JD AMERICAN WORKWEAR, INC.
46 OLD FLAT RIVER ROAD
COVENTRY, RHODE ISLAND 02816
-----------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held Friday, March 27, 1998
-----------------------
To the Shareholders of
JD AMERICAN WORKWEAR, INC.:
Notice is hereby given that the Annual Meeting of Stockholders of JD
American Workwear, Inc. will be held at the offices of the Company, 46 Old
Flat River Road, Coventry, Rhode Island, on Friday, March 27, 1998 at 10:00
a.m., local time, for the purpose of considering and voting upon the
following matters:
1. To elect a Board of seven Directors to serve until the next Annual
Meeting of Stockholders and until their successors are duly
elected and qualified.
2. To approve an amendment to the Company's Certificate of
Incorporation that would increase the number of authorized shares
of Common Stock of the Company from 4,500,000 shares to 7,500,000
shares.
3. To approve an amendment to the Company's 1995 Stock Option Plan
which would increase the number of shares eligible for issuance
under the Plan from 250,000 shares to 750,000 shares.
4. To transact such other business as may properly come before the
meeting or any adjournments thereof.
Only stockholders of record as of the close of business on February
20, 1998 are entitled to receive notice of and to vote at the meeting or any
adjournment thereof.
By order of the Board of Directors
Norman DeBaene
Secretary
March , 1998
YOU ARE CORDIALLY INVITED TO ATTEND THE MEETING AND VOTE YOUR SHARES.
IN THE EVENT YOU CANNOT ATTEND, PLEASE DATE, SIGN AND MAIL THE ENCLOSED
PROXY IN THE ENCLOSED SELF-ADDRESSED ENVELOPE. A STOCKHOLDER WHO EXECUTES
AND RETURNS A PROXY IN THE ACCOMPANYING FORM HAS THE POWER TO REVOKE SUCH
PROXY AT ANY TIME PRIOR TO THE EXERCISE THEREOF.
JD AMERICAN WORKWEAR, INC.
46 OLD FLAT RIVER ROAD
COVENTRY, RHODE ISLAND 02916
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PROXY STATEMENT
-----------------------
The accompanying proxy is solicited by the Board of Directors of JD
American Workwear, Inc. (the "Company"), for the use at the Annual Meeting
of Stockholders to be held on Friday, March 27, 1998 and any adjournments
thereof.
Proxy Solicitation and Expense
Proxies in the accompanying form, properly executed and received prior
to the meeting and not revoked, will be voted as specified, or if no
instructions are given, will be voted in favor of the proposals described
herein. Proxies may be revoked at any time prior to being voted by written
notice to the Secretary of the Company. Solicitation of proxies may be made
by personal interview, mail, telephone, telegraph, telefax or e-mail by
directors, officers and employees of the Company. The expense of soliciting
proxies will be borne by the Company. The Company may also request banking
institutions, brokerage firms, custodians, trustees, nominees and
fiduciaries to forward solicitation material to the beneficial owners of the
Company's Common Stock. The approximate date on which this Proxy Statement
and the accompanying proxy card will first be mailed to stockholders is
March 6, 1998.
OUTSTANDING VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
Only stockholders of record at the close of business on February 20,
1998 will be entitled to notice of and to vote at the meeting. At the close
of business on that date, the Company had outstanding 1,964,898 shares of
Common Stock, $.002 par value, exclusive of treasury shares. Each holder of
the Company's Common Stock will be entitled to one vote for each share held.
In addition, there were 313 shares of Manditorily Convertible Series A
Preferred Stock outstanding, each of which is entitled to 1,000 votes. The
presence at the meeting, in person or by proxy, of shareholders entitled to
cast at least a majority of the votes which all shareholders are entitled to
cast on each particular matter to be considered at the meeting will
constitute a quorum for the purpose of considering such matter.
PROPOSAL NO. 1
ELECTION OF DIRECTORS
Shares represented by the enclosed proxy will, unless otherwise
directed, be voted to elect the nominees listed below to serve until the
next annual meeting of stockholders and until their successors are duly
elected and qualified. In the event of a vacancy in the list of nominees,
the holders of the enclosed proxy will vote for the election of a nominee
acceptable to the remaining nominees. Management is not aware of any person
who is unable or unwilling to stand for election or to serve if nominated.
<TABLE>
<CAPTION>
Name of Nominee Age Position with Company
- --------------- --- ---------------------
<S> <C> <C>
David N. DeBaene 38 Chairman of the Board, President and Chief
Executive Officer
Thomas A. Lisi 52 Vice President, Marketing and Director
Anthony P. Santucci 34 Treasurer and Chief Financial Officer
Elizabeth Cotter 35 Director
Dean M. Denuccio 31 Director
Steev Panneton 38 Vice President, Manufacturing and
Operations and Director
</TABLE>
David N. DeBaene, Chairman of the Board, President, and Chief
Executive Officer. Mr. DeBaene is the founder of the Company and was
responsible for obtaining the patent on the original Jaque Dubois
Construction Jean. Mr. DeBaene is responsible for all executive level
functions regarding the Company's operations and also shares responsibility
for raw materials sourcing and procurement, manufacturing arrangements,
product development, marketing and sales. Prior to founding the Company,
for 14 years Mr. DeBaene was an owner and/or foreman of a construction
company headquartered in West Warwick, Rhode Island, and also was involved
in nursing home administration from 1984 to 1990.
Thomas A. Lisi, Vice President, Marketing and Director. Mr. Lisi
became a director of the Company in January 1994, and became Vice President
of Marketing in June 1996. Mr. Lisi brings 25 years of experience in the
apparel industry to the Company. Mr. Lisi is a principal stockholder and
Chief Executive Officer of Geronimo Leathers, Inc. ("Geronimo"), a
manufacturer of mens leather apparel and outerwear with worldwide
distribution. Geronimo also specializes as a design and manufacturing
consultant to the outerwear trade and is a high volume private label
manufacturer to prominent merchants. Mr. Lisi is a member of the executive
committee of the Leather Apparel Association and is considered by his peers
to be a leading authority in the leather apparel industry. Mr. Lisi and the
Company are parties to a sales representative agreement and a consulting
agreement, and Geronimo and the Company are parties to an overseas agency
agreement. See "CERTAIN TRANSACTIONS."
Anthony P. Santucci, Treasurer and Chief Financial Officer. Mr.
Santucci became the Company's Chief Financial Officer in September 1996.
Mr. Santucci is also President of Bevco Plastics Company a privately held
corporation engaged in manufacturing and distribution of flexible vinyl
products. From 1992 to 1995, Mr. Santucci was Chief Financial Officer of
South Pointe Enterprises, Inc., a publicly held company engaged in
distribution of home videos. While at South Pointe, Mr. Santucci's
responsibilities included all accounting, financial reporting, financial
planning, risk management, tax functions, and managing a staff of 20
persons. During 1990 and 1991, Mr. Santucci was Controller of Weingeroff
Enterprises, Inc., a privately held jewelry manufacturing company. From
1988 to 1990, Mr. Santucci was Finance Manager of A. Santucci Wholesale,
Inc., a family owned and operated wholesale food service distributor.
From 1984 to 1988, Mr. Santucci was a senior accountant with Ernst & Young,
LLP (formerly Arthur Young and Company). In 1985 Mr. Santucci received a
B.S. in Business Administration from Bryant College.
Elizabeth Cotter, Director. Prior to joining the Company in January
1991, Ms. Cotter was a mortgage consultant for Providence Funding Corp. from
1989 through 1991. From March 1985 to 1989, Ms. Cotter was the director of
New England sales for Ready Capital Corp., a mortgage banking company. Ms.
Cotter holds a dual B.A./B.S. Bachelors degree from Boston University School
of Management (marketing and organizational behavior), and has taken
graduate level courses in the MBA program of the University of Rhode Island.
Ms. Cotter is the wife of David N. DeBaene.
Dean M. Denuccio, Director. Mr. Denuccio commenced serving as a
director upon the consummation of the Public Offering. Mr. Denuccio has
since 1994 been the Chief Executive Officer and principal stockholder of
Deanco Enterprises, Inc., a Providence, Rhode Island based home care health
provider which employs up to 200 home health care professionals. From 1988
to 1991, Mr. Denuccio was Chief Executive Officer and principal stockholder
of Personnel Network Services, a privately owned health care staffing
agency. From 1985 to 1988, Mr. Denuccio was a certified public accountant
with Ernest A. Almonte CPAs (1985-1987) and Ernst & Young, CPAs (1987-1988).
In 1986 Mr. Denuccio received a B.S. in Business Administration from Bryant
College, and in 1991 received a JD from University of Tulsa Law School.
Steev Panneton, Vice President, Manufacturing and Operations and
Director. Mr. Panneton has been an employee of the Company since its
inception in 1992, and has overseen and\or participated in all phases of the
Company's manufacturing operations. Mr. Panneton was elected to the Board
of Directors by the Board of Directors in January 1998 to fill the vacancy
created by the resignation of a former director.
The terms of office of all Directors of the Company are from the time
of election until the next annual meeting of stockholders and until their
respective successors are elected and qualified as provided in the Bylaws of
the Company.
The Company does not have standing audit, compensation or nominating
committees. Upon the election of the Directors listed in this Proposal No.
1, the Company anticipates that the new Board will form such committees.
The Board of Directors of the Company held 2 meetings during the
fiscal year ended February 28, 1997. In addition, the Board acted 4 times
by unanimous written consent without a meeting. Each incumbent director has
attended, during the 1997 fiscal year, at least 75% of the aggregate of all
meetings of the Board of Directors held during the period which he/she was a
director.
In January 1998, pursuant to Article XIII, Section A and Article III,
Section 2 of the Company's Bylaws, the Board of Directors voted to amend the
Bylaws of the Company to increase the number of members of the Board of
Directors from five to seven. However, as of the date of mailing of the
Company's Notice of Meeting and Proxy Statement, there are only six nominees
for the Board. Pursuant to Article III, Section 4 of the Company's Bylaws,
the Board of Directors intends to fill the vacancy in the Board of Directors
as soon as a suitable candidate can be located, to serve in such capacity
until the next annual meeting of stockholders and until his or her successor
is elected and qualified as provided in the Bylaws of the Company.
PROPOSAL NO. 2
PROPOSED AMENDMENT TO CERTIFICATE OF INCORPORATION
TO INCREASE AUTHORIZED COMMON STOCK
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE PROPOSAL
GENERAL
The Board of Directors of the Company has adopted a resolution
unanimously approving and recommending to the Company's stockholders for
their approval, an amendment to the Company's Certificate of Incorporation
to increase from 4,500,000 shares to 7,500,000 shares the number of
authorized shares of the Company's Common Stock, par value $.002 per share.
The purpose of the amendment is to increase the number of authorized shares
available for issuance for the following purposes: (i) to enable the Company
to fulfill its existing commitments to issue shares of Common Stock, as
described below; (ii) to permit the Company to obtain additional financing,
if the Board of Directors so determines; and (iii) for such other purposes
as the Board of Directors determines to be in the best interests of the
Company, including, without limitation, for working capital and capital
expenditures, acquisitions of other businesses, various employee benefit
plans, stock dividends and stock splits.
REASONS FOR INCREASE
The Company's Certificate of Incorporation, as amended, currently
authorizes the issuance of 4,500,000 shares of Common Stock, plus additional
1,000,000 shares of preferred stock. As of February 20, 1998, the Company
had 1,964,898 shares of Common Stock issued and outstanding. In addition,
there are outstanding options and warrants to acquire an aggregate 443,824
shares at exercise prices ranging from $1.50 to $4.00 as well as outstanding
convertible notes convertible into 201,389 shares of Common Stock. In
addition, there are 360,545 Class A Warrants outstanding, each of which
enable the holder thereof to purchase one share of Common Stock plus one
Class B Warrants at a purchase price of $7.00 per unit. Each Class B
Warrant, if issued, will enable the holder thereof to purchase one share of
Common Stock at a purchase price of $8.00 per share. In connection with the
Company's Initial Public Offering, the Company issued to its underwriter an
option to purchase 32,777 units each consisting of one share of Common Stock
and One Class A Warrant, at a purchase price of $8.44 per unit.
There are 1,000,000 authorized shares of "blank check" Preferred
Stock, $.001 par value, of the Company, of which the Board of Directors has
designated 600 shares as Series A Convertible Preferred Stock. As of
February 20, 1998, there were 313 shares of Series A Manditorily Convertible
Preferred Stock outstanding, which shares are convertible, in the aggregate,
into 313,000 shares of Common Stock of the Company.
The Common Stock to be authorized will have the same rights and
preferences as the Common Stock presently authorized. The holders of shares
of Common Stock have no preemptive rights. The authorization of the
additional shares of Common Stock will have no effect on the rights of
existing security holders; provided, however, that the issuance of
additional shares of Common Stock may dilute the interest of current
stockholders. Stockholders should note the potential anti-takeover effects
of the issuance of shares of Common Stock. Common Stock may be used, if the
Board of Directors determines to do so, subject to their fiduciary
obligations, so as to deter or make more difficult tender offers for stock
of the Company, thereby perpetuating management's position and potentially
denying stockholders the opportunity to receive above-market prices for
their shares. Management is not aware of any prospective tender offer for
the stock of the Company and has no present intention of using the
additional authorized shares for any such purpose.
No further approval of stockholders will be required in connection
with the issuance of additional shares of Common Stock. Management has no
specific present plans for the issuance or future use of the shares to be
authorized, other than to fulfill the Company's existing commitments to
issue Common Stock, as described above. Management believes that it is
desirable to have the remaining unreserved shares available for future use
in connection with obtaining financing and for such other purposes as the
Board of Directors determines.
VOTE REQUIRED
In order for this Proposal to be approved, a majority of all
outstanding shares of Common Stock voting as a class and a majority of all
votes entitled to be cast at the Shareholders Meeting must be voted in favor
of such amendment.
RECOMMENDATION OF THE BOARD OF DIRECTORS
For the reasons set forth above, The Board of Directors recommends to
its shareholders that they vote "FOR" this proposal. Unless otherwise
directed, proxies will be voted for the adoption of the amendment.
PROPOSAL NO. 3
PROPOSED AMENDMENT TO COMPANY'S 1995 STOCK OPTION PLAN
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE PROPOSAL
In January 1995, the Board of Directors adopted the JD American
Workwear, Inc. 1995 Stock Option Plan (the "Plan") and 500,000 shares of
Common Stock were reserved for issuance thereunder. In January 1996, the
Plan was amended to reflect the Company's two-for-one reverse stock split;
accordingly, the total number of shares that are currently authorized for
issuance under the Plan is 250,000 shares. As of February 28, 1998, all
250,000 of these shares have been issued or are subject to issuance upon
exercise of presently exercisable options.
On January 6, 1998, the Board of Directors approved an amendment to
the Plan which would increase the number of shares available under the 1995
Stock Option Plan from 250,000 shares to 750,000 shares, subject to an
increase in the number of shares of Common Stock authorized for issuance by
the Company. See Proposal No. 1 above. The additional 500,000 shares should
allow the Plan to continue to make offerings to attract and retain necessary
officers, employees, directors and consultants. This amendment to the Plan
will not take effect until it is approved by the affirmative vote of the
holders of a majority of the securities present, or represented, and
entitled to vote at the Annual Meeting.
SUMMARY OF THE 1995 STOCK OPTION PLAN
The Plan, adopted by the Company's Board of Directors in February 1995
and by the stockholders in July 1995, provides for the issuance of options
("Options") to employees, officers and, under certain circumstances,
directors of and consultants to the Company ("Eligible Participants").
Options granted under the plan may be either "incentive stock options"
("ISOs") as defined in Section 422 of the Internal Revenue Code of 1986, as
amended (the "Code") or "nonqualified stock options" ("NQSOs"). The Plan
does not provide for the issuance of stock appreciation rights but does
permit the granting of restricted stock and deferred stock awards. A total
of 250,000 shares of Common Stock are currently reserved for issuance under
the Plan,; however, as of February 10, 1998, all of the shares reserved for
issuance under the Plan have been issued or are issuable upon exercise of
presently exercisable options. The Plan is presently administered by the
Board of Directors, however, upon the election of directors set forth in
Proposal No. 1, above, it is anticipated that the Board of Directors will
name a Compensation Committee of the Board of Directors ("Committee"). The
Committee will have sole discretion and authority, consistent with the
provisions of the Plan, to select the Eligible Participants to whom Options
will be granted under the Plan, the number of shares which will be covered
by each Option and the form and terms of the agreement to be used. All
employees and officers of the Company (except for members of the Committee)
are eligible to participate in the Plan. Directors are eligible to
participate only if they have been declared to be "eligible directors" by
resolution of the Board of Directors. Members of the Committee are not
Eligible Participants. At February 10, 1998, approximately 12 persons were
eligible to receive ISOs under the Plan.
Options. The Committee is empowered to determine the exercise price
of Options granted under the Plan, but the exercise price of ISOs must be
equal to or greater than the fair market value of a share of Common Stock on
the date the Option is granted (110% with respect to optionees who own at
least 10% of the outstanding Common Stock). The exercise price of NQSOs
granted under the Plan must not be less than 85% of the fair market value of
the Common Stock on the date the Option is granted. The Committee has the
authority to determine the time or times at which Options granted under the
Plan become exercisable, but the Options expire no later than ten years from
the date of grant (five years with respect to Optionees who own at least 10%
of the outstanding Common Stock of the Company). The Options are
nontransferable, other than by will and the laws of descent, and generally
may be exercised only by an employee while employed by the Company or within
90 days after termination of employment (one year from termination resulting
from death or disability).
There were no grants of Options under the Plan during fiscal 1997,
although after the close of the fiscal year, NQSOs to purchase 200,000
shares were granted to a financial consultant. Subsequent thereto, in
connection with the extension of the consulting agreement with said
consultant, options to purchase 50,000 of said shares were cancelled, and
the consultant was issued 50,000 shares plus an additional 9,500 shares.
The balance of the stock options have been exercised.
As of the date of this report, there are outstanding NQSOs to purchase
12,500 shares issued to Mr. Lisi, having an exercise price of $1.50 per
share. In connection with the Public Offering, the Company agreed to
restrict the amount of Options available for grant under the Plan to 15% of
the number of shares of Common Stock outstanding.
VOTE REQUIRED
In order for this Proposal to be approved, a majority of all
outstanding shares entitled to be cast at the Shareholders Meeting must be
voted in favor of such amendment.
RECOMMENDATION OF THE BOARD OF DIRECTORS
For the reasons set forth above, the Board of Directors recommends to
its shareholders that they vote "FOR" this proposal. Unless otherwise
directed, proxies will be voted for the adoption of the amendment.
MANAGEMENT
The following is a list of the Company's executive officers, their
ages and their positions and offices:
<TABLE>
<CAPTION>
Name Age Position with Company
- ---- --- ---------------------
<S> <C> <C>
David N. DeBaene 38 Chairman of the Board, President and Chief
Executive Officer
Thomas A. Lisi 52 Vice President, Marketing and Director
Anthony P. Santucci 34 Treasurer and Chief Financial Officer
Steev Panneton 38 Vice President, Operations
</TABLE>
Mr. DeBaene's biography is included above under Proposal No. 1 --
Election of Directors.
Mr. Lisi's biography is included above under Proposal No. 1 --
Election of Directors.
Mr. Santucci's biography is included above under Proposal No. 1 --
Election of Directors.
Mr. Panneton's biography is included above under Proposal No. 1 --
Election of Directors.
All officers hold office at the pleasure of the Board of Directors.
See "Executive Compensation - Employment Agreements" below. None of the
Company's executive officers has a family relationship with any Director or
other executive officer of the Company, other than Mr. DeBaene, who is the
husband of Elizabeth Cotter, a Director of the Company.
EXECUTIVE COMPENSATION
The following table sets forth a summary for the fiscal years ended
February 28, 1997, 1996, and 1995, respectively, of the cash and non-cash
compensation awarded, paid or accrued, by the Company to the President and
CEO and to the Company's second most highly compensated executive officer
who was serving as such at the end of fiscal 1997 (collectively, he "named
executive officers"). The Company at no time during the last three fiscal
years had more than two named executive officers and no officer of the
company earned annual compensation of $100,000 or more.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term
Compensation
Compensation Options by Annual
Name and Fiscal ---------------- No. of All Other
Principal Position Year Salary Bonus Shares Compensation
- ------------------ ------ ------ ----- ------------ ------------
<S> <C> <C> <C> <C> <C>
David N. DeBaene, 1997(1) $85,000 - - -
President and CEO 1996 57,557 0 - -
1995 42,498 650 - -
Anthony P. Santucci, 1997 7,500 - - -
CFO 1996 - - - -
1995 - - - -
<FN>
<F1> Under his employment agreement, Mr. DeBaene was entitled to be paid at
a rate of $85,000 per annum, however, in order to conserve cash, has
agreed to defer approximately $10,000 of such compensation.
</FN>
</TABLE>
The Company does not have any annuity, retirement, pension, deferred
or incentive compensation plan or arrangement under which any executive
officers are entitled to benefits, nor does the Company have any long-term
incentive plan pursuant to which performance units or other forms or
compensation are paid. Executive officers who qualify will be permitted to
participate in the Company's 1995 Stock Option Plan which was adopted in
February 1995. See "Stock Option Plan." Executive officers may participate
in group life, health and hospitalization plans if and when such plans are
available generally to all employees.
Employment Agreements
Effective as of March 1, 1995, the Company entered into an employment
agreement with David N. DeBaene as Chairman and President. The agreement is
for a base term of five (5) years, and is thereafter renewable for
additional periods of three (3) years, unless the Company gives notice to
the contrary. In accordance with his agreement with the Company, Mr.
DeBaene's first year base salary is $65,000, increasing annually thereafter
in $20,000 increments. In order to conserve resources, Mr. DeBaene has
deferred the implementation of his salary increase. In addition, Mr.
DeBaene is entitled to receive an annual cash bonus based upon a percentage
of the Company's pre-tax income (as defined) for each fiscal year in
accordance with a sliding scale schedule contained in the agreements. No
bonus is payable unless and until the Company earns pre-tax income in excess
of $5 million. The agreement also provides for certain non-competition and
non-disclosure covenants of the executive and for certain Company paid
fringe benefits such as disability insurance and inclusion in pension,
profit sharing, stock option, savings, hospitalization and other benefit
plans at such times as the Company shall adopt them. Mr. DeBaene is not
eligible to receive awards under the Company's 1995 Stock Option Plan since
he is on the Committee administering the Plan.
The agreement of Mr. DeBaene also provides for the payment of certain
additional severance compensation of $250,000 in the event that at any time
during the term thereof (i) the agreement is terminated by the Company
without cause (as defined therein), or (ii) terminated by the employee due
to a change in control (as defined therein). The Company believes that the
change in control provisions in this agreement may tend to discourage
attempts to acquire a controlling interest in the Company and may also tend
to make the removal of management more difficult; however, the Company
believes such provisions provide security and decision-making independence
for its executive officers.
Effective as of June 1, 1996, the Company entered into a Consulting
Agreement with Thomas A. Lisi for his services on a part-time basis as Vice
President/Marketing & Manufacturing. Mr. Lisi is obligated to render
services of not more than eight hours per week at the Company's headquarters
facility and is compensated at a rate of $42.50 per hour, without benefits.
The Consulting Agreement is for an initial trial term of three months
subject to termination by either party upon 30 days prior written notice.
After the expiration of the trial period, the agreement will continue for
successive three month periods, unless terminated by either party.
Director Compensation
The Directors of the Company are elected annually and serve until the
next annual meeting of stockholders and until a successor shall have been
duly elected and qualified. Directors of the Company who are not employees
or consultants do not receive any compensation for their services as members
of the Board of Directors, but are reimbursed for expenses incurred in
connection with their attendance at meetings of the Board of Directors.
Directors may be removed with or without cause by a vote of the majority of
the stockholders then entitled to vote.
Compensation Committee
The Company does not have standing compensation committee. Upon the
election of the Directors listed in this Proposal No. 1, the Company
anticipates that the new Board will form such committee. The Board of
Directors reviews and approves and/or ratifies all compensation of officers,
employees and consultants, including the granting of options under the
Company's 1995 Stock Option Plan.
Stock Option Plan
See Summary of 1995 Stock Option Plan under "Proposal No. 3" above.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
(individual grants)
The following table sets forth information with respect to individual
grants of stock options to the named executive officers during fiscal 1997.
<TABLE>
<CAPTION>
Percent of
Number of Total
Securities Options/SARs
Underlying Granted to Exercise or
Options/ Employees Base Price Expiration
Name of Officer SARS Granted In Fiscal Year ($/Sh.) Date
- --------------- ------------ -------------- ----------- ----------
<S> <C> <C> <C> <C>
David N. DeBaene - - - -
Anthony Santucci - - - -
</TABLE>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION/SAR VALUES
The following table sets forth information with respect to the named
executive officers concerning the exercises of Options during fiscal 1997
and the number and value of unexercised Options held as of the end of fiscal
1996.
<TABLE>
<CAPTION>
Value of Unexercised
No. of No. of Unexercised In-the-Money Options
Shares Options at Fiscal at Fiscal Year-End
Acquired Value Year-End (2)
on Realized ----------------------------- -----------------------------
Name Exercise (1) Exercisable Unexercisable Exercisable Unexercisable
- ---- -------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
David N. DeBaene - - - - $ - $ -
Anthony Santucci - - - - - -
<FN>
<F1> Value realized is calculated to equal the market price of the Common
Stock at exercise less the exercise price.
<F2> Represents the difference between the market price of the Common Stock
on February 28, 1997 (fiscal year end) and the exercise price of the
option, multiplied by the number of options for each respective person
named.
</FN>
</TABLE>
Option Repricing
Not applicable.
Compensation Committee Interlock and Insider Participation
No directors other than those identified above as members of the
Compensation Committee served on that Committee during the last completed
fiscal year. None of the executive officers of the Company has served on
the board of directors or on the compensation committee of any other entity,
any of whose officers served either on the Board of Directors or on the
Compensation Committee of the Company.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth as of February 20, 1998 certain
information regarding the ownership of the Common Stock by (i) each person
known by the Company to be the beneficial owner of more than 5% of the
Common Stock, (ii) each of the Company's directors, and (iii) all of the
Company's executive officers and directors as a group. Beneficial ownership
has been determined in accordance with Rule 13d-3 under the Securities
Exchange Act of 1934, as amended. Under this Rule, certain shares may be
deemed to be beneficially owned by more than one person (such as where
persons share voting power or investment power). In addition, shares are
deemed to be beneficially owned by a person if the person has the right to
acquire the shares (for example, upon exercise of an option) within 60 days
of the date as of which the information is provided; in computing the
percentage ownership of any person, the amount of shares outstanding is
deemed to include the amount of shares beneficially owned by such person
(and only such person) by reason of these acquisition rights. As a result,
the percentage of outstanding shares of any person as shown in the following
table does not necessarily reflect the person's actual ownership or voting
power at any particular date.
<TABLE>
<CAPTION>
Name and Address Amount and Nature of Percentage
or Number in Group Beneficial Ownership(1) of Class*
- ------------------ ----------------------- ----------
<S> <C> <C>
David N. DeBaene 613,300(2) 31.21%
Annette DeBaene 51,000(3) 2.60%
Norman DeBaene 48,000(3) 2.44%
Elizabeth Cotter 12,500(4) **
Thomas A. Lisi 62,500(5) 3.16%
Steev Panneton - -
Joseph Lussier 136,200(6) 6.48%
William Durkin 152,200(6) 7.24%
Dean M. Denuccio - -
Anthony P. Santucci - -
All Officers and Directors
as a group (7 persons) 688,300(5) 34.82%
<FN>
<F*> Assumes 1,964,898 shares issued and outstanding
<F**> less than 1%
<F1> Except as otherwise indicated, each named holder has, to the Company's
knowledge, sole voting and investment power with respect to the shares
indicated.
<F2> Includes 25,800 shares owned of record by David N. DeBaene's sister.
<F3> Annette and Norman DeBaene are the parents of David N. DeBaene.
<F4> Ms. Cotter is the spouse of David N. DeBaene
<F5> Includes shares issuable upon exercise of 12,500 non-qualified stock
options.
<F6> Includes shares issuable upon exercise of 136,200 common stock purchase
warrants.
</FN>
</TABLE>
Escrow of Shares
In accordance with the requirements of certain state securities
administrators, certain of the Company's principal stockholders have agreed
to place into escrow an aggregate of 700,000 shares (the "Escrow Shares") of
the 875,000 shares of Common Stock held by them. Under the escrow
agreement, the Escrow Shares will be ratably released to the holders in 25%
increments on the sixth, seventh, eighth and ninth anniversaries,
respectively, of the initial public offering. If the Company meets or
exceeds certain net earnings or stock price targets, the release of the
Escrow Shares will be accelerated. Additionally, in accordance with the
requirements of another state securities administrator, the holdings of all
officers, directors and post-offering five percent (5%) stockholders are
subject to certain lock-up restrictions until January 1999.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Agreements with Thomas A. Lisi and Geronimo Leathers, Inc.
Mr. Lisi and the Company are parties to a sales representative
agreement (the "Representative Agreement") effective March 1, 1993
appointing Mr. Lisi as special accounts director on a nationwide basis for
the following types of accounts: (i) U.S. aircraft companies and defense
industry contractors; (ii) domestic multi-level marketing organizations and
premium gift and catalog services and (iii) domestic specialty leather
stores. Under this agreement, Mr. Lisi is entitled to commissions of 7% of
the wholesale price of all units sold to accounts which were solicited and
closed solely by his efforts, and 3.5% for sales to accounts closed with the
assistance of other Company personnel.
In February 1995, the Representative Agreement between the Company and
Mr. Lisi was amended to remove a royalty provision contained therein, and in
consideration for the modification of the Representative Agreement, the
Company issued to Mr. Lisi 25,000 shares of Common Stock and a non-qualified
stock option under the Company's 1995 Stock Option Plan to purchase 12,500
shares of Common Stock. In connection with the amendment of the
Representative Agreement, the Company and Mr. Lisi entered into a three year
consulting agreement (the "Consulting Agreement") pursuant to which Mr. Lisi
is required to devote not less than ten (10) hours per month to the Company
and provide services with respect to product research and development,
marketing and similar matters. Pursuant to the Consulting Agreement, during
fiscal 1997, Mr. Lisi received consulting fees of $10,000, plus accountable
expenses.
See "EXECUTIVE COMPENSATION - Employment Agreements" for the
description of a consulting arrangement between the Company and Mr. Lisi.
The Company believes that the terms of these transactions were no less
favorable to the Company than would have been obtained from transactions
with non affiliated parties negotiated on an arms length basis.
All future material affiliated transactions and loans will be made or
entered into on terms that are no less favorable to the Company than those
that can be obtained from unaffiliated third parties; and all future
material affiliated transactions and loans, and any forgiveness of loans,
will be approved by a majority of the independent outside members of the
Company's board of directors who do not have an interest in the
transactions.
Consulting Agreements
Warrants to Messrs. Durkin and Lussier. In connection with their
agreement to provide financial consulting services to the Company for a
three (3) year period commencing August 1996, the Company issued on August
6, 1996 to each of Messrs. Joseph Lussier and William Durkin, warrants to
purchase 232,824 shares of Common Stock expiring August 7, 2003, or a total
of 465,648 shares. The warrants are divided into two (2) classes, time
warrants which contain vesting provisions based solely on the expiration of
time, and performance warrants, containing vesting provisions based upon the
price of the Company's Common Stock during various periods. Messrs. Durkin
and Lussier received 136,200 time warrants and 96,624 performance warrants
each. As of the date of this report, none of the performance warrants have
vested, half of said performance warrants have expired, and the balance of
the performance warrants may potentially vest, depending on satisfaction of
the vesting conditions contained therein. At the date hereof, all of the
time warrants have vested and are exercisable. The exercise price of all of
the warrants is $4.00 per share, subject to adjustment under certain
circumstances. Messrs. Lussier and Durkin are affiliated with Merit Capital
Associates, Inc., the underwriter of the Company's Public Offering. In
connection with the issuance of the warrants, the Company recorded an
expense in its financial statements in accordance with FASB No. 123 in the
amount of $60,000 for the fiscal year ended February 28, 1997.
Mission Bay Consultants, Inc. On April 2, 1997, the Company entered
into a one (1) year Consulting Agreement with Mission Bay Consulting, Inc.,
a financial public relations firm ("Mission Bay"), for certain financial
consulting services. In connection with this Consulting Agreement the
Company issued to Mission Bay an option under the Company's 1995 Stock
Option Plan to purchase an aggregate of 200,000 shares of common stock, and
also issued 28,000 shares of common stock under the 1995 Stock Option Plan.
The Company has also agreed to reimburse Mission Bay for its accountable
expenses incurred in connection with the Agreement. In September 1997, in
consideration of the extension of the Consulting Agreement, 50,000 of said
options were cancelled, and the Company issued 50,000 shares of Common Stock
to Mission Bay Consulting under the 1995 Stock Option Plan. In January
1998, the Company issued 9,500 shares to Randy Biemel, an employee of
Mission Bay Consulting, in consideration of services rendered outside of the
scope of the Consulting Agreement.
Related Party Loans
As disclosed in the Notes to the financial statements, the Company has
borrowed money from time to time from related parties. At February 28,
1997, the Company owed approximately $43,000 to Annette and Norman DeBaene,
principal stockholders (of which $25,000 has subsequently been repaid);
$10,000 to a corporation controlled by Annette and Norman DeBaene, and
approximately $15,000 to David N. DeBaene. These loans are not interest
bearing and will be repaid out of operating cashflow.
Legal Services
A former director of the Company, Gerard S. DiFiore, who is also a
warrant holder, is a partner of the law firm that acts as general counsel to
the Company. This firm represented the Company in numerous matters
including all general corporate and real estate matters, several private
placements, several litigation matters and the Public Offering, including
blue sky matters relating thereto. The legal fees paid by the Company in
connection with all the foregoing matters were approximately $39,000 and
$220,000 for the years ended February 28, 1997 and 1996, respectively.
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
The accounting firm of Richard A. Eisner & Company, LLP served as the
Company's independent certified public accountants for the year ended
February 28, 1997 and management anticipates that such firm will be
reappointed for the present fiscal year. A representative of Richard A.
Eisner & Company, LLP is expected to be present at the meeting with an
opportunity to make a statement if he desires to do so. Such representative
is expected to be available to respond to appropriate questions from
stockholders.
ANNUAL REPORT
ANY PERSON FROM WHOM PROXIES FOR THIS MEETING ARE SOLICITED MAY OBTAIN
FROM THE COMPANY, WITHOUT CHARGE, A COPY OF ITS ANNUAL REPORT TO THE
SECURITIES AND EXCHANGE COMMISSION ON FORM 10-KSB FOR THE FISCAL YEAR ENDED
FEBRUARY 28, 1997, INCLUDING THE FINANCIAL STATEMENTS THEREIN AND THE
RELATED SCHEDULES, BY WRITING THE COMPANY AT 46 OLD FLAT RIVER ROAD,
COVENTRY, RHODE ISLAND 02816 ATTENTION: SECRETARY. ANY SUCH REQUEST FROM A
BENEFICIAL OWNER OF STOCK NOT REGISTERED IN HIS NAME MUST CONFIRM THAT HE
WAS A BENEFICIAL OWNER OF SUCH STOCK ON THE RECORD DATE.
STOCKHOLDER PROPOSALS
Proposals of security holders intended to be presented at the next
annual meeting of stockholders must be received by the Company at 46 Old
Flat River Road, Coventry, Rhode Island 02816, on or before April 1, 1998
for inclusion in the proxy material for said meeting.
OTHER BUSINESS
It is not anticipated that any business other than as set forth
hereinabove will be brought before the meeting. Management is not aware of
any matters proposed to be presented to the meeting by any other person.
However, if any other business should properly come before the meeting, it
is the intention of the persons named in the enclosed form of proxy in
accordance with their best judgment on such business.
JD AMERICAN WORKWEAR, INC.
Annual Meeting of Stockholders
March 27, 1998
The undersigned hereby appoints David N. DeBaene and Anthony P. Santucci, or
either one of them, as proxy or proxies for the undersigned, with full
powers of substitution, to vote at the Annual Meeting of Stockholders to be
held on Friday, March 27, 1998 at 10:00 a.m., local time, at the offices of
the Company, 46 Old Flat River Road, Coventry, Rhode Island and at any and
all adjournments thereof, according to the number of votes that the
undersigned would be entitled to cast with all powers the undersigned would
possess if personally present at said meeting. This proxy may be exercised
to vote for the following purposes:
1. FOR [ ] AGAINST [ ]
the election of all of the following nominees listed below as
Directors of the Company:
David N. DeBaene
Dean M. Denuccio
Elizabeth Cotter
Thomas A. Lisi
Steev Panneton
Anthony P. Santucci
If you do not wish your shares be voted "FOR"
a particular nominee, mark "AGAINST" above and
strike a line through the name(s) of the person(s)
for whose election you do not wish to consent.
2. FOR [ ] WITHHOLD AUTHORITY TO VOTE ON [ ] AGAINST [ ]
The proposal to approve an amendment to the Company's Certificate of
Incorporation that would increase the number of authorized shares of
Common Stock of the Company from 4,500,000 shares to 7,500,000 shares.
3. FOR [ ] WITHHOLD AUTHORITY TO VOTE ON [ ] AGAINST [ ]
The proposal to approve an amendment to the Company's 1995 Stock
Option Plan, which would increase the number of shares eligible for
issuance under the Plan from 250,000 shares to 750,000 shares.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH PROPOSAL
The undersigned hereby ratifies and confirms all that said proxy or
proxies, or substitutes, may do by virtue hereof. The proxies are
authorized to vote in their discretion with respect to matters not known or
determined at the date of the Proxy Statement. Receipt of the Notice of
Meeting, Proxy Statement and Annual Report is hereby acknowledged.
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED IN ACCORDANCE WITH
YOUR SPECIFICATIONS ABOVE. IN THE ABSENCE OF SPECIFICATIONS, THIS PROXY
WILL BE VOTED "FOR" ALL OF THE PROPOSALS SET FORTH ABOVE.
Dated: , 1998
L.S.
L.S.
Please sign here exactly as name appears at the left. When signing as
attorney, executor, administrator, trustee or guardian, please give your
full title as such. Each joint owner or trustee should sign the proxy. If
the stockholder is a corporation, the office of the person signing should be
indicated.
Please sign, date and mail today.
This proxy is solicited on behalf of
the Board of Directors of the Company.
