SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
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Check the appropriate box:
|_| Preliminary Proxy Statement
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14a-6(e)(2))
|X| Definitive Proxy Statement
|_| Definitive Additional Materials
|_| Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
BLIMPIE INTERNATIONAL, INC.
(Name of Registrant as Specified in its Charter)
Payment of Filing Fee (Check the appropriate box):
|X| No fee required.
|_| Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
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amount on which the filing fee is calculated and state how it was
determined):
5) Total fee paid:
|_| Fee paid previously with preliminary materials.
|_| Check box if any part of the fee is offset 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 date of its filing.
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3) Filing Party:
4) Date Filed:
<PAGE>
[Logo of Blimpie International, Inc.]
February 8, 2000
TO OUR SHAREHOLDERS:
You are cordially invited to attend our Annual Meeting of Shareholders for
the fiscal year ending June 30, 2000 which will be held on Monday, March 20,
2000 at 9:30 A.M., local time, at the offices of Hall Dickler Kent Friedman
&Wood, LLP, 909 Third Avenue, New York, New York 10022, on the 27th Floor.
At this meeting, you will be asked to consider and vote upon the election
of six (6) directors who will serve until the annual meeting to be held in
December 2000; and to ratify the selection of Ernst & Young LLP as the Company's
independent accountants for the fiscal year ending June 30, 2000.
The accompanying Notice of Annual Meeting and Proxy Statement set forth in
detail the business intended to be transacted. Time will be made available for a
discussion of these items as well as for other questions about the business
affairs of the Company.
If you are unable to join us at the meeting it is very important that you
be represented by proxy. Therefore, please take a moment to sign, date, and
return your proxy in the enclosed envelope. If you do not have a proxy, please
call your broker or the Company, and ask that a proxy be mailed to you. Your
cooperation in mailing your proxy promptly will not only be greatly appreciated;
it will also result in a significant benefit to the Company.
Sincerely yours,
ANTHONY P. CONZA
Chairman and Chief Executive Officer
<PAGE>
BLIMPIE INTERNATIONAL, INC.
740 BROADWAY
NEW YORK, NEW YORK 10003
---------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held Monday, March 20, 2000
---------------
- --------------------------------------------------------------------------------
To The Holders Of Common Stock Of
BLIMPIE INTERNATIONAL, INC.
The Annual Meeting of the holders of the Common Stock of Blimpie
International, Inc. (the 'Company') will be held at the offices of Hall Dickler
Kent Friedman & Wood, LLP, 909 Third Avenue, New York, New York 10022, on the
27th Floor, on Monday, March 20, 2000 at 9:30 A.M., local time, for the
following purposes:
1. To elect six (6) persons to serve as directors of the Company
until the Annual Meeting to be held in December 2000 for the
fiscal year ending June 30, 2001;
2. To ratify the selection of Ernst & Young LLP as the Company's
independent accountants for the fiscal year ending June 30,
2000; and
3. To transact such other business as may properly come before
the meeting.
Only holders of record of the Company's Common Stock at the close of
business on January 21, 2000, are entitled to notice of or to vote at this
meeting and any adjournment or adjournments thereof. Shareholders are entitled
to vote upon all business as may properly be presented for consideration at the
meeting.
By Order of the Board of Directors
CHARLES G. LEANESS,
Secretary
New York, New York
February 8, 2000
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING IN PERSON, PLEASE SIGN, DATE
AND RETURN THE ENCLOSED PROXY CARD AS PROMPTLY AS POSSIBLE. THIS IS IMPORTANT
FOR THE PURPOSE OF ENSURING A QUORUM AT THE MEETING.
<PAGE>
PROXY STATEMENT
BLIMPIE INTERNATIONAL, INC.
740 BROADWAY
NEW YORK, NEW YORK 10003
---------------
ANNUAL MEETING OF SHAREHOLDERS
FOR THE FISCAL YEAR ENDING JUNE 30, 2000
---------------
SOLICITATION OF PROXIES
The enclosed proxy is solicited by the Board of Directors of Blimpie
International, Inc. (the 'Company') for use at the Annual Meeting of
Shareholders to be held March 20, 2000, and at any adjournment or adjournments
thereof (the 'Annual Meeting'). A proxy may be revoked by notice in writing to
the Secretary at any time prior to the exercise thereof. Each valid proxy
received in time will be voted at the Annual meeting, and, if a choice is
specified on the proxy, it will be voted in accordance with such specifications.
If no such specification is made, the persons named in the accompanying proxy
have advised the Company of their intention to vote the shares represented by
the proxies received by them (i) in favor of the election as directors, the
persons named in the proxy as nominees for directors; (ii) in favor of ratifying
the selection of Ernst & Young LLP, as the Company's independent accountants for
the fiscal year ending June 30, 2000; and (iii) in accordance with their best
judgment on any other matters that may come before the meeting.
The cost of solicitation of proxies, including the reimbursement to banks
and brokers for reasonable expenses in sending proxy material to their
principals, will be borne by the Company. The Company's transfer agent,
Registrar and Transfer Company, is assisting the Company in the solicitation of
proxies from brokers, banks, institutions and other fiduciaries by mail, and
will charge the Company its customary fee therefor plus out-of-pocket expenses
which, in the aggregate, are estimated to be less than $5,000. In addition,
proxies may be solicited by officers of the Company by mail, in person or by
telephone, telegraph or telex. It is anticipated that on or about February 8,
2000, this proxy statement and the enclosed form of proxy will be mailed to
shareholders.
The outstanding voting securities of the Company on January 21, 2000 (the
'Record Date') consisted of 9,498,126 shares of Common Stock, $.01 par value
(the 'Common Stock'). Only shareholders of record at the close of business on
the Record Date are entitled to notice of or to vote at the Annual Meeting.
Each share of Common Stock is entitled to one vote with respect to each
proposal which shall properly come before the Annual Meeting for consideration
by the shareholders. The holders of a majority of the outstanding shares
entitled to vote must be present at the Annual Meeting in person or by proxy to
constitute a quorum.
PROPOSAL NUMBER 1: ELECTION OF DIRECTORS
Six directors are to be elected at the meeting to hold office until the
Annual Meeting to be held in December 2000 for the fiscal year ending June 30,
2001, and until their respective successors have been elected and qualified.
The persons named as proxies intend (unless authority is withheld) to vote
for the election of the persons hereinafter named as directors for terms
expiring in 2000 upon their nomination for such office at the Annual Meeting.
The affirmative vote of the holders of a plurality of the outstanding shares of
Common Stock represented in person or by proxy at the Annual Meeting is required
for election of each director.
<PAGE>
If any nominee should become unavailable to serve, the proxy may be voted
for the election of another person designated by the Board. The Board has no
reason to believe any of the nominees will be unable to serve if elected.
The Board Of Directors recommends a vote FOR each of the nominees for
election as directors.
Pertinent information concerning the nominees for directors follows:
Nominees For Election As Directors
Anthony P. Conza, Age 59
Mr. Anthony P. Conza, together with two individuals who are not
affiliated with us, originally created the Blimpie concept in 1964. He is one of
the original founders of the Blimpie outlet chain, and is one of our
co-founders. He has been Chairman of our Board of Directors, and our President
and Chief Executive Officer since we commenced business operations in 1977. In
1992, the "Entrepreneur of the Year" for New York, an award sponsored by Ernst &
Young, Merrill Lynch and Inc. Magazine, was presented to Mr. Conza. In the same
year, he was also named Chain Operator of the Year by the New York State
Restaurant Association. He is a member of the Board of the Jose Limon Dance
Company, a member of the Board of Governors of The Boys & Girls Clubs of America
and he serves on the Dean's Council at Harvard University's JFK School of
Government. Mr. Conza is the brother of Joseph A. Conza, the brother-in-law of
Patrick Pompeo and the father-in-law of Joseph Morgan.
David L. Siegel, Age 55
Mr. Siegel, one of our co-founders, served as our Executive Vice
President and General Counsel and as a member of our Board of Directors since
our formation in 1977. In September 1995, he was appointed as our Vice Chairman
of the Board, Chief Operating Officer and General Counsel. He also served as our
Treasurer from 1977 until January, 1991. He is also a practicing attorney in the
City of New York. Mr. Siegel received a Bachelor of Arts degree in 1965 from
Marietta College, a Juris Doctor Degree in 1968 from New York University School
of Law and a Master of Laws Degree in 1970 from New York University School of
Law. During the past five years, Mr. Siegel has also served as an officer of
each of our leasing subsidiaries.
Patrick J. Pompeo, Age 60
Mr. Pompeo has served as a director and Senior Vice President in
charge of operations since the time of commencement of our business operations
in 1977. In September 1995, he became Executive Vice President of Research
Development and Procurement. Mr. Pompeo was employed for 16 years as a floor
supervisor by E.F. Hutton & Co., the former New York Stock Exchange member firm.
Mr. Pompeo is also a principal shareholder, officer and director of Georgia
Enterprises, Inc., our Subfranchisor for the State of Georgia. Mr. Pompeo is the
brother-in-law of Anthony Conza.
Charles G. Leaness, Age 49
Mr. Leaness has been a member of our Board of Directors since we
commenced business operations, and served as our Senior Vice President-Corporate
Counsel for more than the past five years. He was appointed Chief Executive
Officer of Maui Tacos International, Inc. in February 1999. In September, 1995,
he was appointed as one of our Executive Vice Presidents. Mr. Leaness is also a
principal shareholder, officer and director of Llewellyn Distributors, Inc., our
Blimpie Subfranchisor for a part of New Jersey, and of Manhattan Maui, Inc., our
subfranchisor for Maui Tacos for the County of New York in New York State. Mr.
Leaness received a Bachelor of Arts degree from Tulane University in 1972 and a
Juris Doctor degree from New York Law School in 1982. Mr. Leaness is a
practicing attorney in New York State. He currently serves as Director of the
New York State Restaurant Association and is
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<PAGE>
President of the New York City Chapter. Mr. Leaness also serves on the Board of
Directors of the International Franchise Association (IFA).
Alvin Katz, Age 69
Mr. Katz was appointed to our Board of Directors on November 23,
1993. Mr. Katz has been a member since September 1993 of the Board of Directors
of Nastech Pharmaceutical Company, Inc., a company engaged in the development of
pharmaceuticals. Since 1981, he has served as an adjunct professor of business
management at Florida Atlantic University. In 1991, Mr. Katz was appointed Chief
Executive Officer of Odessa Engineering Corp., a company engaged in the
manufacturing of pollution monitoring equipment. He held this position until
that company was sold in September 1992. Mr. Katz also serves on the Board of
Directors of Amtech Systems Inc. which is engaged in the manufacture of capital
equipment in the chip manufacturing business; and serves as Chairman of the
Board of Ozo Diversified Automation, Inc., a manufacturer of driller and
depaneling machines for circuit board manufacturers. Mr. Katz holds a B.S. in
Business Administration degree from New York University and has done graduate
work at C.U.N.Y.-Baruch School.
Harry G. Chernoff, Age 53
Dr. Chernoff was appointed to our Board of Directors on November 23,
1993. For more than the past five years, Dr. Chernoff has been a principal of
HMS Properties, Inc., a real estate investment, development and management firm.
Dr. Chernoff has an active financial and operational consulting practice with
major financial institutions, and food and hospitality firms as his clients. Dr.
Chernoff received a Ph.D. in Operations Management from the New York University
Leonard N. Stern School of Business in 1985, and has been a member of the
faculty of New York University for 20 years. He also received a B.S. degree from
New York University in 1968 and an M.S. degree from that institution in 1975.
The Board Of Directors; Committees And Attendance
The Board of Directors held four meetings during the fiscal year ended
June 30, 1999. All of the directors attended each of such meetings. The Board of
Directors has established an Audit Committee and a Compensation Committee. The
Audit Committee, among other things, makes recommendations to the Board, for
approval by the shareholders, regarding the appointment of independent
accountants to audit the financial accounts, books and records of the Company,
meets jointly and/or separately with the chief financial officer of the Company
and such accountants before commencement and after conclusion of the audit to
discuss the evaluation by the accountants of the adequacy and effectiveness of
the accounting procedures and internal controls of the Company and its
subsidiaries, to approve the overall scope of the audit to be made and the fees
to be charged, to review the audited financial statements of the Company, to
discuss the results of the audit, and to discuss any significant recommendations
by the accountants of improvement of accounting systems and controls of the
Company. The Compensation Committee develops executive compensation policies and
practices designed to enhance the Company's business plans and strategies, and
is responsible for the administration of the Company's Omnibus Stock Incentive
Plan. The Compensation Committee has full authority in its discretion to
determine the individuals to whom awards shall be made under such plan, the time
or times when they shall receive them and the terms and conditions thereof, all
as more fully set forth and described in such plans. Messrs. Katz and Chernoff
serve on both of such Committees. Mr. Conza is also a member of the Compensation
Committee. The Audit Committee met on two occasions during fiscal year 1999, and
the Compensation Committee acted once by unanimous written consent in lieu of a
meeting during such year.
EXECUTIVE COMPENSATION
The following table sets forth compensation awarded to, earned by or
paid to our Chief Executive Officer and our four highest-paid executive officers
who served as such at June 30, 1999 and whose annual compensation and bonus was
$100,000 or more (collectively, the "Named Executive Officers"). Information
with respect to salary, bonus, other annual compensation, restricted stock and
options is
3
<PAGE>
included for the fiscal years ended June 30, 1999, 1998 and 1997. We have not
paid any compensation that would qualify as "Restricted Stock Awards," payouts
pursuant to long-term incentive plans ("LTIP Payouts"), or "All Other
Compensation" in any of the three years in the period ended June 30, 1999.
<TABLE>
<CAPTION>
Long Term
Compen-
Annual Compensation sation
-------------------------------------- ------
Fiscal Other Securities All
Year Annual Underlying Other
Name and Ended Compen- Options/ Compen-
Principal Position June 30 Salary($) Bonus ($) sation SARs(#) sation
------------------ ------- --------- --------- ------ ------- ------
<S> <C> <C> <C> <C> <C> <C>
Anthony P. Conza,
Chairman & CEO 1999 $235,330 $ 30,736 $ 919(1) 25,000 $2,715(3)
1998 217,375 41,006 1,172(1) -- --
1997 214,326 117,450 3,093(1) 40,000 --
David L. Siegel,
Vice Chairman & COO 1999 174,297 15,498 919(1) 25,000 1,914(3)
1998 156,748 21,558 1,172(1) -- --
1997 149,418 58,725 3,093(1) 40,000 --
Charles G. Leaness,
Exec. V.P. 1999 141,250 8,391 3,399(1) 25,000 1,922(3)
1998 124,028 14,521 4,397(1) -- --
1997 114,654 39,233 10,982(1) 20,000 --
Patrick J. Pompeo,
Exec. V.P. 1999 138,971 9,891 919(1) 25,000 2,000(3)
1998 115,615 14,521 1,172(1) -- --
1997 102,181 39,233 3,093(1) 20,000 --
Joseph W. Morgan,
Sr. V.P., President - 1999 136,437 6,856 919(1,2) 35,000 1,828(3)
Blimpie Subs & Salads 1998 114,654 10,451 3,938(1,2) -- --
And Pasta Central 1997 92,413 14,166 10,827(1,2) 25,000 --
</TABLE>
(1) Represents commissions paid with respect to master license sales
consummated.
(2) Reflects the fair market value on the date of grant of shares of our
Common Stock granted to Mr. Morgan of $2,766 in 1998 and $7,734 in 1997.
(3) Represents matching contributions which we made to our 401(k) Plan on
behalf of each of the Named Executive Officers.
4
<PAGE>
Options/SAR Grants In Last Fiscal Year
Individual Grants
<TABLE>
<CAPTION>
Number of Potential Realizable Value
Securities % of Total at Assumed Annual Rates of
Underlying Options Stock Price Appreciation
Options Granted to Exercise or for Option Term
Granted Employees in Base Price Expiration ---------------
Name (#) Fiscal Year ($/Sh) Date 5 ($) 10($)
---- --- ----------- ------ ---- ----- -----
<S> <C> <C> <C> <C> <C> <C>
Anthony P. Conza 25,000 4.9% $3.03 6/30/08 $ 96,657 $122,033
David L. Siegel 25,000 4.9% 3.03 6/30/08 96,657 122,033
Charles G. Leaness 25,000 4.9% 3.03 6/30/08 96,657 122,033
Patrick J. Pompeo 25,000 4.9% 3.03 6/30/08 96,657 122,033
Joseph W. Morgan 35,000 6.9% 3.03 6/30/08 135,320 170,847
</TABLE>
Fiscal Year End Option Values
The following table sets forth the number of unexercised options
held by our Named Executive Officers during the fiscal year ended June 30, 1999.
No options were exercised during such period.
<TABLE>
<CAPTION>
Value of
Number of Unexercised
Unexercised In-the-Money
Options/SARs Options/SARs
at FY-End(#) at FY-End($)
Shares Acquired Value Exercisable/ Exercisable/
Name on Exercise(#) Realized($) Unexercisable Unexercisable
---- -------------- ----------- ------------- -------------
<S> <C> <C> <C> <C>
Anthony P. Conza -- -- 34,000/31,000 $ -- / --
David L. Siegel -- -- 34,000/31,000 -- / --
Charles G. Leaness -- -- 22,000/23,000 -- / --
Patrick J. Pompeo -- -- 22,000/23,000 -- / --
Joseph W. Morgan -- -- 54,000/131,000 1,563 /6,250
</TABLE>
Compensation Committee Report On Executive Compensation
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
OF BLIMPIE INTERNATIONAL, INC.
The primary purpose of this Committee is to develop executive
compensation policies and practices which coincide with and enhance the business
plans and strategies which the Company undertakes in connection with the pursuit
of its business objectives.
During the past several years, this Committee has almost exclusively
followed a policy of rewarding its senior executives with compensation packages
consisting of salaries which are determined upon the basis of the following four
factors (1) appreciation or depreciation in the Company's Common Stock during
the prior year, (2) increase or decrease in earnings during the prior year, (3)
changes in the size and industry position of the Company through expansions or
contractions in the overall size of the franchise chain, and (4) the growth of
the Company's international franchise operations. In determining the salary to
be paid to the Company's Chief Executive Officer and its other senior
executives, this Committee
5
<PAGE>
also considers, in addition to the foregoing factors, the comparative salaries
paid to other Chief Executives and senior executives in the quick service
restaurant industry, based upon the Executive Compensation Rankings published
annually by Restaurant Business Magazine. Recently, we added a fifth factor,
i.e, the impact of the Company's new franchise initiatives - Maui Tacos, Pasta
Central and Smoothie Island - upon the Company's current and future earnings
prospects.
The payment of bonuses to the Company's senior executives is not a
matter which falls within the jurisdiction of this Committee. Instead, during
the fiscal year ended June 30, 1991, the Board of Directors adopted a
Company-wide standard policy regarding such payments. Such policy is based upon
the Company's annual net income, as determined for financial reporting purposes.
A bonus pool is funded with 10% of the Company's annual net income. A percentage
of the bonus pool is assigned to each level of employment in the Company. As in
prior fiscal years, during the fiscal year ended June 30, 1999, the funds
assigned to each of the levels encompassing the Chief Executive Officer, Chief
Operating Officer, Executive Vice Presidents and Senior Vice Presidents were
divided by the number of employees on each level, and payments were made on a
quarterly basis with each payment being made two months after the end of the
quarter. The percentages assigned to each of the above-mentioned levels are, as
follows:
Chief Executive Officer........................................ 18%
Chief Operating Officer........................................ 9%
Executive Vice Presidents...................................... 12%
Senior Vice Presidents......................................... 12%
Commencing with the fiscal year ending June 30, 2000, the
percentages of the bonus pool which shall be assigned to the Chief Executive
Officer, the Chief Executive Officer, the Executive Vice Presidents and the
Senior Vice Presidents will be cut back from the foregoing levels, so that a
greater proportion of any bonus pool will be available for non-executive
employees.
In applying the above-described factors to the determination of the
compensation to be paid to Anthony P. Conza, the Company's Chief Executive
Officer, during fiscal 1999 your Committee included in its deliberation of the
above-described factors, such matters as the Company's efforts to achieve
increases in quarterly and annual revenues, income and earnings, and the strides
taken by the Company to expand the scope of its operations both internationally
and in terms of the development of its new product and franchise offerings. As a
result of our consideration of all of such factors, this Committee awarded Mr.
Conza a modest 8.3% salary increase to $235,330 for the year ended June 30,
1999, and incentive-based compensation in the form of options to purchase 25,000
shares of the Company's common stock which were issued under the Omnibus Stock
Incentive Plan. By comparison, during the prior fiscal year, Mr. Conza received
a 1.4% salary increase to $217,530, and no stock options. Our decision to
provide only a modest increase in the cash compensation to be paid to Mr. Conza
during fiscal 1999, and relatively small grant of Plan options was based upon
our views that the efforts previously commenced by Mr. Conza and the other
members of the Company's senior management to establish and sustain momentum in
the Company's efforts to expand internationally, and to develop new product and
franchise offerings, showed promise as sources of additional revenues. As a
consequence of these views, the compensation packages of each of the senior
executives consisted of modest salary increases (ranging between 10.3% for Mr.
Siegel, who was one of the highest compensated named executive and 20% for Mr.
Pompeo, the named executive who received the smallest amount of compensation),
and included the same form of incentive-based compensation (except that the
option grant made to Mr. Morgan amounted to 35,000 shares in order to keep his
level of compensation more in line with the compensation packages received by
executives performing services at other quick service restaurant franchise
companies similar to those performed for the Company by Mr. Morgan).
In summary, it is this Committee's belief that the compensation policies
that we have described in this report have served the best interests of the
shareholders and the Company. Such policies have been designed to provide
appropriate levels of compensation to the Company's senior executives based upon
the particular combination of factors which apply to this Company. As and when
those factors change, this Committee will make every effort to make adjustments
to its policies in a manner which will provide fair
6
<PAGE>
and reasonable levels of compensation and appropriate incentives to its
executives, while continuing to be in the best interests of the shareholders and
the Company.
Respectfully submitted,
The Compensation Committee
/S/ ALVIN KATZ /S/ HARRY G. CHERNOFF
- --------------------------------- ---------------------------------------
Comparison Of Total Shareholder Returns
The performance graph which follows compares the cumulative total
shareholder returns on the Company's Common Stock for the five-year period ended
June 30, 1999 with the S&P 500 Index and the S&P 500 Restaurants Index during
the same period. The graph assumes that the value of the Company's Common Stock
and the value of each Index was $100 on June 30, 1994, and that all dividends
have been reinvested. The shareholder returns shown below may not be indicative
of future performance.
[Insert line graph here which depicts the following information]
Company / Index Jun-94 Jun-95 Jun-96 Jun-97 Jun-98 Jun-99
- --------------------------------------------------------------------------------
BLIMPIE INTL INC 100.00 130.39 257.80 97.82 55.36 51.22
S&P 500 INDEX 100.00 126.07 158.85 213.97 278.51 341.88
S&P RESTAURANTS INDEX 500 100.00 131.52 154.75 161.84 219.25 274.86
- -------------------------
Source: S&P Compustat Total Return Service
Omnibus Stock Incentive Plan
The Company has adopted the Omnibus Stock Incentive Plan (the 'Plan') to
permit the grant of awards to employees of the Company (including officers and
directors who are employees of the Company or a subsidiary of the Company) of
restricted shares of the Company's Common Stock, performance shares of the
Company's Common Stock, stock appreciation rights relative to the Company's
Common Stock and both incentive stock options and non-qualified options to
purchase shares of the Company's Common Stock. A maximum of 950,000 shares maybe
issued under the Plan. Through June 30, 1999, the Company granted to certain
employees, pursuant to its incentive plan: (a) options to acquire a total of
753,000 shares of Common Stock, net of amounts canceled or exercised; and (b)
stock grants of 94,700 shares of Common Stock. The options are exercisable at
the fair market value on the date of grant, with prices ranging from $2.13 to
$14.75 per share. The options and stock grants generally provide for vesting at
the rate of 20% per annum and expire five to ten years after the date of the
grant. As of June 30, 1999, 7,850 options had been exercised, 249,300 options
had been vested and not exercised, and 88,300 shares of stock had been issued
under the stock grant program. The aggregate value of the shares issuable
pursuant to vested options under the Plan was $405,113 based on the closing
price of the Common Stock on January 21, 2000 of $1.625 per share. The Plan was
adopted in order that the participants in the Plan will have financial
incentives to contribute to the Company's growth and profitability, and to
enhance the ability of the Company to attract and retain in its employ
individuals of outstanding ability.
Warrants and Options Issued To Non-Employee Directors
On November 24, 1993, the Company issued to each of Harry Chernoff and
Alvin Katz, two non-employee directors of the Company, warrants to purchase up
to 7,500 shares of the Company's Common
7
<PAGE>
Stock at the purchase price of $6.00 per share at any time prior to November 24,
1998. On September 1, 1995, the Company issued to each of Messrs. Chernoff and
Katz warrants to purchase up to 4,000 shares of the Company's Common Stock at
the purchase price of $8.875 per share at any time prior to September 1, 2000.
On September 11, 1998, the Company canceled all of the warrants issued to the
non-employee directors and replaced them with incentive stock options to
purchase up to 17,000 shares of the Company's Common Stock at the purchase price
of $2.56 per share, vesting at 20% per year beginning September 11, 1998, and
exercisable through September 2008.
DIRECTORS' COMPENSATION
The Board has adopted a compensation policy to help the Company to attract
and maintain the services of qualified outside directors. Such compensation
consists of (a) payment of a directors fee of $9,000 per annum; (b) issuance of
five year warrants or options to purchase 5,000 shares of the Company's Common
Stock at an exercise price equal to the closing price of such stock on the date
of his or her appointment or election to the Board; (c) issuance of additional
warrants or options, at the discretion of the Board, periodically during the
tenure of an outside director; and (d) reimbursement of the reasonable travel
and lodging expenses incurred by each outside director in attending Board
meetings which are not held within a 75 mile radius of his or her residence or
principal place of business.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth the holdings of our Common Stock as
of January 21, 2000 by (1) each person or entity known to us to be the
beneficial owner of more than five percent (5%) of the outstanding shares of our
Common Stock; (2) each director and executive officer; and (3) all directors and
executive officers as a group. All of the holders of our Common Stock are
entitled to one vote per share.
Number of Shares Percent
Name and Address of Beneficial Owner (1) Beneficially Owned (2) Owned (3)
---------------------------------------- ---------------------- ---------
Anthony P. Conza .......................... 2,979,308 (4) 31.3%
David L. Siegel ........................... 1,516,615 (5) 15.9%
Charles G. Leaness ........................ 455,065 (6) 4.8%
Patrick Pompeo ............................ 421,020 (7) 4.4%
Alvin L. Katz (8) ......................... 6,800 (9) *
Harry G. Chernoff (10) .................... 9,068 (11) *
Joseph W. Morgan .......................... 188,683 (12) 2.0%
All Directors and Executive Officers
As a Group (12 Persons) ................... 5,709,365 (13) 58.6%
* Represents less than 1%.
(1) Except as otherwise noted, the address of each of the persons listed below
is 740 Broadway, New York, New York 10003.
(2) Includes shares actually and beneficially owned.
(3) Based upon 9,498,126 shares outstanding on January 21, 2000 (not including
156,100 treasury shares), increased by the number of shares under options
which the holder(s) thereof have the right to acquire within 60 days from
January 21, 2000.
(4) Includes 34,000 shares which Mr. Conza may acquire pursuant to options
exercisable within 60 days of January 21, 2000. Does not include (a)
37,050 shares owned by Mr. Conza's daughter, (b) 9,300 shares owned by Mr.
Morgan (Mr. Conza's son-in-law), (c) 125,000 shares owned jointly by Mr.
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Conza's daughter and Mr. Morgan over which Mr. Morgan has sole voting
power, (d) 4,150 shares owned by Mr. Conza's parents, (e) 44,913 shares
owned by Joseph Conza, the brother of Mr. Conza, and (f) 44,000 shares
held by Mr. Conza's daughter as Trustee for the Anthony P. Conza
Charitable Remainder Trust, as to all of which Mr. Conza disclaims
beneficial ownership.
(5) Includes 34,000 shares which Mr. Siegel may acquire pursuant to options
exercisable within 60 days of January 21, 2000. Does not include 13,046
shares held by Mr. Siegel's daughter, as to which Mr. Siegel disclaims
beneficial ownership.
(6) Includes 22,000 shares which Mr. Leaness may acquire pursuant to options
exercisable within 60 days of January 21, 2000.
(7) Includes 22,000 shares which Mr. Pompeo may acquire pursuant to options
exercisable within 60 days of January 21, 2000. Does not include 6,300
shares held by Mr. Pompeo's sister and brother-in-law, as to which Mr.
Pompeo disclaims beneficial ownership.
(8) The address of Mr. Katz is 301 N. Birch Road, Ft. Lauderdale, Florida
33304.
(9) Includes 3,400 shares which Mr. Katz may acquire pursuant to options
exercisable within 60 days of January 21, 2000.
(10) The address of Dr. Chernoff is 286 Spring Street, Suite 401, New York, New
York 10013.
(11) Includes 3,400 shares which Dr. Chernoff may acquire pursuant to options
exercisable within 60 days of January 21, 2000.
(12) Includes 54,000 shares which Mr. Morgan may acquire pursuant to options
exercisable within 60 days of January 21, 2000. Does not include (a)
37,050 shares held by Mr. Morgan's wife (Mr. A. Conza's daughter), (b)
13,100 shares held by Mr. Morgan's children, (c) 700 shares held by Mr.
Morgan's wife as custodian for his son under the Transfers to Minors Act,
(d) 44,000 shares held by Mr. Morgan's wife as Trustee for the Anthony P.
Conza Charitable Remainder Trust, and (e) 16,500 shares held by a
corporation of which Mr. Morgan's wife is the sole shareholder, as to all
of which Mr. Morgan disclaims beneficial ownership.
(13) Includes 252,100 shares which all of such persons may acquire pursuant to
options exercisable within 60 days of January 21, 2000. Does not include
the shares excluded from the percentage ownership calculations made with
respect to Messrs. Conza, Siegel, Pompeo and Morgan pursuant to notes 4,
5, 7 and 12 above.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During the fiscal years ended June 30, 1999, 1998 and 1997, we paid
$1,155,000, $1,149,000, and $984,000, respectively, to Georgia Enterprises, Inc.
("Georgia Enterprises"), a corporation partially owned by Patrick Pompeo, one of
our Executive Vice Presidents and directors, and Joseph Conza, one of our Senior
Vice Presidents and President of B I Concept Systems, Inc., in payment of the
fees that Georgia Enterprises earned as the Subfranchisor for the Georgia
market. During the same three fiscal years, we paid $305,000, $281,000, and
$289,000, respectively, to Llewellyn Distributors, Inc. ('Llewellyn"), a
corporation partially owned by Charles G. Leaness, one of our directors and
Executive Vice Presidents, who also serves as CEO of Maui Tacos International,
Inc., in payment of Llewellyn's share of the fees that it earned as the
Subfranchisor for the northern New Jersey market. We also paid $53,000,
$146,000, and $150,000, respectively, to International Southwest Blimpie, Inc.
('Southwest'), a corporation principally owned and controlled by Joseph Conza
until its sale to an unrelated third party in November 1998, in payment of said
corporation's share of the fees that it earned as the Subfranchisor for the
Houston, Texas market.
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Each of the aforementioned transactions was effected pursuant to
written agreements between us and the parties thereto. Such agreements are
substantially identical to the standard form of subfranchise agreement that we
enter into with unaffiliated subfranchisors. In the opinion of our management,
each such agreement is on terms as favorable to us as would be available from an
unrelated third party.
During the fiscal years ended June 30, 1998, and 1997, we received
$4,000 and $168,000, respectively, in reimbursements of expenses from Georgia
Enterprises. Such reimbursements relate to operational and administrative
support functions which we provided to Georgia Enterprises. In fiscal 1998, we
ceased providing these functions, and the related contract was terminated.
During the years ended June 30, 1999, 1998 and 1997, we paid
$11,000, $11,000 and $7,000, respectively, to Joseph Conza as compensation for
the use of his apartment in New York City by employees of our Atlanta and
Houston offices during business trips. In our estimation, this practice reduced
our lodging expense inasmuch as the per diem amounts paid to Mr. Conza were
below the market rates for hotel accommodations which we would have been
required to pay in order to house such employees during such trips to New York.
During the fiscal years ended June 30, 1999, 1998 and 1997, we
received $110,000, $119,000 and $101,000, respectively, in reimbursements of
expenses from Llewellyn. Such amounts were paid pursuant to a written agreement
which provides that we shall be reimbursed by Llewellyn for costs incurred by us
in providing operational support services to Llewellyn. The agreement also
provides that in the event the costs of such support services shall rise, then
the fees paid pursuant to the agreement shall rise accordingly. In the opinion
of our management, the agreement is on terms as favorable to us as would be
available from an unrelated third party.
During the fiscal years ended June 30, 1998 and 1997, we received
$8,000 and $49,000, respectively, in reimbursements of expenses from Southwest.
Such reimbursements relate to operational and administrative support functions
which we provided to Southwest. In fiscal 1998, we ceased providing these
functions, and the related contract was terminated.
In April 1994, Mr. Leaness borrowed the sum of $20,000 from us, and
collateralized the payment thereof with the same 120,000 shares of Common Stock
which he pledged in connection with a $60,000 option exercise and loan
transaction consummated in December 1991. This $20,000 loan is payable upon
demand and bears interest at the rate of 5% per annum.
In March 1995, Joseph Conza borrowed the principal amount of $55,500
from us. That indebtedness is payable in constant bi-monthly payments of
principal and interest computed at the rate of 8% per annum on the basis of a 20
year amortization schedule, and the unpaid balance of principal and accrued but
unpaid interest shall become due and payable on April 16, 2000, provided,
however, that, Mr. Conza may extend the term of the loan through April 15, 2015
as long as no default exists with regard to the loan when it originally matures.
Mr. Conza pledged 10,000 unregistered shares of our Common Stock as collateral
security for the payment of all sums due under the loan. As of the end of the
fiscal year, Mr. Conza was current with respect to his payment obligations and
the outstanding principal balance had been reduced to $49,806.
In 1997, we acquired the rights possessed by Anthony P. Conza and
David L. Siegel regarding the licensing of the Blimpie trademarks and the
Blimpie Marketing System for all non-U.S. territories, pursuant to a 99 year
license Agreement. That agreement provided for payment of certain income-based
fees to Messrs. Conza and Siegel, and further provided for cancellation by them
if we failed to pay them a minimum annual fee aggregating $350,000 during the
first five years of the term, and a minimum aggregate fee of $150,000 per year
(subject to an annual cost of living adjustment) during the balance of such
term. The payments made to Messrs. Conza and Siegel under this agreement were
$137,029 during the fiscal year ended June 30, 1997. In February 1997, we
acquired, pursuant to a written agreement which we executed with Messrs. Conza
and Siegel, ownership of the undivided 60% interest in the international rights
to the Blimpie trademarks and Blimpie Marketing System owned by them. In
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accordance with that agreement, we paid $3 million to Mr. Conza and $1.5 million
to Mr. Siegel. The agreement also provided that Messrs. Conza and Siegel could
receive annual payments totaling $150,000 per year for 50 years, or could elect,
at any time prior to January 1, 2001, to receive a lump sum distribution of $3
million on January 1, 2001, with $2 million payable to Mr. Conza and $1 million
payable to Mr. Siegel. In February 1999, both of Messrs. Conza and Siegel
elected to receive the lump-sum payment. They also agreed to terminate the
99-year license of the domestic rights to the Blimpie trademarks that they had
granted to us in 1976, and contributed those rights to us. In consideration for
the contribution of these trademark rights and in satisfaction of the lump-sum
payment due in 2001, we amended the 1997 international trademark agreement, and
paid the full $3 million payment in February 1999.
Compliance With Section 16(a) Of The Securities Exchange Act Of 1934
Section 16(a) of the Securities Exchange Act of 1934 (the 'Exchange Act')
requires the Company's Directors and executive officers, and persons who own
more than ten percent of a registered class of the Company's equity securities,
to file with the Securities and Exchange Commission initial reports of ownership
and reports of changes in ownership of the Company's Common Stock. Officers,
Directors and greater than ten-percent shareholders are required by SEC
regulations to furnish the Company with copies of all Section 16(a) forms they
file. To the Company's knowledge, based solely on its review of the copies of
such reports furnished to the Company and written representations that no other
reports were required, during the fiscal year ended June 30, 1999, the Company's
officers, Directors and greater than ten-percent beneficial owners complied with
all applicable Section 16(a) filing requirements.
PROPOSAL NUMBER 2: SELECTION OF AUDITORS
At the Annual Meeting, the Company's shareholders will be asked to ratify
the Board of Directors' selection of the firm of Ernst & Young LLP, as the
Company's independent accountants for the fiscal year ending June 30, 2000. Said
firm has been selected to serve as the Company's independent accountants for the
second time in 2000. It is not expected that a representative of Ernst & Young
LLP will be present at the meeting.
Vote Required For Approval
The affirmative vote of the holders of at least a majority of the
outstanding shares of Common Stock represented in person or by proxy at the
Annual Meeting is required for approval of this proposal.
The Board Of Directors recommends a vote FOR such proposal.
OTHER MATTERS
Discretionary Authority To Vote Proxy
Management does not know of any other matters to be considered at the
Annual Meeting. If any other matters do properly come before the Annual Meeting,
the proxy will be voted in respect thereof in accordance with the best judgment
of the persons authorized therein, and the discretionary authority to do so is
included in the proxy.
Annual Report and First Quarterly Report
The Annual Report of the Company for the fiscal year ended June 30, 1999,
and the Report on Form 10-Q for the Quarter ended September 30, 1999, including
financial statements, accompany this proxy statement. However no action is
proposed to be taken at the Annual Meeting with respect to the Annual or
Quarterly Report, and they are not to be considered as constituting any part of
the proxy soliciting materials.
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Submission Of Shareholder Proposals
Any shareholder who intends to present a proposal at the Annual Meeting of
shareholders to be held in 2000 for inclusion in the Proxy Statement and form of
proxy relating to that meeting is advised that the proposal must be received by
the Company at its principal executive offices no later than July 7, 2000. The
Company will not be required to include in its proxy statement or form of proxy
a shareholder's proposal which is received after that date or which otherwise
fails to meet requirements for shareholder proposals established by regulations
of the Securities and Exchange Commission.
SHAREHOLDERS MAY OBTAIN WITHOUT CHARGE A COPY OF THE COMPANY'S ANNUAL REPORT ON
FORM 10-K FOR THE YEAR ENDED JUNE 30, 1999 BY SENDING A REQUEST TO: INVESTOR
RELATIONS DEPARTMENT, BLIMPIE INTERNATIONAL, INC., 1775 THE EXCHANGE, SUITE 600,
ATLANTA, GA 30339
New York, New York
Dated: February 8, 2000
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BLIMPIE INTERNATIONAL, INC.
This Proxy is Solicited on Behalf of the Board of Directors of Blimpie
International, Inc.
The undersigned holder of the $.01 par value Common Stock (the "Common Shares")
of Blimpie International, Inc. (the "Company"), hereby acknowledges receipt of
the Notice of Annual Meeting of the Company and Proxy Statement attached
thereto, all relating to the Company's Annual Meeting of Shareholders (the
"Annual Meeting"), and does appoint Anthony P. Conza, David L. Siegel, Charles
G. Leaness and Patrick J. Pompeo, and each of them, the true and lawful attorney
or attorneys of the undersigned, with power of substitution, for and in the name
of the undersigned, to vote as proxies for the undersigned according to the
number of Common Shares the undersigned would be entitled to vote if then
personally present at the Annual Meeting to be held at the offices of Hall
Dickler Kent Friedman & Wood, LLP, 909 Third Avenue, 27th Floor, on Monday,
March 20, 2000, at 9:30 A.M., or at any adjournment or adjournments thereof, and
thereat to vote all Common Shares of the Company held by the undersigned and
entitled to be voted thereat upon the following matters:
1. To elect as Directors to serve until the Annual Meeting to be held in 2000
for the fiscal year ending June 30, 2000, the Nominees listed below:
FOR________
WITHHOLD________
FOR ALL EXCEPT________
Anthony P. Conza (Chairman), David L. Siegel (Vice-Chairman), Charles G.
Leaness, Patrick J. Pompeo, Harry G. Chernoff and Alvin Katz.
INSTRUCTION: To withhold authority to vote for any individual nominee, mark "For
All Except" and write that nominee's name in the space provided below.__________
2. To ratify the selection of Ernst & Young LLP as the Company's independent
accountants for the fiscal year ending June 30, 2000.
FOR __________ AGAINST __________ ABSTAIN __________
3. To transact such other business as may properly come before the meeting.
This Proxy confers authority to vote "FOR" each of propositions 1 and 2 listed
above unless otherwise indicated. If any other business is transacted at said
meeting, this proxy shall be voted in accordance with the best judgment of the
proxies. The Board of Directors recommends a vote of "FOR" for each of the
listed propositions. This proxy is solicited on behalf of the Board of Directors
of Blimpie International, Inc. and may be revoked prior to its exercise.
NOTE: Signature(s) should follow exactly the name(s) on the stock certificate.
Executor, administrator, trustee or guardian should sign as such. If more than
one trustee, all should sign. ALL JOINT OWNERS MUST SIGN.
Please be sure to sign and date
this Proxy in the box below Date
Shareholder sign above -- Co-holder (if any) sign above
