D.G. Jewelry Rejects Unsolicited Bid; Board Authorizes Negotiations.

Business Editors

TORONTO--(BUSINESS WIRE)--Dec. 8, 2000

D.G. Jewelry Inc. (Nasdaq:DGJL) has rejected Caprice Jewelry's unsolicited tender offer of $2.50 per share for all the issued and outstanding shares of D.G. Jewelry.

Jack Berkovits, President and CEO of D.G. Jewelry stated: "The Board has considered the offer from Caprice Jewelry and found it to be grossly inadequate.

The Board is strongly of the opinion that using any yardstick, D.G. Jewelry's shares are currently significantly undervalued."

Jack Berkovits further stated: "Our current share price does not reflect our historical or current performance, our technological advantage, our outstanding customer relationships or our numerous positive initiatives including that of our internet investment in Netjewels Inc.

It is clear to us that measured against net book value, trailing earnings, projected earnings or any other yardstick, Caprice Jewelry's offer falls far short of a price that the Board would recommend be approved. Should a revised offer be made which provides full recognition of D.G. Jewelry's value, the Board will give consideration to same.

The Board, however, has recognized the possible benefits that a relationship with one of Israel's foremost diamond jewelry manufacturers, wholesalers and retailers might bring. Accordingly, the Board has authorized discussions with Caprice, in order to determine what form of relationship, if any, would be most beneficial to D.G. Jewelry shareholders."

Jack Berkovits also stated: "Caprice Jewelery has established itself as a prime source for upscale diamond jewelry, particularly the difficult-to-manufacture invisible-set variety. We believe that our advanced processes for manufacturing multi-gemstone product can be synergistically applied to the mutual benefit of both companies. As well, Caprice Jewelry has successfully penetrated the Israeli and European markets, complementing our own success in North America.

"We believe that for these reasons, management should pursue different options for mutual benefit."

D.G. Jewelry Inc. is primarily engaged in the design, manufacture, merchandising and distribution of stone-set jewelry for major retailers including department stores, mass merchants, shopping networks, major high-volume retailers and other major discounters in the U.S., Canada and Europe. For more information, please visit us at www.dgjewelry.com

While the Board of D.G. Jewelry Inc. has authorized negotiations, there is no certainty that any agreement will result. Matters discussed in this release include forward-looking statements that may involve a number of risks and uncertainties. If some form of Agreement were to be entered into, results may vary significantly from expectations for a variety of reasons including, but not limited to, risks in product demand, the impact of competitive products and pricing, changing economic conditions both here and abroad, release and sales of new products and other risk factors detailed in the company's most recent annual report and filings with the Securities and Exchange Commission.