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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY 21, 1998
REGISTRATION STATEMENT NO. 333-
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_________________
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
_________________
TRO LEARNING, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 36-3660532
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
1721 Moon Lake Boulevard
Suite 555
Hoffman Estates, Illinois 60194
(847) 781-7800
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
William R. Roach
Chairman of the Board, Chief Executive Officer and President
TRO Learning, Inc.
1721 Moon Lake Boulevard
Suite 555
Hoffman Estates, Illinois 60194
(847) 781-7800
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
_________________
Copies to:
Leland E. Hutchinson
Winston & Strawn
35 West Wacker Drive
Chicago, Illinois 60601
Telephone No. (312) 558-5600
_________________
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after the Registration Statement is declared
effective.
_________________
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
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If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]_______________
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]_______________
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
TITLE OF EACH PROPOSED PROPOSED
CLASS OF MAXIMUM MAXIMUM
SECURITIES OFFERING AGGREGATE AMOUNT OF
TO BE AMOUNT TO BE PRICE PER OFFERING REGISTRATION
REGISTERED REGISTERED SHARE (1) PRICE (1) FEE
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Common Stock 317,708 shares $9.60 $3,049,996.80 $586.54
_______________________________________________________________________________
_______________________________________________________________________________
(1) Calculated in accordance with Rule 457(g).
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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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 STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED JANUARY 21, 1998
317,708 Shares Common Stock
[LOGO] TRO LEARNING, INC.
This prospectus relates to the offer and sale by the Selling
Stockholders (as defined below) of 317,708 shares of common stock, par value
$.01 per share ("Common Stock"), of TRO Learning, Inc., a Delaware
corporation (the "Company"). See "Selling Stockholders and Plan of
Distribution."
The Common Stock offered hereby is issuable to the Selling Stockholders
by the Company upon the conversion by the Selling Stockholders of the
Company's Series 1997 10% Subordinated Convertible Debentures due March 27,
2004, in the aggregate principal amount of $3,050,000 represented by
Debenture Certificates No. 1997/10-1 through No. 1997/10-55 (the "1997
Debentures").
The Common Stock to which this Prospectus relates may be sold by the
holders thereof (the "Selling Stockholders") after conversion of the 1997
Debentures from time to time through underwriters or dealers, through brokers
or other agents, or directly to one or more purchasers, at market prices
prevailing at the time of sale or at prices otherwise negotiated. See
"Selling Stockholders and Plan of Distribution." The Company will not
receive proceeds from the sale by the Selling Stockholders of the shares of
Common Stock to which this Prospectus relates. The Company will pay all
expenses incident to the registration of the Common Stock to which this
Prospectus relates, except for commissions of brokers or dealers. The
Selling Stockholders and any broker, dealer, agent or underwriter that
participates with the Selling Stockholders in the distribution of the shares
of Common Stock may be deemed to be an "underwriter" within the meaning of
the Securities Act of 1933, as amended (the "Securities Act"), and any
commissions received by them and any profit on the resale of such Common
Stock purchased by them may be deemed to be underwriting commissions or
discounts under the Securities Act. See "Selling Stockholders and Plan of
Distribution" for indemnification arrangements between the Company and the
Selling Stockholders.
The Common Stock is quoted on the Nasdaq National Market under the
symbol "TUTR." On January 20, 1998, the last reported sale price for the
Common Stock, as reported on the Nasdaq National Market, was $5 per
share.
SEE "RISK FACTORS" BEGINNING ON PAGE 9 FOR A DISCUSSION OF CERTAIN
MATTERS THAT SHOULD BE CONSIDERED BY POTENTIAL INVESTORS.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
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UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
The date of this Prospectus is ___________, 1998.
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AVAILABLE INFORMATION
The Company is subject to the reporting requirements of the Securities
Exchange Act of 1934 (the "Exchange Act"), and in accordance therewith, files
periodic reports and other information with the Securities and Exchange
Commission (the "Commission"). The Company has filed a Registration
Statement (which term shall include all amendments thereto) on Form S-3 under
the Securities Act with the Commission with respect to the Common Stock
offered hereby. This Prospectus which constitutes part of the Registration
Statement does not contain all of the information set forth in the
Registration Statement, certain parts of which are omitted in accordance with
the rules and regulations of the Commission. Statements contained herein
concerning the provisions of any documents are not necessarily complete and,
in each instance, reference is made to the copy of such documents filed as an
exhibit to the Registration Statement, and each such statement shall be
deemed qualified in its entirety by such reference.
With respect to each report or other information filed with the
Commission pursuant to the Exchange Act, and such contract, agreement or
document filed as an exhibit to the Registration Statement, reference is made
to such exhibit for a more complete description, and each such statement is
deemed to be qualified in all respects by such reference. Such reports,
proxy statements and other information filed by the Company with the
Commission may be inspected and copied at the public reference facilities
maintained by the Commission at 450 Fifth Street, N.W., Washington, D.C.
20549, and at the following Regional Offices of the Commission: Northeast
Regional Office, 7 World Trade Center, Suite 1300, New York, New York 10048;
and Midwest Regional Office, Citicorp Center, 500 West Madison Street, Suite
1400, Chicago, Illinois 60661. 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 prescribed rates. The Company is subject
to the electronic filing requirements of the Commission. Accordingly,
pursuant to the rules and regulations of the Commission, certain documents,
including annual and quarterly reports and proxy statements, filed by the
Company with the Commission have been or will be filed electronically. The
Commission maintains a World Wide Web site that contains reports, proxy and
information statements and other information regarding registrants that file
electronically with the Commission at http://www.sec.gov. The Company's
Common Stock is quoted on the Nasdaq National Market under the symbol TUTR,
and such reports, proxy statements and other information can also be
inspected at the offices of the New York Stock Exchange, 20 Broad Street, New
York, New York 10005. This Prospectus does not contain all the information
set forth in the Registration Statement and exhibits thereto which the
Company has filed with the Commission under the Securities Act.
INFORMATION INCORPORATED BY REFERENCE
The following documents, each of which has been filed with the Commission,
are incorporated by reference into this Prospectus:
(i) the Company's Annual Report on Form 10-K for the fiscal year ended
October 31, 1997 (file no. 0-20842);
(ii) the Company's Quarterly Reports on Form 10-Q for the quarters ended
January 31, 1997 (file no. 0-20842), April 30, 1997
(file no. 0-20842) and July 31, 1997 (file no. 0-20842); and
(iii) the Company's 1997 Proxy Statement on Schedule 14A
(file no. 0-20842).
All documents filed by the Company with the Commission pursuant to
Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the
date of this Prospectus and prior to the termination of the offering of the
Securities registered hereby shall be deemed to be incorporated by reference
into this Prospectus and to be a part hereof from the respective dates of
filing of such documents. Any statement contained in a document incorporated
or deemed to be incorporated by reference herein shall be deemed to be
modified or superseded for purposes of this Prospectus to the extent that a
statement contained herein or in any other subsequently filed document which
also is or is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any such statement so modified or superseded
shall not be deemed, except as so modified and superseded, to constitute a
part of this Prospectus.
The Company will provide without charge to each person to whom this
Prospectus is delivered, upon written or oral request of such person, a copy of
any and all of the information that has been incorporated by reference in this
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Prospectus, excluding exhibits. Such requests should be directed to TRO
Learning, Inc., 1721 Moon Lake Boulevard, Suite 555, Hoffman Estates, Illinois
60194, Attention: Chief Financial Officer, Telephone: (847) 781-7800.
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PROSPECTUS SUMMARY
THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY THE MORE DETAILED
INFORMATION APPEARING IN THE DOCUMENTS INCORPORATED BY REFERENCE IN THIS
PROSPECTUS. AS USED HEREIN, THE "COMPANY" MEANS TRO LEARNING, INC. TOGETHER
WITH ITS CONSOLIDATED SUBSIDIARIES.
THE COMPANY
GENERAL
The Company is a leading developer and marketer of microcomputer-based,
interactive, self-paced instructional systems used in a wide variety of adult
settings. Offering comprehensive educational courseware specifically designed
for young adult and adult learners, the Company's PLATO-Registered Trademark-
Learning Systems are marketed to middle schools and high schools, community
colleges, job training programs, correctional institutions, government-funded
programs, the military, and corporations. The Company's TRO Aviation Training
Systems are marketed to airlines worldwide for use by commercial airline pilots,
maintenance crews, and cabin personnel.
The Company was incorporated in July 1989 as Edu Corp., and in October 1992
it changed its name to TRO Learning, Inc. The Company's wholly-owned operating
subsidiary is The Roach Organization, Inc. ("TRO"). TRO has two wholly-owned
subsidiaries, one in Canada, TRO Learning (Canada), Inc., and one in the United
Kingdom, TRO Learning (U.K.) Ltd.
In November 1997, the Company announced that it had retained BancAmerica
ROBERTSON STEPHENS to advise it regarding strategic alternatives to enhance
shareholder value.
LITIGATION
On December 15, 1997, a securities fraud class action was filed in the
United States District Court for the Northern District of Illinois against
the Company and two of its current and former executive officers. The
purported class action was filed on behalf of all persons who purchased
common stock of the Company during the period December 7, 1995 through June
10, 1997, seeking damages for alleged violations of the federal securities
laws. The complaint in the purported class action alleges that throughout
this time period, defendants knowingly participated in a course of conduct
involving misrepresentation and concealment of adverse material information
about the business and finances of the Company. The complaint alleges that
the course of action followed by the defendants caused the plaintiff and
other members of the purported class to purchase the Company's securities at
artificially inflated prices. The complaint seeks damages suffered as a
result of the actions of the defendants, including costs, expenses and fees
incurred in the litigation. The Company cannot predict the outcome of this
litigation but believes it has meritorious defenses to these allegations and
intends to defend itself vigorously.
The Company's principal business offices are located at 1721 Moon Lake
Boulevard, Suite 555, Hoffman Estates, Illinois 60194; Telephone: (847)
781-7800.
COMPANY STRATEGY
The Company's strategy is to address the needs of adult and young adult
learners by providing a broad range of interactive, multimedia, self-paced
educational and training courseware delivered on personal computers. The
critical elements of the Company's business strategy are as follows:
TARGET ADULT AND YOUNG ADULT MARKET OPPORTUNITIES. The Company targets
growing market niches that serve adult and young adult learners rather than
pre-school and elementary school-aged children. These market niches,
including the corporate workplace environment, have specific educational and
training requirements that can be addressed by the Company's computer-based
products and services. The Company's courseware incorporates themes,
graphics and media appropriate to adult and young adult learners.
PROVIDE COMPREHENSIVE, SOLUTION-ORIENTED COURSEWARE AND SERVICES. Drawing
upon its extensive library of computer-based courseware, the Company's education
and training specialists work closely with clients to design a
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program of instruction which meets their specific educational and training
needs. The Company offers its products in modular form and flexible formats
that can be tailored to a wide variety of applications.
EMPHASIZE SALES OF HIGH MARGIN COURSEWARE. Since the acquisition from
Control Data in 1989, the Company has redirected the marketing focus of the
business from hardware and data processing services, which have generally
experienced declining profit margins, to solution-oriented education and
training courseware and services which generate higher profit margins and
greater opportunities for growth.
COMMITMENT TO ON-GOING COURSEWARE DEVELOPMENT AND SUPPORT. Since the
acquisition, the Company has made substantial investments in developing and
enhancing courseware for education and training applications and is committed to
maintaining a diverse and comprehensive curriculum. The Company uses the design
and structural advantages inherent in its proprietary software development
systems to design and produce new courseware and services to meet the changing
needs of its clients and prospects.
INTERNET/INTRANET DELIVERY. The Company is focused on developing the
broadest delivery system for its instructional management system and courseware
library. The rapid acceptance and worldwide accessibility of the Internet, as
well as the increased acceptance of a techonology-based distance learning model,
offers the potential of just-in-time learning and expanded access to PLATO
education and training products. Internet delivery is also very supportive of
the sales and marketing focus on organizations providing a wide range of
education and training services throughout the community, allowing for new
distribution channels to complement the direct sales model. Corporations and
many of the larger school districts and training organizations have developed
intranets to share information and communication. The expanding availability of
intranets offers a platform for delivery and distribution of education and
training across the organization to any location. With the availability of
high-speed telecommunications links between facilities, intranets are a powerful
delivery system for PLATO education and training.
THE OFFERING
Conversion of the 1997 Debentures... The Common Stock offered hereby is
issuable to the Selling Stockholders
upon conversion of the 1997 Debentures
at the Conversion Price.
Conversion Price
of the 1997 Debentures........... The 1997 Debentures are convertible, at
the option of the holder thereof, into
Common Stock at a conversion price of
$9.60 per share of Common Stock subject
to adjustments. See "Description of
Capital Stock."
Aggregate Amount of Common Stock
offered by the
Selling Stockholders............. 317,708 shares
Number of Shares of Common Stock
Outstanding as of December 10,
1997 (1)......................... 6,405,346
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(1) Excludes shares of Common Stock issuable pursuant to outstanding
employee and director options and 50,805 shares of Common Stock issuable
pursuant to warrants dated March 27, 1997.
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CAUTIONARY STATEMENTS FOR PURPOSES OF THE "SAFE HARBOR" PROVISIONS OF PRIVATE
SECURITIES LITIGATION ACT OF 1995.
This Prospectus contains forward-looking statements that involve
substantial risks and uncertainties. When used in this Prospectus, the words
"anticipate", "believe", "estimate", "expect" and similar expressions as they
relate to the Company or its management are intended to identify such
forward-looking statements. The Company's actual results, performance or
achievements could differ materially from the results expressed in, or
implied by, these forward-looking statements. Factors that could cause or
contribute to such differences include those discussed in "Risk Factors".
RISK FACTORS
IN ADDITION TO THE OTHER INFORMATION IN THIS PROSPECTUS, THE FOLLOWING
FACTORS SHALL BE CONSIDERED CAREFULLY IN EVALUATING AN INVESTMENT IN THE
COMMON STOCK OFFERED BY THIS PROSPECTUS.
RECENT DECLINES IN ANNUAL RESULTS. The Company sustained a net loss of
$20,217,000 for the fiscal year ended October 31, 1997. In fiscal 1996,
1995, and 1994 the Company's net income was $982,000, $3.75 million, and 3.36
million, respectively. Although the Company has implemented cost control
measures for fiscal 1998 and thereafter, there can be no assurance as to
when, if ever, the Company will return to profitability. Future revenues and
profits, if any, will depend upon various factors, including continued market
acceptance of the Company's products and services. Potential investors
should consider the risks, expenses and difficulties frequently encountered
in connection with the operation and development of a new and expanding
business including, but not limited to, delays in the expansion and addition
of sales and distribution channels, the ability to attract qualified
employees and innovation in the design and development of new products and
product enhancements.
POTENTIAL FLUCTUATIONS IN QUARTERLY RESULTS. The Company's revenues and
profitability may vary significantly among quarterly periods. In addition,
the Company's revenues and profitability may fluctuate as a result of many
factors, including the size, timing and product mix of orders, increased
competition, loss of significant customers, announcements of new products by
the Company or its competitors, delays in shipment of existing or new
products, and capital spending patterns of the Company's customers. Many of
the Company's education and training sales are to customers who purchase
systems and license courseware on a single procurement basis. Accordingly,
new customers must be found or new or additional products must be sold to
existing customers in order to maintain and expand the Company's education
and training revenue stream.
PRODUCT DEVELOPMENT. The computer-based educational and testing
industry is characterized by technological change, frequent product
introductions and evolving industry standards. Although the Company believes
it competes favorably in the markets in which it participates, its future
success will depend, to a significant extent, on the Company's ability to
enhance its existing products, develop and introduce new products, satisfy an
expanded range of customer needs and achieve market acceptance. There can be
no assurance that the Company will have sufficient resources to make the
necessary investments or that the Company will be able to develop and
implement the technological advances required to maintain its competitive
position. The Company is not aware of any emerging standards or new products
which could render its existing products obsolete. However, there can be no
assurance that the Company's products will not be rendered obsolete or that
the Company will be able to develop and market new products.
FINANCING RISK. The Company in fiscal 1997 from time to time did not
meet certain financial ratios specified in its credit facility agreement. On
each such occasion, the lender waived the default upon the payment of a fee
by the Company. Although the Company negotiated an amended and restated
credit facility in December 1997, there can be no assurance that the Company
will not in the future again be in breach of its obligations under the credit
facility. In such event, the Company might be required to pay additional fees
to the lender or may be required to refinance its obligations. There can be
no assurance that refinancing would be available to the Company in such
circumstances on acceptable terms.
RELIANCE ON GOVERNMENT FUNDING. A substantial portion of the Company's
total revenues are derived from clients substantially dependent on government
funding, such as public school systems, community-based organizations and
correctional facilities. The government appropriations process is often
slow, unpredictable and subject to factors outside the Company's control and
several proposals are currently being made to reduce government spending.
Curtailments or substantial reductions in government funded or sponsored
programs and termination or renegotiation
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of government-funded contracts could have a material adverse impact on, or
result in the delay or termination of, the Company's revenues associated with
these programs and contracts.
DEPENDENCE ON KEY PERSONNEL. The Company's future success depends in
large part on the continued service of its key technical, marketing, sales
and management personnel, in particular on William R. Roach, its President
and Chief Executive Officer, and on its ability to continue to attract,
motivate and retain highly qualified employees. The Company's key employees
may terminate their employment with the Company at any time. There is
competition for such employees and the process of locating key technical and
management personnel with suitable skills and attributes to execute the
Company's strategy is often lengthy. Accordingly, the loss of the services
of key personnel, in particular Mr. Roach, could have a material adverse
effect on the Company. Certain executive officers, including Mr. Roach, are
subject to non-compete agreements.
COMPETITION. The computer-based education, training, and testing
industry is competitive and demand for particular software and courseware
products, systems hardware, and services may be affected adversely by the
increasing number of competitive products from which a prospective customer
may choose. The Company competes primarily against other organizations
offering educational and training software and services as well as testing
and certification services. The Company's competitors include several large
companies with substantially greater financial, technical and marketing
resources than those of the Company, including Jostens, Inc. and Viacom, as
well as a number of smaller companies. Existing competitors may broaden
their product lines and potential competitors, such as airframe manufacturers
and airlines, may enter the market and/or increase their focus on aviation
training, resulting in greater competition for the Company. There has been a
recent and material increase in competition and the entry of new competitors
into the computerized certification and testing business. These changes or
potential changes in the market could have a material adverse effect on the
Company's operating results.
CYCLICALITY. Certain of the Company's customers and potential customers
are in industries, such as education and air transportation, that experience
cyclical variations in funding or profitability, which may affect such
customers' willingness or ability to purchase products and services offered
by the Company. These fluctuations in demand could have a material adverse
effect on the Company's future profitability.
PROTECTION OF PROPRIETARY RIGHTS. The Company regards its courseware
and software as proprietary and relies primarily on a combination of
statutory and common law copyright, trademark and trade secret laws, customer
licensing agreements, employee and third-party nondisclosure agreements and
other methods to protect its proprietary rights. The Company owns the
Federal registration of the PLATO-Registered Trademark- trademark. In
addition, in 1989 Control Data Corporation assigned to the Company Federally
registered copyrights in the PLATO-Registered Trademark- courseware. The
Company has not recorded the assignment of these copyrights because it
believes that the additional statutory rights resulting from recordation are
not necessary for the protection of the Company's rights therein. The
Company has Federal copyrights in all PLATO-Registered Trademark- and
aviation courseware produced since 1989. The Company has not applied for
trademark registration at the state level, but has instead relied on its
Federal registrations and state common law rights to protect its proprietary
information. The Company does not include in its products any mechanisms to
prevent or inhibit unauthorized copying, but generally requires the execution
of a license agreement which restricts copying and use of the courseware and
software. The Company has no knowledge of the unauthorized copying of the
Company's products. However, if such copying or misuse were to occur to any
substantial degree, the Company could be materially adversely affected. The
Company has no patents.
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USE OF PROCEEDS
The Company will receive no proceeds from the sale by the Selling
Stockholders of the shares of Common Stock.
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DESCRIPTION OF CAPITAL STOCK
The authorized capital stock of the Company consists of 25,000,000
shares of Common Stock, $.01 par value per share, and 5,000,000 shares of
Preferred Stock, par value per share, of which 6,405,346 shares of Common
Stock (exclusive of treasury shares) were issued and outstanding on December
10, 1997. No shares of Preferred Stock were outstanding at that date.
CONVERSION OF THE 1997 DEBENTURES
In March 1997, the Company issued $3,050,000 of 10% subordinated
convertible debentures (the "1997 Debentures") with a scheduled maturity date
in March 2004. At the option of the holder thereof, the 1997 Debentures are
convertible into the Company's Common Stock at a conversion price of $9.60
per share (the "Conversion Price"). The Common Stock into which the 1997
Debentures are convertible is offered hereby. Pursuant to the terms of the
1997 Debentures, the Company is obligated to register the Common Stock into
which the 1997 Debentures are convertible and provide the Selling
Stockholders with a current prospectus upon request for such Selling
Stockholders to use in the resale of the Common Stock. The Conversion Price
is subject to adjustment if the Company (i) subdivides or combines its
outstanding shares of Common Stock or declares a dividend payable in Common
Stock of the Company; (ii) reorganizes or reclassifies its capital stock,
consolidates or merges with another corporation or sells all or substantially
all of its assets to another corporation; (iii) distributes to all holders of
its Common Stock any assets or debt securities or any rights or warrants to
purchase debt securities, assets or other securities; or (iv) issues or sells
shares of its Common Stock at less than the Conversion Price, or issues any
options or warrants or other rights to purchase the Company's Common Stock at
a price per share less than the Conversion Price or issues securities
convertible into the Company's Common Stock at a price per share less than
the Conversion Price . The Company may redeem the 1997 Debentures at 101% of
principal, plus interest, subject to certain terms and conditions. In
addition, the 1997 Debentures are subject to mandatory redemption at 25% of
principal annually beginning in 2001.
COMMON STOCK
Subject to the rights of holders of any outstanding Preferred Stock, the
holders of outstanding shares of Common Stock are entitled to share ratably
in dividends declared out of assets legally available therefor at such time
and in such amounts as the Board of Directors may from time to time lawfully
determine.
Each holder of Common Stock is entitled to one vote for each share held
by him. Holders of Common Stock are not entitled to cumulate votes for the
election of directors. The Common Stock is not entitled to conversion or
preemptive rights and is not subject to redemption or assessment. The Common
Stock presently outstanding is, and the Common Stock issued upon conversion
of 1997 Debentures will be fully paid and nonassessable. The Common Stock is
quoted on the Nasdaq National Market Exchange under the symbol "TUTR."
Registration Rights
Pursuant to the 1997 Debentures, the Company agreed to file the
Registration Statement of which this Prospectus constitutes a part, covering
the resales by the Selling Securityholders of the Common Stock upon
conversion of the 1997 Debentures and to use its best efforts to cause such
Registration Statement to remain effective for such period as may be
necessary for the holders of such Common Stock to dispose of such Common
Stock; provided, however, that the Company shall not be required to maintain
effectiveness of such Registration Statement at such time as the holders of
the Common Stock are able to sell the Common Stock underlying the 1997
Debentures under Rule 144(k) under the Securities Act or any successor
thereto, which allows unrestricted resales by nonaffiliates of the Company
after a holding period of two years.
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In connection with the Company's offering of the 1997 Debentures, in
March 1997, the Company issued warrants to investors (the "Investor
Warrants") to purchase 31,743 shares of the Company's Common Stock at $9.60
per share (the "Exercise Price") The Exercise Price is subject to adjustment
if the Company issues or sells shares of its Common Stock at less than the
Exercise Price, or issues any options or warrants or other rights to purchase
the Company's Common Stock at a price per share less than the Exercise Price
or issues securities convertible into the Company's Common Stock at a price
per share less than the Exercise Price. The Investor Warrants expire in
2002. At such time, the Company also issued warrants to the placement agents
for the 1997 Debentures (the "Placement Agent Warrants") to purchase 19,062
shares of the Company's Common Stock at the Exercise Price. The Placement
Agent Warrants expire in 2007 and the Exercise Price for the Placement Agent
Warrants is subject to the same adjustments as are applicable to the Exercise
Price for the Investor Warrants.
Under the terms of the Investor Warrants and Placement Agent Warrants
(collectively, the "Registrable Securities"), subject to certain exceptions,
the Holders of at least 20% of the Registrable Securities may demand on two
occasions, at any time during the period from March 27, 1998 through March
27, 2002, that the Company use its best efforts to register for public resale
on Form S-3, all Registrable Securities requested to be registered. In
addition, in the event the Company elects to register any of its Common Stock
under the Securities Act, either for its own account or for the account of
any other stockholders, the Company is required, subject to certain marketing
and other limitations, to include in such registration the Registrable
Securities of holders requesting registration. The Company is required to
bear all registration and certain selling expenses (subject to certain
limitations) incurred in connection with the registration of Registrable
Securities in all demand registrations, short form registrations, and Company
registrations.
Certain Charter Provisions
The Certificate of Incorporation of the Company provides that, to the
fullest extent permitted by the Delaware General Corporation Law, a director
of the Company shall not be liable to the Company or its stockholders for
monetary damages for breach of fiduciary duty as a director. In addition,
the By-laws provide for the indemnification of officers and directors to the
fullest extent permitted by Delaware law. In furtherance thereof, the Board
of Directors is expressly authorized to amend the Company's By-laws to give
full effect to any changes in applicable law, notwithstanding possible
self-interest of the directors in the action being taken.
The Certificate of Incorporation and By-laws of the Company contain
certain provisions that are intended to enhance the likelihood of continuity
and stability in the composition of the Company's Board of Directors and
which may have the effect of delaying, deferring or preventing a future
takeover or change in control of the Company unless such takeover or change
in control is approved by the Company's Board of Directors. Such provisions
may also render the removal of the current Board of Directors and management
more difficult.
The Certificate of Incorporation establishes an advance notice procedure
with regard to the nomination, other than by or at the direction of the Board
of Directors, of candidates for election as directors and with regard to
certain matters to be brought before an annual meeting of stockholders of the
Company. In general, notice must be received by the Company not less than 60
days prior to the meeting and must contain certain specified information
concerning the person to be nominated or the matter to be brought before the
meeting and concerning the stockholder submitting the proposal.
Pursuant to the Certificate of Incorporation, the Board of Directors of
the Company is divided into three classes serving staggered three-year terms.
Directors can be removed from office only for cause. Vacancies on the Board
of Directors may only be filled by the remaining directors and not by the
stockholders, except that in the case of newly created directorships, if the
remaining directors fail to fill any such vacancy, the stockholders may do so
at the next annual or special meeting called for that purpose.
The Preferred Stock may be issued from time to time in one or more
series and with such designations and preferences for each series as shall be
stated in the resolutions providing for the designation and issue of each
such series adopted by the Board of Directors of the Company. The Board of
Directors is authorized in the Company's Certificate of Incorporation to
determine the voting, dividend, redemption and liquidation preferences and
limitations pertaining to such series. No Preferred Stock is currently
issued and outstanding.
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Under Section 203 of the Delaware General Corporation Law (the "Delaware
anti-takeover law"), certain "business combinations" between a Delaware
corporation, whose stock generally is publicly traded or held of record by
more than 2,000 stockholders, and an "interested stockholder" are prohibited
for a three-year period following the date that such stockholder became an
interested stockholder, unless (i) the corporation has elected in its
certificate of incorporation not to be governed by the Delaware anti-takeover
law (the Company has not made such an election), (ii) the business
combination was approved by the board of directors of the corporation before
the other party to the business combination became an interested stockholder,
(iii) upon consummation of the transaction that made it an interested
stockholder, the interested stockholder owned at least 85% of the voting
stock of the corporation outstanding at the commencement of the transaction
(excluding voting stock owned by directors who are also officers or held in
employee benefit plans in which the employees do not have a confidential
right to tender or vote stock held by the plan), or (iv) the business
combination was approved by the board of directors of the corporation and
ratified by 66-2/3 of the voting stock which the interested stockholder did
not own. The three-year prohibition also does not apply to certain business
combinations proposed by an interested stockholder following the announcement
or notification of certain extraordinary transactions involving the
corporation and a person who had not been an interested stockholder during
the previous three years or who became an interested stockholder with the
approval of a majority of the corporation's directors. The term "business
combination" is defined generally to include mergers or consolidations
between a Delaware corporation and an "interested stockholder," transactions
with an "interested stockholder" involving the assets or stock of the
corporation or its majority-owned subsidiaries and transactions which
increase an interested stockholder's percentage ownership of stock. The term
"interested stockholder" is defined generally as those stockholders who
become beneficial owners of 15% or more of a Delaware corporation's voting
stock after it becomes subject to the Delaware antitakeover law.
TRANSFER AGENT
The Transfer Agent and Registrar for the Company's Common Stock is
Harris Bank, Chicago, Illinois.
SELLING STOCKHOLDERS AND PLAN OF DISTRIBUTION
SELLING STOCKHOLDERS
The Selling Stockholders own in the aggregate approximately 5% of the
Company's issued and outstanding Common Stock and no Selling Stockholder
individually owns 5% or more of the Company's issued and outstanding Common
Stock. Because the Selling Stockholders may sell all or a portion of their
Common Stock at any time and from time to time after the date hereof, no
estimate can be made of the amount of Common Stock that the Selling
Stockholders in the aggregate or any Selling Stockholder individually may
retain upon completion of the offering to which this Prospectus relates.
Pursuant to the terms of the 1997 Debentures, the Company has agreed to
indemnify the holders of the Common Stock issuable pursuant to the 1997
Debentures against all losses and liabilities caused by an untrue statement
of material fact contained in this Prospectus or the Registration Statement
of which this Prospectus constitutes a part or any omission to state a
material fact required to be stated therein.
METHOD OF SALE
The Selling Stockholders may sell any or all of its Common Stock through
underwriters or dealers, through brokers or other agents, or directly to one
or more purchasers in one or more transactions in the over-the-counter
market, if such market develops, or in privately negotiated transactions, or
in a combination of such transactions. Such transactions may be effected by
the Selling Stockholders at market prices prevailing at the time of sale, at
prices related to such prevailing market prices, at negotiated prices, or at
fixed prices, which may be changed. Such underwriters, dealers, brokers or
other agents may receive compensation in the form of discounts, concessions
or commissions from the Selling Stockholders and may receive commissions from
the purchasers of its Common Stock.
The Selling Stockholders and any dealer, broker or other agent selling
its Common Stock or purchasing its Common Stock for purposes of resale may be
deemed to be an underwriter under the Securities Act and any profit from
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the sale of the Common Stock or any compensation received by the Selling
Stockholder, dealer, broker or other agent may be deemed underwriting
compensation. Neither the Company nor the Selling Stockholder can presently
estimate the amount of such compensation. The Company knows of no existing
arrangements between the Selling Stockholders and any underwriter, dealer, or
broker or other agent.
In the event that any underwriters are used in the sale of any Common
Stock, a Prospectus Supplement or other appropriate document will be
delivered with this Prospectus which will describe any material arrangements
for the distribution of such Common Stock, including the name or names of any
underwriters, the purchase price of such Common Stock and the proceeds to the
Selling Stockholders from any such sale, any underwriting discounts and other
items constituting underwriters' compensation, any initial public offering
price and any discounts or concessions allowed or reallowed or paid to
dealers, together with other related information.
To comply with certain states' securities laws, if applicable, the
Common Stock may be sold in such states only through registered or licensed
brokers or dealers. In addition, in certain states the Common Stock may not
be sold unless it has been registered or qualified for sale in such state or
an exemption from registration or qualification is available and is complied
with.
The Common Stock is quoted on the Nasdaq National Market under the
symbol "TUTR."
EXPENSES
The Company has agreed to pay the expenses incurred in connection with
the preparation and filing of this Prospectus and the related Registration
Statement, except for commissions of brokers or dealers and any transfer fees
incurred in connection with the sales of the Common Stock by the Selling
Stockholders, which will be paid by the Selling Stockholders. The Company
has also agreed to pay the fees and expenses incurred in connection with the
registration or qualification of the Common Stock for sale under state
securities laws.
LEGAL MATTERS
Winston & Strawn, Chicago, Illinois has rendered an opinion (filed as an
exhibit to the Registration Statement) with respect to the validity of the
Common Stock.
EXPERTS
The consolidated financial statements and schedules to Form 10-K of TRO
Learning, Inc. for the year ended October 31, 1997 have been incorporated by
reference herein and in the Registration Statement in reliance upon the
report of Coopers & Lybrand, L.L.P., independent certified public
accountants, also incorporated by reference herein, and given upon the
authority of said firm as experts in accounting and auditing.
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<PAGE>
No dealer, salesperson or other individual has been authorized to give any
information or to make any representation other than those contained or
incorporated by reference in this Prospectus in connection with the offer
made by this Prospectus and, if given or made, such information or
representations must not be relied upon as having been authorized by the
Company or, underwriter (if applicable). Neither the delivery of this
Prospectus nor any sale made hereunder shall, under any circumstance, create
any implication that there has been no change in the affairs of the Company
since the date as of which information is given in this Prospectus. This
Prospectus does not constitute an offer or solicitation by anyone 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 anyone to whom it is unlawful to make such offer or solicitation.
______________________
TABLE OF CONTENTS
PAGE
Available Information. . . . . . . . . . . . . . . . . . . . . . . . . . . .5
Information Incorporated By Reference. . . . . . . . . . . . . . . . . . . .5
The Company. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7
Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9
Use of Proceeds. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Description of Capital Stock . . . . . . . . . . . . . . . . . . . . . . . 12
Selling Stockholders and Plan of Distribution. . . . . . . . . . . . . . . 14
Legal Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Experts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
317,708 Shares Common Stock
TRO LEARNING, INC.
______________________
P R O S P E C T U S
______________________
_____________, 1998
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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the costs and expenses payable by the
Company in connection with the sale of the Securities being registered
hereby. All of the amounts shown are estimated, except the SEC registration
fee and the Nasdaq National Market filing fee.
Securities and Exchange Commission Registration Fee . . . . . . $ 586.54
Printing expenses . . . . . . . . . . . . . . . . . . . . . . . $ 5,000.00
Legal fees and expenses . . . . . . . . . . . . . . . . . . . . $10,000.00
Accounting fees and expenses . . . . . . . . . . . . . . . . . . $10,000.00
Blue Sky fees and expenses . . . . . . . . . . . . . . . . . . . $ 1,000.00
Miscellaneous expenses . . . . . . . . . . . . . . . . . . . . . $ 5,000.00
TOTAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $31,586.54
-----------
-----------
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the General Corporation Law of the State of Delaware
permits indemnification of directors, officers, employees and agents of
corporations under certain conditions and subject to certain limitations.
Article V of the Company's By-Laws provides for indemnification of any
director, officer, or legal representatives of the Company, or any person
serving in the same capacity in any other enterprise at the request of the
Company, under certain circumstances. Article Five of the Company's Amended
and Restated By-Laws indemnifies the directors and officers of the Company to
the fullest extent permissible under Delaware law.
Directors and officers of the Company are insured, at the expense of the
Registrant, against certain liabilities which might arise out of their
employment and which might not be subject to indemnification under the
By-Laws.
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ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
The following documents are filed herewith or incorporated herein by
reference.
EXHIBIT
NUMBER DESCRIPTION OF EXHIBITS
------- -----------------------
5.1 Opinion of Winston & Strawn as to legality
23.1 Consent of Winston & Strawn (included in Exhibit 5.1)
23.2 Consent of Coopers & Lybrand, L.L.P.
24.1 Power of Attorney (included on signature page)
ITEM 17. UNDERTAKINGS
(a) The undersigned Registrant hereby undertakes that:
(1) To file, during any period in which offers or sales are being made of
the securities registered hereby, 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 (the "Securities Act");
(ii) To reflect in the prospectus any facts or events arising after
the effective date of this registration statement (or the most
recent post-effective amendment thereof) which, individually
or in the aggregate, represent a fundamental change in the
information set forth in this registration statement.
Notwithstanding the foregoing, any increase or decrease in
volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered)
and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b)
if, in the aggregate, the changes in volume and price
represent no more than a 20 percent change in the maximum
aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration
statement; and
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in this registration
statement or any material change to such information in this
registration statement;
PROVIDED, HOWEVER, that the undertakings set forth in paragraphs (i) and (ii)
above do not apply if the information required to be included in a
post-effective amendment by those paragraphs is contained in periodic reports
filed by the Company pursuant to Section 13 or Section 15(d) of the
Securities Exchange Act of 1934 (the "Exchange Act") that are incorporated by
reference in this 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.
(b) That, for purposes of determining any liability under the
Securities Act, each filing of the registrant's annual report pursuant to
section 13(a) or section 15(d) of the Exchange Act (and, where applicable,
each filing of an employee benefit plan's annual report pursuant to section
15(d) of the Exchange Act) 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.
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(c) The undersigned registrant hereby undertakes to deliver or cause to
be delivered with the Prospectus, to each person to whom the prospectus is
sent or given, the latest annual report to security holders that is
incorporated by reference in the prospectus and furnished pursuant to and
meeting requirements of Rule 13a-3 or Rule 14c-3 under the Exchange Act; and,
where interim financial information required to be presented by Article 3 of
Regulation S-X are not set forth in the prospectus, to deliver or cause to be
delivered to each person to whom the prospectus is sent or given, the latest
quarterly report that is specifically incorporated by reference in the
prospectus to provide such interim financial information.
(d) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling
persons of the registrant pursuant to the provisions described in Item 15
(other than the provisions relating to insurance), or otherwise, the
registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as
expressed in the Securities 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, suit 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 Securities Act and will be governed by the
final adjudication of such issue.
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing this Registration Statement on Form S-3
and has duly caused this Registration Statement to be signed on its behalf
by the undersigned, thereunto duly authorized, in the City of Hoffman
Estates, State of Illinois, on January 19, 1998.
TRO LEARNING, INC.
By: /s/ William R. Roach
----------------------------------------
Name: William R. Roach
Title: Chief Executive Officer
POWER OF ATTORNEY
Each person whose signature appears below hereby authorizes and
appoints, Andrew N. Peterson and William R. Roach, and each of them, with
full power of substitution and full power to act without the other, as his
true and lawful attorney-in-fact and agent with full power of substitution
and resubstitution, for such person and in such person's name, place and
stead, and to execute in the name on behalf of each person, individually and
in each capacity stated below, and to sign and file any and all amendments to
this Registration Statement with the Securities and Exchange Commission.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities indicated on the dates indicated:
Signature Title Date
- ----------------------- ------------------------------------ ---------------
/s/ William R. Roach Chief Executive Officer and Director January 19, 1998
- -----------------------
William R. Roach
/s/ Andrew N. Peterson Chief Financial Officer January 19, 1998
- -----------------------
Andrew N. Peterson
/s/ Mary Jo Murphy Principal Accounting Officer January 19, 1998
- -----------------------
Mary Jo Murphy
/s/ John L. Krakauer Director January 19, 1998
- -----------------------
John L. Krakauer
/s/ John Patience Director January 19, 1998
- -----------------------
John Patience
/s/ Vernon B. Lewis, Jr. Director January 19, 1998
- -----------------------
Vernon B. Lewis, Jr.
/s/ Tony J. Christianson Director January 19, 1998
- -----------------------
Tony J. Christianson
/s/ Jack R. Borsting Director January 19, 1998
- -----------------------
Jack R. Borsting
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EXHIBIT INDEX
The following documents are filed herewith or incorporated herein by
reference.
EXHIBIT
NUMBER DESCRIPTION OF EXHIBITS
- -------- ------------------------
5.1 Opinion of Winston & Strawn as to legality
23.1 Consent of Winston & Strawn (included in Exhibit 5.1)
23.2 Consent of Coopers & Lybrand, L.L.P.
24 Power of Attorney (included on signature page)
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<PAGE>
Exhibit 5.1
OPINION AS TO LEGALITY
January 21, 1998
TRO Learning, Inc.
Suite 555
1721 Moon Lake Boulevard
Hoffman Estates, Illinois 60194
Re: 317,708 Shares of Common Stock, $0.01 par
value, of TRO Learning, Inc.
Dear Sir or Madam:
We refer to the Registration Statement on Form S-3, filed by TRO
Learning, Inc. (the "Company") with the Securities and Exchange Commission
under the Securities Act of 1933, as amended, relating to the registration of
317,708 shares of Common Stock, $0.01 par value (the "Shares"), of the
Company.
As set forth in the Registration Statement, the Shares are issuable
by the Company upon conversion by the holders of the Company's Series 1997
10% Subordinated Convertible Debentures due March 27, 2004 (the "1997
Debentures") into common stock of the Company.
Based on the foregoing, we are of the opinion that:
Assuming the conversion mechanics of the 1997 Debentures have been
properly completed and the terms and preconditions to conversion as set forth
in the 1997 Debentures have been satisfied, the Shares will be legally
issued, fully paid, and non-assessable when the Shares shall have been
delivered to the purchasers thereof against payment of the agreed
consideration therefore.
We do not find it necessary for the purposes of this opinion to
cover, and accordingly we express no opinion as to, the application of the
securities or blue sky laws of the various states to the sale of the Shares.
We hereby consent to the filing of this opinion as an Exhibit to
the Registration Statement and to all references to our firm included in or
made a part of the Registration Statement.
Very truly yours,
WINSTON & STRAWN
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Exhibit 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the Prospectus
constituting part of this Registration Statement of TRO Learning, Inc. on
Form S-3 of our report dated January 12, 1998 on our audits of the
consolidated financial statements and financial statement schedule of TRO
Learning, Inc. as of October 31, 1997 and 1996, and for the years ended
October 31, 1997, 1996 and 1995, which report is included on page 38 of the
TRO Learning, Inc. Annual Report Form 10-K for the year ended October 31,
1997. We also consent to the references to us under the heading "Experts"
in such Prospectus.
Coopers & Lybrand, L.L.P.
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