This
Amendment No. 6 to Schedule 13D (“Amendment”) is filed to amend and supplement
the Items set forth below of the Reporting Persons’ Schedule 13D, as amended
(the “Schedule 13D”), previously filed with the Securities and Exchange
Commission. Capitalized terms used and not defined in this Amendment have the
meanings set forth in the Schedule 13D.
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Item
1.
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Security
and Issuer
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This
statement relates to shares of common stock, without par value (“Common Stock”),
of Zones, Inc., a Washington corporation (the “Issuer”). The
principal executive offices of the Issuer are located at 1102 15th Street SW,
Suite 102, Auburn, WA 98001.
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Item
2.
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Identity
and Background
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(a)-(c)
Firoz H. Lalji (“Mr. Lalji”) is the Chairman and Chief Executive Officer of the
Issuer. His business address is 1102 15th Street SW, Suite 102,
Auburn, WA 98001. Najma Lalji (“Mrs. Lalji”) is the wife
of Mr. Lalji. Mrs. Lalji is a homemaker. Her business
address is c/o Firoz H. Lalji, Zones, Inc., 1102 15th Street SW, Suite 102,
Auburn, WA 98001.
(d)
During the last five years, neither of the reporting persons has been convicted
in any criminal proceeding (excluding traffic violations or similar
misdemeanors).
(e)
During the last five years, neither of the reporting persons has been a party to
a civil proceeding of a judicial or administrative body of competent
jurisdiction resulting in 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, and
which judgment, decree or final order was not subsequently vacated.
(f) Mr.
and Mrs. Lalji are citizens of the United States.
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Item
3.
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Source
and Amount of Funds or Other
Consideration
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The
shares of Common Stock beneficially owned by Mr. and Mrs. Lalji were acquired
either by Mr. Lalji as a founder of the Issuer, as compensation for Mr. Lalji’s
services to the Issuer or through open market purchases or private transactions
using personal funds.
The
disclosure under Item 4 below is also incorporated herein by
reference.
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Item
4.
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Purpose
of Transaction
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Mr. and
Mrs. Lalji originally acquired the shares reported herein for investment
purposes.
On July
30, 2008, Zones Acquisition Corp. (“Zac”), a newly formed Washington corporation
wholly owned by Mr. Lalji, and the Issuer entered into a Merger Agreement (the
“Merger Agreement”). Under the Merger Agreement, the parties agreed
that, upon the terms and subject to the conditions set forth in the Merger
Agreement, Zac would be merged with and into the Issuer, with the Issuer
continuing as the surviving corporation. At the effective time of the
merger, each share of Common Stock, other than shares held by Mr. Lalji, Mrs.
Lalji, Natasha Lalji and The Firoz and Najma Lalji Foundation (the “continuing
shareholders”), and other than those shares with respect to which dissenters
rights are properly exercised, would be cancelled and converted into the right
to receive $8.65 in cash, without interest. In connection with the
execution of the Merger Agreement, Mr. Lalji executed a commitment letter to
generally provide financing to Zac, the proceeds of which would be used by Zac,
together with funds available under a credit facility and other cash on hand, to
pay the aggregate consideration for the merger.
On
November 17, 2008, Zac and the Issuer entered into an amendment to the Merger
Agreement (the “Merger Agreement Amendment”)
to provide that upon
completion of the merger, each share of Common Stock not held by the continuing
shareholders will be converted into the right to receive $7.00 in cash, without
interest and less any applicable withholding taxes. In addition, the Merger
Agreement Amendment (a) eliminates certain conditions to Zac’s obligation to
close the merger, (b) eliminates the termination fee payable by the Issuer to
Zac if the Merger Agreement is terminated under certain circumstances, (c)
increases the reverse termination fee payable by Zac to the Issuer from $750,000
to $5 million in the event the Merger Agreement is terminated under certain
circumstances, (d) provided for an additional 10 calendar day period during
which the Issuer is permitted to initiate, solicit, encourage and enter into and
maintain discussions or negotiations regarding competing takeover proposals; and
(e) provides for specific performance of Zac’s obligations to pursue financing
for the merger in the event the currently specified financing becomes
unavailable.
In
connection with the Merger Agreement Amendment, on November 17, 2008, Mr. and
Mrs. Lalji also entered into a Shareholder Voting and Support Agreement with the
Issuer, pursuant to which they agreed at any duly called meeting of the Issuer’s
shareholders (or any adjournment or postponement thereof) to, among other
things, vote all of their shares of Common Stock in favor of the approval of the
merger, and the approval and adoption of the Merger Agreement and the other
transactions contemplated thereby. As required by the Shareholder Voting and
Support Agreement, Mr. and Mrs. Lalji also delivered an irrevocable proxy (the
“Proxy”) to the Issuer, appointing John H. Bauer and William C. Keiper, members
of the Issuer’s Board of Directors, as proxies for Mr. and Mrs. Lalji and
authorizing Mr. Bauer and Mr. Keiper to vote all shares of Common Stock held by
Mr. and Mrs. Lalji FOR, among other things, the Merger Agreement and the
consummation of the merger and FOR the proposal to approve any motion to adjourn
the special meeting, if necessary, to solicit additional proxies. In
addition, on November 17, 2008, Mr. Lalji entered into a Limited Guarantee
pursuant to which he has personally guaranteed Zac’s obligation to pay the
termination fee referred to above, subject to certain conditions, in an amount
up to $5 million plus related fees and expenses associated with enforcement
thereof.
On
December 19, 2008, the shareholders of the Issuer voted to approve the merger
and to approve and adopt the Merger Agreement, as amended by the Merger
Agreement Amendment. The merger is expected to close on December 31,
2008, and remains subject to the satisfaction or waiver of customary closing
conditions.
On
December 19, 2008, Mr. Lalji entered into a Remainder Payment Guarantee (the
“Remainder Payment Guarantee”) in favor of the shareholder’s representative as
agent for the shareholders of the Issuer (other than the continuing
shareholders). Pursuant to the Remainder Payment Guarantee, Mr. Lalji
has personally guaranteed the funding of the final approximately $16.0 million
of merger consideration if it is not otherwise funded on January 2,
2009.
Following
the consummation of the merger, the Issuer’s Common Stock will be
delisted from The Nasdaq Global Market and will become eligible for
deregistration under Section 12(g)(4) of the Securities Exchange Act of
1934.
Pursuant
to the terms of the Merger Agreement, at the effective time of the merger, the
board of directors of Zac immediately prior to the effective time of the merger
will become the board of directors of the Issuer, and the officers of the Issuer
will continue as its officers. Also at the effective time of the merger, the
articles of incorporation and bylaws of the Issuer will be amended and restated
as provided in the Merger Agreement.
The
foregoing description of the merger transaction does not purport to be complete
and is qualified in its entirety by reference to the full text of the Merger
Agreement, Merger Agreement Amendment, Shareholder Voting and Support Agreement,
Limited Guarantee, Proxy, and Remainder Payment Guarantee.
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Item
5.
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Interest
in Securities of the Issuer
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(a) See
Items 11 and 13 of the cover pages to this Schedule 13D/A.
(b) See
Items 7 through 10 of the cover pages to this Schedule 13D/A.
(c) No
transactions in the shares of Common Stock have been effected by the reporting
persons during the past 60 days.
(d) None.
(e) Not
applicable.
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Item
6.
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Contracts,
Arrangements, Understandings or Relationships with Respect to Securities
of the Issuer
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The
disclosure under Item 4 above is hereby incorporated herein by
reference.
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Item
7.
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Material
to Be Filed as Exhibits
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1.
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Joint
Filing Agreement dated November 7, 2007 by and between Firoz H. Lalji and
Najma Lalji (incorporated by reference to Exhibit 1 to the Schedule 13D/A
filed by the reporting persons on November 9,
2007).
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2.
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Agreement
and Plan of Merger between Zones Acquisition Corp. and Zones, Inc. dated
as of July 30, 2008 (incorporated by reference to Exhibit 2.1 to the Form
8-K filed by the Issuer on July 31,
2008).
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3.
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First
Amendment to Agreement and Plan of Merger between Zones Acquisition Corp.
and Zones, Inc. dated as of November 17, 2008 (incorporated by reference
to Exhibit 3 to the Schedule 13D/A filed by the reporting persons on
November 20, 2008).
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4.
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Shareholder
Voting and Support Agreement dated as of November 17, 2008 by and among
Firoz H. Lalji, Najma Lalji and Zones, Inc. (incorporated by reference to
Exhibit 2.2 to the Form 8-K filed by the Issuer on November 18,
2008).
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5.
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Limited
Guarantee dated as of November 17, 2008 by Firoz Lalji in favor of Zones,
Inc. (incorporated by reference to Exhibit 2.3 to the Form 8-K filed by
the Issuer on November 18, 2008).
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6.
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Irrevocable
Proxy delivered by Firoz Lalji and Najma Lalji to Zones, Inc.
(incorporated by reference to Exhibit 6 to the Schedule 13D/A filed by the
reporting persons on November 20,
2008).
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Remainder
Payment Guarantee by Firoz Lalji in favor of the shareholder’s
representative.
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Signature
After
reasonable inquiry and to the best of my knowledge and belief, I certify that
the information set forth in this statement is true, complete and
correct.
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Date: December
23, 2008
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/s/
Firoz H. Lalji
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Firoz
H. Lalji
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Date: December
23, 2008
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/s/
Najma Lalji
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Najma
Lalji
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