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SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to 240.14a-11(c) or 240.14a-12
TRO LEARNING, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(5) Total fee paid:
------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
(3) Filing Party:
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(4) Date Filed:
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DEAR STOCKHOLDERS:
Our directors and officers join me in extending a cordial invitation to
attend the Annual Meeting of Stockholders of TRO Learning, Inc., a Delaware
corporation, at 9:00 a.m. (Central Standard Time) on Tuesday, March 25, 1997, at
The Palmer House Hilton, 17 East Monroe Street, Chicago, Illinois 60603.
The matters to be considered at the meeting are described in the
accompanying Proxy Statement. Regardless of your plans for attending in person,
it is important that your shares be represented at the meeting. Therefore,
please complete, sign, date and return the enclosed proxy card. This will enable
you to vote on the business to be transacted whether or not you attend the
meeting.
Our Annual Report, including financial statements for the fiscal year 1996,
is being mailed with this letter.
The continuing interest of the stockholders in the business of the Company
is gratefully acknowledged and we hope many will attend the meeting.
Sincerely,
William R. Roach
Chairman of the Board, President and
Chief Executive Officer
February 14, 1997
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TRO LEARNING, INC.
POPLAR CREEK OFFICE PLAZA
1721 MOON LAKE BOULEVARD, SUITE 555
HOFFMAN ESTATES, IL 60194
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MARCH 25, 1997
To Our Stockholders:
The Annual Meeting of Stockholders of TRO Learning, Inc. ("the Company")
will be held at 9:00 a.m. (Central Standard Time) on Tuesday, March 25, 1997, at
The Palmer House Hilton, 17 East Monroe Street, Chicago, Illinois 60603, for the
purpose of considering and voting on the following matters:
1. To elect two directors to the Board of Directors.
2. To approve the TRO Learning, Inc. 1997 Stock Incentive Plan.
3. To approve the TRO Learning, Inc. 1997 Non-Employee Directors Stock
Option Plan.
4. To ratify the appointment of Coopers & Lybrand L.L.P. as independent
auditors for the Company for the fiscal year ending October 31, 1997.
5. To consider and act upon any other matters that may properly come before
the meeting or any adjournment thereof.
Only stockholders of record at the close of business on February 3, 1997,
will be entitled to receive notice of and to vote at the meeting or any
adjournment thereof.
Your attention is directed to the accompanying Proxy Statement. Whether or
not you plan to attend the meeting in person, you are urged to complete, sign,
date and return the enclosed proxy card. If you attend the meeting and wish to
vote in person, you may withdraw your proxy and vote your shares personally.
BY THE ORDER OF THE BOARD OF DIRECTORS,
Sharon Fierro
Senior Vice President, Chief Financial
Officer,
Treasurer and Secretary
February 14, 1997
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TRO LEARNING, INC.
POPLAR CREEK OFFICE PLAZA
1721 MOON LAKE BOULEVARD, SUITE 555
HOFFMAN ESTATES, IL 60194
------------------------
PROXY STATEMENT
GENERAL INFORMATION
This Proxy Statement is furnished in connection with the solicitation of the
enclosed proxy by the Board of Directors of the Company for use at the Annual
Meeting of Stockholders to be held on March 25, 1997, at 9:00 a.m. (Central
Standard Time) at The Palmer House Hilton, 17 East Monroe Street, Chicago,
Illinois 60603, and at any adjournment thereof, for the purpose set forth in the
Notice of Annual Meeting of Stockholders.
Shares of Common Stock represented by proxies in the form solicited will be
voted in the manner directed by the stockholder. If no direction is made, the
proxy will be voted for the election of the nominees for director named in this
Proxy Statement, for the approval of the TRO Learning, Inc. 1997 Stock Incentive
Plan, for the approval of the TRO Learning, Inc. 1997 Non-Employee Directors
Stock Option Plan, and for the ratification of the appointment of Coopers &
Lybrand L.L.P. as the Company's independent auditors. A stockholder may revoke
his or her proxy at any time before it is voted by delivering to an officer of
the Company a written notice of termination of the proxy's authority, by filing
with an officer of the Company another proxy bearing a later date, or by
appearing and voting at the meeting. This Proxy Statement and the form of proxy
enclosed are being mailed on or about February 19, 1997.
Votes cast by proxy or in person at the Annual Meeting will be tabulated by
the inspectors of election appointed by the Company for the meeting, and the
number of stockholders present in person or by proxy will determine whether or
not a quorum is present. If a broker indicates on the proxy that it does not
have discretionary authority as to certain shares to vote on a particular
matter, those shares will not be considered as present and entitled to vote by
the inspectors of election with respect to that matter.
Only the holders of the Company's Common Stock whose names appear of record
on the Company's books at the close of business on February 3, 1997 will be
entitled to vote at the annual meeting. At the close of business on February 3,
1997, a total of 6,222,861 shares of Common Stock were outstanding. Each
stockholder of Common Stock is entitled to one vote for each share held. There
is no right to cumulate voting as to any matter.
A stockholder may, with respect to the election of directors, (I) vote "FOR"
the election of all named director nominees, (ii) "WITHHOLD" authority to vote
for all named director nominees or (iii) vote "FOR" the election of all named
director nominees other than any nominee with respect to whom the stockholder
withholds authority to vote by so indicating in the appropriate space on the
proxy card. A stockholder may, with respect to the proposals to approve the TRO
Learning, Inc. 1997 Stock Incentive Plan and the TRO Learning, Inc. 1997
Non-Employee Directors Stock Option Plan, and to ratify the appointment of
Coopers & Lybrand L.L.P. as the Company's independent auditors, (I) vote "FOR"
such proposals, (ii) vote "AGAINST" such proposals or (iii) "ABSTAIN" from
voting on such proposals.
Expenses in connection with the solicitation of proxies will be paid by the
Company. Proxies are being solicited primarily by mail, but, in addition,
officers and regular employees of the Company, who will receive no extra
compensation for their services, may solicit proxies by telephone, telecopier,
or personal calls.
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A COPY OF THE COMPANY'S ANNUAL REPORT FOR THE YEAR ENDED OCTOBER 31, 1996 IS
BEING FURNISHED TO EACH STOCKHOLDER WITH THIS PROXY STATEMENT. A COPY OF THE
COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED OCTOBER 31, 1996 WILL BE
PROVIDED WITHOUT CHARGE TO EACH RECIPIENT HEREOF UPON WRITTEN REQUEST DIRECTED
TO MS. SHARON FIERRO, SENIOR VICE PRESIDENT, CHIEF FINANCIAL OFFICER, TREASURER
AND SECRETARY, TRO LEARNING, INC., POPLAR CREEK OFFICE PLAZA, 1721 MOON LAKE
BOULEVARD, SUITE 555, HOFFMAN ESTATES, ILLINOIS 60194.
PROPOSAL 1. ELECTION OF DIRECTORS
The Board of Directors consists of six (6) persons and is divided into three
classes, each of whose members serves for a staggered three-year term. The terms
of the Class I Directors expire with this Annual Meeting of Stockholders. Each
of the nominees for Class I Director, if elected, will serve three years until
the 2000 Annual Meeting of Stockholders and until a successor has been elected
and qualified. The current Class II and III Directors will continue in office
until the 1998 and 1999 Annual Meetings, respectively.
Directors will be elected at the Annual Meeting by a plurality of the votes
cast at the meeting by the holders of the shares entitled to vote in the
election represented in person or by proxy. Thus, assuming a quorum is present,
the two persons receiving the greatest number of votes will be elected to serve
as members of the Board of Directors. Accordingly, abstentions and non-votes
with respect to the election of directors will not affect the outcome of the
election of directors. If any of the nominees should be unable or unwilling to
serve as a director, an event that is not anticipated, the proxies will be voted
for substitute nominees designated by the Board of Directors. The following sets
forth information as to each of the nominees for election at the meeting and
each director continuing in office.
NOMINEES FOR DIRECTORS
Class I--Nominees to Serve Until
2000 Annual Meeting
WILLIAM R. ROACH, age 56, has been Chairman of the Board of Directors,
President and Chief Executive Officer of the Company since its formation in
1989. Prior to founding the Company, from 1987 to 1988 Mr. Roach was President
and Chief Executive Officer of Applied Learning International, Inc. ("ALI"), a
training and education company and successor to Advanced Systems Inc. ("ASI"),
and a director and Senior Vice President of ALI's parent, National Education
Corporation ("NEC"). NEC is a training and education company. From 1981 to 1987,
Mr. Roach was the Chief Executive Officer of ASI, a New York Stock Exchange
listed training and education company which was acquired by NEC in 1987. After
leaving ALI in 1988, Mr. Roach led a group of investors in pursuing an
acquisition in the field of training and education. Mr. Roach is also a director
of Military Professional Resources, Inc.
JOHN L. KRAKAUER, age 55, a private investor and consultant, has been a
director of the Company since January 1993. From June 1989 to March 1995, Mr.
Krakauer served as Executive Vice President of HealthCare COMPARE Corp., a
medical cost management company. From May 1994 to March 1995, he served as a
director, and from July 1994 to December 1994, he served as interim President
and Chief Executive Officer of Cardiac Alliance, Inc., a home health care
company specializing in cardiac care.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR PROPOSAL 1.
Unless otherwise indicated, proxies solicited by the Board of Directors will be
voted for the two Class I nominees of the Board of Directors named above.
MEMBERS OF BOARD OF DIRECTORS CONTINUING IN OFFICE
Class II--Serving Until 1998 Annual Meeting
MAJOR GENERAL VERNON B. LEWIS, JR. (USA RET), age 66, has been a director of
the Company since January 1993. From 1989 to the present, he has served as Chief
Executive Officer, a member of the Board
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of Directors, and one of the founders of Military Professional Resources, Inc.,
a military training company. He previously served as Chief Executive Officer and
Chairman of the Board of Cypress, Intl., a defense systems international
marketing company, from 1978 to 1989.
JOHN PATIENCE, age 49, has served as a director of the Company since its
formation in 1989. Mr. Patience is currently a General Partner with Crabtree
Partners, which invests capital and its management talent in technology based
businesses that are in a growth phase of development. From 1988 to 1995, Mr.
Patience was a General Partner of Marquette Venture Partners, L.P., a private
venture capital firm.
Class III--Serving Until 1999 Annual Meeting
JACK R. BORSTING, PH.D., age 68, has served as a director of the Company
since March 1993. From January 1994 to the present, he has served as the E.
Morgan Stanley Professor of Business Administration at the University of
Southern California. Dr. Borsting is also currently the Executive Director for
the Center for Telecommunications Management at the University of Southern
California. From 1988 to January 1994, he was Dean and Professor of Business
Administration at the University of Southern California, Los Angeles. Dr.
Borsting is currently a director of Northrop Grumman, Whitman Education Group,
and Bristol Technology.
TONY J. CHRISTIANSON, age 44, has served as a director of the Company since
its formation in 1989. Mr. Christianson is Managing General Partner of Cherry
Tree Ventures III ("Cherry Tree"), a private venture capital firm focused on
health and education enterprises. Cherry Tree is a principal stockholder of the
Company. He was a founder of Cherry Tree in 1980 and is currently on the Board
of Directors of Fourth Shift Corporation and Transport Corp. of America.
DIRECTOR COMPENSATION
Directors who are not employees or affiliates of the Company are paid a
$1,000 fee for attendance at each Board meeting. Committee Chairs receive $750
for each meeting and committee members receive $500 for each meeting attended.
Directors who are employees of the Company receive no additional compensation
for their services as directors of the Company.
Directors who are not employees or affiliates of the Company are eligible to
receive grants of stock options. Eligible directors received options on December
6, 1995, to acquire an aggregate of 6,000 shares of the Company's Common Stock.
The exercise price of these options was $8.00 per share (being the fair market
value of the Company's stock on the date of grant). These options vest ratably
over three years beginning one year from the date of grant and expire ten years
following the date of grant.
COMMITTEES AND MEETINGS OF THE BOARD OF DIRECTORS
The Board of Directors of the Company has an Audit Committee consisting of
Messrs. Christianson (Chairman), Krakauer and Patience, and a Compensation
Committee consisting of Messrs. Borsting (Chairman), Krakauer, and Lewis. The
Company has no standing Nomination Committee; rather, the entire Board of
Directors performs the functions which would otherwise be delegated to such
committee.
During the year ended October 31, 1996, the Board of Directors held four
meetings. All incumbent directors attended at least 80% of the meetings of the
Board and Committees of which they were members. In addition to the meetings,
the Board passed several resolutions during 1996 by written consent.
The Audit Committee met once in fiscal 1996. The Audit Committee reviews the
results and scope of the audit and other services provided by the Company's
independent auditors and recommends the appointment of independent auditors to
the Board of Directors.
The Compensation Committee met once in fiscal 1996. The Compensation
Committee administers and makes awards under the TRO 1993 Stock Option Plan (the
"1993 Employee Plan"). If the TRO
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Learning, Inc. 1997 Stock Incentive Plan (the "1997 Employee Plan") and the TRO
Learning, Inc. 1997 Non-Employee Directors Stock Option Plan (the "1997 Director
Plan") are approved by the stockholders at the Annual Meeting, the Compensation
Committee will administer those plans as well. The Compensation Committee also
studies and recommends the implementation of all compensation programs for
directors and officers of the Company.
PROPOSAL 2. APPROVAL OF THE TRO LEARNING, INC. 1997 STOCK INCENTIVE PLAN
The Board of Directors has determined that, in order to give the Company the
ongoing flexibility to attract and retain the management and employee talent
necessary for the Company's continued success, the types of incentive
compensation awards that can be granted to selected managers and employees and
the number of shares of the Company's Common Stock that may be issued or
transferred pursuant to such awards should be increased from present levels.
Currently, the 1993 Employee Plan allows the Company to grant only
non-qualified stock options and incentive stock options to selected managers and
employees. Options to purchase up to 650,000 shares of the Company's Common
Stock can be granted under this plan. Of that number, approximately 38,000
shares remain available for grant under new stock options as of January 31,
1997.
The proposed 1997 Employee Plan would allow the Company to grant incentive
awards in the form of stock options, stock appreciation rights, stock and cash.
The 1997 Employee Plan authorizes 600,000 shares of the Company's Common Stock
to be issuable or transferable pursuant to awards.
While the Board of Directors recognizes the potential dilutive effect of
compensatory stock awards, it also recognizes the significant motivational and
performance benefits that are achieved from making such awards. The Board of
Directors selected 600,000 shares for the 1997 Employee Plan, considering (1)
such number would be sufficient to provide shares for potential awards for at
least the next several years; and (2) the potential dilutive effect as of
January 31, 1997 of the 1997 Employee Plan, the 1997 Director Plan and the
number of options remaining unissued under the Company's other stock option
plans is approximately 11%.
The affirmative vote of a majority in interest of the stockholders present
in person or by proxy at the Annual Meeting and entitled to vote will be
required to approve the 1997 Employee Plan, a quorum being present.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR PROPOSAL 2.
Unless otherwise indicated, proxies solicited by the Board of Directors will be
voted for the approval of the 1997 Employee Plan.
TRO LEARNING, INC. 1997 STOCK INCENTIVE PLAN (THE "1997 EMPLOYEE PLAN")
NOTE THAT THE 1997 EMPLOYEE PLAN HAS BEEN APPROVED BY THE BOARD OF
DIRECTORS AND WILL BE VOTED UPON BY THE STOCKHOLDERS AT THE ANNUAL
MEETING. THE OPERATION OF THE PLAN IS WHOLLY CONTINGENT UPON THE
APPROVAL OF THE PLAN BY THE STOCKHOLDERS.
SUMMARY. A summary of the 1997 Employee Plan is set forth below. The
summary is qualified in its entirety by reference to the full text of the 1997
Employee Plan, which is attached to this Proxy Statement as Appendix A.
The primary purposes of the 1997 Employee Plan are to promote the long-term
success of the Company and its stockholders by strengthening the Company's
ability to attract and retain highly competent employees to serve as officers
and in other key roles and to provide a means to encourage stock ownership and
proprietary interest in the Company. Grant of awards under this plan is
consistent with the Company's goals of providing total employee compensation
that is competitive in the marketplace recognizing meaningful differences in
individual performance, fostering teamwork and offering the opportunity to earn
above-average rewards when merited by individual and corporate performance. Any
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employee of (1) the Company, (2) any entity that is directly or indirectly
controlled by the Company, or (3) any entity in which the Company has a
significant equity interest, may be recommended by the Compensation Committee
for approval by the Board of Directors to receive one or more awards under the
1997 Employee Plan. As of January 31, 1997, the Company and its subsidiaries had
364 full-time employees.
Under the 1997 Employee Plan, participants may receive stock options, stock
appreciation rights ("SARs") or stock awards, as discussed in greater detail
below. The Compensation Committee will generally recommend to the Board of
Directors, for approval by the Board, the type or types of awards to be made to
each participant; however, all awards to the Chief Executive Officer of the
Company will be approved by the Compensation Committee in its sole discretion.
Awards may be granted singly, in combination, or in tandem. Awards also may be
made in combination or in tandem with, in replacement of, as alternatives to, or
as the payment for grants or rights under any other employee or compensation
plan of the Company, including the plan of any acquired entity. "Fair Market
Value" for all awards granted under the 1997 Employee Plan is defined generally
as the closing price of a share of the Company's Common Stock on the NASDAQ
Market System for the date in question.
The performance criteria that may be used by the Compensation Committee in
granting awards under the 1997 Employee Plan include achievement of strategic
objectives, profitable growth, individual employee performance, or overall
Company performance, where such goals may be stated in absolute terms or
relative to comparable companies.
STOCK OPTIONS. A stock option represents a right to purchase a specified
number of shares of the Company's Common Stock during a specified period as
recommended to the Board by the Compensation Committee. The purchase price per
share for each stock option may not be less than 100% of Fair Market Value on
the date of grant, subject to certain exceptions. A stock option may be in the
form of an incentive stock option ("ISO") which complies with Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code"), or a non-qualified stock
option. The shares covered by a stock option may be purchased by (1) cash
payment; (2) tendering (or attesting to ownership of) shares of the Company's
Common Stock; (3) third-party exercise transactions; or (4) any combination of
these methods.
SARS. A stock appreciation right ("SAR") generally represents a right to
receive payment, in cash and/or shares of the Company's Common Stock, equal to
the excess of the Fair Market Value of a specified number of shares of the
Company's Common Stock on the date the SAR is exercised over the Fair Market
Value of such shares on the date the SAR was granted, as set forth in the
applicable award agreement.
STOCK AWARDS. A stock award represents an award made or denominated in
shares of the Company's Common Stock or units equivalent in value to shares of
the Company's Common Stock. All or part of any stock award may be subject to
conditions and restrictions established by the Compensation Committee and set
forth in the award agreement, which may include, but are not limited to,
continuous service with the Company and/or the achievement of performance goals.
The Compensation Committee may provide that any awards under the 1997
Employee Plan earn dividends or dividend equivalents. Such dividends or dividend
equivalents may be paid currently or may be credited to a participant's account.
Any crediting of dividends or dividend equivalents may be made subject to such
restrictions and conditions as the Committee may establish, including
reinvestment in additional shares or share equivalents.
The aggregate number of shares of the Company's Common Stock which may be
transferred to participants under the 1997 Employee Plan is 600,000. The
aggregate number of shares of the Company's Common Stock that may be covered by
awards granted to any single individual under the 1997 Employee Plan may not
exceed 75,000 shares per fiscal year of the Company. Any or all of the shares
under the 1997 Employee Plan may be granted in the form of ISOs.
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In the event of a stock dividend, stock split or other change affecting the
shares or share price of Common Stock, all shares of Common Stock available for
issuance and outstanding under previously granted awards may be adjusted in an
equitable manner as determined by the Compensation Committee.
Payment of awards may be in the form of cash, shares of the Company's Stock,
other awards or combinations thereof as the Compensation Committee shall
determine at the time of the grant, and with such restrictions as it may impose.
The Compensation Committee also may require or permit participants to elect to
defer the issuance of shares or the settlement of awards in cash under such
rules and procedures as it may establish under the 1997 Employee Plan. It also
may provide that deferred settlements include the payment or crediting of
interest on the deferral amounts, or the payment or crediting of dividend
equivalents where amounts are denominated in share equivalents.
Awards granted under the 1997 Employee Plan shall not be transferable or
assignable other than: (1) by will or the laws of descent and distribution; (2)
by gift or other transfer of an award to any trust or estate in which the
original award recipient or such recipient's spouse or other immediate relative
has a substantial beneficial interest, or to a spouse or other immediate
relative, provided that such transfer is permitted by Rule 16b-3 under the
Exchange Act as in effect when such transfer occurs and the Board of Directors
does not rescind this provision prior to such transfer; or (3) pursuant to a
qualified domestic relations order (as defined by the Code).
FEDERAL INCOME TAX CONSEQUENCES. In general, under the Code as presently in
effect, a participant will not be deemed to receive any income for federal
income tax purposes at the time an option or SAR is granted or a restricted
stock award is made, nor will the Company be entitled to a tax deduction at that
time. However, when any part of an option or SAR is exercised, when restrictions
on restricted stock lapse, or when unrestricted stock award is made, the federal
income tax consequences may be summarized as follows:
1. In the case of an exercise of a non-qualified option, the participant
will recognize ordinary income in an amount equal to the difference
between the option price and the Fair Market Value of the Company's
Common Stock on the exercise date.
2. In the case of an exercise of a SAR, the participant will recognize
ordinary income on the exercise date in an amount equal to any cash and
unrestricted Common Stock received, at Fair Market Value on the exercise
date.
3. In the case of an exercise of an option or SAR payable in restricted
stock, or in the case of an award of restricted stock, the immediate
federal income tax effect for the recipient will depend on the nature of
the restrictions. Generally, the value of the Company's Common Stock will
not be taxable to the recipient as ordinary income until the year in
which his or her interest in the stock is freely transferable or is no
longer subject to a substantial risk of forfeiture. However, the
recipient may elect to recognize income when the stock is received,
rather than when his or her interest in the stock is freely transferable
or is no longer subject to a substantial risk of forfeiture. If the
recipient makes this election, the amount taxed to the recipient as
ordinary income is determined as of the date of receipt of the restricted
stock.
4. In the case of an ISO there is no tax liability at the time of exercise.
However, the excess of the Fair Market Value of the Company's Common
Stock on the exercise date over the option price is included in the
participant's income for purposes of the alternative minimum tax. If no
disposition of the ISO stock is made before the later of one year from
the date of exercise or two years from the date the ISO is granted, the
participant will realize a long-term capital gain or loss upon a sale of
the stock equal to the difference between the option price and the sale
price. If the stock is not held for the required period, ordinary income
tax treatment will generally apply to the amount of any gain at sale or
exercise, whichever is less, and the balance of any gain or loss will
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be treated as capital gain or loss (long-term or short-term, depending on
whether the shares have been held for more than one year).
5. Upon the exercise of a non-qualified option or SAR, the award of stock,
or the recognition of income on restricted stock, the Company will
generally be allowed an income tax deduction equal to the ordinary income
recognized by the employee. The Company does not receive an income tax
deduction as a result of the exercise of an ISO, provided that the ISO
stock is held for the required period as described above. When a cash
payment is made pursuant to the award, the recipient will recognize the
amount of the cash payment as ordinary income, and the Company will
generally be entitled to a deduction in the same amount.
6. The Company may not deduct compensation of more than $1,000,000 that is
paid in a taxable year to certain "covered employees" as defined in
Section 162(m) of the Code. The deduction limit, however, does not apply
to certain types of compensation, including qualified performance-based
compensation. The Company believes that compensation attributable to
awards granted under the 1997 Employee Plan is qualified
performance-based compensation and therefore not subject to the deduction
limit.
ADMINISTRATION OF THE 1997 EMPLOYEE PLAN. The 1997 Employee Plan will be
administered by the Compensation Committee, which has broad and exclusive
authority to administer and interpret the 1997 Employee Plan and its provisions
as it deems necessary and appropriate. All decisions made by the Compensation
Committee are final and binding on all persons affected by such decisions.
The 1997 Employee Plan may be amended by the Compensation Committee as it
deems necessary or appropriate, except that any amendment for which stockholder
approval is required for the Plan to continue to comply with the requirements of
Section 162(m) of the Code must be approved by affirmative vote of the
stockholders in the manner described in the following paragraph prior to
becoming effective.
The 1997 Employee Plan will become effective on the date it is approved by
the affirmative vote of the holders of a majority of the stockholders present or
represented, and entitled to a vote at, the Annual Meeting.
NEW PLAN BENEFITS. No benefits or amounts have been allocated under the
1997 Employee Plan; nor are any such benefits or amounts now determinable. For
comparison purposes, please refer to the grants and awards that were made in
fiscal year 1996 under the 1993 Employee Plan, as shown in the 1996 stock option
grants table on page 10. In addition to the data shown in that table, in 1996,
122,000 stock options were granted to all current elected officers as a group
and 66,250 stock options were granted to all other employees as a group. The
1993 Employee Plan, like the 1997 Employee Plan, does not allow awards to
non-employee Directors.
PROPOSAL 3. APPROVAL OF THE TRO LEARNING, INC. 1997 NON-EMPLOYEE
DIRECTORS STOCK OPTION PLAN
The Board of Directors has determined that, in order to give the Company the
ongoing flexibility to attract and retain the non-employee director talent
necessary for the Company's continued success, the number of shares of the
Company's Common Stock that are issued pursuant to stock option awards should be
increased from present levels.
The proposed 1997 Director Plan authorizes up to 100,000 shares to be issued
under stock option grants to non-employee Directors.
The Board of Directors selected 100,000 shares for the 1997 Director Plan,
considering (1) such number would be sufficient to provide shares for potential
awards for at least the next several years; and (2) the potential dilutive
effect as of January 31, 1997 of the 1997 Director Plan, the 1997 Employee Plan
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and the number of options remaining unissued under the Company's other stock
option plans is approximately 11%.
The affirmative vote of a majority in interest of the stockholders present
in person or by proxy at the Annual Meeting and entitled to vote will be
required to approve the 1997 Director Plan, a quorum being present.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR PROPOSAL
3. Unless otherwise indicated, proxies solicited by the Board of Directors will
be voted for the approval of the 1997 Director Plan.
TRO LEARNING, INC. 1997 NON-EMPLOYEE DIRECTORS STOCK OPTION PLAN (THE "1997
DIRECTOR PLAN")
NOTE THAT THE 1997 DIRECTOR PLAN HAS BEEN APPROVED BY THE BOARD OF
DIRECTORS AND WILL BE VOTED UPON AT THE ANNUAL MEETING. THE
OPERATION OF THE PLAN IS WHOLLY CONTINGENT UPON THE APPROVAL OF
THE PLAN BY THE STOCKHOLDERS.
SUMMARY. A summary of the 1997 Director Plan is set forth below. The
summary is qualified in its entirety by reference to the full text of the 1997
Director Plan, which is attached to this Proxy Statement as Appendix B.
AWARDS. The 1997 Director Plan provides that any non-employee Director may
be granted one or more stock options under the plan. As of January 3, 1997, the
Company had five non-employee Directors.
Stock options under the 1997 Director Plan may be approved by the Board of
Directors or the Compensation Committee. The aggregate number of shares of the
Company's Common Stock which may be transferred to participants under the 1997
Director Plan is 100,000.
The exercise price of options granted under the 1997 Director Plan will be
the Fair Market Value of the Company's Common Stock on the date of grant. "Fair
Market Value" for all options granted under the 1997 Director Plan is defined as
the closing price of a share of the Company's Common Stock on the NASDAQ
National Market System for the date in question. Each option granted under the
plan vests in accordance with the schedule approved by the Board of Directors or
the Compensation Committee. Vesting can only occur so long as the non-employee
Director remains in continuous service from the grant date through the vesting
date. Each option terminates ten years from the date of grant, or earlier, upon
the later to occur of (1) three years after the holder ceases service as a
Director for any reason, if the holder served for six years or more; (2) one
year after the holder ceases service as a Director as a result of death or
disability; or (3) 90 days after the holder ceases service as a Director for any
reason other than death or disability.
OTHER TERMS. Other features of options granted under the 1997 Director
Plan, including the federal income tax consequences thereof, are analogous to
those described for options granted under the 1997 Employee Plan, which
description can be found under the heading "Proposal 2. Approval of the TRO
Learning, Inc. 1997 Stock Incentive Plan" on page 3.
NEW PLAN BENEFITS. The grant of any stock options under the 1997 Director
Plan is subject to stockholder approval of the plan at the Annual Meeting. Only
non-employee Directors may receive stock options under the 1997 Director plan.
PROPOSAL 4. APPOINTMENT OF AUDITORS
The Board of Directors has appointed Coopers & Lybrand L.L.P. as independent
auditors for the Company for the fiscal year ending October 31, 1997. A proposal
to ratify this appointment will be presented at the Annual Meeting. Coopers &
Lybrand L.L.P. was appointed in 1992 to examine the Company's financial
statements. Representatives from Coopers & Lybrand L.L.P. are expected to be
8
<PAGE>
present at the Annual Meeting, will have an opportunity to make a statement if
they desire to do so, and will be available to respond to appropriate questions
from stockholders.
If a quorum is present, in order to approve the proposal to ratify the
appointment of Coopers & Lybrand L.L.P. as the Company's independent auditors, a
majority of the shares present in person or by proxy at the Annual Meeting and
entitled to vote on such proposal must vote in favor of it. Accordingly,
abstentions will have the same effect as votes against and non-votes will reduce
the number of shares considered present and entitled to vote on the proposal.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR PROPOSAL 4. If
the appointment of Coopers & Lybrand L.L.P. as the Company's independent
auditors is not ratified by the stockholders, the Board of Directors is not
obligated to appoint other auditors, but the Board of Directors will give
consideration to such unfavorable vote.
OTHER MATTERS
The Board of Directors of the Company knows of no other matters which may
come before the meeting. However, if any matters other than those referred to
above should properly come before the meeting calling for a vote of the
stockholders, it is the intention of the persons named in the accompanying proxy
card to vote on such matters in accordance with their best judgment.
9
<PAGE>
EXECUTIVE COMPENSATION
The following table provides certain summary information relating to
compensation paid to, or accrued by the Company on behalf of, the Company's
Chief Executive Officer and the other four most highly compensated executive
officers of the Company as of October 31, 1996 (the "Named Officers") for the
years ended October 31, 1996, 1995 and 1994.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
---------------
AWARDS
ANNUAL ---------------
COMPENSATION SECURITIES
NAME AND PRINCIPAL --------------------------------- UNDERLYING ALL OTHER
POSITION AT 10/31/96 YEAR SALARY BONUS(1) OPTIONS (#)(2) COMPENSATION
- -------------------------------------------------- --------- ---------- ---------- --------------- --------------
<S> <C> <C> <C> <C> <C>
William R. Roach, ................................ 1996 $ 227,116 -- 50,000 12,480(3)
President and 1995 175,658 -- 30,000 12,480(3)
Chief Executive Officer 1994 175,658 -- 78,000 12,480(3)
G. Thomas Ahern, ................................. 1996 95,846 $ 97,831 13,000 --
Vice President, North American 1995 80,308 71,748 17,000 --
PLATO-Registered Trademark- Education Sales 1994 80,308 75,124 4,150 --
Wellesley R. Foshay, ............................. 1996 126,040 -- 10,000 --
Vice President, Instructional Design 1995 115,191 -- 4,000 --
and Cognitive Learning 1994 115,191 -- 1,900 --
Michael A. Hill, ................................. 1996 110,923 102,631 13,000 --
Senior Vice President, PLATO 1995 100,385 79,144 17,000 --
Education 1994 100,384 77,856 4,150 --
John Murray, ..................................... 1996 103,716 35,052 10,000 36,121(4)
Vice President, Product 1995 81,256 63,036 7,000 20,368(5)
Development 1994 81,264 28,824 2,200 20,786(5)
</TABLE>
- ------------------------
(1) Includes sales commissions and bonuses.
(2) None of the Named Officers has been granted stock appreciation rights
("SARs"), or holds shares of restricted stock which are subject to
performance-based conditions on vesting.
(3) Amount consists of premiums paid by the Company for term life insurance (of
which the Company is not the beneficiary).
(4) Amount includes value of car allowance, relocation expenses, and health
insurance premiums paid by the Company and contributions made by the Company
to a retirement savings plan. (For fiscal 1996, amounts are $3,961, $27,945,
$270 and $3,945, respectively.)
(5) Amount includes value of car allowance and health insurance premiums paid by
the Company and contributions made by the Company to a retirement savings
plan.
10
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
Shown below is information relating to grants of stock options to the Named
Officers under the 1993 Employee Plan during the year ended October 31, 1996. No
SARs were granted to these individuals in fiscal 1996, and none of the Named
Officers held SARs as of October 31, 1996.
<TABLE>
<CAPTION>
PERCENT OF POTENTIAL REALIZABLE
TOTAL VALUE AT ASSUMED
NUMBER OF OPTIONS ANNUAL RATES OF STOCK
SECURITIES GRANTED TO PRICE APPRECIATION FOR
UNDERLYING EMPLOYEES EXERCISE OPTION TERM(2)
OPTIONS IN FISCAL PRICE EXPIRATION ----------------------
NAME GRANTED (#)(1) 1996 ($/SHARE) DATE 5% 10%
- ------------------------------------- --------------- --------------- ----------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
William R. Roach..................... 30,000 16% $ 8.00 12/6/05 $ 390,934 $ 622,497
20,000 11 17.50 9/27/06 570,112 907,811
G. Thomas Ahern...................... 8,000 4 8.00 12/6/05 104,249 165,999
5,000 3 17.50 9/27/06 142,529 226,952
Wellesley R. Foshay.................. 5,000 3 8.00 12/6/05 65,156 103,749
5,000 3 17.50 9/27/06 142,529 226,952
Michael A. Hill...................... 8,000 4 8.00 12/6/05 104,249 165,999
5,000 3 17.50 9/27/06 142,529 226,952
John Murray.......................... 5,000 3 8.00 12/6/05 65,156 103,749
5,000 3 17.50 9/27/06 142,529 226,952
</TABLE>
- ------------------------
(1) All options granted in fiscal 1996 expire ten years following the date of
grant, subject to earlier termination upon certain events related to
termination of employment. These options were granted at 100% of the fair
market value of such options on the date of grant. Options vest ratably over
a three-year period beginning one year from the date of grant.
(2) Assumes appreciation in value from the date of grant to the end of the
option term at the indicated rate. The dollar amounts under these columns
are the result of calculations at the 5% and 10% rates set by the Securities
and Exchange Commission and therefore are not intended to forecast possible
future appreciation, if any, of the Company's stock price.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END OPTION
VALUES
Shown below is information regarding exercises of stock options during
fiscal 1996 and holdings of unexercised stock options at October 31, 1996 by the
Company's Named Officers.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
VALUE OPTIONS HELD AT IN-THE-MONEY OPTIONS AT
SHARES REALIZED OCTOBER 31, 1996 OCTOBER 31, 1996 ($)(1)
ACQUIRED ON ($) -------------------------- ---------------------------
NAME EXERCISE (#) (1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------------------ ------------- ----------- ----------- ------------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
William R. Roach.............. -- -- 256,403 95,997 $ 2,483,799 $ 733,212
G. Thomas Ahern............... -- -- 23,837 25,717 314,278 217,726
Wellesley R. Foshay........... 6,000 93,810 16,055 13,299 219,415 86,423
Michael A. Hill............... 7,500 121,950 25,707 25,717 338,438 217,726
John Murray................... 14,724 198,144 8,800 15,400 87,330 106,256
</TABLE>
- ------------------------
(1) Aggregate market value on exercise date or October 31, 1996, as appropriate,
less aggregate exercise price.
11
<PAGE>
OTHER COMPENSATION ARRANGEMENTS
The Company's Chief Executive Officer has entered into a Severance and
Non-Competition Agreement (the "Severance Agreement") with the Company. Mr.
Roach's Severance Agreement provides for two year's salary and benefits if he is
terminated without cause (or resigns after a material adverse change or
reduction in position or responsibilities) and precludes employment in any
capacity, during or for two years after termination of employment with the
Company, in any business or activity competitive with the Company's principal
businesses. As of October 31, 1996, the total amount of severance payments
payable by the Company under this Severance Agreement is approximately $450,000.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
This report is submitted by Messrs. Borsting, Krakauer, and Lewis in their
capacity as the Board of Directors' Compensation Committee and addresses the
Company's compensation policies for fiscal 1996 as they affected Mr. Roach, the
Chief Executive Officer ("the CEO"), and the other executive officers of the
Company (including the Named Officers).
Compensation Philosophy
The Company's compensation philosophy, as developed under the supervision of
the Compensation Committee, is highly incentive oriented, particularly for
executive officers. The goals of the executive compensation program are to
attract, retain, and reward executive officers who contribute to the success of
the Company. Compensation opportunities are aligned with the Company's business
objectives. The compensation programs are designed to motivate executive
officers to meet annual corporate performance goals and enhance long-term
stockholder value.
In designing and administering the individual elements of the executive
compensation program, the Committee strives to balance short and long-term
incentive objectives and use prudent judgment in establishing performance
criteria, evaluating performance, and determining incentive awards.
Overview of Executive Compensation Policy
The executive compensation program is designed to be closely linked to
corporate performance and returns to stockholders. Accordingly, the Company has
developed an overall compensation strategy and specific compensation plans that
tie a significant portion of executive compensation to the Company's success in
meeting specified performance goals. The overall objectives of this strategy are
to motivate the CEO and executive officers to achieve the goals inherent in the
Company's business strategy, to link executive and stockholder interests through
equity-based plans to maintain a high quality core of executives, and finally,
to provide a compensation package that recognizes individual contributions, as
well as overall business results.
The Compensation Committee receives the recommendations of the CEO for the
compensation to be paid to executive officers, including the Named Officers, and
after due deliberation determines the compensation of such executive officers
and the CEO. This process is designed to ensure consistency throughout the
executive compensation program. The key elements of the Company's executive
compensation program consist of base salary, annual cash incentive compensation
for the sales executives, and stock option incentives.
The Compensation Committee believes the CEO's compensation should be heavily
influenced by Company performance, including the achievement of long-term
strategic objectives, profitable growth, and increased stockholder value.
Therefore, although there is necessarily some subjectivity in setting the CEO's
base salary, major elements of the compensation package are directly tied to
Company performance. The CEO's annual salary was approximately $227,000 in
fiscal 1996 and approximately $175,000 in each of fiscal 1995 and 1994. The
CEO's stock option incentive grants in fiscal 1996 resulted from the achievement
12
<PAGE>
of fiscal 1995 revenue and earnings growth objectives and certain strategic
growth objectives and were granted on December 6, 1995 and September 27, 1996 at
fair market value.
The Compensation Committee's policies with respect to each of the
compensation program elements are discussed below. In addition, while the
elements of compensation described below are considered separately, the
Compensation Committee takes into account the full compensation package provided
by the Company, including group health and life insurance and participation in
the Company's 401(k) Plan.
Base Salaries
Salaries for executive officers are determined by evaluating the
responsibilities of the position held and the experience of the individual, as
well as their contribution to the achievement of Company goals. The Committee
believes that the Company generally establishes relatively conservative
executive officer base salaries. These base salaries are reviewed annually by
the Committee in view of overall Company performance and may be adjusted to
reflect changes in responsibilities and the executive's personal contribution to
corporate performance.
Annual Cash Incentive Compensation
The annual incentive portion of the sales executive compensation program
provides for sales commissions and bonuses. Commissions are based on billings
and bonuses are based on the achievement of preestablished annual order intake
goals.
Stock Option Incentives
Stock options provide executives with the opportunity to build an equity
interest in the Company and to share in the appreciation of the value of the
Company's Common Stock. Stock options are granted at the fair market value price
of the Common Stock on the date of the grant, are subject to vesting over time,
and only have future value for the executives if the stock price appreciates
from the date of grant. Factors influencing stock option grants to executive
officers include the performance of the Company, the relative levels of
responsibility, contributions to the business of the Company, and
competitiveness with other growth-oriented companies. Stock options granted to
executive officers under the 1993 Employee Plan are approved by the Committee.
Stock options granted in fiscal 1996 to the CEO and the other Named Officers
were awarded under the 1993 Employee Plan and were a result of the achievement
of fiscal 1995 revenue and earnings growth objectives and certain strategic
growth objectives.
Benefits
Benefits offered to executive officers are largely those that are offered to
the general employee population, such as group health and life insurance
coverage and participation in the Company's 401(k) Plan. In addition, the CEO is
provided with supplemental life insurance. These benefits are not tied directly
to corporate performance.
The Compensation Committee believes that the Company's executive
compensation policies and programs serve the interests of the Company and its
stockholders.
THE COMPENSATION COMMITTEE OF
THE BOARD OF DIRECTORS
Jack R. Borsting, Ph.D., Chairman
John L. Krakauer
Major General Vernon B. Lewis, Jr.
(USA Ret)
13
<PAGE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee consists of directors Borsting, Krakauer, and
Lewis. Major General Vernon B. Lewis, Jr., is the Chief Executive Officer of
Military Professional Resources, Inc. William R. Roach, Chairman of the Board of
Directors and Chief Executive Officer of the Company, is a member of the Board
of Directors of Military Professional Resources, Inc.
STOCK PERFORMANCE GRAPH
In accordance with Securities and Exchange Commission regulations, the
following performance graph compares the cumulative total stockholder return on
the Company's Common Stock to the cumulative total return on the NASDAQ Index
and the weighted average return of three peer issuers (described below) from
December 23, 1992, the date of the Company's initial public offering, through
October 31, 1996, assuming an initial investment of $100 and the reinvestment of
all dividends.
The peer group represents three companies which have training and education
operations: National Education Corporation, Broderbund Software, and Apollo
Group. Although the businesses of the companies in the peer group include
operations outside of the training and education industry, and/or serve markets
different than those of the Company, the Company believes the selection of these
issuers for comparison purposes is reasonable.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
12/23/1992 10/31/1993 10/31/1994 10/31/1995 10/31/1996
<S> <C> <C> <C> <C> <C> <C>
TRO Learning $100.00 $90.00 $67.50 $78.80 $177.50
Peer Group 100 140.9 168.9 162.2 80
NASDAQ Comp. 100 117.9 117.7 156.8 184.8
</TABLE>
14
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of January 3, 1997, information about the
ownership of Common Stock of the Company by each stockholder who is known by the
Company to own beneficially more than 5% of the outstanding Common Stock of the
Company. Except as otherwise indicated, the stockholders listed in the table
have sole voting and investment powers with respect to the shares indicated.
<TABLE>
<CAPTION>
NUMBER OF SHARES
NAME AND ADDRESS OF BENEFICIALLY
BENEFICIAL OWNER OWNED PERCENT OF CLASS(1)
- ------------------------------------------------------- ----------------- ----------------------
<S> <C> <C>
William R. Roach (2) .................................. 1,235,725 20%
Poplar Creek Office Plaza
1721 Moon Lake Boulevard
Suite 555
Hoffman Estates, Illinois 60194
Cherry Tree Ventures III .............................. 788,360 13%
3800 W. 80th Street
Suite 1400
Bloomington, MN 55431
</TABLE>
- ------------------------
(1) Percent of class calculation is based on the number of shares of the
Company's Common Stock outstanding as of January 3, 1997.
(2) Excludes an aggregate of 42,128 shares of Common Stock held of record by the
adult children of William R. Roach, and 147,609 shares held of record by a
family limited partnership, over which Mr. Roach maintains voting authority
but disclaims beneficial ownership. Includes 292,398 shares subject to
currently exercisable options and options which become exercisable within 60
days of January 3, 1997 ("currently exercisable options").
15
<PAGE>
The following table sets forth, as of January 3, 1997, information about the
beneficial ownership of Common Stock of the Company by each director, each Named
Officer, and by all directors and all executive officers as a group. Except as
otherwise indicated, the stockholders listed in the following table have sole
voting and investment powers with respect to the shares indicated.
<TABLE>
<CAPTION>
NUMBER OF SHARES
DIRECTORS AND BENEFICIALLY PERCENT OF
EXECUTIVE OFFICERS OWNED(1) CLASS(2)
- ---------------------------------------------------------------- ----------------- --------------
<S> <C> <C>
G. Thomas Ahern (3)............................................. 34,808 1%
Jack R. Borsting (4)............................................ 14,367 *
Tony J. Christianson (5)........................................ 788,360 13%
Wellesley R. Foshay (6)......................................... 26,206 *
Michael A. Hill (7)............................................. 33,114 1%
John L. Krakauer (8)............................................ 79,167 1%
Vernon B. Lewis, Jr. (4)........................................ 35,117 1%
John Murray (9)................................................. 12,898 *
John Patience................................................... 41,012 1%
William R. Roach (10)........................................... 1,235,725 20%
All directors and executive officers as a group (13 individuals)
(5)(11)....................................................... 2,498,425 37%
</TABLE>
- --------------------------
* Less than 1%
(1) Under regulations of the Securities and Exchange Commission, persons who
own or have the power to vote or dispose of shares, either alone or jointly
with others, are deemed to be the beneficial owners of such shares. Such
persons are also deemed to be the beneficial owners of shares beneficially
owned by certain family members.
(2) Shares subject to currently exercisable options are considered outstanding
for the purpose of determining the percent of class held by the holder of
such option or warrant, but not for the purpose of computing the percentage
held by others. For the purpose of computing these percentages, the number
of shares outstanding as of January 3, 1997 was 6,178,880, excluding
currently exercisable options.
(3) Includes 30,220 shares subject to currently exercisable options.
(4) Includes 9,167 shares subject to currently exercisable options.
(5) Includes 788,360 shares held of record by Cherry Tree Ventures III as to
which Mr. Christianson (an affiliate of Cherry Tree Ventures III) disclaims
beneficial ownership.
(6) Includes 11,821 shares subject to currently exercisable options.
(7) Includes 32,090 shares subject to currently exercisable options.
(8) Includes 667 shares subject to currently exercisable options.
(9) Includes 11,866 shares subject to currently exercisable options.
(10) Excludes an aggregate of 42,128 shares of Common Stock held of record by
the adult children of William R. Roach, and 147,609 shares held of record by
a family limited partnership, of which Mr. Roach maintains voting authority
but disclaims beneficial ownership. Includes 292,398 shares subject to
currently exercisable options.
(11) Includes 570,496 shares subject to currently exercisable options.
16
<PAGE>
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires executive
officers and directors, and persons who beneficially own more than ten percent
(10%) of the Company's Common Stock, to file initial reports of ownership and
reports of changes in ownership with the Securities and Exchange Commission
("SEC"). Executive officers, directors, and greater than ten percent (10%)
beneficial owners are required by SEC regulations to furnish the Company with
copies of all Section 16(a) forms they file.
Based solely on a review of the copies of such forms furnished to the
Company and written representations from the executive officers and directors,
the Company believes that all Section 16(a) filing requirements applicable to
its executive officers and directors were complied with during its fiscal year
1996.
STOCKHOLDER PROPOSALS FOR THE NEXT ANNUAL MEETING
Any proposal by a stockholder to be presented at the next Annual Meeting
must be received at the Company's principal executive offices, Poplar Creek
Office Plaza, 1721 Moon Lake Boulevard, Suite 555, Hoffman Estates, Illinois
60194 not later than October 28, 1997.
BY THE ORDER OF THE BOARD OF DIRECTORS
Sharon Fierro
Senior Vice President, Chief Financial
Officer,
Treasurer and Secretary
Dated: February 14, 1997
17
<PAGE>
APPENDIX A
TRO LEARNING, INC.
1997 STOCK INCENTIVE PLAN
1. PURPOSE. The TRO Learning, Inc. 1997 Stock Incentive Plan (the "Plan")
is intended to promote the long-term success of TRO Learning, Inc. (the
"Company") and its stockholders by strengthening the Company's ability to
attract and retain highly competent managers and other selected employees and to
provide a means to encourage stock ownership and proprietary interest in the
Company. The Plan is intended to provide participants with stock-based incentive
compensation which is not subject to the deduction limitation rules prescribed
under Section 162(m) of the Internal Revenue Code of 1986, as amended (the
"Code"), and should be construed to the extent possible as providing for
remuneration which is "performance-based compensation" within the meaning of
Section 162(m) of the Code and the regulations promulgated thereunder.
2. TERM. The Plan shall become effective upon its ratification and
approval by the affirmative vote of the holders of a majority of the securities
of the Company present or represented, and entitled to vote at a meeting of
stockholders of the Company, and shall terminate at the close of business on the
tenth anniversary of such approval date unless terminated earlier under Section
14. After termination of the Plan, no future awards may be granted, but
previously granted awards shall remain outstanding in accordance with their
applicable terms and conditions and the terms and conditions of the Plan.
3. PLAN ADMINISTRATION. A committee (the "Compensation Committee")
appointed by the Board of Directors of the Company (the "Board") shall be
responsible for administering the Plan. The Compensation Committee shall be
comprised of two or more non-employee members of the Board who shall qualify as
outside Directors to administer the Plan as contemplated by (1) Rule 16b-3 under
the Securities and Exchange Act of 1934 (the "Exchange Act") or any successor
rules; and (2) Section 162(m) of the Code. Except as otherwise provided in the
Plan, the Compensation Committee shall have full and exclusive power to
interpret the Plan and to adopt such rules, regulations and guidelines for
carrying out the Plan as it may deem necessary or proper, and such power shall
be executed in the best interests of the Company and in keeping with the
objectives of the Plan. The interpretation and construction of any provision of
the Plan or any option or right granted hereunder and all determinations by the
Compensation Committee in each case shall be final, binding and conclusive with
respect to all interested parties.
4. ELIGIBILITY. Any employee of the Company shall be eligible to receive
one or more awards under the Plan. "Company" includes any entity that is
directly or indirectly controlled by the Company or any entity in which the
Company has a significant equity interest, as determined by the Compensation
Committee.
5. SHARES OF COMMON STOCK SUBJECT TO THE PLAN. Subject to the provisions
of Section 6 of the Plan, the aggregate number of shares of Common Stock, $.01
par value, of the Company ("Stock") which may be transferred to participants
under the Plan shall be 600,000, and the aggregate number of shares of Stock
that may be covered by awards granted to any single individual under the Plan
shall not exceed 75,000 shares per fiscal year of the Company. Any or all of
such shares may be granted in the form of incentive stock options ("ISOs")
intended to comply with Section 422 of the Code.
Shares subject to awards under the Plan which expire, terminate, or are
canceled prior to exercise or, in the case of awards granted under Section 8.3,
do not vest, shall thereafter be available for the granting of other awards.
Shares which have been exchanged by a participant as full or partial payment to
the Company in connection with any award under the Plan also shall thereafter be
available for the granting of other awards. In instances where a stock
appreciation right ("SAR") or other award is settled in cash, the shares covered
by such award shall remain available for issuance under the Plan. Likewise, the
payment of cash dividends and dividend equivalents paid in cash in conjunction
with outstanding awards shall not be counted against the shares available for
issuance. Any shares that are issued by the Company, and any
18
<PAGE>
awards that are granted through the assumption of, or in substitution for,
outstanding awards previously granted by an acquired entity shall not be counted
against the shares available for issuance under the Plan.
Any shares of Stock issued under the Plan may consist in whole or in part of
authorized and unissued shares or of treasury shares, and no fractional shares
shall be issued under the Plan. Cash may be paid in lieu of any fractional
shares in settlements of awards under the Plan.
6. ADJUSTMENTS. In the event of any stock dividend, stock split,
combination or exchange of shares, merger, consolidation, spin-off,
recapitalization or other distribution (other than normal cash dividends) of
Company assets to stockholders, or any other change affecting shares of Stock or
share price, such proportionate adjustments, if any, as the Compensation
Committee in its discretion may deem appropriate to reflect such change shall be
made with respect to (1) the aggregate number of shares of Stock that may be
issued under the Plan; (2) each outstanding award made under the Plan; and (3)
the exercise price per share for any outstanding stock options, SARs or similar
awards under the Plan.
7. FAIR MARKET VALUE. "Fair Market Value," for all purposes of the Plan,
shall mean the closing price of a share of Stock on the NASDAQ National Market
System for the date in question. If no sales of shares were made on such date,
the closing price of a share as reported for the preceding day on which a sale
of shares occurred shall be used.
8. AWARDS. Except as otherwise provided in this Section 8, the
Compensation Committee shall recommend to the Board the type or types of
award(s) to be made to each participant and the number of shares of Stock
subject to each such award, and any other terms, conditions and limitations
applicable to such award, and the Board shall grant awards under the Plan after
considering such recommendations. Awards may be granted singly, in combination
or in tandem. Awards also may be made in combination or in tandem with, in
replacement of, as alternatives to or as the payment form for grants or rights
under any other compensation plan or individual contract or agreement of the
Company including those of any acquired entity. The types of awards that may be
granted under the Plan are:
8.1 STOCK OPTIONS. A stock option is a right to purchase a specified
number of shares of Stock during a specified period. The purchase price
per share for each stock option shall be not less than 100% of Fair
Market Value on the date of grant, except if a stock option is granted
retroactively in tandem with or as a substitution for a SAR, the
exercise price may be no lower than the Fair Market Value of a share as
set forth in award agreements for such tandem or replaced SAR. A stock
option may be in the form of an ISO which complies with Section 422 of
the Code. The price at which shares may be purchased under a stock
option shall be paid in full by the optionee at the time of the
exercise in cash or such other method permitted by the Compensation
Committee, including (1) tendering shares; (2) authorizing a third
party to sell the shares (or a sufficient portion thereof) acquired
upon exercise of a stock option and assigning the delivery to the
Company of a sufficient amount of the sale proceeds to pay for all the
shares acquired through such exercise; or (3) any combination of the
above.
8.2. SARS. A SAR is a right to receive a payment, in cash and/or shares,
equal to the excess of the Fair Market Value of a specified number of
shares of Stock on the date the SAR is exercised over the Fair Market
Value on the date the SAR was granted as set forth in the applicable
award agreement; except that if a SAR is granted retroactively in
tandem with or in substitution for a stock option, the designated Fair
Market Value set forth in the award agreement shall be no lower than
the Fair Market Value of a share for such tandem or replaced stock
option.
8.3. STOCK AWARDS. A stock award is a grant made or denominated in shares
or units equivalent in value to shares. All or part of any stock award
may be subject to conditions and restrictions as set forth in the
applicable award agreement, which may be based on continuous service
with the Company or the achievement of performance goals related to
profits, profit growth, profit-related return ratios, cash flow or
total stockholder return, where such goals may be stated in absolute
terms or relative to comparable companies.
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Notwithstanding the foregoing, the Compensation Committee shall have full
and exclusive authority to determine the type or types of awards to be made to
the Chief Executive Officer of the Company, the number of shares subject to each
such award and any other terms, conditions and limitations applicable to such
awards.
9. DIVIDENDS AND DIVIDEND EQUIVALENTS. Any awards under the Plan may earn
dividends or dividend equivalents as set forth in the applicable award
agreement. Such dividends or dividend equivalents may be paid currently or may
be credited to a participant's account. Any crediting of dividends or dividend
equivalents may be subject to such restrictions and conditions may be
established in the applicable award agreement, including reinvestment in
additional shares or share equivalents.
10. DEFERRALS AND SETTLEMENTS. Payment of awards may be in the form of
cash, stock, other awards or combinations thereof as shall be determined at the
time of grant, and with such restrictions as may be imposed in the award
agreement. The Compensation Committee also may require or permit participants to
elect to defer the issuance of shares or the settlement of awards in cash under
such rules and procedures as it may establish under the Plan. It also may
provide that deferred settlements include the payment or crediting of interest
on the deferral amounts, or the payment or crediting of dividend equivalents
where the deferral amounts are denominated in shares.
11. TRANSFERABILITY AND EXERCISABILITY. Awards granted under the Plan
shall not be transferable or assignable other than (1) by will or the laws of
descent and distribution; (2) by gift or other transfer of an award to any trust
or estate in which the original award recipient or such recipient's spouse or
other immediate relative has a substantial beneficial interest, or to a spouse
or other immediate relative, provided that any such transfer is permitted by
Rule 16b-3 under the Exchange Act as in effect when such transfer occurs and the
Board does not rescind this provision prior to such transfer; or (3) pursuant to
a domestic relations order (as defined by the Code). However, any award so
transferred shall continue to be subject to all the terms and conditions
contained in the instrument evidencing such award.
12. AWARD AGREEMENTS. Awards under the Plan shall be evidenced by
agreements as approved by the Compensation Committee that set forth the terms,
conditions and limitations for each award, which may include the term of an
award (except that in no event shall the term of any ISO exceed a period of ten
years from the date of its grant), the provisions applicable in the event the
participant's employment terminates, and the Compensation Committee's authority
to unilaterally or bilaterally amend, modify, suspend, cancel or rescind any
award. The Compensation Committee need not require the execution of any such
agreement, in which case acceptance of the award by the participant shall
constitute agreement to the terms of the award.
13. ACCELERATION AND SETTLEMENT OF AWARDS. The Compensation Committee
shall have the discretion, exercisable at any time before a sale, merger,
consolidation, reorganization, liquidation or change of control of the Company,
as defined by the Compensation Committee, to provide for the acceleration of
vesting and for settlement, including cash payment of an award granted under the
Plan, upon or immediately before the effectiveness of such event. However, the
granting of awards under the Plan shall in no way affect the right of the
Company to adjust, reclassify, reorganize or otherwise change its capital or
business structure, or to merge, consolidate, dissolve, liquidate, sell or
transfer all or any portion of its businesses or assets.
14. PLAN AMENDMENT. The Plan may be amended by the Compensation Committee
as it deems necessary or appropriate to better achieve the purposes of the Plan,
except that no such amendment shall be made without the approval of the
Company's stockholders which would increase the number of shares available for
issuance in accordance with Sections 5 and 6 of the Plan, or cause the Plan not
to comply with Section 162(m) of the Code. The Board may suspend the Plan or
terminate the Plan at any time; provided, that no such action shall adversely
affect any outstanding benefit. Any shares authorized under Section 5 (or any
amendment thereof) with respect to which no Award is granted prior to
termination of the Plan, or
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with respect to which an Award is terminated, forfeited or canceled after
termination of the Plan, shall automatically be transferred to any subsequent
stock incentive plan for employees of the Company.
15. TAX WITHHOLDING. The Company shall have the right to deduct from any
settlement of an award made under the Plan, including the delivery or vesting of
shares, a sufficient amount to cover withholding of any federal, state or local
taxes required by law, or to take such other action as may be necessary to
satisfy any such withholding obligations. The Compensation Committee may, in its
discretion and subject to such rules as it may adopt, permit participants to use
shares to satisfy required tax withholding and such shares shall be valued at
the Fair Market Value as of the settlement date of the applicable award.
16. REGISTRATION OF SHARES. Notwithstanding any other provision of the
Plan, the Company shall not be obligated to offer or sell any shares unless such
shares are at that time effectively registered or exempt from registration under
the Securities Act of 1933, as amended (the "Securities Act") and the offer and
sale of such shares are otherwise in compliance with all applicable federal and
state securities laws and the requirements of any stock exchange or similar
agency on which the Company's securities may then be listed or quoted. The
Company shall have no obligation to register the shares under the federal
securities laws or take any other steps as may be necessary to enable the shares
to be offered and sold under federal or other securities laws. Prior to
receiving shares a Plan participant may be required to furnish representations
or undertakings deemed appropriate by the Company to enable the offer and sale
of the shares or subsequent transfers of any interest in such shares to comply
with the Securities Act and other applicable securities laws. Certificates
evidencing shares shall bear any legend required by, or useful for the purposes
of compliance with, applicable securities laws, this Plan or award agreements.
17. OTHER BENEFIT AND COMPENSATION PROGRAMS. Unless otherwise specifically
determined by the Compensation Committee, settlements of awards received by
participants under the Plan shall not be deemed a part of a participant's
regular, recurring compensation for purposes of calculating payments or benefits
from any Company benefit plan or severance program. Further, the Company may
adopt other compensation programs, plans or arrangements as it deems appropriate
or necessary.
18. UNDERFUNDED PLAN. Unless otherwise determined by the Compensation
Committee, the Plan shall be unfunded and shall not create (or be construed to
create) a trust or a separate fund or funds. The Plan shall not establish any
fiduciary relationship between the Company and any participant or other person.
To the extent any person holds any rights by virtue of an award granted under
the Plan, such rights shall be no greater than the rights of an unsecured
general creditor of the Company.
19. USE OF PROCEEDS. The cash proceeds received by the Company from the
issuance of shares pursuant to awards under the Plan shall constitute general
funds of the Company.
20. REGULATORY APPROVALS. The implementation of the Plan, the granting of
any award under the Plan, and the issuance of shares upon the exercise or
settlement of any award shall be subject to the Company's procurement of all
approvals and permits required by regulatory authorities having jurisdiction
over the Plan, the awards granted under it or the shares issued pursuant to it.
21. EMPLOYMENT RIGHTS. The Plan does not constitute a contract of
employment and participation in the Plan will not give a participant the right
to continue in the employ of the Company on a full-time, part-time or any other
basis. Participation in the Plan will not give any participant any right or
claim to any benefit under the Plan, unless such right or claim has specifically
accrued under the terms of the Plan.
22. GOVERNING LAW. The validity, construction and effect of the Plan and
any actions taken or relating to the Plan shall be determined in accordance with
the laws of the State of Illinois and applicable federal law.
23. SUCCESSORS AND ASSIGNS. The Plan shall be binding on all successors
and assigns of a participant, including, without limitation, the estate of such
participant and the executor, administrator or trustee of such estate, or any
receiver or trustee in bankruptcy or representative of the participant's
creditors.
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APPENDIX B
TRO LEARNING, INC.
1997 NON-EMPLOYEE DIRECTORS STOCK OPTION PLAN
1. PURPOSE. The purpose of the TRO Learning, Inc. 1997 Non-Employee
Directors Stock Option Plan (the "Plan") is to attract and retain highly
qualified people who are not employees of TRO Learning, Inc. (the "Company") or
any of its subsidiaries to serve as Non-Employee Directors of the Company, and
to encourage Non-Employee Directors to own shares of the Company's Common Stock,
$.01 par value (the "Stock").
2. ADMINISTRATION. Grants of Options under the Plan shall be made in the
manner provided in Section 5. All questions of interpretation of the Plan or of
any options issued hereunder shall be determined by a committee (the
"Compensation Committee") consisting of two or more members appointed by the
Board of Directors of the Company (the "Board").
3. ELIGIBILITY. Only a member of the Board who is not an employee of the
Company or any of its subsidiaries (a "Non-Employee Director") shall be eligible
to participate in the Plan.
4. SHARES AVAILABLE FOR OPTIONS.
4.1 AVAILABLE SHARES. "Option" shall mean an option granted under the
provisions of Section 5 of this Plan to purchase Stock. "Date of
Grant" shall mean the date of grant of an Option. The Company intends
that Options shall constitute nonqualified stock options (and not
incentive stock options within the meaning of Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code")). Subject to
adjustment under Section 4.2, Options may be granted under the Plan
in respect of a maximum of 100,000 shares of Stock. Shares subject to
an Option that expires or terminates unexercised shall again be
available for Options hereunder to the extent of such expiration or
termination. Shares issued under the Plan may consist in whole or in
part of authorized but unissued shares or treasury shares.
4.2 ADJUSTMENTS. In the event of any stock dividend, stock split,
recapitalization, reorganization, merger, consolidation, combination
or exchanges of shares, or any other similar change affecting the
Stock, an appropriate adjustment to reflect any such change shall be
made in the total number and class of shares for which Options may be
granted and the number and class of shares and the price per share of
any Option theretofore granted to the extent unexercised. Such
adjustment shall be as determined by the Compensation Committee;
provided that any such computation shall be rounded to the nearest
whole share and no such modification shall require the issuance of
fractional shares.
5. STOCK OPTIONS. Each Option granted under the Plan shall be approved by
the entire Board or the Compensation Committee, and evidenced by a written
agreement in such form as the Compensation Committee shall approve, and shall be
subject to Section 4 and the following terms and conditions:
5.1 TERMS AND CONDITIONS. The exercise price for each share of Stock
subject to the Option shall be the Fair Market Value of a share of
Stock on the Date of Grant of such Option, and the Option shall
become exercisable according to the schedule approved by the Board
(or the Compensation Committee) and set forth in the Option
agreement.
5.2 EXERCISE OF OPTIONS. An option, or portion thereof, shall be
exercised by delivery of a written notice of exercise to the
Secretary of the Company and payment of the full purchase price (the
"Exercise Price") for the shares being purchased pursuant to the
Option. The Exercise Price may be paid either (1) in cash, (2) in
shares of Stock already owned by the Non-Employee Director who is
granted an Option (including any other person entitled to exercise
the Option, the "Optionee") and to which the Optionee has good title,
free and clear of all liens and encumbrances, or partly in cash and
partly in such shares of Stock, (3) by
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authorizing the Company to retain whole shares of Stock which would
otherwise be issuable upon exercise of the Option having a fair
market value determined as of the date of exercise, (4) in cash
submitted by a broker-dealer to whom the Optionee has submitted an
irrevocable notice of exercise, or (5) a combination of (1), (2) and
(3); provided that the method of paying the Exercise Price shall be
in compliance with Section 16 of the Securities Exchange Act of 1934,
as amended (the "Exchange Act") and the rules and regulations
thereunder. The value of shares delivered in payment of the Exercise
Price shall be their Fair Market Value as of the date of exercise of
the Option. Payments in cash may be made by the delivery of a check
payable to the order of the Company. Subject to Section 6, upon
receipt of notice and payment, the Company shall promptly issue and
deliver to the Optionee (or other person entitled to exercise the
Option) a certificate or certificates for the number of shares as to
which the exercise is made. An Option may not be exercised for
fractional shares of Stock.
5.3 TERMINATION OF SERVICE. Each Option terminates ten years from the
date of grant, or if earlier, upon the later to occur of (1) three
years after the initial grantee of the Option (the "Grantee") ceases
service as a director of the Company for any reason, if the holder
served for six years or more; (2) one year after the Grantee ceases
service as a director of the Company as a result of death or
disability; or (3) 90 days after the Grantee ceases service as a
director of the Company for any reason other than death or
disability. The rights of the Non-Employee Director may be exercised
by such director's guardian or legal representative in the case of
disability or death.
5.4 FAIR MARKET VALUE. "Fair Market Value," for all purposes under the
Plan, shall mean the closing price of a share of Stock on the NASDAQ
National Market System for the date in question. If no sales of
shares of Stock were made on such date, the closing price of a share
of Stock as reported for the preceding day on which a sale of shares
of Stock occurred shall be used.
6. TAX WITHHOLDING. The Company shall be entitled, if necessary or
desirable, to withhold from any Optionee from any amounts due and payable by the
Company to such Optionee (or secure payment from such Optionee in lieu of
withholding) the amount of any withholding or other tax due from the Optionee
with respect to any shares of Stock issuable under the Plan. The Optionee may
satisfy any withholding tax obligation by (1) a cash payment to the Company; (2)
delivery of previously-owned shares of Stock and to which the Optionee has good
title, free and clear of all liens and encumbrances; or (3) by authorizing the
Company to retain shares of Stock which would otherwise be issuable upon
exercise of the Option.
7. TRANSFERABILITY AND EXERCISABILITY. Options granted under the Plan
shall not be transferable or assignable other than (1) by will or the laws of
descent and distribution; (2) by gift or other transfer to any trust or estate
in which the original option recipient or such recipient's spouse or other
immediate relative has a substantial beneficial interest, or to a spouse or
other immediate relative, provided that any such transfer is permitted by Rule
16b-3 of the Exchange Act as in effect when such transfer occurs and the Board
does not rescind this provision prior to such transfer; or (3) pursuant to a
domestic relations order (as defined by the Code). However, any Option so
transferred shall continue to be subject to all the terms and conditions
contained in the instrument evidencing such Option.
If so permitted by the Compensation Committee, an Optionee may designate a
beneficiary or beneficiaries to exercise the rights of the Optionee and receive
any distribution under the Plan upon the death of the Optionee.
8. LEGAL REQUIREMENTS. Notwithstanding any other provision of the Plan,
the Company shall not be obligated to offer or sell any shares of Stock upon
exercise of an Option unless the shares to be issued upon such exercise are at
that time effectively registered or exempt from registration under the
Securities Act of 1933, as amended (the "Securities Act") and the offer and sale
of such shares are otherwise in compliance with all applicable federal and state
securities laws and the requirements of any stock exchange
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or similar agency on which the Company's securities may then be listed or
quoted. The Company shall have no obligation to register the securities covered
by this Plan under the federal securities laws or take any other steps as may be
necessary to enable the securities covered by this Plan to be offered and sold
under federal or other securities laws. Upon exercising all or any portion of an
Option, an Optionee may be required to furnish representations or undertakings
deemed appropriate by the Company to enable the offer and sale of the shares of
Stock upon exercise of the Option or subsequent transfers of any interest in
such shares to comply with the Securities Act and other applicable securities
laws. Certificates evidencing shares of Stock issued pursuant to Options shall
bear any legend required by, or useful for the purposes of compliance with,
applicable securities laws, this Plan or the agreements evidencing the Options.
It is the intention of the Company that the Plan comply in all respects with
Rule 16b-3 promulgated under Section 16(b) of the Exchange Act. Therefore, if
any Plan provision should be found to not be in compliance with Rule 16b-3, that
provision shall be deemed null and void, and in all events the Plan shall be
construed in favor of its meeting the requirements of Rule 16b-3.
9. EFFECTIVE DATE; DURATION; SUSPENSION AND AMENDMENT. The Plan shall
become effective upon approval by the Board and stockholders. The Plan shall
terminate automatically on the tenth anniversary of the effective date unless
terminated earlier by the Board. The Board may suspend the Plan at any time. The
Board may amend or terminate the Plan at any time, but such amendment or
termination shall not affect Options already granted and such Options shall
remain in full force and effect as if the Plan had not been terminated. No
shares of Stock shall be issued or sold under this Plan after the termination of
the Plan, except upon exercise of Options granted before termination. Any shares
of Stock authorized under Section 4 of the Plan (or any amendment thereof) with
respect to which an Option is not granted prior to termination of the Plan, or
with respect to which an Option is terminated, forfeited or canceled after
termination of the Plan, shall automatically be transferred to any subsequent
stock option plan for Non-Employee Directors of the Company.
10. LIMITATION OF RIGHTS. Neither the Plan nor the granting of any Option
hereunder shall constitute an agreement or understanding that the Company will
retain a Non-Employee Director for any period of time or at any particular rate
of compensation. The holder of an Option shall not thereby have any rights as a
stockholder until the holder receives shares of Stock upon exercise of such
Option.
11. UNFUNDED PLAN. Unless otherwise determined by the Compensation
Committee, the Plan shall be unfunded and shall not create (or be construed to
create) a trust or a separate fund or funds. The Plan shall not establish any
fiduciary relationship between the Company and any Optionee or other person. To
the extent any person holds any rights by virtue of an Option granted under the
Plan, such rights shall be no greater than the rights of an unsecured general
creditor of the Company.
12. GOVERNING LAW. The validity, construction and effect of the Plan and
any actions taken or relating to the Plan shall be determined in accordance with
the laws of the State of Illinois and applicable federal law.
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(FRONT SIDE)
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PROXY TRO LEARNING, INC. PROXY
ANNUAL MEETING OF STOCKHOLDERS, MARCH 25, 1997
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned stockholder of TRO Learning, Inc. ("the Company") does hereby
acknowledge receipt of Notice of said Annual Meeting and the accompanying
Proxy Statement and does hereby constitute and appoint William R. Roach and
Sharon Fierro, or either of them, with full power of substitution, to vote
all shares of stock of the Company that the undersigned is entitled to vote,
as fully as the undersigned could do if personally present, at the Annual
Meeting of Stockholders of the Company to be held on March 25, 1997 at 9:00
a.m. (Central Standard Time), at The Palmer House Hilton, 17 East Monroe
Street, Chicago, Illinois 60603, and any adjournment thereof, as indicated on
the reverse side of this card.
/ / Check here for address change. / / Check here if you plan to
attend the meeting.
New Address: _____________________
__________________________________
__________________________________
(Continued and to be signed on reverse side.)
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(REVERSE SIDE)
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PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY. / /
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This proxy, when properly executed, shall be voted in accordance with the
instructions given and, in the absence of such instructions, shall be voted
for the nominees listed in Proposal 1 and in favor of Proposals 2, 3 and 4.
If other business is presented at said meeting, this proxy shall be voted on
those matters in accordance with the best judgment of the named proxies.
1. TO ELECT NOMINEES FOR CLASS 1
DIRECTORS; WILLIAM R. ROACH AND
JOHN L. KRAKAUER
FOR WITHHOLD FOR ALL
(EXCEPT
NOMINEE(S)
WRITTEN BELOW)
/ / / / / /
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2. TO APPROVE THE TRO LEARNING, INC.
1997 STOCK INCENTIVE PLAN.
FOR AGAINST ABSTAIN
/ / / / / /
- -----------------------------------------
LABEL
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3. TO APPROVE THE TRO
LEARNING, INC. 1997 NON-
EMPLOYEE DIRECTORS STOCK
OPTION PLAN
FOR AGAINST ABSTAIN
/ / / / / /
4. TO RATIFY THE APPOINTMENT OF
COOPERS & LYBRAND L.L.P. AS
THE COMPANY'S INDEPENDENT
ACCOUNTANTS
FOR AGAINST ABSTAIN
/ / / / / /
PLEASE VOTE, SIGN, DATE AND RETURN THIS PROXY
CARD PROMPTLY USING THE ENCLOSED ENVELOPE.
Dated: , 1997
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Signature(s):
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- -----------------------------------------------
Please sign exactly as name appears hereon. Joint
owners should each sign. Where applicable, indicate
official position or representative capacity.
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