<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:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission Only
[X] Definitive Proxy Statement (as permitted by Rule 14a-6(e)(2))
[ ] Definitive Additional Materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>
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 6, 2000
----------
TO THE STOCKHOLDERS OF SAMUELS JEWELERS, INC.:
The 2000 Annual Meeting of Stockholders of Samuels Jewelers, Inc., a
Delaware corporation (the "Company"), will be held at 141 Linden Street, Suite
4, Wellesley, Massachusetts, on Monday, November 6, 2000, 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 2001; and
2. 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 September 29, 2000 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 during ordinary business hours ten (10) days prior to the Annual
Meeting at 141 Linden Street, Suite 4, Wellesley, Massachusetts.
By Order of the Board of Directors
/s/ Dwayne A. Cooper
Dwayne A. Cooper
Assistant Secretary
September 29, 2000
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
2000 ANNUAL MEETING OF STOCKHOLDERS
NOVEMBER 6, 2000
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 141 Linden Street,
Suite 4, Wellesley, Massachusetts, on Monday, November 6, 2000, 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 6, 2000.
The Company has fixed the close of business on September 29, 2000 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 7,949,840 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 six 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 six. 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 Wells Fargo 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 Assistant Secretary of the Company
at the address above of written notice of revocation; (b) receipt by the
Assistant 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 2001. 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 29, 2000.
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 29, 2000, 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* .................................................. 293,500(2) 3.7
E. Peter Healey* ...................................................... 263,800(3) 3.3
Bill R. Edgel* ........................................................ 32,500(4) **
Chad C. Haggar* ....................................................... 53,119(4) **
Paul Hart* ............................................................ 57,500(4) **
David B. Barr* ........................................................ 13,900(5) **
David J. Breazzano* ................................................... 3,900,256(5)(6) 49.0
David H. Eisenberg* ................................................... 10,000(5) **
Wendy T. Landon* ...................................................... 2,500(7) **
Jerry Winston* ........................................................ 7,000(5) **
DDJ Capital Management, LLC(8) ........................................ 3,894,079 49.0
141 Linden Street, Suite S-4
Wellesley, Massachusetts 02482
PaineWebber Group Inc.(9) ............................................. 1,046,011 13.2
1285 Avenue of the Americas, 15th Floor
New York, New York 10019-6028
Stephen Feinberg(10) .................................................. 815,813 10.2
Park Avenue, 28th Floor
New York, New York 10022
All executive officers and directors as a group (12 persons) .......... 4,653,575 57.8
</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 7,949,840 shares of Common Stock, except where beneficial
ownership includes the right to acquire Common Stock through the 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.
3
<PAGE> 6
(2) Includes the right to acquire beneficial ownership of 30,000 shares of
Common Stock through options that will vest within 60 days of the date of
this Proxy Statement.
(3) Includes the right to acquire beneficial ownership of 22,500 shares of
Common Stock through options that will vest within 60 days of the date of
this Proxy Statement.
(4) Includes the right to acquire beneficial ownership of 7,500 shares of
Common Stock through options that will vest within 60 days of the date of
this Proxy Statement.
(5) Includes the right to acquire beneficial ownership of 5,000 shares of
Common Stock through options that will vest within 60 days of the date of
this Proxy Statement.
(6) With respect to 3,894,079 of such shares of Common Stock, Mr. Breazzano
shares voting and dispositive power as a member of DDJ Capital Management,
LLC and therefore may be deemed to beneficially own all of such shares (see
note (8) below), but he disclaims such beneficial ownership.
(7) Comprised of the right to acquire beneficial ownership of 2,500 shares of
Common Stock through options that will vest within 60 days of the date of
this Proxy Statement.
(8) DDJ Capital Management, LLC may be deemed to beneficially own all of such
shares through four funds controlled by it, including 3,235,150 shares
owned by B III Capital Partners, L.P. (or approximately 40.7% of the
Company's issued and outstanding Common Stock) and 571,429 shares owned by
B III-A Capital Partners, L.P. (or approximately 7.2% of the Company's
issued and outstanding Common Stock).
(9) PaineWebber Group Inc. beneficially owns all of such shares as the parent
holding company, through its subsidiary, Mitchell Hutchins Asset Management
Inc., which 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 is aware that Doug Bullock and Dwayne Cooper did not timely file a Form
3 after each became an officer of the Company. Such Form 3 has subsequently been
filed by each officer.
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. However, the Board has
adopted a resolution to reduce the number of directors to six, which shall be
effective as of the election of directors at the Meeting.
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. The nominees for
election as directors are persons currently serving on the Board and information
with respect to such directors is set forth below.
BOARD'S NOMINEES
The nominees for director are David B. Barr, David J. Breazzano, David
H. Eisenberg, Wendy T. Landon, Randy N. McCullough and Jerry Winston. Under the
Company's By-Laws, Mr. Eisenberg is also an executive officer of the Company
because he serves as the Chairman of the Board. Nevertheless, the Company
considers Mr. Eisenberg to be a non-employee director for compensation and other
general corporate purposes. Mr. McCullough is the only other nominee and member
of the Board who is also an executive officer 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>
NAME AGE YEAR JOINED COMPANY POSITION(S) HELD
------------------ --- ------------------- ----------------
<S> <C> <C> <C>
David H. Eisenberg 64 1998 Chairman of the Board
David B. Barr 37 1998 Director
David J. Breazzano 44 1998 Director
Wendy T. Landon 35 1999 Director
Randy N. McCullough 48 1998 Director
Jerry Winston 76 1998 Director
</TABLE>
David H. Eisenberg is Chairman of the Board and has been a director of
the Company since September 22, 1998. From November 1998 to February 2000, Mr.
Eisenberg served as Co-Chairman and Chief Executive Officer of Let's Talk
Cellular & Wireless, a publicly traded retail chain of 260 stores based in
Miami, Florida, from November 1998 until 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.
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
5
<PAGE> 8
for Fidelity Management & Research Company. Mr. Breazzano currently serves as a
director of Key Energy Group, Inc. and Waste Systems International, Inc.
Wendy T. Landon has been a director of the Company since August 23,
1999. Ms. 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, such as Mr. Eisenberg) 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. Additionally, on November 4, 1999, each non-employee
director was granted an option to purchase 10,000 shares of Common Stock. These
options in the aggregate represented the right to purchase 70,000 shares of
Common Stock and 180,000 shares remained authorized for issuance under the
Non-employee Directors Plan as of the end of Fiscal 2000. 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 each grant.
THE BOARD UNANIMOUSLY RECOMMENDS A VOTE "FOR" EACH OF THE ABOVE
NOMINEES.
6
<PAGE> 9
BOARD OF DIRECTORS AND COMMITTEES
BOARD OF DIRECTORS
During Fiscal 2000, the Board held eight meetings, including four
special meetings and four 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 in
August 1999. On May 2, 2000, David Eisenberg was elected as the third
independent member of the committee. Mr. Eisenberg, although per the Company's
By-Laws an executive officer of the Company as its Chairman of the Board, is
considered by the Company to be a non-employee director for all other corporate
purposes. 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 2000, the Audit
Committee met three times.
The Audit Committee has reviewed and discussed the audited financial
statements with management. The Audit Committee has discussed with the
independent auditors the matters required to be discussed by SAS 61, which
concerns the codification of statements on auditing standards. The Audit
Committee has received the written disclosures and the letter from the
independent accountants required by Independence Board Standard No. 1, and has
discussed with the independent accountant the independent accountant's
independence. Based on the review and discussions referred to in this paragraph,
the Audit Committee recommended to the Board of Directors that the audited
financial statements be included in the Company's Annual Report on Form 10-K.
The Board has not adopted a written charter for the Audit Committee.
THE AUDIT COMMITTEE
David B. Barr
David H. Eisenberg
Wendy T. Landon
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 2000, 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. Mr. Eisenberg is included in the
following information, although the Company generally considers him to be a
non-employee director for corporate purposes.
<TABLE>
<CAPTION>
YEAR JOINED
NAME AGE COMPANY POSITION(S) HELD
------------------- --- ----------- -------------------------------------------------
<S> <C> <C> <C>
David H. Eisenberg 64 1998 Chairman of the Board
Randy N. McCullough 48 1998 President and Chief Executive Officer
E. Peter Healey 47 1998 Executive Vice President, Chief Financial
Officer and Secretary
Bill R. Edgel 35 1998 Senior Vice President--Marketing
Chad C. Haggar 36 1998 Senior Vice President--Operations
Paul W. Hart 42 1998 Senior Vice President--Information Systems
J. Douglas Bullock 53 1998 Vice President--Finance
Dwayne A. Cooper 41 2000 Vice President--Treasurer and Assistant Secretary
</TABLE>
Biographical information for Messrs. Eisenberg and McCullough can be
found under "Proposal 1. Election of Directors-- Board's Nominees."
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.
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.
8
<PAGE> 11
J. Douglas Bullock has been the Company's Vice President-Finance since
December 1, 1999 and previously served as Vice President-Credit for the Company
and the Predecessor from February 2, 1998. From August 1997 to January 1998, Mr.
Bullock was Vice President and Branch Manager of Search Financial Services, Inc.
From 1994 to 1997, Mr. Bullock was Director of Credit and Operations for MS
Financial, Inc. From 1993 to 1994 Mr. Bullock was a Manager for SunTech, Inc.
From 1983 to 1992, Mr. Bullock was with Trustmark National Bank, Jackson,
Mississippi, serving as Executive Vice President from 1987 to 1992.
Dwayne A. Cooper has been the Company's Vice President-Treasurer and
Assistant Secretary since February 14, 2000. From October 1997 to February 2000,
Mr. Cooper was the Assistant Treasurer and Director of Internal Audit and Taxes
for MS Diversified Corporation. From 1996 to 1997, Mr. Cooper served as Vice
President and Treasurer of MS Financial, Inc. From 1985 to 1996, Mr. Cooper was
with Zale Corporation, serving as Assistant Treasurer from 1992 to 1996.
9
<PAGE> 12
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 June 3, 2000 (collectively, the "Named Executive Officers") for
service in all capacities with the Company.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM COMPENSATION
-------------------------------------- --------------------------
AWARDS
--------------------------
SECURITIES
OTHER UNDER-
ANNUAL RESTRICTED LYING
COMPEN- STOCK OPTIONS/ ALL OTHER
SALARY BONUS SATION(2) Award(s) (3) SARS COMPENSATION(4)
NAME AND PRINCIPAL POSITION YEAR(1) ($) ($) ($) ($) (#) ($)
--------------------------- ------- ------- ------- --------- ------------ ----------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Randy N. McCullough 2000 373,123 108,333 161,000 -- 20,000 1,638
President and Chief 1999 309,929 211,458 80,500 666,667 50,000 1,825
Executive Officer 1998 241,922 81,750 -- -- -- 1,600
E. Peter Healey 2000 381,982 100,000 120,750 -- 15,000 1,638
Executive Vice President 1999 291,306 203,125 60,375 500,000 37,500 2,222
and Chief Financial 1998 275,000 103,125 -- -- -- 1,808
Officer
Chad C. Haggar 2000 180,839 39,128 15,013 27,344 5,000 310
Senior Vice President-- 1999 178,355 66,250 5,031 41,667 12,500 330
Operations 1998 165,000 41,250 -- -- -- 280
Bill R. Edgel 2000 171,571 43,480 15,013 27,344 5,000 254
Senior Vice President-- 1999 145,712 45,000 5,031 41,667 12,500 260
Marketing 1998 120,000 20,000 -- -- -- 202
Paul W. Hart 2000 151,397 43,837 15,013 27,344 5,000 353
Senior Vice President-- 1999 136,750 42,500 5,031 41,667 12,500 314
Management Information 1998 94,615 20,000 -- -- -- 104
Systems
</TABLE>
----------
(1) "2000" represents the Company's 53-week fiscal year ended June 3, 2000.
"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, 1998.
"1998" represents the fiscal year ended May 30, 1998, 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 row for 1998 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
10
<PAGE> 13
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 call 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 2000,
the aggregate restricted stock holdings of the Company were 250,000 shares
of Common Stock and the aggregate value of such holdings was $1,250,000
based on a valuation of $5.00 per share, which is the price at which the
Company's Common Stock was trading at the close of business on June 2,
2000. 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>
----------
(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
11
<PAGE> 14
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 2000.
OPTIONS GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
NUMBER OF VALUE AT ASSUMED
SECURITIES ANNUAL RATES OF STOCK
UNDER- % OF TOTAL PRICE APPRECIATION FOR
LYING OPTIONS OPTION TERM
OPTIONS GRANTED TO EXERCISE ------------------------
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 . 20,000 16.6 4.375 8/23/09 55,028 139,452
E. Peter Healey 15,000 12.4 4.375 8/23/09 41,271 104,589
Chad C. Haggar 5,000 4.1 4.375 8/23/09 13,757 34,863
Bill R. Edgel 5,000 4.1 4.375 8/23/09 13,757 34,863
Paul W. Hart 5,000 4.1 4.375 8/23/09 13,757 34,863
</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.
(3) The stock options are subject to termination prior to their expiration date
in some cases where employment is terminated.
(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.
12
<PAGE> 15
STOCK OPTION EXERCISES AND JUNE 3, 2000, STOCK OPTION VALUE TABLE
The following table shows information concerning stock options the
Named Executive Officers exercised during Fiscal 2000, and unexercised options
they held as of June 3, 2000.
AGGREGATED FISCAL 2000 OPTION EXERCISES
AND YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money Options at
Shares Value Options at Fiscal Year-End (#) Fiscal Year-End ($)(1)
Acquired on Realized ------------------------------ --------------------------
Name Exercise (#) ($) Exercisable Unexercisable Exercisable Unexercisable
------------------- ------------ -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Randy N. McCullough ......... -- -- 12,500 57,500 0 12,500
E. Peter Healey ............. -- -- 9,375 43,125 0 9,375
Chad C. Haggar .............. -- -- 3,125 14,375 0 3,125
Bill R. Edgel ............... -- -- 3,125 14,375 0 3,125
Paul W. Hart ................ -- -- 3,125 14,375 0 3,125
</TABLE>
-------------------
(1) The value of unexercised in-the-money options equals the difference between
the option exercise price and the closing price of the Company's Common
Stock at fiscal year end, multiplied by the number of shares underlying the
in-the-money options. The closing price of the Company's stock on Friday,
June 2, 2000, was $5.00.
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 2000. Messrs. Breazzano and Winston were not
officers or employees of the Company during Fiscal 2000 or prior thereto.
Mr. Breazzano, indirectly as part of his sharing of voting and
dispositive power with regard to DDJ Capital Management, LLC, participated,
through two investment funds controlled by such entity, in a purchase of Common
Stock pursuant to the Company's private offering of 2,095,240 shares of such
Common Stock. See "Certain Relationships and Related Transactions--Private
Placement of Common Stock".
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 2000, 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.
13
<PAGE> 16
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 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
14
<PAGE> 17
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 Bulletin Board)
and ends on June 2, 2000 (the last trading day of Fiscal 2000). 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 Cap Index.
<TABLE>
<CAPTION>
Nov 17, 1998 June 2, 2000
------------ ------------
<S> <C> <C>
Samuels 100.00 129.03
S&P Small Cap 600 Index 100.00 129.37
Retail (Specialty) - Small 100.00 103.13
</TABLE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Private Placement of Common Stock
In July 2000, the Company completed the sale of 2,795,940 shares of
Common Stock to several purchasers pursuant to a private offering by the
Company. The following table sets forth the executive officers and security
holders owning, of record or beneficially, more than five percent of the
Company's Common Stock who participated, directly or indirectly, in purchasing
under the private offering and whose amount purchased, directly or indirectly,
exceeded $60,000. Where applicable, the following table also notes how much of
the purchase price for such shares was paid in the form of a promissory note to
the Company, which such notes are generally described following the table.
15
<PAGE> 18
<TABLE>
<CAPTION>
PRIVATE PLACEMENT PARTICIPATION
----------------------------------------------------------------------------------------------------
Executive Officer or Shares Price Per Total Amount Paid
Security Holder Purchased Share Participation By Note
----------------------------- --------- --------- ------------- -----------
<S> <C> <C> <C> <C>
Randy N. McCullough 150,000 $5.25 $ 787,500 $ 669,375
E. Peter Healey 150,000 $5.25 $ 787,500 $ 669,375
Chad C. Haggar 20,000 $5.25 $ 105,000 $ 94,500
Paul W. Hart 25,000 $5.25 $ 131,250 $ 118,125
DDJ Capital Management, LLC(1) 2,095,240 $5.25 $11,000,010 --
David J. Breazzano(2) 2,095,240 $5.25 $11,000,010 --
</TABLE>
----------------
(1) DDJ Capital Management, LLC may be deemed to have purchased such shares
through the purchase by two funds controlled by it, B III Capital Partners,
L.P., which purchased 1,523,811 shares of Common Stock and B II-A Capital
Partners, L.P., which purchased 571,429 shares of Common Stock.
(2) Deemed to have indirectly participated in the purchase by the funds
controlled by DDJ Capital Management, LLC because he shares voting power
and dispositive power with regard to such entity.
As part of Messrs. McCullough's, Healey's, Haggar's and Hart's
purchases of Common Stock pursuant to the private offering, the Company
permitted each of them to purchase Common Stock for a combination of cash and a
promissory note for up to ninety percent of each officer's respective total
purchase price of the Common Stock. The notes generally require payment in full
by the seventh anniversary of the date of the respective loans, but require
mandatory annual prepayments of principal and accrued interest in varying
amounts. The notes generally are one hundred percent recourse as to accrued
interest and up to thirty-three percent recourse as to principal. The notes
accrue interest at a rate per annum equal to the federal mid-term rate of
interest published by the U.S. Treasury in accordance with IRC Section 1274(d).
The notes require a mandatory annual prepayment of the principal and accrued
interest on the respective note in an amount equal to the lesser of 25% of the
pre-tax amount of any cash bonus paid by the Company to the respective officer
and the sum of accrued and unpaid interest owing on the respective note plus the
unpaid principal amount outstanding on the note. Each officer may elect for one
year in the seven-year period to omit the inclusion of the unpaid principal
amount outstanding on the note under the foregoing calculation.
The notes permit the suspension of the payment of the applicable
prepayment amounts as long as an officer has made sufficient deferrals of
amounts from the officer's base salary and any bonuses under the Company's
Deferred Compensation Plan to equal the prepayment amounts that are being
suspended. The Deferred Compensation Plan provides for the withholding of a
percentage of an eligible employee's base salary and any bonus for a period not
to exceed the seven-year anniversary of the date of the first deferral under the
plan. The Company shall credit the amounts deferred under the Deferred
Compensation Plan to a book entry account of the Company for each participant in
the plan and such amounts shall accrue interest at a rate equal to the prime
rate of interest in effect from time to time.
The notes shall become due and payable within thirty days following a
termination of employment of Mr. McCullough, Mr. Healey, Mr. Haggar or Mr. Hart,
respectively, for any reason other than without cause or other than due to death
or disability. The notes shall become due and payable within six months
following termination by the Company without cause or due to death or
disability, unless Mr. McCullough, Mr. Healey, Mr. Haggar or Mr. Hart, as
applicable, pledges sufficient collateral to secure repayment. As of September
29, 2000, the full original amount of each note is outstanding.
As part of the purchases pursuant to the private offering, the Company
agreed to register such Common Stock under the Securities Act of 1933, as
amended, for resale pursuant to a shelf registration statement.
16
<PAGE> 19
Messrs. McCullough and Healey Employment Agreements
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 29, 2000, the amount
outstanding on Messrs. McCullough's and Healey's related indebtedness to the
Company was $201,250 and $150,938, respectively. The interest rate on the
indebtedness of both Messrs. McCullough and Healey is 4.4%.
Other
As of the date of this Proxy Statement, the Company is aware that DDJ
Capital Management, LLC, owner of approximately 49 percent of the Company's
outstanding Common Stock, is in discussion with several of the Company's vendors
to purchase accounts receivable that are owed to such vendors by the Company.
Such purchase by DDJ Capital Management, LLC will not affect the payment terms
under which the Company will have to pay such accounts receivable, except that
the Company's payments on such accounts may occur at a later date. The total
amount of the purchases of such accounts receivable by DDJ Capital Management,
LLC is not known by the Company at this time. However, the Company does believe
that such amounts may be in excess of five percent of the Company's
consolidated gross revenues for fiscal year 2000.
David Breazzano, as a director of the Company who may be deemed to
beneficially own all of DDJ Capital Management, LLC's shares of Common Stock
because he shares voting and dispositive power with respect to DDJ Capital
Management, LLC, may also be deemed to have an indirect material interest in the
proposed purchases of the vendors' accounts receivable because of such
relationship.
PROPOSAL 2. RATIFICATION OF APPOINTMENT OF INDEPENDENT CERTIFIED
PUBLIC ACCOUNTANTS
Upon the recommendation of the Audit Committee of the Board, the Board
has appointed Deloitte & Touche LLP, as the independent certified public
accountants of the Company for fiscal year 2001. Deloitte & Touche LLP has no
investment in the Company and it served as the Company's independent certified
public accountants for Fiscal 1999 and Fiscal 2000. It is intended that the
17
<PAGE> 20
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 does not expect that a representative of Deloitte & Touche
LLP will be present at the Meeting.
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 2001.
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 28, 2001 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 8, 2001. 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 2001 Annual Meeting of Stockholders may confer
discretionary authority to vote on such matter without any discussion of such
matter in the Proxy Statement for the 2001 Annual Meeting of Stockholders.
By Order of the Board of Directors
/s/ Dwayne A. Cooper
Dwayne A. Cooper
Assistant Secretary
18
<PAGE> 21
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 Dwayne A.
Cooper 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 141 Linden Street,
Suite 4, Wellesley, Massachusetts, at 9:00 a.m. local time, November 6, 2000,
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, 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: , 2000
----------------
(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.
