<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A-1
(Mark One)
[X] Annual report pursuant to Section 13 or 15(d) of the Securities and
Exchange Act of 1934 For the fiscal year ended MARCH 31, 1997 or
[ ] Transition report pursuant to Section 13 or 15(d) of the Securities and
Exchange Act of 1934 [No Fee Required] For the transition period From
_________ to ________
Commission File No. 0-16449
BLYTH HOLDINGS INC.
(Exact name of registrant as specified in its charter)
Delaware 851 Traeger Avenue 94-3046892
(STATE OF INCORPORATION) San Bruno, California 94066 (I.R.S. EMPLOYER
(ADDRESS OF PRINCIPAL EXECUTIVE IDENTIFICATION NO.)
OFFICES INCLUDING ZIP CODE)
(415) 829-6000
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE
------------------------------------------------------------------
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $.01 par value
------------------------------------------------------------------
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. [X] Yes [ ] No
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
The aggregate market value of the registrant's voting stock held by
non-affiliates of the registrant as of June 17, 1997 was approximately
$20,437,097 based upon the closing price for such stock on such date on the
NASDAQ National Market. For purposes of this disclosure, shares of
Common Stock held by persons who hold more than 5% of the outstanding shares
of Common Stock and shares held by officers and directors of the Registrant
have been excluded because such persons may be deemed affiliates. This
determination is not necessarily conclusive.
As of June 17, 1997, the registrant had 21,096,358 shares of its Common Stock
outstanding.
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DOCUMENTS INCORPORATED BY REFERENCE
Parts of the Proxy statement for the 1997 Annual Meeting of Stockholders are
incorporated by reference into Items 10, 11, 12 and 13 hereof.
<PAGE>
THIS ANNUAL REPORT ON FORM 10-K INCLUDES A NUMBER OF FORWARD-LOOKING
STATEMENTS THAT REFLECT THE COMPANY'S CURRENT VIEWS WITH RESPECT TO FUTURE
EVENTS AND FINANCIAL PERFORMANCE. THESE FORWARD-LOOKING STATEMENTS ARE
SUBJECT TO CERTAIN RISKS AND UNCERTAINTIES, INCLUDING THOSE DISCUSSED IN
"MANAGEMENT'S DISCUSSIONS AND ANALYSIS OF FINANCIAL PERFORMANCE AND RESULTS
OF OPERATIONS," BELOW THAT COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY
FROM HISTORICAL RESULTS OR ANTICIPATED RESULTS.
EXECUTIVE OFFICERS OF THE REGISTRANT
The following sets forth certain information regarding the executive
officers of the Company as of July 31, 1997:
Name Age Position
- ---- --- --------
Timothy P. Negris 42 Chairman, President and Chief Executive
Officer
David R. Seaman 44 Vice President and Chief Technical
Officer and Founder
Patrick R. McEntee 44 Vice President, Marketing
Peter C. Mork 53 Vice President, Worldwide Sales
David C. Colby 43 Director and Acting Chief Financial
Officer
Mr. Negris joined the Company in November 1996 as the Executive Vice
President of Marketing and Development. In February 1997, Mr. Negris was
promoted to the position of President and Chief Executive Officer and was
appointed a member of the Board of Directors. In July 1997 he was appointed
Chairman of the Board. Prior to joining the Company, Mr. Negris was employed
by IBM Software Solutions Division, serving as Vice President of Sales and
Marketing from April 1995 to October 1996, and as Vice President of
Applications Development Tools Marketing and Vice President of Industry
Solutions Marketing from June 1994 to April 1995. Prior to joining IBM, Mr.
Negris was employed by Oracle Corporation as Vice President of Server Product
Marketing from March 1993 to January 1994 and Senior Director of Corporate
Strategy from December 1991 to March 1993.
Mr. Seaman is Chief Technical Officer, and is a Founder of the Company. He
has served as a Vice President of the Company since June 1990 and has served as
Research and Development Director since June 1982. He served as Managing
Director of Blyth Software, Ltd from September of 1990 until June of 1993.
Mr. McEntee has served as Vice President of Marketing since he joined the
Company in December 1996. From January 1996 to November 1996, Mr. McEntee
served as Vice President of Marketing, Sales and Product Development of
Ikonic, Inc., an Internet software company. Mr. McEntee served as Director
of Marketing from March 1995 to January 1996 at Interactive Digital
Solutions, a software company. In addition, Mr. McEntee was Senior Director
of Communications Products and Director of Product Management Network
Products Division, from September 1992 to March 1995 at Oracle Corporation.
Previously, Mr. McEntee held marketing and sales positions with IBM.
Mr. Mork has served as Vice President of Worldwide Sales since he joined
the company in April 1997. Prior to joining the Company, Mr. Mork served as
Vice President of Worldwide Sales from 1995 to 1996 at Persistence Software,
Inc., a start-up company with object-oriented middleware facilitating the
access of relational databases. Mr. Mork was President and Chief Executive
Officer from 1992 to 1994 at Aurum Software, Inc., a sales applications
company, and Vice President of North American Sales from 1986 to 1990 at
Sybase, Inc., a database software company.
2
<PAGE>
Mr. Colby, a Director of the Company since February 1997, was appointed
Acting Chief Financial Officer in May 1997. Mr. Colby is currently the Chief
Operating Officer of American Medical Responses Health Services Group. From
April 1996 to April 1997, Mr. Colby served as Executive Vice President and
Chief Financial Officer of American Medical Response, one of the largest
operators of health care transportation services in the United States. From
July 1988 to April 1996 Mr. Colby was the Senior Vice President and Treasurer
at Columbia/HCA Healthcare Corporation, one of the nation's largest hospital
operators.
3
<PAGE>
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information regarding directors of the Company is set forth below.
Current Executive Officers of the Registrant found under the caption
"Executive Officers of the Registrant" in Part I hereof is also incorporated
by reference into this Item 10.
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 each
Class I and Class III.
The following persons have been nominated as Class III Directors:
<TABLE>
<CAPTION>
Director
Name of Nominee Age Principal Occupation Since
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Richard J. Hanschen (1) . . . . . . . . . . . 74 Chairman and Chief Executive Officer of 1990
New Business Resources II, Inc., an
investment firm
Timothy P. Negris . . . . . . . . . . . . . . 42 Chairman, President and Chief Executive 1997
Officer of the Company
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
</TABLE>
The term of the following Class I Director will expire at the 1999 Annual
Meeting of Stockholders:
<TABLE>
<CAPTION>
Director
Name Age * Principal Occupation Since
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Christopher J. Steffen . .. . . . . . . . . 55 Private Investor 1996
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
</TABLE>
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>
William E. Konrad (1) . . . . . . . . . . . . 66 Private Investor 1995
David C. Colby. . . . . . . . . . . . . . . . 43 Chief Financial Officer of 1997
American Medical Response
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
</TABLE>
* As of July 31, 1997.
(1) Member of the Compensation and Options Committee and the Audit Committee
Except as follows, each director 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. Negris joined the Company in November 1996 as the Executive Vice
President of Marketing and Development. In February 1997 Mr. Negris was
promoted to the position of President and Chief Executive Officer and was
appointed a member of the Board of Directors. In July 1997 he was appointed
Chairman of the Board. Prior to joining the Company, Mr. Negris was employed
by IBM Software Solutions Division, serving as Vice President of Sales and
Marketing from April 1995 to October 1996, and as Vice President of
Applications Development Tools Marketing and Vice President of Industry
Solutions Marketing from June 1994 to April 1995. Prior to joining IBM, Mr.
Negris was employed by Oracle Corporation as Vice President of Server Product
Marketing from March 1993 to January 1994 and Senior Director of Corporate
Strategy from December 1991 to March 1993.
Mr. Steffen served as Vice Chairman of Citicorp/Citibank from May 1993 to
December 1996. Mr. Steffen served as Chief Financial Officer and Executive
Vice President for Honeywell from April 1989 to February 1993 and acted as
Senior Vice President and Chief Financial Officer for Kodak from February 1993
to May 1993.
Mr. Colby, a Director of the Company since February 1997, was appointed
Acting Chief Financial Officer in May 1997. Mr. Colby is currently the Chief
Operating Officer of American Medical Responses Health Services Group. From
April 1996 to April 1997, Mr. Colby served as Executive Vice President and
Chief Financial Officer of American Medical Response, one of the largest
operators of health care transportation services in the United States. From
July 1988 to April 1996 Mr. Colby was the Senior Vice President and Treasurer
at Columbia/HCA Healthcare Corporation, one of the nation's largest hospital
operators.
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, Inc. 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,
except that the Forms 3 for Christopher Steffen and Patrick McEntee were filed
late.
ITEM 11. EXECUTIVE COMPENSATION
4
<PAGE>
SUMMARY COMPENSATION
The following table shows, as to the Chief Executive Officer and each of
the other current executive officers and former executive officers whose salary
plus bonus exceeded $100,000, information concerning compensation awarded to,
earned by or paid for services to the Company in all capacities during the last
three fiscal years:
<TABLE>
<CAPTION>
Summary Compensation Table
Long-Term
Compensation
------------
Annual Compensation Awards
---------------------------------------------------------- ------
Year Other Annual All Other
Ended Salary Bonus Compensation Options Compensation
Name and Principal Position March 31, ($) ($) ($) (#) ($)
- --------------------------- --------- ------ ----- ------------ ------- ------------
<S> <C> <C> <C> <C> <C> <C>
TIMOTHY P. NEGRIS (1) 1997 $71,590 -- -- 750,000 $60,000
President and Chief Executive 1996 -- -- -- -- --
Officer 1995 -- -- -- -- --
- --------------------------------------------------------------------------------------------------------------------------------
DAVID R. SEAMAN (2) 1997 $126,580 -- $56,009 -- --
Vice President and Research and 1996 $124,332 -- $48,400 10,000 --
Development Director of Blyth 1995 $124,714 -- $54,412 -- --
Software Limited
- --------------------------------------------------------------------------------------------------------------------------------
PATRICK R. MCENTEE (3) 1997 $43,750 -- -- 100,000 --
Vice President, Marketing 1996 -- -- -- -- --
1995 -- -- -- -- --
- --------------------------------------------------------------------------------------------------------------------------------
MICHAEL J. MINOR (4) 1997 $166,974 -- -- 100,000 $139,515
Former Chief Executive Officer 1996 $185,000 -- -- -- $924
1995 $185,000 -- -- 250,000 $1,017
- --------------------------------------------------------------------------------------------------------------------------------
STEPHEN R. LORENTZEN (5) 1997 $145,833 -- -- -- $29,167
Former President and Chief 1996 $153,125 -- -- 190,000 $44,765
Operating Officer 1995 -- -- -- -- --
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Mr. Negris joined the Company in November 1996 as its Vice President of
Marketing and Development. Mr. Negris was elected as President and Chief
Executive Officer in February 1997. His annual base salary is $180,000.
"Other Annual Compensation" represents relocation expenses.
(2) 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 ($15,712 in
1995, $11,400 in 1996 and $16,805 in 1997) 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 $38,421
in 1995, $37,000 in 1996 and $39,204 in 1997).
(3) Mr. McEntee joined the Company in January 1997 and his annual base salary
is $144,200.
(4) Mr. Minor served as President of the Company from June 1991 to May 1995 and
as Chief Executive Officer from June 1991 through February 1997. Mr. Minor
received a warrant to purchase 100,000 shares of Common Stock in February
1997 as part of his separation from the Company. This warrant has an
exercise price of $1.094 and a term of five years. "All Other
Compensation" listed for Mr. Minor for 1997 includes $138,750 as a
severance payment and $765 contributed by the Company under its 401(k)
Plan. See "--Other Employee Benefit Plans and Termination of Employment
Arrangement." "All Other Compensation" listed for Mr. Minor for 1996
and 1995 represents amounts contributed by the Company under its
401(k) Plan.
(5) Mr. Lorentzen served as President and Chief Operating Officer of the
Company from May 1995 through January 1997. "All Other Compensation"
listed for Mr. Lorentzen in 1997 includes $29,167 paid as severance. The
Company also paid Mr. Lorentzen an additional $58,333 as severance
following March 31, 1997. "All Other Compensation" listed for Mr.
Lorentzen in 1996 includes $525 contributed by the Company under its
401(k) plan and moving expenses of $44,240 paid to Mr. Lorentzen
in connection with his relocation to the San Francisco Bay Area from the
East Coast.
5
<PAGE>
STOCK OPTION GRANTS AND EXERCISES
The following table shows, as to the individuals named in the Summary
Compensation Table above, (the "Named Executive Officers") information
concerning stock options granted during the fiscal year ended March 31, 1997.
This table also sets forth hypothetical gains or "option spreads" for the
options at the end of their respective terms, as calculated in accordance
with the Rules of the Securities and Exchange Commission. Each gain is based
on an arbitrarily assumed annualized rate of compound appreciation of the
market price at the date of the grant of 5% and 10% from the date the option
was granted to the end of the option term. The 5% and 10% rates of
appreciation are specified by the rules of the Securities and Exchange
Commission and do not represent the Company's estimate or projection of
future Common Stock prices. The Company does not necessarily agree that this
method properly values an option. Actual gains, if any, on option exercises
are dependent on the future performance of the Company's Common Stock and
overall market conditions. <TABLE><CAPTION>
Option Grants In Last Fiscal Year
Individual Grants (1)
-----------------------------------------------------------
Potential Realizable
Number of Value at Assumed
Securities % of Total Annual Rates of Stock
Underlying Options Price Appreciation
Options Granted to Exercise for Option Term (3)
Granted Employees in Price Expiration --------------------
Name (#)(1) Fiscal Year (2) ($/Sh) Date 5%($) 10%($)
---------------------------------- -------- --------------- -------- ---------- -------- -----
<S> <C> <C> <C> <C> <C> <C>
Timothy P. Negris . . . . . . . 250,000 19% $1.0000 11/11/06 $157,224 $398,436
500,000 38% .7188 03/20/07 226,025 572,791
David R. Seaman . . . . . . . . . 10,000 1% 3.3130 05/20/06 20,835 52,801
Patrick R. McEntee . . . . . . . 100,000 6% 1.2188 01/21/07 76,650 194,245
Michael J. Minor (4) . . . . . . 100,000 6% 1.094 02/05/02 30,225 66,790
Stephen R. Lorentzen (5) . . . . -- -- -- -- -- --
- -----------------------------------
</TABLE>
(1) Options granted under the Company's 1987 Stock Option Plan and 1996 Stock
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) During the fiscal year ended March 31, 1997, the Company granted a total of
1,316,000 options and warrants to employees.
(3) 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.
(4) Mr. Minor received a warrant to purchase 100,000 shares of Common Stock
as part of his resignation from the Company in February 1997. See "--Other
Employee Benefit Plans and Termination of Employment Arrangement."
(5) Mr. Lorentzen resigned his positions with the Company in January 1997.
6
<PAGE>
No options were exercised by the Named Executive Officers during the last
fiscal year. The following table shows, as to the Named Executive Officers,
the number of securities underlying outstanding options held by them at
March 31, 1997. None of such options were in the money at March 31, 1997.
<TABLE>
<CAPTION>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
Number of Securities Underlying Unexercised
Options at March 31, 1997 (#)(1)
-------------------------------------
Name Exercisable Unexercisable
- ---------------------------- ------------- ---------------
<S> <C> <C>
Timothy P. Negris . . . . . -- 750,000
David R. Seaman . . . . . . 100,000 10,000
Patrick R. McEntee . . . . -- 100,000
Michael J. Minor (3) . . . 100,000 --
Stephen R. Lorentzen (3) . -- --
- ----------------------------
</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, 1997 (the closing price
of the Common Stock of the Company was listed on the Nasdaq National Market
at $0.65625 per share on March 31, 1997) and the exercise price of the
option. None of the options above are currently in-the-money.
(3) Mr. Minor resigned his position with the Company in February 1997 and
Mr. Lorentzen resigned his position with the Company in January 1997. All
of their options, other than the warrant to purchase 100,000 shares
granted to Mr. Minor upon his resignation, terminated without being
exercised. See "--Other Employee Benefit Plans and Termination of
Employment Arrangement."
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 "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
(formerly 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
7
<PAGE>
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 ("Blyth Software Retirement Plan") for substantially
all employees of Omnis Software Limited (formerly Blyth Software Limited). The
Blyth Software 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. Blyth Software Limited makes annual
contributions under the Blyth Software Retirement Plan to fund promised
retirement benefits. In addition, participants are entitled to make voluntary
contributions under the Blyth Software Retirement Plan to increase their
benefits. Currently, Blyth Software Limited contributes an amount equal to 5/8%
of each participants' compensation under the Blyth Software Retirement Plan.
Blyth Software Limited retains the right to terminate the Blyth Software
Retirement 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 401(k) 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 1997 the Company made $765.00 in contributions on behalf of Mike
Minor. 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 $9,500 of compensation may be deferred by a
participant through salary deferral contributions in any one calendar year.
SEVERANCE ARRANGEMENT
In connection with his resignation from the Company in February 1997, Mr.
Minor and the Company entered into a Settlement Agreement and General Release
pursuant to which Mr. Minor received a severance payment of $138,750,
representing nine months of salary, together with a warrant to purchase
100,000 shares of Common Stock at an exercise price of $1.094 per share. This
warrant has a term of 5 years. Mr. Minor also agreed, among other things, to
serve as a consultant to the Company for a period of six months following his
resignation.
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.
8
<PAGE>
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"). Each
Outside Director elected on or after the date of adoption of the Director
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. Mr. Konrad,
Mr. Steffen and Mr. Colby each received such a grant when they were appointed
to the Board of Directors. An Outside Director who is elected Chairman of
the Board on or after the date of adoption of the Director 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"). Mr.
Hanschen received such a grant in September 1995 and 1996 and Mr. Colby, Mr.
Hanschen, Mr. Konrad and Mr. Steffen each will receive such a grant in
September 1997. An Outside Director who is serving as Chairman of the Board
on September 1 of each year 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 of the warrants shall be equal to 100% of the fair market
value of the Company's Common Stock on the date of grant of the warrants and
that warrants will vest monthly over a three (3) year period.
As of the Record Date, warrants to purchase 650,833 shares of the
Company's Common Stock under the Director Plan were outstanding at a weighted
average exercise price of $3.88 per share.
COMPENSATION COMMITTEE' INTERLOCKS AND INSIDER PARTICIPATION
The Compensation and Options Committee was composed of Messrs. Hanschen
and Konrad during fiscal 1997, both non-employee directors.
9
<PAGE>
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth as of July 29, 1997 (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 any class of the Company's voting securities, (ii) each director and
each nominee for director, (iii) each of the named executive officers
identified in the Summary Compensation Table appearing herein, and (iv) all
directors and executive officers of the Company as a group.
Number of Percent
Name and Address (1) Shares of Total
- -------------------------------------------------- ------- --------
Richard J. Hanschen (2) . . . . . . . . . . . . . 497,500 2.33%
12102 Vendome Place
Dallas, TX 75230
Astoria Capital Partner, L.P. (3). . . . . . . . 1,296,800 6.14%
735 Second Avenue
San Francisco, CA 94118
Timothy P. Negris . . . . . . . . . . . . . . . 50,000 *
David C. Colby . . . . . . . . . . . . . . . . . 92,000 *
Christopher J. Steffen (4) . . . . . . . . . . . 20,000 *
William E. Konrad (5) . . . . . . . . . . . . . . 295,500 1.39%
David R. Seaman (6) . . . . . . . . . . . . . . . 210,439 1.00%
Patrick R. McEntee . . . . . . . . . . . . . . . -- --
Michael J. Minor (7). . . . . . . . . . . . . . . 274,000 1.29%
Stephen R. Lorentzen (8) . . . . . . . . . . . . 56,667 *
All directors and executive officers as a group
(10 persons)(9). . . . . . . . . . . . . . . . . 1,506,106 6.96%
- --------------------
* Less than 1%
(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 (i) 200,000 shares which are held by VSH II Limited Partnership,
of which Mr. Hanschen is a general partner; (ii) 100,000 shares which are
held by VSH III Limited Partnership, of which Mr. Hanschen is a general
partner; and (iii) warrants to purchase 167,500 shares of Common Stock
which are currently exercisable or will become exercisable on September 1,
1997, 30,000 of which are held in the name of Vier Sohne Progeny Trust.
(3) Based solely on Schedule 13G filed with the SEC.
(4) Includes warrants to purchase 20,000 shares of Common Stock exercisable
within sixty (60) days of the Record Date held by Mr. Steffen.
(5) Includes warrants to purchase 45,000 shares of Common Stock exercisable
within sixty (60) days of the Record Date held by Mr. Konrad.
(6) Includes options to purchase 102,625 shares of Common Stock exercisable
within sixty (60) days of the Record Date held by Mr. Seaman.
(7) Includes a warrant to purchase 100,000 shares of Common Stock exercisable
within 60 days of the Record Date by Mr. Minor.
(8) Represents warrants exercisable within sixty (60) days of the Record Date
held by Mr. Lorentzen.
(9) Includes the shares, options and warrants described in footnote 2 and
footnoes 4 through 8.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by this item is incorporated by reference from
"Executive Compensation--Other Employee Benefit Plans" contained in Item 11 of
Part III of this Report.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) The following documents are filed as a part of this Annual Report on
Form 10-K:
3. Exhibits:
Exhibit Number Description
- -------------- -----------
3.1 Certificate of Incorporation of the Company, as amended.(1)
3.2 By-Laws of the Company, as amended.(1)
10
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10.1 Definitive Trust Deed dated October 26, 1983 among Blyth Holdings
Limited, Blyth Software Limited and Geoffrey Paul Smith, Paul
Nelson Wright and Suntrust Limited (relating to pension
scheme).(2)
10.2 Service Agreement dated July 30, 1990 between Blyth Holdings Inc.
and David Seaman.(3)
10.3 Deed of Guarantee dated June 1, 1993 between Blyth Holdings Inc.
and A. Levy & Son Limited.(4)
10.4 Form of Subscription Agreement for purchase of Units of the
Company's securities.(4)
10.5 Form of Stock Purchase Warrant sold to purchaser of Units of the
Company's securities.(4)
10.6 Form of Stock Purchase Warrant sold to Director Walter V. Smiley,
Richard J. Hanschen, and Albert Yu on September 1, 1992.(4)
10.7 Director's Warrant Plan and Amendment to Warrant issued to Albert
Yu on September 1, 1992.(6)
10.8 Advisor's Warrant Plan and warrant issued to Garth Saloner on
November 1, 1992.(6)
10.9 Common Stock Purchase Agreement dated March 31, 1993 between
Blyth Holdings Inc. and General Reinsurance Corp.(6)
11
<PAGE>
10.10 Form of Indemnification Agreement entered into between the
Company and all of its directors and certain of its officers.(6)
10.11 The Blyth Holdings Inc. Amended and Restated 1987 Stock Option
Plan, as amended.(6)
10.12 The Blyth Holdings Inc. 1993 Directors' Warrant Plan and form of
Director's Warrant.(6)
10.13 Common Stock Purchase Agreement dated July 19, 1993 between Blyth
Holdings Inc. and The Wisconsin Investment Board.(5)
10.14 The Blyth Holdings Inc. 1994 Employee Stock Purchase Plan.(6)
10.15 Registration Rights Agreement effective as of January 3, 1994,
between the Company and Migration Software Systems Limited.(6)
10.16 Warrant to Purchase shares of Common Stock dated January 3, 1994
granted to Migration Software Systems Limited.(6)
10.17 Warrant to Purchase Common Stock issued to Swartz Investments,
Inc.(7)
10.18 Form of Registration Rights Agreement among the Company,
Purchasers of 8% Convertible Debentures due March 31, 1997 and
Swartz Investments, Inc.(7)
10.19 Form of Warrant to Purchase Common Stock issued to certain persons
affiliated with Swartz Investments, LLC.(8)
10.20 Form of Registration Rights Agreement among the Company and Swartz
Investments, LLC and its designees.(8)
10.21 1996 Stock Plan and Form of Agreement
10.22 Warrant to Purchase Common Stock dated February 5, 1997 granted
to Michael J. Minor
11.1 Statement re: computation of earnings per share
21.1 Subsidiaries of the Company.(3)
12
<PAGE>
23.1 Independent Auditors' Consent (Deloitte & Touche)
27.1 Financial data schedule
--------------
(1) Incorporated by reference to the Registration Statement on Form S-8
(Registration Statement No. 33-46166) filed by the Company with the
Securities and Exchange Commission (the "Commission") on March 2, 1992.
(2) Incorporated by reference to the Annual Report on Form 10-K filed by the
Company with the Commission on July 13, 1990.
(3) Incorporated by reference to the Annual Report on Form 10-K filed by the
Company with the Commission on June 28, 1991.
(4) Incorporated by reference to the Annual Report on Form 10-K filed by the
Company with the Commission on June 26, 1992.
(5) Incorporated by reference to the Quarterly Report on Form 10-Q filed by the
Company with the Commission on August 16, 1993.
(6) Incorporated by reference to the Annual Report filed by the Company with
the Commission on June 28, 1994.
(7) Incorporated by reference to the Current Report on Form 8-K filed by the
Company with the Commission on April 7, 1995.
(8) Incorporated by reference to the Company's Annual Report on Form 10-K for
the fiscal year ended March 31, 1996.
13
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
Dated: July 29, 1997 BLYTH HOLDINGS INC.
By: /s/ TIMOTHY P. NEGRIS
---------------------
Timothy P. Negris
President, Chief Executive
Officer and Chairman
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
Signatures Title Date
- ---------- ----- ----
/s/TIMOTHY P. NEGRIS
- --------------------
Timothy P. Negris President, Chief Executive July 29, 1997
Officer and Chairman
(Principal Executive Officer)
/s/WILLIAM M. GLYNN
- -------------------
William M. Glynn Vice President of Finance, July 29, 1997
(Principal Accounting Officer)
/s/RICHARD J. HANSCHEN
- ----------------------
Richard J. Hanschen Director July 29, 1997
/s/WILLIAM E. KONRAD
- --------------------
William E. Konrad Director July 29, 1997
/s/CHRIS STEFFEN
- ----------------------
Christopher J. Steffen Director July 29, 1997
/s/DAVID COLBY
- --------------
David C. Colby Director and Acting Chief July 29, 1997
Financial Officer
14
<PAGE>
EXHIBIT 10.21
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.
<PAGE>
(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.
2
<PAGE>
(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.
3
<PAGE>
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.
4
<PAGE>
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.
5
<PAGE>
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
6
<PAGE>
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
7
<PAGE>
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.
8
<PAGE>
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
9
<PAGE>
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.
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<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>
EXHIBIT 10.22
THE SECURITIES REPRESENTED HEREBY HAVE BEEN ACQUIRED FOR INVESTMENT AND HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE
STATE SECURITIES LAWS. SUCH SECURITIES MAY NOT BE SOLD, TRANSFERRED, PLEDGED,
HYPOTHECATED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR AN
EXEMPTION UNDER THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS.
BLYTH HOLDINGS, INC.
WARRANT TO PURCHASE COMMON STOCK
February 5, 1997
This Warrant (the "Warrant") entitles Michael Minor, or his transferees and
assigns (collectively, the "Holder"), for value received, to purchase from BLYTH
HOLDINGS, INC., a Delaware corporation, during the period commencing as of the
date hereof and ending on the Expiration Date (as defined herein) not more than
one hundred thousand (100,000) shares of Common Stock of the Company (subject to
adjustment as set forth herein) at a price of $1.094 per share (as adjusted, the
"Exercise Price").
The holder of this Warrant agrees with the Company that this Warrant is
issued and all rights hereunder shall be held subject to all of the conditions,
limitations and provisions set forth herein.
1. EXERCISE OF WARRANT. Provided that the Settlement Agreement and
General Release dated February 5, 1997 between the Company and the Holder shall
become effective, the Holder may exercise this Warrant at any time or from time
to time on any business day prior to or on the Expiration Date, for the full or
any lesser number of shares of Common Stock purchasable hereunder, by
surrendering this Warrant to the Company at its principal office, together with
a duly executed Notice of Exercise (in substantially the form attached hereto as
Exhibit A), and payment in cash or by check of the aggregate Exercise Price then
in effect for the number of shares for which this Warrant is being exercised.
Promptly after such exercise, the Company shall issue and deliver to the Holder
a certificate or certificates representing the number of shares of Common Stock
issuable upon such exercise. Upon issuances by the Company in accordance with
the terms of this Warrant, all such shares of Common Stock shall be validly
issued, fully paid and non-assessable, and free from all taxes, liens and
encumbrances with respect to the issuance thereof (except as set forth in the
Company's Certificate of Incorporation (the "Certificate") or bylaws and any
restrictions on sale set forth therein or pursuant to federal or state
securities laws. To the extent permitted by law, this Warrant shall be deemed
to have been exercised immediately prior to the close of business on the date of
its surrender for exercise as provided herein, even if the Company's stock
transfer books are at that time closed, and the Holder shall be treated for all
purposes as the holder of record of the Common Stock to be issued upon such
exercise as of the close of business on such date. Upon any exercise of this
Warrant for fewer than all shares of Common Stock represented by this Warrant,
the Company shall cancel this Warrant and execute and deliver a new Warrant or
Warrants in substantially identical form for the remaining shares of Common
Stock.
<PAGE>
1.1 NET ISSUE EXERCISE. Notwithstanding any provisions herein to the
contrary, if the Quoted Price (as defined in Section 2.6 hereof) of one share
of the Company's Common Stock is greater than the Exercise Price (at the date
of calculation as set forth below), in lieu of exercising this Warrant by
payment with cash, certified or cashier's check, the Holder may elect to make
a cash-free exercise of this Warrant and thereby to receive Shares equal to
the value (as determined below) of this Warrant (or the portion thereof being
canceled) by surrender of this Warrant at the principal office of the Company
together with the properly endorsed Notice of Exercise and notice of such
election, in which event the Company shall issue to the Holder a number of
Shares of Common Stock computed using the following formula:
X = Y (A-B)
-------
A
Where X = the number of Shares of Common Stock to be issued to
the Holder
Y = the gross number of Shares of Common Stock purchasable
under this Warrant or, if only a portion of this Warrant is
being exercised, the gross number of Shares purchased under
this Warrant being canceled (at the date of such
calculation)
A = the Quoted Price (as defined under Section 2.6 hereof) of
one share of the Company's Common Stock (at the date of
such calculation)
B = Exercise Price (as adjusted to the date of such
calculation)
2. ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF WARRANT SHARES. The
Exercise Price and the number of shares of Common Stock subject to this
Warrant shall be subject to adjustment from time to time as follows:
2.1 SUBDIVISION OR COMBINATION OF STOCK.
(a) If at any time or from time to time after the date of this
Warrant (the "Issue Date") the Company shall subdivide its outstanding shares of
Common Stock, the Exercise Price in effect immediately prior to such subdivision
shall be reduced proportionately, and conversely, in the event the outstanding
shares of Common Stock shall be combined into a smaller number of shares, the
Exercise Price in effect immediately prior to such combination shall be
increased proportionately.
(b) Upon each adjustment of the Exercise Price as provided in
Section 2.1(a), the Holder thereafter shall be entitled to purchase, at the
Exercise Price resulting from such adjustment, the number of shares of Common
Stock (calculated to the nearest whole share) obtained by multiplying the
Exercise Price in effect immediately prior to such adjustment by the number of
shares purchasable pursuant hereto immediately prior to such adjustment and
dividing the product thereof by the Exercise Price resulting from such
adjustment.
-2-
<PAGE>
2.2 ADJUSTMENT FOR STOCK DIVIDENDS. If at any time the Company
shall declare a dividend or make any other distribution upon any class or
series of stock of the Company payable in shares of Common Stock or
securities convertible into shares of Common Stock, the Exercise Price and
the number of shares to be obtained upon exercise of this Warrant shall be
adjusted proportionately to reflect the issuance of any shares of Common
Stock or convertible securities, as the case may be, issuable in payment of
such dividend or distribution.
2.3 REORGANIZATION, RECLASSIFICATION, CONSOLIDATION, MERGER OR
SALE. In the event of any reorganization of the capital stock of the Company,
a consolidation or merger of the Company with another corporation (other than
a merger in which the Company is the surviving corporation), the sale of all
or substantially all of the Company's assets or any transaction involving the
transfer of a majority of the voting power over the capital stock of the
Company effected in a manner such that holders of Common Stock shall be
entitled to receive stock, securities, or other assets or property, then, as
a condition of such reorganization, reclassification, consolidation, merger,
sale or transaction, lawful and adequate provision shall be made whereby the
holder hereof shall have the right to purchase and receive (in lieu of the
shares of Common Stock of the Company immediately theretofore purchasable and
receivable upon the exercise of the rights represented hereby) such shares of
stock, securities or other assets or property as may be issued or payable
with respect to or in exchange for a number of outstanding shares of such
Common Stock equal to the number of shares of such stock immediately
theretofore purchasable and receivable upon the exercise of the rights
represented hereby. In any such reorganization, consolidation, merger, sale
or transaction, including successive events of such nature, appropriate
provision shall be made with respect to the rights and interests of the
Holder such that the provisions hereof (including, without limitation,
provisions for adjustments of the Exercise Price and of the number of shares
purchasable and receivable upon the exercise of this Warrant) thereafter
shall be applicable, as nearly practicable, in relation to any shares of
stock, securities or assets thereafter deliverable upon the exercise hereof.
2.4 MINIMAL ADJUSTMENTS. No adjustment in the Exercise Price
and/or the number of shares of Common Stock subject to this Warrant shall be
made if such adjustment would result in a change in (i) the Exercise Price of
less than one cent ($0.01) per share or (ii) the number of shares represented
by this Warrant of less than one share (the "Adjustment Threshold Amount").
Any adjustment not made because the Adjustment Threshold Amount is not
satisfied shall be carried forward and made, together with any subsequent
adjustments, at such time as (a) the aggregate amount of all such adjustments
is equal to at least the Adjustment Threshold Amount or (b) the Warrant is
exercised.
2.5 CERTIFICATE AS TO ADJUSTMENTS. Upon the occurrence of each
adjustment or readjustment of the Exercise Price pursuant to this Section 2,
the Company promptly shall compute such adjustment or readjustment in
accordance with the terms hereof and prepare and furnish to the Holder a
certificate setting forth such adjustment or readjustment, showing in detail
the facts upon which such adjustment or readjustment is based.
2.6 QUOTED PRICE. The "Quoted Price" of the Common Stock is the last
reported sales price of the Common Stock as reported by the Nasdaq National
Market ("NMS"), or the primary national securities exchange on which the Common
Stock is then quoted; PROVIDED, HOWEVER, that if the Common
-3-
<PAGE>
Stock is neither traded on the NMS nor on a national securities exchange, the
price referred to above shall be the price reflected on Nasdaq, or if the
Common Stock is not then traded on Nasdaq, the price reflected in the
over-the-counter market as reported by the National Quotation Bureau, Inc. or
any organization performing a similar function; and PROVIDED, FURTHER, that
if the Common Stock is not publicly traded, the Quoted Price of the Common
Stock shall be the fair market value as determined in good faith by the Board
of Directors of the Company.
3. RIGHTS OF THE HOLDER. The Holder shall not, by virtue hereof, be
entitled to any rights of a shareholder in the Company, either at law or
equity, and the rights of the Holder are limited to those expressed in this
Warrant. Nothing contained in this Warrant shall be construed as conferring
upon the Holder the right to vote or to consent or to receive notice as a
shareholder of the Company on any matters or with respect to any rights
whatsoever as a shareholder of the Company. No dividends or interest shall
be payable or accrued in respect of this Warrant or the interest represented
hereby or the shares of Common Stock purchasable hereunder until, and only to
the extent that, this Warrant shall have been exercised in accordance with
its terms.
4. NO IMPAIRMENT. The Company will not, by any voluntary action, avoid
or seek to avoid the observance or performance of any of the terms of this
Warrant, but shall at all times in good faith assist in effecting the terms
of this Warrant and in taking all actions necessary or appropriate in order
to protect the rights of the Holder against dilution or other impairment of
its rights hereunder.
5. NO FRACTIONAL SHARES. No fractional share shall be issued upon
exercise of this Warrant. In lieu of issuing any fractional share, the
Company shall pay the Holder entitled to such fraction a sum in cash equal to
the fair market value of such fraction on the date of exercise.
6. RESERVATION OF STOCK ISSUABLE ON EXERCISE OF WARRANT. The Company
covenants and agrees that during the period of time during which this Warrant
is exercisable, it will at all times have authorized and reserved solely for
issuance and delivery upon the exercise of this Warrant, all such shares of
Common Stock and other stock, securities and property as from time to time
are receivable upon the exercise of this Warrant. If at any time the number
of authorized but unissued shares of Common Stock shall not be sufficient to
effect the exercise of this Warrant, the Company will use its best efforts to
take such corporate action as may, in the opinion of its counsel, be
necessary to increase its authorized but unissued shares of Common Stock to
such number of shares as shall be sufficient for such purposes. The Company
further covenants that all shares issuable upon exercise of the Warrant and
payment of the Exercise Price, all as set forth herein, will be free from all
taxes, liens and charges in respect of the issue of such shares (other than
taxes in respect of any transfer occurring contemporaneously with such
exercise and payment or otherwise specified herein). The Company agrees that
its issuance of the Warrant shall constitute full authority to its officers
who are charged with the duty of executing stock certificates to execute and
issue the necessary certificates for shares of Common Stock upon the exercise
of the Warrant and covenants that all such shares, when issued, sold and
delivered in accordance with the terms of the Warrant for the consideration
expressed herein, will be duly and validly issued, fully paid and
nonassessable, and will be free of restrictions on transfer other than
restrictions on transfer set forth in this Warrant, and applicable state and
federal securities laws.
-4-
<PAGE>
7. NOTICES OF RECORD DATE. Upon (a) any establishment by the Company
of a record date of the holders of any class of securities for the purpose of
determining the holders thereof who are entitled to receive any dividend or
other distribution, or right or option to acquire securities of the Company,
or any other right, (b) any capital reorganization, reclassification,
recapitalization, merger or consolidation of the Company with or into any
other corporation, any transfer of all or substantially all the assets of the
Company, or (c) any voluntary or involuntary dissolution, liquidation or
winding up of the Company, then, and in each such case, the Company shall
mail to the Holder a notice specifying, as the case may be, (i) the date
established as the record date for the purpose of such dividend,
distribution, option or right and a description of such dividend,
distribution, option or right, or (ii) the date on which any such
reorganization, reclassification, recapitalization, consolidation, merger,
transfer, dissolution, liquidation or winding up is expected to become
effective and the date, if any is to be fixed, as to when the holders of
record of Common Stock (of other securities at that time receivable upon
exercise of the Warrant) shall be entitled to exchange their shares of Common
Stock (or such other stock or securities) for securities or other property
deliverable upon such reorganization, reclassification, recapitalization,
consolidation, merger, transfer, dissolution, liquidation or winding up.
Such notice shall be mailed at least 10 days prior to the date therein
specified, or such longer period as may be required by law.
8. EXCHANGES OF WARRANT. Upon surrender for exchange of this Warrant
(in negotiable form, if not surrendered by the Holder named on the face
hereof) to the Company at its principal office, the Company will issue and
deliver a new Warrant or Warrants in substantially identical form
representing in the aggregate, the same number of shares of Common Stock, in
the denomination or denominations requested, to or on the order of such
Holder upon payment by such Holder of any applicable transfer taxes; provided
that any transfer of the Warrant shall be subject to the conditions on
transfer set forth herein; and provided further that all reasonable expenses
incurred in connection with such re-issuance and delivery shall be borne by
the Holder.
9. REPLACEMENT OF WARRANT. Upon receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of
this Warrant, and (in the case of loss, theft or destruction) upon delivery
of an indemnity agreement in such reasonable amount as the Company may
determine, or (in the case of mutilation) upon surrender and cancellation
hereof, the Company, at its expense, shall issue a new Warrant in
substantially identical form in replacement hereof.
10. NOTICES. Except as provided in Section 9 above, all notices and
other communications from the Company to the Holder shall be mailed by
overnight courier or by first-class, registered or certified mail, postage
prepaid, to the address furnished to the Company in writing by the last
Holder who has furnished an address to the Company in writing. Notice shall
be deemed given one day after deposit with an overnight courier service,
three days after deposit in the mails in accordance with this Section 10 or
upon delivery if personally delivered.
11. MODIFICATION AND WAIVER. Neither this Warrant nor any term hereof
may be changed, waived, discharged or terminated orally, but only by an
instrument in writing signed by the party against which enforcement of such
change, waiver, discharge or termination is sought.
-5-
<PAGE>
12. HEADINGS. The descriptive headings in this Warrant are included for
convenience only, and do not constitute a part hereof.
13. GOVERNING LAW. This Warrant shall be construed in accordance with
and governed by the laws of the State of California.
14. EXPIRATION DATE. This Warrant will be wholly void and of no effect
after 5:00 p.m. (San Francisco time) February 5, 2002 (the "Expiration
Date"); provided that, if the last day on which this Warrant may be
exercised, or on which it may be exercised at a particular Exercise Price, is
a Sunday or a legal holiday or a day on which banking institutions doing
business in the City of San Francisco are authorized by law to close, this
Warrant may be exercised prior to 5:00 p.m. (San Francisco time) on the next
succeeding full business day with the same force and effect and at the same
Exercise Price as if exercised on such last day specified herein.
15. ISSUE TAX. The issuance of certificate for shares of Common Stock
upon the exercise of this Warrant shall be made without charge to the Holder
of the Warrant for any issue tax (other than applicable income taxes) in
respect thereof; provided, however, that the Company shall not be required to
pay any tax that may be payable in respect of any transfer involved in the
issuance and delivery of any certificate in a name other than that of the
then Holder of the Warrant being exercised.
16. TRANSFER RESTRICTIONS. The Company is relying upon an exemption
from registration, with respect to this Warrant and the shares of Common
Stock issuable upon exercise hereof, under the Act and applicable state
securities laws. The Holder, by acceptance hereof, represents that the
Holder understands that neither this Warrant nor the Common Stock issuable
upon exercise hereof has been registered with the Securities and Exchange
Commission nor under any state securities law, and that neither this Warrant
nor the Common Stock issuable upon exercise hereof may be sold or transferred
unless registered under the Act and any applicable state securities laws, or
unless an exemption from such registration is available. By acceptance
hereof, the Holder represents, warrants and acknowledges that (a) it is
acquiring the Warrant (and the shares of Common Stock or other securities
issuable upon exercise hereof) for its own account for investment purposes
and not with a view to distribution, (b) it has received all such information
as the Holder deems necessary and appropriate to enable the Holder to
evaluate the financial risk inherent in making an investment in the Company,
and satisfactory and complete information concerning the business and
financial condition of the Company in response to all inquiries in respect
thereof, (c) the Holder's acquisition of shares upon exercise hereof will be
a highly speculative investment, (d) the Holder is able, without impairing
its financial condition, to hold such shares for an indefinite period of time
and to suffer a complete loss of the Holder's investment, and (e) the Holder
has such knowledge and experience in financial and business matters that it
is capable of evaluating the merits and risks of acquisition of this Warrant
and the shares issuable upon exercise hereof and of making an informed
investment decision with respect thereto. Each certificate representing
shares of Common Stock or other securities issued upon exercise of this
Warrant shall have conspicuously endorsed on its face, at the time of its
issuance, such legends as counsel to the Company deems necessary or
appropriate, including without limitation the legend set forth on the top of
the first page of this Warrant. The Company agrees to remove such legends
upon (i) receipt of an unqualified written opinion of legal counsel who shall
be reasonably satisfactory to the Company, addressed to the Company and
-6-
<PAGE>
reasonably satisfactory in form and substance to the Company's counsel, to
the effect that the proposed transfer of this Warrant, or the securities
issuable upon exercise hereof, may be effected without registration under the
Securities Act of 1933, as amended, or any applicable state securities laws
or (ii) such other showing as shall be reasonably satisfactory to the
Company's counsel.
IN WITNESS WHEREOF, the Company has caused this Warrant to be duly
executed and delivered on the date first set forth above.
BLYTH HOLDINGS, INC.
By: /s/ Timothy P. Negris
---------------------------------------
Timothy Negris, President and
Chief Executive Officer
[Warrant signature page]
-7-
<PAGE>
EXHIBIT A
NOTICE OF EXERCISE
(To be signed only upon exercise of Warrant)
To: BLYTH HOLDINGS, INC.
989 Hillsdale Boulevard
Suite 400
Foster City, CA 94404
The undersigned, Holder of the attached Warrant, hereby irrevocably elects
to exercise the purchase right represented by this Warrant as follows:
[ ] The undersigned elects to purchase for cash or check _________ full
shares of Common Stock of Blyth Holdings, Inc. and herewith makes
payment of $__________ for those shares;
[ ] The undersigned elects to effect a net exercise of this Warrant,
exercising this Warrant [ ] in full or [ ] as to the following GROSS
number of shares: ____________. The undersigned understands that the
actual number of shares issuable will be determined in accordance with
Sections 1.1 and 2 of this Warrant.
The undersigned requests that the certificates for the shares be issued
in the name of, and delivered to, _________________________________*, whose
address is____________________________________________.
Dated:____________, ____
(Signature must conform in all respects to name of
Holder as specified on the face of the attached
Warrant.)
________________________________________
Signature
________________________________________
Address
________________________________________
________________________
* If the stock is to be issued to anyone other than the registered Holder of
this Warrant, this Notice of Exercise must be accompanied by an opinion of
counsel to the effect that such transfer may be effected without compliance with
the registration and prospectus delivery requirements of the Securities Act of
1933, as amended.
<PAGE>
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in Registration Statements
No. 33-65538, 33-81008, 33-46166 and 33-32677 of Blyth Holding Inc. on Form S-8
of our report dated May 9, 1997 (June 10, 1997 as to the last paragraph of
Note 5) appearing in this Annual Report on Form 10-K of Blyth Holdings Inc. for
the year ended March 31, 1997.
DELOITTE & TOUCHE LLP
San Jose, California
July 28, 1997
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> MAR-31-1997
<PERIOD-START> APR-01-1996
<PERIOD-END> MAR-31-1997
<CASH> 236,000
<SECURITIES> 5,914,000
<RECEIVABLES> 2,419,000
<ALLOWANCES> 676,000
<INVENTORY> 18,000
<CURRENT-ASSETS> 8,597,000
<PP&E> 4,033,000
<DEPRECIATION> 2,583,000
<TOTAL-ASSETS> 10,047,000
<CURRENT-LIABILITIES> 3,069,000
<BONDS> 1,646,000
0
0
<COMMON> 174,000
<OTHER-SE> 5,158,000
<TOTAL-LIABILITY-AND-EQUITY> 10,047,000
<SALES> 4,731,000
<TOTAL-REVENUES> 10,400,000
<CGS> 4,880,000
<TOTAL-COSTS> 17,036,000
<OTHER-EXPENSES> 1,329,000
<LOSS-PROVISION> 676,000
<INTEREST-EXPENSE> 1,757,000
<INCOME-PRETAX> (7,965,000)
<INCOME-TAX> 30,000
<INCOME-CONTINUING> (7,995,000)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (7,995,000)
<EPS-PRIMARY> (0.67)
<EPS-DILUTED> (0.67)
</TABLE>
