... 80 (61)
------ ------
Comprehensive income ........... $1,699 $ 750
====== ======
Note 7 In June 1997 the Financial Accounting Standards Board issued SFAS No.
131 "Disclosures About Segments of an Enterprise and Related
Information." SFAS No. 131 was adopted by the Company for the fiscal
year ended December 31, 1998.
The Company operates in two business segments -- company-owned
training centers and franchising operations. The company-owned
training centers segment operates wholly-owned computer training
centers in the United States and derives its revenues from the
operating revenues of those centers. The franchising segment
franchises computer training centers domestically and internationally
and supplies systems of instruction and sales and management concepts
concerning computer training to independent franchisees. The
franchising segment revenues are from the initial franchise fees and
royalties from the franchise operations and other revenue such as from
the Major Accounts Program. The two segments are managed separately
because of the differences in the source of revenues and the services
offered. Information on the Company's segments is as follows:
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<TABLE>
<CAPTION>
Company-owned Executive
Centers Franchising Office Consolidated
------------- ----------- --------- ------------
<S> <C> <C> <C> <C>
For the three months ended March 31, 1999
Revenues from external customers.................... $16,402 $ 5,700 $ -- $22,102
Depreciation and amortization expenses.............. 995 188 -- 1,183
Income tax expense ................................. 475 513 -- 988
Net income ......................................... 776 843 -- 1,619
Total assets ....................................... 50,982 19,390 18,738 89,110
Capital expenditures ............................... 980 722 -- 1,702
For the three months ended March 31, 1998
Revenues from external customers.................... $10,515 $ 4,170 $ -- $14,685
Depreciation and amortization expenses.............. 821 112 -- 933
Income tax expense ................................. 82 414 -- 496
Net income ......................................... 258 553 -- 811
Total assets ....................................... 27,894 11,841 27,634 67,369
Capital expenditures ............................... 382 263 2 647
</TABLE>
Note 8 As of December 31,1997 the Company adopted SFAS No. 128, "Earnings Per
Share" (EPS). SFAS No.128 requires the Company to report Basic EPS, as
defined therein, which assumes no dilution from outstanding stock
options, and Diluted EPS, as defined therein, which assumes dilution
from the outstanding stock options. Earnings per share amounts for
all periods presented have been calculated to conform to the
requirements of SFAS No. 128.
The computation of Basic EPS is based on the weighted average number
of shares actually outstanding during each year. The computation of
Diluted EPS is based upon the weighted average number of shares
actually outstanding, plus the shares that would be outstanding
assuming the exercise of all outstanding options and warrants,
computed using the treasury stock method.
The weighted average number of shares outstanding in determining Basic
EPS for the three months ended March 31, 1999 and 1998 was 7,512,592
and 7,153,252. The weighted average number of shares outstanding used
in determining Diluted EPS for the three months ended March 31, 1999
and 1998 was 7,936,834 and 7,372,582.
The difference between the shares used for calculating Basic and
Diluted EPS relates to common stock equivalents consisting of stock
options and warrants outstanding during the respective periods.
9
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PART I. FINANCIAL INFORMATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Dollars in thousands)
General
- -------
The Company operates computer training centers in the United States and
franchises computer training centers in the United States and abroad.
Corporate revenues are defined as revenues from company-owned training centers,
initial franchise fees and royalties from franchised operations. System-wide
revenues are comprised of total revenues from all centers, both company-owned
and franchised. System-wide revenues are used to gauge the growth rate of the
entire New Horizons training network.
Revenues from company-owned training centers operated by New Horizons consist
primarily of training fees and fees derived from the sale of courseware. Cost of
revenues consists primarily of instructor costs, courseware costs, rent,
utilities, classroom equipment, and computer hardware, software and peripheral
expenses. Included in selling, general and administrative expenses are costs
associated with technical support personnel, facilities support personnel,
scheduling personnel, training personnel, accounting and finance personnel, and
sales executives.
Revenues from franchising consist primarily of initial franchise fees paid by
franchisees for the purchase of specific franchise territories and franchise
rights, training royalty and advertising fees based on a percentage of gross
training revenues realized by the franchisees, percentage royalty fees received
on the sale of courseware, and revenue earned from the Major Accounts Program.
Cost of revenues consists primarily of costs associated with franchise support
personnel who provide system guidelines and advice on daily operating issues
including sales, marketing, instructor training, and general business problems.
Included in selling, general and administrative expenses are technical support,
courseware development, accounting and finance support, Major Accounts Program
support, advertising expenses, and franchise sales expenses.
Revenues
- --------
Revenues increased $7,417 or 50.5% to $22,102 for the first quarter of 1999
compared to $14,685 for the first quarter of 1998. This was primarily due to
improved revenues at company-owned locations, additional revenues resulting from
the acquisition of the Memphis, Nashville, Hartford, and Albuquerque franchises
since the first quarter of 1998, revenue increases at franchises that were open
more for than twelve months, and additional franchises added to the system.
System-wide revenues for the first quarter were $102,452, up 30.1% from $78,764
for the same period in 1998. Revenues from locations open more than 12 months,
both franchised and company-owned, grew 21.3% in the first quarter of 1999
compared to the same period in 1998.
Cost of Revenues
- ----------------
Cost of revenues increased $2,800 or 40.3% for the first quarter of 1999
compared to the same period in 1998. As a percentage of revenues, cost of
revenues decreased to 44.1% in the first quarter of 1999 from 47.3% in the first
quarter of 1998. The increase in the cost of revenues in absolute dollars was a
result of the increase in the revenues for the quarter as discussed above,
increased franchise support, and higher training, facilities, and depreciation
expenses due to the acquisition of the Memphis, Nashville, Hartford, and
Albuquerque franchises. The decrease in cost of revenues as a percentage of
revenues was primarily due to improved absorption of fixed costs and increased
revenues.
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Selling, General and Administrative Expenses
- --------------------------------------------
Selling, general and administrative expenses increased $3,280 or 49.2% for the
first quarter of 1999 as compared to the first quarter of 1998. As a percentage
of revenues, selling, general and administrative expenses decreased to 45.0% for
the first quarter of 1999 from 45.4% for the same period in 1998. The increase
in selling, general and administrative expenses in absolute dollars was due to
increased spending in the areas of sales and marketing, national advertising,
the expansion of the Major Accounts Program, franchise support of international
operations, and support of the company-owned centers, and additional expenses
resulting from the acquisition of the four franchises. The decrease in selling,
general and administrative expenses as a percentage of revenues was primarily
due to the increase in revenue and control over the addition of non-revenue
producing employees.
Operating Income
- ----------------
Operating income increased to $2,410 or 125% for the first quarter of 1999
compared to $1,073 for the first quarter of 1998. The increase in operating
income for the three months ended March 31, 1999 resulted mainly from the
increase in revenues and the reduction in expenses as a percentage of revenues.
Investment Income, Net
- -----------------------
Investment income decreased $93 or 28.4% for the first quarter of 1999 compared
with the same period of 1998. As a percentage of revenues, investment income
decreased to 1.1% for the first quarter of 1999 when compared to 2.2% in the
first quarter of 1998. The decrease in investment income in absolute dollars was
due mainly to the use of funds to purchase the Memphis, Nashville, Hartford, and
Albuquerque franchises and 8.3 acres of undeveloped land in Santa Ana,
California.
Interest expense decreased $56 or 59.6% for the first quarter of 1999 when
compared to the first quarter of 1998. The lower interest expense was due mainly
to lower outstanding borrowings in the first three months of 1999 compared to
the corresponding period in 1998.
Income Taxes
- ------------
The Company's effective tax rate was 37.9% for the first quarter of 1999 and for
the first three months of 1998.
Liquidity and Capital Resources
- -------------------------------
As of March 31, 1999, the Company's working capital was $19,022 and its cash,
cash equivalents and short-term investments totaled $19,655. Working capital as
of March 31, 1999 reflected a decrease of $1,929 or 9.2% from $20,951 as of
December 31, 1998.
The Company currently maintains a $3,750 credit facility with a commercial bank,
expiring in June 1999. As of March 31, 1999 there was no amount outstanding
under this facility. This facility bears interest at a variable interest rate
equal to 1.0% under the bank's prime rate. At the expiration date the Company
intends to enter into a similar credit facility for future equipment purchases
and acquisitions.
The nature of the computer education and training industry requires substantial
cash commitments for the purchase of computer equipment, software, and training
facilities. During the first three months of 1999 the Company spent
approximately $1,702 on capital items and anticipates spending up to $8,600
during 1999.
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Management believes that its current working capital position, cash flows from
operations, along with its credit facility, will be adequate to support its
current and anticipated capital and operating expenditures and its strategies to
grow its computer education and training business.
Information About Forward Looking Statements
- --------------------------------------------
The statements made in this Quarterly Report on Form 10-Q that are not
historical facts are forward looking statements. Such statements are based on
current expectations but involve risks, uncertainties, and other factors which
may cause actual results to differ materially from those contemplated by such
forward looking statements. Important factors which may result in variations
from results contemplated by such forward looking statements include, but are by
no means limited to: (1) the Company's ability to respond effectively to
potential changes in the manner in which computer training is delivered,
including the increasing acceptance of technology-based training which could
have more favorable economics with respect to timing and delivery costs and the
emergence of just-in-time interactive training; (2) the Company's ability to
attract and retain qualified instructors; (3) the rate at which new software
applications are introduced by manufacturers and the Company's ability to keep
up with new applications and enhancements to existing applications; (4) the
level of expenditures devoted to upgrading information systems and computer
software by customers; (5) the Company's ability to compete effectively with low
cost training providers who may not be authorized by software manufacturers; and
(6) the Company's ability to manage the growth of its business.
The Company's strategy focuses on enhancing revenues and profits at current
locations, and also includes the possible opening of new company-owned
locations, the sale of additional franchises, the selective acquisition of
existing franchises in the United States which have demonstrated the ability to
achieve exceptional profitability while increasing market share, and the
acquisition of companies in similar or complementary businesses. The Company's
growth strategy is premised on a number of assumptions concerning trends in the
information technology training industry. These include the continuation of
growth in the market for information technology training and the trend toward
outsourcing. To the extent that the Company's assumptions with respect to any of
these matters are inaccurate, its results of operations and financial condition
could be adversely effected.
Year 2000
- ---------
The issues raised by the inability of computers, software, and other equipment
utilizing microprocessors to recognize and properly process data fields
containing a 2-digit year are commonly referred to as Year 2000 ("Y2K") issues.
A company-wide Y2K compliance program has been implemented to determine Y2K
issues and develop strategies to assure compliance. The compliance program has
four major areas of concentration: internal information technology systems,
non-information technology systems, systems and processes utilized by
franchisees, and compliance issues related to major suppliers. A Y2K project
team has been established and is directing the activity regarding the issues
confronted in each area, monitoring progress of the effort, and reporting
findings to management. As the Y2K compliance program proceeds, contingency
plans will be prepared, updated, and implemented as necessary to address the
risks identified.
With respect to internal information technology systems, among the most critical
systems to the ongoing operations of both the company-owned and franchised
training centers are those systems which provide customer contact and student
registration information. The systems currently used by the company-owned
centers are not Y2K compliant, but the Company has prepared the necessary
upgrades. The cost of developing these upgrades has not been, and is not
expected to be, material. Certain franchised locations use the same systems as
the company-owned centers and have received these upgrades from the Company.
Other franchised locations use contact management and/or student registration
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software from various vendors which, in many cases, may require updating to
become Y2K compliant. Franchisees have been and will continue to be advised to
bring their systems into compliance. However, simultaneous with these efforts,
the Company has also engaged a third party to develop a comprehensive
replacement information management system (NHMS) for use in all company-owned
and franchised locations. The Company expects to commence deployment of this
system, which is designed to be Y2K compliant, in the third quarter of 1999. In
addition to the foregoing, the Company is reviewing its other computer hardware
and software systems and upgrading or replacing them as necessary. With respect
to the Company's accounting system currently used to consolidate results from
the company-owned centers, the Company has selected a new system. The cost of
the new system is expected to be less than $450. Installation is expected to be
completed for the locations that do not have Y2K compliant accounting systems by
the second quarter of 1999. The new system will be installed in the remaining
centers by September 1999.
Regarding non-information technology systems, the project team has inventoried
the items potentially affected by Y2K issues, and is currently assessing
compliance of those systems considered to have the potential for a material
impact. Those items which appear to have the potential for such an effect that
are determined not to be in compliance will be upgraded or replaced by mid-1999.
Those costs are not expected to be material.
13
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PART I. FINANCIAL INFORMATION
ITEM 3. QUANTITATIVE AND QUALITATIVE
DISCLOSURES ABOUT MARKET RISK
(Dollars in thousands)
The Company is exposed to market risk related to changes in interest rates. It
monitors the risks associated with interest rates and financial instrument
positions.
The Company accounts for investments pursuant to Statement of Financial
Accounting Standards (SFAS) No.115, "Accounting for Certain Investments in Debt
and Equity Securities." At March 31, 1999 and December 31, 1998, the Company's
investments have been categorized as "available for sale" and, as a result, are
stated at fair value. Accordingly, any unrealized holding gains and losses are
included as a component of accumulated other comprehensive income, net of tax,
until realized. Investments at March 31, 1999, consist principally of $4,692 in
short-term closed ends funds, $2,892 in municipal bond funds, and $855 in
tax-exempt government notes and bonds. The bond funds have various maturity
dates ranging from February 2001 to July 2002.
There were net unrealized gains of $80 and $53 recorded as of March 31, 1999 and
December 31, 1998, respectively.
The Company's revenue derived from international operations is not material and,
therefore, the risk related to foreign currency exchange rates is not material.
14
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Form 10Q - Part II: Other Information
Item 6. Exhibits and Reports on Form 8-K
- ------- --------------------------------
(a) Exhibit Index
(b) REPORTS ON FORM 8-K. During the quarter ended March 31, 1999, the
Company filed a Current Report on Form 8-K dated March 1, 1999 to
report the Company's acquisition, through its indirect wholly-owned
subsidiary, New Horizons Computer Learning Center of Albuquerque,
Inc., a Delaware corporation, of substantially all of the assets used
in the computer training business conducted by Computer Learning
Centers of New Mexico, Ltd., Co., a New Mexico limited liability
company.
Exhibit
Number Description of Documents
- ------- ------------------------
10.1 Form of Nonqualified Stock Option Agreement executed by recipients
of options under the Registrant's Omnibus Equity Plan*
10.2** Nonqualified Stock Option Agreement dated January 15, 1999, between
the Registrant and Charles G. Kinch*
10.3** Nonqualified Stock Option Agreement dated January 15, 1999, between
the Registrant and Kenneth M. Hagerstrom*
10.4** Nonqualified Stock Option Agreement dated January 15, 1999, between
the Registrant and Robert S. McMillan*
27 Financial Data Schedule*
- ----------
* Filed herewith
** Compensatory plan or arrangement
15
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereto duly authorized.
NEW HORIZONS WORLDWIDE, INC.
(Registrant)
Date: May 13, 1999 By: /s/
Robert S. McMillan
NEW HORIZONS WORLDWIDE, INC.
Chief Financial Officer
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NONQUALIFIED STOCK OPTION AGREEMENT
THIS AGREEMENT is entered into as of _______________, 1999 by and between
New Horizons Worldwide, Inc., a Delaware corporation (the "Company"), and
________________________ (the "Optionee").
WITNESSETH:
WHEREAS, the Company maintains the New Horizons Worldwide, Inc. Omnibus
Equity Plan (the "Plan") for the benefit of eligible participants therein; and
WHEREAS, the Committee is currently charged with administering the Plan;
and
WHEREAS, the Committee has determined that the Optionee, as a person
eligible to receive awards under the Plan, should be granted nonqualified stock
options to acquire Shares under the Plan upon the terms and conditions set forth
in this Agreement.
NOW, THEREFORE, the Company and the Optionee hereby agree as follows:
1. DEFINITIONS.
(a) The following terms shall have the meanings set forth below whenever
used in this instrument:
(i) The word "Act" shall mean the federal Securities Act of 1933, as
amended.
(ii) The word "Agreement" shall mean this instrument as originally
executed and as it may later be amended.
(iii)The word "Company" shall mean New Horizons Worldwide, Inc., a
Delaware corporation, and any successor thereto which shall
maintain the Plan.
(iv) The word "Disability" or "Disabled" shall mean the Optionee's
inability, due to a mental or physical condition, to perform
services for the Company and/or an Affiliate substantially
consistent with past practice, as determined by the Committee
pursuant to written certification of such condition from a
physician acceptable to the Committee.
(v) The word "Employee" shall mean any person who is an employee of
either the Company or any Affiliate.
(vi) The words "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.
(vii)The word "Option" shall mean the right and option to purchase
Shares pursuant to the terms of this Agreement.
(viii) The words "Option Exercise Date" shall mean the date the
Optionee exercises the Option by performing the acts described in
Section 7 hereof.
(ix) The word "Optionee" shall mean the person to whom the Option has
been granted pursuant to this Agreement.
(x) The words "Personal Representative" shall mean, following the
Optionee's death, the person who shall have acquired, by will or
by the laws of descent and distribution, the right to exercise
the Option.
(xi) The word "Plan" shall mean the New Horizons Worldwide, Inc.
Omnibus Equity Plan, as it was originally adopted and as it may
later be amended.
(xii)The word "Spread" shall mean, as of the Option Exercise Dare, an
amount equal to the excess, if any, of the Fair Market Value of a
Share in respect of which the Option is exercised over the Option
Exercise Price.
(xiii) The word "Transferee" shall mean the person or entity to whom
rights to acquire Shares pursuant to the exercise of the Option
shall have been transferred pursuant to Section 11 hereof.
(b) The following terms when used in the Agreement shall have the meanings
given them in the Plan: "Affiliate;" "Board;" "Change in Control;"
"Code;" "Committee;" "Consent;" "Family Members;" "Option Exercise
Price;" "Shares."
2. GRANT OF NONQUALIFIED OPTION. Effective as of the date of this Agreement,
the Company grants to the Optionee, upon the terms and conditions set forth
hereinafter, the right and option to purchase all or any lesser whole
number of an aggregate of ___________________________ (______) Shares at an
Option Exercise Price of $________ per Share. The Option shall for all
purposes be a nonqualified stock option subject to the federal income tax
treatment described in Section 1.83-7 of the Federal Income Tax
Regulations. Both the Company and the Optionee shall, on their respective
federal income tax returns, report any transaction relating to the Option
in a manner consistent with the preceding sentence.
3. TERM OF OPTION. Except as otherwise provided herein, the term of the Option
shall be for a period of ____________ (__) years from the date hereof, and
the Option shall expire at the close of regular business hours at the
Company's principal executive office (currently located at 500 Campus
Drive, Suite 200, Morganville, New Jersey 07751) on the last day of the
term of the Option, or, if earlier, on the applicable expiration date
provided for in Sections 5, 6 and 7 hereof.
4. EXERCISE DATES. Except as otherwise provided herein, the Optionee shall be
entitled to exercise the Option with respect to the number of Shares
indicated below on or after the date indicated opposite such number below:
Initial and Additional Total Shares with
Number of Shares with Respect to Which Date Beginning
Respect to Which the the Option May on Which Option
Option May be Exercised be Exercised May be Exercised
- ----------------------- ----------------- ----------------
Except as provided in Sections 5 and 6 hereof, the Option may not be
exercised at any time unless the Optionee shall be an Employee at such
time.
5. TERMINATION OF EMPLOYMENT, ETC. So long as the Optionee shall continue to
be an Employee, the Option shall not be affected by (a) any temporary leave
of absence approved in writing by the Company or an Affiliate, or (b) any
change of duties or position (including transfer to or from an Affiliate).
If the Optionee ceases to be an Employee for any reason other than death or
Disability, the Option may be exercised only to the extent of the purchase
rights, if any, which, pursuant to Section 4 hereof, existed as of the date
the Optionee ceases to be an Employee and which have not theretofore been
exercised; provided, however, that the Committee may in its absolute
discretion determine (but shall not be under any obligation to determine)
that such purchase rights shall be deemed to include additional Shares
which are subject to the Option. Except as provided in Section 6 below,
upon an Optionee's ceasing to be an Employee, such purchase rights shall in
any event terminate upon the earlier of either (a) three (3) months after
the date the Optionee ceased to be an Employee (one (1) year after the date
the Optionee ceased to be an Employee if the Optionee dies or becomes
Disabled within three (3) months after ceasing to be an Employee), or (b)
the last day of the term of the Option. Notwithstanding the preceding
provisions of this Section 5, unless the Committee shall otherwise
determine, upon (a) the Optionee's ceasing to be an Employee by reason of
an involuntary termination of such status for good cause, as determined by
the Committee, or (b) the Optionee's voluntary termination with the
intention of rendering services to a competitor of the Company or any
Affiliate or otherwise entering into competition with the Company or any
Affiliate directly or indirectly, or (c) the commission by the Optionee of
a material breach of his obligations under any agreement with the Company
or any Affiliate, the Optionee's right to purchase Shares pursuant to the
exercise of the Option shall terminate.
6. OPTIONEE'S DEATH OR DISABILITY. If, while the Optionee is an Employee, the
Optionee dies or becomes Disabled, the Optionee or the Optionee's Personal
Representative may immediately exercise the Option with respect to all of
the Shares subject to the Option regardless of whether the Optionee had the
right under Section 4 hereof to exercise the Option at the time of his
death or Disability. The Option shall in any event terminate upon the
earlier of either (a) the first anniversary of the date the Optionee ceased
to be an Employee; or (b) the last day of the term of the Option.
7. CHANGE IN CONTROL. Notwithstanding the provisions of Section 4 hereof, in
connection with a Change in Control, the Optionee shall have the immediate
and nonforfeitable right to exercise the Option with respect to all Shares
covered by the Option. The Optionee shall be entitled to exercise the
Option as provided in the immediately preceding sentence regardless of
whether the surviving corporation in any merger or consolidation shall
adopt and maintain the Plan. In the event the Option becomes exercisable
pursuant to this Section 7, the Company shall notify the Optionee of his
right to exercise the Option. Upon a Change in Control described in Section
1.6(b)(iii) of the Plan, the Option, to the extent not exercised, shall
terminate unless the surviving corporation assumes the Option. In the event
of a Change in Control described in Section 1.6(b)(iv) of the Plan, the
Option, to the extent not exercised, shall terminate upon consummation of
the Change in Control.
8. ADJUSTMENT UPON CHANGES IN CAPITALIZATION. The number of Shares which may
be purchased upon exercise of an Option and the Option Exercise Price shall
be appropriately adjusted as the Committee may determine for any change
after the date of the Agreement 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, or other change in the Shares effected
without receipt of consideration by the Company; provided, that any
fractional Shares resulting from any such adjustment shall be eliminated.
Adjustments under this Section 8 shall be made by the Committee, whose
determination as to the adjustments to be made, and the extent thereof,
shall be final, binding and conclusive.
9. EXERCISE OF OPTION. The Option may be exercised by delivering to the
Chairman, Vice Chairman, President or Chief Financial Officer of the
Company at the then principal office address of the recipient officer, a
completed Notice of Exercise of Option (obtainable from the Chief Financial
Officer of the Company) setting forth the number of Shares with respect to
which the Option is being exercised. Such Notice shall be accompanied by
payment in full for the Shares, unless other arrangements satisfactory to
the Committee for prompt payment of such amount are made. Payment of the
Option Exercise Price may be made in any manner permitted by the Plan,
subject to the consent of the Committee as applicable. With the consent of
the Committee, the Optionee may effect a cashless exercise of the Option as
described in the Plan. With the consent of the Committee in its sole
discretion, payment for Shares acquired upon exercise of the Option may be
made by delivery to the Company of an assignment of a sufficient amount of
the proceeds from the sale of Shares acquired upon exercise of the Option
to pay for all or some of the Shares acquired upon exercise of the Option
and an authorization to the broker or selling agent to pay that amount to
the Company, which sale shall be made at the Optionee's direction on the
Option Exercise Date; provided, that the Committee may require the Optionee
to furnish an opinion of counsel acceptable to the Committee to the effect
that such delivery would not result in the Optionee incurring any liability
under Section 16 of the Act and does not require any Consent.
10. ISSUANCE OF SHARE CERTIFICATES. Subject to the last sentence of this
Section 10, upon receipt by the Company prior to expiration of the Option
of a duly completed Notice of Exercise of Option accompanied by payment for
the Shares being purchased pursuant to such Notice (and, with respect to
any Option exercised pursuant to Section 11 hereof by someone other than
the Optionee, accompanied in addition by proof satisfactory to the
Committee of the right of such person to exercise the Option), the Company
shall deliver to the Optionee, within thirty (30) days of such receipt, a
certificate for the number of Shares so purchased. The Optionee shall not
have any of the rights of a stockholder with respect to the Shares which
are subject to the Option unless and until a certificate representing such
Shares is issued to the Optionee. The Company shall not be required to
issue any certificates for Shares upon the exercise of the Option prior to
(i) obtaining any Consents which the Committee shall, in its sole
discretion, determine to be necessary or advisable, or (ii) the
determination by the Committee, in its sole discretion, that no Consents
need be obtained.
11. SUCCESSORS IN INTEREST, ETC. This Agreement shall be binding upon and inure
to the benefit of any successor of the Company and the heirs, estate, and
Personal Representative of the Optionee. A deceased Optionee's Personal
Representative shall act in the place and stead of the deceased Optionee
with respect to exercising an Option or taking any other action pursuant to
this Agreement. The Option shall not be transferable other than by will or
the laws of descent and distribution, and the Option may be exercised
during the lifetime of the Optionee only by the Optionee; provided, that a
guardian or other legal representative who has been duly appointed for such
Optionee may exercise the Option on behalf of the Optionee. Notwithstanding
the preceding sentence, with the consent of the Committee in its sole
discretion, the Optionee may transfer the rights under the Option in
respect of some or all of the Shares which are subject to the Option to a
Family Member or a trust for the exclusive benefit of the Optionee and/or
Family Members, or a partnership or other entity affiliated with the
Optionee that may be approved by the Committee. All terms and conditions of
any Option, including provisions relating to the termination of the
Optionee's employment with the Company and its Affiliates, shall continue
to apply following a transfer made in accordance with this Section 11 and
the Transferee shall have no greater right to exercise the Option than the
Optionee would have in the absence of the transfer. The Option may be
exercised by the Transferee only in accordance with the terms of this
Agreement and the Transferee's exercise of the Option shall be subject to
the Transferee and/or the Optionee satisfying all of the conditions
relating to the exercise of the Option including, without limitation,
provisions concerning payment of the Option Exercise Price and tax
withholding.
12. PROVISIONS OF PLAN CONTROL. This Agreement is subject to all of the terms,
conditions, and provisions of the Plan and to such rules, regulations, and
interpretations relating to the Plan as may be adopted by the Committee and
as may be in effect from time to time. A copy of the Plan is attached
hereto as Exhibit "A" and is incorporated herein by reference. In the event
and to the extent that this Agreement conflicts or is inconsistent with the
terms, conditions, and provisions of the Plan, the Plan shall control, and
this Agreement shall be deemed to be modified accordingly.
13. NO LIABILITY UPON DISTRIBUTION OF SHARES. The liability of the Company
under this Agreement 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 this Agreement 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
this Agreement.
14. NO RIGHT TO BE EMPLOYED, ETC. Nothing in this Agreement shall confer upon
the Optionee any right to continue as an Employee, or to serve as a member
of the Board, or to interfere with or limit either the right of the Company
or an Affiliate to terminate his employment at any time or the right of the
stockholders of the Company to remove him as a member of the Board for any
reason or with no reason.
15. RESALE LIMITATIONS. The Optionee acknowledges and agrees that (a) the
Shares he may acquire upon exercise of the Option may not be transferred
unless they become registered under the Act or unless the holder thereof
establishes to the satisfaction of the Company that an exemption from such
registration is available, (b) the Company will have no obligation to
provide any such registration or take such steps as are necessary to permit
sale of such Shares without registration pursuant to Rule 144 under the Act
or otherwise, (c) at such time as such Shares may be disposed of in routine
sales without registration in reliance on Rule 144 under the Act, such
disposition may be made only in limited amounts in accordance with all of
the terms and conditions of Rule 144 and (d) if the Rule 144 exemption is
not available, compliance with some other exemption from registration will
be required.
16. WITHHOLDING TAXES.
(a) Whenever Shares are to be delivered pursuant to the exercise of the
Option, the Committee may require as a condition of delivery that the
Optionee remit an amount sufficient to satisfy all federal, state and
other governmental withholding tax requirements related thereto. The
Company may, as a condition of the exercise of the Option, deduct from
any salary or other payments due to the Optionee, 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) With the consent of the Committee in its sole discretion, (i) the
Optionee may satisfy all or part of any withholding requirements by
delivery of unrestricted Shares owned by the Optionee for at least one
year (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 withheld; provided, that the
Committee may require the Optionee to furnish an opinion of counsel or
other evidence acceptable to the Committee to the effect that such
delivery would not result in the Optionee incurring any liability
under Section 16 of the Act and does not require any Consent and/or
(ii) the Optionee may direct that Shares to be issued pursuant to the
exercise of the Option be used to satisfy any withholding obligation;
provided, that for purposes of satisfying any such obligation the
value of a Share shall be equal to the Spread.
17. CONSTRUCTION. The captions and section numbers appearing in this Agreement
are inserted only as a matter of convenience. They do not define, limit,
construe or describe the scope or intent of the provisions of this
Agreement. 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 shall require. 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.
18. TIME PERIODS, ETC. Any action required to be taken under this Agreement
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 such action may
be taken shall be automatically extended to the next business day. If the
day for taking any action, or on which any action may be taken, under this
Agreement falls on a weekend or a holiday, such action may be taken on the
next business day.
19. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware and any applicable
federal law.
20. NOTICES. Except as otherwise expressly provided herein, all notices
hereunder shall be in writing and delivered or mailed by registered or
certified mail, return receipt requested, or by private, overnight delivery
services (such as Federal Express) as follows:
If to the Company:
New Horizons Worldwide, Inc.
c/o New Horizons Computer Learning Centers, Inc.
1231 East Dyer Road, Suite 140
Santa Ana, California 92705-5605
Attention: Chief Financial Officer
If to the Optionee:
Last address set forth on the records
of the Company or its Affiliates
or at such other address as either party may hereafter designate by giving
notice to the other party as set forth above.
21. FURTHER ASSURANCES. From time to time after the exercise of an Option,
either party, upon request of the other and without further consideration,
shall execute and deliver to the requesting party any document or
instrument, and shall take any other action as may be reasonably requested,
to give effect to the exercise of the Option and the terms of this
Agreement.
IN WITNESS WHEREOF, the Company has caused this Agreement to be executed on
its behalf by its duly authorized officer, and the Optionee has hereunto set his
hand, all as of the day and year first above written.
NEW HORIZONS WORLDWIDE, INC.
(the "Company")
By:_________________________
Its: _______________________
___________________________
(the "Optionee")
<PAGE>
NONQUALIFIED STOCK OPTION AGREEMENT
THIS AGREEMENT is entered into as of January 15, 1999, by and between New
Horizons Worldwide, Inc., a Delaware corporation (the "Company"), and Charles G.
Kinch (the "Optionee").
WITNESSETH:
WHEREAS, the Company maintains the New Horizons Worldwide, Inc. Omnibus
Equity Plan (the "Plan") for the benefit of eligible participants therein; and
WHEREAS, the Committee is currently charged with administering the Plan;
and
WHEREAS, the Committee has determined that the Optionee, as a person
eligible to receive awards under the Plan, should be granted nonqualified stock
options to acquire Shares under the Plan upon the terms and conditions set forth
in this Agreement.
NOW, THEREFORE, the Company and the Optionee hereby agree as follows:
1. DEFINITIONS.
(a) The following terms shall have the meanings set forth below whenever
used in this instrument:
(i) The word "Act" shall mean the federal Securities Act of 1933, as
amended.
(ii) The word "Agreement" shall mean this instrument as originally
executed and as it may later be amended.
(iii)The word "Company" shall mean New Horizons Worldwide, Inc., a
Delaware corporation, and any successor thereto which shall
maintain the Plan.
(iv) The word "Disability" or "Disabled" shall mean the Optionee's
inability, due to a mental or physical condition, to perform
services for the Company and/or an Affiliate substantially
consistent with past practice, as determined by the Committee
pursuant to written certification of such condition from a
physician acceptable to the Committee.
(v) The word "Employee" shall mean any person who is an employee of
either the Company or any Affiliate.
(vi) The words "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.
(vii)The word "Option" shall mean the right and option to purchase
Shares pursuant to the terms of this Agreement.
(viii) The words "Option Exercise Date" shall mean the date the
Optionee exercises the Option by performing the acts described in
Section 9 hereof.
(ix) The word "Optionee" shall mean the person to whom the Option has
been granted pursuant to this Agreement.
(x) The words "Personal Representative" shall mean, following the
Optionee's death, the person who shall have acquired, by will or
by the laws of descent and distribution, the right to exercise
the Option.
(xi) The word "Plan" shall mean the New Horizons Worldwide, Inc.
Omnibus Equity Plan, as it was originally adopted and as it may
later be amended.
(xii)The words "Pre-Tax Net Income" shall mean the Pretax Income of
New Horizons Computer Learning Centers, Inc. for 1999 as
determined by the Company for purposes of the Incentive Bonus
Program for Optionee described in the letter attached hereto as
Exhibit A.
(xiii) The word "Spread" shall mean, as of the Option Exercise Dare,
an amount equal to the excess, if any, of the Fair Market Value
of a Share in respect of which the Option is exercised over the
Option Exercise Price.
(xiv)The word "Transferee" shall mean the person or entity to whom
rights to acquire Shares pursuant to the exercise of the Option
shall have been transferred pursuant to Section 11 hereof.
(xv) The words "2000 Exercise Date" shall mean the third business day
following the date on which the Company receives its audited
financial statements for calendar year 1999 from its independent
certified public accountants.
(b) The following terms when used in the Agreement shall have the meanings
given them in the Plan: "Affiliate;" "Board;" "Change in Control;"
"Code;" "Committee;" "Consent;" "Family Members;" "Option Exercise
Price;" "Shares."
2. GRANT OF NONQUALIFIED OPTION. Effective as of the date of this Agreement,
the Company grants to the Optionee, upon the terms and conditions set forth
hereinafter, the right and option to purchase all or any lesser whole
number of an aggregate of Thirteen Thousand Three Hundred Thirty-Three
(13,333) Shares at an Option Exercise Price of $21.25 per Share. The Option
shall for all purposes be a nonqualified stock option subject to the
federal income tax treatment described in Section 1.83-7 of the Federal
Income Tax Regulations. Both the Company and the Optionee shall, on their
respective federal income tax returns, report any transaction relating to
the Option in a manner consistent with the preceding sentence.
3. TERM OF OPTION. Except as otherwise provided herein, the Option shall
expire at the close of regular business hours at the Company's principal
executive office (currently located at 500 Campus Drive, Suite 200,
Morganville, New Jersey 07751) on January 2, 2005, or, if earlier, on the
applicable expiration date provided for in Sections 5, 6 and 7 hereof.
4. EXERCISE DATES.
(a) Except as otherwise provided herein, the Optionee shall be entitled to
exercise the Option with respect to the number of Shares indicated
below on or after the date indicated opposite such number below:
Initial and Additional Total Shares with
Number of Shares with Respect to Which Date Beginning
Respect to Which the the Option May on Which Option
Option May be Exercised be Exercised May be Exercised
- ----------------------- ----------------- ----------------
6,667 6,667 2000 Exercise Date
6,666 13,333 January 1, 2001
Except as provided in Sections 5 and 6 hereof, the Option may not be
exercised at any time unless the Optionee shall be an Employee at such
time.
(b) Notwithstanding Section 4(a) above:
(i) if the Pre-Tax Net Income is less than $7,795,000, the Option may
not be exercised in respect of any Shares;
(ii) if the Pre-Tax Net Income is at least $7,795,000 but less than
$8,253,000, the number of Shares for which the Option may be
exercised as set forth in the Table in Section 4(a) shall be
reduced (to the nearest whole Share) by the percentage derived
from the formula set forth below:
$8,253,000 MINUS Pre-Tax Net Income
50% plus (30% x __________________________________)
$458,000
(iii)if the Pre-Tax Net Income is at least $8,253,000 but less than
$9,170,000, the number of Shares for which the Option may be
exercised as set forth in the Table in Section 4(a) shall be
reduced (to the nearest whole Share) by the percentage derived
from the formula set forth below:
$9,170,000 MINUS Pre-Tax Net Income
50% x __________________________________
$917,000
PROVIDED, that the amounts of Pre-Tax Net Income shown above in
this Section 4(b) may be equitably adjusted by the Committee to
take account of (i) any material expansion or contraction of the
Company's business operations during calendar year 1999, or (ii)
any extraordinary events which occur during 1999, or (iii) any
changes in the Company's accounting methodology that became
effective in respect of calendar year 1999. Any such adjustment
shall be made no later than the 2000 Exercise Date and shall be
final and binding upon the Company and the Optionee. The
Committee shall inform the Optionee of any such adjustment no
later than the 2000 Exercise Date.
5. TERMINATION OF EMPLOYMENT, ETC. So long as the Optionee shall continue to
be an Employee, the Option shall not be affected by (a) any temporary leave
of absence approved in writing by the Company or an Affiliate, or (b) any
change of duties or position (including transfer to or from an Affiliate).
If the Optionee ceases to be an Employee for any reason other than death or
Disability, the Option may be exercised only to the extent of the purchase
rights, if any, which, pursuant to Section 4 hereof, existed as of the date
the Optionee ceases to be an Employee (assuming, for this purpose only,
that the 2000 Exercise Date was January 1, 2000) and which have not
theretofore been exercised; provided, however, that the Committee may in
its absolute discretion determine (but shall not be under any obligation to
determine) that such purchase rights shall be deemed to include additional
Shares which are subject to the Option. Except as provided in Section 6
below, upon an Optionee's ceasing to be an Employee, such purchase rights
shall in any event terminate upon the earlier of either (a) three (3)
months after the date the Optionee ceased to be an Employee (one (1) year
after the date the Optionee ceased to be an Employee if the Optionee dies
or becomes Disabled within three (3) months after ceasing to be an
Employee), or (b) the last day of the term of the Option. Notwithstanding
the preceding provisions of this Section 5, unless the Committee shall
otherwise determine, upon (a) the Optionee's ceasing to be an Employee for
any reason prior to January 1, 2000, (b) the Optionee's ceasing to be an
Employee by reason of an involuntary termination of such status for good
cause, as determined by the Committee, or (c) the Optionee's voluntary
termination with the intention of rendering services to a competitor of the
Company or any Affiliate or otherwise entering into competition with the
Company or any Affiliate, directly or indirectly, or (d) the commission by
the Optionee of a material breach of his obligations under any agreement
with the Company or any Affiliate, the Optionee's right to purchase Shares
pursuant to the exercise of the Option shall terminate.
6. OPTIONEE'S DEATH OR DISABILITY. If, after 1999, while the Optionee is an
Employee, the Optionee dies or becomes Disabled, the Optionee or the
Optionee's Personal Representative may, on or after the 2000 Exercise Date,
immediately exercise the Option with respect to all of the Shares for which
the Optionee could have exercised the Option had he survived and continued
in employment until January 1, 2001. The Option shall in any event
terminate upon the earlier of either (a) the first anniversary of the date
the Optionee ceased to be an Employee; or (b) the last day of the term of
the Option.
7. CHANGE IN CONTROL. Notwithstanding the provisions of Section 4 hereof, in
connection with a Change in Control, the Optionee shall have the immediate
and nonforfeitable right to exercise the Option with respect to all Shares
covered by the Option. The Optionee shall be entitled to exercise the
Option as provided in the immediately preceding sentence regardless of
whether the surviving corporation in any merger or consolidation shall
adopt and maintain the Plan. In the event the Option becomes exercisable
pursuant to this Section 7, the Company shall notify the Optionee of his
right to exercise the Option. Upon a Change in Control described in Section
1.6(b)(iii) of the Plan, the Option, to the extent not exercised, shall
terminate unless the surviving corporation assumes the Option. In the event
of a Change in Control described in Section 1.6(b)(iv) of the Plan, the
Option, to the extent not exercised, shall terminate upon consummation of
the Change in Control.
8. ADJUSTMENT UPON CHANGES IN CAPITALIZATION. The number of Shares which may
be purchased upon exercise of an Option and the Option Exercise Price shall
be appropriately adjusted as the Committee may determine for any change
after the date of the Agreement 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, or other change in the Shares effected
without receipt of consideration by the Company; provided, that any
fractional Shares resulting from any such adjustment shall be eliminated.
Adjustments under this Section 8 shall be made by the Committee, whose
determination as to the adjustments to be made, and the extent thereof,
shall be final, binding and conclusive.
9. EXERCISE OF OPTION. The Option may be exercised by delivering to the
Chairman, Vice Chairman, President or Chief Financial Officer of the
Company at the then principal office address of the recipient officer, a
completed Notice of Exercise of Option (obtainable from the Chief Financial
Officer of the Company) setting forth the number of Shares with respect to
which the Option is being exercised. Such Notice shall be accompanied by
payment in full for the Shares, unless other arrangements satisfactory to
the Committee for prompt payment of such amount are made. Payment of the
Option Exercise Price may be made in any manner permitted by the Plan,
subject to the consent of the Committee as applicable. With the consent of
the Committee, the Optionee may effect a cashless exercise of the Option as
described in the Plan. With the consent of the Committee in its sole
discretion, payment for Shares acquired upon exercise of the Option may be
made by delivery to the Company of an assignment of a sufficient amount of
the proceeds from the sale of Shares acquired upon exercise of the Option
to pay for all or some of the Shares acquired upon exercise of the Option
and an authorization to the broker or selling agent to pay that amount to
the Company, which sale shall be made at the Optionee's direction on the
Option Exercise Date; provided, that the Committee may require the Optionee
to furnish an opinion of counsel acceptable to the Committee to the effect
that such delivery would not result in the Optionee incurring any liability
under Section 16 of the Act and does not require any Consent.
10. ISSUANCE OF SHARE CERTIFICATES. Subject to the last sentence of this
Section 10, upon receipt by the Company prior to expiration of the Option
of a duly completed Notice of Exercise of Option accompanied by payment for
the Shares being purchased pursuant to such Notice (and, with respect to
any Option exercised pursuant to Section 11 hereof by someone other than
the Optionee, accompanied in addition by proof satisfactory to the
Committee of the right of such person to exercise the Option), the Company
shall deliver to the Optionee, within thirty (30) days of such receipt, a
certificate for the number of Shares so purchased. The Optionee shall not
have any of the rights of a stockholder with respect to the Shares which
are subject to the Option unless and until a certificate representing such
Shares is issued to the Optionee. The Company shall not be required to
issue any certificates for Shares upon the exercise of the Option prior to
(i) obtaining any Consents which the Committee shall, in its sole
discretion, determine to be necessary or advisable, or (ii) the
determination by the Committee, in its sole discretion, that no Consents
need be obtained.
11. SUCCESSORS IN INTEREST, ETC. This Agreement shall be binding upon and inure
to the benefit of any successor of the Company and the heirs, estate, and
Personal Representative of the Optionee. A deceased Optionee's Personal
Representative shall act in the place and stead of the deceased Optionee
with respect to exercising an Option or taking any other action pursuant to
this Agreement. The Option shall not be transferable other than by will or
the laws of descent and distribution, and the Option may be exercised
during the lifetime of the Optionee only by the Optionee; provided, that a
guardian or other legal representative who has been duly appointed for such
Optionee may exercise the Option on behalf of the Optionee. Notwithstanding
the preceding sentence, with the consent of the Committee in its sole
discretion, the Optionee may transfer the rights under the Option in
respect of some or all of the Shares which are subject to the Option to a
Family Member or a trust for the exclusive benefit of the Optionee and/or
Family Members, or a partnership or other entity affiliated with the
Optionee that may be approved by the Committee. All terms and conditions of
any Option, including provisions relating to the termination of the
Optionee's employment with the Company and its Affiliates, shall continue
to apply following a transfer made in accordance with this Section 11 and
the Transferee shall have no greater right to exercise the Option than the
Optionee would have in the absence of the transfer. The Option may be
exercised by the Transferee only in accordance with the terms of this
Agreement and the Transferee's exercise of the Option shall be subject to
the Transferee and/or the Optionee satisfying all of the conditions
relating to the exercise of the Option including, without limitation,
provisions concerning payment of the Option Exercise Price and tax
withholding.
12. PROVISIONS OF PLAN CONTROL. This Agreement is subject to all of the terms,
conditions, and provisions of the Plan and to such rules, regulations, and
interpretations relating to the Plan as may be adopted by the Committee and
as may be in effect from time to time. A copy of the Plan is attached
hereto as Exhibit B and is incorporated herein by reference. In the event
and to the extent that this Agreement conflicts or is inconsistent with the
terms, conditions, and provisions of the Plan, the Plan shall control, and
this Agreement shall be deemed to be modified accordingly.
13. NO LIABILITY UPON DISTRIBUTION OF SHARES. The liability of the Company
under this Agreement 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 this Agreement 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
this Agreement.
14. NO RIGHT TO BE EMPLOYED, ETC. Nothing in this Agreement shall confer upon
the Optionee any right to continue as an Employee, or to serve as a member
of the Board, or to interfere with or limit either the right of the Company
or an Affiliate to terminate his employment at any time or the right of the
stockholders of the Company to remove him as a member of the Board for any
reason or with no reason.
15. RESALE LIMITATIONS. The Optionee acknowledges and agrees that (a) the
Shares he may acquire upon exercise of the Option may not be transferred
unless they become registered under the Act or unless the holder thereof
establishes to the satisfaction of the Company that an exemption from such
registration is available, (b) the Company will have no obligation to
provide any such registration or take such steps as are necessary to permit
sale of such Shares without registration pursuant to Rule 144 under the Act
or otherwise, (c) at such time as such Shares may be disposed of in routine
sales without registration in reliance on Rule 144 under the Act, such
disposition may be made only in limited amounts in accordance with all of
the terms and conditions of Rule 144 and (d) if the Rule 144 exemption is
not available, compliance with some other exemption from registration will
be required.
16. WITHHOLDING TAXES.
(a) Whenever Shares are to be delivered pursuant to the exercise of the
Option, the Committee may require as a condition of delivery that the
Optionee remit an amount sufficient to satisfy all federal, state and
other governmental withholding tax requirements related thereto. The
Company may, as a condition of the exercise of the Option, deduct from
any salary or other payments due to the Optionee, 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) With the consent of the Committee in its sole discretion, (i) the
Optionee may satisfy all or part of any withholding requirements by
delivery of unrestricted Shares owned by the Optionee for at least one
year (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 withheld; provided, that the
Committee may require the Optionee to furnish an opinion of counsel or
other evidence acceptable to the Committee to the effect that such
delivery would not result in the Optionee incurring any liability
under Section 16 of the Act and does not require any Consent and/or
(ii) the Optionee may direct that Shares to be issued pursuant to the
exercise of the Option be used to satisfy any withholding obligation;
provided, that for purposes of satisfying any such obligation the
value of a Share shall be equal to the Spread.
17. CONSTRUCTION. The captions and section numbers appearing in this Agreement
are inserted only as a matter of convenience. They do not define, limit,
construe or describe the scope or intent of the provisions of this
Agreement. 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 shall require. 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.
18. TIME PERIODS, ETC. Any action required to be taken under this Agreement
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 such action may
be taken shall be automatically extended to the next business day. If the
day for taking any action, or on which any action may be taken, under this
Agreement falls on a weekend or a holiday, such action may be taken on the
next business day.
19. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware and any applicable
federal law.
20. NOTICES. Except as otherwise expressly provided herein, all notices
hereunder shall be in writing and delivered or mailed by registered or
certified mail, return receipt requested, or by private, overnight delivery
services (such as Federal Express) as follows:
If to the Company:
New Horizons Worldwide, Inc.
c/o New Horizons Computer Learning Centers, Inc.
1231 East Dyer Road
Suite 140
Santa Ana, California 92705-5604
If to the Optionee:
Last address set forth on the records
of the Company or its Affiliates
or at such other address as either party may hereafter designate by giving
notice to the other party as set forth above.
21. FURTHER ASSURANCES. From time to time after the exercise of an Option,
either party, upon request of the other and without further consideration,
shall execute and deliver to the requesting party any document or
instrument, and shall take any other action as may be reasonably requested,
to give effect to the exercise of the Option and the terms of this
Agreement.
IN WITNESS WHEREOF, the Company has caused this Agreement to be executed on
its behalf by its duly authorized officer, and the Optionee has hereunto set his
hand, all as of the day and year first above written.
NEW HORIZONS WORLDWIDE, INC.
(the "Company")
By:_________________________
Its: ____________________
____________________________
(the "Optionee")
<PAGE>
NONQUALIFIED STOCK OPTION AGREEMENT
THIS AGREEMENT is entered into as of January 15, 1999, by and between New
Horizons Worldwide, Inc., a Delaware corporation (the "Company"), and Kenneth
Hagerstrom (the "Optionee").
WITNESSETH:
WHEREAS, the Company maintains the New Horizons Worldwide, Inc. Omnibus
Equity Plan (the "Plan") for the benefit of eligible participants therein; and
WHEREAS, the Committee is currently charged with administering the Plan;
and
WHEREAS, the Committee has determined that the Optionee, as a person
eligible to receive awards under the Plan, should be granted nonqualified stock
options to acquire Shares under the Plan upon the terms and conditions set forth
in this Agreement.
NOW, THEREFORE, the Company and the Optionee hereby agree as follows:
1. DEFINITIONS.
(a) The following terms shall have the meanings set forth below whenever
used in this instrument:
(i) The word "Act" shall mean the federal Securities Act of 1933, as
amended.
(ii) The word "Agreement" shall mean this instrument as originally
executed and as it may later be amended.
(iii)The word "Company" shall mean New Horizons Worldwide, Inc., a
Delaware corporation, and any successor thereto which shall
maintain the Plan.
(iv) The word "Disability" or "Disabled" shall mean the Optionee's
inability, due to a mental or physical condition, to perform
services for the Company and/or an Affiliate substantially
consistent with past practice, as determined by the Committee
pursuant to written certification of such condition from a
physician acceptable to the Committee.
(v) The word "Employee" shall mean any person who is an employee of
either the Company or any Affiliate.
(vi) The words "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.
(vii)The word "Option" shall mean the right and option to purchase
Shares pursuant to the terms of this Agreement.
(viii) The words "Option Exercise Date" shall mean the date the
Optionee exercises the Option by performing the acts described in
Section 9 hereof.
(ix) The word "Optionee" shall mean the person to whom the Option has
been granted pursuant to this Agreement.
(x) The words "Personal Representative" shall mean, following the
Optionee's death, the person who shall have acquired, by will or
by the laws of descent and distribution, the right to exercise
the Option.
(xi) The word "Plan" shall mean the New Horizons Worldwide, Inc.
Omnibus Equity Plan, as it was originally adopted and as it may
later be amended.
(xii)The words "Pre-Tax Net Income" shall mean the Pretax Income for
1999 as determined by the Company for purposes of the Incentive
Bonus Program for Optionee described in the letter attached
hereto as Exhibit A.
(xiii) The word "Spread" shall mean, as of the Option Exercise Dare,
an amount equal to the excess, if any, of the Fair Market Value
of a Share in respect of which the Option is exercised over the
Option Exercise Price.
(xiv)The word "Transferee" shall mean the person or entity to whom
rights to acquire Shares pursuant to the exercise of the Option
shall have been transferred pursuant to Section 11 hereof.
(xv) The words "2000 Exercise Date" shall mean the third business day
following the date on which the Company receives its audited
financial statements for calendar year 1999 from its independent
certified public accountants.
(b) The following terms when used in the Agreement shall have the meanings
given them in the Plan: "Affiliate;" "Board;" "Change in Control;"
"Code;" "Committee;" "Consent;" "Family Members;" "Option Exercise
Price;" "Shares."
2. GRANT OF NONQUALIFIED OPTION. Effective as of the date of this Agreement,
the Company grants to the Optionee, upon the terms and conditions set forth
hereinafter, the right and option to purchase all or any lesser whole
number of an aggregate of Thirteen Thousand Three Hundred Thirty-Three
(13,333) Shares at an Option Exercise Price of $21.25 per Share. The Option
shall for all purposes be a nonqualified stock option subject to the
federal income tax treatment described in Section 1.83-7 of the Federal
Income Tax Regulations. Both the Company and the Optionee shall, on their
respective federal income tax returns, report any transaction relating to
the Option in a manner consistent with the preceding sentence.
3. TERM OF OPTION. Except as otherwise provided herein, the Option shall
expire at the close of regular business hours at the Company's principal
executive office (currently located at 500 Campus Drive, Suite 200,
Morganville, New Jersey 07751) on January 2, 2005, or, if earlier, on the
applicable expiration date provided for in Sections 5, 6 and 7 hereof.
4. EXERCISE DATES.
(a) Except as otherwise provided herein, the Optionee shall be entitled to
exercise the Option with respect to the number of Shares indicated
below on or after the date indicated opposite such number below:
Initial and Additional Total Shares with
Number of Shares with Respect to Which Date Beginning
Respect to Which the the Option May on Which Option
Option May be Exercised be Exercised May be Exercised
- ----------------------- ----------------- ----------------
6,667 6,667 2000 Exercise Date
6,666 13,333 January 1, 2001
Except as provided in Sections 5 and 6 hereof, the Option may not be exercised
at any time unless the Optionee shall be an Employee at such time.
(b) Notwithstanding Section 4(a) above:
(i) if the Pre-Tax Net Income is less than $7,856,000, the Option may
not be exercised in respect of any Shares;
(ii) if the Pre-Tax Net Income is at least $7,856,000 but less than
$8,319,000, the number of Shares for which the Option may be
exercised as set forth in the Table in Section 4(a) shall be
reduced (to the nearest whole Share) by the percentage derived
from the formula set forth below:
$8,319,000 minus Pre-Tax Net Income
50% plus (30% x ___________________________________)
$463,000
(iii)if the Pre-Tax Net Income is at least $8,319,000 but less than
$9,242,000, the number of Shares for which the Option may be
exercised as set forth in the Table in Section 4(a) shall be
reduced (to the nearest whole Share) by the percentage derived
from the formula set forth below:
$9,242,000 minus Pre-Tax Net Income
50% x ____________________________________
$923,000
PROVIDED, that the amounts of Pre-Tax Net Income shown above in
this Section 4(b) may be equitably adjusted by the Committee to
take account of (i) any material expansion or contraction of the
Company's business operations during calendar year 1999, or (ii)
any extraordinary events which occur during 1999, or (iii) any
changes in the Company's accounting methodology that became
effective in respect of calendar year 1999 Any such adjustment
shall be made no later than the 2000 Exercise Date and shall be
final and binding upon the Company and the Optionee. The
Committee shall inform the Optionee of any such adjustment no
later than the 2000 Exercise Date.
5. TERMINATION OF EMPLOYMENT, ETC. So long as the Optionee shall continue to
be an Employee, the Option shall not be affected by (a) any temporary leave
of absence approved in writing by the Company or an Affiliate, or (b) any
change of duties or position (including transfer to or from an Affiliate).
If the Optionee ceases to be an Employee for any reason other than death or
Disability, the Option may be exercised only to the extent of the purchase
rights, if any, which, pursuant to Section 4 hereof, existed as of the date
the Optionee ceases to be an Employee (assuming, for this purpose only,
that the 2000 Exercise Date was January 1, 2000) and which have not
theretofore been exercised; provided, however, that the Committee may in
its absolute discretion determine (but shall not be under any obligation to
determine) that such purchase rights shall be deemed to include additional
Shares which are subject to the Option. Except as provided in Section 6
below, upon an Optionee's ceasing to be an Employee, such purchase rights
shall in any event terminate upon the earlier of either (a) three (3)
months after the date the Optionee ceased to be an Employee (one (1) year
after the date the Optionee ceased to be an Employee if the Optionee dies
or becomes Disabled within three (3) months after ceasing to be an
Employee), or (b) the last day of the term of the Option. Notwithstanding
the preceding provisions of this Section 5, unless the Committee shall
otherwise determine, upon (a) the Optionee's ceasing to be an Employee for
any reason prior to January 1, 2000, (b) the Optionee's ceasing to be an
Employee by reason of an involuntary termination of such status for good
cause, as determined by the Committee, or (c) the Optionee's voluntary
termination with the intention of rendering services to a competitor of the
Company or any Affiliate or otherwise entering into competition with the
Company or any Affiliate, directly or indirectly, or (d) the commission by
the Optionee of a material breach of his obligations under any agreement
with the Company or any Affiliate, the Optionee's right to purchase Shares
pursuant to the exercise of the Option shall terminate.
6. OPTIONEE'S DEATH OR DISABILITY. If, after 1999, while the Optionee is an
Employee, the Optionee dies or becomes Disabled, the Optionee or the
Optionee's Personal Representative may, on or after the 2000 Exercise Date,
immediately exercise the Option with respect to all of the Shares for which
the Optionee could have exercised the Option had he survived and continued
in employment until January 1, 2001. The Option shall in any event
terminate upon the earlier of either (a) the first anniversary of the date
the Optionee ceased to be an Employee; or (b) the last day of the term of
the Option.
7. CHANGE IN CONTROL. Notwithstanding the provisions of Section 4 hereof, in
connection with a Change in Control, the Optionee shall have the immediate
and nonforfeitable right to exercise the Option with respect to all Shares
covered by the Option. The Optionee shall be entitled to exercise the
Option as provided in the immediately preceding sentence regardless of
whether the surviving corporation in any merger or consolidation shall
adopt and maintain the Plan. In the event the Option becomes exercisable
pursuant to this Section 7, the Company shall notify the Optionee of his
right to exercise the Option. Upon a Change in Control described in Section
1.6(b)(iii) of the Plan, the Option, to the extent not exercised, shall
terminate unless the surviving corporation assumes the Option. In the event
of a Change in Control described in Section 1.6(b)(iv) of the Plan, the
Option, to the extent not exercised, shall terminate upon consummation of
the Change in Control.
8. ADJUSTMENT UPON CHANGES IN CAPITALIZATION. The number of Shares which may
be purchased upon exercise of an Option and the Option Exercise Price shall
be appropriately adjusted as the Committee may determine for any change
after the date of the Agreement 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, or other change in the Shares effected
without receipt of consideration by the Company; provided, that any
fractional Shares resulting from any such adjustment shall be eliminated.
Adjustments under this Section 8 shall be made by the Committee, whose
determination as to the adjustments to be made, and the extent thereof,
shall be final, binding and conclusive.
9. EXERCISE OF OPTION. The Option may be exercised by delivering to the
Chairman, Vice Chairman, President or Chief Financial Officer of the
Company at the then principal office address of the recipient officer, a
completed Notice of Exercise of Option (obtainable from the Chief Financial
Officer of the Company) setting forth the number of Shares with respect to
which the Option is being exercised. Such Notice shall be accompanied by
payment in full for the Shares, unless other arrangements satisfactory to
the Committee for prompt payment of such amount are made. Payment of the
Option Exercise Price may be made in any manner permitted by the Plan,
subject to the consent of the Committee as applicable. With the consent of
the Committee, the Optionee may effect a cashless exercise of the Option as
described in the Plan. With the consent of the Committee in its sole
discretion, payment for Shares acquired upon exercise of the Option may be
made by delivery to the Company of an assignment of a sufficient amount of
the proceeds from the sale of Shares acquired upon exercise of the Option
to pay for all or some of the Shares acquired upon exercise of the Option
and an authorization to the broker or selling agent to pay that amount to
the Company, which sale shall be made at the Optionee's direction on the
Option Exercise Date; provided, that the Committee may require the Optionee
to furnish an opinion of counsel acceptable to the Committee to the effect
that such delivery would not result in the Optionee incurring any liability
under Section 16 of the Act and does not require any Consent.
10. ISSUANCE OF SHARE CERTIFICATES. Subject to the last sentence of this
Section 10, upon receipt by the Company prior to expiration of the Option
of a duly completed Notice of Exercise of Option accompanied by payment for
the Shares being purchased pursuant to such Notice (and, with respect to
any Option exercised pursuant to Section 11 hereof by someone other than
the Optionee, accompanied in addition by proof satisfactory to the
Committee of the right of such person to exercise the Option), the Company
shall deliver to the Optionee, within thirty (30) days of such receipt, a
certificate for the number of Shares so purchased. The Optionee shall not
have any of the rights of a stockholder with respect to the Shares which
are subject to the Option unless and until a certificate representing such
Shares is issued to the Optionee. The Company shall not be required to
issue any certificates for Shares upon the exercise of the Option prior to
(i) obtaining any Consents which the Committee shall, in its sole
discretion, determine to be necessary or advisable, or (ii) the
determination by the Committee, in its sole discretion, that no Consents
need be obtained.
11. SUCCESSORS IN INTEREST, ETC. This Agreement shall be binding upon and inure
to the benefit of any successor of the Company and the heirs, estate, and
Personal Representative of the Optionee. A deceased Optionee's Personal
Representative shall act in the place and stead of the deceased Optionee
with respect to exercising an Option or taking any other action pursuant to
this Agreement. The Option shall not be transferable other than by will or
the laws of descent and distribution, and the Option may be exercised
during the lifetime of the Optionee only by the Optionee; provided, that a
guardian or other legal representative who has been duly appointed for such
Optionee may exercise the Option on behalf of the Optionee. Notwithstanding
the preceding sentence, with the consent of the Committee in its sole
discretion, the Optionee may transfer the rights under the Option in
respect of some or all of the Shares which are subject to the Option to a
Family Member or a trust for the exclusive benefit of the Optionee and/or
Family Members, or a partnership or other entity affiliated with the
Optionee that may be approved by the Committee. All terms and conditions of
any Option, including provisions relating to the termination of the
Optionee's employment with the Company and its Affiliates, shall continue
to apply following a transfer made in accordance with this Section 11 and
the Transferee shall have no greater right to exercise the Option than the
Optionee would have in the absence of the transfer. The Option may be
exercised by the Transferee only in accordance with the terms of this
Agreement and the Transferee's exercise of the Option shall be subject to
the Transferee and/or the Optionee satisfying all of the conditions
relating to the exercise of the Option including, without limitation,
provisions concerning payment of the Option Exercise Price and tax
withholding.
12. PROVISIONS OF PLAN CONTROL. This Agreement is subject to all of the terms,
conditions, and provisions of the Plan and to such rules, regulations, and
interpretations relating to the Plan as may be adopted by the Committee and
as may be in effect from time to time. A copy of the Plan is attached
hereto as Exhibit B and is incorporated herein by reference. In the event
and to the extent that this Agreement conflicts or is inconsistent with the
terms, conditions, and provisions of the Plan, the Plan shall control, and
this Agreement shall be deemed to be modified accordingly.
13. NO LIABILITY UPON DISTRIBUTION OF SHARES. The liability of the Company
under this Agreement 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 this Agreement 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
this Agreement.
14. NO RIGHT TO BE EMPLOYED, ETC. Nothing in this Agreement shall confer upon
the Optionee any right to continue as an Employee, or to serve as a member
of the Board, or to interfere with or limit either the right of the Company
or an Affiliate to terminate his employment at any time or the right of the
stockholders of the Company to remove him as a member of the Board for any
reason or with no reason.
15. RESALE LIMITATIONS. The Optionee acknowledges and agrees that (a) the
Shares he may acquire upon exercise of the Option may not be transferred
unless they become registered under the Act or unless the holder thereof
establishes to the satisfaction of the Company that an exemption from such
registration is available, (b) the Company will have no obligation to
provide any such registration or take such steps as are necessary to permit
sale of such Shares without registration pursuant to Rule 144 under the Act
or otherwise, (c) at such time as such Shares may be disposed of in routine
sales without registration in reliance on Rule 144 under the Act, such
disposition may be made only in limited amounts in accordance with all of
the terms and conditions of Rule 144 and (d) if the Rule 144 exemption is
not available, compliance with some other exemption from registration will
be required.
16. WITHHOLDING TAXES.
(a) Whenever Shares are to be delivered pursuant to the exercise of the
Option, the Committee may require as a condition of delivery that the
Optionee remit an amount sufficient to satisfy all federal, state and
other governmental withholding tax requirements related thereto. The
Company may, as a condition of the exercise of the Option, deduct from
any salary or other payments due to the Optionee, 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) With the consent of the Committee in its sole discretion, (i) the
Optionee may satisfy all or part of any withholding requirements by
delivery of unrestricted Shares owned by the Optionee for at least one
year (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 withheld; provided, that the
Committee may require the Optionee to furnish an opinion of counsel or
other evidence acceptable to the Committee to the effect that such
delivery would not result in the Optionee incurring any liability
under Section 16 of the Act and does not require any Consent and/or
(ii) the Optionee may direct that Shares to be issued pursuant to the
exercise of the Option be used to satisfy any withholding obligation;
provided, that for purposes of satisfying any such obligation the
value of a Share shall be equal to the Spread.
17. CONSTRUCTION. The captions and section numbers appearing in this Agreement
are inserted only as a matter of convenience. They do not define, limit,
construe or describe the scope or intent of the provisions of this
Agreement. 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 shall require. 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.
18. TIME PERIODS, ETC. Any action required to be taken under this Agreement
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 such action may
be taken shall be automatically extended to the next business day. If the
day for taking any action, or on which any action may be taken, under this
Agreement falls on a weekend or a holiday, such action may be taken on the
next business day.
19. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware and any applicable
federal law.
20. NOTICES. Except as otherwise expressly provided herein, all notices
hereunder shall be in writing and delivered or mailed by registered or
certified mail, return receipt requested, or by private, overnight delivery
services (such as Federal Express) as follows:
If to the Company:
New Horizons Worldwide, Inc.
c/o New Horizons Computer Learning Centers, Inc.
1231 East Dyer Road
Suite 140
Santa Ana, California 92705-5604
If to the Optionee:
Last address set forth on the records
of the Company or its Affiliates
or at such other address as either party may hereafter designate by giving
notice to the other party as set forth above.
21. FURTHER ASSURANCES. From time to time after the exercise of an Option,
either party, upon request of the other and without further consideration,
shall execute and deliver to the requesting party any document or
instrument, and shall take any other action as may be reasonably requested,
to give effect to the exercise of the Option and the terms of this
Agreement.
IN WITNESS WHEREOF, the Company has caused this Agreement to be executed on
its behalf by its duly authorized officer, and the Optionee has hereunto set his
hand, all as of the day and year first above written.
NEW HORIZONS WORLDWIDE, INC.
(the "Company")
By:_________________________
Its: ____________________
____________________________
(the "Optionee")
<PAGE>
NONQUALIFIED STOCK OPTION AGREEMENT
THIS AGREEMENT is entered into as of January 15, 1999, by and between New
Horizons Worldwide, Inc., a Delaware corporation (the "Company"), and Robert S.
McMillan (the "Optionee").
WITNESSETH:
WHEREAS, the Company maintains the New Horizons Worldwide, Inc. Omnibus
Equity Plan (the "Plan") for the benefit of eligible participants therein; and
WHEREAS, the Committee is currently charged with administering the Plan;
and
WHEREAS, the Committee has determined that the Optionee, as a person
eligible to receive awards under the Plan, should be granted nonqualified stock
options to acquire Shares under the Plan upon the terms and conditions set forth
in this Agreement.
NOW, THEREFORE, the Company and the Optionee hereby agree as follows:
1. DEFINITIONS.
(a) The following terms shall have the meanings set forth below whenever
used in this instrument:
(i) The word "Act" shall mean the federal Securities Act of 1933, as
amended.
(ii) The word "Agreement" shall mean this instrument as originally
executed and as it may later be amended.
(iii)The word "Company" shall mean New Horizons Worldwide, Inc., a
Delaware corporation, and any successor thereto which shall
maintain the Plan.
(iv) The word "Disability" or "Disabled" shall mean the Optionee's
inability, due to a mental or physical condition, to perform
services for the Company and/or an Affiliate substantially
consistent with past practice, as determined by the Committee
pursuant to written certification of such condition from a
physician acceptable to the Committee.
(v) The word "Employee" shall mean any person who is an employee of
either the Company or any Affiliate.
(vi) The words "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.
(vii)The word "Option" shall mean the right and option to purchase
Shares pursuant to the terms of this Agreement.
(viii) The words "Option Exercise Date" shall mean the date the
Optionee exercises the Option by performing the acts described in
Section 9 hereof.
(ix) The word "Optionee" shall mean the person to whom the Option has
been granted pursuant to this Agreement.
(x) The words "Personal Representative" shall mean, following the
Optionee's death, the person who shall have acquired, by will or
by the laws of descent and distribution, the right to exercise
the Option.
(xi) The word "Plan" shall mean the New Horizons Worldwide, Inc.
Omnibus Equity Plan, as it was originally adopted and as it may
later be amended.
(xii)The words "Pre-Tax Net Income" shall mean the Pretax Income of
the Company for 1999 as determined by the Company for purposes of
the Incentive Bonus described in the letter attached hereto as
Exhibit A.
(xiii) The word "Spread" shall mean, as of the Option Exercise Dare,
an amount equal to the excess, if any, of the Fair Market Value
of a Share in respect of which the Option is exercised over the
Option Exercise Price.
(xiv)The word "Transferee" shall mean the person or entity to whom
rights to acquire Shares pursuant to the exercise of the Option
shall have been transferred pursuant to Section 11 hereof.
(xv) The words "2000 Exercise Date" shall mean the third business day
following the date on which the Company receives its audited
financial statements for calendar year 1999 from its independent
certified public accountants.
(b) The following terms when used in the Agreement shall have the meanings
given them in the Plan: "Affiliate;" "Board;" "Change in Control;"
"Code;" "Committee;" "Consent;" "Family Members;" "Option Exercise
Price;" "Shares."
2. GRANT OF NONQUALIFIED OPTION. Effective as of the date of this Agreement,
the Company grants to the Optionee, upon the terms and conditions set forth
hereinafter, the right and option to purchase all or any lesser whole
number of an aggregate of Six Thousand Six Hundred Sixty-Seven (6,667)
Shares at an Option Exercise Price of $21.25 per Share. The Option shall
for all purposes be a nonqualified stock option subject to the federal
income tax treatment described in Section 1.83-7 of the Federal Income Tax
Regulations. Both the Company and the Optionee shall, on their respective
federal income tax returns, report any transaction relating to the Option
in a manner consistent with the preceding sentence.
3. TERM OF OPTION. Except as otherwise provided herein, the Option shall
expire at the close of regular business hours at the Company's principal
executive office (currently located at 500 Campus Drive, Suite 200,
Morganville, New Jersey 07751) on January 2, 2005, or, if earlier, on the
applicable expiration date provided for in Sections 5, 6 and 7 hereof.
4. EXERCISE DATES.
(a) Except as otherwise provided herein, the Optionee shall be entitled to
exercise the Option with respect to the number of Shares indicated
below on or after the date indicated opposite such number below:
Initial and Additional Total Shares with
Number of Shares with Respect to Which Date Beginning
Respect to Which the the Option May on Which Option
Option May be Exercised be Exercised May be Exercised
- ----------------------- ----------------- ----------------
3,334 3,334 2000 Exercise Date
3,333 6,667 January 1, 2001
Except as provided in Sections 5 and 6 hereof, the Option may not be
exercised at any time unless the Optionee shall be an Employee at such
time. (b) Notwithstanding Section 4(a) above:
(i) if the Pre-Tax Net Income is less than $15,040,000, the Option
may not be exercised in respect of any Shares;
(ii) if the Pre-Tax Net Income is at least $15,040,000, but less than
$17,694,000, the number of Shares for which the Option may be
exercised as set forth in the Table in Section 4(a) shall be
reduced (to the nearest whole Share) by the percentage (rounded
down to the nearest whole percent) derived from the formula set
forth below:
$17,694,000 minus Pre-Tax Net Income
____________________________________ x 75%
$2,654,000
(iii)if the Pre-Tax Net Income is at least $17,694,000 the number of
Shares for which the Option may be exercised as set forth in the
Table in Section 4(a) shall not be reduced;
PROVIDED, that the amounts of Pre-Tax Net Income shown above in
this Section 4(b) may be equitably adjusted by the Committee to
take account of (i) any material expansion or contraction of the
Company's business operations during calendar year 1999, or (ii)
any extraordinary events which occur during 1999, or (iii) any
changes in the Company's accounting methodology that became
effective in respect of calendar year 1999. Any such adjustment
shall be made no later than the 2000 Exercise Date and shall be
final and binding upon the Company and the Optionee. The
Committee shall inform the Optionee of any such adjustment no
later than the 2000 Exercise Date.
5. TERMINATION OF EMPLOYMENT, ETC. So long as the Optionee shall continue to
be an Employee, the Option shall not be affected by (a) any temporary leave
of absence approved in writing by the Company or an Affiliate, or (b) any
change of duties or position (including transfer to or from an Affiliate).
If the Optionee ceases to be an Employee for any reason other than death or
Disability, the Option may be exercised only to the extent of the purchase
rights, if any, which, pursuant to Section 4 hereof, existed as of the date
the Optionee ceases to be an Employee (assuming, for this purpose only,
that the 2000 Exercise Date was January 1, 2000) and which have not
theretofore been exercised; provided, however, that the Committee may in
its absolute discretion determine (but shall not be under any obligation to
determine) that such purchase rights shall be deemed to include additional
Shares which are subject to the Option. Except as provided in Section 6
below, upon an Optionee's ceasing to be an Employee, such purchase rights
shall in any event terminate upon the earlier of either (a) three (3)
months after the date the Optionee ceased to be an Employee (one (1) year
after the date the Optionee ceased to be an Employee if the Optionee dies
or becomes Disabled within three (3) months after ceasing to be an
Employee), or (b) the last day of the term of the Option. Notwithstanding
the preceding provisions of this Section 5, unless the Committee shall
otherwise determine, upon (a) the Optionee's ceasing to be an Employee for
any reason prior to January 1, 2000, (b) the Optionee's ceasing to be an
Employee by reason of an involuntary termination of such status for good
cause, as determined by the Committee, or (c) the Optionee's voluntary
termination with the intention of rendering services to a competitor of the
Company or any Affiliate or otherwise entering into competition with the
Company or any Affiliate, directly or indirectly, or (d) the commission by
the Optionee of a material breach of his obligations under any agreement
with the Company or any Affiliate, the Optionee's right to purchase Shares
pursuant to the exercise of the Option shall terminate.
6. OPTIONEE'S DEATH OR DISABILITY. If, after 1999, while the Optionee is an
Employee, the Optionee dies or becomes Disabled, the Optionee or the
Optionee's Personal Representative may, on or after the 2000 Exercise Date,
immediately exercise the Option with respect to all of the Shares for which
the Optionee could have exercised the Option had he survived and continued
in employment until January 1, 2001. The Option shall in any event
terminate upon the earlier of either (a) the first anniversary of the date
the Optionee ceased to be an Employee; or (b) the last day of the term of
the Option.
7. CHANGE IN CONTROL. Notwithstanding the provisions of Section 4 hereof, in
connection with a Change in Control, the Optionee shall have the immediate
and nonforfeitable right to exercise the Option with respect to all Shares
covered by the Option. The Optionee shall be entitled to exercise the
Option as provided in the immediately preceding sentence regardless of
whether the surviving corporation in any merger or consolidation shall
adopt and maintain the Plan. In the event the Option becomes exercisable
pursuant to this Section 7, the Company shall notify the Optionee of his
right to exercise the Option. Upon a Change in Control described in Section
1.6(b)(iii) of the Plan, the Option, to the extent not exercised, shall
terminate unless the surviving corporation assumes the Option. In the event
of a Change in Control described in Section 1.6(b)(iv) of the Plan, the
Option, to the extent not exercised, shall terminate upon consummation of
the Change in Control.
8. ADJUSTMENT UPON CHANGES IN CAPITALIZATION. The number of Shares which may
be purchased upon exercise of an Option and the Option Exercise Price shall
be appropriately adjusted as the Committee may determine for any change
after the date of the Agreement 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, or other change in the Shares effected
without receipt of consideration by the Company; provided, that any
fractional Shares resulting from any such adjustment shall be eliminated.
Adjustments under this Section 8 shall be made by the Committee, whose
determination as to the adjustments to be made, and the extent thereof,
shall be final, binding and conclusive.
9. EXERCISE OF OPTION. The Option may be exercised by delivering to the
Chairman, Vice Chairman, President or Chief Financial Officer of the
Company at the then principal office address of the recipient officer, a
completed Notice of Exercise of Option (obtainable from the Chief Financial
Officer of the Company) setting forth the number of Shares with respect to
which the Option is being exercised. Such Notice shall be accompanied by
payment in full for the Shares, unless other arrangements satisfactory to
the Committee for prompt payment of such amount are made. Payment of the
Option Exercise Price may be made in any manner permitted by the Plan,
subject to the consent of the Committee as applicable. With the consent of
the Committee, the Optionee may effect a cashless exercise of the Option as
described in the Plan. With the consent of the Committee in its sole
discretion, payment for Shares acquired upon exercise of the Option may be
made by delivery to the Company of an assignment of a sufficient amount of
the proceeds from the sale of Shares acquired upon exercise of the Option
to pay for all or some of the Shares acquired upon exercise of the Option
and an authorization to the broker or selling agent to pay that amount to
the Company, which sale shall be made at the Optionee's direction on the
Option Exercise Date; provided, that the Committee may require the Optionee
to furnish an opinion of counsel acceptable to the Committee to the effect
that such delivery would not result in the Optionee incurring any liability
under Section 16 of the Act and does not require any Consent.
10. ISSUANCE OF SHARE CERTIFICATES. Subject to the last sentence of this
Section 10, upon receipt by the Company prior to expiration of the Option
of a duly completed Notice of Exercise of Option accompanied by payment for
the Shares being purchased pursuant to such Notice (and, with respect to
any Option exercised pursuant to Section 11 hereof by someone other than
the Optionee, accompanied in addition by proof satisfactory to the
Committee of the right of such person to exercise the Option), the Company
shall deliver to the Optionee, within thirty (30) days of such receipt, a
certificate for the number of Shares so purchased. The Optionee shall not
have any of the rights of a stockholder with respect to the Shares which
are subject to the Option unless and until a certificate representing such
Shares is issued to the Optionee. The Company shall not be required to
issue any certificates for Shares upon the exercise of the Option prior to
(i) obtaining any Consents which the Committee shall, in its sole
discretion, determine to be necessary or advisable, or (ii) the
determination by the Committee, in its sole discretion, that no Consents
need be obtained.
11. SUCCESSORS IN INTEREST, ETC. This Agreement shall be binding upon and inure
to the benefit of any successor of the Company and the heirs, estate, and
Personal Representative of the Optionee. A deceased Optionee's Personal
Representative shall act in the place and stead of the deceased Optionee
with respect to exercising an Option or taking any other action pursuant to
this Agreement. The Option shall not be transferable other than by will or
the laws of descent and distribution, and the Option may be exercised
during the lifetime of the Optionee only by the Optionee; provided, that a
guardian or other legal representative who has been duly appointed for such
Optionee may exercise the Option on behalf of the Optionee. Notwithstanding
the preceding sentence, with the consent of the Committee in its sole
discretion, the Optionee may transfer the rights under the Option in
respect of some or all of the Shares which are subject to the Option to a
Family Member or a trust for the exclusive benefit of the Optionee and/or
Family Members, or a partnership or other entity affiliated with the
Optionee that may be approved by the Committee. All terms and conditions of
any Option, including provisions relating to the termination of the
Optionee's employment with the Company and its Affiliates, shall continue
to apply following a transfer made in accordance with this Section 11 and
the Transferee shall have no greater right to exercise the Option than the
Optionee would have in the absence of the transfer. The Option may be
exercised by the Transferee only in accordance with the terms of this
Agreement and the Transferee's exercise of the Option shall be subject to
the Transferee and/or the Optionee satisfying all of the conditions
relating to the exercise of the Option including, without limitation,
provisions concerning payment of the Option Exercise Price and tax
withholding.
12. PROVISIONS OF PLAN CONTROL. This Agreement is subject to all of the terms,
conditions, and provisions of the Plan and to such rules, regulations, and
interpretations relating to the Plan as may be adopted by the Committee and
as may be in effect from time to time. A copy of the Plan is attached
hereto as Exhibit B and is incorporated herein by reference. In the event
and to the extent that this Agreement conflicts or is inconsistent with the
terms, conditions, and provisions of the Plan, the Plan shall control, and
this Agreement shall be deemed to be modified accordingly.
13. NO LIABILITY UPON DISTRIBUTION OF SHARES. The liability of the Company
under this Agreement 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 this Agreement 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
this Agreement.
14. NO RIGHT TO BE EMPLOYED, ETC. Nothing in this Agreement shall confer upon
the Optionee any right to continue as an Employee, or to serve as a member
of the Board, or to interfere with or limit either the right of the Company
or an Affiliate to terminate his employment at any time or the right of the
stockholders of the Company to remove him as a member of the Board for any
reason or with no reason.
15. RESALE LIMITATIONS. The Optionee acknowledges and agrees that (a) the
Shares he may acquire upon exercise of the Option may not be transferred
unless they become registered under the Act or unless the holder thereof
establishes to the satisfaction of the Company that an exemption from such
registration is available, (b) the Company will have no obligation to
provide any such registration or take such steps as are necessary to permit
sale of such Shares without registration pursuant to Rule 144 under the Act
or otherwise, (c) at such time as such Shares may be disposed of in routine
sales without registration in reliance on Rule 144 under the Act, such
disposition may be made only in limited amounts in accordance with all of
the terms and conditions of Rule 144 and (d) if the Rule 144 exemption is
not available, compliance with some other exemption from registration will
be required.
16. WITHHOLDING TAXES.
(a) Whenever Shares are to be delivered pursuant to the exercise of the
Option, the Committee may require as a condition of delivery that the
Optionee remit an amount sufficient to satisfy all federal, state and
other governmental withholding tax requirements related thereto. The
Company may, as a condition of the exercise of the Option, deduct from
any salary or other payments due to the Optionee, 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) With the consent of the Committee in its sole discretion, (i) the
Optionee may satisfy all or part of any withholding requirements by
delivery of unrestricted Shares owned by the Optionee for at least one
year (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 withheld; provided, that the
Committee may require the Optionee to furnish an opinion of counsel or
other evidence acceptable to the Committee to the effect that such
delivery would not result in the Optionee incurring any liability
under Section 16 of the Act and does not require any Consent and/or
(ii) the Optionee may direct that Shares to be issued pursuant to the
exercise of the Option be used to satisfy any withholding obligation;
provided, that for purposes of satisfying any such obligation the
value of a Share shall be equal to the Spread.
17. CONSTRUCTION. The captions and section numbers appearing in this Agreement
are inserted only as a matter of convenience. They do not define, limit,
construe or describe the scope or intent of the provisions of this
Agreement. 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 shall require. 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.
18. TIME PERIODS, ETC. Any action required to be taken under this Agreement
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 such action may
be taken shall be automatically extended to the next business day. If the
day for taking any action, or on which any action may be taken, under this
Agreement falls on a weekend or a holiday, such action may be taken on the
next business day.
19. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware and any applicable
federal law.
20. NOTICES. Except as otherwise expressly provided herein, all notices
hereunder shall be in writing and delivered or mailed by registered or
certified mail, return receipt requested, or by private, overnight delivery
services (such as Federal Express) as follows:
If to the Company:
New Horizons Worldwide, Inc.
c/o New Horizons Computer Learning Centers, Inc.
1231 East Dyer Road
Suite 140
Santa Ana, California 92705-5604
If to the Optionee:
Last address set forth on the records
of the Company or its Affiliates
or at such other address as either party may hereafter designate by giving
notice to the other party as set forth above.
21. FURTHER ASSURANCES. From time to time after the exercise of an Option,
either party, upon request of the other and without further consideration,
shall execute and deliver to the requesting party any document or
instrument, and shall take any other action as may be reasonably requested,
to give effect to the exercise of the Option and the terms of this
Agreement.
IN WITNESS WHEREOF, the Company has caused this Agreement to be executed on
its behalf by its duly authorized officer, and the Optionee has hereunto set his
hand, all as of the day and year first above written.
NEW HORIZONS WORLDWIDE, INC.
(the "Company")
By:_________________________
Its: ____________________
____________________________
(the "Optionee")
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Company's Q1 1999 Consolidated Balance Sheets and Consolidated Statements of
Operations, and is qualified in its entirety by reference to such 1999 10-Q.
</LEGEND>
<CIK> 0000850414
<NAME> NEW HORIZONS WORLDWIDE
<MULTIPLIER> 1,000
<CURRENCY> USD
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-1-1999
<PERIOD-END> MAR-31-1999
<EXCHANGE-RATE> 1.00
<CASH> 11,216
<SECURITIES> 8,439
<RECEIVABLES> 17,746
<ALLOWANCES> 877
<INVENTORY> 1,017
<CURRENT-ASSETS> 41,927
<PP&E> 26,674
<DEPRECIATION> 11,905
<TOTAL-ASSETS> 89,110
<CURRENT-LIABILITIES> 22,905
<BONDS> 181
0
0
<COMMON> 77
<OTHER-SE> 64,119
<TOTAL-LIABILITY-AND-EQUITY> 89,110
<SALES> 22,102
<TOTAL-REVENUES> 22,102
<CGS> 9,751
<TOTAL-COSTS> 19,692
<OTHER-EXPENSES> 235
<LOSS-PROVISION> 108
<INTEREST-EXPENSE> (38)
<INCOME-PRETAX> 2,607
<INCOME-TAX> 988
<INCOME-CONTINUING> 1,619
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,619
<EPS-PRIMARY> 0.22
<EPS-DILUTED> 0.20
</TABLE>
