<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/X/ Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section240.14a-11(c) or
Section240.14a-12
BLYTH HOLDINGS INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-----------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE>
QUORUM; ABSTENTIONS; BROKER NON-VOTES
The Company's Bylaws provide that stockholders holding a majority of the
shares of Common Stock issued and outstanding and entitled to vote on the Record
Date shall constitute a quorum at meetings of stockholders. Shares that are
voted "FOR," "AGAINST" or "WITHHELD" on a matter are treated as being present at
the meeting for purposes of establishing a quorum and are also treated as
"entitled to vote on the subject matter" (the "Votes Cast") at the Annual
Meeting with respect to such matter.
While there is no definitive statutory or case law authority in Delaware as
to the proper treatment of abstentions, the Company believes that abstentions
should be counted for purposes of determining the presence or absence of a
quorum for the transaction of business and the total number of Votes Cast with
respect to a particular matter (other than the election of directors). In the
absence of controlling precedent to the contrary, the Company intends to treat
abstentions in this manner. Accordingly, with the exception of the proposal for
the election of directors, abstentions will have the same effect as a vote
against the proposal. Because directors are elected by a plurality vote,
abstentions in the election of directors have no impact once a quorum exists.
In a 1988 Delaware case, Berlin v. Emerald Partners, the Delaware Supreme
Court held that while broker non-votes may be counted for purposes of
determining the presence or absence of a quorum for the transaction of business,
broker non-votes should not be counted for purposes of determining the number of
Votes Cast with respect to the particular proposal on which the broker has
expressly not voted. Broker non-votes with respect to proposals set forth in
this Proxy Statement will therefore not be considered "Votes Cast" and,
accordingly, will not affect the determination as to whether the requisite
majority of Votes Cast has been obtained with respect to a particular matter.
DEADLINE FOR RECEIPT OF STOCKHOLDER PROPOSALS
The Company currently intends to hold its 1998 Annual Meeting of
Stockholders in August 1998 and to mail proxy statements relating to such
meeting in July 1998. Proposals of stockholders of the Company that are intended
to be presented by such stockholders at the Company's 1998 Annual Meeting of
Stockholders must be received by the Company no later than April 17, 1998, and
must otherwise be in compliance with applicable laws and regulations in order to
be considered for inclusion in the proxy statement and form of proxy relating to
that meeting.
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers and directors, and persons who own more than ten percent of a
registered class of the Company's equity securities to file reports of ownership
on Form 3 and changes in ownership on Form 4 or 5 with the Securities and
Exchange Commission (the "SEC") and the National Association of Securities
Dealers, 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
Forms 3 filed for Christopher J. Steffen and Patrick R. McEntee were filed late.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth as of the Record Date, certain information
with respect to the beneficial ownership of the Company's Common Stock by (i)
any person (including any "group" as that term is used in Section 13(d)(3) of
the Securities Exchange Act of 1934, as amended (the "Exchange Act")) known by
the Company to be the beneficial owner of more than 5% of 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
2
<PAGE>
Summary Compensation Table appearing herein, and (iv) all directors and
executive officers of the Company as a group.
<TABLE>
<CAPTION>
NUMBER OF PERCENT OF
NAME AND ADDRESS (1) SHARES TOTAL
- -------------------------------------------------------------------------------------------- ---------- -----------
<S> <C> <C>
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 *
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%
</TABLE>
- ------------------------
* 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 a Schedule 13G filed with the Securities and Exchange
Commission.
(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 which is exercisable within 60
days of the Record Date held 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.
3
<PAGE>
PROPOSAL ONE
ELECTION OF DIRECTORS
NOMINEES
The Bylaws of the Company provide that the Board of Directors shall be
composed of seven directors divided into three classes composed of two members
in each of Classes I and II and three members in Class III. The directors are
elected to serve staggered three-year terms, with the term of one class of
directors expiring each year. Following the meeting there will be one vacancy in
each Class I and Class III.
Unless otherwise specified, each properly executed proxy received will be
voted for the election of the two Class III nominees named below, to serve as a
director until the 2000 Annual Meeting of Stockholders or until his successor is
elected and shall qualify. Mr. Hanschen was first appointed as a Class III
director in 1990. Mr. Negris was appointed as a Class III director in February
1997. The nominees have previously consented to be named as nominees in the
proxy statement and to continue to serve as directors if elected. Should the
nominees become unable or unwilling to accept nomination or election, or should
additional persons be nominated at the meeting, the persons named in the
enclosed proxy will vote for the election of the nominees hereafter designated
by the Board of Directors (or if new nominees have been designated by the Board,
in such a manner as to elect such new nominees). The Company is not aware of any
reason that either nominee will be unable or will decline to serve as a
director. There are no arrangements or understandings between any director or
executive officer and any other person pursuant to which he is or was to be
selected as a director or officer of the Company.
The following 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 New 1990
Business Resources II, Inc., an investment
firm
Timothy P. Negris................... 42 Chairman, President and Chief Executive Officer 1997
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 Operating Officer--Healthcare Services 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 nominee has been engaged in his principal occupation
set forth above during the past five years. There is no family relationship
between any director or executive officer of the Company.
4
<PAGE>
Mr. Negris joined the Company in November 1996 as 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, Mr. Negris 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 and Director of Citicorp/Citibank from
May 1993 to December 1996. Mr. Steffen served as Chief Financial Officer and
Executive Vice President and Director 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.
BOARD MEETINGS AND COMMITTEES
The Board of Directors of the Company held a total of five meetings and took
two actions by written consent during the fiscal year ended March 31, 1997. No
director serving during such fiscal year attended fewer than 75% of the
aggregate of all meetings of the Board of Directors and the committees of the
Board upon which such director served. The Board of Directors has two
committees, the Audit Committee and the Compensation and Options Committee. The
Board of Directors has no nominating committee or any committee performing such
functions.
The Audit Committee of the Board of Directors consisted of Messrs. Hanschen
and Konrad during the last fiscal year and held one meeting. The Audit Committee
recommends engagement of the Company's independent public accountants and is
primarily responsible for approving the services performed by the Company's
independent public accountants and for reviewing and evaluating the Company's
accounting principles and its system of internal accounting controls.
The Compensation and Options Committee of the Board of Directors consisted
of directors Hanschen and Konrad during the last fiscal year, held one meeting.
The Committee grants stock options to employees of the Company, including
officers, pursuant to the Company's stock option plans. The Committee has
delegated the responsibility for administering compensation programs (other than
option grants) to the Company's executive officers, subject only to overall
budget review and approval by the full Board of Directors.
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.
5
<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. 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.
VOTE REQUIRED
The Class III directors will be elected by a plurality vote of the shares of
the Company's Common Stock present or represented and entitled to vote on this
matter at the meeting. Cumulative voting in the election of directors is not
authorized by the Company's Bylaws or Certificate of Incorporation. Votes
withheld from a nominee and broker non-votes will be counted for purposes of
determining the presence or absence of a quorum but because directors are
elected by a plurality vote, nominee and broker non-votes will have no impact
once a quorum is present. See "Information Concerning Solicitation and
Voting--Quorum; Abstentions; Broker Non-Votes."
MANAGEMENT RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR"
THE FOREGOING NOMINEES
PROPOSAL TWO
AMENDMENT TO THE RESTATED CERTIFICATE OF INCORPORATION
TO CHANGE THE COMPANY'S NAME TO "OMNIS HOLDINGS, INC."
The Board of Directors is soliciting stockholder approval of an amendment to
the Company's Restated Certificate of Incorporation to change the Company's name
to "OMNIS Holdings, Inc." This proposal is part of the Company's ongoing effort
to unify the Company's corporate identity with its brand identity. ONMIS has
been the Company's flagship product since 1984 and the Company has recently
expanded this product line under the ONMIS brand name. The Board of Directors
and the management of the Company believe it will be able to more clearly
communicate with customers and potential customers if the corporate operating
name is closely aligned with its brand name. To this end, on August 1, 1997 the
Company will change the symbol under which its stock trades from "BLYH" to
"OMNS". In
7
<PAGE>
addition, in the first quarter of fiscal 1998, the Board of Directors changed
the names of the Company's subsidiaries from Blyth Software Inc., Blyth Software
Limited and Blyth Software GmbH to OMNIS Software, Inc., OMNIS Software Limited
and OMNIS Software, GmbH, respectively.
The Board of Directors believes that it is in the best interests of the
Company and its stockholders to also change the name of the parent corporation
from Blyth Holdings Inc. to OMNIS Holdings, Inc.
REQUIRED VOTE
Under Delaware law, approval of the Amendment requires the affirmative vote
of at least a majority of the outstanding shares of Common Stock. An abstention
or failure to vote on this proposal is not an affirmative vote and, therefore,
will have the same effect as a vote against the proposal. A broker non-vote will
not be treated as entitled to vote on this subject matter at the meeting. See
"Information Concerning Solicitation and Voting--Quorum; Abstentions; Broker
Non-Votes."
MANAGEMENT RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR"
THE AMENDMENT TO THE RESTATED CERTIFICATE OF INCORPORATION
TO CHANGE THE COMPANY'S NAME TO "OMNIS HOLDINGS, INC."
PROPOSAL THREE
AMENDMENT TO THE RESTATED CERTIFICATE OF
INCORPORATION TO EFFECT A REVERSE STOCK SPLIT
The Company's Common Stock is traded and listed on the National Association
of Securities Dealers, Inc. ("Nasdaq") National Market ("NMS"). The Board of
Directors believes that it may become necessary in the near future to effect a
reverse split of the Company's Common Stock in order to allow the Company to
comply with the listing requirements of Nasdaq. One of the listing requirements
of the Nasdaq NMS is that the Company's Common Stock have a minimum bid price of
$1.00 or, in the alternative, the Company's net tangible assets must be greater
than $4 million and the market value of its Common Stock must exceed $3 million.
The table below summarizes the high and low closing sales prices based on actual
trades on the Nasdaq NMS by fiscal quarter since April 1, 1995.
<TABLE>
<CAPTION>
HIGH LOW
--------- ---------
<S> <C> <C>
Fiscal 1996
April 1 to June 30, 1995........................................................ $ 5.2500 $ 2.5625
July 1 to September 31, 1995.................................................... $ 3.3750 $ 1.9375
October 1 to December 31, 1995.................................................. $ 2.7500 $ 2.1250
January 1 to March 31, 1996..................................................... $ 3.0625 $ 2.1250
Fiscal 1997
April 1 to June 30, 1996........................................................ $ 3.6870 $ 2.6880
July 1 to September 31, 1996.................................................... $ 2.6250 $ 1.0940
October 1 to December 31, 1996.................................................. $ 1.5340 $ 0.5000
January 1 to March 31, 1997..................................................... $ 1.5635 $ 0.4688
</TABLE>
The closing price of the Common Stock was $ on the Record Date. Since
November 1996 the closing sales price of the Company's Common Stock on Nasdaq
NMS has been approximately $1.00 and has frequently been below $1.00. Although
the market value of the Company's Common Stock is significantly in excess of $3
million, the Company's net tangible assets were slightly above $4 million at the
end of first quarter. The Company does not expect to be profitable in the second
quarter and net tangible assets will most likely drop below $4 million unless
the Company completes a financing by the end of such quarter. As a result, in
the absence of new equity financing which would increase the amount of the
Company's net tangible assets, the Company may be required to effect a reverse
stock split in order to ensure that the bid price of the Company's Common Stock
is consistently in excess of $1.00.
8
<PAGE>
POTENTIAL EFFECTS OF PROPOSED REVERSE STOCK SPLIT
If this proposal is approved by the Company's stockholders, the Board of
Directors will have authority during the nine-month period following the
Meeting, without further stockholder approval, to effect a reverse stock split
whereby one new share of Common Stock ("New Common Stock") will be issued for a
number of presently outstanding shares of Common Stock, such number to be
between two and five shares (the "Reverse Stock Split"). The exact number of
shares to be exchanged for each share of New Common Stock and the timing of the
Reverse Stock Split will be determined by the Board of Directors upon
consultation with its financial advisors. The Board of Directors reserves the
right, notwithstanding stockholder approval and without further action by the
stockholders, not to proceed with the Reverse Stock Split, if, at any time prior
to filing the Amendment with the Secretary of State of the State of Delaware,
the Board of Directors, in its sole discretion, determines that the Reverse
Stock Split is no longer in the best interests of the Company and its
stockholders. The Board of Directors may consider a variety of factors in
determining the terms and timing of the Reverse Stock Split, including, but not
limited to, overall trends in the stock market, recent changes and anticipated
trends in the per share market price of the Company's Common Stock, business
developments and the Company's actual and projected financial performance.
The Board of Directors believes that the decrease in the number of shares of
Common Stock outstanding as a consequence of a reverse Stock Split will result
in a corresponding increase in the price per share of the Company's Common
Stock. There can be assurance, however, that a reverse stock split will result
in any change in in the price of the Company's Common Stock or that, if the
price of the Company's Common Stock does increase as a result of the reverse
stock split, such increase will be sufficient to allow the Company to comply
with the listing requirements of the Nasdaq NMS. If the Company is unable to
comply with the Nasdaq NMS listing requirements, the Company's Common Stock may
be delisted from the Nasdaq NMS. Although in such event the Company would
attempt to list the Company's Common Stock on the Nasdaq SmallCap market, there
can be no assurance that the Company would be successful. If the Company is
delisted from the Nasdaq National Market, the Company believes the liquidity and
market value of the Company's Common Stock could be materially and adversely
affected.
The Company is presently authorized to issue 40,000,000 shares of Common
Stock, $0.01 par value, of which [21,096,358] shares were issued and outstanding
at the close of business on the Record Date. The following tables illustrate the
principal effects of the Reverse Stock Split to the Company's Common Stock:
<TABLE>
<CAPTION>
AFTER THE
AFTER THE 1- AFTER THE 1- AFTER THE 1- 1-
PRIOR TO FOR-2 FOR-3 FOR-4 FOR-5
REVERSE REVERSE REVERSE REVERSE REVERSE
STOCK STOCK STOCK STOCK STOCK
NUMBER OF SHARES SPLIT (#) SPLIT (#) SPLIT (#) SPLIT (#) SPLIT (#)
- -------------------------------------------- ------------ ------------ ------------ ------------ -----------
<S> <C> <C> <C> <C> <C>
Common Stock
Authorized................................ 40,000,000 20,000,000 13,333,333 10,000,000 8,000,000
Outstanding(1)............................ 17,373,525 8,686,763 5,791,175 4,343,381 3,474,705
Available for Future Issuance............. 22,626,475 11,313,238 7,542,158 5,656,619 4,525,295
</TABLE>
The proposed Reverse Stock Split will not affect any stockholder's
proportionate equity interest in the Company, except for those stockholders who
would receive cash in lieu of fractional shares. Holders of Common Stock will
continue to be entitled to receive such dividends as may be declared by the
Board of Directors. To date no dividends on the Common Stock have been paid by
the Company. Outstanding warrants and stock options under the Company's stock
plans will be adjusted to reflect the ratio of the Reverse Stock Split, if such
transaction is effected. The Company's reporting obligations under the Exchange
Act will not be affected by a Reverse Stock Split.
9
<PAGE>
The number of holders of record of Common Stock of the Company as of the
Record Date was approximately 170. Except as discussed above, the Company does
not believe that, if effected, the Reverse Stock Split and related transactions
will result in a significant reduction of the number of stockholders of the
Company, although the Company may choose to engage in a repurchase of odd lot
stock holdings subsequent to the Reverse Stock Split which may result in such a
reduction.
AMENDMENT OF RESTATED CERTIFICATE OF INCORPORATION AND NOTIFICATION OF
STOCKHOLDERS
The Amendment, in substantially the form of Exhibit "A" to this Proxy
Statement, has been adopted by the Board of Directors subject to approval by the
Company's stockholders and subject to final determination of the Board of
Directors of the terms of the Reverse Stock Split. Upon determination by the
Board of the terms of the Reverse Stock Split and the filing of appropriate
documents to effect such Reverse Stock Split, including the amendment to the
Company's Restated Certificate of Incorporation (the "Amendment"), the Board
will notify the stockholders that the Reverse Stock Split has been effected.
Immediately following the Reverse Stock Split, the Board proposes to provide for
payment of cash in lieu of fractional shares of New Common Stock otherwise
issuable in connection with the Reverse Stock Split.
EXCHANGE OF STOCK CERTIFICATES
If the Amendment is approved by the Company's stockholders, then when the
Board of Directors determines the Reverse Stock Split ratio and timing, the
Company will file the Amendment to its Restated Certificate of Incorporation
with the Secretary of State of the State of Delaware. The Reverse Stock Split
will become effective on the date of such filing of the Amendment (the
"Effective Date") and the stockholders will be notified on or after the
Effective Date that the Reverse Stock Split has been effected. The Company's
transfer agent will act as the Company's exchange agent (the "Exchange Agent")
for holders of Common Stock to exchange their certificates representing shares
of the Company's Common Stock.
As soon as practicable after the Effective Date, stockholders will be
notified and requested to surrender their certificates representing shares of
Common Stock to the Exchange Agent in exchange for certificates representing New
Common Stock. Beginning on the Effective Date, each certificate representing
shares of the Company's Common Stock will be deemed for all corporate purposes
to evidence ownership of shares of New Common Stock. To the extent a stockholder
holds a number of shares not evenly divisible by the actual amount of the
Reverse Stock Split (i.e., two, three, four or five), the Company will pay cash
for fractional interests as described below.
LIQUIDATION OF FRACTIONAL SHARES
No scrip or fractional certificates will be issued in connection with the
Reverse Stock Split. Assuming approval of the Reverse Stock Split by the
Company's stockholders, stockholders who ostensibly would be entitled to receive
fractional shares because they hold a number of shares of Common Stock not
evenly divisible by the actual amount of the reverse split (i.e., two, three,
four or five), will be entitled, upon surrender to the Exchange Agent of
certificates representing such shares, to a cash payment in lieu thereof at a
price equal to the closing price of the Company's Common Stock as reported in
the Wall Street Journal on the Effective Date (or the average of the last bid
and ask prices of such Common Stock as reported by Nasdaq NMS if such Common
Stock is not then listed on the Nasdaq NMS) for each such share of Common Stock
held prior to the Effective Date that is not consolidated.
The Company will either deposit sufficient cash with the Exchange Agent or
set aside sufficient cash for the purchase of the above referenced fractional
interests. Stockholders are encouraged to surrender their certificates to the
Exchange Agent for certificates evidencing whole shares of the New Common Stock
and to claim the sums, if any, due them for fractional interests, as promptly as
possible following the Effective Date.
10
<PAGE>
Stockholders should be aware that, under the escheat laws of the various
jurisdictions where stockholders reside, where the Company is domiciled, and
where the funds will be deposited, sums due for fractional interests that are
not timely claimed after the Effective Date may be required to be paid to the
designated agent for each such jurisdiction, unless correspondence has been
received by the Company or the Exchange Agent concerning ownership of such funds
within the time permitted in such jurisdictions. Thereafter, stockholders
otherwise entitled to receive such funds will have to seek to obtain them
directly from the state to which they were paid.
The ownership of a fractional interest will not give the holder thereof any
voting, dividend, or other rights with respect to such tractional interest
except the right to receive payment therefor as described herein. No service
charge will be payable by stockholders in connection with the exchange of
certificates or the issuance of cash for fractional interests, all of which
costs will be borne and paid by the Company.
FEDERAL INCOME TAX CONSEQUENCES
The following description of federal income tax consequences is based on the
Internal Revenue Code of 1986, as amended (the "Code"), the applicable Treasury
Regulations promulgated thereunder, judicial authority and current
administrative rulings and practices as in effect on the date of this Proxy
Statement. This discussion is for general information only and does not discuss
the federal income tax consequences which may apply to non-resident aliens,
broker-dealers, stockholders who receive Common Stock in compensatory
transactions or insurance companies. This discussion does not address any
foreign, state or local tax consequences that may be relevant to the Company's
stockholders. Accordingly, stockholders are urged to consult their own tax
advisors to determine the particular consequences to them of the Reverse Stock
Split.
The exchange of shares of Common Stock for shares of New Common Stock will
not result in recognition of gain or loss (except in the case of cash received
for fractional shares as described below). The holding period of the shares of
New Common Stock will include the stockholder's holding period for the shares of
Common Stock exchanged therefor, provided that the shares of Common Stock were
held as a capital asset. The adjusted basis of the shares of New Common Stock
will be the same as the adjusted basis of the Common Stock exchanged therefor,
reduced by the basis applicable to the receipt of cash in lieu of fractional
shares described below.
Stockholders who receive cash in lieu of fractional shares will be treated
as if the Company has issued fractional shares to them and then immediately
redeemed such shares for cash. Such stockholders should generally recognize gain
or loss, as the case may be, measured by the differences between the amount of
cash received and the basis of their old Common Stock allocable to such
fractional shares, had they actually been issued, provided that such a
redemption is not essentially equivalent to a dividend. Such gain or loss will
be capital gain or loss (if such stockholders' Common Stock was held as a
capital asset), and any such capital gain or loss will generally be long-term
capital gain or loss to the extent such stockholders' holding period for their
Common Stock exceeds twelve months.
In the event the payment in cash for a fractional share is essentially
equivalent to a dividend, the amount received will be taxable as ordinary income
to the extent of the Company's current and accumulated earnings and profits
determined on a pro rata basis. Any amount distributed which is not a dividend
will first be applied against and reduce a stockholder's basis in his or her
Common Stock and thereafter be treated as gain from the sale or exchange of
property.
VOTE REQUIRED AND BOARD OF DIRECTORS RESERVATION OF RIGHTS
Under Delaware law, approval of the Amendment requires the affirmative vote
of at least a majority of the outstanding shares of Common Stock. Such approval
will authorize the Board of Directors during the nine month period following
such approval, to determine the timing and the ratio of the Reverse Stock Split
within the range of from one share of New Common Stock for each two outstanding
shares of
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Common Stock to one share of New Common Stock for each five outstanding shares
of Common Stock. The Board of Directors reserves the right, notwithstanding
stockholder approval and without further action by the stockholders, to elect
not to proceed with the Reverse Stock Split, if at any time prior to filing the
Amendment to the Company's Restated Certificate of Incorporation with the
Secretary of State of the State of Delaware, the Board of Directors, in its sole
discretion determines that the Reverse Stock Split is no longer in the best
interests of the Company and its stockholders. If the Board of Directors does
not effect the Reverse Stock Split within the nine month period following
approval thereof, the Board of Directors will not be able to effect a reverse
stock split without obtaining separate stockholder approval. An abstention or
failure to vote on this proposal is not an affirmative vote and, therefore, will
have the same effect as a vote against the proposal. A broker non-vote will not
be treated as entitled to vote on this subject matter at the meeting. See
"Information Concerning Solicitation and Voting--Quorum; Abstentions; Broker
Non-Votes."
NO DISSENTER'S RIGHTS
Under Delaware law, stockholders are not entitled to dissenter's rights of
appraisal with respect to the proposed Amendment to the Company's Restated
Certificate of Incorporation to effect the Reverse Stock Split.
MANAGEMENT RECOMMENDS A VOTE "FOR"
APPROVAL TO EFFECT A REVERSE STOCK SPLIT AND THE
RELATED AMENDMENT TO THE RESTATED CERTIFICATE OF INCORPORATION
PROPOSAL FOUR
APPROVAL OF AN AMENDMENT TO THE 1996 STOCK PLAN
GENERAL
The 1996 Stock Plan as amended (the "Option Plan") was adopted by the Board
of Directors in May 1996 and approved by the stockholders in August 1996. A
total of 450,000 shares of Common Stock were reserved for issuance under the
Option Plan.
The Option Plan provides for the grant to employees of the Company of
incentive stock options within the meaning of Section 422 of the Internal
Revenue Code of 1986, as amended (the "Code"), and for the grant of nonstatutory
stock options to employees and consultants of the Company. The Option Plan may
be administered by the Board or a committee approved by the Board. As of March
31, 1997, no options were outstanding under the Option Plan.
PROPOSAL
At the Annual Meeting, the Company's stockholders are being requested to
approve an amendment to the Option Plan to increase the number of shares
reserved for issuance thereunder by 850,000 shares for an aggregate of 1,300,000
shares. The Board is seeking approval of this amendment primarily in connection
with the proposed Reverse Stock Split which will effect all outstanding options
and shares reserved for future issuance under the Option Plan. For example, if
the Board determines that a one-for-five Reverse Stock Split is in the best
interests of the Company, and if this proposal to the amend the Option Plan is
approved, following such Reverse Stock Split 260,000 would be reserved for
issuance under the Option Plan, with the number of shares subject to outstanding
options under the Option Plan correspondingly reduced.
The Board of Directors believes that the ability to grant options is
important to the future success of the Company. The granting stock options can
motivate high levels of performance and provide an effective means of
recognizing employee contributions to the success of the Company. The Company
believes that
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this policy is of great value in recruiting and retaining highly qualified
technical and other key personnel who are in great demand as well as rewarding
and incenting current employees.
The material features of the Option Plan are outlined below.
SUMMARY OF THE OPTION PLAN
PURPOSE. The purposes of the Option Plan are to attract and retain the best
available personnel for positions of substantial responsibility, to provide
additional incentives to employees and consultants of the Company, and to
promote the success of the Company's business.
ADMINISTRATION. The Option Plan may be administered by multiple
administrative bodies. With respect to officers and directors, the Option Plan
may be administered by either the Board or one or more committees designated by
the Board as may be necessary to comply with the rules governing a plan intended
to qualify as a discretionary grant under Rule 16b-3. With respect to persons
other than officers or directors, the Option Plan may be administered by the
Board or a committee designated by the Board as necessary to comply with
applicable law. These multiple administrative bodies shall hereinafter be
collectively referred to as the "Administrator."
ELIGIBILITY. Nonstatutory stock options and stock purchase rights may be
granted to employees and consultants of the Company and its subsidiaries.
Incentive stock options may be granted only to employees of the Company and its
subsidiaries. The Administrator selects the employees and consultants who will
be granted options and determines the number of shares to be subject to each
option. In making such determination, the Administrator takes into account the
duties and responsibilities of the employee or consultant, the value of the
services of such employee or consultant, his or her present and potential
contributions to the success of the Company, the anticipated years of future
service of an employee and other relevant factors. As of June 30, 1997,
approximately 120 employees and consultants were eligible to receive options
under the Option Plan.
EXERCISE OF OPTIONS AND PURCHASE OF RESTRICTED SHARES. Options and stock
purchase rights vest at such times as are determined by the Administrator and
set forth in the option or restricted stock purchase agreement. Generally,
options and stock purchase rights vest in equal annual installments over a
four-year period with such vesting accelerated in the event of the sale of the
Company.
An option is exercised by delivery of written notice to the Company
specifying the number of full shares of Common Stock to be purchased and payment
of the purchase price. The method of payment of the exercise price for the
shares of purchased upon exercise of an option shall be determined by the
Administrator.
EXERCISE PRICE. The exercise price of options and stock purchase rights
granted under the Option Plan is determined by the Administrator. In case of
incentive stock options, the exercise price must not be less than 100% of the
fair market value of the Common Stock on the date of grant. Incentive stock
options granted to stockholders owning more that 10% of the voting stock of the
Company are subject to the additional restriction that the exercise price per
share of each option must be at least 110% of the fair market value per share on
the date of grant. The exercise price of nonstatutory options must not be less
than 85% of the fair market value of the Common Stock on the date of grant.
TERMINATION. If an optionee ceases to be an employee or consultant for any
reason other than death or disability, the optionee may exercise an existing
unexercised 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). In the absence of a specified time in the Notice of Grant, the
option shall remain exercisable for three (3) months following the date of
termination. If an optionee is "terminated for cause", any unexercised option
shall become void and unexercisable on the date of termination.
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If an optionee ceases to be an employee or consultant as a result of the
optionee's disability, the unexercised option may be exercised within twelve
(12) months after the date of the optionee's termination, but only to the extent
that the optionee was entitled to exercise it on the date of termination.
If the optionee ceases to be an employee or consultant as a result of the
optionee's death, or if the optionee dies after the termination of employment
but during the period in which the option would have been exercisable pursuant
to the circumstances described above, the unexercised option may be exercised
within twelve (12) months after the date of the optionee's death by the
executors or administrators of the optionee's estate or by the person(s) who has
acquired the option directly from the optionee by will or by the laws of will or
by the laws of decent and distribution.
TERMS. Options and stock purchase rights granted under the Option Plan
expire as determined by the Administrator, but in no event later than ten years
after the date of the grant. No option may be exercised by any person after such
expiration. In addition, incentive stock options granted to stockholders owning
more that 10% of the Company's outstanding voting stock may not have a term of
more than five years.
NON-TRANSFERABILITY. An option or stock purchase right is non-transferable
by the optionee other than by will or the laws of decent and distribution, and
is exercisable during the optionee's lifetime only by the optionee, or in the
event of the optionee's death, by a person who acquires the right to exercise
the option by bequest or inheritance or by reason of the death of an optionee.
ADJUSTMENTS UPON CHANGES IN CAPITALIZATION; CHANGES OF CONTROL. The number
of shares covered by each outstanding option, and the exercise price thereof
shall be proportionately adjusted for any increase or decrease in the number of
issued shares resulting from a change in the Company's capitalization, such as a
stock split, stock dividend and the like. If the Company is a participant in any
merger or consolidation, each outstanding and unexercised option shall be
assumed or substituted by the surviving corporation. If such options are not so
assumed, they shall become fully exercisable prior to the closing of such merger
or consolidation.
AMENDMENT. The Board may from time to time, with respect to any shares at
the time not subject to options, suspend or discontinue the Option Plan or
revise or amend it in any respect whatsoever except that, without the approval
of a majority of the Company's stockholders, no such revision or amendment
shall: (a) increase the number of shares subject to the Option Plan; (b) change
the designation of the class of persons eligible to receive options; or (c)
amend these provisions to defeat the stated purpose.
TERMS OF OPTION PLAN. Options may be granted pursuant to the Option Plan
during the period expiring on May 20, 2006. The Option Plan shall expire for all
purposes no later than May 20, 2016.
The Company's Common Stock is quoted on the NASDAQ National Market System
under the symbol BLYH. On June 30, 1997, the last reported sale price for the
Common Stock was $1.031.
UNITED STATES TAX INFORMATION
Options granted under the Option Plan may be either "incentive stock
options" as that term is defined in Section 422 of the Code or nonstatutory
stock options.
INCENTIVE STOCK OPTIONS. An optionee who is granted an incentive stock
option will not recognize taxable income either at the time the option is
granted or upon its exercise, although the exercise may subject the optionee to
the alternative minimum tax. Upon the sale or exchange of the shares more than
two years after the date of grant and one year after the date of exercise of the
option, any gain or loss will be treated as long-term capital gain or loss. If
these holding periods are not satisfied, the optionee will recognize ordinary
income at the time of sale or exchange equal to the difference between the
exercise price and the lower of (i) fair market value of the shares on the date
of the option exercise or (ii) the sale price of the shares. A different rule
for measuring ordinary income upon such a premature disposition may
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apply if the optionee is also an officer, director or 10% stockholder of the
Company. The Company will be entitled to a deduction in the same amount as the
ordinary income recognized by the optionee. Any gain or loss recognized on such
a premature disposition of the shares in excess of the amount treated as
ordinary income will be characterized as long-term or short-term capital gain or
loss, depending on the holding period.
NONSTATUTORY STOCK OPTIONS. All other options which do not qualify as
incentive stock options are referred to as nonstatutory stock options. An
optionee will not recognize any taxable income at the time he or she is granted
a nonstatutory stock option. However, upon its exercise, the optionee will
recognize taxable income generally measured as the excess of the then fair
market value of the shares exercised over the exercise price. A different rule
may apply if the optionee is a director, officer or 10% stockholder. Any taxable
income recognized in connection with an option exercise by an optionee who is
also an employee of the Company will be subject to tax withholding by the
Company by payment in cash or out of the current earnings paid to the optionee.
Upon resale of such shares by the Optionee, any difference between the sales
price and the optionee's exercise price, to the extent not recognized as taxable
income as described above, will be entitled to a tax deduction in the same
amount as the ordinary income recognized by the optionee with respect to shares
acquired upon exercise of a nonstatutory option.
RESTRICTED SHARES. The receipt of restricted shares pursuant to the
exercise of stock purchase rights will not result in a taxable event to the
participant or the Company until the Company's repurchase rights with respect to
such shares expire, unless the participant makes an election under Section 83(b)
of the Internal Revenue Code to be taxed as of the date of purchase. If a
Section 83(b) election is made, the participant will recognize ordinary income
in an amount equal to the excess of the fair market value of such shares on the
date of purchase over the amount paid for such shares. The election must be
filed with the Internal Revenue Service no later than 30 days after the date of
purchase. If no Section 83(b) election is made, a taxable event will occur on
each date on which the participant's ownership rights vest (i.e., when the
Company's repurchase rights expire) as to the number of shares that vest on that
date, and the holding period for long-term capital gain purposes will not
commence until the date on which the shares vest. The participant will recognize
ordinary income on each date on which shares vest in an amount equal to the
excess of the fair market value of such shares on that date over the amount paid
for such shares. However, if the participant is subject to Section 16(b) of the
Exchange Act, and if no Section 83(b) election was made at the time of purchase,
the recognition date for ordinary income for shares that vest within six months
of purchase will be subject to deferral to the date six months after the date of
purchase. The Company is entitled to a tax deduction in an amount equal to the
ordinary income recognized by the participant, provided that the applicable
withholding requirements are satisfied.
The foregoing summary of the effect of United States federal income taxation
laws upon the optionee and the Company in connection with the Option Plan, does
not purport to be complete, and reference should be made to the applicable
provisions of the Code. In addition, this summary does not discuss the
provisions of the income tax laws of any municipality, state or foreign country
in which the participant may reside.
AMENDED AND NEW PLAN BENEFITS
The Company cannot now determine the number of options to be received in the
future by the Named Executive Officers, all current officers as a group or all
employees (including current officers who are not executive officers) as a
group. In fiscal 1997, options to purchase 1,216,000 shares of Common Stock were
granted to all employees (including current officers who are not executive
officers) and options to purchase 1,000,000 shares of Common Stock were granted
to all current executive officers as a group. See "Executive Compensation--Stock
Option Grants and Exercises" for the number of stock options granted to each of
the Named Executive Officers.
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REQUIRED VOTE
The approval of the amendment to the Option Plan requires the affirmative
vote of a majority of the shares of the Company's Common Stock present or
represented and entitled to vote on this subject matter at the meeting. An
abstention is not an affirmative vote and, therefore, will have the same effect
as a vote against the proposal. A broker non-vote will not be treated as
entitled to vote on this subject matter at the meeting. See "Information
Concerning Solicitation and Voting--Quorum; Abstentions; Broker Non-Votes."
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE AMENDMENT
OF THE 1996 STOCK PLAN. THE EFFECT OF AN ABSTENTION IS THE SAME AS
A VOTE AGAINST THE AMENDMENT OF THE 1996 STOCK PLAN.
PROPOSAL FIVE
APPROVAL OF AN AMENDMENT TO THE
1994 EMPLOYEE STOCK PURCHASE PLAN
GENERAL
The 1994 Employee Stock Purchase Plan (the "Purchase Plan") was adopted by
the Board of Directors in May 1994 and the shareholders in August 1994. A total
of 225,000 shares of Common Stock have been reserved for issuance under the
Purchase Plan. As of July 31, 1997, 60,996 shares remained available for
purchase under the Purchase Plan. At the Annual Meeting, the stockholders are
being asked to approve an amendment to the Purchase Plan to increase the
authorized number of shares of Common Stock under the Purchase Plan by 175,000
shares. The Board of Directors believes it is in the best interests of the
Company to amend the stock purchase plan which provides eligible employees the
opportunity to purchase the Company's Common Stock through payroll deductions.
Since the Company does not contribute to any bonus or retirement program, stock
is an important method of rewarding employees for their performance and for
business successes reflected in stock price appreciation. The Board believes
that this plan will provide incentives, encouraging hard work and dedication
aimed at increasing the value of the Company.
PROPOSAL
At the Annual Meeting, the stockholders are being requested to approve this
amendment to increase the number of shares reserved for issuance thereunder by
175,000 shares for an aggregate of 400,000 shares reserved for issuance
thereunder. The Board is also seeking approval of this amendment in connection
with the proposed Reverse Stock Split which will effect all shares reserved for
future issuance under the Purchase Plan. For example, if the Board determines
that a one-for-five Reverse Stock Split is in the best interests of the Company,
and this proposal to increase the number of shares available for purchase under
the Purchase Plan is approved, following the Reverse Stock Split, a maximum of
35,0000 additional shares will be available for issuance under the Purchase
Plan.
The Company believes that the Purchase Plan motivates high levels of
performance and provides an effective means of recognizing employee
contributions to the success of the Company. The Company believes that the
Purchase Plan is of great value in recruiting and retaining highly qualified
technical and other key personnel who are in great demand as well as rewarding
and incenting current employees. The Board of Directors believes that the
ability to sell stock under the Purchase Plan will be important to the future
success of the Company by allowing it to accomplish these objectives.
Certain features of the Purchase Plan are outlined below.
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SUMMARY OF THE PURCHASE PLAN
ADMINISTRATION. The Purchase Plan, which is intended to qualify under
Section 423 of the Code, is administered by the Board of Directors or its
Compensation Committee (the "Administrator"). The Compensation and Options
Committee of the Board of Directors currently acts as Administrator of the
Purchase Plan. All questions of interpretation or application of the Purchase
Plan are determined by the Administrator, and its decisions are final,
conclusive and binding upon all participants.
Eligibility and Participation; Withdrawal. Company employees are eligible to
participate in the Purchase Plan if they are customarily employed for at least
20 hours per week and more than five months per year. Moreover, the Board may
designate that such employees of its subsidiaries are eligible to participate in
the Purchase Plan. However, no employee may be granted the right to purchase
more than $25,000 worth of Common Stock annually. Eligible employees become
participants in the Purchase Plan by filing with the payroll office of the
Company a subscription agreement authorizing payroll deductions prior to the
applicable offering date of up to 10% of the employee's compensation for an
Offering Period (as defined below). An employee may withdraw from the Purchase
Plan at any time by giving written notice to the Company. In such a case, all of
the payroll deductions credited to the employee's account and not yet used to
purchase Common Stock are refunded.
OFFERING PERIODS. The Purchase Plan is implemented by consecutive and
overlapping offering periods of two years ("Offering Periods") with a new
Offering Period commencing on the first trading day on or after October 1 and
April 1 of each year. The Administrator may change the commencement date and
duration of Offering Periods without obtaining stockholder approval.
PURCHASE PRICE. The purchase price per share at which shares are sold to
employees under the Purchase Plan is 85% of the lower of the fair market value
of the Company's Common Stock (a) on the date of commencement of the Offering
Period or (b) on the applicable Exercise Date within such Offering Period. The
applicable "Exercise Date" is the last day of the particular six-month exercise
period within the Offering Period. The fair market value of the Company's Common
Stock on a given date shall be the closing sale price on Nasdaq NMS. In the
event the Common Stock is quoted on the Nasdaq system (but not on the Nasdaq
NMS), the fair market value shall be the average of the closing bid and ask
prices for the Company's Common Stock on the date of such determination. In the
absence of an established market for the Common Stock, the fair market value
shall be determined in good faith by the Board of Directors.
AUTOMATIC TRANSFER TO LOWER PRICE OFFERING PERIOD. If the fair market value
of the Company's Common Stock on any Exercise Date in an Offering Period is
lower than the fair market value of the Common Stock on the enrollment date of
such Offering Period, then, all participants in such Offering Period will be
automatically withdrawn from such Offering Period immediately after the exercise
of their option on the Exercise Date and will be automatically re-enrolled in
the immediately following Offering Period as of the first day thereof.
ADJUSTMENT ON CHANGES IN CAPITALIZATION. In the event any change is made in
the Company's capitalization, such as a stock split or stock dividend, which
results in an increase or decrease in the number of outstanding shares of the
Company's Common Stock without receipt of consideration by the Company, the
number of shares remaining subject to purchase under the Purchase Plan and the
purchase price per share shall be appropriately adjusted. In the event of the
proposed dissolution or liquidation of the Company, the Offering Periods will
terminate immediately prior to such dissolution or liquidation, unless the Board
provides otherwise. In the event of a proposed sale of all or substantially all
of the assets of the Company, or the merger of the Company with or into another
corporation, each option under the Purchase Plan shall be assumed or an
equivalent option shall be substituted by such successor corporation or a parent
or subsidiary of such successor corporation, unless the Board determines, in the
exercise of its sole discretion and in lieu of such assumption or substitution,
to shorten the Offering Periods then in progress by setting a new Exercise Date.
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NON-ASSIGNABILITY. No rights or accumulated payroll deductions of a
participant under the Purchase Plan may be pledged, assigned or transferred for
any reason (other than by will or the laws of descent and distribution), and any
such attempt may be treated by the Company as an election to withdraw from the
Purchase Plan.
AMENDMENT AND TERMINATION OF THE PLAN; TERM. The Board of Directors may at
any time and for any reason terminate or amend the Purchase Plan. Except upon a
change in capitalization, no such termination can affect options previously
granted, provided that an Offering Period may be terminated by the Board of
Directors on any Exercise Date if the Board determines that the termination of
the Purchase Plan is in the best interests of the Company and its stockholders.
Except upon a change in capitalization, no amendment may make any change in any
option theretofore granted which adversely affects the rights of any
participant. To the extent necessary to comply with Rule 16b-3 promulgated under
the Securities Exchange Act of 1934, as amended, or under Section 423 of the
Code (or any successor rule or provision or any other applicable law or
regulation), the Company shall obtain stockholder approval of amendments to the
Purchase Plan in such a manner and to such a degree as required. In any case,
the Purchase Plan expires pursuant to its terms in May 2004.
UNITED STATES TAX INFORMATION
The Purchase Plan, and the right of participants to make purchases
thereunder, is intended to qualify under the provisions of Sections 421 and 423
of the Code. Under these provisions, no income will be taxable to a participant
until the shares purchased under the Purchase Plan are sold or otherwise
disposed of Upon sale or other disposition of the shares, the participant will
generally be subject to tax and the amount of the tax will depend upon the
holding period. If the shares are sold or otherwise disposed of more than two
years from the first day of the offering period and more than one year from the
date the shares are purchased, the participant will recognize ordinary income
measured as the lesser of (a) the excess of the fair market value of the shares
at the time of such sale or disposition over the purchase price, or (b) an
amount equal to 15% of the fair market value of the shares as of the first day
of the offering period. Any additional gain will be treated as long-term capital
gain. If the shares are sold or otherwise disposed of before the expiration of
these holding periods, the participant will recognize ordinary income generally
measured as the excess of the fair market value of the shares on the date the
shares are purchased over the purchase price. Any additional gain or loss on
such sale or disposition will be long-term or short-term capital gain or loss,
depending on the holding period. The Company is not entitled to a deduction for
amounts taxed as ordinary income or capital gain to a participant except to the
extent of ordinary income recognized by participants upon a sale or disposition
of shares prior to the expiration of the holding period(s) described above.
The foregoing is only a summary of the effect of federal income taxation
upon the recipient and the Company with respect to the stock purchase rights
under the Purchase Plan, does not purport to be complete, and does not discuss
the tax consequences of a participant's death or the income tax laws of any
municipality, state or foreign country in which a participant may reside.
AMENDED AND NEW PLAN BENEFITS.
Participation in the Purchase Plan is voluntary and is dependent on each
eligible employee's election to participate and his or her determination as to
the percentage of compensation to be contributed. Participants may also decrease
their contributions or withdraw from the Purchase Plan at any time. Therefore,
the Company cannot now determine the number of shares which may be purchased in
the future on behalf of the Named Executive Officers, all current executive
officers as a group or all employees (including current officers who are not
executive officers) as a group. No shares were issued to any of the Named
Executive Officers in fiscal 1997.
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REQUIRED VOTE
The amendment of the Purchase Plan requires the affirmative vote of a
majority of the shares of the Company's Common Stock present or represented and
entitled to vote on this subject matter at the meeting. An abstention is not an
affirmative vote and, therefore, will have the same effect as a vote against the
proposal. A broker non-vote will not be treated as entitled to vote on this
subject matter at the meeting. See "Information Concerning Solicitation and
Voting--Quorum; Abstentions; Broker Non-Votes."
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR"
THE AMENDMENT OF THE 1994 EMPLOYEE STOCK PURCHASE PLAN.
THE EFFECT OF AN ABSTENTION IS THE SAME AS A VOTE AGAINST THE
AMENDMENT OF THE 1994 EMPLOYEE STOCK PURCHASE PLAN
PROPOSAL SIX
RATIFICATION OF APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has selected Deloitte & Touche LLP, independent
public accountants, to audit the financial statements of the Company for the
fiscal year ending March 31, 1998, and recommends that stockholders vote for
ratification of such appointment. In the event of a negative vote on
ratification, the Board of Directors will reconsider its selection.
Representatives of Deloitte & Touche LLP are expected to be present at the
meeting with the opportunity to make a statement if they desire to do so, and
are expected to be available to respond to appropriate questions.
MANAGEMENT RECOMMENDS THAT STOCKHOLDERS VOTE "FOR"
RATIFICATION OF THE APPOINTMENT OF DELOITTE & TOUCHE LLP
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EXECUTIVE COMPENSATION
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 $100,000, information concerning compensation awarded to, earned
by or paid for services to the Company in all capacities during the last three
fiscal years:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION -------------
-------------------------------------------------
OTHER ANNUAL AWARDS ALL OTHER
COMPENSATION ------------- COMPENSATION
NAME AND PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) ($) OPTIONS (#) ($)
- --------------------------------------- --------- ---------- ----------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
TIMOTHY P. NEGRIS (1) ................. 1997 $ 71,590 -- -- 750,000 $ 60,000
Chairman, President and Chief 1996 -- -- -- -- --
Executive 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 Operating 1996 $ 153,125 -- -- 190,000 $ 44,765
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 5 years. See "--Other Employee
Benefit Plans and Termination of Employment Arrangement." "All Other
Compensation" listed for Mr. Minor in 1996 represents amounts contributed by
the Company under its 401(k) Plan and in 1997 includes $138,750 as a
severance payment and $765 contributed by the Company under its 401(k) Plan.
20
<PAGE>
(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
Lorentzen an additional $58,333 as severance following March 31, 1997. "All
Other Compensation" listed for Mr. Lorentzen includes $525 contributed by
the Company under its 401(k) plan and moving expenses of $44,240 paid to Mr.
Lorentzen in connection with his relocation to the San Francisco Bay Area
from the East Coast.
STOCK OPTION GRANTS AND EXERCISES
The following table shows, as to the individuals named in the Summary
Compensation Table above, (the "Named Executive Officers") information
concerning stock options granted during the fiscal year ended March 31, 1997.
This table also sets forth hypothetical gains or "option spreads" for the
options at the end of their respective terms, as calculated in accordance with
the Rules of the Securities and Exchange Commission. Each gain is based on an
arbitrarily assumed annualized rate of compound appreciation of the market price
at the date of the grant of 5% and 10% from the date the option was granted to
the end of the option term. The 5% and 10% rates of appreciation are specified
by the rules of the Securities and Exchange Commission and do not represent the
Company's estimate or projection of future Common Stock prices. The Company does
not necessarily agree that this method properly values an option. Actual gains,
if any, on option exercises are dependent on the future performance of the
Company's Common Stock and overall market conditions.
<TABLE>
<CAPTION>
OPTION GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS (1)
------------------------------------------------------ POTENTIAL REALIZABLE
NUMBER OF VALUE AT ASSUMED
SECURITIES ANNUAL RATES OF STOCK
UNDERLYING % OF TOTAL PRICE APPRECIATION FOR
OPTIONS OPTIONS GRANTED EXERCISE OPTION TERM (3)
GRANTED TO EMPLOYEES IN PRICE EXPIRATION ----------------------
NAME (#)(1) FISCAL YEAR (2) ($/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.
(5) Mr. Minor and Mr. Lorentzen resigned his positions with the Company in
January 1997.
21
<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 options at March 31, 1997. None of such options
were in-the-money at March 31, 1997.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
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 positions 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.
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
22
<PAGE>
final remuneration, reduced if the participant has less than ten years of
service with Blyth Holdings Limited. Blyth Holdings Limited makes annual
contributions under the BHL Retirement Plan to fund promised retirement
benefits. The BHL Retirement Plan is partially insured through the Sun Life
Assurance Society. The assets held under the BHL Retirement Plan which are not
used to pay insurance premiums are held in trust for investment purposes for the
benefit of the BHL Retirement Plan. Blyth Holdings Limited retains the right to
terminate the BHL Retirement Plan at any time upon thirty days prior written
notice.
BLYTH SOFTWARE LIMITED RETIREMENT BENEFITS SCHEME
The Company also sponsors a retirement plan called the Blyth Software Ltd.
Retirement Benefits Scheme ("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 five
23
<PAGE>
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.
24
<PAGE>
REPORT OF THE COMPENSATION COMMITTEE
OF THE BOARD OF DIRECTORS
NOTWITHSTANDING ANYTHING TO THE CONTRARY SET FORTH IN ANY OF THE COMPANY'S
PREVIOUS FILINGS UNDER THE SECURITIES EXCHANGE ACT OF 1933, AS AMENDED, OR THE
SECURITIES ACT OF 1934, AS AMENDED, THAT MIGHT PURPORT TO INCORPORATE FUTURE
FILINGS, INCLUDING THIS PROXY STATEMENT, IN WHOLE OR IN PART, THE FOLLOWING
REPORT AND THE PERFORMANCE GRAPH ON PAGE SHALL NOT BE INCORPORATED BY
REFERENCE INTO ANY SUCH FILINGS.
The Compensation and Options Committee (the "Committee") of the Board of
Directors which was formalized in July 1992 currently consists of Messrs.
Hanschen and Konrad. Decisions concerning the compensation of the Company's
executive officers are made by the Committee. All decisions by the Committee
relating to the compensation of the Company's executive officers are reviewed by
the full Board (excluding any interested director), except for decisions
including awards to executive officers under the Company's 1996 Stock Plan,
which are made solely by the Committee. The Committee has delegated the
responsibility for administering compensation programs (other than option
grants) for all other Company employees to the Company's executive officers,
subject only to overall budget review and approval by the full Board of
Directors.
Pursuant to rules designed to enhance disclosure of the Company's policies
on executive compensation, this report is submitted by the members of the
Committee to address the Company's compensation policies for fiscal 1997 as they
affected the current Chief Executive Officer, the other executive officers named
in the Summary Compensation Table, and the former Chief Executive Officers who
served during fiscal 1997.
EXECUTIVE OFFICER COMPENSATION PROGRAMS
The objectives of the overall executive officer compensation program are to
attract, retain, motivate and reward key personnel who possess the necessary
leadership and management skills through competitive base salary, annual cash
bonus incentives, long-term incentive compensation in the form of stock options,
and various benefits (including medical and life insurance plans) generally
available to employees of the Company.
The executive compensation policies of the Committee are intended to combine
competitive levels of compensation with rewards for above average performance
and to align relative compensation with the achievements of key business
objectives, optimal satisfaction of customers, and maximization of stockholder
value. The Committee believes that stock ownership by management is beneficial
in aligning management and stockholder interests and thereby enhancing
stockholder value.
BASE SALARY. Base salary levels for the Company's executive officers are
set relative to other companies in the same stage of development in the same
industry and geographic area. In determining salaries, the Committee also takes
into account the Chief Executive Officer's recommendations, individual
experience and contributions to corporate goals, the Company's performance, and,
in the case of Mr. Seaman, existing contractual commitments. See "Executive
Compensation--Other Employee Benefit Plans--Employment Contracts." Measures of
the Company's performance taken into account by the Committee in establishing
executive officer compensation include the achievement of significant milestones
in the Company's development plan and the relationship of the individual's
contribution to the achievement of these goals.
INCENTIVE BONUSES. The Committee believes that a cash incentive bonus plan
can serve to motivate the Company's executive officers and management to address
annual performance goals, using more immediate measures for performance than
those reflected in the appreciation in value of stock options. However, for
fiscal 1997, the Company's goals were targeted toward longer-term objectives for
corporate development. As a consequence, the Company did not have any incentive
bonus plan for executive officers for fiscal 1997 although certain incentive
payments were made to sales executives. The Company's Service
25
<PAGE>
Agreement with David R. Seaman requires the payment of certain incentive bonuses
if targeted goals are met. No bonus payments have been made under this agreement
to date.
STOCK OPTION GRANTS. Stock options are granted to executive officers and
other employees under the Company's option plan. Stock option grants are
intended to focus the attention of the recipient on long-term Company
performance which should result in improved stockholder value, and to retain the
services of the executive officers in a competitive job market by providing
significant long-term earning potential. To this end, stock options generally
vest over a four or five-year period. One of the principal factors considered in
granting stock options to executive officers of the Company is the executive's
ability to influence the Company's long-term growth and profitability. All
options are granted at the current market price. Because of the direct
relationship between the value of an option and the stock price, the Committee
believes that options motivate executive officers to manage the Company in a
manner that is consistent with stockholder interests.
The Company views stock options as an important component of long-term
performance-based compensation for executive officers. Senior management
generally receives larger grants of stock options, so that their compensation is
weighted more heavily toward compensation contingent upon the Company achieving
improvements in stockholder value. Option awards to executive officers are
generally made at the time of their employment and from time to time thereafter
at the discretion of the Committee.
The stock options granted to the Company's executive officers during fiscal
1997 are consistent with the design of the overall program and are shown in the
Summary Compensation Table and table of Option Grants in Last Fiscal Year above.
OTHER COMPENSATION PLANS. The Company has adopted certain general employee
benefit plans in which executive officers are permitted to participate on a
parity with other employees. The incremental cost to the Company in fiscal 1997
of benefits provided to executive officers under these life insurance and health
plans was less than 10% of the base compensation for executive officers. The
Company also provides deferred income and retirement plans. See "Employee
Benefit Plans." Benefits under these general plans are not directly or
indirectly tied to Company performance.
CHIEF EXECUTIVE OFFICER COMPENSATION.
In making compensation decisions regarding the Chief Executive Officer, the
Compensation Committee generally considers factors such as the Company's
progress towards achieving its goals for the year, his leadership and
establishment and implementation of strategic direction for the Company, and, to
a lesser extent, the relative compensation levels of other comparable companies.
Mr. Minor resigned as Chief Executive Officer in February 1997 and Mr.
Negris was promoted to the position. Mr. Negris was not given an increase in
salary at that time, however, he was granted an option to purchase 200,000
shares of Common Stock. No incentive bonus programs have been adopted for
executive officers during the past few years. However, the Committee may
consider adopting such a program in the future.
The foregoing report has been furnished by the Compensation and Options
Committee of the Board of Directors of Blyth Holdings Inc.
MEMBERS OF THE COMPENSATION
AND OPTIONS COMMITTEE
Richard J. Hanschen
William E. Konrad
Dated: July 29, 1997
26
<PAGE>
COMPANY STOCK PRICE PERFORMANCE
The following graph demonstrates a five-year comparison of cumulative total
stockholder return, calculated on a dividend reinvestment basis and based on an
initial investment of $100 in the Company's Common stock as compared with the
CRSP Index for Nasdaq (US & Foreign Companies) Index and the CRSP Index for
Nasdaq Computer and Data Processing Stocks Index. No dividends have been
declared or paid on the Company's Common Stock during such period. The stock
price performance shown on the graph following is not necessarily indicative of
future price performance.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
BLYTH HOLDINGS INC. NASDAQ MARKET (US & FOREIGN) NASDAQ COMP/DATA PROCESSING
<S> <C> <C> <C>
3/31/92 100 100 100
3/31/93 508 115 112
3/31/94 231 125 115
3/31/95 154 137 154
3/29/96 89 186 219
3/31/97 20 206 239
</TABLE>
OTHER MATTERS
The Company knows of no other matters to be submitted to the meeting. If any
other matters properly come before the meeting, it is the intention of the
persons named in the enclosed form of Proxy to vote the shares they represent as
the Board of Directors may recommend.
THE BOARD OF DIRECTORS
Dated: July 29, 1997
27
<PAGE>
PROXY THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
BLYTH HOLDINGS INC.
1997 ANNUAL MEETING OF STOCKHOLDERS
SEPTEMBER 16, 1997
The undersigned stockholder of Blyth Holdings Inc., a Delaware corporation,
hereby acknowledges receipt of the Notice of Annual Meeting of Stockholders and
Proxy Statement, each dated August 15, 1997, and hereby appoints Timothy P.
Negris and Patrick R. McEntee or either of them, proxies and attorneys-in-fact,
with full power to each of substitution, on behalf and in the name of the
undersigned, to represent the undersigned at the 1997 Annual Meeting of
Stockholders of Blyth Holdings Inc. to be held on September 16, 1997, at 4:00
p.m. local time, at the Marriott Marquee, 1535 Broadway, New York, New York
10036, and at any adjournment(s) thereof and to vote all shares of Common Stock
which the undersigned would be entitled to vote if then and there personally
present, on the matters set forth below:
1. ELECTION OF DIRECTORS:
<TABLE>
<S> <C> <C> <C>
/ / FOR the nominees listed below (except as / / WITHHOLD authority to vote for the nominees listed
indicated). below.
RICHARD J. HANSCHEN TIMOTHY P. NEGRIS
</TABLE>
2. PROPOSAL TO APPROVE AN AMENDMENT TO THE COMPANY'S RESTATED CERTIFICATE OF
INCORPORATION TO EFFECT A NAME CHANGE OF THE COMPANY TO OMNIS HOLDINGS,
INC.;
/ / FOR / / AGAINST / / ABSTAIN
3. TO APPROVE AN AMENDMENT TO THE COMPANY'S RESTATED CERTIFICATE OF
INCORPORATION WHEREBY ONE NEW SHARE OF COMMON STOCK WOULD BE ISSUED FOR SOME
NUMBER OF PRESENTLY OUTSTANDING SHARES OF COMMON STOCK, SUCH NUMBER TO BE
BETWEEN TWO AND FIVE SHARES AS DETERMINED BY THE BOARD OF DIRECTORS, IF THE
BOARD OF DIRECTORS DETERMINES THAT SUCH ACTION IS NECESSARY DURING THE
NINE-MONTH PERIOD FOLLOWING THE MEETING TO COMPLY WITH THE LISTING
REQUIREMENTS OF THE NASDAQ NATIONAL MARKET;
/ / FOR / / AGAINST / / ABSTAIN
4. PROPOSAL TO AMEND THE 1996 STOCK PLAN TO INCREASE THE NUMBER OF SHARES
RESERVED FOR ISSUANCE THEREUNDER FROM 450,000 SHARES TO 1,300,000 SHARES;
/ / FOR / / AGAINST / / ABSTAIN
5. PROPOSAL TO AMEND THE 1994 EMPLOYEE STOCK PURCHASE PLAN TO INCREASE THE
NUMBER OF SHARES RESERVED FOR ISSUANCE THEREUNDER FROM 225,000 SHARES TO
400,000 SHARES;
/ / FOR / / AGAINST / / ABSTAIN
6. PROPOSAL TO RATIFY THE APPOINTMENT OF DELOITTE & TOUCHE LLP AS INDEPENDENT
PUBLIC ACCOUNTANTS OF THE COMPANY FOR THE FISCAL YEAR ENDING MARCH 31, 1998;
/ / FOR / / AGAINST / / ABSTAIN
and, in their discretion, upon such other matter or matters which may
properly come before the meeting and any adjournment(s) thereof.
(CONTINUED, AND TO BE SIGNED AND DATED ON REVERSE SIDE)
<PAGE>
THIS PROXY WILL BE VOTED AS DIRECTED OR, IF NO CONTRARY DIRECTION IS
INDICATED, WILL BE VOTED FOR: (1) THE ELECTION OF THE NOMINATED DIRECTORS,
(2) FOR APPROVAL OF AN AMENDMENT TO THE COMPANY'S RESTATED CERTIFICATE OF
INCORPORATION TO CHANGE THE NAME OF THE COMPANY TO OMNIS HOLDINGS, INC., (3)
FOR APPROVAL OF A DISCRETIONARY REVERSE STOCK SPLIT AND THE RELATED
AMENDMENT TO THE COMPANY'S RESTATED CERTIFICATE OF INCORPORATION, (4) FOR
THE AMENDMENT TO THE COMPANY'S 1996 STOCK PLAN, (5) FOR THE AMENDMENT TO THE
COMPANY'S 1994 EMPLOYEE STOCK PURCHASE PLAN, (6) FOR RATIFICATION OF THE
APPOINTMENT OF THE COMPANY'S INDEPENDENT PUBLIC ACCOUNTANTS, AND AS SAID
PROXIES DEEM ADVISABLE ON SUCH OTHER MATTERS AS MAY COME BEFORE THE MEETING
AND ANY ADJOURNMENT(S) THEREOF.
Dated: --------------------------------------------------------- , 1997
- ------------------------------------------------------------------------
Signature
- ------------------------------------------------------------------------
Signature
(This Proxy should be marked, dated, signed by the stockholder(s)
exactly as his or her name appears hereon, and returned promptly in the
enclosed envelope. Persons signing in a fiduciary capacity should so
indicate. If shares are held by joint tenants or as community property,
both should sign.)
