<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Schedule 13D
Under the Securities Exchange Act of 1934
(Amendment No. 1)*
Greentree Software, Inc.
-----------------------------------------
(Name of Issuer)
Common Stock, $.04 Par Value
-----------------------------------------
(Title of Class of Securities)
395793201
-----------------------------------------
(CUSIP Number)
Larry E. Jeddeloh, T.I.S. Acquisition and Management Group, Inc.,
200 South Sixth Street, Suite 450, Minneapolis, Minnesota, 55402
-----------------------------------------------------------------
(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications)
March 31, 1997
----------------------------------------
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box [_].
* The remainder of this cover page shall be filled out for a reporting
person's initial filing on this form with respect to the subject class
of securities, and for any subsequent amendment containing information
which would alter the disclosures provided in a prior cover page.
The information required in the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
(Continued on following page(s))
Page 1 of 10 Pages
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SCHEDULE 13D
- ----------------------- ---------------------
CUSIP NO. 395793201 PAGE 2 OF 10 PAGES
- ----------------------- ---------------------
- ------------------------------------------------------------------------------
NAME OF REPORTING PERSON
1 S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
T.I.S. Acquisition and Management Group, Inc.
Tax ID# 41-1816227
- ------------------------------------------------------------------------------
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
2 (a) [_]
(b) [_]
- ------------------------------------------------------------------------------
SEC USE ONLY
3
- ------------------------------------------------------------------------------
SOURCE OF FUNDS*
4
OO
- ------------------------------------------------------------------------------
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e) [_]
5
- ------------------------------------------------------------------------------
CITIZENSHIP OR PLACE OF ORGANIZATION
6
Minnesota
- ------------------------------------------------------------------------------
SOLE VOTING POWER
7
NUMBER OF
None
SHARES -----------------------------------------------------------
SHARED VOTING POWER
BENEFICIALLY 8
1,416,667
OWNED BY
-----------------------------------------------------------
EACH SOLE DISPOSITIVE POWER
9
REPORTING None
PERSON -----------------------------------------------------------
SHARED DISPOSITIVE POWER
WITH 10
1,416,667
- ------------------------------------------------------------------------------
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
11
1,416,667
- ------------------------------------------------------------------------------
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
12
[_]
- ------------------------------------------------------------------------------
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13
37.4% (based on 2,564,803 outstanding as of September 1, 1997
- ------------------------------------------------------------------------------
TYPE OF REPORTING PERSON*
14
CO
- ------------------------------------------------------------------------------
<PAGE>
SCHEDULE 13D
- ----------------------- ---------------------
CUSIP NO. 395793201 PAGE 3 OF 10 PAGES
- ----------------------- ---------------------
- ------------------------------------------------------------------------------
NAME OF REPORTING PERSON
1 S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
T.I.S. Group
Tax ID# 41-1808389
- ------------------------------------------------------------------------------
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
2 (a) [_]
(b) [_]
- ------------------------------------------------------------------------------
SEC USE ONLY
3
- ------------------------------------------------------------------------------
SOURCE OF FUNDS*
4
OO
- ------------------------------------------------------------------------------
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e) [_]
5
- ------------------------------------------------------------------------------
CITIZENSHIP OR PLACE OF ORGANIZATION
6
Minnesota
- ------------------------------------------------------------------------------
SOLE VOTING POWER
7
NUMBER OF
None
SHARES -----------------------------------------------------------
SHARED VOTING POWER
BENEFICIALLY 8
OWNED BY 1,447,500
-----------------------------------------------------------
EACH SOLE DISPOSITIVE POWER
9
REPORTING
None
PERSON -----------------------------------------------------------
SHARED DISPOSITIVE POWER
WITH 10
1,447,500
- ------------------------------------------------------------------------------
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
11
1,447,500
- ------------------------------------------------------------------------------
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
12
[_]
- ------------------------------------------------------------------------------
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13
38.2% (based on 2,564,803 outstanding as of September 1, 1997
- ------------------------------------------------------------------------------
TYPE OF REPORTING PERSON*
14
IV
<PAGE>
SCHEDULE 13D
- ----------------------- ---------------------
CUSIP NO. 395793201 PAGE 4 OF 10 PAGES
- ----------------------- ---------------------
- ------------------------------------------------------------------------------
NAME OF REPORTING PERSON
1 S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Larry E. Jeddeloh
- ------------------------------------------------------------------------------
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
2 (a) [_]
(b) [_]
- ------------------------------------------------------------------------------
SEC USE ONLY
3
- ------------------------------------------------------------------------------
SOURCE OF FUNDS*
4
PF,OO
- ------------------------------------------------------------------------------
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e) [_]
5
- ------------------------------------------------------------------------------
CITIZENSHIP OR PLACE OF ORGANIZATION
6
United States
- ------------------------------------------------------------------------------
SOLE VOTING POWER
7
NUMBER OF
13,889
SHARES -----------------------------------------------------------
SHARED VOTING POWER
BENEFICIALLY 8
OWNED BY 1,447,500
-----------------------------------------------------------
EACH SOLE DISPOSITIVE POWER
9
REPORTING
13,889
PERSON -----------------------------------------------------------
SHARED DISPOSITIVE POWER
WITH 10
1,447,500
- ------------------------------------------------------------------------------
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
11
1,461,389
- ------------------------------------------------------------------------------
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
12
[_]
- ------------------------------------------------------------------------------
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13
38.6% (based on 2,564,803 outstanding as of September 1, 1997)
- ------------------------------------------------------------------------------
TYPE OF REPORTING PERSON*
14
IA
- ------------------------------------------------------------------------------
<PAGE>
This Amendment No. 1 relates to the acquisition by T.I.S Acquisition and
Management Group, T.I.S. Group and Larry E. Jeddeloh (collectively, the
"Reporting Entities"), of beneficial ownership of certain shares of common stock
of Greentree Software, Inc. The Reporting Entities are filing this Amendment No.
1 to update certain information contained in the initial filing.
Item 1. Security and Issuer.
The class of securities to which this statement relates is the common stock,
$0.04 par value, (the "Common Stock") of Greentree Software, Inc., a New York
corporation (the "Issuer"), with its principal executive offices located at 2801
Fruitville Road, Suite 180, Sarasota, Florida 34237.
Item 2. Identity and Background.
This statement is being filed by T.I.S. Acquisition and Management Group,
Inc., a corporation organized in the state of Minnesota ("T.I.S. Acquisition");
T.I.S. Group, Inc., a corporation organized in the state of Minnesota ("T.I.S.
Group") and Larry E. Jeddeloh. Mr. Jeddeloh is the sole director and executive
officer of T.I.S. Acquisition and the managing director, chief investment
officer and president of T.I.S. Group.
The address of the principal business and principal office of T.I.S.
Acquisition, T.I.S. Group and Mr. Jeddeloh is 200 South Sixth Street, Suite 450,
Minneapolis, Minnesota 55402. The principal business of T.I.S. Group is the
acquisition and management of companies. T.I.S. Group owns a majority of the
stock of and controls T.I.S. Acquisition. T.I.S. Acquisition is a holding
company whose principal business is to invest and hold securities in the Issuer.
Mr. Jeddeloh currently serves as managing director, chief investment officer and
president of T.I.S. Group.
During the last five years, none of T.I.S. Acquisition, T.I.S. Group or Mr.
Jeddeloh has been convicted in a criminal proceeding (excluding traffic
violations or similar misdemeanors).
During the last five years, none of T.I.S. Acquisition, T.I.S. Group or Mr.
Jeddeloh has been a party to a civil proceeding of a judicial or administrative
body of competent jurisdiction and as a result of such proceeding was or is
subject to a judgment, decree or final order enjoining future violations of, or
prohibiting or mandating activities subject to, federal or state securities laws
or finding any violation with respect to such laws.
Mr. Jeddeloh is a United States citizen.
Item 3. Source and Amount of Funds or Other Consideration.
On September 12, 1995, T.I.S. Acquisition provided a Second Bridge Loan
Promissory Note ("Bridge Loan") (annexed hereto as Exhibit A) to the Issuer for
an
Page 5 of 10 Pages
<PAGE>
amount of up to $200,000, under which the Issuer drew funds totaling $113,000.
The purpose of the Bridge Loan was to assist the Issuer in meeting its working
capital needs.
T.I.S. Acquisition and the Issuer entered into a Stock Purchase Agreement,
dated as of October 4, 1995, pursuant to which T.I.S. Acquisition agreed to buy,
and the Issuer agreed to sell, up to 8,750,000 shares of the Common Stock at
$.40 per share ("Stock Purchase Agreement")(a copy of which is annexed hereto as
Exhibit B). As of the date of this Schedule 13D, T.I.S. Acquisition has paid
cash in acquiring 1,130,833 shares of Common Stock from the Issuer at $.40 per
share under the Stock Purchase Agreement. Additionally, in connection with the
Stock Purchase Agreement, pursuant to a Letter Agreement, dated October 26, 1995
("Letter Agreement") (annexed hereto as Exhibit C), the total proceeds of
$113,000 drawn by the Issuer under the Bridge Loan were converted into shares of
Common Stock on the basis of one share of Common Stock for each $.40 of such
proceeds; T.I.S. Acquisition thereby received 282,500 shares of Common Stock and
the Bridge Loan was deemed paid in full and canceled. Accordingly, as of the
last filing of its Schedule 13D, T.I.S. Acquisition owned a total of 1,413,333
shares of Common Stock. T.I.S. Acquisition has the right to acquire an
additional 7,336,667 shares (1,222,779 shares, as adjusted to reflect the
Issuer's one-for-six reverse stock split on July 21, 1997) of Common Stock in
accordance with the Stock Purchase Agreement.
T.I.S. Acquisition is the source of funding for the purchase of shares of
Common Stock under the Stock Purchase Agreement, and it has obtained, and will
continue to seek, additional funding for such purpose from accredited investors
as defined under rule 501 (d) of the Securities Act of 1933.
On December 9, 1996, T.I.S. Group purchased 60,000 restricted shares of Common
Stock for an aggregate of $15,000 or $0.25 per share in a private placement for
a client's account managed by it. T.I.S. Group used such client's funds to make
this purchase.
On March 31, 1997, T.I.S. Group managers purchased 15,000 shares of Common
Stock for an aggregate of $10,800 or $0.72 per share for the T.I.S. Growth Fund,
an offshore fund wholly owned and managed by T.I.S. Group managers in the
British Virgin Islands. T.I.S. Group managers used general funds to make this
purchase.
On June 18, 1997, T.I.S. Group purchased 5,000 shares of Common Stock for an
aggregate of $2,450 or $0.49 per share for a client's account. T.I.S. Group used
such client's funds to make this purchase.
On June 27, 1997, T.I.S. Group managers purchased 30,000 shares of Common
Stock for an aggregate of $13,650 or $0.455 per share for the T.I.S. Growth Fund
for a client's account. T.I.S. Group managers used such client's funds to make
this purchase.
On June 30, 1997, T.I.S Group managers purchased 25,000 shares of Common Stock
for an aggregate of $11,500 or $0.46 per share for the T.I.S. Growth Fund for a
client's account. T.I.S. Group managers used such client's funds to make this
purchase.
Mr. Jeddeloh purchased 83,333 shares of Common Stock for an aggregate of
$25,000 or $0.30 per share in December 1995. Mr. Jeddeloh used personal funds to
make this purchase.
Item 4. Purpose of Transaction.
The Reporting Entities purchased the Common Stock of the Issuer for general
investment.
(a) As stated in Item 3, T.I.S. Acquisition has the right to acquire an
additional 7,336,667 shares (1,222,779 shares, as adjusted to reflect
Issuer's one-for-six reserve stock split on July 21, 1997) of Common Stock
in accordance with the Stock Purchase Agreement;
Page 6 of 10 Pages
<PAGE>
(b) There are presently no plans or proposals by T.I.S. Acquisition, T.I.S.
Group or Mr. Jeddeloh which relate to or would result in an extraordinary
corporate transaction, such as a merger, reorganization or liquidation,
involving the Issuer or any of its subsidiaries;
(c) There are presently no plans or proposals by T.I.S. Acquisition, T.I.S.
Group or Mr. Jeddeloh which relate to or would result in a sale or
transfer of a material amount of assets of the Issuer or any of its
subsidiaries;
(d) In connection with the purchase of the Common Stock, by T.I.S. Acquisition
participated in the management of the Issuer by changing certain
management positions. The Board of Directors of the Issuer selected Arnold
Muhlbach as Chief Financial Officer. Jeff Pinkerton, the former President
of the Issuer, has remained with the Issuer in the capacity of Vice
President. There are presently no plans or proposals by T.I.S.
Acquisition, T.I.S. Group or Mr. Jeddeloh which relate to or would result
in a change in the Board of Directors;
(e) As stated in Item 3, T.I.S. Acquisition has the right to acquire an
additional 7,336,667 shares (1,222,779 shares, as adjusted to reflect
Issuer's one-for-six reverse stock split on July 21, 1997) of Common Stock
under the Stock Purchase Agreement. Except as stated above, there are
presently no plans or proposals by T.I.S. Acquisition, T.I.S. Group or Mr.
Jeddeloh which relate to or would result in any material change in the
present capitalization or dividend policy of the Issuer.
(f) There are presently no plans or proposals by T.I.S. Acquisition, T.I.S.
Group or Mr. Jeddeloh which relate to or would result in any other
material change in the Issuer's business or corporate structure.
(g) There are presently no plans or proposals by T.I.S. Acquisition, T.I.S.
Group or Mr. Jeddeloh which relate to or would result in changes in the
Issuer's articles of incorporation, bylaws or instruments corresponding
thereto or other actions which may impede the acquisition of control of
the Issuer by any person;
(h) There are presently no plans or proposals by T.I.S. Acquisition, T.I.S.
Group or Mr. Jeddeloh which relate to or would result in causing a class
of securities of the Issuer to be delisted from a national securities
exchange or to cease to be authorized to be quoted in an inter-dealer
quotation system of a registered national securities association;
(i) There are presently no plans or proposals by T.I.S. Acquisition, T.I.S.
Group or Mr. Jeddeloh which relate to or would result in a class of equity
securities of the Issuer becoming eligible for termination of registration
pursuant to Section 12(g)(4) of the Act; or
(j) There are presently no plans or proposals by T.I.S. Acquisition, T.I.S.
Group or Mr. Jeddeloh which relate to or would result in any action
similar to any of those enumerated above.
Page 7 of 10 Pages
<PAGE>
Item 5. Interest in Securities of the Issuer.
(a) The Articles of Incorporation of the Issuer authorize the issuance of
up to 15,000,000 shares of Common Stock. As of September 1, 1997,
following a one-for-six reverse stock split on July 21, 1997, there
were 2,564,803 shares of Common Stock issued and outstanding. The
following share ownership information has been adjusted and rounded to
the nearest dollar to reflect the one-for-six reverse stock split on
July 21, 1997.
T.I.S. Acquisition beneficially owns 193,889 shares of Common Stock and
has the right to acquire 1,222,779 shares of Common Stock within sixty
(60) days, together constituting 37.4% of the shares of Common Stock
issued and outstanding as of September 1, 1997. T.I.S. Group, which
owns a majority of the stock of and controls T.I.S. Acquisition, has
the right to vote and dispose of the shares of Common Stock held by
T.I.S. Acquisition and may be deemed the beneficial owner of such
shares. In addition, T.I.S. Group beneficially owns 30,833 shares of
Common Stock for clients' accounts managed by it.
Mr. Jeddeloh owns 13,889 shares of Common Stock, constituting .50% of
the shares of Common Stock issued and outstanding as of September 1,
1997. By virtue of his positions with T.I.S. Acquisition and T.I.S.
Group, which owns a majority of the stock of and controls T.I.S.
Acquisition, Mr. Jeddeloh has the right to vote and dispose of the
shares of Common Stock held by T.I.S. Acquisition and T.I.S. Group,
respectively, and may be deemed the beneficial owner of such shares.
As a group, T.I.S. Acquisition, T.I.S. Group and Mr. Jeddeloh
beneficially own 1,461,389 shares of Common Stock, constituting 38.6%
of the shares of Common Stock issued and outstanding as of September 1,
1997.
(b) T.I.S. Acquisition, T.I.S. Group and Mr. Jeddeloh share the power to
vote and the power to dispose of all of the 1,447,500 shares of Common
Stock beneficially owned by each of them or which they have the right
to acquire within sixty (60) days as set forth in Item 5(a) above. Mr.
Jeddeloh has the sole power to vote and the sole power to dispose of
all of the 13,889 shares of Common Stock beneficially owed by him as
set forth in Item 5(a) above.
(c) Except for the transactions to which this Schedule 13D relates, neither
of T.I.S. Acquisition nor Mr. Jeddeloh have effected any transaction in
the shares of Common Stock during the last sixty (60) days. T.I.S.
Group has not sold shares of Common Stock in the past 60 days and
T.I.S. Group or accounts managed by T.I.S. Group have made the
following purchases in the past 60 days:
Number of Price
Purchaser Date Shares Per Share
--------- ---- --------- ---------
T.I.S. Growth Fund* August 11, 1997 30,000 $1.1875
T.I.S. Growth Fund* August 13, 1997 5,000 $1.1875
T.I.S. Growth Fund* August 14, 1997 2,500 $1.4375
T.I.S. Growth Fund* August 15, 1997 5,000 $1.5156
T.I.S. Growth Fund* August 18, 1997 2,500 $1.5625
T.I.S. Growth Fund* August 19, 1997 5,000 $1.5625
*See Item 3 for a more detailed discussion.
Page 8 of 10 Pages
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(d) No person other than T.I.S. Acquisition, T.I.S. Group and Mr. Jeddeloh has
the right to receive or the power to direct the receipt of dividends from,
or the proceeds from the sale of, the shares of Common Stock of the Issuer
beneficially owned by T.I.S. Acquisition. No person other than Mr.
Jeddeloh has the right to receive or the power to direct the receipt of
dividends from, or the proceeds from the sale of, the shares of Common
Stock beneficially owned by Mr. Jeddeloh, individually.
(e) Not applicable.
Item 6. Contracts, Arrangements, Understandings or Relationships with Respect
to Securities of the Issuer.
There are no contracts, arrangements, understandings or relationships
(legal or otherwise) among parties named in Item 2 above, except as identified
in Item 2 or elsewhere in this Schedule 13D, or between such parties with
respect to any securities of the Issuer, except the relationships and documents
referred to in Items 3, 4 and 5 of this Schedule 13D as Exhibits A, B and C,
which discussions and Exhibits are incorporated herein by reference.
Item 7. Materials to be Filed as Exhibits.
Exhibit A Secured Bridge Loan Promissory Note
Exhibit B Stock Purchase Agreement by and between
Greentree Software, Inc. and T.I.S. Acquisition
and Management Group, Inc.
Exhibit C Greentree Software, Inc. Letter Agreement
Exhibit D Joint Filing Agreement
Page 9 of 10 Pages
<PAGE>
SIGNATURES
After reasonable inquiry and to the best of our knowledge and belief, each
of the undersigned certifies that the information set forth in this statement is
true, complete and correct.
Dated: September 9, 1997 T.I.S. Acquisition and Management Group, Inc.
By /s/ Larry E. Jeddeloh
-----------------------------
Larry E. Jeddeloh
President and Director
T.I.S. Group
By /s/ Larry E. Jeddeloh
-----------------------------
Larry E. Jeddeloh
President, Managing Director and Chief
Investment Officer
Larry E. Jeddeloh
By /s/ Larry E. Jeddeloh
-----------------------------
Larry E. Jeddeloh, Individually
Page 10 of 10 Pages
<PAGE>
Exhibit A
SECURED BRIDGE LOAN PROMISSORY NOTE
Up to $200,000 September 12, 1995
FOR VALUE RECEIVED, the undersigned, Greentree Software, Inc. (the
"Borrower"), hereby unconditionally promises to pay to the order to TIS
Acquisition & Management Group, Inc. (the "Holder"), at 200 South Sixth Street,
Suite 450, Minneapolis, Minnesota 55402, or at such other place that the Holder
may designate to the Borrower from time to time in writing, the principal sum of
up to Two Hundred Thousand Dollars ($200,000), together with interest on the
unpaid principal balance thereof at the rate of fifteen percent (15%) per annum
computed on the basis of a year of 365 days, from the date hereof until payment
in full. In no event shall the interest rate charged hereunder exceed the
highest rate permissible under applicable law.
All unpaid principal and accrued interest evidenced hereby shall be
due and payable October 11, 1995 (the "Original Maturity Date"). If a "Closing"
occurs under a Stock Purchase Agreement between the Borrower and the Holder
contemplated in the attached Letter of Intent, dated August 11, 1995 (the "Stock
Agreement"), by October 11, 1995, in accordance with the Stock Agreement,
principal and interest due hereunder shall be converted into the Borrower's
common stock at the rate of one (1) share for each Forty Cents ($.40) of such
principal and interest.
If the Closing has not occurred by October 11, 1995, in accordance
with a Stock Purchase Agreement, the Holder hereof may exercise any and all of
its remedies at law or in equity against the Security (as defined below) or
otherwise to collect amounts due under the Note or, in its absolute discretion,
extend the maturity date of the Note to November 10, 1995, or the Closing under
the Stock Agreement, whichever occurs first (such extended date the "Extended
Maturity Date") on the same terms and conditions as herein contained. As a
condition to such extension, the Borrower shall pay to the Holder all accrued
and unpaid interest plus an extension fee equal to Ten Thousand Dollars
($10,000), which, in the Holder's absolute discretion, may be taken in common
stock of the Borrower at the rate of one (1) such share for each Forty Cents
($.40) of such interest and extension fee. If the Closing occurs by November
10, 1995, in accordance with the Stock Agreement, the principal and interest due
on this Note shall be converted to the Company's common stock at the rate of one
(1) share for each Forty Cents ($.40) thereof.
To secure repayment of this Note, Borrower grants to Holder a first
and prior security interest in the following collateral (the
"Security"); the entire right, title and interest, including all
intellectual property rights, of the Borrower in and to any software
and related products, wheresoever located, whether now owned or
hereafter acquired, designed or produced by the Borrower, as further
described in Exhibit A attached hereto.
<PAGE>
Notwithstanding anything contained in this Note to the contrary, no
principal, interest and/or extension fee due under this Note shall be converted
to the Borrower's common stock unless and until the Holder has delivered to the
Borrower a written notice of conversion (the "Conversion Notice") setting forth
(i) the Holder's intention to convert principal, interest and/or extension fee
due under this Note to the Borrower's common stock in accordance with this Note,
(ii) the amount of principal, interest and/or extension fee to be converted,
(iii) the number of shares resulting from the conversion, and (iv) the amount
for any fractional share to be paid to the Holder. Any fractional share
resulting from any conversion of debt to stock under this Note shall be paid in
cash. Upon receipt of the Conversion Notice, or as soon thereafter as is
practicable, the Borrower shall issue and deliver to the Holder a certificate or
certificates evidencing the number of shares set forth in the Conversion Notice.
The certificate or certificates shall be registered in the name of the Holder
and shall bear an appropriate investment legend and any legend required by
federal or state securities laws, rules or regulations. Upon the Holder's
delivery of the Conversion Notice to the Borrower, the Holder shall have all the
rights of a stockholder with respect to those shares, including, but not limited
to, the right to receive all dividends or other distributions paid or made in
connection with those shares.
This Note may be prepaid without penalty in whole or in part at any
time. Any prepayments shall be applied first to accrued and unpaid interest,
and thereafter to the payment of principal.
If any of the following Events of Default shall occur at any time
prior to payment in full of this Note, the Holder shall have all rights and
remedies available to it as a secured creditor under law or equity, including
foreclosure on the Security. Each of the following shall constitute an "Event
of Default" hereunder:
1. Disbursement of funds available under this Note to any creditor of
the Borrower without the prior approval of both the Holder and the
Borrower's Board of Directors of the amount and the creditor to whom such
funds are paid, which approval shall be prompt and not unreasonably
withheld; or
2. Borrower shall default in the payment of principal or interest
payable hereunder when due, and, with respect to any payment other than the
payment due on the Original Maturity Date or the Extended Maturity Date, as
appropriate, continue such default for more than two (2) days; or
3. Borrower shall default in the performance of any covenant,
agreement or condition, or a breach in any representation or warranty,
contained in this Note which, after written notice from Holder, continues
for more than five (5) days; or
4. A proceeding shall have been instituted in a Court having
jurisdiction seeking a decree or order for relief in respect of Borrower in
an
-2-
<PAGE>
involuntary case under any applicable bankruptcy, insolvency or other
similar law now or hereafter in effect, or for the appointment of a
receiver, liquidator, assignee, custodian or trustee of Borrower, and such
proceedings shall remain undismissed or unstayed and in effect for a period
of ten (10) consecutive days or such Court shall enter a decree or order
granting relief sought in such proceedings; or
5. Borrower shall commence a voluntary case under any applicable
bankruptcy, insolvency or other similar law, shall consent to the entry of
an order for relief in an involuntary case under any such law, or shall
consent to the appointment of or taking possession by a receiver,
liquidator, assignee or trustee of Borrower, or shall fail generally to pay
its debt as they become due, or shall take any corporate action in
forbearance of any of the foregoing.
If an Event of Default in subparagraph (1), (2), (3), (4) or (5) above
shall occur, the unpaid balance of this Note and interest accrued thereon and
all other liabilities of Borrower hereunder shall be immediately due and payable
without presentment, demand, protest or notice of any kind, all of which are
hereby expressly waived.
If an Event of Default in subparagraph (4) or (5) above shall occur,
the Borrower agrees that, given the unique characteristics of the security,
cause will exist under 11 USC (S)362(d) entitling Holder to relief from the
automatic stay imposed by 11 USC (S) 362(a).
Demand, presentment, protest and notice of nonpayment and protest are
hereby waived by the Borrower. This Note may be amended or modified only by
agreement by the Borrower and the Holder.
The Borrower shall pay all legal fees and other costs and expenses
incurred by the Holder in collecting on or enforcing this Note following the
failure of the Borrower to make any payment due hereunder.
THIS NOTE HAS BEEN EXECUTED, DELIVERED AND ACCEPTED AT, AND SHALL BE
DEEMED TO HAVE BEEN MADE IN, MINNEAPOLIS, MINNESOTA. THIS NOTE SHALL BE
INTERPRETED, AND THE RIGHTS AND LIABILITIES OF THE PARTIES HERETO DETERMINED, IN
ACCORDANCE WITH THE LAWS OF THE STATE OF MINNESOTA.
Whenever possible, each provision of this Note shall be interpreted in such
manner as to be effective and valid under applicable law, but if any provision
of this Note at all be prohibited by or invalid under applicable law, such
provision shall be ineffective to the extent of such prohibition or invalidity,
without invalidating the remainder of such provision or the remaining provisions
of this Note.
-3-
<PAGE>
IN WITNESS WHEREOF, this Note has been executed and delivered this
12th day of September, 1995.
GREENTREE SOFTWARE, INC.
By: /s/ J. B. Pinkerton
---------------------
Its President
-4-
<PAGE>
Exhibit B
---------
STOCK PURCHASE AGREEMENT
by and between
GREENTREE SOFTWARE, INC.
and
T.I.S. ACQUISITION & MANAGEMENT GROUP, INC.
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
<C> <S> <C>
1. Sale, Purchase and Delivery of the Shares.......................... 2
2. First, Second and Third Closings................................... 2
3. Representations and Warranties of the Company...................... 5
4. Representations and Warranties of the Purchaser.................... 11
5. Registration of Securities and Filing of Reports................... 14
6. Covenants of the Company........................................... 19
7. Conditions to the Purchaser's Obligations.......................... 21
8. Conditions to the Company's Obligations............................ 22
9. Agent: Payment of Fees............................................. 23
10. Indemnification.................................................... 23
11. Termination........................................................ 24
12. Resignations: Certain Compensation Payments........................ 24
13. General............................................................ 25
</TABLE>
i
<PAGE>
EXHIBITS
--------
Exhibit
Number Description
- ------ -----------
2.21(e) Opinion of the Company's Counsel
-- New York law
-- Massachusetts law
3.14 The Company's Articles of Incorporation and Bylaws
ii
<PAGE>
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (the "Agreement") is made and entered into as
of the 4th day of October, 1995, by and among GREENTREE SOFTWARE, INC., a New
York corporation (the "Company"), and T.I.S. ACQUISITION & MANAGEMENT GROUP,
INC., a Minnesota corporation (the "Purchaser").
R E C I T A L S:
1. The parties have reached an understanding regarding the issuance and
sale by the Company to the Purchaser and other accredited investors through Wm
Smith & Co., Denver, Colorado (the "Wm Smith Investors"), of Eight Million Seven
Hundred Fifty Thousand (8,750,000) shares (individually a "Share" and
collectively the "Shares") of the common stock, $.01 par value per share, of the
Company (the "Common Stock"), at a purchase price of $.40 per Share.
2. At the First Closing (as defined herein), the Company shall issue,
sell and deliver to the Purchaser, and the Purchaser shall purchase from the
Company, 2,375,000 Shares (the "First Closing Shares") for a total purchase
price of Nine Hundred Fifty Thousand Dollars ($950,000), comprising Eight
Hundred Thirteen Thousand Dollars ($813,000) by wire transfer and One Hundred
Thirty-Seven Thousand Dollars ($137,000) through conversion of that certain
Secured Bridge Loan Promissory Note dated September 12, 1995, of the Company in
favor of the Purchaser (the "Bridge Note") (such cash and note conversion the
"First Purchase Price").
3. At the Second Closing (as defined herein), the Company shall also
issue, sell and deliver to the Purchaser and the Wm Smith Investors, if any, and
they shall purchase from the Company in such proportion as they may agree, up to
5,125,000 shares (such shares the "Second Closing Shares") for a total purchase
price of up to an additional Two Million Fifty Thousand Dollars ($2,050,000)
(the "Second Purchase Price").
4. At the Third Closing (as defined herein), the Company shall also
issue, sell and deliver to the Purchaser and the Wm Smith Investors, if any, and
they shall purchase from the Company in such proportion as they may agree, up to
1,250,000 shares (such shares the "Third Closing Shares") for a total purchase
price of up to an additional Five Hundred Thousand Dollars ($500,000) (the
"Third Purchase Price").
NOW, THEREFORE, in consideration of the premises and mutually dependent
representations, warranties, covenants and agreements herein contained, and of
other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, the parties hereto agree as follows:
1. Sale, Purchase and Delivery of the Shares.
1.1 Agreement to Sell and Purchase the Shares. Subject to the terms and
conditions of this Agreement, and in reliance upon the representations,
warranties,
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covenants and agreements contained herein, at the First, Second and
Third Closings, the Company shall issue, sell and deliver to the Purchaser, and
the Purchaser shall purchase from the Company, up to the agreed number of the
Shares for the purchase price and in the manner provided below.
1.2 Delivery of the Shares. At the First, Second and Third Closings, the
Company shall deliver to the Purchaser one or more certificates representing the
agreed number of the Shares as herein described.
1.3 Purchase Price. The total purchase price for the Shares shall be
Three Million Five Hundred Thousand Dollars ($3,500,000.00) (the "Purchase
Price"), comprising the First, Second and Third Purchase Prices.
1.3.1 First Closing. At the First Closing, the Purchaser shall
deliver the First Purchase Price to the Company upon receipt of the stock
certificates representing the First Closing Shares.
1.3.2 Second Closing. At the Second Closing, the Purchaser and
the Wm Smith Investors (as they shall agree) shall deliver the Second
Purchase Price to the Company upon receipt of the stock certificates
representing the Second Closing Shares.
1.3.3 Third Closing. At the Third Closing, the Purchaser and the Wm
Smith Investors (as they shall agree) shall deliver the Third Purchase
Price to the Company upon receipt of the stock certificates representing
the Third Closing Shares.
2. First, Second and Third Closings.
---------------------------------
2.1 Location; Closing Dates. Subject to the fulfillment of all of the
conditions precedent contained herein, the consummation of the two sales and
purchases of the Shares contemplated hereby shall take place at the offices of
Robins, Kaplan, Miller & Ciresi, 222 Berkeley Street, Suite 2200, Boston,
Massachusetts, or at such other place as the parties shall agree. The "First
Closing" shall occur on October 4, 1995, the "Second Closing" shall occur on
November 6, 1995, and the "Third Closing" shall occur on December l, 1995, or
such other date or dates as the parties may agree. All events which occur at
any of the Closings shall be deemed to occur simultaneously. The time and date
upon which a Closing occurs is hereinafter referred to as the "Closing Date".
2.2 Deliveries by the Parties.
2.2.1 Deliveries by the Company by the First Closing. Upon the
execution of this Agreement, the Company shall deliver, or shall cause to
be delivered, to the Purchaser the following:
2
<PAGE>
(a) a certificate or certificates representing the First Closing
Shares;
(b) a certificate, dated as of the First Closing Date, duly
executed by an officer of the Company, certifying as to: (i) copies of
the resolutions duly adopted by the Company's board of directors,
authorizing this Agreement and the transactions contemplated herein,
(ii) copies of the Articles of Incorporation and Bylaws of the Company
as they exist on the date hereof, and (iii) the name, title and
signature of each officer of the Company duly authorized to execute
and deliver this Agreement and all documents, instruments, agreements
and certificates contemplated hereby;
(c) the certificate of Jeffrey B. Pinkerton described in Section
7.3.1 below;
(d) the certificate of Brad I. Markowitz described in Section
7.3.2 below;
(e) certificates issued by the Secretary of State of New York as
of a date reasonably acceptable to the Purchaser, as to the good
standing of the Company in such states;
(f) opinions of the Company's counsel covering matters described
in Exhibit 2.2.1(e) hereto regarding New York and Massachusetts law;
(g) the resignations of all of the Company's officers and
directors, except Brad I. Markowitz and Jeffrey B. Pinkerton, as
described in Section 12 below;
(h) an agreement Not to Compete executed by the Company and J.
Robert Gary, in a form acceptable to the parties thereto and to the
Purchaser;
(i) an Employment Agreement executed by the Company and John J.
Medico ("Medico") regarding Medico's employment as the Company's
interim President and Chief Executive Officer, in a form acceptable to
the parties thereto and to the Purchaser;
(j) a Consulting Agreement executed by the Company and J. Robert
Gary ("Gary"), by which Gary will temporarily continue as a director
and will provide certain financial consulting services to the Company,
in form acceptable to the parties thereto and to the Purchaser;
3
<PAGE>
(k) an employment continuation letter executed by the Company and
Jeffrey B. Pinkerton, in a form acceptable to the parties thereto and
to the Purchaser;
(l) a disclosure document satisfactory to the Purchaser and its
counsel for delivery in connection with the sale of the Shares under
this Agreement;
(m) a comfort letter, in customary form and reasonably acceptable
to Purchaser and its counsel, from the Company's auditors concerning
the Company's financial condition;
(n) a schedule of termination benefits (cash and stock) paid by
the Company as contemplated by Section 12 hereof, together with such
written general releases or waivers relative to employment and other
matters as the Purchaser may require, including, without limitation,
instruments evidencing all cancellations of stock options and
warrants;
(o) reduction of accounts payable as described in Section 7.9,
including amounts owed to professionals hired by the Company; and
(p) all other documents or actions reasonably required by the
Purchaser pertaining to this Agreement and the transactions
contemplated hereunder including, without limitation, all conditions
to closing required in Section 7 hereof.
2.2.2 Deliveries by the Purchaser at First Closing. Upon the
execution of this Agreement, the Purchaser shall deliver, or shall cause to
be delivered, to the Company the following:
(a) payment of the First Purchase Price referred to in Section
1.3.1 above;
(b) a certificate duly executed by an officer of the Purchaser,
certifying as to: (i) copies of the resolutions duly adopted by the
Purchaser's board of directors, authorizing this Agreement and the
transactions contemplated herein, and (ii) the name, title and
signature of each officer of the Purchaser duly authorized to execute
and deliver this Agreement and all documents, instruments, agreements
and certificates contemplated hereby;
(c) an opinion of Purchaser's counsel covering matters described
in Exhibit 2.2.2(c) hereto;
4
<PAGE>
(d) a certificate issued by the Secretary of State of Minnesota,
as of a date reasonably acceptable to the Company, as to the good
standing of the Purchaser in such state;
(e) all other documents reasonably required by Company pertaining
to this Agreement and the transactions contemplated hereunder.
2.2.3 Deliveries by the Company at the Second Closing. At the Second
Closing, the Company shall deliver, or cause to be delivered, to the
Purchaser, the following:
(a) a certificate or certificates representing the Second Closing
Shares; and
(b) a certificate or certificates updating information provided
in Subsections 2.2.1(b), (c), (d), and (e).
2.2.4 Deliveries by the Purchaser and the Wm Smith Investors at the
Second Closing. At the Second Closing, the Purchaser shall deliver, or
cause to be delivered, to the Company the following:
(a) the Second Purchase Price referred to in 1.3.2 above; and
(b) a certificate or certificates updating information provided
in 2.2.2(b) and (e).
2.2.5 Deliveries by the Company at the Third Closing. At the Third
Closing, the Company shall deliver, or cause to be delivered, to the
Purchaser, the following:
(a) a certificate or certificates representing the Third Closing
Shares; and
(b) a certificate or certificates updating information provided
in Subsections 2.2.1(b), (c), (d), and (e).
2.2.6 Deliveries by the Purchaser and the Wm Smith Investors at the
Third Closing. At the Third Closing, the Purchaser shall deliver, or cause
to be delivered, to the Company the following:
(a) the Third Purchase Price referred to in 1.3.2 above; and
(b) a certificate or certificates updating information provided
in 2.2.2(b) and (e).
3. Representations and Warranties of the Company.
5
<PAGE>
As a material inducement to the Purchaser to execute and perform its
obligations under this Agreement, the Company hereby represents and warrants to
the Purchaser as follows:
3.1 Organization and Standing: Power and Authority. The Company (a) is a
corporation duly organized, validly existing and in good standing under the laws
of the State of New York, (b) has all requisite power and authority and the
legal right to transact the business in which it is presently engaged and to
own, lease and operate all of the assets and properties owned, leased or
operated by it, and (c) except for Massachusetts is duly qualified or licensed
as a foreign corporation and in good standing in each jurisdiction where its
ownership, lease or operation of property or the conduct of its business
requires such qualification or license and where the absence of such licensing
or qualification would have a material adverse effect on the business of the
Company. The Company has all requisite power and authority, and the legal right
to enter into this Agreement and all other documents referred to herein to which
the Company is a party and to otherwise to consummate the transactions referred
to herein or therein.
3.2 Subsidiaries. Except as set forth on Schedule 3.2 hereof, the Company
does not own and has made no commitment to purchase any shares or securities of,
or otherwise made any investment in, any other corporation, partnership or other
entity and is not a participant in any joint venture.
3.3 Capitalization.
3.3.1 The Company is authorized to issue 15,000,000 shares of its
Common Stock. As of the date of this Agreement and prior to the Closing
Date, 4,728,170 shares of the Common Stock were issued and outstanding. All
of the Company's presently issued and outstanding shares of Common Stock
were duly authorized and validly issued in compliance with all applicable
federal and state securities and corporate laws, rules and regulations, and
are fully paid and non-assessable. No other classes of capital stock of the
Company are authorized or outstanding.
3.3.2 Each share of Common Stock is entitled to one vote on any
matter submitted to a vote of shareholders, to equal dividend rights and to
equal rights in the assets of the Company available for distribution to
holders of the Common Stock on liquidation.
3.3.3 The Shares delivered to the Purchaser pursuant to this
Agreement upon payment of the First Purchase Price and the Second Purchase
Price therefor, shall be duly authorized, validly issued, fully paid and
non-assessable. Subject to the provisions of applicable federal and state
securities laws and compliance with the terms of this Agreement, upon the
consummation of the transactions contemplated herein, the Shares will be
freely transferable and free and clear of
6
<PAGE>
all liens and encumbrances, other than liens, encumbrances or restrictions
on transfer arising herewith or under agreements entered into or actions
taken by the Purchaser.
3.4 Options, Warrants, Rights. Except as set forth in this Agreement and
on Schedule 3.4 hereto, there is no outstanding option, warrant, right,
subscription, call, unsatisfied preemptive right, right of first refusal, right
of first offer or other agreement of any kind to purchase or otherwise receive
from the Company any of the outstanding, authorized but unissued, or treasury
shares of the capital stock or any other security of the Company, and there is
no outstanding security of any kind convertible into such capital stock or other
security.
3.5 Compliance with Laws. Except as set forth on Schedule 3.5, the Company
is not in violation of (a) any applicable order, judgment, injunction, award or
decree, or (b) any federal, state, local or foreign law, ordinance or regulation
or any other requirement of any governmental or regulatory body, court or
arbitrator applicable to the Company or to the business of the Company except
for immaterial and insubstantial violations which could not, either singly or in
the aggregate, have an adverse effect on the business or properties of the
Company. The Company has obtained all licenses, permits, orders and approvals of
any federal, state, local or foreign governmental or regulatory body that are
material to or necessary for the conduct of its business (collectively,
"Permits"). All such Permits are in full force and effect, no violations are or
have been recorded in respect of any Permit, and no proceeding is pending or, to
the knowledge of the Company, threatened to revoke or limit any such Permit. A
list of all Permits is set forth on Schedule 3.5.
3.6 SEC Reports. The last fiscal year of the Company for which an Annual
Report on Form 10-K has been filed ended May 31, 1995. The Company has
previously furnished to the Purchaser true and complete copies of (a) the
Company's Annual Report on Form 10-K for the fiscal year ended May 31, 1995, as
filed with Securities and Exchange Commission (the "SEC"); (b) its Quarterly
Reports on Form 10-Q for the quarter ended February 28, 1995; (c) proxy
statements relating to all meetings of its shareholders (whether annual or
special) which have been mailed to shareholders at any time since December 31,
1994; and (d) all other reports, registration statements and other filings filed
by the Company with the SEC under the Securities Act of 1933, as amended (the
"Securities Act") or the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), at any time since December 31, 1994 (collectively, the "SEC
Reports"). Each of the SEC Reports was filed in a timely manner and, as of their
respective effective or mailing dates, complied as to form in all material
respects with the requirements of the Securities Act or the Exchange Act, as the
case may be, and to the best of the Company's knowledge, did not contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
7
<PAGE>
3.7 Prior Offerings. Set forth in Schedule 3.7, is a description of all
"Prior Offerings" of the Company's equity or other securities other than options
or warrants since December 31, 1993. The Company is not nor has it been found to
be in the past, in violation of (a) any order, judgment, injunction, award,
decree, administrative or otherwise of any state, local or federal securities
law official or (b) the representation concerning securities law or regulations
contained in Section 3.8 assuming that such representation was made at the time
of each such "Prior Offering" listed in Schedule 3.7.
3.8 Securities Laws. Based in part upon the representations and warranties
contained in Section 4.7 of this Agreement, no consent, authorization, approval,
permit or order of or filing with any governmental or regulatory authority is
required under current laws and regulations in connection with the execution and
delivery of this Agreement or the offer, issuance, sale or delivery of the
Shares than the qualifications thereof, if required, under applicable state
securities laws, which qualifications have been obtained or can be obtained
after the final Closing. Under the circumstances contemplated hereby, the offer,
issuance, sale and delivery of the Shares will not, under current laws and
regulations, require compliance with the prospectus delivery or registration
requirements of the Securities Act.
3.9 Financial Statements. All of the financial statements of the Company
previously furnished to the Purchaser, including the financial statements in the
SEC Reports and the Private Placement Memorandum of the Company, dated October
2, 1995 (the "Financial Statements"), accurately reflect the books and records
of the Company and were prepared in conformity with generally accepted
accounting principles consistently applied throughout the periods covered,
except as may be indicated therein or in the footnotes or schedules thereto.
3.10 No Undisclosed Liabilities or Obligations. Except as set forth on
Schedule 3.10 hereto, the Company has no liability or obligation, either
accrued, absolute, contingent, direct or indirect, or otherwise, whether as
principal, agent, partner, coventurer, guarantor or in any capacity whatsoever,
which are not reflected in the Financial Statements, other than: (a) trade
accounts payable incurred since July 31, 1995, in the ordinary course of
business; (b) accrued salary, payroll and employee benefit expenses incurred
since July 31, 1995, and at rates which do not exceed those reflected on the
Financial Statements; (c) accrued amounts payable for ordinary, normal and
routine services (including utilities) incurred since July 31, 1995, and
consistent with past practices; or (d) other normal and ordinary costs of
operations incurred since July 31, 1995, consistent with past practices.
3.11 Absence of Certain Material Changes. Except as set forth on Schedule
3.11 hereto, since July 31, 1995, there has not been any event which has
materially adversely affected the Company's business, operational or financial
condition, including but not limited to (a) any material adverse change in the
business, condition (financial or otherwise), assets, liabilities or obligations
of the Company, (b) any damage, destruction or loss (whether or not covered by
insurance) having a material adverse effect on the
8
<PAGE>
business, assets or properties of the Company, (c) any waiver by the Company of
any rights of material value, (d) any purchase, sale or transfer of any material
assets or properties of the Company, any satisfaction or cancellation of any
material mortgage or pledge or any incurring of any material debts or claims, or
the subjection of any material assets or property of the Company to any lien,
charge, security interest or other encumbrance or any other transaction entered
into by the Company other than in the ordinary and usual course of its business,
(e) any need to write-off or any writing-off of (i) any notes or accounts
receivable or any portion thereof as uncollectible, or (ii) any inventory as
overvalued or unaccounted for, (f) any disposal of or permission to lapse any
material leases, other rights to use of property, licenses, patents, trademarks
or copyrights or any patent, trademark or copyright applications, any of which
were material to the operations of the Company, (g) any declaration or payment
of any dividend or other distribution in respect to, or any direct or indirect
redemption or purchase of, any capital stock of the Company or any loan to any
shareholder of the Company, (h) any increase in the compensation of any of the
officers, employees, or agents of the Company, including, without limitation,
any increase by means of any bonus or pension plan, contract or other
commitment, (i) any transaction between the Company and any affiliated person or
entity or affiliate of any of the officers or directors of the Company, (j) any
termination of any contract with any major customer, or (k) any labor dispute
which does or might adversely affect the business of the Company.
3.12 Validity of Agreement. The execution, delivery and performance of this
Agreement, and the consummation of the transactions provided for herein by the
Company have been duly authorized by all necessary corporate action on the part
of the Company, including any action which may have been required to be taken by
the Company's shareholders: This Agreement, when executed, will constitute the
legal, valid and binding obligation of the Company enforceable against the
Company in accordance with its terms (except as the enforcement thereof may be
limited by applicable bankruptcy, reorganization, insolvency, moratorium and
similar laws affecting creditors' rights generally from time to time in effect
and by equitable principles of general application).
3.13 No Breach. Neither the execution or the delivery of this Agreement,
nor the execution of any of the documents referred to herein to be executed by
the Company, nor the consummation of the transactions contemplated hereby will
constitute a material violation or breach of (a) the Articles of Incorporation
or Bylaws of the Company, each as amended and in effect on the date hereof, (b)
any provision in any contract or other instrument to which the Company is a
party or by which the Company may be bound or by which the business, assets or
properties of the Company may be affected or secured, (c) any order, writ,
injunction, award or decree of any court, arbitrator or governmental or
regulatory body against or binding upon the Company or upon the securities,
properties or business of the Company, (d) any statute, law, rule or regulation
(including, without limitation, applicable federal and state securities laws),
of any jurisdiction to which the Company is subject or (e) any Permit.
9
<PAGE>
3.14 Compliance with Other Instruments. Except as provided on Schedule
3.14, the Company is not in material violation of any provision of its Articles
of Incorporation or Bylaws, each as amended and in effect on the date hereof,
nor is it in material violation of any instrument or contract to which it is a
party or by which it may be bound, or its business, assets or properties
affected or secured.
3.15 Articles of Incorporation and Bylaws. The Company has previously
furnished or made available to the Purchaser true and complete copies of the (a)
Articles of Incorporation of the Company (certified by an appropriate official
of the State of New York), (b) Bylaws of the Company (certified by a proper
officer of the Company) as in effect on such date, and (c) minute books of the
Company covering 1993 through the date hereof (containing records of all
meetings and consents in lieu of meetings of its shareholders and board of
directors (and any committees thereof) and accurately reflecting all
transactions referred to in such minutes and consents in lieu of meetings).
3.16 Tax Returns. The Company has properly completed and filed in correct
form all federal, state and other income, franchise, real property, personal
property, excise, sales, use, employment, occupation and other tax returns and
reports required to be filed by it on or before the due date for the filing
thereof and none of those returns materially understate the tax liability
required to be shown thereon. All taxes and additional obligations imposed or
which may be imposed or asserted by any taxing authority which are due and
payable by the Company through the Closing Dates, or are attributable to the
operation of the Company prior to that date, have been paid in full or
adequately provided for by reserves on the books of the Company. The Company is
not aware of any deficiency with respect to any tax due to any taxing authority.
To the knowledge of the Company, no tax return of the Company is being examined
by the Internal Revenue Service or any other regulatory body and the Company has
not consented to the extension of time to assess any tax. All taxes and other
assessments and levies which the Company is required by law to withhold or
collect have been duly withheld and collected, and have been timely paid over to
the proper governmental authorities or held by the Company for such payment.
3.17 Proprietary Rights.
3.17.1 Schedule 3.17.1 contains a full and complete list of all
Proprietary Rights (as defined herein) owned or used by the Company or in
which the Company has any rights or licenses, except for software used by
the Company which is generally available on the commercial market without
material cost.
3.17.2 Except as set forth in Schedule 3.17.2, the Company owns or
possesses all intellectual property rights, including without limitation,
licenses or other rights to use all computer software, software programs,
all source and object code, algorithms, architecture, structure, display
screens, layouts, development tools, patents, patent rights, patent
applications, trademarks, trademark applications, trade secrets, service
marks, service mark applications, trade names, copyrights, copyright
applications, compilations, inventions,
10
<PAGE>
franchises, drawings, designs, customer lists, proprietary know-how or
proprietary processes or formulae, or other rights with respect thereto,
and all documentation and media constituting, describing or relating to the
above, including without limitation, manuals, memoranda and records
(collectively referred to as "Proprietary Rights"), used in the business of
the Company, and the same are sufficient to conduct the Company's business
as it is now being conducted and as proposed to be conducted.
3.17.3 Except as set forth on Schedule 3.17(c), the operations of the
Company do not conflict with or infringe, and no one has asserted to the
Company that such operations conflict with or infringe, any Proprietary
Rights owned, possessed or used by any third party. Except as set forth on
Schedule 3.17(c), there are no claims, disputes, actions, proceedings,
suits or appeals pending against the Company with respect to any
Proprietary Rights, and, to the knowledge of the Company, none has been
threatened against the Company. To the knowledge of the Company, there are
no facts or alleged facts which could reasonably serve as the basis for any
claim that the Company does not have the right to use, without infringement
of any rights or claims of others, all Proprietary Rights in the
development, manufacture, use, sale, license or other disposition of any or
all products or services presently being used, furnished, sold or licensed
in the conduct of the business of the Company as such have been or are now
being used.
3.18 Litigation. Except as set forth on Schedule 3.18, there are no legal,
administrative or other proceedings, investigations or inquiries at law or in
equity, or other asserted claims, judgments, injunctions or restrictions,
pending or outstanding or, to the best knowledge of the Company, threatened
against the Company or any of its properties or business, or against or
involving any of the Company or the officers or directors of the Company, in
their capacities as such, or any action related to this Agreement or any of the
transactions contemplated herein that might result either individually or in the
aggregate in any material adverse change in the business, operations,
properties, assets or condition (financial or otherwise) of the Company or in
any material liability on the part of the Company. There are no actions, suits
or claims or legal, administrative or arbitration proceedings pending, or to the
knowledge of the Company, threatened that would give rise to any right of
indemnification on the part of any director or officer of the Company or the
heirs, executors or administrators of such director or officer against the
Company or any successor to the business of the Company.
3.19 Use of Proceeds. The Purchase Price to be paid to the Company at the
First, Second and Third Closings is expected to be used for reducing outstanding
debt and for working capital, including employee compensation, lease payments,
capital expenditures, marketing expenses and miscellaneous expenses associated
with its ordinary business including a move to Florida.
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<PAGE>
3.20 Brokers. Except as set forth in Section 9 below, all negotiations
relating to this Agreement and the transactions contemplated hereby have been
carried out without the intervention of any person acting on the Company's
behalf in such manner as to give rise to any valid claim against the Company,
the Purchaser or any other entity or person for any brokerage or Finder's
commission, fee or similar compensation.
3.21 Rights of Registration. Except as set forth in this Agreement and
except for the Wm Smith Investors, the Company has not granted any rights to
demand or require registration of any of its securities under the Securities
Act.
3.22 Other Material Adverse Information. Except as set forth in Schedule
3.22, the Company has no knowledge of any information of a materially adverse
nature to the business, assets, properties, prospects, condition (financial or
otherwise) of the Company including, without limiting the generality of the
foregoing, plans or announcements by any person or firm to compete with the
Company in any area in which such person or firm does not presently compete with
the Company. Changes in the general economy or in economic conditions generally
affecting the United States or the states in which the Company conducts its
business shall not be deemed information included within the meaning or
application of this paragraph.
3.23 Employment Agreements and Benefits, etc. Schedule 3.23 lists all
agreements, contracts, commitments, plans and arrangements of the following
types to which the Company is a party and which relate to any of the employees
of the Company: (a) written and unwritten employment and consulting agreements,
(b) collective bargaining agreements, and (c) profit-sharing, pension,
retirement, bonus, incentive compensation, stock option, deferred compensation
or other employee benefit plans. True, correct and complete copies of each of
the agreements, contracts, commitments, plans and arrangements listed on
Schedule 3.22 have been delivered by to Purchaser.
3.24 Relationships. The Company enjoys good working relationships with all
customers, suppliers, dealers, distributors, customer sales representatives and
other parties necessary to the normal operation of its business. The Company is
not aware of any intention by any of its customers to terminate or materially
reduce the volume of its business with the Company. No director, officer,
employee or shareholder of the Company, nor any member of such person's
immediate family, owns or during the last two years has had an ownership
interest in any business, corporate or otherwise, which is a party to, or in any
property which is the subject of, business relationships or arrangements with
the Company.
3.25 Full Disclosure. No representation or warranty by the Company
contained in this Agreement, and no written statement or certificate or other
documents furnished or to be furnished by or on behalf of the Company to the
Purchaser pursuant to this Agreement, contains or will contain any untrue
statement of a material fact.
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4. Representations and Warranties of the Purchaser.
As a material inducement to the Company to execute and perform its
obligations under this Agreement, the Purchaser hereby represents and warrants
to the Company as follows:
4.1 Organization, Standing, etc. The Purchaser is a corporation duly
organized and validly existing and in good standing under the laws of the State
of Minnesota and has filed all required annual reports, and no proceedings for
dissolution have been filed with or commenced by the Secretary of State of the
State of Minnesota with respect to the Purchaser. The Purchaser has all
requisite power and authority to execute and deliver this Agreement and all
documents, instruments, agreements and certificates required or contemplated to
be executed and/or delivered by the Purchaser hereby ("Purchaser's Ancillary
Documents") and to perform its obligations hereunder and thereunder.
4.2 Authority; Binding Effect. The execution and delivery of this
Agreement and the Purchaser's Ancillary Documents and the consummation of the
transactions contemplated hereby and thereby have been duly authorized by all
necessary action on the part of the Purchaser. This Agreement has been and the
Purchaser's Ancillary Documents when signed by the Purchaser will have been duly
executed and delivered by the Purchaser, and this Agreement constitutes, and the
Purchaser's Ancillary Documents when duly executed and delivered shall each
constitute, the valid, legal and binding obligations of the Purchaser,
enforceable against the Purchaser in accordance with its terms, except as such
enforceability may be limited by applicable bankruptcy, moratorium, insolvency
or other similar laws affecting the rights of creditors generally and by general
equitable principles (whether enforcement is sought by proceedings in equity or
at law).
4.3 No Conflicts, etc.
4.3.1 No Conflicts. The execution, delivery and performance of this
Agreement and the Ancillary Documents will not result in (a) any conflict
with the Purchaser's Articles of Incorporation or Bylaws as amended to
date, (b) any breach or violation of or default under any statute, law,
rule, regulation, judgment, decree or order, or any mortgage, deed of
trust, indenture or agreement relating to borrowed money or any other
agreement, to which the Purchaser is a party or subject or by which any of
the Purchaser's assets or properties are bound or subject, or (c) the
creation of imposition of any lien, charge, pledge or encumbrance on the
Purchaser or any of the Purchaser's properties or assets, except for such
conflicts, breaches, violations or defaults and such liens, charges,
pledges or encumbrances as would not, individually or in the aggregate,
have a material adverse effect on this Agreement and the transactions
contemplated hereby.
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4.3.2 Approvals. To the best of the Purchaser's knowledge, no
consent, approval or authorization of or filing with any governmental
authority or any other third party is required on the part of the Purchaser
in connection with the execution and delivery of this Agreement or the
consummation of the transactions contemplated hereby, except filings,
consents or approvals, which (a) are identified elsewhere herein, or (b) if
not made or obtained, would not, individually or in the aggregate, have a
material adverse effect on the transaction contemplated hereby.
4.4 Litigation. To the best of the Purchaser's knowledge, there are no
judicial or administrative actions, proceedings or investigations pending or
threatened, which question the validity of this Agreement or any action taken or
to be taken by the Purchaser in connection herewith or therewith.
4.5 Brokers. Except as set forth in Section 9 below, all negotiations
relating to this Agreement and the transactions contemplated hereby have been
carried out without the intervention of any person in such manner as to give
rise to any valid claim against the Company, the Purchaser or any other entity
or person for any brokerage or finder's commission, fee or similar compensation.
4.6 Bankruptcy; Insolvency. The Purchaser has not (a) filed, or had filed
against it, a petition in bankruptcy or a petition to take advantage of any
other insolvency act, (b) admitted in writing its inability to pay it debts
generally, (c) made an assignment for the benefit of creditors, consented to the
appointment of a receiver for itself or any substantial part of its property, or
(d) generally committed any act of bankruptcy or insolvency (including the
failure to pay obligations as they become due).
4.7 Investment Representation.
4.7.1 Acquisition of Shares. The Purchaser is acquiring the Shares
for its own account and not with a view to any sale or other disposition or
distribution thereof, and the Purchaser will neither sell nor transfer any
of the Shares in violation of any applicable federal or state law, rule or
regulation.
4.7.2 Qualifications; Acknowledgments. The Purchaser is experienced
in evaluating and making investments of the type contemplated by this
Agreement and is financially able to bear the risks of its investment. The
Purchaser acknowledges that the Company is issuing and selling the Shares
in reliance upon the exemption from registration provided in Sections 3(b),
4(6) and Regulation D of the Securities Act and that the Purchaser is an
"Accredited Investor" as defined in Section 50l(a) of Regulation D and in
MN Stat. Ch. 88, (S)15, subdiv. 2(g), and is relying upon the Purchaser's
representations contained in this Section 4.7. The Purchaser agrees that
the Shares may be transferred only if registered under the Securities Act
or pursuant to an exemption from the registration requirements of the
Securities Act. The Purchaser understands that the Shares will be
"restricted securities" under Rule 144 promulgated under the
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Securities Act and, therefore, may not be sold under Rule 144 until after
the applicable holding period has elapsed.
4.7.3 Legend. To evidence its agreement to hold the Shares consistent
with its investment intent, the Purchaser agrees that the following legend
shall be placed on any certificate or other instrument evidencing the
Shares (and agrees to the terms thereof):
"THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD,
TRANSFERRED, ASSIGNED OR HYPOTHECATED UNLESS THERE IS AN EFFECTIVE
REGISTRATION STATEMENT UNDER SUCH ACT COVERING SUCH SECURITIES, THE
SALE IS MADE IN ACCORDANCE WITH RULE 144 UNDER THE ACT, OR THE COMPANY
RECEIVES AN OPINION OF COUNSEL FOR THE HOLDER OF THESE SECURITIES
REASONABLY SATISFACTORY TO THE COMPANY, STATING THAT SUCH SALE,
TRANSFER, ASSIGNMENT OR HYPOTHECATION IS EXEMPT FROM THE REGISTRATION
AND PROSPECTUS DELIVERY REQUIREMENTS OF SUCH ACT."
The Purchaser understands that, so long as such legend remains on the
certificate(s) representing the Shares, the Company may maintain appropriate
"stop transfer" orders with respect to the Shares on its books and records and
with its registrar and transfer agent. Notwithstanding the foregoing, the
Purchaser shall be entitled to replacement certificates without such legend upon
presentation by the Purchaser to the Company of a favorable opinion of counsel
reasonably satisfactory in form and substance to the Company and its counsel
that the removal of the legend is not in violation of either the Securities Act
and the rules and regulations thereunder or applicable provisions of state
securities law.
5. Registration of Securities and Filing of Reports.
5.1 Grant of Registration Rights. The Company hereby grants to the
Purchaser and the Wm Smith Investors (in this Article 5, together referred to as
the "Investors") the registration rights described below with respect to the
Shares. All of the Shares with respect to which the Purchaser has hereby been
granted registration rights are referred to as Registrable Securities in this
Section 5.
5.2 Filing Reports Under the Exchange Act. With a view to making available
to the Investors the benefits of Rule 144 promulgated under the Securities Act
and any other rule or regulation of the SEC that may at any time permit a holder
to sell securities of the Company to the public without registration, the
Company agrees to the following.
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5.2.1 Public Information. The Company agrees to use its best efforts
to make and keep public information available, as those terms are
understood and defined in Rule 144.
5.2.2 Exchange Act Filings. The Company agrees to use its best
efforts to file with the SEC in a timely manner all reports and other
documents required of the Company under the Securities Act and the Exchange
Act.
5.2.3 Information by the Company. The Company agrees to use its best
efforts to furnish to the Purchaser so long as the Purchaser owns any
Registrable Securities forthwith upon request a written statement by the
Company that it has complied with the reporting requirements of Rule 144
and of the Securities Act and the Exchange Act, a copy of the most recent
annual or quarterly report of the Company, and such other reports and
documents so filed by the Company as may be reasonably requested in
availing the Purchaser of any rule or regulation of the SEC permitting the
selling of any such securities without registration.
5.3 Demand Registrations.
--------------------------
5.3.1 Request for Registration. If at any time after the earlier of
(i) the revenues of the Company exceed $1,000,000.00 during any twelve (12)
month period, or (ii) October 1, 1997, the Purchaser may request
registration under the Securities Act of all or part of its Securities.
All registrations requested pursuant to this Section 5 are referred to
herein as "Demand Registrations".
5.3.2 Demand Registrations. The Investors will be entitled to
request three (3) Demand Registrations; provided, that, at the time of such
request, the holders making such request own, in the aggregate, not less
than 25% of the total outstanding Shares. A registration will not count as
one of the permitted Demand Registrations until it has become effective,
and a registration initiated as a Demand Registration will not count as one
of the permitted Demand Registrations unless the Investors initiating such
Demand Registration are able to register and sell at least 50% of the
Registrable Securities requested by such holders to be included in such
registration; provided that in any event the Company shall pay all
Registration Expenses (as defined below) in connection with any
registration initiated as a Demand Registration. All Demand Registrations
shall be underwritten registrations.
5.3.3 Priority on Demand Registrations. The Company shall not
include in any Demand Registration any securities which are not Registrable
Securities without the prior written consent of the Investors. If in
connection with a Demand Registration the managing underwriters advise the
Company in writing that in their opinion the number of Registrable
Securities and, if permitted hereunder, other securities requested to be
included in such offering, exceeds the number of Registrable Securities and
other securities, if any, which
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can be sold in an orderly manner in such offering within a price range
acceptable to the holders of a majority of the Registrable Securities
initially requesting registration, the Company shall include in such
registration (i) first, up to 50% of the Registrable Securities requested
to be included in such registration by the Investors pro rata based on the
Registered Securities owned by such Investors; (ii) second, other
securities requested to be included in such registration; and (iii) in all
cases where there are more requests than can be included, requests shall be
honored on a pro rata basis.
5.3.4 Restrictions on Demand Registrations. The Company shall not be
obligated to effect any Demand Registration within six months after the
effective date of a previous Demand Registration or a registration in which
the holders of Registrable Securities were given piggyback rights and in
which there was no reduction in the number of Registrable Securities
requested to be included. The Company may postpone for up to six months
the filing or the effectiveness of a registration statement for a Demand
Registration if the Company and the Investors agree that such Demand
Registration would reasonably be expected to have an adverse effect on any
proposal or plan by the Company or any of its Subsidiaries to engage in any
acquisition of assets (other than in the ordinary course of business) or
any merger, consolidation, tender offer or similar transaction; provided
that in such event, the Investors shall be entitled to withdraw such
request and, if such request is withdrawn, such Demand Registration shall
not count as a Demand Registration.
5.3.5 Selection of Underwriters. Investors owning not less than 35%
of the total outstanding shares shall have the right to recommend the
investment banker(s) and manager(s) to administer the offering, subject to
the approval of a majority of the Board which shall not be unreasonably
withheld.
5.3.6 Other Registration Rights. Except as provided in this
Agreement, the Company shall not grant any person or entity ("Person") the
right to request the Company to register any equity securities of the
Company, or any securities convertible or exchangeable into or exercisable
for such securities, without the prior written consent of the Investors
holding at least 35% of Registered Securities provided that the Company
may grant rights to other Persons to (i) participate in Piggyback
Registrations so long as such rights are subordinate to the rights of the
holders of Registrable Securities with respect to such Piggyback
Registrations, and (ii) request registrations so long as the holders of
Registrable Securities are entitled to participate in any such
registrations with such Persons pro rata on the basis of the number of
Shares owned by such Persons and such participating holders of Registrable
Securities.
5.3.7 Effective Registration Statement. A registration requested
pursuant to this Section 5.3 will not be deemed to have been effected
unless it has become effective; provided that if within 180 days after it
has become effective, the offering of Registrable Securities pursuant to
such registration is interfered with
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by any stop order, injunction or other order or requirement of the
Securities and Exchange Commission or other governmental agency or court,
such registration will be deemed not to have been effected.
5.4 Piggy-Back Registration Rights.
5.4.1 Right to Piggy-Back Registration. If at any time the Company
contemplates filing a registration statement under the Securities Act other
than any registration statement which exclusively relates to a registration
of securities under (i) an employee stock option, bonus or other
compensation plan, or (ii) a registration relating solely to a transaction
under Rule 145 of the Securities Act, the Company shall notify the Investor
of its intention to do so at least thirty (30) days prior to the filing of
the registration statement (the "Piggy-Back Notice"). Each Investor will
have twenty (20) days from receipt of a Piggy-Back Notice to give written
notice to the Company of its desire to have any of its Registrable
Securities included in the registration statement and, subject to any
required cutbacks, will have its Registrable Securities included in the
registration statement. The Company shall file any required amendments of
or supplements to any registration statement filed pursuant to this Section
5.4 and otherwise use its best efforts to insure that such registration
statement remains in effect under the Securities Act until the earlier of
the sale of all of the Registrable Securities included in the registration
statement or the expiration of one hundred twenty (120) days from the
effective date thereof.
5.4.2 Underwriter. If the registration of which the Company gives a
PiggyBack Notice is for a registered public offering involving an
underwriter, the Company shall so advise each Investor in such Piggy-Back
Notice. If an underwriter is so involved, the right of the Investor to
registration under this Section shall be conditioned upon his participation
in the underwriting and the inclusion of his Registrable Securities therein
to the extent provided for in this Section. Each Investor along with the
Company shall enter into an underwriting agreement with the managing
underwriter selected by the Company. Each Investor will also abide by any
cutbacks deemed necessary by such managing underwriter.
5.4.3 Right to Withdraw Registration. The Company shall have the
right to terminate or withdraw any registration initiated by it under this
Section 5.4 prior to the effectiveness of the registration statement
whether or not the Investor has elected to include any of its Registrable
Securities in such registration.
5.4.4 Costs of Registration. Subject to any generally applicable
Blue Sky requirements with respect to the allocation of expenses, the
Company shall bear all expenses in connection with the registration
statement, including, without limitation, all registration and filing fees,
printing expenses, fees and
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disbursements of its counsel, Blue Sky fees and expenses and the expense of any
special audits incident to or required by the registration process.
5.5 Additional Covenants Concerning Sale of Shares. In connection with a
registration statement referred to in this Section 5, the Company shall furnish
to each Investor (or any broker or other person at its request) a copy of the
then current prospectus included therein as the Investors may from time to time
reasonably request, and a copy of the opinion of counsel to the Company and a
copy of the "cold comfort letter" of the Company's accountants which are
delivered to the underwriter, if the counsel or accountants, as the case may be,
so consent.
5.6 Blue Sky Provisions. The Company, at its expense, shall endeavor to
cause any of the Registrable Securities included in a registration statement
referred to herein to be qualified under the laws of the jurisdictions of the
residence or place of business of the Investors, and the Company will maintain
that qualification for so long as may be necessary to comply with all applicable
laws regulating sales of securities.
5.7 Advising the Purchaser. In connection with any registration statement
referred to in this Section 5, the Company will promptly advise the Investors
and confirm that advice in writing (a) when the registration statement has
become effective, (b) upon the filing of any amendment or supplement to the
registration statement, (c) when any post-effective amendment to the
registration statement becomes effective, and (d) of any request by the SEC for
any amendment or supplement to the registration statement or prospectus or for
additional information. If at any time the SEC should institute or threaten to
institute any proceeding for the purpose of issuing, or should issue, a stop
order suspending the effectiveness of the registration statement, the Company
will promptly notify the Investors and will use its best efforts to prevent the
issuance of any such stop order to obtain the withdrawal thereof as soon as
possible; and the Company will advise the Investors promptly of any order or
communication of any public board or body addressed to the Company suspending or
threatening to suspend the qualification of any shares of Common Stock for sale
in any jurisdiction.
5.8 Indemnification.
5.8.1 Indemnification by the Company. With respect to the
registration rights described in this Section 5, the Company hereby agrees
to indemnify, hold harmless and defend each Investor against any and all
losses, claims, damages, liabilities and expenses (including reasonable
legal and other expenses incurred in investigating and defending against
the same), to which it may become subject under the Securities Act or other
statute or common law, arising out of or based upon (i) any alleged untrue
statement of a material fact contained in any registration statement or
prospectus included therein, or any amendment thereof or supplement
thereto, or (ii) the alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements contained
therein not misleading; provided, however, that the indemnity contained in
this Section 5.8.1 shall not apply to any such alleged untrue
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statement or omission made in reliance upon and in conformity with
information furnished in writing to the Company by or on behalf of an
Investor. As soon as practicable after the receipt by an Investor of notice
of any claim or action against him in respect of which indemnity may be
sought from the Company hereunder, the Investor shall notify the Company
thereof in writing, and the Company shall assume the defense of that claim
or action (and the cost thereof) by counsel of its own choosing.
5.8.2 Indemnification by the Purchaser. Each Investor hereby agrees
to indemnify, hold harmless and defend the Company, its directors and
officers, and each person who controls, is controlled by or under common
control of the Company within the meaning of the Securities Act against any
and all losses, claims, damages, liabilities and expenses (including
reasonable legal or other expenses incurred in investigating and defending
against the same), to which they or any of them may become subject under
the Securities Act or other statute or common law, arising out of or based
upon (i) any alleged untrue statement of a material fact contained in any
registration statement or prospectus included therein, or any amendment
thereof or supplement thereto, or (ii) the alleged omission to state
therein a material fact required to be stated therein or necessary to make
the statements contained therein not misleading; provided, however, that
the indemnity contained in this Section 5.8.2 shall apply in each case only
to the extent such statement or omission was made solely in reliance upon
and in conformity with written information furnished to the Company by or
on behalf of the Investors in connection with the preparation of the
registration statement. The Company, and any other person in respect of
which indemnity may be sought from the Investors hereunder, shall, as soon
as practicable after the receipt of notice of any claim or action against
the Company or such other person or entity, notify the Investors in writing
and the Investor shall assume the defense of any claim or action (and the
cost thereof) by counsel of its own choosing, who shall be reasonably
satisfactory to the Company.
5.9 Information by the Purchaser. Each Investor shall furnish to the
Company any information regarding the Registrable Securities held by it and the
distribution proposed by the Investors as the Company may reasonably request in
writing and as shall be required in connection with any registration referred to
in this Section 5.
5.10 Transfer of Registration Rights. The right to cause the Company to
register securities granted to the Investors under Sections 5.3 and 5.4 may be
assigned to the subsequent purchaser of the Shares, subject to the consent of
the Company, which shall not be reasonably withheld.
5.11 Termination of Rights. The rights of an Investor to cause the Company
to register securities under Sections 5.3 and 5.4 shall terminate with respect
to the Investor at the time it is able to dispose of all of its Registrable
Securities in one (1) three-month period, pursuant to the provisions of Rule
144.
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5.12 Registration Expenses.
5.12.1 All expenses incident to the Company's performance of or
compliance with this Section 5, including all registration and filing fees,
fees and expenses of compliance with securities or blue sky laws, printing
expenses, messenger and delivery expenses and fees and disbursements of
counsel for the Company and all independent certified public accountants,
underwriters (excluding discounts and commissions) and other Persons
retained by the Company (all such expenses being herein called
"Registration Expenses"), shall be borne as provided in this Agreement,
except that the Company shall, in any event, pay its internal expenses
(including all salaries and expenses of its officers and employees
performing legal or accounting duties), the expenses of any annual audit or
quarterly review, the expense of any liability insurance and the expenses
and fees for listing the securities to be registered on each securities
exchange on which similar securities issued by the Company are then listed
or, if not so listed, on the NASD automated quotation system.
5.12.2 In connection with each Demand Registration and each Piggyback
Registration, the Company shall reimburse the holders of Registrable
Securities covered by such registration for the reasonable fees (not
exceeding, in the aggregate $25,000 for each registration) and
disbursements of one counsel chosen by the holders of a majority or the
Registrable Securities.
5.12.3 To the extent Registration Expenses are not required to be
paid by the Company, each holder of securities included in any registration
hereunder shall pay those Registration Expenses allocable to the
registration of such holder's securities so included, any Registration
Expenses not so allocable shall be borne by all sellers or securities
included in such registration in proportion to the aggregate selling price
of the securities to be so registered.
6. Covenants of the Company.
6.1 Conduct of Business of the Company After the First Closing. After the
First Closing and prior to the Third Closing, the Company will not engage in or
perform any act outside the customary and usual course of business, and will
not, without limiting the generality of the foregoing, undertake any of the
following actions with respect to the Company or its subsidiary unless such
action is approved by a super majority vote of two-thirds of the Company's Board
of Directors:
6.1.1 make any loan to any shareholder, officer or director of the
Company, except as listed in Schedule 6.1.1 hereto;
6.1.2 declare or pay any dividend or distribution with respect of the
stock of the Company, or redeem or purchase any of the stock of the
Company;
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6.1.3 effect a merger, consolidation or sale of assets;
6.1.4 enter into any partnership, joint venture, licensing or
franchise agreement with any party;
6.1.5 except as provided in this Agreement, commence any public
offering or sales of the Company, or authorize any increase in the capital
of the Company or its subsidiary, or issue any capital stock, notes or
other securities (including options and convertible securities) of the
Company or its subsidiary;
6.1.6 sell, lease, exchange or otherwise dispose of all or a
significant portion (defined as 15% or more of book value at the time) of
the assets of the Company or its subsidiary;
6.1.7 settle any litigation or arbitration involving a claim greater
than $500,000 unless covered by insurance or unless approved by the Board;
6.1.8 voluntarily dissolve, wind up, liquidate or recapitalize the
Company or its subsidiary;
6.1.9 enter into any contract, agreement, indenture, instrument,
certificate or undertaking which is not in the ordinary course of business
and is in excess of $250,000;
6.1.10 authorize any borrowing, other than the borrowings in place as
of the date of this Agreement, including any note, debenture or bond given
or issued or any guarantee of any obligation, agreement or contract made by
any party (other than any guarantees of the obligations of the Company's
subsidiary in the ordinary course of business), if the total outstanding
principal amount of borrowings would exceed 100% of Shareholders Equity (as
that term is used and defined in the Company's Audited Financial Statements
prepared in accordance with generally accepted accounting principles) of
the Company and its subsidiary on a consolidated basis at any one time;
6.1.11 change the scope or nature of the business of the Company or
of its subsidiary in any material respect;
6.1.12 change the compensation payable to any employee of the
Company, or amend or enter into any employment agreement other than as
specifically provided in this Agreement, or enter into any transaction with
any shareholder, affiliate or immediate family member of a shareholder of
the Company; or
6.1.13 except for the Software Development Agreement with Parera
Information Services, Inc. and costs associated with the move of the
Company to Florida, authorize any capital expenditure greater than
$500,000.00.
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From the date of the First Closing to the First Closing, the Company will
conduct its business diligently and in the same manner as heretofore conducted
and shall use its best efforts to preserve the business organization intact, to
keep available the present employees and to preserve its business relationships
with their customers and others.
6.2 Minute Books. The Company will maintain true and complete (a) minute
books which shall contain accurate records of all meetings and consents in lieu
of meetings of their shareholders and Boards of Directors (and any committees
thereof) which occur after the date of this Agreement and (b) stock books.
6.3 Access. The Purchaser and any authorized agents or representatives of
the Purchaser shall be granted full access to the books, documents and records,
including income tax returns of the Company, to conduct such examinations and
investigations thereof as it deems necessary from the date of the First Closing
to the date of the Third Closing; provided, such examinations shall be conducted
during the usual business hours of the Company. Upon reasonable notice, the
Company shall also provide that its officers and employees will be available for
consultation and discussion with the Purchaser and/or its authorized agents and
representatives during usual business hours.
6.4 Supplemental Financial Statements. The Company shall, on or prior to
Second Closing, deliver to the Purchaser an unaudited consolidated balance
sheet, an unaudited consolidated statement of earnings and retained earnings,
and an unaudited consolidated statement of changes in financial position for the
four month period ending September 30, 1995 (the "Supplemental Financial
Statements"). The Supplemental Financial Statements shall be accompanied by a
certificate signed by an officer of the Company which shall contain a
representation and warranty to the effect that, except as may be set forth on a
schedule attached thereto, the Supplemental Financial Statements are in
accordance with the books and records of the Company, and although the
Supplemental Financial Statements are not audited and do not contain the
footnotes which would be required in audited financial statements, such
statements present fairly the consolidated financial position, assets and
liabilities of the Company as at such date, reflecting all necessary accruals,
as well as the results of the Company's operations and its changes in financial
position for the period indicated, all in conformity with generally accepted
accounting principles applied on a consistent basis, subject to annual year end
adjustments.
7. Conditions to the Purchaser's Obligations.
Except as may be waived in writing by the Purchaser, the obligations of the
Purchaser under this Agreement are subject to the fulfillment, prior to or at
the First, Second and Third Closings, as appropriate, of each of the following
conditions.
7.1 Performance. The Company shall have performed and complied with all
covenants, agreements and conditions required by this Agreement to be performed
or complied with by them prior to or at such Closing.
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7.2 Representations and Warranties True at Closing. Each of the
representations and warranties of the Company contained in this Agreement and in
any certificate delivered to the Purchaser pursuant hereto shall be true and
correct when made and at and as of such Closing Date, with the same effect as if
made at such Closing Date (or on the date to which it relates, in the case of
any representation or warranty which specifically relates to an earlier date).
7.3 Certificates. The Purchaser shall be provided at the First Closing
with certificates executed by each of Jeffrey B. Pinkerton and Brad I. Markowitz
as an officer or director of the Company to the effect that (i) he has not
undertaken any due diligence investigation with respect to the particular
matters described in this Agreement, and that he would not, in the course of his
duties as an officer or director of the Company, know about many facts which are
the subject of this Agreement; and (ii) he has reviewed the Schedules to this
Agreement with counsel, and based upon counsel's explanation of how to respond,
he has no actual knowledge that such Schedules are not accurate as of the
Closing Dates.
7.4 Deliveries. The Company shall have delivered, or shall have caused to
be delivered, all of the documents, instruments and agreements to the Purchaser
as required under Section 2.2.1 or 2.2.3 above.
7.5 No Actions or Proceedings. No action or proceeding by or before any
court or other governmental body shall have been instituted or threatened by any
party to restrain, prohibit or invalidate the transactions contemplated by this
Agreement.
7.6 No Lapse in Insurance Coverage. No lapse shall have occurred prior to
such Closing Date in the coverage provided under any of the policies of
insurance of the Company, including any liability policies, which relate to the
business, assets, properties or employees of the Company.
7.7 Termination of Lease. The Company shall have terminated the lease for
the Company's facilities in Marlboro, Massachusetts, in a manner acceptable to
the Purchaser.
7.8 Reduction of Accounts Receivable. As set forth on Schedule 7.8 hereto,
the Company shall have reduced in writing and in a manner acceptable to the
Purchaser and its counsel the accounts payable shown on its July 31, 1995
balance sheet by approximately $75,000 as of the First Closing.
8. Conditions to the Company's Obligations.
Except as may be waived in writing by the Company, the obligations of the
Company under this Agreement are subject to the fulfillment, prior to or at the
First, Second and Third Closing, as appropriate, of each of the following
conditions:
24
<PAGE>
8.1 Performance. The Purchaser shall have performed and complied with all
covenants, agreements and conditions required by this Agreement to be performed
or complied with by it prior to or at such Closing.
8.2 Representations and Warranties True at Closing. Each of the
representations and warranties made by the Purchaser shall be true and correct
when made and at and as of such Closing Date, with the same effect as if made at
such Closing Date (or on the date to which it relates, in the case of any
representation or warranty which specifically relates to an earlier date).
8.3 Certificate. The Company shall be provided at each Closing with a
certificate executed by an officer of the Purchaser to the effect that he has no
actual knowledge of any facts as of each Closing Date that the representations
and warranties made by the Purchaser in Section 4 above are not true and correct
in all material respects as of such Closing Date (or on the date to which it
relates, in the case of any representation or warranty which specifically
relates to an earlier date).
9. Agent: Payment of Fees.
The parties acknowledge and agree that Wm. Smith Securities, Inc. ("Smith")
of Denver, Colorado, is the agent with respect to the sale and purchase of the
Shares, and that no other agent has been engaged by either party, nor is any
other agent entitled to any commission, fee or compensation, with respect
thereto. The Company further agrees that it is responsible for paying all of
Smith's fees in connection with the sale and purchase of the Shares pursuant to
the letter agreement between the Company and Smith, executed on April 26, 1995,
as amended, which shall remain in effect through all of the Closings.
10. Indemnification.
In addition to and without any limitation of any other indemnification
provision herein contained, the Company and the Purchaser agree to the following
indemnity provisions:
10.1 Obligation of the Company to Indemnify. The Company agrees to
indemnify, defend and hold harmless the Purchaser from and against all losses,
liabilities, damages, deficiencies, costs or expenses (including interest,
penalties and reasonable attorneys' fees and disbursements) ("Losses") based
upon, arising out of or otherwise in respect of any inaccuracy in or any breach
of any representation, warranty, covenant or agreement of Company contained in
this Agreement or in any document or other papers delivered pursuant to this
Agreement.
10.2 Obligation of the Purchaser to Indemnify. The Purchaser agrees to
indemnify, defend and hold harmless the Company from and against any Losses
based upon, arising out of or otherwise in respect of any inaccuracy in or any
breach of any
25
<PAGE>
representation, warranty, covenant or agreement of the Purchaser contained in
this Agreement or in any document or other papers delivered pursuant to this
Agreement.
10.3 Procedure.
10.3.1 Notice of Asserted Liability. Promptly after receipt by any
party hereto (the "Indemnitee") of notice of any demand, claim or
circumstances which, with the lapse of time, would give rise to a claim or
the commencement (or threatened commencement) of any action, proceeding or
investigation (an "Asserted Liability") that may result in a Loss, the
Indemnitee shall give notice thereof (the "Claims Notice") to any other
party (or parties) obligated to provide indemnification (the "Indemnifying
Party"). The Claims Notice shall describe the Asserted Liability in
reasonable detail, and shall indicate the amount (estimated, if necessary)
of the Losses that have been or may be suffered by the Indemnitee.
10.3.2 Opportunity to Defend. The Indemnifying Party may elect to
compromise or defend, at its own expense and by its own counsel, any
Asserted Liability. If the Indemnifying Party elects to compromise or
defend such Asserted Liability, it shall, within 30 days (or sooner, if the
nature of the Asserted Liability so requires) notify the Indemnitee of its
intent to do so, and the Indemnitee shall reasonably cooperate, at the
expense of the Indemnifying Party, in the compromise of, or defense
against, such Asserted Liability; provided, that the Indemnitee may
participate at its own expense, in the defense of such Asserted Liability.
If the Indemnifying Party elects not to compromise or defend the Asserted
Liability, fails to notify the Indemnitee of its election as herein
provided or contests its obligation to indemnify under this Agreement, the
Indemnitee may pay, compromise or defend such Asserted Liability; provided,
that the Indemnitee may not consent to settlement or compromise of any such
Asserted Liability over the objection of the Indemnifying Party; provided,
further, that consent to settlement or compromise shall not be unreasonably
withheld. If the Indemnifying Party chooses to defend any claim, the
Indemnitee shall make available to the Indemnifying Party any books,
records or other documents within its control that are necessary or
appropriate for such defense.
11. Termination.
This Agreement may be terminated at any time prior to the Third Closing, as
follows:
11.1 by mutual agreement of the Purchaser and the Company, in which event
there shall be no liability on the part of any of the parties or the officers or
directors of the Purchaser or the Company;
11.2 by the Purchaser if on the Second Closing Date any of the conditions
specified in Section 7 have not been met or fulfilled; or
26
<PAGE>
11.3 by the Company if on the Second Closing Date any of the conditions
specified in Section 8 have not been met or fulfilled.
12. Resignations; Certain Compensation Payments.
12.1 Resignations. At the First Closing, I. Frederick Shotkin ("Shotkin"),
Brad I. Markowitz ("Markowitz") and J. Robert Gary ("Gary") shall tender their
written resignations as officers and/or directors of the Company. Shotkin's
resignation shall take effect immediately upon the First Closing. Markowitz and
Gary shall agree to continue in the same capacities in which they have been
serving the Company until the effective date of their resignations set forth in
a subsequent written notice delivered to them by the Company.
12.2 Certain Compensation Payments. As set forth on Schedule 12 hereto, as
of the First Closing Date, the Company shall pay G. Michael Cassidy ("Cassidy"),
Douglas Fleming ("Fleming"), J. Robert Gary ("Gary") and Jeffrey B. Pinkerton
("Pinkerton") the accrued compensation owed to each of them as set forth in
Schedule 7.8 hereto. All other employee benefits, such as salary and all stock
options, whether vested or unvested, shall be waived in full in writing by the
foregoing persons, provided, however, that all warrants existing on the Closing
Date shall remain in full force and effect.
13. General.
13.1 Actions After the First, Second and Third Closing. After each Closing
the parties shall execute and deliver such other and further instruments and
perform such other and further acts as may reasonably be required fully to
consummate the transactions contemplated hereby including amending the number of
shares and prices herein if any reverse stock split is required by NASD.
13.2 Survival of Representations and Warranties. All indemnifications,
representations and warranties made by the Company to the Purchaser and by the
Purchaser to the Company in this Agreement, except as otherwise set forth
herein, shall survive for a period of two (2) years from the Third Closing Date
and shall not in any manner be affected or impaired by the consummation of the
transactions contemplated herein at each Closing.
13.3 Expenses. The Company shall pay, in addition to the agent's fees set
forth in Section 9 above, all of its own fees and expenses related to the sale
and purchase of the Shares, including, but not limited to, the fees and expenses
of the Company's counsel and accountants. The Company, in addition, shall
reimburse the Purchaser's expenses, including, but not limited to, fees and
expenses of the Purchaser's counsel, and costs and expenses of conducting the
due diligence investigation of the Company.
27
<PAGE>
13.4 Publicity. Except for a press release dated August 24, 1995, and
an 8-K dated August 25, 1995, neither party shall disclose the Purchaser's
acquisition of the Shares, the Purchase Price or any other terms of this
Agreement in any press release or any public announcement or in any document or
material filed with any governmental entity or to any other entity or person,
without the prior written consent of the other party, which consent shall not be
unreasonably withheld, unless such disclosure is required by applicable law or
governmental regulations or by order of a court of competent jurisdiction in
which case prior to making such disclosure, the disclosing party shall give
written notice to the other party describing in reasonable detail the proposed
content of such disclosure and shall permit the other party to review and
comment upon the form and substance of such disclosure. All notices, statements
and communications to employees and customers of the Company and to the general
public and the press relating to the transactions covered by this Agreement
shall be made only at such times and in such manner as may be mutually agreed
upon by the Company and the Purchaser unless required by law.
13.5 Notice. Any notice, request or other communication required or
permitted under this Agreement shall be in writing and given or made by physical
delivery, electronic transmission or by registered or certified mail, postage
prepaid, return receipt requested or by overnight courier addressed to the other
party. All such notices shall be addressed as follows:
If to the Company: Greentree Software, Inc.
201 Boston Post Road West
Marlboro, MA 01752
Attention: Brad Markowitz,
Chairman of the Board
With a Copy to: Bingham, Dana & Gould
150 Federal Street
Boston, MA 02110
Attention: Victor J. Paci, Esq.
If to the Purchaser: T.I.S. Acquisition & Management Group, Inc.
200 South 6th Street
Suite 450
Minneapolis, MN 55402
Attention: John J. Medico,
Managing Director
28
<PAGE>
With a Copy to: Robins, Kaplan, Miller & Ciresi
2800 LaSalle Plaza
800 LaSalle Avenue
Minneapolis, MN 55402-2015
Attention: Andrew C. Becher, Esq.
Any party may change the persons and addresses to which notices, requests
or other communications are to be sent by giving written notice or such change
to the other party in the manner provided herein for giving notice. Notices
shall be effective upon receipt in the case of physical delivery, overnight
courier or electronic transmission and three (3) days after deposit in the U.S.
mails in the case of mailing.
13.6 Assignment. This Agreement may be assigned by the Purchaser to a
corporation with respect to which the Purchaser is a controlling shareholder, to
a partnership with respect to which the Purchaser is a general partner or other
joint venture with respect to which the Purchaser holds a controlling interest.
Except as expressly set forth above, this Agreement may not be assigned by
either party without the express written consent of the other party.
13.7 Applicable Laws. This Agreement shall be construed and governed by the
laws of the State of Minnesota.
13.8 Entire Agreement. This Agreement together with all Schedules and
Exhibits attached hereto and thereto shall constitute the entire agreement
between the parties hereto, and no party hereto shall be bound by any
communications between them on the subject matter hereof unless such
communications are in writing and bear a date contemporaneous with or subsequent
to the date hereof. Any prior written agreements or letters of intent between
the parties shall, upon execution of this Agreement, be null and void.
13.9 Reporting for Tax Purposes. The parties agree that the payments of the
Purchase Price provided for herein are solely for the Shares and each party
shall so report all such payments for income tax purposes.
13.10 Waivers and Amendments; Noncontractual Remedies; Preservation of
Remedies. This Agreement may be amended, superseded, canceled, renewed or
extended, and the terms hereof may be waived, only by a written instrument
signed by each of the parties hereto or, in the case of a waiver, by the party
waiving compliance. No delay on the part of any party in exercising any right,
power or privilege hereunder shall operate as a waiver thereof, nor shall any
waiver on the part of any party of any such right, power or privilege, nor any
single or partial exercise of any such right, power or privilege, preclude any
further exercise thereof or the exercise of any other such right, power or
privilege,
29
<PAGE>
13.11 Binding Effect. This Agreement shall be binding upon and inure to
the benefit of the parties and their respective successors and legal
representatives.
13.12 Table of Contents; Captions. The Table of Contents and the captions
of the various sections of this Agreement are inserted for convenience of
reference only and shall not affect the construction of any provision of this
Agreement.
13.13 Separability. If any provision of this Agreement or the application
thereof shall for any reason be invalid or unenforceable, such provision shall
be limited only to the extent necessary in the circumstances to make such
provisions valid and enforceable and its partial or total invalidity or
unenforceability shall in any event not affect the remaining provisions of this
Agreement which shall continue in full force and effect.
13.14 Execution In Counterparts. For the convenience of the parties, this
Agreement may be executed in one or more counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the same
document.
IN WITNESS WHEREOF, the parties hereto have executed this Stock Purchase
Agreement as of the day and year first above written.
GREENTREE SOFTWARE, INC. T.I.S. ACQUISITION & MANAGEMENT GROUP, INC.
By: /s/ Brad I. Markowitz By: /s/ Larry Jeddeloh
---------------------- -----------------------
Name: Brad I. Markowitz Name: Larry Jeddeloh
------------------ --------------
Title: President Title: President
------------------ --------------
Attest: /s/ Alice M. Lipkind Attest:
--------------------- -----------------
Name: Alice M. Lipkind Name:
------------------- ---------------
Title: Title:
------------------- ---------------
30
<PAGE>
EXHIBIT C
---------
GREENTREE SOFTWARE, INC
2801 Fruitville Road
Suite 180
Sarasota, Florida 34237
October 26, 1995
T.I.S. Acquisition & Management Group, Inc.
200 South 6th Street
Suite 450
Minneapolis, MN 55402
Attention: John J. Medico, Managing Director
Ladies and Gentlemen:
Reference is made to that certain Stock Purchase Agreement, dated as of
October 4, 1995 (the "Agreement"), between Greentree Software, Inc., a New York
corporation (the "Company"), and T.I.S. Acquisition & Management Group, Inc., a
Minnesota corporation (the "Purchaser"), pursuant to which the Company agreed to
issue and sell to the Purchaser and the Wm Smith Investors (as defined in the
Agreement) up to 8,750,000 shares of the Company's Common Stock, $.04 par value
per share (the "Common Stock"). Capitalized terms used herein without definition
shall have the respective meanings ascribed to such terms in the Agreement.
In order to address certain issues that have arisen in connection with the
First Closing and to anticipate certain circumstances which may occur in the
future, the parties hereto have agreed as follows:
1. Acknowledgement of Receipt of Cash from the Purchaser.
The Company hereby acknowledges that the Purchaser has contributed
$539,686.57 (the "Funds") to the Company through October 25, 1995. One Hundred
Thirteen Thousand ($113,000) of the Funds have been draws under that certain
Secured Bridge Loan Promissory Note (the "Bridge Note") dated September 12, 1995
of the Company in favor of the Purchaser, and the remainder of the Funds have
been advances to the Company (the "Advances"). The Purchaser and the Company
agree that the aggregate amount of principal and accrued interest under the
Bridge Note and the Advances, when converted into Common Stock in connection
herewith, (i) shall be deemed to have been paid in full, and (ii) the Bridge
Note shall be returned to the Company marked "Paid In Full" or, if the Bridge
Note cannot be located as of the date hereof, shall be marked "Paid In Full"
upon presentation to the Company at any time. In any event, whether the Bridge
Note is presented or not, the Company shall have no further obligations of any
kind whatsoever under the Bridge Note or for the Advances.
<PAGE>
2. Issuance and Sale of Common Stock.
----------------------------------
On the date hereof, the Funds shall convert into shares of Common Stock on
the basis of one (1) share of Common Stock for each $0.40 (the "Conversion
Price") of such aggregate amount of Funds, resulting in a total of 1,349,216
shares of Common Stock to be issued to the Purchaser on account of such
conversion. No fractional shares shall be issued in connection with the
conversion of the Funds, but, in lieu of such fractional share, the Company
shall pay to the Purchaser a cash adjustment in the amount of $.16. The Company
shall request the Transfer Agent to prepare and deliver to the Purchaser as
promptly as practicable a stock certificate representing the 1,349,216 shares of
Common Stock issued pursuant to this Section 2.
3. Service Agreement.
------------------
The parties acknowledge and agree that, upon the execution and delivery of
this letter agreement, the Agreement and that certain Service Agreement, dated
as of October 17, 1995 (the "Service Agreement"), between the Company and the
Purchaser, the Service Agreement shall be in full force and effect. The parties
also acknowledge and agree that in the event that the Purchaser does not
purchase at least an additional 1,025,784 shares of Common Stock at $.40 per
share, including any shares purchased pursuant to Section 7 hereof, on or before
November 6, 1995, then, notwithstanding anything in the Service Agreement to the
contrary, the Service Agreement shall terminate and the parties shall have no
further obligations with respect thereto, including, without limitation, any
severance pay obligations.
4. Management of the Company.
--------------------------
The Company acknowledges and agrees that, upon the execution and delivery
of this letter agreement and the Agreement, the resignations of Michael Cassidy
as Chief Executive Officer of the Company, Jeffrey Pinkerton as President, and
Douglas Fleming as Vice President--Engineering shall be deemed to be accepted
and in effect. The Company also acknowledges and agrees that, upon the execution
and delivery of this letter agreement and the Agreement, John J. Medico shall be
President and Chief Executive Officer of the Company, Arnold Muhlbach shall be
Chief Financial Officer, and Jeffrey Pinkerton shall be Vice President--Product
Development.
5. Employee Matters; Legal Opinions.
---------------------------------
The Company and the Purchaser acknowledge and agree that payment to the
individuals and of the amounts set forth on the attached Schedule 1 has not been
made. The Company and the Purchaser acknowledge that any releases of options or
rights by such individuals are not effective unless and until such payments are
received by such individuals and any required recision period expires
thereafter. The Company and the Purchaser also acknowledge that delivery of
legal opinions by counsels to the Company and counsel to the Purchaser were
conditions to the First Closing and that such conditions have been waived.
<PAGE>
6. First Closing.
--------------
Notwithstanding anything in the Stock Purchase Agreement to the contrary,
the First Closing is hereby being consummated simultaneously with the execution
of this letter agreement. Notwithstanding anything in the Stock Purchase
Agreement to the contrary, the representations and warranties contained in the
Stock Purchase Agreement shall be dated as of October 4, 1995.
7. Funding of the Company Pending the Second Closing.
--------------------------------------------------
The Company and the Purchaser acknowledge and agree that the Purchaser may
advance additional funds, on an as available basis, to the Company to ensure the
continued operations of the Company. The Purchaser shall be entitled to have
such additional funds, together with an accrued interest thereon (the "Future
Advances"), converted into Common Stock at the Conversion Price; provided,
however, that any and all Future Advances shall be converted into Common Stock
at the Conversion Price upon the Second Closing and that a certificate
representing such shares of Common Stock issued and sold to the Purchaser shall
be prepared and delivered to the Purchaser at the Second Closing.
8. Miscellaneous.
--------------
Except to the extent modified, supplemented and/or amended by this letter
agreement, all of the terms, provisions and conditions of the Stock Purchase
Agreement and the Service Agreement are hereby ratified and confirmed and in
full force and effect. Notwithstanding anything in the Stock Purchase Agreement
or the Service Agreement to the contrary, the Stock Purchase Agreement, the
Service Agreement and this letter agreement shall be read and construed
together. This letter agreement may be signed in multiple counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument. This letter agreement shall be construed and
enforced in accordance with the laws of the State of Minnesota applicable to a
contract made and performed in the State of Minnesota by residents thereof.
<PAGE>
If the foregoing represents our agreement, please sign where indicated
below, whereupon this letter agreement will constitute a legally binding and
enforceable agreement executed under seal.
Very truly yours,
GREENTREE SOFTWARE, INC.
By:
---------------------------
Brad I. Markowitz, Chairman
Accepted and Agreed To:
T.I.S. ACQUISITION & MANAGEMENT GROUP, INC.
By:
---------------------------------
John J. Medico, Managing Director
<PAGE>
Schedule 1
----------
Name Amount Payable
---- --------------
G. Michael Cassidy $29,875.77
Douglas Fleming $15,833.32
J. Robert Gary $29,875.76
Jeffrey B. Pinkerton $29,875.77
<PAGE>
Exhibit D
AGREEMENT OF JOINT FILING
OF 13D RELATING TO
GREENTREE SOFTWARE, INC.
COMMON STOCK, PAR VALUE $0.04
In accordance with Rule 13d-1(f) under the Securities Exchange Act of 1934,
as amended, the undersigned hereby confirm the agreement by and among them to
the joint filing on behalf of each of them of a Statement on Schedule 13D, and
any and all amendments thereto, with respect to the above referenced securities
and that this Agreement be included as an Exhibit to such filing.
IN WITNESS WHEREOF, the undersigned hereby execute this Agreement as of
this 9th day of September, 1997.
T.I.S. ACQUISITION AND MANAGEMENT GROUP, INC.
By: /s/ Larry E. Jeddeloh
--------------------------------------------
Larry E. Jeddeloh
President and Director
T.I.S. GROUP
By: /s/ Larry E. Jeddeloh
--------------------------------------------
Larry E. Jeddeloh
President, Managing Director and Chief
Investment Officer
LARRY E. JEDDELOH
By: /s/ Larry E. Jeddeloh
--------------------------------------------
Larry E. Jeddeloh, Individually
