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PROSPECTUS
Filed Pursuant to Rule 424B3
File No 333-44729
1,030,067 SHARES
COMPUTER LEARNING CENTERS, INC.
COMMON STOCK
----------------
All of the shares of common stock, par value $.01 per share ("Common
Stock"), of Computer Learning Centers, Inc. (the "Company") offered hereby (the
"Shares") are being sold by certain current or future stockholders of the
Company (the "Selling Stockholders"). See "Selling Stockholders." The shares
covered by this Prospectus were issued to the Selling Stockholders in connection
with the purchase of substantially all of the rights, title and interest in the
assets of, and assumption of substantially all of the liabilities of Markerdowne
Corporation ("Markerdowne"), completed on February 17, 1998, and the purchase of
all of the outstanding shares of Delta College Inc. ("Delta College"), completed
on February 20, 1998.
The Company will bear all expenses incurred in effecting the registration of
the Shares covered by this Prospectus, including all registration and filing
fees, listing fees and fees and expenses of counsel and accountants for the
Company but excluding (i) any brokerage fees, selling commissions or
underwriting discounts incurred by the Selling Stockholders in connection with a
sale under the Registration Statement of which this Prospectus is a part and
(ii) the fees and expenses of any counsel retained by the Selling Stockholders.
The Shares covered by this Prospectus may be sold from time to time by the
Selling Stockholders, or by their pledgees, donees, transferees or other
successors in interest, on the Nasdaq National Market, in the over the counter
market, through the writing of options on the Shares, in ordinary brokerage
transactions, in negotiated transactions, or otherwise, at market prices
prevailing at the time of sale or at negotiated prices. See "Plan of
Distribution".
The Selling Stockholders and intermediaries through whom the Shares are sold
may be deemed "underwriters" within the meaning of Securities Act of 1933, as
amended (the "Securities Act"), with respect to the Shares offered, and any
profits realized or commissions received may be deemed underwriting
compensation. The Company and the Selling Stockholders have agreed to certain
indemnification arrangements with respect to the offering. See "Plan of
Distribution".
The Common Stock is traded on the Nasdaq National Market under the symbol
"CLCX". On May 21, 1998, the closing sale price of the Common Stock on the
Nasdaq National Market was $16.25 per share.
------------------------
THE COMMON STOCK OFFERED HEREBY INVOLVES A HIGH DEGREE OF RISK. SEE "RISK
FACTORS" BEGINNING ON PAGE 2.
---------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
------------------------
The date of this Prospectus is May 22, 1998
<PAGE>
TABLE OF CONTENTS
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PAGE
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Available Information...................................................................................... 1
Incorporation of Certain Documents by Reference............................................................ 1
Special Note Regarding Forward-Looking Information......................................................... 2
The Company................................................................................................ 2
Risk Factors............................................................................................... 2
Use of Proceeds............................................................................................ 7
The Acquisitions........................................................................................... 7
Selling Stockholders....................................................................................... 7
Plan of Distribution....................................................................................... 8
Legal Matters.............................................................................................. 9
Experts.................................................................................................... 9
</TABLE>
<PAGE>
AVAILABLE INFORMATION
Computer Learning Centers, Inc. (the "Company") is subject to the
informational requirements of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), and in accordance therewith files reports and other
information with the Securities and Exchange Commission (the "Commission").
Reports, proxy statements and other information filed by the Company with the
Commission pursuant to the informational requirements of the Exchange Act may be
inspected and copied at the public reference facilities maintained by the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549 and at the
Commission's regional offices located at 7 World Trade Center, 13th Floor, New
York, New York 10048 and Northwestern Atrium Center, 500 West Madison Street,
Suite 1400, Chicago, Illinois 60661. Copies of such materials also may be
obtained from the Public Reference Section of the Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549 at prescribed rates. The Common Stock of
the Company is traded on the Nasdaq National Market. Reports and other
information concerning the Company may be inspected at the National Association
of Securities Dealers, Inc., 1735 K Street, N.W., Washington, D.C. 20006.
The Company has filed with the Commission a Registration Statement on Form
S-3 with respect to the Shares (herein, together with all amendments and
exhibits, referred to as the "Registration Statement") under the Securities Act
of 1933, as amended (the "Securities Act"). This Prospectus does not contain all
of the information set forth in the Registration Statement and the exhibits and
schedules thereto, as certain items are omitted in accordance with the rules and
regulations of the Commission. For further information pertaining to the Company
and the Shares, reference is made to such Registration Statement and the
exhibits and schedules thereto, which may be inspected without charge at the
office of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, and
copies of which may be obtained from the Commission at prescribed rates. The
Commission also makes electronic filings publicly available in the Internet
within 24 hours of acceptance. The Commission's Internet address is
http://www.sec.gov. The Commission's Web site also contains reports, proxy and
information statements and other information regarding registrants that file
electronically with the Commission.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS IN CONNECTION WITH THIS OFFERING OTHER THAN THOSE CONTAINED IN
THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH OTHER INFORMATION AND
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
COMPANY. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER
SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO
CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT THE
INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN
OFFER TO BUY ANY SECURITIES OTHER THAN THE REGISTERED SECURITIES TO WHICH IT
RELATES OR AN OFFER TO ANY PERSON IN ANY JURISDICTION WHERE SUCH AN OFFER WOULD
BE UNLAWFUL. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A
SOLICITATION OF AN OFFER TO BUY SUCH SECURITIES IN ANY CIRCUMSTANCES IN WHICH
SUCH OFFER OR SOLICITATION IS UNLAWFUL.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Commission are
incorporated herein by reference:
(1) The Company's Annual Report on Form 10-K for the fiscal year ended
January 31, 1998;
(2) The Company's Notice, Proxy Statement and Proxy for the Annual
Meeting of Stockholders held on July 10, 1997, filed with the Commission on
May 30, 1997;
(3) The Company's Current Reports on Form 8-K filed March 16, 1998,
March 10, 1998 and January 20, 1998;
(4) The Company's Registration Statement on Form 8-A filed May 9, 1995,
registering the Common Stock under Section 12(g) of the Exchange Act.
All documents filed by the Company with the Commission pursuant to Sections
13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date hereof and
prior to the termination of the offering of the
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Common Stock registered hereby shall be deemed to be incorporated by reference
into this Prospectus and to be a part hereof from the date of filing such
documents. Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein
or in any other subsequently filed document which also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Prospectus.
The Company will provide without charge to each person to whom this
Prospectus is delivered, upon written or oral request of such person, a copy of
any or all of the documents incorporated by reference into this Prospectus
(without exhibits to such documents other than exhibits specifically
incorporated by reference into such documents). Requests for such copies should
be directed to Computer Learning Centers, Inc., 11350 Random Hills Road, Suite
240, Fairfax, Virginia 22030, Attention: Chief Financial Officer, telephone
(703) 359-9333.
SPECIAL NOTE REGARDING FORWARD-LOOKING INFORMATION
Certain statements in this Prospectus and in the documents incorporated
herein constitute "forward-looking statements" within the meaning of Section 27A
of the Securities Act and Section 2B of the Exchange Act. Without limiting the
foregoing, the words "believes", "anticipates", "plans", "expects" and similar
expressions are intended to identify a forward-looking statement. Any statements
contained herein or incorporated herein that are not statements of historical
fact may be deemed to be forward-looking statements. Such forward looking
statements are made only as of the date of this prospectus. There are a number
of important factors that could cause the results of the Company to differ
materially from those indicated by such forward-looking statements. These
factors include those set forth under the heading "Risk Factors" herein.
THE COMPANY
The Company provides information and computer-related education and training
at Learning Centers in the United States and Canada ("Learning Centers"). The
Company designs programs and courses to meet current information technology
education needs, offering instruction in technologies such as client server,
databases, networking and object-oriented programming. The Company's Advantec
Institutes offer intensive, two-to-six week programs to enhance the skills of
information technology professionals in such areas as Unix System
Administration, C and C ++ and Java and PERL internet programming languages.
The Company was incorporated in Delaware in March 1987. The Company's
principal executive offices are located at 11350 Random Hills Road, Suite 240,
Fairfax, Virginia 22030 and the telephone number is (703) 359-9333.
All share numbers in this Prospectus give effect to the two-for-one stock
split effected by the Company in the form of a stock dividend distributed
January 8, 1998.
RISK FACTORS
THE SHARES OFFERED HEREBY INVOLVE A HIGH DEGREE OF RISK. THE FOLLOWING RISK
FACTORS, SHOULD BE CONSIDERED CAREFULLY IN ADDITION TO THE OTHER INFORMATION
INCLUDED OR INCORPORATED BY A REFERENCE IN THIS PROSPECTUS BEFORE PURCHASING THE
SHARES OFFERED HEREBY.
LITIGATION
On March 10, 1998, the Attorney General of Illinois filed a complaint
against the Company in Circuit Court in Cook County, Illinois, asserting that
the Company had violated the Illinois Private Business and Vocational Schools
Act and the Illinois Consumer Fraud and Deceptive Business Practices Act (the
"Acts") at its Schaumburg, Illinois Learning Center. The complaint alleges that
the Company, at the Schaumburg Learning Center, failed to provide certain
educational services and resources and misrepresented certain
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information respecting services, resources, occupational opportunities and
student outcomes. The complaint seeks suspension of the Schaumburg Center's
charter to operate within Illinois, restitution to persons alleged to have been
injured by the conduct of the Schaumburg Learning Center, costs, civil penalties
totaling $100,000 for violations of the Acts and an additional civil penalty of
$50,000 for each alleged violation of each of the Acts, committed with intent to
defraud. The Company has filed a motion to extend the date to answer or
otherwise plead. As a result of this motion being filed, the Company has been
granted an extension through May 21, 1998 to answer or otherwise plead the
complaint. The Company is unable to estimate the outcome of this matter or any
potential liability.
On March 13, 1998, a class action lawsuit was filed against the Company in
the United States District Court for the Central District of California on
behalf of all purchasers of Company Common Stock from
April 30, 1997 through March 10, 1998. The Company has not yet been served with
the complaint, but has obtained a copy. The complaint alleges violations of the
Securities Exchange Act of 1934, including allegations that the Company is
experiencing "operations difficulties" and failed to disclose the alleged
difficulties. The complaint also alleges that Company insiders realized profits
by trading their shares of Company stock while in possession of material adverse
information. The Company has moved for a change in venue in this litigation. The
Company is unable to estimate the outcome of this matter or any potential
liability.
On or about March 20, 1998, three additional class action lawsuits were
filed against the Company in the United States District Court for the Northern
District of Illinois, Eastern Division. Two of these lawsuits were filed on
behalf of all purchasers of Company Common Stock from April 30, 1997 through
March 10, 1998; the other lawsuit was filed on behalf of all purchasers of
Company Common Stock from June 6, 1997 through March 13, 1998. On April 16,
1998, a class action lawsuit was filed in the United States District Court for
the Northern District of Illinois, Eastern Division, on behalf of all purchasers
of Company Common Stock from March 17, 1997 through March 10, 1998. On May 4,
1998, an additional class action lawsuit was filed against the Company in the
Central District of California, Western Division, on behalf of all purchasers of
Company Common Stock from April 30, 1997 to April 7, 1998. On or about May 12,
1998, an additional class action lawsuit was filed against the Company in the
Eastern District of Virginia. As of May 12, 1998, the Company had been served
with two of these complaints and had obtained copies of the remaining
complaints. The complaints allege violations of the Securities Exchange Act of
1934, and assert claims similar to those described in the preceding paragraph.
The Company has not yet filed answers in any of these matters and is unable to
estimate the outcome of any of these matters or any potential liability.
On May 5, 1998, a class action lawsuit was filed against the Company in the
Superior Court of New Jersey, Bergen County, on behalf of all persons who have
enrolled in a course of study, education or training provided by the Company at
its New Jersey Learning Centers. The complaint alleges that the Company failed
to provide the quality of education it represented and/or promised to provide.
The Company has not yet responded to this complaint, and is unable to estimate
the outcome of the matter or any potential liability.
The Company intends to defend itself vigorously in the above proceedings;
however, there can be no assurance that the Company will be successful in
defending itself in any of these proceedings. Even if the Company prevails on
the merits in such litigation, the Company expects to incur legal and other
defense costs as a result of such proceedings. These proceedings could involve
substantial diversion of the time of some members of management, and an adverse
determination in, or settlement of such litigation could involve the payment of
significant amounts, or could include terms in addition to such payments, which
could have a severe impact on the Company's business, financial condition and
results of operations.
There can be no assurance that additional legal proceedings will not be
filed or that adverse action will not be initiated against the Company, either
by attorneys general of other states, federal or state regulators, an
accrediting organization, or other parties. Any such legal proceedings or
adverse action could have a severe impact on the Company's business, financial
condition and results of operations.
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POTENTIAL ADVERSE EFFECTS OF REGULATION
The Company is dependent on the authorization of the applicable agency or
agencies of each state within which a Learning Center is located to allow it to
operate and to grant degrees or diplomas to students. State authorization is
also required in order for an institution to become and remain eligible to
participate in the Title IV Programs. The Company is subject to extensive and
varying regulation in each of the states in which the Learning Centers currently
operate.
The loss of state authorization by an existing Learning Center or the
failure of a new or newly acquired Learning Center to obtain state authorization
would render the affected Learning Center ineligible to participate in the Title
IV Programs, could affect its accreditation and would have a material adverse
effect on the Company.
As educational institutions that participate in various federal and state
financial aid programs, the Company and the Learning Centers are subject to
extensive governmental regulation. In particular, the Higher Education Act of
1965, as amended ("HEA"), and the regulations promulgated thereunder, subject
the Company, the Learning Centers and all other higher education institutions
eligible to participate in the various Title IV Programs to significant
regulatory scrutiny. The Company's Delta College participates in Quebec's
student financial aid programs administered by the Quebec Loans and Bursaries
Program ("QLBP"). The termination or material limitation of the ability of the
Company or any of the Learning Centers to participate in either the Title IV
Programs or the QLBP would have a material adverse effect on the Company.
Because certain statutory and regulatory provisions impose significant
requirements on the Company and the Learning Centers and because the agency
administering these regulations, the United States Department of Education, has
not fully developed administrative interpretations of certain of the statutory
and regulatory provisions, it is not clear how the requirements imposed by
statute and regulations or other applicable laws, rules or regulations could
have a material adverse effect on the accreditation, authorization to operate in
various states, permissible activities or costs of doing business of the Company
or one or more of the Learning Centers. The failure to maintain or renew any
required regulatory approvals, accreditations or authorizations by the Company,
Delta College or any of the Learning Centers would have a material adverse
effect on the Company.
The violation of federal requirements governing participation in the Title
IV Programs or of state or accrediting agency requirements governing the
provision of educational services by the Company or any Learning Center could
result in the restriction or loss by the Company or a Learning Center of its
ability to participate in government funding programs or to offer education and
training programs. Any such loss or restriction would have a material adverse
effect on the Company. Furthermore, current statutes or regulations or statutory
or regulatory standards that become effective in the future may be applied or
interpreted by the government in ways that will delay or change the Company's
expansion plans or otherwise adversely affect the operation of the Learning
Centers and their participation in the Title IV Programs. In addition, all
government-provided student financial aid programs, including the Title IV
Programs, are subject to the effects of federal and state budgetary processes
and the possible elimination or consolidation of the Department of Education,
and there can be no assurance that government funding for the financial aid
programs in which the Company's students participate will continue to be
available or be maintained at current levels. The loss of funding or a reduction
in funding levels for either the Title IV Programs or the QLBP would have a
material adverse effect on the Company.
CONTROL BY GENERAL ATLANTIC ENTITIES; POTENTIAL ADVERSE REGULATORY EFFECTS OF
CHANGE OF CONTROL
General Atlantic Corporation ("GAC"), General Atlantic Partners II, L.P.
("GAP") and GAP-CLC Partners, L.P. ("GAP-CLC") (collectively, the "General
Atlantic Entities") beneficially own approximately 17.0% of the outstanding
shares of Common Stock. Consequently, the General Atlantic Entities, and GAC in
particular, will continue to have significant influence over the policies and
affairs of the Company and may be in a position to determine the outcome of
corporate actions requiring stockholder approval,
4
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including the election of directors, the adoption of amendments to the Company's
Certificate of Incorporation and the approval of mergers and sales of the
Company's assets.
Because of the control position of the General Atlantic Entities, any
disposition of CLC's common stock by the General Atlantic Entities or issuance
of stock by the Company that results in a loss of control by the General
Atlantic Entities may have material adverse consequences for the Company under
applicable federal and state regulations and accrediting agency requirements,
including potential loss of eligibility to participate in the Title IV Programs.
Upon a change of ownership resulting in a change of control of the Company, as
defined in the HEA and the Department of Education's regulations, each Learning
Center would lose its eligibility to participate in the Title IV Programs for an
indeterminate period of time while it applies to regain eligibility, with the
likely loss of a portion of its Title IV funding during the reapproval period. A
change of control also would have significant regulatory consequences for the
Company at the state level and could affect the accreditation of the Learning
Centers.
The HEA and the Department of Education's regulations include the sale of a
controlling interest of common stock of an institution or its parent corporation
in the definition of a change of control. For a publicly traded corporation such
as the Company, Department of Education regulations specify that a change of
control arises at the same time that a report on Form 8-K is required to be
filed with the Securities and Exchange Commission reporting a change of control.
Most states and accrediting agencies have similar requirements, but they do not
uniformly define a change of control. A change of control of the Company that
exceeds the threshold set by the Department of Education would have a material
adverse effect on the Company.
COMPETITION
The postsecondary adult education and training market is highly fragmented,
with no single institution or company holding a dominant market share. The
Company competes for students with vocational and technical training schools,
degree-granting colleges and universities, continuing education programs and
commercial training programs. Certain public and private colleges may offer
programs similar to those of the Learning Centers at a lower tuition cost due in
part to government subsidies, foundation grants, tax-deductible contributions or
other financial resources not available to proprietary institutions.
DEPENDENCE ON NEW PROGRAMS AND LOCATIONS; RISKS ASSOCIATED WITH CHANGES IN
TECHNOLOGY AND GROWTH
The market for the Company's programs and services is characterized by
rapidly changing requirements and characteristics, and the Company's ability to
develop and offer new programs and services and to open new locations is subject
to extensive state and federal regulation and accrediting agency requirements.
If the Company is unable, for financial, regulatory or other reasons, to develop
and offer new programs and services in a timely manner in response to changes in
the industry, or if programs and services offered by the Company fail to gain or
maintain widespread commercial acceptance, the Company's business may be
materially and adversely affected.
The Company offers training programs and services for rapidly changing
information technology. The introduction of information products embodying new
technologies and the emergence of new information system standards or services
may adversely affect the Company's ability to market its programs and services.
This may require the Company to make substantial expenditures to develop new
programs and services and to acquire new faculty, equipment and facilities. If
the Company is unable, for financial, regulatory or other reasons, to make those
expenditures or acquisitions, the Company's business may be materially and
adversely affected.
The Company's ability to meet its future operating and financial goals will
depend upon the Company's ability to successfully implement its growth strategy,
which will include the introduction of new locations as well as the potential
acquisition of assets and programs complementary to the Company's operations.
The Company's success in this area will depend on its ability to integrate
successfully such new
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locations, assets and businesses. There can be no assurance that the Company
will be able to implement or manage expansion effectively.
DEPENDENCE UPON KEY EMPLOYEES
The Company's success depends to a significant extent upon the continued
service of its executive officers and other key personnel. None of the Company's
executive officers or key employees, other than the President, Chief Executive
Officer and Chief Financial Officer are subject to an employment or non-
competition agreement. The loss of the services of any of its executive officers
or other key employees could have a material adverse effect on the Company. The
Company's future success will depend in part upon its continuing ability to
attract and retain highly qualified personnel. There can be no assurance that
the Company will be successful in attracting and retaining such personnel.
ANTITAKEOVER EFFECT OF CERTAIN CHARTER, BY-LAW AND OTHER PROVISIONS; POSSIBLE
ISSUANCE OF PREFERRED STOCK
Certain provisions of the Company's Amended and Restated Certificate of
Incorporation ("Certificate of Incorporation") and Amended and Restated Bylaws
("Bylaws") may be deemed to have anti-takeover effects and may discourage, delay
or prevent a takeover attempt that might be considered to be in the best
interests of the stockholders of the Company. These provisions, among other
things, (i) classify the Company's Board of Directors into three classes, each
of which serves for different three-year periods, (ii) provide that only the
Board of Directors, Chairman or President may call special meetings of the
stockholders, (iii) establish certain advance notice procedures for nominations
of candidates for election as directors and for stockholder proposals to be
considered at stockholders' meetings, (iv) provide that directors may be removed
by the stockholders only for cause and (v) require a vote of the holders of more
than two-thirds of the shares entitled to vote in order to amend the foregoing
and certain other provisions of the Certificate of Incorporation and Bylaws. In
addition, the Board of Directors, without further action of the stockholders, is
permitted to issue and fix the terms of preferred stock which may have rights
senior to those of the Common Stock. The Company is subject to the "business
combination" provisions of the Delaware General Corporation Law which may be
deemed to have anti-takeover effects and may discourage, delay or prevent a
takeover attempt that might be considered in the best interests of the
stockholders of the Company. The business combination provisions of the Delaware
General Corporation Law will, subject to certain exceptions, prohibit the
Company from engaging in certain "business combinations" with an "interested
stockholder," unless the business combination is approved in a prescribed
manner.
VOLATILITY OF MARKET PRICE
From time to time after this offering, there may be significant volatility
in the market price of the Common Stock. The Company believes that the current
market price of the Common Stock reflects expectations that the Company will be
able to continue to operate its programs profitably and to develop additional
and new programs at a significant rate and operate them profitably. If the
Company is unable to operate its programs profitably or develop programs at a
pace that reflects the expectations of the market, investors could sell shares
of Common Stock at or after the time that it becomes apparent that such
expectations may not be realized, resulting in a decrease in the market price of
the Common Stock. In addition to the operating results of the Company, changes
in earnings estimates by analysts, changes in general conditions in the economy
or the financial markets or other developments affecting the Company or the
educational services industry could cause the market price of the Common Stock
to fluctuate substantially. In recent years, the stock market prices of
securities issued by many companies have fluctuated for reasons unrelated to
their operating performance.
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POSSIBLE LACK OF RESOURCES OF SELLING STOCKHOLDERS
The Selling Stockholders may be deemed to be "underwriters" pursuant to the
Securities Act, and in that regard may become liable to the purchasers of the
Common Stock offered hereby pursuant to the terms of the Securities Act if
certain provisions of the Securities Act are not complied with by them. There
can be no assurance that any of the Selling Stockholders have the financial
resources to discharge any such liability.
USE OF PROCEEDS
The Company will not receive any proceeds from the sale of the Shares by the
Selling Stockholders or by their respective pledgees, donees, transferees or
other successors in interest.
THE ACQUISITIONS
Pursuant to an Asset Purchase Agreement, as amended (the "Markerdowne
Agreement"), the Company purchased substantially all the rights, title and
interest in the assets of, and assumed substantially all of the liabilities of
Markerdowne on February 17, 1998. Under the Markerdowne Agreement, Markerdowne
was issued a total of 510,287 shares of Common Stock. Under the terms of the
Markerdowne Agreement, 10% of such shares (51,029 shares) are to be held in
escrow until February 17, 1999 to satisfy any post-closing adjustments or
indemnification obligations of Makerdowne or its shareholders. Markerdowne has
also agreed not to sell or otherwise dispose of its shares of Common Stock until
such time as the Company shall publicly release a report, such as an earnings
report or periodic report filed with the Commission, taking into account at
least 30 days of combined operations of the Company and Markerdowne. It is
anticipated that Markerdowne will distribute such shares of Common Stock to its
shareholders, Graeme Dorras, Randy Proto and Chris Coutts on or about June 1998.
Pursuant to an Amended and Restated Share Purchase Agreement among the
Company, Computer Learning Centers of Quebec, Inc., Delta College, Roger Matte,
Richard Matte, Marie-Josee Matte, Dominique Matte, Johanne Matte, Suzanne Matte
and Dolmen (1994) Inc. (the "Delta Agreement"), the Company, through its
subsidiary Computer Learning Centers of Quebec, Inc., acquired all of the
outstanding shares of Delta on February 20, 1998. Under the Delta Agreement the
shareholders of Delta College were issued an aggregate of 519,780 Dividend
Access Shares of Computer Learning Centers of Quebec, Inc. Each Dividend Access
Share entitles the holder thereof, subject to the provisions of the Delta
Agreement, to receive one share of Common Stock in exchange for each such
Dividend Access Share. The shareholders of Delta College have agreed not to sell
or otherwise dispose of any Common Stock until such time as the Company shall
have publicly released a report, such as an earnings report or periodic report
filed with the Commission, taking into account at least 30 days of combined
operations of the Company and Delta College.
SELLING STOCKHOLDERS
All of the shares of Common Stock of the Company offered hereby are being
sold by the Selling Stockholders named below. None of the Selling Stockholders
beneficially owns 5% or more of the Company's outstanding Common Stock, and none
of the Selling Stockholders or their respective affiliates has held any office
or maintained any material relationship with the Company or its predecessors or
affiliates over the past three years.
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The following table sets forth information concerning the beneficial
ownership of shares of Common Stock by the Selling Stockholders as of May 15,
1998 and the number of such shares included for sale in this Prospectus,
assuming the sale of all Shares being offered by this Prospectus.
<TABLE>
<CAPTION>
SHARES OWNED PRIOR SHARES SHARES OWNED
SELLING STOCKHOLDERS TO OFFERING OFFERED HEREBY AFTER OFFERING
- -------------------------------------------------------------- ------------------ -------------- -----------------
<S> <C> <C> <C>
Graeme Dorras................................................. 340,209 340,209 --
Randy Proto................................................... 85,039 85,039 --
Chris Coutts.................................................. 85,039 85,039 --
Roger Matte................................................... 24,490 24,490 --
Richard Matte................................................. 14,082 14,082 --
Marie-Josee Matte............................................. 14,082 14,082 --
Dominique Matte............................................... 14,082 14,082 --
Johanne Matte................................................. 14,082 14,082 --
Suzanne Matte................................................. 24,487 24,487 --
Dolmen (1994), Inc............................................ 414,475 414,475 --
</TABLE>
PLAN OF DISTRIBUTION
The Shares may be offered and sold from time to time by the Selling
Stockholders, or by their pledgees, donees, transferees or other successors in
interest. The Selling Stockholders will act independently of the Company in
making decisions with respect to the timing, manner and size of each sale. Such
sales may be made in the over-the-counter market or otherwise, at prices related
to the then current market price or in negotiated transactions, including
pursuant to one or more of the following methods: (a) purchase by a
broker-dealer as principal and resale by such broker or dealer for its account
pursuant to this Prospectus; (b) ordinary brokerage transactions and
transactions in which the broker solicits purchasers; and (c) block trades in
which the broker-dealer so engaged will attempt to sell the shares as agent but
may position and resell a portion of the block as principal to facilitate the
transaction. The Company has been advised by the Selling Stockholders that they
have not made any arrangements relating to the distribution of the Shares
covered by this Prospectus. In effecting sales, broker-dealers engaged by the
Selling Stockholders, or by their pledgees, donees, transferees or other
successors in interest, may arrange for other broker-dealers to participate.
Broker-dealers will receive commissions or discounts from the Selling
Stockholders, or their pledgees, donees transferees or other successors in
interest, in amounts to be negotiated immediately prior to the sale.
In offering the Shares, the Selling Stockholders and any broker-dealers and
any other participating broker-dealers who execute sales for the Selling
Stockholders may be deemed to be "underwriters" within the meaning of the
Securities Act in connection with such sales, and any profits realized by the
Selling Stockholders and the compensation of such broker-dealer may be deemed to
be underwriting discounts and commissions. In addition, any of the Shares which
qualify for sale pursuant to Rule 144 may be sold under Rule 144 rather than
pursuant to this Prospectus. None of the Shares presently qualify for sale
pursuant to Rule 144.
The Company has advised the Selling Stockholders that during such time as
they may be engaged in a distribution of Common Stock included herein, they are
required to comply with the Securities Act, any rule or regulation under the
Securities Act, and Regulation M under the Exchange Act.
The Company has agreed to indemnify Markerdowne and/or certain other holders
of Common Stock and related persons against certain liabilities set forth in
Section 9.7(a) of the Markerdowne Agreement in connection with the offer and
sale of the Shares, including liabilities under the Securities Act. Markerdowne
and/or such holders have agreed to indemnify in certain circumstances the
Company and certain related persons against certain liabilities set forth in
Section 9.7(b) of the Markerdowne Agreement, including liabilities under the
Securities Act.
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The Company has agreed to indemnify the shareholders of Delta College and
certain related persons against certain liabilities set forth in Section 17.7(a)
of the Delta Agreement in connection with the offer and sale of the shares,
including liabilities under the Securities Act. Such shareholders have agreed to
indemnify in certain circumstances the Company and certain related persons
against certain liabilities set forth in Section 17.7(b) of the Delta Agreement,
including liabilities under the Securities Act.
The Company has agreed with the Selling Stockholders to keep the
Registration Statement of which this Prospectus is a part effective until the
earlier of February 20, 2000 or the Company's determination that all of the
Shares may be freely sold without the need for continued registration in the
three-month period preceding termination of the effectiveness of the
Registration Statement. The Company intends to de-register any of the Shares not
sold by the Selling Stockholders and any other shares remaining unsold at the
end of such period. The Company may, under specified circumstances set forth in
Section 9.5 of the Markerdowne Agreement and Section 17.5 of the Delta
Agreement, suspend the Registration Statement of which this Prospectus is a part
after effectiveness and require that sales of shares pursuant to such
Registration Statement cease immediately.
LEGAL MATTERS
The validity of the shares offered hereby has been passed upon for the
Company by Hale and Dorr LLP, Washington, D.C.
EXPERTS
The financial statements incorporated in this Prospectus by reference to the
Annual Report on Form 10-K for the year ended January 31, 1998 have been so
incorporated in reliance on the report of Price Waterhouse LLP, independent
accountants, given on the authority of said firm as experts in auditing and
accounting.
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