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AS FILED WITH SECURITIES AND EXCHANGE COMMISSION ON MAY 19, 1997. FILE NO.
0-26040
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE
SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. __)
Filed by the Registrant /X/)
Filed by a Party other than the Registrant / /
Check the appropriate box:
/X/ Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
COMPUTER LEARNING CENTERS, INC.
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
-----------------------------------------------------------------
(NAME OF PERSON(S) FILING PROXY STATEMENT IF OTHER THAN REGISTRANT)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
<PAGE>
COMPUTER LEARNING CENTERS, INC.
11350 RANDOM HILLS ROAD, SUITE 240
FAIRFAX, VIRGINIA 22030
------------------------
June 6, 1997
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders to be
held at 10:00 a.m. on Thursday, July 10, 1997 at the Westfields International
Conference Center, 14750 Conference Center Drive, Chantilly, Virginia 22151.
We urge you to participate in the business of the Annual Meeting by
completing and returning the enclosed proxy as promptly as possible. Your vote
is important.
The accompanying Notice of Annual Meeting and Proxy Statement provide
information about the matters to be acted upon by the stockholders. The Proxy
Statement also contains information about the role and responsibility of the
Board of Directors and the committees of the Board and provides important
information about each nominee for election as Director.
Sincerely,
Reid R. Bechtle
PRESIDENT AND CHIEF EXECUTIVE OFFICER
<PAGE>
PRELIMINARY COPIES FOR INFORMATION OF SECURITIES AND EXCHANGE COMMISSION ONLY
COMPUTER LEARNING CENTERS, INC.
----------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JULY 10, 1997
------------------------
The 1997 Annual Meeting of Stockholders of Computer Learning Centers, Inc.
(the "Company") will be held Thursday, July 10, 1997 at 10:00 a.m. at the
Westfields International Conference Center, 14750 Conference Center Drive,
Chantilly, Virginia 20151 for the following purposes:
1. To elect two Class II Directors to serve until the 2000 Annual Meeting
of Stockholders.
2. To approve an amendment to the Company's Second Amended and Restated
Certificate of Incorporation to increase the authorized number of shares
of Common Stock of the Company from 10,000,000 shares to 35,000,000
shares.
3. To approve the Company's 1997 Employee Stock Purchase Plan.
4. To approve amendments to the Company's 1995 Non-Employee Directors Stock
Option Plan.
5. To ratify the selection by the Board of Directors of Price Waterhouse
LLP as independent accountants for the current fiscal year.
6. To transact such other business as may properly come before the meeting
or any adjournment thereof.
All stockholders of record at the close of business on June 5, 1997 will be
entitled to vote at the meeting. The stock transfer books of the Company will
remain open following the record date.
It is important that your shares be represented at this meeting. Whether or
not you expect to be present, please fill in, date, sign and return the enclosed
proxy form in the accompanying addressed, postage-prepaid envelope. If you
attend the meeting, you may revoke your proxy and vote in person.
By Order of the Board of Directors,
Charles L. Cosgrove,
SECRETARY
June 6, 1997
<PAGE>
PRELIMINARY COPIES FOR INFORMATION OF SECURITIES AND EXCHANGE COMMISSION ONLY
COMPUTER LEARNING CENTERS, INC.
11350 RANDOM HILLS ROAD, SUITE 240
FAIRFAX, VIRGINIA 22030
------------------------
PROXY STATEMENT
---------------------
FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JULY 10, 1997
This Proxy Statement and accompanying proxy are being furnished to
stockholders on or about June 6, 1997, in connection with the solicitation by
the Board of Directors of Computer Learning Centers, Inc. ( the "Company") of
proxies to be voted at the Annual Meeting of Stockholders to be held at 10:00 am
on Thursday, July 10, 1997, at the Westfields International Conference Center,
14750 Conference Center Drive, Chantilly, Virginia 20151 and at any adjournments
of that meeting. All proxies will be voted in accordance with the stockholders'
instructions, and if no choice is specified, the proxies will be voted in favor
of the matters set forth in the accompanying Notice of Meeting. Any proxy may be
revoked by a stockholder at any time before its exercise by delivery of a
written revocation or a subsequently dated proxy to the Secretary of the Company
or by voting in person at the Annual Meeting.
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED
JANUARY 31, 1997 AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, WITHOUT
EXHIBITS, WILL BE FURNISHED WITHOUT CHARGE TO ANY STOCKHOLDER UPON WRITTEN
REQUEST TO THE SECRETARY, COMPUTER LEARNING CENTERS, INC., 11350 RANDOM HILLS
ROAD, SUITE 240, FAIRFAX, VIRGINIA 22030. EXHIBITS WILL BE PROVIDED UPON WRITTEN
REQUEST AND PAYMENT OF AN APPROPRIATE PROCESSING FEE.
At the close of business on June 5, 1997, the record date for determining
the stockholders entitled to vote at the Annual Meeting, there were outstanding
and entitled to vote an aggregate of 7,830,821 shares, $.01 par value per share,
of the Company (the "Common Stock"). Stockholders are entitled to one vote per
share. The presence in person or by proxy of stockholders holding a majority of
such shares will constitute a quorum for the transaction of business at the
Annual Meeting. Shares of Common Stock present in person or represented by proxy
(including shares which abstain or do not vote with respect to one or more of
the proposals presented for stockholder approval) will be counted for purposes
of determining whether a quorum is present.
Election of Directors will be determined by the vote of the holders of a
plurality of the shares voting on such election. Approval of the amendment to
the Company's Certificate of Incorporation increasing the number of shares of
Common Stock will require the affirmative vote of a majority of the shares
outstanding and entitled to vote on the matter. Approval of the other matters to
be voted on will require the affirmative vote of a majority of the shares
present or represented at the meeting. Shares that abstain from voting with
respect to a specific proposal and shares held in "street name" by brokers or
nominees who indicate on their proxies that they do not have discretionary
authority to vote such shares as to a particular proposal will not be counted as
votes in favor of such proposal. Accordingly, neither broker non-votes nor
abstentions will have any effect on the vote required to approve any matter that
requires the affirmative vote of a certain percentage of the votes cast or
shares voting on the proposal.
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The Board of Directors knows of no matters, other than those reported below,
which are to be brought before the Annual Meeting. If other matters properly
come before the Annual Meeting, however, it is the intention of the persons
named in the enclosed form of proxy to vote such proxy in accordance with their
judgment on such matters.
All expenses of solicitation of proxies will be borne by the Company.
Present and former officers, Directors and other employees of the Company may
solicit proxies by telephone, telegram or mail, or by meetings with stockholders
or their representatives. The Company will reimburse brokers, banks or other
custodians, nominees and fiduciaries for their charges and expenses in
forwarding proxy material to beneficial owners.
Unless otherwise indicated, all Company common share amounts set forth in
this Proxy Statement reflect the three-for-two stock split effected by the
Company in the form of a stock dividend paid April 14, 1997.
PROPOSAL ONE: ELECTION OF DIRECTORS
The Board of Directors of the Company currently consists of six Directors
divided into three classes. The Board is comprised of two Class I Directors, two
Class II Directors and two Class III Directors, with members of each class
holding office for staggered three-year terms. Each Director serves (subject to
his earlier death, resignation or removal) until the Annual Meeting of
Stockholders held in the year that is three years after such Director's election
and thereafter until such Director's successor is elected and has qualified.
At the Annual Meeting, two Directors are to be elected to hold office for a
three-year term to expire at the 2000 Annual Meeting of Stockholders. Unless
there is a contrary indication, the persons named in the accompanying form of
proxy intend to vote such proxy for the election to the Board of Directors of
Ira D. Cohen and Stephen P. Reynolds, the current Directors whose terms expire
this year.
Each of the nominees has consented to serve as a Director. If for any reason
a nominee should become unable or unwilling to accept nomination or election,
the persons named in the accompanying form of proxy intend to vote such proxy
for the election of such other person as the Board may recommend. Alternatively,
the Board may reduce the number of Directors to eliminate the vacancy.
Patricia D. Hedley resigned as a Director in August 1996. The Company is
grateful for her service and wishes her well in her future endeavors.
A brief summary of each Director's principal occupation, business
affiliations and other information follows. Unless otherwise indicated, the
principal occupation of each Director has been the same for the past five years.
There is no family relationship between any of the Directors or executive
officers of the Company.
NOMINEES FOR DIRECTOR
NOMINEES FOR TERM EXPIRING AT 2000 ANNUAL MEETING
Ira D. Cohen, age 45, has served as a Director of the Company since 1987.
Since 1988, he has been a Managing Director of The Updata Group, Inc., an
investment banking firm that specializes in mergers and acquisitions for the
information technology industry. From 1984 to 1986, he served as Chief Financial
Officer for CGA Computer, Inc., and from 1986 to 1988 he served as Chief
Financial Officer of Updata Software, Inc. Mr. Cohen is a certified public
accountant. Mr. Cohen is also a director of Datastream, Inc.
Stephen P. Reynolds, age 45, has served as a Director of the Company since
August 1996. Mr. Reynolds is a managing member of General Atlantic Partners, LLC
("GAP LLC") and has been with GAP LLC or its predecessor entities since April
1980. Mr. Reynolds is also a general partner and limited
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partner of GAP-CLC. Partners, L.P. Mr. Reynolds, a certified public accountant,
is on the board of Solo Serve Corporation, a publicly traded off-price soft
goods retail company.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR EACH OF THE NOMINEES LISTED ABOVE.
DIRECTORS CONTINUING IN OFFICE
TERM EXPIRING AT 1998 ANNUAL MEETING
John L. Corse, age 55, has served as a Director of the Company since October
1994. Since February 1995, he has served as President of Hughes Advanced
Systems, a subsidiary of Hughes Aircraft Corporation and a provider of
information systems and services to businesses. From 1993 to 1995, Mr. Corse was
a self-employed business consultant. From 1992 to 1993, he served as President
and Chief Executive Officer of Security Software America, Inc., a software
publisher serving government contractors and government agencies. From 1990 to
1992, Mr. Corse was a self-employed business consultant. Mr. Corse is also a
Director of Medic Computer Systems, Inc.
Ralph W. Clark, age 56, has served as a Director of the Company since
October 1994. He is currently Chairman of Frontec AMT Inc., a software company.
From 1988 to 1994, Mr. Clark was a Vice President of International Business
Machines Corporation ("IBM"), where he served as Assistant General Manager of
the Application Software Group, President of the General and Public Sector
Division (a software division), and, most recently, President of Skill Dynamics,
IBM's education division.
TERM EXPIRING AT 1999 ANNUAL MEETING
Reid R. Bechtle, age 44, joined the Company in 1991 as President of the
Company's Computer Learning Center division and has been a Director and the
President and Chief Executive Officer of the Company since October 1994. From
1982 to 1991, he served as President of Multi-List, Inc., a software services
subsidiary of PRC/Litton, Inc.
Harry H. Gaines, age 59, has been Chairman of the Board of Directors since
October 1994 and has served as a Director since 1987. From 1987 to October 1994
and from 1988 to October 1994, he served as President and Chief Executive
Officer of the Company and of Mohr Development Company, respectively. From 1989
through September 1995, Mr. Gaines served as President of Blessing/White Inc.
MEETING AND COMMITTEES OF THE BOARD OF DIRECTORS
The standing committees of the Board of Directors are the Audit and
Compensation Committees. The Company does not have a nominating committee.
The Audit Committee supports the independence of the Company's independent
auditors and the objectivity of the Company's financial statements. The Audit
Committee (a) reviews the Company's principal policies for accounting, internal
control and financial reporting, (b) recommends to the Board of Directors the
engagement or discharge of the independent auditors, (c) reviews with the
independent auditors the plan, scope and timing of their audit, and (d) reviews
the independent auditors' fees and, after completion of the audit, reviews with
management the independent auditors' report. The Audit Committee also reviews
the annual financial statements of the Company, the independence of the
independent auditors, the adequacy of the Company's internal accounting control
system, and the Company's polices on business integrity and ethics and conflicts
of interest. The Audit Committee held one meeting during fiscal 1997. The
members of the Audit Committee are Ralph W. Clark and Stephen P. Reynolds.
The Compensation Committee (a) reviews and makes recommendations to the
Board of Directors with respect to the direct and indirect compensation and
employee benefits of the President and other elected officers of the Company,
(b) reviews, administers and makes recommendations to the Board of Directors
with respect to any incentive plans and bonus plans that include elected
officers, and (c) reviews the Company's policies relating to the compensation of
senior management and other employees. In
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addition, the Committee reviews management's long-range planning for executive
development and succession, establishes and periodically reviews policies on
perquisites, and performs certain other review functions relating to management
compensation and employee relations policies. The Compensation Committee held
two meetings during fiscal 1997. The members of the Compensation Committee are
Ira D. Cohen and John L. Corse.
During fiscal 1997, there were five regular meetings of the Board of
Directors. Each of the Directors attended 80% or more of the aggregate number of
meetings of the Board of Directors and the standing Board committees on which he
or she served.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's officer's and Directors and persons who own greater than ten
percent of a registered class of the Company's equity securities to file reports
of ownership and changes in ownership with the Securities and Exchange
Commission and the Nasdaq Stock Market.
Based solely on a review of the forms it has received and on written
representations from certain reporting persons that no such forms were required
for them, the Company believes that during the fiscal year ended January 31,
1997 all Section 16(a) filing requirements applicable to its officers, Directors
and ten percent beneficial owners were complied with by such persons, except Mr.
Clark, who was late filing a Form 4 reporting the purchase of the Company's
Common Stock.
PROPOSAL TWO: AMENDMENT TO THE COMPANY'S SECOND AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION TO INCREASE THE AUTHORIZED NUMBER OF
SHARES OF COMMON STOCK
The Company's Board of Directors has adopted a resolution recommending that
the stockholders adopt an amendment to Article Fourth of the Company's Second
Amended and Restated Certificate of Incorporation (the "Certificate of
Incorporation") to increase the authorized shares of the Company's Common Stock
from 10,000,000 shares to 35,000,000 shares (the "Amendment"). If the Amendment
is approved, Section I of Article Fourth of the Certificate of Incorporation,
which sets forth the Company's presently authorized capital stock, will be
deleted and the following will be substituted therefor:
"The total number of shares of all classes of stock which the Corporation
shall have authority to issue is 36,000,000 shares, consisting of (i) 35,000,000
shares of common stock, $.01 par value (the "Common Stock") and (ii) 1,000,000
shares of Series Preferred Stock, $.01 par value ("Preferred Stock")."
The Board of Directors believes that the authorized number of shares of
Common Stock should be increased to provide sufficient shares for such corporate
purposes as may be determined by the Board of Directors, including facilitating
broader ownership of the Company's Common Stock by effecting a stock split or
issuing a stock dividend; flexibility for possible future financing; recruiting
and retaining valuable employees and directors by the issuance of additional
stock options or awards; and acquiring other businesses in exchange for shares
of the Company's Common Stock. The Company at present has no commitments,
agreements or undertakings to issue any such additional shares. The Board of
Directors considers the authorization of additional shares of Common Stock
advisable to ensure prompt availability of shares for issuance should the
occasion arise. If required by law or regulation, the Company will seek
stockholder approval prior to any issuance of shares.
The Company intends to apply to the Nasdaq Stock Market, on which the shares
of the Company's Common Stock are currently listed, for the listing thereon of
the additional shares to be issued and reserved for future issuance as a result
of the Amendment. Shares of the Company's Common Stock, including the additional
shares proposed for authorization, do not have preemptive or similar rights. The
issuance of additional shares of Common Stock could have the effect of diluting
existing stockholder earnings per share, book value per share and voting power.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THIS PROPOSAL.
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PROPOSAL THREE: APPROVAL OF THE 1997 EMPLOYEE STOCK PURCHASE PLAN
On March 13, 1997, the Board of Directors adopted, subject to stockholder
approval, the Company's 1997 Employee Stock Purchase Plan (the "1997 Purchase
Plan"). The 1997 Purchase Plan is administered by the Board of Directors of the
Company or a committee thereof (the "Board") and consists of 200,000 shares of
the Company's Common Stock (subject to adjustment for any dividend, stock split
or other relevant changes in the Company's capitalization). With certain limited
exceptions, all full time employees, including executive officers, employed by
the Company for at least twelve months, are eligible to participate in the 1997
Purchase Plan. Benefits to named executive officers under the 1997 Purchase Plan
are not yet determinable.
One or more offerings of Common Stock will be made under the 1997 Purchase
Plan. The number of shares available for an offering shall be determined by the
Board and may be increased at the election of the Board by the number of shares
of Common Stock, if any, which were made available, but not purchased during an
earlier offering. The first offering under the 1997 Purchase Plan shall commence
on August 1, 1997 and shall terminate on January 31, 1998. The other offerings
under the 1997 Purchase Plan will run for consecutive twelve-month periods
commencing on February 1, 1998, unless the Board sets a different offering
period.
If an employee is not a participant on the last day of the Offering Period,
such employee is not entitled to exercise any option, and the amount of such
employee's accumulated payroll deductions will be refunded. An employee's rights
under the 1997 Purchase Plan terminate upon voluntary withdrawal from the
Purchase Plan at any time, or when such employee ceases employment for any
reason, except that upon termination of employment because of death, the
employee's beneficiary has certain rights to elect to exercise the option to
purchase the shares which the accumulated payroll deductions in the
participant's account would purchase at the date of death.
On the first day of the designated payroll deduction period (the "Offering
Period"), the Company shall grant to each eligible employee who has elected to
participate in the 1997 Purchase Plan an option to purchase shares as follows:
the employee may authorize an amount (a whole percentage from 1% to 10% of such
employee's Compensation (as defined in the 1997 Purchase Plan)) to be deducted
by the Company from such Compensation during the Offering Period. On the last
day of the Offering Period, the employee shall be deemed to have exercised the
option, at the option exercise price, to the extent of accumulated payroll
deductions. Under the terms of the 1997 Purchase Plan, the option price is an
amount equal to 85% of the fair market value per share of the Common Stock on
either the first day or the last day of the Offering Period, whichever is lower.
In no event may an employee purchase in any one Offering Period shares of Common
Stock having a fair market value of more than $25,000, computed as of the first
day of the Offering Period.
FEDERAL INCOME TAX CONSEQUENCES. The 1997 Purchase Plan is intended to
qualify as an "employee stock purchase plan" as defined by Section 423 of the
Code. The 1997 Purchase Plan is not a qualified plan under Section 401(a) of the
Code.
TAX CONSEQUENCES TO PARTICIPANTS. In general, a participant will not
recognize taxable income upon enrolling in the 1997 Purchase Plan or upon
purchasing shares of Common Stock at the end of an Offering Period. Instead, if
a participant sells Common Stock acquired under the 1997 Purchase Plan at a sale
price that exceeds the price at which the participant purchased the Common
Stock, then the participant will recognize taxable income. A portion of that
taxable income will be ordinary income, and a portion may be capital gain.
If the participant sells the Common Stock more than one year after acquiring
it and more than two years after the date on which the Offering Period commenced
(the "Grant Date"), then the participant will be taxed as follows. If the sale
price of the Common Stock is higher than the price at which the participant
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purchased the Common Stock, then the participant will recognize ordinary
compensation income in an amount equal to the lesser of:
(i) the excess of the fair market value of the Common Stock on the Grant
Date over the price at which the participant purchased the Common Stock; and
(ii) the excess of the sale price of the Common Stock over the price at
which the participant purchased the Common Stock.
Any further income will be long-term capital gain. If the sale price of the
Common Stock is less than the price at which the participant purchased the
Common Stock, then the participant will recognize long-term capital loss in an
amount equal to the excess of the price at which the participant purchased the
Common Stock over the sale price of the Common Stock.
If the participant sells the Common Stock within one year after acquiring it
or within two years after the Grant Date (a "Disqualifying Disposition"), then
the participant will recognize ordinary compensation income in an amount equal
to the excess of the fair market value of the Common Stock on the date that it
was purchased over the price at which the participant purchased the Common
Stock. The participant will also recognize capital gain in an amount equal to
the excess of the sale price of the Common Stock over the fair market value of
the Common Stock on the date that it was purchased, or capital loss in an amount
equal to the excess of the fair market value of the Common Stock on the date
that it was purchased over the sale price of the Common Stock. This capital gain
or loss will be a long-term capital gain or loss if the participant has held the
Common Stock for more than one year prior to the date of the sale and will be a
short-term capital gain or loss if the participant has held the Common Stock for
a shorter period.
TAX CONSEQUENCES TO THE COMPANY. The offering of Common Stock under the 1997
Purchase Plan will have no tax consequences to the Company. Moreover, in
general, neither the purchase nor the sale of Common Stock acquired under the
1997 Purchase Plan will have any tax consequences to the Company except that the
Company will be entitled to a business-expense deduction with respect to any
ordinary compensation income recognized by a participant upon making a
Disqualifying Disposition. Any such deduction will be subject to the limitations
of Section 162(m) of the Code.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THIS PROPOSAL.
PROPOSAL FOUR: AMENDMENT TO THE COMPANY'S 1995 NON-EMPLOYEE DIRECTORS STOCK
OPTION PLAN.
On March 14, 1995, the Board of Directors adopted the 1995 Non-Employee
Directors Stock Option Plan (the "Directors Plan"). Under the Directors Plan,
each of the non-employee Directors as of May 31, 1995 received a non-statutory
option exercisable for 7,020 shares of Common Stock at an exercise price equal
to the initial public offering price of $5.33 per share. In addition, under the
Directors Plan as currently in place, each new Director who is not also an
employee of the Company will receive upon his or her initial election to the
Board an option to purchase 7,020 shares of Common Stock. On the day after each
Annual Meeting of stockholders, each non-employee Director then serving will
also receive an option to purchase 2,325 shares of Common Stock. All options
granted under the Directors Plan have an exercise price equal to the fair market
value of the Common Stock on the date of grant. In addition all options
heretofore granted under the Directors Plan vest immediately. The Company has
reserved 105,267 shares for issuance under the Directors Plan. On July 12, 1996,
the Company granted options to purchase 2,325 shares of Common Stock to each of
Ms. Hedley and Mr. Corse, Mr. Cohen and Mr. Clark at an exercise price of $14.08
per share and on August 31, 1996, the Company granted options to purchase 7,020
shares of Common Stock to Mr. Reynolds at an exercise price of $16.00 per share.
During fiscal 1997, Mr. Cohen exercised options previously granted under the
Directors Plan to purchase 7,020 shares of Common Stock at exercise prices of
$14.75 and $14.58 per share, realizing a value of $65,685. As of April 30, 1997,
the Company had outstanding options to purchase an aggregate of 37,380 shares
under the Directors Plan.
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On March 13, 1997, the Board of Directors adopted an amendment to the
Directors Plan, which replaces the provisions for option grants described above.
The amendment provides for the grant to each non-employee Director on the date
following the 1997 Annual Meeting of a non-statutory option exercisable for
11,000 shares of Common Stock, for Directors whose terms expire in 2000 (Messrs.
Cohen and Reynolds, if they are reelected), 7,330 shares, for Directors whose
terms expire in 1999 (Mr. Gaines), and 3,660 shares of Common Stock, for
Directors whose terms expire in 1998 (Messrs. Clark and Corse). Thereafter, each
Director elected to a three-year term by the stockholders will receive an option
to purchase 11,000 shares of Common Stock on the date following his or her
election and each Director elected to fill a vacancy on the Board will receive
an option to purchase 11,000 shares of Common Stock, multiplied by a fraction
the numerator of which is the number of years (counting any portion of a year as
one year) remaining in such Director's term and the denominator of which is
three. Options to purchase Common Stock under the Directors Plan will vest in
three equal increments on the first, second and third anniversary of grant,
except that options exercisable for less than 11,000 shares will vest over such
period and in such amounts, if any, as may be determined by the Directors.
FEDERAL INCOME TAX CONSEQUENCES. Participants in the Directors Plan will
receive non-statutory options and thus will not recognize taxable income upon
the grant of the option. A participant who exercises a nonstatutory stock option
generally will recognize ordinary compensation income in an amount equal to the
excess of the fair market value of the Common Stock acquired through the
exercise of the option ("NSO Stock") on the exercise date over the exercise
price.
With respect to any NSO Stock, a participant will have a tax basis equal to
the exercise price plus any income recognized upon the exercise of the option.
Upon selling NSO Stock, a participant generally will recognize capital gain or
loss in an amount equal to the excess of the sale price of the NSO Stock over
the participant's tax basis in the NSO Stock. This capital gain or loss will be
a long-term gain or loss if the participant has held the NSO Stock for more than
one year prior to the date of the sale.
The grant of an option under the Directors Plan will have no tax
consequences to the Company. The Company generally will be entitled to a
business-expense deduction, however, with respect to any ordinary compensation
income recognized by a participant under the Directors Plan as a result of the
exercise of a nonstatutory stock option.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THIS PROPOSAL.
PROPOSAL FIVE: RATIFY THE SELECTION BY THE BOARD OF DIRECTORS OF PRICE
WATERHOUSE LLP AS INDEPENDENT ACCOUNTANTS FOR THE CURRENT FISCAL
YEAR
In accordance with the recommendation of the Audit Committee, the Board of
Directors has reappointed Price Waterhouse LLP as independent accountants of the
Company for fiscal 1998. Although ratification of the reappointment of Price
Waterhouse LLP is not legally required, the Board believes it is appropriate for
the stockholders to ratify such action. In the event the stockholders do not
ratify the selection of Price Waterhouse LLP as the Company's independent
accountants, the Company will reconsider such appointment. A representative of
Price Waterhouse LLP, which has served as the Company's independent accountants
since 1987, will attend the meeting, will have the opportunity to make a
statement if he or she desires to do so, and will be available to respond to
appropriate questions. The Board of Directors reserves the right to replace the
independent accountants at any time upon the recommendation of the Audit
Committee.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THIS PROPOSAL.
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COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS
SUMMARY COMPENSATION TABLE
The following table sets forth certain information regarding compensation
paid or accrued during each of the last three fiscal years for the Company's
Chief Executive Officer and each of the Company's other executive officers,
based on salary and bonus earned during the fiscal year (the "Named Executive
Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
------------------------------------------------------------
OTHER ANNUAL ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUSES(1) COMPENSATION(2) COMPENSATION(3)
- - --------------------------------------------- --------- ---------- ----------- ---------------- -----------------
<S> <C> <C> <C> <C> <C>
Reid R. Bechtle ............................. 1997 $ 225,000 $ 320,000 $ 14,496 $ 3,000
President/Chief Executive Officer 1996 200,000 215,000 10,598 3,000
1995 195,362 81,250 6,550 2,310
Charles L. Cosgrove ......................... 1997 145,833 150,000 5,676 2,068
Vice President/Chief Financial Officer 1996 123,333 90,000 0 1,838
1995 113,833 25,000 0 1,708
Susan L. Luster ............................. 1997 151,250 150,000 0 1,988
Vice President/Chief Operating Officer 1996 27,308 0 0 0
1995 0 0 0 0
</TABLE>
- - ------------------------
(1) All bonus amounts shown above were accrued during the stated fiscal year and
paid in the subsequent fiscal year.
(2) Represents contributions toward automobile allowances made by the Company on
behalf of the Named Executive Officers indicated.
(3) Represents contributions to the Company's 401(k) Plan made by the Company on
behalf of the Named Executive Officers indicated.
COMPENSATION OF DIRECTORS
No Director who is an employee of the Company is compensated for service as
a member of the Board of Directors or any committee of the Board of Directors.
As compensation for serving on the Board of Directors, each Director who is not
also an employee of the Company is entitled to receive an annual fee of $8,000
for attendance of the full Board and an annual fee of $2,000 for all committee
meetings. Directors also are entitled to reasonable expenses incurred by them in
connection with their attendance at Board or committee meetings. Insurance
policies in the name of the Company provide for the indemnification of the
Company's Directors and officers, as well as for the reimbursement to the
Company for amounts paid by the Company above certain limits in indemnifying its
Directors and officers.
CERTAIN TRANSACTIONS
EMPLOYMENT AGREEMENTS
In February 1997, Reid R. Bechtle, the Company's President and Chief
Executive Officer, entered into an employment agreement that has a term of one
year but shall be automatically renewed for successive one-year periods unless
the Company notifies Mr. Bechtle of non-renewal at least 90 days prior to the
end of the initial term or any renewal term. The agreement provides for an
annual salary of $250,000, which may be increased from time to time by the
Compensation Committee, a guaranteed annual bonus equal to 25% of Mr. Bechtle's
salary and an additional annual bonus payable based on
8
<PAGE>
achievement by the Company of certain revenue and income targets. In the event
Mr. Bechtle's employment is terminated other than for cause, as defined in the
agreement, or due to his voluntary resignation, he is entitled to receive an
amount equal to two times his then effective base salary and guarenteed bonus.
In addition, if Mr. Bechtle's employment is terminated as the result of a change
of control as defined in the agreement, he is entitled to receive an amount
equal to three times the greater of (i) the average annual total compensation
paid to him over the Company's last three fiscal years or (ii) total
compensation paid during the Company's fiscal year ended January 31, 1997.
The Company had an employment agreement with Harry H. Gaines with a term
extending through January 31, 1997, pursuant to which Mr. Gaines provided such
assistance to the Company as specified by the President of the Company. Pursuant
to the employment agreement, Mr. Gaines received a salary of $30,000 per year.
THE REPURCHASE TRANSACTIONS
In connection with the Company's refinancing of its credit agreement with
Bankers Trust Company ("BTC") and The First National Bank of Boston ("FNBB") in
1989, the Company sold an aggregate of 675,206 shares of its Class B Convertible
Preferred Stock ("Class B Stock") for $8.00 per share to the following principal
stockholders and other affiliates: 593,875 shares to General Atlantic Partners
II, L.P. ("GAP"), a principal stockholder of the Company; 15,500 shares to
GAP-CLC Partners, L.P. ("GAP-CLC"), a principal stockholder of the Company;
32,072 shares to Bankers Trust (Delaware) ("BTD"), an affiliate of BTC, one of
the Company's commercial lenders; and 33,759 shares to BancBoston Capital, Inc.
("BCI"), an affiliate of FNBB, one of the Company's commercial lenders. In
addition, the Company sold 171,053 and 153,741 shares of its Class C Convertible
Preferred Stock ("Class C Stock") for $8.00 per share to BTD and BCI,
respectively. Stephen P. Reynolds, a Director of the Company, is a managing
member of GAP and a general partner and limited partner of GAP-CLC.
The Company repurchased (i) 32,072 shares and 33,759 shares of Class B Stock
from BTD and BCI, respectively, (ii) 171,053 shares of Class C Stock and
warrants to purchase 188,397 shares of Common Stock from BTD and (iii) 153,741
shares of Class C Stock from BCI. These repurchases are referred to collectively
as the "Repurchase Transactions." Each share of convertible preferred stock was
repurchased for $8.00 per share, and the warrants were repurchased for
approximately $5.24 per share of Common Stock purchasable thereunder.
In consideration of the Repurchase Transactions, the Company issued
subordinated notes for $2,611,400 to BTD and $1,500,000 to BCI, each of which
notes were paid in full with a portion of the net proceeds from the Company's
initial public offering.
THE RECAPITALIZATION
In connection with the Company's initial public offering, the Company (i)
transferred all of its shares of Comprehensive Learning Concepts (U.K.) Limited
and Mohr Development Incorporated to Blessing/ White Inc.; (ii) cancelled the
promissory note payable to the Company dated February 1, 1990, which promissory
note had an outstanding balance of approximately $7.5 million (after netting the
receivable from the Company against the note on or about the date of its
cancellation), bore interest at the rate of prime plus 2% per annum and was
issued by Blessing/White Inc. to the Company to evidence the indebtedness of
Blessing/White Inc. to the Company for declared but unpaid dividends; (iii)
transferred 67,500 shares of Common Stock of Blessing/White Inc. to the holders
of Common Stock of the Company; (iv) transferred $500,000 of cash to
Blessing/White Inc.; and (v) transferred all of the issued and outstanding
shares of preferred stock of Blessing/White Inc. to the holders of Preferred
Stock of the Company. These transactions are referred to collectively as the
"Recapitalization."
As a result of the Recapitalization, GAP, GAP-CLC and General Atlantic
Corporation received 4,970,913 shares of Preferred Stock of Blessing/White Inc.
with a cost basis of $5,950,083; Mr. Gaines, the
9
<PAGE>
Chairman of the Company's Board of Directors, received 100,000 shares of
Preferred Stock of Blessing/ White Inc. with a cost basis of $50,568 and Mr.
Cohen, a Director of the Company, received 41,500 shares of Preferred Stock of
Blessing/White Inc. with a cost basis of $20,986. Mr. Reynolds, a Director of
the Company, is a managing member of GAP and a general partner and limited
partner of GAP-CLC.
TAX SHARING AGREEMENT
The Company and Blessing/White Inc., are parties to a tax sharing and
indemnification agreement providing for, among other matters, (i) the payment of
tax liabilities and entitlement to tax refunds, (ii) the allocation of
responsibility and the providing of cooperation in the filing of tax returns,
(iii) the indemnification of Blessing/White Inc. by the Company from certain tax
and other liabilities related to the operation of the Company prior to the
Recapitalization and (iv) the indemnification of the Company by Blessing/ White
Inc. from certain tax and other liabilities related to the operation of
Blessing/White Inc. prior to the Recapitalization.
STOCK OPTIONS
The Company has a Long-Term Incentive Plan that provides for award of
incentive and non-statutory stock options and stock appreciation rights to
certain directors, officers and key employees. The plan is administered by the
Compensation Committee of the Board of Directors. The Company has reserved
1,163,187 shares of Common Stock for grant under the plan. On February 1, 1994,
options to purchase 419,711 shares of Common Stock were granted to Mr. Bechtle,
at an exercise price of $3.67 per share. During fiscal 1997, Mr. Bechtle
exercised options to purchase 185,858 of these shares, realizing a value of
$2,441,333 (see table below on page 11). During fiscal 1997, Mr. Gaines
exercised options previously granted under this plan to purchase 117,749 shares
of Common Stock at an exercise price of $9.68 per share, realizing a value of
$1,139,805. As of April 30, 1997, options to purchase 242,847 shares of Common
Stock were outstanding under this Long-Term Incentive Plan. The Company has
provided that no further grants may be made under the Long-Term Incentive Plan.
The Company's 1995 Stock Incentive Plan provides a variety of awards,
including stock options, stock appreciation rights and restricted and
unrestriced stock grants to the Company's employees, officers, consultants and
advisors. Stock options may be granted either in the form of incentive stock
options or non-statutory stock options. The option exercise price of incentive
stock options may not be less than the fair market value of common stock on the
date of grant. The Company has reserved 730,230 shares of Common Stock for grant
under this plan. During fiscal 1997, Mr. Cosgrove exercised 18,000 of these
shares, realizing a value of $206,865 (see table below on page 11). As of
January 31, 1997 options to purchase 573,375 shares of common stock were
outstanding under this plan, and 151,230 options were available for grant.
Incentive and non-statutory options are exercisable at a price not less than
100% and 50%, respectively, of the fair market value of the common stock at the
date of grant, as determined by the Compensation Committee. Stock appreciation
rights provide for payments equal to the base amount of the right, as determined
by the administration committee. No such appreciation rights are outstanding.
Options may be granted in tandem with appreciation rights; however, holders of
such tandem awards are subject to restrictions on the matter of exercise as
defined in the plan. Generally, stock options and rights vest ratably over five
years. All options and rights must be exercised within ten years from date of
grant.
10
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS
<TABLE>
<CAPTION>
NUMBER OF PERCENT OF
SECURITIES TOTAL OPTIONS
UNDERLYING GRANTED TO EXERCISE GRANT DATE
OPTIONS EMPLOYEES IN PRICE PER EXPIRATION PRESENT VALUE
NAME GRANTED(1) FISCAL YEAR SHARE(2) DATE ($)(3)
- - ------------------------------------------------- ----------- ------------- ----------- --------- -------------
<S> <C> <C> <C> <C> <C>
Reid R. Bechtle.................................. 300,000 61.94% $ 16.67 11/25/06 $ 2,379,287
Charles L. Cosgrove.............................. 26,250 5.42% 13.00 7/15/06 165,188
37,500 7.74% 16.67 11/25/06 297,411
Susan L. Luster.................................. 60,000 12.39% 6.00 3/07/06 161,241
</TABLE>
- - ------------------------
(1) Numbers shown represent options to purchase Common Stock.
(2) Stock options granted at 100% of fair market value of Common Stock on the
date of grant. With the exception of Mr. Bechtle, as to whom 20% of the
options vested upon grant, with the remaining options vesting in 20%
increments over the next four years, all other options become exercisable in
20% increments over five years.
(3) Grant date present value is determined using the Black-Scholes model. The
model makes assumptions about future variables, so the actual value of
options may be greater or less than the values stated in the table. For new
options granted during fiscal year 1997, the calculations assume a dividend
yield of 0.0%, volatility of approximately 42% and a risk-free rate of
return of 6.7% based on Zero Coupon Treasury Bonds for five-year maturities
on the respective grant dates.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
SHARES UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
ACQUIRED OPTIONS AT FISCAL-YEAR END AT FISCAL YEAR-END(1)
ON VALUE -------------------------- ---------------------------
NAME EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- - -------------------------------- --------- ------------ ----------- ------------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
Reid R. Bechtle................. 185,858 $ 2,441,333 263,854 240,000 $ 3,301,821 $ 3,712,800
Charles L.Cosgrove.............. 18,000 206,865 6,026 97,882 79,594 725,163
Susan L. Luster................. 0 0 12,000 48,000 157,680 630,720
</TABLE>
- - ------------------------
(1) The closing price for the Company's Common Stock on the Nasdaq Stock Market
on January 31, 1997 was $19.14 (Reflects three-for-two stock split effective
April 14, 1997). Value is calculated on the basis of the difference between
the option exercise price and $19.14, multiplied by the number of "in-the-
money" shares of Common Stock underlying the option.
11
<PAGE>
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
This report sets forth the executive compensation policies of the Committee
with respect to the Company's executive officers in general and the rationale
for the specific decisions affecting the compensation for Mr. Reid Bechtle, the
Company's Chief Executive Officer in fiscal 1997. This report also discusses the
relationship between the compensation of the Named Executive Officers and the
performance of the Company.
The Company's executive compensation program is designed to promote the
following objectives:
- To provide competitive compensation that will help attract, retain and
reward highly qualified executives who contribute to the long-term success
of the Company.
- To align management's interests with the success of the Company by placing
a portion of the executive's compensation at risk in relation to the
Company's performance.
- To align management's interests with stockholders by including long-term
equity incentives.
The Committee reviewed the compensation policies adopted with respect to all
of the Company's executive officers and confirmed that executive officer
compensation must be related to the Company's performance and must emphasize
increasing stockholder value. The Committee determined that the current
compensation policies sufficiently tied the executive officers' compensation to
the Company's performance.
The Committee determined that the Company's continued success is due in part
to its skilled executives. In setting and administering the Company's
compensation policies and programs, the Committee considers compensation
provided to executives of corporations similar to the Company in terms of
assets, sales, revenues and earnings. The Company's executive compensation
programs are designed to attract, reward and retain skilled executives and to
provide incentives which vary upon the attainment of short-term operating
performance objectives and long-term performance goals. The main objective is to
provide the Company executives with incentives directly linked to the creation
of stockholder value.
THE COMMITTEE'S ROLE. The Committee is responsible for the administration
of the executive compensation program and reviews all proposed new or amended
employee benefit plans. During fiscal 1997, the Committee was composed of the
two Directors named below, neither of whom was eligible to participate in any of
the plans which make up the Company's executive compensation program.
The Committee may select consultants from nationally recognized independent
compensation and benefits consulting firms to provide expert advice on any
aspect of the Company executive compensation program. The Committee may request
written reports or hold private meetings with such consultants in order to
obtain independent opinions on compensation proposals. The Committee has met,
and will continue to meet, in executive sessions which are not attended by any
of the Company's executives or managers.
PERFORMANCE EVALUATION. The Committee met in executive session in March
1997 to review the overall performance of the Chief Executive Officer,
particularly with respect to the Company's long range strategies and the
achievement of both financial and non-financial objectives. Paramount
consideration was given to the Chief Executive Officer's role in building
stockholder value and improving the return on the stockholders' investment.
THE COMPENSATION PROGRAM. The compensation program for the Company
executives presently consists of base salary, annual incentive bonus, long-term
incentives and employee benefits. It is the intent of the Committee that
incentives based on long-term performance should be the major component in the
pay package for senior executives. Discussed below is each element of the
compensation program.
BASE SALARY. Salaries are set and administered to reflect the value of the
job in the marketplace and individual contribution and performance. Salaries
provide a necessary element of stability in the total pay program and, as such,
are not subject to significant variability. Salary increases are based primarily
on merit. In March 1996, the Company's executive salaries were evaluated in
relation to a competitive annualized merit increase guideline of 4.5% for
expected levels of individual performance. Actual
12
<PAGE>
increases can vary from the guideline depending primarily on individual
performance. The normal interval between salary reviews for the Chief Executive
Officer and other executives is 12 months.
Mr. Bechtle's salary was increased effective April 1, 1996 to $230,000 an
increase of 15% after 24 months. Among the other named officers and executives,
Mr. Cosgrove's salary was increased effective April 1, 1996 to $150,000 an
increase of 20.0% after 12 months. Ms. Luster's salary was increased effective
December 1, 1996 to $157,500 an increase of 5.0% after 12 months.
ANNUAL INCENTIVE BONUS. The amounts of annual bonus awards are based on
corporate financial performance for the year compared to annual performance
goals established at the beginning of the year. For fiscal 1997, such
performance goals were: (1) fiscal 1997 net income and earnings per share
compared to plan; (2) fiscal 1997 revenue compared to plan; and (3) individual
performance goals related to long-term growth of the Company.
For fiscal 1997, Mr. Bechtle's targeted bonus was 125% of salary or
$287,500. As a result of exceeding the net income, earnings per share and
revenue plans for fiscal 1997, the Compensation Committee recommended and the
Board of Directors concurred, that Mr. Bechtle receive a bonus of $320,000 for
fiscal 1997, which is 111% of his targeted bonus.
STOCK OPTION AWARDS. The Compensation Committee also believes that equity
ownership by key executives provides a valuable incentive for such executives
and helps align executive's and stockholders' interests. Stock option awards
provide long-term incentives which are directly related to the performance of
the Company's Common Stock. Options generally vest at the rate of 20% per year
and have 10-year terms.
In connection with her commencement of employment with the Company, on March
7, 1996, Ms. Luster received an option grant to purchase 60,000 shares of Common
Stock at $6.00 per share. On July 15, 1996, Mr. Cosgrove received an option
grant to purchase 26,650 shares of Common Stock at $13.00 per share. Both Ms.
Luster's and Mr. Cosgrove's options have a ten-year term and vest 20% per year
for five years.
In November 1996, Mr. Bechtle and Mr. Cosgrove received option grants to
purchase 300,000 and 37,500 shares of Common Stock, respectively, at an exercise
price of $16.67 per share. Mr. Bechtle's options vest 20% immediately on the
date of grant and 20% per year thereafter for the next four years. Mr.
Cosgrove's have a ten year term and vest 20% per year for the next five years.
EMPLOYEE BENEFITS. Executives also participate in the Company's broad-based
employee benefits program which includes a 401(k) plan, group medical and dental
coverage, group life insurance and other benefit plans.
DISCUSSION OF THE COMMITTEE'S POLICY REGARDING QUALIFYING COMPENSATION FOR
DEDUCTIBILITY UNDER SECTION 162(M) OF THE INTERNAL REVENUE CODE.
Tax legislation known as the Omnibus Budget Reconciliation Act of 1993
("OBRA") created a new Code subsection 162(m), under which the allowable
deduction for compensation paid or accrued with respect to the chief executive
officer and each of the four most highly compensated executive officers of a
publicly held corporation is limited to no more than $1 million per year for
taxable years on or after January 1, 1994. Certain types of compensation are
exempted from this deduction limitation, including payments subject to: (a) the
attainment of an objective performance goal or goals; (b) an outside director
requirement; and (c) a stockholder approval requirement.
It is the policy of the Committee to establish a competitive executive
compensation program and to design and administer incentive plans which relate
directly to the Company's overall performance and the individual executive's
specific contribution.
In light of OBRA, it is the policy of the Committee to modify where
necessary the executive compensation plans so as to maximize the tax
deductibility of compensation paid to its executive officers, and the Committee
does not anticipate paying any compensation in 1996 that is not fully tax
deductible. Accordingly, the 1995 Stock Option Plan includes a fixed limit on
the number of options that may be granted to any individual in any given year.
13
<PAGE>
This report is furnished by the members of the Committee:
Ira D. Cohen
John L. Corse
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The current members of the Compensation Committee of the Board of Directors
are Mr. Corse and Mr. Cohen, neither of whom is an executive officer or employee
of the Company. See "Certain Transactions--The Repurchase Transactions" and
"Certain Transactions--The Recapitalization."
PERFORMANCE GRAPH
The performance graph set forth below compares the cumulative total
shareholder return on the Company's Stock with the S&P 500 Index and an Industry
Group Index for the period from June 1, 1995 through January 31, 1997. The graph
assumes the investment of $100 at the close of trading on May 31, 1995 in the
Company's Common Stock, the S & P 500 Index and the Industry Group Index and
assumes re-investment of all dividends, if any. The industry group consists of
the following companies selected on the basis of the similar nature of their
business: DeVry, Inc., Whitman Education Group, Inc., ITT Educational Services,
Inc., Education Management Corporation and Education Medical, Inc. The Company
believes that, including itself, these companies represent the majority of the
market value of publicly traded companies whose primary business is vocational
education and training. The Company's Common Stock commenced trading on the
Nasdaq Stock Market on May 31, 1995.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
THE COMPANY S&P 500 INDUSTRY GROUP
<S> <C> <C> <C>
1995 $100.00 $100.00 $100.00
1996 114.68 121.09 154.52
1997 380.08 152.99 293.36
</TABLE>
COMPARISON OF CUMULATIVE TOTAL RETURN
S & P 500 INDEX AND INDUSTRY GROUP INDEX
<TABLE>
<CAPTION>
JANUARY 31,
JUNE 1, 1995 1997
--------------- ---------------
<S> <C> <C>
The Company........................................................................ $ 100 $ 380.08
S&P 500 Index...................................................................... $ 100 $ 152.99
Industry Group Index............................................................... $ 100 $ 293.36
</TABLE>
14
<PAGE>
SECURITY OWNERSHIP
The following table sets forth, as of April 30, 1997, the number of shares
of the Company's Common Stock owned by (i) any person (including any group)
known by management to beneficially own more than 5% of the Company's Common
Stock, (ii) each Director of the Company and nominee for Director, (iii) each of
the executive officers of the Company named in the Summary Compensation Table
and (iv) all Directors and executive officers as a group. Unless otherwise
indicated in a footnote, each individual or group possesses sole voting and
investment power with respect to the shares indicated as beneficially owned.
<TABLE>
<CAPTION>
PERCENTAGE OF
NUMBER OF SHARES OUTSTANDING SHARES
NAME AND ADDRESS OF BENEFICIAL OWNER OWNED(1) OWNED(1)
- - --------------------------------------------------------------------------- ----------------- ------------------
<S> <C> <C>
General Atlantic Entities (2).............................................. 1,777,359 22.7%
125 East 56th Street
New York, NY 10022
Putnam Investments, Inc. (3)............................................... 1,055,063 13.5%
One Post Office Square
Boston, MA 02109
Fidelity Investments (4)................................................... 830,550 10.6%
82 Devonshire Street
Boston, MA 02109-3614
Janus Capital Corporation (5).............................................. 600,000 7.7%
100 Fillmore Street
Denver, CO 80206-4923
National Westminster Bank PLC (6).......................................... 427,500 5.5%
41 Lothbury
London EC2P 2BP
England
Harry H. Gaines............................................................ 207,597 2.7%
35 Maher Lane
Newtown, PA 18940
Ira D. Cohen (7)........................................................... 17,120 *
Stephen P. Reynolds (8).................................................... 1,788,879 22.8%
John L. Corse (9).......................................................... 21,345 *
Ralph W. Clark (10)........................................................ 10,845 *
Reid R. Bechtle (11)....................................................... 263,854 3.4%
Charles L. Cosgrove (12)................................................... 17,657 *
Susan L. Luster (13)....................................................... 12,000 *
All Directors and executive officers as a group (8 persons) (14)........... 2,339,297 29.9%
</TABLE>
- - ------------------------
* Less than 1%
(1) Each stockholder possesses sole voting and investment power with respect to
the shares listed, except as otherwise noted. Amounts shown include shares
issuable within the 60-day period following April 30, 1997 pursuant to the
exercise of options.
(2) This information based on Schedules 13G received by the Company on or about
February 14, 1997. Includes 858,189 shares held by General Atlantic
Corporation ("GAC"), which retains sole voting power with respect to such
shares, 903,032 shares held by General Atlantic Partners II, L.P. ("GAP")
and 16,138 shares held by GAP-CLC Partners, L.P. ("GAP-CLC") (collectively,
the "General Atlantic Entities"). The General Atlantic Entities retain
shared voting power with respect to the shares held by
15
<PAGE>
GAP and GAP-CLC. Stephen P. Reynolds, a Director of the Company, is a
limited partner in GAP-CLC and a managing member of GAP and disclaims
beneficial ownership of shares owned by the General Atlantic Entities.
(3) This information based on Schedule 13G received by the Company on or about
January 31, 1997.
(4) This information based on Schedule 13G filed with the Securities and
Exchange Commission on March 10, 1997.
(5) This information based on Schedule 13G filed with the Securities and
Exchange Commission on or about February 10, 1997.
(6) This information based on Schedule 13G filed with the Securities and
Exchange Commission on or about February 12, 1997.
(7) Includes 2,325 shares issuable pursuant to the exercise of Director options
within 60 days after April 30, 1997.
(8) Includes all of the shares referenced in note (2) above, Mr. Reynolds, a
Director of the Company, is a managing member of GAP and a limited partner
of GAP-CLC. Mr. Reynolds disclaims beneficial ownership of all of such
shares. Also includes 7,020 shares issuable pursuant to the exercise of
Director options within 60 days after April 30, 1997.
(9) Includes 9,345 shares issuable pursuant to the exercise of Director options
within 60 days after April 30, 1997.
(10) Includes 9,345 shares issuable pursuant to the exercise of Director options
within 60 days after April 30, 1997.
(11) Includes 263,854 shares issuable pursuant to the exercise of options within
60 days after April 30, 1997.
(12) Includes 17,657 shares issuable pursuant to the exercise of options within
60 days after April 30, 1997.
(13) Includes 12,000 shares issuable pursuant to the exercise of options within
60 days after April 30, 1997.
(14) Includes 321,546 shares issuable pursuant to the exercise of options within
60 days after April 30, 1997. See note (2) and notes (7) through (13) above.
STOCKHOLDER PROPOSALS FOR 1998 ANNUAL MEETING
The date by which stockholder proposals must be received by the Company for
inclusion in proxy material relating to the 1998 Annual Meeting of Stockholders
is March 12, 1998.
By Order of the Board of Directors
Charles L. Cosgrove, Secretary
June 6, 1997
16
<PAGE>
COMPUTER LEARNING CENTERS, INC.
EMPLOYEE STOCK PURCHASE PLAN
The purpose of this Plan is to provide eligible employees of Computer
Learning Centers, Inc. (the "Company") and certain of its subsidiaries with
opportunities to purchase shares of the Company's common stock, $.01 par value
(the "Common Stock"), commencing on August 1, 1997. Two hundred thousand
(200,000) shares of Common Stock in the aggregate have been approved for this
purpose.
1. ADMINISTRATION. The Plan will be administered by the Company's Board of
Directors (the "Board") or by a Committee appointed by the Board (the
"Committee"). The Board or the Committee has authority to make rules and
regulations for the administration of the Plan and its interpretation and
decisions with regard thereto shall be final and conclusive.
2. ELIGIBILITY. Participation in the Plan will neither be permitted nor
denied contrary to the requirements of Section 423 of the Internal Revenue Code
of 1986, as amended (the "Code"), and regulations promulgated thereunder. All
employees of the Company, including Directors who are employees, and all
employees of any subsidiary of the Company (as defined in Section 424(f) of the
Code) designated by the Board or the Committee from time to time (a "Designated
Subsidiary"), are eligible to participate in any one or more of the offerings of
Options (as defined in Section 9) to purchase Common Stock under the Plan
provided that:
(a) they are regularly employed by the Company or a Designated
Subsidiary for more than 20 hours a week and for more than five months in a
calendar year; and
(b) they have been employed by the Company or a Designated Subsidiary
for at least 12 months prior to enrolling in the Plan; and
(c) they are employees of the Company or a Designated Subsidiary on the
first day of the applicable Plan Period (as defined below).
No employee may be granted an option hereunder if such employee, immediately
after the option is granted, owns 5% or more of the total combined voting power
or value of the stock of the Company or the subsidiary. For purposes of the
preceding sentence, the attribution rules of Section 424 (d) of the Code shall
apply in determining the stock ownership of an employee, and all stock which the
employee has a contractual right to purchase shall be treated as stock owned by
the employee.
3. OFFERINGS. The Company will make one or more offerings ("Offerings") to
employees to purchase stock under this Plan. Offerings will begin each February
1, or the first business day thereafter (the "Offering Commencement Dates").
Each Offering Commencement Date will begin a 12 month period (a "Plan Period")
during which payroll deductions will be made and held for the purchase of Common
Stock at the end of the Plan Period. The Board or the Committee may, at its
discretion, choose a different Plan Period of twelve (12) months or less for
subsequent offerings.
The Board has approved the initial offering period, subject to the Plan
being approved by stockholders, of August 1, 1997 through January 31, 1998.
Thereafter, the offering period unless changed by the Board or Committee will be
a twelve month period beginning February 1, and ending January 31.
4. PARTICIPATION. An employee eligible on the Offering Commencement Date of
any Offering may participate in such Offering by completing and forwarding a
payroll deduction authorization form to the Corporate Human Resources Department
at least 30 days prior to the applicable Offering Commencement Date. The form
will authorize a regular payroll deduction from the Compensation received by the
employee during the Plan Period. Unless an employee files a new form or
withdraws from the Plan, his deductions and purchases will continue at the same
rate for future Offerings under the Plan as long as the Plan remains in effect.
The term "Compensation" means the amount of money reportable on the employee's
Federal Income Tax Withholding Statement, excluding (overtime, shift premium,
incentive or bonus awards, allowances for travel expenses, income or gains on
the exercise of Company stock options or
2
<PAGE>
stock appreciation rights, and similar items, whether or not shown on the
employee's Federal Income Tax Withholding Statement, but including, in the case
of salespersons, sales commissions to the extent determined by the Board of the
Committee).
5. DEDUCTIONS. The Company will maintain payroll deduction accounts for all
participating employees. With respect to any Offering made under this Plan, an
employee may authorize a payroll deduction in any whole percentage from 1% to
10% of the Compensation he or she receives during the Plan Period or such
shorter period during which deductions from payroll are made. The deduction
percentages will be converted to fixed dollar amounts and rounded down to the
nearest whole dollar.
No employee may be granted an Option (as defined in Section 9) which permits
his rights to purchase Common Stock under this Plan and any other purchase plan
of the Company and its subsidiaries, to accrue at a rate which exceeds $25,000
of the fair market value of such Common Stock (determined at the Offering
Commencement Date of the Plan Period) for each calendar year in which the Option
is outstanding at any time.
6. DEDUCTION CHANGES. An employee may discontinue his payroll deduction
during any Plan Period, by filing a new payroll deduction authorization form. An
employee may not increase his payroll deduction during a Plan Period. If an
employee elects to discontinue his payroll deductions during a Plan Period, but
does not elect to withdraw his funds pursuant to Section 8 hereof, funds
deducted prior to his election to discontinue will be applied to the purchase of
Common Stock on the Exercise Date (as defined below).
7. INTEREST. Interest will not be paid on any employee accounts, except to
the extent that the Board or the Committee, in its sole discretion, may elect in
the future to credit employee accounts with interest at such per annum rate as
it may from time to time determine.
8. WITHDRAWAL OF FUNDS. An employee may at any time prior to the close of
business on the last business day in a Plan Period and for any reason
permanently draw out the balance accumulated in the employee's account and
thereby withdraw from participation in an Offering. Partial withdrawals are not
permitted. The employee may not begin participation again during the remainder
of the Plan Period. The employee may participate in any subsequent Offering in
accordance with terms and conditions established by the Board or the Committee,
except that employees who are also directors or officers of the Company within
the meaning of Section 16 of the Securities Exchange Act of 1934 (the "Exchange
Act") and the rules promulgated there under may not participate again for a
period of at least six months as provided in Rule 16b--3 (d) (2) (i) or any
successor provision.
9. PURCHASE OF SHARES. On the Offering Commencement Date of each Plan
Period, the Company will grant to each eligible employee who is then a
participant in the Plan an option ("Option") to purchase on the last business
day of such Plan. In no event may an employee purchase in any one Offering
Period, a number of shares which is more than 15% of the employee's annualized
base pay divided by 85% of the market value of a share of Common Stock on the
Commencement date of the offering period.
The purchase price for each share purchased will be 85% of the closing price
of the Common Stock on (i) the first business day of such Plan Period or (ii)
the Exercise Date, whichever closing price shall be less. Such closing price
shall be (a) the closing price on any national securities exchange on which the
Common Stock is listed, (b) the closing price of the Common Stock on the Nasdaq
National Market or (c) the average of the closing bid and asked prices in the
over-the-counter-market, whichever is applicable, as published in THE WALL
STREET JOURNAL. If no sales of Common Stock were made on such a day, the price
of the Common Stock for purposes of clauses (a) and (b) above shall be the
reported price for the next preceding day on which sales were made.
Each employee who continues to be a participant in the Plan on the Exercise
Date shall be deemed to have exercised his Option at the Option Price on such
date and shall be deemed to have purchased from the Company the number of full
shares of Common Stock reserved for the purpose of the Plan that his accumulated
payroll deductions on such date will pay for pursuant to the formula set forth
above (but not in excess of the maximum number determined in the manner set
forth above).
3
<PAGE>
Any balance remaining in an employee's payroll deduction account at the end
of a Plan Period which is less than the purchase price of one share of Common
Stock will be carried forward into the employee's payroll deduction account for
the following Offering, unless the employee elects not to participate in the
following Offering under the Plan, in which case the balance in the employee's
account shall be refunded.
10. ISSUANCE OF CERTIFICATES. Certificates representing shares of Common
Stock purchased under the Plan may be issued only in the name of the employee,
in the name of the employee and another person of legal age as joint tenants
with rights of survivorship, or (in the Company's sole discretion) in the street
name of a brokerage firm, bank or other nominee holder designated by the
employee.
11. RIGHTS ON RETIREMENT, DEATH OR TERMINATION OF EMPLOYMENT. In the event
of a participating employee's termination of employment prior to the last
business day of a Plan Period, no payroll deduction shall be taken from any pay
due and owing to an employee and the balance in the employee's account shall be
paid to the employee or, in the event of the employee's death, (a) to a
beneficiary previously designated in a revocable notice signed by the employee
(with any spousal consent required under state law) or (b) in the absence of
such a designated beneficiary, to the executor or administrator of the
employee's estate or (c) if no such executor or administrator has been appointed
to the knowledge of the Company, to such other person(s) as the Company may, in
its discretion, designate. If, prior to the last business day of the Plan
Period, the Designated Subsidiary by which an employee is employed shall cease
to be a subsidiary of the Company, or if the employee is transferred to a
subsidiary of the Company that is not a Designated Subsidiary, the employee
shall be deemed to have terminated employment for the purpose of this Plan.
12. OPTIONEES NOT STOCKHOLDERS. Neither the granting of an Option to an
employee nor the deductions from his pay shall constitute such employee a
stockholder of the shares of Common Stock covered by an Option under this Plan
until such shares have been purchased by and issued to him.
13. RIGHTS NOT TRANSFERABLE. Rights under this Plan are not transferable by
a participating employee other than by will or the laws of descent and
distribution, and are exercisable during the employee's lifetime only by the
employee.
14. APPLICATION OF FUNDS. All funds received or held by the Company under
this Plan may be combined with other corporate funds and may be used for any
corporate purpose.
15. ADJUSTMENT IN CASE OF CHANGES AFFECTING COMMON STOCK. In the event of a
subdivision of outstanding shares of Common Stock, or the payment of dividend in
Common Stock, the number of shares approved for this Plan, and the share
limitation set forth in Section 9, shall be increased proportionately, and such
other adjustment shall be made as may be deemed equitable by the Board or the
Committee. In the event of any other change affecting the Common Stock, such
adjustment shall be made as may be deemed equitable by the Board or the
Committee to give proper effect to such event.
16. MERGER. If the Company shall at any time merge or consolidate with
another corporation and the holders of the capital stock of the Company
immediately prior to such merger or consolidation continue to hold at least 80%
by voting power of the capital stock of the surviving corporation ("Continuity
of Control"), the holder of each Option then outstanding will thereafter be
entitled to receive at the next Exercise Date upon the exercise of such Option
for each share as to which such Option shall be exercised the securities or
property which a holder of one share of the Common Stock was entitled to upon
and at the time of such merger, and the Committee shall take such steps in
connection with such merger as the Committee shall deem necessary to assure that
the provisions of Paragraph 15 shall thereafter be applicable, as nearly as
reasonably may be, in relation to the said securities or property as to which
such holder of such Option might thereafter be entitled to receive thereunder.
In the event of a merger or consolidation of the Company with or into
another corporation which does not involve Continuity of Control, or of a sale
of all or substantially all of the assets of the Company while unexercised
Options remain outstanding under the Plan, (a) subject to the provisions of
clauses (b) and (c), after the effective date of such transaction, each holder
of an outstanding Option shall be entitled, upon exercise of such Option, to
receive in lieu of shares of Common Stock, shares of such Stock or other
4
<PAGE>
securities as the holders of shares of Common Stock received pursuant to the
terms of such transactions; or (b) all outstanding Options may be cancelled by
the Board or the Committee as of a date prior to the effective date of any such
transaction and all payroll deductions shall be paid out to the participating
employees; or (c) all outstanding Options may be cancelled by the Board or the
Committee as of the effective date of any such transaction, provided that notice
of such cancellation shall be given to each holder of an Option, and each holder
of an Option shall have the right to exercise such Option in full based on
payroll deductions then credited to his account as of a date determined by the
Board or the Committee, which date shall not be less than ten (10) days
preceding the effective date of such transaction.
17. AMENDMENT OF THE PLAN. The Board may at any time, and from time to time,
amend this Plan in any respect, except that (a) if the approval of any such
amendment by the shareholders of the Company is required by Section 423 of the
Code or by Rule 16b-3 under the Exchange Act, such amendment shall not be
effected without such approval, and (b) in no event may any amendment be made
which would cause the Plan to fail to comply with Section 16 of the Exchange Act
and the rules promulgated thereunder, as in effect from time to time, or Section
423 of the Code.
18. INSUFFICIENT SHARES. In the event that the total number of shares of
Common Stock specified in elections to be purchased under any Offerings plus the
number of shares purchased under previous Offerings under this Plan exceeds the
maximum number of shares issuable under this Plan, the Board or the Committee
will allot the shares then available on a pro rata basis.
19. TERMINATION OF THE PLAN. This plan may be terminated at any time by the
Board. Upon termination of this Plan all amounts in the accounts of
participating employees shall be promptly refunded.
20. GOVERNMENTAL REGULATIONS. The Company's obligation to sell and deliver
Common Stock under this Plan is subject to listing on a national stock exchange
or quotation on the Nasdaq National Market and the approval of all governmental
authorities required in connection with the authorization, issuance or sale of
such stock.
The Plan shall be governed by Delaware law except to the extent that such
law is preempted by federal law.
The Plan is intended to comply with the provisions of Rule 16b-3 promulgated
under the Securities Exchange Act of 1934. Any provision inconsistent with such
Rule shall to that extent be inoperative and shall not affect the validity of
the Plan.
21. ISSUANCE OF SHARES. Shares may be issued upon exercise of an Option from
authorized but unissued Common Stock, from shares held in the treasury of the
Company, or from any other proper source.
22. NOTIFICATION UPON SALE OF SHARES. Each employee agrees, by entering the
Plan, to promptly give the Company notice of any disposition of shares purchased
under the Plan where such disposition occurs within two years after the date of
grant of the Option pursuant to which such shares were purchased.
23. EFFECTIVE DATE AND APPROVAL OF SHAREHOLDERS. The Plan shall take effect
on August 1, 1997 subject to approval by the shareholders of the Company as
required by Rule 16b-3 under the Exchange Act and by Section 423 of the Code,
which approval must occur within twelve months of the adoption of the Plan by
the Board.
Adopted by the Board of Directors
on March 13, 1997
Approved by the stockholders on
, 199
5
<PAGE>
COMPUTER LEARNING CENTERS, INC.
1995 NON-EMPLOYEE DIRECTORS STOCK OPTION PLAN
1. PURPOSE. The purpose of this 1995 Non-Employee Directors Stock Option Plan
(the "Plan") of Computer Learning Centers, Inc. (the "Company") is to encourage
stock ownership in the Company by outside directors of the Company whose
continued services are considered essential to the Company's future success and
to provide them with a further incentive to remain as directors of the Company.
2. ADMINISTRATION. The Board of Directors of Computer Learning Centers, Inc.
(the "Board") shall supervise and administer the Plan. Grants of stock options
under the Plan and the amount and nature of the options to be granted shall be
automatic in accordance with Section 5. However, all questions concerning
interpretation of the Plan or any options granted under it shall be resolved by
the Board and such resolution shall be final and binding upon all persons having
an interest in the Plan.
3. PARTICIPATION IN THE PLAN. Directors of the Company who are not employees
of the Company or any subsidiary of the Company ("outside directors") shall be
eligible to receive options under the Plan.
4. STOCK SUBJECT TO THE PLAN.
(a) The maximum number of shares of the Company's Common Stock, par value
$.01 per share ("Common Stock"), which may be issued under the Plan shall be
105,267 shares, subject to adjustment as provided in Section 7.
(b) If any outstanding option under the Plan for any reason expires or is
terminated without having been exercised in full, the shares covered by the
unexercised portion of such option shall again become available for issuance
pursuant to the Plan.
(c) All options granted under the Plan shall be non-statutory options not
under Section 422 of the Internal Revenue Code of 1986, as amended (the "Code").
5. TERMS, CONDITIONS AND FORM OF OPTIONS. Each option granted under the Plan
shall be evidenced by a written agreement in such form as the Chairman of the
Board of Directors shall from time to time approve, which agreement shall comply
with and be subject to the following terms and conditions:
(a) Option Grant Dates and Shares Subject to Option.
(i) GRANTS UPON ELECTION AT ANNUAL MEETING. An option to purchase
11,000 shares of Common Stock shall be granted automatically to each
person who becomes an outside director of the Company on the date
following the Annual Meeting at which such outside director is elected
for a three-year term to the Board. Such option shall vest in three as
nearly equal whole share increments as possible on the first, second and
third anniversary of grant; if an optionee ceases to be a director prior
to any of such anniversary dates, the option shall be exercisable only
with respect to the vested portion of the option.
(ii) OTHER GRANTS. Any outside director elected or appointed to fill
a vacancy on the Board for less than a three-year term shall be granted
an option effective as of the date of such election to purchase a number
of shares of Common Stock equal to 11,000 multiplied by a fraction, the
numerator of which is the number of years (rounding any fraction of a
year up to the next whole number) remaining in such director's term and
the denominator of which is three. Such option shall vest over such
period and in such amounts, if any, as may be determined by the Board of
Directors.
(b) OPTION EXERCISE PRICE. The option exercise price per share for each
option granted under the Plan shall be equal to the fair market value per share
of Common Stock on the date of grant, which shall be determined as follows: (i)
if the Common Stock is listed on the Nasdaq National Market or another
nationally recognized exchange or trading system as of the date on which a
determination of fair market value is to be made, the fair market value per
share shall be deemed to be the last reported sale price per share of Common
Stock thereon on such date (or, if no such price is reported on such date, such
price on the nearest preceding date on which such a price is reported); and (ii)
if the Common Stock is not listed on
<PAGE>
the Nasdaq National Market or another nationally recognized exchange or trading
system as of the date on which a determination of fair market value is to be
made, the fair market value per share shall be deemed to be the book value per
share of the Common Stock as of the end of the most recent fiscal quarter
preceding such date.
(c) OPTIONS NON-TRANSFERABLE. To the extent required to qualify for the
exemption provided by Rule 16b-3 under the Securities Exchange Act of 1934, each
option granted under the Plan by its terms shall not be transferable by the
optionee otherwise than by will or the laws of descent and distribution or
pursuant to a qualified domestic relations order (as defined in the Code), and
shall be exercised during the lifetime of the optionee only by the optionee or
his or her legal representative. No option or interest therein may be
transferred, assigned, pledged or hypothecated by the optionee during his or her
lifetime, whether by operation of law or otherwise, or be made subject to
execution, attachment or similar process.
(d) EXERCISE PERIOD. Each option may be exercised at any time and from time
to time, in whole or in part, prior to the tenth anniversary of the date of
grant, except that no option may be exercised more than six months after the
optionee ceases to serve as a director of the Company.
(e) TERMINATION. Each option shall terminate, and may no longer be
exercised, on the earlier of (i) the date 10 years after the date of grant or
(ii) the date one year after the optionee ceases to serve as a director of the
Company for any reason, whether by death, resignation, removal or otherwise.
(f) EXERCISE PROCEDURE. An option may be exercised only by written notice to
the Company at its principal office accompanied by payment in cash of the full
consideration for the shares as to which the option is exercised.
(g) EXERCISE BY REPRESENTATIVE FOLLOWING DEATH OF DIRECTOR. An optionee, by
written notice to the Company, may designate one or more persons (and from time
to time change such designation), including his or her legal representative,
who, by reason of the optionee's death, shall acquire the right to exercise all
or a portion of the option. If the person or persons so designated wish to
exercise any portion of the option, they must do so within the term of the
option as provided herein. Any exercise by a representative shall be subject to
the provisions of the Plan.
6. LIMITATION OF RIGHTS.
(a) NO RIGHT TO CONTINUE AS A DIRECTOR. Neither the Plan, nor the
granting of an option nor any other action taken pursuant to the Plan, shall
constitute or be evidence of any agreement or understanding, express or
implied, that the optionee shall be entitled to continue as a director for
any period of time.
(b) NO STOCKHOLDER RIGHTS FOR OPTIONS. An optionee shall have no rights
as a stockholder with respect to the shares covered by his or her option
until the date of the issuance to him or her of a stock certificate
therefor, and no adjustment will be made for dividends or other rights
(except as provided in Section 7) for which the record date is prior to the
date such certificate is issued.
7. ADJUSTMENT PROVISIONS FOR MERGERS, RECAPITALIZATIONS AND RELATED
TRANSACTIONS.
If, through or as a result of any merger, consolidation, reorganization,
recapitalization, reclassification, stock dividend, stock split, reverse stock
split or other similar transaction, (i) the outstanding shares of Common Stock
are exchanged for a different number or kind of securities of the Company or of
another entity, or (ii) additional shares or new or different shares or other
securities of the Company or of another entity are distributed with respect to
such shares of Common Stock, the Board shall make an appropriate and
proportionate adjustment in (x) the maximum number and kind of shares reserved
for issuance under the Plan, (y) the number and kind of shares or other
securities subject to then outstanding options under the Plan, and/or (z) the
price for each share subject to any then outstanding options under the Plan
(without changing the aggregate purchase price for such options), to the end
that each option shall be exercisable, for the same aggregate exercise price,
for such securities as such optionholder would have held
2
<PAGE>
immediately following such event if he or she had exercised such option
immediately prior to such event. No fractional shares will be issued under the
Plan on account of any such adjustments.
8. MODIFICATION, EXTENSION AND RENEWAL OF OPTIONS.
The Board shall have the power to modify or amend outstanding options;
provided, however, that no modification or amendment may (i) have the effect of
altering or impairing any rights or obligations of any option previously granted
without the consent of the optionee, or (ii) modify the number of shares of
Common Stock subject to the option (except as provided in Section 7).
9. TERMINATION AND AMENDMENT OF THE PLAN.
The Board may suspend, terminate or discontinue the Plan or amend it in any
respect whatsoever; provided, however, that without approval of the stockholders
of the Company, no amendment may (i) increase the number of shares subject to
the Plan (except as provided in Section 7), (ii) materially modify the
requirements as to eligibility to receive options under the Plan, or (iii)
materially increase the benefits accruing to participants in the Plan; and
provided further that the Board may not amend the provisions of Sections 3 or 5,
insofar as they relate to the amount, price and timing of options to be granted
hereunder, more frequently than once every six months, other than to comply with
changes in the Code or the rules thereunder.
10. NOTICE.
Any written notice to the Company required by any of the provisions of the
Plan shall be addressed to the Treasurer of the Company and shall become
effective when it is received.
11. GOVERNING LAW.
The Plan and all determinations made and actions taken pursuant hereto shall
be governed by the laws of the State of Delaware.
12. STOCKHOLDER APPROVAL.
The Plan is conditional upon approval by the Company's stockholders of the
Plan within one year from its date of adoption by the Board. No option under the
Plan may be exercised until such stockholder approval is obtained, and the Plan
and all options granted under the Plan shall be null and void if the Plan is not
so approved by the Company's stockholders.
Adopted by the Board
March 14, 1995
Approved by the Stockholders
April 17, 1995
Amended by the Board
March 13, 1997
3
<PAGE>
COMPUTER LEARNING CENTERS, INC.
Proxy for Annual Meeting of Stockholders to be held July 10, 1997
The undersigned, having received notice of the meeting and management proxy
statement therefor, and revoking all prior proxies, hereby appoints Reid R.
Bechtle and Charles L. Cosgrove, and each of them, as Proxies, each with the
power to appoint his substitute, and hereby authorizes them, to represent and
vote, as designated below, all shares of Common Stock of Computer Learning
Centers, Inc. (the "Company") which the undersigned would be entitled to vote
if personally present at the Annual Meeting of Stockholders to be held on
July 10, 1997 or any adjournment thereof.
In their discretion, the Proxies are authorized to vote upon such other
matters as may properly come before the meeting or any adjournment thereof.
Attendance of the undersigned at the meeting or any adjournment thereof will
not be deemed to revoke this proxy unless the undersigned shall revoke this
proxy in writing.
(To be Signed on Reverse Side.)
<PAGE>
/x/ Please mark your
votes as in this
example.
<TABLE>
<CAPTION>
WITHHOLD AUTHORITY
to vote for
all nominees
For listed below For Against Abstain
<S> <C> <C> <C> <C> <C> <C> <C>
/ / / / / /
Proposal 1: / / / / Nominees: Ira D. Cohen Proposal 2:
To elect two Stephen P. Reynolds Proposal to approve an amendment
Class II Directors to the Company's Certificate
to serve until the of Incorporation increasing
2000 Annual from 10,000,000 to 35,000,000
Meeting of the aggregate number of common
Stockholders shares authorized for issuance.
FOR all nominees listed (except as marked to the contrary listed below) Proposal 3: / / / / / /
- - ---------------------------------------------------------------------- Proposal to approve the Company's
1997 Employee Stock Purchase Plan.
Proposal 4: / / / / / /
Proposal to approve amendments to
the Company's 1995 Non-Employee
Directors Stock Option Plan.
Proposal 5: / / / / / /
Proposal to ratify the selection
of Price Waterhouse LLP to serve
as the Company's independent
accountants for fiscal 1998.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS. THIS PROXY WILL
BE VOTED AS DIRECTED. IN THE ABSENCE OF DIRECTIONS, THIS PROXY WILL BE VOTED
FOR THE DIRECTORS NAMED ABOVE, AND FOR PROPOSALS 2, 3, 4 AND 5.
STOCKHOLDERS ARE URGED TO DATE, MARK, SIGN AND RETURN THIS PROXY PROMPTLY IN
THE ENVELOPE PROVIDED, WHICH REQUIRES NO POSTAGE IF MAILED WITHIN THE UNITED
STATES.
</TABLE>
Signature(s) DATE
----------------------------- ----------------------------
Note: Please sign exactly as name or names appear on Stock Certificates
(as indicated hereon).
