THE SECURITIES REPRESENTED BY THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 OR APPLICABLE STATE SECURITIES LAWS, AND MAY NOT BE
SOLD, ASSIGNED, OFFERED, PLEDGED OR OTHERWISE TRANSFERRED FOR VALUE EXCEPT
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND SUCH LAWS
COVERING SUCH SECURITIES OR UNLESS THE ISSUER RECEIVES AN OPINION OF COUNSEL
ACCEPTABLE TO THE ISSUER STATING THAT SUCH SALE, ASSIGNMENT, PLEDGE OR
TRANSFER IS EXEMPT FROM THE REQUIREMENTS OF SUCH ACT AND SUCH LAWS.
COMMON STOCK WARRANT
To Purchase ______
Shares of Common Stock of
TRO Learning, Inc.
______________, 1997
THIS CERTIFIES THAT, for good and valuable consideration ________________
or registered assigns is entitled to subscribe for and purchase from TRO
Learning, Inc. (the "Company") at any time after the date hereof to and
including ___________, 2002, ________________________(_____) fully paid and
nonassessable shares of the Company's Common Stock, $.01 par value, at a
price of $ ______ per share (the "Exercise Price"):*
This Warrant is subject to the following provisions, terms and conditions:
1. EXERCISE; TRANSFERABILITY. The rights represented by this Warrant
may be exercised by the holder hereof, in whole or in part (but not as to a
fractional share of Common Stock), by written notice of exercise delivered to
the Company twenty (20) days prior to the intended date of exercise and by
the surrender of this Warrant (properly endorsed if required) at the principal
office of the Company and upon payment to it by certified or bank check or
wire transfer of the purchase price for such shares.
2. ISSUANCE OF SHARES. The Company agrees that the shares purchased
hereby shall be and are deemed to be issued to the record holder hereof as of
the close of business on the date on which this Warrant shall have been
exercised by surrender of the Warrant and payment for the shares. Subject to
the provisions of the next succeeding paragraph, certificates for the shares
of stock so purchased shall be delivered to the holder hereof within a
reasonable time, not exceeding ten (10) days after the rights represented by
this Warrant shall have been so exercised, and, unless this Warrant has
expired, a new Warrant representing the number of shares, if any, with
respect to
_______________________________
* The Exercise Price shall be equal to the conversion price of the debentures.
which this Warrant shall not then have been exercised shall also be delivered
to the holder hereof within such time.
Notwithstanding the foregoing, however, the Company shall not be required
to deliver any certificate for shares of stock upon exercise of this Warrant,
except in accordance with the provisions, and subject to the limitations, of
paragraph 7 hereof.
3. COVENANTS OF COMPANY. The Company covenants and agrees that all
shares which may be issued upon the exercise of the rights represented by
this Warrant will, upon issuance, be duly authorized and issued, fully paid,
nonassessable and free from all taxes, liens and charges with respect to the
issue thereof, and, without limiting the generality of the foregoing, the
Company covenants and agrees that it will from time to time take all such
action as may be required to assure that the par value per share of Common
Stock is at all times equal to or less than the then effective purchase price
per share of the Common Stock issuable pursuant to this Warrant. The Company
further covenants and agrees that, during the period within which the rights
represented by this Warrant may be exercised, the Company will at all times
have authorized, and reserved for the purpose of issue or transfer upon
exercise of the subscription rights evidenced by this Warrant, a sufficient
number of shares of its Common Stock to provide for the exercise of the rights
represented by this Warrant.
4. ANTI-DILUTION ADJUSTMENTS. The above provisions are, however,
subject to the following:
(a) In case the Company shall at any time hereafter subdivide or
combine the outstanding shares of Common Stock or declare a dividend payable
in Common Stock, the Exercise Price of this Warrant in effect immediately
prior to the subdivision, combination or record date for such dividend
payable in Common Stock shall forthwith be proportionately increased, in the
case of combination, or decreased, in the case of subdivision or dividend
payable in Common Stock. Upon each adjustment of the Exercise Price, the
holder of this Warrant shall thereafter be entitled to purchase, at the
Exercise Price resulting from such adjustment, the number of shares obtained
by multiplying the Exercise Price immediately prior to such adjustment by the
number of shares purchasable pursuant hereto immediately prior to such
adjustment and dividing the product thereof by the Exercise Price resulting
from such adjustment.
(b) No fractional shares of Common Stock are to be issued upon the
exercise of this Warrant, but the Company shall pay a cash adjustment in
respect of any fraction of a share which would otherwise be issuable in an
amount equal to the same fraction of the market price per share of Common
Stock on the day of exercise as determined in good faith by the Company.
(c) If any capital reorganization or reclassification of the capital
stock of the Company, or consolidation or merger of the Company with another
corporation, or the sale of all or substantially all of its assets to another
corporation shall be effected in such a way that holders of Common Stock
shall be entitled to receive stock, securities or assets with respect to or
in exchange for Common Stock, then, as a condition of such reorganization,
reclassification, consolidation,
2
merger or sale, lawful and adequate provision shall be made whereby the
holder hereof shall thereafter have the right to purchase and receive, upon
the basis and upon the terms and conditions specified in this Warrant and in
lieu of the shares of Common Stock of the Company immediately theretofore
purchasable and receivable upon the exercise of the rights represented
hereby, such stock, securities or assets as may be issued or payable with
respect to or in exchange for a number of outstanding shares of such Common
Stock equal to the number of shares of such stock immediately theretofore
purchasable and receivable upon the exercise of the rights represented hereby
had such reorganization, reclassification, consolidation, merger or sale not
taken place, and in any such case appropriate provisions shall be made with
respect to the rights and interest of the holder of this Warrant to the end
that the provisions hereof (including without limitation provisions for
adjustments of the Warrant purchase price and of the number of shares
purchasable upon the exercise of this Warrant) shall thereafter be
applicable, as nearly as may be, in relation to any shares of stock,
securities or assets thereafter deliverable, as nearly as may be, in relation
to any shares of stock, securities or assets thereafter deliverable upon the
exercise hereof. The Company shall not effect any such consolidation, merger
or sale unless prior to the consummation thereof the successor corporation
(if other than the Company) resulting from such consolidation or merger, or
the corporation purchasing such assets, shall assume by operation of law or
written instrument, the obligation to deliver to such holder such shares of
stock, securities or assets as, in accordance with the foregoing provisions,
such holder may be entitled to purchase. Notice of such assumption shall be
promptly mailed to the registered holder hereof at the least address of such
holder appearing on the books of the Company.
Notwithstanding any language to the contrary set forth in this
paragraph 4(c), if an occurrence or event described herein shall take place
in which the shareholders of the Company receive cash for their shares of
Common Stock of the Company and a successor corporation or corporation
purchasing assets shall receive the transaction then, at the election of the
record holder hereof, such corporation shall be obligated to purchase this
Warrant (or the unexercised part hereof) from the record holder without
requiring the holder to exercise all or part of the Warrant. If such
corporation refuses to so purchase this Warrant the the Company shall
purchase the Warrant for cash. In either case the purchase price shall be the
amount per share that shareholders of the outstanding Common Stock of the
Company shall receive as a result of the transaction multiplied by the number
of shares covered by the Warrant, minus the aggregate Exercise Price of the
Warrant. Such purchase shall be closed within 60 days following the election
of the holder to sell this Warrant.
(d)
(i) If the Company issues or sells any shares of
Common Stock for a consideration per share less than the
Exercise Price then in effect (other than dividends payable in
shares of Common Stock), or issues any options, warrants, or
other rights to purchase Common Stock at a consideration per
share less than the Exercise Price then in effect, or issues
securities convertible into Common Stock at a Exercise Price
per share of less than the Exercise Price then in effect, then
the Exercise Price in effect immediately prior to such
issuance or sale shall be adjusted by multiplying the Exercise
Price by a fraction, the numerator of which shall be an amount
equal to the sum of (A) the aggregate
3
number of shares of Common Stock outstanding immediately prior
to such issuance or sale multiplied by the applicable Exercise
Price in effect immediately prior to such issuance or sale,
and (B) the total consideration payable to the Company upon
such issuance or sale of such Common Stock and/or such
purchase rights or convertible securities, plus the
consideration payable to the Company upon the exercise of such
purchase rights or upon conversion of such convertible
securities, and the denominator of which shall be an amount
equal to the aggregate number of shares of Common Stock
outstanding immediately after such issuance or sale plus the
number of shares of Common Stock issuable upon the exercise of
any purchase rights and/or upon the conversion of convertible
securities issued in such issuance. If the Exercise Price is
adjusted as the result of the issuance of any options,
warrants or other purchase rights or upon the issuance of
convertible securities, no further adjustments of such
Exercise Price shall be made at the time of the exercise of
such options, warrants or other purchase rights or convertible
securities. If securities are issued for a consideration other
than cash, the amount of the consideration other than cash
received by the Company shall be deemed to be the fair value
of such consideration as determined by the Board of Directors
of the Issuer.
(ii) Upon any adjustment of the Exercise Price
pursuant to subsection 4(d)(i) hereof, the holder of this
Warrant shall thereafter (until another such adjustment) be
entitled to purchase, at the new Exercise Price, the number of
shares of Common Stock determined by multiplying the number of
shares as to which this Warrant was exercisable immediately
prior to such adjustment by the Exercise Price which would
have been in effect but for subsection 4(d) hereof and
dividing the product so obtained by the Exercise Price as
adjusted pursuant to subsection 4(d)(i) hereof.
(iii) ISSUANCE OF CASH. In case of the issuance
of additional shares of Common Stock entirely for cash, the
consideration received by the Company therefor shall be deemed
to be an amount of cash received by the Company for such
shares, without deducting therefrom any commissions or other
expenses paid or incurred by the Company for any underwriting
of, or otherwise in connection with, the issuance of such
shares of Common Stock.
(iv) ISSUANCE FOR PROPERTY. In case of the
issuance of additional shares of Common Stock for a
consideration other than cash, or for a consideration a part
of which shall be other than cash, the amount of per share
consideration other than cash received by the Company for such
shares shall be deemed to be the fair market value of such
consideration as determined in good faith by the Board of
Directors.
(e) Upon any adjustment of the Warrant purchase price, then, and
in each such case, the Company shall give written notice thereof, by first
class mail, postage prepaid, addressed to the registered holder of this
Warrant at the address of such holder as shown on the books of the Company,
which notice shall state the Warrant purchase price resulting from such
adjustment and the increase or decrease, if any, in the number of shares
purchasable at such price upon the exercise
4
of this Warrant, setting forth in reasonable detail the method of calculation
and the facts upon which such calculation is based.
(f) If any event occurs as to which in the good faith determination
of the Board of Directors of the Company the other provisions of this
paragraph 4 are not strictly applicable or if strictly applicable would not
fairly protect the purchase rights of the holder of this Warrant or of Common
Stock in accordance with the essential intent and principles of such
provisions, then the Board of Directors shall make an adjustment in the
application of such provisions, in accordance with such essential intent and
principles, so as to protect such purchase rights as aforesaid.
5. COMMON STOCK. As used herein, the term "Common Stock" shall mean and
include the Company's presently authorized shares of Common Stock and shall
also include any capital stock of any class of the Company hereafter
authorized which shall not be limited to fixed sum or percentage in respect
of the rights of the holders thereof to participate in dividends or in the
distribution, dissolution or winding up of the Company; provided that the
shares purchasable pursuant to this Warrant shall include shares designated
as Common Stock of the Company on the date of original issue of this Warrant
or, in the case of any reclassification of the outstanding shares thereof, the
stock, securities or assets provided for in Section 4 above.
6. NO VOTING RIGHTS. This Warrant shall not entitle the holder hereof to
any voting rights or other rights as a stockholder of the Company.
7. TRANSFER OF WARRANT OR RESALE OF SHARES. In the event the holder of
this Warrant desires to transfer this Warrant, or any Common Stock issued
upon the exercise hereof, the holder shall provide the Company with a written
notice describing the manner of such transfer and an opinion of counsel
(reasonably acceptable to the Company) that the proposed transfer may be
effected without registration or qualification (under any Federal or State
law), whereupon such holder shall be entitled to transfer this Warrant or to
dispose of shares of Common Stock received upon the previous exercise hereof
in accordance with the notice delivered by such holder to the Company;
PROVIDED, that an appropriate legend may be endorsed on this Warrant or the
certificates for such shares respecting restrictions upon transfer thereof
necessary or advisable in the opinion of counsel satisfactory to the Company
to prevent further transfers which would be in violation of Section 5 of the
Securities Act of 1933 (the "Securities Act"); and PROVIDED, FURTHER, that
the holder shall not be entitled to transfer this Warrant in part if such
transfer would result in a Warrant for less than one thousand (1,000) shares
(unless such amount represents the residual balance of the number of shares
subject to this Warrant); and PROVIDED, FURTHER that the prospective
transferee or purchaser shall execute such documents and make such
representations, warranties and agreements as may be required solely to
comply with the registration exemptions relied upon by the Company for the
transfer or disposition of the Warrant or shares issuable upon exercise of
the Warrant.
If, in the opinion of either of the counsel referred to in this
paragraph 7, the proposed transfer or disposition described in the written
notice given pursuant to this paragraph 7 may not be effected without
registration or qualification of this Warrant or the shares of Common Stock
issued upon the exercise hereof, the Company shall promptly give written
notice thereof to
5
the holder hereof, and such holder will limit its activities in respect to
such proposed transfer or disposition as, in the opinion of both such
counsel, are permitted by law.
8. REGISTRATION RIGHTS. (a) If the Company proposes to claim an
exemption under Section 3(b) for a public offering of any of its securities
or to register under the Securities Act (the "Securities Act") (except by a
claim of exemption or registration statement on a form that does not permit
the inclusion of shares by its security holders) any of its securities, it
will give written notice to all registered holders of Warrants, and all
registered holders of shares of Common Stock acquired upon the exercise of
Warrants, of its intention to do so and, on the written request of any such
registered holders given within twenty (20) days after receipt of any such
notice (which request must be made within five (5) years from the date of
this Warrant), the Company will use its best efforts to cause all such
shares, the registered holders of which shall have requested the registration
or qualification thereof, to be included in such notification or registration
statement proposed to be filed by the Company; provided, however, that (i)
the Company shall not be required to include any such shares of Common Stock
in any such registration for any holder who is able to sell all shares of
Common Stock owned by such holder (or issuable to such holder upon exercise
of this Warrant), and which benefit from the registration rights granted
hereunder, during the three-month period beginning on the date such notice is
received by such holder, without compliance with the registration
requirements of the Securities Act pursuant to Rule 144(k) (or any successor
thereto) under the Securities Act; (ii) the Company shall only be required to
include this Warrant in any such registration where (A) the Common Stock
issuable upon the exercise of such Warrant is also included in such
registration and (B) it is contemplated that such Warrant will be exercised
and such Common Stock will be offered in connection with such registration;
(iii) the Company shall not be required to give such notice with respect to,
or to include such Warrant or Common Stock in, any such registration which is
primarily (A) a registration of a stock option plan or other employee benefit
plan or of securities issued or issuable pursuant to any such plan such as a
registration on Form S-8, or (B) a registration of securities proposed to be
issued in exchange for securities or assets of, or in connection with a
merger or consolidation with, another corporation such as a registration on
Form S-4; (iv) the Company shall not be required to include in any such
registration any shares of Common Stock previously duly registered under the
Securities Act; (v) the Company may, in its sole discretion, withdraw any
such registration statement and abandon the proposed offering in which any
such holder had requested to participate; (vi) if the offering to which the
registration statement relates is to be distributed by or through an
underwriter, each such holder shall agree, as a condition to the inclusion of
such holder's securities in such registration, to sell the securities held by
such holder through such underwriter on the same terms and conditions as the
underwriter agrees to sell securities on behalf of the Company and not to
sell, transfer, pledge, assign or otherwise dispose of any shares of Common
Stock not sold by such holder in such offering for such period (up to ninety
(90) days after the effective date of the registration statement) as may be
required by the underwriter; and (vii) if the offering to which the
registration statement relates is to be distributed by or through an
underwriter and a greater number of securities is offered for participation
in the proposed underwriting than, in the opinion of the Company's
underwriter, can be accommodated without significantly adversely affecting
the proposed underwriting, the amount of such securities otherwise to be
included in the underwritten offering on behalf of all persons other than the
Company may be reduced pro rata, in accordance with the number of shares
6
of Common Stock proposed to be sold by each such holder, or may be eliminated
entirely from such underwritten public offering. The costs and expenses of
such offering, including but not limited to legal fees, special audit fees,
printing expenses, filing fees, fees and expenses relating to qualifications
under state securities or blue sky laws and the premiums for insurance, if
any, incurred by the Company in connection with any registration made
pursuant to this Section 8(a) shall be borne entirely by the Company;
PROVIDED, HOWEVER, that any holders participating in such registration shall
bear their own underwriting discounts and commissions and the fees and
expenses of their own counsel or accountants in connection with any such
registration.
(b) On two occasions only, at any time during the period commencing
one (1) year from the date hereof and ending five (5) years from the date
hereof, upon request by the holders of Warrants and/or the holders of shares
issued upon the exercise of the Warrants who collectively (i) have the right
to purchase at least 20% of the shares subject to the Warrants, (ii) hold
directly at least 20% of the shares purchased hereunder, or (iii) have the
right to purchase or hold directly an aggregate of at least 20% of the shares
purchasable or purchased hereunder, the Company will promptly take all
necessary steps to register the sale of such shares by the holders thereof,
on Form S-3 under the Securities Act (and, upon the request of such
holders,under Rule 415 thereunder) and such state laws as such holders may
reasonably request; provided, however, that (i) the Company shall not be
required to include any such shares of Common Stock in any such registration
for any holder who is able to sell all shares of Common Stock owned by such
holder (or issuable to such holder upon exercise of this Warrant), and which
benefit from the registration rights granted hereunder, during the
three-month period beginning on the date such registration is requested by
such holder, without compliance with the registration requirements of the
Securities Act pursuant to Rule 144(k) (or any successor thereto) under the
Securities Act; (ii) the Company shall only be required to include this
Warrant in any such registration where (A) the Common Stock issuable upon the
exercise of such Warrant is also included in such registration and (B) it is
contemplated that such Warrant will be exercised and such Common Stock will
be offered in connection with such registration; (iii) the Company shall not
be required to include in any such registration any shares of Common Stock
duly registered under the Securities Act and registered or qualified under
all applicable state securities or blue sky laws upon original issuance; and
(iv) the Company may, on not more than one occasion, delay the filing of any
registration statement requested pursuant to this Section 8(b) to a date not
more than 90 days following the date of such request if in the reasonable
opinion of the Company at the time of such request such a delay is necessary
in order not to significantly adversely affect financing efforts then
underway at the Company (in which case the expiration date of this Section
8(b) shall be extended by a period equal to the period of such delay). The
costs and expenses directly related to any registration requested pursuant to
this Section 8(b), including but not limited to legal fees of the Company's
counsel, audit fees, printing expense, filing fees and fees and expenses
relating to qualifications under state securities or blue sky laws incurred
by the Company shall be borne entirely by the Company; provided, however,
that the persons for whose account the securities covered by such
registration are sold shall bear the underwriting commissions applicable to
their shares and fees of their legal counsel. If the holders of Warrants and
the holders of shares of Common Stock underlying the Warrants are the only
persons whose shares are included in the registration pursuant to this
Section 8(b), such holders shall bear the expense of inclusion of audited
financial statements in the registration statement
7
which are not dated as of the Company's normal fiscal year or are not
otherwise prepared by the Company for its own business purposes. The Company
shall keep effective and maintain any registration, qualification,
notification or approval specified in this Section 8(b) for such period as may
be necessary for the holders of the Warrants and such Common Stock to dispose
of such securities and, from time to time shall amend or supplement, at the
holder's expense, the prospectus or offering circular used in connection
therewith to the extent necessary in order to comply with applicable law.
If, at the time any written request for registration is received by
the Company pursuant to this Section 8(b), the Company has determined to
proceed with the actual preparation and filing of a registration statement
under the Securities Act in connection with the proposed offer and sale for
cash of any of its securities by it or any of its security holders, such
written request shall be deemed to have been given pursuant to Section 8(a)
hereof rather than this Section 8(b), and the rights of the holders of
Warrants and or shares issued upon the exercise of the Warrants covered by
such written request shall be governed by Section 8(a) hereof.
The managing underwriter of an offering registered pursuant to this
Section 8(b), if any, shall be selected by the holders of a majority of the
Warrants and/or shares issued upon the exercise of the Warrants for which
registration has been requested and shall be reasonably acceptable to the
Company. Without the written consent of the holders of a majority of the
Warrants and/or shares issued upon the exercise of the Warrants for which
registration has been requested pursuant to this Section 8(b), neither the
Company nor any other holder of securities of the Company may include
securities in such registration if in the good faith judgment of the managing
underwriter of such public offering the inclusion of such securities would
interfere with the successful marketing of the Warrants and/or shares issued
upon the exercise of the Warrants or require the exclusion of any portion of
the Warrants and/or shares issued upon the exercise of the Warrants to be
registered. Subject to the preceding sentence, shares to be excluded from an
underwritten public offering shall be selected in the manner provided in
Section 8(a) hereof.
(c) If and whenever the Company is required by the provisions of
Sections 8(a) or 8(b) hereof to effect the registration of Warrants and/or
shares issued upon the exercise of the Warrants under the Securities Act, the
Company will:
(i) Prepare and file with the U.S. Securities and
Exchange Commission (the "Commission") a registration statement
with respect to such securities, and use its best efforts to cause
such registration statement to become and remain effective for such
period as may be reasonably necessary to effect the sale of such
securities;
(ii) prepare and file with the Commission such
amendments to such registration statement and supplements to the
prospectus contained therein as may be necessary to keep such
registration statement effective for such period as may be
reasonably necessary to effect the sale of such securities;
8
(iii) furnish to the security holders participating in such
registration and to the underwriters of the securities being registered
such reasonable number of copies of the registration statement,
preliminary prospectus, final prospectus and such other documents as such
underwriters may reasonably request in order to facilitate the public
offering of such securities;
(iv) use its best efforts to register or qualify the securities
covered by such registration statement under such state securities or
blue sky laws of such jurisdictions as such participating holders may
reasonably request in writing within 30 days following the original filing
of such registration statement, except that the Company shall not for any
purpose be required to execute a general consent to service of process or
to qualify to do business as a foreign corporation in any jurisdiction
wherein it is not so qualified;
(v) notify the security holders participating in such registration,
promptly after it shall receive notice thereof, of the time when such
registration statement has become effective or a supplement to any
prospectus forming a part of such registration statement has been filed;
(vi) notify such holders promptly of any request by the Commission
for the amending or supplementing of such registration statement or
prospectus or for additional information;
(vii) prepare and file with the Commission, promptly upon the request
of any such holders, any amendments or supplements to such registration
statement or prospectus which, in the opinion of counsel for such holders
(and concurred in by counsel for the Company), is required under the
Securities Act or the rules and regulations thereunder in connection with
the distribution of the Warrants or shares by such holder;
(viii) prepare and promptly file with the Commission and promptly
notify such holders of the filing of such amendment or supplement to such
registration statement or prospectus as may be necessary to correct any
statements or omissions if, at the time when a prospectus relating to
such securities is required to be delivered under the Securities Act, any
event shall have occurred as the result of which any such prospectus or
any other prospectus as then in effect would include an untrue statement
of a material fact or omit to state any material fact necessary to make
the statements therein, in the light of the circumstances in which they
were made, not misleading;
(ix) advise such holders, promptly after it shall receive notice
or obtain knowledge thereof, of the issuance of any stop order by the
Commission suspending the effectiveness of such registration statement or
the initiation or threatening of any
9
proceeding for that purpose and promptly use its best efforts to prevent
the issuance of any stop order or to obtain its withdrawal if such stop
order should be issued;
(x) not file any amendment or supplement to such registration
statement or prospectus to which a majority in interest of such holders
shall have reasonably objected on the grounds that such amendment or
supplement does not comply in all material respects with the requirements
of the Securities Act or the rules and regulations thereunder, after
having been furnished with a copy thereof at least five business days
prior to the filing thereof, unless in the opinion of counsel for the
Company the filing of such amendment or supplement is reasonably
necessary to protect the Company from any liabilities under any
applicable federal or state law and such filing will not violate
applicable law; and
(xi) at the request of any such holder, furnish on the effective
date of the registration statement and, if such registration includes an
underwritten public offering, at the closing provided for in the
underwriting agreement: (i) opinions, dated such respective dates, of the
counsel representing the Company for the purposes of such registration,
addressed to the underwriters, if any, and to the holder or holders
making such request, covering such matters as such underwriters and
holder or holders may reasonably request; and (ii) letters, dated such
respective dates, from the independent certified public accountants of
the Company, addressed to the underwriters, if any, and to the holder or
holders making such request, covering such matters as such underwriters
and holder or holders may reasonably request, in which letter such
accountants shall state (without limiting the generality of the
foregoing) that they are independent certified public accountants within
the meaning of the Securities Act and that in the opinion of such
accountants the financial statements and other financial data of the
Company included in the registration statement or the prospectus or any
amendment or supplement thereto comply in all material respects with the
applicable accounting requirements of the Securities Act.
(d) The Company hereby indemnifies the holder of this Warrant and of any
Common Stock issued or issuable hereunder, its officers and directors, and any
person who controls such Warrant holder or such holder of Common Stock within
the meaning of Section 15 of the Securities Act, against all losses, claims,
damages and liabilities caused by any untrue statement of a material fact
contained in any registration statement, prospectus, notification or offering
circular (and as amended or supplemented if the Company shall have furnished
any amendments or supplements thereto) or any preliminary prospectus or
caused by any omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading except
insofar as such losses, claims, damages or liabilities are caused by any
untrue statement or omission contained in information furnished in writing to
the Company by such Warrant holder or such holder of Common Stock expressly
for use therein, and each such holder by its acceptance hereof severally
agrees that it will indemnify and hold harmless the Company and each of its
officers who signs such registration statement and each of its directors and
each person,
10
if any, who controls the Company within the meaning of Section 15 of the
Securities Act of 1933 with respect to losses, claims, damages or liabilities
which are caused by any untrue statement or omission contained in information
furnished in writing to the Company by such holder expressly for use therein.
9. ADDITIONAL RIGHT TO CONVERT WARRANT.
(a) Subject to the provisions of Section 7 hereof, the holder of
this Warrant shall have the right to require the Company to convert this
Warrant (the "Conversion Right") at any time prior to its expiration into
shares of Common Stock as provided for in this Section 9. Upon exercise of
the Conversion Right, the Company shall deliver to the holder (without
payment by the holder of any Exercise Price) that number of shares of Common
Stock equal to the quotient obtained by dividing (x) the value of the Warrant
at the time the Conversion Right is exercised (determined by subtracting the
aggregate Exercise Price for the Warrant Shares in effect immediately prior
to the exercise of the Conversion Right from the aggregate Fair Market Value
for the Warrant Shares immediately prior to the exercise of the Conversion
Right) by (y) the Fair Market Value of one share of Common Stock immediately
prior to the exercise of the Conversion Right.
(b) The Conversion Right may be exercised by the holder, at any
time or from time to time, prior to its expiration, on any business day by
delivering a written notice in the form attached hereto (the "Conversion
Notice") to the Company at the offices of the Company exercising the
Conversion Right and specifying (i) the total number of shares of Stock the
Warrantholder will purchase pursuant to such conversion and (ii) a place and
date not less than one nor more than 20 business days from the date of the
Conversion Notice for the closing of such purchase.
(c) At any closing under Section 9(b) hereof, (i) the holder will
surrender the Warrant and (ii) the Company will deliver to the holder a
certificate or certificates for the number of shares of Common Stock issuable
upon such conversion, together with cash, in lieu of any fraction of a share,
and (iii) the Company will deliver to the holder a new warrant representing
the number of shares, if any, with respect to which the warrant shall not
have been exercised.
(d) "FAIR MARKET VALUE" means, with respect to the Company's Common
Stock, as of any date:
(i) if the Common Stock is listed or admitted to unlisted
trading privileges on any national securities exchange or is not so listed or
admitted by transactions in the Common Stock are reported on the NASDAQ
National Market System, the reported closing price of the Common Stock on
such exchange or by the NASDAQ National Market System as of such date (or, if
no shares were traded on such day, as of the next preceding day on which
there was such a trade); or
(ii) if the Common Stock is not so listed or admitted to
unlisted trading privileges or reported on the NASDAQ National Market System,
and bid and asked prices therefor
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in the over-the-counter market are reported by the NASDAQ system or National
Quotation Bureau, Inc. (or any comparable reporting service), the mean of the
closing bid and asked prices as of such date, as so reported by the NASDAQ
System, or, if not so reported thereon, as reported by National Quotation
Bureau, Inc. (or such comparable reporting service); or
(iii) if the Common Stock is not so listed or admitted to
unlisted trading privileges, or reported on the NASDAQ National Market
System, and such bid and asked prices are not so reported by the NASDAQ
system or National Quotation Bureau, Inc. (or any comparable reporting
service), such price as the Company's Board of Directors determines in good
faith in the exercise of its reasonable discretion.
IN WITNESS WHEREOF, TRO Learning, Inc. has caused this Warrant to be
executed by its duly authorized officers and this Warrant to be dated as of
________, 1997.
TRO LEARNING, INC.
By
---------------------------------------
, President
--------------------
By
---------------------------------------
, Secretary
--------------------
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EXERCISE FORM
(TO BE SIGNED ONLY UPON EXERCISE OF WARRANT)
TRO LEARNING, INC.
The undersigned, the holder of the within warrant, hereby irrevocably
elects to exercise the purchase right represented by such warrant for, and to
purchase thereunder _____________________ shares of the Common Stock, $.01
par value, of TRO Learning, Inc. and herewith makes payment of
$____________ therefor, and requests that the certificates for such shares
be issued in the name of _____________________________ and be delivered to
_________________________ whose address is __________________________________.
Dated:
------------- ------------------------------------------
(Signature must conform in all respects to
the name of holder as specified on the face
of the warrant)
(Address)
(City - State - Zip)
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ASSIGNMENT FORM
(TO BE SIGNED ONLY UPON TRANSFER OF THE WARRANT)
For value received, the undersigned hereby sells, assigns and transfers
unto ________________________________ the right represented by the within
warrant to purchase ________________ of the shares of Common Stock, $.01 par
value, of TRO Learning, Inc. to which the within warrant relates, and
appoints ______________________________ attorney to transfer said right on
the books of TRO Learning, Inc., with full power of substitution in the
premises.
Dated:
------------- ------------------------------------------
(Signature must conform in all respects to
the name of holder as specified on the face
of the warrant)
(Address)
(City - State - Zip)
In the presence of:
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CONVERSION NOTICE
(TO BE SIGNED ONLY UPON EXERCISE OF CONVERSION RIGHT
SET FORTH IN SECTION 9 OF THE WARRANT)
TO TRO LEARNING, INC.:
The undersigned, the holder of the within Warrant, hereby irrevocably
elects to exercise the Conversion Right set forth in Section 9 of such
Warrant and to purchase __________________________ shares of the Common
Stock, $.01 par value, of TRO Learning, Inc. The closing of this conversion
shall take place at the offices of the Company on ___________________.
Certificates for the shares to be delivered at the closing shall be issued in
the name of _________________________________, whose address is ______________
____________________________.
Dated:
------------- ------------------------------------------
(Signature must conform in all respects to
the name of holder as specified on the face
of the warrant)
(Address)
15