<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ 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)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/ / $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 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:
------------------------------------------------------------------------
5) Total fee paid:
------------------------------------------------------------------------
/X/ Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
------------------------------------------------------------------------
2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
3) Filing Party:
------------------------------------------------------------------------
4) Date Filed:
------------------------------------------------------------------------
<PAGE>
October 18, 1996
TO THE STOCKHOLDERS
OF BLYTH HOLDINGS INC.
A special meeting of the stockholders of Blyth Holdings Inc. (the "Company")
will be held on November 18, 1996. The purpose of this special meeting is to
ratify the issuance by the Company of 8% Convertible Debentures in an aggregate
principal amount of $7.35 million (the "Debentures") in June 1996.
The rules of The Nasdaq National Market ("Nasdaq") on which the Company's
Common Stock is presently listed requires stockholder approval of the issuance
of Common Stock (or securities convertible into Common Stock) equal to 20% or
more of the Common Stock outstanding before the transaction for less than the
greater of book or market value of the stock. On the date the Debentures were
issued, they were convertible into less than 20% of the Company's then
outstanding Common Stock. However, the price of the Company's Common Stock has
dropped so that as of the Record Date, the Debentures were convertible into more
than 20% of the outstanding shares of the Company's Common Stock.
Under Nasdaq's current rule interpretation, stockholder approval is required
for this transaction and, after discussions with Nasdaq, the Company agreed to
seek stockholder ratification of this transaction.
If the stockholders do not approve this transaction, the Company will be
forced to repurchase the Debentures or have its Common Stock delisted from
Nasdaq's National Market System. Repurchase of the Debentures would
substantially reduce the Company's available reserves of cash and cash
equivalents and adversely affect the Company's ability to conduct its business.
Therefore, the Company's board of directors strongly recommends a vote in favor
of this proposal.
YOUR VOTE IS VERY 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.
Sincerely,
Michael J. Minor
CHAIRMAN AND CHIEF
EXECUTIVE OFFICER
<PAGE>
BLYTH HOLDINGS INC.
----------------
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON NOVEMBER 18, 1996
------------------------
TO THE STOCKHOLDERS:
NOTICE IS HEREBY GIVEN that a Special Meeting of Stockholders of Blyth
Holdings Inc. ("the Company"), a Delaware corporation, will be held on November
18, 1996 at 1:00 p.m., local time, at the Company's offices located at 989 East
Hillsdale Boulevard, Suite 400, Foster City, California for the purpose of
ratifying the issuance of and the amendment to 8% Convertible Debentures in the
aggregate principal amount of $7.35 million due June 3, 1999.
The foregoing item of business is more fully described in the Proxy
Statement accompanying this Notice.
Stockholders of record at the close of business on September 30, 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
October 18, 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 Special Meeting of Stockholders to
be held at the Company's principal office located at 989 East Hillsdale
Boulevard, Suite 400, Foster City, California on November 18, 1996 at 1:00 p.m.,
Pacific daylight savings time, and at any adjournment(s) thereof for the
purposes set forth herein and in the accompanying Notice of Special Meeting of
Stockholders. The Company's telephone number is (415)571-0222. These proxy
solicitation materials were mailed on or about October 18, 1996 to all
stockholders entitled to vote at the meeting.
RECORD DATE AND SHARE OWNERSHIP
Stockholders of record at the close of business on September 30, 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, 10,931,350 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.
SOLICITATION
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 $3,000 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; VOTING; 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 Special
Meeting with respect to such matter. On all matters each share of Common Stock
has one vote.
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. In the absence of controlling precedent to the
contrary, the Company
<PAGE>
intends to treat abstentions in this manner. Accordingly, abstentions will have
the same effect as a vote against the proposal.
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 the proposal 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 the proposal.
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 March 26, 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.
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<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth as of the Record Date, 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 "Exchange Act")) known by
the Company to be the beneficial owner of more than 5% of the Company's voting
securities, (ii) each director of the Company, (iii) Michael J. Minor, Stephen
R. Lorentzen and David R. Seaman, the Company's executive officers who were
named in the Summary Compensation Table appearing in the Proxy Statement for the
Company's Annual Meeting of Stockholders held on August 20, 1996, 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 7.82%
111 Center Street
Little Rock, AR 72203
Richard J. Hanschen (3) ............................................... 745,000 6.82%
12102 Vendome Place
Dallas, TX 75230
State of Wisconsin Investment Board ................................... 660,834 6.05%
Lake Terrace
121 East Wilson Street
PO. Box 7842
Madison, WI 53707
Michael J. Minor (4)................................................... 578,666 5.29%
Stephen R. Lorentzen (5)............................................... 141,146 1.29%
William E. Konrad (6).................................................. 160,500 1.47%
David R. Seaman (7).................................................... 207,814 1.90%
Christopher Steffen (8)................................................ -- --
All directors and executive officers as a group (6 persons) (9)........ 1,833,126 16.77%
</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 within sixty (60) days of
the Record Date, 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
3
<PAGE>
Mr. Minor; and (iv) 351,666 shares subject to outstanding options which are
currently exercisable or will become exercisable within sixty (60) days of
the Record Date. 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 is
currently exercisable or will become exercisable within sixty (60) days of
the Record Date held by Mr. Lorentzen and (ii) 81,146 shares subject to
outstanding options which are currently exercisable or will become
exercisable within sixty (60) days of the Record Date.
(6) Includes warrants to purchase 40,000 shares which are currently exercisable
or will become exercisable within sixty (60) days of the Record Date.
(7) Includes options to purchase 70,000 shares of Common Stock exercisable
within sixty (60) days of the Record Date.
(8) Mr. Steffen was elected to the Board of Directors effective as of September
17, 1996.
(9) Includes the shares described in footnotes 3, 4, 5, 6, and 7 above.
PROPOSAL
RATIFICATION OF ISSUANCE OF AND AMENDMENT TO CONVERTIBLE DEBENTURES
INTRODUCTION
As of June 4, 1996, the Company had approximately $3.8 million in cash and
cash equivalents, which management believed was insufficient to fund the
Company's ongoing research and development of new products and working capital
requirements. In addition, the Company's business strategy includes forming
strategic relationships with industry vendors and large corporate customers,
which requires the Company to maintain a strong balance sheet. In order to raise
additional cash and to strengthen the Company's balance sheet, effective as of
June 4, 1996, the Company issued 8% Convertible Debentures due June 3, 1999 in
the aggregate principal amount of $7.35 million (the "Original Debentures").
Copies of the Form of 8% Convertible Debenture due June 3, 1999 and the Form of
Regulation S Securities Subscription Agreement were filed as exhibits to the
Company's Annual Report on Form 10-K filed with the Securities and Exchange
Commission on June 28, 1996. The Company is seeking ratification of the issuance
of and an amendment to these debentures.
TERMS OF THE ORIGINAL DEBENTURES
The principal and any accrued interest on the Original Debentures are
generally convertible into Common Stock at a conversion price equal to the
lesser of (i) $3.75 (the "Fixed Conversion Price"), or (ii) 85% of the average
closing bid price of the Company's Common Stock for the five trading days
immediately preceding the date of conversion. The Original Debentures are
convertible at the option of the holder. One-third (1/3) of the principal amount
is eligible for conversion beginning forty-five (45) days following June 4,
1996, an additional one-third (1/3) of the principal amount is eligible for
conversion beginning seventy-five (75) days following June 4, 1996, and the
balance is eligible for conversion beginning one hundred five (105) days
following June 4, 1996. Any Original Debentures outstanding on June 4, 1999 will
be automatically converted into Common Stock.
The Company has the right to redeem Original Debentures submitted for
conversion at a premium of the closing bid price of the Company's Common Stock
on the date the Original Debenture is submitted for conversion over the
conversion price for the Original Debentures. After June 3, 1997, the Company
also has the right to call the Original Debentures with a minimum aggregate
principal amount of $1.5 million at a premium over the original principal
amount.
Under the terms of the Subscription Agreements and the Original Debentures,
the Company is obligated to convert an Original Debenture submitted for
conversion within a stated period from the date the Original Debenture is
submitted. If the Company fails to convert an Original Debenture within 5
business days of the date of submission of an Original Debenture for conversion,
the Company will be
4
<PAGE>
liable for daily penalties of up to $100 per day for each $10,000 principal
amount of Original Debentures not converted.
As of the Record Date, Original Debentures in the principal amount of $1.3
million had converted into an aggregate of 1,125,809 shares of Common Stock. In
addition, Debentures in the aggregate principal amount of $307,333 had been
redeemed, leaving outstanding Debentures in the aggregate principal amount of
$5.75 million.
The Original Debentures were issued pursuant to Regulation S promulgated
under the Securities Act of 1933, as amended in a private offering to persons
other than U.S. persons as defined in Rule 902 promulgated thereunder.
Swartz Investments, Inc. ("Swartz") acted as Placement Agent in connection
with the transaction. In consideration of such services, the Company paid to
Swartz a fee of $514,500 and delivered warrants to purchase an aggregate of
137,200 shares of the Company's Common Stock at an exercise price of $3.75.
TERMS OF THE AMENDED DEBENTURES
On September 6, 1996, the Company and holders of Original Debentures in the
aggregate principal amount of $4.2 million agreed to amend these Original
Debentures (the "Amended Debentures"). The Original Debentures and the Amended
Debentures are collectively referred to as the "Debentures". Under the terms of
the amendment, the principal and any accrued interest on the Amended Debentures
are convertible into Common Stock at a conversion price equal to the lower of
(i) 95% of the highest ten day average closing bid price of the Company's Common
Stock as reported on The Nasdaq National Market between October 15, 1996 and
November 15, 1996, not to exceed $3.00 per share or be less than $2.25 per share
or (ii) 85% of the average closing bid price of the Company's Common Stock for
the five trading days immediately preceding the date of conversion. Fifty
percent of the aggregate principal amount of each Amended Debenture will be
convertible on December 1, 1996 and the balance of the principal amount of the
Amended Debentures will become convertible on March 1, 1997. All of the other
terms of the Amended Debentures are identical to the Original Debentures.
APPROVAL SOUGHT
Schedule D of the Bylaws of The Nasdaq National Market on which the
Company's Common Stock is presently listed, requires stockholder approval of the
issuance of Common Stock (or securities convertible into Common Stock) equal to
20% or more of the Common Stock outstanding before the transaction for less than
the greater of book or market value of the stock. Based upon a conversion price
on the Original Issue Date of $3.75, the Debentures were convertible into
1,960,000 shares of Common Stock, which represented less than 20% of the
Company's then outstanding Common Stock. However, since the Original Issue Date,
the trading price of the Company's Common Stock has dropped so that as of the
Record Date, the Debentures were convertible into more than 20% of the
outstanding shares of the Company's Common Stock.
Under The Nasdaq National Market's current interpretation of Schedule D,
stockholder approval is required for this transaction and, after discussions
with The Nasdaq National Market, the Company has agreed to seek stockholder
ratification of the issuance of the Debentures and the subsequent amendment.
If the stockholders ratify the Original Debentures and the Amended
Debentures, the Original and Amended Debentures will be convertible or
redeemable in accordance with their terms.
If the stockholders do not ratify the issuance of the Debentures and the
subsequent amendment, the Company will be forced to redeem the Debentures
(except those Debentures that upon conversion (including those Debentures
previously converted) would result in the issuance of no more than 19.9% of the
Company's outstanding Common Stock as of the Original Issue Date) or the Nasdaq
National Market will delist the Company's Common Stock. The repurchase of such
Debentures would substantially reduce the Company's available reserves of cash
and cash equivalents, and adversely affect the Company's ability to conduct its
business.
5
<PAGE>
Accordingly, the Board of Directors strongly recommends a vote in favor of
this proposal.
VOTE REQUIRED
Approval of the proposal 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 matter at the Special Meeting. Abstentions and broker non-votes will be
counted for purposes of determining the presence or absence of a quorum.
Abstentions will have the same effect as a vote against the proposal. Broker
non-votes will not be considered "Votes Cast" and, accordingly, will not affect
the determination of whether the required majority of Votes Cast has been
obtained with respect to the proposal. See "Information concerning Solicitation
and Voting -- Quorum; Voting; Abstentions; Broker Non-Votes."
THE BOARD OF DIRECTORS RECOMMENDS A VOTE IN FAVOR OF THE PROPOSAL.
THE BOARD OF DIRECTORS
Dated: October 18, 1996
6
<PAGE>
PROXY
BLYTH HOLDINGS INC.
SPECIAL MEETING OF STOCKHOLDERS
NOVEMBER 18, 1996
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned stockholder of Blyth Holdings Inc., a Delaware corporation,
hereby acknowledges receipt of the Notice of Special Meeting of Stockholders and
Proxy Statement, each dated October 18, 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
undersigned, to represent the undersigned at the Special Meeting of Stockholders
of Blyth Holdings Inc. to be held on November 18, 1996, at 1:00 p.m. local time,
at the Company's offices located at 989 East Hillsdale Boulevard, Suite 400,
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:
Proposal to ratify the issuance of 8% Convertible Debentures due June 3,
1999 in the aggregate principal amount of $7.35 million and the
amendment to Debentures in the aggregate principal amount of $4.2
million.
/ / FOR / / AGAINST / / ABSTAIN
(CONTINUED, AND TO BE SIGNED AND DATED ON REVERSE SIDE)
<PAGE>
This proxy will be voted as directed or, if no contrary direction is
indicated, will be voted FOR ratification of the issuance of 8%
Convertible Debentures due June 3, 1999 in the aggregate principal amount
of $7.35 million and the amendment to Debentures in the aggregate
principal amount of $4.2 million.
Date: ------------------------------------------------- , 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.)
