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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 17, 1999
REGISTRATION STATEMENT NO. 333-
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. [ ]
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. [ ]
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.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
CALCULATION OF REGISTRATION FEE
TITLE OF EACH CLASS PROPOSED PROPOSED MAXIMUM
OF SECURITIES AMOUNT TO BE MAXIMUM OFFERING AGGREGATE AMOUNT OF
TO BE REGISTERED REGISTERED PRICE PER SHARE (1) OFFERING PRICE (1) REGISTRATION FEE
------------------- ------------ ------------------- ------------------ -----------------
<S> <C> <C> <C> <C>
Common Stock 1,828,470 shares $9.51 17,388,749.70 $4,834.07
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Calculated in accordance with Rule 457(g).
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INFORMATION CONTAINED IN THIS PRELIMINARY PROSPECTUS IS SUBJECT TO COMPLETION
OR AMENDMENT.
SUBJECT TO COMPLETION, DATED FEBRUARY 17, 1999
1,828,470 Shares Common Stock
[LOGO] TRO LEARNING, INC.
All of the shares of common stock offered for sale under this prospectus
are being sold by certain selling stockholders. The selling stockholders are
selling up to 1,828,470 shares of common stock, par value $.01 per share of
TRO Learning, Inc., a Delaware corporation. See "Selling Stockholders and
Plan of Distribution."
The common stock offered hereby is issuable to the selling stockholders
by TRO upon (i) the conversion by the selling stockholders of TRO's Series C
Convertible Preferred Stock issued to such selling stockholders pursuant to a
Series C Convertible Preferred Stock Purchase Agreement dated January 13,
1999 among TRO and the holders of the Convertible Preferred Stock and (ii)
the exercise by the selling stockholders of the Warrants issued by TRO to
such selling stockholders in connection with the Stock Purchase Agreement.
The common stock to which this prospectus relates may be sold by the
holders thereof after conversion of the Convertible Preferred Stock or the
exercise of the Warrants 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."
Our common stock is quoted on the Nasdaq National Market under the
symbol "TUTR." On February 16, 1999, the last reported sale price for the
common stock, as reported on the Nasdaq National Market, was $6.875 per share.
INVESTING IN OUR COMMON STOCK INVOLVES CERTAIN RISKS. SEE "RISK
FACTORS" ON PAGE 4.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF
THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
THE DATE OF THIS PROSPECTUS IS _______________________.
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YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS DOCUMENT OR TO
WHICH WE REFERRED YOU. WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH
INFORMATION THAT IS DIFFERENT. THIS DOCUMENT MAY ONLY BE USED WHERE IT IS
LEGAL TO SELL THESE SECURITIES. THE INFORMATION CONTAINED IN THIS DOCUMENT
MAY ONLY BE ACCURATE ON THE DATE OF THIS DOCUMENT.
______________________
TABLE OF CONTENTS
PAGE
Available Information. . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Information Incorporated By Reference. . . . . . . . . . . . . . . . . . . 1
Prospectus Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Forward-Looking Statements . . . . . . . . . . . . . . . . . . . . . . . . 4
Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Use of Proceeds. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Description of Capital Stock . . . . . . . . . . . . . . . . . . . . . . . 8
Selling Stockholders and Plan of Distribution. . . . . . . . . . . . . . . 11
Legal Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Experts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
ii
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AVAILABLE INFORMATION
TRO files annual, quarterly, and current reports and other information
with the Securities and Exchange Commission. You may read and copy any
reports, statements or other information on file at the Commission's public
reference room in Washington, D.C. You can request copies of those
documents, upon payment of a duplicating fee, by writing to the commission.
TRO has filed a registration statement on Form S-3 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 included in the registration statement. Certain information is
omitted and you should refer to the exhibits attached to the registration
statement and its exhibits. With respect to references made in this
prospectus to any contract or other document of TRO, such references are not
necessarily complete and you should refer to the exhibits attached to the
registration statement for copies of the actual contract or document.
You may review a copy of the registration statement at the Commission's
public reference room at 450 Fifth Street, N.W., Washington, D.C. 20549, and
at the Commission's regional offices in New York, New York and Chicago,
Illinois. Please call the Commission at 1-800-SEC-0330 for further
information on the operation of public reference rooms. TRO's Commission
filings and registration statements can also be reviewed by accessing the
Commission's Internet site at http://www.sec.gov.
INFORMATION INCORPORATED BY REFERENCE
The Commission allows us to "incorporate by reference" the information
we file with them, which means that we can disclose important information to
you by referring you to those documents. The information incorporated by
reference is considered to be a part of this prospectus, and information that
we file later with the Commission will automatically update and supersede the
information in this prospectus. We incorporate by reference the documents
listed below and any future filing we make with the Commission under Sections
13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934 until the
selling stockholders sell all of the shares offered by this prospectus:
- Annual Report on Form 10-K for the fiscal year ended October 31, 1998
(file no. 000-20842); and
- Report on Form 8-K filed January 25, 1999 (file no. 000-20842).
You may request a copy of these filings at no cost by writing or
telephoning us at the following address: TRO Learning, Inc., 1721 Moon Lake
Boulevard, Suite 555, Hoffman Estates, Illinois 60194, Attention: Patricia A.
Hlavacek, Telephone: (847) 781-7800.
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PROSPECTUS SUMMARY
This summary highlights information contained elsewhere in this
prospectus. This summary is not complete and does not contain all the
information that you should consider before investing in the common stock.
You should carefully read the entire prospectus, including the documents
incorporated by reference into it. TRO's operations are comprised of the TRO
business and the business of our wholly-owned operating subsidiary, The Roach
Organization, Inc., which has two wholly-owned subsidiaries, TRO Learning
(Canada), Inc. in Canada, and TRO Learning (UK) Ltd., in the United Kingdom.
GENERAL
TRO is a leading developer and marketer of microcomputer-based,
interactive, self-paced instructional systems used in a wide variety of adult
settings. Offering more than 2,000 hours of comprehensive academic and
applied skills courseware designed for adolescents and adults, TRO's
PLATO-Registered Trademark- Learning Systems are marketed to middle schools
and high schools, colleges, job training programs, correctional institutions,
military education programs, and corporations. PLATO-Registered Trademark-
Learning Systems is delivered via networks, CD-ROM, the Internet and private
intranets.
TRO was incorporated in June 1989 as Edu Corp., and in October 1992 we
changed our name to TRO Learning, Inc. TRO's wholly-owned operating
subsidiary is The Roach Organization, Inc. The Roach Organization has two
wholly-owned subsidiaries, one in Canada, TRO Learning (Canada), Inc., and
one in the United Kingdom, TRO Learning (UK) Ltd.
In September 1998, TRO announced the sale of its Aviation Training
business which marketed PC-based instructional systems to airlines worldwide
for use by commercial airline pilots, maintenance crews, and cabin personnel.
We will focus exclusively on our PLATO-Registered Trademark- brand going
forward.
TRO's principal business offices are located at 1721 Moon Lake
Boulevard, Suite 555, Hoffman Estates, Illinois 60194; Telephone: (847)
781-7800.
STRATEGY
TRO's strategy is to address the needs of adolescent and adult learners
by providing a broad range of interactive, multimedia, self-paced educational
and training courseware delivered on personal computers. The critical
elements of our business strategy are as follows:
- Target growing market niches that serve adolescent and adult learners
rather than pre-school and elementary school-aged children.
- Work closely with clients to design a program of instruction which
meets their specific educational and training needs by providing
comprehensive, solution-oriented courseware, and services to our
clients.
- Emphasize sales of solution-oriented education and training courseware
and services which generate high profit margins and greater
opportunities for growth.
- Utilize the design and structural advantages inherent in its
proprietary software development systems to design and produce new
courseware and services.
- Focus on developing the broadest delivery system for its instructional
management system and courseware library, including the use of
Internet and Intranet delivery.
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THE OFFERING
The Offering . . . . . . . . . . . . The common stock offered hereby will
be issued to the selling stockholders
upon (i) conversion of the Convertible
Preferred Stock and (ii) the exercise
of the Warrants, each issued pursuant
to the Stock Purchase Agreement.
Conversion Price of Series C
Convertible Preferred Stock . . . Shares of Series C Convertible
Preferred Stock are convertible, at
the option of the holder, into common
stock at a conversion price of the
lower of (i) $9.51 or (ii) the
applicable percentage of the average
of the lowest three per share market
values of the common stock during the
thirty trading days immediately
preceding the conversion date. The
applicable percentage is adjusted over
time from 90% to 82%. See
"Description of Capital Stock."
Exercise Price of the Warrants . . . The Warrants are exercisable, at the
option of the holder, into common
stock at an exercise price of $9.51
per share of common stock subject to
adjustments. See "Description of
Capital Stock."
Aggregate Amount of common stock
offered by the selling
stockholders . . . . . . . . . . . . 1,828,470 shares
Number of shares of common stock
outstanding as of January 29, 1999(1) 6,445,832
Nasdaq Symbol . . . . . . . . . . . . TUTR
________________________
(1) Does not include (i) shares of common stock, issuable pursuant to
outstanding employee and director options, (ii) 50,805 and 125,000 shares of
common stock issuable pursuant to warrants dated March 27, 1997 and January
13, 1999, respectively, or (iii) shares of common stock issuable pursuant to
the Convertible Preferred Stock.
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FORWARD-LOOKING STATEMENTS
Certain statements incorporated by reference or made in this prospectus
are "forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995. The statements are subject to the safe harbor
provisions of the Reform Act. Such forward-looking statements include our
statements about:
- the competitiveness of the computer-based education and training
industry;
- the ability to keep up with changing trends in the industry;
- our strategies; and
- other statements that are not historical facts.
When used in this prospectus, the words "anticipate", "believe",
"estimate", and similar expressions are generally intended to identify
forward-looking statements. Because such forward-looking statements involve
risks and uncertainties, there are important factors that could cause actual
results to differ materially from those expressed or implied by such
forward-looking statements, including:
- Declines in annual financial results;
- Unpredictability of government appropriations;
- Ability to keep up with changing trends in the industry;
- Changes in economic and business conditions (including in the
computer-based education and training industry);
- Changes in business strategies; and
- Other factors discussed in "Risk Factors".
RISK FACTORS
You should carefully consider the following factors and other
information in this prospectus before deciding to invest in shares of common
stock.
VARIABILITY IN ANNUAL RESULTS MAKE IT UNCERTAIN AS TO WHETHER WE CAN SUSTAIN
PROFITABILITY.
For fiscal year ended October 31, 1998, we reported a net income of
$3,068,000, an increase from the net loss of ($20,217,000) we sustained for
the fiscal year ended October 31, 1997. In fiscal 1996, 1995, and 1994, our
net income was $982,000, $3,752,000, and $3,361,000, respectively. After TRO
sustained net losses for the fiscal year 1997, we implemented cost control
measures for fiscal 1998 and thereafter; however, there can be no assurance
that we can sustain profitability. Future revenues and profits, if any, will
depend upon various factors, including continued market acceptance of our
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 AFFECT REVENUES AND PROFITABILITY
FOR SUCH QUARTERLY PERIODS.
TRO's revenues and profitability may vary significantly among quarterly
periods. In addition, our 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 TRO or any of our competitors, delays in shipment of existing or
new products, and capital spending patterns of TRO's customers. Many of our
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 TRO's education and training
revenue stream.
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FUTURE SUCCESS WILL DEPEND ON OUR ABILITY TO ADAPT TO TECHNOLOGICAL CHANGES
AND MEET EVOLVING INDUSTRY STANDARDS.
The computer-based educational and training industry is characterized by
technological change, frequent product introductions, and evolving industry
standards. Although we believe we compete favorably in the markets in which
we participate, our future success will depend, to a significant extent, on
our ability to enhance our existing products, develop and introduce new
products, satisfy an expanded range of customer needs and achieve market
acceptance. There can be no assurance that we will have sufficient resources
to make the necessary investments or that we will be able to develop and
implement the technological advances required to maintain our competitive
position. We are not aware of any emerging standards or new products which
could render our existing products obsolete. However, there can be no
assurance that TRO's products will not be rendered obsolete or that we will
be able to develop and market new products.
FINANCING RISK.
In fiscal 1998, TRO from time to time did not meet certain financial
ratios specified in our credit facility agreement. On each such occasion,
the lender waived the default upon the payment of a fee by TRO. There can be
no assurance that we will not in the future again be in breach of our
obligations under the credit facility. In such event, we might be required
to pay additional fees to the lender or may be required to refinance our
obligations. There can be no assurance that refinancing would be available
to TRO in such circumstances on acceptable terms.
RELIANCE ON GOVERNMENT FUNDING COULD HAVE A NEGATIVE EFFECT ON REVENUES.
A substantial portion of our 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 our 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 of
government-funded contracts could have a material adverse impact on, or
result in the delay or termination of, TRO's revenues associated with these
programs and contracts.
THERE IS NO ASSURANCE THAT KEY MANAGEMENT PERSONNEL WILL REMAIN WITH US.
TRO's future success depends in large part on the continued service of
our key technical, marketing, sales and management personnel, in particular
on William R. Roach, our President and Chief Executive Officer, and on our
ability to continue to attract, motivate and retain highly qualified
employees. Our key employees may terminate their employment with us at any
time. There is competition within the industry for such employees and the
process of locating key technical and management personnel with suitable
skills and attributes to execute TRO'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 TRO.
COMPETITION COULD ADVERSELY AFFECT OUR PERFORMANCE.
The computer-based education and training 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. We compete primarily
against other organizations offering educational and training software and
services. TRO's competitors include several large companies with
substantially greater financial, technical and marketing resources than those
of TRO, including divisions within Pearson PLC and Mc-Graw Hill McMillan, as
well as a number of smaller companies. Existing competitors may broaden
their product lines and potential competitors, may enter the market and/or
increase their focus on computer-based education and training, resulting in
greater competition for TRO. These changes or potential changes in the
market could have a material adverse effect on our operating results.
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FLUCTUATIONS IN DEMAND COULD ADVERSELY AFFECT OUR PROFITABILITY.
Certain of the our customers and potential customers are in industries,
such as education, that experience cyclical variations in funding or
profitability, which may affect such customers' willingness or ability to
purchase products and services offered by TRO. These fluctuations in demand
could have a material adverse effect on our future profitability.
MISUSE OR MISAPPROPRIATION OF OUR PROPRIETARY RIGHTS COULD ADVERSELY AFFECT
OUR PERFORMANCE.
We regard our courseware and software as proprietary and rely 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 our proprietary rights.
TRO owns the Federal registration of the PLATO-Registered Trademark-
trademark. In addition, in 1989 Control Data Corporation assigned to TRO
Federally registered copyrights in the PLATO-Registered Trademark-
courseware. TRO has not recorded the assignment of these copyrights because
we believe that the additional statutory rights resulting from recordation
are not necessary for the protection of our rights therein. TRO has Federal
copyrights in all PLATO-Registered Trademark-courseware produced since 1989.
We have not applied for trademark registration at the state level, but have
instead relied on our Federal registrations and state common law rights to
protect our proprietary information. We do not include in our products any
mechanisms to prevent or inhibit unauthorized copying, but we generally
require the execution of a license agreement which restricts copying and use
of the courseware and software. We have no knowledge of the unauthorized
copying of our products. However, if such copying or misuse were to occur to
any substantial degree, TRO could be materially adversely affected.
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USE OF PROCEEDS
We 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 TRO consists of 25,000,000 shares of
common stock, $.01 par value per share, and 5,000,000 shares of preferred
stock, par value $.01 per share, of which 6,445,832 shares of common stock
(exclusive of treasury shares) were issued and outstanding on January 29,
1999. As of January 13, 1999, TRO has 540 shares of Series C Convertible
Preferred Stock issued and outstanding.
SERIES C CONVERTIBLE PREFERRED STOCK
On January 13, 1999, TRO completed a $5 million private placement of
Series C Convertible Preferred Stock. The Convertible Preferred Stock is
convertible into shares of TRO's common stock, at the option of the holder,
up to two years from the issue date. Conversion is mandatory for all such
securities still outstanding two years from the issue date. The conversion
price is the lower of $9.51 or the applicable percentage of the average of
the lowest three per share market values during the thirty trading days
immediately preceding the conversion date. The applicable percentage is
adjusted over time from 90% to 82%. The conversion price is also subject to
ceiling and floor limitations, which may be adjusted based on our financial
performance.
TRO may redeem the Convertible Preferred Stock in accordance with the
formula set forth in the Stock Purchase Agreement. In addition, upon the
occurrence of certain triggering events, the Convertible Preferred Stock is
subject to a mandatory redemption. The triggering events include the
following:
(i) the failure of this registration statement to be declared
effective on or prior to the 180th day after the date of issuance of the
Convertible Preferred Stock;
(ii) the failure of TRO shares of common stock to be listed for
trading on NASDAQ or the suspension of the TRO common stock from trading on
NASDAQ, in either case, for more than five trading days in the aggregate;
(iii) TRO shall be a party to any change of control transaction, shall
agree to sell all or substantially all or in excess of 50% of its assets in
one or more transaction or shall redeem more than a de minimis number of
shares of TRO common stock or the other TRO securities; or
(iv) TRO shall fail to have available a sufficient number of
authorized and unreserved shares of its common stock to issue to the
holders of the Convertible Preferred Stock upon the conversion of such
securities.
1999 WARRANTS
Concurrently with the issuance of the Convertible Preferred Stock, we
issued Warrants to purchase 125,000 shares of TRO's common stock at an
exercise price of $9.51 per share. These Warrants expire in 2004. The
exercise price of the Warrants are subject to adjustment from time to time if
TRO shall (i) pay a stock dividend (except scheduled dividends paid on
outstanding preferred stock as of the date hereof which contain a stated
dividend rate) or otherwise make a distribution or distributions on shares of
its common stock or on any other class of capital stock payable in shares of
common stocks, (ii) subdivide outstanding shares of common stock into a
larger number of shares, or (iii) combine outstanding shares of common stock
into a smaller number of shares.
In connection with the Convertible Preferred Stock and the Warrants, and
pursuant to the Registration Rights Agreement between the selling
stockholders and TRO, we are obligated to register the common stock into
which the Convertible Preferred Stock are convertible and the Warrants
exercisable. We are also required to provide the selling stockholders with a
current prospectus upon request for such selling stockholders to use in the
resale of the common stock.
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1997 DEBENTURES
In March 1997, we issued $3,050,000 of 10% subordinated convertible
debentures with a scheduled maturity date in March 2004. Pursuant to the
1997 Debentures, we filed a registration statement on Form S-3 dated January
21, 1998, covering the resales by the selling securityholders of the common
stock upon conversion of the 1997 Debentures and shall use our 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 we 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 TRO after a
holding period of two years. At the option of each holder of the 1997
Debentures, the 1997 Debentures are convertible into TRO's common stock at a
conversion price, subject to adjustments, of $9.60 per share. The conversion
price of the common stock into which the 1997 Debentures are convertible is
subject to adjustment if we (i) subdivide or combine our outstanding shares
of common stock or declare a dividend payable in common stock of TRO; (ii)
reorganize or reclassify our capital stock, consolidate or merge with another
corporation or sell all or substantially all of our assets to another
corporation; (iii) distribute to all holders of our common stock any assets
or debt securities or any rights or warrants to purchase debt securities,
assets or other securities; or (iv) issue or sell shares of our common stock
at less than the conversion price, or issue any options or warrants or other
rights to purchase TRO's common stock at a price per share less than the
conversion price or issue securities convertible into TRO's common stock at
a price per share less than the conversion price. TRO 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.
1997 WARRANTS
In connection with TRO's offering of the 1997 Debentures, in March 1997,
we issued warrants to investors (the "Investor Warrants") to purchase 31,743
shares of the our common stock at an exercise price of $9.60 per share. The
exercise price is subject to adjustment if we issue or sell shares of our
common stock at less than the exercise price, or issues any options or
warrants or other rights to purchase our common stock at a price per share
less than the exercise price or issue securities convertible into our common
stock at a price per share less than the exercise price. The Investor
Warrants expire in 2002. TRO also issued warrants to the placement agents
for the 1997 Debentures (the "Placement Agent Warrants") to purchase 19,062
shares of our common stock at an exercise price of $9.60. 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.
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 our board of directors may from time to time lawfully
determine. TRO's ability to pay dividends is restricted by TRO's facility
credit agreement.
Each common stock holder is entitled to one vote for each share held by
him. Common stockholders 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 the
1997 Debentures and the Convertible Preferred Stock will be fully paid and
nonassessable.
REGISTRATION RIGHTS
Pursuant to a Registration Rights Agreement between TRO and the selling
stockholders, we agreed to file a registration statement of which this
prospectus constitutes a part, covering the resales by the selling
stockholders of the common stock upon (i) conversion of the Convertible
Preferred Stock and (ii) exercise of the Warrants. We agreed to use our best
efforts to cause the registration statement to remain effective for such
period as may be necessary for the
9
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selling stockholders of the common stock to dispose of such common stock.
However, we shall not be required to maintain effectiveness of the
registration statement after the earlier of (i) when the selling stockholders
are able to sell the common stock underlying the Convertible Preferred Stock
and the Warrants under Rule 144(k) under the Securities Act or any successors
thereto or (ii) three years.
CERTAIN CHARTER PROVISIONS
The Certificate of Incorporation of TRO provides that, to the fullest
extent permitted by the Delaware General Corporation Law, a director of TRO
shall not be liable to us or our stockholders for monetary damages for breach
of fiduciary duty as a director. In addition, our 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 TRO'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.
TRO's Certificate of Incorporation and By-laws contain certain
provisions that are intended to enhance the likelihood of continuity and
stability in the composition of our Board of Directors and which may have the
effect of delaying, deferring or preventing a future takeover or change in
control of TRO unless such takeover or change in control is approved by our
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 a TRO annual meeting of stockholders.
In general, notice must be received by TRO 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, TRO's Board of Directors
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 TRO's Board of Directors. The Board of Directors is
authorized in TRO's Certificate of Incorporation to determine the voting,
dividend, redemption and liquidation preferences and limitations pertaining
to such series. As of January 13, 1999, TRO has 540 shares of Series C
Convertible Preferred Stock issued and outstanding.
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 (TRO 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 662/3
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
10
<PAGE>
"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 TRO's common stock is Harris Bank,
Chicago, Illinois.
SELLING STOCKHOLDERS AND PLAN OF DISTRIBUTION
SELLING STOCKHOLDERS
<TABLE>
<CAPTION>
NUMBER OF SHARES OF
COMMON STOCK NUMBER OF SHARES
BENEFICIALLY OWNED OF COMMON STOCK
PRIOR TO THE OFFERING NUMBER OF SHARES BENEFICIALLY OWNED
NAME AND ADDRESS OF ------------------------ OF COMMON STOCK FOLLOWING THE
SELLING STOCKHOLDERS # OF SHARES % OF CLASS OFFERED HEREBY OFFERING (11)
- ---------------------- ------------------------ ---------------- -------------------
<S> <C> <C> <C> <C>
KA Investments LDC 339,183(1) 4.999% 1,353,068(2) 0
Stark International 170,401(3) 2.6% 365,694(4) 0
Industricorp & Co., FBO 25,561(5) * 54,854(6) 0
Twin City Carpenters Pension Plan
First Trust National Association 12,781(7) * 27,427(8) 0
TTEE FBO Gary Kohler IRA
Gary S. Kohler 12,781(9) * 27,427(10) 0
</TABLE>
* Represents less than one percent of the common stock outstanding.
(1) The certificate of designation governing the Convertible Preferred Stock
prohibits KA from converting shares of Convertible Preferred Stock to the
extent that such conversion would result in KA beneficially owning in
excess of 4.999% of the outstanding shares of common stock following such
conversion. Such restriction may be waived by such holder upon not less
than 75 days' notice to TRO. The number of shares of common stock listed
as beneficially owned by KA represents the number of shares of common stock
issuable to KA, subject to the limitation set forth in the first sentence
of this footnote, (i) upon conversion of 399.6 shares of Convertible
Preferred Stock, acquired on January 13, 1999, at an assumed conversion
price of $6.338 (which price will fluctuate from time to time based on
changes in the market price of the common stock and provisions in the
formula for determining the conversion price), and (ii) upon exercise of
the warrant issued to KA in conjunction with the sale of the Convertible
Preferred Stock for 92,500 shares of common stock ("Convertible"). Because
the number of shares of common stock issuable upon conversion of the
Convertible Preferred Stock is dependent in part upon the market price of
the common stock prior to a conversion, the actual number of shares of
common stock that will be issued in respect of such conversions and
consequently the
11
<PAGE>
number of shares of common stock that will be beneficially owned by KA
will fluctuate daily and cannot be determined at this time.
(2) Represents shares of common stock issuable to KA upon (i) conversion of
its Convertible Preferred Stock, and (ii) exercise of the Warrant issued
to KA. Because the number of shares of common stock issuable upon
conversion of the Convertible Preferred Stock is dependent in part upon
the market price of the common stock prior to a conversion, the actual
number of shares of common stock that will be issued in respect of such
conversions and, consequently, offered for sale under this Registration
Statement, cannot be determined at this time. However, TRO has
contractually agreed to include herein for KA 1,353,068 shares of common
stock issuable upon conversion of its Convertible Preferred Stock and
exercise of its Warrant.
(3) The number of shares of common stock listed as beneficially owned by Stark
represents the number of shares of common stock issuable to Stark (i) upon
conversion of 108 shares of Convertible Preferred Stock, acquired on
January 13, 1999, at an assumed conversion price of $6.338 (which price
will fluctuate from time to time based on changes in the market price of
the common stock and provisions in the formula for determining the
conversion price), and (ii) upon exercise of a Warrant issued to Stark in
conjunction with the sale of the Convertible Preferred Stock for 25,000
shares of common stock. Because the number of shares of common stock upon
conversion of the Convertible Preferred Stock is dependent in part upon the
market price of the common stock prior to a conversion, the actual number
of shares of common stock that will be issued in respect of such
conversions and consequently the number of shares of common stock that will
be beneficially owned by Stark will fluctuate daily and cannot be
determined at this time.
(4) Represents shares of common stock issuable to Stark upon (i) conversion of
its Convertible Preferred Stock, and (ii) exercise of the Warrant issued to
Stark. Because the number of shares of common stock issuable upon
conversion of the Convertible Preferred Stock is dependent in part upon the
market price of the common stock prior to a conversion, the actual number
of shares of common stock that will be issued in respect of such
conversions and, consequently, offered for sale under this Registration
Statement, cannot be determined at this time. However, TRO has
contractually agreed to include herein for Stark 365,694 shares of common
stock issuable upon conversion of its Convertible Preferred Stock and
exercise of its Warrant.
(5) The number of shares of common stock listed as beneficially owned by Twin
City represents the number of shares of common stock issuable to Twin City
(i) upon conversion of 16.2 shares of Convertible Preferred Stock, acquired
on January 13, 1999, at an assumed conversion price of $6.338 (which price
will fluctuate from time to time based on changes in the market price of
the common stock and provisions in the formula for determining the
conversion price), and (ii) upon exercise of a Warrant issued to Twin City
in conjunction with the sale of the Convertible Preferred Stock for 3,750
shares of common stock. Because the number of shares of common stock
issuable upon conversion of the Convertible Preferred Stock is dependent in
part upon the market price of the common stock prior to a conversion, the
actual number of shares of common stock that will be issued in respect of
such conversions and consequently the number of shares of common stock that
will be beneficially owned by Twin City will fluctuate daily and cannot be
determined at this time.
(6) Represents shares of common stock issuable to Twin City upon (i) conversion
of its Convertible Preferred Stock, and (ii) exercise of the Warrant issued
to Twin City. Because the number of shares of common stock issuable upon
conversion of the Convertible Preferred Stock is dependent in part upon the
market price of the common stock prior to a conversion, the actual number
of shares of common stock that will be issued in respect of such
conversions and, consequently, offered for sale under this Registration
Statement, cannot be determined at this time. However, TRO has
contractually agreed to include herein for Twin City 54,854 shares of
common stock issuable upon conversion of its Convertible Preferred Stock
and exercise of its Warrant.
(7) The number of shares of common stock listed as beneficially owned by Kohler
IRA represents the number of shares of common stock issuable to Kohler IRA
(i) upon conversion of 8.1 shares of Convertible Preferred Stock, acquired
on January 13, 1999, at an assumed conversion price of $6.338 (which price
will fluctuate from time to time based on changes in the market price of
the common stock and provisions in the formula for
12
<PAGE>
determining the conversion price), and (ii) upon exercise of a Warrant
issued to Kohler IRA in conjunction with the sale of the Convertible
Preferred Stock for 1,875 shares of common stock. Because the number of
shares of common stock upon conversion of the Convertible Preferred
Stock is dependent in part upon the market price of the common stock
prior to a conversion, the actual number of shares of common stock that
will be issued in respect of such conversions and consequently the
number of shares of common stock that will be beneficially owed by
Kohler IRA will fluctuate daily and cannot be determined at this time.
(8) Represents shares of common stock issuable to Kohler IRA upon (i)
conversion of its Convertible Preferred Stock, and (ii) exercise of the
Warrant issued to Kohler IRA. Because the number of shares of common stock
issuable upon conversion of the Convertible Preferred Stock is dependent in
part upon the market price of the common stock prior to a conversion, the
actual number of shares of common stock that will be issued in respect of
such conversions and, consequently, offered for sale under this
Registration Statement, cannot be determined at this time. However, TRO
has contractually agreed to include herein for Kohler IRA 27,427 shares of
common stock issuable upon conversion of its Convertible Preferred Stock
and exercise of its Warrant.
(9) The number of shares of common stock listed as beneficially owned by Kohler
represents the number of shares of common stock issuable to Kohler (i) upon
conversion of 8.1 shares of Convertible Preferred Stock, acquired on
January 13, 1999, at an assumed conversion price of $6.338 (which price
will fluctuate from time to time based on changes in the market price of
the common stock and provisions in the formula for determining the
conversion price), and (ii) upon exercise of a Warrant issued to Kohler in
conjunction with the sale of the Convertible Preferred Stock for 1,875
shares of common stock. Because the number of shares of common stock upon
conversion of the Convertible Preferred Stock is dependent in part upon the
market price of the common stock prior to a conversion, the actual number
of shares of common stock that will be issued in respect of such
conversions and consequently the number of shares of common stock that will
be beneficially owned by Kohler will fluctuate daily and cannot be
determined at this time.
(10) Represents shares of common stock issuable to Kohler upon (i) conversion of
its Convertible Preferred Stock, and (ii) exercise of the Warrant issued to
Kohler. Because the number of shares of common stock issuable upon
conversion of the Convertible Preferred Stock is dependent in part upon the
market price of the common stock prior to a conversion, the actual number
of shares of common stock that will be issued in respect of such
conversions and, consequently, offered for sale under this Registration
Statement, cannot be determined at this time. However, TRO has
contractually agreed to include herein for Kohler 27,427 shares of common
stock issuable upon conversion of its Convertible Preferred Stock and
exercise of its Warrant.
(11) Assumes sale of all shares of common stock offered hereby.
Pursuant to the terms of the Registration Rights Agreement, TRO has agreed
to indemnify the holders of the common stock issuable upon the conversion of the
Convertible Preferred Stock and the exercise of the Warrants 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.
PLAN OF DISTRIBUTION
The selling stockholders and any of their pledgees, assignees and
successors-in-interest may, from time to time, sell any or all of their shares
of common stock on any stock exchange, market or trading facility on which the
shares are traded or in private transactions. These sales may be at fixed or
negotiated prices. The selling stockholders may use any one or more of the
following methods when selling shares:
- ordinary brokerage transactions and transactions in which the
broker-dealer solicits purchasers;
- block trades in which the broker-dealer will attempt to sell the
shares as agent but may position and resell a portion of the block as
principal to facilitate the transaction;
13
<PAGE>
- purchases by a broker-dealer as principal and resale by the
broker-dealer for its account;
- an exchange distribution in accordance with the rules of the
applicable exchange;
- privately negotiated transactions;
- short sales;
- broker-dealers may agree with the selling stockholders to sell a
specified number of such shares at a stipulated price per share;
- a combination of any such methods of sale; and
- any other method permitted pursuant to applicable law.
The selling stockholders may also sell shares under Rule 14 under the Securities
Act, if available, rather than under this prospectus.
The selling stockholders may also engage in short sales against the box,
puts and calls and other transactions in securities of TRO or derivatives of
TRO's securities and may sell or deliver shares in connection with these
trades. The selling stockholders may pledge their shares to their brokers
under the margin provisions of customer agreements. If a selling stockholder
defaults on a margin loan, the broker may, from time to time, offer and sell
the pledged shares.
Broker-dealers engaged by the selling stockholders may arrange for other
broker-dealers to participate in sales. Broker-dealers may receive
commissions or discounts from the selling stockholders (or, if any
broker-dealer acts as agent for the purchaser or shares, from the purchaser)
in amounts to be negotiated. The selling stockholders do not expect these
commissions and discounts to exceed what is customary in the types of
transactions involved.
The selling stockholders any broker-dealers or agents that are involved
in selling the shares may be deemed to be "underwriters" within the meaning
of the Securities Act in connection with such sales. In such event, any
commissions received by such broker-dealers or agents and any profit on the
resale of the shares purchased by them may be deemed to be underwriting
commissions or discounts under the Securities Act. Neither TRO nor the
selling stockholder can presently estimate the amount of such commission or
discount. TRO knows of no existing arrangements between the selling
stockholders and any broker-dealers or agents.
TRO is required to pay all fees and expenses incident to the
registration of the shares, including fees and disbursements of counsel to
the selling stockholders. TRO has agreed to indemnify the selling
stockholders against certain losses, claims, damages and liabilities,
including liabilities under the Securities Act.
EXPENSES
TRO 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. We have 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.
14
<PAGE>
EXPERTS
The consolidated financial statements and schedule to Form 10-K of TRO
Learning, Inc. for the year ended October 31, 1998 have been incorporated by
reference herein and in the Registration Statement in reliance upon the
report of PricewaterhouseCoopers LLP, independent certified public
accountants, also incorporated by reference herein, and given upon the
authority of said firm as experts in accounting and auditing.
15
<PAGE>
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 TRO 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 . . . $ 4,834.07
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 . . . . . . . . . . . . . . . . . . . . . . . . . . . $35,834.07
-----------
-----------
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 TRO's By-Laws provides for indemnification of any director,
officer, or legal representatives of TRO, or any person serving in the same
capacity in any other enterprise at our request, under certain circumstances.
Article Five of TRO's Amended and Restated By-Laws indemnifies the directors
and officers of TRO to the fullest extent permissible under Delaware law.
TRO's directors and officers 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.
II-1
<PAGE>
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 PricewaterhouseCoopers LLP
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 TRO 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
II-2
<PAGE>
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.
(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.
II-3
<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 February 16, 1999.
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
William R. Roach and John Murray, 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:
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------- ----- ----
<S> <C> <C>
/s/ William R. Roach Chief Executive Officer and Director February 16, 1999
- ------------------------
William R. Roach
/s/ John Murray Executive Vice President February 16, 1999
- ------------------------ and Chief Financial Officer
John Murray
/s/ Mary Jo Murphy Vice President, Corporate Controller February 16, 1999
- ------------------------ and Chief Accounting Officer
Mary Jo Murphy
/s/ John L. Krakauer Director February 16, 1999
- ------------------------
John L. Krakauer
/s/ John Patience Director February 16, 1999
- ------------------------
John Patience
/s/ Vernon B. Lewis, Jr. Director February 16, 1999
- ------------------------
Vernon B. Lewis, Jr.
/s/ Tony J. Christianson Director February 16, 1999
- ------------------------
Tony J. Christianson
/s/ Jack R. Borsting Director February 16, 1999
- ------------------------
Jack R. Borsting
</TABLE>
II-4
<PAGE>
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 PricewaterhouseCoopers LLP
24 Power of Attorney (included on signature page)
<PAGE>
Exhibit 5.1
OPINION AS TO LEGALITY
February 17, 1999
TRO Learning, Inc.
Suite 555
1721 Moon Lake Boulevard
Hoffman Estates, Illinois 60194
Re: 1,828,470 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
1,828,470 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 (i) conversion by the holders of the Company's Series C
Convertible Preferred Stock (into common stock of the Company) and (ii)
issued pursuant to that certain Series C Convertible Preferred Stock Purchase
Agreement among the Company, KA Investments, LDC, Gary S. Kohler, First Trust
National Association TTEE FBO Gary Kohler IRA, Industricorp & Co., Inc. FBO
Twin City Carpenters Pension Plan, and Stark International (the "Purchase
Agreement").
Based on the foregoing, we are of the opinion that:
Assuming the conversion mechanics of the Convertible Preferred
Stock have been properly completed and the terms and preconditions to
conversion as set forth in the Certificate of Designations of Series C
Convertible Preferred Stock filed on January 13, 1999 with the Secretary of
State of the State of Delaware and the exercise mechanics set forth in the
Warrants 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,
/s/ Winston & Strawn
WINSTON & STRAWN
<PAGE>
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 (File No. 333-xxxxx) of our report dated December 3, 1998 on our
audits of the consolidated financial statements and financial statement
schedule of TRO Learning, Inc., as of October 31, 1998 and 1997, and for the
years ended October 31, 1998, 1997 and 1996, which report is included on page
30 of the TRO Learning Inc. Annual Report Form 10-K for the year ended
October 31, 1998. We also consent to the references to us under the headings
"Experts".
PricewaterhouseCoopers LLP
Chicago, Illinois
/s/PricewaterhouseCoopers LLP
February 17, 1999
