<PAGE>
As filed with the Securities and Exchange Commission on January 12, 1998
Registration No. 333-43355
===============================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
__________________________
PRE-EFFECTIVE AMENDMENT NO. 1 TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
__________________________
SYLVAN LEARNING SYSTEMS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
MARYLAND 52-1492296
(STATE OF INCORPORATION) (I.R.S. EMPLOYER IDENTIFICATION NO.)
1000 LANCASTER STREET
BALTIMORE, MARYLAND 21202
(410) 843-8000
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
DOUGLAS L. BECKER
PRESIDENT, CO-CHIEF EXECUTIVE OFFICER AND SECRETARY
SYLVAN LEARNING SYSTEMS, INC.
1000 LANCASTER STREET
BALTIMORE, MARYLAND 21231
(410) 843-8000
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
COPIES OF ALL COMMUNICATIONS, INCLUDING ALL COMMUNICATIONS SENT TO THE AGENT FOR
SERVICE, SHOULD BE SENT TO:
RICHARD C. TILGHMAN, JR., ESQUIRE
JILL CANTOR NORD, ESQUIRE
PIPER & MARBURY
36 SOUTH CHARLES STREET
BALTIMORE, MARYLAND 21201
(410) 539-2530
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: AS SOON AS
PRACTICABLE AFTER THE EFFECTIVE DATE OF THIS REGISTRATION STATEMENT.
IF THE ONLY SECURITIES BEING REGISTERED ON THIS FORM ARE BEING OFFERED PURSUANT
TO DIVIDEND OR INTEREST REINVESTMENT PLANS, PLEASE
CHECK THE FOLLOWING BOX: [_]
IF ANY OF THE SECURITIES BEING REGISTERED ON THIS FORM ARE TO BE OFFERED ON A
DELAYED OR CONTINUOUS BASIS PURSUANT TO RULE 415 UNDER THE SECURITIES ACT OF
1933,OTHER THAN SECURITIES OFFERED IN CONNECTION WITH DIVIDEND OR INTEREST
REINVESTMENT PLANS, CHECK THE FOLLOWING BOX: [X]
IF THIS FORM IS FILED TO REGISTER ADDITIONAL SECURITIES FOR AN OFFERING PURSUANT
TO RULE 462(b) UNDER THE SECURITIES ACT, PLEASE CHECK THE FOLLOWING BOX AND LIST
THE SECURITIES ACT REGISTRATION STATEMENT NUMBER OF THE EARLIER EFFECTIVE
REGISTRATION STATEMENT FOR THE SAME OFFERING: [_]________________________
IF THIS FORM IS A POST-EFFECTIVE AMENDMENT FILED PURSUANT TO RULE 462(C) UNDER
THE SECURITIES ACT, CHECK THE FOLLOWING BOX AND LIST THE SECURITIES ACT
REGISTRATION STATEMENT NUMBER OF THE EARLIER EFFECTIVE REGISTRATION STATEMENT
FOR THE SAME OFFERING: [_]
IF DELIVERY OF THE PROSPECTUS IS EXPECTED TO BE MADE PURSUANT TO RULE 434,
PLEASE CHECK THE FOLLOWING BOX: [_]
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
TITLE OF SHARES PROPOSED MAXIMUM AGGREGATE AMOUNT OF
TO BE REGISTERED OFFERING PRICE REGISTRATION FEE (1)
---------------- -------------------------- ----------------
<S> <C> <C>
Common Stock, $.01 par value $11,887,500 $3,507.00
======================================================================================
</TABLE>
(1) CALCULATED IN ACCORDANCE WITH RULE 457(O) OF THE SECURITIES ACT OF 1933, AS
AMENDED, AND PAID ON DECEMBER 29, 1997.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE
SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
<PAGE>
Subject to Completion
JANUARY 12, 1998
PROSPECTUS
300,000 SHARES
SYLVAN LEARNING SYSTEMS, INC.
COMMON STOCK
___________
All of the shares of Common Stock of Sylvan Learning Systems, Inc. (the
"Company") offered hereby will be sold by the Company upon exercise of options
(the "Options") granted by the Company to those of its franchisees who operate
Sylvan Testing Centers (the "Testing Franchisees") pursuant to the STC Stock
Option Plan (the "Plan"). See "Description of STC Stock Option Plan." The
Company will not receive any proceeds from the resale of the Common Stock by the
Franchisees other than the aggregate exercise price payable upon exercise of the
Options. The Common Stock is quoted on the Nasdaq National Market under the
symbol "SLVN." On January 9, 1998 the last sale price for the Common Stock as
reported on the Nasdaq Stock Market was $33.00 per share.
___________
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
___________
PRICE TO PUBLIC PROCEEDS TO COMPANY(1)
- -------------------------------------------------------------------------------
Per Share............ $ $
Total................ $ $
================================================================================
(1) Before deducting expenses payable by the Company estimated at $23,000.
The date of this Prospectus is , 1998.
<PAGE>
[INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY JURISDICTION IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL
PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH
JURISDICTION.]
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "1934 Act"), and in accordance therewith
files reports, proxy statements and other information with the Securities and
Exchange Commission (the "Commission"). Reports, proxy statements and other
information filed by the Company with the Commission, including the reports and
other information incorporated by reference into this Prospectus, can be
inspected and copied at the public reference facilities maintained by the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549 and at its
regional offices located at 7 World Trade Center, 13th Floor, New York, New York
10048 and Citicorp Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661-2511. Copies of such material can also be obtained from the
Public Reference Section of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549 at rates prescribed by the Commission or from the
Commission's Internet web site at http:\\www.sec.gov. The Common Stock of the
Company is quoted on the Nasdaq National Market. Reports, proxy statements and
other information concerning the Company can be inspected at the offices of the
Nasdaq Stock Market, 1735 K Street, Washington, D.C. 20006. This Prospectus
does not contain all the information set forth in the Registration Statement of
which this Prospectus is a part and exhibits relating thereto which the Company
has filed with the Commission. Copies of the information and exhibits are on
file at the offices of the Commission and may be obtained, upon payment of the
fees prescribed by the Commission, may be examined without charge at the offices
of the Commission or through the Commission's Internet web site.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Commission (File No.
0-22844) pursuant to the 1934 Act are incorporated herein by reference: (i) the
Company's Annual Report on Form 10-K for the year ended December 31, 1996, as
amended by its Annual Report on Form 10-K/A (with Items 6, 7 and 8 thereof
having been superseded by the information contained in the Company's Current
Report on Form 8-K dated July 15, 1997), (ii) the Company's Current Report on
Form 8-K and 8-K/A dated January 28, 1997, relating to the Company's acquisition
of Wall Street Institute; (iii) the Company's Current Report on Form 8-K/A dated
March 12, 1997, relating to the termination of the Company's Merger Agreement
with National Education Corporation; (iv) the Company's Current Report on Form
8-K and 8-K/A dated April 17, 1997 and May 30, 1997, relating to the Company's
acquisition of I-R, Inc. and Independent Child Study Teams, Inc. (collectively,
"Educational Inroads"); (v) the Company's Current Report on Form 8-K dated July
15, 1997, restating certain historical financial information to reflect the
acquisition of Educational Inroads; (vi) the Company's Quarterly Reports on Form
10-Q for the quarters ended March 31, 1997; June 30, 1997; and September 30,
1997; (vii) the description of Common Stock contained in Item 4 of the Company's
Registration Statement on Form 8-A, filed with the Commission under the 1934
Act; and (viii) all other documents filed by the Company pursuant to Sections
13(a), 13(c), 14 or 15(d) of the 1934 Act subsequent to the date of filing of
the Registration Statement of which this Prospectus is a part and prior to the
termination of the offering made hereby.
The Company will provide without charge to each person to whom a copy of
this Prospectus is delivered, upon the request of any such person, a copy of any
or all of the documents which have been incorporated herein by reference, other
than exhibits to such documents (unless such exhibits are specifically
incorporated by reference into such documents). Requests for such documents
should be directed to Sylvan Learning Systems, Inc., 1000 Lancaster Street,
Baltimore, Maryland 21202, Attention: Chief Financial Officer, telephone: (410)
843-8000.
Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein
or in any other subsequently filed document which also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any
such statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this Prospectus.
-2-
<PAGE>
THE COMPANY
Sylvan Learning Systems, Inc. (the "Company" or "Sylvan") is a leading
international private provider of educational and testing services. The Company
delivers a broad array of supplemental and remedial educational services and
computer-based testing through three principal divisions. The Core Educational
Services division designs and delivers individualized tutorial services to
school-age children and adults at 669 franchised and Company-owned Sylvan
Learning Centers. Sylvan Prometric, the Company's testing services division,
administers computer-based tests for major organizations, corporations,
professional associations and governmental agencies through its worldwide
network of Testing Centers. The Contract Educational Services division provides
Sylvan's core educational services under federal and state funding programs to
more than 12,000 students in 89 public schools and more than 38,000 students in
507 non-public schools (including Educational Inroads) and provides on-site
educational and training services to employees of large corporations. Since
1994, the Company has substantially expanded its business through a combination
of internal growth and acquisitions and has increased revenue and operating
income from $68.7 million and $3.4 million, respectively, in 1994 to $181.9
million and $22.7 million, respectively, in 1996. Sylvan's 1996 systemwide
revenues were approximately $310.3 million, consisting of $165.1 million from
core educational services ($139.5 million from franchised Learning Centers and
$25.6 million from Company-owned Learning Centers, product sales and franchise
sales fees), $87.0 million from testing services and $58.2 million from contract
educational services.
Core Educational Services. The Company's Core Educational Services
division provides supplemental instruction in reading, mathematics and reading
readiness and features an extensive series of standardized diagnostic tests,
individualized instruction, a student motivational system and continued
involvement from both parents and the child's regular school teacher. As of
September 30, 1997, the Company or its franchisees operated 669 Learning Centers
in 49 states, five Canadian provinces, Hong Kong, South Korea and Guam, with 403
franchisees owning and operating 628 Sylvan Learning Centers and Sylvan owning
and operating 41 Learning Centers.
Sylvan Prometric Testing Services. As of September 30, 1997, Sylvan or its
authorized representatives operated 1,908 Testing Centers, 1,207 of which were
located in North America and the remainder in 97 foreign countries. The Company
enters into contracts directly with various professional licensure, educational
and information technology ("IT") businesses, organizations and agencies, under
which Sylvan receives a fee based upon the number of tests given for those
customers. Principal customers for the Company's testing services are
Educational Testing Services ("ETS") and, in the IT industry, Microsoft Corp.
and Novell, Inc.. IT customers sponsor worldwide certification programs for
various professionals such as network administrators and engineers, service
technicians and instructors. Sylvan has been designated as the exclusive
commercial provider of computer-based tests administered by ETS (excluding the
SAT and PSAT) and operates 47 testing centers in 33 countries to facilitate
delivery of international testing for ETS. The Company also provides testing
services for organizations responsible for licensing broker-dealers, pilots,
aviation mechanics, computer professionals and medical laboratory technicians.
Through the Company's December 1996 acquisition of Wall Street Institute
International B.V. and its affiliates ("Wall Street"), Sylvan now provides live
and computer-based English instruction and testing in Europe and Latin America
through a network of more than 180 franchised and Company-owned centers.
Contract Educational Services; PACE; Sylvan-at-Work; Caliber Learning
Network, Inc. Sylvan provides educational services under federal and various
state funding programs to students in 89 public and 507 non-public schools.
Sylvan provides educational and training services to large corporations
throughout the United States, including racial and gender workplace diversity
training and skills improvement programs such as writing, advanced reading,
listening and public speaking, through its wholly-owned subsidiary, The PACE
Group ("PACE"), and the Company's Sylvan-at-Work program. In November 1996,
Caliber Learning Network, Inc. was formed as a joint initiative of Sylvan and
MCI Telecommunications Corporation to become a worldwide distribution network of
professional education centers equipped with satellite-based video conferencing
and computer network capabilities. Sylvan currently owns a 10 percent interest
in Caliber Learning Network and has the option to acquire a majority interest in
the future.
-3-
<PAGE>
The Company's principal executive offices are located at 1000 Lancaster
Street, Baltimore, Maryland 21202, and its telephone number is (410) 843-8000.
USE OF PROCEEDS
The net proceeds to the Company from the sale of the Commmon Stock being
offered hereby are estimated to be approximately $6,455,470, assuming (i)
exercise of all of the Options for cash and (ii) other than the Options (as
defined below) no other options are granted under the Plan. See "Description of
Sylvan Technology Center Stock Option Plan." The Company will use the net
proceeds from this offering for general corporate purposes, which may include
the acquisition of complementary businesses. The Company intends to invest
substantially all of the net proceeds from this offering in interest-bearing,
investment-grade obligations pending application thereof in the manner described
above. The Company will not receive proceeds from any resales of the Common
Stock acquired by the Franchisees upon exercise of the Options.
DESCRIPTION OF STC STOCK OPTION PLAN
The Company adopted the Sylvan Technology Center Stock Option Plan (the
"Plan") in April 1997. Under the Plan, the Committee, comprised of the Company's
Co-Chief Executive Officers, R. Christopher Hoehn-Saric and Douglas L. Becker,
is authorized to grant options to purchase shares of Common Stock to any Sylvan
Learning Center franchisee who operates one or more Sylvan Technology Centers
(collectively, the "Franchisees") as compensation for services rendered or
contributions made to the Company. There are an aggregate of 300,000 shares
reserved for issuance upon exercise of options granted under the Plan. Options
to purchase an aggregate of 177,000 shares of Common Stock were granted to an
aggregate of 177 Franchisees on April 15, 1997 (the "April Options"); options to
purchase an aggregate of 6,000 shares of Common Stock were granted to 6
Franchisees on July 1, 1997 (the "July Options"); options to purchase an
aggregate of 6,000 shares of Common Stock were granted to 6 Franchisees on
October 1, 1997 (the "October Options"); and options to purchase an aggregate
of 22,000 shares of Common Stock were granted to 22 Franchisees on December 31,
1997 (the "December Options" and, together with the April Options, July Options
and October Options, the "Options").
The exercise prices of the Options are: $29.13 per share for the April
Options; $33.53 per share for the July Options; and $43.88 per share for the
October Options; and $39.00 per share for the December Options. The April
Options, July Options and October Options vest ratably beginning on January 1,
1998 and each of the successive anniversaries thereof, and the December Options
will vest ratably beginning on January 1, 1999 and each of the successive
anniversaries thereof; provided, however, that the Options will vest on the
specified vesting dates only if the Franchisee continues to operate one or more
Sylvan Technology Centers pursuant to a written agreement between the Company
and the the Franchisee. All Options, whether vested or unvested, terminate on
the tenth anniversary of the Grant Date specified in the Option Agreement
relating to said options, subject to earlier termination in the event of the
termination of a Franchisee's operation of the Sylvan Technology Center(s)
described in the Franchisee's Option Agreement or the termination of the
Optionholder's Sylvan Technology Center agency relationship with the Company by
the Company, for cause, or at the election of the Franchisee. \
The Stock Option Agreements pursuant to which the Options are or will be
granted provide that full payment for each share of Common Stock purchased upon
exercise of the Option shall be made no later than the time of exercise or, in
the discretion of the Committee, at such later time as the certificate for the
share is delivered, in (A) cash or certified check or (B) as long as the shares
of Common Stock of the Company remain registered under Section 12(b) or 12(g) of
the Securities Exchange Act of 1934, as amended, by delivery of a properly
executed exercise notice, together with irrevocable instructions: (i) to a
brokerage firm approved by the Company to deliver promptly to the Company the
aggregate amount of sale or loan proceeds to pay the exercise price and any
withholding tax obligations that may arise in connection with the exercise, and
(ii) to the Company to deliver the certificates for such purchased shares
directly to such brokerage firm. In the event any income or employment taxes
are required to be withheld with respect to an Option, payment of such taxes
must be made to the Company.
-4-
<PAGE>
Shares issuable upon exercise of Options will be shares of authorized but
unissued Common Stock. The Company will, during the term of the Plan, reserve
and keep available a number of shares of Common Stock sufficient to satisfy the
requirements of the Plan. Other than the exercise price described in the Stock
Option Agreement, there will be no fees, commissions or other charges paid in
connection with the exercise of Options.
The Plan imposes no restrictions on the resale of Common Stock acquired
upon the exercise of Options except that such shares of Common Stock may be
resold only in compliance with the registration requirements of the Securities
Act of 1933, as amended (the "Securities Act"), and applicable state securities
laws. The Committee may impose resale restrictions on all or a portion of the
shares of Common Stock delivered upon exercise of any Option to ensure
compliance with these laws. Under the Securities Act, affiliates of the Company
generally may resell shares of Common Stock purchased pursuant to the Plan only
(i) in accordance with the provisions of Rule 144 of the Securities Act
promulgated by the SEC or some other exemption from registration under the
Securities Act, or (ii) pursuant to an applicable current and effective
registration statement under the Securities Act.
Tax Summary. The following is a brief summary of the significant aspects
-----------
of current federal income tax treatment of the Options that may be granted under
the Plan. The grant of the Options does not result in tax consequences to the
Franchisees to whom the Options were granted. Upon the exercise of an Option,
the Franchisee will recognize ordinary income equal to the difference between
the option price and the Fair Market Value of the Common Stock on the date of
exercise. No amount other than the price paid under the Option shall be
considered as received by the Company for the Common Stock so issued. When the
Franchisee disposes of Common Stock acquired by the exercise of an Option, any
amount received in excess of the Fair Market Value of the Common Stock on the
date of exercise will be treated as a long- or short-term capital gain,
depending upon how long the Franchisee holds the Common Stock prior to selling
it. If the amount received is less than the Fair Market Value of the Common
Stock on the date of exercise, the loss will be treated as a long- or short-term
capital loss, depending upon the holding period of the Common Stock.
Except as noted below, the exercise of an Option by the exchange of shares
of Common Stock already owned by the Franchisee will not result in any taxable
gain or loss on the unrealized appreciation of the shares so used. The Internal
Revenue Service has ruled that, since the Options are non-qualified, if the
Option exercised (i) a number of shares of the Common Stock received equal to
the number of shares surrendered will have the same basis as the shares
surrendered, and (ii) the remaining shares received will have a basis equal to
their Fair Market Value on the date of exercise (the compensation income
recognized upon exercise). For purposes of determining whether shares have been
held for the long-term capital gain holding period, the holding period of shares
received will generally include the holding period of the shares surrendered
only if the shares received have the same basis, in whole or in part, in the
Franchisee's hands as the shares surrendered.
Section 401(a) of the Code is not applicable to the Plan.
PLAN OF DISTRIBUTION
The Registration Statement of which this Prospectus forms a part relates to
sales by the Company, from time to time, of up to an aggregate of 300,000 shares
of Common Stock to the Franchisees upon their exercise of the Options. If all
of the Options are exercised, the aggregate purchase price payable by the
Franchisees will equal $6,478,470, assuming that other than the Options, no
other options are granted under the Plan. The Franchisees are not obligated to
exercise any of the Options; however, options not exercised prior to their
expiration dates will terminate, and thereafter no shares of Common Stock will
be issued by the Company to the Franchisees in respect thereof.
The Common Stock the Franchisees acquire upon exercise of the Options
should be able to be resold by the Franchisees without further registration
under the Securities Act of 1933, as amended (the "Act") in reliance upon
Section 4(1) of the Act. However, resales of the Common Stock by Franchisees or
their transferees who are or become affiliates of the Company will be subject to
the limitations set forth in Rule 144 under the Act.
-5-
<PAGE>
LEGAL MATTERS
The legality of the shares offered hereby has been passed upon for the
Company by Piper & Marbury L.L.P., Baltimore, Maryland.
EXPERTS
The consolidated financial statements and schedule of Sylvan Learning
Systems, Inc. at December 31, 1996 and 1995 and for each of the three years in
the period ended December 31, 1996, incorporated by reference in this Prospectus
and Registration Statement, have been audited by Ernst & Young LLP, independent
auditors, as set forth in their report thereon included therein also
incorporated herein by reference which, as to the years 1996 and 1995, is based
in part on the reports of Deloitte & Touche LLP, independent auditors, and as to
the year 1994, is based in part on the report of Canterelli & Vernoia, CPAs,
independent auditors. Such consolidated financial statements have been
incorporated herein by reference in reliance upon such reports given upon the
authority of such firms as experts in accounting and auditing.
-6-
<PAGE>
================================================================================
No person has been authorized by the Company to give any information or to
make any representations other than those contained in this Prospectus in
connection with the offer contained in this Prospectus, and if given or made,
such information or representations may not be relied upon as having been
authorized by the Company. This Prospectus does not constitute an offer to sell
or a solicitation of an offer to buy any of the securities in any jurisdiction
in which such offer or solicitation is not authorized, or in which the person
making such offer or solicitation is not qualified to do so, or to any person to
whom it is unlawful to make such offer or solicitation. Neither the delivery of
this Prospectus nor any sale made hereunder shall create an implication that
there has been no change in the affairs of the Company since the date hereof.
_____________________________
TABLE OF CONTENTS
PAGE
----
AVAILABLE INFORMATION................................................... 2
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE......................... 2
THE COMPANY............................................................. 3
USE OF PROCEEDS......................................................... 4
SELLING STOCKHOLDERS.................................................... 4
PLAN OF DISTRIBUTION.................................................... 4
LEGAL MATTERS........................................................... 5
EXPERTS................................................................. 5
300,000 SHARES
SYLVAN LEARNING
SYSTEMS, INC.
COMMON STOCK
PROSPECTUS
, 1998
================================================================================
<PAGE>
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the expenses in connection with this
Registration Statement. The Company will pay all expenses of the offering. All
of such expenses are estimates, other than the filing fees payable to the
Securities and Exchange Commission.
Filing Fee-Securities and Exchange Commission.. $ 3,507
Nasdaq National Market Listing Fees............ 6,000
Fees and Expenses of Counsel................... 7,000
Miscellaneous Expenses......................... 6,493
-------
TOTAL........................................ $23,000
=======
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Company's Charter provides that, to the fullest extent that limitations
on the liability of directors and officers are permitted by the Maryland General
Corporation Law, no director or officer of the Company shall have any liability
to the Company or its stockholders for monetary damages. The Maryland General
Corporation Law provides that a corporation's charter may include a provision
which restricts or limits the liability of its directors or officers to the
corporation or its stockholders for money damages except: (1) to the extent that
it is provided that the person actually received an improper benefit or profit
in money, property or services, for the amount of the benefit or profit in
money, property or services actually received, or (2) to the extent that a
judgment or other final adjudication adverse to the person is entered in a
proceeding based on a finding in the proceeding that the person's action, or
failure to act, was the result of active and deliberate dishonesty and was
material to the cause of action adjudicated in the proceeding. The Company's
Charter and By-laws provide that the Company shall indemnify and advance
expenses to its currently acting and its former directors to the fullest extent
permitted by the Maryland General Corporation Law and that the Company shall
indemnify and advance expenses to its officers to the same extent as its
directors and to such further extent as is consistent with law.
The Charter and By-laws provides that the Company will indemnify its
directors and officers and may indemnify employees or agents of the Company to
the fullest extent permitted by law against liabilities and expenses incurred in
connection with litigation in which they may be involved because of their
offices with the Company. In addition, the Company's Charter provides that its
directors and officers will not be liable to stockholders for money damages,
except in limited instances. However, nothing in the Charter or By-laws of the
Company protects or indemnifies a director, officer, employee or agent against
any liability to which he would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of his office. To the extent that a director has been
successful in defense of any proceeding, the Maryland General Corporation Law
provides that he shall be indemnified against reasonable expenses incurred in
connection therewith.
II-1
<PAGE>
ITEM 16. EXHIBITS.
Exhibit No. Description
----------- -------------------------------------------------------------
3.1 Articles of Amendment and Restatement of the Charter*
3.2 Amended and Restated By-Laws dated September 27, 1996**
4.1 Specimen Stock Certificate*
4.2 1997 Sylvan Technology Center Stock Option Plan***
4.3 Form of Stock Option Agreement Under 1997 Sylvan Technology
Center Stock Option Plan***
5.1 Opinion of Piper & Marbury L.L.P.
23.1 Consent of Ernst & Young LLP.
23.2 Consent of Deloitte & Touche LLP
23.3 Consent of Canterelli & Vernoia, CPAs
23.4 Consent of Piper & Marbury L.L.P. (contained in Exhibit 5.1)
24.1 Powers of Attorney (included on signature page)
______________
* Incorporated by reference from the Registrant's Registration Statement on
Form S-1 (No. 33-69558), filed on September 28, 1993.
** Incorporated by reference from the Company's Annual Report on Form 10-K for
the Year ended December 31, 1996.
*** Previously filed with this Registration Statement on December 29, 1997.
ITEM 17. UNDERTAKINGS.
(a) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Securities Exchange of
1934) that is incorporated by reference in the Registration Statement shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(b) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suite or proceeding) is asserted by
such director, officer or controlling person in connection with the securities
being registered, the Registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
(c) The undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part of
this Registration Statement in reliance upon Rule 430A and contained in a form
of
II-2
<PAGE>
prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or 497(h)
under the Securities Act shall be deemed to be part of this Registration
Statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of prospectus
shall be deemed to be a new Registration Statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(d) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement;
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933, as amended (the "Securities Act");
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent post-
effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement;
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement;
Provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not
apply if the information required to be included in a post-effective
amendment by those paragraphs in contained in periodic reports filed by the
registrant pursuant to Section 13 or 15(d) of the Securities Exchange Act
of 1934, as amended (the "Exchange Act") that are incorporated by reference
in the registration statement.
(2) That for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement or Amendment to be signed on its behalf by the undersigned, thereunto
duly authorized, in Baltimore, Maryland, on this 12th day of January, 1998.
SYLVAN LEARNING SYSTEMS, INC.
By /s/ R. Christopher Hoehn-Saric
----------------------------------------
R. Christopher Hoehn-Saric, Chairman of
the Board and Co-Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, as amended,
this registration statement has been signed below by the following persons in
the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ R. Christopher Hoehn-Saric Co-Chief Executive Officer and Chairman of the
- -------------------------------------- Board of Directors (Principal Executive January 12, 1998
R. Christopher Hoehn-Saric Officer)
/s/ Douglas L. Becker* Co-Chief Executive Officer President,
- -------------------------------------- Secretary and Director January 12, 1998
Douglas L. Becker
/s/ B. Lee McGee Chief Financial Officer (Principal Financial
- -------------------------------------- and Accounting Officer) January 12, 1998
B. Lee McGee
/s/ Donald V. Berlanti* Director January 12, 1998
- --------------------------------------
Donald V. Berlanti
/s/ R. William Pollock* Director January 12, 1998
- --------------------------------------
R. William Pollock
Director January 12, 1998
- --------------------------------------
J. Phillip Samper
/s/ Nancy A. Cole* Director January 12, 1998
- --------------------------------------
Nancy A. Cole
Director January 12, 1998
- --------------------------------------
James H. McGuire
Director January 12, 1998
- --------------------------------------
Rick Inatome
</TABLE>
*By: /s/ R. Christopher Hoehn-Saric
------------------------------
R. Christopher Hoehn-Saric
Attorney-in-fact
II-4
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Sequentially
Exhibit No. Description Numbered Pages
----------- ----------- --------------
<S> <C> <C>
3.1 Articles of Amendment and Restatement*
3.2 Amended and Restated By-Laws dated
September 27, 1996**
4.1 Specimen Stock Certificate*
4.2 1997 Sylvan Technology Center Stock Option Plan***
4.3 Form of Stock Option Agreement Under 1997 Sylvan
Technology Center Stock Option Plan***
5.1 Opinion of Piper & Marbury L.L.P.
23.1 Consent of Ernst & Young LLP.
23.2 Consent of Deloitte & Touche LLP
23.3 Consent of Canterelli & Vernoia, CPAs
23.4 Consent of Piper & Marbury L.L.P. (contained
in Exhibit 5.1)
24.1 Powers of Attorney (included on signature page)
</TABLE>
___________________
* Incorporated by reference from the Registrant's Registration Statement on
Form S-1 (No. 33-69558), filed on September 28, 1993.
** Incorporated by reference from the Company's Annual Report on Form 10-K
for the Year ended December 31, 1996.
*** Previously Filed with this Registration Statement on December 29, 1997.
II-5
<PAGE>
EXHIBIT 5.1
-----------
<TABLE>
<S> <C> <C>
PIPER & MARBURY
L.L.P.
CHARLES CENTER SOUTH WASHINGTON
36 SOUTH CHARLES STREET NEW YORK
BALTIMORE, MARYLAND 21201-3018 PHILADELPHIA
410-539-2530
FAX: 410-539-0489
</TABLE>
January 12, 1998
Sylvan Learning Systems, Inc.
1000 Lancaster Street
Baltimore, Maryland 21201
Re: Registration Statement on Form S-3
----------------------------------
Dear Sirs:
We have acted as counsel to Sylvan Learning Systems, Inc., a Maryland
corporation (the "Company"), in connection with the Company's Registration
Statement on Form S-3 (the "Registration Statement") filed on the date hereof
with the Securities and Exchange Commission (the "Commission") under the
Securities Act of 1933, as amended (the "Act"). The Registration Statement
relates to 300,000 shares of the Company's Common Stock, par value $.01 per
share (the "Shares"), issuable by the Company upon exercise of stock options
granted under the Company's STC Stock Option Plan (the "Plan").
In this capacity, we have examined the Company's Charter and By-Laws, the
proceedings of the Board of Directors of the Company relating to the adoption of
the Plan and the issuance of the Shares and such other documents, instruments
and matters of law as we have deemed necessary to the rendering of this opinion.
In such examination, we have assumed the genuineness of all signatures, the
authenticity of all documents submitted to us as originals, and the conformity
with originals of all documents submitted to us as copies.
Based upon the foregoing, we are of the opinion and advise you that each of
the Shares described in the Registration Statement has been duly authorized and,
upon issuance in accordance with the terms of the Plan, will be validly issued,
fully paid and nonassessable.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement. In giving our consent, we do not thereby admit that we
are in the category of persons whose consent is required under Section 7 of the
Act or the Rules and Regulations of the Commission thereunder.
Very truly yours,
/s/ PIPER & MARBURY L.L.P.
<PAGE>
EXHIBIT 23.1
------------
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
--------------------------------------------------
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Pre-Effective Amendment No. 1 to Form S-3 No. 333-43355)
and related Prospectus of Sylvan Learning Systems, Inc. for the registration of
300,000 shares of its common stock and to the incorporation by reference therein
of our report dated July 10, 1997, with respect to the consolidated financial
statements and schedule of Sylvan Learning Systems, Inc. and subsidiaries
included in its Current Report on Form 8-K dated July 15, 1997, filed with the
Securities and Exchange Commission.
/s/ ERNST & YOUNG LLP
Baltimore, MD
January 8, 1998
<PAGE>
EXHIBIT 23.2
------------
CONSENT OF DELOITTE & TOUCHE LLP, INDEPENDENT AUDITORS
------------------------------------------------------
We consent to the use of our reports on the financial statements of Independent
Child Study Teams, Inc. and I--R, Inc., dated March 14, 1997, appearing in the
prospectus, which is part of this Registration Statement, and to the reference
to us under the heading "Experts" in such Registration Statement.
/s/ DELOITTE & TOUCHE LLP
Parsippany, New Jersey
January 7, 1998
<PAGE>
EXHIBIT 23.3
------------
CONSENT OF CANTERELLI & VERNOIA, CPAs, INDEPENDENT AUDITORS
-----------------------------------------------------------
We consent to the reference to our firm under the caption "Experts" and to the
use of our report dated April 25, 1995 and May 10, 1995, with respect to the
financial statements of I--R, Inc. and Independent Child Study Teams, Inc.,
respectively, included in the Registration Statement (Form S-3 No. 333-
43355) and related Prospectus of Sylvan Learning Systems, Inc. for the
registration of 300,000 shares of its common stock.
/s/ CANTERELLI & VERNOIA, CPAs
Sommerville, New Jersey
January 7, 1998
