<PAGE>
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 [ ]
- -------------------------------------------------------------------------------
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 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:
- -------------------------------------------------------------------------------
<PAGE>
GREENTREE SOFTWARE, INC.
7901 FLYING CLOUD DRIVE
SUITE 200
EDEN PRAIRIE, MINNESOTA 55344
NOTICE OF THE
1999 ANNUAL MEETING OF SHAREHOLDERS
TO THE SHAREHOLDERS OF GREENTREE SOFTWARE, INC.:
NOTICE IS HEREBY GIVEN that the 1999 Annual Meeting of Shareholders of
Greentree Software, Inc. (the "Corporation") will be held at the offices of
Bingham Dana LLP, 399 Park Avenue, New York, New York 10022, on Thursday,
September 17, 1998 at 11:00 A.M. (local time) for the following purposes:
(1) To elect five (5) directors of the Corporation to hold office for
a one year term;
(2) To consider and vote upon a proposal to approve a plan of merger
to reincorporate the Corporation in Delaware;
(3) To consider and vote upon a proposal to increase the maximum
number of shares which may be made available upon exercise of
stock options under the Greentree Software, Inc. 1997 Stock Option
Plan from 1,500,000 to 3,500,000;
(4) To consider and vote upon a proposal to amend the Corporation's
Certificate of Incorporation to increase the number of authorized
capital shares of the Corporation from 15,000,000 to 25,000,000;
and
(5) To transact such other business as may properly come before the
meeting or any adjournments or postponements thereof.
The Board of Directors has fixed August 7, 1998 as the record date for
the determination of shareholders entitled to notice of, and to vote at, the
1999 Annual Meeting of Shareholders. Accordingly, only shareholders of
record at the close of business on August 7, 1998 will be entitled to notice
of, and to vote at, such meeting or any adjournments thereof.
By order of the Board of Directors
/s/ JOSEPH D. MOONEY
JOSEPH D. MOONEY
Chairman of the Board of Directors and
Chief Executive Officer
August 24, 1998
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.
<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 1999 Annual Meeting of
Shareholders on September 17, 1998 and at any adjournments or postponements
thereof (the "Meeting"), pursuant to the accompanying Notice of the 1999
Annual Meeting of Shareholders. The purposes of the Meeting and the matters
to be acted upon are set forth in the accompanying Notice of the 1999 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 August 18, 1998, 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 plan of merger to reincorporate the
Corporation in Delaware, in favor of the proposal to increase the maximum
number of shares which may be made available upon exercise of stock options
under 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 $0.01 per share
(the "Common Shares"), of the Corporation at the close of business on August
7, 1998, will be eligible to vote at the Meeting. Each share is entitled to
one vote. As of June 30, 1998, the Corporation had outstanding 8,029,761
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
August 18, 1998.
<PAGE>
-2-
OWNERSHIP OF EQUITY SECURITIES BY PRINCIPAL SHAREHOLDERS AND MANAGEMENT
The following table sets forth certain information as of June 30,
1998, as reported to the Corporation, as to the beneficial ownership of the
Common Shares of the Corporation by each director, each nominee for election
as director, each named officer, by all directors and executive officers as a
group and each person known to the Corporation to be the beneficial owner of
more than 5% of the issued and outstanding Common Shares as of June 30, 1998
or other date noted below. As of June 30, 1998, 8,029,761 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 (2)
------------------- -------------------- ----------------------
<S> <C> <C>
J. Murray Logan (3) 4,159,874 51.81%
c/o L-R Global Partners, L.P.
30 Rockefeller Plaza, Room 5425
New York, New York 10112
L-R Global Partners, L.P.
c/o Rockefeller & Co., Inc.
30 Rockefeller Plaza, Room 5425
New York, New York 10112 4,000,000 49.81%
Travelers Group Inc. ("Travelers") (4)
388 Greenwich Street
Legal Dept. - 20th Floor
New York, New York 10013 952,553 11.50%
Larry E. Jeddeloh (5)
c/o T.I.S. Acquisition &
Management Group, Inc. ("TIS")
200 South Sixth Street
Suite 450
Minneapolis, MN 55402 763,837 9.36%
T.I.S. Group, Inc. ("TIS Group") (6)
c/o T.I.S. Acquisition &
Management Group, Inc.
200 South Sixth Street
Suite 450
Minneapolis, MN 55402 763,004 9.35%
Joseph D. Mooney (7) 386,666 4.61%
Jeffrey B. Pinkerton (8) 338,876 4.06%
Brad I. Markowitz (9) 110,820 1.36%
Donald S. LaGuardia 10,000 0.12%
All current directors and executive
officers as a group (7 persons) (10) 5,018,736 56.92%
- --------------------------------
</TABLE>
<PAGE>
-3-
(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
and warrants to the extent called for by such rule, with respect to
shares of Common Shares, that can be exercised within 60 days.
Except as set forth in the footnotes below, such shares are
beneficially owned with sole investment and sole voting power.
(2) The percent of class calculation is based on 8,029,761 shares
of the Corporation's Common Shares being issued and outstanding as of
June 30, 1998 and effect being given, where appropriate, pursuant to
Rule 13d-3(d)(1)(i) under the Exchange Act, to any option or warrant
then exercisable or exercisable within 60 days thereafter.
(3) Includes 4,000,000 shares held by L-R Global Partners, L.P. Mr. Logan,
together with L-R Managers, LLC, Rockefeller & Co., Inc., and
Rockefeller Financial Services, Inc. share voting and investment control
with respect to L-R Global Partners, L.P. Mr. Logan may be deemed the
beneficial owner of shares held by L-R Global Partners, L.P. although
he disclaims beneficial ownership to the extent of his purported
ownership interest.
(4) Based upon information provided on Travelers Group Inc.'s
Schedule 13G/A filed with the SEC on May 11, 1998. Includes 250,000
shares that Travelers has the right to acquire upon the exercise of a
warrant.
(5) Based upon information provided by Mr. Jeddeloh's Schedule
13D/A filed with the SEC as of June 18, 1998. By virtue of his
positions with TIS and TIS Group, which owns a majority of the stock
of and controls TIS, Mr. Jeddeloh has the right to vote and dispose
of the shares held by TIS and TIS Group, respectively, and may be
deemed the beneficial owner of such shares. Includes 193,888 shares
held by TIS which may be deemed beneficially owned by TIS Group.
Includes 633,004 shares held by TIS Group for clients accounts
managed by TIS Group. Includes 833 shares held by Mr. Jeddeloh over
which he has sole power to vote and power to dispose. Includes
125,000 shares that TIS Group Managers, Inc. has the right to acquire
within 60 days upon the exercise of a warrant. Includes 5,000 shares
that TIS Group has the right to acquire within 60 days upon the
exercise of a warrant. TIS Group has the right to dispose of the
shares held by T.I.S. Group Managers, Inc. and may be deemed the
beneficial owner of such shares.
(6) Based upon information provided by Mr. Jeddeloh's Schedule 13D/A filed
with the SEC as of June 18, 1998. See note (5) above.
(7) Includes 366,666 shares issuable within 60 days of June 30, 1998 upon
the exercise of stock options.
(8) Includes 324,999 shares issuable within 60 days of June 30, 1998 upon the
exercise of stock options.
(9) Includes 10,544 shares owned by Focus Capital Corp., 4,443 shares owned
by Mr. Markowitz and 95,833 shares issuable to Mr. Markowitz within 60
days of June 30, 1998 upon exercise of stock options. 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.
(10) Includes 787,498 shares issuable within 60 days of June 30, 1998 upon
the exercise of stock options.
CHANGE IN CONTROL OF REGISTRANT
On April 17, 1998, Greentree Software, Inc. (the "Corporation")
consummated a private offering of a convertible promissory note in the
principal amount of $3.2 million to L-R Global Partners, L.P., a Delaware
limited partnership (the "Purchaser") (the "Note"). The Note was issued
pursuant to a certain Convertible Note Purchase Agreement dated April 17,
1998 (the "Purchase Agreement"), by and among the Corporation and the
Purchaser. The funds for the acquisition of the Note were obtained from the
working capital of the Purchaser. None of such funds were obtained by means
of a loan or other borrowing arrangement.
<PAGE>
-4-
The principal of the Note was to become due and payable on or before July
31, 1998 (the "Maturity Date"). Interest on the principal amount would have
accrued at the rate of 8% per annum on any portion of the principal not paid at
the Maturity Date until the date such payment is made.
The Note was convertible at any time into shares of Common Shares at a
conversion price of the lesser of (i) $.80 or (ii) 80% of the average closing
bid price of the Common Shares for the five trading days preceding the
conversion date. The Note would have automatically converted into shares of
Common Shares at the applicable conversion price upon the later of (i) the
filing of certain amendments to the Corporation's Certificate of Incorporation
(the "Amendments"), or (ii) July 16, 1998, in both cases, provided that certain
covenants are not in default.
On May 29, 1998, L-R Global elected to convert its note into 4,000,000
shares of Common Shares at a price of $0.80 per share.
The table above under the section heading "Ownership of Equity Securities
by Principal Shareholders and Management" sets forth the percentage of Common
Shares beneficially owned by the Purchaser and the voting and investment
power with respect to the shares beneficially owned by the Purchaser.
The foregoing information has been provided because the transaction may
be deemed to be a "change of control" of the Corporation within the meaning of
Item 6(e) of Schedule 14A.
<PAGE>
-5-
PROPOSAL 1
ELECTION OF DIRECTORS
NOMINEES FOR ELECTION AS DIRECTORS
The Board of Directors has set the number of Board members at five 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. 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.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE NOMINEES LISTED
BELOW. Unless authority to do so is withheld, the person(s) named in each
proxy will vote the shares represented thereby "FOR" the election of the
Nominees.
INFORMATION AS TO DIRECTORS AND NOMINEES FOR DIRECTOR
There is shown below for each director and nominee for director and
executive officer, 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>
Donald S. LaGuardia 31 Director June 1998
J. Murray Logan 63 Director June 1998
Brad I. Markowitz 40 Director February 1994
Joseph D. Mooney 60 Chief Executive Officer and Chairman of December 1996
the Board of Directors and a Director
Jeffrey B. Pinkerton 50 President and a Director October 1995
</TABLE>
DONALD S. LAGUARDIA has served as a member of the Board of Directors of
the Corporation since June 1998. From 1987 to 1991, Mr. LaGuardia served as a
senior auditor for Price Waterhouse. From 1991 to 1997, Mr. LaGuardia served
as a network business planning manager and financial analyst for BMW of North
America, Inc. Since 1997, Mr. LaGuardia has served as an equity analyst for
Rockefeller & Co. Mr. LaGuardia is a Certified Public Accountant and a
candidate for the Chartered Financial Analyst designation. Mr. LaGuardia
received his B.A. in 1989 from Pace University and his M.B.A. from New York
University in 1997.
J. MURRAY LOGAN has served as a member of the Board of Directors of
the Corporation since June 1998. Since 1975, Mr. Logan has served as
<PAGE>
-6-
a vice president, portfolio manager, Chairman of Investment Policy of
Rockefeller & Co., Inc. and as a vice president of Rockefeller Gas & Oil
Inc, General Partner of various Rockefeller partnerships. Mr. Logan is the
Managing Partner of L-R Global Partners, L.P. since its inception in 1997 and
along with Rockefeller & Co., Inc., is a member of L-R Managers, LLC which is
the management company for L-R Global Partners, L.P. Mr. Logan is a director
of three unaffiliated trusts: The World Trust Fund, The Europe Fund, Inc.,
and the United Kingdom Fund. Mr. Logan served as a trustee of the John
Hopkins University and chaired its Committee on Investments. Mr. Logan is
also a director of the Camphill Foundation, Camphill Village USA and the
Berkshire Opera Company. Mr. Logan received his B.A. from Johns Hopkins
University in 1959.
BRAD I. MARKOWITZ has served as a member of the Board of Directors of
the Corporation since February 1994. From February 1994 to June 1997, Mr.
Markowitz served as Chairman of the Board of Directors. 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.
JOSEPH D. MOONEY has served as Chairman of the Board of Directors of
the Corporation since June 1997 and Chief Executive Officer and a member of
the Board of Directors 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 Spanlink Communications, Inc.
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.
THE BOARD OF DIRECTORS AND COMMITTEES OF THE BOARD
The Board of Directors met two times during the last full fiscal 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.
<PAGE>
-7-
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The table below sets forth certain compensation information for the
fiscal years ended May 31, 1998, 1997 and 1996 with respect to the
Corporation's Chief Executive Officers and each of the four most highly
compensated executive officers whose compensation for fiscal 1998 exceeded
$100,000.
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
--------------------- ------------ ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) OPTIONS(#) COMPENSATION($)
- --------------------------- ---- --------- -------- ------------ ---------------
<S> <C> <C> <C> <C> <C>
Joseph D. Mooney 1998(1) $200,000 -- 366,666 $68,083 (3)
Chairman and Chief 1997 $75,000 -- -- $211,357 (4)
Executive Officer
Jeffrey B. Pinkerton 1998(2) $125,000 -- 304,166 $9,750 (5)
President 1997 $116,667 -- -- --
1996 $108,750 -- -- --
</TABLE>
- -----------------------------
(1) See the section "Information as to Directors and Nominees for Director"
for information as to the offices held by Mr. Mooney in fiscal 1997.
(2) See the section "Information as to Directors and Nominees for Director"
for information as to the offices held by Mr. Pinkerton in fiscal 1996
and thereafter.
(3) Includes $58,333 in deferred compensation and a $9,750 automobile
allowance.
(4) Includes $116,667 in deferred compensation, a $91,667 independent
contractor payment and a $3023 automobile allowance.
(5) Includes a $9,750 automobile allowance.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
NUMBER OF INDIVIDUAL GRANT
SECURITIES --------------- EXERCISE
UNDERLYING OPTIONS % OF TOTAL OPTIONS GRANTED TO PRICE EXPIRATION
NAME GRANTED EMPLOYEES IN FISCAL YEAR ($/ SHARE) DATE
- ---- ------------------ ----------------------------- ---------- ----------------
<S> <C> <C> <C> <C>
Joseph D. Mooney 166,666 (1) 19.2% $1.13 August 6, 2002
200,000 (1) 23.0% $1.00 January 13, 2003
Jeffrey B. Pinkerton 104,166 (2) 12.0% $1.13 August 6, 2002
200,000 (2) 23.0% $1.00 January 13, 2003
</TABLE>
- -------------------------------
(1) Mr. Mooney's options were fully vested on the date of the grant.
(2) Mr. Pinkerton's options were fully vested on the date of the grant.
<PAGE>
-8-
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END OPTION
VALUES
No options were exercised during the year by any person who held
options that were eligible to be exercised. The following table sets forth
information as to options exercised during the fiscal year ended May 31,
1998, and unexercised options held at the end of such fiscal year, by the
individuals listed in the Summary Compensation Table.
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
NUMBERS OF UNEXERCISED IN-THE-MONEY OPTIONS
SHARES ACQUIRED VALUE OPTIONS AT 5/31/98(#) AT 5/31/98($)
NAME ON EXERCISE(#) REALIZED($) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE(1)
- ---- --------------- ----------- ------------------------- ----------------------------
<S> <C> <C> <C> <C>
Joseph D. Mooney 0 $0 366,666/0 $448,066/$0
Jeffrey B. Pinkerton 0 $0 324,999/0 $376,253/$0
</TABLE>
- --------------------------------
(1) Value is based on the average of the ask and bid prices supplied by the
National Quotations Bureau in the Nasdaq System and reported by the NASD
as of May 29, 1998 (the last trading date during fiscal 1998) ($2.281)
minus the exercise price.
EXECUTIVE EMPLOYMENT AGREEMENTS
The Corporation entered into an employment agreement with Jeffrey B.
Pinkerton, the President of the Corporation, effective as of December 15, 1996
for a five (5) year term from the effective date (the "Pinkerton Employment
Agreement"). Pursuant to the Pinkerton Employment Agreement, the Corporation
agreed to grant Mr. Pinkerton options exercisable for up to 200,000 shares of
Common Shares. Mr. Pinkerton's current annual base salary is $150,000, subject
to annual review and increase by the Board of Directors of the Corporation.
If the Pinkerton Employment Agreement is terminated by the Corporation
for any reason other than cause, death, disability, mutual agreement or is
terminated by Mr. Pinkerton for good reason, the Corporation shall continue to
pay Mr. Pinkerton his base salary for twenty-four (24) months (or twelve (12)
months for termination as a result of good reason) and provide benefits,
including but not limited to, plan participation, vacation time, and office
facilities for a twelve (12) month period. In the event of a termination in
connection with a change in control of the Corporation (as defined in the
Pinkerton Employment Agreement), the Corporation shall pay a lump sum payment
to Mr. Pinkerton equal to 2.99 times the sum of (i) his annual base salary
and (ii) his earned executive compensation plan benefits, which shall be
"grossed-up" in the event of certain excise tax charges. In addition the
Corporation shall reimburse, for a twelve (12) month period, Mr. Pinkerton's
reasonable expenses while seeking employment. In addition to compensatory
provisions, the Pinkerton Employment Agreement also contains certain
confidentially and non-competition provisions intended to protect the
Corporation.
The Corporation entered into an employment agreement with Joseph D.
Mooney, the Chief Executive Officer of the Corporation, effective as of
December 15, 1996 (the "Mooney Employment Agreement") for a five (5) year
term from the effective date. Pursuant to the Mooney Employment Agreement,
the Corporation agreed to grant Mr. Mooney options exercisable for up to
366,666 shares of Common Shares. Mr. Mooney's current annual base salary is
$200,000, subject to annual review and increase by the Board of Directors of
the Corporation. The Mooney Employment Agreement provides for a deferred
employment bonus in the amount of $175,000 pursuant to specified terms, of
which $115,000 has been paid, leaving an unpaid balance of $60,000. In
addition, the Corporation shall pay a facilitator's fee to Mr. Mooney upon a
sale of the Corporation (by stock or assets) if certain price conditions are
met. The facilitator's fee is computed as a percentage (2%) of the gross
consideration of the transaction, up to a maximum of $400,000; however Mr.
Mooney agreed that the transaction between the Corporation and L-R Global
Partners, L.P. was not to be a transaction entitling Mr. Mooney to a
facilitator's fee.
<PAGE>
-9-
If the Mooney Employment Agreement is terminated by the Corporation
for any reason other than cause, death, disability, mutual agreement or is
terminated by Mr. Mooney for good reason, the Corporation shall continue to
pay Mr. Mooney his base salary for twenty-four (24) months (or twelve (12)
months for termination as a result of good reason) and provide certain
benefits, including but not limited to, plan participation, vacation time,
and office facilities for a twelve (12) month period. In the event of a
termination in connection with a change in control of the Corporation (as
defined in the Mooney Employment Agreement), the Corporation shall pay a lump
sum payment to Mr. Mooney equal to 2.99 times the sum of (i) his annual base
salary and (ii) his earned executive compensation plan benefits, which shall
be "grossed-up" in the event of certain excise tax charges. In addition the
Corporation shall reimburse, for a twelve (12) month period, Mr. Mooney's
reasonable expenses while seeking employment. In addition to compensatory
provisions, the Mooney Employment Agreement also contains certain confidentially
and non-competition provisions intended to protect the Corporation.
DIRECTOR COMPENSATION
At the current time, directors of the Corporation receive no
compensation for their service to the Corporation as directors.
<PAGE>
-10-
CERTAIN TRANSACTIONS
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 was
convertible into 500,000 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. On July 22, 1997, the Travelers Convertible
Promissory Note converted into 500,000 shares of Common Stock.
On March 26, 1998, the Corporation sold 333,333 shares of Common
Shares to TIS Growth Fund at a price of $.75 per share and raised $250,000
in gross proceeds. A warrant to purchase 125,000 shares of the Corporation's
Common Shares at an exercise price of $1.50 per share was issued in
conjunction with this transaction. The exercise price of the Warrant was
subsequently reduced to $1.14 per share due to an anti-dilution clause in the
warrant agreement. This Warrant can be called by the Corporation if the bid
price of the Common Shares trades at or above $2.00 per share for ten trading
days. The Warrant expires on March 26, 2000. On June 15, 1998, the
Corporation called the Warrant and the holder has exercised the Warrant by
remitting to the Corporation the sum of $142,500 to purchase 125,000 shares
of the Corporation's Common Shares.
On April 17, 1998, the Corporation sold a convertible promissory note
in the principal amount of $3.2 million to L-R Global Partners, L.P. ("L-R
Global"), an accredited investor. The note was convertible at any time into
shares of Common Shares at a conversion price of the lesser of $.80 or 80% of
the average closing bid price of the Common Shares for the five trading days
preceding the conversion date. The note would have automatically converted
into shares of Common Shares at the applicable conversion price upon the
later of the filing of certain amendments to the Corporation's Certificate of
Incorporation, or July 16, 1998, provided that certain covenants are not in
default. On May 29, 1998, L-R Global elected to convert its note into
4,000,000 shares of Common Shares at a price of $0.80 per share. See "Change
in Control of Registrant."
FAMILY RELATIONSHIPS
There are no family relationships among any of the directors or executive
officers.
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 ownership
to the Securities and Exchange Commission and the Corporation. Specific due
dates 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, 1998. Based on the Corporation's review of copies of such
reports, Mr. Wolf filed one untimely Form 3, Mr. Markowitz filed one untimely
Form 4, Mr. Mooney filed two untimely Form 4s and Mr. Pinkerton filed two
untimely Form 4s.
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PROPOSAL 2
REINCORPORATION OF THE CORPORATION
IN DELAWARE
On June 26, 1998, the Board of Directors adopted a plan, subject to
approval by the shareholders, to reincorporate the Corporation under the laws
of the State of Delaware (the "Reincorporation"). The Corporation was
incorporated under the laws of the State of New York in 1977 under the name
Schacher, Greentree & Co., Inc. The Board believes Delaware corporate law
will better serve the shareholders' interests and provide the Corporation
with advantages not available under New York corporate law. Therefore, the
Board of Directors recommends the shareholders approve the form of Merger
Agreement which appears as Appendix A at the end of this Proxy Statement to
effect a transaction commonly called a "reincorporation."
The Corporation will not continue to be called "Greentree Software,
Inc." after the reincorporation, but will continue operations under the name
"PurchaseSoft, Inc." To explain the proposal, however, this Proxy Statement
will call the Corporation that exists today as a New York corporation either
"the Corporation" or "Greentree-New York," and "PurchaseSoft" will refer to
the new Delaware corporation that will be organized as a wholly-owned
subsidiary of Greentree-New York. If the holders of at least two-thirds of
all outstanding shares of the Common Shares approve the Merger Agreement,
Greentree-New York will be merged into PurchaseSoft. The effective date will
be when the necessary documents have been filed in both New York and
Delaware. PurchaseSoft will be the surviving corporation, and the charter
and by-laws of the new corporation will be substantially the same as those of
Greentree-New York today, except as otherwise discussed below.
REASONS FOR THE CHANGE.
For many years, Delaware has encouraged incorporation in that state by
adopting modern, comprehensive and flexible corporate laws, and it
periodically updates and revises them to meet changing business needs. The
Delaware General Corporation Law (the "DGCL") is considered a sophisticated
statute, highly conducive to business. That is why many corporations choose
Delaware initially as their place of incorporation, and why many others have
reincorporated in Delaware by means of transactions like the one now
proposed. Because of Delaware's policy of encouraging incorporation and its
preeminence as the most popular state of incorporation for major
corporations, the courts of Delaware have developed considerable expertise in
dealing with corporate issues. As a result, Delaware's case law interpreting
its corporate laws is more developed than that of any other state. This
gives Delaware corporate law an extra measure of predictability that is
useful and often crucial in our precedent-based judicial system.
For the board and the management of a Delaware corporation, these
features of Delaware law allow greater certainty in managing the corporation.
The state's court system also provides for relatively prompt resolution of
most corporate disputes. For example, Delaware has a specialized Court of
Chancery which hears cases involving corporate law. The Court of Chancery
has no jurisdiction over most other kinds of cases, and therefore its dockets
are not as backlogged as many other states. In addition, the Supreme Court
of Delaware hears and decides important corporate appeals rapidly.
The Board of Directors of the Corporation considered the
predictability and flexibility of Delaware law and the efficiency of its
judicial process when it recommended the present proposal. The Board also
recognized the possibility that choosing to be governed by the corporate law
of Delaware, as so many other corporations have done, may further enhance the
reputation of the Corporation
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CONTINUITY OF BUSINESS AND OTHER FACTORS.
The Corporation has not carried on its business in New York (other
than sales of products) since 1994 when it moved its principal place of
business away from New York after its establishment there in 1977.
PurchaseSoft will have its principal corporate offices in Eden Prairie,
Minnesota at Greentree-New York's current address, and will appoint a
registered agent to represent it in Delaware. Reincorporation in Delaware
will not change the business plan, management, assets, liabilities, net
worth, capitalization or employee benefit plans of the Corporation. Each of
Greentree-New York's Common Shares will automatically become one share of
the common stock of PurchaseSoft. Furthermore, each stock option or warrant
that would be, or later becomes, exercisable for shares of the Corporation's
Common Shares will automatically be, or later becomes, exercisable for the
same number of shares of the common stock of PurchaseSoft on the same terms
and conditions.
AUTHORIZED SHARES OF CAPITAL STOCK.
After the reincorporation, the authorized capital stock of
PurchaseSoft will consist of 15,000,000 shares of common stock, par value
$.01 per share (see the section "Changes in Authorized Capital Stock" for
additional discussion). PurchaseSoft will not issue any shares of common
stock in connection with the reincorporation, other than the shares which the
old shares will convert into.
CONVERSION OF SHARES.
As soon as the reincorporation becomes effective, PurchaseSoft will
issue a press release announcing that the transaction has occurred. At the
same time, the holders of the old shares of Greentree-New York will become
holders of the new shares of PurchaseSoft. Shares of Greentree-New York will
automatically convert into shares of PurchaseSoft, on these terms:
- - The conversion will be on a one-for-one basis.
- - Each share of the old Common Shares of Greentree-New York which is
outstanding at the effective date will become one share of the new common
stock, par value $.01 per share, of PurchaseSoft.
- - Each share of the old Common Shares held in the treasury of Greentree-New
York will become a share held in the treasury of PurchaseSoft.
THIS MEANS THAT, BEGINNING ON THE EFFECTIVE DATE, EACH GREENTREE-NEW
YORK STOCK CERTIFICATE WHICH WAS OUTSTANDING JUST BEFORE THE REINCORPORATION
WILL AUTOMATICALLY REPRESENT THE SAME NUMBER OF PURCHASESOFT SHARES.
THEREFORE, SHAREHOLDERS OF GREENTREE-NEW YORK NEED NOT EXCHANGE THEIR STOCK
CERTIFICATES FOR NEW PURCHASESOFT STOCK CERTIFICATES. LIKEWISE, SHAREHOLDERS
SHOULD NOT DESTROY THEIR OLD CERTIFICATES AND SHOULD NOT SEND THEIR OLD
CERTIFICATES TO THE CORPORATION, EITHER BEFORE OR AFTER THE EFFECTIVE DATE OF
REINCORPORATION.
TRADING OF THE STOCK.
After reincorporation, those who were formerly shareholders of
Greentree-New York may continue to make sales or transfers using their
Greentree-New York stock certificates. PurchaseSoft will issue new
certificates representing shares of PurchaseSoft common stock for transfers
occurring after the effective date. On request, PurchaseSoft will issue new
certificates to anyone who holds Greentree-New York stock certificates. Any
request for new certificates will be subject to normal requirements including
proper endorsement, signature guarantee, if required, and payment of
applicable taxes.
Shareholders whose shares of Greentree-New York were freely tradable
before the reincorporation will own shares of PurchaseSoft which are freely
tradable after reincorporation. Similarly, any
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Shareholders holding securities with transfer restrictions before
reincorporation will hold shares of PurchaseSoft which have the same transfer
restrictions after reincorporation. For purposes of computing the holding
period under Rule 144 of the Securities Act of 1933, as amended, those who
hold PurchaseSoft stock certificates will be deemed to have acquired their
shares on the date they originally acquired their shares in Greentree-New
York.
After the reincorporation, PurchaseSoft will continue to be a
publicly-held company. It will also file with the Securities and Exchange
Commission and provide to its shareholders the same types of information that
Greentree-New York has previously filed and provided.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES.
The following is a brief summary of the principal federal income tax
consequences of reincorporation under current law to holders of the
Corporation's Common Shares. This summary is for general information only.
It does not address potential legislative changes that may affect these
consequences, and it does not address any state, local or foreign tax
consequences of reincorporation. The Corporation has not obtained, and does
not intend to obtain, a ruling from the Internal Revenue Service to the
effect that the reincorporation is nontaxable.
Neither the Corporation nor its shareholders will recognize any gain
or loss by reason of the reincorporation. The tax basis of the shares of
PurchaseSoft common stock received by a shareholder of Greentree-New York
through the reincorporation will be the same as the tax basis of
Greentree-New York Common Shares prior to reincorporation. A shareholder of
Greentree-New York who holds the stock as a capital asset should include the
period he or she has held the Common Shares in determining the holding period
for his or her PurchaseSoft shares.
SHAREHOLDERS SHOULD CONSULT THEIR PERSONAL TAX ADVISERS TO DISCUSS
THEIR OWN TAX SITUATIONS AND ANY POTENTIAL CHANGES IN FEDERAL, STATE AND
LOCAL LAWS AND OTHER APPLICABLE TAX MATTERS RELATING TO THE REINCORPORATION.
ABANDONMENT.
The Board of Directors will have the right to abandon the Merger
Agreement and take no further action towards reincorporating the Corporation
in Delaware at any time before the Reincorporation becomes effective, even
after shareholder approval, if for any reason the Board determines that it is
not advisable to proceed with the reincorporation, including considering the
number of shares for which appraisal rights have been exercised and the cost
to the Corporation thereof.
COMPARISON OF NEW YORK AND DELAWARE CORPORATE LAWS
If Proposal 2 is approved by the holders of at least two-thirds of the
Corporation's outstanding Common Shares, and if the Corporation
reincorporates in Delaware as outlined above, then the shareholders of the
Corporation will become stockholders of the new Delaware corporation,
PurchaseSoft. There are differences between the Business Corporation Law of
New York (the "BCL") and the General Corporation Law of Delaware (the "DGCL")
which will affect the rights of Shareholders in certain respects. Some of
these differences define the particular provisions a corporation may choose
to put into its certificate of incorporation, commonly called the "charter,"
and other differences may not affect the Corporation.
<PAGE>
-14-
The following summary is not a substitute for direct reference to the
statutes themselves or for professional interpretation of them.
SHAREHOLDERS SHOULD CONSULT THEIR PERSONAL LEGAL COUNSEL TO DISCUSS
ANY MATTERS RELATING TO THEIR RIGHTS AS SHAREHOLDERS IN CONNECTION WITH THE
REINCORPORATION.
AMENDMENT OF CHARTER.
Both the BCL and the DGCL allow a board of directors to recommend a
charter amendment for approval by shareholders, and a majority of the shares
entitled to vote at a shareholders' meeting are normally enough to approve
that amendment. Both laws require that a majority of the holders of any
particular class of stock must approve the amendment if it would have an
adverse effect on the holders of that class. In addition, both laws allow a
corporation to require a vote larger than a majority on special types of
issues.
AMENDMENT OF BY-LAWS.
The by-laws of Greentree-New York provide, as permitted by the BCL,
that the Board of Directors may amend, adopt or repeal the Corporation's
By-laws, subject to the rights of shareholders to alter, amend, or repeal
those by-laws made by the Board of Directors. Under the DGCL, however, the
board may amend, adopt or repeal by-laws only if permitted by the charter.
The charter of PurchaseSoft will specifically permit amendment of the by-laws
by the Board. Additionally, both the BCL and the DGCL allow stockholders to
further amend or repeal by-laws adopted or amended by the board.
SPECIAL MEETINGS OF SHAREHOLDERS.
Under both the BCL and the DGCL, the board of directors or anyone
authorized in the charter or by-laws may call a special meeting of
stockholders. Currently the By-laws of Greentree-New York allow the Chairman
of the Board or the Chief Executive Officer and the President, the Board of
Directors by a written request of a majority of the Board to call a special
meeting. The By-laws further provide that upon written request to the
Corporation by shareholders who hold greater than one-third of the
outstanding shares, the Corporation shall call a special meeting. The
provision in the by-laws of PurchaseSoft will be comparable.
CORPORATE ACTION WITHOUT SHAREHOLDERS' MEETING.
The BCL and DGCL differ about whether corporate action can be taken by
written consent and without a shareholders' meeting. Under the BCL, the
holders of at least the minimum number of votes required to authorize such an
action may take the action if the corporation's charter allows this, but
otherwise the consent must be unanimous. The By-laws of Greentree-New York
do not permit stockholder action by less than unanimous written consent. The
DGCL, on the other hand, lets stockholders take action by the written consent
of at least the minimum number of votes required to act at a shareholders'
meeting, unless the charter forbids it. The PurchaseSoft charter will
provide that shareholders may not take corporate action by written consent.
INSPECTION OF SHAREHOLDERS LIST.
The BCL requires five days' written notice from a shareholder of
record to inspect the list of record shareholders for any purpose reasonably
related to the person's interest as a shareholder. Under the DGCL, any
shareholder may inspect the shareholders list for any purpose reasonably
related to the person's interest as a shareholder. In addition, for at least
ten days prior to each shareholders meeting, a Delaware corporation must make
available for examination a list of shareholders entitled to vote at the
meeting.
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VOTE REQUIRED FOR CERTAIN TRANSACTIONS.
Until February 1998, the BCL required the holders of two-thirds of the
outstanding stock of a New York corporation to approve certain mergers,
consolidations or sales of all or substantially all the corporation's assets
that may occur outside the ordinary course of business. Since February 1998,
however, a New York corporation may provide in its charter that the holders
of a majority of the outstanding stock may approve such transactions. The
Corporation has not adopted such a charter provision. Under the DGCL,
holders of a majority of the outstanding stock entitled to vote on such
transactions have the power to approve a merger, consolidation or sale of all
or substantially all the assets without a special provision in the charter,
unless the charter provides otherwise. Furthermore, in the case of a merger
under the DGCL, stockholders of the surviving corporation do not have to
approve the merger at all, unless the charter provides otherwise, if these
three conditions are met:
- - No amendment of the surviving corporation's charter is made by the merger
agreement; and
- - Each share of the surviving corporation's stock outstanding or in the
treasury immediately prior to the effective date of the merger is to be an
identical outstanding or treasury share of the surviving corporation after
the effective date; and
- - The merger results in no more than a 20% increase in its outstanding
common stock.
Special vote requirements may apply to certain business combinations
with interested stockholders. See the discussion of these below under the
heading "Business Combinations with Interested Shareholders."
CLASSIFICATION OF DIRECTORS.
Both laws permit "classified" boards of directors, which means the
directors have staggered terms that do not all expire at once. The BCL
permits as many as four classes, the DGCL only three. The Corporation
currently has one class of director and PurchaseSoft will also have only one.
NUMBER OF DIRECTORS.
Under the BCL, the number of directors may be one or more, and any
number may be fixed by the by-laws or by the action of the shareholders or of
the board of directors under the specific provisions of the by-laws adopted
by the shareholders, and if not so fixed the number of directors shall be
one. The number of directors may be increased or decreased by amendment of
the by-laws or by action of the shareholders or of the board of directors
under the specific provisions of a by-law adopted by the shareholders,
subject to certain limitations. Under the DGCL, a corporation may have as
few as one director and there is no statutory upper limit on the number of
directors. The specific number may be fixed in the by-laws or the charter,
but if fixed in the charter, may be changed only by amendment of the charter.
If the charter is silent as to the number of directors, the board of
directors may fix or change the authorized number of directors pursuant to a
provision of the by-laws. The By-laws of Greentree-New York fix the number
of directors between three (3) and nine (9). The number of directors of the
Corporation is currently fixed by the Board of Directors at five (5), and the
number of directors of PurchaseSoft will also be fixed by the Board of
Directors at five (5). While the Board of Directors has no current plans to
change the number of directors, it may decide to do so in the future.
<PAGE>
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REMOVAL OF DIRECTORS.
Under the BCL, directors may be removed by the shareholders for cause,
or by either the shareholders or the directors if the charter so provides.
Furthermore, if the charter or by-laws so provide, directors may be removed
without cause by a vote of the shareholders. The Corporation's By-laws
provide that directors may be removed with or without cause by a majority
vote of the shareholders at a special meeting of the shareholders called for
such purpose. Directors under the DGCL would generally be subject to removal
with or without cause by a majority of the stockholders, unless the charter
provides otherwise. The by-laws of PurchaseSoft will substantially conform to
the current provisions governing removal of Greentree-New York directors.
LIMITATION OF DIRECTORS' LIABILITY.
Both states permit the limitation of a director's personal liability
while acting in his or her official capacity. Under the BCL, a director is
not liable to the corporation or to its stockholders for monetary damages if
the director has acted in good faith and with the same degree of care that an
ordinarily prudent person would exercise in similar circumstances. The DGCL,
on the other hand, requires a charter provision in order to limit a
director's liability for breach of his or her fiduciary duty to the
corporation. The Corporation's current charter limits liability of directors
for any breach of duty to the extent permitted by the Section 402(b) of the
BCL, and the charter of PurchaseSoft will likewise limit such liability to
the fullest extent permitted by the DGCL.
In some cases directors may be liable despite these limitations.
Under the BCL, for example, a director is not immune from liability if he or
she violates applicable statutes which expressly make directors liable. The
DGCL forbids any limitation of liability if the director breached his or her
duty of loyalty to the corporation or its shareholders, or if he or she
failed to act in good faith, received an improper personal benefit from the
corporation, or authorized a dividend or stock repurchase that was forbidden
by the DGCL.
INDEMNIFICATION OF DIRECTORS AND OFFICERS; AND INSURANCE.
With some variations, both the BCL and the DGCL allow a corporation to
"indemnify," that is, to make whole, any person who is or was a director,
officer, employee or agent of the corporation if that person is held liable
for something he or she did or failed to do in an official capacity. Besides
covering court judgments, out-of-court settlements, fines and penalties, both
laws also allow the corporation to advance certain reasonable expenses the
person will incur or to reimburse the person's expenses after he or she
incurs them, even if liability is not actually proven. The right to
indemnification under both laws does not normally exclude other rights of
recovery the indemnified person may have.
Additionally, each of the two laws permits a corporation to purchase
insurance for its directors, officers, employees and agents against some or
all of the costs of such indemnification or against liabilities arising from
actions and omissions of the insured person, even though the corporation may
not have power to indemnify the person against such liabilities. The BCL,
however, restricts the kinds of claims that may be made under insurance
purchased by the corporation against these liabilities. For example, there
would be no insurance coverage if the person to be indemnified was guilty of
deliberate dishonesty and that dishonesty was material to the event that
produced the claim, or if the person gained some financial profit or other
advantage that he or she was not entitled to.
However, neither the BCL nor the DGCL permits indemnification of a
director, officer, employee or agent if a court finds the person liable to
the corporation itself, unless the court determines otherwise. Furthermore,
if the corporation sues the person because of some act or omission, the
corporation does not need to indemnify the person unless a court determines
the person was not liable. Furthermore, the DGCL generally requires that the
person to be indemnified must have acted in good faith and in a manner he or
she reasonably believed was consistent with the best interests of the
corporation.
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If Proposal 2 is approved by the Corporation's Shareholders, the BCL
indemnification provisions, and not the DGCL, will apply to acts and
omissions that occurred before the effective date of the reincorporation.
LOANS AND GUARANTEES OF OBLIGATIONS FOR DIRECTORS.
Under the BCL, the holders of a majority of the shares entitled to
vote, excluding any shares of the director who is the proposed borrower, are
required to approve any loans to, or guarantees of obligations of, a
director. Under the DGCL, a board of directors may authorize loans or
guarantees of indebtedness to employees and officers, including any employee
or officer who is a director.
ISSUANCE OF RIGHTS AND OPTIONS TO DIRECTORS, OFFICERS AND EMPLOYEES.
Under the BCL, the issuance of any stock rights or stock options, as
well as plans to issue rights or options, to directors, officers or employees
must be approved by a majority of votes cast at a shareholders' meeting. The
DGCL does not require stockholder approval of such transactions.
CONSIDERATION FOR SHARES.
Under the BCL, stock certificates cannot be issued until full payment
has been made, except for shares purchased under a stock option plan
permitting installment payments. Under the DGCL, however, a corporation can
receive cash, services, personal or real property, leases of real property or
any combination of these as payment in full or in part for the shares. A
purchaser of shares under the DGCL may pay an amount equal to or greater than
the par value of such shares if the corporation receives a binding obligation
of the purchaser to pay the balance of the purchase price.
DIVIDENDS AND REDEMPTION OF STOCK.
Subject to its charter provisions, a corporation may generally pay
dividends, redeem shares of its stock or make other distributions to
stockholders if the corporation is solvent and would not become insolvent
because of the dividend, redemption or distribution. The assets applied to
such a distribution may not be greater than the corporation's "surplus." The
BCL defines surplus as the excess of net assets over stated capital, and
allows the board to adjust stated capital. The DGCL, on the other hand,
defines surplus as the excess of net assets over capital, and allows the
board to adjust capital (for shares with par value, the capital need only
equal the aggregate par value of such shares). If there is no surplus, the
DGCL allows the corporation to apply net profits from the current or
preceding fiscal year, or both, unless the corporation's net assets are less
than the capital represented by issued and outstanding stock which has a
preference on any distribution of assets.
Both the BCL and the DGCL permit redemptions only when the corporation
has outstanding shares of at least one class of voting stock which is not
subject to the redemption.
APPRAISAL RIGHTS.
Generally, "appraisal rights" entitle dissenting shareholders to
receive the fair value of their shares in the merger or consolidation of a
corporation or in the sale of all or substantially all its assets. The BCL
also extends appraisal rights to an exchange of a corporation's shares.
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The BCL provides that dissenting shareholders have no appraisal rights
if their shares are listed on a national securities exchange. But in the
case of shares not listed on an exchange, appraisal rights under the BCL
allow any shareholder of a New York corporation, with various exceptions, to
receive fair value for his or her shares in such transactions. Regardless of
listing on an exchange, appraisal rights are available under the BCL in a
merger between a parent corporation and its subsidiary where only one of them
is a New York corporation, or in a merger between a parent and subsidiary
where both are New York corporations and the parent owns at least 90% of the
subsidiary. Also, appraisal rights are available to shareholders who are not
allowed to vote on a merger or consolidation and whose shares will be
canceled or exchanged for cash or something else of value other than shares
of the surviving corporation or another corporation. When appraisal rights
are available, the shareholder may have to request the appraisal and follow
other required procedures. See the discussion of appraisal rights under the
section heading "Rights of Dissenting Shareholders."
Similarly, under the DGCL, appraisal rights are not available to a
shareholder if the corporation's shares are listed on a national securities
exchange or held by more than 2,000 shareholders of record, or if the
corporation will be the surviving corporation in a merger which does not
require the approval of the surviving corporation's shareholders. But,
regardless of listing on an exchange, a dissenting shareholder in a merger or
consolidation has appraisal rights under the DGCL if the transaction requires
him or her to exchange shares for anything of value other than one or more of
the following:
- - Shares of stock of the surviving corporation or of a new corporation
which results from the merger or consolidation.
- - Shares of another corporation which will be listed on a national
securities exchange or held by more than 2,000 shareholders of record
after the merger or consolidation occurs.
- - Cash instead of fractional shares of the surviving corporation or another
corporation.
BUSINESS COMBINATIONS WITH INTERESTED SHAREHOLDERS.
Provisions in both laws may help to prevent or delay changes of
corporate control. In particular, both the BCL and the DGCL restrict or
prohibit an interested stockholder from entering into certain types of
business combinations unless the board of directors approves the transaction
in advance.
Under the BCL, an interested shareholder is generally prohibited from
entering into certain types of business combinations with a New York
corporation for a period of five years after becoming an interested
shareholder, unless the board of directors approved either the business
combination or the acquisition of stock by the interested shareholder before
the interested shareholder acquired his or her shares. An "interested
shareholder" under the BCL is generally a beneficial owner of at least 20% of
the corporation's outstanding voting stock. "Business combinations" under
the BCL include mergers and consolidations between corporations or with an
interested shareholder; sales, leases, mortgages or other dispositions to an
interested stockholder of assets with an aggregate market value which either
(1) equals 10% or more of the corporation's consolidated assets or
outstanding stock, or (2) represents 10% or more of the consolidated earning
power or net income of the corporation; issues and transfers of stock with an
aggregate market value of at least 5% in relation to the outstanding stock of
the corporation; liquidation or dissolution of the corporation proposed by or
in connection with an interested shareholder; reclassification or
recapitalization of stock that would increase the proportionate stock
ownership of an interested shareholder; and the receipt by an interested
shareholder of benefit from loans, guarantees, pledges or other financial
assistance or tax benefits provided by the corporation.
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After the five-year period referred to in the BCL, the law allows such
business combinations if either the board of directors or a majority of the
outstanding voting stock not owned by the interested shareholder have
approved the business combination or the purchase of stock by the interested
shareholder before the interested shareholder acquired his or her shares.
Business combinations are also permitted when certain statutory "fair price"
requirements are met.
Section 203 of the DGCL generally prohibits an interested shareholder
from entering into certain types of business combinations with a Delaware
corporation for three years after becoming an interested shareholder. An
"interested shareholder" under the DGCL is any person other than the
corporation and its majority-owned subsidiaries who owns at least 15% of the
outstanding voting stock, or who owned at least 15% within the preceding
three years, and this definition includes affiliates of the corporation.
Briefly described, the prohibited combinations include:
- - Mergers or consolidations.
- - Sales, leases, exchanges or other dispositions of 10% or more of (1) the
aggregate market value of all assets of the corporation or (2) the
aggregate market value of all the outstanding stock of the corporation.
- - Issuances or transfers by the corporation of its stock that would
increase the proportionate share of stock owned by the interested
shareholder.
- - Receipt by the interested shareholder of the benefit of loans, advances,
guarantees, pledges or other financial benefits provided by the
corporation.
- - Any other transaction, with certain exceptions, that increases the
proportionate share of the stock owned by the interested shareholder.
A Delaware corporation may choose not to have Section 203 of the DGCL
apply. The Corporation has chosen, however, to accept the protections of
Section 203, and therefore the charter of PurchaseSoft will not waive those
protections. Nevertheless, Section 203 will not apply in the following cases:
- - If, before the shareholder became an interested shareholder, the board of
directors approved the business combination or the transaction that
resulted in the shareholder becoming an interested shareholder.
- - If, after the transaction that resulted in the shareholder becoming an
interested shareholder, the interested shareholder owned at least 85% of
the voting stock of the corporation outstanding at the time the
transaction commenced, subject to technical calculation rules.
- - If, on or after the time the interested shareholder became an interested
shareholder, the board of directors approved the business combination,
and at least two-thirds of the outstanding voting stock which is not
owned by the interested shareholder also ratified the business
combination at a shareholders' meeting.
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MATERIAL CHANGES IN THE PURCHASESOFT CHARTER AND BY-LAWS FROM THE
GREENTREE-NEW YORK CHARTER AND BY-LAWS
The PurchaseSoft charter and by-laws (in the forms attached as
Appendices B and C, respectively, to this Proxy Statement) will be in effect
and will govern the rights of stockholders in the event Proposal 2 is
approved and the merger of Greentree-New York into PurchaseSoft takes place.
The PurchaseSoft charter is substantially similar to the Greentree-New York
Charter. Except for the provisions relating to corporate purpose,
indemnification and limitation of liability, the ability to call special
meetings of shareholders, and amending the by-laws, the differences between
the two are primarily as a result of differences between the New York BCL and
the DGCL as discussed above. Set forth below is a summary of the material
changes in the PurchaseSoft charter and by-laws from the current
Greentree-New York Charter and By-laws. The by-laws of PurchaseSoft and
Greentree-New York are substantially similar except that the by-laws of
PurchaseSoft reflect the DGCL and the provisions of the PurchaseSoft charter.
The following summary does not purport to be a complete statement of such
changes or of the PurchaseSoft charter and by-laws and is qualified in its
entirety by reference to such charter and by-laws documents. Copies of the
Charter and By-laws of Greentree-New York are available for inspection at the
principal office of Greentree-New York and copies will be sent to
shareholders upon request.
NAME OF CORPORATION.
The Delaware corporation, the stock of which will be issued to
shareholders in the Merger, will be named PurchaseSoft, Inc.
PURPOSE CLAUSE.
The purpose clause in the PurchaseSoft charter will permit
PurchaseSoft "to engage in any lawful act or activity for which corporations
may be organized under the General Corporation Law of the State of Delaware."
The current Greentree-New York Charter reflects the purpose for which
the Corporation was formed in 1977 and includes certain provisions in which
the Corporation in its present form is no longer engaged and does not include
provisions reflecting the purposes in which the Corporation is currently
engaged. Moreover, the Corporation may elect to pursue other activities in
the future. By virtue of the change, the PurchaseSoft charter will contain a
purpose clause that is in keeping with modern Delaware corporate charters and
will afford PurchaseSoft flexibility in its corporate purposes and activities.
INDEMNIFICATION AND LIMITATION OF LIABILITY.
The PurchaseSoft charter and by-laws provide for indemnification of
directors and officers (including provisions authorizing the advancement of
expenses incurred in connection with certain applicable proceedings) to the
fullest extent permitted by the DGCL.
Provisions relating to indemnification of directors and officers of
Greentree-New York are included in Greentree-New York's By-laws rather than
in the Greentree-New York Charter. Such provisions provide for
indemnification of directors and officers to the fullest extent permitted by
the BCL.
The PurchaseSoft by-laws expressly authorize the corporation to
purchase and maintain directors and officers liability insurance to insure
against liabilities or losses incurred in such capacities whether or not the
corporation would have the power to indemnify the individual under the DGCL.
There is no similar provision in the Greentree-New York Charter or By-laws.
<PAGE>
-21-
Furthermore, the PurchaseSoft charter provides that a director of the
corporation shall not be liable to the corporation or its stockholders for
monetary damages for breach of fiduciary duty as a director to the fullest
extent permitted by Delaware Law. A similar provision in the Greentree-New
York Charter provides directors shall not be liable to the extent permitted
under Section 402(b) of the BCL. This provision in the PurchaseSoft charter
is intended to afford directors additional protection and limit their
potential liability from suits alleging a breach of the duty of care by a
director. As a result of the inclusion of such a provision, shareholders may
be unable to recover monetary damages against directors for actions taken by
them that constitute negligence or that are otherwise in violation of their
duty of care, although it may be possible to obtain injunctive or other
equitable relief with respect to such actions. If equitable remedies are
found not to be available to shareholders in any particular situation,
shareholders may not have an effective remedy against a director in
connection with such conduct.
In general, the purpose of the changes in the PurchaseSoft charter is
to provide indemnification and exculpation provisions that are customary in
modern charter documents of Delaware corporations (particularly in charter
documents of major, public corporations that have incorporated in Delaware).
CHANGES IN AUTHORIZED CAPITAL STOCK.
The Greentree-New York Charter authorizes the Corporation to issue
"Fifteen Million (15,000,000) common shares, having a par value of $0.01 per
share."
The PurchaseSoft charter authorizes PurchaseSoft to issue Fifteen
Million (15,000,000) common shares, having a par value of $0.01 per share.
Paragraph 4 of the Greentree-New York Charter now provides that the
Corporation has the authority to issue only one class of stock, consisting of
15,000,000 shares of Common Shares. The PurchaseSoft charter would also
authorize 15,000,000 common shares, with no change in par value and no
change in the voting powers, qualifications, rights and privileges of such
common shares. All common shares will continue to be equal to each other with
respect to voting rights, liquidation rights and dividend rights.
TIME FOR ANNUAL MEETING.
The Greentree-New York By-laws provide that the annual meeting of the
stockholders of PurchaseSoft shall be held at 4:00 p.m. on the third Tuesday
of January of each year or on such other day as the Board of Directors may
determine. The PurchaseSoft by-laws will require that annual meetings be
held within the first six months of each fiscal year.
<PAGE>
-22-
OTHER CHANGES TO REFLECT TECHNICAL DIFFERENCES BETWEEN DELAWARE LAW AND NEW YORK
LAW.
In addition to the changes described above, certain technical changes
have been made in the PurchaseSoft charter and by-laws from the Greentree-New
York Charter and By-laws to reflect differences between the DGCL and the BCL.
Such technical changes include: designation of a registered office and
registered agent in the State of Delaware; changes in the minimum and maximum
number of days applicable for giving notice of meetings and for setting
record dates; and changing references in the By-laws to place or to
applicable law from New York to Delaware.
RIGHTS OF DISSENTING SHAREHOLDERS
Section 910 of the BCL sets forth the rights of shareholders of the
Corporation who object to the Merger which will take place if this Proposal 2
is approved. Any shareholder of the Corporation who does not vote in favor
of the Proposal or who duly revokes his or her vote in favor of the
transaction may, if the Merger is consummated, have the right to seek to
obtain payment in cash of the fair value of his shares by strictly complying
with the requirements of Section 623 of the New York BCL ("Section 623") .
The dissenting shareholder must file with the Corporation before the
taking of the vote on the Proposal a written objection including statement of
election to dissent, such shareholder's name and residence address, the
number and classes of shares of stock as to which dissent is made (which
number may not be less than all of the shares as to which such shareholder
has a right to dissent) and a demand for payment of the fair value of such
shares if the Merger is consummated. Any such written objection should be
addressed to: Greentree Software Inc., 7901 Flying Cloud Drive, Suite 200,
Eden Prairie, MN 55344, Attention: Secretary.
Within ten days after the vote of shareholders authorizing the
Proposal, the Corporation must give written notice of such authorization to
each such dissenting shareholder. Within twenty days after the giving of
such notice, any shareholder to whom the Corporation failed to give notice of
the Meeting who elects to dissent from the Merger must file with the
Corporation a written notice of such election, stating such shareholder's
name and residence address, the number and classes of shares of stock as to
which dissent is made (which number may not be less than all of the shares as
to which such shareholder has a right to dissent) and a demand for payment of
the fair value of such shares if the Merger is consummated.
At the time of filing the notice of election to dissent or within one
month thereafter, dissenting shareholders must submit certificates
representing the applicable shares to the Corporation or its transfer agent,
American Stock Transfer & Trust Company, for notation thereon of the election
to dissent, after which such certificates will be returned to the
shareholder. Any shareholder who fails to submit his or her share
certificates for such notation shall, at the option of the Corporation
exercised by written notice to the shareholder within 45 days from the date
of filing of the notice of election to dissent, lose such shareholder's
appraisal rights unless a court, for good cause shown, shall otherwise direct.
Within 15 days after the expiration of the period within which
shareholders may file their notices of election to dissent, or within 15 days
after consummation of the Merger, whichever is later (but not later than
ninety days after the shareholders, vote authorizing the Merger), the
Corporation must make a written offer (which, if the Merger has not been
consummated, may be conditioned upon such consummation) to each shareholder
who has filed such notice of election to pay for the shares at a specified
price which the Corporation considers to be their fair value. If the
Corporation and the dissenting shareholder are unable to agree as to such
value, Section 623 provides for judicial determination of fair value. In the
event of such a disagreement, a proceeding shall be commenced by the
Corporation in the Supreme Court of the State of New York, County of New
York, or by the dissenting shareholder if the Corporation fails to commence
the proceeding within the time period required by Section 623 of the New York
BCL. The Corporation intends to commence such a proceeding in the event of
such a disagreement.
<PAGE>
-23-
A negative vote on the Proposal does not constitute a "written
objection" filed by an objecting shareholder. Failure by a shareholder to
vote against the Proposal will not, however, constitute a waiver of rights
under Section 623 provided that a written objection has been properly filed
and such shareholder has not voted in favor of the Proposal.
The foregoing does not purport to be a complete statement of the
provisions of Section 623 and is qualified in its entirety by reference to
said Section, a copy of which is attached in full as Appendix D. Each
shareholder intending to exercise dissenter's rights should review Appendix D
carefully and consult such shareholder's counsel for a more complete and
definitive statement of the rights of a dissenting shareholder and the proper
procedure to follow to exercise such rights.
Because the Proposal does not involve any change in the nature of the
Corporation's business but only involves technical corporate matters such as
the Reincorporation, the Merger and the charter amendments described herein,
management hopes that no shareholder will exercise a dissenter's right.
Under the Merger Agreement, the Board of Directors may abandon the Merger,
even after shareholder approval, if for any reason the Board determines that
it is inadvisable to proceed with the Merger, including considering the
number of shares for which appraisal rights have been exercised and the cost
to the Corporation thereof.
VOTE REQUIRED FOR APPROVAL OF THE PROPOSAL
Approval of the Proposal will require the affirmative vote of
two-thirds of the outstanding shares of Greentree-New York Common Shares
entitled to vote thereon at the Meeting. As of the record date for the
Meeting, the current Directors and officers of the Corporation have the right
to vote 4,231,238 shares, representing 52.69% of the outstanding Common
Shares, and have advised the Corporation that their present intent is to vote
in favor of the proposal to reincorporate in Delaware. Proxies solicited by
the Board of Directors will be voted FOR the Proposal, unless shareholders
specify otherwise.
THE BOARD OF DIRECTORS DEEMS PROPOSAL NO. 2 TO BE IN THE BEST INTERESTS OF
THE CORPORATION AND ITS SHAREHOLDERS AND RECOMMENDS A VOTE "FOR" APPROVAL
THEREOF. UNLESS AUTHORITY TO DO SO IS WITHHELD, THE PERSON(S) NAMED IN EACH
PROXY WILL VOTE THE SHARES REPRESENTED THEREBY "FOR" THE APPROVAL OF THE
MERGER AGREEMENT TO EFFECT THE REINCORPORATION IN DELAWARE.
<PAGE>
-24-
PROPOSAL 3
APPROVAL OF AN AMENDMENT TO THE CORPORATION'S 1997 STOCK OPTION PLAN
On June 26, 1998, the Corporation's Board of Directors, subject to
stockholder approval, adopted and approved an amendment to the Corporation's
1997 Stock Option Plan (the "1997 Plan") for the purpose of increasing the
number of shares of Common Shares authorized for issuance under the 1997 Plan
from 1,500,000 shares to 3,500,000 shares.
The Board of Directors believes that an increase in the number of
shares available for issuance under the 1997 Plan will enable the Corporation
to meet industry norms and to continue to attract and retain key employees,
officers and directors essential to the long-term success of the Corporation.
By encouraging stock ownership by key employees, officers and directors of
the Corporation and its subsidiaries, the Corporation is providing additional
incentives for them to promote the success of the Corporation's business.
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 discussion below provides a summary description of certain
provisions of the 1997 Plan, as amended, and a brief and general description
of the incentive stock options and nonqualified stock options granted under
the 1997 Plan.
The 1997 Plan provides for grants of stock options intended to qualify
for preferential tax treatment (the "Incentive Stock Options") under Section
422 of the Internal Revenue Code of 1986, as amended (the "Code"), and
nonstatutory stock options that do not qualify for such treatment. All
employees of the Corporation are eligible for stock options under the 1997
Plan in amounts and at prices determined by the Compensation Committee,
provided that, in the case of Incentive Stock Options, the price will not be
less than 100% of the fair market value of the Common Shares on the date of
grant, or not less than 110% of the fair market value of the Shares on the
grant date if the optionee owns, directly or indirectly, more than 10% of the
total combined voting power of all classes of stock.
The 1997 Plan is administered by the Compensation Committee. The
Compensation Committee has 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 shareholders 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.
<PAGE>
-25-
The shares authorized for issuance under the 1997 Plan are shares of
the Corporation's Common Shares, which may be newly issued shares or shares
held in the treasury or acquired in the open market. Currently, the maximum
number of shares of Common Shares which may be made available upon exercise
of stock options granted under the 1997 Plan is 1,500,000 shares, 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 Shares, subject to adjustment in the event of
capital changes.
Incentive Stock Options granted under the 1997 Plan are not
transferable except by will or the laws of descent and distribution and may
be exercised during the life of the optionee only by the optionee.
Nonstatutory stock options granted under the 1997 Plan are not transferable
except by will or the laws of descent and distribution and except that
nonstatutory stock options may be transferred if and to the extent authorized
by the Compensation Committee.
The following table sets forth information as of June 30, 1998 with
respect to stock options which have been received since the 1997 Plan was
adopted by the Corporation by (i) each of the Corporation's Chief Executive
Officer and the other executive officers of the Corporation named in the
Summary Compensation Table, (ii) all current executive officers of the
Corporation as a group, (iii) all current directors of the Corporation as a
group, (iv) all current directors of the Corporation, other than those who
are executive officers, as a group, and (v) all employees of the Corporation,
excluding executive officers, as a group since the 1997 Plan was adopted by
the Corporation.
<TABLE>
<CAPTION>
OPTION GRANTS UNDER 1997 PLAN
OPTIONS
NAME (SHARES)
- ---- --------
<S> <C>
Joseph Mooney . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 366,666
Jeffrey Pinkerton . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 304,166
Brad Markowitz . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95,833
All executive officers of the Corporation, as a group . . . . . . . . . . . . . . . . 670,832
All current directors of the Corporation, as a group. . . . . . . . . . . . . . . . . 766,665
All directors of the Corporation, excluding executive officers, as a group. . . . . . 95,833
All employees of the Corporation, excluding executive officers, as a group. . . . . . 53,993
</TABLE>
The affirmative vote of the holders of a majority of the shares of
Common Shares voted on the issue at the Meeting, in person or by proxy, is
required to ratify the adoption and approval by the Board of Directors of the
amendment to the 1997 Plan. If the proposal to ratify the amendment to the
1997 Plan is not approved at the Meeting, the 1997 Plan, as previously
adopted by the Board of Directors and ratified by the shareholders, will
remain in full force and effect.
THE BOARD OF DIRECTORS DEEMS PROPOSAL NO. 3 TO BE IN THE BEST
INTERESTS OF THE CORPORATION AND ITS SHAREHOLDERS AND RECOMMENDS A VOTE "FOR"
APPROVAL THEREOF. UNLESS AUTHORITY TO DO SO IS WITHHELD, THE PERSON(S) NAMED
IN EACH PROXY WILL VOTE THE SHARES REPRESENTED THEREBY "FOR" THE APPROVAL OF
THE AMENDMENT TO THE 1997 PLAN.
<PAGE>
PROPOSAL 4
APPROVAL OF AN AMENDMENT TO INCREASE THE AUTHORIZED CAPITAL SHARES
The current authorized capital stock of the Corporation consists of
15,000,000 shares of Common Stock, $.01 par value, of which 8,029,761 shares of
Common Stock were issued and outstanding as of June 30, 1998. The Board of
Directors, on June 26, 1998, adopted a resolution to increase the authorized
number of shares of Common Shares from 15,000,000 to 25,000,000. The proposed
increase requires an amendment to the Corporation's charter and, therefore,
submission to the shareholders at the Annual Meeting. The proposed amendment
does not change any other aspect of the Corporation's charter.
Holders of Common Shares are entitled to one vote per share on all
matters submitted to a vote of shareholders of the Corporation and to ratably
receive dividends, if any, as may be declared from time to time by the Board
of Directors from funds legally available therefor. Upon liquidation,
dissolution or winding up of the Corporation, holders of Common Shares are
entitled to share ratably in any assets available for distribution to
shareholders after payment of all obligations of the Corporation.
If the proposed amendment is approved, all or any part of the authorized
but unissued shares of Common Shares may thereafter be issued without further
approval from the shareholders, except as may be required by law or the
policies of any stock exchange or stock market on which the shares of stock of
the Corporation may be listed or quoted, for such purposes and on such terms
as the Board of Directors may determine. Holders of the capital stock of the
Corporation do not have any preemptive rights to subscribe for the purchase of
any shares of Common Shares, which means that current shareholders do not have
a prior right to purchase any new issue of Common Stock in order to maintain
their proportionate ownership.
The proposed amendment will not affect the rights of existing holders of
Common Shares except to the extent that further issuances of Common Stock will
reduce each existing shareholder's proportionate ownership.
The Board of Directors has determined that it would be appropriate for
the Corporation to increase the number of its authorized shares of Common
Shares in order to have additional shares available for possible future
acquisition or financing transactions and other issuances, or to satisfy
requirements for additional reservations of shares by reason of future
transactions which might require increased reservations. The Board of
Directors believes that the complexity of customary financing, employment and
acquisition transactions requires that the Directors be able to respond
promptly and effectively to opportunities that involve the issuance of shares
of Common Shares. For example, if the proposal is approved, the Corporation
will have the flexibility to authorize stock splits and stock dividends and to
enter into joint ventures and corporate financings involving the issuance of
shares of Common Shares. The Corporation has no present plans, agreements,
understandings or arrangements regarding transactions expected to require
issuance of the additional shares of Common Shares that would be authorized by
the proposed amendment.
The flexibility of the Board of Directors to issue additional shares of
stock could enhance the Board's ability to negotiate on behalf of shareholders
in a takeover situation. Although it is not the purpose of the proposed
amendment, the authorized but unissued shares of Common Shares also could be
used by the Board of Directors to discourage, delay or make more difficult a
change in control of the Corporation. For example, such shares could be
privately placed with purchasers who might align themselves with the Board of
Directors in opposing a hostile takeover bid. The issuance of additional
shares might serve to dilute the stock ownership of persons seeking to obtain
control and thereby increase the cost of acquiring a given percentage of the
outstanding shares. The Board of Directors is not aware of any pending or
proposed effort to acquire control of the Corporation.
<PAGE>
If this Proposal 4 (Amendment to Increase the Authorized Capital Shares)
is adopted by the Corporation's shareholders, this Proposal will become
effective on either of (i) the date the merger contemplated by Proposal 2
(Reincorporation of the Corporation in Delaware) is effected if Proposal 2 is
approved by the Corporation's shareholders, or (ii) on the date a certificate
of amendment is filed to amend Greentree-New York's Certificate of
Incorporation in New York, if Proposal 2 is not approved by the Corporation's
shareholders.
Approval of this Proposal 4 requires the affirmative vote of the holders
of a majority of the outstanding shares of the Corporation's Common Shares
entitled for vote at the Annual Meeting.
THE BOARD OF DIRECTORS DEEMS PROPOSAL NO. 4 TO BE IN THE BEST INTERESTS
OF THE CORPORATION AND ITS SHAREHOLDERS AND RECOMMENDS A VOTE "FOR" APPROVAL
THEREOF. UNLESS AUTHORITY TO DO SO IS WITHHELD, THE PERSON(S) NAMED IN EACH
PROXY WILL VOTE THE SHARES REPRESENTED THEREBY "FOR" THE APPROVAL OF THE
AMENDMENT TO INCREASE THE AUTHORIZED CAPITAL SHARES.
<PAGE>
-26-
MISCELLANEOUS
ACCOUNTANTS
On June 26, 1998, the Board of Directors of the Corporation authorized
the Corporation to engage PricewaterhouseCoopers LLP ("PWC," formerly Price
Waterhouse LLP) as the Corporation's independent public accountants for the
fiscal year ending May 31, 1998, subject to the Chief Financial Officer of
the Corporation confirming acceptance by PWC of such appointment.
PWC has served as the Corporation's independent public accountants and
auditors since May 15, 1997. KPMG was dismissed by the Board of Directors as
of May 15, 1997. The Corporation's decision to employ PWC rather than KPMG
was the result of the Corporation'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 Corporation 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 1995 and 1996 fiscal years, KPMG in its report noted
that, although the financial statements had been prepared assuming that the
Corporation will continue as a going concern, the Corporation 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 Corporation notes that,
in connection with the fiscal year 1996 audit, certain matters concerning the
Corporation's internal controls were brought to the Corporation'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 Corporation. All required adjustments were made in the
Corporation'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 Corporation and KPMG with respect to these
issues. The Corporation has authorized KPMG to respond fully to the
inquiries of PWC concerning the internal control issues raised in the
Management letter.
Neither the Corporation nor any person acting on its behalf, prior to
the engagement of PWC, consulted PWC 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 Corporation's financial
statements.
The financial statements of the Corporation for the fiscal year ended
May 31, 1998, have been audited by PWC. It is not expected that
representatives of PWC 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.
2000 ANNUAL MEETING OF SHAREHOLDERS PROPOSALS
In order for shareholder proposals to be presented at the
Corporation's 2000 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, 1999 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>
-27-
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, 1998) are being furnished to
shareholders of record together with this Proxy Statement. Requests for
additional copies should be directed to: Greentree Software, Inc., 7901
Flying Cloud Drive, Suite 200, Eden Prairie, Minnesota 55344, Attn: Philip
D. Wolf, Secretary.
August 24, 1998
<PAGE>
Appendix A
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement"), made this _____ day of
_____________ 1998, by and between Greentree Software, Inc., a New York
corporation ("Greentree-New York"), and PurchaseSoft, Inc., a Delaware
corporation and a wholly-owned subsidiary of Greentree-New York ("PurchaseSoft")
(the two corporate parties hereto being sometimes collectively referred to as
the "Constituent Corporations").
WITNESSETH:
WHEREAS, the Boards of Directors of Greentree-New York and PurchaseSoft have
determined that the proposed merger (the "Merger") of Greentree-New York with
PurchaseSoft upon the terms hereinafter set forth is advisable and in the best
interests of the shareholders of such corporations, and the Boards of Directors
of Greentree-New York and PurchaseSoft have adopted and approved this Agreement
and both such Boards of Directors have directed that this Agreement be submitted
to the shareholders of Greentree-New York and PurchaseSoft for their approval;
and
WHEREAS, the Merger is intended to constitute a reorganization within the
meaning of Section 368(a)(1)(F) of the Internal Revenue Code of 1986; and
WHEREAS, Greentree-New York and PurchaseSoft, as appropriate, intend to take all
such action as may be necessary or appropriate as and when required by the
provisions of this Agreement in order to consummate the Merger;
WHEREAS, the authorized capital stock of Greentree-New York consists solely of
15,000,000 shares of common stock, par value $.01 per share, of which
_______________ shares are issued and outstanding as of the date hereof; and
WHEREAS, the authorized capital stock of PurchaseSoft consists solely of
15,000,000 shares of common stock, par value $.01 per share, of which
________________ shares are issued and outstanding as of the date hereof, all of
which shares are owned by Greentree-New York;
NOW, THEREFORE, the Constituent Corporations do hereby agree to merge on the
terms and conditions herein provided, as follows:
ARTICLE I
GENERAL
1.1 Agreement to Merge. The parties to this Agreement agree to effect the
Merger herein provided for, subject to the terms and conditions set forth
herein.
1.2 Effective Time of the Merger. The Merger shall be effective in
accordance with the laws of the States of New York and Delaware. The date and
time the Merger becomes effective is referred to as the "Effective Time of the
Merger."
<PAGE>
-2-
1.3 Surviving Corporation. At the Effective Time of the Merger,
Greentree-New York shall be merged with and into PurchaseSoft, and
PurchaseSoft shall be the surviving corporation, governed by the laws of the
State of Delaware (hereinafter sometimes called the 'Surviving Corporation").
The name of the Surviving Corporation will be PurchaseSoft, Inc.
1.4 Certificate of Incorporation and Bylaws. At the Effective Time of the
Merger, the Certificate of Incorporation and Bylaws of PurchaseSoft in effect
immediately prior to the Effective Time of the Merger shall be the
Certificate of Incorporation and Bylaws of the Surviving Corporation, subject
always to the right of the Surviving Corporation to amend its Certificate of
Incorporation and Bylaws in accordance with the laws of the State of Delaware
and the provisions of the Certificate of Incorporation.
1.5 Directors. The directors of Greentree-New York in office at the
Effective Time of the Merger shall be and constitute the directors of the
Surviving Corporation, each holding the same directorship in the Surviving
Corporation as he or she held in Greentree-New York for the terms elected
and/or until their respective successors shall be elected or appointed and
qualified.
1.6 Officers. The officers of Greentree-New York in office at the
Effective Time of the Merger shall be and constitute the officers of the
Surviving Corporation, each holding the same office in the Surviving
Corporation as he or she held in Greentree-New York for the terms elected
and/or until their respective successors shall be elected or appointed and
qualified.
1.7 Effect of the Merger. On and after the Effective Time of the Merger,
the separate existence of Greentree-New York and PurchaseSoft shall cease and
the Surviving Corporation shall succeed, without further action, to all the
properties and assets of Greentree-New York and PurchaseSoft of every kind,
nature and description and to Greentree-New York's and PurchaseSoft's
business as a going concern. The Surviving Corporation shall also succeed to
all rights, title and interests to all real estate and other property owned
by Greentree-New York or PurchaseSoft without reversion or impairment,
without further act or deed, and without any transfer or assignment having
occurred, but subject to any existing liens thereon. All liabilities and
obligations of Greentree-New York or PurchaseSoft shall become the
liabilities and obligations of the Surviving Corporation, and any proceedings
pending against Greentree-New York or PurchaseSoft will be continued as if
the Merger had not occurred.
1.8 Further Assurances. Greentree-New York hereby agrees that at any
time, or from time to time, as and when requested by the Surviving
Corporation, or by its successors and assigns, it will execute and deliver,
or cause to be executed and delivered in its name by its last acting
officers, or by the corresponding officers of the Surviving Corporation, all
such conveyances, assignments, transfers, deeds or other instruments, and
will take or cause to be taken such further or other action and give such
assurances as the Surviving Corporation, its successors or assigns may deem
necessary or desirable in order to evidence the transfer, vesting of any
property, right, privilege or franchise or to vest or perfect in or confirm
to the Surviving Corporation, its successors and assigns, title to and
possession of all the property, rights, privileges, powers, immunities,
franchises and interests referred to in this Article I and otherwise to carry
out the intent and purposes thereof.
ARTICLE II
CAPITAL STOCK OF THE CONSTITUENT CORPORATIONS
2.1 Greentree-New York Capital Stock. At the Effective Time of the Merger,
by virtue of the Merger and without any action on the part of Greentree-New
York, PurchaseSoft or the holders of any of the common stock ("Greentree-New
York Common Stock") of Greentree-New York: (i) each issued and outstanding
share of Greentree-New York Common Stock, including any rights attached
thereto, and each share of Common Stock of Greentree-New York, including any
rights attached thereto, held in the treasury of Greentree-New York, shall be
converted into one share of PurchaseSoft Common Stock with such similar
rights attached thereto.
<PAGE>
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2.2 PurchaseSoft Capital Stock. At the Effective Time of the Merger, by
virtue of the Merger and without any action on the part of Greentree-New
York, PurchaseSoft or the holders of any of the common stock ("PurchaseSoft
Common Stock") of PurchaseSoft, each issued and outstanding share of
PurchaseSoft Common Stock shall be canceled.
ARTICLE III
TERMINATION AND AMENDMENT
3.1 Termination. This Agreement may be terminated and abandoned at any
time prior to the Effective Time of the Merger, whether before or after
action thereon by the shareholders of the Constituent corporations, by the
mutual written consent of the Boards of Directors of Greentree-New York and
PurchaseSoft.
3.2 Consequences of Termination. In the event of the termination and
abandonment of this Agreement pursuant to the provisions of Section 3.1
hereof, this Agreement shall be of no further force or effect.
3.3 Modification, Amendment, Etc. Any of the terms or conditions of this
Agreement may be waived at any time, whether before or after action thereon
by the shareholders of the Constituent Corporations, by the party entitled to
the benefits thereof, and this Agreement may be modified or amended at any
time, whether before or after action thereon by the shareholders of the
Constituent Corporations, to the full extent permitted by the corporate laws
of the States of New York and Delaware. Any waiver, modification or
amendment shall be effective only if reduced to writing and executed by the
duly authorized representatives of the Constituent Corporations.
ARTICLE IV
MISCELLANEOUS
4.1 Expenses. The Surviving Corporation shall pay all expenses of
carrying this Agreement into effect and accomplishing the Merger herein
provided for.
4.2 Headings. Descriptive headings are for convenience only and shall not
control or affect the meaning or construction of any provisions of this
Agreement.
4.3 Counterparts. This Agreement may be executed in any number of
counterparts, each of which when so executed and delivered shall be deemed to
be an original instrument, and all such counterparts together shall
constitute only one original.
4.4 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York without regard to the
conflicts of laws principles thereof.
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to
be executed on its behalf by an officer duly authorized thereunto as of the
date first above written.
GREENTREE SOFTWARE, INC.,
a New York corporation
By: _________________________
Joseph D. Mooney,
Chairman and
Chief Executive Officer
<PAGE>
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PURCHASESOFT, INC.,
a Delaware corporation
By: _________________________
Joseph D. Mooney,
Chairman and
Chief Executive Officer
<PAGE>
Appendix B
CERTIFICATE OF INCORPORATION
OF
PURCHASESOFT, INC.
FIRST. The name of the Corporation is PURCHASESOFT, INC.
SECOND. The address of the Corporation's registered office in the
State of Delaware is 1013 Centre Road, in the City of Wilmington, County of
New Castle. The name of the Corporation's registered agent at such address
is Corporation Service Company.
THIRD. The purpose of the Corporation is to engage in any lawful act
or activity for which corporations may be organized under the General
Corporation Law of the State of Delaware.
FOURTH. The total number of shares of all classes of stock that the
Corporation shall have authority to issue is 15,000,000, consisting solely of:
15,000,000 shares of common stock, $.01 par value per share
("Common Stock").
The following is a statement of the powers, designations, preferences,
privileges, and relative, participating, optional, and other special rights
of the Common Stock:
1. COMMON STOCK
1.1. INCREASE OR DECREASE IN AUTHORIZED NUMBER. The number of
authorized shares of Common Stock may be increased or decreased (but not
below the combined number of shares thereof then outstanding) by the
affirmative vote of the holders of the majority of the stock of the
Corporation entitled to vote, irrespective of the provisions of Section
242(b)(2) of the Delaware General Corporation Law.
1.2. VOTING RIGHTS. Except as otherwise required by law, the
holders of Common Stock shall have full voting rights and powers to vote on
all matters submitted to stockholders of the Corporation for vote, consent or
approval, and each holder of Common Stock shall be entitled to one vote for
each share of Common Stock held of record by such holder.
1.3. DIVIDEND, LIQUIDATION AND OTHER RIGHTS. Each share of Common
Stock issued and outstanding shall be identical in all respects with each
other such share, and no dividends shall be paid on any shares of Common
Stock unless the same dividend is paid on all shares of Common Stock
outstanding at the time of such payment. Except as may be provided by the
laws of the State of Delaware, the holders of Common Stock shall have all
other rights of stockholders, including, without limitation, (a) the right to
receive dividends, when and as declared by the Board of Directors, out of
assets lawfully available therefor, and (b) in the event of any distribution
of assets upon a liquidation or otherwise, the right to receive ratably and
equally all the assets and funds of the Corporation remaining after the
payment to the holders of any other class or series of stock ranking senior
to the Common Stock upon liquidation of the specific preferential amounts
which they are entitled to receive upon such liquidation.
FIFTH. The following provisions are inserted for the management of
the business and for the conduct of the affairs of the Corporation and for
defining and regulating the powers of the Corporation and its directors and
stockholders and are in furtherance and not in limitation of the powers
conferred upon the Corporation by statute:
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(a) At each annual meeting of stockholders, nominees will stand
for election for one-year terms to succeed those directors whose terms
are to expire as of such meeting. Notwithstanding anything expressed or
implied to the contrary in the foregoing provisions of this Article
FIFTH, each director shall continue to serve as such until the expiration
of his term as set forth above in this paragraph (a) and his successor is
duly elected and qualified or until his or her earlier death, incapacity,
resignation or removal. Any director serving as such pursuant to this
paragraph (a) of Article FIFTH may be removed only for cause and only by
the vote of the holders of a majority of the shares of the Corporation's
stock entitled to vote for the election of directors.
(b) The Board of Directors shall have the power and authority:
(1) to adopt, amend or repeal any or all of the By-Laws of the
Corporation, subject only to such limitations, if any, as may be from
time to time imposed by other provisions of this Certificate of
Incorporation, by law, or by the By-Laws; and (2) to the full extent
permitted or not prohibited by law, and without the consent of or other
action by the stockholders, to authorize or create mortgage, pledges or
other liens or encumbrances upon any or all of the assets, real, personal
or mixed, and franchises of the Corporation, including after-acquired
property, and to exercise all of the powers of the Corporation in
connection therewith.
(c) Except as the Delaware General Corporation Law may
otherwise require with respect to the filling of vacancies or new
directorships in the Board of Directors, any vacancies or new
directorships in the Board of Directors, including unfilled vacancies or
new directorships resulting from the removal of directors with cause or
from any increase in the number of directors, may be filled only by the
vote of a majority of the remaining directors then in office, although
less than a quorum, or by the sole remaining director.
(d) Directors need not be stockholders of the Corporation.
SIXTH. No director of the Corporation shall be personally liable to
the Corporation or to any of its stockholders for monetary damages for breach
of fiduciary duty as a director, notwithstanding any provision of law
imposing such liability; PROVIDED, HOWEVER, that, to the extent required from
time to time by applicable law, this Article SIXTH shall not eliminate or
limit the liability of a director, to the extent such liability is provided
by applicable law, (i) for any breach of the director's duty of loyalty to
the Corporation or its stockholders, (ii) for acts or omissions not in good
faith or which involve intentional misconduct or a knowing violation of law,
(iii) under Section 174 of Title 8 of the Delaware Code, or (iv) for any
transactions from which the director derived an improper personal benefit.
No amendment to or repeal of this Article SIXTH shall apply to or have any
effect on the liability or alleged liability of any director for or with
respect to any acts or omissions of such director occurring prior to the
effective date of such amendment or repeal.
SEVENTH. Each person who was or is made a party or is threatened to
be made a party to or is otherwise involved in any action, suit or
proceeding, by reason of being or having been a director or officer of the
Corporation or serving or having served at the request of the Corporation as
a director, trustee, officer, employee or agent of another corporation or of
a partnership, joint venture, trust or other enterprise, including service
with respect to an employee benefit plan, whether the basis of such
proceeding is alleged action or failure to act in an official capacity as a
director, trustee, officer, employee or agent or in any other capacity while
serving as a director, trustee, officer, employee or agent, shall be
indemnified and held harmless by the Corporation to the fullest extent
authorized by the Delaware General Corporation Law, as the same exists or may
hereafter be amended, against all expense, liability and loss (including
attorneys' fees, judgments, fines, ERISA excise taxes or penalties and
amounts paid in settlement) reasonably incurred or suffered by such person in
connection therewith, as further provided in the By-Laws.
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EIGHTH. Whenever a compromise or arrangement is proposed between the
Corporation and its creditors or any class of them and/or between the
Corporation and its stockholders or any class or series of them, any court of
equitable jurisdiction within the State of Delaware may, on the application
in a summary way of the Corporation or of any creditor or stockholder thereof
or on the application of any receiver or receivers appointed for the
Corporation under the provisions of Section 391 of Title 8 of the Delaware
Code or on the application of trustees in dissolution or of any receiver or
receivers appointed for the Corporation under the provisions of Section 279
of Title 8 of the Delaware Code, order a meeting of the creditors or class of
creditors, and/or of the stockholders or class or series of stockholders of
the Corporation, as the case may be, to be summoned in such a manner as the
said court directs. If a majority of the number representing three-fourths
(3/4ths) in value of the creditors or class of creditors, and/or of the
stockholders or class or series of stockholders of the Corporation, as the
case may be, agree to any compromise or arrangement and to any reorganization
of the Corporation as a consequence of such compromise or arrangement, the
compromise or arrangement and the said reorganization shall, if sanctioned by
the court to which the said application has been made, be binding on all
creditors or class of creditors, and/or stockholders or class or series of
stockholders of the Corporation, as the case may be, and also on the
Corporation.
NINTH. The Board of Directors, when considering a tender offer or
merger or acquisition proposal, may take into account factors in addition to
potential short-term economic benefits to stockholders of the Corporation,
including without limitation (A) comparison of the proposed consideration to
be received by stockholders in relation to the then current market price of
the Corporation's capital stock, the estimated current value of the
Corporation in a freely negotiated transaction, and the estimated future
value of the Corporation as an independent entity and (B) the impact of such
a transaction on the employees, suppliers, and customers of the Corporation
and its effect on the communities in which the Corporation operates.
TENTH. Any action required or permitted to be taken by the
stockholders of the Corporation may be taken only at a duly called annual or
special meeting of the stockholders, and not by written consent in lieu of
such a meeting. Special meetings of stockholders of the Corporation may be
called only by the Chairman of the Board of Directors, the President, or a
majority of the total number of directors which the Corporation would have if
there were no vacancies.
ELEVENTH. The affirmative vote of the holders of at least
seventy-five percent (75%) of the outstanding voting stock of the Corporation
(in addition to any separate class vote that may in the future be required
pursuant to the terms of any outstanding preferred stock) shall be required
(i) to amend or repeal the provisions of Articles FOURTH (to the extent such
provisions relate to the authority of the Board of Directors to issue shares
of Preferred Stock in one or more series, the terms of which may be
determined by the Board of Directors), FIFTH, SEVENTH, NINTH, TENTH or
ELEVENTH of the Corporation's Certificate of Incorporation, as amended from
time to time, (ii) to amend, adopt or repeal the Corporation's By-Laws
(PROVIDED, HOWEVER, that the provisions of this Article ELEVENTH shall in no
way limit the power or authority of the Board of Directors to amend, adopt or
repeal By-Laws), or (iii) to reduce the number of authorized shares of Common
Stock.
TWELFTH. The name and mailing address of the sole incorporator is as
follows:
<TABLE>
<CAPTION>
NAME MAILING ADDRESS
---- ---------------
<S> <C>
Douglas E. Onsi, Esq. c/o Bingham Dana LLP
150 Federal Street
Boston, Massachusetts 02110
</TABLE>
[Remainder of page intentionally left blank]
<PAGE>
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THE UNDERSIGNED, being the sole incorporator hereinbefore named, for
the purposes of forming a corporation pursuant to the General Corporation Law
of the State of Delaware, does make this certificate, hereby declaring and
certifying that this is my act and deed and the facts stated herein are true,
and accordingly have hereunto set my hand this _____ day of __________, 1998.
___________________________________
Douglas E. Onsi, Esq.
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<PAGE>
Appendix C
BY-LAWS OF
PURCHASESOFT, INC.
ARTICLE I. - GENERAL.
1.1. OFFICES. The registered office shall be in the City of Wilmington,
County of New Castle, State of Delaware. The Corporation may also have
offices at such other places both within and without the State of
Delaware as the Board of Directors may from time to time determine or the
business of the Corporation may require.
1.2. SEAL. The seal of the Corporation shall be in the form of a circle and
shall have inscribed thereon the name of the Corporation, the year of its
organization and the words "Corporate Seal, Delaware".
1.3. FISCAL YEAR. The fiscal year of the Corporation shall be the period from
June 1 through May 31.
ARTICLE II. - STOCKHOLDERS.
2.1. PLACE OF MEETINGS. All meetings of the stockholders shall be held at
the office of the Corporation except such meetings as the Board of
Directors expressly determine shall be held elsewhere, in which case
meetings may be held upon notice as hereinafter provided at such other
place or places within or without the State of Minnesota as the Board
of Directors shall have determined and as shall be stated in such
notice.
2.2. ANNUAL MEETING. The annual meeting of stockholders of the Corporation
shall be held on such date and at such place and time, within the first
six months of the Corporation's fiscal year, as may be fixed by
resolution of the Board of Directors and stated in the notice of the
meeting. At each annual meeting of stockholders, the stockholders
entitled to vote shall elect such members of the Board of Directors as
are standing for election at such meeting, and shall transact such other
business as may properly be brought before the meeting. At the annual
meeting any business may be transacted, irrespective of whether the
notice calling such meeting shall have contained a reference thereto,
except where notice is required by law, the Corporation's Certificate of
Incorporation, as amended and in effect from time to time (the
"Certificate of Incorporation"), or these By-Laws.
2.3. SPECIAL MEETING. Special meetings of stockholders for any purpose or
purposes may only be called by the Chairman of the Board of Directors,
the President, a majority of the total number of directors which the
Corporation would have if there were no vacancies (the "Whole Board"), or
by the Corporation at the written request of the stockholders holding
greater than one-third of the outstanding shares. Only such business
shall be conducted at a special meeting as shall have been brought before
the meeting pursuant to the Corporation's notice of meeting.
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2.4. NOTICE OF MEETING. Written notice of any meeting of the stockholders
stating the place, date and hour of the meeting shall be given to each
stockholder entitled to vote at such meeting not less than ten nor more
than sixty days before the date of the meeting. Notice need not be given
to any stockholder who submits a written waiver of notice signed by him
before or after the time stated therein. Attendance of a stockholder at
a meeting of stockholders shall constitute a waiver of notice of such
meeting, except when the stockholder attends the meeting for the express
purpose of objecting, at the beginning of the meeting, to the transaction
of any business because the meeting is not lawfully called or convened.
Neither the business to be transacted at, nor the purpose of, any regular
or special meeting of the stockholders need be specified in any written
waiver of notice. Any previously scheduled meeting of the stockholders
may be postponed, and (unless the Certificate of Incorporation otherwise
provides) any special meeting of the stockholders may be canceled, by
resolution of the Board of Directors upon public notice given prior to
the date previously scheduled for such meeting of stockholders.
2.5. NOTICE OF STOCKHOLDER BUSINESS AND NOMINATIONS.
(a) NOMINATION OF DIRECTORS. Only persons who are
nominated in accordance with the procedures set forth in these By-Laws
shall be eligible to serve as directors. Nominations of persons for
election to the Board of Directors of the Corporation may be made at a
meeting of stockholders (a) by or at the direction of the Board of
Directors or (b) by any stockholder of the Corporation who is a
stockholder of record at the time of giving of notice for the election
of directors at the meeting and who complies with the notice
procedures set forth in this Section 2.5(a). Such nominations, other
than those made by or at the direction of the Board of Directors,
shall be made pursuant to timely notice in writing to the Secretary of
the Corporation. To be timely, a stockholder's notice shall be
delivered to or mailed and received at the principal executive offices
of the Corporation not less than 90 days nor more than 120 days prior
to the meeting; PROVIDED, HOWEVER, that in the event that less than
100 days' notice or prior public disclosure of the date of the meeting
is given or made to stockholders, notice by the stockholder to be
timely must be so received not later than the close of business on the
seventh day following the day on which such notice of the date of the
meeting or such public disclosure was made. Such stockholder's notice
shall set forth (a) as to each person whom the stockholder proposes to
nominate for election or reelection as a director, all information
relating to such person that is required to be disclosed in
solicitations of proxies for election of directors, or is otherwise
required, in each case pursuant to Regulation 14A under the Securities
Exchange Act of 1934, as amended (including such person's written
consent to being named in the proxy statement as a nominee and to
serving as a director if elected), and (b) as to the stockholder
giving the notice (i) the name and address, as they appear on the
Corporation's books, of such stockholder and (ii) the class and number
of shares of the Corporation which are beneficially owned by such
stockholder. At the request of the Board of Directors, any person
nominated by the Board of Directors for election as a director shall
furnish to the Secretary of the Corporation that information required
to be set forth in a stockholder's notice of nomination which pertains
to the nominee. No person shall be eligible to serve as a director of
the Corporation unless nominated in accordance with the procedures set
forth in this Section 2.5(a). The chairman of the meeting shall, if
the facts warrant, determine and declare to the meeting that a
nomination was not made in accordance with the procedures prescribed
by the By-Laws, and if he should so determine, he shall so declare to
the meeting and the defective nomination shall be disregarded.
Notwithstanding the foregoing provisions of this Section 2.5(a), a
stockholder shall also comply with all applicable requirements of the
Securities Exchange Act of 1934, as amended, and the rules and
regulations thereunder with respect to the matters set forth in this
Section 2.5(a).
<PAGE>
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(b) NOTICE OF BUSINESS. At any meeting of the
stockholders, only such business shall be conducted as shall have been
brought before the meeting (a) by or at the direction of the Board of
Directors or (b) by any stockholder of the Corporation who is a
stockholder of record at the time of giving of the notice provided for in
this Section 2.5(b), who shall be entitled to vote at such meeting and
who complies with the notice procedures set forth in this Section 2.5(b).
For business to be properly brought before a stockholder meeting by a
stockholder, the stockholder must have given timely notice thereof in
writing to the Secretary of the Corporation. To be timely, a
stockholder's notice must be delivered to or mailed and received at the
principal executive offices of the Corporation not less than 90 days nor
more than 120 days prior to the meeting; PROVIDED, HOWEVER, that in the
event that less than 100 days' notice or prior public disclosure of the
date of the meeting is given or made to stockholders, notice by the
stockholder to be timely must be received no later than the close of
business on the seventh day following the day on which such notice of the
date of the meeting was mailed or such public disclosure was made. A
stockholder's notice to the Secretary shall set forth as to each matter
the stockholder proposes to bring before the meeting (a) a brief
description of the business desired to be brought before the meeting and
the reasons for conducting such business at the meeting; (b) the name and
address, as they appear on the Corporation's books, of the stockholder
proposing such business, (c) the class and number of shares of the
Corporation which are beneficially owned by the stockholder, and (d) any
material interest of the stockholder in such business. Notwithstanding
anything in the By-Laws to the contrary, no business shall be conducted
at a stockholder meeting except (i) in accordance with the procedures set
forth in this Section 2.5(b) or (ii) with respect to nominations of
persons for election as directors of the Corporation, in accordance with
the provisions of Section 2.5(a) hereof. The Chairman of the meeting
shall, if the facts warrant, determine and declare to the meeting that
business was not properly brought before the meeting and in accordance
with the provisions of the By-Laws, and if he should so determine, he
shall so declare to the meeting and any such business not properly
brought before the meeting shall not be transacted. Notwithstanding the
foregoing provisions of this Section 2.5(b), a stockholder shall also
comply with all applicable requirements of the Securities Exchange Act of
1934, as amended, and the rules and regulations thereunder with respect
to the matters set forth in this Section.
2.6. QUORUM AND ADJOURNMENT. At all meetings of the stockholders, the
holders of a majority of the stock issued and outstanding and entitled
to vote thereat, present in person or represented by proxy, shall
constitute a quorum requisite for the transaction of business except
as otherwise provided by law, by the Certificate of Incorporation or
by these By-Laws. The chairman of the meeting or a majority of the
shares so represented may, whether or not there is such a quorum,
adjourn the meeting from time to time without notice other than
announcement at the meeting. If the adjournment is for more than
thirty days, or if after the adjournment a new record date is fixed
for the adjourned meeting, a notice of the adjourned meeting shall be
given to each stockholder of record entitled to vote at the meeting.
At such adjourned meeting, at which the requisite amount of voting
stock shall be represented, any business may be transacted which might
have been transacted if the meeting had been held as originally
called. The stockholders present at a duly called meeting at which
quorum is present may continue to transact business until adjournment,
notwithstanding the withdrawal of enough stockholders to leave less
than a quorum.
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2.7. RIGHT TO VOTE; PROXIES. Each holder of a share or shares of capital
stock of the Corporation having the right to vote at any meeting shall
be entitled to one vote for each such share of stock held by him. Any
stockholder entitled to vote at any meeting of stockholders may vote
either in person or by proxy, but no proxy which is dated more than
three years prior to the meeting at which it is offered shall confer
the right to vote thereat unless the proxy provides that it shall be
effective for a longer period. A proxy may be granted by a writing
executed by the stockholder or his authorized officer, director,
employee or agent or by transmission or authorization of transmission
of a telegram, cablegram, or other means of electronic transmission to
the person who will be the holder of the proxy or to a proxy
solicitation firm, proxy support service organization or like agent
duly authorized by the person who will be the holder of the proxy to
receive such transmission, subject to the conditions set forth in
Section 212 of the Delaware General Corporation Law, as it may be
amended from time to time (the "Delaware GCL").
2.8. VOTING. At all meetings of stockholders, except as otherwise expressly
provided for by statute, the Certificate of Incorporation or these
By-Laws, (i) in all matters other than the election of directors, the
affirmative vote of a majority of shares present in person or
represented by proxy at the meeting and entitled to vote on such
matter shall be the act of the stockholders and (ii) directors shall
be elected by a plurality of the votes of the shares present in person
or represented by proxy at the meeting and entitled to vote on the
election of directors. Except as otherwise expressly provided by law,
the Certificate of Incorporation or these By-Laws, at all meetings of
stockholders the voting shall be by ballot, each of which shall state
the name of the stockholder voting and the number of shares voted by
him, and, if such ballot be cast by a proxy, it shall also state the
name of the proxy. The chairman of the meeting shall fix and announce
at the meeting the date and time of the opening and the closing of the
polls for each matter upon which the stockholders will vote at a
meeting.
2.8.1. INSPECTORS. The Board of Directors by resolutions shall
appoint one or more inspectors, which inspector or inspectors may include
individuals who serve the Corporation in other capacities, including,
without limitation, as officers, employees, agents or representatives, to
act at the meeting of stockholders and make a written report thereof.
One or more persons may be designated as alternate inspectors to replace
any inspector who fails to act. If no inspector or alternate has been
appointed to act or is able to act at a meeting of stockholders, the
chairman of the meeting shall appoint one or more inspectors to act at
the meeting. Each inspector, before discharging his or her duties, shall
take and sign an oath faithfully to execute the duties of inspector with
strict impartiality and according to the best of his or her ability. The
inspectors shall have the duties prescribed by law.
2.9. STOCKHOLDERS' LIST. A complete list of the stockholders entitled to
vote at any meeting of stockholders, arranged in alphabetical order
and showing the address of each stockholder, and the number of shares
registered in the name of each stockholder, shall be prepared by the
Secretary and filed either at a place within the city where the
meeting is to be held, which place shall be specified in the notice of
the meeting, or, if not so specified, at the place where the meeting
is to be held, at least 10 days before such meeting, and shall at all
times during the usual hours for business, and during the whole time
of said election, be open to the examination of any stockholder for a
purpose germane to the meeting.
2.10. NO STOCKHOLDER ACTION BY WRITTEN CONSENT. Unless otherwise provided
in the Certificate of Incorporation, any action required or permitted
to be taken by the stockholders of the Corporation must be effected at
an annual or special meeting of stockholders of the Corporation and
may not be effected by any consent in writing by such stockholders.
<PAGE>
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ARTICLE III. - DIRECTORS.
3.1. GENERAL POWERS. In addition to the powers and authority expressly
conferred upon them by these By-Laws, the Board of Directors may
exercise all such powers of the Corporation and do all such lawful
acts and things as are not by statute or by the Certificate of
Incorporation or by these By-Laws directed or required to be exercised
or done by the stockholders.
3.2. QUALIFICATIONS OF DIRECTORS. A director need not be a stockholder, a
citizen of the United States, or a resident of the State of Delaware.
3.3. NUMBER OF DIRECTORS; VACANCIES.
(a) The number of directors of the Corporation shall be not
less than three (3) nor more than nine (9), unless and until otherwise
determined by a vote of a majority of the Board of Directors as herein
provided. The size of the Board of Directors shall be fixed from time to
time pursuant to a resolution adopted by a majority of the Whole Board of
Directors or by the stockholders. The Board of Directors shall hold
office until the annual meeting of stockholders and until their
successors are elected and qualified or until their earlier resignation
or removal. Any director may resign at any time upon written notice to
the Corporation. Except as the Delaware GCL may otherwise require, in
the interim between annual meetings of stockholders or of special
meetings of stockholders called for the election of directors and/or for
the removal of one or more directors and for the filling of any vacancy
in that connection, any vacancies in the Board of Directors, including
unfilled vacancies resulting from the removal of directors for cause or
without cause, may be filled by the vote of a majority of the remaining
directors then in office, although less than a quorum, or by the sole
remaining director, or by the stockholders.
3.4. RESIGNATION. Any director of this Corporation may resign at any time
by giving written notice to the Chairman of the Board, if any, the
President or the Secretary of the Corporation. Such resignation shall
take effect at the time specified therein, at the time of receipt if
no time is specified therein or at the time of acceptance if the
effectiveness of such resignation is conditioned upon its acceptance.
Unless otherwise specified therein, the acceptance of such resignation
shall not be necessary to make it effective.
3.5. REMOVAL. Except as may otherwise be provided by the Delaware GCL or the
Certificate of Incorporation, any director or the entire Board of
Directors may be removed, with or without cause, by the holders of a
majority of the shares then entitled to vote at an election of directors.
3.6. PLACE OF MEETINGS AND BOOKS. The Board of Directors may hold their
meetings and keep the books of the Corporation outside the State of
Delaware, at such places as they may from time to time determine.
3.7. EXECUTIVE COMMITTEE. There may be an executive committee of one or
more directors designated by resolution passed by a majority of the
Whole Board. The act of a majority of the members of such committee
shall be the act of the committee. Said committee may meet at stated
times or on notice to all by any of their own number, and shall have
and may exercise those powers of the Board of Directors in the
management of the business affairs of the Corporation as are provided
by law and may authorize the seal of the Corporation to be affixed to
all papers which may require it. Vacancies in the membership of the
committee shall be filled by the Board of Directors at a regular
meeting or at a special meeting called for that purpose.
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3.8. OTHER COMMITTEES. The Board of Directors may also designate one or
more committees in addition to the executive committee, by resolution
or resolutions passed by a majority of the Whole Board; such committee
or committees shall consist of one or more directors of the
Corporation, and to the extent provided in the resolution or
resolutions designating them, shall have and may exercise specific
powers of the Board of Directors in the management of the business and
affairs of the Corporation to the extent permitted by statute and
shall have power to authorize the seal of the Corporation to be
affixed to all papers which may require it. Such committee or
committees shall have such name or names as may be determined from
time to time by resolution adopted by the Board of Directors.
3.9. POWERS DENIED TO COMMITTEES. Committees of the Board of Directors
shall not, in any event, have any power or authority to amend the
Certificate of Incorporation (except that a committee may, to the
extent authorized in the resolution or resolutions providing for the
issuance of shares adopted by the Board of Directors as provided in
Section 151(a) of the Delaware GCL, fix the designations and any of
the preferences or rights of such shares relating to dividends,
redemption, dissolution, any distribution of assets of the Corporation
or the conversion into, or the exchange of such shares for, shares of
any other class or classes or any other series of the same or any
other class or classes of stock of the Corporation or fix the number
of shares of any series of stock or authorize the increase or decrease
of the shares of any series), adopt an agreement of merger or
consolidation, recommend to the stockholders the sale, lease or
exchange of all or substantially all of the Corporation's property and
assets, recommend to the stockholders a dissolution of the Corporation
or a revocation of a dissolution or to amend the By-Laws of the
Corporation. Further, no committee of the Board of Directors shall
have the power or authority to declare a dividend, to authorize the
issuance of stock or to adopt a certificate of ownership and merger
pursuant to Section 253 of the Delaware GCL, unless the resolution or
resolutions designating such committee expressly so provides.
3.10. SUBSTITUTE COMMITTEE MEMBER. In the absence or on the disqualification
of a member of a committee, the member or members thereof present at
any meeting and not disqualified from voting, whether or not he or
they constitute a quorum, may unanimously appoint another member of
the Board of Directors to act at the meeting in the place of such
absent or disqualified member. Any committee shall keep regular
minutes of its proceedings and report the same to the Board of
Directors as may be required by the Board of Directors.
3.11. COMPENSATION OF DIRECTORS. The Board of Directors shall have the power
to fix the compensation of directors and members of committees of the
Board of Directors. The directors may be paid their expenses, if any,
of attendance at each meeting of the Board of Directors and may be
paid a fixed sum for attendance at each meeting of the Board of
Directors and/or a stated annual fee (some or all of which may be paid
in the form of capital stock of the Corporation) as director. No such
payment shall preclude any director from serving the Corporation in
any other capacity and receiving compensation therefor. Members of
special or standing committees may be allowed like compensation for
attending committee meetings.
3.12. REGULAR MEETINGS. A regular meeting of the Board of Directors shall be
held without other notice than this Section 3.12, immediately after,
and at the same place as, the Annual Meeting of Stockholders. The
Board of Directors may, by resolutions, provide the time and place for
the holding of additional regular meetings without other notice than
such resolution. Such regular meetings shall be held at such place
within or without the State of Delaware as shall be fixed by the Board
of Directors.
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3.13. SPECIAL MEETINGS. Special meetings of the Board of Directors may be
called by the Chairman of the Board of Directors, if any, or the
President, on two (2) days notice to each director, or such shorter
period of time before the meeting as will nonetheless be sufficient
for the convenient assembly of the directors so notified; special
meetings shall be called by the Secretary in like manner and on like
notice, on the written request of two or more directors.
3.14. QUORUM. At all meetings of the Board of Directors, a majority of the
total number of directors shall be necessary and sufficient to
constitute a quorum for the transaction of business, and the act of a
majority of the directors present at any meeting at which there is a
quorum shall be the act of the Board of Directors, except as may be
otherwise specifically permitted or provided by statute, or by the
Certificate of Incorporation, or by these By-Laws. If at any meeting
of the Board of Directors there shall be less than a quorum present, a
majority of those present may adjourn the meeting from time to time
until a quorum is obtained, and no further notice thereof need be
given other than by announcement at said meeting which shall be so
adjourned.
3.15. TELEPHONIC PARTICIPATION IN MEETINGS. Members of the Board of
Directors or any committee designated by such board may participate in
a meeting of the Board of Directors or committee thereof by means of
conference telephone or similar communications equipment by means of
which all persons participating in the meeting can hear each other,
and participation in a meeting pursuant to this section shall
constitute presence in person at such meeting.
3.16. ACTION BY CONSENT. Unless otherwise restricted by the Certificate of
Incorporation or these By-Laws, any action required or permitted to be
taken at any meeting of the Board of Directors or of any committee
thereof may be taken without a meeting, if written consent thereto is
signed by all members of the Board of Directors or of such committee,
as the case may be, and such written consent is filed with the minutes
of proceedings of the Board of Directors or committee.
ARTICLE IV. - OFFICERS.
4.1. SELECTION; STATUTORY OFFICERS. The officers of the Corporation shall
be chosen by the Board of Directors. There shall be a President, a
Secretary and a Treasurer, and there may be a Chairman of the Board of
Directors, one or more Vice Presidents, one or more Assistant
Secretaries, and one or more Assistant Treasurers, as the Board of
Directors may elect. Any number of offices may be held by the same
person, unless the Certificate of Incorporation or these By-Laws
otherwise provide.
4.2. TIME OF ELECTION. The officers above named shall be chosen by the
Board of Directors at its first meeting after each annual meeting of
stockholders. None of said officers need be a director.
4.3. ADDITIONAL OFFICERS. The Board of Directors may appoint such other
officers and agents as it shall deem necessary, who shall hold their
offices for such terms and shall exercise such powers and perform such
duties as shall be determined from time to time by the Board of
Directors.
4.4. TERMS OF OFFICE. The officers of the Corporation shall hold office
until their successors are chosen and qualify. Any officer elected or
appointed by the stockholders may be removed at any time by the
affirmative vote of a majority of the stockholders. Any vacancy
occurring in any office of the Corporation shall be filled by the
Board of Directors.
4.5. COMPENSATION OF OFFICERS. The Board of Directors (or a duly appointed
committee of the Board of Directors) shall have power to fix the
compensation of all officers of the Corporation.
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4.6. CHAIRMAN OF THE BOARD. Unless the Board of Directors otherwise
determines, the Chairman of the Board shall be the chief executive
officer and head of the Corporation. The Chairman of the Board of
Directors, if any, otherwise the President, if a director, or such
other director as the Board may choose, shall preside at all meetings
of the Board of Directors and of the stockholders of the Corporation.
In the absence of the President, or in the event of the President's
inability or refusal to act, the Chairman of the Board shall perform
the duties and exercise the powers of the President until such vacancy
shall be filled in the manner prescribed by these By-Laws or by law.
The Chairman of the Board shall have such other powers and perform
such other duties as may from time to time be prescribed by the Board
of Directors or these By-Laws.
4.7. PRESIDENT. Unless there is a Chairman of the Board, the President
shall preside at all meetings of directors and stockholders. Under
the supervision of the Board of Directors and of the executive
committee, the President shall have the general control and management
of its business and affairs, subject, however, to the right of the
Board of Directors and of the executive committee to confer any
specific power, except such as may be by statute exclusively conferred
on the President, upon any other officer or officers of the
Corporation. The President shall perform and do all acts and things
incident to the position of President and such other duties as may be
assigned to him from time to time by the Board of Directors or the
executive committee.
4.8. VICE-PRESIDENTS. The Vice-Presidents shall perform such of the duties
of the President on behalf of the Corporation as may be respectively
assigned to them from time to time by the Board of Directors or by the
executive committee or by the President. The Board of Directors or the
executive committee may designate one of the Vice-Presidents as the
Executive Vice-President, and in the absence or inability of the
President to act, such Executive Vice-President shall have and possess
all of the powers and discharge all of the duties of the President,
subject to the control of the Board of Directors and of the executive
committee.
4.9. TREASURER. The Treasurer shall have the care and custody of all the
funds and securities of the Corporation which may come into his hands as
Treasurer, and the power and authority to endorse checks, drafts and
other instruments for the payment of money for deposit or collection when
necessary or proper and to deposit the same to the credit of the
Corporation in such bank or banks or depository as the Board of Directors
or the executive committee, or the officers or agents to whom the Board
of Directors or the executive committee may delegate such authority, may
designate, and he may endorse all commercial documents requiring
endorsements for or on behalf of the Corporation. He may sign all
receipts and vouchers for the payments made to the Corporation. He shall
render an account of his transactions to the Board of Directors or to the
executive committee as often as the Board of Directors or the committee
shall require the same. He shall enter regularly in the books to be kept
by him for that purpose full and adequate account of all moneys received
and paid by him on account of the Corporation. He shall perform all acts
incident to the position of Treasurer, subject to the control of the
Board of Directors and of the executive committee. He shall when
requested, pursuant to vote of the Board of Directors or the executive
committee, give a bond to the Corporation conditioned for the faithful
performance of his duties, the expense of which bond shall be borne by
the Corporation.
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4.10. SECRETARY. The Secretary shall keep the minutes of all meetings of the
Board of Directors and of the stockholders; and shall attend to the
giving and serving of all notices of the Corporation. Except as
otherwise ordered by the Board of Directors or the executive committee,
the Secretary shall attest the seal of the Corporation upon all contracts
and instruments executed under such seal and shall affix the seal of the
Corporation thereto and to all certificates of shares of capital stock of
the Corporation. The Secretary shall have charge of the stock
certificate book, transfer book and stock ledger, and such other books
and papers as the Board of Directors or the executive committee may
direct. He shall, in general, perform all the duties of Secretary,
subject to the control of the Board of Directors and of the executive
committee.
4.11. ASSISTANT SECRETARY. The Assistant Secretary, or if there be more
than one, the assistant secretaries in the order determined by the Board
of Directors (or if there be no such determination, then in the order of
their election) shall, in the absence of the Secretary or in the event of
his inability or refusal to act, perform the duties and exercise the
powers of the Secretary and shall perform such other duties and have such
other powers as the Board of Directors may from time to time prescribe.
4.12. ASSISTANT TREASURER. The Assistant Treasurer, or if there shall be
more than one, the Assistant Treasurers in the order determined by the
Board of Directors (or if there be no such determination, then in the
order of their election), shall, in the absence of the Treasurer or in
the event of his inability or refusal to act, perform the duties and
exercise the powers of the Treasurer and shall perform such other duties
and have such other powers as the Board of Directors may from time to
time prescribe.
4.13. SUBORDINATE OFFICERS. The Board of Directors may select such
subordinate officers as it may deem desirable. Each such officer shall
hold office for such period, have such authority, and perform such duties
as the Board of Directors may prescribe. The Board of Directors may,
from time to time, authorize any officer to appoint and remove
subordinate officers and to prescribe the powers and duties thereof.
4.14. REMOVAL. Any officer elected, or agent appointed, by the Board of
Directors may be removed by the affirmative vote of a majority of the
Whole Board whenever, in their judgment, the best interests of the
Corporation would be served thereby. Any officer or agent appointed by
the President may be removed by him whenever, in his judgment, the best
interests of the Corporation would be served thereby. No elected officer
shall have any contractual rights against the Corporation for
compensation by virtue of such election beyond the date of the election
of his successor, his death, his resignation or his removal, whichever
event shall first occur, except as otherwise provided in an employment
contract or under an employee deferred compensation plan.
4.15. VACANCIES. A newly created elected office and a vacancy in any elected
office because of death, resignation or removal may be filled by the
Board of Directors for the unexpired portion of the term at any meeting
of the Board of Directors. Any vacancy in an office appointed by the
President because of death, resignation, or removal may be filled by the
President.
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ARTICLE V. - STOCK.
5.1. STOCK. Each stockholder shall be entitled to a certificate or
certificates of stock of the Corporation in such form as the Board of
Directors may from time to time prescribe. The certificates of stock of
the Corporation shall be numbered and shall be entered in the books of
the Corporation as they are issued. They shall certify the holder's name
and number and class of shares and shall be signed by both of (i) either
the President or a Vice-President, and (ii) any one of the Treasurer or
an Assistant Treasurer or the Secretary or an Assistant Secretary, and
shall be sealed with the corporate seal of the Corporation. If such
certificate is countersigned (l) by a transfer agent other than the
Corporation or its employee, or, (2) by a registrar other than the
Corporation or its employee, the signature of the officers of the
Corporation and the corporate seal may be facsimiles. In case any
officer or officers who shall have signed, or whose facsimile signature
or signatures shall have been used on, any such certificate or
certificates shall cease to be such officer or officers of the
Corporation, whether because of death, resignation or otherwise, before
such certificate or certificates shall have been delivered by the
Corporation, such certificate or certificates may nevertheless be adopted
by the Corporation and be issued and delivered as though the person or
persons who signed such certificate or certificates or whose facsimile
signature shall have been used thereon had not ceased to be such officer
or officers of the Corporation.
5.2. FRACTIONAL SHARE INTERESTS. The Corporation may, but shall not be
required to, issue fractions of a share. If the Corporation does not
issue fractions of a share, it shall (i) arrange for the disposition of
fractional interests by those entitled thereto, (ii) pay in cash the fair
value of fractions of a share as of the time when those entitled to
receive such fractions are determined, or (iii) issue scrip or warrants
in registered or bearer form which shall entitle the holder to receive a
certificate for a full share upon the surrender of such scrip or warrants
aggregating a full share. A certificate for a fractional share shall,
but scrip or warrants shall not unless otherwise provided therein,
entitle the holder to exercise voting rights, to receive dividends
thereon, and to participate in any of the assets of the Corporation in
the event of liquidation. The Board of Directors may cause scrip or
warrants to be issued subject to the conditions that they shall become
void if not exchanged for certificates representing full shares before a
specified date, or subject to the conditions that the shares for which
scrip or warrants are exchangeable may be sold by the Corporation and the
proceeds thereof distributed to the holders of scrip or warrants, or
subject to any other conditions which the Board of Directors may impose.
5.3. TRANSFERS OF STOCK. Subject to any transfer restrictions then in force,
the shares of stock of the Corporation shall be transferable only upon
its books by the holders thereof in person or by their duly authorized
attorneys or legal representatives and upon such transfer the old
certificates shall be surrendered to the Corporation by the delivery
thereof to the person in charge of the stock and transfer books and
ledgers or to such other person as the directors may designate by whom
they shall be cancelled and new certificates shall thereupon be issued.
The Corporation shall be entitled to treat the holder of record of any
share or shares of stock as the holder in fact thereof and accordingly
shall not be bound to recognize any equitable or other claim to or
interest in such share on the part of any other person whether or not it
shall have express or other notice thereof save as expressly provided by
the laws of Delaware.
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5.4. RECORD DATE. For the purpose of determining the stockholders entitled to
notice of or to vote at any meeting of stockholders or any adjournment
thereof, or to express consent to corporate action in writing without a
meeting, or entitled to receive payment of any dividend or other
distribution or the allotment of any rights, or entitled to exercise any
rights in respect of any change, conversion, or exchange of stock or for
the purpose of any other lawful action, the Board of Directors may fix,
in advance, a record date, which shall not be more than sixty (60) days
nor less than ten (10) days before the date of such meeting, nor more
than sixty (60) days prior to any other action. If no such record date
is fixed by the Board of Directors, the record date for determining
stockholders entitled to notice of or to vote at a meeting of
stockholders shall be at the close of business on the day next preceding
the day on which notice is given, or, if notice is waived, at the close
of business on the day next preceding the day on which the meeting is
held; the record date for determining stockholders entitled to express
consent to corporate action in writing without a meeting, when no prior
action by the Board of Directors is necessary, shall be the day on which
the first written consent is expressed; and the record date for
determining stockholders for any other purpose shall be at the close of
business on the day on which the Board of Directors adopts the resolution
relating thereto. A determination of stockholders of record entitled to
notice of or to vote at any meeting of stockholders shall apply to any
adjournment of the meeting; provided, however, that the Board of
Directors may fix a new record date for the adjourned meeting.
5.5. TRANSFER AGENT AND REGISTRAR. The Board of Directors may appoint one
or more transfer agents or transfer clerks and one or more registrars and
may require all certificates of stock to bear the signature or signatures
of any of them.
5.6. DIVIDENDS.
1. Power to Declare. Dividends upon the capital stock of the
Corporation, subject to the provisions of the Certificate of
Incorporation, if any, may be declared by the Board of Directors at any
regular or special meeting, pursuant to law. Dividends may be paid in
cash, in property, in promissory notes or in shares of the capital stock,
subject to the provisions of the Certificate of Incorporation and the
laws of Delaware.
2. Reserves. Before payment of any dividend, there may be set
aside out of any funds of the Corporation available for dividends such
sum or sums as the directors from time to time, in their absolute
discretion, think proper as a reserve or reserves to meet contingencies,
or for equalizing dividends, or for repairing or maintaining any property
of the Corporation, or for such other purpose as the directors shall
think conducive to the interest of the Corporation, and the directors may
modify or abolish any such reserve in the manner in which it was created.
5.7. LOST, STOLEN OR DESTROYED CERTIFICATES. No certificates for shares of
stock of the Corporation shall be issued in place of any certificate
alleged to have been lost, stolen or destroyed, except upon production
of such evidence of the loss, theft or destruction and upon
indemnification of the Corporation and its agents to such extent and
in such manner as the Board of Directors may from time to time prescribe.
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ARTICLE VI. - MISCELLANEOUS MANAGEMENT PROVISIONS.
6.1. CHECKS, DRAFTS AND NOTES. All checks, drafts or orders for the payment
of money, and all notes and acceptances of the Corporation shall be
signed by such officer or officers, agent or agents as the Board of
Directors may designate.
6.2. NOTICES.
1. Notices to directors may, and notices to
stockholders shall, be in writing and delivered personally or
mailed to the directors or stockholders at their addresses
appearing on the books of the Corporation. Notice by mail shall
be deemed to be given at the time when the same shall be mailed.
Notice to directors may also be given by telegram, telecopy or
orally, by telephone or in person.
2. Whenever any notice is required to be given under the
provisions of the statutes or of the Certificate of Incorporation
of the Corporation or of these By-Laws, a written waiver of
notice, signed by the person or persons entitled to said notice,
whether before or after the time stated therein or the meeting or
action to which such notice relates, shall be deemed equivalent to
notice. Attendance of a person at a meeting shall constitute a
waiver of notice of such meeting except when the person attends a
meeting for the express purpose of objecting, at the beginning of
the meeting, to the transaction of any business because the
meeting is not lawfully called or convened.
6.3. CONFLICT OF INTEREST. No contract or transaction between the
Corporation and one or more of its directors or officers, or between
the Corporation and any other corporation, partnership, association,
or other organization in which one or more of its directors or
officers are directors or officers, or have a financial interest,
shall be void or voidable solely for this reason, or solely because
the director or officer is present at or participates in the meeting
of the Board of Directors or committee thereof which authorized the
contract or transaction, or solely because his or their votes are
counted for such purpose, if: (i) the material facts as to his
relationship or interest and as to the contract or transaction are
disclosed or are known to the Board of Directors or the committee and
the Board of Directors or committee in good faith authorizes the
contract or transaction by the affirmative vote of a majority of the
disinterested directors, even though the disinterested directors be
less than a quorum; or (ii) the material facts as to his relationship
or interest and as to the contract or transaction are disclosed or are
known to the stockholders of the Corporation entitled to vote thereon,
and the contract or transaction as specifically approved in good faith
by vote of such stockholders; or (iii) the contract or transaction is
fair as to the Corporation as of the time it is authorized, approved
or ratified, by the Board of Directors, a committee or the
stockholders. Common or interested directors may be counted in
determining the presence of a quorum at a meeting of the Board of
Directors or of a committee which authorizes the contract or
transaction.
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6.4. VOTING OF SECURITIES OWNED BY THIS CORPORATION. Subject always to the
specific directions of the Board of Directors, (i) any shares or other
securities issued by any other corporation and owned or controlled by
this Corporation may be voted in person at any meeting of security
holders of such other corporation by the President of this Corporation
if he is present at such meeting, or in his absence by the Treasurer
of this Corporation if he is present at such meeting, and (ii)
whenever, in the judgment of the President, it is desirable for this
Corporation to execute a proxy or written consent in respect to any
shares or other securities issued by any other corporation and owned
by this Corporation, such proxy or consent shall be executed in the
name of this Corporation by the President, without the necessity of
any authorization by the Board of Directors, affixation of corporate
seal or countersignature or attestation by another officer, provided
that if the President is unable to execute such proxy or consent by
reason of sickness, absence from the United States or other similar
cause, the Treasurer may execute such proxy or consent. Any person or
persons designated in the manner above stated as the proxy or proxies
of this Corporation shall have full right, power and authority to vote
the shares or other securities issued by such other corporation and
owned by this Corporation the same as such shares or other securities
might be voted by this Corporation.
6.5. INSPECTION OF BOOKS. The stockholders of the Corporation, by a
majority vote at any meeting of stockholders duly called, or in case
the stockholders shall fail to act, the Board of Directors shall have
power from time to time to determine whether and to what extent and at
what times and places and under what conditions and regulations the
accounts and books of the Corporation (other than the stock ledger) or
any of them, shall be open to inspection of stockholders; and no
stockholder shall have any right to inspect any account or book or
document of the Corporation except as conferred by statute or
authorized by the Board of Directors or by a resolution of the
stockholders.
ARTICLE VII. - INDEMNIFICATION.
7.1. RIGHT TO INDEMNIFICATION. Each person who was or is made a party or is
threatened to be made a party to or is otherwise involved in any
action, suit or proceeding, whether civil, criminal, administrative or
investigative (a "Proceeding"), by reason of being or having been a
director or officer of the Corporation or serving or having served at
the request of the Corporation as a director, trustee, officer,
employee or agent of another corporation or of a partnership, joint
venture, trust or other enterprise, including service with respect to
an employee benefit plan (an "Indemnitee"), whether the basis of such
proceeding is alleged action or failure to act in an official capacity
as a director, trustee, officer, employee or agent or in any other
capacity while serving as a director, trustee, officer, employee or
agent, shall be indemnified and held harmless by the Corporation to
the fullest extent authorized by the Delaware General Corporation Law,
as the same exists or may hereafter be amended (but, in the case of
any such amendment, only to the extent that such amendment permits the
Corporation to provide broader indemnification rights than permitted
prior thereto) (as used in this Article VII, the "Delaware Law"),
against all expense, liability and loss (including attorneys' fees,
judgments, fines, ERISA excise taxes or penalties and amounts paid in
settlement) reasonably incurred or suffered by such Indemnitee in
connection therewith and such indemnification shall continue as to an
Indemnitee who has ceased to be a director, trustee, officer, employee
or agent and shall inure to the benefit of the Indemnitee's heirs,
executors and administrators; provided, however, that, except as
provided in Section 7.2 hereof with respect to Proceedings to enforce
rights to indemnification, the Corporation shall indemnify any such
Indemnitee in connection with a Proceeding (or part thereof) initiated
by such Indemnitee only if such Proceeding (or part thereof) was
authorized by the Board of Directors of the Corporation. The right to
indemnification conferred in this Article VII shall be a contract
right and shall include the right to be paid by the Corporation the
expenses (including attorneys' fees) incurred in defending any such
Proceeding in advance of its final disposition (an "Advancement of
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Expenses"); provided, however, that, if the Delaware Law so requires, an
Advancement of Expenses incurred by an Indemnitee shall be made only upon
delivery to the Corporation of an undertaking (an "Undertaking"), by or
on behalf of such Indemnitee, to repay all amounts so advanced if it
shall ultimately be determined by final judicial decision from which
there is no further right to appeal (a "Final Adjudication") that such
Indemnitee is not entitled to be indemnified for such expenses under this
Article VII or otherwise.
7.2. RIGHT OF INDEMNITEE TO BRING SUIT. If a claim under Section 7.1 hereof
is not paid in full by the Corporation within sixty days after a
written claim has been received by the Corporation, except in the case
of a claim for an Advancement of Expenses, in which case the
applicable period shall be twenty days, the Indemnitee may at any time
thereafter bring suit against the Corporation to recover the unpaid
amount of the claim. If successful in whole or in part in any such
suit, or in a suit brought by the Corporation to recover an
Advancement of Expenses pursuant to the terms of an Undertaking, the
Indemnitee shall be entitled to be paid also the expense of
prosecuting or defending such suit. In (i) any suit brought by the
Indemnitee to enforce a right to indemnification hereunder (but not in
a suit brought by the Indemnitee to enforce a right to an Advancement
of Expenses) it shall be a defense that, and (ii) in any suit by the
Corporation to recover an Advancement of Expenses pursuant to the
terms of an Undertaking the Corporation shall be entitled to recover
such expenses upon a Final Adjudication that, the Indemnitee has not
met the applicable standard of conduct set forth in the Delaware Law.
Neither the failure of the Corporation (including its board of
directors, independent legal counsel, or its stockholders) to have
made a determination prior to the commencement of such suit that
indemnification of the Indemnitee is proper in the circumstances
because the Indemnitee has met the applicable standard of conduct set
forth in the Delaware Law, nor an actual determination by the
Corporation (including its board of directors, independent legal
counsel, or its stockholders) that the Indemnitee has not met such
applicable standard of conduct, shall create a presumption that the
Indemnitee has not met the applicable standard of conduct or, in the
case of such a suit brought by the Indemnitee, be a defense to such
suit. In any suit brought by the Indemnitee to enforce a right to
indemnification or to an Advancement of Expenses hereunder, or by the
Corporation to recover an Advancement of Expenses pursuant to the
terms of an Undertaking, the burden of proving that the Indemnitee is
not entitled to be indemnified, or to such Advancement of Expenses,
under this Article VII or otherwise shall be on the Corporation.
7.3. NON-EXCLUSIVITY OF RIGHTS. The rights to indemnification and to the
Advancement of Expenses conferred in this Article 7 shall not be
exclusive of any other right which any person may have or hereafter
acquire under any statute, the Corporation's Certificate of
Incorporation, By-Law, agreement, vote of stockholders or
disinterested directors or otherwise.
7.4. INSURANCE. The Corporation may maintain insurance, at its expense, to
protect itself and any director, officer, employee or agent of the
Corporation or another corporation, partnership, joint venture, trust
or other enterprise against any expense, liability or loss, whether or
not the Corporation would have the power to indemnify such person
against such expense, liability or loss under this Article VII or
under the Delaware Law.
7.5. INDEMNIFICATION OF EMPLOYEES AND AGENTS OF THE CORPORATION. The
Corporation may, to the extent authorized from time to time by the
Board of Directors, grant rights to indemnification, and to the
Advancement of Expenses, to any employee or agent of the Corporation
to the fullest extent of the provisions of this Article VII with
respect to the indemnification and Advancement of Expenses of
directors and officers of the Corporation.
<PAGE>
-15-
ARTICLE VIII. - AMENDMENTS.
8.1. AMENDMENTS. Subject always to any limitations imposed by the
Corporation's Certificate of Incorporation, these By-Laws may be
altered, amended, or repealed, or new By-Laws may be adopted, only by
(i) the affirmative vote of the holders of at least three-quarters
(75%) of the outstanding voting stock of the Corporation (in addition
to any separate class vote that may be required pursuant to the terms
of any then outstanding preferred stock of the Corporation), or (ii)
by resolution of the Board of Directors duly adopted by not less than
a majority of the directors then constituting the full Board of
Directors.
<PAGE>
Appendix D
TEXT OF SECTION 623 OF THE NEW YORK BUSINESS CORPORATION LAW -- PROCEDURE TO
ENFORCE SHAREHOLDER'S RIGHT TO RECEIVE PAYMENT
(a) A shareholder intending to enforce his right under a section of
this chapter to receive payment for his shares if the proposed corporate
action referred to therein is taken shall file with the corporation, before
the meeting of shareholders at which the action is submitted to a vote, or at
such meeting but before the vote, written objection to the action. The
objection shall include a notice of his election to dissent, his name and
residence address, the number and classes of shares as to which he dissents
and a demand for payment of the fair value of his shares if the action is
taken. Such objection is not required from any shareholder to whom the
corporation did not give notice of such meeting in accordance with this
chapter or where the proposed action is authorized by written consent of
shareholders without a meeting.
(b) Within ten days after the shareholders' authorization date,
which term as used in this section means the date on which the shareholders'
vote authorizing such action was taken, or the date on which such consent
without a meeting was obtained from the requisite shareholders, the
corporation shall give written notice of such authorization or consent by
registered mail to each shareholder who filed written objection or from whom
written objection was not required, excepting any shareholder who voted for
or consented in writing to the proposed action and who thereby is deemed to
have elected not to enforce his right to receive payment for his shares.
(c) Within twenty days after the giving of notice to him, any
shareholder from whom written objection was not required and who elects to
dissent shall file with the corporation a written notice of such election,
stating his name and residence address, the number and classes of shares as
to which he dissents and a demand for payment of the fair value of his
shares. Any shareholder who elects to dissent from a merger under section
905 (Merger of subsidiary corporation) or paragraph (c) of section 907
(Merger or consolidation of domestic and foreign corporations) or from a
share exchange under paragraph (g) of Section 913 (Share exchanges) shall
file a written notice of such election to dissent within twenty days after
the giving to him of a copy of the plan of merger or exchange or an outline
of the material features thereof under section 905 or 913.
(d) A shareholder may not dissent as to less than all of the
shares, as to which he has a right to dissent, held by him of record, that he
owns beneficially. A nominee of fiduciary may not dissent on behalf of any
beneficial owner as to less than all of the shares of such owner, as to which
such nominee or fiduciary has a right to dissent, held of record by such
nominee or fiduciary.
(e) Upon consummation of the corporate action, the shareholder
shall cease to have any of the rights of a shareholder except the right to be
paid the fair value of his shares and any other rights under this section. A
notice of election may be withdrawn by the shareholder at any time prior to
his acceptance in writing of an offer made by the corporation, as provided in
paragraph (g), but in no case later than sixty days from the date of
consummation of the corporate action except that if the corporation fails to
make a timely offer, as provided in paragraph (g), the time for withdrawing a
notice of election shall be extended until sixty days from the date an offer
is made. Upon expiration of such time, withdrawal of a notice of election
shall require the written consent of the corporation. In order to be
effective, withdrawal of a notice of election must be accompanied by the
return to the corporation of any advance payment made to the shareholder as
provided in paragraph (g). If a notice of election is withdrawn, or the
corporate action is rescinded, or a court shall determine that the
shareholder is not entitled to receive payment for his shares, or the
shareholder shall otherwise lose his dissenters' rights, he shall not have
the right to receive payment for his shares and he shall be reinstated to all
his rights as a shareholder as of the consummation of the corporate action,
including any intervening preemptive rights and the right to payment of any
intervening
<PAGE>
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dividend or other distribution or, if any such rights have expired or any
such dividend or distribution other than in cash has been completed, in lieu
thereof, at the election of the corporation, the fair value thereof in cash
as determined by the board as of the time of such expiration or completion,
but without prejudice otherwise to any corporate proceedings that may have
been taken in the interim.
(f) At the time of filing the notice of election to dissent or
within one month thereafter the shareholder of shares represented by
certificates shall submit the certificates representing his shares to the
corporation, or to its transfer agent, which shall forthwith note
conspicuously thereon that a notice of election has been filed and shall
return the certificates to the shareholder or other person who submitted them
on his behalf. Any shareholder of shares represented by certificates who
fails to submit his certificates for such notation as herein specified shall,
at the option of the corporation exercised by written notice to him within
forty-five days from the date of filing of such notice of election to
dissent, lose his dissenter's rights unless a court, for good cause shown,
shall otherwise direct. Upon transfer of a certificate bearing such
notation, each new certificate issued therefor shall bear a similar notation
together with the name of the original dissenting holder of the shares and a
transferee shall acquire no rights in the corporation except those which the
original dissenting shareholder had at the time of transfer.
(g) Within fifteen days after the expiration of the period within
which shareholders may file their notices of election to dissent, or within
fifteen days after the proposed corporate action is consummated, whichever is
later (but in no case later than ninety days from the shareholders'
authorization date), the corporation or, in the case of a merger or
consolidation, the surviving or new corporation, shall make a written offer
by registered mail to each shareholder who has filed such notice of election
to pay for his shares at a specified price which the corporation considers to
be their fair value. Such offer shall be accompanied by a statement setting
forth the aggregate number of shares with respect to which notices of
election to dissent have been received and the aggregate number of holders of
such shares. If the corporate action has been consummated, such offer shall
also be accompanied by (1) advance payment to each such shareholder who has
submitted the certificates representing his shares to the corporation, as
provided in paragraph (f), of an amount equal to eighty percent of the amount
of such offer, or (2) as to each shareholder who has not yet submitted his
certificates a statement that advance payment to him of an amount equal to
eighty percent of the amount of such offer will be made by the corporation
promptly upon submission of his certificates. If the corporate action has not
been consummated at the time of the making of the offer, such advance payment
or statement as to advance payment shall be sent to each shareholder entitled
thereto forthwith upon consummation of the corporate action. Every advance
payment or statement as to advance payment shall include advice to the
shareholder to the effect that acceptance of such payment does not constitute
a waiver of any dissenters' rights. If the corporate action has not been
consummated upon the expiration of the ninety day period after the
shareholders' authorization date, the offer may be conditioned upon the
consummation of such action. Such offer shall be made at the same price per
share to all dissenting shareholders of the same class, or if divided into
series, of the same series and shall be accompanied by a balance sheet of the
corporation whose shares the dissenting shareholder holds as of the latest
available date, which shall not be earlier than twelve months before the
making of such offer, and a profit and loss statement or statements for not
less than a twelve month period ended on the date of such balance sheet or,
if the corporation was not in existence throughout such twelve month period,
for the portion thereof during which it was in existence. Notwithstanding
the foregoing, the corporation shall not be required to furnish a balance
sheet or profit and loss statement or statements to any shareholder to whom
such balance sheet or profit and loss statement or statements were previously
furnished, nor if in connection with obtaining the shareholders'
authorization for or consent to the proposed corporate action the
shareholders were furnished with a proxy or information statement, which
included financial statements, pursuant to Regulation 14A or Regulation 14C
of the United States Securities and Exchange Commission. If within thirty
days after the making of such offer, the corporation making the offer and any
shareholder agree upon the price to be paid for his shares, payment therefor
shall be made within sixty days after the making of such offer or the
consummation of the proposed corporate action, whichever is later, upon the
surrender of the certificates for any such shares represented by certificates.
<PAGE>
-3-
(h) The following procedure shall apply if the corporation fails to
make such offer within such period of fifteen days, or if it makes the offer
and any dissenting shareholder or shareholders fail to agree with it within
the period of thirty days thereafter upon the price to be paid for their
shares:
(1) The corporation shall, within twenty days after the
expiration of whichever is applicable of the two periods last mentioned,
institute a special proceeding in the supreme court in the judicial
district in which the office of the corporation is located to determine
the rights of dissenting shareholders and to fix the fair value of their
shares. If, in the case of merger or consolidation, the surviving or new
corporation is a foreign corporation without an office in this state,
such proceeding shall be brought in the county where the office of the
domestic corporation, whose shares are to be valued, was located.
(2) If the corporation fails to institute such proceeding
within such period of twenty days, any dissenting shareholder may
institute such proceeding for the same purpose not later than thirty days
after the expiration of such twenty day period. If such proceeding is
not instituted within such thirty day period, all dissenter's rights
shall be lost unless the supreme court, for good cause shown, shall
otherwise direct.
(3) All dissenting shareholders, excepting those who, as
provided in paragraph (g), have agreed with the corporation upon the
price to be paid for their shares, shall be made parties to such
proceeding, which shall have the effect of an action quasi in rem against
their shares. The corporation shall serve a copy of the petition in such
proceeding upon each dissenting shareholder who is a resident of this
state in the manner provided by law for the service of a summons, and
upon each nonresident dissenting shareholder either by registered mail
and publication, or in such other manner as is permitted by law. The
jurisdiction of the court shall be plenary and exclusive.
(4) The court shall determine whether each dissenting
shareholder, as to whom the corporation requests the court to make such
determination, is entitled to receive payment for his shares. If the
corporation does not request any such determination or if the court finds
that any dissenting shareholder is so entitled, it shall proceed to fix
the value of the shares, which, for the purposes of this section, shall
be the fair value as of the close of business on the day prior to the
shareholders' authorization date. In fixing the fair value of the
shares, the court shall consider the nature of the transaction giving
rise to the shareholder's right to receive payment for shares and its
effects on the corporation and its shareholders, the concepts and methods
then customary in the relevant securities and financial markets for
determining fair value of shares of a corporation engaging in a similar
transaction under comparable circumstances and all other relevant
factors. The court shall determine the fair value of the shares without
a jury and without referral to an appraiser or referee. Upon application
by the corporation or by any shareholder who is a party to the
proceeding, the court may, in its discretion, permit pretrial disclosure,
including, but not limited to, disclosure of any expert's reports
relating to the fair value of the shares whether or not intended for use
at the trial in the proceeding and notwithstanding subdivision (d) of
section 3101 of the civil practice laws and rules.
(5) The final order in the proceeding shall be entered against
the corporation in favor of each dissenting shareholder who is a party to
the proceeding and is entitled thereto for the value of his shares so
determined.
(6) The final order shall include an allowance for interest at
such rate as the court finds to be equitable, from the date the corporate
action was consummated to the date of payment. In determining the rate
of interest, the court shall consider all relevant factors, including the
rate of interest which the corporation would have had to pay to borrow
money during the pendency of the proceeding. If the court finds that the
refusal of any shareholder to accept the corporate offer of payment for
his shares was arbitrary, vexatious or otherwise not in good faith, no
interest shall be allowed to him.
<PAGE>
-4-
(7) Each party to such proceeding shall bear its own costs and
expenses, including the fees and expenses of its counsel and of any
experts employed by it. Notwithstanding the foregoing, the court may, in
its discretion, apportion and assess all or any part of the costs,
expenses and fees incurred by the corporation against any or all of the
dissenting shareholders who are parties to the proceeding, including any
who have withdrawn their notices of election as provided in paragraph
(e), if the court finds that their refusal to accept the corporate offer
was arbitrary, vexatious or otherwise not in good faith. The court may,
in its discretion, apportion and assess all or any part of the costs,
expenses and fees incurred by any or all of the dissenting shareholders
who are parties to the proceeding against the corporation if the court
finds any of the following: (A) that the fair value of the shares as
determined materially exceeds the amount which the corporation offered to
pay; (B) that no offer or required advance payment was made by the
corporation; (C) that the corporation failed to institute the special
proceeding within the period specified therefor; or (D) that the action
of the corporation in complying with its obligations as provided in this
section was arbitrary, vexatious or otherwise not in good faith. In
making any determination as provided in clause (A), the court may
consider the dollar amount or the percentage, or both, by which the fair
value of the shares as determined exceeds the corporate offer.
(8) Within sixty days after final determination of the
proceeding, the corporation shall pay to each dissenting shareholder the
amount found to be due him, upon surrender of the certificates for any
such shares represented by certificates.
(i) Shares acquired by the corporation upon the payment of the agreed
value therefor or of the amount due under the final order, as provided in this
section, shall become treasury shares or be canceled as provided in section 515
(Reacquired shares), except that, in the case of a merger or consolidation, they
may be held and disposed of as the plan of merger or consolidation may otherwise
provide.
(j) No payment shall be made to a dissenting shareholder under this
section at a time when the corporation is insolvent or when such payment would
make it insolvent. In such event, the dissenting shareholder shall, at his
option:
(1) Withdraw his notice of election, which shall in such event
be deemed withdrawn with the written consent of the corporation; or
(2) Retain his status as a claimant against the corporation
and, if it is liquidated, be subordinated to the rights of creditors of
the corporation, but have rights superior to the non-dissenting
shareholders, and if it is not liquidated, retain his right to be paid
for his shares, which right the corporation shall be obliged to satisfy
when the restrictions of this paragraph do not apply.
(3) The dissenting shareholder shall exercise such option under
subparagraph (1) or (2) by written notice filed with the corporation
within thirty days after the corporation has given him written notice
that payment for his shares cannot be made because of the restrictions of
this paragraph. If the dissenting shareholder fails to exercise such
option as provided, the corporation shall exercise the option by written
notice given to him within twenty days after the expiration of such
period of thirty days,
(k) The enforcement by a shareholder of his right to receive payment
for his shares in the manner provided herein shall exclude the enforcement by
such shareholder of any other right to which he might otherwise be entitled by
virtue of share ownership, except as provided in paragraph (e), and except that
this section shall not exclude the right of such shareholder to bring or
maintain an appropriate action to obtain relief on the ground that such
corporate action will be or is unlawful or fraudulent as to him.
<PAGE>
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(l) Except as otherwise expressly provided in this section, any notice
to be given by a corporation to a shareholder under this section shall be given
in the manner provided in section 605 (Notice of meetings of shareholders).
(m) This section shall not apply to foreign corporations except as
provided in subparagraph (e)(2) of section 907 (Merger or consolidation of
domestic and foreign corporations). (Last amended by L.1986, c. 117, Section 3.)
<PAGE>
GREENTREE SOFTWARE, INC.
7901 Flying Cloud Drive, Suite 200
Eden Prairie, Minnesota 55344
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
The undersigned hereby appoints Philip D. Wolf as Proxy, with the power
to appoint his substitute, and hereby authorizes him to represent and to vote
as designated below, all the shares of common shares, $0.01 par value per
share (the "Common Shares"), of Greentree Software, Inc. (the "Corporation")
held of record by the undersigned on August 7, 1998, at the 1999 Annual
Meeting of Shareholders (the "Meeting") to be held on Thursday, September 17,
1998, 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
J. Murray Logan
Donald S. LaGuardia
(Instruction: To WITHHOLD authority to vote for any individual, write the
nominee's name in the space provided below.)
2. To approve the Merger Agreement and the reincorporation of the
Corporation in Delaware.
/ / FOR / / AGAINST / / ABSTAIN
3. To approve an increase in the maximum number of shares which may be made
available upon exercise of stock options under the Corporation's 1997
Stock Option Plan from 1,500,000 to 3,500,000.
/ / FOR / / AGAINST / / ABSTAIN
4. To approve an increase in the number of authorized shares of the
Corporation from 15,000,000 to 25,000,000.
/ / 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
-----------------------------
Signature
-----------------------------
(if held jointly)
------------------------------
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY PAPER PROMPTLY USING THE
ENCLOSED ENVELOPE.
------------------------------
