SCHEDULE 14A INFORMATION
CONSENT STATEMENT PURSUANT TO SECTION 14(A) OF
THE SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant { }
Filed by a Party other than the Registrant {x}
Check the appropriate box:
{ } Preliminary Consent Statement
{ } Confidential, for Use of the Commission Only (as Permitted by Rule 14a-
6(e)(2))
{ x } Definitive Consent Statement
{ } Definitive Additional Materials
{ } Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.
14a-12
DESIGNS, INC.
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
JEWELCOR MANAGEMENT, INC.
(NAME OF PERSON(S) FILING CONSENT STATEMENT, IF OTHER THAN
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 transaction computed pursuant to
Exchange Act Rule 0- 11 (set forth the amount on which the filing fee is
calculated and state how it was determined):
................................................................................
4) Proposed maximum aggregate value of transaction:
................................................................................
5) Total fee paid:
................................................................................
{ } Fee paid previously with preliminary materials.
{ } Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
................................................................................
2) Form, Schedule or Registration Statement No.
................................................................................
3) Filing Party:
................................................................................
4) Date Filed:
................................................................................
CONSENT STATEMENT
OF
JEWELCOR MANAGEMENT, INC.
FOR
DESIGNS, INC.
This Consent Solicitation Statement (the "Consent Statement")
and the accompanying form of written consent are furnished by Jewelcor
Management, Inc. ("JMI") in connection with its solicitation of written consents
from the holders of common stock, $0.01 par value per share (the "Common
Stock"), of Designs, Inc., a Delaware corporation (the "Company"), to take the
following actions without a meeting of the Company's stockholders, as permitted
by Delaware law:
1. Remove (i) all current members of the Company's Board of
Directors (the "Board of Directors") other than Stanley I.
Berger and (ii) any other person or persons (other than the
persons elected pursuant to this consent) elected or
appointed to the Board of Directors prior to the effective
time of this stockholder action in addition to or in lieu of
any of such current members (including any persons elected or
appointed in lieu of Stanley I. Berger) to fill any newly
created directorship or vacancy on the Board of Directors or
otherwise (the "Director Removal Proposal");
2. Elect Jesse H. Choper, Seymour Holtzman, Peter R. McMullin,
Deborah M. Rhem-Jackson and Steve R. Tomasi (collectively,
the "JMI Nominees" or the "Nominees") as directors of the
Company to serve until their respective successors are duly
elected and qualified (the "Director Election Proposal");
3. Amend Section 4.1 of the By-Laws of the Company (the
"By-Laws") to set the number of directors on the Board of
Directors at six (the "Board Size Proposal");
4. Amend Section 4.16 of the By-Laws to clarify that a
stockholder seeking to nominate candidates for election to
the Board of Directors pursuant to a stockholder action by
written consent need not comply with the advance notification
provisions of the By-Laws (the "Advance Notification
Provisions") applicable to the nomination of candidates in
connection with meetings of the stockholders (the "Advance
Notification Clarification Proposal");
5. Repeal any By-Laws adopted by the Board of Directors
subsequent to December 11, 1995 (the effective date of the
By-Laws most recently filed by the Company with the
Securities Exchange Commission (the "Commission") prior to
the filing by JMI of the Preliminary Consent Statement (as
defined herein) on December 7, 1998), and prior to the
effectiveness of the Proposals (as defined below) other than
the By-Laws adopted as contemplated by this Consent Statement
(the "ByLaw Proposal" and, collectively with the Director
Removal Proposal, the Director Election Proposal, the Board
Size Proposal and the Advance Notification Clarification
Proposal, the "Proposals").
Stockholders of the Company are being asked to express their
consent to the Proposals by MARKING, SIGNING and DATING the enclosed WHITE
consent card and returning it to D.F. King & Co., Inc. in accordance with the
instructions set forth below.
JMI RECOMMENDS THAT YOU CONSENT TO EACH OF THE PROPOSALS
This Consent Statement and the enclosed WHITE consent card are
first being furnished to the Company's stockholders on or about December 21,
1998.
SUMMARY OF CONSENT PROCEDURE
The Proposals will become effective on the date when the
written consents of holders of a majority of the shares of the Common Stock
outstanding on the record date as determined in accordance with Delaware law
(the "Record Date") are delivered to the Company, so long as each of such
consents is delivered to the Company within 60 days of the earliest dated
consent delivered to the Company. If the Designs By-Law Amendment (as defined
below) is given effect, it may result in the delay of the effectiveness of the
Proposals until the delivery of the contemplated certification by the
independent inspector to the Company. See "Background to the Consent
Solicitation." As applicable here, Section 213(b) of the Delaware General
Corporation Law (the "DGCL") provides that the record date for a consent
solicitation shall be as established by the board of directors of the
corporation (i.e., the Company), which date shall not be more than ten days
after the date upon which the resolution fixing the record date is adopted by
the board, or, if no record date is established, shall be the first date on
which a signed written consent is delivered to the corporation. JMI delivered a
signed written consent to the Company on December 7, 1998. Accordingly, JMI
believes that the Record Date is December 7, 1998.
The Company reported that there were 15,878,233 shares of
Common Stock outstanding on December 7, 1998. Each share of Common Stock
outstanding on the Record Date is entitled to one vote on each of the Proposals
and are not entitled to cumulative voting. Accordingly, based on the number of
shares reported by the Company as outstanding on December 7, 1998, written
consents by holders representing 7,939,117 shares of Common Stock will be
required to adopt and approve each of the Proposals. JMI intends to vote the
1,570,200 shares of Common Stock (representing approximately 9.9% of the shares
of Common Stock reported by the Company as outstanding on December 7, 1998) it
owns in favor of the Proposals. Accordingly, based on the number of shares
reported by the Company as outstanding on December 7, 1998, written consents by
holders representing an additional 6,368,917 shares of Common Stock, or
approximately 44.5% of the shares not owned by JMI, will be required to adopt
and approve each of the Proposals. Each abstention and broker non-vote with
respect to any of the Proposals will have the same effect as voting against the
adoption of such Proposal.
JMI RECOMMENDS THAT YOU CONSENT TO EACH OF THE PROPOSALS. YOUR
CONSENT IS IMPORTANT. PLEASE MARK, SIGN AND DATE THE ENCLOSED WHITE CONSENT CARD
AND RETURN IT IN THE ENCLOSED POSTAGE-PAID ENVELOPE PROMPTLY. FAILURE TO SIGN
AND RETURN YOUR CONSENT WILL HAVE THE SAME EFFECT AS VOTING AGAINST THE
PROPOSALS.
JMI has retained D.F. King & Co., Inc. ("DF King") to assist
in the solicitation of consents. If your shares are held in your name, please
mark, sign, date and mail the enclosed WHITE consent card to DF King in the
postage-paid envelope provided. If your shares are held in the name of a
brokerage firm, bank nominee or other institution, you should contact the person
responsible for your account and give instructions for the WHITE consent card
representing your shares to be marked, dated, signed and mailed. Only that
institution can execute a WHITE consent card with respect to your shares held in
the name of such institution and only upon receipt of specific instructions from
you. JMI urges you to confirm in writing your instructions to the person
responsible for your account and to provide a copy of those instructions to JMI
in care of DF King at the address set forth below so that JMI will be aware of
all instructions given and can attempt to ensure that such instructions are
followed.
If you have any questions about executing your consent or
require assistance, please contact:
D.F. King & Co., Inc.
77 Water Street, 20th Floor
New York, NY 10005
Toll Free: (800) 431-9643
Banks and Brokers call collect: (212) 269-5550
INFORMATION ABOUT JMI
JMI is a Nevada corporation and a wholly-owned subsidiary of
Jewelcor, Inc., a Pennsylvania corporation ("JI"), which in turn is a
wholly-owned subsidiary of S.H. Holdings, Inc. ("SH"). Seymour Holtzman and
Evelyn Holtzman, husband and wife, own, as tenants by the entirety, a
controlling interest of SH. The principal business of JMI is investment and
management services. The principal business of JI is the rental of commercial
real estate. SH is a holding company. Mr. Holtzman is the President, Chief
Executive Officer and Chairman of the Board of Directors of each of JMI, JI and
SH. As of the date of this Consent Statement, JMI owns an aggregate of 1,570,200
shares of Common Stock representing approximately 9.9% of the shares of the
Common Stock outstanding on December 7, 1998, as reported by the Company in the
Preliminary Consent Revocation Statement (as defined herein) filed with the
Securities and Exchange Commission (the "Commission") on December 11, 1998. The
business address and the address of the principal executive offices of JMI is
100 North Wilkes-Barre Blvd., Wilkes-Barre, Pennsylvania 18702.
Additional information about JMI and its Nominees is set forth
under the heading "Certain Other Information Regarding JMI and the JMI Nominees"
and in Annex A attached to this Consent Statement.
BACKGROUND OF THE CONSENT SOLICITATION
Beginning in October 1998, JMI began to acquire shares of the
Company's Common Stock because JMI believed that the then current trading prices
of the Common Stock did not adequately reflect the value of the underlying
business and assets of the Company.
On November 27, 1998 JMI, JI, SH and Seymour and Evelyn
Holtzman (the "Reporting Persons") filed with the Commission a Statement on
Schedule 13D (the "Schedule 13D") disclosing that JMI had acquired in excess of
5% of the outstanding shares of the Company's Common Stock.
On December 1, 1998 the Reporting Persons filed an amendment
to the Schedule 13D disclosing that JMI had acquired an additional 528,500
shares of the Company's Common Stock, bringing JMI's ownership to approximately
9.9% of the Common Stock last reported by the Company as outstanding.
The total amount of funds required to purchase the shares of
Common Stock acquired by JMI since October 26, 1998 was $976,978.50, all of
which was obtained through credit made available to JMI under standard margin
agreements with a registered broker dealer entered into in the ordinary course
of business.
On December 7, 1998, JMI delivered a preliminary copy of this
Consent Statement (the "Preliminary Consent Statement") and the JMI written
consent in favor of the Proposals to the Company. JMI also delivered a demand
for the Company to provide, among other things, a list of stockholders of the
Company to assist JMI in delivering this Consent Statement to the Company's
stockholders and in communicating with such stockholders.
On December 11, 1998, the Company filed with the Commission a
preliminary Revocation of Consent Statement on Schedule 14A (the "Preliminary
Consent Revocation Statement") in opposition to the solicitation by JMI of
written consents from the stockholders of the Company. On December 11, 1998, the
Company also filed with the Commission a Form 8-K reporting that it had amended
its By-Laws (the "Designs By-Law Amendment") to provide, among other things,
that no action by written consent of the stockholders without a meeting shall be
effective until the date an independent inspector certifies to the Company that
the consents delivered constitute at least the minimum number of votes that
would be necessary to take the corporate action.
JMI believes that the Company's existing business plan and
strategy, which has been formulated and implemented under the direction of the
current Board of Directors and management, has demonstrably failed to enhance
stockholder value and the Company's business prospects. Examples of the results
of this failure can be seen from information reported by the Company:
* The Company reported an operating loss of approximately $46.1 million
(approximately $21.6 million of which represents a pre-tax nonrecurring
charge) for the fiscal year ended January 31, 1998 (reported in the
Company's Form 10-K for such fiscal year).
* The Company reported an operating loss of approximately $5.0 million
for the quarter ended May 2, 1998 (reported in the Company's Form 10-Q
for such quarter).
* The Company reported an operating loss of approximately $5.1 million
for the quarter ended August 1, 1998 (reported in the Company's Form
10-Q for such quarter).
* The Company reported an operating loss of approximately $15.2 million
(approximately $13.4 million of which represents a pre-tax nonrecurring
charge) for the quarter ended October 31, 1998 (reported in the
Company's Form 10-Q for such quarter).
The closing price for the Company's Common Stock on December
31, 1994, the month in which Mr. Reichman became Chief Executive Officer was
$7.00. The closing price for the Company's Common Stock on November 25, 1998,
the business day preceding the filing by JMI of its initial Schedule 13D, was
$.69 -- a decline of $6.31 or approximately 90%.
Based upon JMI's review of the Company's business and
financial results, JMI firmly believes that the execution of the strategic
business plan of the Company as designed and implemented by the existing Board
of Directors and management has been a complete failure for the Company and its
stockholders.
If the JMI Nominees are elected as directors of the Company,
they will immediately undertake a review of the Company's business plan and
management to determine a plan to enhance stockholder value. Based upon JMI's
review of the Company's existing business strategy as reported by the Company,
it believes that the Company should decisively return to a business strategy
focused principally on marketing Levi's(R) and Dockers(R) brand name merchandise
through factory outlet stores. JMI believes that the Company should shift away
from, and exit, the business associated with the Boston Trading Co.(R)
vertically integrated private label concept and the Buffalo Jeans product, and,
subject to existing commitments, close unprofitable stores.
As part of its overall review and shift toward the core
business of selling Levi's(R) and Dockers(R) branded merchandise at factory
outlet stores, the JMI Nominees will examine the existing management structure
and personnel and seek to make necessary management changes where appropriate.
The JMI Nominees would also seek to substantially reduce administrative and
other overhead expenses to become a true low cost retail operator with a goal of
creating a sustainable competitive advantage. The JMI Nominees would also
consider all other options to enhance stockholder value, including, but not
limited to, a sale or merger of the Company or stock buy back programs.
This approach differs from JMI's understanding of the
Company's present business plans in that the Company does not appear to have
determined to completely focus on merchandizing of Levis(R) and Dockers(R) brand
name products through outlet stores. Moreover, JMI would seek to more
significantly reduce administrative and other overhead expenses from those
recently proposed by the Company. In addition, to JMI's knowledge, the Company
has not announced a plan to consider changes to management structure and
personnel. The foregoing description of the Company's present plans is based
solely upon JMI's understanding of such plans based upon the Company's public
statements which have been reviewed by JMI. In addition, stockholders should
note that on December 11, 1998, the Company announced that it was considering
strategic alternatives, including a possible sale of the Company, which could
result in a further change in its announced business strategy.
As part of this Consent Solicitation, JMI is not seeking to
remove the current chairman, Stanley I. Berger. Mr. Holtzman, the Chairman of
the Board and President of JMI, has personally known Mr. Berger for many years.
Mr. Berger had served as the Chief Executive Officer of the Company when the
Company was financially healthy and since that time, while under the management
of a different Chief Executive Officer, the financial condition of the Company
had deteriorated. JMI believes that it would be in the best interests of the
stockholders for Mr. Berger to remain as a director of the Company and,
therefore, has not proposed that he be removed as a director. However, there can
be no assurance that Mr. Berger will continue to serve as a director if the JMI
Nominees are elected. If Mr. Berger declines to serve as a director if the
Nominees are elected or were to resign prior to the effectiveness of this
consent solicitation, the JMI Nominees currently intend to fill the vacancy on
the Board created by his resignation. There are no existing arrangements or
understandings between Mr. Berger and Mr. Holtzman or his affiliates relating to
the Company or this consent solicitation. JMI expects to solicit Mr. Berger's
(and other stockholders') consent in favor of the JMI Proposals and hopes that
he will be willing to remain as a director and/or Chairman of the Company in the
event the JMI Nominees are elected.
THE PROPOSALS
JMI is seeking written consents from the holders of shares of
Common Stock to elect the Nominees and adopt the other Proposals and to take the
following actions without a stockholders meeting, as permitted by the DGCL.
The effectiveness of each of the Proposals is subject to, and
conditioned upon, the adoption of each of the other Proposals by the holders of
record, as of the close of business on the Record Date, of a majority of the
shares of the Company's Common Stock then outstanding. However, if Proposal 5 is
not so adopted, JMI reserves the right to waive this condition, but only with
respect to Proposal 5.
1. Board Removal Proposal
----------------------
This proposal would remove each of the current members of the
Company's Board of Directors other than the Remaining Director and the persons
elected pursuant to this consent. The text of the resolution is as follows:
"RESOLVED, that (i) each current member of the Board of
Directors of the Company, other than Stanley I. Berger (the
"Remaining Director") and (ii) any other person or persons
(other than the persons elected pursuant to this consent)
elected or appointed to the Board of Directors of the
Company, prior to the effective time of this resolution, in
addition to or in lieu of any of such current members
(including any persons elected or appointed in lieu of the
Remaining Director) to fill any newly created directorship or
vacancy on the Board of Directors of the Company, or
otherwise, is hereby removed and the office of each such
member of the Board of Directors is hereby declared vacant."
Delaware law provides, as relevant here, that directors of the
Company may be removed, with or without cause, by the holders of a majority of
the shares of Common Stock then entitled to vote at an election of the
directors. This Proposal would remove all of the current directors (other than
the Remaining Director) so that the Nominees, if elected, along with the
Remaining Director, would constitute the entire Board of Directors.
2. Director Election Proposal
--------------------------
This proposal would elect the five persons listed below as
directors of the Company. The text of the resolution is as follows:
"RESOLVED, that the following persons are hereby elected as
directors of the Company to serve until their respective
successors are duly elected and qualified:
Jesse H. Choper, Seymour Holtzman, Peter R. McMullin, Deborah
M. Rhem-Jackson and Steve R. Tomasi."
JMI seeks to replace the current Board of Directors other than
the Remaining Director with its own Nominees. If elected, the Nominees would be
responsible for managing the business and affairs of the Company. The Nominees
understand that, as directors of the Company, each of them has an obligation
under Delaware law to the scrupulous observance of his or her duty of care and
duty of loyalty to the Company and its stockholders.
JMI proposes that the JMI Nominees named above, once elected,
serve until the next annual meeting of the stockholders and until their
successors have been duly elected and qualified. Each of the JMI Nominees has
consented to serve as a director of the Company if elected. See the next Section
for more information about the JMI Nominees.
3. Board Size Proposal
-------------------
This proposal would amend Section 4.1 of the By-Laws to set
the number of directors on the Board of Directors at six. The text of the
amending resolution to the By-Laws, which should be carefully reviewed, is set
forth below.
"RESOLVED, that the stockholders hereby amend the first
sentence of Section 4.1 of the By-Laws to read as follows:
'The Board of Directors shall consist of six members.'"
The Company By-Laws currently provide that the Board of
Directors shall consist of one or more members, with the number to be determined
from time to time by the Board of Directors. The Board Size Proposal would set
the number of directors on the Board of Directors at six, so that, if the
Director Election Proposal is approved, the Nominees together with the
Remaining Director would constitute the entire Board of Directors.
4. Advance Notification Clarification Proposal
-------------------------------------------
This proposal would amend Section 4.16 of the By-Laws to
clarify that a stockholder seeking to nominate persons for election to the Board
of Directors by stockholder action by written consent need not comply with the
Advance Notification Provisions. The text of the resolution amending the
By-Laws, which should be carefully reviewed, is set forth below.
"RESOLVED, that the stockholders hereby amend Section 4.16 of
the By-Laws by adding the following sentence after the last
sentence thereof:
'Notwithstanding anything contained in this Section 4.16 or
any other provision of these By-Laws, any stockholder seeking
to nominate candidates for election to the Board of Directors
of the Corporation pursuant to stockholder action by written
consent need not comply with any advance notification
provisions contained in these By-Laws, including, without
limitation, this Section 4.16.'"
Section 3.13 of the By-Laws provides that any action which may
be taken at any annual or special meeting of stockholders of the Company may be
taken without a meeting, without prior notice and without a vote, if proper
written consent is made to the action as described therein. Section 4.16 of the
By-Laws currently provides, among other things, that: "No person shall be
elected by the stockholders as directors of the Corporation unless nominated in
accordance with the procedures set forth in this Section 4.16." The procedures
set forth in Section 4.16 purport to require certain information to be provided
to the Company within certain specified time frames in order for a nomination to
the Board of Directors to be made other than those made by, or at the direction
of, the Board of Directors. These procedures appear to apply only to nominations
for election to the Board of Directors at annual and special meetings of
stockholders. Nevertheless, the Advance Notification Clarification Amendment is
being proposed in order to clarify that the requirements of Section 4.16 of the
By-Laws are inapplicable to the election of directors pursuant to action by
written consent of stockholders.
5. By-Law Proposal
---------------
This proposal would repeal each provision of any amendment to
the By-Laws adopted subsequent to December 11, 1995 (the effective date of the
By-Laws most recently filed by the Company with the Commission prior to the
filing by JMI of the Preliminary Consent Statement on December 7, 1998), and
prior to the effectiveness of the Proposals other than the By-Laws adopted as
contemplated by this Consent Statement. This proposal is designed to prevent the
Board of Directors from taking actions to amend the By-Laws to prevent the
stockholders from accomplishing the objectives described in this Consent
Statement. The text of the resolution is set forth below.
"RESOLVED, that all By-Laws adopted subsequent to December 11,
1995 and prior to the effectiveness of this resolution (other
than those specifically adopted pursuant to the consent
solicitation undertaken by Jewelcor Management, Inc.) shall be
null and void and of no force and effect."
Section 109 of the DGCL provides that ". . . the power to
adopt, amend or repeal bylaws shall be in the stockholders entitled to vote...;
provided, however, any corporation may, in its certificate of incorporation,
confer the power to adopt, amend or repeal bylaws upon the directors. . . The
fact that such power has been so conferred upon the directors. . .shall not
divest the stockholders . . . of the power, nor limit their power to adopt,
amend, or repeal bylaws." JMI believes that such an unequivocal statement makes
it clear that the stockholders of the Company have the power under Delaware law
to repeal By-Laws as provided by the By- Law Proposal, whether or not the
By-Laws so amended or repealed are known to the stockholders. To the knowledge
of JMI, the Delaware courts have not addressed the validity of a proposal in the
form of the By-Law Proposal. Based upon a review of the By-Laws on file with the
Commission as of December 17, 1998, JMI does not believe that the invalidity of
this proposal would have an adverse effect on the stockholders or this consent
solicitation. Upon effectiveness of this proposal, all By-Laws adopted
subsequent to December 11, 1995, including ones that could be considered as
beneficial or detrimental to the stockholders, will be repealed.
If the Board of Directors of the Company adopts any material
amendments to the By-Laws which are relevant to the Proposals prior to the
effectiveness of the Proposals, JMI may forward additional solicitation
materials to the Company's stockholders regarding such actions.
CERTAIN OTHER INFORMATION REGARDING JMI AND THE JMI NOMINEES
Set forth below are the name, age, business address, present
principal occupation and employment history of each of the JMI Nominees for at
least the past five years. This information has been furnished to JMI by the
respective Nominees. Each of the Nominees has consented to serve as a director
of the Company. Each of the Nominees is at least 18 years of age. None of the
entities referenced below is a parent or subsidiary of the Company.
Name, Age and
Business Address Principal Occupation and Five Year History
---------------- ------------------------------------------
Jesse H. Choper, 63 Mr. Choper has been the Earl Warren Professor of
University of California Public Law at the University of California at Berkeley
at Berkeley School of Law since 1965. Professor Choper was the
School of Law Dean of the Law School from 1982 to 1992. In 1996, he
Berkeley, CA 94720 was a visiting Professor at Universitad Autonoma in
Barcelona, Spain. From 1960 to 1961, Professor Choper
was a law clerk for Chief Justice Earl Warren.
Seymour Holtzman, 63 Mr. Holtzman is the founder and Chief Executive
100 North Wilkes-Barre Officer of Jewelcor Management, Inc. Since 1990, Mr.
Blvd. Holtzman has served as Chairman and Chief Executive
Wilkes-Barre, PA 18702 Officer of each of Jewelcor Management & Consulting,
Inc., located in Wilkes-Barre, Pennsylvania; C.D.
Peacock, Inc., a Chicago, Illinois retail jewelry
establishment; Central European Capital Investors,
Inc., an investment company operating in eastern
Europe; and S.A. Peck & Company, a retail and mail
order jewelry company based in Chicago, Illinois.
Peter R. McMullin, 55 Mr. McMullin is the co-founder of Southeast Research
2101 Corporate Boulevard Partners, Inc. ("Southeast") and has been an Executive
Suite 402 Vice President and a managing director of Southeast
Boca Raton, FL 33431 since its inception in June 1990. Since 1997, Mr.
McMullin has been the Executive Vice President, Chief
Investment Officer and a director of Research Partners
International, a company that provides institutional
research, investment banking, securities brokerage and
trading services through its principal subsidiaries.
Deborah M. Rhem- Mrs. Rhem-Jackson has, in the last five years, been a
Jackson, 41 part-time accounting professor at SUNY College at Old
190 Delhi Road Westbury and Monroe College in New Rochelle, New York.
Scarsdale, NY 10583 Prior to her years in academia, Mrs. Rhem-Jackson
spent seven years at Chemical Bank in various
capacities, having most recently served as a Vice
President and Curriculum Manager from 1988 to 1990.
She has previously worked as a financial analyst for
W.R. Grace & Company and as a staff accountant for
Price Waterhouse. Mrs. Rhem-Jackson received a
Bachelor of Science from Syracuse University School of
Management and a Master of Business Administration
from Columbia University. Mrs. Rhem-Jackson is a
Certified Public Accountant.
Steve R. Tomasi, 32 Mr. Tomasi is a Certified Public Accountant and is a
433 Plaza Road full-time portfolio management consultant for JMI.
Suite 365 From March 1996 to November 1998, Mr. Tomasi served as
Boca Raton, FL 33932 the Director of Bank and Thrift Research for SNL
Securities, LC. He was an Assistant Vice President of
Balance Sheet Management at Crestar Bank from June
1993 to March 1996. Mr. Tomasi has served as an
in-charge auditor for Price Waterhouse from 1988 to
1990.
Except as set forth in this Consent Statement or in the Annexes
hereto, to the best knowledge of JMI, none of the Nominees is employed by JMI or
Seymour Holtzman. All of the Nominees are citizens of the United States. Mr.
McMullin is also a citizen of Canada.
Except as set forth in this Consent Statement or in the
Annexes hereto, to the best knowledge of JMI, none of JMI, any of the persons
participating in this solicitation on behalf of JMI, the JMI Nominees and, with
respect to items (i), (vii) and (viii) of this paragraph, any associate (within
the meaning of Rule 14a-1 of the Securities Exchange Act of 1934, as amended
(the "Exchange Act")) of the foregoing persons (i) owns beneficially, directly
or indirectly any securities of the Company, (ii) owns beneficially, directly or
indirectly any securities of any parent or subsidiary of the Company, (iii) owns
any securities of the Company of record but not beneficially, (iv) has purchased
or sold any securities of the Company within the past two years, (v) has
incurred indebtedness for the purpose of acquiring or holding securities of the
Company, (vi) is or has within the past year been a party to any contract,
arrangement or understanding with respect to any securities of the Company,
(vii) since the beginning of the Company's last fiscal year has been indebted to
the Company or any of its subsidiaries in excess of $60,000 or (viii) has any
arrangement or understanding with respect to future employment by the Company or
with respect to any future transactions to which the Company or any of its
affiliates will or may be a party. In addition, except as set forth in this
Consent Statement or in the Annexes hereto, to the best knowledge of JMI, none
of JMI, any of the persons participating in this solicitation on behalf of JMI,
the JMI Nominees and any associates of the foregoing persons, has had or is to
have a direct or indirect material interest in any transaction or proposed
transaction with the Company in which the amount involved exceeds $60,000, since
the beginning of the Company's last fiscal year.
Except as set forth in this Consent Statement or in the
Annexes hereto, to the best knowledge of JMI, none of the Nominees, since the
beginning of the Company's last fiscal year, has been affiliated with (i) any
entity that made or received, or during the Company's current fiscal year
proposes to make or receive, payments to or from the Company or its subsidiaries
for property or services in excess of five percent of either the Company's or
such entity's consolidated gross revenues for its last full fiscal year, or (ii)
any entity to which the Company or its subsidiaries was indebted at the end of
the Company's last full fiscal year in an aggregate amount exceeding five
percent of the Company's total consolidated assets at the end of such year. None
of the Nominees is or during the Company's last fiscal year has been affiliated
with any law or investment banking firm that has performed or proposes to
perform services for the Company.
To the best knowledge of JMI, none of the corporations or
organizations in which the JMI Nominees have conducted their principal
occupation or employment was a parent, subsidiary or other affiliate of the
Company, and the Nominees do not hold any position or office with the Company or
have any family relationship with any executive officer or director of the
Company or have been involved in any proceedings, legal or otherwise, of the
type required to be disclosed by the rules governing this solicitation.
JMI has agreed to indemnify each of the Nominees against
certain liabilities, including liabilities under the federal securities laws, in
connection with this consent solicitation and such person's involvement in the
operation of the Company and to reimburse such Nominee for his or her
out-of-pocket expenses.
Certain additional information about the employees of JMI, its
affiliates and other persons who are not Nominees and who may assist in
soliciting consents is set forth in Annex A.
CERTAIN EFFECTS OF THE PROPOSALS
Set forth below is a description of certain provisions of
certain agreements to which the Company is a party which may be implicated as a
result of the adoption of certain of the Proposals. This description is
qualified in its entirety by reference to such agreements which have been filed
by the Company with the Commission. Other documents or arrangements applicable
to the Company not available to or not reviewed by JMI may affect the matters
described below or may be affected by the matters contemplated by the Consent
Statement.
The Director Removal Proposal and the Director Election
Proposal, if adopted, may trigger "change of control" provisions in certain
agreements to which the Company is a party.
Credit Agreement
- ----------------
On June 4, 1998 the Company entered into a $50 million credit
agreement (the "Credit Agreement") with BankBoston Retail Finance, Inc.
("BankBoston"). The Credit Agreement provides that the removal and replacement
of a majority of the Board of Directors as contemplated by the Director Removal
Proposal would constitute an "event of default." Upon the occurrence of an
"event of default" any and all "Liabilities" shall either (i) become due and
payable without any further act on the part of BankBoston or any other lender or
(ii) become immediately due and payable, at the option of BankBoston without
notice or demand. Liabilities include, among other things, the obligation to pay
any loan or advance and any interest thereon. JMI expects to seek to either (i)
assist the Company in making alternative financing arrangements to replace the
Credit Agreement or (ii) have the Company seek from BankBoston confirmation that
no "change of control" has occurred or waive the effects of any such "change of
control." There can be no assurance that either of the foregoing can be
implemented or agreed, or if implemented or agreed, the terms on which such
implementation or agreement may be reached.
Employment Agreements
- ---------------------
The Company has entered into employment agreements (each an
"Employment Agreement" and collectively, the "Employment Agreements") with each
of Joel H. Reichman, the President and Chief Executive Officer, Scott N. Semel,
Senior Vice President, General Counsel and Secretary, and Carolyn Faulkner, Vice
President and Chief Financial Officer (each an "Executive" and collectively, the
"Executives"). The Employment Agreements provide that removal and replacement of
a majority of the Board of Directors as contemplated by the Director Removal
Proposal and the Director Election Proposal would constitute a "change of
control."
If, among other things, any of the Executives is terminated
without justifiable cause or if the Company shall fail to renew such Executive's
Employment Agreement within two years of a "change of control," the Company
shall upon such termination, immediately pay such Executive, the greater of (i)
two times the then annual salary of such Executive or (ii) 1/12 of such
Executive's then annual salary multiplied by the number of months remaining in
the term (the "Severance Period"). In addition, the Company shall continue to
allow such Executive to participate, at the Company's expense, in the Company's
health insurance and disability insurance programs, to the extent permitted
under such programs, during the Severance Period and shall pay such Executive
additional compensation to enable such Executive to pay any tax that may be
imposed by Section 280G of the Internal Revenue Code of 1986, as amended. Based
on publicly available filings, the current annual salaries of each of Mr.
Reichman, Mr. Semel and Ms. Faulkner are $375,000, $290,000 and $210,000,
respectively.
Stock Options
- -------------
Pursuant to the Company's 1992 Stock Incentive Plan, as
amended (the "1992 Stock Incentive Plan"), incentive and non-incentive stock
options, unrestricted and restricted stock awards and performance share awards
may be granted to full or part time officers and other selected employees of the
Company and its subsidiaries. In addition, the 1992 Stock Incentive Plan
provides that each non-employee director of the Company that is elected by the
stockholders initially will be granted, upon such election, a stock option to
purchase, up to 10,000 shares of the Company's Common Stock at the then fair
market value of the Common Stock. The 1992 Stock Incentive Plan also provides
that each non-employee director of the Company that is re-elected to the Board
is granted, upon such re-election, a stock option to purchase up to 3,000 shares
of Common Stock at the then fair market value of the Common Stock.
Each stock option granted under the 1992 Stock Incentive Plan
will automatically become fully exercisable upon a "change of control." For
purposes of the 1992 Stock Incentive Plan, the Director Removal Proposal would
constitute a "change of control." In addition, upon a "change of control" all
restrictions on restricted stock are automatically deemed waived and the
recipients of such restricted stock awards shall become entitled to receipt of
the stock subject to such awards.
The following, which is based on the Company's proxy
statements for the annual meetings of stockholders for each of 1996, 1997 and
1998 and qualified in its entirety by reference thereto, sets forth the number
of options and the exercise price of such options for the Executives listed
above for each of 1995, 1996 and 1997.
NAME 1995 GRANT 1996 GRANT 1997 GRANT
---- ---------- ---------- ----------
Joel H. Reichman 50,000 at $10.50 40,000 at $6.875 270,000 at $12.00
Scott N. Semel 50,000 at $10.50 40,000 at $6.875 150,000 at $12.00
Carolyn R. Faulkner ---- 20,000 at $6.125 80,000 at $12.00
Trademark and License Agreement
- -------------------------------
The Company is a party to an Amended and Restated Trademark
License Agreement (the "License Agreement") with Levi Strauss & Co. ("Levi
Strauss") pursuant to which, among other things, Levi Strauss has granted
certain rights to use certain Levi Strauss trademarks in connection with the
Company's business. The License Agreement purports to restrict assignments,
sublicenses or other transfers (a "transfer") by the Company of its rights or
obligations under the License Agreement without the prior written approval of
Levi Strauss, and to further provide that a "transfer" shall include any direct
or indirect transfer of control of the Company. The License Agreement further
provides that any attempt to "transfer" without the prior written consent of
Levi Strauss shall be void and deemed a material breach of the License
Agreement, which would purport to permit Levi Strauss to, among other remedies
available under law, terminate the License Agreement 120 days after written
notice is given to the Company, unless the breach is cured.
While JMI does not believe that a change in the Board of
Directors pursuant to a validly authorized shareholder action constitutes a
"transfer" under the License Agreement, in the event that Levi Strauss were to
take the position that election of the JMI Nominees constitutes a "transfer" or
other material breach under the License Agreement, JMI would seek to have Levi
Strauss confirm that no "transfer" or breach has occurred. There can be no
assurance that Levi Strauss would so agree and, if (i) it were ultimately
determined that a "transfer" and breach had occurred, (ii) such breach were not
cured within the requisite time period and (iii) Levi Strauss were to ultimately
terminate the License Agreement, the Company's business could be materially
adversely effected.
THE CONSENT PROCEDURE
Section 228 of the DGCL states that, unless otherwise provided
in a corporation's certificate of incorporation, any action that may be taken at
any annual or special meeting of stockholders may be taken without a meeting,
without prior notice and without a vote, if consents in writing, setting forth
the action so taken, shall be signed by the holders of outstanding stock having
not less than the minimum number of votes that would be necessary to authorize
or take such action at a meeting at which all shares entitled to vote thereon
were present and voted, and those consents are delivered to the corporation by
delivery to its registered office in Delaware, its principal place of business
or an officer or agent of the corporation having custody of the book in which
proceedings of meetings of stockholders are recorded. In the case of this
consent solicitation, written, unrevoked consents of the holders of a majority
of the outstanding shares of Common Stock as of the Record Date must be
delivered to the Company as described above to effect the actions as to which
consents are being solicited hereunder. Section 228 of the DGCL further provides
that no written consent shall be effective to take the corporate action referred
to therein unless, within 60 days of the earliest dated consent delivered in the
manner required by Section 228, written consents signed by a sufficient number
of holders to take such action are delivered to the corporation in the manner
required by Section 228.
IT IS CURRENTLY THE INTENTION OF JMI TO CEASE THE SOLICITATION OF CONSENTS ONCE
IT HAS DETERMINED THAT VALID AND UNREVOKED CONSENTS REPRESENTING A MAJORITY OF
THE ISSUED AND OUTSTANDING SHARES OF COMMON STOCK AS OF THE RECORD DATE HAVE
BEEN OBTAINED AND TO DELIVER SUCH CONSENTS TO THE COMPANY IN THE MANNER REQUIRED
BY SECTION 228 OF THE DGCL AS SOON AS PRACTICABLE THEREAFTER. WHEN THE PROPOSALS
FOR WHICH CONSENTS ARE GIVEN BECOME EFFECTIVE, A STOCKHOLDER WILL BE UNABLE TO
REVOKE HIS OR HER CONSENT.
If the actions described herein are taken, the Company will
promptly notify the stockholders who have not consented to the actions taken as
required by the DGCL.
Consents may only be executed by stockholders of record at the
close of business on the Record Date. The Company reported that, as of December
7, 1998, it had outstanding 15,878,233 shares of Common Stock. Based on its
review of publicly available information, JMI is not aware of any change since
December 7, 1998 in the number of outstanding shares of Common Stock. Based upon
these numbers, the number of votes necessary to effect the Proposals is
7,939,117 shares.
Since JMI must receive consents from a majority of the
Company's outstanding shares in order for the Proposals to be adopted, a broker
non-vote or direction to withhold authority to vote on the WHITE consent card
will have the same effect as a "no" vote with respect to JMI's solicitation.
Consent Card Special Instructions
- ---------------------------------
If you were a record holder as of the close of business on the
Record Date, you may elect to consent to, withhold consent or abstain with
respect to each Proposal by marking the "CONSENT," "WITHHOLD CONSENT" or
"ABSTAIN" box, as applicable, underneath EACH such Proposal on the accompanying
WHITE consent card and signing, dating and returning it promptly in the enclosed
postage-paid envelope.
The accompanying WHITE consent card will be voted in
accordance with the stockholder's instruction on such WHITE consent card. As to
the Proposals set forth herein, stockholders may consent to an individual
Proposal or may withhold their consent by marking the proper box in the WHITE
consent card. If the enclosed WHITE consent card is signed and returned and no
direction is given, it will be voted in favor of all of the Proposals and if the
WHITE consent card is signed and returned and not dated, it will be dated on or
about the date it is received.
IF THE STOCKHOLDER WHO HAS EXECUTED AND RETURNED THE CONSENT CARD HAS FAILED TO
CHECK A BOX MARKED "CONSENT," "WITHHOLD CONSENT," OR "ABSTAIN" FOR ANY OR ALL OF
THE PROPOSALS, SUCH STOCKHOLDER CONSENT CARD WILL BE VOTED IN FAVOR OF SUCH
PROPOSAL OR PROPOSALS.
JMI RECOMMENDS THAT YOU CONSENT TO EACH OF THE PROPOSALS. YOUR CONSENT IS
IMPORTANT. PLEASE MARK, SIGN AND DATE THE ENCLOSED WHITE CONSENT CARD AND RETURN
IT IN THE ENCLOSED POSTAGE-PAID ENVELOPE PROMPTLY. FAILURE TO RETURN YOUR
CONSENT WILL HAVE THE SAME EFFECT AS WITHHOLDING CONSENT TO THE PROPOSALS.
If your shares are held in the name of a brokerage firm, bank
nominee or other institution, you should contact the person responsible for your
account and give instructions for the WHITE consent card representing your
shares to be marked, dated, signed and mailed. Only that institution can execute
a WHITE consent card with respect to your shares held in the name of the
institution and only upon receipt of specific instructions from you. JMI urges
you to confirm in writing your instructions to the person responsible for your
account and to provide a copy of those instructions to JMI in care of DF King at
the address set forth herein under "Summary of Consent Procedure" so that JMI
will be aware of all instructions given and can attempt to ensure that such
instructions are followed.
BROKER NON-VOTES, ABSTENTIONS OR FAILURE TO RETURN A SIGNED CONSENT WILL HAVE
THE SAME EFFECT AS WITHHOLDING CONSENT TO THE PROPOSALS. JMI URGES EACH
STOCKHOLDER TO ENSURE THAT THE RECORD HOLDER OF HIS OR HER SHARES MARKS, SIGNS,
DATES AND RETURNS THE ENCLOSED CONSENT AS SOON AS POSSIBLE.
CERTAIN OTHER INFORMATION REGARDING THE COMPANY;
STOCKHOLDER PROPOSALS
Stockholders are referred to the Company's Preliminary Consent
Revocation Statement with respect to the compensation and remuneration paid and
payable and other information related to the Company's officers and directors
and to the beneficial ownership of the Company's securities. Certain information
regarding beneficial ownership of the Common Stock, as reported by the Company
in such statement, is set forth in Annex C attached hereto. The Preliminary
Consent Revocation Statement stated that the deadline for stockholders to submit
proposals for inclusion in the Company's proxy statement for next year's Annual
Meeting of Stockholders is January 5, 1999.
APPRAISAL RIGHTS
Stockholders of the Company are not entitled to appraisal
rights in connection with the adoption of the Proposals.
VOTING; REVOCATION; COSTS OF CONSENT SOLICITATION
Written consents may be solicited by mail, advertisement,
telephone, facsimile or in person. Solicitations may be made by officers of JMI;
however, no person will receive additional compensation for such solicitation
other than DF King. If your shares are registered in your own name, you may mail
or fax your consent to JMI in care of DF King at the address listed below.
If your shares are held in "street name" (held by your
brokerage firm or bank), immediately instruct your broker or bank representative
-------- ---- ------ -- ---- --------------
to sign the WHITE consent card and mail it to JMI in care of DF King, who will
promptly deliver it. Please be certain to include the name of your brokerage
firm or bank. If you have additional questions, please call:
D.F. KING & CO., INC.
77 Water Street, 20th Floor
New York, NY 10005
Call Toll-Free: (800) 431-9643
Banks and Brokers call collect: (212) 269-5550
A consent executed by a stockholder may be revoked at any time
before its exercise by submitting (i) a written, dated revocation of such
consent or (ii) a later dated consent covering the same shares. A revocation may
be in any written form validly signed by the record holder as long as it clearly
states that the consent previously given is no longer effective and must be
executed and delivered prior to the time that the action authorized by the
executed consent is taken. The revocation may be delivered to Jewelcor
Management, Inc., c/o D.F. King & Co., Inc., 77 Water Street, 20th Floor, New
York, NY 10005, Attn.: Thomas Long. Although a revocation or later dated consent
delivered only to the Company will be effective to revoke a previously executed
consent, JMI requests that if a revocation or later dated consent is delivered
to the Company, a photocopy of the revocation or later dated consent also be
delivered to JMI in care of DF King, at the address set forth above, so that JMI
will be aware of such revocation.
JMI has retained DF King to act as an advisor in connection
with this consent solicitation. Approximately 25 employees of DF King will
engage in the solicitation. JMI has agreed to pay DF King a fee of up to $30,000
plus reasonable out-of-pocket expenses. In connection with its retention by JMI,
DF King agreed to provide consulting and analytic services and provide
solicitation services with respect to banks, brokers, institutional investors
and individual stockholders. JMI has agreed to indemnify DF King against certain
liabilities and expenses, including liabilities and expenses under the federal
securities laws.
The purpose of the Proposals being made by JMI in this Consent
Statement is to advance the interests of all of the Company's stockholders.
Therefore, JMI believes that its expenses in connection with the consent
solicitation should be reimbursed by the Company. The cost of the solicitation
of consents to the Proposals will be initially borne by JMI. JMI intends to seek
reimbursement of its expenses from the Company if the JMI Nominees are elected
to the Board of Directors. This request will not be submitted to a stockholder
vote. Costs related to the solicitation of consents to the Proposals include
expenditures for attorneys, consent solicitors, printing, postage, and filing
fees and are expected to aggregate approximately $200,000. The actual costs and
expenses could be materially different than the estimate set for above, and, in
particular, could be substantially higher if for any reason litigation is
instituted in connection with the matters related to this Consent Statement.
YOUR CONSENT IS IMPORTANT. NO MATTER HOW MANY OR HOW FEW SHARES YOU OWN, PLEASE
CONSENT TO THE REMOVAL OF THE CURRENT BOARD OF DIRECTORS (OTHER THAN THE
REMAINING DIRECTOR), THE AMENDMENT OF THE BY-LAWS TO SET THE NUMBER OF DIRECTORS
AND TO CLARIFY THAT THE ADVANCE NOTIFICATION PROVISIONS DO NOT APPLY, THE
ELECTION OF THE JMI NOMINEES AND THE REPEAL OF ANY BY-LAWS ADOPTED SINCE
DECEMBER 11, 1995 (OTHER THAN THE BY-LAWS ADOPTED BY THIS CONSENT) BY MARKING,
SIGNING, DATING AND MAILING THE ENCLOSED WHITE CONSENT CARD PROMPTLY. ONLY YOUR
LATEST DATED CONSENT COUNTS.
JEWELCOR MANAGEMENT, INC.
December 21, 1998
ANNEX A
INFORMATION CONCERNING EMPLOYEES OF JMI, ITS AFFILIATES AND
OTHER PERSONS WHO ARE NOT NOMINEES AND WHO MAY SOLICIT
CONSENTS
The following table sets forth the name and the present principal
occupation or employment, of each employee of JMI, its affiliates and other
persons who is not a Nominee and who may assist in soliciting consents.
Information regarding Nominees is set forth in "The Proposals" in this Consent
Statement. The principal business address of each person listed below is 100
North Wilkes-Barre Boulevard, Wilkes-Barre, PA 18702.
Name and Principal Business Address Present Principal Occupation or Employment
- ----------------------------------- ------------------------------------------
James R. Verano Vice President - Finance
Richard L. Huffsmith Vice President - General Counsel
Brian Bufalino Attorney at Law
Jacqueline Quigley Administrative Assistant to Seymour Holtzman,
President and Chief Executive Officer
ANNEX B
JMI TRANSACTIONS IN DESIGNS, INC. COMMON STOCK
The following table sets forth information with respect to all
purchases of Common Stock of the Company by JMI during the past two years.
Except as set forth below, to the knowledge of JMI, no participant in this
solicitation or JMI Nominee has purchased or sold securities of the Company
within the past two years.
Trade Date Number of Shares Purchased Total Costs
---------- -------------------------- -----------
10/26/98 50,000 $36,765.00
11/9/98 225,000 $164,265.00
11/10/98 166,700 $105,036.00
11/17/98 600,000 $330,015.00
11/30/98 528,500 $340,897.50
Please see the section titled "Information about JMI" in this
Consent Statement for information regarding the relationship between JMI, Mr.
Seymour Holtzman and certain other persons.
ANNEX C
SHARE OWNERSHIP OF DESIGNS, INC.
AS REPORTED IN THE PRELIMINARY CONSENT REVOCATION STATEMENT
DATED DECEMBER 11, 1998
The following table sets forth certain information with respect to the beneficial ownership of the
Company's Common Stock by (a) all persons who were reported to be beneficial owners of five percent or more of the Company's
Common Stock (other than JMI), (b) directors and certain executive officers of the Company and (c) all directors and
executive officers as a group as of December 7, 1998, as reported in the Preliminary Consent Revocation Statement.
This information is qualified in its entirety by reference to the Preliminary Consent Revocation
Statement. JMI makes no representations as to the accuracy of such information. Moreover, because changes in beneficial
ownership may have occurred since the effective dates of the filings cited below, such information, even if accurate as of
the time of filing, may no longer be valid.
NAME AND ADDRESS/TITLE NUMBER OF SHARES
OF BENEFICIAL OWNER BENEFICIALLY OWNED PERCENTAGE OF CLASS (1)
------------------- ------------------ -----------------------
Heartland Advisors, Inc 1,097,000(2) 6.9%
790 North Milwaukee Street Milwaukee,
Wisconsin 53202
Franklin Resources, Inc 1,900,000(3) 12.1%
777 Mariners Island Boulevard
San Mateo, California 94403
Grace & White, Inc 1,206,250(4) 7.6%
515 Madison Avenue
New York, New York 10022
Dimensional Fund Advisors Inc 910,300(5) 5.7%
1299 Ocean Avenue, 11th Floor
Santa Monica, California 90401
Stanley I. Berger 1,197,106(6) 7.4%
Chairman of the Board and Director
Joel H. Reichman 349,121(7) 2.2%
President, Chief Executive Officer and
Director
Scott N. Semel 267,203(8) 1.7%
Executive Vice President, General
Counsel and Secretary
Carolyn R. Faulkner 55,333(9) *
Vice President, Chief Financial Officer
and Treasurer
Mark S. Lisnow -0-(10) *
Former Senior Vice President,
Merchandising
James G. Groninger 49,604(11) *
Director
Melvin I. Shapiro 57,326(12) *
Director
Bernard M. Manuel 61,706(13) *
Director
Peter L. Thigpen 28,304(14) *
Director
Directors, Executive Officers and a 2,065,703(15) 12.3%
former Executive Officer as a group (9
persons)
____________________________________________________________________________________________________________________________
* Less than 1%
(1) A total of 15,878,233 shares of Common Stock was outstanding as of December 7, 1998.
(2) The Company received a report on Schedule 13G dated November 30, 1998 stating that Heartland Advisors, Inc. ("HAI")
was the beneficial owner of and had sole voting and dispositive power with respect to the number of shares of Common
Stock set forth opposite its name in the table. The report on Schedule 13G described the relationship among HAI and
certain investment advisory accounts and a registered investment company but did not affirm the existence of a group.
Nevertheless, the Company believes that HAI, such investment accounts and the investment company may be deemed to
constitute a "group" as that term is used in Section 13(d)(3) of the Securities Exchange Act, as amended, and that
such group may be deemed to be the beneficial owner of the shares described in this footnote.
(3) Franklin Resources, Inc. ("Franklin") informed the Company that, as of May 6, 1998, it was the beneficial owner of
the number of shares of Common Stock set forth opposite its name in the table and that, as of such date, Franklin had
sole voting and dispositive power with respect to all such shares. The Company previously received a report on
Schedule 13G with a signature dated January 16, 1998 stating that Franklin, as parent holding company of Franklin
Advisory Services, Inc. ("FASI"), was reporting the beneficial ownership of FASI and its principal shareholders,
Charles B. Johnson and Rupert H. Johnson, Jr., as result of FASI acting as an investment adviser to several
investment companies and other managed accounts registered under the Investment Company Act. The report on Schedule
13G indicates that at December 31, 1997 FASI had sole voting power with respect to 1,494,000 shares and that FASI may
be deemed to beneficially own, within the meaning of Rule 13d-3 of the Exchange Act, 1,494,000 shares over which it
had sole dispositive power. The report described the relationship among Franklin, FASI, Charles B. Johnson and Rupert
H. Johnson, Jr., but it denied the existence of a group. Nevertheless, the Company believes that Franklin, FASI,
Charles B. Johnson and Rupert H. Johnson, Jr., may be deemed to constitute a "group" as that term is used in Section
13 (d) (3) of the Exchange Act, and that such group may be deemed to be the beneficial owner of the shares described
in this footnote.
(4) The Company received a report on Schedule 13G dated February 12, 1998 stating that Grace & White, Inc. ("Grace &
White") was the beneficial owner of the number of shares of Common Stock set forth opposite its name in the table.
The report on Schedule 13G indicates that at December 31, 1997 Grace & White had sole voting power with respect to
30,100 shares and that Grace & White may be deemed to beneficially own, within the meaning of Rule 13d-3 of the
Exchange Act, 1,206,250 shares over which it had sole dispositive power. The report indicated that the shares were
acquired in the ordinary course of Grace & White's investment advisory business and not with the purpose of changing
or influencing the control of the Company.
(5) The Company received a report on Schedule 13G with a signature dated February 9, 1998 stating that Dimensional Fund
Advisors Inc. ("DFAI") was reporting the beneficial ownership of DFAI and advisory clients of DFAI, including DFA
Investment Dimensions Group Inc. ("DFA Fund") and The DFA Investment Trust Company ("DFA Trust"), each an open-end
management investment company under the Investment Company Act of 1940, as amended. The report on Schedule 13G and
the correspondence accompanying the report indicated that at December 31, 1997 DFAI had sole voting power with
respect to 588,900 shares and that DFAI may be deemed to beneficially own, within the meaning of Rule 13d-3 of the
Exchange Act, 910,300 shares over which it had sole dispositive power. The report described the relationship among
DFAI, DFA Fund and DFA Trust but did not affirm the existence of a group. Nevertheless, the Company believes that
DFAI, DFA Fund and DFA Trust may be deemed to constitute a "group" as that term is used in Section 13 (d) (3) of the
Exchange Act, and that such group may be deemed to be the beneficial owner of the shares described in this footnote.
(6) Includes 238,500 shares issuable pursuant to outstanding stock options exercisable within 60 days of December 7,
1998.
(7) Includes 303,166 shares issuable pursuant to outstanding stock options exercisable within 60 days of December 7,
1998, as well as 280 shares owned by Mr. Reichman's wife and 427 shares owned by Mr. Reichman's children, as to which
707 shares Mr. Reichman disclaims beneficial ownership.
(8) Includes 229,166 shares issuable pursuant to outstanding stock options exercisable within 60 days of December 7,
1998, as well as 450 shares owned by Mr. Semel's daughter, as to which he disclaims beneficial ownership.
(9) Includes 42,466 shares issuable pursuant to outstanding stock options exercisable within 60 days of December 7, 1998.
(10) Mr. Lisnow's employment with the company and his service as an officer of the company ended on February 13, 1998. The
information in the table with respect to shares beneficially owned by Mr. Lisnow is based solely upon information
available to the Company.
(11) Includes 40,500 shares issuable pursuant to outstanding stock options exercisable within 60 days of December 7, 1998.
(12) Includes 40,500 shares issuable pursuant to outstanding stock options exercisable within 60 days of December 7, 1998
and 450 shares owned by Mr. Shapiro's wife as to which he disclaims beneficial ownership.
(13) Includes 40,500 shares issuable pursuant to outstanding stock options exercisable within 60 days of December 7, 1998.
(14) Includes 19,000 shares issuable pursuant to outstanding stock options exercisable within 60 days of December 7, 1998.
(15) Includes 953,798 shares issuable pursuant to outstanding stock options exercisable within 60 days of December 7,
1998. See also Notes 6 through 9 and 11 through 14 above for further details concerning such options.
APPENDIX 1
DESIGNS, INC.
CONSENT OF STOCKHOLDERS TO ACTION WITHOUT A MEETING:
THIS CONSENT IS SOLICITED BY JEWELCOR MANAGEMENT, INC.
("JMI")
The undersigned, a stockholder of record of DESIGNS, INC. (the
"Company"), hereby consents pursuant to Section 228 of the Delaware General
Corporation Law, with respect to the number of shares of common stock, par value
$0.01 per share, of the Company held by the undersigned, to each of the
following actions without a prior notice and without a vote as more fully
described in JMI's consent statement (the "Consent Statement"), receipt of which
is hereby acknowledged.
JMI STRONGLY RECOMMENDS THAT STOCKHOLDERS CONSENT TO THE FOLLOWING PROPOSALS:
1. Director Removal Proposal: Remove (i) all current members of
--------------------------
the Company's Board of Directors (the "Board of Directors")
other than Stanley I. Berger and (ii) any other person or
persons (other than the persons elected pursuant to this
Consent) elected or appointed to the Board of Directors prior
to the effective time of this stockholder action in addition
to or in lieu of any of such current members (including, any
persons elected or appointed in lieu of Stanley I. Berger) to
fill any newly created directorship or vacancy on the Board of
Directors or otherwise, pursuant to the resolution set forth
in the Consent Statement.
_ CONSENT _ WITHHOLD CONSENT _ ABSTAIN
If no box is marked with respect to the Director Removal
Proposal, this Consent will be voted in favor of the removal
of the directors of the Company as set forth above.
2. Director Election Proposal: Elect Jesse H. Choper, Seymour
----------------------------
Holtzman, Peter R. McMullin, Deborah M. Rhem-Jackson and Steve
R. Tomasi (collectively, the "Nominees") as directors of the
Company to serve until their respective successors are duly
elected and qualified, pursuant to the resolution set forth in
the Consent Statement.
_ CONSENT _ WITHHOLD CONSENT _ ABSTAIN
To withhold consent to any proposed Nominee(s), specify the
Nominee(s) in the following space:
--------------------------------------------------------------
If no box is marked above with respect to the Director
Election Proposal, this Consent will be voted in favor of the
election of all five Nominees, except that this Consent will
not be voted in favor of the election of any Nominee whose
name is written in the space provided.
3. Board Size Proposal: Amend Section 4.1 of the By-Laws of the
--------------------
Company (the "By-Laws") to set the number of directors on the
Board of Directors at six, pursuant to the resolution set
forth in the Consent Statement.
_ CONSENT _ WITHHOLD CONSENT _ ABSTAIN
If no box is marked with respect to the Board Size Proposal,
this Consent will be voted in favor of the amendment of the
By-Laws as set forth above.
4. Advanced Notification Clarification Proposal: Amend Section
----------------------------------------------
4.16 of the ByLaws to clarify that a stockholder seeking to
nominate candidates for election to the Board of Directors
pursuant to a stockholder action by written consent need not
comply with the advance notification provisions of the By-Laws
applicable to the nomination of candidates in connection with
meetings of the stockholders, pursuant to the resolution set
forth in the Consent Statement.
_ CONSENT _ WITHHOLD CONSENT _ ABSTAIN
If no box is marked with respect to Advance Notification
Clarification Proposal, this Consent will be voted in favor of
the amendment of the ByLaws as set forth above.
5. By-Law Proposal: Repeal any By-Laws adopted by the Board of
Directors subsequent to December 11, 1995 (other than the
By-Laws adopted by this Consent) and prior to the
effectiveness of all of the foregoing Proposals, pursuant to
the resolution set forth in the Consent Statement.
_ CONSENT _ WITHHOLD CONSENT _ ABSTAIN
If no box is marked with respect to the By-Law Proposal, this
Consent will be voted in favor of the repeal of any By-Laws
adopted since December 11, 1995 as set forth above.
PLEASE ACT PROMPTLY.
IMPORTANT: THIS CONSENT MUST BE SIGNED
AND DATED TO BE VALID.
Dated:
Signature:
Signature
(if held jointly):
Title or Authority
(if applicable): _____________________________
Please sign exactly as name appears hereon. If shares are
registered in more than one name, the signature of all such
persons should be provided. A corporation should sign in its full
corporate name by a duly authorized officer, stating his or her
title. Trustees, guardians, executors and administrators should
sign in their official capacity, giving their full title as such.
If a partnership, please sign in the partnership name by
authorized persons. The consent card votes all shares in all
capacities.
PLEASE MARK, SIGN AND DATE THIS CONSENT BEFORE MAILING THE
CONSENT IN THE ENCLOSED ENVELOPE.
