SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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
/X/ Definitive Proxy Statement
/_/ Definitive Additional Materials
/_/ Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
BLUE FISH CLOTHING, INC.
________________________________________________________________________________
(Name of Registrant as Specified In Its Charter)
________________________________________________________________________________
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
/_/ $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1) or 14a-6(j)(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:
_____________________________________________________________________________
2) Aggregate number of securities to which transaction applies:
_____________________________________________________________________________
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:*
_____________________________________________________________________________
4) Proposed maximum aggregate value of transaction:
_____________________________________________________________________________
/_/ Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the form or schedule
and the date of its filing.
1) Amount previously paid: _________________________________________________
2) Form, Schedule or Registration No. ______________________________________
3) Filing party: ___________________________________________________________
4) Date filed: _____________________________________________________________
___________
*Set forth the amount on which the filing fee is calculated and state how it was
determined.
BLUE FISH CLOTHING, INC.
NO. 3 SIXTH STREET
FRENCHTOWN, NEW JERSEY 08825
(908) 996-3844
--------------
June 30, 1997
Dear Fellow Blue Fish Stockholder:
We cordially invite you to attend the 1997 Annual Meeting of
Stockholders of Blue Fish Clothing, Inc. (the "Company") to be held on Thursday,
July 31, 1997 at 2:00 p.m. at Tinicum Park, Route 32, River Road, Erwinna,
Pennsylvania 18920.
At the meeting, you are being asked to elect 4 directors to serve until
the next Annual Meeting of Stockholders and to approve the appointment of Arthur
Andersen LLP as the Company's independent public accountants for the 1997 fiscal
year. The Notice of Annual Meeting of Stockholders and Proxy Statement that
accompany this letter describe in detail the matters that will be presented at
the meeting.
Your vote is important regardless of the number of shares you own. We
urge you to complete, sign, date and return the enclosed proxy card promptly in
the prepaid envelope provided, whether or not you plan to attend the meeting in
person. This will ensure your proper representation at the meeting. If you
decide to attend the meeting in person, your proxy will be returned to you and
you may vote your shares in person.
We plan to have Blue Fish items available for sale before and after the
meeting, so we hope you can attend.
Thank you for giving these materials your careful consideration and we
hope to see you on July 31st.
Sincerely,
/s/ Jennifer Barclay
----------------------------
Jennifer Barclay, Chairman
/s/ Marc K. Wallach
-----------------------------
Marc K. Wallach, President & CEO
BLUE FISH CLOTHING, INC.
NO. 3 SIXTH STREET
FRENCHTOWN, NEW JERSEY 08825
(908) 996-3844
--------------
NOTICE OF ANNUAL MEETING
OF STOCKHOLDERS
TO BE HELD ON JULY 31, 1997
Notice is hereby given that the 1997 Annual Meeting of Stockholders of
Blue Fish Clothing, Inc. a Pennsylvania corporation (the "Company"), will be
held on Thursday, July 31, 1997 at 2:00 p.m. at Tinicum Park, Route 32, River
Road, Erwinna, Pennsylvania 18920 for the following purposes:
1. To elect four directors to serve until the next Annual Meeting of
Stockholders and until their successors are elected and qualified.
2. To approve the appointment of Arthur Andersen LLP as the Company's
independent public accountants for the fical year ending December
31, 1997.
3. To consider and act upon such other business as may properly come
before the meeting.
Reference is hereby made to the accompanying Proxy Statement for more
complete information concerning the matters to be acted upon at the meeting.
Only stockholders of record of the Company's Common Stock at the close
of business on May 30, 1997 will be entitled to vote at the Annual Meeting and
any adjournments thereof.
STOCKHOLDERS ARE REQUESTED TO COMPLETE, SIGN, DATE AND RETURN THE
ENCLOSED PROXY CARD IN THE ENCLOSED ENVELOPE.
By Order of the Board of Directors
/s/ Lana Schempp
-------------------------------------
Lana Schempp, Secretary
June 30, 1997
BLUE FISH CLOTHING, INC.
NO. 3 SIXTH STREET
FRENCHTOWN, NEW JERSEY 08825
(908) 996-3844
--------------
PROXY STATEMENT
FOR 1997 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JULY 31, 1997
This Proxy Statement, with the enclosed proxy card, is being furnished
to stockholders of Blue Fish Clothing, Inc. ("Blue Fish" or the "Company"), a
Pennsylvania corporation, in connection with the solicitation by the Company's
Board of Directors (the "Board") of proxies to be voted at the Company's 1997
Annual Meeting of Stockholders to be held on Thursday, July 31, 1997 at 2:00
p.m. at Tinicum Park, Route 32, River Road, Erwinna, Pennsylvania 18920, and at
any adjournments thereof (the "Meeting").
This Proxy Statement and the enclosed proxy card are first being mailed
or otherwise furnished to stockholders of the Company on or about June 30, 1997.
The Annual Report to Stockholders on Form 10-KSB, as amended, for the fiscal
year ended December 31, 1996 is being mailed to the stockholders with this Proxy
Statement, but does not constitute a part hereof.
Proxies may be solicited by directors, officers and employees of the
Company by mail, by telephone, in person or otherwise. No such person will
receive additional compensation for such solicitation. In addition, the Company
will request banks, brokers and other custodians, nominees and fiduciaries to
forward proxy materials to the beneficial owners of Common Stock and obtain
voting instructions from such beneficial owners. The Company will reimburse
those firms for their reasonable expenses in forwarding proxy materials and
obtaining voting instructions.
When the proxy card of a stockholder is duly executed and returned, the
shares represented thereby will be voted in accordance with the voting
instructions given on the proxy by the stockholder. If no such voting
instructions are given on a proxy card with respect to one or more proposals,
the shares represented by that proxy card will be voted, in the election of
directors, for the nominees named herein, and with respect to other proposals,
if any, in accordance with the recommendations of the Board. Stockholders may
revoke their proxies at any time prior to any vote at the Meeting by written
notice to the Secretary of the Company at or before the Meeting, by submission
of a duly executed proxy card bearing a later date, or by voting in person by
ballot at the Meeting.
VOTING SECURITIES
Holders of Common Stock of record on the books of the Company at the
close of business on May 30, 1997 (the "Record Date") are entitled to notice of
and to vote at the Meeting. At the Record Date, there were issued and
outstanding 4,599,200 shares of Common Stock, each of which entitles the holder
to one vote on each matter submitted to a vote of the stockholders, except that
pursuant to Pennsylvania law, stockholders may cumulate their votes in the
election of directors. The Bylaws of the Company provide that in each election
of directors every stockholder entitled to vote shall have the right to multiply
the number of votes to which the stockholder is entitled by the total number of
directors to be elected in the same election by the holders of the class or
classes of shares of which his or her shares are a part. The stockholder may
cast the whole number of votes for one candidate, or may distribute them among
two or more candidates.
The proxy card provides space for a stockholder to withhold voting for
any or all nominees for the Board of Directors or to abstain from voting for any
proposal if the stockholder chooses to do so. The holders of a majority of all
shares of Common Stock issued and outstanding and entitled to vote at the
Meeting shall constitute a quorum for the transaction of business. A plurality
of the votes cast in person or by proxy is required for election of directors.
The affirmative vote of a majority of the votes cast in person or by proxy at
the Meeting is required for all other matters. Abstentions and broker non-votes
are not counted in determining the number of votes cast in connection with any
voting matter.
PROPOSAL 1
ELECTION OF DIRECTORS
The Bylaws of the Company provide for a Board consisting of such number
of directors, not less than four nor more than eight, as may be fixed from time
to time by the Board. The Board has fixed the number of directors to constitute
the full Board for the ensuing year at four, all of whom are to be elected at
the Meeting to serve until the next Annual Meeting of Stockholders and until
their respective successors are elected and qualified.
As noted above, stockholders may cumulate their votes for the election
of directors. By way of example, if a stockholder owns 100 shares, he or she
will be entitled to 400 votes in this election because there are four nominees
for election as directors. The stockholder may cast all 400 votes for a single
candidate or may distribute them among two or more candidates.
NOMINEES FOR DIRECTOR
Jennifer Barclay, Marc K. Wallach, Ben Cohen and Gary Hirshberg, all of
whom are currently serving as directors, have been nominated for election to the
Board at the Meeting. Shares represented by proxies will be voted for the
election as directors of those nominees unless otherwise specified in the proxy.
If any of the nominees for election to the Board should, for any reason not now
anticipated, be unavailable to serve as such, proxies will be voted for such
other candidate as may be designated by the Board unless the Board reduces the
number of directors. The Board has no reason to believe that any of the nominees
will be unable to serve if elected.
-2-
Set forth below is information with respect to each nominee for election to
the Board of Directors at the Meeting.
JENNIFER BARCLAY, age 30, founded Blue Fish in 1985, and has been its
President and Chairman of the Board of Directors since the Company's
incorporation in March 1987. She also served as the Company's Chief Executive
Officer from March 1987 until September 1994, and as its Treasurer from August
1993 through August 1995. In September 1996, Ms. Barclay relinquished the title
of President but remains Chairman of the Board.
MARC WALLACH, age 59, joined the Company as Chief Operating Officer and
General Manager in September 1993 and became the Company's Chief Executive
Officer in September 1994. Mr. Wallach was appointed as a Director of the
Company in June 1995. In September 1996, Mr. Wallach assumed the additional
title of President. From 1990-1993, Mr. Wallach was an independent consultant to
the apparel industry. In 1987, Mr. Wallach founded U.S. One, a manufacturer and
marketer of children's apparel, and served as its President until 1989. For the
15 years preceding 1987, Mr. Wallach served in various executive capacities,
including Senior Vice President of the Youthwear Division, for Cluett Peabody,
Inc., an apparel conglomerate. Mr. Wallach holds a Bachelor of Science degree in
Textile Management from Philadelphia College of Textiles and Science.
BEN COHEN, age 46, has served as a member of the Board of Directors since
June 1995. Mr. Cohen is the Co-Founder and Chairman of the Board of Ben and
Jerry's Homemade, Inc., a public company, and served as its Chief Executive
Officer until February 1995. He presently serves as a member of the Board of
Directors of The Social Venture Network. Mr. Cohen also serves as a member of
the Board of Directors of Community Products, Inc., a privately held
buttercrunch candy manufacturer, which filed a petition for federal bankruptcy
protection in April 1997.
GARY HIRSHBERG, age 42, has served as a member of the Board of Directors
since June 1995. Mr. Hirshberg has been the Chief Executive Officer of
Stonyfield Farm, Inc., a privately held yogurt and ice cream company, since
September 1983 and its President since June 1989. He is the Chairman of The
Social Venture Network and a Trustee of Leadership New Hampshire, Inc. Mr.
Hirshberg has extensive experience as an environmental activist, including terms
as the founding President of the Cape and Island Self Reliance Corporation, as
founding President of the Cape Cod Environmental Alliance and as a Director of
the New Hampshire Audubon Society and the Association for the Preservation of
Cape Cod. Mr. Hirshberg holds a Bachelor of Arts degree from Hampshire College,
an honorary Doctor of Science degree from New Hampshire College and an honorary
Doctor of Laws degree from Notre Dame College (Manchester, New Hampshire).
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
During the fiscal year ended December 31, 1996, the Board held six
meetings. Each of the directors attended all of the Board meetings and meetings
of committees of the Board of which he or she was a member.
-3-
The Audit Committee, composed of Messrs. Cohen and Hirshberg, is
responsible to meet periodically with the Company's independent auditors to
review the scope of the annual audit, to discuss the adequacy of internal
accounting controls and procedures and to perform general oversight with respect
to the accounting principles applied in the financial reporting of the Company.
The Audit Committee did not meet during fiscal 1996.
The Compensation Committee, composed of Messrs. Cohen and Hirshberg,
administers the Company's stock option and compensation plans and recommends to
the full Board the amount, character and method of payment of compensation of
all executive officers and certain other key employees and consultants of the
Company. The Compensation Committee did not meet apart from the full Board
during fiscal 1996, but took action by written consent in lieu of meeting on one
occasion.
The Executive Committee, composed of Ms. Barclay and Mr. Wallach, is
authorized to take any action upon which the Board of Directors is authorized to
act, except as reserved by law or the Company's Bylaws. The Executive Committee
also administers the Company's 1995 Non-Employee Directors' Stock Option plan.
The Executive Committee did not meet apart from the full Board during 1996.
BOARD RECOMMENDATION
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THE
ELECTION OF THE NOMINEES TO THE BOARD OF DIRECTORS. A PLURALITY OF THE VOTES
CAST IN PERSON OR BY PROXY AT THE MEETING IS REQUIRED TO ELECT EACH NOMINEE AS
DIRECTOR.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table sets forth certain information known to the Company
regarding the beneficial ownership of the Company's Common Stock as of June 23,
1997 for (i) each director and executive officer of the Company; (ii) each
stockholder known by the Company to own beneficially 5% or more of the
outstanding shares of its Common Stock; and (iii) all directors and officers as
a group for each class of capital stock of the Company. The Company believes
that the beneficial owners of the Common Stock listed below, based on
information furnished by such owners, have sole investment and voting power with
respect to such shares, subject to community property laws where applicable.
<TABLE>
<CAPTION>
DIRECTORS, SHARES
EXECUTIVE OFFICERS BENEFICIALLY
AND 5% STOCKHOLDERS: OWNED (1) PERCENTAGE OF COMMON SHARES OUTSTANDING (1):
---------------------------------------------- ---------------------------------------------
<S> <C> <C>
Jennifer Barclay................. 3,486,000 75.8%
c/o Blue Fish Clothing, Inc.
No. 3 Sixth Street
Frenchtown, NJ 08825
Marc Wallach..................... 349,600 (2) 7.5%
Richard Swarttz ................. 2,860 (3) *
Jolie Cross Doyle................ 4,400 (4) *
Megan Doyle...................... 1,000 (5) *
-4-
DIRECTORS, SHARES
EXECUTIVE OFFICERS BENEFICIALLY
AND 5% STOCKHOLDERS: OWNED (1) PERCENTAGE OF COMMON SHARES OUTSTANDING (1):
---------------------------------------------- ---------------------------------------------
Dianne Ige....................... 2,000 (6) *
Ben Cohen ....................... 5,200 (7) *
Gary Hirshberg .................. 5,200 (7) *
All directors and executive ..... 3,856,260 (8) 82.7%
officers as a group (eight persons)
</TABLE>
- ---------------------------------
*Less than 1%
(1) Pursuant to the rules of the Securities and Exchange Commission,
shares of Common Stock which an individual or group has a right to
acquire within 60 days pursuant to the exercise of options or
warrants 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 the purpose of computing the percentage
ownership of any other person shown in the table.
(2) Consists of 304,000 shares of Common stock owned beneficially by Mr.
Wallach and 45,600 shares of Common Stock issuable upon exercise of
currently exercisable incentive stock options assuming a five-year
vesting schedule but excludes 68,400 shares of Common Stock issuable
upon exercise of incentive stock options granted under the Option
Plan that are not currently exercisable.
(3) Consists of 2,860 shares of Common Stock issuable upon exercise of
currently exercisable incentive stock options but excludes 11,440
shares of Common Stock issuable upon exercise of incentive stock
options granted under the Option Plan that are not currently
exercisable.
(4) Consists of 400 shares of Common stock owned beneficially by Ms.
Cross Doyle and 4,000 shares of Common Stock issuable upon exercise
of currently exercisable incentive stock options but excludes 6,000
shares of Common Stock issuable upon exercise of incentive stock
options granted under the Option Plan that are not currently
exercisable.
(5) Consists of 1,000 shares of Common Stock issuable upon exercise of
currently exercisable incentive stock options but excludes 3,000
shares of Common Stock issuable upon exercise of incentive stock
options granted under the Option Plan that are not currently
exercisable.
(6) Consists of 2,000 shares of Common Stock issuable upon exercise of
currently exerciseable incentive stock options but excludes 8,000
shares of Common Stock issuable upon exercise of incentive stock
options granted under the Option Plan that are not currently
exercisable.
(7) Consists of 2,500 shares of Common Stock issuable upon exercise of
nonqualified options issued under the Directors' Plan
(8) Includes an aggregate of 63,860 shares of the Common Stock issuable
upon exercise of currently exercisable incentive stock options
granted under the Option Plan and Directors' Plan to executive
officers and directors, but excludes 88,840 shares of Common Stock
issuable upon exercise of incentive stock options granted under the
Option Plan that are not yet exercisable.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities and Exchange Act of 1934 requires the
Company's directors and executive officers, and persons who own more than 10% of
the Company's Common Stock ("10% Stockholders"), to file with the Securities and
Exchange Commission (the "SEC") initial reports of ownership of the Company's
Common Stock and other equity securities on Form 3 and reports of changes in
such ownership on a Form 4 and Form 5. Executive officers, directors and 10%
Stockholders are required by SEC regulations to furnish the Company with copies
of all Section 16(a) forms they file.
To the Company's knowledge, based solely on review of the copies of such
reports furnished to the Company during, and with respect to, its most recent
fiscal year and written representation
-5-
that no other reports were required, all Section 16(a) filing requirements
applicable to its officers, directors and 10% Stockholders were complied with,
except as follows:
On October 1, 1996, the Company appointed Jolie Cross Doyle Vice President
of Sales and Marketing and Megan Doyle Vice President of Production. Both
individuals failed to file Form 3s reporting their beneficial ownership of the
Company's securities (or lack thereof) within ten days of their appointments.
Form 3s for each individual were filed with the Commission on April 17, 1997.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth for the years ended December 31, 1994, 1995,
and 1996 the annual compensation, including salary, bonuses and certain other
compensation, paid by the Company to its President, Chief Executive Officer, and
any executive officers whose annual compensation exceeded $100,000 (the "Named
Executive Officers").
<TABLE>
<CAPTION>
- -------------------------------- ---------- --------------------------------------- ------------------------------ ------------
LONG TERM COMPENSATION
------------------- ----------
ANNUAL COMPENSATION AWARDS PAYOUTS
- -------------------------------- ---------- --------------------------------------- ------------------- ---------- ------------
(A) (B) (C) (D) (E) (F) (G) (H)
OTHER
ANNUAL RESTRICTED ALL
COMPEN- STOCK LTIP OTHER
NAME AND FISCAL SATION AWARDS(S) OPTIONS/ PAYOUTS COMPENSATION
PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) ($) ($) SARS(#) ($) ($)
- -------------------------------- ---------- ---------- ------------ --------------- ---------- -------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
JENNIFER BARCLAY 12/31/96 $ 100,000 $ -0- $ 2,178 (4) $ --- --- $ --- $ ---
CHAIRMAN (1) $ 4,905 (5)
$ 1,985 (6)
12/31/95 $ 100,000 $ 1,923 $ 1,968 (4) $ --- --- $ --- $ ---
$ 5,420 (5)
$ 2,038 (6)
12/31/94 $ 108,903 $207,328(3) $ 1,968 (4) $ --- --- $ --- $ ---
$ 5,420 (5)
MARC WALLACH 12/31/96 $ 105,000 $ -0- $ 4,581 (4) $ --- --- $ --- $ ---
PRESIDENT & CHIEF $ 900 (5)
EXECUTIVE OFFICER (2) $ 2,355 (6)
12/31/95 $ 105,000 $ 21,576 $ 5,163 (4) $ 480,320 114,000 $ --- $ ---
$ 900 (5)
$ 2,532 (6)
$392,989 (7)
12/31/94 $ 101,524 $ -0- $ 5,163 (4)
- -------------------------------- ---------- ---------- ------------ --------------- ---------- -------- ---------- ------------
</TABLE>
(1) Ms. Barclay served as Chairman and President until September 1996, when she
relinquished the title of President.
(2) Mr. Wallach served as Chief Executive Officer until September 1996, when he
assumed the additional title of President.
(3) S Corporation distribution (4) Company contribution for healthcare premiums
(5) Allowance for automobile lease (6) 401(k) Company match accrued at December
31
(7) Deferred grossed up bonus to pay taxes due on the restricted stock grant
-6-
The following table sets forth the aggregated option / SAR exercises
and fiscal year end option / SAR values by the Company to each executive officer
of the Company who earned $100,000 or more for the year ended December 31, 1996.
<TABLE>
<CAPTION>
- ------------------------------------------- ---------------------- --------------- ---------------------- ----------------------
Number of
Unexercised Value of
Securities Unexercised
Shares Underlying In-The-Money
Acquired Options/SARs Options/SARs
On At FY-End (#) At FY-End ($)
Exercise Value Exercisable/ Exercisable/
Name (#) Realized Unexercisable Unexercisable
(a) (b) (c) (d) (e)
- ------------------------------------------- ---------------------- --------------- ---------------------- ----------------------
<S> <C> <C> <C> <C>
Marc Wallach -0- $ -0- 45,600/68,400 $ 28,500/ $ 42,750
President & Chief Executive Officer
- ------------------------------------------- ---------------------- --------------- ---------------------- ----------------------
</TABLE>
EMPLOYMENT AND NON-DISCLOSURE AGREEMENTS
The Company entered into an Employment Agreement with Marc Wallach to serve
as the Company's General Manager and Chief Operating Officer, effective January
1, 1994, for a period of three years, subject to termination by the Company for
cause or, by either party, at any time upon ninety (90) days prior written
notice. On September 7, 1994, Mr. Wallach was appointed Chief Executive Officer.
Although Mr. Wallach's Employment Agreement expired on December 31, 1996, he
continues to work for the Company on the same terms. The Company's Board of
Directors intends to consider an extension of the current Employment Agreement
or the execution of a new one at its next meeting. The Employment Agreement, as
amended, provides that Mr. Wallach's annual base compensation will be $105,000
effective September 1, 1994, and that he will receive an annual bonus of 3% of
the Company's net after-tax profits for each year that the Employment Agreement
remains in effect. Mr. Wallach will also receive an additional bonus of 1% of
the Company's net after-tax profits for each of the five years commencing
January 1, 1994 and ending December 31, 1998 provided that Mr. Wallach remains
continuously employed by the Company during this five-year period. This
additional bonus will be paid by the Company in five equal annual installments
commencing on January 1, 1999. Mr. Wallach is also entitled to participate in
the Company's employee benefit plans. Mr. Wallach is also subject to certain
non-disclosure covenants and has agreed not to compete with the Company during
the term of the Employment Agreement and for two years thereafter. On September
15, 1995, the Company granted to Mr. Wallach 304,000 shares of Common Stock in
consideration of services rendered. In connection with this stock grant, Ms.
Barclay contributed 304,000 shares of her Common Stock to the capital of the
Company and Ms. Barclay, Mr. Wallach and the Company entered into a Restricted
Stock Agreement. Pursuant to this Agreement, all of Mr. Wallach's 304,000 shares
are subject to purchase by the Company for a total consideration of $1.00 in the
event that Mr. Wallach voluntarily terminates his employment or is terminated
for cause by the Company prior to September 16, 1997. In 1995, the Company
recognized a compensation expense of $873,309, representing the fair market
value of the Common Stock plus a bonus to cover income taxes payable in
connection with the stock grant. Mr. Wallach also waived his right to receive
any portion or all of his undistributed S corporation earnings other than to pay
taxes on S corporation earnings.
-7-
The Company has also executed stock option agreements containing
non-competition and non-disclosure provisions with each of the Company's
officers and key employees who have been granted stock options under the
Company's 1995 Stock Option Plan.
401(K) PLAN
In March 1995, the Company adopted an employee savings and retirement plan
(the "401(k) Plan") covering all of the Company's employees who have attained
the age of 21 and who normally work 20 hours per week. The 401(k) Plan is
intended to be a tax-qualified plan under Section 401(a) of the Internal Revenue
Code. The 401(k) Plan enables employees to reduce their taxable compensation by
electing to defer current compensation into the 401(k) Plan, up to the
statutorily prescribed annual limit ($9,500 in 1996). The trustees of the 401(k)
Plan, at the direction of each participant, invest the assets of the 401(k) Plan
in the various investment alternatives offered under the 401(k) Plan. The
Company may, but is not required to, make matching contributions to the 401(k)
Plan based on the amounts participants contribute to the 401(k) Plan, but in no
event may the Company's contribution exceed 10% of the participant's gross
compensation. The Company presently makes monthly matching contributions of up
to 2% of a participant's gross compensation. The 401(k) Plan is administered by
Merrill Lynch.
1995 STOCK OPTION PLAN
The 1995 Stock Option Plan (the "Option Plan") was adopted by the Board of
Directors and approved by the stockholders in September 1995. The Option Plan is
intended to motivate and reward employees and selected consultants by granting
them stock options to acquire shares of Common Stock.
Grants of stock options under the Option Plan may be made to the Company's
employees, officers (including officers who are directors), and consultants. A
total of 570,000 shares of Common Stock has been reserved for issuance under the
Option Plan. The Option Plan is administered by the Compensation Committee of
the Board of Directors.
Both stock options intended to qualify as incentive stock options under the
Code and nonqualified stock options may be granted under the Option Plan. No
employee may receive options in any given calendar year to purchase more than
200,000 shares. The exercise price of incentive stock options granted under the
Option Plan will be at least equal to the fair market value of the Common Stock
of the Company on the date of the grant. The exercise price of nonqualified
stock options granted under the Option Plan will be not less than eighty-five
percent (85%) of the fair market value of the Common Stock of the Company on the
date of the grant. In addition, any option granted under the Option Plan will
have an exercise price of one hundred and ten percent (110%) of the fair market
value on the date of the grant in the case of any person who owns stock
possessing more than 10% of the total combined voting power. Options granted
under the Option Plan will vest at such times as are specified by the
Compensation Committee. If an individual with outstanding stock options
terminates employment on account of death, disability or retirement approved by
the Company, all of the individual's stock options will become immediately
exercisable. Once exercisable, stock options granted under the Option Plan
remain exercisable for nine years from the date of grant, unless the individual
terminates his or her relationship with the Company other than described above.
However, if an option holder wishes to preserve the status of an option as an
incentive stock option, the holder must exercise
-8-
the option within three months of his or her termination of employment or within
one year from a termination of employment on account of disability.
Prior to October 23, 1995, the Option Plan provided that all outstanding
stock options granted under the Option Plan, whether or not vested, would become
immediately exercisable upon a "change of control of the Company" (as defined in
the Option Plan). In certain circumstances, if an individual who has received an
option grant under the Option Plan terminates employment within 18 months of a
"change of control of the Company," the Company is required to make a cash
payment to the individual in an amount equal to the difference between the fair
market value of the shares of Common Stock subject to the option and the
option's exercise price, unless the individual elects otherwise. In addition, if
the Company is not the surviving corporation in a transaction such as a merger,
or sale of substantially all the assets of the corporation, at least 10 days
before the effective date of the transaction, each individual who has an
outstanding and currently exercisable stock option will be entitled to exercise
the option or to receive a cash payment equal to the difference between the fair
market value of the shares of Common Stock subject to the option and the
option's exercise price if a cash payment of the stock option would not affect
the accounting treatment of any such transaction in the judgment of the
Compensation Committee. The Option Plan was amended such that the provision
relating to individuals who terminate employment within 18 months of a change of
control was deleted, and for options granted on or after October 23, 1995, only
vested options are subject to immediate exercise or cash payment upon a change
of control.
On September 11, 1995 the Compensation Committee authorized the grant of
nine-year incentive stock options with an effective date of September 15, 1995
to purchase an aggregate of 60,000 shares of the Company's Common Stock to its
officers and key employees pursuant to the Option Plan. Options to purchase an
aggregate of only 55,000 shares were actually granted. Twenty percent were
immediately exercisable on September 15, 1995 and an additional 20% will become
exercisable on each of the first four anniversaries of the grant date. The
Compensation Committee also granted a nine-year incentive stock option under the
Option Plan with an effective date of September 15, 1995 to the Company's Chief
Executive Officer, Marc Wallach, to purchase 114,000 shares of the Company's
Common Stock. Mr. Wallach's option becomes exercisable according to a schedule
that provides for the most rapid exercise of the option without disqualifying
the option as an incentive stock option under the Code. All of the options were
granted with an exercise price of $4.00 per share. On December 15, 1995, the
Compensation Committee authorized an additional grant of nine-year incentive
stock options to purchase 45,000 shares to its officers and key employees
pursuant to the Option Plan under the same conditions as the September 15, 1995
grant, with an exercise price of $5.00 per share. Options to purchase only
40,000 shares were actually granted. During 1996, the Compensation Committee
granted a nine-year incentive stock option to purchase 14,300 shares of Common
Stock to an officer, with the same vesting schedule as the 1995 grants (other
than to Mr. Wallach), and at an exercise price of $7.00 per share. The
Compensation Committee also granted non-qualified five-year stock options to
purchase an aggregate of 12,000 shares to three consultants, at an exercise
price of $7.25 per share. One-half of the options became exercisable on January
1, 1997 and the balance become exercisable on January 1, 1998. On April 4, 1997,
the Compensation Committee granted an incentive option to purchase 10,000 shares
of the Company's Common Stock to an officer of the Company with the same vesting
schedule as the 1995 grants with an exercise price of $4.75 per share. On May
27, 1997, the Compensation
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Committee granted incentive stock options to purchase an aggregate of 20,000
shares of the Company's Common Stock to two managers of the Company with the
same vesting schedule as the 1995 grants with an exercise price of $4.50 per
share.
Options to purchase 4,000 shares were exercised by three employees during
1996. The employment of four optionees holding options to purchase an aggregate
of 60,000 shares terminated during 1996. Of these options to purchase 60,000
shares, options to purchase 42,000 shares terminated unexercised during 1996 and
options to purchase an additional 10,000 shares terminated unexercised on March
2, 1997. Options to purchase the remaining 8,000 shares were exercised.
Accordingly, as of the date of this Report, options to purchase a total of
181,300 shares of Common Stock granted pursuant to the Option Plan remain
outstanding.
PERFORMANCE STOCK ESCROW AND LOCK-IN AGREEMENTS
All executive officers and directors of the Company are subject to a
"lock-in" agreement, under which they have agreed not to sell or otherwise
transfer any shares of the Company's Common Stock which are held or come to be
held by them for less than the Company's $5.00 initial public offering price. In
addition, Jennifer Barclay, the founder, Chairman of the Board of the Company,
has deposited into escrow 3,495,224 of the 3,486,000 shares of the Company's
Common Stock owned by her. Under the terms of the Escrow Agreement, 25% of her
shares shall become transferable on the sixth, seventh, eighth and ninth
anniversary dates of November 13, 1995. No transfer of those shares may be made
until November 13, 2001, except as follows: (A) Ms. Barclay may transfer a
number of her shares that, within any three-month period, would equal one
percent of the shares of the Company's Common Stock then outstanding; or (B) all
of the shares may earlier become transferable upon certification by the
Company's Chief Financial Officer that any of the following has been achieved:
(i) for two consecutive fiscal years after November 13, 1995, the Company has
minimum annual earnings equal to $0.25 per share; (ii) for five consecutive
fiscal years after November 13, 1995, the Company has an average minimum annual
earnings of $0.25 per share; (iii) after at least one year from November 13,
1995, the Company's Shares have traded on a United States stock exchange at a
price of at least of $8.75 per share (adjusted for stock splits, stock dividends
and recapitalizations) for at least 90 consecutive trading days; or (iv) the
Company's initial public offering is terminated, and none of the Company's
registered Common Stock is sold.
1995 NON-EMPLOYEE DIRECTORS' STOCK OPTION PLAN
In September 1995, the Board of Directors adopted and the stockholders
approved the Company's Non-Employee Directors' Stock Option Plan (the
"Directors' Plan"). The Directors' Plan provides for an annual nondiscretionary
grant of stock options to each director who is not an employee of the Company
(collectively, the "Non-Employee Directors"). The annual grant is in lieu of an
annual retainer for service as a member of the Board of Directors.
A total of 75,000 shares of Common Stock has been reserved for issuance
under the Directors' Plan. On January 1 of each year, each Non-Employee Director
will receive a nondiscretionary grant of options to purchase a total amount of
shares of Common Stock equal in value to $7,500, plus an additional $2,500 for
each Board of Directors' committee on which the Non-Employee Director serves,
based on the fair market value of the Common Stock on the date of grant. The
exercise price of options granted under the Directors' Plan will be equal to the
fair market value of the Common Stock on the date of grant, except that the
exercise price shall be
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one hundred and ten percent (110%) of the fair market value in the case of any
person who owns stock possessing more than 10% of the total combined voting
power. Options will remain exercisable for nine years from the date of grant.
Pursuant to the terms of the Directors' Plan, each of the two Non-Employee
Directors received grants of nonqualified stock options to purchase 2,500 shares
of Common Stock, at an exercise price of $5.00 per share on January 1, 1996, and
2,700 shares of Common Stock, at an exercise price of $4.63 per share on January
1, 1997. As of the date of this Report, options to purchase a total of 10,400
shares of Common Stock have been granted under the Directors' Plan.
PROPOSAL 2
APPROVAL OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has appointed Arthur Andersen LLP as the
Company's independent public accountants for the fiscal year ending December 31,
1997. Arthur Andersen LLP has served as the Company's independent accountants
since 1995. Representatives of Arthur Andersen LLP will be present at the
Meeting to respond to questions and will be given the opportunity to make a
statement should they desire to do so.
BOARD RECOMMENDATION
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR
APPROVAL OF THE APPOINTMENT OF ARTHUR ANDERSEN LLP AS THE COMPANY'S INDEPENDENT
PUBLIC ACCOUNTANTS FOR THE FISCAL YEAR ENDING DECEMBER 31, 1997. A MAJORITY OF
THE VOTES CAST IN PERSON OR BY PROXY AT THE MEETING IS REQUIRED FOR SUCH
APPROVAL. IF THE APPOINTMENT IS NOT SO APPROVED, THE BOARD WILL SELECT OTHER
INDEPENDENT ACCOUNTANTS.
STOCKHOLDER PROPOSALS FOR THE 1998 ANNUAL MEETING
In order to be considered for inclusion in the Proxy Statement for the
Company's 1998 Annual Meeting of Stockholders, stockholder proposals must be
received by the Company no later than February 27, 1998. Proposals should be
sent to the attention of the Secretary at the Company's offices at Post Office
Box 36, No. 3 Sixth Street, Frenchtown, New Jersey 08825.
OTHER MATTERS
The Meeting is called for the purposes set forth in the notice. The
Board of Directors does not know of any matter for action by the stockholders at
the Meeting other than the matters described in the notice. However, the
enclosed proxy confers discretionary authority on the persons named therein with
respect to matters which are not known to the directors at the date of printing
hereof and which may properly come before the Meeting. It is the intention of
the persons named in the proxy to vote in accordance with their best judgment on
any such matter.
By order of the Board of Directors
/s/ Lana Schempp
--------------------------------
Lana Schempp, Secretary
June 30, 1997
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BLUE FISH CLOTHING, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
ANNUAL MEETING OF STOCKHOLDERS TO BE HELD JULY 31, 1997
Revoking all prior proxies, the undersigned, a stockholder of BLUE FISH
CLOTHING, INC. (the "Company"), hereby appoints Jennifer Barclay and Marc K.
Wallach, and each of them, attorneys and agents of the undersigned, with full
power of substitution, to vote all shares of the Company's Common Stock, par
value $.001 per share ("Common Stock"), owned by the undersigned at the Annual
Meeting of Stockholders of the Company to be held at Tinicum Park, Route 32,
River Road, Erwinna, Pennsylvania 18920 on July 31, 1997 at 2:00 p.m., local
time, and at any adjournment thereof, as fully and effectively as the
undersigned could do if personally present and voting, hereby approving,
ratifying and confirming all that said attorneys and agents or their substitutes
may lawfully do in place of the undersigned as indicated on the reverse.
IMPORTANT: SIGNATURE REQUIRED ON REVERSE SIDE
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PLEASE DATE, SIGN AND MAIL YOUR
PROXY CARD BACK AS SOON AS POSSIBLE!
ANNUAL MEETING OF STOCKHOLDERS
BLUE FISH CLOTHING, INC.
JULY 31, 1997
Please Detach and Mail in the Envelope Provided
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Please mark your
[X] vote as in this
example.
FOR ALL WITHHOLD
NOMINEES AUTHORITY FOR
LISTED BELOW ALL NOMINEES
1. Election of [ ] [ ]
Directors
To vote for the election of Jennifer Barclay, Marc K.
Wallach, Ben Cohen and Gary Hirshberg as directors.
FOR, except votes withheld from the following nominee(s):
- --------------------------------------------------------
CUMULATIVE VOTES FOR ONE OR MORE NOMINEES AS FOLLOWS (SEE PROXY STATEMENT):
NOMINEES: Jennifer Barclay
------------
Marc K. Wallach
------------
Ben Cohen
------------
Gary Hirshberg
------------
(Total must not exceed 4x
number of shares held)
FOR AGAINST ABSTAIN
2. Proposal to approve the appointment of Arthur
Andersen LLP as the Company's independent [ ] [ ] [ ]
public accountants for the fiscal year ending
December 31, 1997.
IN THEIR DISCRETION THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER
MATTERS WHICH MAY PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENT
THEREOF.
THIS PROXY WHEN PROPERLY EXECUTED, WILL BE VOTED AS DIRECTED. IF NO
DIRECTION IS MADE, THE PROXY SHALL BE VOTED FOR THE ELECTION OF THE LISTED
NOMINEES AS DIRECTORS AND FOR PROPOSAL 2 AND, IN THE CASE OF OTHER MATTERS
THAT LEGALLY COME BEFORE THE MEETING, AS SAID ATTORNEY(S) MAY DEEM
ADVISABLE.
PLEASE CHECK HERE IF YOU PLAN TO ATTEND THE ANNUAL MEETING OF
STOCKHOLDERS ON THURSDAY, JULY 31, 1997 AT 2:00 P.M. AT TINICUM [ ]
PARK, ROUTE 32, RIVER ROAD, ERWINNA, PENNSYLVANIA 18920.
Signature:_______________________________________ Date:___________
Signature:_______________________________________ Date:___________
ADDITIONAL SIGNATURE(S) IF HELD JOINTLY
NOTE: Please sign exactly as name appears hereon. Joint owners should each sign.
If signing as attorney, executor, administrator, trustee, guardian or
other fiduciary, please indicate title or capacity in which signed.
- --------------------------------------------------------------------------------
