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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
March 12, 1997
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SYLVAN LEARNING SYSTEMS, INC..
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(Exact name of registrant as specified in its charter)
Maryland 0-22844 52-1492296
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(State of Incorporation) (Commission File Number) (IRS Employer
Identification No.)
1000 Lancaster Street
Baltimore, Maryland 21202
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(Address of principal executive offices) (Zip Code)
(410) 843-8000
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(Registrant's telephone number)
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Item 5. Other Events.
As previously disclosed, on May 14, 1997, Sylvan Learning Systems, Inc.
("Sylvan") announced that, in connection with the announced increase in
Harcourt General, Inc.'s offer to acquire National Education Corporation
(NYSE:NEC) ("NEC"), Sylvan had terminated its definitive agreement to acquire
NEC and had received from NEC the $30 million termination fee required by
Section 6.3 of that agreement.
Douglas Becker, President and co-Chief Executive Officer of Sylvan,
commented, "Harcourt's competing offer and the resulting increase in purchase
price made us reconsider our value equation for the acquisition of NEC and for
this reason, we declined to increase our bid. We believe that there are other
ways to achieve our strategic objectives for far less money than would have been
required to match Harcourt's offer. We reiterate our commitment to extend
Sylvan's services into a lifelong learning relationship with each client that we
teach, test and train. We congratulate Sam Yau and the entire NEC team on the
impressive turnaround of the past few years that led to this sale and wish them
and Harcourt General continued success."
Sylvan Learning Systems, Inc. is a leading provider of educational
services to families, schools and industry. It delivers computer-based testing
for academic admissions, as well as for professional licensure and certification
programs at more than 1,300 testing centers through its Sylvan Prometric
division. The Company traditionally is known for the network of more than 650
Sylvan Learning Centers that provide personalized instructional services to
students of all ages and skill levels. Also, Sylvan provides educational
services under contract to public and non-public school systems through the
Sylvan Contract Educational Services division, and will provide adult
professional education and training through the Caliber Learning Network, Inc.
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Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(c) Exhibits.
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2.1 Termination Agreement and Mutual Release.
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SIGNATURES
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Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: May 19, 1997 SYLVAN LEARNING SYSTEMS, INC.
By:/s/ B. Lee McGee
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B. Lee McGee, Senior Vice President
and Chief Financial Officer
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EXHIBIT 2.1
National Education Corporation
2601 Main Street
Irvine, California 92714
Sylvan Learning Systems, Inc.
1000 Lancaster Street
Baltimore, Maryland 21202
May 12, 1997
Gentlemen:
By this letter, you agree with us to amend the Agreement and Plan of
Reorganization (the "Sylvan Agreement") dated as of March 12, 1997, by and among
Sylvan Learning Systems, Inc. ("Sylvan") and National Education Corporation
("NEC") as follows. In the event that NEC and Harcourt General, Inc.
("Harcourt") come to an agreement on or before May 16, 1997 for a business
combination between NEC and Harcourt at a price of $21.00 per NEC share
(the "Harcourt Transaction"), NEC and Sylvan agree that the Sylvan Agreement
shall automatically and without any further action required by NEC or Sylvan be
terminated effective immediately prior to such time as Harcourt and NEC enter
into an agreement with respect to the Harcourt Transaction (the "Harcourt
Agreement"). No later than noon Pacific Daylight Time (the "Drop-Dead Time") on
the business day immediately following the execution of the Harcourt Agreement
(the "Drop-Dead Date"), NEC and Harcourt jointly and severally agree that a fee
of $30.0 million (the "Sylvan Fee") will be paid by NEC to Sylvan by wire
transfer in immediately available funds to the account of Sylvan at NationsBank,
N.A. (Account Number: 3933614751); provided, however, that if the Sylvan Fee is
not paid by the Drop-Dead Time, the Sylvan Agreement shall be deemed not to have
been terminated in accordance with the preceding sentence and shall remain in
full force and effect and no breach or right of termination shall have occurred
thereunder as a result of actions taken in compliance with the preceding
sentence. Notwithstanding the foregoing, in the event the Sylvan Fee is paid to
Sylvan following the Drop-Dead Time but on the Drop-Dead Date and by noon
Eastern Daylight Time on the business day immediately following the Drop-Dead
Date Sylvan has not (i) rejected the Sylvan fee in a written notice to NEC and
(ii) irrevocably instructed NationsBank, N.A. to refund the Sylvan fee to NEC,
the Sylvan Agreement shall be deemed to have been terminated in accordance with
the second sentence of this letter agreement. Sylvan shall be entitled to no
further payments from NEC or Harcourt pursuant to the Sylvan Agreement or
otherwise. Upon effectiveness of the termination of the Sylvan Agreement
pursuant to the second sentence hereof, the mutual release set forth as Annex A
hereto shall become effective.
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Please indicate your agreement to the foregoing by executing
this letter in the space below.
Very truly yours,
NATIONAL EDUCATION CORPORATION
By: /s/ Keith K. Ogata
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Name: Keith K. Ogata
Title: Vice President,
Chief Financial Officer
and Treasurer
Accepted and agreed: Accepted and agreed:
SYLVAN LEARNING SYSTEMS, INC. HARCOURT GENERAL, INC.
By: /s/ Douglas L. Becker By: /s/ Eric P. Geller
--------------------------------- ----------------------------
Name: Douglas L. Becker Name: Eric P. Geller
Title: President and Title: Senior Vice President
Co-Chief Executive Officer and General Counsel
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Annex A
MUTUAL RELEASE
WHEREAS, Sylvan Learning Systems, Inc., a Maryland corporation
("Sylvan"), and National Education Corporation, a Delaware corporation ("NEC"),
are parties to an Agreement and Plan of Reorganization by and among Sylvan and
NEC dated as of March 12, 1997 (the "Reorganization Agreement"); and
WHEREAS, Harcourt General, Inc., a Delaware corporation ("Harcourt"),
through a wholly-owned subsidiary has commenced a tender offer to purchase all
the outstanding capital stock of NEC (the "Tender Offer"); and
WHEREAS, Sylvan, NEC and Harcourt have entered into a letter agreement
(the "Letter Agreement") dated May 9, 1997; and
WHEREAS, Sylvan and NEC wish to resolve any actual or potential
controversies or disputes between them arising out of or relating to the
Reorganization Agreement if the Reorganization Agreement is terminated in
accordance with the terms of the Letter Agreement:
NOW, THEREFORE,
1. In consideration of the release of Sylvan by NEC and Harcourt
contained herein, (i) Sylvan for itself, its predecessors, successors and
assigns (ii) does hereby remise, release and forever discharge and covenant not
to sue (iii) NEC and Harcourt and the corporate predecessors, successors,
assigns, subsidiaries, affiliates, parents and divisions, as well as the present
and former officers, partners, directors, advisory directors, employees, agents,
stockholders, advisers (including without limitation, financial advisors) and
attorneys of each of NEC and Harcourt and their heirs, executors,
administrators, and representatives (collectively, the "NEC/Harcourt
Releasees"), (iv) of and from all manner of actions, causes of action, suits,
debts, dues, sums of money, accounts, bonds, bills, specialties, covenants,
contracts, controversies, agreements, promises, damages, judgments, executions,
rights, claims, and demands whatsoever, in law or in equity, whether known or
unknown, suspected or unsuspected, (v) which against the NEC/Harcourt Releasees,
or any of them, Sylvan or Sylvan's predecessors, successors, or assigns or any
of the present or former officers, directors, employees, agents, stockholders,
advisers (including without limitation, financial advisors) or attorneys of the
foregoing, or any of their heirs, executors, administrators, representatives,
successors or assigns, acting in any capacity, ever had or now has or hereafter
can, shall, or may have, (vi) arising out of or relating to the Reorganization
Agreement (including without limitation the negotiation, execution, amendment or
termination of the Reorganization Agreement) or the Tender Offer or the
transactions contemplated thereby (including,
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without limitation, any claim for tortious interference with the Reorganization
Agreement or the transactions contemplated thereby), (vii) subject to the
exception provided in Paragraph 3 of this Mutual Release.
2. In consideration of the release of NEC and Harcourt by Sylvan
contained herein, (i) NEC and Harcourt each for itself, its predecessors,
successors and assigns (ii) does hereby remise, release and forever discharge
and convenant not to sue (iii) Sylvan and its corporate predecessors,
successors, assigns, subisidiaries, affiliates, parents and divisions, as well
as the present and former officers, partners, directors, advisory directors,
employees, agents, stockholders, advisors (including, without limitation,
financial advisors) and attorneys of the foregoing and their heirs, executors,
administrtors, and representatives (collectively, the "Sylvan Releasees"), (iv)
of and from all manner of actions, causes of action, suits, debts, dues, sums of
money, accounts, bonds, bills, specialties, convenants, contracts,
controversies, agreements, promises, damages, judgements, executions, rights,
claims, and demands whatsoever, in law, or in equity, whether known or unknown,
suspected or unsuspected, (v) which against the Sylvan Releasees, or any of
them, NEC or Harcourt or each's predecessors, successors, or assigns or any of
the present or former officers, directors, employees, agents, stockholders,
advisers (including, without limitation, financial advisors) or attorneys of the
foregoing, or any of their heirs, executors, administrators, representatives,
successors or assigns, acting in any capacity, ever had or now has or hereafter
can, shall, or may have, (vi) arising out of or relating to the Reorganization
Agreement (including without limitation the negotiation, execution, amendment or
termination of the Reorganization Agreement) or the Tender Offer or the
transactions contemplated thereby (including, without limitation, any claim for
tortious interference with the Tender Offer or the Transactions contemplated
thereby).
3. Nothing in this Mutual Release shall affect Sylvan's rights or claims
to payments from NEC (or Harcourt on behalf of NEC) pursuant to the third
sentence of the Letter Agreement.
4. This Mutual Release shall inure to the benefit of and shall be
binding upon the heirs, executors, administrators and successors of Sylvan, the
Sylvan Releasees, NEC and Harcourt and the NEC/Harcourt Releasees.
5. This Mutual Release shall be governed and construed in accordance
with the substantive law of the State of New York without regard to principles
of choice or conflict of laws.
6. The person who enters into and executes this Mutual Release on behalf
of Sylvan warrants and represents that he or she has been duly authorized by
Sylvan to do so. The
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person who enters into and executes this Mutual Release on behalf of NEC
warrants and represents that he or she has been duly authorized by NEC to do so.
The person who enters into and executes this Mutual Release on behalf of
Harcourt warrants and represents that he or she has been duly authorized by
Harcourt to do so.
7. This Mutual Release may be modified only by a writing signed by the
Releasees.
8. This Mutual Release shall only be effective after the Merger
Agreement has been terminated in accordance with the terms of the Letter
Agreement; provided, that this Mutual Release shall automatically and without
any further action required by Harcourt, NEC or Sylvan be terminated effective
immediately in the event the Sylvan Fee is not paid by the Drop-Dead Time or is
not paid to Sylvan following the Drop-Dead Time but on the Drop-Dead Date and is
not accepted by Sylvan in accordance with the terms of the Letter Agreement.
9. Capitalized terms which are used herein but not defined herein are
used herein as defined in the Letter Agreement.
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IN WITNESS WHEREOF, Sylvan, NEC and Harcourt have executed this Mutual
Release by their duly authorized officers as of the 14th day of May, 1997.
SYLVAN LEARNING SYSTEMS, INC. NATIONAL EDUCATION CORPORATION
By: /s/ Douglas L. Becker By: /s/ Keith K. Ogata
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Name: Douglas L. Becker Name: Keith K. Ogata
Title: President & Title: Vice President, Chief
Co-Chief Executive Officer Financial Officer and
Treasurer
HARCOURT GENERAL, INC.
By: /s/ Eric P. Geller
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Name: Eric P. Geller
Title: Senior Vice President
and General Counsel
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