-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, URDuiJVOyBvFkSgb9cMZ1TeW/MAVtGu2oDMQRCOEPofzC5iA5QeC7lgWGUqhSH59 7rAbh2HQk1JtohgDyPktJw== 0001193125-10-170338.txt : 20100729 0001193125-10-170338.hdr.sgml : 20100729 20100729131034 ACCESSION NUMBER: 0001193125-10-170338 CONFORMED SUBMISSION TYPE: SC 13D/A PUBLIC DOCUMENT COUNT: 1 FILED AS OF DATE: 20100729 DATE AS OF CHANGE: 20100729 GROUP MEMBERS: GGC OPPORTUNITY FUND MANAGEMENT GP, LTD. GROUP MEMBERS: GGC OPPORTUNITY FUND MANAGEMENT, L.P. GROUP MEMBERS: GGCOF CO-INVEST MANAGEMENT, L.P. GROUP MEMBERS: GGCOF CO-INVEST, L.P. GROUP MEMBERS: GGCOF THIRD PARTY CO-INVEST, L.P. GROUP MEMBERS: GOLDEN GATE CAPITAL OPPORTUNITY FUND, L.P. GROUP MEMBERS: GOLDEN GATE CAPITAL OPPORTUNITY FUND-A, L.P. SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: ZALE CORP CENTRAL INDEX KEY: 0000109156 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-JEWELRY STORES [5944] IRS NUMBER: 750675400 STATE OF INCORPORATION: DE FISCAL YEAR END: 0731 FILING VALUES: FORM TYPE: SC 13D/A SEC ACT: 1934 Act SEC FILE NUMBER: 005-30781 FILM NUMBER: 10977054 BUSINESS ADDRESS: STREET 1: 901 W WALNUT HILL LN STREET 2: MS 6B-3 CITY: IRVING STATE: TX ZIP: 75038 BUSINESS PHONE: 9725804000 MAIL ADDRESS: STREET 1: 901 WEST WALNUT HILL LANE STREET 2: MAIL STOP 6B-3 CITY: IRVING STATE: TX ZIP: 75038-1003 FORMER COMPANY: FORMER CONFORMED NAME: ZALE JEWELRY CO INC DATE OF NAME CHANGE: 19710510 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: Z Investment Holdings, LLC CENTRAL INDEX KEY: 0001492455 IRS NUMBER: 272515118 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A BUSINESS ADDRESS: STREET 1: C/O GOLDEN GATE PRIVATE EQUITY, INC. STREET 2: 1 EMBARCADERO CENTER CITY: SAN FRANCISCO STATE: CA ZIP: 94111 BUSINESS PHONE: 415-983-2700 MAIL ADDRESS: STREET 1: C/O GOLDEN GATE PRIVATE EQUITY, INC. STREET 2: 1 EMBARCADERO CENTER CITY: SAN FRANCISCO STATE: CA ZIP: 94111 SC 13D/A 1 dsc13da.htm AMENDMENT NUMBER 1 TO SCHEDULE 13D Amendment Number 1 to Schedule 13D

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

 

 

SCHEDULE 13D

(Rule 13d-101)

INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT TO

§ 240.13d-1(a) AND AMENDMENTS THERETO FILED PURSUANT TO § 240.13d-2(a)

(Amendment No. 1)*

 

 

Zale Corporation

(Name of issuer)

 

 

 

Common Stock, $0.01 par value per share

(Title of class of securities)

988858106

(CUSIP number)

Kirkland & Ellis LLP

300 North LaSalle

Chicago, Illinois 60654

Attn: Gary M. Holihan, P.C.

                Robert M. Hayward, P.C.

(312) 862-2000

(Name, address and telephone number of person authorized to receive notices and communications)

July 23, 2010

(Date of event which requires filing of this statement)

 

 

If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of §§240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the following box.  ¨

Note: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See §240 13d-7 for other parties to whom copies are to be sent.

 

*   The remainder of this cover page shall be filled out for a reporting person’s initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page.

The information required on the remainder of this cover page shall not be deemed to be “filed” for the purpose of section 18 of the Securities Exchange Act of 1934 (“Act”) or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes).

 

 

 


 

CUSIP No. 988858106

 

  1.   

Name of reporting person

 

Z Investment Holdings, LLC

  2.  

Check the appropriate box if a member of a group

(a)  ¨        (b)   ¨

 

  3.  

SEC use only

 

  4.  

Source of funds

 

    OO

  5.  

Check if disclosure of legal proceedings is required pursuant to Items 2(d) or 2(e)  ¨

 

  6.  

Citizenship or place of organization

 

    Delaware

Number of

shares

beneficially

owned by

each

reporting

person

with

     7.    

Sole voting power

 

    0

     8.   

Shared voting power

 

    11,064,684 (See Item 5)

     9.   

Sole dispositive power

 

    0

   10.   

Shared dispositive power

 

    11,064,684 (See Item 5)

11.

 

Aggregate amount beneficially owned by each reporting person

 

    11,064,684 (See Item 5)

12.

 

Check if the aggregate amount in Row (11) excludes certain shares  ¨

 

13.

 

Percent of class represented by amount in Row (11)

 

    34.5%*

14.

 

Type of reporting person

 

    OO

 

* As reported on the most recently filed Quarterly Report on Form 10-Q of the Issuer, 32,107,425 shares of common stock were outstanding as of June 2, 2010.

 

2


 

CUSIP No. 988858106

 

  1.   

Name of reporting person

 

Golden Gate Capital Opportunity Fund, L.P.

  2.  

Check the appropriate box if a member of a group

(a)  ¨        (b)   ¨

 

  3.  

SEC use only

 

  4.  

Source of funds

 

    OO

  5.  

Check if disclosure of legal proceedings is required pursuant to Items 2(d) or 2(e)  ¨

 

  6.  

Citizenship or place of organization

 

    Cayman Islands

Number of

shares

beneficially

owned by

each

reporting

person

with

     7.    

Sole voting power

 

    0

     8.   

Shared voting power

 

    11,064,684 (See Item 5)

     9.   

Sole dispositive power

 

    0

   10.   

Shared dispositive power

 

    11,064,684 (See Item 5)

11.

 

Aggregate amount beneficially owned by each reporting person

 

    11,064,684 (See Item 5)

12.

 

Check if the aggregate amount in Row (11) excludes certain shares  ¨

 

13.

 

Percent of class represented by amount in Row (11)

 

    34.5%*

14.

 

Type of reporting person

 

    PN

 

* As reported on the most recently filed Quarterly Report on Form 10-Q of the Issuer, 32,107,425 shares of common stock were outstanding as of June 2, 2010.

 

3


 

CUSIP No. 988858106

 

  1.   

Name of reporting person

 

Golden Gate Capital Opportunity Fund-A, L.P.

  2.  

Check the appropriate box if a member of a group

(a)  ¨        (b)   ¨

 

  3.  

SEC use only

 

  4.  

Source of funds

 

    OO

  5.  

Check if disclosure of legal proceedings is required pursuant to Items 2(d) or 2(e)  ¨

 

  6.  

Citizenship or place of organization

 

    Cayman Islands

Number of

shares

beneficially

owned by

each

reporting

person

with

     7.    

Sole voting power

 

    0

     8.   

Shared voting power

 

    11,064,684 (see Item 5)

     9.   

Sole dispositive power

 

    0

   10.   

Shared dispositive power

 

    11,064,684 (see Item 5)

11.

 

Aggregate amount beneficially owned by each reporting person

 

    11,064,684 (See Item 5)

12.

 

Check if the aggregate amount in Row (11) excludes certain shares  ¨

 

13.

 

Percent of class represented by amount in Row (11)

 

    34.5%*

14.

 

Type of reporting person

 

    PN

 

* As reported on the most recently filed Quarterly Report on Form 10-Q of the Issuer, 32,107,425 shares of common stock were outstanding as of June 2, 2010.

 

4


 

CUSIP No. 988858106

 

  1.   

Name of reporting person

 

GGCOF Third Party Co-Invest, L.P.

  2.  

Check the appropriate box if a member of a group

(a)  ¨        (b)   ¨

 

  3.  

SEC use only

 

  4.  

Source of funds

 

    OO

  5.  

Check if disclosure of legal proceedings is required pursuant to Items 2(d) or 2(e)  ¨

 

  6.  

Citizenship or place of organization

 

    Cayman Islands

Number of

shares

beneficially

owned by

each

reporting

person

with

     7.    

Sole voting power

 

    0

     8.   

Shared voting power

 

    11,064,684 (see Item 5)

     9.   

Sole dispositive power

 

    0

   10.   

Shared dispositive power

 

    11,064,684 (see Item 5)

11.

 

Aggregate amount beneficially owned by each reporting person

 

    11,064,684 (See Item 5)

12.

 

Check if the aggregate amount in Row (11) excludes certain shares  ¨

 

13.

 

Percent of class represented by amount in Row (11)

 

    34.5%*

14.

 

Type of reporting person

 

    PN

 

* As reported on the most recently filed Quarterly Report on Form 10-Q of the Issuer, 32,107,425 shares of common stock were outstanding as of June 2, 2010.

 

5


 

CUSIP No. 988858106

 

  1.   

Name of reporting person

 

GGCOF Co-Invest, L.P.

  2.  

Check the appropriate box if a member of a group

(a)  ¨        (b)   ¨

 

  3.  

SEC use only

 

  4.  

Source of funds

 

    OO

  5.  

Check if disclosure of legal proceedings is required pursuant to Items 2(d) or 2(e)  ¨

 

  6.  

Citizenship or place of organization

 

    Cayman Islands

Number of

shares

beneficially

owned by

each

reporting

person

with

     7.    

Sole voting power

 

    0

     8.   

Shared voting power

 

    11,064,684 (see Item 5)

     9.   

Sole dispositive power

 

    0

   10.   

Shared dispositive power

 

    11,064,684 (see Item 5)

11.

 

Aggregate amount beneficially owned by each reporting person

 

    11,064,684 (See Item 5)

12.

 

Check if the aggregate amount in Row (11) excludes certain shares  ¨

 

13.

 

Percent of class represented by amount in Row (11)

 

    34.5%*

14.

 

Type of reporting person

 

    PN

 

* As reported on the most recently filed Quarterly Report on Form 10-Q of the Issuer, 32,107,425 shares of common stock were outstanding as of June 2, 2010.

 

6


 

CUSIP No. 988858106

 

  1.   

Name of reporting person

 

GGCOF Co-Invest Management, L.P.

  2.  

Check the appropriate box if a member of a group

(a)  ¨        (b)   ¨

 

  3.  

SEC use only

 

  4.  

Source of funds

 

    OO

  5.  

Check if disclosure of legal proceedings is required pursuant to Items 2(d) or 2(e)  ¨

 

  6.  

Citizenship or place of organization

 

    Cayman Islands

Number of

shares

beneficially

owned by

each

reporting

person

with

     7.    

Sole voting power

 

    0

     8.   

Shared voting power

 

    11,064,684 (see Item 5)

     9.   

Sole dispositive power

 

    0

   10.   

Shared dispositive power

 

    11,064,684 (see Item 5)

11.

 

Aggregate amount beneficially owned by each reporting person

 

    11,064,684 (See Item 5)

12.

 

Check if the aggregate amount in Row (11) excludes certain shares  ¨

 

13.

 

Percent of class represented by amount in Row (11)

 

    34.5%*

14.

 

Type of reporting person

 

    PN

 

* As reported on the most recently filed Quarterly Report on Form 10-Q of the Issuer, 32,107,425 shares of common stock were outstanding as of June 2, 2010.

 

7


 

CUSIP No. 988858106

 

  1.   

Name of reporting person

 

GGC Opportunity Fund Management, L.P.

  2.  

Check the appropriate box if a member of a group

(a)  ¨        (b)   ¨

 

  3.  

SEC use only

 

  4.  

Source of funds

 

    OO

  5.  

Check if disclosure of legal proceedings is required pursuant to Items 2(d) or 2(e)  ¨

 

  6.  

Citizenship or place of organization

 

    Cayman Islands

Number of

shares

beneficially

owned by

each

reporting

person

with

     7.    

Sole voting power

 

    0

     8.   

Shared voting power

 

    11,064,684 (See Item 5)

     9.   

Sole dispositive power

 

    0

   10.   

Shared dispositive power

 

    11,064,684 (See Item 5)

11.

 

Aggregate amount beneficially owned by each reporting person

 

    11,064,684 (See Item 5)

12.

 

Check if the aggregate amount in Row (11) excludes certain shares  ¨

 

13.

 

Percent of class represented by amount in Row (11)

 

    34.5%*

14.

 

Type of reporting person

 

    PN

 

* As reported on the most recently filed Quarterly Report on Form 10-Q of the Issuer, 32,107,425 shares of common stock were outstanding as of June 2, 2010.

 

8


 

CUSIP No. 988858106

 

  1.   

Name of reporting person

 

GGC Opportunity Fund Management GP, Ltd.

  2.  

Check the appropriate box if a member of a group

(a)  ¨        (b)   ¨

 

  3.  

SEC use only

 

  4.  

Source of funds

 

    OO

  5.  

Check if disclosure of legal proceedings is required pursuant to Items 2(d) or 2(e)  ¨

 

  6.  

Citizenship or place of organization

 

    Cayman Islands

Number of

shares

beneficially

owned by

each

reporting

person

with

     7.    

Sole voting power

 

    11,064,684 (See Item 5)

     8.   

Shared voting power

 

    0

     9.   

Sole dispositive power

 

    11,064,684 (See Item 5)

   10.   

Shared dispositive power

 

    0

11.

 

Aggregate amount beneficially owned by each reporting person

 

    11,064,684 (See Item 5)

12.

 

Check if the aggregate amount in Row (11) excludes certain shares  ¨

 

13.

 

Percent of class represented by amount in Row (11)

 

    34.5%*

14.

 

Type of reporting person

 

    CO

 

* As reported on the most recently filed Quarterly Report on Form 10-Q of the Issuer, 32,107,425 shares of common stock were outstanding as of June 2, 2010.

 

9


The information set forth in response to each separate Item below shall be deemed to be a response to all Items where such information is relevant.

This Amendment No. 1 amends and restates in its entirety the Statement on Schedule 13D filed with the Securities and Exchange Commission (the “Commission”) on May 20, 2010 by the Reporting Persons (as defined below).

 

Item 1. Security and Issuer.

This Statement on Schedule 13D (this “Statement”) relates to the shares of common stock, $0.01 par value per share (“Common Stock”), of Zale Corporation, a Delaware corporation (“Zales” or the “Issuer”). The principal executive offices of the Issuer are located at 901 W. Walnut Hill Lane, Irving, TX 75038-1003.

 

Item 2. Identity and Background.

(a) – (c) This Statement is jointly filed by each of the following persons pursuant to Rule 13d-1(k) promulgated by the Commission pursuant to Section 13 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”): Z Investment Holdings, LLC (“Z Investment”), Golden Gate Capital Opportunity Fund, L.P. (“GGCOF”), Golden Gate Capital Opportunity Fund-A, L.P. (“GGCOF-A”), GGCOF Third Party Co-Invest, L.P. (“GGCOF Third Party Co-Invest”), GGCOF Co-Invest, L.P. (“GGCOF Co-Invest”), GGC Opportunity Fund Management, L.P. (“Fund GP”), GGCOF Co-Invest Management, L.P. (“Co-Invest GP”) and GGC Opportunity Fund Management GP, Ltd. (“Ultimate GP”) (collectively, the “Reporting Persons”). GGCOF, GGCOF-A, GGCOF Third Party Co-Invest and GGCOF Co-Invest (the “Funds”) hold all of the equity interests in Z Investment. Fund GP is the general partner of each of GGCOF, GGCOF-A and GGCOF Third Party Co-Invest, and Ultimate GP is the general partner of Fund GP. Co-Invest GP is the general partner of GGCOF Co-Invest and Fund GP is the general partner of Co-Invest GP. As a result, each of the Funds, Fund GP, Co-Invest GP and Ultimate GP may be deemed, pursuant to Rule 13d-3 of the Securities Exchange Act of 1934, as amended (the “Act”), to be the beneficial owners of all of the securities owned by Z Investment. Ultimate GP has ultimate voting and dispositive authority over all of the securities held by Z Investment and is governed by its board of directors. The Reporting Persons are filing this Statement jointly, as they may be considered a “group” under Section 13(d)(3) of the Act. However, neither the fact of this filing nor anything contained herein shall be deemed to be an admission by the Reporting Persons that such a group exists.

Each of the Reporting Persons is responsible for the completeness and accuracy of the information concerning him or it contained herein, but is not responsible for the completeness and accuracy of the information concerning the others, except to the extent that he or it knows or has reason to believe that such information is inaccurate. Each of the Reporting Persons expressly disclaims beneficial ownership of securities held by any person or entity other than, to the extent of any pecuniary interest therein, the various accounts under such Reporting Person’s management and control.

The principal business address for each of the Reporting Persons is c/o Golden Gate Private Equity, Inc., One Embarcadero Center, 39th Floor, San Francisco, California 94111.

The principal business of Z Investment is investing in the securities of the Issuer. The principal business of each of the Funds is that of a private investment fund engaging in the purchase and sale of investments for its own account. The principal business of Fund GP is to act as the general partner of various investment funds, including GGCOF, GGCOF-A and GGCOF Third Party Co-Invest, and Co-Invest GP. The principal business of Co-Invest GP is to act as the general partner of GGCOF Co-Invest. The principal business of Ultimate GP is to act as the general partner of Fund GP.

 

10


Certain information required by this Item 2 concerning the executive officers, controlling persons and directors of Ultimate GP is set forth on Schedule A annexed hereto, which is incorporated herein by reference.

(d) During the last five years, none of the Reporting Persons, nor to the best of their knowledge, any of the persons listed on Schedule A (including all executive officers and directors of Ultimate GP) has been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors).

(e) During the last five years, none of the Reporting Persons, nor to the best of their knowledge, any of the persons listed on Schedule A (including all executive officers and directors of Ultimate GP) has been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws.

(f) Z Investment is a limited liability company organized under the laws of the state of Delaware. The Funds, Fund GP and Co-Invest GP are limited partnerships organized under the laws of the Cayman Islands. Ultimate GP is an exempted company organized under the laws of the Cayman Islands.

 

Item 3. Source and Amount of Funds or Other Consideration.

Each of the Funds is a private equity fund formed for the purpose of making investments for its own account. The source of funds for the Reporting Persons is capital committed by the partners of the Funds, who are not themselves necessarily affiliates of the Reporting Persons.

 

Item 4. Purpose of Transaction.

Z Investment, on behalf of the Funds, entered into the following transactions for investment purposes in the ordinary course of its business:

On May 10, 2010, Z Investment, on behalf of the Funds, made a loan (the “Loan”) to Zales in the principal amount of $150 million and received (a) warrants (the “A-Warrants”) to purchase up to 6,389,378 shares of Common Stock that were immediately exercisable as of May 10, 2010 and (b) warrants (the “B-Warrants,” and together with the A-Warrants, the “Warrants”) to purchase up to 4,675,306 shares of Common Stock that were to become exercisable, subject to stockholder approval, upon the earlier of (i) the date of the first meeting of Zales’ stockholders to approve the shares of Common Stock to be issued upon exercise of the Warrants and (ii) the date of the first annual meeting of Zales’ stockholders to be held after the issuance of the Warrants. On July 23, 2010, Zales’ stockholders approved the issuance of shares of Common Stock upon the exercise of the Warrants and the B-Warrants became immediately exercisable. In addition, in connection with the foregoing, Z Investment is entitled to designate two directors to the Board of Directors of Zales and to recommend one additional independent candidate for consideration by the Nominating and Corporate Governance Committee of Zales’ Board of Directors. Following Zales’ next annual meeting, if the size of its Board of Directors is increased above seven directors and the vacancy is filled by a director not approved by Z Investment, Z Investment will be entitled to appoint an additional director.

 

11


The Reporting Persons intend to review continuously their equity interest in the Issuer. Depending upon their evaluation of the factors described below, one or more of the Reporting Persons may from time to time purchase additional securities of the Issuer, exercise the Warrants, dispose of all or a portion of the securities then held by such Reporting Persons, or cease buying or selling such securities; any such additional purchases or sales of securities of the Issuer may be in the open market, in privately negotiated transactions or otherwise.

The Reporting Persons may wish to engage in a constructive dialogue with officers, directors and other representatives of the Issuer, as well as the Issuer’s shareholders; topics of discussion may include, but are not limited to, the Issuer’s markets, operations, competitors, prospects, strategy, personnel, directors, ownership and capitalization. The Reporting Persons may also enter into confidentiality or similar agreements with the Issuer and, subject to such an agreement or otherwise, exchange information with the Issuer. The factors that the Reporting Persons may consider in evaluating their interest in the Issuer’s business include the following: (i) the Issuer’s business and prospects; (ii) the performance of the Common Stock and the availability of the Common Stock for purchase at particular price levels; (iii) the availability and nature of opportunities to dispose of the Reporting Persons’ interests; (iv) general economic conditions; (v) stock market conditions; (vi) other business and investment opportunities available to the Reporting Persons; and (vii) other plans and requirements of the Reporting Persons.

Depending on their assessment of the foregoing factors, the Reporting Persons may, from time to time, modify their present intention as stated in this Item 4.

Except as set forth in this Schedule, the Reporting Persons intend to continuously review their options but do not have at this time any specific plans that would result in (a) the acquisition of additional securities of the Issuer or the disposition of securities of the Issuer; (b) any extraordinary corporate transactions such as a merger, reorganization or liquidation involving the Issuer or any of its subsidiaries; (c) any sale or transfer of a material amount of the assets of the Issuer or of any of its subsidiaries; (d) any change in the present management or Board of Directors of the Issuer, including any plans or proposals to change the number or term of directors or to fill any existing vacancies on the Issuer’s Board of Directors; (e) any material change in the present capitalization or dividend policy of the Issuer; (f) any other material change in the Issuer’s business or corporate structure; (g) any change in the Issuer’s charter or by-laws that may impede the acquisition of control of the Issuer by any person; (h) the Issuer’s Common Stock being delisted from a national securities exchange or ceasing to be authorized to be quoted in an inter-dealer quotation system or a registered national securities association; (i) causing a class of equity securities of the Issuer to become eligible for termination of registration pursuant to Section 12(g)(4) of the Securities Exchange Act of 1934, as amended; or (j) any action similar to those enumerated above.

 

12


Item 5. Interest in Securities of the Issuer.

(a) – (b) In the aggregate, the Reporting Persons beneficially own, as of July 29, 2010, 11,064,684 shares of the Common Stock by virtue of the Warrants directly held by Z Investment. Each of Z Investment, the Funds, Fund GP and Co-Invest GP have shared dispositive power with each other with respect to the Warrants. Ultimate GP has sole dispositive power with respect to all of the Warrants.

As a result of the relationships described in this Statement, each of the Reporting Persons may be deemed to beneficially own the Warrants owned by Z Investment. Neither the filing of this Statement nor any of its contents shall be deemed to constitute an admission by any Reporting Person, other than, solely with respect to the Warrants acquired by Z Investment, that it is the beneficial owner of any of the Warrants referred to herein for purposes of the Exchange Act, or for any other purpose, and such beneficial ownership is expressly disclaimed.

(c) On May 10, 2010, Z Investment, on behalf of the Funds, made a Loan to Zales in the principal amount of $150 million and received (a) A-Warrants to purchase up to 6,389,378 shares of Common Stock of Zales that were immediately exercisable as of May 10, 2010 and (b) B-Warrants to purchase up to 4,675,306 shares of Common Stock of Zales that were to become exercisable, subject to stockholder approval, upon the earlier of (i) the date of the first meeting of Zale’s stockholders to approve the shares of Common Stock to be issued upon exercise of the Warrants and (ii) the date of the first annual meeting of Zale’s stockholders to be held after the issuance of the Warrants. On July 23, 2010, Zales’ stockholders approved the issuance of shares of Common Stock upon the exercise of the Warrants and the B-Warrants became immediately exercisable.

(d) No person other than the Reporting Persons is known to have the right to receive, or the power to direct the receipt of dividends from, or proceeds from the sale of, the shares of Common Stock.

(e) Not applicable.

 

Item 6. Contracts, Arrangements, Understandings or Relationships With Respect to Securities of the Issuer.

On May 10, 2010, Zales, and, in some instances, one or more of its subsidiaries, entered into (1) the Credit Agreement and Warrant Agreement with Z Investment. Under the terms of the Loan, Zales borrowed $150 million at an interest rate of 15% per annum, 10% to be paid in cash and 5% eligible to be paid-in-kind at Zales’ option. The Loan matures on May 10, 2015, but can be prepaid with a call premium beginning with 10% during the first year and declining to 0% in the fifth year. The Loan is secured with a second priority security interest on inventory and receivables and a first priority security interest on substantially all of the remaining assets of Zales and its subsidiaries. The Loan includes various covenants including restrictions on the incurrence of indebtedness, liens, investments, asset sales, and restricted payments. The Loan also contains various financial covenants including requirements for minimum consolidated EBITDA, required contribution levels with respect to the Piercing Pagoda brand and Zales’ Canadian brands, and minimum liquidity levels.

 

13


In connection with the Loan, Zale issued to Z Investment, A-Warrants to purchase up to 6,389,378 shares of common stock of Zales that were immediately exercisable as of May 10, 2010 and (b) B-Warrants to purchase up to 4,675,306 shares of common stock of Zales that were to become exercisable, subject to stockholder approval, upon the earlier of (i) the date of the first meeting of Zale’s stockholders to approve the shares of common stock to be issued upon exercise of the Warrants and (ii) the date of the first annual meeting of Zale’s stockholders to be held after the issuance of the Warrants. On July 23, 2010, Zales’ stockholders approved the issuance of shares of Common Stock upon the exercise of the Warrants and the B-Warrants became immediately exercisable. The exercise price of the Warrants is $2.00 per share. The Warrants may not be transferred to any person outside of the Golden Gate Capital group prior to January 1, 2011. The number of shares and exercise price are subject to customary anti-dilution protection.

The Warrant Agreement entitles Z Investment to designate two directors to the board of directors of Zales. The Warrant Agreement also entitles Z Investment to recommend one additional independent candidate for consideration by the Nominating and Corporate Governance Committee of the board of directors of Zales. Following Zales’ next annual meeting, if the size of the board of directors is increased above seven directors and the vacancy is filled by a director not approved by the Z Investment, the holder shall be entitled to appoint an additional director.

The Warrant Agreement entitles Z Investment to certain registration rights with respect to securities issuable to Z Investment in connection with its exercise of the warrants, including three demand registrations and piggyback registration rights.

This description of the material terms of the Loan and Warrants, board representation and registration rights is qualified in its entirety by reference to the Credit Agreement, Security Agreement, Warrant Agreement and Warrants which are incorporated by reference herein.

 

Item 7. Material to be Filed as Exhibits.

Exhibit 1 Credit Agreement, dated as of May 10, 2010, among Zale Corporation, as Borrower, Z Investment Holdings, LLC, as Administrative Agent and the lenders party thereto (incorporated by reference to Exhibit 1 to the initial Schedule 13D, filed May 20, 2010 (File No. 005-30781)).

Exhibit 2 Security Agreement, dated as of May 10, 2010, among Zale Corporation, the subsidiaries identified therein and Z Investment Holdings, LLC, as Administrative Agent (incorporated by reference to Exhibit 2 to the initial Schedule 13D, filed May 20, 2010 (File No. 005-30781)).

Exhibit 3 Warrant and Registration Rights Agreement, dated as of May 10, 2010, among Zale Corporation, the Initial Warrant Holder and Z Investment Holdings, LLC (incorporated by reference to Exhibit 3 to the initial Schedule 13D, filed May 20, 2010 (File No. 005-30781)).

Exhibit 4 A-Warrant Certificate (incorporated by reference to Exhibit 4 to the initial Schedule 13D, filed May 20, 2010 (File No. 005-30781)).

 

14


Exhibit 5 B-Warrant Certificate (incorporated by reference to Exhibit 5 to the initial Schedule 13D, filed May 20, 2010 (File No. 005-30781)).

Exhibit 6 Joint Filing Undertaking dated as of May 20, 2010 by and among Golden Gate Capital Opportunity Fund, L.P., Golden Gate Capital Opportunity Fund-A, L.P., GGCOF Third-Party Co-Invest, L.P., GGC Opportunity Fund Management, L.P., GGC Opportunity Fund Management GP, Ltd., GGCOF Co-Invest, L.P., GGCOF Co-Invest Management, L.P. and Z Investment Holdings, LLC (incorporated by reference to Exhibit 6 to the initial Schedule 13D, filed May 20, 2010 (File No. 005-30781)).

 

15


After reasonable inquiry and to the best of the undersigned’s knowledge and belief, each of the undersigned certifies that the information set forth in this Statement is true, complete and correct.

Dated: July 29, 2010

 

Golden Gate Capital Opportunity Fund, L.P.
Golden Gate Capital Opportunity Fund-A, L.P.
GGCOF Third-Party Co-Invest, L.P.
By:   GGC Opportunity Fund Management, L.P.
Its:   General Partner
By:   GGC Opportunity Fund Management GP, Ltd.
Its:   General Partner
By:  

/s/ David C. Dominik

  David C. Dominik
  Director
GGC Opportunity Fund Management, L.P.
By:   GGC Opportunity Fund Management GP, Ltd.
Its:   General Partner
By:  

/s/ David C. Dominik

  David C. Dominik
  Director
GGC Opportunity Fund Management GP, Ltd.
By:  

/s/ David C. Dominik

  David C. Dominik
  Director


GGCOF Co-Invest, L.P.
By:   GGCOF Co-Invest Management, L.P.
Its:   General Partner
By:   GGC Opportunity Fund Management, L.P.
Its:   General Partner
By:   GGC Opportunity Fund Management GP, Ltd.
Its:   General Partner
By:  

/s/ David C. Dominik

  David C. Dominik
  Director
GGCOF Co-Invest Management, L.P.
By:   GGC Opportunity Fund Management, L.P.
Its:   General Partner
By:   GGC Opportunity Fund Management GP, Ltd.
Its:   General Partner
By:  

/s/ David C. Dominik

  David C. Dominik
  Director
Z Investment Holdings, LLC
By:  

/s/ David C. Dominik

  David C. Dominik
  Authorized Person


SCHEDULE A

CERTAIN INFORMATION REGARDING THE PERSONS CONTROLLING THE

REPORTING PERSONS

Ultimate GP. Ultimate GP is an exempted company organized under the laws of the Cayman Islands and is governed by its directors. David C. Dominik holds a controlling amount of the outstanding shares in Ultimate GP and also controls its Board of Directors. Ultimate GP does not have any officers. Each of Ultimate GP’s directors is a United States citizen. Mr. Dominik’s principal occupation is serving as Managing Director of Golden Gate Capital. The business address of each of the directors, officers and controlling shareholder is c/o Golden Gate Private Equity, Inc., One Embarcadero Center, 39th Floor, San Francisco, California 94111.

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