SCHEDULE 14A
(Rule 14a-101)
Information Required in Proxy Statement
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [x]
Filed by a party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Com-
mission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
THE VILLAGE GREEN BOOKSTORE, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[ ] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14A-6(i)(1), or
14a-6(i)(2)
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] 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:
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2) Aggregate number of securities to which transaction applies:
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3) Per unit price of other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
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<PAGE>
4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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[X] 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:
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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
-2-
<PAGE>
THE VILLAGE GREEN BOOKSTORE, INC.
-------------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON SEPTEMBER 7, 1995
-------------------------------
NOTICE IS HEREBY GIVEN that the 1995 Annual Meeting of Shareholders of The
Village Green Bookstore, Inc. (the "Company") will be held on September 7, 1995
at 10:00 a.m. local time, at The Rochester Plaza Hotel, 70 State Street,
Rochester, New York 14614, for the following purposes:
(i) to elect the list of nominees for election as Directors of the
Company;
(ii) to ratify the appointment of the accounting firm of Deloitte &
Touche LLP as the Company's independent accountants;
(iii) to approve an amendment to the Company's 1993 Stock Option Plan to
increase shares available for grant from 200,000 shares to 400,000
shares;
(iv) to approve the Company's reincorporation from New York to Delaware;
and
(v) to transact such other business as may properly be brought before
the meeting.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice.
Only shareholders of record at the close of business on July 31, 1995 are
entitled to notice of, and to vote at, the meeting and any adjournments thereof.
The Board of Directors unanimously recommends that shareholders vote "FOR"
(i) the election of the list of nominees as Directors of the Company; (ii) the
ratification of the appointment of Deloitte & Touche LLP as the Company's
independent accountants for the fiscal year ended January 28, 1996; (iii) the
amendment to the Company's 1993 Stock Option Plan to increase shares available
for grant from 200,000 shares to 400,000 shares; and (iv) the Company's
reincorporation from New York to Delaware.
You are cordially invited to attend the meeting in person. Even if you plan
to attend the meeting, however, you are requested to mark, sign, date and return
the accompanying proxy as soon as possible.
BY ORDER OF THE BOARD OF DIRECTORS
John W. Borek
Secretary
Rochester, New York
August 4, 1995
================================================================================
YOUR VOTE IS IMPORTANT
To ensure your representation at the meeting, you are urged to mark, sign,
date and return the enclosed proxy as promptly as possible in the
postage-prepaid envelope enclosed for that purpose. To revoke a proxy, you must
submit to the Secretary of the Company, prior to voting, either a signed
instrument of revocation or a duly executed proxy bearing a date or time later
than the proxy being revoked. If you attend the meeting, you may vote in person
even if you previously returned a proxy.
================================================================================
<PAGE>
THE VILLAGE GREEN BOOKSTORE, INC.
1357 Monroe Avenue
Rochester, New York 14618
------------------------
ANNUAL MEETING OF SHAREHOLDERS
SEPTEMBER 7, 1995
------------------------
PROXY STATEMENT
------------------------
The accompanying proxy is solicited by the Board of Directors of The
Village Green Bookstore, Inc. (the "Company"), to be voted at the Annual Meeting
of Shareholders of the Company to be held on September 7, 1995 at 10:00 a.m.
Eastern Daylight Time, at the Rochester Plaza Hotel, 70 State Street, Rochester,
New York 14614 (the "Annual Meeting"), for the purposes set forth in the
accompanying Notice of Annual Meeting of Shareholders and described therein, and
at any adjournments thereof.
This proxy statement is being furnished to shareholders of the Company in
connection with the solicitation of proxies by the Board of Directors for the
Annual Meeting to:
(i) elect the list of nominees for election as Directors of the
Company;
(ii) ratify the appointment of the accounting firm of Deloitte & Touche
LLP as the Company's independent accountants;
(iii) approve an amendment to the Company's 1993 Stock Option Plan to
increase shares available for grant from 200,000 shares to 400,000
shares; and
(iv) approve the Company's reincorporation from New York to Delaware.
The record date for determining shareholders of record eligible to vote at
the Annual Meeting is July 31, 1995.
This proxy statement and the accompanying proxy are being sent to
shareholders commencing on or about August 4, 1995. In addition to the
solicitation of proxies by mail, regular officers and employees of the Company
may solicit the return of proxies by mail, telephone, telegram or personal
contact. The Company will pay the cost of soliciting proxies in the accompanying
form. The Company will reimburse brokers or other persons holding stock in their
names or in the names of their nominees for their reasonable expenses in
forwarding proxy material to beneficial owners.
================================================================================
IMPORTANT -
IF YOU WISH TO VOTE IN PERSON, YOU MUST ATTEND THE MEETING
IN ROCHESTER, NEW YORK.
================================================================================
<PAGE>
VOTING RIGHTS AND SOLICITATION OF PROXIES
Record Date and Share Ownership
The Board of Directors of the Company has fixed the close of business on
July 31, 1995 as the record date for the determination of the shareholders
entitled to receive notice of, and to vote at, the Annual Meeting (the "Record
Date"). The only outstanding class of stock of the Company is its Common Stock.
On the Record Date, there were approximately 3,741,255 shares of Common Stock
issued and outstanding.
Proxies and Revocation of Proxies
All duly executed proxies in the enclosed form are solicited by the Board
of Directors of the Company in order to provide each shareholder an opportunity
to vote on all matters scheduled to come before the Annual Meeting, whether or
not the shareholder attends in person. All proxies received prior to the Annual
Meeting pursuant to this solicitation will be voted except as to matters where
authority to vote is specifically withheld or the holder has elected to abstain
and, where a choice is specified as to the proposal, they will be voted in
accordance with such specification. In the absence of specific directions,
properly executed proxies will be voted (i) "FOR" the election of the list of
nominees as Directors of the Company; (ii) "FOR" the ratification of the
appointment of Deloitte & Touche LLP as the Company's independent accountants
for the fiscal year ended January 28, 1996; (iii) "FOR" the amendment to the
Company's 1993 Stock Option Plan to increase shares available for grant from
200,000 shares to 400,000 shares; and (iv) "FOR" the Company's reincorporation
from New York to Delaware.
Any shareholder giving a proxy has the power to revoke the proxy prior to
its exercise. A proxy may be revoked (a) by delivering to the Secretary of the
Company at or prior to the Annual Meeting an instrument of revocation or a duly
executed proxy bearing a date or time later than the date or time of the proxy
being revoked or (b) at the Annual Meeting if the shareholder is present and
elects to vote in person. Mere attendance at the Annual Meeting will not serve
to revoke a proxy.
Quorum and Voting
The presence at the Annual Meeting, in person or by proxy, of the holders
of a majority of the total number of shares of Common Stock outstanding on the
Record Date constitutes a quorum for the transaction of business by such holders
at the Annual Meeting. Each share of Common Stock, the only securities of the
Company entitled to vote at the Annual Meeting, will be entitled to one vote at
such Annual Meeting. There are no cumulative voting rights with respect to the
Common Stock.
Directors are elected by a plurality of votes cast. A majority of votes
cast is required to ratify the appointment of Deloitte & Touche LLP as the
Company's independent accountants and to approve the amendment to the Company's
1993 Stock Option Plan. However, two-thirds of votes cast is required to approve
the Company's reincorporation in Delaware. Under the law of New York, the
Company's state of incorporation, "votes cast" at a meeting of shareholders by
the holders of shares entitled to vote are determinative of the outcome of the
matter subject to vote. Abstentions, broker non-votes, and withheld votes will
not be considered "votes cast" based upon the Company's understanding of state
law requirements and the Company's Certificate of Incorporation and Bylaws.
Other Proposals
The Board is unaware of any matter other than the foregoing that is
expected to be presented for consideration at the Annual Meeting. However, if
other matters properly come before the Annual Meeting, the persons named in the
accompanying proxy intend to vote thereon in accordance with their judgment.
2
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth the beneficial ownership of Common Stock as
of July 31, 1995 of (a) each Director and nominee for election as a Director,
(b) each executive officer, and (c) each person known by the Company to own
beneficially more than five percent of the Company's outstanding Common Stock.
The Company believes that, except as otherwise stated, the beneficial holders
listed below have sole voting and investment power regarding the shares of
Common Stock reflected as being beneficially owned by them.
Shares Beneficially Owned
-------------------------
Number Percent
of of
Name and Address(1) Shares(2) Shares
- ------------------- --------- ------
Raymond C. Sparks 150,000(3) 3.85%
Steven B. Sands 379,000(4) 10.07%
John P. Holmes 130,000(5) 3.47%
John W. Borek 20,100(6) 0.53%
Michael S. Smith(7) -- --
Martin S. Sands(8) 379,000(9) 10.07%
Sands Brothers & Co., Ltd.(8) 260,000 6.95%
Mark Kalimian(10) 229,000(11) 5.96%
All Directors and Executive
Officers as a Group
(5 persons) 679,100(12) 17.28%
- ----------
(1) Unless otherwise indicated, the address of each of the persons listed below
is 1357 Monroe Avenue, Rochester, New York 14618.
(2) Shares of Common Stock that an individual or group has a right to acquire
within 60 days pursuant to the exercise of options, warrants or other
rights are deemed to be outstanding for the purpose of computing the
percentage ownership of such individual or group, but are not deemed to be
outstanding for computing the percentage ownership of any other person
shown in the table. Does not include 200,000 shares of Common Stock
purportedly issuable to Robert Todd Investment Group, Inc. ("Todd")
pursuant to a December 1989 agreement between Todd and the Company. The
Company does not believe that Todd has performed any obligations under said
agreement and, therefore, is not entitled to said shares.
(3) Includes 103,500 shares of Common Stock subject to exercise by Mr. Sparks
in connection with non-qualified stock options and 46,500 shares of Common
Stock subject to exercise by Mr. Sparks in accordance with the 1987 Stock
Option Plan. Does not include 30,000 shares of Common Stock underlying
options which Mr. Sparks does not have the right to acquire within 60 days
from the date of this proxy statement.
(4) Includes (i) 260,000 shares of Common Stock held by Sands Brothers & Co.,
Ltd. ("Sands Brothers"); and (ii) an aggregate of 99,500 shares of Common
Stock and 19,500 Redeemable Warrants owned by four private limited
partnerships which Mr. Steven B. Sands may be deemed to control. Mr. Steven
B. Sands is the brother of Mr. Martin S. Sands.
(5) Includes 80,000 shares of Common Stock beneficially owned by Mr. Holmes'
wife. Mr. Holmes disclaims beneficial ownership of all shares owned by his
wife.
(6) Includes 20,000 shares of Common Stock subject to exercise by Mr. Borek in
accordance with the 1987 Stock Option Plan. Does not include 30,000 shares
of Common Stock underlying options which Mr. Borek does not have the right
to acquire within 60 days from the date of this proxy statement.
(7) The address of Mr. Michael S. Smith is c/o H.J. Meyers & Co., Inc., 1895
Mount Hope Avenue, Rochester, New York 14620.
(8) The address of Mr. Martin S. Sands is c/o Sands Brothers, 101 Park Avenue,
New York, New York, 10178.
(9) Includes (i) 260,000 shares of Common Stock held by Sands Brothers; and
(ii) an aggregate of 99,500 shares of Common Stock and 19,500 immediately
exercisable Redeemable Warrants owned by four private limited partnerships
which Mr. Martin S. Sands may be deemed to control. Mr. Martin S. Sands is
the brother of Mr. Steven B. Sands.
3
<PAGE>
(10) The address of Mr. Mark Kalimian is c/o Abington Holding, 950 Third Avenue,
New York, New York 10022.
(11) Includes 100,000 shares underlying a warrant held by Mr. Kalimian.
(12) Consists of Raymond C. Sparks, John W. Borek, Steven B. Sands and John P.
Holmes. Also includes Michael S. Smith, the nominee for election as
Director.
4
<PAGE>
PROPOSAL I - ELECTION OF DIRECTORS
A board of five Directors will be elected at the Annual Meeting by the
holders of Common Stock, to hold office until their successors have been elected
and qualified. It is intended that, unless authorization to do so is withheld,
the proxies will be voted "FOR" the election of the Director nominees named
below. Each nominee has consented to be named in this Proxy Statement and to
serve as a Director if elected. However, if any nominee shall become unable to
stand for election as a Director at the Annual Meeting, an event not now
anticipated by the Board, the proxy will be voted for a substitute designated by
the Board.
The nominees are listed below with brief statements of their principal
occupation and other information. A listing of the nominees' beneficial
ownership of Common Stock appears on the preceding pages under "SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT." All of the nominees
listed below currently are Directors, except for Mr. Michael S. Smith. On June
27, 1995, the Board of Directors, pursuant to authority vested in it by the
Company's Bylaws, created a fifth seat on the Board. Mr. Smith has been
nominated by the Board of Directors to fill the vacancy created by the
establishment of the fifth seat on the Board.
<TABLE>
<CAPTION>
Name of Nominees Age Director Since Principal Occupation
- ---------------- --- -------------- --------------------
<S> <C> <C> <C>
Raymond C. Sparks 45 June 1993 Chairman of the Board,
President, Chief
Executive Officer,
Treasurer, Chief
Financial Officer and
Chief Operating Officer
of the Company
Steven B. Sands 36 June 1993 Co-Chairman and Chief
Executive Officer of
Sands Brothers & Co.,
Ltd.
John W. Borek 46 December 1986 Vice President of
Marketing and Secretary
of the Company
John P. Holmes 57 October 1993 Managing Director of
Sands Brothers & Co.,
Ltd.
Michael S. Smith 41 n/a Managing Director of
H.J. Meyers & Co., Inc.
</TABLE>
The term of office of each person elected as a Director will continue until
the Company's next Annual Meeting of Shareholders or until his successor has
been elected.
Raymond C. Sparks became the Company's President, Chairman and Chief
Executive Officer on June 28, 1993. Mr. Sparks has eight years of public
accounting experience in South Africa with Ernst & Young and later, with Webb &
Company. Since 1979, Mr. Sparks has concentrated in the retail industry,
primarily in supermarket and specialty stores, in both operational and financial
capacities. Mr. Sparks was the Chief Operating/Financial Officer of Burke &
Burke (New York) in 1991. Mr. Sparks was Vice President of Conston Corporation,
an apparel retailer located in Philadelphia before he joined the Company in June
1993. Mr. Sparks holds the professional qualification of Chartered Accountant
(C.A.(S.A.)), and was awarded a Bachelor of Commerce (with honors) degree in
Financial Accounting by the University of Cape Town, South Africa.
5
<PAGE>
John W. Borek has been a Director of the Company since 1986. Mr. Borek has
been Vice-President of Marketing and Merchandise since 1986. He has been
employed by the Company since 1982.
Steven B. Sands became a Director of the Company on June 28, 1993. Mr.
Sands has been engaged in the investment banking business since 1980. Since
1990, Mr. Sands has been Co-Chairman and Chief Executive Officer of Sands
Brothers & Co., Ltd., an investment banking firm. Mr. Sands is a director of
Semi-Conductor Packaging Materials Co. (semiconductor components manufacturer),
Digital Solutions, Inc. (payroll and related services), Command Security Corp.
(security guards), Wholesale Cellular USA, Inc. (cellular telephone
distributor), Financing for Science International, Inc. (scientific equipment
leasing) and IWI Holding Limited (jewelry design, manufacture and distribution),
each a publicly traded company.
John P. Holmes has been a Director of the Company since October 29, 1993.
Mr. Holmes has been a Managing Director of Sands Brothers & Co., Ltd. since
January 1993. Mr. Holmes has been engaged in the investment banking business
since 1962 and also is a private investor.
Michael S. Smith is the Managing Director of Corporate Finance at H.J.
Meyers & Co., Inc. (f/k/a Thomas James Associates, Inc.) ("H.J. Meyers"), an
investment banking firm which acted as the managing underwriter of the Company's
1995 public offering. Mr. Smith serves on the Board of Directors of The Bhirud
MidCap Growth Fund, a publicly traded mutual fund. Mr. Smith has been with H.J.
Meyers since May 1991, and from 1987 until 1991 was an attorney with the law
firm of Harter, Secrest, & Emery. Mr. Smith received a B.A. from Cornell
University and a J.D. from Cornell University School of Law.
The Board of Directors held 21 meetings in the fiscal year ended January
29, 1995 ("Fiscal Year 1995"), including written consents in lieu of meetings.
All members of the Board of Directors attended at least 75 percent of the
aggregate number of meetings of the Board of Directors.
Each Director is elected for a period of one year at the Company's Annual
Meeting of shareholders and serves until his successor is duly elected by the
shareholders. Officers are elected by and serve at the discretion of the Board
of Directors. Directors of the Company currently receive no compensation for
their service as a Director.
The Board of Directors does not have a standing audit, nominating or
compensation committee. The Stock Option Committee (the "Committee") of the
Board of Directors held one meeting in Fiscal Year 1995. The Committee currently
consists of Messrs. John P. Holmes and Steven B. Sands. If elected to the Board
of Directors, Mr. Michael S. Smith is expected to be appointed to the Committee.
The Board of Directors unanimously recommends that the shareholders vote
"FOR" the election as Directors of the nominees listed above.
6
<PAGE>
EXECUTIVE OFFICERS
The executive officers of the Company are as follows:
<TABLE>
<CAPTION>
Executive
Position(s) with the Officer of the
Name Age Company Company Since
- ---- --- ------- -------------
<S> <C> <C> <C>
Raymond C. Sparks 45 Chairman of the Board of June 1993
Directors, President,
Chief Executive Officer,
Treasurer, Chief
Financial Officer and
Chief Operating Officer
John W. Borek 46 Director, Vice President June 1986
of Marketing and
Merchandise and
Secretary
</TABLE>
Additional information regarding Messrs. Raymond C. Sparks and John W.
Borek is included in the preceding pages under "PROPOSAL I - ELECTION OF
DIRECTORS."
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table discloses the compensation for the persons who served
as the Company's Chief Executive Officer during Fiscal Year 1995, January 30,
1994 ("Fiscal Year 1994"), and January 31, 1993 ("Fiscal Year 1993"). No other
executive officer of the Company had total compensation in excess of $100,000
for the Fiscal Years 1995, 1994 and 1993.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Compensation Long-Term Compensation
- ------------------------------------------------------------------------------------------------------------------------------------
Name and Principal Position Fiscal Salary* Bonus Other Securities All
Year ($) ($) Annual Underlying Other
ending Compen- Options (#) Compen-
1/29-30-31 sation sation
($) ($)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Raymond C. Sparks 1995 $100,096 $0 (1) 30,000 $ 20,400
- ------------------------------------------------------------------------------------------------------------------------------------
Raymond C. Sparks, CEO 1994 $ 72,596 $0 (1) 150,000 $0
since June 28, 1993
- ------------------------------------------------------------------------------------------------------------------------------------
Paul Adams, CEO 1994 $ 70,192 $0 (2) 0 $0
until June 28, 1993
- ------------------------------------------------------------------------------------------------------------------------------------
Paul Adams, CEO 1993 $104,403 $0 (2) 0 $0
====================================================================================================================================
</TABLE>
(1) Other annual compensation for Mr. Sparks, including the use of a
Company car and health insurance benefits is not reported because the aggregate
of such amounts does not exceed the lesser of $50,000 or 10% of Mr. Sparks'
annual salary and bonus for the periods indicated.
(2) Other annual compensation for Mr. Adams, which included the use of a
Company car, health insurance benefits, and a store charge account, is not
reported because the aggregate of such amounts does not exceed the lesser of
$50,000 or 10% of Mr. Adams' annual salary and bonus for the years indicated.
Mr. Adams also receives rent from the Company as landlord of the Company's
flagship store located at 766 Monroe Avenue, Rochester, New York.
The foregoing table does not give effect to compensation which may be
deemed to have been made to Steven B. Sands, a director of the Company, in his
capacity as a control person
7
<PAGE>
of Sands Brothers & Co., Ltd. in connection with the Company's June 1993 and
April 1994 private placements. See "Certain Relationships and Related
Transactions."
The following table provides information with respect to individual stock
options granted during Fiscal Year 1995 to each of the named executive officers
(the "Named Executives").
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
=============================================================================================================
Number of
Securities Percent of Total
Underlying Options Granted
Options Granted to Employees in Exercise or Base
(1) (#) Fiscal Year Price Expiration
Name ($/Sh) Date
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Raymond C. Sparks 30,000 26.5% $3.875 12/31/99
- -------------------------------------------------------------------------------------------------------------
John W. Borek 30,000 26.5% $3.875 12/31/99
=============================================================================================================
</TABLE>
(1) These options were granted during Fiscal Year 1995 pursuant to the
Company's 1993 Stock Option Plan. Each of Messrs. Sparks' and Borek's options
will vest as follows: 25,000 on December 31, 1995 and 5,000 on September 15,
1996.
The following table sets forth information concerning the value of
unexercised stock options held by the Named Executives as of January 29, 1995.
No stock options were exercised by the Named Executives in Fiscal Year 1995.
AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION VALUES
<TABLE>
<CAPTION>
=====================================================================================================================
Number of Securities Value of Unexercised
Underlying In-the-Money Options
Unexercised Options at Fiscal Year End
at Fiscal Year End (1)
Shares
Acquired on Value Exercisable/ Exercisable/
Name Exercise (#) Realized ($) Unexercisable Unexercisable
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Raymond C. Sparks -- N/A 150,000 / 30,000 $313,500/ -
- ---------------------------------------------------------------------------------------------------------------------
John W. Borek -- N/A 20,000 / 30,000 $43,600/ -
=====================================================================================================================
</TABLE>
(1) Year-end values for unexercised in-the-money options represent the
positive spread between the exercise price of such options (in the case of Mr.
Sparks, $1.97, and in the case of Mr. Borek, $1.88 (the weighted average
exercise price of Mr. Borek's options) and the year-end market value (the
average of the closing bid and asked prices of the Company's Common Stock on
January 27, 1995, or $4.06.
The Company does not have a stock appreciation rights plan, any long-term
compensation plan, or any pension plan requiring funding.
Employment Agreements
On June 28, 1993, the Company entered into an employment agreement with Mr.
Raymond C. Sparks, who became the Company's President, Chairman and Chief
Executive Officer on that date. This agreement, which has a term of three years,
provides for a base annual salary of $125,000, with salary increases and bonuses
to be determined by the Board of Directors in its discretion. In addition,
pursuant to Mr. Sparks' employment agreement, the Company has advanced $17,153
to Mr. Sparks during the current fiscal year for expenses related to the
relocation of Mr. Sparks and his family to the Rochester, New York area. On
April 21, 1995, Mr. Sparks reimbursed the Company for this advance.
8
<PAGE>
On June 28, 1993 the Company entered into a one year employment agreement
with Mr. John W. Borek, the Company's Vice President for Marketing and
Merchandise, Secretary and a Director of the Company. This agreement provided
for an annual salary of $60,000. Mr. Borek currently has an oral employment
arrangement with the Company at an annual salary of $60,000.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On June 28, 1993 (the "1993 Closing Date"), the Company consummated a
private placement (the "1993 Private Placement") of 20 units with 34 investors,
including four investors affiliated with Mr. Steven B. Sands, a Director of the
Company, in the aggregate amount of $2 million, each unit consisting of (i) a
7.5% senior secured subordinated note in the principal amount of $90,000
(collectively, the "1993 Notes") and (ii) 20,000 shares of Common Stock at a
purchase price of $0.50 per share. To secure the obligations under the 1993
Notes, the Company granted a security interest in substantially all the assets
of the Company and pledged the capital stock in each of the Company's
subsidiaries in favor of the investors of the 1993 Private Placement. The 1993
Notes were retired from a portion of the net proceeds of the Company's Public
Offering and such security interests and pledges were released at such time.
Sands Brothers & Co., Ltd. ("Sands Brothers") acted as placement agent for
the 1993 Private Placement. Mr. Sands is a principal of Sands Brothers. Mr. John
P. Holmes, a Director of the Company, is a Managing Director of Sands Brothers.
In addition to receiving a ten (10%) percent sales commission ($200,000) and a
three (3%) percent expense allowance ($60,000), on the 1993 Closing Date, Sands
Brothers received, directly and as nominee for certain of its employees,
warrants to purchase 500,000 shares of Common Stock, at an exercise price of
$0.50 per share. On the 1993 Closing Date, the closing bid and asked prices for
the Common Stock as reported by NASDAQ were $1 13/16 and $2 1/8 per share,
respectively. These warrants were exercisable for five years commencing
September 27, 1993. On July 28, 1993, Sands Brothers divided up 215,000
Placement Agent Warrants among certain of its employees. On the 1993 Closing
Date, the Company also agreed to pay Sands Brothers a graduated finder's fee
consisting of 5% of the first $1 million of consideration; 4% on the second $1
million; 3% on the third $1 million; 2% on the fourth $1 million; and 1% on the
fifth $1 million and above, in the event that Sands Brothers originates a
merger, acquisition, joint venture or other transaction to which the Company is
a party, which transaction is consummated by June 28, 1996. As of the date of
this Annual Report, Sands Brothers has not identified any acquisition candidate
for the Company. On the 1993 Closing Date, the Company also granted to Sands
Brothers the right of first refusal to underwrite or place any public or private
sale of debt or equity securities (excluding sales to employees) of the Company,
any subsidiary or successor of the Company or any of the principal shareholders
of the Company through June 28, 1996. Sands Brothers waived its right of first
refusal with respect to the Company's 1995 public offering.
In connection with the 1993 Private Placement, Paul Adams resigned his
positions as the Company's President, Chief Executive Officer, Chief Operating
Officer, Chief Financial Officer, Treasurer and Chairman of the Board of
Directors, and as an officer and Director of each of the Company's subsidiaries.
He was replaced in such capacities by Raymond C. Sparks. The Company and Mr.
Adams entered into a one-year employment agreement pursuant to which Mr. Adams
served as Manager of Real Estate Operations and received a salary of $50,000 per
annum. Such agreement expired on June 28, 1994.
In order to induce Sands Brothers to proceed with the 1993 Private
Placement, on the 1993 Closing Date, the Company and Mr. Paul Adams entered into
an affiliate agreement (the "Affiliate Agreement") pertaining to certain
transactions and relationships between the Company and Mr. Adams. The Company
believes that the transactions contemplated by the Affiliate Agreement were as
favorable to the Company as could have been obtained in arms-length negotiated
transactions with unaffiliated third parties. Under the Affiliate Agreement, Mr.
Adams, among other things, (a) granted to the Company an option to repurchase
186,500 shares of common stock at an exercise price of $1.00 per share (the
"Adams Option"); (b) granted to the Company an option to purchase real property
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(the "Option to Purchase"), which secured certain other obligations under the
Affiliate Agreement; and (c) agreed to assume liability for $68,000 in loans
made during Fiscal Year 1993 to Penfield Realty Holding Co., Inc. ("Penfield
Realty") and William Yager as Penfield Realty's sole shareholder and former
officer of the Company (the "Yager Loans"), if such Yager Loans become
uncollectible after reasonable legal and collection efforts and notice is given
to Mr. Adams. As security for this obligation, Mr. Adams delivered to the
Company a collateral assignment of mortgage pertaining to certain real property
of which Mr. Adams is the mortgagee, up to the sum of $83,000 (the "Collateral
Assignment").
On October 27, 1993, the Company obtained a judgment with respect to the
Yager Loans in the amount of $88,597.62 (the "Yager Judgment"). Notwithstanding
reasonable legal and collection efforts undertaken by the Company, the judgment
remained unsatisfied and the Company accordingly sent notice to Mr. Adams on
March 25, 1994. In a series of letters from Mr. Adams and/or his counsel, Mr.
Adams has claimed that the Company improperly pursued its remedies against Yager
and Penfield Realty, and as such, denied his obligation to assume liability for
the Yager Loans under the Affiliate Agreement.
On March 31, 1995, the Company entered into an agreement with Mr. Adams
(the "Adams Agreement") in order to resolve certain disputes with respect to (i)
the Affiliate Agreement (including, without limitation, the payment of the Yager
Loans) and (ii) their relationship as landlord and tenant with respect to the
premises located at 746-766 Monroe Avenue, Rochester, New York (the "Monroe
Avenue Premises"), under a lease dated January 20, 1986, as amended (the "Monroe
Avenue Lease").
Under the terms and conditions provided for in the Adams Agreement, (i) the
parties terminated the Affiliate Agreement; (ii) the Company exercised its
option with Adams and acquired 186,500 shares of the Company's Common Stock held
by Adams at an exercise price of $186,500, which exercise price was offset by
the repayment by Adams of $83,000, representing full payment of the Yager Loans,
resulting in the net payment from the Company to Adams in the amount of
$103,500; (iii) the Collateral Assignment of Mortgage Agreement between the
parties dated June 28, 1993, which secured Adams' obligation to repay the Yager
Loans was terminated; (iv) the Option to Purchase Real Property Agreement dated
June 28, 1993 between the parties, which secured certain of Adams' obligations
under the Affiliate Agreement, was terminated; (v) the parties executed a
Further Modification Agreement to the Monroe Avenue Lease; (vi) the parties and
Lyndon Guaranty Bank of New York, the new mortgagee of the Monroe Avenue
Premises, executed a Subordination, Non-Disturbance and Attornment Agreement;
and (vii) Adams executed and delivered general releases in favor of the Company,
its board of directors and executive officers and its subsidiaries and the
Company, its board of directors and executive officers and its subsidiaries
executed and delivered general releases in favor of Adams. In addition, the
Company assigned the Yager Judgment in favor of Adams.
In connection with the 1993 Private Placement, Ms. Jessie Lazeroff tendered
her resignation as a Director of the Company and its subsidiaries. Mr. Steven B.
Sands was elected to the Board of Directors to fill the vacancy created by Ms.
Lazeroff's resignation. Pursuant to an agreement between the Company and Sands
Brothers, the Board of Directors of the Company nominated John P. Holmes as the
Company's fourth Director. Mr. Holmes was elected to the Board of Directors of
the Company at the Company's Annual Meeting of Shareholders on October 29, 1993.
On March 31, 1994, Sands Brothers exercised all of the Placement Agent
Warrants which it held on such date and was issued 285,000 shares of Common
Stock. Mr. Holmes held 130,000 Placement Agent Warrants, which he exercised on
March 31, 1994 and was issued 130,000 shares of Common Stock. An aggregate of
487,900 Placement Agent Warrants have been exercised since March 31, 1994 by
Sands Brothers and certain of its employees. A Registration Statement on Form
S-3 covering the 400,000 shares of Common Stock comprising a portion of the 1993
Private Placement units and the 500,000 shares of Common Stock underlying the
Placement Agent Warrants was declared effective by the Commission on March 17,
1994.
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On April 28, 1994, the Company consummated a private placement (the "1994
Private Placement") with 37 investors with respect to an aggregate of $1.2
million Principal Amount 7% Convertible Senior Subordinated Debentures of the
Company (the "Debentures") due two years from the date of issuance, convertible
into shares of the Common Stock at any time prior to maturity, unless previously
redeemed, at an initial conversion price of $5.00 per share. Sands Brothers
acted as placement agent in the sale of the Debentures and received a placement
fee of 8% ($96,000) for placing the Debentures plus a 2% non-accountable expense
allowance ($24,000).
The Debentures are expressly senior in right of payment to all Company
obligations (but subordinated to the payment of any future bank or institutional
indebtedness up to $1 million). The Debentures are redeemable, in whole only,
from time to time at the option of the Company at a redemption price equal to
100% of the principal amount thereof plus accrued interest, provided that the
Debentures may not be redeemed prior to maturity unless, during any period of 20
consecutive trading days ending within 30 days prior to the giving of the notice
of redemption, the market price for the Common Stock is at least 125% of the
conversion price, or $6.00 per share. The shares of Common Stock issuable upon
conversion of the Debentures have been registered pursuant to a registration
statement on Form S-3 which was declared effective by the SEC on March 15, 1995.
In September 1994, the Company issued 100,000 shares of Common Stock and a
warrant exercisable for 100,000 shares of Common Stock to Mr. Mark Kalimian.
Such 100,000 shares and the shares underlying Mr. Kalimian's warrant are
registered under a registration statement on Form S-3 initially filed with the
Securities and Exchange Commission on January 11, 1995 (the "Resale
Prospectus"). The Company has entered into an agreement with Mr. Kalimian, a
principal shareholder of the Company, whereby in consideration of Mr. Kalimian
waiving his registration rights, and agreeing to certain "lock up" provisions
requested by H.J. Meyers, the leading underwriter of the Company's 1995 public
offering, the Company reserved a portion of the net proceeds of the Company's
1995 public offering towards the payment to Mr. Kalimian of any amount by which
the net proceeds of the entire 100,000 shares of Common Stock that are actually
sold by Mr. Kalimian under the Resale Prospectus are less than $300,000. On May
15, 1995, the Company agreed to reduce the exercise price of Mr. Kalimian's
warrant from $4.00 to $2.25, the fair market value of the Company's Common Stock
on such date.
John Borek, an officer and Director of the Company, owed $22,787 to the
Company as of January 30, 1994. This advance was non-interest bearing through
the year ended January 30, 1994, and during the current fiscal year is bearing
interest at the rate of nine (9%) percent per annum. Although Mr. Borek has
agreed to reimburse the Company for such amounts not later than June 30, 1995,
such amounts are still outstanding as of the date of this Proxy Statement. On
March 3, 1994, the Board of Directors of the Company, by unanimous consent,
resolved that it would be the policy of the Company not to extend further loans
to any officers or Directors of the Company.
On March 23, 1995, the Company consummated a public offering through H.J.
Meyers resulting in net proceeds to the Company of $5,163,500. Sands Brothers
acted as a selected dealer in connection with the public offering and received
aggregate selling concessions of $52,500. Pursuant to the underwriting agreement
between the Company and H.J. Meyers, the Board of Directors of the Company
nominated Michael S. Smith, a designee of H.J. Meyers, as the Company's fifth
Director.
On March 21, 1995, the SEC declared effective a Registration Statement on
Form S-3 containing a "market making" prospectus. This prospectus may be used by
Sands Brothers in connection with offers and sales in market-making transactions
in the Common Stock and Redeemable Warrants of the Company. Sands Brothers may
act as a principal or agent in such transactions. Sands Brothers has no
obligation to make a market in the Common Stock and Redeemable Warrants and may
discontinue its market-making activities at any time without notice, in its sole
discretion.
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Officers, Directors and holders of five percent or more of the Company's
outstanding capital stock have agreed that they will not sell any shares owned
by them (or subsequently acquired under any option, warrant or convertible
security owned prior to the 1995 public offering) for periods ranging from 45
days to eighteen months from March 15, 1995, without H.J. Meyers' prior written
consent, provided, however, that certain limited partnerships affiliated with
Steven B. Sands, a Director of the Company, are not subject to any such
restrictions. In addition, of the 440,000 shares of Common Stock registered
under the Resale Prospectus, (i) 240,000 shares issuable upon conversion of the
Debentures are subject to "hold-back" arrangements with the Company pursuant to
which they may not be resold until September 15, 1995 without H.J. Meyers'
consent; (ii) 100,000 shares underlying a warrant held by Mark D. Kalimian, a
principal shareholder, are subject to a lock-up agreement with H.J. Meyers
pursuant to which Mr. Kalimian may not resell any of such shares until December
15, 1995 without H.J. Meyers' consent; and (iii) 100,000 shares held by Mr.
Kalimian are immediately available for resale under the Resale Prospectus,
subject, however, to a 1,000 share per day limitation imposed by H.J. Meyers
until December 15, 1995 (which limitations may be waived by H.J. Meyers in its
sole discretion).
All future transactions and/or loans between the Company and its officers,
Directors and 5% shareholders will be on terms no less favorable than could be
obtained from independent third parties and will be approved by a majority of
the independent, disinterested directors of the Company.
Compliance with Section 16(a) of the Securities Exchange Act of 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers and directors, and persons who own more than ten percent of a
registered class of the Company's equity securities, to file reports of
ownership and changes in ownership with the Securities and Exchange Commission
(the "SEC"). Officers, directors and greater than ten percent shareholders are
required by SEC regulations to furnish the Company with copies of all Section
16(a) forms they file.
Based solely on its review of the copies of such forms received by it, or
written representations from certain reporting persons that no Forms 3, 4 or 5
were required for those persons, the Company believes that, except for G.L.
Wilson Building Co. ("Wilson Co."), during Fiscal Year 1995, its officers,
directors, and greater than ten-percent beneficial owners complied with all
applicable Section 16(a) filing requirements. The Company believes that no Form
3 was filed by Wilson Co. or any officer, director or beneficial owner thereof.
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PROPOSAL II - RATIFICATION OF APPOINTMENT OF
INDEPENDENT PUBLIC ACCOUNTANTS
The Board believes it appropriate to submit for ratification by the
shareholders its selection of Deloitte & Touche LLP as independent public
accountants for the Company for the fiscal year ending January 28, 1996.
Deloitte & Touche LLP served as the Company's independent public accountants
since September 3, 1993, prior to which time Michael F. Cronin, C.P.A. served as
independent accountant for the Company since the fiscal year ended January 31,
1988.
The reports of Michael F. Cronin, C.P.A. on the Company's financial
statements for Fiscal Year 1993 and fiscal year ending January 31, 1992 ("Fiscal
Year 1992") did not contain an adverse opinion or a disclaimer of opinion, and
were not qualified or modified as to uncertainty, audit scope or accounting
principles. During Fiscal Years 1992 and 1993, and through the date of Mr.
Cronin's dismissal, there were no disagreements between the Company and Michael
F. Cronin, C.P.A. on any matter of accounting principles or practices, financial
statement disclosure, or auditing scope or procedure, which were not resolved to
the satisfaction of Michael F. Cronin, C.P.A.
During Fiscal Years 1992 and 1993 and through the date of Mr. Cronin's
dismissal, the Company did not consult with Deloitte & Touche LLP as to the
application of accounting principles to a specified transaction, the type of
audit opinion that might be rendered on the Company's financial statements, the
subject matter of a disagreement (although no disagreements have arisen) or
reportable event with the former auditor.
A representative of Deloitte & Touche LLP is expected to be present at the
Annual Meeting. The representative will have the opportunity to make a statement
if he desires to do so, and is expected to be available to respond to
appropriate questions.
In the event of a negative note, the Board of Directors will reconsider its
selection.
The Board of Directors unanimously recommends that the shareholders vote
"FOR" the ratification of Deloitte & Touche LLP as the Company's independent
public accountants for the current fiscal year.
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PROPOSAL III - AMENDMENT TO THE 1993 STOCK OPTION PLAN
A proposal to approve an amendment to the Company's 1993 Stock Option Plan
(the "1993 Plan") will be presented to shareholders at the Annual Meeting. The
description of the 1993 Plan and the proposed amendment set forth below is a
summary and does not purport to be complete, and is subject to and qualified in
its entirety by reference to the text of the 1993 Stock Option Plan itself.
Copies of the 1993 Stock Option Plan are available for inspection at the
principal executive offices of the Company and will be sent to shareholders of
the Company upon written request.
The 1993 Stock Option Plan
In September 1993, the Company adopted the 1993 Plan which provided for the
grant by the Company of options to purchase up to an aggregate of 200,000 shares
of the Company's authorized but unissued Common Stock (subject to adjustment in
certain cases, including stock splits, recapitalizations and reorganizations) to
officers, directors, employees and consultants of the Company.
The 1993 Plan is administered by the Board of Directors or the Stock Option
Committee (the "Committee"), such Committee currently consisting of Steven B.
Sands and John P. Holmes, who are "disinterested persons" within the meaning of
Rule 16b-3 promulgated under the Securities Exchange Act of 1934 (the "Exchange
Act"). The Committee has the authority to select the recipients of options and
determine the terms of options granted under the 1993 Plan. The Board of
Directors may, in its discretion, reserve to itself any or all of the authority
and responsibility of the Committee with respect to awards of options to
employees who are not subject to liability under the Exchange Act at the time
any such responsibility is exercised.
Options granted under the 1993 Plan may be either incentive stock options
within the meaning of the Internal Revenue Code, as amended, ("Incentive Stock
Options"), or options that do not qualify as Incentive Stock Options ("Non-
Qualified Stock Options"). The exercise price per share of Common Stock under an
Option will be established by the Committee in its sole discretion at the time
of grant; provided, however, that with respect to Incentive Stock Options, the
Option Price will not be less than the fair market value of the Common Stock at
the time the Option is granted, and with respect to Non-Qualified Stock Options,
the Option Price will not be less than eighty-five (85%) percent of the fair
market value of the Common Stock at the time the Option is granted. Options may
be exercised in whole or in part at such time or times as will be determined by
the Committee and set forth in the applicable option agreement, except that the
term of any Option will not be longer than ten years from the date of its grant.
Options will be exercised in accordance with procedures established by the
Committee. Options are nontransferable other than by will or the laws of descent
and distribution, or pursuant to a qualified domestic relations order, as
defined in the Code and the Employee Retirement Income Security Act of 1974, as
amended.
Except as otherwise permitted by the Code, the aggregate fair market value
(determined as of the time the Option is granted) of the Common Stock with
respect to which any Incentive Stock Option may be exercisable for the first
time by the grantee in any calendar year (under the 1993 Plan or any other stock
option plan of the Company or any or subsidiary thereof) will not exceed
$100,000.
No Incentive Stock Option may be granted to an individual who, at the time
the Option is granted, owns, directly or indirectly, stock possessing more than
ten percent (10%) of the total combined voting power of all classes of Common
Stock of the Company or of any subsidiary thereof, unless such Option (i) has an
Option price of at least 110 percent of the fair market value of the Common
Stock on the date of the grant of such Option and (ii) cannot be exercised more
than five years after the date it is granted. The Committee may grant options
under the 1993 Plan to any officer, Director, employee or consultant of the
Company or its subsidiaries, who is not a member of the Committee. Directors of
the Company who are not also officers or employees are not eligible for awards
under the 1993
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Plan. There currently are two executive officers of the Company who are eligible
for the grant of options under the 1993 Plan.
The aggregate number of shares of Common Stock which may be purchased
pursuant to options granted under the 1993 Plan, the number of shares of Common
Stock covered by each outstanding Option, and the price per share thereof of
each such Option will be appropriately adjusted, if necessary, for any increase
or decrease in the number of outstanding shares of Common Stock resulting from a
stock split or other subdivision or consolidation of shares of Common Stock or
for other capital adjustments or payments of stock dividends or distributions or
other increases or decreases in the outstanding shares of Common Stock effected
without receipt of consideration by the Company. Subject to any required action
by the shareholders, if the Company will be the surviving corporation in any
merger or consolidation, any Option granted will cover the securities to which a
holder of the number of shares of Common Stock covered by the unexercised or
invested portion of the Option would have been entitled pursuant to the terms of
the merger or consolidation.
Options to purchase up to an aggregate of 163,250 shares of the Company's
authorized but unissued Common Stock (subject to adjustment in certain cases,
including stock splits, recapitalizations and reorganizations) are outstanding
under the 1993 Plan. The Company has an effective registration statement on Form
S-8 under the Securities Act covering up to an aggregate of 300,000 shares under
the 1993 Plan and the Company's 1987 Stock Option Plan permitting the resale of
shares issued under such Plans by affiliates and nonaffiliates in the public
market without restriction under the Securities Act. However, the Company has
agreed with H.J. Meyers not to issue any options under the 1993 Stock Option
Plan that will either vest, or whose underlying shares of Common Stock may be
resold under the Form S-8, prior to September 15, 1996.
Under the Internal Revenue Code of 1986, as amended, the recipient of an
incentive stock option does not generally recognize taxable income upon the
grant and exercise of the option and the employer cannot deduct the related
compensation expense. While the exercise of an Incentive Stock Option does not
result in current taxable income, there are implications with regard to
alternative minimum tax ("AMT"). When calculating income for AMT purposes, the
amount is equal to the fair market value of the shares on the date of exercise
less the purchase price. The recipient has a taxable event only at the later
sale or distribution of the option stock, using the original option price as the
basis for determining gain. If, however, the recipient engages in a
disqualifying disposition of the option stock, the recipient will recognize as
income at that time the difference between the exercise price and the option
stock fair market value at the time of option exercise and the employer may
deduct that amount as compensation expense.
The Proposed Amendment
The 1993 Plan currently authorizes a total of 200,000 shares. The Board of
Directors has approved, and recommends that the shareholders approve, a proposal
to increase the number of shares of Common Stock available for issuance under
the 1993 Plan from 200,000 to 400,000 shares. As of July 31, 1995, options for
163,250 shares have been granted under the 1993 Plan. As of that date, the last
sale price of the Common Stock on the NASDAQ Small-Cap Market was $3.125 per
share.
The Board believes that in order to enable the Company to continue to
attract and retain personnel of the highest caliber, provide incentive for
officers, directors, key employees and other key personnel and continue to
promote the well being of the Company, it is in the best interest of the Company
and its shareholders to provide to officers, directors, key employees,
consultants and other independent contractors who perform services for the
Company, through the granting of stock options, the opportunity to participate
in the value and appreciation in value of the Company's Common Stock. The Board
has found that the grant of options under the 1993 Plan has proven to be a
valuable tool in attracting and retaining key employees. It believes that such
authority, in view of the Company's proposed expansion plans, should be expanded
to increase the number of options which may be granted under the 1993 Plan. The
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Board believes that such authority (i) will provide the Company with significant
means to attract and retain talented personnel, (ii) will result in saving cash,
which otherwise would be required to maintain currently key employees, and
adequately attract and reward key personnel, and (iii) consequently, will prove
beneficial to the Company's ability to be competitive.
Shareholder Vote Required to Approve the Proposal
The approval by a majority of the votes present and entitled to vote at the
Annual Meeting is required to approve an increase in the number of shares
available for issuance pursuant to the 1993 Plan.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE SHAREHOLDERS VOTE "FOR"
THE AMENDMENT TO THE 1993 STOCK OPTION PLAN.
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PROPOSAL IV - REINCORPORATION IN DELAWARE
General
The Board of Directors has unanimously approved, and recommends for
shareholder approval, the change of the Company's state of incorporation from
New York to Delaware, which also will result in the ability of the Company to
issue preferred stock. The transaction will not result in any change in the
business, management, assets, liabilities or net worth of the Company.
Reincorporation in Delaware will allow the Company to take advantage of certain
provisions of the corporate laws of Delaware, while the ability to issue
preferred stock will afford the Company additional financial flexibility. The
purposes and effects of the proposed transaction are summarized below.
In order to effect the Company's reincorporation in Delaware, the Company
will be merged into a newly formed, wholly owned subsidiary incorporated in
Delaware. The Delaware subsidiary has not engaged in any activities except in
connection with the proposed transaction. The mailing address of the Delaware
subsidiary's principal executive offices and its telephone number are the same
as those of the Company. As part of its approval and recommendations of the
Company's reincorporation in Delaware, the Board has approved, and recommends to
the shareholders for their adoption and approval, an Agreement and Plan of
Merger (the "Reincorporation Agreement") pursuant to which the Company will be
merged with and into the Delaware subsidiary. The full texts of the
Reincorporation Agreement and the Certificate of Incorporation and Bylaws of the
successor Delaware corporation under which the Company's business would be
conducted after the merger are set forth as Appendix A, Appendix B, and Appendix
C, respectively, hereto. The discussion contained in this Proxy Statement is
qualified in its entirety by reference to such Appendices.
The reincorporation of the Company in Delaware through the above-described
merger (hereinafter referred to as the "Reincorporation") requires approval of
the Company's shareholders by the affirmative vote of the holders of two-thirds
of all outstanding shares of Common Stock. Shareholders who do not vote for the
proposal and who dissent by complying with the procedures required by the New
York Business Corporation Law will have the right, if the Reincorporation is
consummated, to receive payment of the fair value of their shares. See "Right to
Dissent and Appraisal," below.
In the following discussion of the proposed Reincorporation, the term
"Village Green-NY" refers to the Company as currently organized as a New York
corporation; the term "Village Green-DEL" refers to the new wholly owned
Delaware subsidiary of Village Green-NY that will be the surviving corporation
after the completion of the transaction; and the term "Company" includes either
or both, as the context may require, without regard to the state of
incorporation.
Upon shareholder approval of the Reincorporation, and upon approval of
appropriate certificates of merger by the Secretaries of State of the States of
New York and Delaware, Village Green-NY will be merged with and into Village
Green-DEL pursuant to the Reincorporation Agreement, resulting in a change in
the Company's state of incorporation. The Company will then be subject to the
Delaware General Corporation Law and the Certificate of Incorporation and Bylaws
set forth in Appendix B and Appendix C, respectively. Upon the effective time of
the Reincorporation, each outstanding share of common stock of Village Green- NY
and each share of Common Stock of Village Green-NY held in the treasury of
Village Green-NY automatically will be converted into one share of Common Stock
of Village Green-DEL. Outstanding options to purchase shares of Common Stock of
Village Green-NY will be converted into options to purchase the same number of
shares of Common Stock of Village Green-DEL. Each employee stock plan and any
other employee benefit plan to which Village Green-NY is a party, whether or not
such plan relates to the Common Stock of Village Green-NY, will be assumed by
Village Green-DEL and, to the extent any such plan provides for the issuance or
purchase of Common Stock of Village Green-NY, will be deemed to provide for the
issuance or purchase of shares of Common Stock of Village Green-DEL.
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IT WILL NOT BE NECESSARY FOR SHAREHOLDERS OF THE COMPANY TO EXCHANGE THEIR
EXISTING STOCK CERTIFICATES FOR CERTIFICATES OF VILLAGE GREEN-DEL; OUTSTANDING
STOCK CERTIFICATES OF VILLAGE GREEN-NY SHOULD NOT BE DESTROYED OR SENT TO THE
COMPANY. THE COMMON STOCK OF THE COMPANY WILL CONTINUE TO BE TRADED ON THE
NASDAQ SMALL-CAP MARKET AND BOSTON STOCK EXCHANGE.
Principal Reasons for Changing the Company's State of Incorporation
The Company's Board of Directors believes that the Reincorporation will
provide flexibility for both the management and business of the Company.
Delaware is a favorable legal and regulatory environment in which to
operate. For many years, Delaware has followed a policy of encouraging
incorporation in that state and, in furtherance of that policy, has adopted
comprehensive, modern and flexible corporate laws which are periodically updated
and revised to meet changing business needs. As a result, many major
corporations have initially chosen Delaware for their domicile or have
subsequently reincorporated in Delaware. The Delaware courts have developed
considerable expertise in dealing with corporate issues, and a substantial body
of case law has developed construing Delaware law and establishing public
policies with respect to Delaware corporations thereby providing greater
predictability with respect to corporate legal affairs.
The Delaware Business Combinations Statute
The Delaware Business Combinations Statute prohibits certain transactions
between a Delaware corporation and an "interested stockholder," which is defined
as a person that is directly or indirectly a beneficial owner of 15% or more of
the voting power of the outstanding voting stock of a Delaware corporation and
such person's affiliates and associates. This provision prohibits certain
business combinations (defined broadly to include mergers, consolidations, sales
or other dispositions of assets having an aggregate value in excess of 10% of
the consolidated assets of a company, and certain transactions that would
increase the interested shareholder's proportionate share ownership in a
company) between an interested shareholder and a company for a period of three
years after the date the interest shareholder acquired its stock, unless (i) the
business combination is approved by such company's Board of Directors prior to
the date the interested shareholder acquired its shares, (ii) the interested
shareholder acquired at least 85% of the voting stock of such company in the
transaction in which it became an interested shareholder, or (iii) the business
combination is approved by a majority of the Board of Directors and the
affirmative vote of two-thirds of the votes entitled to be cast by disinterested
shareholders at an annual or special meeting.
If the Reincorporation is consummated, the Delaware Business Combinations
Statute will apply to Village Green-DEL. The effect of the application of the
Delaware Business Combinations Statute would be to reduce the likelihood of
situations in which the Company may be forced to accept a proposal for the
takeover of the Company without ample time to evaluate the proposal and
appropriate alternatives and to encourage anyone contemplating a transaction
with the Company to negotiate directly with the Company on a fair and equitable
basis. The application of the Delaware Business Combinations Statute could make
more difficult or discourage a tender offer for the Company's Common Stock or
the completion of a "second step" merger by holder of a substantial block of the
Company's Common Stock, irrespective of whether such action might be perceived
by shareholders holding a majority of the Company's Common Stock to be
beneficial to the Company and its shareholders. In effect, shareholders owning
15% of the Company's Common Stock might be able to block certain transactions,
which is a smaller percentage than is currently the case.
The application of the Delaware Business Combinations Statute could
adversely affect the ability of shareholders to benefit from certain
transactions which are opposed by the Board or by shareholders owning 15% of the
Company's Common Stock, even if the price offered in such transactions
represents a premium over the then-current market price of the Company's Common
Stock. To the extent that the Board's disapproval of a proposed transaction
discourages establishment of a controlling stock interest, the position of the
Board and current management
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may be strengthened, thereby assisting those persons in retaining their
positions.
However, the Board believes on balance that the Company's becoming subject
to the provisions of the Delaware Business Combinations Statute will be in the
best interests of the Company and its shareholders. In recent years there have
been a number of surprise takeovers of publicly-owned corporations. These
transactions have occurred through tender offers or other sudden purchases of a
substantial number of outstanding shares. Frequently, these tender offers and
other share purchases have been followed by a merger or other form of complete
acquisition of the target company by the purchaser without any negotiations with
the Board of Directors of the target company. Such a "second step" business
combination automatically eliminates minority interests in the target company,
often for less valuable considerations per share than was paid in the
purchaser's original tender offer or market purchases. In other instances, a
purchaser has used its controlling interest to effect other transactions having
an adverse impact on the target company and its shareholders. The protections
afforded by the Delaware Business Combinations Statute will increase the
likelihood that anyone contemplating a transaction with the Company would
negotiate directly with the Company in advance. The Board believes that it is in
a better position than the individual shareholders of the Company to negotiate
effectively for an adequate price for all the shareholders, since the Board is
likely to be more knowledgeable than any individual shareholder in assessing the
business and prospects of the Company.
The Board of Directors has carefully considered the potential adverse
effects of being subject to the Delaware Business Combinations Statute described
above and has unanimously concluded that the adverse effects are substantially
outweighed by the increased protection which the statute will afford the Company
and its shareholders.
Comparison of Certain Provisions of the Certificates of Incorporation and Bylaws
of Village Green-DEL and Village Green-NY
Upon the Reincorporation, the Certificate of Incorporation and Bylaws of
Village Green-DEL will become the Company's Certificate of Incorporation and
Bylaws. The following is a summary of certain significant differences between
the provisions of the Certificate of Incorporation and Bylaws of Village Green-
DEL and those of the Certificate of Incorporation and Bylaws of Village
Green-NY. This summary does not purport to be complete, and reference is made to
the Certificate of Incorporation and Bylaws of Village Green-DEL, which are
attached hereto as Appendix B and Appendix C, respectively. Copies of the
Certificate of Incorporation and Bylaws of Village Green-NY are available for
inspection at the principal executive offices of the Company and will be sent to
shareholders of the Company upon written request.
Capitalization.
The Certificate of Incorporation of Village Green-DEL authorizes the
issuance of 10,000,000 shares of Common Stock, par value $.001 per share, and
1,000,000 shares of preferred stock, par value $.001 per share. Village Green-
DEL's preferred stock may be issued in series, each series being composed of
such number of shares and having such dividend, liquidation, voting, conversion,
redemption and other rights, if any, as the Board of Directors may determine.
Currently Village Green-NY is authorized to issue 10,000,000 shares of Common
Stock, par value $.001 per share, 3,741,155 shares of which were outstanding as
of July 31, 1995. Village Green-NY is not authorized to issue any preferred
stock. In the Reincorporation, one share of Common Stock of Village Green-DEL
will be issued for each outstanding share of Common Stock of Village Green-NY.
Accordingly, while the Reincorporation would not affect the extent of any
shareholder's proportional ownership interest in the Company, it grants the
Board the authority to issue preferred stock as it deems advisable.
The Board believes that it is desirable to have preferred stock available
for future financings, acquisitions, stock splits or dividends, employee benefit
plans or other corporate purposes. The Company has no definitive plans,
arrangements, commitments, or understandings with respect to
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the issuance of any shares of preferred stock which would be authorized by the
Certificate of Incorporation of Village Green-DEL. The Board (subject to
applicable law, rules of regulatory agencies and requirements of the NASDAQ
Small-Cap Market and Boston Stock Exchange) has the power to issue shares of
preferred stock without further shareholder approval. One of the effects of the
ability of the Company to issue preferred stock may be to enable the Board to
render more difficult or discourage an attempt to obtain control of the Company.
The Board would have the ability to issue shares of preferred stock with terms
which would make a takeover substantially more expensive. In addition, any
issuance of preferred stock could have the effect of diluting the earnings per
share and book value per share of existing shares of Common Stock. See "Purposes
and Effects of Certain Provisions of the Certificate of Incorporation and Bylaws
of Village Green- Delaware - Serial Preferred Shares Provisions" below.
Removal of Directors; Filling Vacancies on the Board of Directors.
The Village Green-DEL Bylaws provide that any director or the entire board
of directors generally may be removed, with or without cause, by the holders of
a majority of the shares entitled to vote at an election of directors. The
Village Green-NY Bylaws similarly provide that a director may be removed, with
or without cause, by the holders of a majority of the shares entitled to vote at
an election of directors, but also authorizes the Board of Directors, by
majority vote, to remove a director for cause.
Under the Village Green-DEL Bylaws, if the office of any director becomes
vacant, the remaining directors in office, though less than a quorum, by a
majority vote, may appoint any qualified person to fill such vacancy, such
appointee to hold office until the next annual meeting of shareholders or until
his successor shall be duly chosen.
The Village Green-NY Bylaws also provide that if any vacancies occur in the
Board of Directors, all of the directors then in office, although less than a
quorum, may, by majority vote choose a successor or successors, or fill a newly
created directorship, and the directors so chosen shall hold office until the
next annual meeting of the shareholders and until their successors shall be duly
elected and qualified, unless sooner displaced; provided, however, that if in
the event of any such vacancy, the directors remaining in office shall be unable
by majority vote, to fill such vacancy, within thirty (30) days of the
occurrence thereof, the President or the Secretary may call a special meeting of
the shareholders at which such vacancy shall be filled.
Limitation on Directors' Liability.
The Village Green-DEL ByLaws provide that no director of the Company shall
be personally liable for any monetary damages for breaches of fiduciary duty as
a director, provided that this provision shall not eliminate or limit the
liability of a director (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) for any transaction from which the director derived an improper personal
benefit, or (iv) under Section 174 of the Delaware General Corporation Law,
which relates to the unlawful payment of dividend or unlawful stock purchase or
redemption.
The Village Green-NY Certificate of Incorporation provides that the
personal liability of the Company's Directors for breach of duty as a director
shall be eliminated to the fullest extent permitted by the New York Business
Corporation Law. Section 402(b) of the New York Business Corporation Law
provides that no such provision shall eliminate or limit the liability of any
director if a judgment or other final adjudication adverse to him establishes
that (i) his acts or omissions were in bad faith or involved intentional
misconduct, or (ii) he personally gained a financial profit or other advantage
to which such director was not legally entitled or (iii) the director's acts
violated Section 719 of the New York Business Corporation Law, which relates to
the improper payment of a dividend, an invalid purchase of shares or
distribution of assets, and unauthorized loans to directors.
Amendment or Repeal of the Certificate and Bylaws.
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The Village Green-DEL Certificate of Incorporation is silent as to the
amendment or repeal of the Certificate of Incorporation. Under Delaware law,
unless the certificate of incorporation otherwise provides, amendments of the
certificate of incorporation generally require the approval of the holders of a
majority of the outstanding stock entitled to vote thereon, and if the amendment
would increase or decrease the number of authorized shares of any class or
series or the par value of such shares or would adversely affect the rights,
powers or preferences of such class or series, a majority of the outstanding
stock of such class or series also would have to approve the amendment. The
Village Green-DEL Bylaws provide that the Bylaws may be amended or repealed by
the vote of a majority of the (i) stockholders or (ii) Board of Directors.
The Village Green-NY Bylaws and Village Green-NY Certificate of
Incorporation are silent concerning amendment of its provisions. The New York
Business Corporation Law generally requires approval of the majority of
shareholders to amend the certificate of incorporation.
Limitation on Call of Meetings.
The Village Green-DEL Bylaws provide that a special meeting of shareholders
may be called by the President or the Board of Directors.
The Village Green-NY Bylaws permit a special meeting of stockholders to be
called by the President, the Board of Directors or shareholders of at least 10%
of outstanding shares entitled to vote and shall be called by the President or
the Secretary at the request in writing of a majority of the directors or
shareholders of at least 10% of outstanding shares entitled to vote.
Certain Differences Between the Corporation Laws of New York and Delaware
Summarized below are certain differences between the New York Business
Corporation Law and the Delaware General Corporation Law which may affect the
interests of stockholders. The summary does not purport to be a complete
statement of the differences between the New York Business Corporation Law and
the Delaware General Corporation Law and related laws affecting stockholders'
rights, and the summary is qualified in its entirety by reference to the
provisions of these laws.
Vote Required for Mergers.
New York law requires the affirmative vote of two-thirds of a corporation's
outstanding shares to authorize a merger, consolidation, dissolution or
disposition of substantially all of its assets. Delaware law requires the
affirmative vote of a majority of the outstanding shares to authorize any such
action, unless otherwise expressly provided in the certificate of incorporation.
There is no such provision in the Village Green-DEL Certificate of
Incorporation.
Dividends.
Under both New York and Delaware law, a corporation may generally pay
dividends out of surplus. In addition, Delaware law permits a corporation, under
certain circumstances, to pay dividends if there is no surplus out of its net
profits for the fiscal year in which the dividend is declared and/or the
preceding fiscal year.
Loans to Directors.
New York law prohibit loans to directors unless authorized by stockholder
vote. Delaware law permits the Board of Directors without stockholder approval
to authorize loans to corporate directors who also are officers, whenever, in
the judgment of the directors, such loan may reasonably be expected to benefit
the Company.
Stock Repurchases.
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New York law permits repurchases of shares out of surplus except when
currently the corporation is insolvent or would thereby be made insolvent, and
permits a corporation to purchase its own shares out of stated capital, except
when currently the corporation is insolvent or would thereby be made insolvent,
if the purchase is made for the purpose of (i) eliminating fractions of shares,
(ii) collecting or compromising indebtedness to the corporation, or (iii) paying
stockholders entitled to receive payment for their shares under the appraisal
provisions of the New York corporation laws. Under Delaware law a corporation
may purchase or redeem shares of any class except when its capital is impaired
or such purchase would cause impairment of capital, except that a corporation
may purchase or redeem out of capital any of its preferred shares is such shares
will be retired upon the acquisition and the capital of the corporation will be
thereby reduced.
Stockholder Records.
Under New York Law, a person must have been a stockholder for at least six
months, or be authorized in writing by the holders of 5% of any class of a
corporation's outstanding shares, in order to examine the minutes and
stockholder records of a corporation. Under Delaware law, any stockholder with a
proper purpose may demand inspection.
Corporate Action Without a Stockholders Meeting.
A stockholders' meeting to authorize corporate action may be dispensed with
by a New York corporation only upon the written consent of all stockholders.
Delaware law permits corporate action without a meeting of stockholders upon the
written consent of the holders of that number of shares necessary to authorize
the proposed corporate action being taken, unless the certificate of
incorporation expressly provides otherwise. There is no such provision in the
Village Green-DEL Certificate of Incorporation.
Rights and Options.
New York requires stockholder approval of any plan pursuant to which rights
or options are to be granted to directors, officers or employees. Delaware law
does not require stockholder approval of such plans, although various other
applicable legal requirements, such as rules of the Securities and Exchange
Commission, may make stockholder approval of certain rights or option plans
necessary or desirable.
Dissenters' Rights.
New York law provides that, upon compliance with the applicable
requirements and procedures, a dissenting stockholder has the right to receive
the fair value of his shares if he objects to (i) certain mergers, (ii) a
consolidation, (iii) a disposition of assets requiring stockholder approval or
(iv) certain amendments to the certificate of incorporation which adversely
affect the rights of stockholder.
Delaware law provides such appraisal rights only in the case of a
stockholder objecting to certain mergers or consolidations, and such appraisal
rights do not apply (i) to stockholders of the surviving corporation in a merger
if stockholder approval of the merger is not required or (ii) to any class of
stock which is either listed on a national securities exchange or held of record
by more than 2,000 holders unless stockholders are required to accept for their
shares in the merger or consolidation anything other than Common Stock of the
surviving or resulting corporation or common stock of another corporation that
it so listed or held (and cash in lieu of fractional shares). The shares of the
Company are presently listed on the NASDAQ Small-Cap Market and Boston Stock
Exchange and as of July 31, 1995, were held by approximately 741 stockholders of
record.
Consideration for Shares.
New York law provides that neither obligations of the subscriber for future
payments nor obligations of the subscriber for future services shall
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constitute payment or part payment for shares of a corporation. Further,
certificates for shares may not be issued until the full amount of the
consideration therefor has been actually paid or services actually performed
(except in the case of shares purchased pursuant to stock options under a plan
permitting installment payments). Delaware law provides that shares of stock may
be issued, and deemed to be fully paid and nonassessable, if the corporation
receives consideration having a value not less than the par value of such shares
and the corporation receives a binding obligation of the subscriber to pay the
balance of the subscription price.
Notices and Record Date.
Under Delaware law, the Board of Directors of Village Green-DEL may fix a
record date for stockholder meeting and may give notices for such meetings which
shall not be more than sixty nor less than ten days before the date of a
meeting. New York law allows for a period of between ten and fifty days for
notices or determinations of a record date.
Federal Tax Consequences
In the opinion of Littman & Krooks, P.C., counsel to the Company, the
merger which will take place in connection with the Reincorporation should,
under current law, constitute a tax-free reorganization under section 368 of the
Internal Revenue Code of 1986, as amended (the "Code"). In rendering such
opinion, such counsel has relied upon representations contained in certificates
of the Company. No ruling has been or is expected to be requested from the
Internal Revenue Service ("IRS") as to the tax consequences of such merger.
Since no ruling has been obtained, no assurance can be given that the IRS will
agree with the conclusions of counsel or that a challenge by the IRS, if made,
will not be successful.
Assuming that the Reincorporation constitutes a tax-free reorganization,
the federal income tax consequences to the Company and its stockholders are as
follows. No gain or loss will be recognized to Village Green-NY or Village
Green-DEL as a result of this transaction. No gain or loss will be recognized to
stockholders who exchange their Village Green-NY Common Stock solely for Village
Green-DEL Common Stock. Stockholders will have the same tax basis in the Common
Stock of Village Green-DEL received in this transaction as the basis in the
Common Stock of Village Green-NY exchanged therefor, and the holding period of
the Common Stock of Village Green-DEL will include the period during which the
Common Stock of Village Green-NY were held, provided such Common Stock of
Village Green-NY were held as capital assets on the effective date of the
Reincorporation. In most instances, a dissenting stockholder who receives
payment for Common Stock upon exercise of the right of appraisal will recognize
gain or loss for federal income tax purposes measured by the difference between
the basis for the Common Stock and the amount of payment received. Such gain or
loss will be capital gain or loss if the Common Stock were held as capital
assets on the effective date of the Reincorporation.
The foregoing summary of federal income tax consequences is included for
general information only and does not address the federal income tax
consequences to all holders, including those who acquired shares of Common Stock
pursuant to the exercise of employee stock options or otherwise as compensation
and corporations subject to the alternative minimum tax. In view of the
individual nature of tax consequences, holders are urged to consul their own tax
advisors as to the specific tax consequences of the transaction, including the
application and effect of state, local and foreign income and other tax laws.
Right to Dissent and Appraisal
Section 910 of the New York Business Corporation Law ("BCL") sets forth the
rights of stockholders of the Company who object to the merger which will take
place in connection with the Reincorporation. Any stockholder of the Company who
does not vote in favor of the Reincorporation may, if the Reincorporation is
effected, obtain payment in cash of the fair value of his shares by complying
with requirements of Section 623 of the BCL, which relates
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to the procedure to enforce shareholder's right to receive payment for shares.
In general, Section 623 requires a shareholder seeking to enforce appraisal
rights to:
(1) file with the Company, at or prior to the Annual Meeting, a written
objection to the Reincorporation including a statement that the shareholder
intends to demand payment for his shares if the Reincorporation is effected;
(2) vote against or abstain from voting on the Reincorporation; and
(3) file with the Company, within 20 days after receipt of a notice from
the Company stating that the Reincorporation was approved by the Company's
shareholders, a written notice of election to exercise appraisal rights in
compliance with Section 623(c), which notice shall terminate all of such
shareholder's rights as a shareholder except only to receive the fair value of
the shares.
Upon receipt of the shareholder's Section 623(c) notice, in the event that
the Company and the shareholder do not agree on the fair market value of such
shareholder's Company Common Stock, the Company must, pursuant to Section
623(h), institute a special court proceeding to determine the rights of the
dissenting shareholder and to fix the fair value of his shares of the Company
Common Stock. Although the management of the Company intends to institute such
special proceedings when required, if the Company should fail to institute such
a proceeding within the time period fixed under Section 623(h), the dissenting
shareholder may then institute such proceeding.
Please note that a vote against the Reincorporation will not satisfy the
notice requirement under the New York law. Any shareholder wishing to enforce
his rights under Section 623 must file a separate objection to the
Reincorporation and a separate notice of election to exercise appraisal rights,
in the manner and within the time frames, specified in Section 623.
The foregoing summary does not purport to be a complete statement of the
provisions of Sections 910 and 623 of the BCL and is qualified in its entirety
by reference to those Sections, copies of which are attached as Appendix D
hereto.
FAILURE TO COMPLY WITH ANY OF THE PROCEDURAL REQUIREMENTS OF SECTION 623
MAY RESULT IN A TERMINATION OR WAIVER OF APPRAISAL RIGHTS UNDER SECTION 623.
Amendment
The Reincorporation Agreement may be amended, modified or supplemented
prior to the effective time of the Reincorporation upon the approval of the
Board of Directors of Village Green-NY and Village Green-DEL. However, no
amendment, modification or supplement may be made after the adoption of the
Reincorporation Agreement by the stockholders of Village Green-NY which changes
the Reincorporation Agreement in a way which, in the judgment if the Board of
Directors of Village Green-NY, would have a material adverse effect on the
stockholders of Village Green-NY unless such amendment, modification or
supplement is approved by such stockholders.
Termination
The Reincorporation Agreement provides that the Board of Directors of
Village Green-NY may terminate the Reincorporation Agreement and abandon the
merger contemplated thereby at any time prior to its effective time, whether
before or after approval by the stockholders of Village Green-NY, if (i) the
Reincorporation shall not have received the requisite approval of the
stockholders of Village Green-NY or (ii) the Board of Directors of Village
Green- NY determines for any reason in its sole judgment that the consummation
of the transaction would be inadvisable or not in the best interests of Village
Green-NY and its stockholders.
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Stockholder Vote Required to Approve the Proposal
Approval of the proposal will require the affirmative vote of the holders
of two-thirds of the shares of Common Stock issued and outstanding and entitled
to vote thereon.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE SHAREHOLDERS VOTE "FOR"
THE COMPANY'S REINCORPORATION IN DELAWARE.
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OTHER BUSINESS
Management of the Company knows of no other business which will be
presented for consideration at the Meeting, but should any other matters be
brought before the Meeting, it is intended that the persons named in the
accompanying proxy will vote at their discretion.
ANNUAL REPORT
The Annual Report for the Fiscal Year 1995 including financial statements,
is being furnished herewith to shareholders of record as of the Record Date. The
Annual Report does not constitute a part of the proxy soliciting material.
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SHAREHOLDER PROPOSALS FOR NEXT ANNUAL MEETING
Any shareholder desiring to present proposals to other shareholders at the
next annual meeting of shareholders must transmit such proposal to the Company
so that it is received by the Company on or before April 31, 1996. All such
proposals should be in compliance with applicable regulations of the Securities
and Exchange Commission.
THE COMPANY WILL PROVIDE WITHOUT CHARGE TO EACH BENEFICIAL HOLDER OF COMMON
STOCK ON THE RECORD DATE, ON THE WRITTEN REQUEST OF ANY SUCH PERSON, A COPY OF
THE COMPANY'S ANNUAL REPORT ON FORM 10-KSB FOR FISCAL YEAR 1995 AS FILED WITH
THE SECURITIES AND EXCHANGE COMMISSION. ANY SUCH REQUEST SHOULD BE MADE IN
WRITING TO THE CORPORATE SECRETARY, THE VILLAGE GREEN BOOKSTORE, INC., 1357
MONROE AVENUE, ROCHESTER, NEW YORK 14618.
By Order of the Board of Directors
John W. Borek
Secretary
August 4, 1995
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APPENDIX A
AGREEMENT AND PLAN OF MERGER
(REINCORPORATION MERGER AGREEMENT)
OF
THE VILLAGE GREEN BOOKSTORE, INC.
(a New York corporation)
AND
THE VILLAGE GREEN BOOKSTORE, INC.
(a Delaware corporation)
THIS AGREEMENT AND PLAN OF MERGER is made and entered into as of [ ,
1995] by and between THE VILLAGE GREEN BOOKSTORE, INC., a New York corporation
("VILLAGE GREEN-NY") and THE VILLAGE GREEN BOOKSTORE, INC., a Delaware
corportion which is a newly-formed and wholly-owned subsidiary of VILLAGE
GREEN-NY ("VILLAGE GREEN-DEL"), and approved by resolutions adopted by their
respective Boards of Directors.
WHEREAS, VILLAGE GREEN-NY is a business corporation of the State of New
York with its principal office therein located at 1357 Monroe Avenue, City of
Rochester, County of Monroe; and
WHEREAS, the total number of shares of stock which VILLAGE GREEN-NY has
authority to issue is ten million (10,000,000), all of which are of one class
and of a par value of $0.001 each; and
WHEREAS, VILLAGE GREEN-DEL is a business corporation of the State of
Delaware with its registered office therein located at 32 Lockerman Square,
Suite L-100, in the City of Dover, County of Kent, 19901; and
WHEREAS, the total authorized capital stock of VILLAGE GREEN- DEL is (i)
10,000,000 shares of Common Stock with a par value of $0.001 each, of which [ ]
shares are issued and outstanding and owned by VILLAGE GREEN-NY; and (ii)
1,000,000 shares of Preferred Stock, $0.001 par value, none of which are issued
and outstanding; and
WHEREAS, the New York Business Corporation Law permits a merger of a
business corporation of the State of New York with and into a business
corporation of another jurisdiction; and
WHEREAS, the General Corporation Law of the State of Delaware permits the
merger of a business corporation of another jurisdiction with and into a
business corporation of the State of Delaware; and
WHEREAS, VILLAGE GREEN-NY and VILLAGE GREEN-DEL, and the respective Boards
of Directors thereof, deem it advisable and to
<PAGE>
the advantage, welfare, and best interests of said corporations and their
respective stockholders to merge VILLAGE GREEN-NY with and into VILLAGE
GREEN-DEL pursuant to the provisions of the New York Business Corporation Law
and pursuant to the provisions of the General Corporation Law of the State of
Delaware upon the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and of the mutual
agreement of the parties hereto, being thereunto duly entered into by VILLAGE
GREEN-NY and approved by a resolution adopted by its Board of Directors and
being thereunto duly entered into by VILLAGE GREEN-DEL and approved by a
resolution adopted by its Board of Directors, the Agreement and Plan of Merger
and the terms and conditions thereof and the mode of carrying the same into
effect, together with any provisions required or permitted to be set forth
therein, are hereby determined and agreed upon as hereinafter in this Agreement
set forth.
1. VILLAGE GREEN-NY and VILLAGE GREEN-DEL shall, pursuant to the provisions
of the New York Business Corporation Law and the provisions of the General
Corporation Law of the State of Delaware, be merged with and into a single
corporation, to wit, VILLAGE GREEN-DEL, which shall be the surviving corporation
from and after the effective time of the merger, and which is sometimes
hereinafter referred to as the "surviving corporation", and which shall continue
to exist as said surviving corporation under its present name pursuant to the
provisions of the General Corporation Law of the State of Delaware. The separate
existence of VILLAGE GREEN-NY, which is sometimes hereinafter referred to as the
"terminating corporation", shall cease at said effective time in accordance with
the provisions of the New York Business Corporation Law.
2. Annexed hereto and made a part hereof is a copy of the Certificate of
Incorporation of the surviving corporation as the same shall be in force and
effect at the effective time in the State of Delaware of the merger herein
provided for; and said Certificate of Incorporation shall continue to be the
Certificate of Incorporation of said surviving corporation until amended and
changed pursuant to the provisions of the General Corporation Law of the State
of Delaware.
3. The present by-laws of the surviving corporation will be the by-laws of
said surviving corporation and will continue in full force and effect until
changed, altered or amended as therein provided and in the manner prescribed by
the provisions of the General Corporation Law of the State of Delaware.
4. The directors and officers in office of the surviving corporation at the
effective time of the merger shall be the members of the first Board of
Directors and the first officers of the surviving corporation, all of whom shall
hold their
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directorships and offices until the election and qualification of their
respective successors or until their tenure is otherwise terminated in
accordance with the by-laws of the surviving corporation.
5. Upon the effective time of the merger, by virtue of the Reincorporation
Merger and without any action on the part of the holder thereof, each VILLAGE-NY
Common Share outstanding immediately prior thereto shall be changed and
converted into and shall be one fully paid and nonassessable share of VILLAGE
GREEN- DEL Common Stock.
6. Upon the effective time of the merger, by virtue of the Reincorporation
Merger and without any action on the part of the holder thereof, each share of
VILLAGE GREEN-DEL Common Stock outstanding immediately prior thereto shall be
canceled and retired and resume the status of an authorized and unissued share
of VILLAGE GREEN-DEL Common Stock, and no shares of VILLAGE GREEN-DEL Common
Stock or other securities of VILLAGE GREEN-DEL shall be issued in respect
thereof and no amount shall be paid or other property delivered in respect
thereof.
7. In the event that this Agreement and Plan of Merger shall have been
fully approved and adopted upon behalf of the terminating corporation in
accordance with the provisions of the New York Business Corporation Law and upon
behalf of the surviving corporation in accordance with the provisions of the
General Corporation Law of the State of Delaware, the said corporations agree
that they will cause to be executed and filed and recorded any document or
documents prescribed by the laws of the State of New York and by the laws of the
State of Delaware, and that they will cause to be performed all necessary acts
within the State of New York and the State of Delaware and elsewhere to
effectuate the merger herein provided for.
8. The Board of Directors and the proper officers of the terminating
corporation and of the surviving corporation are hereby authorized, empowered,
and directed to do any and all acts and things, and to make, execute, deliver,
file, and record any and all instruments, papers, and documents which shall be
or become necessary, proper, or convenient to carry out or put into effect any
of the provisions of this Agreement and Plan of Merger or of the merger herein
provided for.
The effective time of this Agreement and Plan of Merger, and the time at
which the merger herein agreed upon shall become effective in the State of
Delaware, shall be [ , 1995].
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IN WITNESS WHEREOF, this Agreement and Plan of Merger is hereby executed
upon behalf of each of the constituent corporations parties thereto.
Dated: [ , 1995]
THE VILLAGE GREEN BOOKSTORE, INC.,
a Delaware corporation
By:
-----------------------------------------
RAYMOND C. SPARKS, President and
Chairman of the Board of Directors
Attest:
- ------------------------------
JOHN W. BOREK, Secretary
THE VILLAGE GREEN BOOKSTORE, INC.,
a New York corporation
By:
-----------------------------------------
RAYMOND C. SPARKS, President and
Chairman of the Board of Directors
Attest:
- ------------------------------
JOHN W. BOREK, Secretary
4
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APPENDIX B
CERTIFICATE OF INCORPORATION
OF
THE VILLAGE GREEN BOOKSTORE, INC.
FIRST: The name of the Corporation is:
THE VILLAGE GREEN BOOKSTORE, INC.
SECOND: The address of the Corporation's registered office in the State of
Delaware is 32 Loockerman Square, Suite L-100, in the City of Dover, County of
Kent, 19901. The name of the registered agent at such address is The
Prentice-Hall Corporation System, Inc.
THIRD: The purpose of the Corporation is to engage in any lawful act or
activity for which a corporation may be organized under the laws of the General
Corporation Law of the State of Delaware.
FOURTH: The total number of shares of capital stock which the Corporation
shall have authority to issue is eleven million 11,000,000 shares, of which ten
million 10,000,000 shares shall be Common Stock, par value $.001 per share, and
one million 1,000,000 shares shall be Preferred Stock, par value $.001 per
share. The Preferred Stock may be issued from time to time in one or more
series. The Board of Directors of the Corporation is hereby expressly authorized
to provide, by resolution or resolutions duly adopted by it prior to issuance,
for the creation of each such series and to fix the designation and the powers,
preferences, rights, qualifications, limitations and restrictions relating to
the shares of each such series. The authority of the Board of
<PAGE>
Directors with respect to each series of Preferred Stock shall include, but not
be limited to, determining the following:
(a) the designation of such series, the number of shares to constitute
such series and the stated value if different from the par value thereof;
(b) whether the shares of such series shall have voting rights, in
addition to any voting rights provided by law, and, if so, the terms of
such voting rights, which may be general or limited;
(c) the dividends, if any, payable on such series, whether any such
dividends shall be cumulative, and, if so, from what dates, the conditions
and dates upon which such dividends shall be payable, and the preference or
relation which such dividends shall bear to the dividends payable on any
shares of stock of any other class or any other series of Preferred Stock;
(d) whether the shares of such series shall be subject to redemption
by the Corporation, and, if so, the times, prices and other conditions of
such redemption;
(e) the amount or amounts payable upon shares of such series upon, and
the rights of the holders of such series in, the voluntary or involuntary
liquidation, dissolution, or winding up, or upon any distribution of the
assets, of the Corporation;
(f) whether the shares of such series shall be subject to the
operation of a retirement or sinking fund, and, if so, the
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extent to and manner in which any such retirement or sinking fund shall be
applied to the purchase or redemption of the shares of such series for
retirement or other corporate purposes and the terms and provisions
relative to the operation thereof;
(g) whether the shares of such series shall be convertible into, or
exchangeable for, shares of stock of any other class or any other series of
Preferred Stock or any other securities and, if so, the price or prices or
the rate or rates of conversion or exchange and the method, if any, of
adjusting the same, and any other terms and conditions of such conversion
or exchange;
(h) the limitations and restrictions, if any, to be effective while
any shares of such series are outstanding upon the payment of dividends or
the making of other distributions on, and upon the purchase, redemption or
other acquisition by the Corporation of, the Common Stock or shares of
stock of any other class or any other series of Preferred Stock;
(i) the conditions or restrictions, if any, upon the creation of
indebtedness of the Corporation or upon the issue of any additional stock,
including additional shares of such series or of any other series of
Preferred Stock or of any other class; and
(j) any other powers, preferences and relative, participating,
optional and other special rights, and qualifications, limitations and
restrictions, thereof.
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The powers, preferences and relative, participating, optional and other
special rights of each series of Preferred Stock, and the qualifications,
limitations or restrictions thereof, if any, may differ from those of any and
all other series at any time outstanding. All shares of any one series of
Preferred Stock shall be identical in all respects with all other shares of such
series, except that shares of any one series issued at different times may
differ as to the dates from which dividends thereof shall be cumulative.
FIFTH: The name and address of the sole incorporator are as follows:
Name Address
---- -------
Raymond C. Sparks 1357 Monroe Avenue
New York, NY 14618
SIXTH: Unless required by law or determined by the chairman of the meeting
to be advisable, the vote by stockholders on any matter, including the election
of directors, need not be by written ballot.
SEVENTH: The Corporation reserves the right to increase or decrease its
authorized capital stock, or any class or series thereof, and to reclassify the
same, and to amend, alter, change or repeal any provision contained in the
Certificate of Incorporation under which the Corporation is organized or in any
amendment thereto, in the manner now or hereafter prescribed by law, and all
rights conferred upon stockholders in said Certificate of Incorporation or any
amendment thereto are granted subject to the
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aforementioned reservation.
EIGHTH: The Board of Directors shall have the power at any time, and from
time to time, to adopt, amend and repeal any and all By-laws of the Corporation.
NINTH: All persons who the Corporation is empowered to indemnify pursuant
to the provision of Section 145 of the General Corporation Law of the State of
Delaware (or any similar provision or provision of applicable law at the time in
effect), shall be indemnified by the Corporation to the full extent permitted
thereby. The foregoing right of indemnification shall not be deemed to be
exclusive of any other rights to which those seeking indemnification may be
entitled under any by-law, agreement, vote of stockholders or disinterested
director, or otherwise. No repeal or amendment of this Article NINTH shall
adversely affect any rights of any person pursuant to this Article NINTH which
existed at the time of such repeal or amendment with respect to acts or
omissions occurring prior to such repeal or amendment.
TENTH: No director of the Corporation shall be personally liable to the
Corporation or its stockholders for any monetary damages for breaches of
fiduciary duty as a director, provided that this provision shall not eliminate
or limit the liability of a director (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 the General Corporation Law of the State of
Delaware, or (iv) for any
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transaction from which the director derived an improper personal benefit. No
repeal or amendment of this Article TENTH shall adversely affect any rights of
any person pursuant to this Article TENTH which existed at the time of such
repeal or amendment with respect to acts or omissions occurring prior to such
repeal or amendment.
ELEVENTH: Whenever a compromise or arrangement is proposed between this
Corporation and its creditors or any class of them and/or between this
Corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of this Corporation or of any creditor or stockholder thereof or on the
application of any receiver or receivers appointed for this Corporation under
the provisions of Section 291 of Title 8 of the Delaware Code or on the
application of trustees in dissolution or of any receiver or receivers appointed
for this 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 of stockholders of this Corporation, as the case may
be, to be summoned in such manner as the said court directs. If a majority in
number representing three-fourths in value of the creditors or class of
creditors, and/or of the stockholders or class of stockholders of this
Corporation, as the case may be, agree to any compromise or arrangement and to
any reorganization of this Corporation as a consequence of such compromise or
arrangement, the said compromise or arrangement and
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the said reorganization shall, if sanctioned by the court to which the said
application has been made, be binding on all the creditors or class or
creditors, and/or on all the stockholders or class of stockholders, of this
Corporation, as the case may be, and also on this Corporation.
THE UNDERSIGNED incorporator hereby affirms that the statements made herein
are true under penalties of perjury, and is hereby executing this Certificate of
Incorporation this [ ] day of [ , 1995].
By:
------------------------------
Raymond C. Sparks
Incorporator
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APPENDIX C
THE VILLAGE GREEN BOOKSTORE, INC.
BY-LAWS
- - - - - - - - - - - - - - - - -
ARTICLE I
OFFICES
1. REGISTERED OFFICE. The location of the registered office of the
Corporation in the State of Delaware is 32 Loockerman Square, Suite L-100, in
the City of Dover, County of Kent, and the name of its registered agent at such
address is The Prentice-Hall Corporation System, Inc.
2. OTHER OFFICES. The Corporation shall in addition to its registered
office in the State of Delaware establish and maintain an office or offices at
such place or places as the Board of Directors may from time to time find
necessary or desirable.
ARTICLE I.
CORPORATE SEAL
The corporate seal of the Corporation shall have inscribed thereon the name
of the Corporation and may be in such form as the Board of Directors may
determine. Such seal may be used by causing it or a facsimile thereof to be
impressed, affixed or otherwise reproduced.
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ARTICLE III
MEETINGS OF STOCKHOLDERS
1. PLACE OF MEETING. All meetings of the stockholders shall be held at the
registered office of the Corporation in the State of Delaware or at such other
place, either within or without the State of Delaware, as shall be determined
from time to time by the Board of Directors.
2. ANNUAL MEETINGS. The annual meeting of stockholders shall be held on
such day and at such time as may be determined from time to time by resolution
of the Board of Directors. The election of Directors and any other proper
business may be transacted at the annual meeting.
3. QUORUM. 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 at all meetings of the stockholders for the transaction of
business, except as otherwise expressly provided by statute, by the Certificate
of Incorporation or by these By-laws. If, however, such majority shall not be
present or represented at any meeting of the stockholders, the stockholders
entitled to vote thereat, present in person or by proxy, shall have power to
adjourn the meeting, from time to time, without notice other than announcement
at the meeting, until the requisite amount of stock entitled to vote shall be
present. At such adjourned meeting at which
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the requisite amount of voting stock shall be represented any business may be
transacted which might have been transacted at the meeting as originally
notified.
4. VOTING. At each meeting of the stockholders each stockholder shall have
one vote for each share of capital stock having voting power, registered in his
name on the books of the Corporation at the record date fixed in accordance with
these By-laws, or otherwise determined, with respect to such meeting. Except as
otherwise expressly provided by statute, by the Certificate of Incorporation or
by these By-laws, all matters coming before any meeting shall be decided by the
vote of a majority of the number of shares of stock present in person or
represented by proxy at such meeting and entitled to vote thereat, a quorum
being present.
5. NOTICE. Notice of each meeting of the stockholders shall be mailed to
each stockholder entitled to vote thereat not less than 10 nor more than 60 days
before the date of the meeting. Such notice shall state the place, date and hour
of the meeting and, in the case of a special meeting, the purpose for which the
meeting is called.
6. OTHER MEETINGS. Special meetings of the stockholders, for any purpose or
purposes other than the election of directors, unless otherwise prescribed by
statute, may be called by the President or by the Board of
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Directors. Business transacted at each special meeting shall be confined to the
purpose or purposes stated in the notice of such meeting.
ARTICLE IV
DIRECTORS
1. POWERS. The business and affairs of the Corporation shall be managed
under the direction of a Board if Directors, which may exercise all such powers
and authority for and on behalf of the Corporation as shall be permitted by law,
the Certificate of Incorporation or these By-laws.
2. NUMBER AND TERM. The number of directors comprising the Board of
Directors shall be such number as may be from time to time fixed by resolution
of the Board of Directors and shall not be less than two or more than ten. The
directors shall be elected at the annual meeting of the stockholders and each
director shall be elected to serve until his successor shall be elected and
shall qualify. Directors need not be stockholders.
3. ELECTION. The directors shall be elected by the holders of shares of
stock of the Corporation entitled to vote on the election of directors, and
directors shall be elected by a plurality vote.
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4. RESIGNATION. Any director may resign at any time by giving written
notice of his resignation to the Board of Directors. Any such resignation shall
take effect upon receipt thereof by the Board, or at such later date as may be
specified therein. Any such notice to the Board shall be addressed to it in care
of the Secretary.
5. REMOVAL. Any director or directors may be removed, with or without
cause, by the holders of a majority of the shares entitled to vote at an
election of directors.
6. VACANCIES. If the office of any director, member of a committee or other
office becomes vacant, the remaining directors in office, though less than a
quorum, by a majority vote, may appoint any qualified person to fill such
vacancy, such appointee to hold office until the next annual meeting of
shareholders or until his successor shall be duly chosen.
ARTICLE V
COMMITTEES OF DIRECTORS
The Board of Directors may, by resolution or resolutions passed by a
majority of the whole Board, designate one or more committees, including,
without limitation, a financial committee and a stock option committee, each
committee to consist of two or more of the directors of the Corporation. Each
such committee shall
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have such of the powers and authority of the Board as may be provided from time
to time in resolutions adopted by a majority of the whole Board. The
requirements with respect to the manner in which the committee or committees
shall hold meetings and take actions shall be set forth in the resolutions of
the Board of Directors designating the committee or committees.
ARTICLE VI
MEETING OF DIRECTORS; ACTION WITHOUT A MEETING
1. MEETINGS. The newly elected directors may hold their first meeting for
the purpose of organization and the transaction of business within or without
the State of Delaware if a quorum be present immediately after the annual
meeting of the stockholders or the time and place of such meeting may be fixed
by consent in writing of all the directors. Regular meetings of the directors
may be held without notice at such places and times as shall be determined from
time to time by resolution of the directors.
2. SPECIAL MEETINGS. Special meetings of the Board of Directors shall be
held whenever called by the Chairman of the Board or Chief Executive Officer on
at least 24 hours' notice to each director. Except as may be otherwise
specifically provided by statute, by the Certificate of Incorporation or by
these By-laws, the
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purpose or purposes of any such special meeting need not be stated in such
notice, although the time and place of the meeting shall be stated.
3. QUORUM. A majority of the Board of Directors shall constitute a quorum
for the transaction of business. If, at any meeting of the Board, 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 the meeting which shall be adjourned. Any
member or members of the Board of Directors or of any committee designated by
the Board may participate in a meeting of the Board or any such committee, as
the case may be, 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 sentence shall
constitute presence in person at such meeting.
4. ACTION WITHOUT A MEETING. 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, prior to such action, a written consent thereto is
signed by all members of the Board or of such committee, as the case may be, and
such written consent is filed with
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the minutes of the proceedings of the Board or such committee.
5. COMPENSATION. Directors shall not receive any stated salary for their
services as directors or as members of committees but, by resolution of the
Board of Directors, fixed fees and expenses of attendance may be allowed for
attendance at each meeting. Nothing herein contained shall be construed to
preclude any director from serving the Corporation in any other capacity as an
officer, agent or otherwise, and receiving compensation therefor.
ARTICLE VII
CHAIRMAN OF THE BOARD AND EXECUTIVE OFFICERS
1. CHAIRMAN OF THE BOARD. The Chairman of the Board of Directors shall have
general supervision and management of the business of the Corporation and shall
see that all orders and resolution of the Board are carried into effect. He
shall preside at all meetings of the Shareholders and the Board of Directors.
2. EXECUTIVE OFFICERS. The executive officers of the Corporation shall be a
Chairman of the Board, a President, one or more Vice-Presidents, a Treasurer and
a Secretary, all of whom shall be elected annually by the Directors, who shall
hold office until their respective successors are elected and qualified. All
vacancies
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occurring among any of the officers shall be filled by the Directors. Any
officer may be removed at any time by the affirmative vote of a majority of the
Directors present at a Special Meeting of Directors called for the purpose.
3. OTHER OFFICERS. The Board of Directors may appoint such other officers
and agents with such powers and duties as it shall deem necessary.
4. PRESIDENT. The President shall be the chief executive officer of the
Corporation. Subject to the supervision and direction of the Board of Director,
he shall be responsible for managing the affairs of the Corporation. He shall
have supervision and direction of all of the other officers of the Corporation
and shall have the powers and duties usually and customarily associated with the
office of the President. In the absence of the Chairman, he shall preside at
meetings of the stockholders.
5. VICE PRESIDENTS. The Vice Presidents shall have such powers and duties
as may be delegated to them by the President.
6. TREASURER. The Treasurer shall have custody of the corporate funds and
securities, and shall deposit or cause to be deposited under his direction all
moneys and other valuable effects in the name and to the credit of the
Corporation in such depositories as may be designated by the Board of Directors
or pursuant to authority granted by it.
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He shall render to the President and the Board whenever they may require it an
account of all his transactions as Treasurer and of the financial condition of
the Corporation. He shall have such other powers and duties as may be delegated
to him by the President.
7. THE SECRETARY. The Secretary shall keep the minutes of all proceedings
of the Directors and of the Shareholders; shall attend to the giving and serving
of all notices to the Shareholders and Directors or other notice required by law
or by these By-Laws; shall affix the seal of the Corporation to deeds, contracts
and other instruments in writing requiring a seal, when duly signed or when so
ordered by the Directors; shall have charge of the certificate books and stock
books and such other books and papers as the Board may direct, and shall perform
all other duties incident to the office of Secretary.
8. SALARIES. The salaries of all officers shall be fixed by the Board of
Directors, and the fact that any officer is a Director shall not preclude him
from receiving a salary as an officer, or from voting upon the resolution
providing the same.
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9. RESIGNATION. Any officer may resign at any time by giving written notice
of his resignation to the Board of Directors. Any such resignation shall take
effect upon receipt thereof by the Board or at such later date as may be
specified therein. Any such notice to the Board shall be addressed to it in care
of the Secretary.
ARTICLE VIII
MISCELLANEOUS
1. CERTIFICATES OF STOCK. 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 exhibit the holder's name and number of shares and shall
be signed by the President and Treasurer.
2. LOST CERTIFICATES. A new certificate of stock may be issued in the place
of any certificate theretofore issued by the Corporation, alleged to have been
lost or destroyed, and the directors may, in their discretion, require the owner
of the lost or destroyed certificate, or his legal representatives, to give the
Corporation a bond, in such sum as they may direct, to indemnify the Corporation
against any claim that may be made against it on account of the alleged loss of
any such certificate or the issuance of any such new certificate.
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3. CHECKS. All checks, drafts or other orders for the payment of money,
notes or other evidences of indebtedness issued in the name of the Corporation
shall be signed by such officer or officers or agent or agents of the
Corporation, and in such manner as shall be determined, from time to time, by
resolution of the Board of Directors.
4. FISCAL YEAR. The fiscal year of the Corporation shall be determined by
resolution of the Board of Directors.
5. NOTICE AND WAIVER OF NOTICE. Whenever any notice is required to be given
by these By-Laws, personal notice is not meant unless expressly so stated and
any notice so required shall be deemed to be sufficient if given by depositing
the same in the United States mail, postage prepaid, addressed to the person
entitled thereto at his address as it appears on the records of the Corporation,
and such notice shall be deemed to have been given on the fifth day following
such mailing. Stockholders not entitled to vote shall not be entitled to receive
notice of any meetings except as otherwise provided by Statute.
Whenever any notice whatever is required to be given under the provisions
of any law or under the provisions of the Certificate of Incorporation of the
Corporation or of these By-Laws, a waiver thereof in writing, signed by the
person or persons entitled to said
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notice, whether before or after the time stated therein, shall be deemed
equivalent thereto.
ARTICLE IX
INDEMNIFICATION
1. INDEMNIFICATION. Any person who was or is a party or threatened to be
made a party to any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative (other than an action
by or in the right of the Corporation) by reason of the fact that he or she is
or was a Director, officer, employee or agent of the Corporation or is or was
serving at the request of the Corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise (including employee benefit plans) (hereinafter an "indemnitee"),
shall be indemnified and held harmless by the Corporation to the fullest extent
authorized by the 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 provided broader indemnification than
permitted prior thereto), against expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement actually and reasonably incurred
by such indemnitee in connection with such action, suit or proceeding, if the
indemnitee acted in good faith and in a
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manner he or she reasonably believed to be in or not opposed to the best
interests of the Corporation, and with respect to any criminal action or
proceeding, had no reasonable cause to believe such conduct was unlawful. The
termination of the proceeding, whether by judgment, order, settlement,
conviction or upon a plea of nolo contendere or its equivalent, shall not, of
itself, create a presumption that the person did not act in good faith and in a
manner which he or she reasonably believed to be in or not opposed to the best
interests of the Corporation and, with respect to any criminal action or
proceeding, had reasonable cause to believe such conduct was unlawful.
2. EXPENSES. All reasonable expenses incurred by or on behalf of the
indemnitee in connection with any suit, action or proceeding, may be advanced to
the indemnitee by the Corporation.
3. NON-EXCLUSIVITY. The rights to indemnification and to advancement of
expenses conferred in this article shall not be exclusive of any other right
which any person may have or hereafter acquire under any statute the Certificate
of Incorporation, a By-Law of the Corporation, agreement, vote of stockholders
or disinterested Directors or otherwise.
4. BINDING EFFECT. The indemnification and advancement of expenses provided
by this article shall
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continue as to a person who has ceased to be a Director, officer, employee or
agent and shall inure to the benefit of the heirs, executors and administrators
of such person.
ARTICLE X
AMENDMENTS
These By-Laws may be altered or repealed and new By-Laws may be made at any
annual meeting of the stockholders or at any special meeting thereof if notice
of the proposed alteration or repeal of any By-Law or By-Laws to be made be
contained in the notice of such special meeting by the affirmative vote of a
majority of the stock issued and outstanding and entitled to vote thereat or by
the affirmative vote of a majority of the Board of Directors, at any regular or
special meeting of the Board of Directors, if notice of the proposed alteration
or repeal of any By-Law or By-Laws to be made, be contained in the notice of
such regular or special meeting.
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APPENDIX D
Section 910 - RIGHT OF SHAREHOLDER TO RECEIVE PAYMENT FOR SHARES UPON
MERGER OR CONSOLIDATION,OR SALE, LEASE, EXCHANGE OR OTHER DISPOSITION OF ASSETS,
OR SHARE EXCHANGE.--(a) A shareholder of a domestic corporation shall, subject
to and by complying with section 623 (Procedure to enforce shareholder's right
to receive payment for shares), have the right to receive payment of the fair
value of his shares and the other rights and benefits provided by such section,
in the following cases:
(1) Any shareholder entitled to vote who does not assent to the taking of
an action specified in subparagraphs (A), (B) and (C).
(A) Any plan of merger or consolidation to which the corporation is a
party; except that the right to receive payment of the fair value of his shares
shall not be available:
(i) To a shareholder of the parent corporation in a merger
authorized by section 905 (Merger of parent and subsidiary corporations), or
paragraph (c) of section 907 (Merger or consolidation of domestic and foreign
corporations); and
(ii) To a shareholder of the surviving corporation in a merger
authorized by this article, other than a merger specified in subparagraph (i),
unless such merger effects one or more of the changes specified in subparagraph
(b)(6) of section 806 (Provisions as to certain proceedings) in the rights of
the shares held by such shareholder.
(B) Any sale, lease, exchange or other disposition of all of
substantially all of the assets of a corporation which requires shareholder
approval under section 909 (Sale, lease, exchange or other disposition of
assets) other than a transaction wholly for cash where the shareholders'
approval thereof is conditioned upon the dissolution of the corporation and the
distribution of substantially all its net assets to the shareholders in
accordance with their respective interests within one year after the date of
such transaction.
(C) Any share exchange authorized by section 913 in which the
corporation is participating as a subject corporation; except that the right to
receive payment of the fair value of his shares shall not be available to a
shareholder whose shares have not been acquired in the exchange.
(2) Any shareholder of the subsidiary corporation in a merger authorized by
section 905 or paragraph (c) of section 907, or in a share exchange authorized
by paragraph (g) of section 913, who files with the corporation a written notice
of election to dissent as provided in paragraph (c) of section 623. (Last
amended by Ch. 390, L. '91, eff. 7-15-91.)
<PAGE>
Section 623 - PROCEDURE TO ENFORCE SHAREHOLDER'S RIGHT TO RECEIVE PAYMENT
FOR SHARES. --(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 or record, that he owns
beneficially. A nominee or 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
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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
dissenter's 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 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 the 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 shareholder's 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.
<PAGE>
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, of 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 with 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.
(h) The following procedure shall apply if the corporation fails to make
such offer within such period of fifteen days, of if it makes the offer and any
dissenting shareholder or shareholders fail to agree with it within the period
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
<PAGE>
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 3401 of
the civil practice law 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.
<PAGE>
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.
(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 certificate 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 cancelled 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
<PAGE>
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 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.
(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 Ch. 117, L.'86, eff. 9-1-86.)
<PAGE>
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
OF THE VILLAGE GREEN BOOKSTORE, INC.
PROXY - Annual Meeting of Shareholders, September 7, 1995
The undersigned, a shareholder of The Village Green Bookstore, Inc., a New
York corporation (the "Company"), does hereby constitute and appoint Raymond C.
Sparks, John W. Borek, Steven B. Sands and John P. Holmes and each of them, the
true and lawful attorneys and proxies with full power of substitution, for and
in the name, place and stead of the undersigned, to vote all of the shares of
Common Stock of the Company that the undersigned would be entitled to vote if
personally present at the 1995 Annual Meeting of Shareholders of the Company to
be held at the Rochester Plaza Hotel, 70 State Street, Rochester, NY 14614, on
September 7, 1995 at 10:00 a.m., local time, or at any adjournment or
adjournments thereof.
The undersigned hereby instructs said proxies or their substitutes as set
forth below.
1. ELECTION OF DIRECTORS:
The election of the following directors: Raymond C. Sparks, John W. Borek,
Steven B. Sands, John P. Holmes and Michael S. Smith, to the Board of Directors,
to serve until their successors are elected and shall qualify.
/ / FOR / / TO WITHHOLD AUTHORITY TO VOTE FOR ALL
NOMINEES
/ / TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL
NOMINEE(S), PRINT NAMES(S) BELOW:
----------------------------------------------------------
2. RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS:
To ratify the appointment of Deloitte & Touche LLP as the Company's
independent auditors for the fiscal year ending January 28, 1996.
/ / FOR / / AGAINST / / ABSTAIN
----------------------------------------------------------
3. AMENDMENT TO THE 1993 STOCK OPTION PLAN:
To approve an amendment to the Company's 1993 Stock Option Plan to increase
shares available for grant from 200,000 shares to 400,000 shares.
/ / FOR / / AGAINST / / ABSTAIN
----------------------------------------------------------
4. REINCORPORATION FROM NEW YORK TO DELAWARE:
To approve the Company's reincorporation from New York to Delaware.
<PAGE>
/ / FOR / / AGAINST / / ABSTAIN
----------------------------------------------------------
5. DISCRETIONARY AUTHORITY: To vote with discretionary authority with respect to
all other matters that may come before the Meeting.
THIS PROXY WILL BE VOTED IN ACCORDANCE WITH ANY DIRECTIONS HEREINBEFORE
GIVEN. UNLESS OTHERWISE SPECIFIED, THIS PROXY WILL BE VOTED TO ELECT THE
NOMINEES AS DIRECTORS, TO RATIFY THE APPOINTMENT OF DELOITTE & TOUCHE LLP AS THE
COMPANY'S INDEPENDENT AUDITORS, TO APPROVE THE AMENDMENT TO THE COMPANY'S 1993
STOCK OPTION PLAN, TO APPROVE THE COMPANY'S REINCORPORATION FROM NEW YORK TO
DELAWARE AND IN ACCORDANCE WITH THE DISCRETION OF THE PROXIES OR PROXY WITH
RESPECT TO ANY OTHER BUSINESS TRANSACTED AT THE ANNUAL MEETING.
The undersigned hereby revokes any proxy or proxies heretofore given and
ratifies and confirms all that the proxies appointed hereby, or any of them, or
their substitutes, may lawfully do or cause to be done by virtue hereof. The
undersigned hereby acknowledges receipt of a copy of the Notice of Annual
Meeting and Proxy Statement, both dated August 4, 1995, and a copy of the
Company's Annual Report.
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<PAGE>
Please mark, date, sign and mail this proxy in the envelope
provided for this purpose.
Dated:_________________________________, 1995
_________________________________________________ (L.S.)
_________________________________________________ (L.S.)
Signature(s)
NOTE: Please sign exactly as your name or names appear
hereon. When signing as attorney, executor, administrator,
trustee or guardian, please indicate the capacity in which
signing. When signing as joint tenants, all parties in the
joint tenancy must sign. When a proxy is given by a
corporation, it should be signed with full corporate name by
a duly authorized officers.
PLEASE MARK, SIGN, DATE AND PROMPTLY RETURN THIS PROXY.
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