SCHEDULE 14A INFORMATION
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 under Rule 240.14a-12
INNOVO GROUP INC.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the
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 value of 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:
INNOVO GROUP INC.
5900 S. Eastern Ave., Suite 104
Commerce, California 90040
(323) 725-5516
April 21, 2003
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of
Stockholders (the "Annual Meeting") of Innovo Group Inc. (the
"Company"), which will be held at The Wyndham Commerce Hotel,
5757 Telegraph Road, Commerce, CA 90040, (near Los Angeles, CA),
on Thursday, May 22, 2003. The Annual Meeting will begin
promptly at 10:00 a.m. local time.
The accompanying Notice and Proxy Statement, which you are
urged to read carefully, provide important information regarding
the business to be conducted at the Annual Meeting.
Your Board of Directors recommends a vote "FOR" all of the
proposals and nominees.
You are requested to complete, date and sign the enclosed
proxy card and promptly return it in the enclosed envelope,
whether or not you plan to attend the Annual Meeting. If you do
attend the meeting, you may vote in person even if you have
submitted a proxy card. REGARDLESS OF THE NUMBER OF SHARES YOU
OWN OR WHETHER YOU PLAN TO ATTEND THE ANNUAL MEETING, IT IS
IMPORTANT THAT YOUR SHARES BE REPRESENTED AND VOTED. If you hold
your shares in "street name" (that is, through a bank, broker or
other nominee), please review the instructions on the proxy
forwarded by your bank, broker or other nominee regarding the
option, if any, to vote on the Internet or by telephone. If you
plan to attend the meeting in person, please remember to bring a
form of personal identification with you and, if you are acting
as a proxy for another stockholder, please bring written
confirmation from the record owner that you are acting as a
proxy.
On behalf of the Board of Directors, I thank you for your
support and continued interest in the Company.
Sincerely,
Samuel J. Furrow
Chairman
INNOVO GROUP INC.
5900 S. Eastern Ave., Suite 104
Commerce, California 90040
(323) 725-5516
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON THURSDAY, MAY 22, 2003
NOTICE IS HEREBY GIVEN that the 2003 Annual Meeting of
Stockholders (the "Annual Meeting") of Innovo Group Inc. (the
"Company") will be held Thursday, May 22, 2003 at 10:00 a.m.
(local time) at The Wyndham Commerce Hotel, 5757 Telegraph Road,
Commerce, CA 90040, to consider and act upon the following
proposals:
1. To elect seven directors to serve on the Board of
Directors until the 2004 annual meeting of stockholders and until
their respective successors are elected and qualified;
2. To approve and ratify the issuance of options to
purchase up to 200,000 shares of Common Stock be granted to the
Company's CEO and the Company's President. The options have an
exercise price of $2.40 per share and a 5-year term expiring in
December 2007; and
3. To ratify the appointment of Ernst & Young, LLP as the
Company's independent auditors for the fiscal year ending
November 30, 2003;
4. To transact such other business as may properly come
before the Annual Meeting or any adjournments thereof.
Only stockholders of record of the Company at the close of
business on April 17, 2002 are entitled to notice of and to vote
at the Annual Meeting or any adjournments thereof. A list of the
Company's stockholders entitled to vote at the Annual Meeting
will be open to the examination of any stockholder for any
purpose germane to the meeting during ordinary business hours for
a period of ten days before the Annual Meeting at the Company's
offices.
All stockholders are cordially invited to attend the Annual
Meeting in person. However, to ensure your representation at the
Annual Meeting, you are urged to mark, sign and return the
enclosed proxy as promptly as possible in the postage prepaid
envelope enclosed for that purpose. Any stockholder attending
the Annual Meeting may vote in person even though he or she has
returned a proxy.
By Order of the Board of Directors
Samuel J. Furrow
Chairman
Los Angeles, CA
April 21, 2003
IN ORDER TO ENSURE YOUR REPRESENTATION AT THE ANNUAL MEETING, YOU
ARE REQUESTED TO COMPLETE, DATE AND SIGN THE ACCOMPANYING PROXY
AS PROMPTLY AS POSSIBLE AND RETURN IT IN THE ENCLOSED ENVELOPE.
FOR SPECIFIC INSTRUCTIONS ON VOTING, PLEASE REFER TO THE
INSTRUCTIONS ON THE PROXY OR THE INFORMATION FORWARDED BY YOUR
BROKER, BANK OR OTHER HOLDER OF RECORD. EVEN IF YOU HAVE VOTED
YOUR PROXY, YOU MAY STILL VOTE IN PERSON IF YOU ATTEND THE
MEETING. PLEASE NOTE, HOWEVER, THAT IF YOUR SHARES ARE HELD OF
RECORD BY A BROKER, BANK OR OTHER NOMINEE AND YOU WISH TO VOTE IN
PERSON AT THE MEETING, YOU MUST OBTAIN FROM SUCH BROKER, BANK OR
OTHER NOMINEE, A PROXY ISSUED IN YOUR NAME.
INNOVO GROUP INC.
5900 S. Eastern Ave. Suite 104
Commerce, California 90040
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON
THURSDAY, MAY 22, 2003
INTRODUCTION
This Proxy Statement and the accompanying Notice of Annual
Meeting and Proxy Card are being furnished, on or about April 21,
2003, to the stockholders of Innovo Group Inc. (the "Company") in
connection with the solicitation of proxies by the Board of
Directors of the Company to be used at the 2003 Annual Meeting
of Stockholders of the Company (the "Annual Meeting") to be held
on Thursday, May 22, 2003 at 10:00 a.m. (local time) The Wyndham
Commerce Hotel, 5757 Telegraph Road, Commerce, CA 90040, and any
adjournment thereof. The Company's 2002 Annual Report, which
includes its consolidated financial statements and is not part of
the proxy solicitation material, is being mailed with this Proxy
Statement.
At the Annual Meeting, the holders of the Company's common
stock (the "Common Stock") will vote upon: (a) the election of
seven directors to serve until the Company's 2004 annual meeting
of stockholders and until their respective successors are elected
and qualified; (b) the approval and ratification of the issuance
of options to purchase an aggergrate of 200,000 shares of the
Company's common stock to each of the Company's Chief Executive
Officer, and the Company's President (the "Option Grant
Proposal"); (c) the ratification of the appointment of Ernst
& Young, LLP as the Company's independent auditors for the
fiscal year ending November 30, 2003; and (d) such other matters
as may properly come before the Annual Meeting or any adjournment
or postponement thereof.
A proxy for use at the Annual Meeting is enclosed. Any
stockholder who executes and delivers such proxy has the right to
revoke it at any time before it is exercised. The presence of a
stockholder at the Annual Meeting will not automatically revoke
such stockholder's proxy. Stockholders may, however, revoke a
proxy at any time prior to its exercise by filing with the
Secretary of the Company a written notice of revocation, by
delivering to the Company a duly executed proxy bearing a later
date or by attending the Annual Meeting and voting in person.
Subject to such revocation, if the enclosed form of proxy is
properly executed and returned to the Company in time to be voted
at the Annual Meeting, the shares represented thereby will be
voted in accordance with the instructions thereon. If no
instruction is specified with respect to a written matter to be
acted upon, shares represented by the proxy will be voted: (a)
"FOR" election of the Board of Director's seven nominees for
director; (b) "FOR" the Option Grant Proposal; and (c) "FOR" the
ratification of the appointment of Ernst & Young LLP as the
Company's independent auditors.
If any other matters are properly brought before the Annual
Meeting, proxies will be voted in the discretion of the proxy
holders. The Company is not aware of any other matters to be
presented at its Annual Meeting.
The cost of preparing, assembling, printing and mailing this
Proxy Statement and the material used in the Solicitation of
Proxies will be borne entirely by the Company. It is
contemplated that the proxies will be solicited by mail, but
directors, officers and regular employees of the Company may
solicit proxies personally, without extra remuneration, by
personal interviews, telephone, telegraph or otherwise. The
Company will request persons, firms and corporations holding
shares in their name or in the names of their nominees, which are
beneficially owned by others, to send proxy materials to and
obtain proxies from the beneficial owners and will reimburse the
holders for their reasonable expenses in doing so.
VOTING SECURITIES
The securities that may be voted at the Annual Meeting are
the Company's shares of Common Stock. Each outstanding share of
Common Stock entitles its owner to one vote on each matter as to
which a vote is taken at the Annual Meeting. Holders of Common
Stock do not have cumulative voting rights. The close of
business on April 17, 2003 has been fixed by the Board of
Directors as the record date (the "Record Date") for
determination of stockholders entitled to notice of and to vote
at the Annual Meeting. On the Record Date, it is expected that
approximately 15,129,764 shares of Common Stock will be
outstanding and entitled to vote. The presence, in person or by
proxy, of the holders of record of at least a majority of the
shares of Common Stock issued and outstanding and entitled to
vote on the Record Date is necessary to constitute a quorum for
the transaction of business at the Annual Meeting.
A plurality of the votes duly cast by holders of Common
Stock is required for the election of the directors. That is,
the nominees receiving the greatest number of votes will be
elected.
Approval and ratification of the Option Grant Proposal
requires the affirmative vote of a majority of the votes duly
cast by holders of Common Stock.
Ratification of the appointment of Ernst & Young, LLP as the
Company's independent auditors for the fiscal year ending
November 30, 2003 requires the affirmative vote of a majority of
the votes duly cast by holders of Common Stock.
Unless otherwise required by law or the Company's
Certificate of Incorporation or the Company's Amended and
Restated Bylaws (the "Bylaws"), any other matter put to a
stockholder vote will be decided by the affirmative vote of a
majority of the votes duly cast by holders of Common Stock.
Abstentions and broker non-votes will be counted as present
for the purpose of determining if a quorum is present. Broker
non-votes occur when a nominee holding shares for a beneficial
owner does not vote on a particular matter because the nominee
does not have discretionary voting power with respect to that
matter and has not received instructions from the beneficial
owner.
In connection with the election of the director nominees,
the approval of the Option Grant Proposal, the ratification of
the appointment of Ernst & Young, LLP as the Company's
independent auditors for the fiscal year ending November 30, 2003
and the adoption of all other proposals that may properly come
before the Annual Meeting, abstentions and broker non-votes will
not be deemed "votes cast" and accordingly will not have the
effect of votes in opposition.
NO APPRAISAL RIGHTS
Under the General Corporation Law of the State of Delaware,
stockholders of the Company do not have appraisal rights in
connection with any of the proposals upon which a vote is
scheduled to be taken at the Annual Meeting.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR
APPROVAL OF THE PROPOSALS SET FORTH IN THIS PROXY STATEMENT.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table provides information as of March 25,
2003 concerning beneficial ownership of Common Stock by (1) each
person or entity known by the Company to beneficially own more
than 5% of the outstanding Common Stock, (2) each Director and
nominee for election as a Director of the Company, (3) each Named
Executive Officer, and (4) all Directors and executive officers
of the Company as a group. The information as to beneficial
ownership has been furnished by the respective stockholders,
Directors and executive officers of the Company, and, unless
otherwise indicated, each of the stockholders has sole voting
and investment power with respect to the shares beneficially
owned.
Shares of Common Stock Beneficially
Name and Owned (1)
Offices Number Percent
Samuel J.(Sam) Furrow 3,338,293 (2)(9) 21.28%
Chairman and Director
Hubert Guez 6,337,537 (3) 34.82%
5804 E. Slauson Avenue
Commerce, California 90040
Patricia Anderson 683,146 (4) 4.46%
President and Director
Daniel A. (Dan) Page 353,251 (5)(9) 2.36%
Director
Samuel J. (Jay) Furrow, Jr. 1,713,158 (6) 10.69%
CEO, COO and Director
Marc B. Crossman 241,975 (7)(9) 1.60%
Chief Financial Officer
and Director
John G. Looney, MD 185,641 (8)(9) 1.24%
Director
Joseph Mizrachi 2,738,500 (10) 15.75%
7700 Congress Avenue, Ste. 3106
Boca Raton, Florida 33487
Joe Dahan 632,990 (11) 4.20%
President of Joe's Jeans, Inc.
Seymour Braun 3,312,500 (12) 20.20%
Braun & Goldberg
110 East 59th St,
Suite 3201
New York, NY 10022
Suhail Rizvi -- --
Director
All Executive Officers 7,265,464 40.95%
and Directors as a Group (2)(4)(5)(6)(7)(8)(9)(11)
(8 persons)
________________
* Less than 1%
(1) Pursuant to the rules of the Securities and Exchange
Commission ("SEC"), certain shares of the Company's common stock
that a beneficial owner set forth in this table has a right to
acquire within 60 days of the date hereof pursuant to the
exercise of options or warrants for the purchase of shares of
common stock are deemed to be outstanding for the purpose of
computing the percentage ownership of that owner but are not
deemed outstanding for the purpose of computing percentage
ownership of any other beneficial owner shown in the table.
Percentages are calculated based on 14,901,264 shares outstanding
as of March 25, 2003.
The address for the officers and Directors is the
corporate office of the Company located at 5900 S.
Eastern Ave., Suite 124 Commerce, California, 90040.
(2) Includes 10,000 shares subject to currently exercisable
options with an exercise price of $1.00 per share expiring in
April 2022 and 750,000 shares subject to exercisable warrants
with a 3-year term expiring October 2003 and an exercise price of
$2.10 per share.
(3) Includes 650,000 shares solely owned by Azteca Productions
International, Inc., 23,900 shares owned solely by Hubert Guez,
250,000 shares and currently exercisable warrants aggregating
500,000 shares which have an exercise price of $2.10 per share
and an expiration date of October 29, 2003 and are owned solely
by SHD Investments, LLC, of which Mr. Guez's brother is the
manager, 1,863,637 shares and currently exercisable warrants
aggregating 1,000,000 shares which have an exercise price of
$2.10 per share and an expiration date of October 29, 2003 and
currently exercisable warrants aggregating 300,000 shares which
have an exercise price of $2.10 per share and an expiration date
of October 1, 2005 and are owned solely by Commerce Investment
Group, LLC, 250,000 shares and currently exercisable warrants
aggregating 250,000 shares which have an exercise price of $2.10
per share and an expiration date of October 29, 2003 and are
owned solely by the Griffin James Aron Guez Irrevocable Trust
dated September 13, 1996, currently exercisable warrants
aggregating 250,000 shares which have an exercise price of $2.10
per share and an expiration date of October 29, 2003 and are
owned solely by the Stephan Avner Felix Guez Irrevocable Trust
dated September 13, 1996, currently exercisable warrants
aggregating 1,000,000 shares which have an exercise price of
$2.10 per share and an expiration date of October 29, 2003 and
are owned solely by Integrated Apparel, LLC. All parties listed
herein are members of a "group" for the purposes of Section 13(d)
of the Exchange Act and with the exception of the 23,900 shares
owned solely by Mr. Guez, Mr. Guez disclaims beneficial ownership
of all securities described herein .
(4) Includes 100,000 shares subject to currently exercisable
options with an exercise price of $2.40 per share and a 5-year
term expiring in December 2007 (such options are subject to
shareholder approval pursuant to Proposal 2 herein) and 300,000
shares subject to exercisable options pursuant to a 400,000
option grant of nonqualified options made in June 2001 with an
exercise price of $1.25 per share and expiring June 5, 2005; also
includes 250,000 shares purchased by Ms. Anderson-Lasko pursuant
to the 1997 Stock Purchase Right Award, awarded to her in
February 1997. Under the terms of the 1997 Stock Purchase Right
Award, Ms. Anderson-Lasko was permitted to, and elected to, pay
for the purchase of the 250,000 shares (the "1997 Award Shares")
by the execution of a non-recourse note (the "Note") to the
Company for the exercise price of $2.8125 per share ($703,125) in
the aggregate. The Note was originally due without interest on
April 30, 2002, and has been extended to April 30, 2005, and is
collateralized by the 1997 Award Shares purchased therewith. Ms.
Anderson-Lasko may pay or prepay (without penalty) all or any
part of the Note by (i) the payment of cash, or (ii) the delivery
to the Company of other shares of Common Stock (other than the
1997 Award Shares) that Ms. Anderson has owned for a period of at
least six months, which shares would be credited against the Note
on the basis of the closing bid price for the Common Stock on the
date of delivery. The 1997 Award Shares will be forfeited and
returned (at the rate of one shares per $2.8125) to the Company
to the extent the Note is not paid on or before its maturity;
accordingly, the number of shares owned by Ms. Anderson-Lasko
could decrease in the future.
(5) Includes 10,000 shares subject to exercisable options
at an exercise price of $1.00 per share and expiring
April 2022.
(6) Includes 100,000 shares subject to currently
exercisable options with an exercise price of $2.40 per
share and a 5-year term expiring in December 2007 (such
options are subject to shareholder approval pursuant to
Proposal 2 herein); 150,000 shares subject to
exercisable options pursuant to a 200,000 option grant
of nonqualified options made in June 2001 with an
exercise price of $1.25 per share and expiring June 5,
2005; 100,000 shares subject to currently exercisable
options with an exercise price of $4.75 expiring in
February 2004; 25,000 shares subject to currently
exercisable options with an exercise price of $3.31 per
share expiring in July 2003, and 750,000 shares subject
to currently exercisable warrants with an exercise
price of $2.10 per share and a 3-year term expiring in
October 2003.
(7) Includes 100,000 shares subject to currently
exercisable options with an exercise price of $4.75 per
share and expiring February 2004, 10,000 shares subject
to currently exercisable options with an exercise price
of $1.00 per share and expiring April 2022. Also
includes 83,334 shares subject to currently exercisable
options which are exercisable within the next 60 days,
and are a part of a 1,000,000 share option grant dated
March 25, 2003 that vests over a 24 month period and
has an exercise price of $2.86 per share and an
expiration date of March 2023
(8) Includes 10,000 shares subject to currently exercisable
options with an exercise price of $1.00 per share and
expiring in February 2022.
(9) Includes 25,641 shares subject to exercisable 20-year
term options with an exercise price of $0.39 per share
granted under the Company's 2000 Director Stock
Incentive Plan in lieu of cash directors' fees. See
"Director Compensation and 2000 Director Stock
Incentive Plan" below.
(10) Includes 1,497,500 shares of common stock (includes
10,000 shares of common stock owned by the wife of
Joseph Mizrachi, Cheryl Mizrachi through CJ Rahm, LP)
and includes 1,241,000 warrants to purchase shares of
common stock (including 16,000 warrants owned by the
wife of Joseph Mizrachi, Cheryl Mizrachi through CJ
Rahm, L.P.). This information is based solely upon
information set forth in a Schedule 13D filed with the
Securities and Exchange Commission, dated November 30,
2000 and may include some shares and warrants owned by
Innovation, LLC (see footnote 12 below); currently, it
is unclear as to the exact amount in question.
(11) Includes 500,000 shares as to which Mr.
Dahan, President of the Joes Jeans, Inc. subsidiary,
shares beneficial ownership and 250,000 shares subject
to currently exercisable options with an exercise price
of $1.00 per share and expiring in February 2005.
(12) Includes 1,500,000 shares of common stock subject
to currently exercisable warrants with an exercise
price of $2 per share expiring October 31, 2003.
Pursuant to a convertible note and pledge agreement
dated on or about November 1, 2000 ("Note") whereby
Yardworth Mortgage Corp. ("Yardworth") loaned Joseph
Mizrachi ("Mizrachi") $1,500,000, Yardworth had the
right to convert the outstanding Note into an 85%
membership interest in Innovation, LLC, a Delaware
limited liability company ("Innovation"), wholly-owned
by Mizrachi. Innovation owns 1,812,500 shares of the
Company and 1,500,000 shares of common stock subject to
currently exercisable warrants with an exercise price
of $2 per share expiring October 31, 2003. Yardworth's
85% membership interest in Innovation equals 1,540,625
shares of the Company and 1,275,000 shares of common
stock subject to currently exercisable warrants to
purchase shares of the Company. On February 6, 2003,
Yardworth provided written notice to Mizrachi that it
was converting the Note into the 85% membership
interest in Innovation effective February 21, 2003.
Yardworth has the right to vote all shares and warrants
owned by Innovation. Seymour Braun ("Braun"), an
attorney located at 110 East 59th Street, Suite 3201,
New York, NY 10022, is the sole trustee of Praha Trust
("Praha"), a trust organized under the laws of Canada,
with an address of 105 Penstraat, Curacao, Netherlands
Antilles. Praha is the beneficial owner of Yardworth.
Braun, as the sole trustee of Praha Trust, which
beneficially owns Yardworth, has the sole power to vote
or direct the vote and dispose or direct the
disposition of 3,312,500 shares of common stock,
including 1,500,00 warrants to purchase 1,500,000
shares of common stock. This information is based
solely upon information set forth in a Schedule 13D
filed with the Securities and Exchange Commission,
dated March 6, 2003.
ELECTION OF DIRECTORS
(PROPOSAL 1)
The Company's Bylaws provide that the Board of Directors
shall consist of not fewer than three Directors, with the exact
number of Directors (subject to such minimum and any range of
size established by the Company's stockholders) to be determined
by resolution of the Board of Directors. The Board of Directors
currently consists of seven Directors. At the Annual Meeting,
seven Directors will be elected to serve until the 2004 annual
meeting of stockholders, which is expected to be held in May
2004. The Board of Directors' nominees for election are set
forth below.
Each of the Company's Directors is elected at the annual
meeting of stockholders and serves until the next annual meeting
and until a successor has been elected and qualified or their
earlier death, resignation or removal. Vacancies in the Board of
Directors are filled by a majority vote of the remaining members
of the Board of Directors.
In connection with investments by Commerce Investment Group,
LLC and other investors affiliated with Hubert Guez ("Commerce
Group") during August and October 2000, (as discussed in this
Proxy Statement under "Certain Related Party Transactions"), the
Company agreed that Mr. Guez shall have the right to nominate
three individuals for election to the Board. Additionally, one
of Mr. Guez's nominees, if elected, shall have the right to serve
on the each of the Company's Board committees. Mr. Guez has not
nominated any Board member at this time. Joseph Mizrachi,
pursuant to investments made in October 2000, has the right to
nominate one individual for election to the Board, with this
individual having the right to serve on the Company's Board
committees upon election. Mr. Mizrachi, at this time, has not
nominated a member to the Board.
As a condition to the investment made by the Commerce Group,
the Company amended its Bylaws to provide that from November 2,
2000 until November 1, 2003 the number of members of the Board of
Directors will be between three and twelve, with the exact number
to be designated by the Board of Directors. The investments made
by the Commerce Group are further discussed in this Proxy
Statement under "Certain Relationships and Related Transactions."
Unless otherwise instructed on the proxy, properly executed
proxies will be voted for the election as Directors of all of the
nominees set forth below. The Board of Directors believes that
all such nominees will stand for election and will serve if
elected. However, if any of the persons nominated by the Board
of Directors fails to stand for election or is unable to accept
election, proxies will be voted by the proxy holders for the
election of such other person or persons as the Board of
Directors may recommend. Directors will be elected by a
plurality vote.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF
ITS NOMINEES FOR DIRECTORS.
Information with respect to Nominees for Directors and Executive
Officers
The following table and biographical description sets forth
certain information regarding the persons nominated for election
as Directors of the Company as of March 25, 2003, based upon
information furnished to the Company by each Director.
Name Age Position with the Company
Samuel J. (Sam) Furrow Sr. 61 Chairman of the Board
and Director
Samuel J. (Jay) Furrow, Jr. 29 Chief Executive Officer, Chief
Operating Officer and Director
Patricia Anderson 44 President and Director
Marc B. Crossman 31 Chief Financial Officer and
Director
Daniel A. (Dan) Page (1)(2) 54 Director
John G. Looney, MD (1)(2) 61 Director
Suhail Rizvi (1)(2) 37 Director
____________________
(1) Member of the audit committee of the Board of Directors
(2) Member of the executive compensation committee of the Board
of Directors
Following is information with respect to the business
experience for at least the last five years and certain other
information regarding each of the nominees for election as a
Director.
Samuel J. (Sam) Furrow became a Director in April 1998 and
the Company's Chairman and Chief Executive Officer in October
1998. He served as Chief Executive Officer until December, 2000,
when Ms. Anderson resumed that position. Mr. Furrow has also
been the Chairman of Furrow Auction Company (a real estate and
equipment sales company) since April 1968, and previously the
Chairman of Furrow-Justice Machinery Corporation (a six-branch
industrial and construction equipment dealer) since September
1983 (to whom now Mr. Furrow provides advisory services), owner
of Knoxville Motor Company - Mercedes Benz since December 1980
and of Land Rover of Knoxville and Chattanooga since July 1997.
Mr. Furrow has been a Director of Southeastern Advertising Inc.
(an advertising agency) since April 1968, a Director of First
American National Bank since September 1993, and of Goody's
Family Clothing, Inc, a publicly traded retail clothing store
chain, since 1995. Sam Furrow is Jay Furrow's father.
Samuel J. (Jay) Furrow, Jr. became the Company's Vice
President for Corporate Development and In-House Counsel in
August 1998 and a Director in January 1999. Mr. Furrow served as
President from December 2000 until July 2002, when he became
Chief Executive Officer. He has also served as the Company's
Chief Operating Officer since April 1999 and its Acting Chief
Financial Officer from August 2000 through March 2003. Mr.
Furrow is an attorney. Mr. Furrow has a J.D degree from Southern
Methodist University School of Law and has a B.S degree from
Vanderbilt University. Jay Furrow is Sam Furrow's son.
Patricia Anderson has been a Director of the Company since
August 1990, President of the Company from August 1990 through
December 2000 and since July 2002, and President of the Company's
Innovo, Inc. subsidiary since she founded that company in 1987.
From August 1990 until August 1997, Ms. Anderson was also the
Chairman and Chief Executive Officer of the Company, and she once
again served as Chief Executive Officer from December 2000
through July 2002.
Marc B. Crossman has been a Director since January 1999 and
Chief Financial Officer since March 2003. Mr. Crossman has also
been a Vice President and Equity Analyst with J.P. Morgan
Securities Inc., New York, New York, since January 1999, and was
previously a Vice President and Equity Analyst with CIBC
Oppenheimer Corp. from September 1997 through January 1999 and an
Associate and Equity Analyst with Dain Rauscher Wessels from
November 1994 through September 1997. Mr. Crossman has extensive
experience in financial analysis and has been involved in
corporate finance at many levels. Mr. Crossman has a degree in
mathematics from Vanderbilt University.
Daniel A. Page was the chief operating officer of the
Company from August 1997 through April 1999 and has been a
Director of the Company since August 1997. From June 1993 until
August 1997, Mr. Page was the principal operating and executive
officer of Southeast Mat Company, a privately held manufacturer
of automobile floor mats. Prior thereto Mr. Page was the
president of Tennessee Properties Company, a privately held real
estate development company.
John G. Looney, MD has been a Director since August 1999.
Dr. Looney is a psychiatrist employed by the Duke Medical Center
since 1986. Dr. Looney just completed a role as Medical Director
of Peninsula Behavioral Health, a multi-hospital psychiatric
treatment system in East Tennessee. He was responsible for
building the clinical programs of this large enterprise. Dr.
Looney is currently working with Carolinas' Medical Center in
Charlotte, North Carolina, pursuant to a contract between the
Duke Medical Center and Carolinas' Medical Center. Dr. Looney
has been a Board of Director member of Covenant Behavioral
Health, Knoxville, TN, since 1995. He also participates in a
variety of venture capital investments independent of Duke,
Carolinas' Medical Center and the Company.
Suhail R. Rizvi has been a Director since March 2003. Since
1995, Mr. Rizvi has been the Chairman and a Director of
Electronic Manufacturing Services, Inc., a Puerto Rico based OEM
contract manufacturing company. From 1991 to 1995, Mr. Rizvi was
the founder and principal in Suntel, Inc., a telecommunications
services company that later became part of Access Authority,
Inc., a company that provided international long distance resale
services to customers in Europe and Asia. From 1986 to 1991, Mr.
Rizvi was a financial analyst for MIG Companies, a multi-billion
dollar investment management firm and in 1989, became a principal
in the firm and headed up the firm's efforts in the real estate
and corporate securities area. Mr. Rizvi has also been the
Chairman and Director for JN Industries since April 2002, the
Chairman and Director of R and C Technology since December 2001
and a Director for Doublespace Holdings since April 1999. Mr.
Rizvi has a Bachelor of Science in Economics degree from the
Wharton School of the University of Pennsylvania.
Other Significant Employees
The biographical description of the Company's executive
officers is provided above. The Company deems Joe Dahan, the
President of Joe's Jeans, Inc., to be a "significant employee" as
defined by Item 401 of Regulation S-K of the Securities Act of
1933. Mr. Dahan's biographical information is provided below.
Joe Dahan is the President and head designer of Joe's Jeans,
Inc. Mr. Dahan is responsible for the design, development and
marketing of Joe's Jeans, Inc.'s products. Prior to his
employment with Joe's Jeans, Inc. Mr. Dahan was the head designer
for Azteca Production International, Inc., where he was
responsible for the design, development and merchandising of
product lines developed by Azteca Production International, Inc.
Mr. Dahan, prior to his employment with Azteca Production
International, Inc., was engaged in the design and development of
apparel products for a company of which he was an owner and
operator.
CORPORATE GOVERNANCE AND RELATED MATTERS
BOARD OF DIRECTORS AND COMMITTEES
Board of Directors and Meetings of Directors
The Board of Directors manages the Company through Board
meetings and through its committees. During 2002, the Board of
Directors met five times and acted by unanimous written consent
on seven occasions. No incumbent director who served as a
director in 2002 attended less than 75% of all the meetings of
the Board and the committees on which he or she served during
2002 except for Dan Page, who missed two Board meetings.
Compensation of Directors
Pursuant to the Company's 2000 Director Stock Incentive Plan
(the "2000 Director Plan"), each non-employee director receives
annual compensation in the form of options to buy Common Stock
with a nominal initial value of $10,000. Directors who are also
employees of the Company receive no additional compensation for
their services as directors. Board Members who serve on the Board
committees do not receive additional compensation for serving on
the Board committees. See "Equity Compensation Plan Information"
for further discussion of the 2000 Director Plan.
Prior to the adoption of the 2000 Director Plan, the Company
customarily issued options to a new Board member upon joining
the Board. The Company currently issues all Board options under
the 2000 Director Plan. Mr. Page received a grant of
nonqualified stock options to purchase 120,000 shares of Common
Stock at an exercise price of $3.31 per share upon becoming a
Director in August 1997. All of such options are vested. Sam
Furrow received a grant of nonqualified stock options to purchase
100,000 shares of Common Stock at an exercise price of $4.75 per
share upon becoming a Director in March 1998. These options
expired on March 1, 2003. Jay Furrow received a grant of
nonqualified stock options to purchase 100,000 shares of Common
Stock at an exercise price of $4.75 per share upon becoming a
Director in February 1999. Mr. Crossman received a grant of
nonqualified stock options to purchase 100,000 shares of Common
Stock at an exercise price of $4.75 per share upon becoming a
Director in February 1999. All of such options are currently
vested.
Committees of the Board of Directors
The Board of Directors has an Audit Committee and an
Executive Compensation Committee. The Board does not have a
nominating committee. The Board selects director nominees to
stand for election at the annual stockholder meetings. The Board
will consider stockholder nomination(s), provided such
nomination(s) are submitted in writing to the Secretary of the
Company no later than December 23, 2003, together with the
identity of the nominator and the number shares of the Company's
stock owned, directly and indirectly, by the nominator. The Board
also requires certain specified information pertaining to the
nominee which requirements can be obtained from the Secretary of
the Corporation by making a written request to the Company at
5900 S. Eastern Ave, Commerce, CA 90040. The submission of a
director nomination by a stockholder does not guarantee that the
Board will recommend such director nominee to the stockholder's
for election at the annual meeting. No such nominations have
been received as of the date hereof in connection with the Annual
Meeting.
The Audit Committee. The Audit Committee is primarily
responsible for (i) monitoring the integrity of the Company's
financial reporting process and systems of internal controls
regarding finance, accounting, and legal compliance, (ii)
monitoring the independence and performance of the Company's
independent auditors and internal auditing department, and (iii)
providing an avenue of communication among the independent
auditors, management, the internal auditing department, and the
Board of Directors. The Audit Committee has a charter that
details its duties and responsibilities, which was adopted by the
Board on June 8, 2000. A copy of the charter was filed with the
Securities and Exchange Commission in connection with the filing
of our proxy statement for our 2000 annual meeting of
stockholders. The current members of the Audit Committee are Dr.
Looney and Messrs. Page and Rizvi. Mr. Rizvi joined the
Executive Compensation Committee by replacing Mr. Crossman as a
member in March 2003. Mr. Crossman resigned from the Audit
Committee when he was appointed to be the Company's Chief
Financial Officer. Currently, all Audit Committee members are
"independent" under NASDAQ listing standards. Dan Page was not
considered "independent" last year under the guidelines because
he had been a Company employee within the prior three years.
During fiscal 2002, the Audit Committee met four times. The
formal report of the Audit Committee with respect to 2002 begins
on page 12 of this Proxy Statement.
Executive Compensation Committee. The Executive
Compensation Committee reviews and recommends the compensation
arrangements for management of the Company. The current members
of the Executive Compensation Committee are Dr. Looney and
Messrs. Page and Rizvi. Mr. Rizvi joined the Executive
Compensation Committee by replacing Mr. Crossman as a member in
March 2003. The Executive Compensation Committee administers the
Company's 2000 Employee Plan. In carrying out such
responsibilities, the Executive Compensation Committee reviews
the salaries, benefits, performance, and other incentive bonuses
of key employees as well as the general terms and conditions of
the other benefit plans. During fiscal 2002, the Executive
Compensation Committee met one time. Executive officers of the
Company are elected on an annual basis and serve at the
discretion of the Board of Directors. The formal report of the
Executive Compensation Committee with respect to 2002 executive
compensation begins on page 13 of this Proxy Statement.
REPORT OF THE AUDIT COMMITTEE
In accordance with the written charter of the Audit
Committee, which was approved by the Board of Directors on June
8, 2000, the Audit Committee assists the Board in oversight of
the quality and integrity of the accounting, auditing, and
financial reporting practices of the Company. In addition, the
Audit Committee recommends to the full board the selection of the
independent auditors.
The Audit Committee consists of three directors who are
"Independent" for purposes of the NASDAQ listing standards.
In performing its oversight function, the Audit Committee
reviewed and discussed the audited consolidated financial
statements of the Company as of and for the year ended November
30, 2002 with management and the Company's independent auditors.
The Audit Committee also discussed with the Company's independent
auditors all matters required by generally accepted auditing
standards, including those described in Statement on Auditing
Standards No. 61, "Communication with Audit Committees" as
amended by the Auditing Standards Board of the American Institute
of Certified Public Accountants, and, with and without management
present, discussed and reviewed the results of the independent
auditors' examination of the financial statements.
The Audit Committee obtained from the independent auditors a
formal written statement describing all relationships between the
independent auditors and the Company that might bear on the
independent auditors' independence consistent with Independence
Standards Board Standard No. 1, "Independence Discussions with
Audit Committees." The Audit Committee discussed with the
independent auditors any relationships that may have an impact on
their objectivity and independence and satisfied itself that the
non-audit services provided by the independent accountants are
compatible with maintaining its independence.
Based on the above-mentioned review and discussions with
management and the independent auditors, the Audit Committee
recommended to the Board of Directors that the Company's audited
consolidated financial statements be included in the Company's
Annual Report on Form 10-K for the fiscal year ended November 30,
2002 for filing with the Securities and Exchange Commission.
The Audit Committee:
JOHN G. LOONEY, MD
Daniel A. Page
Suhail R. Rizvi
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During 2002, the Executive Compensation Committee of the
Board of Directors was comprised of John G. Looney, MD, Daniel A.
Page and Marc B. Crossman. Mr. Crossman resigned from this
Committee when he was appointed to be the Company's Chief
Financial Officer. Mr. Suhail R. Rizvi replaced Mr. Crossman on
the Executive Compensation Committee.
During 2002, no executive officer of the Company served on
the board of directors or compensation committee of any other
entity that had one or more executive officers serving as a
member of the Board or Executive Compensation Committee of the
Company.
REPORT OF THE EXECUTIVE COMPENSATION COMMITTEE
As the Company's business grows, the Executive Compensation
Committee expects to work closely with management to design an
executive compensation program to assist the Company in
attracting and retaining needed outstanding executives and senior
management personnel. The design and implementation of such
program will evolve as needed, but will be based primarily on two
elements: (i) providing compensation opportunities that are
competitive with competing companies of similar size; and (ii)
linking executives' compensation with the Company's or a
division's financial performance by rewarding the achievement of
short-term and long-term objectives of the Company.
The three principal components of the executive
compensation program are expected to include annual base salary,
short-term incentive compensation in the form of performance
bonuses payable in cash each year, and long-term incentive
compensation in the form of stock options. The Company has not
previously needed to attract additional executive management
through its compensation arrangement, but expects have such
requirements in the near future. Executive officers of the
Company are elected on an annual basis and serve at the
discretion of the Board of Directors.
Mr. Jay Furrow became Chief Executive Officer in July 2002,
succeeding Ms. Patricia Anderson, who currently serves as the
Company's President. Prior to December 2002, the annual base
salary for both Mr. Furrow and Ms. Anderson was $150,000 and
$200,000 respectively. As of December 2002, the annual
compensation for both Mr. Furrow and Ms. Anderson was increased
to $275,000 in base salary in addition to each receiving, in
December 2002, a stock option grant of 100,000 of common stock
with an exercise price of $2.40 per share expiring in December
2007. Up to 1,000,000 shares of Common Stock, subject to
adjustment as provided in the 2000 Employee Plan, may be issued
under the 2000 Employee Plan. n an effort to conserve the amount
of Common Stock which can be issued under the 2000 Employee Plan,
the option grants made to the Company's Chief Executive Officer
and President were made outside of the Company's 2000 Employee
Plan. As such, the grant is subject to shareholder approval(see
Proposal 2 below).
During fiscal 2002, the Executive Compensation Committee
met during the Company's Board meeting held on November 27, 2003
at which time the Executive Compensation Committee voted in favor
of granting the Company's Chief Executive Officer, Samuel J.
Furrow, Jr. and the Company's President, Patricia Anderson each a
raise to an annual salary of $275,000 and 100,000 options priced
at $2.40 subject to shareholder approval. Such compensation was
recommend by the Executive Compensation Committee and approved by
the full Board of Directors and was based on individual
performance and analysis of compensation for the positions at
comparative companies.
Neither Ms. Anderson nor Mr. Furrow have employment
agreements with the Company.
The Compensation Committee:
John G. Looney, MD
Daniel A. Page
Suhail R. Rizvi
The foregoing report of the Compensation Committee shall
not be deemed incorporated by reference by any general statement
incorporating by reference the Proxy Statement into any filing
under the Securities Act of 1933, as amended, or the Exchange
Act, and shall not otherwise be deemed filed under such Acts.
Executive Compensation and Other Information
Summary Compensation Table. The following table sets forth
the compensation paid to the Chief Executive Officer of the
Company during fiscal 2002 and to the other executive officer of
the Company who received annual compensation in excess of
$100,000 during fiscal 2002 (the "Named Executive Officers")
during fiscal years 2002, 2001 and 2000.
Summary Compensation Table
Annual Compensation(1) Long-term Compensation
Name and Other Annual Options/
Principal Position Year Salary Bonus Compensation(2) SARs
------------------ ---- ------ ----- -------------- ----
Samuel J. Furrow, Jr. 2002 $160,000 -- -- --
CEO and COO 2001 143,000 -- -- 150,000
2000 100,000 -- -- --
Patricia Anderson-Lasko 2002 $206,000 -- -- --
President 2001 200,000 -- -- 300,000
2000 195,000 -- -- --
Joe Dahan 2002 $100,000 -- -- --
President, Joe's Jeans, Inc. 2001 61,538 -- -- 250,000
2000 -- -- -- --
(1) No executive officer received restricted stock awards or
option grants during the fiscal year ending November 30, 2002;
(2) Does not include any royalties payable to Mr. Dahan by the
Company for the acquisition of the licensing rights to the JD
logo and Joe's Jeans trademark for all apparel and accessory
products from JD Design, LLC, a company owned by Dahan.
Employment Contracts, Termination of Employment and Change in
Control
The Company has entered into no employment or severance
agreements other than an employment agreement with Joe Dahan.
The employment agreement with Mr. Dahan, the President of the
Company's Joe's Jeans, Inc. subsidiary, stipulates that Mr. Dahan
shall receive an annual salary of $100,000. Mr. Dahan's
employment agreement can be terminated by either party by given
60 days written notice prior to the anniversary date of the
agreement acknowledging either parties desire to terminate the
agreement.
EQUITY COMPENSATION PLAN INFORMATION
The following table sets forth certain information about the
Common Stock that may be issued upon the exercise of options,
warrants and rights under all of the Company's compensation plans
(including individual compensation arrangements) under which
equity securities of the Company are authorized for issuance,
which includes the Company's 2000 Employee Stock Incentive Plan
(the "2000 Employee Plan") and 2000 Director Plan. The table
does not include the aggregate of 200,000 shares of Common Stock
issued to each of the Company's Chief Executive Officer and
President, subject to approval and ratification of the option
grants by the shareholders.
Number of Securities
Remaining Available For
Future Issuance Under
Number of Securities to Weighted Average Equity Compensation
be Issued Upon Exercise Exercise Price of Plan
of Outstanding Options, Outstanding Options, (excluding securities
Plan Category Warrants and Rights Warrants and Rights reflected in Column (a))
------------- ------------------- ------------------- ------------------------
(a) (b) (c)
Equity compensation plans(1)
approved by security holders:
2000 Employee Plan 280,000 $1.00 720,000
2000 Director Plan 142,564 $0.67 357,436
Equity compensation plans not
approved by security holders:
Pat Anderson-Lasko(2) 300,000 $1.25 0
Samuel (Jay) Furrow(3) 275,000 $2.71 0
not approved by
Total 997,564 1,077,436
(1) See "2000 Employee Stock Incentive Plan" and "2000 Director
Stock Incentive Plan" described above.
(2) Options have an exercise price of $1.25 per share and expire
June 5, 2005.
(3) Includes 150,000 shares subject to exercisable options with
an exercise price of $1.25 per share and expire June 5, 2005;
100,000 shares subject to currently exercisable options with an
exercise price of $4.75 and expire in February 2004; 25,000
shares subject to currently exercisable options with an exercise
price of $3.31 per share and expire in July 2003.
STOCK PLANS
2000 Employee Plan
The 2000 Employee Plan provides for the grant of options to
officers, employees and consultants of the Company and its
affiliates (an "Affiliate"). The 2000 Employee Plan continues in
effect until March 2010, unless terminated earlier. Options
granted under the 2000 Employee Plan may be either "incentive
stock options" ("ISOs") within the meaning of Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code"), or
nonqualified stock options ("NQSOs").
The 2000 Employee Plan is administered by the Board of
Directors. The Board of Directors has full authority in its
discretion to determine the officers and key employees of the
Company or its affiliates to whom stock incentive options will be
granted and the terms and provisions of stock incentive options,
subject to the requirements and limitations of the 2000 Employee
Plan. Subject to the provisions of the 2000 Employee Plan, the
Board of Directors has full and conclusive authority to interpret
the 2000 Employee Plan; to prescribe, amend and rescind rules and
regulations relating to the 2000 Employee Plan, to determine the
terms and provisions of the respective stock incentive agreements
and to make all other determinations necessary or advisable for
the proper administration of the 2000 Employee Plan.
The 2000 Employee Plan is intended to: (a) provide incentive
to officers and key employees of the Company and its affiliates
to stimulate their efforts toward the continued success of the
Company and to operate and manage the business in a manner that
will provide for the long-term growth and profitability of the
Company; (b) encourage stock ownership by officers and key
employees by providing them with a means to acquire a proprietary
interest in the Company, acquire shares of stock, or to receive
compensation which is based upon appreciation in the value of the
stock; and (c) provide means of obtaining, rewarding and
retaining key personnel and consultants.
The number of shares of stock as to which a stock incentive
may be granted will be determined by the Board of Directors in
its sole discretion, subject to the limitations of the 2000
Employee Plan. To the extent required under Section 162(m) of
the Code and the regulations thereunder for compensation to be
treated as qualified performance based compensation, the maximum
number of shares of stock with respect to which options may be
granted during any one year period to any employee many not
exceed 500,000.
Stock option grants issued under the 2000 Employee Plan may
be granted only to officers, and key employees and consultants of
the Company, or any Affiliate of the Company. The aggregate fair
market value (determined as at the date an ISO is granted) of
stock with respect to which stock options intended to meet the
requirements of the Code Section 422 become exercisable for the
first time by an individual during any calendar year under all
plans of the Company and its subsidiaries may not exceed
$100,000; provided further, that if the limitation is exceeded,
the ISOs which cause the limitation to be exceeded will be
treated as NQSOs.
The 2000 Employee Plan was adopted by the Company's Board of
Directors on March 12, 2000 and approved by stockholders at the
2000 annual meeting. Up to 1,000,000 share of Common Stock,
subject to adjustment as provided in the 2000 Employee Plan, may
be issued under the 2000 Employee Plan. As of March 25, 2003,
280,000 shares have been issued under the Company's 2000 Employee
Plan. Awards under the 2000 Employee Plan are discretionary.
Therefore, it is not possible to determine the benefits that will
be received in the future by participants in the 2000 Employee
Plan.
Federal Income Tax Consequences of Options
The following is a brief summary of certain Federal
income tax aspects of awards of options to Company employees
under the 2000 Employee Plan and otherwise based upon the Federal
income tax laws in effect on the date hereof. This summary is
not intended to be exhaustive and does not describe state or
local tax consequences.
An optionee will not realize taxable income upon the
grant of an ISO. In addition, an optionee will not realize
taxable income upon the exercise of an ISO, provided that such
exercise occurs no later than three months after the optionee's
termination of employment with the Company (one year in the event
of a termination on account of death or disability). However, an
optionee's alternative minimum taxable income will be increased
by the amount that the fair market value of the shares acquired
upon exercise of an ISO, generally determined as of the date of
exercise, exceeds the exercise price of the option. If an
optionee sells the shares of Common Stock acquired upon exercise
of an ISO, the tax consequences of the disposition depend upon
whether the disposition is qualifying or disqualifying. The
disposition of the shares is qualifying if made more than two
years after the date of the ISO was granted and more than one
year after the date the ISO was exercised. If the disposition of
the shares is qualifying, any excess of the sale price of the
shares over the exercise price of the ISO would be treated as
long-term capital gain taxable to the option holder at the time
of the sale. If the disposition is not qualifying, i.e., a
disqualifying disposition, the optionee will recognize ordinary
compensation income in an amount equal to the lesser of the
difference between (a) the exercise price and the fair market
value of the shares on the date of exercise or (b) the exercise
price and the sales proceeds. Any remaining gain or loss will be
treated as a capital gain or loss. Unless an optionee engages in
a disqualifying disposition, the Company will not be entitled to
a deduction with respect to an ISO. However, if an optionee
engages in a disqualifying disposition, the Company generally
will be entitled to a deduction in the same amount and at the
same time as compensation income is taxable to the optionee.
An optionee will not realize taxable income upon the
grant of an NQSO. However, when the optionee exercises the NQSO,
the difference between the exercise price of the NQSO and the
fair market value of the shares acquired upon exercise of the
NQSO on the date of exercise is ordinary compensation income
taxable to the optionee. The Company generally will be entitled
to a deduction in the same amount and at the same time as
compensation income is taxable to the optionee.
2000 Director Plan
The purpose of the 2000 Director Plan is to permit the
granting of stock options to Directors of the Company who are not
employees of the Company at an exercise price less than market
value at the date of grant in lieu of paying Directors' fees in
cash, thereby advancing the interests of the Company by
encouraging and enabling the acquisition of its common stock by
Directors whose judgment and ability are relied upon by the
Company for the attainment of its long-term growth and
development. Accordingly the 2000 Director Plan is intended to
promote a close identity of interest among the Company, the
Directors, and its stockholders, as well as to provide a means to
attract and attain well-qualified Directors. The 2000 Director
Plan was adopted by the Company's Board of Directors on September
13, 2000 and approved by stockholders at the 1999 annual
shareholder's meeting.
There are authorized for issuance or delivery upon the
exercise of options to the be granted from time to time under the
2000 Director Plan an aggregate of 500,000, subject to adjustment
as provided in the 2000 Director Plan. As of March 25, 2002,
142,564 shares have been issued under the 2000 Director Plan.
The 2000 Director Plan is administered by the Executive
Compensation Committee, which shall consist of not less than two
Directors appointed by the Board.
The 2000 Director Plan provides for the automatic grant of
options to directors of the Company and its affiliates and
subsidiaries (an "Affiliate") in place of director's fee payable
in cash. Each non-management member of the Board of Directors
receives annual compensation in the form of options to buy Common
Stock with a nominal initial value of $10,000. Board Members
currently do not receive additional compensation for serving on
the Company's Board committees.
Each option has an exercise price equal to one-half of the
market price on the date of grant, and covers a number of shares
equal to $10,000 divided the exercise price per share. The market
price is determined as of the close of business on the day of the
Company's Board meeting immediately following the Company's
annual shareholder meeting. The 2000 Director Plan will continue
in effect until September 2010, unless terminated earlier.
Options granted under the 2000 Director Plan are nonqualified
stock options.
During 2002, the non-employee directors received exercisable
20-year term options to purchase 10,000 shares with an exercise
price of $1.00 per share under the Company's 2000 Director Plan
in lieu of cash directors' fees.
Aggregated Option/SAR Exercised in 2002 and Year-end Option/SAR
Values
The following table sets froth certain information with
respect to stock options exercised by the Named Executive
Officers during the fiscal year ended November 30, 2002. In
addition, the table sets forth the number of shares covered by
unexercised stock options held by the Named Executive Officers as
November 30, 2002, and the value of "in-the-money" stock options,
which represents the positive spread between the exercise price
of a stock and the market price of the shares subject to such
option as of November 30, 2002.
Shares Number of Unexercised Value of Unexercised
Acquired Options/SARs at FY-End In-the-Money Options/SARs
on Value (#) Exercisable/ ($) Exercisable/
Name Exercise Realized Unexercisable Unexercisable
---- -------- -------- ------------- -------------
Samuel J. Furrow Jr. 0 0 275,000/0 $597,500(1)(2)(3)
Pat Anderson-Lasko 0 0 400,000/0 $425,000(1)(2)
Joe Dahan 0 0 250,000/0 $425,000(1)
(1) Based on a closing price per share of $2.60 for the Common
Stock on November 30, 2002, as reported by the Nasdaq Small Cap
Market.
(2) Does not include a stock option grant of 100,000 shares of
common stock with an exercise price of $2.40 per share expiring
in December 2007 which was granted to each of Furrow and Anderson-
Lasko in December 2002; the grants are subject to shareholder
approval pursuant to Proposal 3 herein.
(3) Does not include warrants for the purchase of up to 750,000
shares with an exercise price of $2.10 per share and expiration
of October 2003 which were acquired by Furrow in a debtassumption
transaction in October 2000 and is unrelated to compensation.
Stock Performance Graph
The following graph compares the cumulative total
stockholder return of the Company, the NASDAQ Stock Market (U.S.
companies) Index (the "Nasdaq Market Index") and the NASDAQ Non-
Financial Stocks Index. Measurement points are the last trading
day of each of the Company's fiscal years ended November 30,
1997, November 30, 1998, November 30, 1999, November 30, 2000,
December 1, 2001 and November 30, 2002. The graph assumes that
$100 was invested on November 30, 1997 in the Common Stock of the
Company, the Nasdaq Market Index and the Nasdaq Non-Financial
Stocks Index and assumes reinvestment of any dividends. The stock
price performance on the following graph is not necessary
indicative of future stock price performance.
INNOVO GROUP, INC.
COMPARISON OF CUMULATIVE TOTAL RETURN
TO NASDAQ MARKET INDEX AND
NASDAQ NON-FINANCIAL INDEX
(PERFORMANCE GRAPH)
1997 1998 1999 2000 2001 2002
---- ---- ---- ---- ---- ----
Innovo Group Inc. $100 $ 21.91 $ 24.29 $ 12.39 $ 29.86 $ 39.60
NASDAQ Stock Market(US) $100 $122.59 $210.61 $163.33 $121.68 $ 93.92
NASDAQ Non-Financial
Stocks $100 $124.42 $224.33 $172.06 $122.73 $ 90.68
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company has adopted a policy requiring that any material
transactions between the Company and persons or entities
affiliated with officers, directors or principal stockholders of
the Company be on terms no less favorable to the Company than
reasonably could have been obtained in arms' length transactions
with independent third parties. Related party transactions are
approved by a majority of the disinterested directors.
Anderson Stock Purchase Agreement
Pursuant to a Stock Purchase Right Award granted in February
1997, the Company's president purchased 250,000 shares of common
stock (the Award Shares) with payment made by the execution of a
non-recourse note (the Note) for the exercise price of $2.81 per
share ($703,125 in the aggregate). The Note was due, without
interest, on April 30, 2002, and was collateralized by the 1997
Award Shares. The Note may be paid or prepaid (without penalty)
by (i) cash, or (ii) the delivery of the Company's common stock
(other than the Award Shares) held for a period of at least six
months, which shares would be credited against the Note on the
basis of the closing bid price for the common stock on the date
of delivery.
On July 18, 2002, the Board of Directors voted in favor of
extending the term of Note until April 30, 2005. The remaining
provisions of the Note remained the same. At November 30, 2002,
$703,000 remains outstanding under this promissory note.
Purchases of Goods and Services
During fiscal 2000, the Company restructured its operations
to focus on its core product categories with the highest volume
and profit margin. The Company also raised additional working
capital and converted certain indebtedness to equity. The
restructuring was undertaken as a condition to the equity
investment by the Commerce Group, a strategic investment partner,
and resulted in Commerce and its affiliates becoming an affiliate
of the Company. In an effort to reduce product costs and
increase gross profit, the Company shifted manufacturing to third-
party foreign manufacturers and outsourced certain distribution
functions to the Commerce Group to increase the effectiveness of
the distribution network and reduce freight costs. In September
2000, the Company completed the closure of its Knoxville,
Tennessee, manufacturing and distribution operations and
realigned these functions in accordance with terms under certain
supply and distribution agreements with Commerce Group.
These agreements provide for Commerce Group or its
designated affiliates to manufacture and supply specified craft
products to the Company at agreed upon prices. In addition,
Commerce Group provides distribution services to the Company for
its craft products for an agreed upon fee, including warehousing,
shipping and receiving, storage, order processing, billing,
customer service, information systems, maintenance of inventory
records, and all direct labor and management services. These
agreements, which expired in 2002, were renewed for a two-year
term ending 2004 and are renewable thereafter for consecutive two-
year terms unless terminated by either party with 90 days notice.
Purchases of craft goods and distribution services during the
initial term were subject to a minimum of $3,000,000, which the
Company purchased from Commerce Group during the first term of
the agreement. No minimum obligation is required for the renewal
periods.
As required under the terms of the Commerce Group
investment, the Company's Innovo subsidiary purchased its craft
goods and distribution and operational services from Commerce
Group in fiscal 2002, 2001 and 2000. The services purchased
included but were not limited to accounts receivable collections,
certain general accounting functions, inventory management and
distribution logistics. The following schedule represents
Innovo's purchases from Commerce Group during fiscal 2002, 2001
and 2000 (in thousands):
Innovo
2002 2001 2000
Goods $3,317 $2,320 $3,108
Distribution Services 644 362 196
Operational Services 203 112 --
----- ----- -----
Total $4,164 $2,794 $3,304
----- ----- -----
----- ----- -----
During fiscal 2002 and fiscal 2001, Joe's and IAA purchased
goods and services from Commerce Group. Joe's and IAA did not
purchase goods or services from Commerce Group in 2000. The
purchases were made based on Joe's and IAA's needs during the
period and were not made pursuant to contractual obligations.
The distribution expenses are reflected in the cost of goods sold
in the Company's financial statements. The following schedule
represents Joe's and IAA's purchases from Commerce Group (in
thousands):
Joe's IAA
2002 2001 2002 2001
Goods $6,102 $1,102 $6,171 $1,794
Distribution Services 107 20 -- --
----- ----- ----- -----
Total $6,209 $1,122 $6,171 $1,794
----- ----- ----- -----
----- ----- ----- -----
Additionally, the Company is charged an allocation expense
from Commerce Group for expenses associated with the Company
occupying space in Commerce Group's Commerce Group, California
facility and the use of general business machines and
communication services. These expenses totaled approximately
$25,000 for fiscal 2002 and fiscal 2001.
The Company from time to time will advance or loan funds to
Commerce Group for use in the production process of the Company's
goods or for other expenses associated with the Company's
operations. The Company believes that all the transactions
conducted between the Company and Commerce Group were completed
on terms that where competitive and at market rates.
As part of the Commerce Group transaction completed in 2000, Mr.
Hubert Guez, a principal of the Commerce Group, was given the
right to nominate three directors to the Company's Board of
Directors. Additionally, if elected, one of Mr. Guez's nominees
shall have the right to serve on each of the Company's Board
committees.
JD Design, LLC
Pursuant to the license agreement entered into with JD
Design, LLC under which the Company obtained the licensing rights
to Joe's Jeans, Joe's Jeans, Inc. is obligated to pay a 3%
royalty on the net sales of all products bearing the Joe's Jeans
or JD trademark or logo. Joe Dahan, the President of the
Company's Joe's Jeans, Inc. subsidiary, is a principal of JD
Design, LLC. For fiscal 2002 and 2001, this amount totaled
$277,000 and $46,000, respectively.
Azteca Production International, Inc.
In the third quarter of fiscal 2001, the Company acquired
Azteca Productions International, Inc.'s Knit Division and formed
the subsidiary Innovo-Azteca Apparel, Inc. Azteca Production
International, Inc. is an affiliate of the Commerce Group and Mr.
Hubert Guez. Pursuant to equity transactions completed in 2000,
Azteca Production International, Inc. and its principals,
including Mr. Hubert Guez, became affiliates of the Company. The
Company purchased the Division's customer list, the right to
manufacture and market all of the Knit Division's current
products and entered into certain non-compete and non-
solicitation agreements and other intangible assets associated
with the Knit Division. As consideration, the Company issued to
Azteca, 700,000 shares of Company's common stock valued at $1.27
per share based upon the closing price of the common stock on
August 24, 2001, and promissory notes in the amount of $3.6
million. Included in due to related parties is $2,250,000 at
November 30, 2002 relating to amounts due to Commerce Group for
goods and services described above.
Facility Lease Arrangements
The Company currently leases its Knoxville, TN office and
storage space from a company owned by Sam Furrow, the Company's
Chairman. The office space is approximately 5,000 square feet
consisting of the first floor of a two-story building located in
downtown Knoxville, Tennessee, with a monthly rental of $3,500
triple net. The storage space is used by the Company to store
its documents and is currently rented on a month-to month basis
for $450 per month.
Crossman Loan to the Company
On February 7, 2003 the Company entered into a loan
agreement with Marc Crossman, a member of the Company's Board of
Directors and Chief Financial Officer. The loan was funded by Mr.
Crossman in two phases of $250,000 each on February 7, 2003 and
February 13, 2003 for an aggregate loan value of $500,000. In the
event of default, each phase is collateralized by 125,000 shares
of the Company's common stock as well as a general claim on the
assets of the Company, subordinate to existing lenders. Each
phase matures six months and one day from the date of its
respective funding, at which point the principal amount and any
accrued interest is due in full. The loan carries an 8%
annualized interest rate with interest due on a monthly basis.
The loan may be repaid by the Company at any time during the term
of the loan without penalty. Further, the Company has the option
to extend the term of the loan for an additional period of six
months and one day at anytime before maturity. The disinterested
directors of the Company approved the Loan from Mr. Crossman.
Joseph Mizrachi and Yardworth Mortgage Corp. Transactions
Pursuant to a convertible note and pledge agreement dated on
or about November 1, 2000 ("Note") whereby Yardworth Mortgage
Corp. ("Yardworth") loaned Joseph Mizrachi ("Mizrachi")
$1,500,000, Yardworth had the right to convert the outstanding
Note into an 85% membership interest in Innovation, LLC, a
Delaware limited liability company ("Innovation"), wholly-owned
by Mizrachi. Innovation owns 1,812,500 shares of the Company and
1,500,000 shares of common stock subject to currently exercisable
warrants with an exercise price of $2 per share expiring October
31, 2003. Yardworth's 85% membership interest in Innovation
equals 1,540,625 shares of the Company and 1,275,000 shares of
common stock subject to currently exercisable warrants to
purchase shares of the Company. On February 6, 2003, Yardworth
provided written notice to Mizrachi that it was converting the
Note into the 85% membership interest in Innovation effective
February 21, 2003. Yardworth has the right to vote all shares and
warrants owned by Innovation. Seymour Braun, an attorney located
at 110 East 59th Street, Suite 3201, New York, NY 10022, is the
sole trustee of Praha Trust ("Praha"), a trust organized under
the laws of Canada, with an address of 105 Penstraat, Curacao,
Netherlands Antilles. Praha is the beneficial owner of Yardworth.
This information is based solely upon information set forth in a
Schedule 13D filed with the Securities and Exchange Commission,
dated March 6, 2003.
Pursuant to an investment with Mizrachi and his affiliates,
in October 2000, the Company granted Mizrachi the right to
nominate on individual to serve on the Company's Board of
Directors, and if elected, the nominated Director shall have the
right to serve on each of the Company's Board committees.
Section 16 Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires the Company's
directors, officers and persons who beneficially 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 (the "Commission") on
a timely basis. Directors, officers and greater than ten percent
beneficial owners are required by the Commission's regulations to
furnish the Company with copies of all Section 16(a) forms they
file.
Based solely on a review of copies of such forms furnished
to the Company and certain of the Company's internal records, or
upon written representations that no Form 5s were required, the
Company believes that during the year ended December 31, 2001,
all Section 16(a) filing requirements applicable to its
directors, officers and greater than ten percent beneficial
owners were satisfied on a timely basis except that Mr. Guez
inadvertently failed to timely file a Form 4 reporting the
acquisition of 500 shares in December 2001, the acquisition of
2,100 shares in January 2002 and the acquisition of 1,300 shares
in February 2002.
APPROVAL OF OPTION ISSUANCES TO THE COMPANY'S CEO AND ITS
PRESIDENT (PROPOSAL 2)
In December 2002, the Board of Directors approved the grant
of options to purchase 100,000 shares of Common Stock to each of
the Company's CEO, Samuel J. (Jay) Furrow, Jr., and the Company's
President Patricia Anderson-Lasko. Each option is immediately
exercisable at an exercise price of $2.40 per share and has a 5-
year term expiring in December 2007, subject to approval and
ratification of the grants. Up to 1,000,000 shares of Common
Stock, subject to adjustmt as provided in the 2000 Employee Plan,
may be issued under the 2000 Employee Plan. In an effort to
conserve the amount of Common Stock which can be issued under the
2000 Employee Plan,the options grants made to the Company's Chief
Executive Officer and President were made outside of the
Company's 2000 Employee Plan. As such, the grant is subject to
shareholder approval. In the event shareholder approval is not
obtained, the options will be cancelled.
The $2.40 exercise price was equal to the closing market
price of the Company's common stock on the date of the grant as
reported by NASDAQ National Market. Further, as described above
in the "Executive Compensation Committee Report on Executive
Compensation," the full Board of Directors determined that the
option grants were appropriate based on individual performance
and analysis of compensation for the positions at comparative
companies. The option agreements will not be modified or amended
in a manner that would increase the cost thereof to the Company
without shareholder approval.
NEW PLAN BENEFITS
Samuel (Jay) Furrow Plan and Patricia Anderson Plan (1)
Name Dollar Number of
and Position Value (2) Options (3)
Samuel (Jay) Furrow, CEO and $294,000 100,000
COO
Patricia Anderson, President $294,000 100,000
_______________________________
(1) Dollar Value is based upon the closing price of the
Company's common stock of $2.94 per share on the NASDAQ
National Market for March 25, 2003.
(2) Options have an exercise price of $2.40 per share and a
year term expiring in December 2007;
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSAL 2.
RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
(Proposal 3)
The Board of Directors has appointed Ernst & Young LLP,
("E&Y") as the Company's independent auditors for the fiscal year
ended November 30, 2003, subject to ratification by stockholders
at the Annual Meeting. Representatives of E&Y will be present at
the Annual Meeting and will have the opportunity to make a
statement if they so desire and be available to respond to
appropriate questions. Unless otherwise instructed on the proxy,
properly executed proxies will be voted in favor of ratifying the
appointment of E&Y to audit the books and accounts of the Company
for the fiscal year ended November 30, 2002. The affirmative
vote of a majority of the votes present in person or represented
by proxy at the Annual Meeting is required to approve Proposal 3.
For the fiscal year ended November 30, 2002, E&Y billed the
approximate fees set forth below:
Audit Fees
The aggregate fees billed for professional services rendered
by E&Y for the audit of the Company's consolidated financial
statements for the fiscal year ended November 30, 2002, including
the reviews of the Company's condensed consolidated financial
statements included in its quarterly reports on Form 10-Q during
the fiscal year ended November, 30 2002, were approximately
$203,917. E&Y also billed the Company $49,211 for audit related
services, which primarily consisted of accounting consultations
and audit work related to an acquired business.
Financial Information Systems Design and Implementation Fees
E&Y did not render any services to the Company related to
financial information systems design and implementation during
the fiscal year ended November 30, 2002.
All Other Fees
The aggregate fees billed for all other professional
services rendered by E&Y during the fiscal year ended November
30, 2002 other than those described above were approximately
$16,580. These services consisted primarily of tax return
preparation fees.
The Audit Committee has determined that the services
provided by E&Y were compatible with maintaining E&Y's
independence.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSAL 3.
2004 STOCKHOLDER PROPOSALS
The Company expects to hold its 2004 annual meeting of
stockholders in May 2004. Stockholders of the Company may submit
proposals that they believe should be voted upon at the 2004
annual meeting consistent with regulations of the Securities and
Exchange Commission and the Company's Bylaws.
Pursuant to Rule 14a-8 under the Securities Exchange Act of
1934, some stockholder proposals may be eligible for inclusion in
the Company's 2004 proxy statement. Any such stockholder
proposals must be submitted in writing to and received by the
Secretary of the Company at 5900 S. Eastern Ave., Suite 104,
Commerce, California 90040 no later than December 23, 2003. The
submission of a stockholder proposal does not guarantee that it
will be included in the Company's proxy statement.
A stockholder may also submit a proposal for consideration
outside of Rule 14a-8. Pursuant to Rule 14(a)(4)(c)(1), a
stockholder may submit a proposal for consideration at the annual
meeting. Any such stockholder proposals to be considered at the
annual meeting must be submitted in writing to and received by
the Secretary of the Company no later than March 8, 2004. The
submission of a stockholder proposal does not guarantee that it
will be presented at the annual meeting.
Stockholders interested in submitting a proposal are advised
to contact knowledgeable legal counsel with regard to the
detailed requirements of applicable federal securities laws and
the Company's Bylaws, as applicable.
OTHER BUSINESS TO BE TRANSACTED
As of the date of this Proxy Statement, the Board of
Directors knows of no other business which may come before the
Annual Meeting. If any other business is properly brought before
the Annual Meeting, it is the intention of the proxy holders to
vote or act in accordance with their best judgment with respect
to such matters.
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE
YEAR ENDED NOVEMBER 30, 2002 ACCOMPANIES THIS PROXY STATEMENT.
STOCKHOLDERS MAY OBTAIN, FREE OF CHARGE, AN ADDITIONAL COPY OF
THE COMPANY'S 2002 ANNUAL REPORT ON FORM 10-K (WITHOUT EXHIBITS)
BY WRITING TO INNOVO GROUP INC., ATTENTION: INVESTOR RELATIONS,
5900 S. EASTERN AVE, SUITE 124, COMMERCE, CA 90040. THE COMPANY
WILL PROVIDE COPIES OF THE EXHIBITS TO THE FORM 10-K UPON PAYMENT
OF A REASONABLE FEE.
INNOVO GROUP INC.
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD THURSDAY, MAY 22, 2003
THIS PROXY IS BEING SOLICITED ON BEHALF OF THE BOARD OF
DIRECTORS.
The undersigned stockholder of Innovo Group Inc. (the
"Company") hereby appoints Samuel J. Furrow, Jr., and Patricia
Anderson-Lasko or either of them, with full power of
substitution, as proxies to cast all votes, as designated below,
which the undersigned stockholder is entitled to cast at the 2003
Annual Meeting of Stockholders (the "Annual Meeting") to be held
on Thursday, May 22, at 10:00 a.m. (local time) at The Wyndham
Commerce Hotel, 5757 Telegraph Road, Commerce, CA, 90040 upon the
following matters and any other matter as may properly come
before the Annual Meeting or any adjournments thereof.
1. Election of seven Directors to serve on the Board of
Directors:
Samuel J. Furrow Samuel J. Furrow, Jr. Suhail Rizvi
Patricia Anderson-Lasko Marc B. Crossman
Daniel A. Page John G. Looney
[ ] FOR all the nominees listed above (except as
marked to the contrary below).
[ ] WITHHOLD AUTHORITY to vote for all the
nominees listed above.
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR
ANY INDIVIDUAL NOMINEE, WRITE THAT NOMINEE'S NAME
ON THE SPACE PROVIDED BELOW.)
_________________________________________________________________
2. To approve and ratify the issuance of options to
purchase an aggregate of 200,000 shares of common stock
granted to the Company's CEO and the Company's
President. The options have an exercise price of $2.40
per share and a 5-year term expiring in December 2007,
subject to approval and ratification of the option
grants by the shareholders.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. Proposal to ratify the appointment of Ernst & Young LLP
as the independent auditors of the Company for the
fiscal year ending November 30, 2002.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
_________________________________________________________________
(continued and to be dated and signed on reverse side.)
(continued from other side)
This proxy, when properly executed, will be voted as
directed by the undersigned stockholder and in accordance with
the best judgment of the proxies as to other matters. IF NO
DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED "FOR" THE NOMINEES
LISTED IN PROPOSAL 1, "FOR" PROPOSAL 2, "FOR" PROPOSAL 3, AND IN
ACCORDANCE WITH THE BEST JUDGMENT OF THE PROXIES AS TO OTHER
MATTERS.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE NOMINEES
LISTED IN PROPOSAL 1 AND "FOR" PROPOSALS 2 AND 3.
The undersigned hereby acknowledges prior receipt of the
Notice of Annual Meeting of Stockholders and Proxy Statement
dated April 21, 2003, and the Annual Report on Form10-K for the
year ended November 30, 2002, and hereby revokes any proxy or
proxies heretofore given. This Proxy may be revoked at any time
before it is voted by delivering to the Secretary of the Company
either a written revocation of proxy or a duly executed proxy
bearing a later date, or by appearing at the Annual Meeting and
voting in person.
If you receive more than one proxy card, please sign and
return all cards in the accompanying envelope.
Date: ___________________, 2003.
____________________________________
Signature of Stockholder or
Authorized Representative
Please date and sign exactly as
name appears hereon. Each executor,
administrator, trustee, guardian,
attorney-in-fact and other
fiduciary should sign and indicate
his or her full title. In the case
of stock ownership in the name of
two or more persons, all persons
should sign.
[ ] I PLAN TO ATTEND THE MAY 22, 2003 ANNUAL
STOCKHOLDERS MEETING
PLEASE COMPLETE, DATE AND SIGN THIS PROXY AND RETURN IT PROMPTLY
TO ENSURE A QUORUM AT THE MEETING. IT IS IMPORTANT WHETHER YOU
OWN FEW OR MANY SHARES. DELAY IN RETURNING YOUR PROXY MAY SUBJECT
THE COMPANY TO ADDITIONAL EXPENSE.