<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
[X] Definitive Proxy Statement Rule 14a-6(e)(2))
[ ] Definitive Additional Materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
SAMUELS JEWELERS, INC.
----------------------
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of filing fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(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 the
Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.
(1) Amount previously paid:
(2) Form, Schedule or Registration Statement no.:
(3) Filing Party:
(4) Date Filed:
<PAGE> 2
SAMUELS JEWELERS, INC.
2914 MONTOPOLIS DRIVE, SUITE 200
AUSTIN, TEXAS 78741
----------------------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD NOVEMBER 3, 1999
---------------------------
TO THE STOCKHOLDERS OF SAMUELS JEWELERS, INC.:
The 1999 Annual Meeting of Stockholders of Samuels Jewelers, Inc., a
Delaware corporation (the "Company"), will be held at Hilton Dallas Parkway,
4801 LBJ Freeway, Dallas, Texas on Wednesday, November 3, 1999, at 9:00 a.m.
local time, to consider and vote on the following matters:
1. To elect a Board of Directors to serve until the next annual meeting
of stockholders and until their successors are elected and qualified;
2. To ratify the appointment of independent certified public accountants
for the Company for fiscal year 2000; and
3. To transact such other business as may properly come before the Annual
Meeting or any adjournment or postponement thereof.
The Company has fixed the close of business on October 1, 1999 as the
record date for determining stockholders entitled to notice of and to vote at,
the Annual Meeting and any adjournments thereof. Stockholders who execute
proxies solicited by the Board of Directors of the Company retain the right to
revoke them at any time. Unless so revoked, the shares of Common Stock of the
Company represented by such proxies will be voted at the Annual Meeting in
accordance with the directions given therein. If a stockholder does not specify
a choice on such stockholder's proxy, the proxy will be voted "FOR" the nominees
for director named in the attached Proxy Statement and "FOR" the ratification of
the appointment of the independent certified public accountants for the Company
named in the Proxy Statement. The list of stockholders of the Company may be
examined at the offices of the Company at 2914 Montopolis Drive, Suite 200,
Austin, Texas 78741.
By Order of the Board of Directors
/s/ E. Peter Healey
E. Peter Healey
Secretary
September 27, 1999
YOU ARE CORDIALLY INVITED TO ATTEND THE ANNUAL MEETING. WHETHER OR NOT YOU PLAN
TO ATTEND THE ANNUAL MEETING, PLEASE COMPLETE, DATE, SIGN AND MAIL PROMPTLY THE
ENCLOSED PROXY IN THE ENCLOSED POSTPAID ENVELOPE. THE PROXY IS REVOCABLE AND
WILL NOT BE USED IF YOU ARE PRESENT AT THE ANNUAL MEETING AND PREFER TO VOTE
YOUR SHARES IN PERSON.
<PAGE> 3
SAMUELS JEWELERS, INC.
2914 MONTOPOLIS DRIVE, SUITE 200
AUSTIN, TEXAS 78741
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
NOVEMBER 3, 1999
This Proxy Statement is being furnished to the holders of common stock (the
"Common Stock") of Samuels Jewelers, Inc., a Delaware corporation (the
"Company"), in connection with the solicitation of proxies by the Board of
Directors of the Company (the "Board") from such stockholders for use at the
Annual Meeting of Stockholders (the "Meeting") to be held at Hilton Dallas
Parkway, 4801 LBJ Freeway, Dallas, Texas on Wednesday, November 3, 1999,
beginning at 9:00 a.m. local time, and any adjournment or postponement thereof,
for the purposes set forth in the preceding notice. A form of proxy for use at
the Meeting is also enclosed. This Proxy Statement and the form of proxy is
expected to be first mailed or delivered to stockholders of the Company entitled
to notice of the Meeting on or about October 7, 1999.
The Company has fixed the close of business on October 1, 1999 as the
record date (the "Record Date") for the determination of stockholders entitled
to notice of, and to vote at, the Meeting. On that date there were issued and
outstanding and entitled to vote 5,061,800 shares of Common Stock, which is the
Company's only class of voting securities with issued and outstanding shares as
of that date. The presence at the Meeting, in person or by proxy, of the holders
of a majority of the issued and outstanding shares of the Company's Common Stock
entitled to vote thereat is necessary to constitute a quorum for the transaction
of business. Abstentions and broker non-votes will be counted in determining
whether a quorum is present.
Each stockholder is entitled to one vote, in person or by proxy, for each
share of Common Stock held by such stockholder on the Record Date on all matters
that properly come before the Meeting. For purposes of election of directors,
each stockholder is entitled to as many votes as such stockholder would
otherwise be entitled to cast multiplied by the number of directors to be
elected. In such election of directors, a stockholder may cast all of the votes
to which he or she is entitled for a single director, may distribute them among
the number of directors or may distribute them among two or more directors as he
or she desires.
The election of directors requires a plurality of the shares of Common
Stock that are voted thereon. Accordingly, the seven nominees for election as
directors at the Meeting who receive the greatest number of votes cast for
election by the holders of record of Common Stock on the Record Date shall be
the duly elected directors upon completion of the vote tabulation at the
Meeting. It is the intention of the holders of proxies, unless authorization to
do so is withheld, to vote "FOR" the election of the Board nominees named in
this Proxy Statement. The holders of proxies may not vote such proxies for a
greater number of persons than seven. However, the persons authorized to vote
shares represented by executed proxies in the enclosed form (if authority to
vote for the election of directors is not withheld) will have full discretion
and authority to vote cumulatively and to allocate votes among any or all of
such nominees as they may determine or, if authority to vote for a specified
candidate or candidates has been withheld, among those candidates for whom
authority to vote has not been withheld. If prior to the Meeting any such
nominee should become unavailable for election, an event which is not now
anticipated by the Board, the proxies will be voted for the election of such
person or persons as shall be determined by the holders of proxies in accordance
with their judgment.
<PAGE> 4
The affirmative vote of the holders of a majority of the shares of Common
Stock present in person or represented by proxy and entitled to vote at the
Meeting is required for approval of all other items being submitted to the
stockholders for their consideration.
Abstentions and broker non-votes will not be counted as votes cast for the
election of directors. Abstentions will be considered present for calculating
the vote on all other items being submitted to stockholders while broker
non-votes will not be considered present for the purpose of calculating those
votes. Therefore, provided that a quorum exists at the Meeting, abstentions and
broker non-votes will have no effect on the election of directors and broker
non-votes also will have no effect for votes on all other items being submitted
to stockholders, but abstentions will have the effect of a negative vote for
votes on those other items.
Votes will be tabulated by Norwest Bank Minnesota, N.A., the transfer agent
and registrar for the Common Stock, and the results will be certified by one or
more inspectors of election who are required to resolve impartially any
interpretive questions as to the conduct of the vote. In tabulating votes, a
record will be made of the number of shares voted for each nominee or other
matter voted upon, the number of shares with respect to which authority to vote
for that nominee or such other matter has been withheld and the number of shares
held of record by broker-dealers and present at the Meeting but not voting.
Any stockholder who executes and delivers a proxy may revoke it at any time
prior to its use upon (a) receipt by the Secretary of the Company at the address
above of written notice of revocation; (b) receipt by the Secretary of the
Company at the address above of a duly executed proxy bearing a later date; or
(c) appearing at the Meeting and voting in person. Attendance in person at the
Meeting does not itself revoke an otherwise valid proxy; however, any
stockholder who attends the Meeting may orally revoke his proxy at the Meeting
and vote in person.
All properly executed proxies received prior to or at the Meeting and not
revoked will be voted at the Meeting in accordance with the instructions
indicated on such proxies. If no instructions are indicated, such proxies will
be voted "FOR" the election of the Board's nominees as directors and "FOR" the
ratification of the appointment of Deloitte & Touche LLP as the independent
certified public accountants for the Company for fiscal year 2000. In addition,
the proxy holders will vote in their sole discretion upon such other business as
may properly come before the Meeting.
The information provided in this Proxy Statement is generally for the
Company. On October 2, 1998, the Company's predecessor-in-interest, Barry's
Jewelers, Inc. ("Predecessor Company"), successfully emerged from bankruptcy
proceedings, and, through a merger, the Predecessor Company was reincorporated
in Delaware as the Company immediately thereafter. The Company provides
information herein as it relates to the Predecessor Company under its
obligations to do so as set forth in the Securities and Exchange Act of 1934, as
amended.
The date of this Proxy Statement is September 27, 1999.
2
<PAGE> 5
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
To the best knowledge of the Company, the following table sets forth
information, as of September 27, 1999, as to the beneficial ownership of the
Company's Common Stock by (i) each person who is known by the Company (based
upon Schedule 13D and 13G filings by such persons with the Securities and
Exchange Commission (the "Commission") for beneficial ownership at such date) to
own beneficially more than 5% of its outstanding shares of Common Stock, (ii)
each of the Company's directors and director nominees, (iii) each of the
officers named in the Summary Compensation Table under the caption "Executive
Compensation" and (iv) all executive officers and directors of the Company as a
group. In each instance, information as to the number of shares owned and the
nature of ownership has been provided by the person or entity identified or
described and is not within the direct knowledge of the Company. Except as
otherwise noted, to the best knowledge of the Company, all persons and entities
listed below have sole voting, investment and dispositive power with respect to
all shares of Common Stock shown as beneficially owned by them, subject to
community property laws where applicable.
<TABLE>
<CAPTION>
NUMBER OF SHARES PERCENT
NAME OF BENEFICIAL OWNER BENEFICIALLY OWNED OF CLASS(1)
- ------------------------ ------------------ -----------
<S> <C> <C>
Randy N. McCullough* ....................................... 123,500(2) 2.4
E. Peter Healey* ........................................... 86,375(3) 1.7
Bill R. Edgel* ............................................. 28,125(4) **
Chad C. Haggar* ............................................ 28,125(4) **
Paul Hart* ................................................. 28,125(4) **
David B. Barr* ............................................. 1,250(5) **
David J. Breazzano* ........................................ 1,793,689(5)(6) 35.4
David H. Eisenberg* ........................................ 1,250(5) **
Wendy T. Landon* ........................................... -- **
Jerry Winston* ............................................. 1,250(5) **
Ken D'Amato(7) ............................................. -- **
DDJ Capital Management, LLC(8) ............................. 1,792,439 35.4
141 Linden Street, Suite S-4
Wellesley, Massachusetts 02482
Mitchell Hutchins Asset Management, Inc.(9) ................ 998,511 19.7
1285 Avenue of the Americas, 15th Floor
New York, New York 10019
Stephen Feinberg(10) ....................................... 815,813 16.1
Park Avenue, 28th Floor
New York, New York 10022
BMI Capital Corporation .................................... 364,275 7.2
570 Lexington Avenue
New York, New York 10022
All executive officers and directors as a group
(11 persons)........................................... 2,042,439 41.0
</TABLE>
- ----------
* Address is c/o Samuels Jewelers, Inc., 2914 Montopolis Drive, Suite 200,
Austin, Texas 78741.
** Less than one percent.
(1) Percentage of Common Stock beneficially owned is calculated based upon a
denominator of 5,061,800 shares of Common Stock, except where beneficial
ownership includes the right to acquire Common Stock through the
3
<PAGE> 6
exercise of options or warrants within 60 days of the date of this Proxy
Statement. In such instances, the number of shares subject to exercise by
the beneficial owner is added to the denominator in calculating the
percentage ownership of only the beneficial owner who possesses the right
to exercise under the options or warrants.
(2) Includes the right to acquire beneficial ownership of 12,500 shares of
Common Stock through options that will vest within 60 days.
(3) Includes the right to acquire beneficial ownership of 9,375 shares of
Common Stock through options that will vest within 60 days.
(4) Includes the right to acquire beneficial ownership of 3,125 shares of
Common Stock through options that will vest within 60 days.
(5) Includes the right to acquire beneficial ownership of 1,250 shares of
Common Stock through options that will vest within 60 days.
(6) With respect to 1,792,439 of such shares of Common Stock, Mr. Breazzano
shares voting and dispositive power as a member of DDJ Capital Management,
LLC, who may be deemed to beneficially own all of such shares (see note (8)
below), but as to which he disclaims beneficial ownership.
(7) Ken D'Amato resigned as director of the Company effective August 23, 1999.
(8) DDJ Capital Management, LLC may be deemed to beneficially own all of such
shares through three funds controlled by it, including 1,704,939 shares
owned by B III Capital Partners, L.P. (or approximately 33.7% of the
Company's issued and outstanding Common Stock).
(9) Mitchell Hutchins Asset Management, Inc. beneficially owns all of such
shares through four funds controlled by it.
(10) Stephen Feinberg may be deemed to beneficially own the following: 158,555
shares through the fund Cerberus Partners, L.P.; 267,710 shares through the
fund Cerberus International, Ltd.; 24,510 shares through the fund Ultra
Cerberus, Ltd.; 346,275 aggregate shares through additional private
investment funds; and 18,763 warrants to purchase shares through the
additional private investment funds. The warrants are exercisable through
the payment of an exercise price, revised annually on the date after the
October 2 anniversary of the Company's Warrant Agreement, which established
such warrant rights.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Under Section 16(a) of the Securities and Exchange Act of 1934, as amended,
the officers and directors of the Company and certain stockholders beneficially
owning more than ten percent of the Company's Common Stock ("Ten Percent
Stockholders") are required to file with the Commission and the Company reports
of ownership, and changes in ownership, of Company Common Stock. The Company's
officers, directors and Ten Percent Stockholders failed to timely file the
Initial Statement of Beneficial Ownership of Securities on Form 3, but such
officers, directors and Ten Percent Stockholders have since filed such Forms 3.
Based solely upon a review of copies of forms furnished to the Company or
written representations from certain reporting persons that no additional Form 5
filings were required, the Company believes that all other such Section 16(a)
filing requirements were timely satisfied.
4
<PAGE> 7
PROPOSAL 1. ELECTION OF DIRECTORS
The Board currently consists of seven directors. In August 1999, Ken
D'Amato resigned from the Board and the Board elected Wendy T. Landon to fill
the vacancy created by the resignation. The Company's directors are elected
annually to serve until the next annual meeting of stockholders and until their
respective successors are elected and qualified or until their earlier
resignation or removal. Because the nominees for election as directors are the
same persons as currently serving on the Board, information with respect to the
Company's directors is set forth below.
BOARD'S NOMINEES
The nominees for director are David B. Barr, David J. Breazzano, David H.
Eisenberg, E. Peter Healey, Wendy T. Landon, Randy N. McCullough and Jerry
Winston. Messrs. Healey and McCullough are the only members of the Board who are
also executive officers of the Company.
Further information concerning the nominees for election as directors at
the Meeting, including their business experience during the past five years,
appears below.
<TABLE>
<CAPTION>
YEAR JOINED
NAME AGE COMPANY POSITION(S) HELD
---- --- ----------- ----------------
<S> <C> <C> <C>
David H. Eisenberg 63 1998 Chairman of the Board
David B. Barr 36 1998 Director
David J. Breazzano 43 1998 Director
E. Peter Healey 46 1998 Director
Wendy T. Landon 34 1999 Director
Randy N. McCullough 47 1998 Director
Jerry Winston 75 1998 Director
</TABLE>
DAVID H. EISENBERG is Chairman of the Board and has been a director of the
Company since September 22, 1998. Since November 8, 1998, Mr. Eisenberg has been
Co-Chairman and Chief Executive Officer of Let's Talk Cellular & Wireless, a
publicly traded retail chain of 260 stores based in Miami, Florida. Mr.
Eisenberg served as Chairman, President and Chief Executive Officer of Chief
Auto Parts Inc., a retail auto parts chain of 550 stores headquartered in
Dallas, Texas, from November 1992 to September 1998. Mr. Eisenberg currently
serves on the boards of directors of PowerSports, Inc., Earl Scheib, Inc., and
several charitable organizations.
DAVID B. BARR has been a director of the Company since September 22, 1998.
Mr. Barr has been Chief Executive Officer and a Member of PMTD Restaurants, LLC
since September 1998. He served in the offices of Chief Executive Officer,
President, Vice President of Finance and Treasurer of Great-American Cookie
Company, Inc. ("GACC") from May 1996 to September 1998. Mr. Barr was Executive
Vice President of Operations, Chief Financial Officer and Treasurer of GACC from
July 1995 to May 1996. Prior to that, Mr. Barr served as Chief Financial
Officer, Vice President of Finance and Treasurer of GACC from May 1994. Mr. Barr
served as Finance Manager of Pizza Hut, Inc. from March 1991 to May 1994.
DAVID J. BREAZZANO has been a director of the Company since September 22,
1998. Mr. Breazzano co-founded DDJ Capital Management, LLC in March 1996 and has
been a member since such time. From October 1990 to February 1996, Mr. Breazzano
was Vice President of, and Portfolio Manager for Fidelity Management & Research
Company. Mr. Breazzano currently serves as a director of Key Energy Group, Inc.
and Waste Systems International, Inc.
5
<PAGE> 8
E. PETER HEALEY has been a director of the Company since September 22,
1998. Mr. Healey has served as the Company's Executive Vice President, Chief
Financial Officer, Secretary and Treasurer of the Company since its inception on
August 20, 1998, and previously served in that capacity for the Predecessor
Company since February 1997. From 1994 to 1996, Mr. Healey was the Vice
President, Chief Financial Officer, Secretary and Treasurer of MS Financial,
Inc. From 1985 to 1993, Mr. Healey was with Zale Corporation, serving as Vice
President and Treasurer from 1987 to 1993.
WENDY T. LANDON has been a Vice President of DDJ Capital Management, LLC
since 1997. From 1992 through 1997, Ms. Landon worked at Fidelity Investments as
a high yield analyst focusing on the media, telecommunications and retailing
sectors. Before joining Fidelity, Ms. Landon worked as a Senior Financial
Analyst with responsibilities for private placements with Oppenheimer and
Company, Inc.
RANDY N. MCCULLOUGH has been a director of the Company since September 22,
1998. Mr. McCullough has been the Company's President and Chief Executive
Officer since its inception on August 20, 1998, and previously served in that
capacity for the Predecessor Company since March 31, 1998. Mr. McCullough served
as the Predecessor Company's Executive Vice President and Chief Operating
Officer from January to March 1998. Mr. McCullough joined the Predecessor
Company in April 1997 and was its Senior Vice President-Merchandise from April
1997 to March 1998. Prior to joining the Predecessor Company, Mr. McCullough
served as President of Silverman's Factory Jewelers from 1991 to March 1997.
Prior to that time, Mr. McCullough was a senior manager with a leading national
retail jewelry chain for over 18 years.
JERRY WINSTON has been a director of the Company since September 22, 1998.
Prior to retirement in 1997, Mr. Winston was President of Jerry Winston
Enterprises, Ltd., a wholesale diamond business, since 1990. Prior to 1990, Mr.
Winston served as Executive Vice President of Harry Winston, Inc. for over 30
years with responsibility for directing the wholesale diamond division of one of
the world's largest diamond distributors.
DIRECTOR COMPENSATION
Employees of the Company receive no extra pay for serving as directors. The
Company pays each of its non-employee directors (including any non-employee
director holding an officer's title with the Company but who is not separately
compensated for serving in such position) an annual retainer fee of $15,000,
plus, for attendance at meeting of the Board or committee meetings, an
additional $500 per meeting. Directors are also reimbursed for the reasonable
expenses incurred in connection with attending meetings of the Board and its
committees.
By and at the discretion of the Board, non-employee directors periodically
may also be granted options to purchase Common Stock under the Company's 1998
Stock Option Plan for Non-employee Directors (the "Non-employee Directors
Plan"). The Company is authorized to issue 250,000 shares of Common Stock under
the Non-Employee Directors Plan. Each non-employee director elected to the
Company's initial Board was granted under the Non-employee Directors Plan,
subject to the stockholder approval of the Non-employee Directors Plan, which
approval was received at the Annual Meeting of Stockholders held on November 3,
1998, an option to purchase 5,000 shares of Common Stock upon their election as
director. Those options in the aggregate represented the right to purchase
25,000 shares of Common Stock and 225,000 shares remained authorized for
issuance under the Non-employee Directors Plan at the end of Fiscal 1999. All
such options granted under the Non-employee Directors Plan have an exercise
price equal to the market price of the Common Stock on the date of grant.
THE BOARD UNANIMOUSLY RECOMMENDS A VOTE "FOR" EACH OF THE ABOVE NOMINEES.
6
<PAGE> 9
BOARD OF DIRECTORS AND COMMITTEES
BOARD OF DIRECTORS
Since the Company's inception on August 20, 1998, the Board has held five
meetings, including two special meetings and three regular meetings. Further
information concerning the Board's standing committees appears below.
AUDIT COMMITTEE
The Audit Committee of the Board was created at the September 22, 1998
Board meeting and consists of David B. Barr and Wendy T. Landon, who was elected
to fill the vacancy on the committee created by Ken D'Amato's resignation. The
functions of the Audit Committee are, among other things, to recommend to the
Board selection of the Company's independent accountants, to review the scope
and results of the year-end audit with the independent accountants, and to
review the Company's internal accounting and financial controls and reporting
systems and practices. During fiscal year 1999, the Audit Committee met once.
COMPENSATION COMMITTEE
The Compensation Committee of the Board was created at the September 22,
1998 Board meeting and consists of David J. Breazzano, David H. Eisenberg and
Jerry Winston. The functions of the Compensation Committee are, among other
things, to make recommendations to the Board concerning compensation plans and
salaries of the Company's officers and other key personnel and to administer the
Company's stock option, incentive stock, employee stock purchase and bonus
plans. During fiscal year 1999, the Compensation Committee met once.
NOMINATING COMMITTEE
The Company has no nominating committee or other committee of the Board
performing similar functions.
7
<PAGE> 10
EXECUTIVE OFFICERS
The Company's executive officers are elected by the Board to hold office
until their respective successor is elected and qualified or until their earlier
resignation or removal. Information with respect to the Company's current
executive officers is set forth below.
<TABLE>
<CAPTION>
YEAR JOINED
NAME AGE COMPANY POSITION(S) HELD
---- --- ----------- ----------------
<S> <C> <C> <C>
Randy N. McCullough 47 1998 President and Chief Executive Officer
E. Peter Healey 46 1998 Executive Vice President, Chief Financial
Officer, Secretary and Treasurer
Bill R. Edgel 33 1998 Senior Vice President--Merchandising and
Marketing
Chad C. Haggar 35 1998 Senior Vice President--Operations
Paul W. Hart 41 1998 Senior Vice President--Information Systems
Robert J. Herman 38 1998 Vice President, Controller and Assistant
Secretary
</TABLE>
Biographical information for Messrs. McCullough and Healey can be found
under "Proposal 1. Election of Directors -- Board's Nominees."
BILL R. EDGEL has been the Company's Senior Vice President -- Merchandising
and Marketing since October 2, 1998, and previously served the Predecessor
Company as Vice President of Marketing since February 1997. Prior to joining the
Predecessor Company, Mr. Edgel served as Director of Credit Marketing of Macy's
West, a division of Federated Department Stores, from 1996 to 1997. From 1995 to
1996, Mr. Edgel served as Director of Marketing for Merksamer Jewelers, Inc.
From 1993 to 1995, Mr. Edgel served as Advertising Manager/Creative Director for
Troutman's Emporium, Inc. From 1992 to 1993, Mr. Edgel served as
Partner/Creative Director of Vaki Advertising, Inc.
CHAD C. HAGGAR has been the Company's Senior Vice President -- Operations
since October 2, 1998, and previously served as Vice President -- Operations for
the Predecessor Company since February 1997. Prior to joining the Predecessor
Company, Mr. Haggar served as Director of Stores of Fred Meyer, Inc. from 1996
to 1997. From before 1987 to 1996, Mr. Haggar served as Regional Manager of
Merksamer Jewelers, Inc. Prior to 1987, Mr. Haggar served in various management
positions, with leading jewelry chains, for over six years.
PAUL W. HART has been the Company's Senior Vice President -- Information
Systems since October 2, 1998, and previously served as Vice President --
Management Information Systems for the Predecessor Company since August 1997.
Prior to joining the Predecessor Company, Mr. Hart served as Vice President --
Management Information Systems of MS Financial, Inc. From 1974 to 1995, Mr. Hart
was employed by Zale Corporation, serving as Director of Credit Systems from
1994 to 1995, and as its Manager of Business Systems Planning and Support from
1988 to 1994.
ROBERT J. HERMAN has been the Company's Vice President, Controller and
Assistant Secretary since October 2, 1998, and previously served in that
capacity for the Predecessor Company since February 1998. Prior to joining the
Predecessor Company, Mr. Herman served as the Controller for Datamark, Inc. from
1997 to February 1998. From 1994 to 1997, Mr. Herman served as the Controller
for Silverman's Factory Jewelers. From 1987 to 1994, Mr. Herman was employed by
Sunbelt Nursery Group, Inc., serving as its Controller from 1991 to 1994.
8
<PAGE> 11
EXECUTIVE COMPENSATION
The following table sets forth the cash and non-cash compensation during
each of the Company's last three fiscal years to the Company's Chief Executive
Officer and each its four other most high compensated executive officers as of
May 29, 1999 (collectively, the "Named Executive Officers") for service in all
capacities with the Company.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
-------------------------------- -------------------------
AWARDS
-------------------------
SECURITIES
OTHER UNDER-
ANNUAL RESTRICTED LYING
COMPEN- STOCK OPTIONS/ ALL OTHER
NAME AND PRINCIPAL SALARY BONUS SATION(2) AWARD(S)(3) SARS COMPENSATION(4)
POSITION YEAR(1) ($) ($) ($) ($) (#) ($)
------------------ ------- ------ ----- --------- ----------- ---------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Randy N. McCullough ............ 1999 309,929 211,458 80,500 666,667 50,000 1,825
President and Chief 1998 241,922 81,750 -- -- -- 1,600
Executive Officer 1997 24,462 -- -- -- -- --
E. Peter Healey ................ 1999 291,306 203,125 60,375 500,000 37,500 2,222
Executive Vice President 1998 275,000 103,125 -- -- -- 1,808
and Chief Financial Officer 1997 61,057 -- -- -- -- --
Chad C. Haggar ................. 1999 178,355 66,250 5,031 41,667 12,500 330
Senior Vice President-- 1998 165,000 41,250 -- -- -- 280
Operations 1997 41,804 -- -- -- -- --
Bill R. Edgel .................. 1999 145,712 45,000 5,031 41,667 12,500 260
Senior Vice President-- 1998 120,000 20,000 -- -- -- 202
Merchandising and Marketing 1997 28,530 15,000 -- -- -- --
Paul W. Hart ................... 1999 136,750 42,500 5,031 41,667 12,500 314
Senior Vice President-- 1998 94,615 20,000 -- -- -- 104
Management Information Systems 1997 -- -- -- -- -- --
</TABLE>
- ----------
(1) "1999" represents the Company's initial fiscal year ended May 29, 1999 and
includes information relating to the Predecessor Company with respect to
the period between the end of its fiscal year 1998 and October 2,
9
<PAGE> 12
1998. "1998" and "1997" represent fiscal years ended May 30, 1998 and May
31, 1997, respectively, for the Predecessor Company. Amounts shown in the
rows for 1999 compensation reflect amounts paid by both the Company and the
Predecessor Company for Fiscal 1999. Amounts shown in the rows for 1998 and
1997 compensation reflect compensation paid by the Predecessor Company.
(2) Includes bonuses paid by the Company to compensate for the taxes incurred
as part of the grants of equity in the Company to the Named Executive
Officers pursuant to their respective employment agreements. Under the
terms of the employment agreements, the Company agreed to loan funds to
approximate such taxes and also to make bonus payments, provided generally
the Named Executive Officer remains employed by the Company on the due
date, equal to the amounts of principal (but not interest thereon) due
under the promissory notes executed as part of the loans. The repayment
terms for the loans calls for quarterly payments over three years for each
of the Named Executive Officers. Excludes perquisites, other personal
benefits, securities and property, which, in the aggregate, did not exceed
in any year shown the lesser of $50,000 or 10% of the total annual salary
and bonus reported for such individual for such year.
(3) The restricted stock awards were made to the Named Executive Officers upon
the reorganization of and merger with the Predecessor Company and were made
in lieu of confirmation bonuses provided for in their employment contracts
with the Predecessor Company. The Named Executive Officers possess all of
the restricted stock holdings of the Company. As of the end of Fiscal 1999,
the aggregate restricted stock holdings of the Company were 250,000 shares
of Common Stock and the aggregate value of such holdings was $1,000,000,
based on a valuation of $4.00 per share, which is the price at which the
Company's Common Stock was trading at the close of business on May 28,
1999. The awards of each Named Executive Officer vest in 25% increments on
the date of such grant and the three successive anniversaries thereof.
Dividends will be paid on these restricted stock holdings to the extent the
Company pays any dividends with respect to its Common Stock.
(4) Includes the dollar value of payments by the Company with respect to group
term life insurance and life insurance premium reimbursements for the
benefit of each of the respective Named Executive Officers.
EMPLOYMENT AGREEMENTS
Upon the reorganization of and merger with the Predecessor Company, the
Company entered into employment agreements with each of the Named Executive
Officers. Set forth in the following table are some of the terms and conditions
of each of the employment agreements. The text following the table summarizes
the employment agreements' provisions in the event of the termination of or
resignation by the respective Named Executive Officer or of a change in control
of the Company.
<TABLE>
<CAPTION>
MAXIMUM ANNUAL
CASH BONUS GRANT OF
ANNUAL BASE (AS A PERCENTAGE OF RESTRICTED SHARES UNDERLYING
EXECUTIVE SALARY ANNUAL BASE SALARY) STOCK (1) STOCK OPTIONS
- ----------------------------- ----------- ------------------- -------------- -----------------
<S> <C> <C> <C> <C>
Randy N. McCullough.......... $325,000 100% 100,000 shares 50,000 shares
E. Peter Healey.............. $300,000 100% 75,000 shares 37,500 shares
Chad C. Haggar............... $150,000 50% 25,000 shares 12,500 shares
Bill R. Edgel................ $150,000 50% 25,000 shares 12,500 shares
Paul Hart.................... $135,000 50% 25,000 shares 12,500 shares
</TABLE>
- ----------
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<PAGE> 13
(1) Shares granted on October 2, 1998 upon effectiveness of the reorganization
of and merger with the Predecessor Company.
Under all of these employment agreements, if a Named Executive
Officer's employment is terminated due to the respective Named Executive
Officer's death or disability, such Executive is entitled to receive (i) accrued
annual base salary and benefits, (ii) his full annual cash bonus and (iii) an
amount equal to 18 months of his base salary. If the employment of Messrs.
McCullough or Healey is terminated by the Company without cause or by the
respective executive officer with good reason, the respective terminated or
resigning executive officer is entitled to receive (i) accrued annual base
salary and benefits, (ii) an amount equal to three times the respective
executive officer's annual base salary multiplied by a fraction, the numerator
of which is (A) 36 minus (B) the number of months the respective executive
officer has been in the Company's employ since October 2, 1998, but in no event
shall it be less than 18; and the denominator of which is 36; provided, however,
that in the event of a change of control, the numerator shall be 36. If the
employment of Messrs. Haggar, Edgel and Hart is terminated by the Company
without cause or by the respective executive officer with good reason, the
respective executive officer is entitled to receive (i) accrued annual base
salary and benefits, (ii) an amount equal to two times the respective executive
officer's annual base salary multiplied by a fraction, the numerator of which is
(A) 36 minus (B) the number of months the respective executive officer has been
in the Company's employ since October 2, 1998, but in no event shall it be less
than 18; and the denominator of which is 36; provided, however, that in the
event of a change of control, the numerator shall be 36. If the Named Executive
Officer's employment is terminated by the Company for cause or by the Named
Executive Officer without good reason, such Named Executive Officer is entitled
to receive accrued annual base salary and benefits and his prorated annual cash
bonus.
OPTIONS GRANTED
The table below contains information with respect to stock options
granted to the Named Executive Officers in Fiscal 1999.
<TABLE>
<CAPTION>
OPTIONS GRANTS IN LAST FISCAL YEAR
Number of Potential Realizable
Securities Value at Assumed
Under- % of Total Annual Rates of Stock
lying Options Price Appreciation for
Options Granted to Exercise Option Term
Granted Employees in Price Expiration -------------------------
Name (#)(1) Fiscal Year ($/SH)(2) Date(3) 5% ($)(4) 10% ($)(4)
- ---- ---------- ------------ --------- ---------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
Randy N. McCullough 50,000 21.6 6.67 11/03/08 209,736 531,513
E. Peter Healey 37,500 16.2 6.67 11/03/08 157,302 398,635
Chad C. Haggar 12,500 5.4 6.67 11/03/08 52,434 132,878
Bill R. Edgel 12,500 5.4 6.67 11/03/08 52,434 132,878
Paul W. Hart 12,500 5.4 6.67 11/03/08 52,434 132,878
- ------------------
</TABLE>
(1) The Company has not granted any stock appreciation rights. These options
become exercisable in installments of 25% on the successive four
anniversaries of the date of grant.
(2) The exercise price of the options is equal to the fair market value on the
date of grant as determined by the value exchanged, per share, by the
Predecessor Company's bondholders for Common Stock.
(3) The stock options are subject to termination prior to their expiration
date in some cases where employment is terminated.
11
<PAGE> 14
(4) These columns show the gains the Named Executive Officers could realize if
the Company's stock appreciates at a 5% or 10% rate. These growth rates
are arbitrary assumptions specified by the Commission, not the Company's
predictions.
STOCK OPTION EXERCISES AND MAY 29, 1999 STOCK OPTION VALUE TABLE
The following table shows information concerning stock options the
Named Executive Officers exercised during Fiscal 1999, and unexercised options
they held as of May 29, 1999.
AGGREGATED 1999 OPTION EXERCISES
AND YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
SHARES NUMBER OF SECURITIES VALUE OF UNEXERCISED
ACQUIRED UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS AT
ON VALUE OPTIONS AT FISCAL YEAR-END (#) FISCAL YEAR-END ($)(1)
EXERCISE REALIZED ----------------------------- ----------------------------
NAME (#) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ---- --- ----------- -------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Randy N. McCullough.......... -- -- 0 50,000 0 0
E. Peter Healey ............. -- -- 0 37,500 0 0
Chad C. Haggar .............. -- -- 0 12,500 0 0
Bill R. Edgel ............... -- -- 0 12,500 0 0
Paul W. Hart ................ -- -- 0 12,500 0 0
</TABLE>
- --------
(1) None of the options granted to the Named Executive Officers were
in-the-money options at end of Fiscal 1999.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee consists of three directors, David J.
Breazzano, David H. Eisenberg and Jerry Winston. Under the Company's By-laws,
Mr. Eisenberg is considered an officer of the Company because he serves as the
Chairman of the Board. However, he receives no compensation based upon his
position as an officer of the Company. Mr. Eisenberg served as Chairman of the
Board for the Company during Fiscal 1999. Messrs. Breazzano and Winston were not
officers or employees of the Company during Fiscal 1999 or prior thereto.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The terms of the compensation for the Company's executive officers had
previously been determined as part of the reorganization of and merger with the
Predecessor Company. In its single meeting during Fiscal 1999, the Compensation
Committee reviewed those arrangements for the compensation of the executive
officers and determined they were appropriate. Therefore, the following text
sets forth the Compensation Committee's general statement as to its policies in
determining executive officer compensation.
COMPENSATION PHILOSOPHY
The Compensation Committee of the Board is responsible for developing
and implementing the Company's executive compensation policies. The Compensation
Committee's philosophy of executive
12
<PAGE> 15
compensation is to enhance the profitability of the Company, and thus
stockholder value, by closely aligning the financial interests of the executive
officers with those of the stockholders.
IMPLEMENTATION OF PHILOSOPHY
Generally, the Compensation Committee seeks to realize this objective
by the use of short term incentives in the form of salary and cash bonuses, and
long term incentives in the form of stock option and restricted stock grants.
Salaries initially are set based on the executive officer's experience and
competitive conditions. Thereafter, salaries may be adjusted based on various
factors, including the executive's performance. In setting and making
adjustments to salaries, the Compensation Committee also considers salaries paid
to similarly situated executive officers in comparable companies.
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER
In reviewing Mr. McCullough's annual salary and incentive compensation,
the Compensation Committee considered numerous factors, including Mr.
McCullough's extensive experience in the jewelry industry, his prior success in
turning around troubled companies and the market rate for presidents and chief
executive officers with knowledge and experience commensurate to that of Mr.
McCullough. Based on these factors, and after negotiations between the
Compensation Committee and Mr. McCullough, the Compensation Committee
established Mr. McCullough's compensation terms.
THE COMPENSATION COMMITTEE
David J. Breazzano
David H. Eisenberg
Jerry Winston
COMMON STOCK PERFORMANCE GRAPH
The following graph sets forth the cumulative total stockholder return
on the Company's Common Stock over the period since the stock has been traded
and during which the Common Stock has been registered pursuant to Section 12(g)
of the Securities and Exchange Act of 1934, as amended, (assuming a $100
investment in the Common Stock at the beginning of such period and the
reinvestment of all dividends). Such period begins on November 17, 1998 (the
first day the Company's Common Stock was traded on Nasdaq's OTC Bulleting Board)
and ends on May 28, 1999 (the last trading day of Fiscal 1999). Also presented
are the cumulative total stockholder returns for the same period (assuming a
$100 investment in each at the beginning of the period and the reinvestment of
all dividends) of the Standard & Poor's Small Cap Index and the Standard &
Poor's Retail (Specialty)-Small Index.
13
<PAGE> 16
[TOTAL STOCKHOLDER RETURN GRAPH]
Nov 17, 1998 May 28, 1999
Samuels 100.00 103.23
S&P Small Cap 600 Index 100.00 108.31
Retail (Specialty) - Small 100.00 112.53
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Under employment agreements entered into by the Company with executive
officers Randy N. McCullough and E. Peter Healey, the Company agreed to provide
Messrs. McCullough and Healey with a signing bonus in the form of equity grants
that vest in 25% increments on the date of such grant and the three successive
anniversaries thereof. In addition to the grants, the Company agreed to lend
Messrs. McCullough and Healey, in varying amounts, sums to compensate for the
taxes incurred as a result of the grants. Messrs. McCullough's and Healey's
largest aggregate amount of indebtedness to the Company for such loans were
$483,000 and $362,250, respectively. Under their respective employment
agreements, Messrs. McCullough and Healey are obligated to repay their
respective principal and interest on the loans quarterly for three years, with
interest to accrue at the lowest statutory interest rate necessary for tax
purposes. The Company holds twelve promissory notes for each of Messrs.
McCullough and Healey to secure the repayment. The Company also agreed in the
respective employment agreement with Messrs. McCullough and Healey to pay each a
bonus equal to the amounts of principal (but not interest) due under the
aforementioned promissory notes on the dates Messrs. McCullough and Healey are
obligated to make their respective quarterly payments, provided generally that
they remain employed on such date. In the event Messrs. McCullough or Healey
voluntarily terminates his employment or is terminated by the Company for cause,
his respective unpaid portion will be accelerated and all of the promissory
notes related thereto will become due and payable within ninety days of the date
of termination. In the event, Messrs. McCullough or Healey is terminated by the
Company for other reasons, his respective signing bonus grant will immediately
vest and the Company will be obligated to pay to him a one time lump sum bonus
equal to the principal amount of any remaining outstanding promissory notes
related to the respective grant to him. As of September 27, 1999, the amount
outstanding on Messrs. McCullough's and Healey's related indebtedness to the
Company was $362,250 and $271,688, respectively. The interest rate on the
indebtedness of both Messrs. McCullough and Healey is 4.4%.
14
<PAGE> 17
PROPOSAL 2. RATIFICATION OF APPOINTMENT OF INDEPENDENT CERTIFIED
PUBLIC ACCOUNTANTS
Upon the recommendation of the Audit Committee of the Board, none of
whose members is an officer of the Company, the Board has appointed Deloitte &
Touche LLP, as the independent certified public accountants of the Company for
fiscal year 2000. Deloitte & Touche LLP has no investment in the Company and it
served as the Company's independent certified public accountants for Fiscal
1999. It is intended that the appointment of Deloitte & Touche LLP be submitted
to the stockholders for ratification at the Meeting. If the appointment is not
approved or if that firm shall decline to act or their employment is otherwise
discontinued, the Board will consider whether to appoint other independent
certified public accountants.
The Company expects that one or more representatives of Deloitte &
Touche LLP will be present at the Meeting with the opportunity to make a
statement should they desire to do so and will be available to respond to
appropriate questions from stockholders.
THE BOARD UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE RATIFICATION OF THE
APPOINTMENT OF DELOITTE & TOUCHE LLP AS INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
FOR THE COMPANY FOR FISCAL YEAR 2000.
OTHER MATTERS
The Company does not know of any other business to be presented at the
Meeting and does not intend to bring any other matters before the Meeting.
However, if any other matters properly come before the Meeting, the persons
named in the accompanying proxy are empowered, in the absence of contrary
instructions, to vote according to their best judgment.
SOLICITATION EXPENSES
This solicitation of proxies is being made by the Board of the Company,
and the cost of the solicitation will be borne by the Company. The principal
solicitation of proxies is being made by mail, except that, if necessary,
directors, officers and regular employees of the Company may make solicitations
of proxies personally or by telephone or telegraph, but such persons will not be
specially compensated for such services. Brokerage houses and other custodians
and nominees will be asked whether other persons are beneficial owners of the
shares of Common Stock which they hold of record, and, if so, they will be
supplied with additional copies of the proxy materials for distribution to such
beneficial owners. The Company may reimburse brokers, banks, custodians,
nominees and fiduciaries for their reasonable charges and expenses in forwarding
proxies and proxy materials to the beneficial owners of such shares.
STOCKHOLDER PROPOSALS
Stockholder proposals intended for inclusion in the Proxy Statement to
be issued in connection with the Company's next annual meeting of stockholders
must be received by the Company no later than May 30, 2000 and the proposals
must meet certain eligibility requirements under the rules of the Commission.
Proposals must be addressed to the attention of the Corporate Secretary, Samuels
Jewelers, Inc., 2914 Montopolis Drive, Suite 200, Austin, Texas 78741.
Stockholder proposals, including nominations of one or more persons for
election as directors, submitted outside of the Commission's procedures for
including such proposals in the Company's Proxy Statement must be mailed or
delivered in a notice to the attention of the Corporate Secretary at the address
above and must be received by the Company no later than August 5, 2000. The
notice must comply in all respects with the requirements therefor set forth in
the Company's By-laws. If such notice is received after such respective date,
the Company's proxy for the 2000 Annual Meeting of Stockholders
15
<PAGE> 18
may confer discretionary authority to vote on such matter without any discussion
of such matter in the Proxy Statement for the 2000 Annual Meeting of
Stockholders.
By Order of the Board of Directors
/s/ E. Peter Healey
E. Peter Healey
Secretary
16
<PAGE> 19
PROXY SAMUELS JEWELERS, INC.
2914 Montopolis Drive, Suite 200, Austin, Texas 78741
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned stockholder of SAMUELS JEWELERS, INC., a
Delaware corporation (the "Company"), hereby appoints Randy N. McCullough and E.
Peter Healey and each or either of them, the proxy or proxies of the
undersigned, with full power of substitution to such proxy and substitute, to
vote all shares of Common Stock of the Company that the undersigned is entitled
to vote at the Annual Meeting of Stockholders of the Company to be held at
Hilton Dallas Parkway, 4801 LBJ Freeway, Dallas, Texas at 9:00 a.m., local time,
November 3, 1999 and all adjournments and postponements thereof with authority
to vote said stock on the matters set forth below.
The Board of Directors recommends a vote FOR Items 1 and 2.
1. ELECTION OF DIRECTORS. David B. Barr, David J. Breazzano, David H.
Eisenberg, E. Peter Healey, Wendy T. Landon, Randy N. McCullough and
Jerry Winston.
[ ] FOR all nominees listed above, except that a vote shall be
withheld from the following nominee(s) (insert names, if any)
-----------------------------------------------------------.
[ ] WITHHOLD AUTHORITY to vote for all nominees.
This proxy also grants to the proxyholders the discretionary power to
vote the shares of Common Stock represented cumulatively for one or
more of the above nominees other than those (if any) for whom authority
to vote is withheld above.
2. RATIFICATION OF APPOINTMENT OF CERTIFIED PUBLIC ACCOUNTANTS.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. In their discretion, the proxyholders will vote upon such other
business as may be properly brought before the meeting and each
adjournment or postponement thereof.
THIS PROXY WILL BE VOTED AS SPECIFIED. IF NO SPECIFICATION IS MADE, THIS
PROXY WILL BE VOTED FOR ITEMS 1 AND 2.
Dated: ________________, 1999
(Signature)
(Signature)
Please sign your name
exactly as it appears on
the left. Executors,
administrators, trustees,
guardians, attorneys and
agents should give their
full titles and submit
evidence of the appointment
unless previously furnished
to the Company or its
transfer agent. All joint
owners should sign.
PLEASE MARK, DATE, SIGN AND RETURN USING THE ENCLOSED ENVELOPE. YOUR PROMPT
ATTENTION WILL BE APPRECIATED.
