UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted
by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to 240.14a-12
JLM Couture, Inc.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement if other than the
Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
JLM COUTURE, INC.
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(a Delaware Corporation)
Notice of 2004 Annual Meeting
of Shareholders to be held
at 10:00 A.M. on ,2004
To the Shareholders of
JLM COUTURE, INC.:
NOTICE IS HEREBY GIVEN that the 2004 Annual Meeting of
Shareholders (the "Meeting") of JLM COUTURE, INC. (the "Company")
will be held on , 2004 at 10:00 A.M. at the Company's
offices, located at 525 Seventh Avenue, Suite 1703, New York, NY
10018, to consider and vote on the following matters described
under the corresponding numbers in the attached Proxy Statement:
1. To elect one Class III Director to hold office for
three years and until the 2007 Annual Meeting of Shareholders at
which his term expires or until his successor has been duly
elected and qualifies;
2. To ratify the appointment of Goldstein Golub Kessler
LLP as the Company's independent auditors for its fiscal year
ending October 31, 2004; and
3. To transact such other business as may properly come
before the Meeting.
The Board of Directors has fixed , 2004, at the
close of business, as the record date for the determination of
shareholders entitled to vote at the Meeting, and only holders of
shares of Common Stock of the Company of record at the close of
business on that day will be entitled to vote. The stock
transfer books of the Company will not be closed.
A complete list of shareholders entitled to vote at the
Meeting shall be available for examination by any shareholder,
for any purpose germane to the Meeting, during ordinary business
hours from , 2004 until the Meeting at the offices of
the Company. The list will also be available at the Meeting.
Whether or not you expect to be present at the Meeting,
please fill in, date, sign, and return the enclosed Proxy, which
is solicited by management. The Proxy is revocable and will not
affect your vote in person in the event you attend the Meeting.
By Order of the Board of Directors
Joseph E. O'Grady, Secretary
Date: , 2004
Requests for additional copies of proxy material and the
Company's Annual Report for its fiscal year ended October 31,
2003 should be addressed to Shareholder Relations, JLM Couture,
Inc., 525 Seventh Avenue, Suite 1703, New York, NY 10018. This
material will be furnished without charge to any shareholder
requesting it.
JLM COUTURE, INC.
525 Seventh Avenue, Suite 1703
New York, NY 10018
Proxy Statement
The enclosed proxy is solicited by the management of JLM
Couture, Inc. (the "Company") in connection with the 2004 Annual
Meeting of Shareholders (the "Meeting") to be held on ,
2004 at 10:00 A.M. at the Company's offices located at 525
Seventh Avenue, Suite 1703, New York, NY 10018 and any
adjournment thereof. The Board of Directors (the "Board") has
set , 2004 as the record date for the determination of
shareholders entitled to vote at the Meeting. A shareholder
executing and returning a proxy has the power to revoke it at any
time before it is exercised by filing a later proxy with, or
other communication to, the Secretary of the Company or by
attending the Meeting and voting in person.
The proxy will be voted in accordance with your directions
as to:
(1) The election of one Class III Director to hold office
for three years and until the 2007 Annual Meeting of Shareholders
at which his term expires or until his successor has been duly
elected and qualifies;
(2) The ratification of the appointment of Goldstein Golub
Kessler LLP ("GGK") as the Company's independent auditors for its
fiscal year ending October 31, 2004; and
(3) The transaction of such other business as may properly
come before the Meeting.
In the absence of direction, the proxy will be voted in
favor of management's proposals.
The entire cost of soliciting proxies will be borne by the
Company. The costs of solicitation, which represent an amount
believed to be normally expended for a solicitation relating to
an uncontested election of directors, will include the costs of
supplying necessary additional copies of the solicitation
materials and the Company's Annual Report to Shareholders for its
fiscal year ended October 31, 2003 ("Fiscal 2003")(the "Annual
Report") to beneficial owners of shares held of record by
brokers, dealers, banks, trustees, and their nominees, including
the reasonable expenses of such recordholders for completing the
mailing of such materials and Annual Reports to such beneficial
owners.
Only shareholders of record of the Company's 1,912,694
shares of Common Stock (the "Common Stock") outstanding at the
close of business on , 2004 will be entitled to vote.
Each share of Common Stock is entitled to one vote. Holders of a
majority of the outstanding shares of Common Stock must be
represented in person or by proxy in order to achieve a quorum.
All shares of our Common Stock represented in person or by proxy
(including shares which abstain or do not vote for any reason
with respect to one or more of the matters presented for
stockholder approval) will be counted for purposes of determining
whether a quorum is present at the Annual Meeting. Abstentions
will be treated as shares that are present and entitled to vote
for purposes of determining the number of shares present and
entitled to vote with respect to any particular matter, but will
not be counted as a vote in favor of such matter. Accordingly,
an abstention from voting on a matter has the same legal effect
as a vote against the matter. If a broker or nominee holding
stock in "street name" indicates on the proxy that it does not
have discretionary authority to vote as to a particular matter
("broker non-votes"), those shares will not be considered as
present and entitled to vote with respect to such matter.
Accordingly, a broker non-vote on a matter has no effect on the
voting on such matter. The proxy statement, the attached notice
of meeting, the enclosed form of proxy and the Annual Report are
being mailed to shareholders on or about , 2004. The
mailing address of the Company's principal executive offices is
525 Seventh Avenue, Suite 1703, New York, NY 10018.
PROPOSAL ONE. ELECTION OF ONE CLASS III DIRECTOR
The Company's By-laws require the Company to have five or
less directors. The number of directors is set by the Board and
was increased from three to four on August 12, 2003. The Board
is divided into three classes of directors. Classes I and III
currently each consist of one director and Class II currently
consists of two directors. Class III, whose term expires at the
Meeting, consists of Joseph L. Murphy; Class I, whose term
expires in 2005, consists of Joseph E. O'Grady; and Class II,
whose term expires in 2006, consists of Daniel M. Sullivan and
Keith Cannon. At the Meeting, one director will be elected to
fill the term of the Class II director. Mr. Murphy who is
running for reelection, is the nominee for election at the
Meeting. If elected, Mr. Murphy will serve for a term expiring
at the 2007 Annual Meeting of Shareholders.
The persons named in the accompanying proxy have advised
management that it is their intention to vote for the election of
Mr. Murphy as a Class II Director unless indication is made on
your proxy card that your vote should be withheld from either or
both of the nominees.
The Board of Directors unanimously recommends a vote FOR the
election of this nominee as Director.
The following table sets forth certain information as to the
person nominated for election as a director of the Company and
for those directors whose terms of office will continue after the
Meeting:
Nominee For Director Whose Term Expires in 2007:
-----------------------------------------------
Position with Director
Name Age the Company Since
---- ---- ------------- -----------
Joseph L. Murphy 48 Chief Executive April 1986
Officer
Chief Financial Officer,
and Director
Joseph L. Murphy, a founder of the Company, has been a
director of the Company since its inception. During Fiscal 1992,
Mr. Murphy was appointed President. In February 1993, Mr. Murphy
was appointed Chief Executive Officer. Mr. Murphy is the brother
of Mark Murphy, the Company's Vice President - Operations.
Directors Whose Terms Continue After the Meeting:
------------------------------------------------
Position with Director
Name Age the Company Since
----- ---- ------------- --------
Joseph E. O'Grady 81 Secretary and Director February 1991
Daniel M. Sullivan 79 Chairman of the September 1986
Board of Directors
Keith Cannon 63 Director October 2003
Joseph E. O'Grady was appointed to the Board of Directors in
February 1991. In December 1992, Mr. O'Grady was appointed
Secretary of the Company. For more than the past five years, Mr.
O'Grady has been President of JOG Associates, Inc., a privately-
held financial consulting firm based in Hicksville, NY. JOG
Associates, Inc. arranges business financing and provides
financial consulting services for closely-held companies.
Daniel M. Sullivan became a director in September 1986 and
was elected Chairman of the Board in 1989. In 1989, Mr. Sullivan
retired as President and Chief Executive Officer of Frost &
Sullivan, Inc., a publicly-traded publisher of market research
studies, a position he had held for more than five years prior to
his retirement.
Keith A. Cannon, became a director of the Company in
October 2003. Mr. Cannon is currently a registered representative
for Wilson-Davis & Co., Inc., a broker-dealer based in Salt Lake
City, Utah. For the past ten years, he has acted in this
capacity and resided in Oceanside, California. Mr. Cannon also
serves as member of the Board of Directors and Audit Committee of
the following public companies: Elamex S.A. de C.V., Global e-
Point, Inc., M.B.A. Holdings, Inc. and Montgomery Realty Group,
Inc. He has been engaged in various capacities in the
investments business for the past 35 years.
During Fiscal 2003, the Board met informally. It acted six
times by unanimous written consent.
OTHER EXECUTIVE OFFICERS
Position with Position
Name Age the Company Held Since
----- ---- ------------- -----------
Mark Murphy 38 Vice President- May 1993
Operations
Jerrold Walkenfeld 46 Principal Accounting June 2002
Officer
Mark Murphy was appointed Vice President - Operations in May
1993. Mr. Mark Murphy joined the Company in January 1993. Prior
to his joining the Company, Mr. Mark Murphy was employed as a
manager by Accurate Testing Co., a metals testing company based
in California, a position he had held since 1988. Mr. Mark
Murphy is the brother of Joseph L. Murphy, the Company's
President.
Jerrold Walkenfeld, Principal Accounting Officer, commenced
employment with the Company in June 2002. Since 1995 until his
employment by the Company in June 2002, he was engaged by the
Company as an outside consultant to render financial and
accounting services for the Company. For more than the past five
years, Mr. Walkenfeld has maintained an independent accounting
practice. Mr. Walkenfeld is a certified public accountant.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF
1934.
Section 16(a) of the Securities Exchange Act of 1934
requires the Company's executive officers and directors, and
persons who own more than ten percent of a registered class of
the Company's equity securities to file reports of ownership and
changes in ownership with the Securities and Exchange Commission.
Based solely on its review of the copies of such forms received
by it, the Company believes that during Fiscal 2003, such forms
have been filed with the SEC on a timely basis.
AUDIT AND COMPENSATION COMMITTEE
During Fiscal 2003, the Audit and Compensation Committee
(the "Audit Committee") consisting of Messrs. O'Grady and
Sullivan met two times. Mr. Cannon was appointed to the Audit
Committee by the Board in Fiscal 2004.
AUDIT COMMITTEE REPORT
The Audit Committee consists of a majority of independent
directors all of whom meet the independence and experience
requirements of Nasdaq Marketplace Rule 4200(a)(14). The Audit
Committee's responsibilities are as described in a written
charter adopted by the Board, which is attached as Appendix A to
this Proxy Statement.
The Audit Committee has reviewed and discussed the Company's
audited financial statements for Fiscal 2003 with management and
with the Company's independent auditors, Goldstein Golub Kessler
LLP ("GGK"). The Audit Committee has discussed with GGK the
matters required to be discussed by the Statement on Auditing
Standards No. 61 relating to the conduct of the audit. The Audit
Committee has received the written disclosures and the letter
from GGK required by Independence Standards Board Standard No. 1,
Independence Discussions with Audit Committees, and has discussed
with GGK its independence. Based on the Audit Committee's review
of the audited financial statements and the review and
discussions described in this paragraph, the Audit Committee
recommended to the Board that the audited financial statements
for Fiscal 2003 be included in the Company's Annual Report on
Form 10-K for Fiscal 2003 for filing with the Securities and
Exchange Commission.
Submitted by the members of the Audit Committee:
Joseph E. O'Grady
Daniel M. Sullivan
Keith Cannon
AUDIT FEES; FINANCIAL INFORMATION SYSTEMS DESIGN AND
IMPLEMENTATION FEES; ALL OTHER FEES
Audit fees billed to the Company by GGK during Fiscal 2003
for review of the Company's annual financial statements and those
financial statements included in the Company's quarterly reports
on Form 10-QSB totaled $69,114. The Company did not engage GGK
to provide advice to the Company regarding financial information
systems design and implementation during Fiscal 2003. The
Company did not engage GGK during Fiscal 2003 for any other non-
audit services.
EXECUTIVE COMPENSATION
The following table sets forth the compensation the Company
paid for its fiscal years ended October 31, 2003, 2002 and 2001
to its Chief Executive Officer and to each of its other executive
officers whose compensation exceeded $100,000 on an annual basis.
SUMMARY COMPENSATION TABLE
Name and Annual Com- Other Long Term Other
Principal Fiscal pensation Annual Com- Compensation/ Compen-
Position Year Salary ($) pensation ($) Options ation($)
--------- ------ ----------- ------------- ------------- ---------
Joseph L. 2003 325,000 70,132 200,000(1) 38,327
Murphy, 2002 325,000 202,807 100,000 37,009
President 2001 325,000 57,640 - 9,526
and Chief
Executive
Officer
Mark Murphy, 2003 103,308 6,088 - -
Vice President 2002 97,243 5,000 12,000 -
Operations
Jerrold 2003 109,975 7,331 - -
Walkenfeld, 2002 90,921 13,920 - -
Principal
Accounting
OfficeR
------------------
(1) Mr. Murphy agreed to cancel options to purchase 200,000
shares of Common Stock of the Company for a consideration of
$200,000. See "Certain Relationships and Related
Transactions."
EMPLOYMENT AGREEMENT
Mr. Joseph L. Murphy has an employment agreement (the
"Agreement") with the Company which provides for a base salary of
$325,000 per year. As additional compensation, Mr. Murphy
receives five percent (5%) of the Company's annual pre-tax
profits. On August 14, 2001, the Board amended the Agreement to
extend the term of Mr. Murphy's employment until May 19, 2006.
STOCK OPTION PLAN
On August 26, 1996, the Company adopted a stock option plan
(the "1996 Plan"). The 1996 Plan provides for the issuance of
incentive and non-statutory stock options to employees,
consultants advisors and/or directors for a total of up to 100,000
shares of Common Stock. The 1996 Plan was amended by the Board of
Directors in September 1998 to increase the authorized number of
shares thereunder from 100,000 to 250,000 shares. A majority of
the Company's shareholders approved the amendment to the 1996 Plan
in October 1998. The exercise price of options granted may not be
less than the fair market of the shares on the date of grant (110%
of such fair market value for a holder of more than 10% of the
Company's Common Stock). The 1996 Plan will terminate on August
26, 2006.
On October 28, 2003, the Company adopted the 2003 Stock
Incentive Plan (the "2003 Plan"). Awards may be granted under the
Plan on and after its effective date (August 12, 2003). The 2003
Plan authorizes the grant of incentive options, nonqualified
options, SARs, restricted awards and performance awards.
Incentive options may only be granted to employees of the
Company. The option price at which an option may be exercised
must be at least 100% of the fair market value per share of the
Common Stock on the date of grant (or 110% of the fair market
value with respect to incentive options granted to an employee
who owns stock possessing more than 10% of the total voting power
of all classes of stock of the Company). The maximum number of
shares that may be issued pursuant to awards granted under the
2003 Plan may not exceed the sum of (a) 500,000 shares, plus (b)
any shares of Common Stock remaining available for issuance as of
the effective date of the 2003 Plan under the 1996 Plan.
AGGREGATED OPTION EXERCISES IN LAST FISCAL
YEAR AND FISCAL YEAR-END (FYE) OPTION VALUES
Value of
Unexercised
Number In-the-Money
Of Unexercised Options
Options At FYE
Shares At FYE Acquired ($)
Acquired Value Exercisable/ Exercisable/
Name On Exercise Realized($) Unexercisable Unexercisable (1)
------ ----------- ----------- ------------- -----------------
Joseph L. -(2) 200,000 25,000/75,000 60,000/180,000
Murphy
Mark 0 0 3,000/9,000 7,200/21,600
Murphy
Joseph E. 14,000 46,530 0/13,000 0/32,950
O'Grady
Daniel M. 0 0 13,000/14,000 34,700/35,350
Sullivan
-------------------
(1) Represents fair market value of Common Stock at October 31,
2003 of $4.50 as reported by Nasdaq, less the exercise
price.
(2) Mr. Murphy agreed to cancel options to purchase 200,000
shares of Common Stock of the Company for a consideration of
$200,000. See "Certain Relationships and Related
Transactions."
COMPENSATION OF DIRECTORS
Directors not employed by the Company are compensated as
consultants for the time spent on Company matters, including
attendance at directors' and other meetings. During Fiscal 2003,
Mr. Sullivan received $32,606, Mr. O'Grady received $47,700
as director fees.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth as of February 24, 2004, the
number of shares of Common Stock held of record or beneficially
(i) by each person who held of record, or was known by the
Company to own beneficially, more than five percent of the
outstanding shares of Common Stock, (ii) by each director and
(iii) by all officers and directors as a group:
Number of Percent of Out-
Names and Address Shares Owned (1) standing shares
----------------- --------------- ----------------
Joseph L. Murphy 716,964(2)(3) 36.53%
225 West 37th Street
New York, NY 10018
Daniel M. Sullivan 95,499(2) 4.95%
225 West 37th Street
New York, NY 10018
Joseph E. O'Grady 22,411(2) 1.74%
225 West 37th Street
New York, NY 10018
Keith Cannon 0 0.00%
225 West 37th Street
New York, NY 10018
FMR Corp. 197,100(4) 10.30%
82 Devonshire Street
Boston, MA 02109
Carl Seaman 281,666(5) 14.73%
12 The Poplars
Roslyn, NY 11576
All directors and 790,931(2) 44.22%
officers as a
group (5 persons)
--------------------------------------------------
(1) Unless otherwise indicated, all shares of Common Stock are
owned directly.
(2) Includes 50,000, 16,000, 2,000 and 74,000 shares for Messrs.
Murphy, Sullivan, O'Grady and all officers and directors as
a group, respectively, that are issuable upon exercise of
presently exercisable options at an average exercise price
of approximately $2.05 per share.
(3) 148,331 of these shares are pledged to a bank to secure a
personal loan.
(4) Based on information furnished to the Company on Schedule
13G/A dated February 14, 2002.
(5) Based on information furnished to the Company on Schedule
13D dated June 1, 1995 filed with the Company on behalf of
Mr. Seaman.
The Company is unaware of any arrangement, the operation of
which, at a subsequent date, may result in a change of control of
the Company.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On December 22, 1998, Mr. Joseph L. Murphy purchased from
the Company 200,000 shares of Common Stock at a price of $2.25
per share, the market value of such shares on such date. The
purchase was financed by Mr. Murphy executing a ten year
promissory note due to the Company in the principal amount of
$450,000. The promissory note bears interest at 5% per annum and
requires annual principal payments of $45,000 with accrued
interest. The purchase was approved by the unanimous consent of
the Board. The Company sold these shares to Mr. Murphy because
it was deemed to be in the best interests of the Company for him
to increase his equity ownership in the Company to better align
his interest with that of the other shareholders of the Company.
$229,000 of this note currently remains unpaid. Interest is
current through February 22, 2004 and the annual principal
payment of $45,000 due on December 22, 2003 was paid.
On February 24, 2003, the Company and Mr. Murphy agreed to
cancel 200,000 of Mr. Murphy's exercisable options upon payment
of $200,000 to Mr. Murphy. On that date, this payment
represented an imputed discount of approximately 16% from the
closing price of the Common Stock as reported by NASDAQ minus the
exercise price of such options.
PROPOSAL 2
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Audit Committee has reappointed GGK to audit the
consolidated financial statements of the Company for Fiscal 2004.
GGK has served as our independent auditors since Fiscal 2002. A
representative from GGK is expected to be present at the Meeting
with the opportunity to make a statement if he or she desires to
do so and to be available to respond to appropriate questions.
Although shareholder ratification of the appointment is not
required by law, the Company desires to solicit such
ratification. If the appointment of GGK is not approved by a
majority of the shares represented at the Annual Meeting, the
Company will consider the appointment of other independent
auditors for Fiscal 2004.
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS A VOTE
"FOR" RATIFICATION OF THE APPOINTMENT OF GGK AS THE COMPANY'S
INDEPENDENT AUDITORS FOR FISCAL 2004.
INDEPENDENT AUDITOR FEE INFORMATION
The following table shows the fees that the Company paid or
accrued for the audit and other services provided by GGK for
Fiscal 2003.
Type of Service Amount of Fee for Fiscal 2003
--------------- ------------------------------
Audit Fees $69,114
Audit-Related Fees -
Tax Fees -
All Other Fees -
------
Total $69,114
======
AUDIT FEES. This category includes fees for the audits of the
Company's annual financial statements, review of financial
statements included in the Company's Form 10-QSB Quarterly
Reports and services that are normally provided by the
independent auditors in connection with statutory and regulatory
filings or engagements for the relevant fiscal years.
AUDIT-RELATED FEES. This category consists of due diligence in
connection with acquisitions, various accounting consultations,
and benefit plan audits.
TAX FEES. This category consists of professional services
rendered for tax compliance, tax planning and tax advice. The
services for the fees disclosed under this category include tax
return preparation, research and technical tax advice.
ALL OTHER FEES. There were no other fees paid or accrued to GGK
in Fiscal 2003.
GGK has a continuing relationship with American Express Tax and
Business Services Inc. ("TBS") from which it leases auditing
staff who are full time, permanent employees of TBS and through
which its partners provide non-audit services. As a result of
this arrangement, GGK has no full time employees and therefore,
none of the audit services performed were provided by permanent
full time employees of GGK. GGK manages and supervises the audit
and audit staff, and is exclusively responsible for the opinion
rendered in connection with its examination.
OTHER MATTERS
The Board of Directors has no knowledge of any other matters
which may come before the Meeting and does not intend to present
any other matters. However, if any other matters shall properly
come before the Meeting or any adjournment thereof, the persons
named as proxies will have discretionary authority to vote the
shares of Common Stock represented by the accompanying proxy in
accordance with their best judgment.
SHAREHOLDERS' PROPOSALS
Any shareholder of the Company who wishes to present a
proposal to be considered at the next annual meeting of
shareholders of the Company and who wishes to have such proposal
presented in the Company's Proxy Statement for such meeting must
deliver such proposal in writing to the Company at 525 Seventh
Avenue, Suite 1703, New York, New York 10018 on or before
,2004.
By Order of the Board of Directors
Joseph E. O'Grady
Secretary
Dated: , 2004
APPENDIX A
JLM COUTURE, INC.
AUDIT COMMITTEE CHARTER
Purpose of Committee
The purpose of the Audit Committee (the "Committee") of the
Board of Directors (the "Board") of JLM Couture, Inc. (the
"Company") is to:
(a) assist the Board in its oversight of (i) the integrity of
the Company's financial statements, (ii) the Company's compliance
with legal and regulatory requirements, (iii) the independent
auditors' qualifications and independence, (iv) the performance
of the Company's internal audit function and independent
auditors, and (v) the Company's management of market, credit,
liquidity and other financial and operational risks; and
(b) prepare the report required to be prepared by the
Committee pursuant to the rules of the Securities and Exchange
Commission (the "SEC") for inclusion in the Company's annual
proxy statement.
Committee Membership
The Committee shall consist of no fewer than two members of
the Board. The members of the Committee shall each have been
determined by the Board to be "independent", as applicable, under
the Sarbanes-Oxley Act of 2002 (the "2002 Act"). The Board shall
also determine that each member is "financially literate" and
shall endeavor to have at least one member who has "accounting or
related financial management expertise," in each case as such
qualifications are defined by, to the extent required by, the
applicable SEC rules, that at least one member of the Committee
is an "audit committee financial expert" as defined by the SEC
(or if no member is an "audit committee financial expert",
explaining the reason for not having an audit committee financial
expert on the Committee). No director may serve as a member of
the Committee if such director serves on the audit committees of
more than two other public companies unless the Board determines
that such simultaneous service would not impair the ability of
such director to serve effectively on the Committee, and
discloses this determination in the Company's annual proxy
statement. No member of the Committee may receive any
compensation from the Company other than (i) director's fees,
which may be received in cash, common stock, equity-based awards
or other in-kind consideration ordinarily available to directors;
(ii) a pension or other deferred compensation for prior service
that is not contingent on future service; and (iii) any other
regular benefits that other directors receive.
Members shall be appointed by the Board and shall serve at
the pleasure of the Board and for such term or terms as the Board
may determine.
Committee Structure and Operations
The Board shall designate one member of the Committee as its
chairperson. The Committee shall meet at least once during each
fiscal quarter, with further meetings to occur, or actions to be
taken by unanimous written consent, when deemed necessary or
desirable by the Committee or its chairperson.
The Committee may invite such members of management and other
persons to its meetings as it may deem desirable or appropriate.
The Committee shall report regularly to the Board summarizing the
Committee's actions and any significant issues considered by the
Committee.
Committee Duties and Responsibilities
The following are the duties and responsibilities of the
Committee:
1. To meet with the independent auditors and the Company's
management and such other personnel as it deems appropriate and
discuss such matters as it considers appropriate, including the
matters referred to below. The Committee should meet separately
with the independent auditors and the Company's management,
periodically.
2. To decide whether to appoint, retain or terminate the
Company's independent auditors, including sole authority to
approve all audit engagement fees and terms and to pre-approve
all audit and non-audit services to be provided by the
independent auditors. The Committee shall monitor and evaluate
the auditors' qualifications, performance and independence on an
ongoing basis, and shall be directly responsible for overseeing
the work of the independent auditors (including resolving
disagreements between management and the auditors regarding
financial reporting). In conducting such evaluations, the
Committee shall:
q At least annually, obtain and review a report by the
independent auditors describing: the auditors' internal quality-
control procedures; any material issues raised by the most recent
internal quality-control review or peer review of the auditors,
or by any inquiry or investigation by governmental or
professional authorities, within the preceding five years,
respecting one or more independent audits carried out by the
auditors, and any steps taken to deal with any such issues; and
(to assess the auditors' independence) all relationships between
the independent auditors and the Company (including information
the Company determines is required to be disclosed in the
Company's proxy statement as to services for audit and non-audit
services provided to the Company and those disclosures required
by Independence Standards Board Standard No. 1, as it may be
modified or supplemented).
q Discuss with the independent auditors any disclosed
relationships or services that may impact the objectivity or
independence of the independent auditors.
q Take into account the opinions of management.
The Committee shall present its conclusions with respect to
the independent auditors to the Board for its information at
least annually.
3. To obtain from management in connection with any audit a
timely report relating to the Company's annual audited financial
statements describing all critical accounting policies and
practices to be used, which report will be reviewed and concurred
with by the independent auditors, and to obtain from the
independent auditors any material written communications between
the independent auditors and management, such as any "management"
letter or schedule of unadjusted differences.
4. To discuss with management and the independent auditors the
Company's annual audited financial statements and quarterly
financial statements, including the Company's disclosures under
"Management's Discussion and Analysis of Financial Condition and
Results of Operations," and to discuss with the Company's Chief
Executive Officer and Chief Financial Officer their
certifications to be provided pursuant to Sections 302 and 906 of
the 2002 Act, including whether the financial statements fairly
present, in all material respects, the financial condition,
results of operations and cash flows of the Company as of and for
the periods presented and whether any significant deficiencies
exist in the design or operation of internal controls that could
adversely affect the Company's ability to record, process,
summarize and report financial data, any material weaknesses
exist in internal controls, or any fraud has occurred, whether or
not material, that involves management or other employees who
have a significant role in the Company's internal controls. The
Committee shall discuss, as applicable: (a) major issues
regarding accounting principles and financial statement
presentations, including any significant changes in the Company's
selection or application of accounting principles, and major
issues as to the adequacy of the Company's internal controls and
any special audit steps adopted in light of material control
deficiencies; (b) analyses prepared by management and/or the
independent auditors setting forth significant financial
reporting issues and judgments made in connection with the
preparation of the financial statements; and (c) the effect of
regulatory and accounting initiatives, as well as off-balance
sheet structures, on the financial statements of the Company.
5. To discuss with the independent auditors on at least an
annual basis the matters required to be discussed by Statement of
Accounting Standards No. 61, as it may be modified or
supplemented, as well as any problems or difficulties the
auditors encountered in the course of the audit work, including
any restrictions on the scope of the independent auditors'
activities or access to requested information, and any
significant disagreements with management. Among the items the
Committee will consider discussing with the independent auditors
are: any accounting adjustments that were noted or proposed by
the independent auditors but were "passed" (as immaterial or
otherwise); and any "management" or "internal control" letter
issued, or proposed to be issued, by the independent auditors to
the Company.
6. To discuss with management and, as appropriate, the
independent auditors periodically, normally on at least an annual
basis:
q The independent auditors' annual audit scope, risk
assessment and plan.
q The form of independent auditors' report on the annual
financial statements and matters related to the conduct of the
audit under generally accepted auditing standards.
q Comments by the independent auditors on internal
controls and significant findings and recommendations resulting
from the audit.
7. To establish procedures for the receipt, retention and
treatment of complaints received by the Company regarding
accounting, internal accounting controls or auditing matters, and
for the confidential, anonymous submission by Company employees
of concerns regarding questionable accounting or auditing
matters.
8. To discuss with management periodically, normally on at
least an annual basis, management's assessment of the Company's
market, credit, liquidity and other financial and operational
risks, and the guidelines, policies and processes for managing
such risks.
9. To discuss with the Company's management and Company's
lawyer, if it so desires, any significant legal, compliance or
regulatory matters that may have a material impact on the
Company's business, financial statements or compliance policies.
10. To obtain assurance from the independent auditors that the
audit of the Company's financial statements was conducted in a
manner consistent with Section 10A of the Securities Exchange Act
of 1934, as amended, which sets forth certain procedures to be
followed in any audit of financial statements required under that
Act.
11. To produce the reports described under "Committee Reports"
below.
12. To discharge any other duties or responsibilities delegated
to the Committee by the Board from time to time.
Committee Reports
The Committee shall produce the following reports and
provide them to the Board:
1. Any report, including any recommendation, or other
disclosures required to be prepared by the Committee pursuant to
the rules of the SEC for inclusion in the Company's annual proxy
statement.
2. An annual performance evaluation of the Committee, which
evaluation shall compare the performance of the Committee with
the requirements of this charter. The performance evaluation
shall also include a review of the adequacy of this charter and
shall recommend to the Board any revisions the Committee deems
necessary or desirable, although the Board shall have the sole
authority to amend this charter. The performance evaluation shall
be conducted in such manner as the Committee deems appropriate.
Delegation to Subcommittee
The Committee may, in its discretion, delegate all or a
portion of its duties and responsibilities to a subcommittee of
the Committee. The Committee may, in its discretion, delegate to
one or more of its members the authority to pre-approve any audit
or non-audit services to be performed by the independent
auditors, provided that any such approvals are presented to the
Committee at its next scheduled meeting.
Resources and Authority of the Committee
The Committee shall have the resources and authority
appropriate to discharge its duties and responsibilities,
including the authority to select, retain, terminate, and approve
the fees and other retention terms of special or independent
counsel, accountants or other experts, as it deems appropriate,
without seeking approval of the Board or management.
APPENDIX B
JLM COUTURE, INC.
PROXY
Proxy for 2004 Annual Meeting of Shareholders.
The undersigned hereby appoints Joseph L. Murphy and Joseph
E. O'Grady proxies of the undersigned, with full power of
substitution, to vote shares of Common Stock of the Company which
the undersigned would be entitled to vote if present at the 2004
Annual Meeting of Shareholders of the Company to be held on
, 2004 at 10:00 A.M. at the Company's offices located at
525 Seventh Avenue, Suite 1703, New York, NY 10018 and any
adjournments thereof, upon the matters set forth in the Notice of
Annual Meeting as follows:
The undersigned acknowledges receipt of the Notice of
Annual Meeting, Proxy Statement and the Company's 2003 Annual
Report.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
and when properly executed will be voted as directed herein. If
no direction is given, this Proxy will be voted FOR the nominee
listed in proposal 1.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE NOMINEE
LISTED IN ITEM 1.
(1) ELECTION OF CLASS III DIRECTOR:
(Mark ONE box only)
Instructions:
To vote FOR the Class III Director nominee, place an X in
Box Number 1.
To withhold authority to vote for the Class III Director
nominee, place an X in Box Number 2.
To withhold authority to vote for the nominee place an X
in box Number 3 and strike a line through such nominee's name in
the list below.
1. ____ For Class III Director nominee.
2. ____ Withhold authority to vote for the Class
III Director nominee.
3. ____ Withhold authority to vote for any
individual nominees. Strike a line through such
nominee(s) name below:
- Joseph L. Murphy
(2) RATIFICATION OF THE APPOINTMENT OF GOLDSTEIN GOLUB KESSLER
LLP AS THE COMPANY'S INDEPENDENT AUDITORS FOR THE
COMPANY'S FISCAL YEAR ENDING OCTOBER 31, 2004.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
In their discretion, the proxies are authorized to vote upon
other matters properly coming before the meeting or any
adjournment thereof.
DATED: , 2004
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(Signature)
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(Signature, if held jointly)
Where stock is registered in the
names of two or more persons ALL
should sign. Signature(s) should
correspond exactly with the name(s)
as shown above. Please sign, date
and return promptly in the enclosed
envelope. No postage need be affixed
if mailed in the United States.
Requests for copies of proxy statements, the Company's
Annual Report for Fiscal 2003, or the Company's Annual Report for
Fiscal 2003 on Form 10-K should be addressed to Shareholder
Relations, JLM Couture, Inc., 525 Seventh Avenue, Suite 1703, New
York, NY 10018. This material will be furnished without charge
to any shareholder requesting it.