SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant [X] Filed by a Party other than the Registrant [ ]
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Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss.240.14a-11(c) or ss.240.14a-12
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
Greentree Software, Inc.
(Name of Registrant as Specified In Its Charter)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is
calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
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<PAGE>
GREENTREE SOFTWARE, INC.
7901 Flying Cloud Drive
Suite 150
Eden Prairie, Minnesota 55344
NOTICE OF A SPECIAL MEETING IN LIEU OF THE
1997 ANNUAL MEETING OF SHAREHOLDERS
TO THE SHAREHOLDERS OF GREENTREE SOFTWARE, INC.:
NOTICE IS HEREBY GIVEN that a Special Meeting in lieu of the 1997
Annual Meeting of Shareholders of Greentree Software, Inc. (the "Corporation")
will be held at the offices of Bingham, Dana & Gould LLP, 150 Federal Street,
Boston, Massachusetts 02110, on Monday, June 23, 1997 at 10:00 A.M. (local time)
for the following purposes:
(a) To elect directors of the Corporation;
(b) To consider and vote upon a proposal to amend of the
Corporation's Certificate of Incorporation to effect a one for
six reverse stock split of the common shares, par value $0.04
per share (the "Common Shares") and to reclassify the Common
Shares with a par value of $0.01 per share;
(c) To consider and vote upon a proposal to adopt the Greentree
Software, Inc. 1997 Stock Option Plan pursuant to which stock
options may be granted to employees, directors, suppliers,
service providers and consultants of the Corporation;
(d) To transact such other business as may properly come before
the meeting or any adjournments or postponements thereof.
The Board of Directors has fixed June 2, 1997 as the record date for
the determination of shareholders entitled to notice of, and to vote at, a
Special Meeting in lieu of the 1997 Annual Meeting of Shareholders. Accordingly,
only shareholders of record at the close of business on June 2, 1997 will be
entitled to notice of, and to vote at, such meeting or any adjournments thereof.
By order of the Board of Directors
BRAD I. MARKOWITZ
Chairman of the Board of Directors
June 6, 1997
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NOTE: THE BOARD OF DIRECTORS SOLICITS THE EXECUTION AND PROMPT RETURN OF
THE ACCOMPANYING PROXY. WHETHER OR NOT YOU EXPECT TO BE PRESENT AT
THE MEETING, PLEASE COMPLETE, DATE, SIGN AND MAIL THE ACCOMPANYING
PROXY AND PROMPTLY RETURN IT IN THE PRE-ADDRESSED ENVELOPE PROVIDED
FOR THAT PURPOSE. IF YOU ATTEND THE MEETING, YOU MAY WITHDRAW ANY
PROXY GIVEN BY YOU AND VOTE YOUR SHARES IN PERSON.
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<PAGE>
GREENTREE SOFTWARE, INC.
PROXY STATEMENT
Proxy Solicitation
The enclosed proxy is solicited by the Board of Directors of Greentree
Software, Inc. (the "Corporation") for use at the Special Meeting in lieu of the
1997 Annual Meeting of Shareholders on June 23, 1997 and at any adjournments or
postponements thereof (the "Meeting"), pursuant to the accompanying Notice of
Annual Meeting of Shareholders. The purposes of the Meeting and the matters to
be acted upon are set forth in the accompanying Notice of Annual Meeting of
Shareholders. The Board of Directors knows of no other business that will come
before the Meeting.
This Proxy Statement and proxies for use at the Meeting will be mailed
to shareholders on or about June 6, 1997, and such proxies will be solicited
chiefly by mail, but additional solicitations may be made by telephone or
telegram by the officers or regular employees of the Corporation. The
Corporation may enlist the assistance of brokerage houses in soliciting proxies.
All solicitation expenses, including costs of preparing, assembling and mailing
proxy material, will be borne by the Corporation.
Revocability and Voting of Proxy
A form of proxy and a return envelope for the proxy are enclosed. You
may revoke your proxy at any time prior to its use by giving written notice to
the Secretary of the Corporation, by executing a revised proxy at a later date
or by attending the Meeting and voting in person. Proxies in the form enclosed,
unless previously revoked, will be voted at the Meeting in accordance with the
specifications made by you on the proxy or, in the absence of such
specifications, in favor of the election of the nominees for directors listed
herein, in favor of the proposals to amend the Corporation's Certificate of
Incorporation as described herein, in favor of the proposal to establish the
Corporation's 1997 Stock Option Plan, and, with respect to any other business
which may properly come before the meeting, in the discretion of the named
proxies.
If, in a proxy submitted on your behalf by a person acting solely in a
representative capacity, the proxy is marked clearly to indicate that the shares
represented thereby are not being voted with respect to one or more proposals,
then your proxy will not be counted as present at the meeting with respect to
such proposals. Votes withheld from any nominee, abstentions and broker
"non-votes" are counted as present or represented for purposes of determining
the presence or absence of a quorum for the Meeting. A "non-vote" occurs when a
nominee holding shares for a beneficial owner votes on one proposal, but does
not vote on another proposal because the nominee does not have discretionary
voting power and has not received instructions from the beneficial owner.
Abstentions are included in the number of shares present or represented and
voting on each matter. Broker "non-votes" are not so included.
All holders of record of the common shares, par value $0.04 per share
(the "Common Shares"), of the Corporation at the close of business on June 2,
1997, will be eligible to vote at the Meeting. Each share is entitled to one
vote. As of June 2, 1997, the Corporation had outstanding 9,663,662 shares of
Common Shares. The presence, in person or by proxy, of a majority of the issued
and outstanding Common Stock will constitute a quorum for the transaction of
business at the Meeting. This proxy statement and the enclosed proxy are first
being mailed or given to shareholders on or about June 6, 1997.
<PAGE>
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PRINCIPAL SHAREHOLDERS
The following table sets forth certain information with respect to each
person known to the Corporation to be the beneficial owner of more than 5% of
the issued and outstanding Common Shares as of March 31, 1997 or other date
noted below. As of March 31, 1997, 9,663,662 shares of Common Shares were
outstanding.
<TABLE>
<CAPTION>
Amount and Nature of Percentage of
Name and Address Beneficial Ownership Outstanding Shares of
of Beneficial Owner of Common Stock (1) Common Stock Owned (1)
------------------- ------------------- ----------------------
<S> <C> <C>
Primerica Life Insurance Company
("Primerica")
3120 Breckenridge Blvd.
Duluth, GA 30199 2,166,666(2) 19.41%
Larry E. Jeddeloh
c/o T.I.S. Acquisition & Management
Group, Inc.
200 South Sixth Street
Suite 450
Minneapolis, MN 55402 1,586,666(3) 16.37%
T.I.S. Acquisition & Management
Group, Inc. ("TIS")
200 South Sixth Street
Suite 450
Minneapolis, MN 55402 1,473,333(4) 15.25%
Mark Cahill
666 Greenwich Street
New York, NY 10014 1,049,318(5) 10.73%
William S. Smith
c/o Wm Smith & Co.
1700 Lincoln Street
Denver, CO 80203 682,738(6) 6.69%
Wm Smith & Co.
1700 Lincoln Street
Denver, CO 80203 539,106(7) 5.28%
</TABLE>
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(1) The shares owned, and the shares included in the total number of shares
outstanding, have been adjusted, and the percentage owned has been
computed, in accordance with Rule 13d-3(d)(1) under the Securities
Exchange Act of 1934, as amended, and includes, options to the extent
called for by such rule, with respect to shares of Common Shares that
can be exercised within 60 days of March 31, 1997. Except as set forth
in the footnotes below, such shares are beneficially owned with sole
investment and sole voting power.
(2) Based upon information provided to the Corporation by Primerica.
Includes 1,500,000 shares that The Travelers Indemnity Company, an
affiliate of Primerica, has the right to acquire within 60 days of
March 31, 1997 upon the exercise of a warrant.
<PAGE>
-3-
(3) Based upon information provided to the Corporation by Mr. Jeddeloh.
Includes 1,413,333 shares held by TIS of which Mr. Jeddeloh has shared
voting and investment power. Includes 60,000 shares held by TIS Group,
Inc. of which Mr. Jeddeloh has shared voting and investment power.
Includes 30,000 shares that TIS Group, Inc. has the right to acquire
within 60 days of March 31, 1997 upon the exercise of a warrant.
(4) Based upon information provided to the Corporation by TIS.
(5) Based upon information provided to the Corporation by Mr. Cahill.
Includes 59,659 shares that Mr. Cahill has the right to acquire within
60 days of March 31, 1997 upon the exercise of a warrant. 51,667 shares
held by Raymond James as Custodian of the IRA Account of Mark Cahill,
as to which Mr. Cahill has sole voting and investment power.
(6) Based upon information provided to the Corporation by Mr. Smith.
Includes 539,106 shares that Wm Smith & Co. has the right to acquire
within 60 days of March 31, 1997 upon the exercise of certain warrants
held by Wm Smith & Co., as to which Mr. Smith has shared voting and
investment power.
(7) Based upon information provided to the Corporation by Wm Smith & Co.
Consists of 539,106 shares that Wm Smith & Co. has the right to acquire
within 60 days of March 31, 1997 upon the exercise of warrants.
<PAGE>
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PROPOSAL 1
ELECTION OF DIRECTORS
Nominees for Election as Directors
The Board of Directors has set the number of Board members at three for
the upcoming year. Each director is elected to hold office until the next annual
meeting of shareholders, or special meeting in lieu thereof, and until their
respective successors are duly elected and qualified. The Board has nominated
all of the current members of the Board for re-election. The affirmative vote of
a plurality of the shares of Common Shares present at the Meeting, in person or
by proxy, is required for the re-election of the members of the Board.
Unless authority to do so is withheld, the persons named in each proxy
(and/or their substitutes) will vote the shares represented thereby "FOR" the
election of the director nominees, Brad I. Markowitz, Jeffrey B. Pinkerton and
Joseph D. Mooney. If for any reason any nominee is not a candidate (which is not
now expected), a new nominee will be designated by the Board to fill such
vacancy, unless the Board of Directors shall reduce the number of directors in
accordance with the By-Laws of the Corporation.
Information as to Directors and Nominees for Director
There is shown below for each director and nominee for director, as
reported to the Corporation, the name, age and family relationship, if any, with
any other director or officer, the principal occupation and employment over at
least the last five years, the position, if any, with the Corporation, the
period of service as a director of the Corporation, and certain other
directorships held.
<TABLE>
<CAPTION>
Name Age Office Held Director Since
---- --- ----------- --------------
<S> <C> <C> <C>
Brad I. Markowitz 38 Chairman of the Board of Directors February 1994
Jeffrey B. Pinkerton 48 President and a Director October 1995
Joseph D. Mooney 59 Chief Executive Officer and a Director December 1996
</TABLE>
BRAD I. MARKOWITZ has served as Chairman of the Board of Directors of
the Corporation since February 1994. Since 1990, Mr. Markowitz has served as
President and a member of the board of directors of Focus Capital Corp., an
investment banking firm. Since 1995, Mr. Markowitz has served as President and a
member of the Board of Directors of Park Avenue Health Care Management, Inc., a
physician practice management company. Since 1995, Mr. Markowitz has served as
President and a member of the board of directors of Buckeye Communications, Inc.
From 1987 to 1995, Mr. Markowitz served as Vice President of the ADCO Group, a
real estate, banking and venture capital company.
JEFFREY B. PINKERTON has served as President of the Corporation since
August 1996 and as a member of the Board of Directors since October 1995. Since
1994 and from 1987 to 1991, Mr. Pinkerton has served in various positions for
the Corporation, including President, Executive Vice President, Vice
President-Product Development, and as a member of the board of directors. From
1991 to 1994, Mr. Pinkerton served as the owner of Viewpoint Consulting, a
reseller of the Corporation's software products.
JOSEPH D. MOONEY has served as Chief Executive Officer and a director of
the Corporation since December 1996. From August 1996 to December 1996, Mr.
Mooney served as a consultant to the Corporation to assist the Corporation in
product development and marketing strategy. Since 1973, Mr. Mooney has served in
various management and marketing positions with Benchmark Computer Systems,
Inc., a software management company. He is also currently a member of the board
of directors of Benchmark Computer Systems, Inc. and Span Link, Inc.
<PAGE>
-5-
The Board of Directors met two times last year and took other actions
by unanimous consent. Each director attended at least 75% of the total number of
such meetings of the Board of Directors during the time that such person was a
member of the Board.
Ownership of Equity Securities by Management
The table below sets forth information as of March 31, 1997, as
reported to the Corporation, as to the beneficial ownership of the Common Stock
of the Corporation by each director, each nominee for election as a director,
and each named executive officer, and by all directors and executive officers as
a group.
<TABLE>
<CAPTION>
Amount and Nature of Percentage of
Beneficial Ownership Outstanding Shares of
Name of Common Stock (1) Common Stock Owned (1)
---- ------------------- ----------------------
<S> <C> <C>
Brad I. Markowitz (2)........... 302,710 (3) 3.06%
John J. Medico (4).............. 216,666 (5) 2.22%
Jeffrey B. Pinkerton (6)........ 186,766 (7) 1.90%
G. Michael Cassidy (8).......... 115,000(9) 1.19%
Joseph D. Mooney................ --- ---
All current directors and executive
officers as a group (3 persons). 489,476 4.88%
</TABLE>
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(1) Except as set forth in the footnotes below, each stockholder has sole
investment and voting power with respect to the shares beneficially
owned. Includes options with respect to shares of Common Stock that can
be exercised within 60 days of March 31, 1997.
(2) Mr. Markowitz is the Chairman of the Board of Directors of the
Corporation.
(3) Includes 63,267 shares owned by Focus Capital Corp. and 222,777 shares
issuable within 60 days of March 31, 1997 upon exercise of outstanding
warrants granted to Focus Capital Corp. Mr. Markowitz is the President
and a member of the board of directors of Focus Capital Corp., although
he disclaims beneficial ownership of such shares and warrants held by
Focus Capital Corp.
(4) Mr. Medico was the Chief Executive Officer of the Corporation from
October 4, 1995 to August 9, 1996.
(5) Includes 111,921 shares that Mr. Medico has the right to acquire within
60 days of March 31, 1997 upon the exercise of outstanding stock
options.
(6) Mr. Pinkerton is the President and a director of the Corporation.
(7) Includes 53,499 shares that Mr. Pinkerton has the right to acquire
within 60 days of March 31, 1997 upon the exercise of outstanding
warrants and 100,000 shares that Mr. Pinkerton has the right to acquire
within 60 days of March 31, 1997 upon the exercise of outstanding stock
options.
(8) Mr. Cassidy was the Chief Executive Officer of the Corporation until
October 4, 1995
(9) Includes 25,483 shares issuable upon the exercise of outstanding
warrants.
<PAGE>
-6-
EXECUTIVE COMPENSATION
Summary Compensation Table
The table below sets forth certain compensation information for the
fiscal years ended May 31, 1996, 1995 and 1994 with respect to the Corporation's
Chief Executive Officers and each executive officer of the Corporation who were
the most highly paid for fiscal 1996.
<TABLE>
<CAPTION>
Long Term
Compensation
Annual Compensation Awards
------------------- ----------- All Other
Name and Principal Position Year Salary($) Bonus($) Options(#) Compensation($)
- --------------------------- ---- --------- -------- ---------- ---------------
<S> <C> <C> <C> <C> <C>
G. Michael Cassidy
Chief Executive Officer 1996 (1) $15,000 -- -- --
1995 $120,000 $7,500 -- --
1994 $108,826 -- 125,000 --
John J. Medico
President and Chief 1996 (2) $87,500 -- -- --
Executive
Officer
Jeffrey B. Pinkerton
President, Vice 1996 (3) $108,750 -- -- --
President-Product 1995 $120,000 -- -- --
Development 1994 $ 35,923 -- 75,000 --
</TABLE>
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(1) Mr. Cassidy resigned as Chief Executive Officer on October 4, 1995.
(2) Mr. Medico was appointed President and Chief Executive Officer by the
Board of Directors on October 4, 1995 and resigned on August 9, 1996.
(3) See the section "Directors" for information as to the offices held by
Mr. Pinkerton in fiscal 1994 and thereafter.
<PAGE>
-7-
Option Grants in Last Fiscal Year
No individual grants were made during fiscal year 1996 to any of the
executive officers listed in the Summary Compensation Table noted above.
Aggregated Option Exercises in Last Fiscal Year and Fiscal Year End Option
Values
No options were exercised during the year by any person who held
options which were eligible to be exercised. The following table sets forth
information as to options exercised during the fiscal year ended May 31, 1996,
and unexercised options held at the end of such fiscal year, by the individuals
listed in the Summary Compensation Table.
<TABLE>
<CAPTION>
Value of Unexercised
Numbers of Unexercised In-the-Money Options
Shares Acquired Value Options at 5/31/96(#) at 5/31/96($)
Name on Exercise(#) Realized($) Exercisable/Unexercisable Exercisable/Unexercisable(1)
---- -------------- ----------- ------------------------- ----------------------------
<S> <C> <C> <C> <C>
G. Michael Cassidy 0 $0 0/0 $0/$0
John J. Medico 0 $0 0/0 $0/$0
Jeffrey B. Pinkerton 0 $0 75,000/50,000 $0/$0
</TABLE>
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(1) Value is based on the mean between the high ask and the low bid prices
supplied by the National Quotations Bureau in the Nasdaq System and
reported by the NASD as of May 31, 1996 (the last trading date during
fiscal 1996) ($0.6875) minus the exercise price.
Executive Employment Agreements
The Corporation entered into an employment agreement with Jeffrey B.
Pinkerton, the President of the Corporation, as of February 17, 1994 (the
"Pinkerton Employment Agreement"), which terminated on February 16, 1997. Mr.
Pinkerton continues to be employed by the Corporation upon the same terms and
conditions as the Pinkerton Employment Agreement, and the Corporation and Mr.
Pinkerton intend to enter into a new employment agreement. In addition, the
Corporation will agree to grant Mr. Pinkerton options exercisable for up to
625,000 shares of Common Shares. Mr. Pinkerton's current annual base salary is
$120,000, subject to annual review and increase by the Board of Directors of the
Corporation. The Pinkerton Employment Agreement provides that Mr. Pinkerton's
employment with the Corporation may be terminated by either Mr. Pinkerton or the
Corporation, at any time and for any reason whatsoever. If the Corporation
terminates Mr. Pinkerton's employment for a reason other than death, the
Corporation will continue to pay Mr.
Pinkerton's base salary for a period of three (3) months following such
termination.
The Corporation intends to enter into an employment agreement with
Joseph D. Mooney, the Chief Executive Officer of the Corporation (the "Mooney
Employment Agreement"), with terms substantially similar to that certain letter
agreement, dated August 2, 1996, between the Corporation and Mr. Mooney. Mr.
Mooney's annual base salary will be $200,000 and, in addition, he will be
entitled to deferred compensation during his first year of service of $175,000.
In addition, the Corporation will agree to grant Mr. Mooney options exercisable
for up to 1,000,000 shares of Common Shares. The Mooney Employment Agreement
will provide that it may be terminated by either Mr. Mooney or the Corporation
upon 30 days notice.
Director Compensation
The Corporation will agree to grant to Mr. Markowitz an option
exercisable for up to 575,000 shares of Common Shares as compensation for his
services to the Corporation to date. At the current time, directors of the
Corporation receive no compensation for their service to the Corporation as
directors.
<PAGE>
-8-
CERTAIN TRANSACTIONS
In October 1995, the Corporation entered into a Stock Purchase
Agreement (the "Stock Purchase Agreement") with T.I.S. Acquisition & Management
Group, Inc. ("TIS"), pursuant to which TIS agreed to purchase up to 3,125,000
shares of Common Shares at a price of $.40 per share. From October through
December 1995, TIS purchased 1,410,000 shares of Common Shares for an aggregate
consideration of $564,000. In October 1995, the Corporation entered into a
Services Agreement with TIS pursuant to which John Medico became President and
Chief Executive Officer of the Corporation. The Services Agreement became null
and void upon the failure of TIS to consummate the Second Closing under the
Stock Purchase Agreement prior to November 9, 1995.
In December 1995, the Corporation entered into a Subscription Agreement
and Letter of Intent with each of Mark Cahill and Primerica Life Insurance
Company ("Primerica"), as part of a private placement of Common Shares. Mr.
Cahill purchased 700,000 shares of Common Shares for an aggregate consideration
of $210,000. Primerica purchased 666,666 shares of Common Shares for an
aggregate consideration of $200,000.
In October 1996, the Corporation entered into a Subscription Agreement
and Letter of Intent with The Travelers Indemnity Company ("Travelers"), as part
of a private placement of Convertible Promissory Notes and Common Shares.
Travelers purchased a $750,000 Convertible Promissory Note which is convertible
into 3,000,000 shares of Common Shares upon the filing of a Certificate of
Amendment to the Corporation's Certificate of Incorporation providing for a
sufficient number of authorized shares of Common Shares to permit the
conversion.
In connection with each of the aforementioned private placements of
Common Shares, Wm Smith Securities, Incorporated, an affiliate of William S.
Smith and Wm Smith & Co., is entitled to receive compensation for services
rendered to the Corporation as placement agent. Wm Smith Securities,
Incorporated, pursuant to an Engagement Letter, dated as of April 26, 1996, as
amended and restated as of October 24, 1996, is entitled to receive 8% of the
gross proceeds of each private placement and a warrant exercisable for up to 12%
of the number of Common Shares, sold in such private placements at an exercise
price per share of 120% of the per share purchase price of the Common Shares
sold in such private placement.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Under Section 16(a) of the Securities Exchange Act of 1934, as amended,
the Corporation's directors and certain of its officers and persons holding more
than ten percent of the Corporation's Common Shares are required to report their
ownership of the Common Shares and any changes in such ownership to the
Securities and Exchange Commission and the Corporation. Specific due dates for
these reports have been established and the Corporation is required to report in
this proxy statement any failure to file by these dates during the fiscal year
ended May 31, 1996. Based on the Corporation's review of copies of such reports,
Mr. Markowitz filed one untimely Form 4, and Mr. Medico filed one untimely Form
3 and one untimely Form 4 during the fiscal year ended May 31, 1996.
<PAGE>
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PROPOSAL 2
APPROVAL OF THE AMENDMENT TO THE CORPORATION'S
CERTIFICATE OF INCORPORATION
TO EFFECT A REVERSE STOCK SPLIT OF THE COMMON SHARES
AND TO RECLASSIFY THE PAR VALUE OF THE COMMON SHARES
The Corporation's Board of Directors has adopted a resolution
recommending that shareholders vote to amend the Corporation's Certificate of
Incorporation (the "Certificate") to effect a one to six reverse stock split of
the outstanding Common Shares and to reclassify the par value of the Common
Shares from $0.04 per share to $0.01 per share (collectively, the "Reverse
Split").
The Amendment would amend Paragraph 4 of the Certificate to effect the
Reverse Split with no change in the authorized number of shares of Common Shares
and no change in the voting powers, qualifications, rights and privileges of
such Common Shares. All 15,000,000 shares of the Common Shares will continue to
be equal to each other with respect to voting rights, liquidation rights and
dividend rights. No preemptive rights to purchase additional shares attach to
the Common Shares. Holders of shares of the Common Shares do not have the right
to cumulate their votes for the elections of Directors. Each share of the Common
Shares is entitled to one vote on each matter submitted to shareholders. If the
Reverse Split is approved, stockholders shall receive cash in the amount equal
to the market value on the effective date of the Reverse Split of each
fractional share remaining after and surrendered pursuant to the Reverse Split.
The Reverse Split, if approved by the Corporation's shareholders, will
permit the Corporation to effect the automatic conversion of that certain
promissory note dated October 25, 1996 in the original principal amount of
$750,000 issued by the Corporation to The Travelers Indemnity Company into
shares of Common Shares at a pre-Reverse Split purchase price per share of
$0.25. The Reverse Split will also permit the Corporation to effect the
automatic conversion of additional convertible promissory notes into an
aggregate of 2,394,333 shares at a pre-Reverse Split purchase price per share of
$0.50, and an aggregate of 260,000 shares at a pre-Reverse Split purchase price
per share of $0.25.
The Reverse Split, if approved by the Corporation's shareholders, will
reduce the number of outstanding shares of the Common Shares to a level
consistent with comparably situated companies. As a result of the increase in
the price per share of Common Shares due to the Reverse Split, the Corporation
will be able to move closer to compliance with certain of the Nasdaq small cap
market listing requirements, so that the Corporation may be able to apply to be
relisted in the future.
As a result of the Reverse Split, there will be a significant number of
authorized shares available for issuance from time to time, in connection with
potential investment opportunities, acquisitions of other companies, stock
splits, joint ventures, additional corporate financings or for other corporate
purposes as determined by the Corporation's Board of Directors. These other
purposes might include raising additional capital funds through offerings of
shares of the Corporation's Common Shares, the issuance of shares of Common
Shares in connection with the declaration of stock dividends, and the issuance
of shares in connection with employee benefit plans and incentive compensation
plans of the Corporation.
If this proposal is approved by the Corporation's shareholders, the
Board of Directors will be able to issue additional shares of Common Shares
without first seeking shareholder approval (except as required under applicable
law or by an applicable national stock exchange or market). If such additional
authorized shares are issued to persons other than existing stockholders, the
percentage interest of existing stockholders in the Corporation will be reduced.
Although the existence or issuance of authorized but unissued shares of capital
stock of the Corporation could, under certain circumstances, have an
anti-takeover effect, the Corporation has no present intention of issuing such
shares for anti-takeover purposes.
If the amendment is approved, as soon as practicable after the Meeting,
the Corporation will file with the
<PAGE>
-10-
New York Secretary of State's Office, a Certificate of Amendment to the
Certificate reflecting the Reverse Split.
The affirmative vote of the holders of a majority of the shares of the
Common Shares is required for the approval of the amendment to the Certificate
to effect the Reverse Split.
The Board Of Directors Recommends A Vote FOR The Proposal To Amend The
Certificate To Provide For An One To Six Reverse Stock Split Of The Common
Shares And To Reclassify The Common Shares With A Par Value Of $0.01 Per Share,
And Proxies Solicited By The Board Will Be Voted In Favor Thereof Unless A
Shareholder Has Indicated Otherwise On The Proxy.
PROPOSAL 3
APPROVAL OF THE CORPORATION'S 1997 STOCK OPTION PLAN
Brief Description.
On March 17, 1997, the Corporation adopted, subject to stockholder
approval, the Greentree Software, Inc. 1997 Stock Option Plan (the "1997 Plan")
to enable the Corporation to grant stock options to employees, directors,
consultants and advisers of the Corporation and any of its subsidiaries. The
Board of Directors believes that ratification by the Corporation's stockholders
of the adoption of the 1997 Plan will serve the purposes described below.
The purposes of the 1997 Plan are to promote the interests of the
Corporation and its stockholders by strengthening the Corporation's ability to
attract, motivate, and retain key employees, directors, consultants and advisers
of exceptional ability and to provide a means to encourage stock ownership and a
proprietary interest in the Corporation to selected employees, directors,
consultants and advisers of the Corporation upon whose judgment, initiative, and
efforts the financial success and growth of the Corporation largely depend.
The 1997 Plan will be administered by the Compensation Committee. The
Compensation Committee will have complete authority, subject to the limitations
described herein, to interpret and enforce the 1997 Plan and to determine all
rights with respect to participants under the 1997 Plan. The Board may, at any
earlier time, amend, modify, suspend or terminate the 1997 Plan as it shall deem
advisable, subject to the rights of holders of stock options or restricted stock
subject thereto and to approval of the stockholders of the Corporation if
required by applicable law or regulation. No stock options or restricted stock
may be granted or sold under the 1997 Plan after March 17, 2007.
Stock options may be granted under the 1997 Plan to key employees,
directors, consultants, and advisers to the Corporation or any of its
subsidiaries and others as the Compensation Committee may determine.
The shares authorized for issuance under the 1997 Plan are shares of
the Corporation's Common Stock, which may be newly issued shares or shares held
in the treasury or acquired in the open market. The maximum number of shares of
Common Stock which may be made available upon exercise of stock options granted
under the 1997 Plan is 1,500,000 shares (after giving effect to the Reverse
Split), subject to increase or decrease in the event of subsequent stock splits
or other capital changes, including reorganizations or mergers. No person may in
any calendar year be granted stock options under the 1997 Plan with respect to
more than 250,000 shares of Common Stock, subject to adjustment in the event of
capital changes.
As of June 2, 1997, no stock options had been awarded under the 1997
Plan.
Stock Options.
The 1997 Plan provides that the Corporation may grant stock options to
eligible participants at such times and in such amounts as the Compensation
Committee determines. Such stock options may be intended to be
<PAGE>
-11-
incentive stock options or nonqualified stock options, at the Compensation
Committee's discretion. However, only employees of the Corporation or its
subsidiaries are eligible to receive incentive stock options under the 1997
Plan.
The exercise price of an incentive stock option must not be less than
100% (or 110% with respect to any optionee owning more than 10% of the total
combined voting power of all classes of stock of the Corporation) of the fair
market value of the Common Stock on the date of grant, and the aggregate fair
market value (determined at the time of grant) of shares issuable to any one
employee pursuant to incentive stock options that first become exercisable in
any calendar year may not exceed $100,000. In the case of nonqualified stock
options, the exercise price of each such option is to be determined by the
Compensation Committee, and need not be equal to the fair market value of the
Common Stock.
Payment for shares purchased upon exercise of any stock option under
the 1997 Plan must be made in full in cash when the option is exercised, unless
the Compensation Committee otherwise determines. No stock option granted under
the 1997 Plan may be transferred except by will or the laws of descent and
distribution; provided, however, that the Compensation Committee may, at its
discretion, permit the transfer of a nonqualified stock option to one or more
immediate family members of the optionee or to a trust maintained exclusively
for the benefit of, or partnership all of the interests of which are held by,
one or more of such immediate family members. If an optionee ceases to be an
employee, director, consultant, or advisor of the Corporation for any reason,
any stock options exercisable on the date of termination of such relationship
shall expire after such period as the Compensation Committee shall determine at
the time of grant of such stock options.
The vesting schedule, if any, and the date of termination of stock
options granted under the 1997 Plan are to be established by the Compensation
Committee at the time of grant, except that the date of termination of any
incentive stock option may not be more than ten years after the date of grant
(five years with respect to an optionee who owns more than 10% of the total
combined voting power of all classes of stock of the Corporation). Unvested
stock options granted under the 1997 Plan will automatically vest in full in the
event of an acquisition of the Corporation (to the extent that such stock
options are not assumed by the acquiring entity), and the Compensation Committee
has the power to provide for the accelerated vesting of stock options granted
under the 1997 Plan in the event of certain other corporate transactions
affecting a change in control of the Corporation.
The federal income tax aspects of incentive stock options and
nonqualified stock options are generally described below. An employee will
generally not be taxed at the time of grant or exercise of an incentive stock
option, although the excess of the fair market value of the stock over the
exercise price on exercise of an incentive stock option will be taken into
account for alternative minimum tax purposes. If the employee holds the shares
acquired upon exercise of an incentive stock option until at least one year
after issuance and two years after grant of the option, the employee will have
long-term capital gain (or loss) based on the difference between the amount
realized on the sale or disposition and the exercise price of the option. If
these holding periods are not satisfied, then upon disposition of the shares,
the employee will recognize ordinary income equal, in general, to the excess of
the fair market value of the shares at time of exercise over the exercise price
of the stock option, plus capital gain in respect of any additional
appreciation. With respect to a nonqualified stock option, an optionee will not
be taxed at the time of grant; upon exercise, however, the optionee will
generally realize compensation income to the extent that the fair market value
of the stock exceeds the stock option exercise price. The Corporation will
generally have a compensation deduction to the extent that, and at the time
that, an optionee realizes compensation income with respect to an option. In the
case of an incentive stock option, this means that the Corporation ordinarily is
not entitled to a compensation deduction.
The Board recommends that the shareholders vote "FOR" the adoption of
the 1997 Plan and the enclosed proxy will be so voted unless a contrary vote is
indicated. The affirmative vote of the holders of a majority of the shares of
the common Stock represented in person or by proxy at the Meeting is required
for approval of the adoption of the 1997 Plan.
<PAGE>
-12-
MISCELLANEOUS
Accountants
On May 15, 1997, the Board of Directors of the Company authorized the
Company to engage Price Waterhouse LLP ("PW") rather than KPMG Peat Marwick LLP
("KPMG") as the Company's independent public accountants for the fiscal year
ending May 31, 1997, subject to the Chief Financial Officer of the Company
confirming acceptance by PW of such appointment and notifying KPMG. On May 15,
1997, the Company advised KPMG and PW of its decision. On May 15, 1997, PW
advised the Company that it accepted the appointment and the company officially
engaged PW as its independent public accountants for the fiscal year ending May
31, 1997.
KPMG served as the Company's independent public accountants and
auditors since November 21, 1994. KPMG was dismissed by the Board of Directors
as of May 15, 1997. The Company's decision to employ PW rather than KPMG was the
result of the Company's decision to move its executive offices to Eden Prairie,
Minnesota, upon the hiring of Mr. Mooney as Chief Executive Officer, and the
fact that the Company wanted to utilize the services locally of a large
independent public accounting firm which had particular expertise in the
software industry.
In each of the past two fiscal years, KPMG in its report noted that,
although the financial statements had been prepared assuming that the Company
will continue as a going concern, the Company has suffered recurring losses from
operations that raise substantial doubt about its ability to continue as a going
concern. Such firm also stated that the financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
There were no disagreements with KPMG, whether or not resolved, on any
matter of accounting principles or practices, financial statement disclosure, or
auditing scope or procedure, which, if not resolved to that firm's satisfaction,
would have caused it to make reference to the subject matter of the
disagreements in connection with its report. The Company notes that, in
connection with the fiscal year 1996 audit, certain matters concerning the
Company's internal controls were brought to the Company's attention in a letter
to the Board of Directors dated September 11, 1996. These concerns were
discussed with the former accountant and addressed by the Board of Directors of
the Company. All required adjustments were made in the Company's internal
controls and financial statements in connection with the audit. KPMG's audit
opinion was not qualified as to these matters and no disagreement existed
between the Company and KPMG with respect to these issues. The Company has
authorized KPMG to respond fully to the inquiries of PW concerning the internal
control issues raised in the Management letter.
Neither the Company nor any person acting on its behalf, prior to the
engagement of PW, consulted PW regarding the application of accounting
principles to a specific completed or contemplated transaction, or the type of
audit opinion that might be rendered on the Company's financial statements.
The financial statements of the Corporation for the fiscal year ended
May 31, 1996, have been audited by KPMG. It is not expected that representatives
of KPMG will be present at the Meeting.
Other Matters
The Board of Directors does not know of any other matters that may be
presented at the Meeting, except for routine matters. If other business does
properly come before the Meeting, however, the persons named on the accompanying
proxy intend to vote on such matters in accordance with their best judgment.
1998 Shareholder Proposals
In order for shareholder proposals to be presented at the Corporation's
1998 Annual Meeting of Shareholders (or special meeting in lieu thereof), such
proposals must be received by the Secretary of the Corporation at the
Corporation's principal office in Eden Prairie, Minnesota not later than August
31, 1997 for inclusion in the proxy statement for that meeting, subject to the
applicable rules of the Securities and Exchange Commission. Delivery of such
proposals should be by Certified Mail, Return Receipt Requested.
<PAGE>
-13-
Annual Report on Form 10-KSB
The Corporation's Annual Report on Form 10-KSB (as amended and without
exhibits for the fiscal year ended May 31, 1996) is being furnished to
shareholders of record together with this Proxy Statement. Requests for
additional copies should be directed to: Secretary, Greentree Software, Inc.,
7901 Flying Cloud Drive, Suite 150, Eden Prairie, Minnesota 55344.
June 6, 1997
<PAGE>
GREENTREE SOFTWARE, INC.
7901 Flying Cloud Drive, Suite 150
Eden Prairie, Minnesota 55344
This proxy is solicited on behalf of the Board of Directors.
The undersigned hereby appoints Brad I. Markowitz and Jeffrey B.
Pinkerton or either of them as Proxies, each with the power to appoint his
substitute, and hereby authorizes them to represent and to vote as designated
below, all the shares of common shares, $0.04 par value per share (the "Common
Shares"), of Greentree Software, Inc. (the "Corporation") held of record by the
undersigned on June 2, 1997, at the Special Meeting in lieu of the 1997 Annual
Meeting of Shareholders (the "Meeting") to be held on Monday, June 23, 1997, or
any postponement or adjournment thereof.
1. To elect directors
FOR all nominees (except as marked to the contrary below)
WITHHOLD AUTHORITY for all nominees listed below
Brad I. Markowitz
Joseph D. Mooney
Jeffrey B. Pinkerton
(Instruction: To withhold authority to vote for any individual, write the
nominee's name in the space provided below.)
2. To approve an amendment to the Corporation's Certificate of Incorporation
to effect a one for six reverse stock split of the Common Shares and to
reclassify the Common Shares with a par value of $0.01 per share.
____ FOR ____ AGAINST ____ ABSTAIN
3. To approve the Corporation's 1997 Stock Option Plan.
____ FOR ____ AGAINST ____ ABSTAIN
---------------------------------------------------
Account No. No. of Shares Proxy No.
This proxy, when properly executed, will be voted in the manner directed by the
undersigned shareholder. If no direction is made, this proxy will be voted FOR
all nominees for director and FOR the action described in each of the Items
above. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the Meeting or any adjournment thereof.
<PAGE>
-2-
Please sign exactly as the name appears below. When shares are held by joint
tenants, both should sign.
Dated
------------------------------------------------
Signature
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Signature
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(if held jointly)
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PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY PAPER PROMPTLY USING THE ENCLOSED
ENVELOPE.
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