<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement / / Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/X/ Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
ZALE CORPORATION
(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/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
- --------------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
- --------------------------------------------------------------------------------
(3) Filing Party:
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(4) Date Filed:
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<PAGE> 2
ZALE CORPORATION
901 WEST WALNUT HILL LANE
IRVING, TEXAS 75038-1003
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON NOVEMBER 2, 1995
---------------------
Notice is hereby given that the Annual Meeting of Stockholders of Zale
Corporation, a Delaware corporation (the "Company"), will be held on Thursday,
November 2, 1995, at 10:00 a.m., local time, at The Westin Galleria, Dallas,
Texas, for the following purposes:
1. To elect seven directors for terms expiring at the 1996 annual meeting
of stockholders;
2. To approve the Zale Corporation Outside Directors' 1995 Stock Option
Plan;
3. To ratify the appointment of Arthur Andersen LLP as the Company's
independent public accountants; and
4. To transact such other business as may properly come before the meeting
or any adjournment thereof.
The Board of Directors has fixed the close of business on September 5,
1995, as the record date for determining the stockholders entitled to notice of,
and to vote at, the Annual Meeting or any adjournment thereof. A list of such
stockholders will be maintained at the Company's headquarters located at 901
West Walnut Hill Lane in Irving, Texas, during the ten-day period prior to the
date of the annual meeting and will be available for inspection by stockholders,
for any purpose germane to the meeting, during ordinary business hours.
We hope you will be represented at the meeting by signing and returning the
enclosed proxy card in the accompanying envelope as promptly as possible,
whether or not you expect to be present in person. Your vote is important and
the Board of Directors appreciates the cooperation of stockholders in directing
proxies to vote at the meeting.
By Order of the Board of Directors,
Alan P. Shor
Senior Vice President,
General Counsel and Secretary
Dallas, Texas
September 28, 1995
<PAGE> 3
ZALE CORPORATION
901 WEST WALNUT HILL LANE
IRVING, TEXAS 75038-1003
(214) 580-4000
---------------------
PROXY STATEMENT
SEPTEMBER 28, 1995
---------------------
GENERAL INFORMATION
This Proxy Statement is being furnished by the Board of Directors (the
"Board of Directors") of Zale Corporation, a Delaware corporation (the
"Company"), to the holders of common stock (the "Common Stock") of the Company
in connection with the solicitation of proxies for use at the Annual Meeting of
Stockholders (the "Annual Meeting") to be held at 10:00 a.m., local time, on
Thursday, November 2, 1995, at The Westin Galleria, Dallas, Texas, and at any
and all adjournments thereof.
A proxy delivered pursuant to this solicitation is revocable at the option
of the person giving the same at any time before it is exercised. A proxy may be
revoked, prior to its exercise, by executing and delivering a later dated proxy
card, by delivering written notice of the revocation of the proxy to the
Secretary of the Company prior to the Annual Meeting, or by attending and voting
at the Annual Meeting. Attendance at the Annual Meeting, in and of itself, will
not constitute a revocation of a proxy. Unless previously revoked, the shares
represented by the enclosed proxy will be voted in accordance with the
stockholder's directions if the proxy is duly executed and returned prior to the
Annual Meeting. If no directions are specified, the shares will be voted FOR the
election of the director nominees recommended by the Board of Directors, FOR
approval of the Zale Corporation Outside Directors' 1995 Stock Option Plan (the
"Outside Directors' Plan"), FOR the ratification of the appointment of Arthur
Andersen LLP as the Company's independent public accountants, and in accordance
with the discretion of the named attorneys-in-fact on other matters properly
brought before the Annual Meeting.
The expense of preparing, printing and mailing this Proxy Statement and
soliciting the proxies sought hereby will be borne by the Company. In addition
to the use of the mails, proxies may be solicited by officers, directors and
regular employees of the Company, who will not receive additional compensation
therefor, in person, or by telephone, telegraph or facsimile transmission. The
Company also will request brokerage firms, banks, nominees, custodians and
fiduciaries to forward proxy materials to the beneficial owners of shares of
Common Stock as of the record date and will provide reimbursement for the cost
of forwarding the proxy materials in accordance with customary practice. Your
cooperation in promptly signing and returning the enclosed proxy card will help
to avoid additional expense.
At September 5, 1995, the Company had 34,984,508 shares of Common Stock
issued and outstanding. Each share of Common Stock entitles the holder to one
vote. Only stockholders of record at the close of business on September 5, 1995
will be entitled to notice of, and to vote at, the Annual Meeting.
This Proxy Statement and the enclosed proxy card are first being mailed to
stockholders on or about September 28, 1995.
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OUTSTANDING VOTING SECURITIES OF THE COMPANY
AND PRINCIPAL HOLDERS THEREOF
The following table sets forth certain information with respect to the
beneficial ownership, as of September 5, 1995 (except as otherwise noted below),
of shares of Common Stock by persons believed by the Company to own beneficially
more than five percent of the outstanding shares of Common Stock and by the
directors and executive officers named in the Summary Compensation Table herein
and the directors and executive officers of the Company as a group, and the
percentage of the outstanding shares of Common Stock represented thereby. Other
than as set forth below, no director or executive officer of the Company is
known to be the beneficial owner of any shares of Common Stock. Except as noted
below, the Company believes that each of the persons listed has sole investment
and voting power with respect to the shares included in the table.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF PERCENT OF
NAME OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP(1) CLASS(1)
- ------------------------------------- ----------------------- ----------
<S> <C> <C>
FIVE PERCENT STOCKHOLDERS:
Harris Associates L.P.
Two North LaSalle Street
Suite 500
Chicago, Illinois 60602-3790 6,410,540(2) 18.3%
Apollo Jewelry Partners, L.P.
c/o Apollo Advisors, L.P.
Two Manhattanville Road
Purchase, New York 10577 4,900,854(3) 14.0%
Leon G. Cooperman
c/o Omega Advisors, Inc.
88 Pine Street
Wall Street Plaza, 31st Floor
New York, New York 10005 3,488,473(4) 10.0%
Snyder Capital Management, Inc.
350 California St., Suite 1460
San Francisco, CA 94104 2,131,000(5) 6.1%
DIRECTORS AND
NAMED EXECUTIVE OFFICERS:
Robert J. DiNicola 145,750(6) *
Glen Adams 36,500(7) *
Peter P. Copses 1,500(8) *
Mark Dickstein 100,000(9) *
Frank E. Grzelecki 3,000 *
Richard C. Marcus 1,000 *
Andrew H. Tisch 41,000(10) *
Larry Pollock 82,800(11) *
Merrill J. Wertheimer 10,000(12) *
Mary Forte 4,620(13) *
Max Brown 5,000(14) *
DIRECTORS AND EXECUTIVE OFFICERS
AS A GROUP: 461,435(15) 1.3%
</TABLE>
- ---------------
* Represents less than 1 percent.
(1) The information contained in this table with respect to Common Stock
ownership reflects "beneficial ownership" as determined in accordance with
Rule 13d-3 under the Securities Exchange Act of 1934, as amended (the
"Exchange Act").
(2) Consists of (i) 4,804,040 shares of Common Stock as to which Harris
Associates L.P. ("Harris"), by reason of advisory and other relationships
with the persons who own such shares, may be deemed to have the sole power
to dispose or to direct the disposition and (ii) 1,606,500 shares of Common
Stock, as to which Harris, by reason of advisory and other relationships
with the persons who
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own such shares, may be deemed to share the power to dispose or to direct
the disposition. Harris Associates, Inc. is the general partner of Harris,
and as such may be deemed to beneficially own the 6,410,540 shares of
Common Stock beneficially owned by Harris. Harris has been granted the
power to vote any shares of Common Stock beneficially owned by it in
circumstances it determines to be appropriate in connection with assisting
its clients to whom it renders financial advice in the ordinary course of
business by either providing information or advice to the persons having
such power, or by exercising the power to vote when it determines such
action to be appropriate in connection with matters which are submitted to
a security holder's vote. Of the 1,606,500 shares of Common Stock as to
which Harris has shared dispositive power, 1,600,000 shares are
beneficially owned by The Oakmark Fund, a series of an investment trust to
which Harris serves as investment adviser. The Oakmark Fund has shared
voting power with Harris with respect to the shares of Common Stock
beneficially owned by The Oakmark Fund. The information provided above was
obtained from Harris Associates L.P.
(3) Consists of (i) 4,874,654 shares of Common Stock owned directly by such
entity and (ii) 26,200 shares of Common Stock issuable upon exercise of
Warrants to Purchase Common Stock, Series A ("Series A Warrants") held by
such entity. The information provided above was obtained from Apollo
Advisors, L.P. ("Apollo Advisors").
(4) Consists of (i) 1,362,265 shares of Common Stock owned directly by Omega
Capital Partners, L.P. ("Omega Capital"), (ii) 30,600 shares of Common
Stock issuable upon exercise of Series A Warrants owned directly by Omega
Capital, (iii) 1,023,165 shares of Common Stock owned directly by Omega
Institutional Partners, L.P. ("Omega Institutional"), (iv) 19,200 shares of
Common Stock issuable upon exercise of Series A Warrants owned directly by
Omega Institutional, (v) 589,047 shares of Common Stock owned directly by
Omega Overseas Partners, Ltd. ("Omega Overseas"), (vi) 5,400 shares of
Common Stock issuable upon exercise of Series A Warrants owned directly by
Omega Overseas, (vii) 453,996 shares of Common Stock owned directly by
unrelated third parties for whom Omega Advisors, Inc. serves with
discretionary power as investment manager (the "Managed Account") and
(viii) 4,800 shares of Common Stock issuable upon exercise of Series A
Warrants owned by the Managed Account. Mr. Cooperman is the President and
majority stockholder of Omega Advisors, Inc. Mr. Cooperman possesses sole
power to vote and direct the disposition of all shares of Common Stock
owned by Omega Capital, Omega Institutional and Omega Overseas. As to
453,996 shares of Common Stock and the 4,800 shares of Common Stock
issuable upon the exercise of Series A warrants owned by the Managed
Account, the owners of the Managed Accounts may be deemed to have shared
power to dispose or to direct the disposition of such shares as a result of
their right to terminate the discretionary account within a period of 60
days. The information was obtained from a Schedule 13D filed with the
Securities and Exchange Commission on February 14, 1995.
(5) Consists of (i) 128,900 shares of Common Stock as to which Snyder Capital
Management, Inc. ("Snyder") has the sole power to dispose or to direct the
disposition and (ii) 2,002,100 shares of Common Stock as to which Snyder
has shared power to dispose or to direct the disposition. Of the 2,002,100
shares of Common Stock as to which Snyder has shared dispositive power,
Snyder has shared voting power with respect to 1,797,800 shares and no
voting power with respect to 204,300 shares. The information was obtained
from a Schedule 13F filed with the Securities and Exchange Commission by
Snyder on June 30, 1995.
(6) Includes 143,750 shares of Common Stock which Mr. DiNicola may acquire upon
the exercise of options within 60 days after September 5, 1995.
(7) Includes 35,000 shares of Common Stock issuable upon exercise of Series A
Warrants held by Mr. Adams.
(8) Does not include 4,874,654 shares of Common Stock owned directly by Apollo
Jewelry Partners, L.P. ("Apollo Jewelry") and 26,200 shares of Common Stock
issuable upon exercise of Series A Warrants held by Apollo Jewelry. The
general partner of Apollo Jewelry is AIF II, L.P. The managing general
partner of AIF II, L.P. is Apollo Advisors, whose general partner is Apollo
Capital Management, Inc. ("Apollo Capital"). Mr. Copses, a director of the
Company, is an officer of Apollo Capital and a limited partner of Apollo
Advisors. See "Proposal No. 1 -- Election of Directors." Mr. Copses
disclaims beneficial ownership of the shares of Common Stock and Series A
Warrants held by Apollo Jewelry. The information provided above was
obtained from Mr. Copses.
(9) Consists of (i) 68,000 shares of Common Stock beneficially owned by
Dickstein & Co., L.P. ("Dickstein & Co.") and (ii) 32,000 shares of Common
Stock beneficially owned by Dickstein International Limited ("Dickstein
International"). Mr. Dickstein, a director of the Company, is the President
and sole shareholder of Dickstein Partners Inc. ("Dickstein Partners").
Dickstein Partners is the general partner of Dickstein Partners, L.P.
("Dickstein L.P.") and the advisor to Dickstein International. Dickstein
L.P. is the general partner of Dickstein & Co. Mr. Dickstein is not
standing for reelection as a Director. The information provided above was
obtained from a Form 4 dated April 4, 1995 filed with the Securities and
Exchange Commission by Mr. Dickstein.
(10) Includes 20,000 shares of Common Stock held by Mr. Tisch as custodian for
his four minor children. The information provided above was obtained from a
Form 4 dated January 9, 1995 filed with the Securities and Exchange
Commission by Mr. Tisch.
(11) Includes 75,000 shares of Common Stock which Mr. Pollock may acquire upon
the exercise of options within 60 days after September 5, 1995.
(12) Includes 2,000 shares of Common Stock owned by the JAR Family Limited
Partners of which Mr. Wertheimer is the general partner and 4,000 shares of
Common Stock which Mr. Wertheimer may acquire upon the exercise of options
within 60 days after September 5, 1995.
(13) Includes 3,750 shares of Common Stock which Ms. Forte may acquire upon the
exercise of options within 60 days after September 5, 1995.
(14) Includes 4,000 shares of Common Stock which Mr. Brown may acquire upon the
exercise of options within 60 days after September 5, 1995.
(15) Includes (i) 249,250 shares of Common Stock which may be acquired upon the
exercise of options within 60 days after September 5, 1995 and (ii) 35,000
shares of Common Stock issuable upon the exercise of Series A Warrants held
by Mr. Adams.
3
<PAGE> 6
PROPOSAL NO. 1:
ELECTION OF DIRECTORS
Action will be taken at the Annual Meeting for the election of seven
directors, each of whom will serve until the 1996 annual meeting of stockholders
and until his successor is elected and qualified.
It is intended that the attorneys-in-fact named in the proxy card will vote
FOR the election of the seven nominees listed below, unless instructions to the
contrary are given therein. These nominees have indicated that they are able and
willing to serve as directors. However, if some unexpected occurrence should
require the substitution of some other person or persons for any one or more of
the nominees, it is intended that the attorneys-in-fact will vote FOR such
substitute nominees as the Board of Directors may designate. All directors
elected at the Annual Meeting will hold office until the 1996 annual meeting of
stockholders and until their respective successors are elected and qualified.
The Company's bylaws currently fix the number of members of the Board of
Directors at eight. Because only seven nominees are standing for election at the
Annual Meeting, a vacancy will exist on the Board of Directors following the
Annual Meeting. The Board of Directors intends to fill the vacancy after the
Annual Meeting if and when an appropriate candidate has been identified. Proxies
cannot be voted for a greater number of persons than the number of nominees
named therein.
The following table sets forth the principal occupations for at least the
last five years and the current directorships of the seven nominees for director
to be elected pursuant to Proposal No. 1.
ROBERT J. DINICOLA, Age 47.
Chairman of the Board, Chief Executive Officer and Director
Mr. DiNicola has served as Chairman of the Board, Chief Executive Officer
and a director of the Company since April 18, 1994. For the three years prior to
joining the Company, Mr. DiNicola was a senior executive officer of The Bon
Marche Division of Federated Department Stores, Inc., having served as Chairman
and Chief Executive Officer of that Division from 1992 to 1994 and as its
President and Chief Operating Officer from 1991 to 1992. From 1989 to 1991, Mr.
DiNicola was a Senior Vice President of Rich's Department Store Division of
Federated. For seventeen years, prior to joining the Federated organization, Mr.
DiNicola was associated with Macy's, where he held various executive, management
and merchandising positions, except for a one-year period while he held a
division officer position with May Co.
LARRY POLLOCK, Age 48.
President, Chief Operating Officer and Director
The Board of Directors elected Mr. Pollock President and Chief Operating
Officer of the Company on January 10, 1994 and appointed him as a director on
July 27, 1994. From January 1990 until joining the Company, Mr. Pollock served
as President and Chief Executive Officer of Kartens Jewelers. From 1987 to 1990,
Mr. Pollock was a consultant in the retail jewelry industry. For eighteen years
prior to 1987, Mr. Pollock was associated with J. B. Robinson Jewelers, Inc.
where he held various executive positions including President and Chief
Executive Officer from 1981 through 1986. Mr. Pollock has an ownership interest
in two radio stations in the Cleveland area and also serves as a director of New
West Eyeworks.
GLEN ADAMS, Age 56.
Director
Mr. Adams has served as a director of the Company since July 21, 1993. From
1990 to the present, Mr. Adams has served as Chairman, President and Chief
Executive Officer of Southmark Corporation in Dallas, Texas. From 1986 to 1989,
he served as Chairman, President and Chief Executive Officer of The Great
Western Sugar Company. In addition to Southmark Corporation, Mr. Adams is also a
director of U.S. Home Corporation.
4
<PAGE> 7
PETER P. COPSES, Age 37.
Director
Mr. Copses has served as a director of the Company since September 9, 1993.
Since 1990, Mr. Copses has been an officer of Apollo Advisors, L.P. which,
together with its affiliates, acts as the managing general partner of Apollo
Investment Fund, L.P., AIF II, L.P. and Apollo Investment Fund III, L.P.,
private securities investment funds, and of Lion Advisors, L.P., which acts as
financial advisor to and representative for certain institutional investors with
respect to securities investments. Mr. Copses is a director of Calton, Inc.,
Dominicks Finer Foods, Inc., Family Restaurants, Inc., Food 4 Less Holdings,
Inc. and Forum Group, Inc.
FRANK E. GRZELECKI, Age 58.
Director
Mr. Grzelecki has served as a director of the Company since July 21, 1993.
Since 1988, Mr. Grzelecki has served in several capacities with Handy & Harman
of Rye, New York, including outside director and consultant from 1988 to 1989,
Vice Chairman of the Board from 1989 to 1992, and President, Chief Operating
Officer and director from 1992 to the present. In addition to Handy & Harman,
Mr. Grzelecki currently serves as a director of Chartwell Re Corporation.
RICHARD C. MARCUS, Age 56.
Director
Mr. Marcus has served as a director of the Company since July 21, 1993. Mr.
Marcus is a principal of InterSolve Group, Inc., a management services firm he
cofounded in 1991. Since September 1994, Mr. Marcus has served in several
capacities with Plaid Clothing Group, including as an outside director from
September to November 1994, Chief Executive Officer and director from December
1994 through September 1995, and is presently an outside director. From 1988 to
1994, Mr. Marcus was a private investor and consultant for companies serving the
retail industry. From 1979 to 1988, he served as Chairman and Chief Executive
Officer of Neiman Marcus in Dallas, Texas.
ANDREW H. TISCH, Age 45.
Director
Mr. Tisch has served as a director of the Company since July 21, 1993. Mr.
Tisch has served as a member of the Loews Corporation Management Committee since
October 1994. Mr. Tisch also served as Chairman of the Board and Chief Executive
Officer of Lorillard, Inc. from 1989 to June 1995. From 1980 to 1989, he served
as President of Bulova Corporation. From 1986 to 1989, Mr. Tisch served as a
director of Gordon Jewelry Corporation prior to its acquisition by the Company.
Mr. Tisch currently serves as a director of Loews Corporation and of Bulova
Corporation.
COMMITTEES AND MEETINGS OF THE BOARD OF DIRECTORS
The following discussion of meetings of the Board of Directors and the
committees thereof includes meetings occurring between the end of the Company's
1994 fiscal year on March 31, 1994 and the end of the 1995 fiscal year on July
31, 1995.
The standing committees of the Board of Directors are the Audit and
Compensation Committees. Their principal functions and the names of the
directors currently serving as members of those committees are set forth below.
The Audit Committee has the power and authority to initiate or review the
results of all audits or investigations into the business affairs of the Company
and its subsidiaries, and to conduct pre- and post-audit reviews with the
Company's management, financial employees and independent auditors. The Audit
Committee also reviews the Company's quarterly and annual financial statements
and reports. The Audit Committee met three times between April 1, 1994 and July
31, 1995. The current members of the Audit
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<PAGE> 8
Committee are Glen Adams, Peter P. Copses and Mark Dickstein. Mr. Dickstein is
not standing for reelection as a director and will not serve as a member of the
Audit Committee following the Annual Meeting.
Subject to the final decision of the Board of Directors, the Compensation
Committee reviews the proposed compensation of the Company's Chief Executive
Officer and all other corporate officers and considers management succession and
related matters. In addition, the Compensation Committee administers the
Company's Omnibus Stock Incentive Plan (the "Option Plan"), and its other
incentive compensation plans. The Compensation Committee met nine times between
April 1, 1994 and July 31, 1995. The current members of the Compensation
Committee are Frank E. Grzelecki, Richard C. Marcus and Andrew H. Tisch.
From April 1, 1994 to July 31, 1995, the Board of Directors met ten times.
No member of the Board of Directors attended fewer than 75% of the total number
of meetings held by the Board of Directors and the committees on which such
director served during that period.
PROPOSAL NO. 2:
ZALE CORPORATION OUTSIDE DIRECTORS' 1995 STOCK OPTION PLAN
GENERAL
In order to attract and retain non-employee directors, on May 16, 1995, the
Board of Directors adopted, subject to stockholder approval, the Outside
Directors' Plan. A copy of the Outside Directors' Plan is attached hereto as
Annex A. The Outside Directors' Plan provides for the granting of stock options
to members of the Company's Board of Directors who are not employees of the
Company or any subsidiary thereof ("Eligible Directors"). An aggregate of
150,000 shares of Common Stock may be issued upon exercise of options granted to
Eligible Directors under the Outside Directors' Plan.
The Outside Directors' Plan provides for the automatic grant of an option
to purchase 5,000 shares of Common Stock to each Eligible Director serving as
such on May 16, 1995 and to each future Eligible Director at the time he or she
is first elected to the Company's Board of Directors. The Outside Directors'
Plan also provides for the grant of an option to purchase 3,000 shares of Common
Stock to each Eligible Director as of the date of the first meeting of the Board
of Directors following such Eligible Director's reelection to the Board of
Directors.
Options granted under the Outside Directors' Plan shall have an exercise
price equal to the fair market value (as defined) of the Common Stock on the
date of grant, a term of 10 years and become cumulatively exercisable as to 25%
of the shares subject thereto on each of the first, second, third and fourth
anniversaries of the date of grant. An option may be exercised from time to time
for all or part of the shares as to which it is then exercisable. Upon the
occurrence of a change of control (as defined), each outstanding option shall
become fully and immediately exercisable and remain exercisable until its
expiration, termination or cancellation pursuant to the terms of the Outside
Directors' Plan.
Options granted under the Outside Directors' Plan may be exercised by
filing a written notice with the Company accompanied by payment for the shares
being purchased. Such payment shall be made (i) in cash, by certified or
official bank check (or the equivalent thereof acceptable to the Company), for
the full option purchase price; or (ii) by delivery of shares of Common Stock
acquired prior to the option exercise date and having a fair market value as of
the exercise date equal to all or part of the option exercise price and cash or
a certified or official bank check (or the equivalent thereof acceptable to the
Company) for any remaining portion of the full option exercise price. To the
extent necessary for compliance with Rule 16b-3 promulgated under the Exchange
Act, no option granted under the Outside Directors' Plan shall be assignable or
transferable. Additionally, no assignment or transfer may be made without
consent of the Board of Directors. In the event an optionee's membership on the
Board of Directors terminates for any reason other than death or for cause (as
defined), such optionee may exercise any outstanding option to the extent that
he or she was entitled to exercise it on the date of termination. Such exercise
must occur within three months after termination, but in no event may any
exercise occur after the expiration date of the option. If an optionee dies
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<PAGE> 9
while serving on the Board of Directors, any outstanding option shall be
exercisable to the extent the optionee was entitled to exercise the option on
the date of death. Exercise must occur by the earlier of the first anniversary
of death or the expiration date of the option. This exercise shall be made only
by the optionee's executor or administrator, unless his or her will specifically
disposes of the option, in which case exercise shall be made only by the
recipient of such specific disposition. Except as provided for above, any
unexercised option held by a person who is no longer a member of the Board of
Directors shall be null and void.
The Board of Directors may, subject to certain limitations, suspend or
terminate the Outside Directors' Plan or revise or amend it. Amendments must be
approved by the stockholders of the Company where the failure to obtain such
approval would adversely affect compliance with the requirements of Rule 16b-3
promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), or with the requirements of any other applicable law, rule or regulation.
If the Outside Directors' Plan had been in effect during the 1995 fiscal
year, the current executive officers of the Company, as a group, would have
received no options, the non-employee directors of the Company, as a group,
would have received options to purchase 30,000 shares of Common Stock and all
employees, including all current officers who are not executive officers, as a
group, would have received no options.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following discussion is a summary of the material federal income tax
consequences of participation in the Outside Directors' Plan for an Eligible
Director under currently applicable law. It does not purport to be a complete
discussion of all tax consequences to such an Eligible Director and does not
cover, among other things, state and local tax treatment of participation in the
Outside Directors' Plan.
An Eligible Director who receives an option granted under the Outside
Directors' Plan will not recognize any taxable income in connection with the
grant of the option.
In general, upon exercise of the option, if the shares of Common Stock
received are not subject to a substantial risk of forfeiture or are
transferable, the amount by which the fair market value of the shares at the
time of exercise of the option exceeds the exercise price will be treated as
ordinary income received by the Eligible Director.
If the shares of Common Stock received upon exercise of the option are
subject to a substantial risk of forfeiture and are not transferable ("Nonvested
Shares"), Section 83(b) of the Internal Revenue Code of 1986, as amended (the
"Code"), permits the Eligible Director to elect, not more than 30 days after the
date of exercise of the option to acquire the Nonvested Shares, to include as
ordinary income the difference between the fair market value of the Nonvested
Shares at the time of exercise and the exercise price for the shares. If no
Section 83(b) election is made, then the ordinary income inclusion occurs on the
date the Nonvested Shares become vested (because they are no longer subject to a
substantial risk of forfeiture or are transferable), and the amount of such
inclusion will be the excess of the fair market value of the shares at the time
they vest over the exercise price.
Special rules may apply to Eligible Directors who are subject to Section
16(b) of the Exchange Act as a consequence of their exercise of an option. While
the exercise of an option will not be a "purchase" of a security for purposes of
Section 16(b) of the Exchange Act unless the option is out-of-the-money, the
Eligible Director may nonetheless be subject to Section 16(b) of the Exchange
Act with respect to the sale of Common Stock acquired upon the exercise of such
option if the Eligible Director has purchased other shares within six months
before the exercise of the option. In that case, the common stock received upon
exercise of the option may be treated as restricted property subject to a
substantial risk of forfeiture (i.e., as Nonvested Shares) for purposes of
Section 83 of the Code until such shares are no longer subject to Section 16(b)
of the Exchange Act for purposes of Section 83(b) of the Code. Unless the
Eligible Director makes a Section 83(b) election, the Eligible Director will
recognize ordinary income when his shares are no longer subject to Section 16(b)
of the Exchange Act for purposes of Section 83(b) of the Code (i.e., up to six
months after the date on which the shares are acquired) in the amount by which
the fair market value of the common stock at such later date exceeds the
exercise price. Under Section 83(b), the Eligible Director may elect to
7
<PAGE> 10
recognize income as of the date the option is exercised in an amount equal to
the excess of the fair market value of the shares acquired on such date
(determined without regard to Section 16(b) restrictions) over the exercise
price.
An Eligible Director's tax basis in the shares of Common Stock received on
exercise of an option for cash will be equal to the amount of any cash paid on
exercise plus the amount of ordinary income recognized by such Eligible Director
as a result of the receipt of such Common Stock. The holding period for such
Common Stock will begin the day after the date of exercise of the option or, in
the case of Nonvested Shares as to which no election under Section 83(b) is
made, the day after the date on which such shares of Common Stock become vested
or are no longer subject to Section 16(b) of the Exchange Act as herein
described.
If the Eligible Director pays the exercise price by tendering other vested
shares of Common Stock then owned by the Eligible Director, the difference
between the fair market value and adjusted basis of the tendered shares will not
produce a taxable gain or loss to the Eligible Director; however, the Eligible
Director's tax basis and holding period for an equal number of acquired shares
will be the same as the Eligible Director's tax basis for the tendered shares.
The remaining acquired shares will have a tax basis equal to the sum of the
amount paid in cash, if any, plus any amount which the Eligible Director is
required to recognize as income as a result of the exercise of the option, and
the holding period for such shares will be determined in the same manner as
described in the preceding paragraph.
Upon a taxable disposition of shares of Common Stock acquired through the
exercise of an option, any amount received by the Eligible Director in excess of
the Eligible Director's tax basis in the Common Stock will generally be treated
as long-term or short-term capital gain, depending upon the holding period of
the Common Stock. To qualify for long-term capital gain or loss treatment,
shares of Common Stock must have been held for more than one year as a capital
asset. The maximum federal income tax rate currently applicable to individuals
for long-term capital gain is 28%. If, upon disposition, the Eligible Director
receives an amount that is less than the Eligible Director's tax basis in the
Common Stock the loss will generally be treated as a long or short-term capital
loss, depending upon the holding period of the Common Stock.
The Company generally will be entitled to deduct for federal income tax
purposes the amount that the Eligible Director is required to treat as ordinary
income, to the extent such amount constitutes an ordinary and necessary business
expense.
The Board of Directors recommends that stockholders vote FOR approval of
the Outsider Directors' Plan.
PROPOSAL NO. 3:
RATIFICATION OF INDEPENDENT PUBLIC ACCOUNTANTS
Arthur Andersen LLP served as the Company's independent public accountants
for the interim period from April 1, 1994 to July 31, 1994 and for the fiscal
year ended July 31, 1995, and has been reappointed by the Board of Directors to
serve in that capacity for the 1996 fiscal year. The Company has been advised
that no member of Arthur Andersen LLP or any of its associates has any financial
interest in the Company or its affiliates. A representative of Arthur Andersen
LLP will be available at the Annual Meeting to respond to appropriate questions
and will be given an opportunity to make a statement on behalf of Arthur
Andersen LLP, if desired.
Although not formally required, the appointment of the independent auditors
of the Company has been directed by the Board of Directors to be submitted to
the stockholders for ratification as a matter of sound corporate practice. If
the stockholders do not ratify the appointment of Arthur Andersen LLP, the
appointment of the independent auditors will be reconsidered by the Board of
Directors. If the stockholders ratify the appointment, the Board of Directors,
in its sole discretion, may still direct the appointment of new independent
auditors at any time during the 1996 fiscal year if the Board of Directors
believes that such a change would be in the best interests of the Company.
The Board of Directors recommends that the stockholders vote FOR the
ratification of the appointment of Arthur Andersen LLP as the Company's
independent public accountants.
8
<PAGE> 11
EXECUTIVE AND DIRECTOR COMPENSATION
The following tables set forth all compensation, including bonuses, stock
option awards and other payments, paid or accrued by the Company during each of
the fiscal years ended July 31, 1995 and March 31, 1994 and 1993, to the
Company's Chief Executive Officer and the four other most highly compensated
executive officers of the Company during the fiscal year ended July 31, 1995.
All compensation paid or accrued by the Company during the interim period from
April 1, 1994 to July 31, 1994 (i.e., the transition period from the end of
fiscal 1994 until the beginning of fiscal 1995), excluding base salary, are
included as compensation paid for the fiscal year ended July 31, 1995.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
ANNUAL COMPENSATION ------------
------------------- SECURITIES ALL OTHER
SALARY UNDERLYING COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($)(1) BONUS($) OPTIONS(#) ($)
- ---------------------------------------- ---- ------- -------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Robert J. DiNicola, Chairman
and Chief Executive Officer(2)........ 1995 679,791 325,000 675,000 620,383
Larry Pollock, President
and Chief Operating 1995 428,368 200,000 50,000 24,222
Officer(3)............................ 1994 94,269 0 300,000 150,000
Merrill J. Wertheimer, 1995 230,708 81,535 66,000 7,880
Executive Vice President -- 1994 201,927 10,000 0 17,440
Finance and Administration(4)......... 1993 200,000 0 0 882
Mary Forte, President --
Gordon's Division(5).................. 1995 216,264 44,691 55,000 121,207
Max Brown, 1995 204,895 81,958 26,000 9,446
President -- Diamond Park 1994 198,501 0 0 34,919
Division(6)........................... 1993 185,000 37,925 0 1,879
========================================
Dolph B. H. Simon, Former Vice 1995 226,331 93,440 10,000 216,049
President and General 1994 275,893 15,375 0 68,174
Counsel............................... 1993 307,500 0 0 1,808
</TABLE>
- ---------------
(1) Includes amounts contributed by such executive officers to the Company's
401(k) savings plan.
(2) Mr. DiNicola became Chairman of the Board and Chief Executive Officer of the
Company on April 18, 1994. Mr. DiNicola's salary during the transition
period from the end of fiscal 1994 until the beginning of fiscal 1995 was
$189,996. "All Other Compensation" for 1995 includes a one-time bonus of
$200,000 paid to Mr. DiNicola upon the commencement of his employment by the
Company, a one-time reimbursement of $150,000 for certain benefits Mr.
DiNicola would have otherwise received from his former employer, a one-time
payment of $264,447 for relocation costs incurred by Mr. DiNicola in
connection with the commencement of his employment by the Company, a
one-time payment of $5,472 in connection with the termination of the
Company's Key Executive Medical Plan and $464 of term life insurance
premiums paid by the Company.
(3) Mr. Pollock became President and Chief Operating Officer of the Company on
January 10, 1994. Mr. Pollock's salary during the transition period from the
end of fiscal 1994 until the beginning of fiscal 1995 was $133,721. "All
Other Compensation" for 1995 consists of a one-time payment of $18,103 for
moving expenses incurred by Mr. Pollock in connection with the commencement
of his employment by the Company, a one-time payment of $5,597 in connection
with the termination of the Company's Key Executive Medical Plan and $522 of
term life insurance premiums paid by the Company.
(4) Mr. Wertheimer's salary during the transition period from the end of fiscal
1994 until the beginning of fiscal 1995 was $67,139. "All Other
Compensation" for 1995 consists of a one-time payment of $5,837 in
connection with the termination of the Company's Key Executive Medical Plan,
$1,215 of term life insurance premiums paid by the Company and a $828
matching contribution by the Company in stock under its 401(k) plan.
9
<PAGE> 12
(5) Ms. Forte became President -- Gordon's Division on July 18, 1994. Ms.
Forte's salary during the transition period from the end of fiscal 1994
until the beginning of fiscal 1995 was $9,011. "All Other Compensation" for
1995 consists of a one-time payment of $116,775 for moving expenses incurred
by Ms. Forte in connection with the commencement of her employment by the
Company, a one-time payment of $4,291 in connection with the termination of
the Company's Key Executive Medical Plan and $141 of term life insurance
premiums paid by the Company.
(6) Mr. Brown's salary during the transition period from the end of fiscal 1994
until the beginning of fiscal 1995 was $67,091. "All Other Compensation" for
1995 consists of a one-time payment of $5,879 in connection with the
termination of the Company's Key Executive Medical Plan, $2,739 of term life
premiums paid by the Company and a $828 matching contribution by the Company
in stock under its 401(k) plan.
(7) Mr. Simon resigned from the Company effective June 15, 1995. Mr. Simon's
salary during the transition period from the end of fiscal 1994 until the
beginning of fiscal 1995 was $86,221. "All Other Compensation" for 1995
consists of $207,085 of severance payments in connection with Mr. Simon's
resignation from the Company, a one-time payment of $5,563 in connection
with the termination of the Company's Key Executive Medical Plan, $2,808 in
term life insurance premiums paid by the Company and a $593 matching
contribution by the Company in stock under its 401(k) plan. Mr. Simon's
options granted during 1995 lapsed upon the termination of his employment
with the Company.
OPTION GRANTS IN LAST FISCAL YEAR(1)
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED ANNUAL
INDIVIDUAL GRANTS RATES OF STOCK PRICE
---------------------------------------------------------------------- APPRECIATION FOR OPTION
NUMBER OF SECURITIES % OF TOTAL OPTIONS EXERCISE OR TERM(2)
UNDERLYING OPTIONS GRANTED TO EMPLOYEES BASE PRICE EXPIRATION -----------------------
NAME GRANTED (#) IN FISCAL YEAR ($/SH) DATE 5% ($) 10% ($)
- -------------------- -------------------- -------------------- ----------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Robert J. DiNicola... 575,000(3) 32.4% 8.675 4/18/04 3,137,005 7,949,787
100,000(4) 5.6% 14.000 7/20/05 880,452 2,231,239
Larry Pollock........ 50,000(4) 2.8% 14.000 7/20/05 440,225 1,115,620
Merrill J.
Wertheimer......... 16,000(5) * 9.000 7/27/04 90,561 229,499
50,000(4) 2.8% 14.000 7/20/05 440,225 1,115,620
Mary Forte........... 15,000(5) * 9.000 7/27/04 84,902 215,156
40,000(4) 2.3% 14.000 7/20/05 352,180 892,496
Max Brown............ 16,000(5) * 9.000 7/27/04 90,561 229,499
10,000(4) * 14.000 7/20/05 88,045 223,124
====================
Dolph B. H. Simon.... 10,000(6) * 9.000 N/A 0 0
</TABLE>
- ---------------
* Less than 1%
(1) Sets forth options granted under the Zale Corporation Omnibus Stock
Incentive Plan during the interim period from April 1, 1994 to July 31,
1994 and for the fiscal year ended July 31, 1995. Upon the occurrence of a
change of control (as defined) each option shall become fully and
immediately exercisable.
(2) The dollar amounts under these columns are the result of calculations at the
5% and 10% rates required by the Securities and Exchange Commission. These
amounts should not be construed as forecasts of possible future
appreciation, if any, of the stock price for the Company's Common Stock.
(3) Granted pursuant to Mr. DiNicola's employment agreement. Such options become
exercisable in four equal annual installments commencing April 18, 1995.
(4) Exercisable in four equal annual installments commencing July 20, 1996.
(5) Exercisable in four equal annual installments commencing July 27, 1995.
(6) Mr. Simon's options lapsed upon the termination of his employment with the
Company on June 15, 1995.
10
<PAGE> 13
FY-END OPTION VALUES
<TABLE>
<CAPTION>
VALUE OF
NUMBER OF SECURITIES UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
OPTIONS AT FISCAL YEAR-END AT FISCAL YEAR-END
($) ($)
---------------------------- ----------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
-------------------------------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Robert J. DiNicola.................... 143,750 531,250 801,406 2,429,219
Larry Pollock......................... 75,000 275,000 404,500 1,226,150
Merrill J. Wertheimer................. 4,000 62,000 21,000 75,500
Mary Forte............................ 3,750 51,250 19,688 69,063
Max Brown............................. 4,000 22,000 21,000 65,500
</TABLE>
EXECUTIVE SEVERANCE ARRANGEMENTS
Effective February 10, 1994, the Company adopted an executive severance
plan for its executives (the "Severance Plan"), which becomes operative upon the
happening of certain events, such as termination without cause (as defined).
Under the Severance Plan, as amended effective May 20, 1995, Executive Vice
Presidents, Company Senior Vice Presidents and Division Presidents are entitled
to receive severance pay equal to one month of pay and benefits for each year of
continuous service, with a minimum of three months of pay and a maximum of nine
months of pay. Company Vice Presidents and directors, and Division Senior Vice
Presidents, Vice Presidents and directors are entitled to severance pay equal to
one week of pay for each year of continuous service, with a minimum of twelve
weeks of pay and a maximum of twenty-six weeks of pay. Each of Mr. Wertheimer,
Ms. Forte and Mr. Brown, in addition to other executive officers of the Company,
are eligible to receive benefits under the Severance Plan in accordance with its
terms.
On May 15, 1995, the Company entered into a severance agreement with Dolph
B.H. Simon, former Vice President and General Counsel of the Company. Under the
terms of this agreement, Mr. Simon resigned from all positions with the Company
on June 15, 1995. In connection with his resignation, Mr. Simon received
benefits under the Company's Severance Plan consisting of a lump-sum payment
equal to nine months salary, certain medical and life insurance benefits,
outplacement assistance and other benefits. The severance agreement also
provided Mr. Simon with certain additional benefits beyond those provided for in
the Severance Plan. These additional benefits consist of a single lump-sum
payment equal to three months salary payable to Mr. Simon on April 15, 1996,
twelve additional months of salary payable in twelve equal installments starting
July 15, 1996 (such payments will be offset by any amounts earned by Mr. Simon
during such twelve month period), and any bonus Mr. Simon would have been
entitled to receive if he had been an employee of the Company on July 31, 1995.
EMPLOYMENT AGREEMENTS
DiNicola Employment Agreement. On March 14, 1994, Mr. DiNicola entered into
an employment agreement with the Company that will expire on April 17, 1998,
unless earlier terminated. Mr. DiNicola serves as the Company's Chairman of the
Board and Chief Executive Officer as a requirement of his employment agreement.
Pursuant to his employment agreement, Mr. DiNicola will receive an annual base
salary of not less than $650,000 (subject to annual review and potential
increase by the Board of Directors). Mr. DiNicola is eligible to participate in
any incentive bonus plan authorized by the Board of Directors.
If Mr. DiNicola's employment is terminated without cause (as defined), he
will be entitled to receive his base salary for the remainder of the term of the
agreement (subject to mitigation in certain circumstances). In the event of a
change of control (as defined), the term of Mr. DiNicola's agreement will be
extended for 30 months from the date of the change of control (if that period is
longer than the unexpired term of the agreement), unless the Company had
previously given notice of its termination of Mr. DiNicola's employment.
Notwithstanding the foregoing, if Mr. DiNicola's employment is terminated while
the Company is actively considering participating in a change of control, and if
that change of control is consummated within four months of the date of
termination of his employment, the term of Mr. DiNicola's employment will
nevertheless be extended for 30 months from the date of the change of control.
11
<PAGE> 14
Pollock Employment Agreement. On December 22, 1993, Mr. Pollock entered
into an employment agreement with the Company that will expire on January 10,
1998, subject to automatic one-year extensions of the term of the agreement
unless either party notifies the other to the contrary at least 120 days prior
to the end of the then current term. Mr. Pollock serves as the Company's
President and Chief Operating Officer as a requirement of his employment
contract. Pursuant to his employment agreement, Mr. Pollock will receive an
annual base salary of not less than $400,000 (subject to annual review and
potential increase by the Board of Directors). Mr. Pollock also is eligible to
participate in any incentive bonus plan authorized by the Board of Directors.
If Mr. Pollock's employment is terminated without cause (as defined), he
will be entitled to receive his annual base salary for the remainder of the term
of the agreement. In addition, if Mr. Pollock resigns from the Company at a time
when he was not also subject to dismissal for cause, he will be entitled to
receive his annual base salary for a period of one year from the date of his
termination, subject to mitigation in certain circumstances.
DIRECTOR COMPENSATION
Each Non-Employee director of the Company receives an annual retainer fee
of $10,000, and is entitled to a $3,000 fee for each board meeting attended in
person and a $1,000 fee for each meeting attended by telephone. A chairman of a
committee of the Board of Directors receives an additional annual retainer fee
of $2,500, and each committee member is entitled to $1,000 for each committee
meeting attended, whether in person or by telephone, unless such committee
meeting is held on the same day as a meeting of the Board of Directors. If
approved by the Company's Stockholders at the Annual Meeting, non-employee
directors also will receive grants of options to purchase Common Stock under the
Outside Directors' Plan, which is described in more detail under "Proposal No.
2" above.
DIRECTOR INDEMNIFICATION ARRANGEMENTS
During 1993, each of the Company and Zale Delaware, Inc., a wholly-owned
subsidiary of the Company ("ZDel"), entered into indemnification agreements (the
"Indemnification Agreements") with the directors of the Company, agreeing to
indemnify such persons against expenses, judgments, fines and amounts paid in
settlement of, or incurred in connection with, any threatened, pending or
completed action, suit or proceeding in which the director was or is, or is
threatened to be made, a party by reason of his service as a director, officer,
employee or agent of the Company subsequent to July 21, 1993, provided that the
director acted in good faith and in a manner he reasonably believed to be in the
best interest of the Company or ZDel, as applicable, and, with respect to any
criminal action or proceeding, provided he had reasonable cause to believe his
actions were lawful. Each Indemnification Agreement also provides for the
advancement of expenses incurred by the director in defending any proceeding.
The Company may enter into similar agreements with any new directors elected in
the future.
The Company and ZDel also entered into a Trust Agreement with United States
Trust Company of New York, as trustee, pursuant to which $1,000,000 was
deposited with the trustee to secure the performance of the Company and ZDel
under the Indemnification Agreements and under the indemnification provisions of
the Certificate of Incorporation and Bylaws of the Company or ZDel or applicable
law.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During 1995, there were no Compensation Committee interlocks.
RELATED PARTY TRANSACTIONS
During the fiscal year ended July 31, 1995, the Company purchased
approximately $1.9 million of fashion jewelry and giftware merchandise from
Swarovski International Holding A.G. ("Swarovski") and its subsidiaries in the
ordinary course of its business. Swarovski was a beneficial owner of more than
5% of the Company's Common Stock until August 31, 1995, when the Company
repurchased the 1,852,884 Series B
12
<PAGE> 15
Warrants held by Swarovski for an aggregate purchase price of approximately $9.3
million, which represented a discount, on a per warrant basis, to the then
current trading price of the Company's publicly traded Series A Warrants. The
Series B Warrants were not publicly traded.
In July 1994, Mr. DiNicola borrowed $394,235 from the Company in connection
with his relocation to Dallas. Mr. DiNicola repaid that loan in full, plus
accrued interest at a rate of 7% per annum, on January 23, 1995.
As of August 30, 1995, Ms. Forte owed a subsidiary of the Company $100,000
which is payable in full, plus interest at a rate of 7% per annum, on the first
to occur of October 31, 1995 or Ms. Forte's termination of employment with the
Company.
REPORT OF THE COMPENSATION COMMITTEE
ON EXECUTIVE COMPENSATION
Subject to the final decision of the Board of Directors, the Compensation
Committee (the "Committee") actively reviews the proposed compensation of the
Company's Chief Executive Officer and all other corporate officers and considers
management succession and related matters. In addition, the Committee
administers the Company's Option Plan and its other incentive compensation
plans.
Under the supervision of the Committee, the Company has developed and
implemented compensation policies, plans and programs that seek to enhance the
profitability of the Company, and thus stockholder value, by aligning closely
the financial interests of the Company's executives with those of its
stockholders. The objectives of the Company's executive compensation program are
to:
- Support the achievement of the Company's strategic operating objectives;
- Provide compensation that will attract and retain superior talent and
reward the executives based upon Company and individual performance;
- Align the executives' financial interests with the success of the Company
by placing a substantial portion of pay at risk (i.e., payout that is
dependent upon Company and individual performance); and
- Provide a strategic balance between short- and long-term incentive
compensation such that it encourages a balanced perspective on the part
of the executive between short-term profit goals and long-term value
creation.
The Company's executive compensation program consists of base salary,
annual cash incentive compensation, long-term incentive compensation in the form
of stock options, restricted stock grants and other equity incentives,
supplemental executive benefits and various other benefits, including life and
medical insurance plans.
Base Salaries. It is the Committee's objective to maintain base salaries
that are reflective of the financial performance of the Company and the
individual executive's experience, responsibility level and performance, and
that are competitive with the salary levels of executives at other companies
engaged in the same or similar lines of business with revenues in a range
comparable to those of the Company. The Committee intends to monitor the
salaries of all corporate officers annually and to make any adjustments it deems
necessary and appropriate.
Bonuses. For fiscal 1995, the annual bonuses available to the Company's
executive officers were based upon the Company's quantitative financial
performance as measured by certain Company and division earnings before
interest, taxes, depreciation and amortization ("EBITDA") targets set forth in
the Company's annual financial plan. Bonuses were calculated as a percentage of
the recipient's base salary and were weighted such that Corporate employees
could earn up to 75% of their maximum bonus if the Company achieved its EBITDA
target and up to 25% if certain operating divisions achieved their EBITDA
targets, and division employees could earn up to 25% of their maximum bonus if
the Company achieves its EBITDA target and up to 75% if their operating division
achieved its EBITDA target. Bonuses for each EBITDA target were available to be
paid only in the event such target was achieved and could be increased to the
extent such
13
<PAGE> 16
EBITDA targets were exceeded. The Company exceeded its initial EBITDA target for
fiscal 1995 and related annual bonuses were paid for that period. For fiscal
1996 annual bonuses will be determined using targets based upon an EBITDA dollar
target and an EBITDA as a percentage of sales target.
Equity Incentives. The Company's Omnibus Stock Incentive Plan (the "Option
Plan") currently forms the basis for the Company's long-term incentive plan for
executives and key employees. The Option Plan provides for the grant of stock
options, SARs, restricted stock and phantom stock. The specific objective of the
Option Plan is to align executive and stockholder long-term interests by
creating a strong link between executive pay and stockholder returns by
providing a vehicle through which Company executives may develop and maintain
long-term stock ownership positions in the Company's Common Stock.
During the period from April 1, 1994 to July 31, 1994 and during the 1995
fiscal year, option awards were made to approximately 125 of the Company's
employees covering 1,776,000 shares of Common Stock. All options were granted
with an exercise price equal to the fair market value of the Company's Common
Stock at the date of grant, have a term of ten years, and become exercisable 25%
per year beginning one year from the date of grant.
The Committee, in satisfying its duty to establish the compensation levels
of the Company's Chief Executive Officer and its other corporate officers,
considered and approved management's recommendations for the 1996 fiscal year
with respect to changes to the elements and levels of compensation paid to such
officers. The Committee consulted with the Company's human resources department
and/or outside compensation consultants in evaluating the recommendations made
by management. The Committee, in its role as administrator of the Option Plan,
intends to review periodically with the Company's human resources department
and/or outside compensation consultants the levels and types of cash incentives
and stock-based compensation that are appropriate for a corporation similarly
situated to the Company.
Compensation of the Chief Executive Officer and Chief Operating
Officer. Under the terms of their respective employment agreements, Mr. DiNicola
and Mr. Pollock receive annual base salaries of not less than $650,000 and
$400,000, respectively. These base salaries are subject to annual review and
potential increase by the Board of Directors. See "Executive and Director
Compensation -- Employment Agreements." After a review of the salaries of the
chief executive officers, presidents and chief operating officers of a number of
retail and specialty retail companies of similar size to the Company and a
review of the Company's performance, the Board of Directors increased Mr.
DiNicola's base salary to $750,000 and Mr. Pollock's base salary to $450,000,
effective April 18, 1995 and January 10, 1995, respectively. Bonuses for Mr.
DiNicola and Mr. Pollock for fiscal 1995 were governed by the terms of their
individual employment agreements with the Company, which provided Mr. DiNicola
with a guaranteed bonus of $325,000 and Mr. Pollock with a guaranteed bonus of
$200,000. In addition, options awards were made to Mr. DiNicola under the terms
of his employment agreement. See "Executive and Directors
Compensation -- Summary Compensation Table."
Omnibus Budget Reconciliation Act of 1993. The Omnibus Budget
Reconciliation Act of 1993, which amended the Internal Revenue Code of 1986, as
previously amended (the "Code"), added Section 162(m). With certain exceptions,
Section 162(m) prevents publicly held corporations, including the Company, from
taking a tax deduction for compensation paid to a "covered employee" in a
taxable year to the extent that the compensation deduction exceeds $1 million. A
"covered employee" is the Chief Executive Officer on the last day of the taxable
year and any other officer who is among the four highest compensated officers
(other than the Chief Executive Officer). Generally, those individuals are the
executive officers named in the Summary Compensation Table.
The $1 million limit on deductibility does not apply to compensation that
meets the requirements for "qualified performance-based compensation" under
regulations adopted pursuant to the Code. These requirements include the
following: (i) the compensation must be paid solely on account of the attainment
of one or more pre-established objective performance goals, (ii) the performance
goals must be timely established by the Compensation Committee of the Board of
Directors, comprised solely of two or more outside directors, (iii) the material
terms of the performance goals must be disclosed to and approved by the
stockholders before payment of such remuneration, and (iv) the Compensation
Committee must certify, in writing, that the performance goals were satisfied.
14
<PAGE> 17
The Compensation Committee intends to periodically review the impact of
Section 162(m) on the Company and to act in accordance with what it considers to
be the best interests of the Company's stockholders.
The Option Plan has been designed to meet the proposed regulations so that
compensation realized in connection with stock options, stock appreciation
rights and other performance-based equity incentives granted under the Option
Plan, will also be excluded from the deduction limit.
Frank E. Grzelecki, Chairman
Richard C. Marcus
Andrew H. Tisch
15
<PAGE> 18
CORPORATE PERFORMANCE GRAPH
The following graph shows a comparison of cumulative total returns for the
Company, the S&P 500 Index and the Dow Jones Retail -- All Specialty Index for
the period since August 1, 1993 (the date on which the Company's Common Stock
began trading publicly). The comparison assumes $100 was invested on August 1,
1993 in the Company's Common Stock and in each of the two indices and, for the
S&P 500 Index and the Dow Jones Retail -- All Specialty Index, assumes
reinvestment of dividends. The Company has not paid dividends since August 1,
1993.
[GRAPH]
The stock price performance depicted in the above graph is not necessarily
indicative of future price performance. The Corporate Performance Graph will not
be deemed to be incorporated by reference in any filing by the Company under the
Securities Act or the Exchange Act, except to the extent that the Company
specifically incorporates the graph by reference.
SECTION 16(A) REPORTING
Section 16(a) of the Exchange Act requires the Company's directors and
executive officers, and persons who beneficially own more than 10% of any class
of the Company's equity securities, to file with the Commission initial reports
("Form 3") of beneficial ownership and reports of changes ("Form 4") in
beneficial ownership of Common Stock and other equity securities of the Company.
Officers, directors and greater than 10% beneficial owners are required by
Commission regulation to furnish the Company with copies of all Section 16(a)
reports they file. To the Company's knowledge, based solely on a review of the
copies of such reports furnished to the Company and written representations that
no other reports were required, all
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<PAGE> 19
Section 16(a) filing requirements applicable to its officers, directors and
greater than 10% beneficial owners were complied with for the year ended July
31, 1995, except that the following filings were late: (i) Paul Leonard's Form 4
relating to the grant of an option to purchase 15,000 shares of Common Stock;
(ii) Beryl Raff's Form 4 relating to the grant of an option to purchase 15,000
shares of Common Stock; (iii) Paul Kanneman's Form 4 relating to the grant of an
option to purchase 15,000 shares of Common Stock; (iv) Thomas Whiddon's Form 3
relating to his initial employment by the Company; (v) Ms. Forte's Form 4
relating to the purchase of 150 shares of Common Stock; and (vi) Mr. Tisch's
Form 4 relating to the purchase of 20,000 shares of Common Stock. Mr. Tisch's
Form 4 was timely filed with the Company, but inadvertently filed late with the
Commission.
OTHER MATTERS
The Board of Directors knows of no other matters to be brought before the
Annual Meeting. However, if any other matters are properly brought before the
Annual Meeting, it is the intention of the attorneys-in-fact named in the
accompanying proxy to vote in accordance with their judgment on such matters.
VOTING REQUIREMENTS
With regard to Proposal No. 1, the election of directors, votes may be cast
for or votes may be withheld from each nominee. Directors will be elected by
plurality vote. Therefore, votes that are withheld will be excluded entirely
from the vote and will have no effect. Abstentions may not be specified with
respect to the election of directors and, under Delaware law, broker non-votes
(as explained below) will have no effect on the outcome of the election of
directors. In general, a broker who holds securities in street name has limited
authority to vote on matters submitted at a stockholders meeting in the absence
of specific instructions from the beneficial owner. In the absence of
instructions from the beneficial owner or authorization from the National
Association of Securities Dealers, Inc. (the "NASD") to vote on specific matters
without the necessity of obtaining instructions from the beneficial owner, a
broker will specify a "non-vote" on particular matters. For the purposes of
Delaware law, a broker non-vote is counted as present for quorum purposes, but
is generally excluded entirely from determining whether a particular matter is
approved. Typically, however, brokers are permitted by the NASD to vote for the
election of directors without instruction from the beneficial owner.
With regard to Proposal No. 2, approval of the Outside Directors' Plan, and
Proposal No. 3, the ratification of independent public accountants, votes may be
cast for or against the matter, or stockholders may abstain from voting on the
matter. Approval of each such matter requires the affirmative vote of at least a
majority of the shares of Common Stock present or represented by proxy at the
meeting and entitled to vote. Therefore, abstentions will have the effect of
votes against the approval of the matter and, under Delaware law, broker
non-votes will have no effect on the outcome.
If no directions are specified in any duly signed and dated proxy card
received by the Company, the shares represented by that proxy card will be
counted as present for quorum purposes and will be voted by the
attorneys-in-fact named in the proxy FOR the election of the director nominees
recommended by the Board of Directors, FOR approval of the Outside Directors'
Plan, FOR the ratification of the appointment of Arthur Andersen LLP as the
Company's independent public accountants, and in accordance with the discretion
of the named attorneys-in-fact on other matters properly brought before the
Annual Meeting.
STOCKHOLDER NOMINATION OF DIRECTOR CANDIDATES
The Bylaws of the Company provide that any stockholder of record who is
entitled to vote for the election of directors at a meeting called for that
purpose may nominate persons for election to the Board of Directors subject to
the following notice requirements.
As described more fully in the Company's Bylaws, a stockholder desiring to
nominate a person for election to the Board of Directors must send a written
notice to the Secretary of the Company setting forth
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<PAGE> 20
(i) as to each person who the stockholder proposes to nominate, all information
required to be disclosed in solicitations of proxies for election of directors,
or as otherwise required, in each case pursuant to Regulation 14A under the
Exchange Act (including such person's written consent to being named in the
Proxy Statement as a nominee and to serving as a director if elected); and (ii)
as to the stockholder giving the notice (A) the name and address of such
stockholder as it appears on the Company's books and (B) the class and number of
shares of the Company that are owned of record by such stockholder.
Pursuant to the Company's Bylaws, to be timely, notice of persons to be
nominated by a stockholder as a director at a meeting of stockholders must be
delivered to or mailed and received at the principal executive offices of the
Company not less than 60 days nor more than 90 days prior to the meeting;
provided, however, that in the event that less than 70 days' notice or prior
public disclosure of the date of the meeting is given or made to stockholders,
notice by the stockholder to be timely must be received not later than the close
of business on the tenth day following the day on which such notice of the
meeting date was mailed or such public disclosure was made or, in the case of an
annual meeting, if earlier than such tenth day, the sixtieth day before the
anniversary date of the last annual meeting (September 2, 1996 in the case of
the 1996 annual stockholders' meeting). The obligation of stockholders to comply
with the foregoing Bylaw provision is in addition to the requirements of the
proxy rules if the stockholder intends to solicit proxies in favor of the
election of its nominee(s).
STOCKHOLDER PROPOSALS
Stockholder proposals to be included in the Company's Proxy Statement
relating to the 1996 Annual Meeting of Stockholders of the Company must be
received by no later than May 31, 1996 at the Company's principal executive
offices, 901 West Walnut Hill Lane, Irving, Texas 75038-1003, Attention: Legal
Department. Stockholders of the Company who intend to nominate candidates for
election as a director or to bring business before the meeting must also comply
with the applicable procedures set forth in the Company's Bylaws. See
"Stockholder Nomination of Director Candidates." The Company will furnish copies
of such Bylaw provisions upon written request to the Secretary of the Company at
the aforementioned address.
AVAILABILITY OF FORM 10-K
The Company will provide to any stockholder, without charge, upon written
request of such stockholder, a copy of the Annual Report on Form 10-K for the
Fiscal Year Ended July 31, 1995, as filed with the Commission. Such requests
should be addressed to Zale Corporation, 901 West Walnut Hill Lane, Irving,
Texas 75038-1003, Attention: Investor Relations, MS 6B-1.
The foregoing Notice and Proxy Statement are sent by order of the Board of
Directors.
ALAN P. SHOR
Senior Vice President, General
Counsel
and Secretary
September 28, 1995
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<PAGE> 21
ANNEX A
ZALE CORPORATION
OUTSIDE DIRECTORS' 1995 STOCK OPTION PLAN
1. PURPOSE
The purpose of this Zale Corporation Outside Directors' 1995 Stock Option
Plan (the "Plan") is to provide an incentive to those directors of Zale
Corporation (the "Company") who are not employees of the Company to serve on the
board of directors of the Company (the "Board") and to maintain and enhance the
Company's long-term performance.
2. ADMINISTRATION
The terms of the stock options to be awarded under the Plan are set forth
and may not be varied other than by amendment of the Plan in accordance with
Section 9. To the extent that any administrative action is required in
connection with the Plan, such action shall be taken by the Board, whose
determination in such case shall be conclusive.
3. SHARES AVAILABLE FOR AWARDS
(a) Shares of common stock of the Company ("Common Stock") transferred upon
the exercise of options granted under the Plan shall be authorized but unissued
shares or treasury shares. Subject to Section 3(b), the aggregate number of
shares of Common Stock which may be transferred pursuant to the Plan shall be
150,000 shares. For purposes of this Section 3(a), the number of shares
transferred upon exercise of an option shall be calculated after deducting any
shares tendered to the Company in payment upon such exercise. Any shares of
Common Stock that are subject to a stock option under the Plan and that have not
been transferred at the time such option is cancelled or terminated shall again
be available for awards under the Plan.
(b) In the event of any change in the Common Stock by reason of a stock
dividend or distribution, stock split-up, recapitalization, combination or
exchange of shares, or by reason of any merger, consolidation, spinoff or other
corporate reorganization in which the Company is the surviving corporation, the
Board shall equitably adjust the total number of shares of Common Stock that may
be transferred under the Plan, the number of shares subject to each stock option
then outstanding or subsequently granted under the Plan, and the exercise price
of each such option. After any such adjustment, the number of shares subject to
each option shall be rounded to the nearest whole number.
4. PERSONS ELIGIBLE FOR STOCK OPTIONS
Stock options shall be granted under the Plan only to persons who are
members of the Board and who are not employees of the Company or any subsidiary
thereof ("Eligible Directors").
5. GRANT OF STOCK OPTION
(a) Every option granted under the Plan shall be subject to the terms and
conditions set forth in the Plan, and shall be evidenced by an option agreement
which shall not be inconsistent with the provisions of the Plan.
(b) As of May 16, 1995, each person who is then an Eligible Director shall
be granted an option to purchase 5,000 shares of Common Stock. Upon the initial
election to the Board, after May 16, 1995, of any person who satisfies the
definition of Eligible Director, such person shall be granted an option to
purchase 5,000 shares of Common Stock.
(c) As of the date of the first meeting of the Board following each annual
meeting of shareholders, each person who is an Eligible Director at the
adjournment of such meeting of the Board (other than an Eligible
ANNEX A - Page 1
<PAGE> 22
Director who is initially elected at such annual meeting or such meeting of the
Board) shall be granted an option to purchase 3,000 shares of Common Stock.
6. TERMS OF STOCK OPTIONS
(a) The exercise price per share of Common Stock under each option shall be
equal to the fair market value per share of Common Stock on the date of option
grant as defined in section 2(I) of the Company's Omnibus Stock Incentive (the
"Omnibus Plan").
(b) Each option granted under the Plan shall have a term of 10 years.
Subject to the requirements of shareholder approval set forth in Section 11,
each option granted under the Plan shall become cumulatively exercisable as to
25 percent of the shares subject thereto on each of the first, second, third and
fourth anniversaries of the date of grant. An option may be exercised from time
to time for all or part of the shares as to which it is then exercisable.
(c) Upon the occurrence of a change in control as defined in section 2(d)
of the Zale Corporation Omnibus Stock Incentive Plan, each outstanding option
shall become fully and immediately exercisable and shall remain exercisable
until its expiration, termination or cancellation pursuant to the terms of this
Plan.
7. EXERCISE OF OPTIONS
(a) An option shall be exercised by the filing of a written notice with the
Company, on such form and in such manner as the Company shall prescribe,
accompanied by payment for the shares being purchased. Such payment shall be
made: (i) in cash, by certified or official bank check (or the equivalent
thereof acceptable to the Company) for the full option exercise price; or (ii)
by delivery of shares of Common Stock acquired prior to the option exercise date
and having a fair market value as of the exercise date equal to all or part of
the option exercise price and cash or a certified or official bank check (or the
equivalent thereof acceptable to the Company) for any remaining portion of the
full option exercise price.
(b) Promptly after receiving payment of the full option exercise price, the
Company shall deliver to the Eligible Director, or to such other person as may
then have the right to exercise the option, a certificate for the shares of
Common Stock for which the option has been exercised. The holder of a stock
option shall have none of the rights of a shareholder with respect to the shares
subject to the option until such shares shall be transferred to the holder upon
the exercise of the option.
(c) To the extent necessary for compliance with Rule 16b-3 promulgated
under the Securities Exchange Act of 1934 (the "Exchange Act"), no option
granted under the Plan shall be assignable or transferable. No assignment or
transfer may be made without consent of the Board.
8. TERMINATION OF DIRECTORSHIP
(a) If an optionee's membership on the Board terminates for any reason
other than death or for cause, he may exercise any outstanding option to the
extent that he was entitled to exercise it on the date of termination. Exercise
must occur within three months after termination, but in no event may any
exercise occur after the expiration date of the option.
(b) If an optionee dies while serving on the Board, or during the period in
which an option is exercisable pursuant to paragraph (b) of this Section 8, any
outstanding option shall be exercisable to the extent that the optionee was
entitled to exercise it on the date of death. Exercise must occur by the earlier
of the first anniversary of death or the expiration date of the option. Such
exercise shall be made only by the optionee's executor or administrator, unless
his will specifically disposes of the option, in which case exercise shall be
made only by the recipient of such specific disposition.
(c) Except as provided in paragraph (a) or (b) of this Section 8, any
unexercised option held by a person who is no longer a member of the Board shall
be null and void.
ANNEX A - Page 2
<PAGE> 23
9. AMENDMENT OF THE PLAN
The Board may, at any time, suspend or terminate the Plan or revise or
amend it in any respect whatsoever; provided, however, that Sections 4, 5 and 6
may not be amended more than once every six months except as may be necessary to
comply with changes in the Internal Revenue Code, or as permitted under rules
promulgated under Section 16 of the Exchange Act; and further provided, that no
amendment shall be effective unless and until it has been duly approved by the
shareholders if the failure to obtain such approval would adversely affect the
compliance of the Plan with the requirements of Rule 16b-3 under the Exchange
Act, or with the requirements of any other applicable law, rule or regulation.
10. SECURITIES MATTERS
The Company shall be under no obligation to effect the registration
pursuant to the Securities Act of 1933 of any shares of Common Stock to be
issued hereunder or to effect similar compliance under any state laws.
Notwithstanding anything herein to the contrary, the Company shall not be
obligated to cause to be issued or delivered any certificates evidencing shares
of Common Stock pursuant to the Plan unless and until the Company is advised by
its counsel that the issuance and delivery of such certificates is in compliance
with all applicable laws, regulations of governmental authority and the
requirements of the National Association of Securities Dealers Automated
Quotation System and any other securities exchange on which shares of Common
Stock are traded. The Board may require, as a condition of the issuance and
delivery of certificates evidencing shares of Common Stock pursuant to the terms
hereof, that the recipient of such shares make such covenants, agreements and
representations, and that such certificates bear such legends, as the Board, in
its sole discretion, deems necessary or desirable.
11. EFFECTIVE DATE AND TERM OF PLAN
(a) The Plan and any amendment thereto shall become effective upon adoption
by the Board; provided, that no option granted under the Plan may be exercised
prior to the date on which the shareholders of the Company approve the Plan or
applicable amendment by majority vote. If such approval is not obtained within
twelve (12) months following adoption of the Plan by the Board, the Plan and any
options granted under it shall be null and void.
(b) Unless terminated sooner by action of the Board, the Plan shall
terminate on the tenth anniversary of the date of its adoption. Options
outstanding upon Plan termination shall continue in effect in accordance with
their terms.
12. GOVERNING LAWS
All rights and obligations under the Plan shall be construed and
interpreted in accordance with the laws of the State of Texas, without giving
effect to principles of conflict of laws.
13. SECTION HEADINGS
The Section headings herein are for purposes of convenience only and are
not intended to define or limit the contents of the Sections.
ANNEX A - Page 3
<PAGE> 24
P R O X Y
ZALE CORPORATION
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
ZALE CORPORATION FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON NOVEMBER 2, 1995
The undersigned, having received the notice and accompanying Proxy
Statement for said meeting, hereby appoints Robert J. DiNicola, Larry Pollock
and Alan P. Shor, and each of them, with full power of substitution, as
the undersigned's proxy and attorney-in-fact to vote at the Annual Meeting of
Stockholders of Zale Corporation to be held on November 2, 1995, or at any
adjournment thereof, all shares of Zale Corporation which the undersigned may
be entitled to vote. The above proxy is hereby instructed to vote as shown on
the reverse side of this card.
ELECTION OF DIRECTORS:
Glen Adams Frank E. Grzelecki
Peter P. Copses Richard C. Marcus
Robert DiNicola Larry Pollock
Andrew H. Tisch
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE NOMINEES AND
FOR PROPOSALS 2 AND 3. THIS PROXY WILL BE VOTED AS SPECIFIED. IF NO SPECIFIC
DIRECTIONS ARE GIVEN, ALL OF THE VOTES ATTRIBUTABLE TO YOUR VOTING SHARES
WILL BE VOTED FOR THE NOMINEES AND FOR PROPOSALS 2 AND 3.
/SEE REVERSE
CONTINUED AND TO BE SIGNED ON REVERSE SIDE SIDE/
<PAGE> 25
/X/ PLEASE MARK YOUR
VOTES AS IN THIS
EXAMPLE.
FOR WITHHELD
1. Election of
Directors. / / / /
(see reverse).
For, except vote(s) withheld from the following nominee(s):
MARK HERE MARK HERE
IF YOU PLAN / / FOR ADDRESS / /
TO ATTEND CHANGE AND
THE MEETING NOTE BELOW
FOR AGAINST ABSTAIN
2. Adoption of the Zale Corporation
Outside Directors 1995 Stock Option / / / / / /
Plan.
3. Ratification of appointment of
Arthur Andersen & Co. as / / / / / /
Independent Public Accountants.
If any other business is properly brought before the meeting, the undersigned
acknowledges that the above-named proxy will vote in his discretion on
such other business.
NOTE: Please sign exactly as name appears hereon. Joint owners should each
sign. When signing as attorney, executor, administrator, trustee or
guardian, please give full title as such.
Signature:_______________________________________________ Date _________________
Signature:_______________________________________________ Date _________________
