<PAGE>
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:
[ X ] Preliminary Proxy Statement
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
BLYTH HOLDINGS INC.
- - ------------------------------------------------------------------------
(Name of Registrant as specified in its charter)
BLYTH HOLDINGS INC.
- - ------------------------------------------------------------------------
(Name of person(s) filing proxy statement)
Payment of Filing Fee (Check the appropriate box):
[ X ] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
[ ] $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 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------
(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 Statement No.:_______________________
(3) Filing Party:_______________________________________________________
(4) Date Filed:_________________________________________________________
<PAGE>
BLYTH HOLDINGS INC.
------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON AUGUST 20, 1996
---------------------
TO THE STOCKHOLDERS:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of Blyth
Holdings Inc. ("the Company"), a Delaware corporation, will be held on August
20, 1996 at 9:00 a.m., local time, at the Company's offices located at 989 East
Hillsdale Boulevard, Suite 400, Foster City, California for the following
purposes:
1. To elect one (1) Class I Director to serve until the 1999 Annual Meeting
of Stockholders or until his successor is elected and shall qualify
(Proposal 1);
2. To approve an amendment of the Company's Certificate of Incorporation to
increase the number of authorized shares of Common Stock from 20,000,000
to 40,000,000 (Proposal 2);
3. To approve the adoption of the 1996 Stock Plan and the reservation of
450,000 shares of Common Stock for issuance thereunder (Proposal 3);
4. To ratify the appointment of Deloitte & Touche LLP as independent public
accountants of the Company for the fiscal year ending March 31, 1997
(Proposal 4); and
5. To transact such other business as may properly be brought before the
meeting and any adjournment(s) thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice.
Stockholders of record at the close of business on July 12, 1996 shall be
entitled to notice of and to vote at the meeting.
All stockholders are cordially invited to attend the meeting. However, to
assure your representation at the meeting, you are urged to mark, sign, date and
return the enclosed proxy card as promptly as possible in the postage-prepaid
envelope enclosed for that purpose. Any stockholder attending the meeting may
vote in person even if he or she has returned a proxy.
Sincerely,
Judith Mayer O'Brien,
SECRETARY
Foster City, California
July , 1996
YOUR VOTE IS IMPORTANT
IN ORDER TO ASSURE YOUR REPRESENTATION AT THE MEETING, YOU ARE REQUESTED TO
COMPLETE, SIGN AND DATE THE ENCLOSED PROXY CARD AS PROMPTLY AS POSSIBLE AND
RETURN IT IN THE ENCLOSED ENVELOPE.
<PAGE>
BLYTH HOLDINGS INC.
989 EAST HILLSDALE BOULEVARD, SUITE 400
FOSTER CITY, CALIFORNIA 94404
------------------------
PROXY STATEMENT
---------------------
INFORMATION CONCERNING SOLICITATION AND VOTING
GENERAL
The enclosed Proxy is solicited on behalf of the Board of Directors of Blyth
Holdings Inc. (the "Company") for use at the Annual Meeting of Stockholders to
be held at the Company's principal office located at 989 East Hillsdale
Boulevard, Suite 400, Foster City, California on August 20, 1996 at 9:00 a.m.,
Pacific daylight savings time, and at any adjournment(s) thereof, for the
purposes set forth herein and in the accompanying Notice of Annual Meeting of
Stockholders. The Company's telephone number is (415) 571-0222. These proxy
solicitation materials were mailed on or about July , 1996 to all
stockholders entitled to vote at the meeting.
RECORD DATE AND SHARE OWNERSHIP
Stockholders of record at the close of business on July 12, 1996 (the
"Record Date") are entitled to notice of and to vote at the meeting and at any
adjournment(s) thereof. At the Record Date, 9,804,838 shares of the Company's
Common Stock, $.01 par value, were issued and outstanding.
REVOCABILITY OF PROXIES
Any proxy given pursuant to this solicitation may be revoked by the person
giving it at any time before its use by delivering to the Company (Attention:
William M. Glynn) a written notice of revocation or a duly executed proxy
bearing a later date or by attending the meeting and voting in person.
VOTING AND SOLICITATION
On all matters each share of Common Stock has one vote. Directors are
elected by a plurality vote of the Common Stock in person or represented by
proxy at a meeting. See "Election of Directors -- Vote Required."
The cost of this solicitation will be borne by the Company. The Company has
retained the services of Skinner & Co., (the "Agent") to perform a search of
brokers, bank nominees and other institutional owners. The Company estimates
that it will pay the Agent a fee of $1,000 for its services and will reimburse
it for reasonable out-of-pocket expenses, if necessary. In addition, the Company
may reimburse brokerage firms and other persons representing beneficial owners
of shares for their expenses in forwarding solicitation material to such
beneficial owners. Proxies may also be solicited by certain of the Company's
directors, officers and regular employees, without additional compensation,
personally or by telephone or telegram.
QUORUM; ABSTENTIONS; BROKER NON-VOTES
The Company's Bylaws provide that stockholders holding a majority of the
shares of Common Stock issued and outstanding and entitled to vote on the Record
Date shall constitute a quorum at meetings of stockholders. Shares that are
voted "FOR," "AGAINST" or "WITHHELD" on a matter are treated as being present at
the meeting for purposes of establishing a quorum and are also treated as
"entitled to vote on the subject matter" (the "Votes Cast") at the Annual
Meeting with respect to such matter.
While there is no definitive statutory or case law authority in Delaware as
to the proper treatment of abstentions, the Company believes that abstentions
should be counted for purposes of determining the presence or absence of a
quorum for the transaction of business and the total number of Votes Cast with
respect to a particular matter (other than the election of directors). In the
absence of controlling precedent to the contrary, the Company intends to treat
abstentions in this manner. Accordingly, with
<PAGE>
the exception of the proposal for the election of directors, abstentions will
have the same effect as a vote against the proposal. Because directors are
elected by a plurality vote, abstentions in the election of directors have no
impact once a quorum exists.
In a 1988 Delaware case, BERLIN V. EMERALD PARTNERS, the Delaware Supreme
Court held that, while broker non-votes may be counted for purposes of
determining the presence or absence of a quorum for the transaction of business,
broker non-votes should not be counted for purposes of determining the number of
Votes Cast with respect to the particular proposal on which the broker has
expressly not voted. Broker non-votes with respect to proposals set forth in
this Proxy Statement will therefore not be considered "Votes Cast" and,
accordingly, will not affect the determination as to whether the requisite
majority of Votes Cast has been obtained with respect to a particular matter.
DEADLINE FOR RECEIPT OF STOCKHOLDER PROPOSALS
The Company currently intends to hold its 1997 Annual Meeting of
Stockholders in August 1997 and to mail proxy statements relating to such
meeting in July 1997. Proposals of stockholders of the Company that are intended
to be presented by such stockholders at the Company's 1997 Annual Meeting of
Stockholders must be received by the Company no later than , 1997
and must otherwise be in compliance with applicable laws and regulations in
order to be considered for inclusion in the proxy statement and form of proxy
relating to that meeting.
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
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 on Form 3 and changes in ownership on Form 4 or 5 with the Securities
and Exchange Commission (the "SEC") and the National Association of Securities
Dealers. Such officers, directors and ten-percent stockholders are also required
by SEC rules to furnish the Company with copies of all forms that they file
pursuant to Section 16(a). Based solely on its review of the copies of such
forms received by it, or written representations from certain reporting persons
that no other reports were required for such persons, the Company believes that
all Section 16(a) filing requirements applicable to its officers, directors and
ten-percent stockholders were complied with in a timely fashion.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth as of June 30, 1996, certain information with
respect to the beneficial ownership of the Company's Common Stock by (i) any
person (including any "group" as that term is used in Section 13(d)(3) of the
Securities Exchange Act of 1934, as amended (the
2
<PAGE>
"Exchange Act")) known by the Company to be the beneficial owner of more than 5%
of the Company's voting securities, (ii) each director and each nominee for
director of the Company, (iii) each of the executive officers named in the
Summary Compensation Table appearing herein, and (iv) all directors and
executive officers of the Company as a group.
<TABLE>
<CAPTION>
NUMBER OF PERCENT
NAME AND ADDRESS (1) SHARES OF TOTAL
- - --------------------------------------------------------------------------------- ----------- -----------
<S> <C> <C>
Stephens Group, Inc. (2) ........................................................ 855,000 8.3%
111 Center Street
Little Rock, AR 72203
Richard J. Hanschen (3) ......................................................... 745,000 7.3%
12102 Vendome Place
Dallas, TX 75230
State of Wisconsin Investment Board ............................................. 660,834 6.7%
Lake Terrace
121 East Wilson Street
P.O. Box 7842
Madison, WI 53707
Michael J. Minor (4)............................................................. 578,666 5.6%
Stephen R. Lorentzen (5)......................................................... 141,146 1.4%
William E. Konrad (6)............................................................ 160,500 1.6%
David R. Seaman (7).............................................................. 207,814 2.1%
All directors and executive officers as a group (five persons)(8)................ 1,833,126 16.8%
</TABLE>
- - ------------------------
(1) Except as otherwise indicated below, the persons whose names appear in the
table above have sole voting and investment power with respect to all shares
of stock shown as beneficially owned by them, subject to community property
laws, where applicable.
(2) Includes warrants to purchase 450,000 shares of Common Stock exercisable
within 60 days of the Record Date.
(3) Includes (i) 200,000 shares and warrants to purchase 200,000 shares of
Common Stock which are exercisable within sixty (60) days of the Record
Date, and which are held by VSH II Limited Partnership, of which Mr.
Hanschen is a general partner; (ii) 100,000 shares of Common Stock held by
VSH III Limited Partnership, of which Mr. Hanschen is a general partner; and
(iii) warrants to purchase 215,000 shares of Common Stock which are
currently exercisable or will become exercisable on September 1, 1997,
60,000 of which are held in the name of Vier Sohne Progeny Trust.
(4) Includes (i) 14,500 shares of Common Stock and warrants to purchase 14,500
shares of Common Stock exercisable within sixty (60) days of the Record Date
held jointly by Mr. Minor and his spouse; (ii) 74,000 shares of Common Stock
and warrants to purchase 74,000 shares of Common stock exercisable within
sixty (60) days of the Record Date held by an IRA for the benefit of Mr.
Minor's spouse; (iii) 38,500 shares of Common Stock and warrants to purchase
11,500 shares of Common Stock exercisable within sixty (60) days of the
Record Date held by an IRA for the benefit of Mr. Minor; and (iv) 351,666
shares subject to outstanding options which are currently exercisable or
will become exercisable on September 1, 1997. Mr. Minor disclaims beneficial
ownership of the shares set forth in clause (ii) above.
(5) Includes (i)a warrant to purchase 60,000 shares of Common Stock which are
currently exercisable or will become exercisable on September 1, 1997 held
by Mr. Lorentzen and (ii) 81,146 shares subject to outstanding options which
are currently exercisable or will become exercisable on September 1, 1997.
3
<PAGE>
(6) Includes warrants to purchase 40,000 shares which are currently exercisable
or will become exercisable on September 1, 1997.
(7) Includes options to purchase 70,000 shares of Common Stock exercisable
within sixty (60) days of the Record Date held by Mr. Seaman.
(8) Includes the shares described in footnotes 3, 4, 5, 6, and 7 above.
PROPOSAL ONE
ELECTION OF DIRECTORS
NOMINEES
The Bylaws of the Company provide that the Board of Directors shall be
composed of seven directors divided into three classes composed of two members
in each of Classes I and II and three members in Class III. The directors are
elected to serve staggered three-year terms, with the term of one class of
directors expiring each year. Following the meeting there will be one vacancy in
Class I and two vacancies in Class III.
Unless otherwise specified, each properly executed proxy received will be
voted for the election of the one Class I nominee named below to serve as a
director until the 1999 Annual Meeting of Stockholders or until his successor is
elected and shall qualify. Mr. Minor was elected as a Class I director in 1991.
The nominee has consented to be named a nominee in the proxy statement and to
continue to serve as a director if elected. Should the nominee become unable or
unwilling to accept a nomination or election, or should additional persons be
nominated at the meeting, the persons named in the enclosed proxy will vote for
the election of the nominee hereafter designated by the Board of Directors (or
if new nominees have been designated by the Board, in such a manner as to elect
such new nominees). The Company is not aware of any reason that the nominee will
be unable or will decline to serve as a director. There are no arrangements or
understandings between any director or executive officer and any other person
pursuant to which he is or was to be selected as a director or officer of the
Company.
The following person has been nominated as a Class I Director:
<TABLE>
<CAPTION>
DIRECTOR
NAME OF NOMINEE AGE* PRINCIPAL OCCUPATION SINCE
- - --------------------------------------- ----- --------------------------------------------- -----------
<S> <C> <C> <C>
Michael J. Minor....................... 48 Chief Executive Officer and Chairman of the 1991
Board of Directors of the Company and Chief
Executive Officer of Blyth Software Inc. and
Blyth Software Limited
</TABLE>
The term of the following Class III Director will expire at the 1997 Annual
Meeting of Stockholders:
<TABLE>
<CAPTION>
DIRECTOR
NAME AGE* PRINCIPAL OCCUPATION SINCE
- - --------------------------------------- ----- --------------------------------------------- -----------
<S> <C> <C> <C>
Richard J. Hanschen (1)(2)............. 73 Chairman and Chief Executive Officer of New 1990
Business Resources II, Inc., an investment
firm
</TABLE>
4
<PAGE>
The term of the following Class II Directors will expire at the 1998 Annual
Meeting of Stockholders:
<TABLE>
<CAPTION>
DIRECTOR
NAME AGE* PRINCIPAL OCCUPATION SINCE
- - --------------------------------------- ----- --------------------------------------------- -----------
<S> <C> <C> <C>
Stephen R. Lorentzen................... 42 President and Chief Operating Officer of the 1994
Company and President of Blyth Software Inc.
and Blyth Software Limited
William E. Konrad (1)(2)............... 65 Private Investor 1995
</TABLE>
- - ------------------------
* As of July 12, 1996.
(1) Member of the Compensation and Options Committee
(2) Member of the Audit Committee
Except as set forth below, the nominee has been engaged in his principal
occupation set forth above during the past five years. There is no family
relationship between any director or executive officer of the Company.
Mr. Minor has served as Chairman of the Board and Chief Executive Officer of
the Company and of Blyth Software Inc. and Blyth Software Limited since May 1995
and previously as President and Chief Executive Officer since he joined the
Company in July 1991. Mr. Minor served as President and Chief Executive Officer
of Connect, Inc., a computer software company, from May 1990 to May 1991, and in
various positions at Apple Computer, Inc. a computer manufacturer, ("Apple"),
including Group Manager, Worldwide Channel Systems and Senior Manager, Strategic
Planning, of Apple USA, a division of Apple from January 1988 to April 1990.
BOARD MEETINGS AND COMMITTEES
The Board of Directors of the Company held a total of four meetings and took
three actions by unanimous written consent during the fiscal year ended March
31, 1996. No director serving during such fiscal year attended fewer than 75% of
the aggregate of all meetings of the Board of Directors and the committees of
the Board upon which such director served. The Board of Directors has two
committees, the Audit Committee and the Compensation and Options Committee. The
Board of Directors has no nominating committee or any committee performing such
functions.
The Audit Committee of the Board of Directors consisted of directors
Hanschen and Konrad during the last fiscal year and held one meeting. The Audit
Committee recommends engagement of the Company's independent public accountants
and is primarily responsible for approving the services performed by the
Company's independent public accountants and for reviewing and evaluating the
Company's accounting principles and its system of internal accounting controls.
The Compensation and Options Committee of the Board of Directors consisted
of directors Hanschen and Konrad during the last fiscal year, held three
meetings and took three actions by written consent. The Compensation and Options
Committee reviews and approves the Company's executive compensation policy and
grants stock options to employees of the Company, including officers, pursuant
to the Company's stock option plans.
DIRECTOR COMPENSATION
The Company reimburses directors for travel and other out-of-pocket expenses
incurred in attending Board meetings but no cash compensation is otherwise paid
to directors.
The 1993 Directors' Warrant Plan (the "Director Plan") was adopted by the
Board of Directors in September 1993 and was approved by the stockholders in
August 1994. The Director Plan provides for automatic non-discretionary grants
of warrants to non-employee directors ("Outside Directors").
5
<PAGE>
Each Outside Director elected on or after the date of adoption of this plan is
automatically granted a warrant to purchase 60,000 shares of Common Stock upon
the date he or she becomes a director of the Company. Director Konrad received
such a grant in June 1995, when he was appointed to the Board of Directors. An
Outside Director who is elected Chairman of the Board on or after the date of
adoption of this plan is automatically granted a warrant to purchase 90,000
shares of Common Stock on the date he or she is first elected Chairman.
Thereafter, each Outside Director (other than the Chairman of the Board) is
automatically granted a warrant to purchase 5,000 shares of Common Stock on
September 1 of each year, provided that he or she has served for at least six
(6) months as of such date and is then serving as an Outside Director
("Subsequent Warrant"). Director Hanschen received such a grant in September
1995. An Outside Director who is serving as Chairman of the Board at such time
shall automatically be granted a warrant to purchase 7,500 shares of Common
Stock, provided that he or she has served for at least six (6) months as of such
date and is then serving as Chairman of the Board ("Subsequent Chairman
Warrant"). The Director Plan provides that the exercise price shall be equal to
100% of the fair market value of the Common Stock on the date of grant of the
warrants and that warrants will vest monthly over a three (3) year period.
As of June 30, 1996, warrants to purchase 490,833 shares of the Company's
Common Stock under the Director Plan were outstanding at a weighted average
exercise price of $3.80 per share.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation and Options Committee was composed of Directors Hanschen
and Konrad during fiscal 1996, both non-employee directors.
VOTE REQUIRED
The Class I director will be elected by a plurality vote of the shares of
the Company's Common Stock present or represented and entitled to vote on this
matter at the meeting. Cumulative voting in the election of directors is not
authorized by the Company's Bylaws or Certificate of Incorporation. Votes
withheld from a nominee and broker non-votes will be counted for purposes of
determining the presence or absence of a quorum but because directors are
elected by a plurality vote, have no impact once a quorum is present. See
"Information Concerning Solicitation and Voting -- Quorum; Abstentions; Broker
Non-Votes."
MANAGEMENT RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR"
THE FOREGOING NOMINEE, MICHAEL J. MINOR
PROPOSAL TWO
AMENDMENT AND RESTATEMENT OF THE CERTIFICATE OF INCORPORATION
In May 1996, the Board of Directors declared advisable and unanimously
approved an amendment and restatement of the Company's Certificate of
Incorporation to amend Article Fourth of the Company's Certificate of
Incorporation to increase the number of authorized shares of Common Stock from
20,000,000 shares to 40,000,000 shares. No increase in the number of shares of
Preferred Stock of the Company, currently 3,000,000 shares, is proposed or
anticipated. As more fully set forth below, the proposed Restatement is intended
to improve the Company's flexibility in meeting its future needs for unreserved
Common Stock.
If the Restatement is approved by the stockholders, such Restatement will
become effective upon the filing of a restatement of the Company's Certificate
of Incorporation with the Delaware Secretary of State. The text of the first
paragraph of Article Fourth of the Company's Restated Certificate of
Incorporation will read as follows:
"The Corporation is authorized to issue two classes of stock to be
designated, respectively, "Common" and "Preferred." The number of Common is
40,000,000, $.01 par value per share, and the number of Preferred Shares
authorized is 3,000,000, $1.00 par value per share."
6
<PAGE>
As of the close of business on the Record Date, of the 20,000,000 shares
authorized, 9,804,838 shares of Common Stock of the Company were issued and
outstanding, 881,671 shares of Common Stock were reserved for issuance upon
exercise of outstanding stock options and warrants and 807,364 shares were
reserved for future issuance under the Company's stock benefit plans, and
1,375,000 shares were reserved for issuance upon exercise of warrants issued by
the Company in 1991. In addition, the Company is required under its outstanding
convertible debentures, issued in June 1996, to reserve approximately 3,920,000
shares for future issuance upon conversion of such convertible debentures,
although the actual number of shares issued is dependent upon the price of the
Company's stock at conversion and, therefore, may be substantially fewer than
the amount reserved. This leaves 3,211,127 shares of Common Stock unreserved. As
of the close of business on the Record Date, no shares of Preferred Stock were
outstanding.
REASONS FOR AND POSSIBLE EFFECTS OF THE PROPOSED RESTATEMENT
The Company has only 3,211,127 authorized but unreserved and unissued shares
of Common Stock available for future issuance. This may limit the ability of the
Board of Directors to issue shares of Common Stock without seeking stockholder
approval. Obtaining stockholder approval is a time consuming, expensive process
and could delay or prevent the Company from taking such actions as potential
acquisitions, financings, stock splits, stock dividends or additional
compensation plans.
If approved, the increased number of authorized shares of Common Stock will
be available for issue from time to time for such purposes and consideration as
the Board of Directors may approve and no further vote of the stockholders of
the Company will be required, except as provided under Delaware law or under the
rules of any national securities exchange on which shares of Common Stock of the
Company are then listed. The availability of additional shares for issue,
without the delay and expense of obtaining the approval of stockholders at a
special meeting, will afford the Company greater flexibility in acting upon
proposed transactions in which shares of Common Stock may be issued.
The additional Common Stock to be authorized by adoption of the Restatement
would have rights identical to the currently outstanding Common Stock of the
Company. Adoption of the proposed Restatement and issuance of the Common Stock
would not affect the rights of the holders of currently outstanding Common Stock
of the Company, except for effects incidental to increasing the number of shares
of the Company's Common Stock outstanding such as dilution of the earnings per
share and voting rights of current holders of Common Stock. If the amendment is
adopted, it will become effective upon the filing of a Restated Certificate of
Incorporation with the Secretary of State of the State of Delaware.
Stockholders should note, however, that authorized but unissued stock could
be issued by the Board of Directors for the purpose of countering an unsolicited
takeover or other proposal that is opposed by the Board. Accordingly, an effect
of the increase in the number of authorized shares may be to deter a future
takeover attempt which holders of Common Stock may deem to be in their best
interest or in which holders of Common Stock may be offered a premium for their
shares over the market price. The Board is not currently aware of any attempt to
takeover or acquire the Company, and has no current plans to issue additional
shares of Common Stock other than pursuant to the conversion of outstanding
convertible debentures, the exercise of outstanding stock options and warrants
and stock options and warrants that might be granted in the future under the
Company's employee benefit plans. The Board of Directors believes that the
benefits of providing the Company with the flexibility to issue shares without
delay for any purpose outweighs the possible disadvantages discussed above, and
that it is prudent and in the best interests of the stockholders to provide the
greater flexibility that will result from the approval of the proposed increase
in authorized shares.
VOTE REQUIRED
The approval of the restatement of the Company's Certificate of
Incorporation requires the affirmative vote of a majority of the outstanding
shares of the Company's Common Stock as of the
7
<PAGE>
Record Date entitled to vote on this matter at the meeting. Neither an
abstention nor a broker non-vote is an affirmative vote and, therefore, both
will have the same effect as a vote against the proposal. See "Information
Concerning Solicitation and Voting -- Quorum; Abstentions; Broker Non-Votes."
MANAGEMENT RECOMMENDS THAT STOCKHOLDERS VOTE "FOR"
AMENDMENT AND RESTATEMENT OF THE CERTIFICATE OF INCORPORATION
PROPOSAL THREE
ADOPTION OF THE 1996 STOCK PLAN
INTRODUCTION
The 1996 Stock Plan (the "1996 Plan") was adopted by the Board of Directors
in May 1996, subject to stockholder approval. The 1996 Plan provides for the
grant of options and stock purchase rights to purchase shares of the Company's
Common Stock to employees and consultants of the Company. A total of 450,000
shares of Common Stock are reserved for issuance under the 1996 Plan.
As of June 30, 1996, the Company's 1987 Stock Option Plan had only
approximately 500,000 shares available for future grant and expires in August
1997. Therefore, the Board believes that rather than increase the number of
shares reserved under the Company's 1987 Stock Plan, it is in the best interest
of the Company to adopt the 1996 Plan. The Board believes that an option plan is
necessary to enable the Company to compete successfully with other companies to
attract and retain valuable employees, and the 1996 Plan will fulfill this
purpose. The Board also believes that it is appropriate to have a substantial
pool of options available for grant in connection with acquisitions that the
Company may make from time to time. The ability to make such grants enhances the
Company's ability to structure attractive offers to potential acquisition
targets. No such acquisitions are presently being considered by the Company.
SUMMARY OF THE 1996 PLAN
The full text of the 1996 Plan is set forth as Exhibit "A" to this Proxy
Statement. The following summary of the 1996 Plan is qualified by reference to
that text.
PURPOSE. The purposes of the 1996 Plan are to provide key employees and
consultants an opportunity to acquire a proprietary interest in the Company and
to attract and retain personnel with outstanding qualifications for the Company.
ADMINISTRATION. The 1996 Plan may be administered by multiple
administrative bodies. With respect to officers and directors, the 1996 Plan is
administered by either the Board or one or more committees designated by the
Board as may be necessary to comply with the rules governing a plan intended to
qualify as a discretionary grant under Rule 16b-3. With respect to persons other
than officers or directors, the 1996 Plan is administered by the Board or a
committee designated by the Board as necessary to comply with applicable law.
These multiple administrative bodies shall hereinafter be collectively referred
to as the "Administrator."
ELIGIBILITY. Nonstatutory stock options and stock purchase rights may be
granted to employees and consultants of the Company and its subsidiaries.
Incentive stock options may be granted only to employees of the Company and its
subsidiaries. The Administrator selects the employees and consultants who will
be granted options and determines the number of shares to be subject to each
option. In making such determination, the Administrator takes into account the
duties and responsibilities of the employee or consultant, the value of the
services of such employee or consultant, his or her present and potential
contributions to the success of the Company, the anticipated years of future
service of an employee and other relevant factors. As of June 30, 1996,
approximately 120 employees and consultants were eligible to receive options
under the Option Plan.
8
<PAGE>
EXERCISE OF OPTIONS AND PURCHASE OF RESTRICTED SHARES. Options and stock
purchase rights vest at such times as are determined by the Administrator and
set forth in the option or restricted stock purchase agreement. Generally,
options and stock purchase rights vest in equal annual installments over a
four-year period with such vesting accelerated in the event of the sale of the
Company.
An option is exercised by delivery of written notice to the Company
specifying the number of full shares of Common Stock to be purchased and payment
of the purchase price. The method of payment of the exercise price for the
shares of purchased upon exercise of an option shall be determined by the
Administrator.
EXERCISE PRICE. The exercise price of options and stock purchase rights
granted under the 1996 Plan is determined by the Administrator. In case of
incentive stock options, the exercise price must not be less than 100% of the
fair market value of the Common Stock on the date of grant. Incentive stock
options granted to stockholders owning more that 10% of the voting stock of the
Company are subject to the additional restriction that the exercise price per
share of each option must be at least 110% of the fair market value per share on
the date of grant. The exercise price of nonstatutory options must not be less
than 85% of the fair market value of the Common Stock on the date of grant.
TERMINATION. If an optionee ceases to be an employee for any reason other
than death, the optionee shall have the right to exercise an existing
unexercised option within three (3) months after the date of termination of
employment. If such termination is due to the optionee becoming permanently and
totally disabled, the optionee shall have the right to exercise an existing
unexercised option at any time within twelve (12) months after the date of
termination. If the optionee's employment was "terminated for cause" any
unexercised option shall become void and unexercisable on the date of
termination.
If the optionee ceases to be an employee by reason of the optionee's death,
or if the optionee dies after the termination of employment but during the
period in which the option would have been exercisable pursuant to the
circumstances described above, the unexercised option may be exercised within
twelve (12) months after the date of the optionee's death by the executors or
administrators of the optionee's estate or by the person(s) who has acquired the
option directly from the optionee by will or by the laws of will or by the laws
of decent and distribution.
TERMS. Options and stock purchase rights granted under the 1996 Plan expire
as determined by the Administrator, but in no event later than 10 years after
the date of the grant. No option may be exercised by any person after such
expiration. In addition, incentive stock options granted to stockholders owning
more that 10% of the Company's outstanding voting stock may not have a term of
more than five years.
NON-TRANSFERABILITY. An option or stock purchase right is non-transferable
by the optionee other than by will or the laws of decent and distribution, and
is exercisable during the optionee's lifetime only by the optionee, or in the
event of the optionee's death, by a person who acquires the right to exercise
the option by bequest or inheritance or by reason of the death of an optionee.
ADJUSTMENTS UPON CHANGES IN CAPITALIZATION; CHANGES OF CONTROL. The number
of shares covered by each outstanding option, and the exercise price thereof
shall be proportionately adjusted for any increase or decrease in the number of
issued shares resulting from a change in the Company's capitalization, such as a
stock split, stock dividend and the like. If the Company is a participant in any
merger or consolidation, each outstanding and unexercised option shall be
assumed or substituted by the surviving corporation. If such options are not so
assumed, they shall become fully exercisable prior to the closing of such merger
or consolidation.
AMENDMENT. The Board may from time to time, with respect to any shares at
the time not subject to options, suspend or discontinue the 1996 Plan or revise
or amend it in any respect whatsoever except that, without the approval of a
majority of the Company's stockholders, no such revision
9
<PAGE>
or amendment shall: (a) increase the number of shares subject to the 1996 Plan;
(b) change the designation of the class of persons eligible to receive options;
or (c) amend these provisions to defeat the stated purpose.
TERMS OF 1996 PLAN. Options may be granted pursuant to the 1996 Plan during
the period expiring on May 20, 2006. The 1996 Plan shall expire for all purposes
on May 20, 2016.
The Company's Common Stock is quoted on the NASDAQ National Market System
under the symbol BLYH. On June 28, 1996, the last reported sale price for the
Common Stock was $2.813. As of June 28, 1996 no options or stock purchase rights
had been granted under the 1996 Plan.
SUMMARY OF FEDERAL INCOME TAX CONSEQUENCES
Options granted under the 1996 Plan may be either "incentive stock options"
as that term is defined in Section 422 of the Code or nonstatutory stock
options.
INCENTIVE STOCK OPTIONS. An optionee who is granted an incentive stock
option will not recognize taxable income either at the time the option is
granted or upon its exercise, although the exercise may subject the optionee to
the alternative minimum tax. Upon the sale or exchange of the shares more than
two years after the date of grant and one year after the date of exercise of the
option, any gain or loss will be treated as long-term capital gain or loss. If
these holding periods are not satisfied, the optionee will recognize ordinary
income at the time of sale or exchange equal to the difference between the
exercise price and the lower of (i) fair market value of the shares on the date
of the option exercise or (ii) the sale price of the shares. A different rule
for measuring ordinary income upon such a premature disposition may apply if the
optionee is also an officer, director or 10% stockholder of the Company. The
Company will be entitled to a deduction in the same amount as the ordinary
income recognized by the optionee. Any gain or loss recognized on such a
premature disposition of the shares in excess of the amount treated as ordinary
income will be characterized as long-term or short-term capital gain or loss,
depending on the holding period.
NONSTATUTORY STOCK OPTIONS. All other options which do not qualify as
incentive stock options are referred to as nonstatutory stock options. An
optionee will not recognize any taxable income at the time he or she is granted
a nonstatutory stock option. However, upon its exercise, the optionee will
recognize taxable income generally measured as the excess of the then fair
market value of the shares exercised over the exercise price. A different rule
may apply if the option exercise by an optionee who is also an employee of the
Company will be subject to tax withholding by the Company by payment in cash or
out of the current earnings paid to the optionee. Upon resale of such shares by
the Optionee, any difference between the sales price and the optionee's exercise
price, to the extent not recognized as taxable income as described above, will
be entitled to a tax deduction in the same amount as the ordinary income
recognized by the optionee with respect to shares acquired upon exercise of a
nonstatutory option.
RESTRICTED SHARES. The receipt of restricted shares pursuant to the
exercise of stock purchase rights will not result in a taxable event to the
participant or the Company until the Company's repurchase rights with respect to
such shares expire, unless the participant makes and election under Section
83(b) of the Internal Revenue Code to be taxed as of the date of purchase. If a
Section 83(b) election is made, the participant will recognize ordinary income
in an amount equal to the excess of the fair market value of such shares on the
date of purchase over the amount paid for such shares. The election must be
filed with the Internal Revenue Service no later than 30 days after the date of
purchase. If no Section 83(b) election is made, a taxable event will occur on
each date on which the participant's ownership rights vest (i.e., when the
Company's repurchase rights expire) as to the number of shares that vest on that
date, and the holding period for long-term capital gain purposes will not
commence until the date on which the shares vest. The participant will recognize
ordinary income on each date on which shares vest in an amount equal to the
excess of the fair market value of such shares on that date over the amount paid
for such shares. However, if the participant is subject to Section 16(b) of the
Exchange Act, and if no Section 83(b) election was made at the time of purchase,
10
<PAGE>
the recognition date for ordinary income for shares that vest within six months
of purchase will be subject to deferral to the date six months after the date of
purchase. The Company is entitled to a tax deduction in an amount equal to the
ordinary income recognized by the participant, provided that the applicable
withholding requirements are satisfied.
THE FOREGOING SUMMARY OF THE EFFECT OF UNITED STATES FEDERAL INCOME TAXATION
LAWS UPON THE OPTIONEE AND THE COMPANY IN CONNECTION WITH THE 1996 PLAN, DOES
NOT PURPORT TO BE COMPLETE, AND REFERENCE SHOULD BE MADE TO THE APPLICABLE
PROVISIONS OF THE CODE. IN ADDITION, THIS SUMMARY DOES NOT DISCUSS THE
PROVISIONS OF THE INCOME TAX LAWS OF ANY MUNICIPALITY, STATE OR FOREIGN COUNTRY
IN WHICH THE PARTICIPANT MAY RESIDE.
REQUIRED VOTE
The approval of the 1996 Plan requires the affirmative vote of a majority of
the shares of the Company's Common Stock present or represented and entitled to
vote on this subject matter at the meeting. An abstention is not an affirmative
vote and, therefore, will have the same effect as a vote against the proposal. A
broker non-vote will not be treated as entitled to vote on this subject matter
at the meeting. See "Information Concerning Solicitation and Voting -- Quorum;
Abstentions; Broker Non-Votes."
MANAGEMENT RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" ADOPTION OF THE 1996 STOCK
PLAN
PROPOSAL FOUR
RATIFICATION OF APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has selected Deloitte & Touche LLP, independent
public accountants, to audit the financial statements of the Company for the
fiscal year ending March 31, 1997, and recommends that stockholders vote for
ratification of such appointment. In the event of a negative vote on
ratification, the Board of Directors will reconsider its selection.
Representatives of Deloitte & Touche LLP are expected to be present at the
meeting with the opportunity to make a statement if they desire to do so, and
are expected to be available to respond to appropriate questions.
MANAGEMENT RECOMMENDS THAT STOCKHOLDERS VOTE "FOR"
RATIFICATION OF THE APPOINTMENT OF DELOITTE & TOUCHE LLP
11
<PAGE>
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION
The following table shows, as to the Chief Executive Officer and each of the
other executive officers whose salary plus bonus exceeded $100,000, information
concerning compensation awarded to, earned by or paid for services to the
Company in all capacities during the last three fiscal years (to the extent that
such person was the Chief Executive Officer and/or an executive officer, as the
case may be, during any part of such fiscal year):
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
-------------
ANNUAL COMPENSATION
------------------------------------------------ AWARDS
OTHER ANNUAL ------------- ALL OTHER
SALARY BONUS COMPENSATION OPTIONS COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($) ($) ($) (#) ($)
- - ------------------------------------------------ --------- --------- ----------- ------------- ------------- --------------
<S> <C> <C> <C> <C> <C> <C>
MICHAEL J. MINOR 1996 185,000 -- -- -- 924(1)
Chief Executive Officer 1995 185,000 -- -- 250,000(2) 1,017(1)
1994 185,000 -- -- -- 844(1)
DAVID R. SEAMAN (3) 1996 124,332 -- 48,400 -- --
Vice President and Research and Development 1995 124,714 -- 54,133 -- --
Director of Blyth Software Limited 1994 112,712 -- 52,587 -- --
STEPHEN R. LORENTZEN (4) 1996 153,125 -- -- 190,000 44,765(5)
President and Chief Operating Officer 1995 -- -- -- -- --
1994 -- -- -- -- --
</TABLE>
- - ------------------------------
(1) Represents amounts contributed by the Company under its 401(k) Plan.
(2) In August 1994, at Mr. Minor's request, the Company canceled an option to
purchase 250,000 shares of Common Stock granted to him in October 1993.
(3) Mr. Seaman is paid in pounds sterling, which have been converted into U.S.
dollars at the exchange rate in effect on March 31 of the applicable fiscal
year. "Other Annual Compensation" represents the value of the use of an
automobile and amounts paid or reimbursed for automobile use ( $16,587 in
1994, $15,712 in 1995 and 11,400 in 1996) and amounts contributed to the
Blyth Holdings Limited Retirement Benefits Scheme and the Blyth Software
Limited Retirement Scheme on Mr. Seaman's behalf (an aggregate of $36,000
in 1994, $38,421 in 1995 and 37,000 in 1996).
(4) Mr. Lorentzen became President and Chief Operating Officer of the Company
in May 1995.
(5) Represents $525 contributed by the Company under its 401(k) plan and moving
expenses of $44,240 paid to Mr. Lorentzen in connection with his relocation
to the San Francisco Bay Area from the East Coast.
STOCK OPTION GRANTS AND EXERCISES
The following table shows, as to the individuals named in the Summary
Compensation Table above, (the "Named Executive Officers") information
concerning stock options granted during the fiscal year ended March 31, 1996.
This table also sets forth hypothetical gains or "option spreads" for the
options at the end of their respective ten-year terms, as calculated in
accordance with the Rules of the Securities and Exchange Commission. Each gain
is based on an arbitrarily assumed annualized rate of compound appreciation of
the market price at the date of the grant of 5% and 10% from the date the option
was granted to the end of the option term. The 5% and 10% rates of appreciation
are specified by the rules of the Securities and Exchange Commission and do not
represent the Company's estimate or projection of future Common Stock prices.
The Company does not necessarily agree that this method properly values an
option. Actual gains, if any, on option exercises are dependent on the future
performance of the Company's Common Stock and overall market conditions.
12
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS (1)
---------------------------------------------------------- POTENTIAL REALIZABLE
NUMBER OF VALUE AT ASSUMED
SECURITIES % OF TOTAL ANNUAL RATES OF STOCK
UNDERLYING OPTIONS PRICE APPRECIATION
OPTIONS GRANTED TO EXERCISE FOR OPTION TERM (2)
GRANTED EMPLOYEES IN PRICE EXPIRATION ----------------------------
NAME (#)(1) FISCAL YEAR (2) ($/SH) DATE 5% ($) 10% ($)
- - ------------------------------ ----------- ----------------- ----------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Michael J. Minor.............. -- -- -- -- -- --
David R. Seaman............... -- -- -- -- -- --
Stephen R. Lorentzen.......... 90,000 11.0% 3.31 5/23/2000 187,347.71 474,775.88
100,000 12.3% 2.375 12/1/2000 149,362.47 378,513.83
</TABLE>
- - ------------------------
(1) Options granted under the Company's 1987 Stock Option Plan are granted with
an exercise price not less than at 100% of fair market value of the
Company's Common Stock at the date of grant and generally vest over a
four-year period.
(2) This column sets forth hypothetical gains or "option spreads" for the
options at the end of their respective ten-year terms, as calculated in
accordance with the rules of the Securities and Exchange Commission. Each
gain is based on an arbitrarily assumed annualized rate of compound
appreciation of the market price at the date of grant of 5% and 10% from the
date the option was granted to the end of the option term. The 5% and 10%
rates of appreciation are specified by the rules of the Securities and
Exchange Commission and do not represent the Company's estimate or
projection of future performance of the Company's Common Stock and overall
market conditions.
No options were exercised by the Named Executive Officers. The following
table shows, as to the Named Executive Officers the value of unexercised
in-the-money options at March 31, 1996.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS/SARS AT MARCH 31, IN-THE-MONEY OPTIONS AT
1996 (#)(1) MARCH 31, 1996 ($)(2)
-------------------------- --------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- - ---------------------------------------------------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Michael J. Minor.......................................... 625,000 50,000 -- --
David R. Seaman........................................... 100,000 -- 21,875 --
Stephen R. Lorentzen...................................... 190,000 50,000
</TABLE>
- - ------------------------
(1) The Company has not granted any stock appreciation rights and its stock
plans do not provide for the granting of such rights.
(2) Calculated by determining the difference between the fair market value of
the securities underlying the options at March 31, 1996 (the closing price
of the Common Stock of the Company was listed on the NASDAQ National Market
at $2.875 per share on March 31, 1996) and the exercise price of the option.
13
<PAGE>
OTHER EMPLOYEE BENEFIT PLANS
EMPLOYMENT CONTRACTS
The Service Agreement effective April 1, 1990 between the Company and Mr.
Seaman retains Mr. Seaman as the Company's chief technical officer for an
initial term of four (4) years, which is automatically renewed for subsequent
two year terms unless the agreement is terminated by either party by delivery of
six months prior notice. The Service Agreement was automatically renewed for two
year terms in April 1994 and April 1996. It provides for an annual base salary
of 48,000 pounds sterling, with annual increases based on a United Kingdom
consumer index throughout the term of the agreement. In addition, Mr. Seaman is
entitled to an annual incentive bonus of 25% of his base salary if certain
annual profitability goals are achieved (no bonuses have been paid to date), to
an automobile and payments or reimbursements for automobile expenses, and to
Company contributions to a retirement plan on his behalf. See "Other Employee
Benefits Plans -- Blyth Holdings Limited Retirement Benefits Scheme" and "--
Blyth Software Limited Retirement Benefits Scheme."
BLYTH HOLDINGS LIMITED RETIREMENT BENEFITS SCHEME
The Company, through its United Kingdom subsidiary, Blyth Holdings Limited,
sponsors a retirement plan, the Blyth Retirement Benefits Scheme ("BHL
Retirement Plan"). The only participant in the BHL Retirement Plan is David R.
Seaman. Participation in the BHL Retirement Plan is frozen; no additional
employees may participate. The BHL Retirement Plan provides retirement benefits
upon attainment of normal retirement age and incidental benefits in case of
death or termination of employment prior to retirement. A participant's normal
retirement benefit is 66.66% of his final remuneration, reduced if the
participant has less than ten years of service with Blyth Holdings Limited.
Blyth Holdings Limited makes annual contributions under the BHL Retirement Plan
to fund promised retirement benefits. The BHL Retirement Plan is partially
insured through the Sun Life Assurance Society. The assets held under the BHL
Retirement Plan which are not used to pay insurance premiums are held in trust
for investment purposes for the benefit of the BHL Retirement Plan. Blyth
Holdings Limited retains the right to terminate the BHL Retirement Plan at any
time upon thirty days prior written notice.
BLYTH SOFTWARE LIMITED RETIREMENT BENEFITS SCHEME
The Company also sponsors a retirement plan called the Blyth Software Ltd.
Retirement Benefits Scheme ("BSL Plan") for substantially all employees of Blyth
Software Limited. The BSL Plan provides retirement benefits upon attainment of
normal retirement age and incidental benefits in case of death or termination of
employment prior to retirement. Blyth Software Limited makes annual
contributions under the BSL Plan to fund promised retirement benefits. In
addition, participants are entitled to make voluntary contributions under the
BSL Plan to increase their benefits. Currently, Blyth Software Limited
contributes an amount equal to 5/8% of each participants' compensation under the
BSL Plan. Blyth Software Limited retains the right to terminate the BSL Plan at
any time upon thirty days prior written notice.
401(K) EMPLOYEE SAVINGS PLAN
The Company established a 401(k) Employee Savings and Retirement Plan (the
"401(k) Plan") in November 1992. The 401(k) Plan is a qualified profit sharing
plan and salary deferral program under the Federal tax laws and is administered
by the Company. All employees of the Company (except for certain specifically
excluded classifications as defined in the plan) are eligible to participate in
the 401(k) Plan on the first day of each quarter upon attainment of age 21.
Participants may defer from 1% to 15% of their total salary (including bonuses
and commissions) each pay period through contributions to the 401(k) Plan. The
Company makes a matching contribution of 10% of the amount contributed by the
participant up to a maximum of 6% of the salary deferral. During fiscal 1996 the
14
<PAGE>
Company made $1,449 in contributions on behalf of executive officers. All salary
deferral and Company matching contributions are credited to separate accounts
maintained in trust for each participant and are invested, at the participant's
direction, in one or more of the investment funds available under the 401(k)
Plan. All account balances are adjusted at least annually to reflect the
investment earnings and losses of the trust fund.
Each participant is fully vested in the portion of his or her account under
the 401(k) Plan which such participant contributed. The portion contributed by
the Company vests over five years. Distribution may be made from a participant's
account upon termination of employment, retirement, disability, death or in the
event of financial hardship or attainment of age 59 1/2.
The federal tax laws limit the amount which may be added to a participant's
account for any one year under a qualified plan such as the 401(k) Plan to the
lesser of (i) $30,000 or (ii) 25% of the participant's compensation (net of
salary deferral contributions) for the year. In addition, not more than $9,240
of compensation may be deferred by a participant through salary deferral
contributions in any one calendar year.
REPORT OF THE COMPENSATION COMMITTEE
OF THE BOARD OF DIRECTORS
NOTWITHSTANDING ANYTHING TO THE CONTRARY SET FORTH IN ANY OF THE COMPANY'S
PREVIOUS FILINGS UNDER THE SECURITIES EXCHANGE ACT OF 1933, AS AMENDED, OR THE
SECURITIES ACT OF 1934, AS AMENDED, THAT MIGHT INCORPORATE FUTURE FILINGS,
INCLUDING THIS PROXY STATEMENT, IN WHOLE OR IN PART, THE FOLLOWING REPORT AND
THE PERFORMANCE GRAPH ON PAGE SHALL NOT BE INCORPORATED BY REFERENCE INTO ANY
SUCH FILINGS.
The Compensation and Options Committee (the "Committee") of the Board of
Directors which was formalized in July 1992 currently consists of directors
Hanschen and Konrad. Decisions concerning the compensation of the Company's
executive officers are made by the Committee. All decisions by the Committee
relating to the compensation of the Company's executive officers are reviewed by
the full Board (excluding any interested director), except for decisions about
awards to executive officers under the Company's option plan, which are made
solely by the Committee. The Committee has delegated the responsibility for
administering compensation programs (other than option grants) for all other
Company employees to the Company's executive officers, subject only to overall
budget review and approval by the full Board of Directors.
Pursuant to recently adopted rules designed to enhance disclosure of the
Company's policies on executive compensation, this report is submitted by the
members of the Committee to address the Company's compensation policies for
fiscal 1996 as they affected the Chief Executive Officer and other executive
officers named in the Summary Compensation Table.
EXECUTIVE OFFICER COMPENSATION PROGRAMS
The objectives of the overall executive officer compensation program are to
attract, retain, motivate and reward key personnel who possess the necessary
leadership and management skills through competitive base salary, annual cash
bonus incentives, long-term incentive compensation in the form of stock options,
and various benefits (including medical and life insurance plans) generally
available to employees of the Company.
The executive compensation policies of the Committee are intended to combine
competitive levels of compensation with rewards for above average performance
and to align relative compensation with the achievements of key business
objectives, optimal satisfaction of customers, and maximization of stockholder
value. The Committee believes that stock ownership by management is beneficial
in aligning management and stockholder interests and thereby enhancing
stockholder value.
BASE SALARY. Base salary levels for the Company's executive officers are
set relative to other companies in the same stage of development in the same
industry and geographic area. In determining salaries, the Committee also takes
into account the Chief Executive Officer's recommendations,
15
<PAGE>
individual experience and contributions to corporate goals, the Company's
performance, and, in the case of Mr. Seaman, existing contractual commitments.
See "Executive Compensation -- Other Employee Benefit Plans -- Employment
Contracts." Measures of the Company's performance taken into account by the
Committee in establishing executive officer compensation include the achievement
of significant milestones in the Company's development plan and the relationship
of the individual's contribution to the achievement of these goals.
INCENTIVE BONUSES. The Committee believes that a cash incentive bonus plan
can serve to motivate the Company's executive officers and management to address
annual performance goals, using more immediate measures for performance than
those reflected in the appreciation in value of stock options. However, for
fiscal 1996, the Company's goals were targeted toward longer-term objectives for
corporate development. As a consequence, the Company did not have any incentive
bonus plan for executive officers for fiscal 1996 although certain incentive
payments were made to sales executives. The Company's Service Agreement with
David R. Seaman requires the payment of certain incentive bonuses if targeted
goals are met. No bonus payments have been made under this agreement to date.
STOCK OPTION GRANTS. Stock options are granted to executive officers and
other employees under the Company's option plan. Stock option grants are
intended to focus the attention of the recipient on long-term Company
performance which should result in improved stockholder value, and to retain the
services of the executive officers in a competitive job market by providing
significant long-term earning potential. To this end, stock options generally
vest over a four or five-year period. One of the principal factors considered in
granting stock options to executive officers of the Company is the executive's
ability to influence the Company's long-term growth and profitability. All
options are granted at the current market price. Because of the direct
relationship between the value of an option and the stock price, the Committee
believes that options motivate executive officers to manage the Company in a
manner that is consistent with stockholder interests.
The Company views stock options as an important component of long-term
performance-based compensation for executive officers. Senior management
generally receives larger grants of stock options, so that their compensation is
weighted more heavily toward compensation contingent upon the Company achieving
improvements in stockholder value. Option awards to executive officers are
generally made at the time of their employment and from time to time thereafter
at the discretion of the Committee.
The stock options granted to the Company's executive officers during fiscal
1996 are consistent with the design of the overall program and are shown in the
Summary Compensation Table and table of Option Grants in Last Fiscal Year above.
OTHER COMPENSATION PLANS. The Company has adopted certain general employee
benefit plans in which executive officers are permitted to participate on a
parity with other employees. The incremental cost to the Company in fiscal 1996
of benefits provided to executive officers under these life insurance and health
plans was less than 10% of the base compensation for executive officers. The
Company also provides deferred income and retirement plans. See "Employee
Benefit Plans." Benefits under these general plans are not directly or
indirectly tied to Company performance.
CHIEF EXECUTIVE OFFICER COMPENSATION.
In making compensation decisions regarding the Chief Executive Officer, the
Compensation Committee generally considers factors such as the Company's
progress towards achieving its goals for the year, his leadership and
establishment and implementation of strategic direction for the Company, and, to
a lesser extent, the relative compensation levels of other comparable companies.
In fiscal 1996, Mr. Minor's salary was not increased. No incentive bonus program
was adopted for Mr. Minor during fiscal 1996 although the Committee is
considering adopting such a program for fiscal 1997.
16
<PAGE>
The foregoing report has been furnished by the Compensation and Options
Committee of the Board of Directors of Blyth Holdings Inc.
MEMBERS OF THE COMPENSATION
AND OPTIONS COMMITTEE
Richard J. Hanschen
William E. Konrad
Dated:
17
<PAGE>
COMPANY STOCK PRICE PERFORMANCE
The following graph demonstrates a five-year comparison of cumulative total
stockholder return, calculated on a dividend reinvestment basis and based on an
initial investment of $100 in the Company's Common stock as compared with the
CRSP Index for NASDAQ (US & Foreign Companies) Index and the CRSP Index for
NASDAQ Computer and Data Processing Stocks Index. No dividends have been
declared or paid on the Company's Common Stock during such period. The stock
price performance shown on the graph following is not necessarily indicative of
future price performance.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
DOLLARS
<S> <C> <C> <C>
CRSP Index for Nasdaq CRSP Index for Nasdaq
Blyth Holdings Inc. (Computer & Data Processing) (US & Foreign Companies)
03/29/91 100 100 100
03/31/92 71 148 127
03/31/93 471 165 146
03/31/94 214 169 159
03/31/95 143 228 174
03/29/96 82 323 233
</TABLE>
OTHER MATTERS
The Company knows of no other matters to be submitted to the meeting. If any
other matters properly come before the meeting, it is the intention of the
persons named in the enclosed form of Proxy to vote the shares they represent as
the Board of Directors may recommend.
THE BOARD OF DIRECTORS
Dated: July , 1996
18
<PAGE>
EXHIBIT A
BLYTH HOLDINGS INC.
1996 STOCK PLAN
1. PURPOSES OF THE PLAN. The purposes of this Stock Plan are:
- to attract and retain the best available personnel for positions of
substantial responsibility,
- to provide additional incentive to Employees and Consultants, and
- to promote the success of the Company's business.
Options granted under the Plan may be Incentive Stock Options or
Nonstatutory Stock Options, as determined by the Administrator at the time of
grant. Stock Purchase Rights may also be granted under the Plan.
2. DEFINITIONS. As used herein, the following definitions shall apply:
(a) "ADMINISTRATOR" means the Board or any of its Committees as shall be
administering the Plan, in accordance with Section 4 of the Plan.
(b) "APPLICABLE LAWS" means the legal requirements relating to the
administration of stock option plans under U.S. state corporate laws, U.S.
federal and state securities laws, the Code and the applicable laws of any
foreign country or jurisdiction where Options or Stock Purchase Rights are,
or will be, granted under the Plan.
(c) "BOARD" means the Board of Directors of the Company.
(d) "CODE" means the Internal Revenue Code of 1986, as amended.
(e) "COMMITTEE" means a Committee appointed by the Board in accordance
with Section 4 of the Plan.
(f) "COMMON STOCK" means the Common Stock of the Company.
(g) "COMPANY" means Blyth Holdings Inc., a Delaware corporation.
(h) "CONSULTANT" means any person, including an advisor, engaged by the
Company or a Parent or Subsidiary to render services and who is compensated
for such services, the term also includes any member of the Board of
Directors of the Company.
(i) "CONTINUOUS STATUS AS AN EMPLOYEE OR CONSULTANT" means that the
employment or consulting relationship with the Company, any Parent, or
Subsidiary, is not interrupted or terminated. Continuous Status as an
Employee or Consultant shall not be considered interrupted in the case of
(i) any leave of absence approved by the Company or (ii) transfers between
locations of the Company or between the Company, its Parent, any Subsidiary,
or any successor. A leave of absence approved by the Company shall include
sick leave, military leave, or any other personal leave approved by an
authorized representative of the Company. For purposes of Incentive Stock
Options, no such leave may exceed ninety days, unless reemployment upon
expiration of such leave is guaranteed by statute or contract. If
reemployment upon expiration of a leave of absence approved by the Company
is not so guaranteed, on the 181st day of such leave any Incentive Stock
Option held by the Optionee shall cease to be treated as an Incentive Stock
Option and shall be treated for tax purposes as a Nonstatutory Stock Option.
(j) "DIRECTOR" means a member of the Board.
(k) "DISABILITY" means total and permanent disability as defined in
Section 22(e)(3) of the Code.
(l) "EMPLOYEE" means any person, including Officers and Directors,
employed by the Company or any Parent or Subsidiary of the Company. Neither
service as a Director nor payment of a director's fee by the Company shall
be sufficient to constitute "employment" by the Company.
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(m) "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
(n) "FAIR MARKET VALUE" means, as of any date, the value of Common Stock
determined as follows:
(i) If the Common Stock is listed on any established stock exchange
or a national market system, including without limitation the Nasdaq
National Market or The Nasdaq SmallCap Market of The Nasdaq Stock Market,
its Fair Market Value shall be the closing sales price for such stock (or
the closing bid, if no sales were reported) as quoted on such exchange or
system for the last market trading day prior to the time of
determination, as reported in THE WALL STREET JOURNAL or such other
source as the Administrator deems reliable;
(ii) If the Common Stock is regularly quoted by a recognized
securities dealer but selling prices are not reported, the Fair Market
Value of a Share of Common Stock shall be the mean between the high bid
and low asked prices for the Common Stock on the last market trading day
prior to the day of determination, as reported in THE WALL STREET JOURNAL
or such other source as the Administrator deems reliable;
(iii) In the absence of an established market for the Common Stock,
the Fair Market Value shall be determined in good faith by the
Administrator.
(o) "INCENTIVE STOCK OPTION" means an Option intended to qualify as an
incentive stock option within the meaning of Section 422 of the Code and the
regulations promulgated thereunder.
(p) "NONSTATUTORY STOCK OPTION" means an Option not intended to qualify
as an Incentive Stock Option.
(q) "NOTICE OF GRANT" means a written notice evidencing certain terms
and conditions of an individual Option or Stock Purchase Right grant. The
Notice of Grant is part of the Option Agreement.
(r) "OFFICER" means a person who is an officer of the Company within the
meaning of Section 16 of the Exchange Act and the rules and regulations
promulgated thereunder.
(s) "OPTION" means a stock option granted pursuant to the Plan.
(t) "OPTION AGREEMENT" means a written agreement between the Company and
an Optionee evidencing the terms and conditions of an individual Option
grant. The Option Agreement is subject to the terms and conditions of the
Plan.
(u) "OPTION EXCHANGE PROGRAM" means a program whereby outstanding
options are surrendered in exchange for options with a lower exercise price.
(v) "OPTIONED STOCK" means the Common Stock subject to an Option or
Stock Purchase Right.
(w) "OPTIONEE" means an Employee or Consultant who holds an outstanding
Option or Stock Purchase Right.
(x) "PARENT" means a "PARENT CORPORATION," whether now or hereafter
existing, as defined in Section 424(e) of the Code.
(y) "PLAN" means this 1996 Stock Plan.
(z) "RESTRICTED STOCK" means shares of Common Stock acquired pursuant to
a grant of Stock Purchase Rights under Section 11 below.
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(aa) "RESTRICTED STOCK PURCHASE AGREEMENT" means a written agreement
between the Company and the Optionee evidencing the terms and restrictions
applying to stock purchased under a Stock Purchase Right. The Restricted
Stock Purchase Agreement is subject to the terms and conditions of the Plan
and the Notice of Grant.
(bb) "RULE 16B-3" means Rule 16b-3 of the Exchange Act or any successor
to Rule 16b-3, as in effect when discretion is being exercised with respect
to the Plan.
(cc) "SECTION 16(B)" means Section 16(b) of the Securities Exchange Act
of 1934, as amended.
(dd) "SHARE" means a share of the Common Stock, as adjusted in
accordance with Section 13 of the Plan.
(ee) "STOCK PURCHASE RIGHT" means the right to purchase Common Stock
pursuant to Section 11 of the Plan, as evidenced by a Notice of Grant.
(ff) "SUBSIDIARY" means a "subsidiary corporation", whether now or
hereafter existing, as defined in Section 424(f) of the Code.
3. STOCK SUBJECT TO THE PLAN. Subject to the provisions of Section 13 of
the Plan, the maximum aggregate number of Shares which may be optioned and sold
under the Plan is 450,000 Shares. The Shares may be authorized, but unissued, or
reacquired Common Stock.
If an Option or Stock Purchase Right expires or becomes unexercisable
without having been exercised in full, or is surrendered pursuant to an Option
Exchange Program, the unpurchased Shares which were subject thereto shall become
available for future grant or sale under the Plan (unless the Plan has
terminated).
4. ADMINISTRATION OF THE PLAN.
(a) PROCEDURE.
(i) MULTIPLE ADMINISTRATIVE BODIES. If permitted by Rule 16b-3, the
Plan may be administered by different bodies with respect to Directors,
Officers who are not Directors, and Employees who are neither Directors
nor Officers.
(ii) ADMINISTRATION WITH RESPECT TO DIRECTORS AND OFFICERS SUBJECT
TO SECTION 16(B). With respect to Option or Stock Purchase Right grants
made to Employees who are also Officers or Directors subject to Section
16(b) of the Exchange Act, the Plan shall be administered by (A) the
Board, if the Board may administer the Plan in a manner complying with
the rules under Rule 16b-3 relating to the disinterested administration
of employee benefit plans under which Section 16(b) exempt discretionary
grants and awards of equity securities are to be made, or (B) a committee
designated by the Board to administer the Plan, which committee shall be
constituted to comply with the rules under Rule 16b-3 relating to the
disinterested administration of employee benefit plans under which
Section 16(b) exempt discretionary grants and awards of equity securities
are to be made. Once appointed, such Committee shall continue to serve in
its designated capacity until otherwise directed by the Board. From time
to time the Board may increase the size of the Committee and appoint
additional members, remove members (with or without cause) and substitute
new members, fill vacancies (however caused), and remove all members of
the Committee and thereafter directly administer the Plan, all to the
extent permitted by the rules under Rule 16b-3 relating to the
disinterested administration of employee benefit plans under which
Section 16(b) exempt discretionary grants and awards of equity securities
are to be made.
(iii) ADMINISTRATION WITH RESPECT TO OTHER PERSONS. With respect to
Option or Stock Purchase Right grants made to Employees or Consultants
who are neither Directors nor Officers of the Company, the Plan shall be
administered by (A) the Board or (B) a committee designated by the Board,
which committee shall be constituted to satisfy Applicable Laws.
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Once appointed, such Committee shall serve in its designated capacity
until otherwise directed by the Board. The Board may increase the size of
the Committee and appoint additional members, remove members (with or
without cause) and substitute new members, fill vacancies (however
caused), and remove all members of the Committee and thereafter directly
administer the Plan, all to the extent permitted by Applicable Laws.
(b) POWERS OF THE ADMINISTRATOR. Subject to the provisions of the
Plan, and in the case of a Committee, subject to the specific duties
delegated by the Board to such Committee, the Administrator shall have the
authority, in its discretion:
(i) to determine the Fair Market Value of the Common Stock, in
accordance with Section 2(n) of the Plan;
(ii) to select the Consultants and Employees to whom Options and
Stock Purchase Rights may be granted hereunder;
(iii) to determine whether and to what extent Options and Stock
Purchase Rights or any combination thereof, are granted hereunder;
(iv) to determine the number of shares of Common Stock to be covered
by each Option and Stock Purchase Right granted hereunder;
(v) to approve forms of agreement for use under the Plan;
(vi) to determine the terms and conditions, not inconsistent with the
terms of the Plan, of any award granted hereunder. Such terms and
conditions include, but are not limited to, the exercise price, the time
or times when Options or Stock Purchase Rights may be exercised (which
may be based on performance criteria), any vesting acceleration or waiver
of forfeiture restrictions, and any restriction or limitation regarding
any Option or Stock Purchase Right or the shares of Common Stock relating
thereto, based in each case on such factors as the Administrator, in its
sole discretion, shall determine;
(vii) to reduce the exercise price of any Option or Stock Purchase
Right to the then current Fair Market Value if the Fair Market Value of
the Common Stock covered by such Option or Stock Purchase Right shall
have declined since the date the Option or Stock Purchase Right was
granted;
(viii) to construe and interpret the terms of the Plan and awards
granted pursuant to the Plan;
(ix) to prescribe, amend and rescind rules and regulations relating to
the Plan, including rules and regulations relating to sub-plans
established for the purpose of qualifying for preferred tax treatment
under foreign tax laws;
(x) to modify or amend each Option or Stock Purchase Right (subject
to Section 15(c) of the Plan), including the discretionary authority to
extend the post-termination exercisability period of Options longer than
is otherwise provided for in the Plan;
(xi) to authorize any person to execute on behalf of the Company any
instrument required to effect the grant of an Option or Stock Purchase
Right previously granted by the Administrator;
(xii) to institute an Option Exchange Program;
(xiii) to make all other determinations deemed necessary or advisable
for administering the Plan.
(c) EFFECT OF ADMINISTRATOR'S DECISION. The Administrator's decisions,
determinations and interpretations shall be final and binding on all
Optionees and any other holders of Options or Stock Purchase Rights.
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5. ELIGIBILITY. Nonstatutory Stock Options and Stock Purchase Rights may
be granted to Employees and Consultants. Incentive Stock Options may be granted
only to Employees. If otherwise eligible, an Employee or Consultant who has been
granted an Option or Stock Purchase Right may be granted additional Options or
Stock Purchase Rights.
6. LIMITATIONS.
(a) Each Option shall be designated in the written option agreement as
either an Incentive Stock Option or a Nonstatutory Stock Option. However,
notwithstanding such designation, to the extent that the aggregate Fair Market
Value of the Shares with respect to which Incentive Stock Options are
exercisable for the first time by the Optionee during any calendar year (under
all plans of the Company and any Parent or Subsidiary) exceeds $100,000, such
Options shall be treated as Nonstatutory Stock Options. For purposes of this
Section 6(a), Incentive Stock Options shall be taken into account in the order
in which they were granted. The Fair Market Value of the Shares shall be
determined as of the time the Option with respect to such Shares is granted. If
an Option is granted hereunder that is part Incentive Stock Option and part
Nonstatutory Stock Option due to becoming first exercisable in any calendar year
in excess of $100,000, the Incentive Stock Option portion of such Option shall
become exercisable first in such calendar year, and the Nonstatutory Stock
Option portion shall commence becoming exercisable once the $100,000 limit has
been reached.
(b) Neither the Plan nor any Option or Stock Purchase Right shall confer
upon an Optionee any right with respect to continuing the Optionee's employment
or consulting relationship with the Company, nor shall they interfere in any way
with the Optionee's right or the Company's right to terminate such employment or
consulting relationship at any time, with or without cause.
(c) The following limitations shall apply to grants of Options to Employees:
(i) No Employee shall be granted, in any fiscal year of the Company,
Options to purchase more than 500,000 Shares.
(ii) In connection with his or her initial employment, an Employee may
be granted Options to purchase up to an additional 500,000 Shares which
shall not count against the limit set forth in subsection (i) above.
(iii) The foregoing limitations shall be adjusted proportionately in
connection with any change in the Company's capitalization as described in
Section 13.
(iv) If an Option is canceled in the same fiscal year of the Company in
which it was granted (other than in connection with a transaction described
in Section 13), the canceled Option will be counted against the limits set
forth in subsections (i) and (ii) above. For this purpose, if the exercise
price of an Option is reduced, the transaction will be treated as a
cancellation of the Option and the grant of a new Option.
7. TERM OF PLAN. Subject to Section 19 of the Plan, the Plan shall become
effective upon the earlier to occur of its adoption by the Board or its approval
by the shareholders of the Company as described in Section 19 of the Plan. It
shall continue in effect for a term of ten (10) years unless terminated earlier
under Section 15 of the Plan.
8. TERM OF OPTION. The term of each Option shall be stated in the Notice
of Grant; provided, however, that in the case of an Incentive Stock Option, the
term shall be ten (10) years from the date of grant or such shorter term as may
be provided in the Notice of Grant. Moreover, in the case of an Incentive Stock
Option granted to an Optionee who, at the time the Incentive Stock Option is
granted, owns stock representing more than ten percent (10%) of the voting power
of all classes of stock of the Company or any Parent or Subsidiary, the term of
the Incentive Stock Option shall be five (5) years from the date of grant or
such shorter term as may be provided in the Notice of Grant.
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9. OPTION EXERCISE PRICE AND CONSIDERATION.
(a) EXERCISE PRICE. The per share exercise price for the Shares to be
issued pursuant to exercise of an Option shall be determined by the
Administrator, subject to the following:
(i) In the case of an Incentive Stock Option
(A) granted to an Employee who, at the time the Incentive Stock
Option is granted, owns stock representing more than ten percent
(10%) of the voting power of all classes of stock of the Company or
any Parent or Subsidiary, the per Share exercise price shall be no
less than 110% of the Fair Market Value per Share on the date of
grant.
(B) granted to any Employee other than an Employee described in
paragraph (A) immediately above, the per Share exercise price shall
be no less than 100% of the Fair Market Value per Share on the date
of grant.
(ii) In the case of a Nonstatutory Stock Option, the per Share
exercise price shall not be less than 85% of the Fair Market Value per
share on the date of grant.
(b) WAITING PERIOD AND EXERCISE DATES. At the time an Option is
granted, the Administrator shall fix the period within which the Option may
be exercised and shall determine any conditions which must be satisfied
before the Option may be exercised. In so doing, the Administrator may
specify that an Option may not be exercised until the completion of a
service period.
(c) FORM OF CONSIDERATION. The Administrator shall determine the
acceptable form of consideration for exercising an Option, including the
method of payment. In the case of an Incentive Stock Option, the
Administrator shall determine the acceptable form of consideration at the
time of grant. Such consideration may consist entirely of:
(i) cash;
(ii) check;
(iii) promissory note;
(iv) other Shares which (A) in the case of Shares acquired upon
exercise of an option, have been owned by the Optionee for more than six
months on the date of surrender, and (B) have a Fair Market Value on the
date of surrender equal to the aggregate exercise price of the Shares as
to which said Option shall be exercised;
(v) delivery of a properly executed exercise notice together with
such other documentation as the Administrator and the broker, if
applicable, shall require to effect an exercise of the Option and
delivery to the Company of the sale or loan proceeds required to pay the
exercise price;
(vi) a reduction in the amount of any Company liability to the
Optionee, including any liability attributable to the Optionee's
participation in any Company-sponsored deferred compensation program or
arrangement;
(vii) any combination of the foregoing methods of payment; or
(viii) such other consideration and method of payment for the issuance
of Shares to the extent permitted by Applicable Laws.
10. EXERCISE OF OPTION.
(a) PROCEDURE FOR EXERCISE; RIGHTS AS A SHAREHOLDER. Any Option granted
hereunder shall be exercisable according to the terms of the Plan and at such
times and under such conditions as determined by the Administrator and set forth
in the Option Agreement.
An Option may not be exercised for a fraction of a Share.
An Option shall be deemed exercised when the Company receives: (i) written
notice of exercise (in accordance with the Option Agreement) from the person
entitled to exercise the Option, and (ii) full
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payment for the Shares with respect to which the Option is exercised. Full
payment may consist of any consideration and method of payment authorized by the
Administrator and permitted by the Option Agreement and the Plan. Shares issued
upon exercise of an Option shall be issued in the name of the Optionee or, if
requested by the Optionee, in the name of the Optionee and his or her spouse.
Until the stock certificate evidencing such Shares is issued (as evidenced by
the appropriate entry on the books of the Company or of a duly authorized
transfer agent of the Company), no right to vote or receive dividends or any
other rights as a shareholder shall exist with respect to the Optioned Stock,
notwithstanding the exercise of the Option. The Company shall issue (or cause to
be issued) such stock certificate promptly after the Option is exercised. No
adjustment will be made for a dividend or other right for which the record date
is prior to the date the stock certificate is issued, except as provided in
Section 13 of the Plan.
Exercising an Option in any manner shall decrease the number of Shares
thereafter available, both for purposes of the Plan and for sale under the
Option, by the number of Shares as to which the Option is exercised.
(b) TERMINATION OF EMPLOYMENT OR CONSULTING RELATIONSHIP. Upon termination
of an Optionee's Continuous Status as an Employee or Consultant, other than upon
the Optionee's death or Disability, the Optionee may exercise his or her Option
within such period of time as is specified in the Notice of Grant to the extent
that he or she is entitled to exercise it on the date of termination (but in no
event later than the expiration of the term of such Option as set forth in the
Notice of Grant). In the absence of a specified time in the Notice of Grant, the
Option shall remain exercisable for three (3) months following the Optionee's
termination. In the case of an Incentive Stock Option, such period of time for
exercise shall not exceed three (3) months from the date of termination. If, on
the date of termination, the Optionee is not entitled to exercise his or her
entire Option, the Shares covered by the unexercisable portion of the Option
shall revert to the Plan. If, after termination, the Optionee does not exercise
his or her Option within the time specified by the Administrator, the Option
shall terminate, and the Shares covered by such Option shall revert to the Plan.
In the event of an Optionee's change in status from Consultant to Employee
or Employee to Consultant, the Optionee's Continuous Status as an Employee or
Consultant shall not automatically terminate solely as a result of such change
in status. In such event, an Incentive Stock Option held by the Optionee shall
cease to be treated as an Incentive Stock Option and shall be treated for tax
purposes as a Nonstatutory Stock Option three months and one day following such
change of status.
Notwithstanding the above, if an Optionee is terminated for "Cause" (defined
below), any portion of an Option not exercised prior to the date of such
termination shall be canceled and shall be unexerciseable. For the purposes of
the Plan, "Cause" shall mean conviction of a felony, misappropriation of the
assets of the Company or its Parent of any Subsidiary, continued or repeated
insobriety or abuse on misuse of prescription or nonprescription drugs,
continued or repeated absence from employment during the normal working hours of
the Optionee's position for reasons other than disability, sickness or bona fide
leave of absence, or refusal to carry out the reasonable directions of the
Board.
(c) DISABILITY OF OPTIONEE. Upon termination of an Optionee's Continuous
Status as an Employee or Consultant as a result of the Optionee's Disability,
the Optionee may exercise his or her Option at any time within twelve (12)
months from the date of termination, but only to the extent that the Optionee is
entitled to exercise it on the date of termination (and in no event later than
the expiration of the term of the Option as set forth in the Notice of Grant).
If, on the date of termination, the Optionee is not entitled to exercise his or
her entire Option, the Shares covered by the unexercisable portion of the Option
shall revert to the Plan. If, after termination, the Optionee does not exercise
his or her Option within the time specified herein, the Option shall terminate,
and the Shares covered by such Option shall revert to the Plan.
(d) DEATH OF OPTIONEE. Upon the death of an Optionee, the Option may be
exercised at any time within twelve (12) months following the date of death (but
in no event later than the expiration of the
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term of such Option as set forth in the Notice of Grant), by the Optionee's
estate or by a person who acquires the right to exercise the Option by bequest
or inheritance, but only to the extent that the Optionee would have been
entitled to exercise the Option on the date of death. If, at the time of death,
the Optionee is not entitled to exercise his or her entire Option, the Shares
covered by the unexercisable portion of the Option shall immediately revert to
the Plan. If the Optionee's estate or the person who acquires the right to
exercise the Option by bequest or inheritance does not exercise the Option
within the time specified herein, the Option shall terminate, and the Shares
covered by such Option shall revert to the Plan.
(e) BUYOUT PROVISIONS. The Administrator may at any time offer to buy out
for a payment in cash or Shares, an Option previously granted based on such
terms and conditions as the Administrator shall establish and communicate to the
Optionee at the time that such offer is made.
(f) RULE 16B-3. Options granted to individuals subject to Section 16 of
the Exchange Act ("Insiders") must comply with the applicable provisions of Rule
16b-3 and shall contain such additional conditions or restrictions as may be
required thereunder to qualify for the maximum exemption from Section 16 of the
Exchange Act with respect to Plan transactions.
11. STOCK PURCHASE RIGHTS.
(a) RIGHTS TO PURCHASE. Stock Purchase Rights may be issued either alone,
in addition to, or in tandem with other awards granted under the Plan and/or
cash awards made outside of the Plan. After the Administrator determines that it
will offer Stock Purchase Rights under the Plan, it shall advise the offeree in
writing, by means of a Notice of Grant, of the terms, conditions and
restrictions related to the offer, including the number of Shares that the
offeree shall be entitled to purchase, the price to be paid, and the time within
which the offeree must accept such offer, which shall in no event exceed six (6)
months from the date upon which the Administrator made the determination to
grant the Stock Purchase Right. The offer shall be accepted by execution of a
Restricted Stock Purchase Agreement in the form determined by the Administrator.
(b) REPURCHASE OPTION. Unless the Administrator determines otherwise, the
Restricted Stock Purchase Agreement shall grant the Company a repurchase option
exercisable upon the voluntary or involuntary termination of the purchaser's
employment with the Company for any reason (including death or Disability). The
purchase price for Shares repurchased pursuant to the Restricted Stock purchase
agreement shall be the original price paid by the purchaser and may be paid by
cancellation of any indebtedness of the purchaser to the Company. The repurchase
option shall lapse at a rate determined by the Administrator.
(c) RULE 16B-3. Stock Purchase Rights granted to Insiders, and Shares
purchased by Insiders in connection with Stock Purchase Rights, shall be subject
to any restrictions applicable thereto in compliance with Rule 16b-3. An Insider
may only purchase Shares pursuant to the grant of a Stock Purchase Right, and
may only sell Shares purchased pursuant to the grant of a Stock Purchase Right,
during such time or times as are permitted by Rule 16b-3.
(d) OTHER PROVISIONS. The Restricted Stock Purchase Agreement shall
contain such other terms, provisions and conditions not inconsistent with the
Plan as may be determined by the Administrator in its sole discretion. In
addition, the provisions of Restricted Stock Purchase Agreements need not be the
same with respect to each purchaser.
(e) RIGHTS AS A SHAREHOLDER. Once the Stock Purchase Right is exercised,
the purchaser shall have the rights equivalent to those of a shareholder, and
shall be a shareholder when his or her purchase is entered upon the records of
the duly authorized transfer agent of the Company. No adjustment will be made
for a dividend or other right for which the record date is prior to the date the
Stock Purchase Right is exercised, except as provided in Section 13 of the Plan.
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12. NON-TRANSFERABILITY OF OPTIONS AND STOCK PURCHASE RIGHTS. An Option or
Stock Purchase Right may not be sold, pledged, assigned, hypothecated,
transferred, or disposed of in any manner other than by will or by the laws of
descent or distribution and may be exercised, during the lifetime of the
Optionee, only by the Optionee.
13. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION, DISSOLUTION, MERGER OR
ASSET SALE.
(a) CHANGES IN CAPITALIZATION. Subject to any required action by the
shareholders of the Company, the number of shares of Common Stock covered by
each outstanding Option and Stock Purchase Right, and the number of shares of
Common Stock which have been authorized for issuance under the Plan but as to
which no Options or Stock Purchase Rights have yet been granted or which have
been returned to the Plan upon cancellation or expiration of an Option or Stock
Purchase Right, as well as the price per share of Common Stock covered by each
such outstanding Option or Stock Purchase Right, shall be proportionately
adjusted for any increase or decrease in the number of issued shares of Common
Stock resulting from a stock split, reverse stock split, stock dividend,
combination or reclassification of the Common Stock, or any other increase or
decrease in the number of issued shares of Common Stock effected without receipt
of consideration by the Company; provided, however, that conversion of any
convertible securities of the Company shall not be deemed to have been "effected
without receipt of consideration." Such adjustment shall be made by the Board,
whose determination in that respect shall be final, binding and conclusive.
Except as expressly provided herein, no issuance by the Company of shares of
stock of any class, or securities convertible into shares of stock of any class,
shall affect, and no adjustment by reason thereof shall be made with respect to,
the number or price of shares of Common Stock subject to an Option or Stock
Purchase Right.
(b) DISSOLUTION OR LIQUIDATION. In the event of the proposed dissolution
or liquidation of the Company, the Administrator shall notify each Optionee as
soon as practicable prior to the effective date of such proposed transaction.
The Administrator in its discretion may provide for an Optionee to have the
right to exercise his or her Option until ten (10) days prior to such
transaction as to all of the Optioned Stock covered thereby, including Shares as
to which the Option would not otherwise be exercisable. In addition, the
Administrator may provide that any Company repurchase option applicable to any
Shares purchased upon exercise of an Option shall lapse as to all such Shares,
provided the proposed dissolution or liquidation takes place at the time and in
the manner contemplated. To the extent it has not been previously exercised, an
Option will terminate immediately prior to the consummation of such proposed
action.
(c) MERGER OR ASSET SALE. In the event of a merger of the Company with or
into another corporation, or the sale of substantially all of the assets of the
Company, each outstanding Option and Stock Purchase Right shall be assumed or an
equivalent option or right substituted by the successor corporation or a Parent
or Subsidiary of the successor corporation. In the event that the successor
corporation refuses to assume or substitute for the Option or Stock Purchase
Right, the Optionee shall fully vest in and have the right to exercise the
Option or Stock Purchase Right as to all of the Optioned Stock, including Shares
as to which it would not otherwise be vested or exercisable. If an Option or
Stock Purchase Right becomes fully vested and exercisable in lieu of assumption
or substitution in the event of a merger or sale of assets, the Administrator
shall notify the Optionee that the Option or Stock Purchase Right shall be fully
exercisable for a period of fifteen (15) days from the date of such notice, and
the Option or Stock Purchase Right shall terminate upon the expiration of such
period. For the purposes of this paragraph, the Option or Stock Purchase Right
shall be considered assumed if, following the merger or sale of assets, the
option or right confers the right to purchase or receive, for each Share of
Optioned Stock subject to the Option or Stock Purchase Right immediately prior
to the merger or sale of assets, the consideration (whether stock, cash, or
other securities or property) received in the merger or sale of assets by
holders of Common Stock for each Share held on the effective date of the
transaction (and if holders were offered a choice of consideration, the type of
consideration chosen by the holders of a majority of the outstanding Shares);
provided, however, that if such consideration received in the merger or sale of
assets is not solely common stock of the
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successor corporation or its Parent, the Administrator may, with the consent of
the successor corporation, provide for the consideration to be received upon the
exercise of the Option or Stock Purchase Right, for each Share of Optioned Stock
subject to the Option or Stock Purchase Right, to be solely common stock of the
successor corporation or its Parent equal in fair market value to the per share
consideration received by holders of Common Stock in the merger or sale of
assets.
14. DATE OF GRANT. The date of grant of an Option or Stock Purchase Right
shall be, for all purposes, the date on which the Administrator makes the
determination granting such Option or Stock Purchase Right, or such other later
date as is determined by the Administrator. Notice of the determination shall be
provided to each Optionee within a reasonable time after the date of such grant.
15. AMENDMENT AND TERMINATION OF THE PLAN.
(a) AMENDMENT AND TERMINATION. The Board may at any time amend, alter,
suspend or terminate the Plan.
(b) SHAREHOLDER APPROVAL. The Company shall obtain shareholder approval of
any Plan amendment to the extent necessary and desirable to comply with Rule
16b-3 or with Section 422 of the Code (or any successor rule or statute or other
applicable law, rule or regulation, including the requirements of any exchange
or quotation system on which the Common Stock is listed or quoted). Such
shareholder approval, if required, shall be obtained in such a manner and to
such a degree as is required by the applicable law, rule or regulation.
(c) EFFECT OF AMENDMENT OR TERMINATION. No amendment, alteration,
suspension or termination of the Plan shall impair the rights of any Optionee,
unless mutually agreed otherwise between the Optionee and the Administrator,
which agreement must be in writing and signed by the Optionee and the Company.
16. CONDITIONS UPON ISSUANCE OF SHARES.
(a) LEGAL COMPLIANCE. Shares shall not be issued pursuant to the exercise
of an Option or Stock Purchase Right unless the exercise of such Option or Stock
Purchase Right and the issuance and delivery of such Shares shall comply with
all relevant provisions of law, including, without limitation, the Securities
Act of 1933, as amended, the Exchange Act, the rules and regulations promulgated
thereunder, Applicable Laws, and the requirements of any stock exchange or
quotation system upon which the Shares may then be listed or quoted, and shall
be further subject to the approval of counsel for the Company with respect to
such compliance.
(b) INVESTMENT REPRESENTATIONS. As a condition to the exercise of an
Option or Stock Purchase Right, the Company may require the person exercising
such Option or Stock Purchase Right to represent and warrant at the time of any
such exercise that the Shares are being purchased only for investment and
without any present intention to sell or distribute such Shares if, in the
opinion of counsel for the Company, such a representation is required.
17. LIABILITY OF COMPANY.
(a) INABILITY TO OBTAIN AUTHORITY. The inability of the Company to obtain
authority from any regulatory body having jurisdiction, which authority is
deemed by the Company's counsel to be necessary to the lawful issuance and sale
of any Shares hereunder, shall relieve the Company of any liability in respect
of the failure to issue or sell such Shares as to which such requisite authority
shall not have been obtained.
(b) GRANTS EXCEEDING ALLOTTED SHARES. If the Optioned Stock covered by an
Option or Stock Purchase Right exceeds, as of the date of grant, the number of
Shares which may be issued under the Plan without additional shareholder
approval, such Option or Stock Purchase Right shall be void with respect to such
excess Optioned Stock, unless shareholder approval of an amendment sufficiently
increasing the number of Shares subject to the Plan is timely obtained in
accordance with Section 15(b) of the Plan.
10
<PAGE>
18. RESERVATION OF SHARES. The Company, during the term of this Plan, will
at all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan.
19. SHAREHOLDER APPROVAL. Continuance of the Plan shall be subject to
approval by the shareholders of the Company within twelve (12) months before or
after the date the Plan is adopted. Such shareholder approval shall be obtained
in the manner and to the degree required under Applicable Laws and the rules of
any stock exchange upon which the Common Stock is listed.
11
<PAGE>
BLYTH HOLDINGS INC.
STOCK OPTION AGREEMENT
Unless otherwise defined herein, the terms defined in the Plan shall have
the same defined meanings in this Option Agreement.
I. NOTICE OF STOCK OPTION GRANT
[Optionee's Name and Address]
You have been granted an option to purchase Common Stock of the Company,
subject to the terms and conditions of the Plan and this Option Agreement, as
follows:
<TABLE>
<S> <C>
Grant Number ------------------------------------------
Date of Grant ------------------------------------------
Vesting Commencement Date ------------------------------------------
Exercise Price per Share $ ----------------------------------------
Total Number of Shares Granted
Total Exercise Price $ ----------------------------------------
Type of Option: ------- Incentive Stock Option
------- Nonstatutory Stock Option
Term/Expiration Date: ------------------------------------------
</TABLE>
VESTING SCHEDULE:
This Option may be exercised, in whole or in part, in accordance with the
following schedule:
[25% of the Shares subject to the Option shall vest twelve months after the
Vesting Commencement Date, and 1/48 of the Shares subject to the Option shall
vest each month thereafter];
Provided, however, that in the event you take a leave of absence from the
Company, whether such leave is authorized or unauthorized, the vesting schedule
set forth above shall be delayed by the extent of such leave. If your Continued
Status as an Employee or Consultant is deemed to have terminated during such
leave, vesting shall not resume upon your return to the Company.
TERMINATION PERIOD:
This Option may be exercised for three months after termination of the
Optionee's Continuous Status as an Employee or Consultant. Upon the death or
Disability of the Optionee, this Option may be exercised for such longer period
as provided in the Plan. In the event of the Optionee's change in status from
Employee to Consultant or Consultant to Employee, this Option Agreement shall
remain in effect. In the event of a termination for Cause, the exercisability of
this Option shall be subject to Section 10(b) of the Plan. In no event shall
this Option be exercised later than the Term/Expiration Date as provided above.
II. AGREEMENT
1. GRANT OF OPTION. The Plan Administrator of the Company hereby grants to
the Optionee named in the Notice of Grant attached as Part I of this Agreement
(the "Optionee") an option (the "Option") to purchase the number of Shares, as
set forth in the Notice of Grant, at the exercise price per share set forth in
the Notice of Grant (the "Exercise Price"), subject to the terms and conditions
of the Plan, which is incorporated herein by reference. Subject to Section 15(c)
of the Plan, in the event of a conflict between the terms and conditions of the
Plan and the terms and conditions of this Option Agreement, the terms and
conditions of the Plan shall prevail.
<PAGE>
If designated in the Notice of Grant as an Incentive Stock Option ("ISO"),
this Option is intended to qualify as an Incentive Stock Option under Section
422 of the Code. However, if this Option is intended to be an Incentive Stock
Option, to the extent that it exceeds the $100,000 rule of Code Section 422(d)
it shall be treated as a Nonstatutory Stock Option ("NSO").
2. EXERCISE OF OPTION.
(a) RIGHT TO EXERCISE. This Option is exercisable during its term in
accordance with the Vesting Schedule set out in the Notice of Grant and the
applicable provisions of the Plan and this Option Agreement. In the event of
Optionee's death, Disability or other termination of Optionee's employment
or consulting relationship, the exercisability of the Option is governed by
the applicable provisions of the Plan and this Option Agreement.
(b) METHOD OF EXERCISE. This Option is exercisable by delivery of an
exercise notice, in the form attached as Exhibit A (the "Exercise Notice"),
which shall state the election to exercise the Option, the number of Shares
in respect of which the Option is being exercised (the "Exercised Shares"),
and such other representations and agreements as may be required by the
Company pursuant to the provisions of the Plan. The Exercise Notice shall be
signed by the Optionee and shall be delivered in person or by certified mail
to the Secretary of the Company. The Exercise Notice shall be accompanied by
payment of the aggregate Exercise Price as to all Exercised Shares. This
Option shall be deemed to be exercised upon receipt by the Company of such
fully executed Exercise Notice accompanied by such aggregate Exercise Price.
No Shares shall be issued pursuant to the exercise of this Option unless
such issuance and exercise complies with all relevant provisions of law and
the requirements of any stock exchange or quotation service upon which the
Shares are then listed. Assuming such compliance, for income tax purposes
the Exercised Shares shall be considered transferred to the Optionee on the
date the Option is exercised with respect to such Exercised Shares.
3. METHOD OF PAYMENT. Payment of the aggregate Exercise Price shall be by
any of the following, or a combination thereof, at the election of the Optionee:
(a) cash;
(b) check;
(c) delivery of a properly executed exercise notice together with such
other documentation as the Administrator and the broker, if applicable,
shall require to effect an exercise of the Option and delivery to the
Company of the sale or loan proceeds required to pay the exercise price;
(d) surrender of other Shares which (i) in the case of Shares acquired
upon exercise of an option, have been owned by the Optionee for more than
six (6) months on the date of surrender, AND (ii) have a Fair Market Value
on the date of surrender equal to the aggregate Exercise Price of the
Exercised Shares; or
(e) with the consent of the Administrator, delivery of Optionee's
promissory note (the "Note") in the form attached hereto as Exhibit C, in
the amount of the aggregate Exercise Price of the Exercised Shares together
with the execution and delivery by the Optionee of the Security Agreement
attached hereto as Exhibit B. The Note shall bear interest at a rate no less
than the "applicable federal rate" prescribed under the Code and its
regulations at time of purchase, and shall be secured by a pledge of the
Shares purchased by the Note pursuant to the Security Agreement.
4. NON-TRANSFERABILITY OF OPTION. This Option may not be transferred in
any manner otherwise than by will or by the laws of descent or distribution and
may be exercised during the lifetime of Optionee only by the Optionee. The terms
of the Plan and this Option Agreement shall be binding upon the executors,
administrators, heirs, successors and assigns of the Optionee.
2
<PAGE>
5. TERM OF OPTION. This Option may be exercised only within the term set
out in the Notice of Grant, and may be exercised during such term only in
accordance with the Plan and the terms of this Option Agreement.
6. TAX CONSEQUENCES. Some of the federal and state tax consequences
relating to this Option, as of the date of this Option, are set forth below.
THIS SUMMARY IS NECESSARILY INCOMPLETE, AND THE TAX LAWS AND REGULATIONS ARE
SUBJECT TO CHANGE. THE OPTIONEE SHOULD CONSULT A TAX ADVISER BEFORE EXERCISING
THIS OPTION OR DISPOSING OF THE SHARES.
(a) EXERCISING THE OPTION.
(i) NONSTATUTORY STOCK OPTION. The Optionee may incur regular
federal income tax and [state] income tax liability upon exercise of
a NSO. The Optionee will be treated as having received compensation
income (taxable at ordinary income tax rates) equal to the excess, if
any, of the Fair Market Value of the Exercised Shares on the date of
exercise over their aggregate Exercise Price. If the Optionee is an
Employee or a former Employee, the Company will be required to withhold
from his or her compensation or collect from Optionee and pay to the
applicable taxing authorities an amount in cash equal to a percentage of
this compensation income at the time of exercise, and may refuse to honor
the exercise and refuse to deliver Shares if such withholding amounts are
not delivered at the time of exercise.
(ii) INCENTIVE STOCK OPTION. If this Option qualifies as an ISO,
the Optionee will have no regular federal income tax or state income
tax liability upon its exercise, although the excess, if any, of the Fair
Market Value of the Exercised Shares on the date of exercise over their
aggregate Exercise Price will be treated as an adjustment to alternative
minimum taxable income for federal tax purposes and may subject the
Optionee to alternative minimum tax in the year of exercise. In the event
that the Optionee undergoes a change of status from Employee to
Consultant, any Incentive Stock Option of the Optionee that remains
unexercised shall cease to qualify as an Incentive Stock Option and will
be treated for tax purposes as a Nonstatutory Stock Option on the
ninety-first (91st) day following such change of status.
(b) DISPOSITION OF SHARES.
(i) NSO. If the Optionee holds NSO Shares for at least one year,
any gain realized on disposition of the Shares will be treated as
long-term capital gain for federal income tax purposes.
(ii) ISO. If the Optionee holds ISO Shares for at least one year
after exercise and two years after the grant date, any gain realized
on disposition of the Shares will be treated as long-term capital gain
for federal income tax purposes. If the Optionee disposes of ISO Shares
within one year after exercise or two years after the grant date, any
gain realized on such disposition will be treated as compensation income
(taxable at ordinary income rates) to the extent of the excess, if any,
of the lesser of (A) the difference between the Fair Market Value of the
Shares acquired on the date of exercise and the aggregate Exercise Price,
or (B) the difference between the sale price of such Shares and the
aggregate Exercise Price. Any additional gain will be taxed as capital
gain, short-term or long-term depending on the period that the ISO Shares
were held.
(c) NOTICE OF DISQUALIFYING DISPOSITION OF ISO SHARES. If the Optionee
sells or otherwise disposes of any of the Shares acquired pursuant to an ISO
on or before the later of (i) two years after the grant date, or (ii) one
year after the exercise date, the Optionee shall immediately notify the
Company in writing of such disposition. The Optionee agrees that he or she
may be subject to income tax withholding by the Company on the compensation
income recognized from such early disposition of ISO Shares by payment in
cash or out of the current earnings paid to the Optionee.
3
<PAGE>
7. ENTIRE AGREEMENT; GOVERNING LAW. The Plan is incorporated herein by
reference. The Plan and this Option Agreement constitute the entire agreement of
the parties with respect to the subject matter hereof and supersede in their
entirety all prior undertakings and agreements of the Company and Optionee with
respect to the subject matter hereof, and may not be modified adversely to the
Optionee's interest except by means of a writing signed by the Company and
Optionee. This agreement is governed by California law except for that body of
law pertaining to conflict of laws.
8. NO GUARANTEE OF EMPLOYMENT. OPTIONEE ACKNOWLEDGES AND AGREES THAT THE
VESTING OF SHARES PURSUANT TO THE VESTING SCHEDULE HEREOF IS EARNED ONLY BY
CONTINUING SERVICE AS AN EMPLOYEE OR CONSULTANT AT THE WILL OF THE COMPANY (AND
NOT THROUGH THE ACT OF BEING HIRED, BEING GRANTED AN OPTION OR PURCHASING SHARES
HEREUNDER). OPTIONEE FURTHER ACKNOWLEDGES AND AGREES THAT THIS AGREEMENT, THE
TRANSACTIONS CONTEMPLATED HEREUNDER AND THE VESTING SCHEDULE SET FORTH HEREIN DO
NOT CONSTITUTE AN EXPRESS OR IMPLIED PROMISE OF CONTINUED ENGAGEMENT AS AN
EMPLOYEE OR CONSULTANT FOR THE VESTING PERIOD, FOR ANY PERIOD, OR AT ALL, AND
SHALL NOT INTERFERE WITH OPTIONEE'S RIGHT OR THE COMPANY'S RIGHT TO TERMINATE
OPTIONEE'S EMPLOYMENT OR CONSULTING RELATIONSHIP AT ANY TIME, WITH OR WITHOUT
CAUSE.
By your signature and the signature of the Company's representative below,
you and the Company agree that this Option is granted under and governed by the
terms and conditions of the Plan and this Option Agreement. Optionee has
reviewed the Plan and this Option Agreement in their entirety, has had an
opportunity to obtain the advice of counsel prior to executing this Option
Agreement and fully understands all provisions of the Plan and Option Agreement.
Optionee hereby agrees to accept as binding, conclusive and final all decisions
or interpretations of the Administrator upon any questions relating to the Plan
and Option Agreement. Optionee further agrees to notify the Company upon any
change in the residence address indicated below.
<TABLE>
<S> <C>
OPTIONEE: BLYTH HOLDINGS INC.
By: ---------------------------------------
- - -------------------------------------------
Signature
Title: -------------------------------------
- - -------------------------------------------
Print Name
- - -------------------------------------------
Residence Address
- - -------------------------------------------
</TABLE>
4
<PAGE>
CONSENT OF SPOUSE
The undersigned spouse of Optionee has read and hereby approves the terms
and conditions of the Plan and this Option Agreement. In consideration of the
Company's granting his or her spouse the right to purchase Shares as set forth
in the Plan and this Option Agreement, the undersigned hereby agrees to be
irrevocably bound by the terms and conditions of the Plan and this Option
Agreement and further agrees that any community property interest shall be
similarly bound. The undersigned hereby appoints the undersigned's spouse as
attorney-in-fact for the undersigned with respect to any amendment or exercise
of rights under the Plan or this Option Agreement.
______________________________________
Spouse of Optionee
5
<PAGE>
EXHIBIT A
1996 STOCK PLAN
EXERCISE NOTICE
Blyth Holdings Inc.
989 East Hillsdale Boulevard, Suite 400
Foster City, CA 94404
Attention: Secretary
1. EXERCISE OF OPTION. Effective as of today, , 199 , the
undersigned ("Purchaser") hereby elects to purchase shares (the
"Shares") of the Common Stock of [Company Name] (the "Company") under and
pursuant to the [Name of Plan] (the "Plan") and the Stock Option Agreement dated
, 19 (the "Option Agreement"). The purchase price for the Shares
shall be $ , as required by the Option Agreement.
2. DELIVERY OF PAYMENT. Purchaser herewith delivers to the Company the
full purchase price for the Shares.
3. REPRESENTATIONS OF PURCHASER. Purchaser acknowledges that Purchaser has
received, read and understood the Plan and the Option Agreement and agrees to
abide by and be bound by their terms and conditions.
4. RIGHTS AS SHAREHOLDER. Until the issuance (as evidenced by the
appropriate entry on the books of the Company or of a duly authorized transfer
agent of the Company) of the stock certificate evidencing such Shares, no right
to vote or receive dividends or any other rights as a shareholder shall exist
with respect to the Optioned Stock, notwithstanding the exercise of the Option.
A share certificate for the number of Shares so acquired shall be issued to the
Optionee as soon as practicable after exercise of the Option. No adjustment will
be made for a dividend or other right for which the record date is prior to the
date the stock certificate is issued, except as provided in [Section 13] of the
Plan.
5. TAX CONSULTATION. Purchaser understands that Purchaser may suffer
adverse tax consequences as a result of Purchaser's purchase or disposition of
the Shares. Purchaser represents that Purchaser has consulted with any tax
consultants Purchaser deems advisable in connection with the purchase or
disposition of the Shares and that Purchaser is not relying on the Company for
any tax advice.
6. ENTIRE AGREEMENT; GOVERNING LAW. The Plan and Option Agreement are
incorporated herein by reference. This Agreement, the Plan and the Option
Agreement constitute the entire agreement of the parties with respect to the
subject matter hereof and supersede in their entirety all prior undertakings and
agreements of the Company and Purchaser with respect to the subject matter
<PAGE>
hereof, and may not be modified adversely to the Purchaser's interest except by
means of a writing signed by the Company and Purchaser. This agreement is
governed by California law except for that body of law pertaining to conflict of
laws.
<TABLE>
<S> <C>
Submitted by: Accepted by:
PURCHASER: BLYTH HOLDINGS INC.
- - ------------------------------------------- By: ----------------------------------------
Signature
- - ------------------------------------------- Its:
----------------------------------------
Print Name
ADDRESS: ADDRESS:
- - ------------------------------------------- 989 East Hillsdale Boulevard, Suite 400
Foster City, CA 94404
- - -------------------------------------------
</TABLE>
2
<PAGE>
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
BLYTH HOLDINGS INC.
1996 ANNUAL MEETING OF STOCKHOLDERS
August 20, 1996
The undersigned stockholder of Blyth Holdings Inc., a Delaware
corporation, hereby acknowledges receipt of the Notice of Annual Meeting of
Stockholders and Proxy Statement, each dated July __, 1996, and hereby
appoints Michael J. Minor and Stephen R. Lorentzen or either of them, proxies
and attorneys-in-fact, with full power to each of substitution, on behalf and
in the name of the under-signed, to represent the undersigned at the 1996
Annual Meeting of Stockholders of Blyth Holdings Inc. to be held on August
20, 1996, at 9:00 a.m. local time, at the Company's offices located at 989
East Hillsdale Boulevard, Foster City, California, and at any adjournment(s)
thereof and to vote all shares of Common Stock which the undersigned would be
entitled to vote if then and there personally present, on the matters set
forth below:
1. ELECTION OF DIRECTORS: __ FOR all nominees listed below
(except as indicated).
__ WITHHOLD authority to vote for
all nominees listed below.
IF YOU WISH TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE(S),
STRIKE A LINE THROUGH THAT NOMINEE'S NAME IN THE LIST BELOW:
Michael J. Minor
2. PROPOSAL TO APPROVE AN AMENDMENT OF THE COMPANY'S
CERTIFICATE OF INCORPORATION TO INCREASE THE NUMBER OF
AUTHORIZED SHARES OF COMMON STOCK FROM 20,000,000 TO 40,000,000;
__ FOR __ AGAINST __ ABSTAIN
3. PROPOSAL TO APPROVE THE ADOPTION OF THE 1996 STOCK PLAN AND
THE RESERVATION OF 450,000 SHARES OF COMMON STOCK FOR ISSUANCE
THEREUNDER:
__ FOR __ AGAINST __ ABSTAIN
4. PROPOSAL TO RATIFY THE APPOINTMENT OF DELOITTE & TOUCHE LLP AS
INDEPENDENT PUBLIC ACCOUNTANTS OF THE COMPANY FOR THE FISCAL
YEAR ENDING MARCH 31, 1997:
__ FOR __ AGAINST __ ABSTAIN
<PAGE>
and, in their discretion, upon such other matter or matters which may
properly come before the meeting and any adjournment(s) thereof.
THIS PROXY WILL BE VOTED AS DIRECTED OR, IF NO CONTRARY DIRECTION IS
INDICATED, WILL BE VOTED FOR THE ELECTION OF THE NOMINATED DIRECTOR, FOR
THE AMENDMENT OF THE COMPANY'S CERTIFICATE OF INCORPORATION TO
INCREASE THE NUMBER OF AUTHORIZED SHARES OF COMMON STOCK FROM 20,000,000
TO 40,000,000, FOR THE ADOPTION OF THE 1996 STOCK PLAN AND THE RESERVATION
OF 450,000 SHARES OF COMMON STOCK FOR ISSUANCE THEREUNDER AND FOR RATIFICATION
OF THE APPOINTMENT OF THE COMPANY'S INDEPENDENT PUBLIC ACCOUNTANTS, AND AS
SAID PROXIES DEEM ADVISABLE ON SUCH OTHER MATTERS AS MAY COME BEFORE
THE MEETING AND ANY ADJOURNMENT(S) THEREOF.
Dated: ____________________________________, 1996
___________________________________________________
Signature
___________________________________________________
Signature
(This Proxy should be marked, dated, signed by the
stockholder(s) exactly as his or her name appears hereon,
and returned promptly in the enclosed envelope. Persons
signing in a fiduciary capacity should so indicate. If shares
are held by joint tenants or as community property, both
should sign.)
