As filed with the Securities and Exchange Commission on December 29, 1997February 23, 1998
                                                   Registration No. 333-
===============================================================================================================================================================

                       SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C.  20549

                           __________________________--------------------------
                                    FORM S-3
                             REGISTRATION STATEMENT
                                     UNDER
                           THE SECURITIES ACT OFUnder
                           The Securities Act of 1933

                           __________________________--------------------------
                         SYLVAN LEARNING SYSTEMS, INC.
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)(Exact name of registrant as specified in its charter)

        MARYLAND                                       52-1492296
(STATE OF INCORPORATION)(State of Incorporation)                  (I.R.S. EMPLOYER IDENTIFICATION NO.Employer Identification No.)

                             1000 LANCASTER STREET
                           BALTIMORE, MARYLANDLancaster Street
                           Baltimore, Maryland 21202
                                 (410) 843-8000
              (ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
       INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)

                               DOUGLAS(Address, including zip code, and telephone number,
       including area code, of registrant's principal executive offices)

                               Douglas L. BECKER
              PRESIDENT, CO-CHIEF EXECUTIVE OFFICER AND SECRETARY
                         SYLVAN LEARNING SYSTEMS, INC.Becker
              President, Co-Chief Executive Officer and Secretary
                         Sylvan Learning Systems, Inc.
                             1000 LANCASTER STREET
                           BALTIMORE, MARYLAND 21231Lancaster Street
                           Baltimore, Maryland 21202
                                 (410) 843-8000
           (NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
                   INCLUDING AREA CODE, OF AGENT FOR SERVICE)

COPIES OF ALL COMMUNICATIONS, INCLUDING ALL COMMUNICATIONS SENT TO THE AGENT FOR
                          SERVICE, SHOULD BE SENT TO:

                      RICHARD(Name, address, including zip code, and telephone number,
                   including area code, of agent for service)

Copies of all communications, including all communications sent to the agent for
                          service, should be sent to:

                       Richard C. TILGHMAN, JR.Tilghman, Jr., ESQUIRE
                          JILL CANTOR NORD, ESQUIRE
                               PIPEREsquire
                             Piper & MARBURYMarbury L.L.P.
                            36 SOUTH CHARLES STREET
                         BALTIMORE, MARYLANDSouth Charles Street
                           Baltimore, Maryland  21201
                                 (410) 539-2530
                                        
     APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:  AS SOON AS
PRACTICABLE AFTER THE EFFECTIVE DATE OF THIS REGISTRATION STATEMENT.

IF THE ONLY SECURITIES BEING REGISTERED ON THIS FORM ARE BEING OFFERED PURSUANT
TO DIVIDEND OR INTEREST REINVESTMENT PLANS, PLEASE
CHECK THE FOLLOWING BOX:Approximate date of commencement of proposed sale to the public:  As soon
as practicable after the effective date of this Registration Statement.

     If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following 
box: [_]

     IF ANY OF THE SECURITIES BEING REGISTERED ON THIS FORM ARE TO BE OFFERED ON A
DELAYED OR CONTINUOUS BASIS PURSUANT TO RULEIf any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 UNDER THE SECURITIES ACT OFunder the Securities Act of
1933,OTHER THAN SECURITIES OFFERED IN CONNECTION WITH DIVIDEND OR INTEREST
REINVESTMENT PLANS, CHECK THE FOLLOWING BOX: other than securities offered in connection with dividend or interest
reinvestment plans, check the following box: [X]

     If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering: [_]

     IF THIS FORM IS FILED TO REGISTER ADDITIONAL SECURITIES FOR AN OFFERING PURSUANT
TO RULE 462(b) UNDER THE SECURITIES ACT, PLEASE CHECK THE FOLLOWING BOX AND LIST
THE SECURITIES ACT REGISTRATION STATEMENT NUMBER OF THE EARLIER EFFECTIVE
REGISTRATION STATEMENT FOR THE SAME OFFERING:If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering: [_]________________________

IF THIS FORM IS A POST-EFFECTIVE AMENDMENT FILED PURSUANT TO RULE 462(C) UNDER
THE SECURITIES ACT, CHECK THE FOLLOWING BOX AND LIST THE SECURITIES ACT
REGISTRATION STATEMENT NUMBER OF THE EARLIER EFFECTIVE REGISTRATION STATEMENT
FOR THE SAME OFFERING: [_]

IF DELIVERY OF THE PROSPECTUS IS EXPECTED TO BE MADE PURSUANT TO RULE

     If delivery of the prospectus is expected to be made pursuant to Rule 434,
PLEASE CHECK THE FOLLOWING BOX:please check the following box: [_]

                        CALCULATION OF REGISTRATION FEE

TITLE OF SHARES PROPOSED MAXIMUM AGGREGATE AMOUNT OF TO BE REGISTERED OFFERING PRICE REGISTRATION FEE ---------------- -------------------------- ----------------================================================================================================================ Title of Shares to be Registered Proposed Maximum Aggregate Offering Price Amount of Registration Fee - ---------------------------------------------------------------------------------------------------------------- Common Stock, $.01 par value $11,887,500 $3,507.00 ======================================================================================$25,775,412 $7,604 ================================================================================================================
(1) CALCULATED IN ACCORDANCE WITH RULE 457(O) OF THE SECURITIES ACT OFCalculated in accordance with Rule 457(o) of the Securities Act of 1933, AS AMENDED. THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTIONas amended. The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) OF THE SECURITIES ACT OFof the Securities Act of 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTIONor until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), MAY DETERMINE.may determine. Subject to Completion DECEMBER 29, 1997February 23, 1998 PROSPECTUS 300,000 SHARES660,908 Shares SYLVAN LEARNING SYSTEMS, INC. COMMON STOCK ___________ All of theCommon Stock ----------- The shares of Common Stock of Sylvan Learning Systems, Inc. (the "Company") covered by this Prospectus are outstanding shares which may be offered hereby will beand sold from time to time by the Company upon exercise of options (the "Options") granted by the Company to those of its franchisees who operate Sylvan Testing Centers (the "Testing Franchisees") pursuant to the STC Stock Option Plan (the "Plan").stockholders named herein. See "Description of STC Stock Option Plan."Selling Stockholders." The Company will not receive any proceeds from the resalesale of the Common Stockshares by the Franchisees other than the aggregate exercise price payable upon exercise of the Options.Selling Stockholders. The Common Stock is quoted on the Nasdaq National Market under the symbol "SLVN." On December 23, 1997February 20, 1998 the last sale price for the Common Stock as reported on the Nasdaq Stock Market was $39.25$40.125 per share. ___________The Selling Stockholders may from time to time sell shares of the Common Stock offered hereby in transactions on the Nasdaq Stock Market, in privately- negotiated transactions or otherwise, in each case at negotiated prices. See "Plan of Distribution." The brokers or dealers through or to whom the shares of Common Stock covered hereby may be sold may be deemed "underwriters" within the meaning of the Securities Act of 1933, in which event all brokerage commissions or discounts and other compensation received by such brokers or dealers may be deemed underwriting compensation. ----------- THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. ___________ PRICE TO PUBLIC PROCEEDS TO COMPANY(1) - ------------------------------------------------------------------------------- Per Share............ $ $ Total................ $ $ ================================================================================ (1) Before deducting expenses payable by the Company estimated at $23,000.----------- The date of this Prospectus is , 1998. [INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT.[Information contained herein is subject to completion or amendment. A REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY JURISDICTION IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH JURISDICTION.registration statement relating to these securities has been filed with the Securities and Exchange Commission. These securities may not be sold nor may offers to buy be accepted prior to the time the registration statement becomes effective. This prospectus shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of these securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction.] AVAILABLE INFORMATION The Company is subject to the informational requirements of the Securities Exchange Act of 1934, as amended (the "1934 Act"), and in accordance therewith files reports, proxy statements and other information with the Securities and Exchange Commission (the "Commission"). Reports, proxy statements and other information filed by the Company with the Commission, including the reports and other information incorporated by reference into this Prospectus, can be inspected and copied at the public reference facilities maintained by the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549 and at its regional offices located at 7 World Trade Center, 13th Floor, New York, New York 10048 and Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661-2511. Copies of such material can also be obtained from the Public Reference Section of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549 at rates prescribed by the Commission or from the Commission's Internet web site at http:\\www.sec.gov. The Common Stock of the Company is quoted on the Nasdaq National Market. Reports, proxy statements and other information concerning the Company can be inspected at the offices of the Nasdaq Stock Market, 1735 K Street, Washington, D.C. 20006. This Prospectus does not contain all the information set forth in the Registration Statement of which this Prospectus is a part and exhibits relating thereto which the Company has filed with the Commission. Copies of the information and exhibits are on file at the offices of the Commission and may be obtained, upon payment of the fees prescribed by the Commission, may be examined without charge at the offices of the Commission or through the Commission's Internet web site. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE The following documents filed by the Company with the Commission (File No. 0-22844) pursuant to the 1934 Act are incorporated herein by reference: (i) the Company's Annual Report on Form 10-K for the year ended December 31, 1996, as amended by its Annual Report on Form 10-K/A (with Items 6, 7 and 8 thereof having been superseded by the information contained in the Company's Current Report on Form 8-K dated July 15, 1997), (ii) the Company's Current Report on Form 8-K and 8-K/A dated January 28, 1997, relating to the Company's acquisition of Wall Street Institute; (iii) the Company's Current Report on Form 8-K/A dated March 12, 1997, relating to the termination of the Company's Merger Agreement with National Education Corporation; (iv) the Company's Current Report on Form 8-K and 8-K/A dated April 17, 1997 and May 30, 1997, relating to the Company's acquisition of I-R, Inc. and Independent Child Study Teams, Inc. (collectively, "Educational Inroads"); (v) the Company's Current Report on Form 8-K dated July 15, 1997, restating certain historical financial information to reflect the acquisition of Educational Inroads; (vi) the Company's Quarterly Reports on Form 10-Q for the quarters ended March 31, 1997; June 30, 1997; and September 30, 1997; (vii) the description of Common Stock contained in Item 4 of the Company's Registration Statement on Form 8-A, filed with the Commission under the 1934 Act; and (viii) all other documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or 15(d) of the 1934 Act subsequent to the date of filing of the Registration Statement of which this Prospectus is a part and prior to the termination of the offering made hereby. The Company will provide without charge to each person to whom a copy of this Prospectus is delivered, upon the request of any such person, a copy of any or all of the documents which have been incorporated herein by reference, other than exhibits to such documents (unless such exhibits are specifically incorporated by reference into such documents). Requests for such documents should be directed to Sylvan Learning Systems, Inc., 1000 Lancaster Street, Baltimore, Maryland 21202, Attention: Chief Financial Officer, telephone: (410) 843-8000. Any statement contained in a document incorporated or deemed to be incorporated by reference herein shall be deemed to be modified or superseded for purposes of this Prospectus to the extent that a statement contained herein or in any other subsequently filed document which also is or is deemed to be incorporated by reference herein modifies or supersedes such statement. Any such statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this Prospectus. -2- THE COMPANY Sylvan Learning Systems, Inc. (the "Company" or "Sylvan") is a leading international private provider of educational and testing services. The Company delivers a broad array of supplemental and remedial educational services and computer-based testing through three principal divisions. The Core Educational Services division designs and delivers individualized tutorial services to school-age children and adults at 669 franchised and Company-owned Sylvan Learning Centers. Sylvan Prometric, the Company's testing services division, administers computer-based tests for major organizations, corporations, professional associations and governmental agencies through its worldwide network of Testing Centers. The Contract Educational Services division provides Sylvan's core educational services under federal and state funding programs to more than 12,000 students in 89 public schools and more than 38,000 students in 507 non-public schools (including Educational Inroads) and provides on-site educational and training services to employees of large corporations. Since 1994, the Company has substantially expanded its business through a combination of internal growth and acquisitions and has increased revenue and operating income from $68.7 million and $3.4 million, respectively, in 1994 to $181.9 million and $22.7 million, respectively, in 1996. Sylvan's 1996 systemwide revenues were approximately $310.3 million, consisting of $165.1 million from core educational services ($139.5 million from franchised Learning Centers and $25.6 million from Company-owned Learning Centers, product sales and franchise sales fees), $87.0 million from testing services and $58.2 million from contract educational services. Core Educational Services. The Company's Core Educational Services division provides supplemental instruction in reading, mathematics and reading readiness and features an extensive series of standardized diagnostic tests, individualized instruction, a student motivational system and continued involvement from both parents and the child's regular school teacher. As of September 30, 1997, the Company or its franchisees operated 669 Learning Centers in 49 states, five Canadian provinces, Hong Kong, South Korea and Guam, with 403 franchisees owning and operating 628 Sylvan Learning Centers and Sylvan owning and operating 41 Learning Centers. Sylvan Prometric Testing Services. As of September 30, 1997, Sylvan or its authorized representatives operated 1,908 Testing Centers, 1,207 of which were located in North America and the remainder in 97 foreign countries. The Company enters into contracts directly with various professional licensure, educational and information technology ("IT") businesses, organizations and agencies, under which Sylvan receives a fee based upon the number of tests given for those customers. Principal customers for the Company's testing services are Educational Testing Services ("ETS") and, in the IT industry, Microsoft Corp. and Novell, Inc..Inc. IT customers sponsor worldwide certification programs for various professionals such as network administrators and engineers, service technicians and instructors. Sylvan has been designated as the exclusive commercial provider of computer-based tests administered by ETS (excluding the SAT and PSAT) and operates 47 testing centers in 33 countries to facilitate delivery of international testing for ETS. The Company also provides testing services for organizations responsible for licensing broker-dealers, pilots, aviation mechanics, computer professionals and medical laboratory technicians. Through the Company's December 1996 acquisition of Wall Street Institute International B.V. and its affiliates ("Wall Street"), Sylvan now provides live and computer-based English instruction and testing in Europe and Latin America through a network of more than 180 franchised and Company-owned centers. Contract Educational Services; PACE; Sylvan-at-Work; Caliber Learning Network, Inc. Sylvan provides educational services under federal and various state funding programs to students in 89 public and 507 non-public schools. Sylvan provides educational and training services to large corporations throughout the United States, including racial and gender workplace diversity training and skills improvement programs such as writing, advanced reading, listening and public speaking, through its wholly-owned subsidiary, The PACE Group ("PACE"), and the Company's Sylvan-at-Work program. In November 1996, Caliber Learning Network, Inc. was formed as a joint initiative of Sylvan and MCI Telecommunications Corporation to become a worldwide distribution network of professional education centers equipped with satellite-based video conferencing and computer network capabilities. Sylvan currently owns a 10 percent interest in Caliber Learning Network and has the option to acquire a majority interest in the future. -3- The Company's principal executive offices are located at 1000 Lancaster Street, Baltimore, Maryland 21202, and its telephone number is (410) 843-8000. USE OF PROCEEDS The netAll of the proceeds to the Company from the sale of the Commmonshares of the Company's Common Stock being offered hereby are estimated towill be approximately $6,322,710, assuming (i) exercise of all ofreceived by the Options for cash, (ii) a per share exercise price for the December Options (as defined below) of $39.25, the per share closing price for the Common Stock, as reported by The Nasdaq Stock Market, and (iii) other than the Options, no other options are granted under the Plan. See "Description of Sylvan Technology Center Stock Option Plan."Selling Stockholders. The Company will usereceive none of the net proceeds from this offering for general corporate purposes, which may include the acquisition of complementary businesses. The Company intends to invest substantially allsale of the net proceeds from this offering in interest-bearing, investment-grade obligations pending application thereof in the manner described above. The Company will not receive proceeds from any resalesshares of the Common Stock acquired byoffered hereby. -4- SELLING STOCKHOLDERS The following table sets forth information regarding the Franchisees upon exercise of the Options. DESCRIPTION OF STC STOCK OPTION PLAN The Company adopted the Sylvan Technology Center Stock Option Plan (the "Plan") in April 1997. Under the Plan, the Committee, comprisedbeneficial ownership of the Company's Co-Chief Executive Officers, R. Christopher Hoehn-Saric and Douglas L. Becker, is authorizedCommon Stock by the person listed therein (the "Selling Stockholders") prior to grant options to purchasethis offering, the maximum number of shares of Common Stock to any Sylvan Learning Center franchisee who operates one or more Sylvan Technology Centers (collectively,be sold by the "Franchisees") as compensation for services rendered or contributions made toSelling Stockholders hereby, and the Company. There are an aggregatebeneficial ownership of 300,000 shares reserved for issuance upon exercise of options granted under the Plan. Options to purchase an aggregate of 174,000Company's Common Stock by the Selling Stockholders after this offering, assuming that all shares of Common Stock were granted to an aggregateoffered hereby are sold.
Shares Beneficially Shares Beneficially Owned Prior to Offering Shares To Owned After Offering ------------------------- Be Sold In -------------------------- Name and Address of Beneficial Owner Number Percent Offering Number Percent ========================================= ============ =========== ============ ============ ============ Block Testing Services L.P(1).......... 471,622 1.6% 471,622 -- -- 650 Dundee Road, Suite 370 Northbrook, IL 60062 Dr. James A. Bax(2).................... 86,410 ** 86,410 -- -- Dr. Anthony W. Mitchell(2)............. 42,434 ** 42,434 -- -- Sue J. Mitchell(2)..................... 42,435 ** 42,435 -- -- Leslie Zalk............................ 5,186 ** 5,186 -- -- 507 Morning Canyon Road Carona Del Mar, CA 92625 Kathleen Gillan........................ 1,765 ** 1,765 -- -- 4110 Apricot Irvin CA 92620 Carleen Garza.......................... 2,207 ** 2,207 -- -- 575 North Ramprt Way Denver, CO 80220 Evelyn M. Tuey......................... 1,765 ** 1,765 -- -- 3829 Sheffield Circle Danville, CA 92526 Stephanie Thomas....................... 1,103 ** 1,103 -- -- 3112 Quail Run Rossmoor, CA 90720 Merida M. Phillips..................... 883 ** 883 -- -- 2955 Champion, #295 Justin CA 92782 Kay L. Bennett......................... 574 ** 574 -- -- 6332 Silverood Drive Huntington Beach, CA 92647 Patricia McSwain....................... 2,074 ** 2,074 -- -- 10 Evening Breeze Irvine, CA 92612 Harold Sakayan......................... 2,450 ** 2,450 -- -- 8813 Belmart Road Potomac, MD 20854
-5- - -------------- * Less than 1%. (1) The general partner of 174 Franchisees on April 15, 1997 (the "April Options"); options to purchase an aggregate of 6,000 shares of Common Stock were granted to 6 Franchisees on July 1, 1997 (the "July Options"); and options to purchase an aggregate of 7,000 shares of Common Stock were granted to 7 Franchisees on October 1, 1997. The Committee intends to grant options to purchase an aggregate of 19,000 shares of Common Stock to 18 Franchisees on December 31, 1997 (the "December Options" and, together with the April Options, July Options and October Options, the "Options"this holder is Registry Testing Services L.L.C. ("Registry LLC"). The exercise pricesmembers of Registry LLC are Messrs. Steven Taslitz, Eric Becker and Merrick Elfman (managing member). Each of the Options are: $29.13 per share for the April Options; $33.53 per share for the July Options; and $39.25 per share for the October Options; and a per share exercise price equal to the per share closing price for the Common Stock on December 31, 1997, as reported by the Nasdaq Stock Market, for the December Options. The April Options, July Options and October Options vest ratably beginning on January 1, 1998 and eachmembers of the successive anniversaries thereof, and the December Options will vest ratably beginning on January 1, 1999 and eachRegistry LLC disclaims beneficial ownership of the successive anniversaries thereof; provided, however, that the Options will vest on the specified vesting dates only if the Franchisee continues to operate one or more Sylvan Technology Centers pursuant to a written agreement between the Company and the the Franchisee. All Options, whether vested or unvested, terminate on the tenth anniversary of the Grant Date specified in the Option Agreement relating to said options, subject to earlier termination in the event of the termination of a Franchisee's operation of the Sylvan Technology Center(s) described in the Franchisee's Option Agreement or the termination of the Optionholder's Sylvan Technology Center agency relationship with the Company by the Company, for cause, or at the election of the Franchisee. The Stock Option Agreements pursuant to which the Options are or will be granted provide that full payment for each share of Common Stock purchased upon exercise of the Option shall be made no later than the time of exercise or, in the discretion of the Committee, at such later time as the certificate for the share is delivered, in (A) cash or certified check or (B) as long as the shares of Common Stock of the Company remain registered under Section 12(b) or 12(g)owned by the holder. Mr. Becker is the brother of Douglas L. Becker, the President and Co-Chief Executive Officer of the Securities Exchange ActCompany. (2) The address of 1934,this holder is c/o of Harold W. Mullis, Jr., Esquire, Trenam Kemker, 2700 Barnett Plaza, 101 East Kennedy Boulevard, Tampa, Florida 33601. Pursuant to an asset purchase agreement, dated as amended,of December 1, 1997, by delivery of a properly executed exercise notice, together with irrevocable instructions: (i) to a brokerage firm approved byand among Block Testing Services L.P. ("Block"), Block State Testing Services L.P. ("Block State") and the Company to deliver promptly to(the "Block Agreement"), the Company the aggregate amount of sale or loan proceeds to pay the exercise price and any withholding tax obligations that may arise in connection with the exercise, and (ii) to the Company to deliver the certificates for such purchased shares directly to such brokerage firm. In the event any income or employment taxes are required to be withheld with respect to an Option, payment of such taxes must be made to the Company. -4- Shares issuable upon exercise of Options will be shares of authorized but unissued Common Stock. The Company will, during the termacquired all of the Plan, reserveassets and keep available a numbercertain liabilities of Block and Block Stock in exchange for the issuance to Block of 315,669 shares of Common Stock sufficient to satisfy the requirements of the Plan. Other thanCompany and the exercise price described in the Stock Option Agreement, there will be no fees, commissions or other charges paid in connection with the exerciseissuance to Dr. James A. Bax, Dr. Anthony W. Mitchell and Sue J. Mitchell (the "Block Debtholders") of Options. The Plan imposes no restrictions on the resalean aggregate of Common Stock acquired upon the exercise of Options except that such171,279 shares of Common Stock may be resold only in compliance with the registration requirements of the Securities ActCompany, all of 1933,which are being offered in this Prospectus, as amendedrequired by the Block Agreement. None of the Block Debtholders nor any of their affiliates is an officer, director, employee or affiliate of the Company. Pursuant to an agreement and plan of reorganization dated as of December 1, 1997 by and among Block, National Assessment Institute, Inc. ("NAI"), NAI Merger Corp. and the Company (the "Securities Act""NAI Merger Agreement"), the Company acquired from Block all of the outstanding stock of NAI in exchange for the issuance to Block of an aggregate of 155,953 shares of Common Stock of the Company, all of which are being offered in this Prospectus, as required by the NAI Merger Agreement. Pursuant to an Agreement for Purchase of Stock, effective as of October 1, 1997 (the "PMZ Agreement"), by and applicable state securities laws.among the Company and Leslie Zalk, Kathleen Gillan, Carleen Garza, Evelyn M. Tuey, Stephanie Thomas, Merida M. Phillips, Kay L. Bennett and Patricia McSwain (collectively, the "PMZ Stockholders"), the Company acquired from the PMZ Stockholders 75% of the issued and outstanding capital stock of PMZ, Inc. ("PMZ") in exchange for the issuance to the PMZ Stockholders of an aggregate of 15,557 shares of Common Stock of the Company. The Committee may impose resale restrictions on all or a portionCompany already held 25% of the PMZ capital stock prior to the consummation of the PMZ Agreement. All of the shares of Common Stock delivered upon exercise of any Option to ensure compliance with these laws. Under the Securities Act, affiliates of the Company generally may resellissued to the PMZ Stockholders pursuant to the PMZ Agreement are being offered in this Prospectus, as required by the PMZ Agreement. None of the PMZ Stockholders nor any of their affiliates is an officer, director, employee or affiliate of the Company. Pursuant to an Agreement for Purchase of Operating Sylvan Learning Center from VCM, Inc. ("VCM"), dated September 30, 1997 (the "VCM Agreement"), by and between the Company and VCM, the Company acquired all of the issued and outstanding shares of capital stock of VCM in exchange for the issuance to VCM's sole stockholder, Harold Sakayan (the "VCM Stockholder" and, together with Block, the Block Debtholders and the PMZ Stockholders, the "Selling Stockholders"), of an aggregate of 2,450 shares of Common Stock purchased pursuant to the Plan only (i) in accordance with the provisions of Rule 144 of the Securities Act promulgated by the SEC or some other exemption from registration under the Securities Act, or (ii) pursuant to an applicable current and effective registration statement under the Securities Act. Tax Summary. The following is a brief summaryCompany. All of the significant aspects ----------- of current federal income tax treatment of the Options that may be granted under the Plan. The grant of the Options does not result in tax consequences to the Franchisees to whom the Options were granted. Upon the exercise of an Option, the Franchisee will recognize ordinary income equal to the difference between the option price and the Fair Market Value of the Common Stock on the date of exercise. No amount other than the price paid under the Option shall be considered as received by the Company for the Common Stock so issued. When the Franchisee disposes of Common Stock acquired by the exercise of an Option, any amount received in excess of the Fair Market Value of the Common Stock on the date of exercise will be treated as a long- or short-term capital gain, depending upon how long the Franchisee holds the Common Stock prior to selling it. If the amount received is less than the Fair Market Value of the Common Stock on the date of exercise, the loss will be treated as a long- or short-term capital loss, depending upon the holding period of the Common Stock. Except as noted below, the exercise of an Option by the exchange of shares of Common Stock already ownedissued to the VCM Stockholder pursuant to the VCM Agreement are being offered in this Prospectus, as required by the Franchisee will not result inVCM Agreement. Neither the VCM Stockholder nor any taxable gainof his affiliates is an officer, director, employee or loss on the unrealized appreciationaffiliate of the shares so used. The Internal Revenue Service has ruled that, since the Options are non-qualified, if the Option exercised (i) a number of shares of the Common Stock received equal to the number of shares surrendered will have the same basis as the shares surrendered, and (ii) the remaining shares received will have a basis equal to their Fair Market Value on the date of exercise (the compensation income recognized upon exercise). For purposes of determining whether shares have been held for the long-term capital gain holding period, the holding period of shares received will generally include the holding period of the shares surrendered only if the shares received have the same basis, in whole or in part, in the Franchisee's hands as the shares surrendered. Section 401(a) of the Code is not applicable to the Plan.Company. PLAN OF DISTRIBUTION The Company's Common Stock is quoted on the Nasdaq National Market under the symbol "SLVN." The Shares may be sold from time to time by the Selling Stockholders directly or through broker-dealers or underwriters who may act solely as agents, or who may acquire the Shares as principals. In connection with any sales of the Shares hereunder, the Selling Stockholders and any broker- dealers participating such sales may be deemed to be "underwriters" within the meaning of the Securities Act. The distribution of the Shares hereunder by the Selling Stockholders may be effected in one or more transactions that may take place on the Nasdaq National Market or otherwise, including block trades or ordinary brokers' transactions, or through privately negotiated transactions, through an underwritten public offering, or through a -6- combination of any such methods of sale, at market prices prevailing at the time of sale, at prices related to such prevailing market prices or at negotiated prices. Usual and customary or specially negotiated brokerage fees or commissions may be paid by the Selling Stockholders in connection with such sales. The Company will not bear any commissions or discounts paid or allowed by the Selling Stockholders to underwriters, dealers, brokers or agents. To the extent required, the specific shares of Common Stock to be sold, purchase price, public offering price, the names of any such agent, dealer or underwriter and any applicable commission or discount with respect to a particular offering may be set forth in an accompanying Prospectus Supplement. The Company has agreed to bear the cost of preparing the Registration Statement of which this Prospectus formsis a part relates to sales byand all filing fees and legal and accounting expenses in connection with registration of the Company, from time to time, of up to an aggregate of 300,000 shares of Common Stock to the Franchisees upon their exercise of the Options. If all of the Options are exercised, the aggregate purchase price payableoffered by the Franchisees will equal $6,322,710, assuming (i) the December Options have a per share exercise price equal to $39.25, the closing price per share of the Common Stock on December 23, 1997, as reported by The Nasdaq Stock Market,Selling Stockholders hereby under federal and (ii) other than the Options, no other options are granted under the Plan. The Franchisees are not obligated to exercise any of the Options; however, options not exercised prior to their expiration dates will terminate, and thereafter no shares of Common Stock will be issued by the Company to the Franchisees in respect thereof. The Common Stock the Franchisees acquire upon exercise of the Options should be able to be resold by the Franchisees without further registration under the Securities Act of 1933, as amended (the "Act") in reliance upon Section 4(1) of the Act. However, resales of the Common Stock by Franchisees or their transferees who are or become affiliates of the Company will be subject to the limitations set forth in Rule 144 under the Act. -5- state securities laws. LEGAL MATTERS The legality of the shares offered hereby has been passed upon for the Company by Piper & Marbury L.L.P., Baltimore, Maryland. EXPERTS The consolidated financial statements and schedule of Sylvan Learning Systems, Inc. at December 31, 1996 and 1995 and for each of the three years in the period ended December 31, 1996, incorporated by reference in this Prospectus and Registration Statement, have been audited by Ernst & Young LLP, independent auditors, as set forth in their report thereon included therein also incorporated herein by reference which, as to the years 1996 and 1995, is based in part on the reports of Deloitte & Touche LLP, independent auditors, and as to the year 1994, is based in part on the report of Canterelli & Vernoia, CPAs, independent auditors. Such consolidated financial statements have been incorporated herein by reference in reliance upon such reports given upon the authority of such firms as experts in accounting and auditing. -6--7- =============================================================================================================================================================== No person has been authorized by the Company to give any information or to make any representations other than those contained in this Prospectus in connection with the offer contained in this Prospectus, and if given or made, such information or representations may not be relied upon as having been authorized by the Company. This Prospectus does not constitute an offer to sell or a solicitation of an offer to buy any of the securities in any jurisdiction in which such offer or solicitation is not authorized, or in which the person making such offer or solicitation is not qualified to do so, or to any person to whom it is unlawful to make such offer or solicitation. Neither the delivery of this Prospectus nor any sale made hereunder shall create an implication that there has been no change in the affairs of the Company since the date hereof. _____________________________ TABLE OF CONTENTS PAGE ---- AVAILABLE INFORMATION................................................... 2 INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE......................... 2 THE COMPANY............................................................. 3 USE OF PROCEEDS......................................................... 4 SELLING STOCKHOLDERS.................................................... 4 PLAN OF DISTRIBUTION.................................................... 4 LEGAL MATTERS........................................................... 5 EXPERTS................................................................. 5 300,000 SHARES-----------------------------
TABLE OF CONTENTS PAGE - ---- Available Information..............................2 Incorporation of Certain Documents by Reference...........................2 The Company........................................3 Use of Proceeds....................................4 Selling Stockholders...............................5 Plan of Distribution...............................6 Legal Matters......................................7 Experts............................................7
================================================================================ 660,908 Shares SYLVAN LEARNING SYSTEMS, INC. COMMON STOCKCommon Stock PROSPECTUS , 1998,1998 ================================================================================ INFORMATION NOT REQUIRED IN PROSPECTUS ITEMItem 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.Other Expenses of Issuance and Distribution. The following table sets forth the expenses in connection with this Registration Statement. The Company will pay all expenses of the offering. All of such expenses are estimates, other than the filing fees payable to the Securities and Exchange Commission.
Filing Fee-Securities and Exchange Commission.................$ 7,604.00 Nasdaq National Market Listing Fees........................... 11,490.00 Fees and Expenses of Counsel.................................. 6,000.00 Miscellaneous Expenses........................................ 23,000.00 ---------- TOTAL........................................................$48,094.00 ==========
Item 15. Indemnification of Directors and Exchange Commission.. $ 3,507 Nasdaq National Market Listing Fees............ 6,000 Fees and Expenses of Counsel................... 7,000 Miscellaneous Expenses......................... 6,493 ------- TOTAL........................................ $23,000 ======= ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.Officers. The Company's Charter provides that, to the fullest extent that limitations on the liability of directors and officers are permitted by the Maryland General Corporation Law, no director or officer of the Company shall have any liability to the Company or its stockholders for monetary damages. The Maryland General Corporation Law provides that a corporation's charter may include a provision which restricts or limits the liability of its directors or officers to the corporation or its stockholders for money damages except: (1) to the extent that it is provided that the person actually received an improper benefit or profit in money, property or services, for the amount of the benefit or profit in money, property or services actually received, or (2) to the extent that a judgment or other final adjudication adverse to the person is entered in a proceeding based on a finding in the proceeding that the person's action, or failure to act, was the result of active and deliberate dishonesty and was material to the cause of action adjudicated in the proceeding. The Company's Charter and By-laws provide that the Company shall indemnify and advance expenses to its currently acting and its former directors to the fullest extent permitted by the Maryland General Corporation Law and that the Company shall indemnify and advance expenses to its officers to the same extent as its directors and to such further extent as is consistent with law. The Charter and By-laws provides that the Company will indemnify its directors and officers and may indemnify employees or agents of the Company to the fullest extent permitted by law against liabilities and expenses incurred in connection with litigation in which they may be involved because of their offices with the Company. In addition, the Company's Charter provides that its directors and officers will not be liable to stockholders for money damages, except in limited instances. However, nothing in the Charter or By-laws of the Company protects or indemnifies a director, officer, employee or agent against any liability to which he would otherwise be subject by reason of willful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of his office. To the extent that a director has been successful in defense of any proceeding, the Maryland General Corporation Law provides that he shall be indemnified against reasonable expenses incurred in connection therewith. II-1 ITEMItem 16. EXHIBITS. Exhibit No. Description ----------- -------------------------------------------------------------Exhibits.
Exhibit No. Description - ----------- ----------- 3.1 Articles of Amendment and Restatement of the Charter* 3.2 Amended and Restated By-Laws dated September 27, 1996** 4.1 Specimen Stock Certificate* 4.2 Asset Purchase Agreement by and among Sylvan Learning Systems, Inc., Block Testing Services L.P. and Block State Testing Services L.P, dated as of December 1, 1997 4.3 Agreement and Plan of Reorganization by and among Sylvan Learning Systems, Inc., Block Testing Services L.P., National Assessment Institute, Inc. and NAI Merger Corp, dated as of December 1, 1997 4.4 Agreement for the Purchase of Stock by and among Sylvan Learning Systems, Inc. and the Stockholders of PMZ, Inc., dated as of October 1, 1997 4.5 Agreement for Purchase of Operating Sylvan Learning Center from VCM, Inc. by and between VCM, Inc. and Sylvan Learning Systems, Inc., dated as of September 30, 1997 5.1 Opinion of Piper & Marbury L.L.P. 23.1 Consent of Ernst & Young LLP 23.2 Consent of Deloitte & Touche LLP 23.3 Consent of Canterelli and Restatement of the Charter* 3.2 Amended and Restated By-Laws dated September 27, 1996** 4.1 Specimen Stock Certificate* 4.2 1997 Sylvan Technology Center Stock Option Plan 4.3 Form of Stock Option Agreement Under 1997 Sylvan Technology Center Stock Option Plan 23.1 Consent of Ernst & Young LLP. 23.2 Consent of Deloitte & Touche LLP 23.3 Consent of Canterelli & Vernoia, CPAs 23.4 Consent of Piper & Marbury L.L.P. (contained in Exhibit 5.1) 24.1 Powers of Attorney (included on signature page) ______________
-------------- * Incorporated by reference from the Registrant's Registration Statement on Form S-1 (No. 33-69558), filed on September 28, 1993. ** Incorporated by reference from the Company's Annual Report on Form 10-K for the Year ended December 31, 1996. ITEMItem 17. UNDERTAKINGS.Undertakings. (a) The undersigned Registrant hereby undertakes that, for purposes of determining any liability under the Securities Act of 1933, each filing of the Registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing of an employee benefit plan's annual report pursuant to Section 15(d) of the Securities Exchange of 1934) that is incorporated by reference in the Registration Statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (b) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as II-2 expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suite or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. (c) The undersigned Registrant hereby undertakes that: (1) For purposes of determining any liability under the Securities Act of 1933, the information omitted from the form of prospectus filed as part of this Registration Statement in reliance upon Rule 430A and contained in a form of II-2 prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this Registration Statement as of the time it was declared effective. (2) For the purpose of determining any liability under the Securities Act of 1933, each post-effective amendment that contains a form of prospectus shall be deemed to be a new Registration Statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (d) The undersigned registrant hereby undertakes: (1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement; (i) To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933, as amended (the "Securities Act"); (ii) To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post- effectivepost-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement; (iii) To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement; Provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the information required to be included in a post-effective amendment by those paragraphs in contained in periodic reports filed by the registrant pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act") that are incorporated by reference in the registration statement. (2) That for the purpose of determining any liability under the Securities Act, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. II-3 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this Registration Statement or Amendment to be signed on its behalf by the undersigned, thereunto duly authorized, in Baltimore, Maryland, on this 29th23rd day of December, 1997.February, 1998. SYLVAN LEARNING SYSTEMS, INC. By /s/ R. Christopher Hoehn-Saric ----------------------------------------------------------------------------------- R. Christopher Hoehn-Saric, Chairman of the Board and Co-Chief Executive Officer Know all men by these presents, that each person whose signature appears below constitutes and appoints R. Christopher Hoehn-Saric and Douglas L. Becker (with full power to each of them to act alone) as his true and lawful attorney- in-fact and agent, with full power of substitution, for him and in his name, place and stead in any and all capacities to sign any or all amendments or post- effective amendments to this Registration Statement, including post-effective amendments filed pursuant to Rule 462(b) of the Securities Act of 1933, as amended, and to file the same with all exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, to sign any and all applications, registration statements, notices or other document necessary or advisable to comply with the applicable state securities laws, and to file the same, together with all other documents in connection therewith, with the appropriate state securities authorities, granting unto said attorneys- in-fact and agents or any of them, or their or his substitute or substitutes, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, thereby ratifying and confirming all that said attorneys-in-fact and agents or any of them, or their or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act of 1933, as amended, this registration statement has been signed below by the following persons in the capacities and on the dates indicated.
Signature Title Date --------- ----- ---- /s/ R. Christopher Hoehn-Saric Co-Chief Executive Officer and - -------------------------------------- Chairman of the - -------------------------------------- Board of Directors (Principal Executive December 29, 1997February 23, 1998 R. Christopher Hoehn-Saric (Principal Executive Officer) /s/ Douglas L. Becker - -------------------------------------- Co-Chief Executive Officer February 23, 1998 Douglas L. Becker President, - -------------------------------------- Secretary and Director December 29, 1997 Douglas L. Becker /s/ B. Lee McGee - -------------------------------------- Chief Financial Officer (Principal February 23, 1998 B. Lee McGee Financial - -------------------------------------- and Accounting Officer) December 29, 1997 B. Lee McGee /s/ Donald V. Berlanti Director December 29, 1997 - -------------------------------------- Director February 23, 1998 Donald V. Berlanti /s/- -------------------------------------- Director February 23, 1998 R. William Pollock Director December 29, 1997 - -------------------------------------- R. William Pollock Director December __, 1997February 23, 1998 - -------------------------------------- J. Phillip Samper /s/- -------------------------------------- Director February 23, 1998 Nancy A. Cole Director December 29, 1997 - -------------------------------------- Nancy A. Cole Director December __, 1997 - --------------------------------------/s/ James H. McGuire Director December __, 1997 - -------------------------------------- Director February 23, 1998 James H. McGuire /s/ Rick Inatome - -------------------------------------- Director February 23, 1998 Rick Inatome
II-4 EXHIBIT INDEX Sequentially Exhibit No. Description Numbered Pages ----------- ----------- --------------
Sequentially Exhibit No. Description Numbered Page ----------- ----------- ------------- 3.1 Articles of Amendment and Restatement* 3.2 Amended and Restated By-Laws dated September 27, 1996** 4.1 Specimen Stock Certificate* 4.2 Asset Purchase Agreement by and among Sylvan Learning Systems, Inc., Block Testing Services L.P. and Block State Testing Services L.P, dated as of December 1, 1997 4.3 Agreement and Restatement* 3.2 Amended and Restated By-Laws dated September 27, 1996** 4.1 Specimen Stock Certificate* 4.2 1997 Sylvan Technology Center Stock Option Plan 4.3 Form of Stock Option Agreement Under 1997 Sylvan Technology Center Stock Option Plan of Reorganization by and among Sylvan Learning Systems, Inc., Block Testing Services L.P., National Assessment Institute, Inc. and NAI Merger Corp, dated as of December 1, 1997 4.4 Agreement for the Purchase of Stock by and among Sylvan Learning Systems, Inc. and the Stockholders of PMZ, Inc., dated as of October 1, 1997 4.5 Agreement for Purchase of Operating Sylvan Learning Center from VCM, Inc. by and between VCM, Inc. and Sylvan Learning Systems, Inc., dated as of September 30, 1997 5.1 Opinion of Piper & Marbury LLP 23.1 Consent of Ernst & Young LLP. 23.2 Consent of Deloitte & Touche LLP 23.3 Consent of Canterelli & Vernoia, CPAs 23.4 Consent of Piper & Marbury L.L.P. (contained in Exhibit 5.1) 24.1 Powers of Attorney (included on signature page) ___________________
------------------- * Incorporated by reference from the Registrant's Registration Statement on Form S-1 (No. 33-69558), filed on September 28, 1993. ** Incorporated by reference from the Company's Annual Report on Form 10-K for the Yearyear ended December 31, 1996. II-5