Edgar Filing: FRESH AMERICA CORP

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

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Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934

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Fresh America Corp.
(Name of Registrant as Specified in its Charter)

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(Name of Person Filing Proxy Statement, if other than Registrant)

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Fresh America Corp.
1049 Avenue H East
Arlington, Texas 76011

June 26, 2002

Dear Shareholder:

You are cordially invited to attend the Annual Meeting of Shareholders of Fresh
America Corp. to be held at 2:00 p.m., Central Time, on July 31, 2002, at our
corporate offices located at 1049 Avenue H East, Arlington, Texas 76011. At this
meeting you will be asked to:

1. Approve an amendment to our articles of incorporation to increase the
number of authorized shares of our common stock and to decrease the
stated par value of our common stock;

2. Elect five directors to serve for a one-year term or until their
successors are elected and qualified;

3. Ratify the selection of KPMG, LLP as the Company's independent
auditors for fiscal 2002; and

4. Transact any other business that may properly come before the meeting.

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE IN FAVOR OF EACH OF
THE ABOVE PROPOSALS.

Whether or not you plan to attend the annual meeting, I urge you to complete,
sign and promptly return the enclosed proxy card to assure that your shares will
be voted at the meeting.

The proxy statement that accompanies this letter provides you with detailed
information about the proposals. I encourage you to read the proxy statement
carefully.

On behalf of the Board of Directors, I thank you for your support and urge you
to vote for the approval of each of the above proposals.

Very truly yours,

/s/ Arthur W. Hollingsworth

Arthur W. Hollingsworth
Chairman of the Board

Fresh America Corp.
1049 Avenue H East
Arlington, Texas 76011
(817) 871-4000

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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

TO BE HELD ON JULY 31, 2002

To Our Shareholders:

This is a notice that the Annual Meeting of Shareholders of Fresh America Corp.
will be held on July 31, 2002 at 2:00 p.m., Central Time, at our corporate
offices located at 1049 Avenue H East, Arlington, Texas 76011. The purpose of
this meeting is for you to:

1. Approve an amendment to our articles of incorporation to increase the
number of authorized shares of our common stock from 10 million to 250
million shares and to decrease the stated par value of our common
stock from $.01 to $.0001 per share (the proposed restated articles of
incorporation, which includes these charter amendments, is attached as
Appendix A);

2. Elect five directors to serve for a one-year term or until their
successors are elected and qualified;

3. Ratify the selection of KPMG, LLP as the Company's independent
auditors for fiscal 2002; and

4. Transact any other business that may properly come before the meeting.

Our board of directors has determined that only holders of shares of our common
stock and our Series D cumulative redeemable preferred stock at the close of
business on June 14, 2002, will be entitled to notice of, and to vote at, the
annual meeting or any adjournments or postponements of the annual meeting. A
form of proxy and a proxy statement containing more detailed information with
respect to the matters to be considered at the annual meeting accompany this
notice.

By Order of the Board of Directors,

/s/ Cheryl A. Taylor

Cheryl A. Taylor
Secretary

Arlington, Texas
June 26, 2002

TABLE OF CONTENTS

Annual Meeting of Shareholders Proxy Statement ................................................................ 3
Date, Time and Place of the Annual Meeting ................................................................. 3
Matters to be Considered at the Annual Meeting ............................................................. 3
Proxy Solicitation ......................................................................................... 3
Record Date and Quorum Requirement ......................................................................... 3
Voting Procedures .......................................................................................... 4
Voting and Revocation of Proxies ........................................................................... 5
Other Matters to be Considered ............................................................................. 5

Security Ownership of Certain Beneficial Owners ............................................................... 5

Proposal 1. Amendment to the Articles of Incorporation ....................................................... 8
Vote Required .............................................................................................. 10
Background of the Restructuring ............................................................................ 10
Terms of Restructuring ..................................................................................... 10
Impact of Failure to Approve Charter Amendment at 2001 Special Meeting ..................................... 11
Impact of Failure to Approve Charter Amendment at 2002 Annual Meeting ...................................... 12
Other Preferred Stock Rights ............................................................................... 12
Ownership if the Charter Amendment is Approved ............................................................. 14
Board Recommendation ....................................................................................... 15

Proposal 2. Election of Five Directors ....................................................................... 16

Proposal 3. Ratification of Selection of KPMG, LLP as the Company's Independent Auditors For Fiscal 2002 ..... 17

Directors and Executive Officers .............................................................................. 18
Current Directors .......................................................................................... 18
Former 2001 Directors & Officers ........................................................................... 20
Audit Committee ............................................................................................ 21
Report of the Audit Committee .............................................................................. 21
Audit Fees ................................................................................................. 22
Financial Information Systems Design and Implementation Fees ............................................... 22
All Other Fees ............................................................................................. 22
Compensation Committee ..................................................................................... 22

Executive Compensation ........................................................................................ 23
Summary Compensation Table ................................................................................. 23
Option Grants in Last Fiscal Year .......................................................................... 24
Aggregated Option Exercises in Last Fiscal Year and Fiscal Year-End Option Values .......................... 24
401(k) Plan ................................................................................................ 24
Compensation Committee Interlocks and Insider Participation ................................................ 24

Compensation Committee's Report on Executive Compensation ..................................................... 24
Base Salary ................................................................................................ 25
Bonuses .................................................................................................... 25
Long-Term Incentives ....................................................................................... 25

Chief Executive Officer Compensation ....................................................................... 25
Employment Agreements ...................................................................................... 26
Severance Agreements ....................................................................................... 27
Stock Performance Graph .................................................................................... 27

Shareholder Proposals ......................................................................................... 28

Financial Statements .......................................................................................... 28

Other Business ................................................................................................ 29

Where You Can Find More Information ........................................................................... 29

Appendices:

Appendix A Restated Articles of Incorporation of Fresh America Corp.

Fresh America Corp.
1049 Avenue H East
Arlington, Texas 76011

ANNUAL MEETING OF SHAREHOLDERS
PROXY STATEMENT

Date, Time and Place of the Annual Meeting

The annual meeting will be held on July 31, 2002 at 2:00 p.m., Central Time at
our corporate offices located at 1049 Avenue H East, Arlington, Texas 76011.

Matters to be Considered at the Annual Meeting

The purpose of the annual meeting is to consider and vote upon:

o an amendment to our articles of incorporation to increase the number
of authorized shares of our common stock from 10 million to 250
million and to decrease the stated par value of our common stock from
$.01 to $.0001;

o the election of four directors by the holders of our Series D
preferred stock, voting as a separate class, and the election of one
director by the holders of our common stock, voting as a separate
class;

o the ratification of the selection of KPMG, LLP as the Company's
independent auditors for fiscal 2002; and

o the transaction of any other business that may properly come before
the meeting.

Proxy Solicitation

Our board of directors is soliciting your proxy for use at the annual meeting to
be held on July 31, 2002, or at any continuation, adjournment or postponement
thereof, for the purposes set forth herein and in the Notice of Annual Meeting
of Shareholders. We will pay all expenses incurred in connection with
solicitation of the enclosed proxy. Our officers, directors and regular
employees may solicit proxies in person or by telephone. They will receive no
additional compensation for their services. We have requested brokers and
nominees who hold stock in their names to furnish this proxy statement to their
customers, and we will reimburse these brokers and nominees for their related
out-of-pocket expenses. This proxy statement and the accompanying proxy card are
being mailed to shareholders on or about June 29, 2002.

Record Date and Quorum Requirement

Our common stock, par value $.01 per share (the "Common Stock"), and our Series
D Cumulative Redeemable Preferred Stock, $1.00, par value per share (the
"Preferred Stock"), are our only outstanding securities eligible to vote with
respect to matters to be considered at the annual meeting. The shares of Common
Stock and the shares of Preferred Stock together are referred to as the "Voting
Shares." Our board has fixed the close of business on June 14, 2002 as the
record date for the determination of shareholders entitled to notice of, and to
vote at, the annual meeting and any adjournments or postponements of the annual
meeting. At the close of business on the record date, there were 8,410,098
shares of our Common Stock issued and outstanding, and there were 77,000 shares
of our Preferred Stock issued and outstanding.

The holders of a majority of the outstanding Common Stock and the outstanding
Preferred Stock, each considered as a separate class, must be present in person
or represented by proxy to constitute a quorum for the transaction of business.
Abstentions are counted as present for purposes of determining the presence or
absence of a quorum for the transaction of business. In the event that there are
not sufficient votes for a quorum or to approve or ratify any proposal at the
time of the annual meeting, the annual meeting may be adjourned in order to
permit the further

solicitation of proxies.

Voting Procedures

Assuming the presence of a quorum:

o Approval of the amendment to our articles of incorporation will
require (1) the affirmative vote of two-thirds of the combined voting
power of the Voting Shares, voting together as a combined class,
outstanding on the record date, and (2) the affirmative vote of
two-thirds of the shares of Preferred Stock, voting as a separate
class.

o Election of four directors will require the affirmative votes of a
plurality of the shares of our Preferred Stock cast, voting as a
separate class, and the election of one director will require the
affirmative votes of a plurality of the shares of our Common Stock
cast, voting as a separate class. Election by the vote of a plurality
of shares requires that a nominee for director receive more votes than
any other nominee (or, in the case of the election of four directors
by the holders of our Preferred Stock, more votes than the person
receiving the fifth most votes) but does not require that a nominee
receive a majority of votes cast.

o Ratification of the selection of KPMG, LLP as the Company's
independent auditors for fiscal 2002 will require (1) the affirmative
votes of a majority of the combined voting power of the Voting Shares
cast, voting together as a combined class, and (2) the affirmative
votes of a majority of the shares of our Preferred Stock cast, voting
as a separate class.

Abstentions will have a neutral effect on the election of directors and the
ratification of auditors. However, abstentions or the failure to vote on the
amendment to our articles of incorporation will have the same effect as votes
cast against approval of the proposal.

Because the holders of Preferred Stock vote together with the holders of Common
Stock on the amendment to our articles of incorporation and the ratification of
accountants, with respect to such proposals, each share of Preferred Stock is
entitled to 250 votes per share, and each share of Common Stock is entitled to
one vote per share. Therefore, the Preferred Stock represents 70% of the
combined voting power of the Company's Voting Shares and holds a sufficient
number of shares needed to approve these two proposals without any other
shareholder vote in favor of such proposals. The Company believes that the
holders of the Preferred Stock currently intend to vote their shares in favor of
these two proposals.

Your broker and, in many cases, your nominee will not have discretionary power
to vote on the amendment to our articles of incorporation. They will have
discretionary power to vote on the other matters to be voted on at the annual
meeting described in this proxy statement. Accordingly, you should instruct your
broker or nominee how to vote any shares of our Voting Shares that they hold in
your name or on your behalf. A broker non-vote occurs if a broker or other
nominee does not have discretionary authority and has not received instructions
with respect to a particular item. A broker non-vote will have the same effect
as an abstention on the election of directors and the ratification of auditors
and a vote against the amendment to our articles of incorporation.

Voting and Revocation of Proxies

You may revoke your proxy at any time before it is exercised by:

o filing with our Secretary an instrument revoking it;

o submitting a properly executed proxy bearing a later date; or

o voting in person at the annual meeting.

Unless revoked, all of your shares represented by a properly executed proxy
received by our Secretary will be voted in accordance with your instructions.
Shares represented by each proxy that is properly executed and returned and upon
which no contrary instructions are indicated will be voted:

o "FOR" the amendment to our articles of incorporation to increase the
number of authorized shares of Common Stock and decrease the stated
par value of our Common Stock;

o "FOR" the election of each applicable nominated director; and

o "FOR" the ratification of the selection for KPMG, LLP as the Company's
independent auditor for fiscal 2002.

Your shares will be voted by proxy at the annual meeting if your proxy card is
properly signed, dated and received by our Corporate Secretary prior to or at
the annual meeting.

Other Matters to be Considered

Our board of directors is not aware of any other matter that will be brought
before the annual meeting. If, however, other matters are presented, your proxy
will be voted in the discretion of the holder of your proxy.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS

The following table sets forth certain information believed by the Company to be
accurate based on information provided to it concerning the beneficial ownership
of Common Stock by (a) each shareholder who is known by the Company to own
beneficially in excess of 5% of the outstanding Common Stock, (b) each director,
(c) the Company's Chief Executive Officer, (d) each of the Company's most highly
compensated executive officers other than the Chief Executive Officer and (e)
all executive officers and directors as a group, as of March 15, 2002.

SERIES D
COMMON STOCK PREFERRED STOCK
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Amount and Notice of Percent of Amount and Nature of Percent of
Beneficial Owner Beneficial Ownership Class(1) Beneficial Ownership Class
---------------- -------------------- -------- -------------------- -----

North Texas Opportunity Fund LP -0-(2) * 46,500(3) 60.4%
13355 Noel Road, Suite 2210
Dallas, TX 75240

John Hancock Financial Services, Inc. -0-(4) * 27,000(5) 35.1%
John Hancock Place, P.O. Box 111
Boston, MA 02117

Larry Martin 3,166,694(6) 37.7% -0- *
2729 Sunrise Drive
Arlington, TX 76006

Gruber & McBaine Capital Management 892,400(7) 10.6% -0- *
50 Osgood Place
San Francisco, CA 94133

DiMare Homestead, Inc. 528,300(8) 6.3% -0- *
258 NW 1st Avenue
Florida City, FL 33034

Arthur W. Hollingsworth -0-(9) * 50,000(3) 64.9%

Darren L. Miles -0- * -0- *

Colon O. Washburn 122,435(10) 1.4% -0- *

Cheryl A. Taylor -0- * -0- *

Gary D. Wiener 29,600(11) * -0- *

Steven C. Finberg 26,500 * -0- *

Eric T. Janke 2,000 * -0- *

Jerry L. Campbell 7,000 * -0- *

All Directors and Executive Officers as 164,935(12) 1.9% -0- *
a Group (10 persons)

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*Does not exceed 1% of the outstanding Common Stock.

(1) Percentages with respect to each person or group of persons have been
calculated on the basis of 8,410,098 shares, the total number of shares of
Common Stock outstanding as of March 15, 2002, plus the number of shares of
Common Stock which such person or group of persons has the right to
acquire, without contingency, within 60 days after the record date.

(2) Does not include warrants to purchase 78,213,911 shares of Common Stock
beneficially owned by NTOF due to the existence of a material contingency
(the need for shareholder approval of the amendment to our articles of
incorporation described in Proposal 1 of this proxy statement) that is not
within NTOF's control and that is required to be satisfied prior to
exercise of the warrants.

(3) North Texas Opportunity Fund LP ("NTOF") is a direct beneficial owner of
46,500 shares of Preferred Stock. North Texas Opportunity Fund Capital
Partners LP ("NTOF Partners") is an indirect beneficial owner of this
Preferred Stock because NTOF Partners is the general partner of NTOF. NTOF
LLC ("NTOF LLC") is an indirect beneficial owner of this Preferred Stock
because NTOF LLC is the general partner of NTOF Partners. North Texas
Investment Advisors LLC ("NT Advisors") is an indirect beneficial owner of
this Preferred Stock because NT Advisors is the investment manager of NTOF.
Arthur W. Hollingsworth ("Hollingsworth") is the direct beneficial owner of
3,500 shares of Preferred Stock, and is an indirect beneficial owner of
NTOF's 46,500 shares of Preferred Stock because Hollingsworth is a manager
of NTOF LLC and NT Advisors. Luke M. Sweetser ("Sweetser") and Gregory A.
Campbell ("Campbell") are both indirect beneficial owners of NTOF's 46,500
shares of Preferred Stock because Sweetser is a manager of NTOF LLC and of
NT Advisors and because Campbell is a manager of NTOF LLC and of NT
Advisors. Hollingsworth, Sweetser and Campbell control the investment
decisions of this group because they are the managers of (i) NT Advisors,
which is the investment manager of NTOF, and (ii) NTOF LLC, which is the
general partner of the general partner of NTOF. This group beneficially
owns shares of Preferred Stock, with voting and dispositive power, as
follows:

Voting and Dispositive Power
----------------------------
Name Sole Shared
---- ---- ------
NTOF - 46,500
NTOF Partners - 46,500
NTOF LLC - 46,500
NT Advisors - 46,500
Hollingsworth 3,500 46,500
Sweetser - 46,500
Campbell - 46,500

(4) Does not include warrants to purchase 45,414,529 shares of Common Stock
beneficially owned by the Hancock Entities and reported by the Hancock
Entities in a Schedule 13D filed with the SEC on September 17, 2001, due to
the existence of a material contingency

(the need for shareholder approval of the amendment to our articles of
incorporation described in Proposal 1 of this proxy statement) that is not
within the Hancock Entities' control and that is required to be satisfied
prior to exercise of the warrants.

(5) John Hancock Financial Services, Inc. ("JHFSI") has shared voting and
dispositive power over an aggregate of 27,000 shares of Preferred Stock,
22,950 through its direct, wholly-owned subsidiary, John Hancock Life
Insurance Company ("JHLICO"), and 4,050 through its indirect, wholly-owned
subsidiary, John Hancock Variable Life Insurance Company ("JHVLIC"); JHLICO
has shared voting and dispositive power over 22,950 shares of Preferred
Stock held directly (consisting of 17,550 shares issued to JHLICO; 2,700
shares issued to Signature 1A (Cayman) Ltd., an advisory account of JHLICO;
and 2,700 shares issued to Signature 3 Limited, an advisory account of
JHLICO) and 4,050 held through JHVLICO, its wholly-owned subsidiary; and
JHVLICO has shared voting and dispositive power over 4,050 shares held
directly. Therefore, this group beneficially owns shares of Preferred
Stock, with voting and dispositive power, as follows:

Voting and Dispositive Power
----------------------------
Name Sole Shared
---- ---- ------
JHFSI - 27,000
JHLICO - 27,000
JHVLIC - 4,050

(6) Based on information set forth in a Schedule 13D filed with the SEC on
April 24, 2001, Mr. Martin beneficially owns 3,166,694 shares of Common
Stock.

(7) Based on information provided to the Company by Gruber & McBaine Capital
Management, LLC ("GMCM"), Jon D. Gruber ("Gruber"), J. Patterson McBaine
("McBaine") and Thomas O. Lloyd-Butler ("Lloyd-Butler"). This group
informed the Company that it beneficially owned 892,400 shares of Common
Stock and that the voting and dispositive power among such group's members
is as follows:

Voting and Dispositive Power
----------------------------
Name Sole Shared
---- ---- ------
GMCM - 689,300
Gruber 94,500 689,300
McBaine 108,600 689,300
Lloyd-Butler - 689,300

(8) Based on information set forth in a Schedule 13D filed with the SEC on June
16, 2000, by DiMare Homestead, Inc. ("DiMare"). Paul DiMare, President of
DiMare, Inc., has sole voting and dispositive power with regard to the
528,300 shares of Common Stock beneficially owned by DiMare, a wholly-owned
subsidiary of DiMare, Inc.

(9) Does not include warrants to purchase 5,887,069 shares of Common Stock
beneficially owned by Arthur W. Hollingsworth due to the existence of a
material contingency (the need for shareholder approval of the amendment to
our articles of incorporation described in Proposal 1 of this proxy
statement) that is not within NTOF's control and that is required to be
satisfied prior to exercise of the warrants.

(10) Includes 90,753 shares subject to options issued to Mr. Colon Washburn that
are exercisable within 60 days.

(11) Includes options to acquire 29,500 shares of Common Stock that are
exercisable within 60 days. Mr. Wiener resigned from the Company on January
25, 2002 and his 29,500 options expire on April 25, 2002, 90 days after his
resignation.

(12) Includes 133,523 shares subject to options issued to certain directors and
executive officers of the Company that are exercisable within 60 days.

PROPOSAL 1. AMENDMENT TO THE ARTICLES OF INCORPORATION

Under our present capital structure as set forth in the articles of
incorporation, we have 10,000,000 authorized shares of Common Stock and
1,000,000 authorized shares of Preferred Stock. Our board of directors
unanimously believes that this capital structure is inadequate for the present
and future needs of the Company. Accordingly, our board of directors has adopted
a proposal to amend our articles of incorporation to increase the number of
authorized shares of Common Stock from 10,000,000 shares to 250,000,000 shares
and to decrease the stated par value of each share of Common Stock from $.01 to
$.0001 (the "Charter Amendment"). As of March 29, 2002, 8,410,098 shares of
Common Stock were outstanding, 300,000 shares have been reserved for issuance
pursuant to outstanding warrants and 259,003 shares of Common Stock are reserved
for issuance under current benefit plans, resulting in 81,798,040 shares
remaining and available for our present and future needs.

As part of our financial restructuring, which is described in greater detail
below, we issued warrants exercisable for an aggregate of 129,515,509 shares of
our Common Stock to John Hancock Life Insurance Company, John Hancock Variable
Life Insurance Company, Signature 1A (Cayman), Ltd. and Signature 3 Limited
(collectively, the "Hancock Entities"), our subordinated lenders, and North
Texas Opportunity Fund LP ("NTOF"), a new investor, as a necessary incentive to
complete the restructuring.

In connection with the financial restructuring, the Company held a special
meeting of its shareholders which was adjourned on December 28, 2001, and
reconvened on December 29, 2001. The Company's shareholders were asked to
approve the Charter Amendment. At the special meeting, approximately 61.9% of
the shareholders voted in favor of the Charter Amendment, and 5.9% voted against
the Charter Amendment. The Charter Amendment therefore failed to receive the
necessary approval of the holders of a supermajority (66.7%) of the shares of
the Common Stock. As a result, the Company's articles of incorporation have not
been amended and although the warrants are by their terms immediately
exercisable, these warrants in fact are not exercisable. Before the warrants may
be exercised, we must amend our articles of incorporation to increase the number
of authorized shares of Common Stock and to decrease the stated par value of the
Common Stock.

Of the warrants exercisable for 129,515,509 shares of our Common Stock, the
Hancock Entities beneficially own warrants exercisable for 45,414,529 shares as
follows:

Voting and Dispositive Power
----------------------------
Name Sole Shared
---- ---- ------
John Hancock Financial Services, Inc. -- 45,414,529
John Hancock Life Insurance Company -- 45,414,529
John Hancock Variable Life Insurance -- 6,812,179
Company

By virtue of the warrants issued to the Hancock Entities, John Hancock Financial
Services, Inc. has shared voting and dispositive power over an aggregate of
45,414,529 shares, 38,602,350 through its direct, wholly-owned subsidiary, John
Hancock Life Insurance Company ("JHLICO"), and 6,812,179 through its indirect,
wholly-owned subsidiary, John Hancock Variable Life Insurance Company
("JHVLIC"); JHLICO has shared voting and dispositive power over 38,602,350
shares held directly (consisting of warrants for 29,519,444 shares issued to
JHLICO; warrants for 4,541,453 shares issued to Signature 1A (Cayman) Ltd., an
advisory account of JHLICO; and warrants for 4,541,453 shares issued to
Signature 3 Limited, an advisory account of JHLICO) and 6,812,179 held through
JHVLICO, its wholly-owned subsidiary; and JHVLICO has shared voting and
dispositive power over 6,812,179 shares held directly.

Of the warrants exercisable for 84,100,980 shares purchased by NTOF in the
financial restructuring, warrants exercisable for 5,887,069 shares were
purchased by Arthur Hollingsworth from NTOF subsequent to the financial
restructuring. As a result, the beneficial ownership of the 84,100,980 warrants
originally issued to NTOF in connection with the financial restructuring is as
follows:

Voting and Dispositive Power
----------------------------
Name Sole Shared
---- ---- ------
NTOF - 78,213,911
NTOF Partners - 78,213,911
NTOF LLC - 78,213,911
NT Advisors - 78,213,911
Arthur W. Hollingsworth 5,887,069 78,213,911
Luke M. Sweetser - 78,213,911
Gregory A. Campbell - 78,213,911

NTOF is a direct beneficial owner of warrants exercisable for 78,213,911 shares
of our Common Stock. North Texas Opportunity Fund Capital Partners LP ("NTOF
Partners") is an indirect beneficial owner of the warrants because NTOF Partners
is the general partner of NTOF. NTOF LLC ("NTOF LLC") is an indirect beneficial
owner of the warrants because NTOF LLC is the general partner of NTOF Partners.
North Texas Investment Advisors LLC ("NT Advisors") is an indirect beneficial
owner of the warrants because NT Advisors is the investment manager of NTOF.
Arthur Hollingsworth is the direct beneficial owner of warrants exercisable for
5,887,069 shares of our Common Stock, and is an indirect beneficial owner of
NTOF's warrants exercisable for 78,213,911 shares of our Common Stock because
Hollingsworth is a manager of NTOF LLC and NT Advisors. Luke Sweetser and
Gregory Campbell are both indirect beneficial owners of NTOF's warrants
exercisable for 78,213,911 shares of our Common Stock because Mr. Sweetser is a
manager of NTOF LLC and of NT Advisors and because Mr. Campbell is a manager of
NTOF LLC and of NT Advisors. Hollingsworth, Sweetser and Campbell control the
investment decisions of this group because they are the managers of (i) NT
Advisors, which is the investment manager of NTOF, and (ii) NTOF LLC, which is
the general partner of the general partner of NTOF.

In addition, at the special meeting of our shareholders in December 2001, our
shareholders adopted our 2001 Stock Option Plan, but we are not currently able
to reserve the 29,717,350 shares of Common Stock that may be issued pursuant to
our 2001 Stock Option Plan. Approval of the Charter Amendment will allow us to
reserve these shares for issuance.

Further, authorizing additional shares of Common Stock would provide the Company
with more flexibility to issue shares of its Common Stock, as needed, for
possible stock splits, acquisitions, financings and other corporate purposes
from time to time as it deems necessary and in the best interests of the
Company. At this time, the Company does not have any plans for issuing any
additional shares of Common Stock other than as disclosed in this Proxy
Statement.

Pending shareholder approval of this proposal to increase the number of
authorized shares of Common Stock to 250,000,000 shares, and taking into account
(a) the 8,410,098 shares currently outstanding and (b) shares reserved or to be
reserved for issuance (i) pursuant to the exercise of the warrants for
129,515,509 shares issued in connection with the financial restructuring, (ii)
pursuant to warrants for 300,000 shares that are currently outstanding, (iii)
pursuant to outstanding options for 259,003 shares granted under our existing
benefit plans, and (iv) pursuant to the 2001 Stock Option Plan (29,717,350
shares), we will have 81,798,040 authorized shares of Common Stock available for
future needs of the Company.

Our board of directors unanimously believes that it is necessary to have the
ability to issue additional shares of our Common Stock for general corporate
purposes, as well as to effectuate the financial restructuring described below.
Shareholders should be aware that, as set forth above, Messrs. Hollingsworth,
Campbell and Sweetser may be deemed to beneficially own the 78,213,911 shares of
Common Stock underlying the warrants issued to NTOF in connection with the
financial restructuring and Mr. Hollingsworth is the sole beneficial owner of
warrants exercisable for an additional 5,887,069 shares that were initially
issued to NTOF in connection with the restructuring but subsequently purchased
by Mr. Hollingsworth from NTOF. Therefore, Messrs. Hollingsworth, Campbell and
Sweetser would significantly benefit from shareholder approval of Proposal 1.
However, our previous board of directors (consisting of Messrs. Washburn,
Martin, Gier and McKinney, with the exception of Mr. Martin, a creditor of the
Company, who abstained from voting on the matter), approved the submission of
the Charter Amendment to the shareholders at the special meeting of the
Company's shareholders held in December 2001. When the Charter Amendment failed
to receive the requisite approval at the special meeting, our board again

decided to submit the Charter Amendment for shareholder approval. Our board
unanimously believes that our best interests and the best interests of our
shareholders would be served by amending our articles of incorporation to
increase the number of authorized shares of Common Stock and decrease the stated
par value of the Common Stock. If approved by you, it is anticipated that the
amendment will become effective as soon as practicable following the annual
meeting.

Vote Required

Assuming the presence of a quorum, approval of the amendment to our articles of
incorporation will require (1) the affirmative vote of two-thirds of the
combined voting power of the Voting Shares, voting together as a single class,
outstanding on the record date, and (2) the affirmative vote of two-thirds of
the shares of Preferred Stock, voting as a separate class.

Because the holders of Preferred Stock vote together with the holders of Common
Stock on the Charter Amendment, with respect to this proposal, each share of
Preferred Stock is entitled to 250 votes per share, and each share of Common
Stock is entitled to one vote per share. Therefore, the Preferred Stock
represents 70% of the combined voting power of the Company's Voting Shares,
which is a sufficient number of shares needed to approve the Charter Amendment
without any other shareholder vote in favor of the Charter Amendment. The
Company believes that the holders of the Preferred Stock currently intend to
vote their shares in favor of the Charter Amendment.

Background of the Restructuring

During the past three years, we pursued various re-financing and strategic
alternatives in an effort to restructure our debt and raise capital. Since
October 1999, we had been operating under covenant default waivers and
short-term extensions from our lenders. In addition, we failed to make the
scheduled semi-annual interest payment due to our subordinated lenders on May 1,
2001, although our subordinated lenders extended the due date of the interest
payment (without any penalty or premium charged to the Company) while we pursued
re-financing alternatives. In February, 2001, the Company was introduced to NTOF
by an independent broker. NTOF is a private equity fund that was established in
August 2000 to invest in companies in underserved areas in North Texas and
minority- and women-owned or managed companies located in that region. Prior to
this introduction, there was no business or other affiliation between the
Company and NTOF or any of its affiliates.

In late May 2001, we signed a letter of intent for a $5 million equity
investment by NTOF. In connection with the letter of intent, we received
additional extensions of our senior credit facility and for the semi-annual
interest payment on our subordinated debt as well as payments owed to other
creditors in order to allow for the negotiation of a definitive agreement with
respect to the equity- investment proposal. Although the Company had pursued
various financial and strategic alternatives, at that time none had progressed
beyond preliminary stages to warrant consideration by our Board, and the Company
had no other active financing proposals or investment prospects. A condition to
the NTOF investment was that our subordinated lenders exchange all of their
subordinated debt, Series C preferred stock, warrants and all accrued and unpaid
dividends thereon into Series D preferred stock.

In August 2001, Darren L. Miles was appointed as our President and Chief
Executive Officer. Since 2000, Mr. Miles has been a director of Lewis
Hollingsworth LP, a venture capital/private equity firm of which Mr.
Hollingsworth is managing partner and Mr. Sweetser is a managing director. As
set forth above, Messrs. Hollingsworth and Sweetser are beneficial owners and
managers of NTOF. On August 14, 2001 we entered into definitive agreements for
the equity-financing with NTOF, including a Securities Exchange and Purchase
Agreement (the "Purchase Agreement") and a Shareholders Agreement (the
"Shareholders Agreement" and, together with the Purchase Agreement, the
"Agreements"), in each case entered into by and among the Company, NTOF, and the
Hancock Entities. On September 5, 2001, we completed our restructuring pursuant
to the Agreements and a Post-Closing Agreement dated as of September 5, 2001, by
and among the Company, NTOF and the Hancock Entities.

Terms of Restructuring

In September 2001, the Company completed a financial restructuring pursuant to
the Agreements whereby NTOF purchased 50,000 shares of the Company's Preferred
Stock at a purchase price of $100 per share and warrants

exercisable for 84,100,980 shares of our Common Stock at a purchase price of $1
for all warrants for total cash proceeds of $5,000,001. Mr. Hollingsworth
subsequently purchased from NTOF, for the same price per share as paid by NTOF,
3,500 shares of Preferred Stock and, for $1, warrants exercisable for 5,887,069
shares of our Common Stock. The exercise price of the warrants is $0.0001 for
each share of Common Stock represented by the warrants; provided that in no
event will the aggregate exercise price for all of the shares of Common Stock
covered by all warrants owned by either NTOF or Mr. Hollingsworth exceed $100.
In connection with the NTOF investment in the Company, the Hancock Entities
exchanged $20 million of subordinated debt, warrants to purchase 576,134 shares
of the Company's Common Stock, 50,000 shares of Series C cumulative redeemable
preferred stock and all accrued interest and dividends thereon, for 27,000
shares of the Company's Preferred Stock and warrants exercisable for 45,414,529
shares of our Common Stock. The warrants are exercisable for a ten-year period
that commenced on August 14, 2001 and ends August 14, 2011. The exercise price
of the warrants is $.0001 per share and the warrants are subject to
anti-dilution provisions providing adjustment in the event of any
recapitalization, stock dividend, stock split, reorganization, merger or similar
transaction or certain issuances of shares below their market value.

Impact of Failure to Approve Charter Amendment at 2001 Special Meeting

Because the Charter Amendment has not been approved, the warrants are not
currently exercisable. In addition, because the Charter Amendment was not
approved by December 31, 2001, the holders of Preferred Stock received enhanced
rights under the terms of the Certificate of Designation governing the Preferred
Stock (the "Certificate of Designation"). Initially, each share of the 77,000
shares of Preferred Stock had the right to receive cumulative dividends, payable
monthly in cash and calculated on the basis of an annual dividend rate of $8 for
each share plus interest on any accrued but unpaid dividends. Because the
Charter Amendment was not approved by December 31, 2001, the annual dividend
rate increased to $18 per share on December 31, 2001 pursuant to Section 2.2(g)
of the Certificate of Designation. However, the Company has obtained a waiver
for the enhanced dividend amount from the Preferred Shareholders for the period
from December 29, 2001 until January 3, 2003. Therefore, the annual dividend
rate will not increase to $18 per share during this period, but will remain at
the original annual dividend rate of $8 for each share of Preferred Stock. The
Company may not declare a dividend on any other class of capital stock so long
as any accrued dividends for the Preferred Stock have not been paid. If the
Company pays a dividend to holders of any other class of the Company's capital
stock, then the Company will pay a dilution fee to the holders of the Preferred
Stock.

When the Charter Amendment was not approved by December 31, 2001, pursuant to
Section 2.5(b) of the Certificate of Designation, the holders of Preferred Stock
also became entitled to vote as a separate class for all matters on which the
holders of Common Stock are entitled to vote, with each share entitled to one
vote per share, except where applicable law prevents class voting. Also, holders
of the Preferred Stock became entitled to vote together with the holders of
Common Stock as a combined class on any matter on which Common Stock was
eligible to vote, with each share of Common Stock entitled to one vote per share
and each share of Preferred Stock entitled to 250 votes per share, being
11,625,000 votes for NTOF, 875,000 for Mr. Hollingsworth and 6,750,000 for the
Hancock Entities.

Because the holders of Preferred Stock are entitled to vote as a separate class
for all matters on which the holders of Common Stock are entitled to vote, the
Charter Amendment will not become effective unless it is approved by two-thirds
of the shares of Preferred Stock in addition to being approved by two-thirds of
the combined voting power of the Preferred Stock and the Common Stock. Because
the Preferred Stock is entitled to 250 votes per share and the Common Stock is
entitled to one vote per share, the Preferred Stock represents 70% of the
combined voting power, which is a sufficient number to approve the Charter
Amendment without the vote of any holder of Common Stock.

Pursuant to Article V of the Purchase Agreement, the Preferred Shareholders have
a put right on the Preferred Stock after August 14, 2004, and immediately upon
any breach by the Company of the financial restructuring agreements or any sale,
merger or change of control of the Company, at $100 per share plus accrued and
unpaid dividends. Because the requisite shareholder approval for the Charter
Amendment was not obtained, the holders of Preferred Stock have the right to
exercise their put right at three times the face value of the Preferred Stock
($300 per share), such amount being $13,950,000 for NTOF, $1,050,000 for Mr.
Hollingsworth and $8,100,000 for the Hancock Entities plus accrued and unpaid
dividends. Additionally, the holders of the Preferred Stock, have the right to
redeem their shares of Preferred Stock on the same terms of the put right after
April 30, 2007 or immediately upon

the occurrence of any sale, merger or change of control of the Company, any
qualified public offering with net proceeds of at least $20,000,000 or any
private equity financing with net proceeds of at least $20,000,000.

Each share of Preferred Stock has a preference upon liquidation, dissolution,
winding up or sale of the Company equal to $100 per share plus accrued and
unpaid interest. Because the Charter Amendment was not approved by December 31,
2001, the holders of the Preferred Stock have an enhanced right to a liquidation
preference payment equal to the face value of the Preferred Stock plus 90% of
the fair market value of the remaining property of the Company and the holders
of the Company's Common Stock will have the right to a liquidation preference
payment equal to the remaining 10% of the fair market value of the remaining
property of the Company.

Impact of Failure to Approve Charter Amendment at 2002 Annual Meeting

Regardless of whether the Charter Amendment is approved at the annual meeting,
the holders of Preferred Stock will continue to have the enhanced rights
described above under the terms of the Certificate of Designation, unless the
holders otherwise waive the enhanced rights or amend the terms of the
Certificate of Designation. The warrants will remain unexercisable until the
Charter Amendment is approved. If the Charter Amendment is approved at the
annual meeting, the warrants will become exercisable, and the Company will be
able to issue stock options to its associates as incentive compensation as
described below in "Option Grants in Last Fiscal Year." As previously discussed,
the holders of Preferred Stock have sufficient voting power to approve the
Charter Amendment without the vote of any holder of Common Stock.

Other Preferred Stock Rights

Under the terms of the Preferred Stock and the Shareholders Agreement, NTOF has
the right to appoint three directors to the Board of Directors and the Hancock
Entities have the right to collectively appoint one director to the Board of
Directors, unless they waive such right. Because the Hancock Entities waived
their right to appoint a director, NTOF appointed four members to the Company's
Board of Directors in October 2001. The current Board of Directors consists of
five members. In addition, NTOF and the Hancock Entities each have the right to
designate one observer to attend all meetings of the Board of Directors. The
holders of Preferred Stock, voting as a separate class, are entitled to elect
four of the Company's directors. The remaining director is elected by a vote or
consent of the holders of our Common Stock, voting as a separate class.

Under the Shareholders Agreement, the Company granted each holder of Preferred
Stock the preemptive right to purchase, pro rata, all or any part of new
securities offered by the Company. The Shareholders Agreement also grants each
holder of Preferred Stock the right of first offer and co-sale rights in the
event another holder of Preferred Stock elects to sell its stock. Prior to a
public offering with net proceeds of at least $20,000,000, if the holder of 50%
or more of the outstanding capital stock of the Company elects to sell all of
its shares, then the holder will have pull-along rights with respect to the
non-selling holders of Preferred Stock (i.e. the holder may require that the
non-selling holders of Preferred Stock sell all of their shares of capital stock
as well).

Under the Purchase Agreement, the Company has granted registration rights to
NTOF and the Hancock Entities. The registration rights granted include two
rights to demand that the Company register as soon as reasonably practicable the
holder's shares for resale to the public pursuant to the Securities Act of 1933,
an unlimited number of rights to register as soon as reasonably practicable the
holder's shares for resale to the public pursuant to other public offerings and,
upon the Company's eligibility for use of Form S-3 under the Securities Act of
1933, an unlimited number of rights to register as soon as reasonably
practicable the holder's shares for resale to the public on Form S-3. Failure to
register the holder's shares as soon as reasonably practicable, when requested,
will result in a breach of the Purchase Agreement, and the holders would be
entitled to their rights and remedies at law for such a contractual breach,
which may include the awarding of money damages arising out of direct, indirect,
special, consequential, or punitive damages suffered by the holders.

The Purchase Agreement also requires the Company to obtain NTOF's and/or the
Hancock Entities' consent prior to taking certain actions in the operation of
its business, other than pursuant to the terms of the financial restructuring.
These actions include, but are not limited to, amending the Company's
organizational documents adversely to NTOF and the Hancock Entities, declaring
any dividends, selling or leasing any assets of the Company outside of the
ordinary course of business, selling any additional capital stock of the Company
(except pursuant to existing

warrants and under the Company's stock option plan for employees), entering into
any transactions with affiliates (other than in arms-length transactions),
paying any management or consulting fees, acquiring any debt or equity interest
in another entity, increasing the compensation of any executive officer by 5% or
more, terminating any key employee, adopting a new employee benefit plan or
employment agreement, acquiring any property for more than $500,000 or making
any capital expenditure greater than $250,000 individually or $1,000,000 in the
aggregate. The prior consent of NTOF and the Hancock Entities under the Purchase
Agreement is not required prior to effecting the Charter Amendment.

If, during the time period which a holder of Preferred Stock has the right to
put its shares of Preferred Stock to us as described above, we receive any bona
fide third-party proposal, an "unlocking proposal," as defined in the
Shareholders Agreement, relating to the sale of all or substantially all of our
assets, a merger, consolidation or share exchange involving the Company that
would result in a change in the beneficial ownership of our capital stock or a
change in control of the Company, and if we accept the proposal within the time
periods mandated by the Shareholders Agreement, then we must use good faith and
commercially reasonable efforts to consummate the transactions described in the
proposal. If, however, we do not accept the proposal within the time periods
mandated by the Shareholders Agreement, then each holder of Preferred Stock will
also have the right to cause us to purchase all of the capital stock of the
Company that the holder owns for an amount of cash equal to the consideration
that would have been paid to the holder had we accepted the proposal.

Ownership if the Charter Amendment is Approved

The table set forth above on page 5 under "Security Ownership of Certain
Beneficial Owners" illustrates the current security ownership of shareholders.
The following table sets forth information concerning the beneficial ownership
of the Company's capital stock if the Charter Amendment is approved at the
annual meeting. A comparison of the tables demonstrates that a change in control
of the Company will occur immediately upon the approval of the Charter
Amendment. Prior to approval of the Charter Amendment, NTOF, the Hancock
Entities and Mr. Hollingsworth collectively owned no shares of Common Stock of
the Company because the warrants they hold are not exercisable. Upon the
approval of the Charter Amendment, such warrants become exercisable for a
nominal exercise price, and NTOF, the Hancock Entities and Mr. Hollingsworth
will collectively be deemed to have beneficial ownership of 129,515,509 shares
of Common Stock, representing 77% of the issued and outstanding shares of the
Company's Common Stock. Regardless of whether the Charter Amendment is approved,
the ownership of the issued and outstanding Preferred Stock will remain
unchanged. As previously noted, the Preferred Stock has sufficient voting power
to determine the outcome of matters presented to the Company's shareholders for
approval without the vote of any holder of Common Stock.

Post Charter Amendment
Security Ownership

Number of Shares Percent of Number of Shares of Percent
Beneficial Owner of Common Stock Class(1) Series D Preferred of Class
---------------- --------------- -------- ------------------ --------

NTOF 78,213,911(2) 46.5% 46,500 60.4%
Existing shareholders other than 8,378,416(5) 5.0%
management
Hancock Entities 45,414,529(3) 27.0% 27,000 35.1%
Arthur Hollingsworth 5,887,069(6) 3.5% 3,500 4.5%
Management share distribution:

Darren Miles 2,724,872(4) 1.6%
Steve Finberg 2,751,372(4)(7) 1.6%
Cheryl Taylor 2,724,872(4) 1.6%
Colon Washburn 1,122,435(8) 0.7%

Existing warrants 300,000 0.2%
Options under stock option plans not held 146,250 0.1%
by management
Option pool to be issued to existing 7,450,000 4.4%
associates
Option pool to be issued to future 13,088,234 7.8%
associates

(1) Percentages are based upon 8,410,098 shares (the total number of shares of
Common Stock outstanding as of March 29, 2002) plus the total number of
shares underlying all outstanding options and warrants regardless of
whether such options or warrants are currently exercisable or subject to
contingency.

(2) Represents warrants to purchase 78,213,911 shares of Common Stock owned by
NTOF which becomes exercisable upon approval of the Charter Amendment.

(3) Represents warrants to purchase 45,414,529 shares of Common Stock owned by
the Hancock Entities which becomes exercisable upon approval of the Charter
Amendment.

(4) Represents options to purchase 2,724,872 shares of Common Stock which the
Company intends to issue upon the approval of the Charter Amendment.

(5) Includes 3,166,694 shares of Common Stock held by Larry Martin. Mr. Martin
retired from the Company's employment and resigned as a director effective
December 1, 2001.

(6) Represents warrants to purchase 5,887,069 shares of Common Stock owned by
Arthur Hollingsworth which becomes exercisable upon approval of the Charter
Amendment.

(7) Includes options to purchase 26,500 shares of Common Stock which are
currently exercisable.

(8) Includes options to purchase 1,000,000 shares of Common Stock which the
Company intends to issue upon approval of the Charter Amendment. Includes
options to purchase 90,753 shares of Common Stock which are currently
exercisable.

Board Recommendation

Our former board of directors (which consisted of Messrs. Washburn, Martin, Gier
and McKinney) held a meeting on August 9, 2001 to consider and vote upon the
Agreements and the proposed amendment to our articles of incorporation. At such
meeting, our former board determined unanimously (with Mr. Martin, a creditor of
the Company, abstaining) to authorize the Agreements and the Charter Amendment
and recommend approval of the Charter Amendment to the shareholders.

When the Company's shareholders failed to approve the Charter Amendment at the
special meeting of the Company's shareholders in December 2001, our current
board in April, 2002 unanimously approved submission of the Charter Amendment
for shareholder approval at the annual meeting. Our board considered various
factors, including:

o the fact that the Company's credit facilities were past due and
subject to continuous short-term waivers;

o the Company's recent operating losses and its extremely limited
available working capital;

o the fact that the Company's relationships with its suppliers,
customers, employees and creditors might deteriorate in the near
future;

o the terms of the Agreements and the Charter Amendment; and

o the effect of the warrants not being exercisable on the Company's
shareholders, creditors and other stakeholders.

In making its determination, the board did not give a disproportionate amount of
weight to any one or more of the factors, but rather based its decision on the
total mix of information available to it at the time.

THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" THE PROPOSED
AMENDMENT TO OUR ARTICLES OF INCORPORATION.

PROPOSAL 2. ELECTION OF DIRECTORS

There are five directors whose terms expire at the annual meeting. The board of
directors has proposed Arthur W. Hollingsworth, Darren L. Miles, Gregory A.
Campbell and Luke M. Sweetser as nominees for re-election by the holders of our
Preferred Stock, voting as a separate class, as directors to serve for one-year
terms and until their successors are elected and qualified. The board has
proposed Colon O. Washburn as nominee for re-election by the holders of our
Common Stock, voting as a separate class, as a director to serve for a one-year
term and until his successor is elected and qualified.

Assuming the presence of a quorum, election of four directors will require the
affirmative votes of a plurality of the shares of our Preferred Stock cast,
voting as a separate class, and the election of one director will require the
affirmative votes of a plurality of the shares of our Common Stock cast, voting
as a separate class. Election by the vote of a plurality of shares requires that
a nominee for director receive more votes than any other nominee (or, in the
case of the election of four directors by the holders of our Preferred Stock,
more votes than the person receiving the fifth most votes) but does not require
that a nominee receive a majority of votes cast.

Shares represented by proxies will be voted for the election of the foregoing
nominees unless authority to do so is withheld. If, at the time of the annual
meeting, any nominee should be unable to serve, which is not anticipated, the
shares represented by proxy may be voted for a substitute nominee to be
designated by the Board of Directors. For information regarding each of the
nominees, see "Executive Officers and Directors."

THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" EACH NOMINEE FOR
DIRECTOR FOR WHICH YOU ARE ENTITLED TO VOTE.

PROPOSAL 3. RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS

KPMG, LLP, independent certified public accountants, served as independent
auditors for the Company for the fiscal year ended December 28, 2001 and has
reported on the Company's financial statements for fiscal year 2001. The Board
of Directors has selected KPMG, LLP as the Company's independent auditors for
fiscal year 2002 and recommends that the shareholders ratify this selection.

A representative of KPMG, LLP is expected to be present at the annual meeting
and will have an opportunity to make a statement if he desires to do so. He is
also expected to be available to respond to appropriate questions.

Assuming the presence of a quorum, ratification of the selection of KPMG, LLP as
the Company's independent auditors for fiscal 2002 will require (1) the
affirmative votes of a majority of combined voting power of the Voting Shares
cast, voting together as a combined class, and (2) the affirmative votes of a
majority of the shares of our Preferred Stock cast, voting as a separate class.

Shareholder ratification is not required for the selection of KPMG, LLP as the
Company's independent auditors. The selection is being submitted for
ratification with a view toward soliciting the opinion of shareholders, which
opinion will be taken into consideration in future deliberations.

THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" THE RATIFICATION OF
KPMG, LLP AS THE COMPANY'S INDEPENDENT AUDITORS.

DIRECTORS AND EXECUTIVE OFFICERS

The board of directors currently consists of five members. Pursuant to our
bylaws, each director holds office for a term of one year or until such
director's successor is elected and qualified or until such director's earlier
resignation, death or removal. Colon O. Washburn has served as a member of the
board since 1993. The other four members of our board of directors were
designated by NTOF pursuant to the terms of our Preferred Stock. Under the terms
of our Preferred Stock, NTOF has the right to designate three members of our
board of directors, and the Hancock Entities have the right to designate one
member of our board of directors, unless the Hancock Entities waive such right.
Because the Hancock Entities waived their right to designate a director, NTOF
appointed four members to our board of directors in October 2001. These
directors are Arthur W. Hollingsworth, Luke M. Sweetser, Gregory A. Campbell and
Darren L. Miles.

Current Directors

The following table sets forth, as of the record date, the names of our
directors and our executive officers; their respective ages; their position with
the Company; and, with respect to each director, the year in which they became a
director of the Company; and the year in which their term as director expires.

Director Term to
Name Age Position with the Company Since Expire
---- --- ------------------------- ----- ------

Darren L. Mile 43 President, Chief Executive Officer and 2001 2002
Director

Arthur W. Hollingsworth 39 Chairman of the Board of Directors 2001 2002

Colon O. Washburn 56 Director 1993 2002

Luke M. Sweetser 30 Director 2001 2002

Gregory A. Campbell 49 Director 2001 2002

Steven C. Finberg 33 Executive Vice President - Business
Development

Cheryl A. Taylor 34 Executive Vice President, Chief Financial
Officer and Secretary

Helen Mihas 36 Vice President, Treasurer, Controller and
Assistant Secretary

Eric T. Janke 40 Vice President - Procurement/Services

Jerry L. Campbell 41 Vice President - Information Technology

Darren L. Miles. Since October 2001, Mr. Miles has served as a member of our
Board of Directors. In August 2001, Mr. Miles was appointed President and Chief
Executive Officer of the Company. Since 2000, Mr. Miles has been a director of
Lewis Hollingsworth LP, a venture capital/private equity firm in Dallas, TX.
From 1998 to 2000, Mr. Miles was Chief Financial Officer and Executive Vice
President of ACS Incorporated, a commodity distribution company. From 1984 to
1998, Mr. Miles was Chief Financial Officer, Executive Vice President, and a
Principal of Hutson Companies Inc., a privately held wholesale/retail
distribution company. ACS Incorporated filed for bankruptcy protection on
February 4, 2000.

Steven C. Finberg. In October 1999, Mr. Finberg was promoted to Vice President
of Sales and Marketing. Previously, Mr. Finberg had been the Director of
Merchandising since 1997. From 1989 to 1997, Mr. Finberg had a variety of upper
management and executive roles within the Company including Regional Director of
Operations.

Cheryl A. Taylor. Ms. Taylor serves the Company as its Chief Financial Officer,
Executive Vice President and Secretary. Ms. Taylor joined the Company in April
2001. From 1994 until joining the Company, Ms. Taylor was employed by The Great
Train Store Company, a nation-wide specialty retailer. Since 1996, Ms. Taylor
served The Great Train Stores as its Chief Financial Officer and Vice
President-Finance and Administration. From 1989 to 1994, Ms. Taylor served as a
certified public accountant with Coopers & Lybrand LLP, an international
accounting and auditing firm. The Great Train Store Company filed for bankruptcy
protection on February 28, 2000.

Helen Mihas. In April 2001, Ms. Mihas was promoted to Controller, Vice President
and Assistant Secretary. She had been with the Company since March 2000 as its
Assistant Controller. From 1993 until 2000, Ms. Mihas was employed by Columbia
and Tenet Healthcare Corporations, two major national healthcare corporations,
in various financial positions. From 1988 to 1993, Ms. Mihas held an accounting
position at McNeil Real Estate Management.

Eric T. Janke. Mr. Janke currently serves the Company as its Vice President -
Procurement/Services. Mr. Janke has been with the Company since October 1996 and
has been in the industry for 26 years. His experience within the food industry
includes sales, marketing and procurement throughout retail management to
foodservice distribution along with brokerage and fresh cut processing.

Jerry L. Campbell. Mr. Campbell currently serves the Company as its Vice
President - Information Technology. Mr. Campbell has been with the company for
over 10 years. He has held various operations and sales positions within the
Company prior to becoming the Director of Information Technology. Before joining
Fresh America, Mr. Campbell advanced to Store Manager during his 15 year career
in the grocery industry with Brookshire Bros.

Colon O. Washburn. Mr. Washburn resigned his position as our Chief Executive
Officer in August 2001. Mr. Washburn had been appointed Chief Executive Officer
in October 1999. Since his resignation, Mr. Washburn has remained with the
Company as a member of our Board of Directors and continues to serve as an
advisor to management. Mr. Washburn has been a director of the Company since
July 1993. From 1971 until January 1993, Mr. Washburn was employed by Wal-Mart
Stores, Inc. ("Wal-Mart"), where he served most recently as Executive Vice
President of Sam's Wholesale Club, a division of Wal-Mart, and also as Senior
Vice President of Wal-Mart. Since February 1993, Mr. Washburn has been President
of Beau Chene Farms, a real estate development company. Additionally, Mr.
Washburn serves as a director of Tandycrafts, Inc.

Arthur W. Hollingsworth. Since October 2001, Mr. Hollingsworth has been the
Chairman of our Board of Directors. Since August 2000, Mr. Hollingsworth has
been a Co-founder and Partner of North Texas Opportunity Fund LP, a venture
capital/private equity firm located in Dallas, TX. From 1989 to the present, Mr.
Hollingsworth has also been a Partner of Lewis Hollingsworth LP, a venture
capital/private equity firm located in Dallas, TX. Mr. Hollingsworth is Chairman
of the Boards of Belding Hausman Incorporated (textile manufacturer) and Instaff
Personnel, Inc. (temporary staffing services), and is also Co-Chairman of
BillMatrix Corporation (payment processing). In addition, Mr. Hollingsworth
serves on the Board of Directors of Hollingsworth & Vose Company (paper
manufacturing), Irving Holdings, Inc. (Yellow Cab of Dallas) and the Zale Lipshy
University Medical Center, Inc. (healthcare).

Gregory A. Campbell. Since October 2001, Mr. Campbell has served as a member of
our Board of Directors. Since August 2000, Mr. Campbell has been a Co-founder
and Partner of North Texas Opportunity Fund LP, a venture capital/private equity
firm in Dallas, TX. Since September 1988, Mr. Campbell has served as President
of Campbell Consulting Group, a strategic management consulting group. In
addition, Mr. Campbell presently serves as a director on the boards of
PrimeSource Foodservice Equipment, Inc. (foodservice equipment distribution and
logistics), InStaff Personnel, Inc. (temporary staffing services), IBIS
Communications (marketing communications) and MLN Holding Corporation
(convenience stores).

Luke M. Sweetser. Since October 2001, Mr. Sweetser has served as a member of our
Board of Directors. Since August 2000, Mr. Sweetser has been a Co-founder and
Partner of North Texas Opportunity Fund LP, a venture capital/private equity
firm located in Dallas, TX. From 1994 to the present, Mr. Sweetser has been a
Managing Director of Lewis Hollingsworth LP, a venture capital/private equity
firm located in Dallas, TX. Mr. Sweetser is a director of InStaff Personnel
(temporary staffing services), PrimeSource Foodservice Equipment, Inc.
(foodservice equipment distribution and logistics) and the Dallas-Ft. Worth
Private Equity Forum. Mr. Sweetser has served as a director for the City of
Dallas Housing Finance Corporation (municipal bond issuer for housing
development) since

1994 and has served as its Chief Investment Officer since 1996. Mr. Sweetser
holds the designation of Chartered Financial Analyst from the Association of
Investment Management and Research.

Former 2001 Directors & Officers

Mark R. Gier. From April 2001 until October 15, 2001, Mr. Gier was a Director of
the Company. Mr. Gier formed Diversified Management Services, LLC in November
2000. Mr. Gier is also a faculty member of The Refrigeration Research and
Education Foundation annual institute and served as a former Chairman of the
Finance and Administration, Investments, and Insurance Committees of the World
Food Logistics Organization from 1993 to 1998. Upon the closing of the NTOF
transaction, Mr. Gier tendered his resignation from the Board. Such resignation
was accepted by the Company.

Larry Martin. Mr. Martin served as a Director of the Company from April 2001
through August 2001. Mr. Martin was the former owner of Martin Bros. in
Arlington, Texas which was acquired by the Company in January 1998. After the
acquisition he served as the General Manager of the Arlington facility until his
retirement in December 2001.

Keith McKinney. From April 2001 until October 15, 2001, Mr. McKinney was a
Director of the Company. Mr. McKinney is a private investor who retired in 1992
as President, CEO and Vice Chairman of Intertrans Corporation, a public,
international transportation and logistics company. Prior to co-founding
Intertrans in 1978, Mr. McKinney held several positions with Circle
International, a public international freight forwarder, customs broker and
logistics company and with Texas Instruments in various capacities, including
International Traffic Manager. Upon the closing of the NTOF transaction, Mr.
McKinney tendered his resignation from the Board. Such resignation was accepted
by the Company.

Gary D. Wiener. Mr. Wiener joined the Company in 1993. In March 2000, Mr. Wiener
was appointed Executive Vice President and Chief Operating Officer. From 1996 to
1999, Mr. Wiener served as the Corporate Vice President of Operations. Mr.
Wiener resigned from the Company in January 2002.

BOARD OF DIRECTORS AND COMMITTEES

Our business is managed under the direction of our board of directors. Our board
of directors meets during the fiscal year to review significant developments
affecting the Company and to act on matters requiring board approval. Our board
of directors currently has established audit and compensation committees. We do
not have a standing nominating committee. Nominees for director are selected by
our board of directors. The committees devote attention to specific subjects and
assist the board of directors in the discharge of its responsibilities. The
current functions of each committee and its current members are described below.

Audit Committee

Our audit committee currently is composed of two members, Messrs. Hollingsworth
and Sweetser, both of whom were appointed to the committee in October 2001.
Neither of the current directors on the committee is independent as defined by
the listing standards of The Nasdaq Stock Market.

Our audit committee met on one occasion during 2001. Our audit committee is
responsible for reporting to the board of directors on the general financial
condition of the Company and the results of our annual audit, and are
responsible for ensuring that the Company's activities are conducted in
accordance with applicable laws and regulations. Our Board of Directors adopted
an audit committee charter for the Company on June 12, 2000 by written consent.

The following Report of the Audit Committee was approved and adopted by Arthur
Hollingsworth and Luke Sweetser, members of the audit committee.

Report of the Audit Committee

The report of the Audit Committee shall not be deemed incorporated by reference
by any general statement incorporating by reference this proxy statement into
any filing under the Securities Act of 1933, as amended (the "Securities Act")
or the Exchange Act, except as to the extent that the Company specifically
incorporates this information by reference and shall not otherwise be deemed
filed under such Acts.

In accordance with its written charter adopted by the Board of Directors on June
12, 2000, the Audit Committee (the "Committee") assists the Board of Directors
in fulfilling its responsibility for overseeing the quality and integrity of the
accounting, auditing and financial reporting practices of the Company and its
system of internal controls.

In discharging its oversight responsibility as to the audit process, the
Committee obtained from the independent accountants a formal written statement
describing all relationships between the accounts and the Company that might
bear on the accountants' independence consistent with Independence Standards
Board Standard No. 1, "Independence Discussions with Audit Committees,"
discussed with the accountants any relationships that may impact their
objectivity and independence, and satisfied itself as to the accountants'
independence.

The Committee reviewed with the Company's independent accountants the overall
scope and plans for their audit. The Committee also discussed with management,
the independent accountants, the quality and adequacy of the Company's internal
controls and the overall quality of the Company's financial reporting process.

The Committee discussed and reviewed with its independent accountants
communications required by generally accepted auditing standards, including
those described in Statement of Auditing Standards No. 61, as amended,
"Communication with Audit Committees" and discussed and reviewed the results of
the independent accountants' examination of the consolidated financial
statements. In addition, the Committee considered the compatibility of
nonauditing services provided to the Company with the accountants' independence
in performing their auditing functions.

The Committee reviewed and discussed interim financial information contained in
each quarterly report and earnings announcement with management and independent
accountants prior to public release as necessary. The Committee reviewed the
audited consolidated financial statements of the Company as of and for the year
ended December 28, 2001, with management and the independent accountants.
Management has the responsibility for the

preparation of the Company's consolidated financial statements and the
independent accountants have the responsibility for the audit of those
statements.

Based on the above-mentioned reviews and discussions with management and the
independent accountants, the Committee recommended to the Board that the
Company's audited consolidated financial statements be included in its Annual
Report on Form 10-K for the year ended December 28, 2001, for filing with the
Securities and Exchange Commission. The Committee also recommended the
appointment, subject to shareholder approval, of the independent accountants,
and the Board of Directors concurs with such recommendation.

This Report is submitted by the members of the Audit Committee of the Board of
Directors.

Arthur W. Hollingsworth Luke M. Sweetser

Audit Fees

The aggregate fees billed for professional services rendered in connection with
the audit of the Company's annual financial statements and the reviews of the
financial statements included in the Company's 10-Q's for the 2001 fiscal year
was $185,000.

Financial Information Systems Design and Implementation Fees

KPMG, LLP did not provide any professional services relating to financial
information systems design and implementation during the 2001 fiscal year.

All Other Fees

The aggregate fees billed by KPMG, LLP for all other services rendered to the
Company, other than the services described above, were $57,000. The audit
committee has considered whether KPMG, LLP's independence is compatible with
rendering the non-audit services during fiscal year 2001.

Compensation Committee

The compensation committee presently consists of two members, Messrs.
Hollingsworth and Campbell, both of whom were appointed to the compensation
committee in October 2001 and neither of whom are officers or employees of the
Company. The compensation committee determines the compensation of our Chief
Executive Officer and, with the assistance of management, of our senior
executive employees (including salary, bonus, equity participation through
grants of stock options, and benefits). Our compensation committee met on one
occasion during 2001.

EXECUTIVE COMPENSATION

Summary Compensation Table

The following table sets forth certain information regarding compensation paid
during each of the last three fiscal years to the Company's Chief Executive
Officer and each of the Company's other executive officers (the "named executive
officers").

Long-Term
Compensation
Annual Compensation ------------
------------------- Shares
Name and Underlying All other
Principal Position Year Salary Bonus Other Options/SARs Compensation(1)
------------------ ---- ------ ----- ----- ------------ ---------------

Colon O. Washburn(2) 2001 220,385 - - - 2,146
Former Chief Executive Officer, 2000 240,000 - - 60,000 2,215
Chairman of the Board and President 1999 56,308 - 4,940 5,000 -

Gary D. Wiener(3) 2001 150,769 - 13,302 - 3,421
Former Executive Vice President 2000 138,051 - - 25,000 2,233
and Chief Operating Officer 1999 113,473 - - - 1,777

Steven C. Finberg 2001 131,154 - - - 1,996
Executive Vice President- 2000 113,424 - - 20,000 3,201
Business Development 1999 96,750 11,500 - - 4,191

John H. Gray(4) 2001 78,269 - - - 1,423
Former Executive Vice President, 2000 175,000 4,586
Chief Financial Officer and 1999 165,000 - - - 1,333
Secretary

Darren L. Miles(5) 2001 - 50,000 142,500 - -
Chief Executive Officer,
Director and President

Cheryl A. Taylor(6) 2001 40,385 - 137,531 - -
Executive Vice President, Chief
Financial Officer and Secretary

Eric Janke(7) 2001 110,076 12,433 - - 3,302
Vice President - Procurement/ 2000 106,734 - 22,800 - 3,202
Services 1999 90,772 3,000 16,470 - 2,813

Jerry Campbell(8) 2001 125,000 - 12,500 - 3,125
Vice President - Information 2000 98,654 47,500 - - 1,973
Technology 1999 88,706 10,499 - - 1,692

----------------------

(1) These amounts consist of contributions by the Company to a 401(k) plan on
behalf of the named executive.

(2) Effective October 1999, Mr. Washburn was appointed Chief Executive Officer
of the Company. Mr. Washburn's annual base compensation was $240,000.
Effective August 2001, Mr. Washburn resigned his position as Chief
Executive Officer and Darren Miles became Chief Executive Officer.

(3) Mr. Wiener received $13,301 during fiscal 2001 related to moving expenses.

(4) Effective May 2001, Mr. Gray resigned as Executive Vice President, Chief
Financial Officer, and Secretary. Effective April 2001, Cheryl Taylor
became Executive Vice President, Chief Financial Officer, and Secretary.

(5) Effective August 2001, Mr. Miles became Chief Executive Officer and
President. Mr. Miles is compensated as a consultant to the Company.

(6) Effective April 2001, Ms. Taylor became Executive Vice President, Chief
Financial Officer and Secretary. Beginning in October 2001, Ms. Taylor
became an employee of the Company. Prior to this time she was compensated
as a consultant.

(7) Mr. Janke received $22,800 and $16,410 during fiscal 2001 and 2000,
respectively related to moving expenses.

(8) Mr. Campbell received $12,500 during fiscal 2001 related to moving
expenses.

Option Grants In Last Fiscal Year

No option grants were made during the 2001 fiscal year. If the Charter Amendment
is approved, the Company intends to issue options to purchase Common Stock under
the Company's 2001 Stock Option Plan to associates of the Company, including the
Company's officers and directors. See "Ownership if the Charter Amendment is
Approved" in Proposal 1 above.

Aggregated Option Exercises In Last Fiscal Year and Fiscal Year-End Option
Values

There were no options exercised by the named executive officers during the 2001
fiscal year.

401(k) Plan

The Company maintains a 401(k) Profit Sharing Plan, a tax-qualified retirement
plan under Section 401(k) of the Internal Revenue Code of 1986, as amended (the
"Code"). The Company's 401(k) Plan provides participants with retirement
benefits and may also provide benefits upon death, disability or termination of
employment with the Company. Employees are eligible to participate in the
Company's 401(k) Plan following the completion of three (3) months of
employment. In addition, employees must be at least twenty-one (21) years of age
to be eligible for participation in the 401(k) Plan. Participants may make
elective salary reduction contributions to the 401(k) Plan up to the lesser of
15% of the participant's compensation or the legally permissible limit
(currently $11,000) imposed by the Code. The Company may, in its sole discretion
make a matching employer contribution for employees of the amount of the
percentage of each employee contribution up to a maximum contribution of 3% of
the contributing employee's compensation. In addition, the Company may, in its
sole discretion, make non-elective contributions to the 401(k) Plan for
participants who are not considered to be "highly compensated employees" under
the Plan. Contributions by the Company vest over a period of five (5) years.
Enrollment in the 401(k) Profit Sharing Plan may be effected on the first day of
the month following the date the employee meets the eligibility requirements of
the Plan.

Compensation Committee Interlocks and Insider Participation

Mr. Washburn, our former Chief Executive Officer, served on our Compensation
Committee until February 2001. From February until September 2001, the
Compensation Committee consisted of Keith McKinney and Mark Gier, and there were
no Compensation Committee interlocks. From October 2001 to present, our
Compensation Committee is composed of Arthur Hollingsworth and Greg Campbell and
there are no Compensation Committee interlocks.

COMPENSATION COMMITTEE'S REPORT
ON EXECUTIVE COMPENSATION

Since its formation in 1994, the Compensation Committee has been responsible for
recommending bonuses and any increase in base salaries for the Company's
executive officers.

The Compensation Committee believes that, in order for the Company to succeed,
it must be able to attract and retain qualified executive officers. In
determining the type and amount of executive officer compensation, the
objectives of the Compensation Committee are to provide levels of base
compensation, bonuses and long-term incentives (in the form of stock options or
other plans) that will attract and retain talented executive officers and align
their interests with the success of the Company. The Company's executive officer
compensation program currently is comprised of base salary, bonus plan,
long-term incentive compensation (in the form of stock options)

and various benefits generally available to employees of the Company (such as
health and disability insurance). Under the supervision of the Compensation
Committee and the Board of Directors, the Company has developed and implemented
compensation policies, plans and programs that seek to enhance the profitability
of the Company and increase shareholder value.

Base Salaries

The Company's policy is to maintain base salaries competitive with salaries paid
to similarly situated executive officers of companies of similar size in
comparable industries. Although neither the Board of Directors nor the
Compensation Committee has conducted a formal review of base salaries paid to
similarly situated executive officers, the Company believes that the base
salaries payable to its executive officers are comparable to those paid by
similar companies located in the Company's geographical area and engaged in
industries comparable to the Company's. The Compensation Committee anticipates
that adjustments to base compensation will generally be made based upon assigned
responsibility and performance and successful attainment of specific goals and
objectives of the Company and individual employees.

Bonuses

Year-end cash bonuses are designed to motivate the Company's executive officers
to achieve specific annual financial goals and to achieve favorable returns for
the Company's shareholders. At the end of each fiscal year, the Compensation
Committee will assess each executive's contributions to the Company as well as
the degree to which specific annual financial, strategic, and operating
objectives were met by the Company.

Long-Term Incentives

Stock option grants under the Company's stock option plans form the basis of the
Company's long-term incentive compensation for executive officers and employees.
The specific objective of the Company's stock option plans is to align the
long-term interests of the Company's executive officers and employees with those
of shareholders by creating a strong link between executive pay and shareholder
returns. The Company encourages its executive officers and employees to develop
and maintain a significant, long-term stock ownership position in the Company's
Common Stock. Stock options are awarded to executive officers and employees in
order to encourage future management actions aimed at improving the Company's
sales efforts, product quality and profitability. The Company believes that
success in these endeavors will increase the value of the Company's Common Stock
for shareholders. Recipients of stock options will have the opportunity to share
in the increased value that results from their efforts. The Plan Administration
Committee makes specific awards of options based on an individual's ability to
impact Company-wide performance and in light of the total compensation
appropriate for the individual's position. The Compensation Committee may also
consider other bonus or long-term incentives at their discretion.

Chief Executive Officer Compensation

Mr. Colon Washburn was the Company's Chief Executive Officer for the period of
January 2001 until August 2001. Mr. Washburn resigned in 2001 as the Company's
Chief Executive Officer. Mr. Washburn is a director of the Company and continues
to be employed with the Company as an Executive Consultant pursuant to an
employment agreement, which provides for a one-year term commencing on October
5, 2001, and which may be renewed for up to three successive one-year periods
thereafter. In approving Mr. Washburn's compensation, the Board of Directors at
that time evaluated and compared Mr. Washburn's duties, responsibilities and
performance results, and the overall results of the Company, to industry norms
to determine his base compensation. See subheading "Employment Agreements" under
this section of the proxy statement.

Mr. Darren Miles joined the Company in August 2001 as the Chief Executive
Officer. Mr. Miles is compensated as a consultant at an annual amount of
$250,000. In approving Mr. Miles' compensation, the Board of Directors at that
time evaluated and compared Mr. Miles' duties, responsibilities and performance
results, and the overall results of the Company, to industry norms to determine
his base compensation. During October 2001, the Compensation Committee reviewed
Mr. Miles performance and recommended a cash bonus of $50,000 for fiscal 2001.

In November 2000, the Company entered into a resignation agreement and contract
for services with Mr. David

Sheinfeld, the former Chief Executive Officer of the Company. Pursuant to the
agreement, the Company paid Mr. Sheinfeld $33,333 per month for the six months
of January through June 2001. The payments decreased to $8,333 for the last six
months of 2001. See subheading "Severance Agreements" under this section of the
proxy statement.

This Report is submitted by the members of the Compensation Committee of the
Board of Directors.

Arthur W. Hollingsworth Gregory A. Campbell

Employment Agreements

The Company has entered into employment agreements with Steven Finberg, Cheryl
Taylor and Colon Washburn. These employment agreements set forth the basic terms
of Mr. Finberg's, Ms. Taylor's and Mr. Washburn's employment with the Company,
and also contain provisions regarding non-competition, non-solicitation of
Company employees, non-solicitation of Company customers, and confidentiality of
certain Company information.

Mr. Finberg's agreement for employment with the Company as a Vice President
Sales and Marketing has a term of three years, commencing on October 5, 2001.
The term of the employment agreement may be extended by a written extension
agreement signed by both parties. Mr. Finberg is obligated under the agreement
to devote his full professional working time to the Company and shall not
otherwise be employed or otherwise engaged in any other business or enterprise
without the written permission of the Company. The agreement provides for a base
salary of $145,000 per year, which is to be reviewed annually by the Company,
but which may not be decreased. In addition to the base salary, the agreement
provides for, among other things, participation in benefit plans and other
fringe benefits applicable to similarly situated officers and managers,
reimbursement for business expenses in accordance with Company policy, and
eligibility to receive a performance-based annual bonus. The bonus will be
awarded beginning on the first day of the calendar year following October 5,
2001, only if the economic performance of the Company during twelve consecutive
months has achieved or exceeded the 2002 annual budget as approved by the Board
of Directors and subject to adjustment as set forth in the agreement. The
agreement provides that the Company may terminate Mr. Finberg for cause (as
defined in the agreement) at any time. The agreement terminates automatically in
the event of disability (as defined in the agreement) and also terminates
automatically upon death. Termination by either the employee or the Company
(except for in the event of death) requires two weeks' written notice.

Ms. Taylor's agreement for employment with the Company as an Executive Vice
President and the Chief Financial Officer has a term of three years, commencing
on October 5, 2001. The term of the employment agreement may be extended by a
written extension agreement signed by both parties. Ms. Taylor is obligated
under the agreement to devote her full professional working time to the Company
and shall not otherwise be employed or otherwise engaged in any other business
or enterprise without the written permission of the Company. The agreement
provides for a base salary of $175,000 per year, which is to be reviewed
annually by the Company, but which may not be decreased. In addition to the base
salary, the agreement provides for, among other things, participation in benefit
plans and other fringe benefits applicable to similarly situated officers and
managers, reimbursement for business expenses in accordance with Company policy,
and eligibility to receive a performance-based annual bonus. The bonus will be
awarded beginning on the first day of the calendar year following October 5,
2001, only if the economic performance of the Company during twelve consecutive
months has achieved or exceeded the 2002 annual budget as approved by the Board
of Directors and subject to adjustment as set forth in the agreement. The
agreement provides that the Company may terminate Ms. Taylor for cause (as
defined in the agreement) at any time. The agreement terminates automatically in
the event of disability (as defined in the agreement) and also terminates
automatically upon death. Termination by either the employee or the Company
(except for in the event of death) requires two weeks' written notice.

Mr. Washburn's agreement for employment with the Company as an Executive
Consultant provides for a one-year term commencing on October 5, 2001, which may
be renewed for up to three successive one-year periods thereafter. Renewal is
automatic unless either party gives thirty days' notice prior to the expiration
of the term. During Mr. Washburn's term of employment, he may continue the
business relationships he already has, and any new consulting or part-time
employment arrangements as may arise. He otherwise agrees to devote his full
professional working time to the Company and shall not otherwise be employed or
otherwise engaged in any other business or enterprise without the written
permission of the Company. The agreement provides that Mr. Washburn shall
receive

consulting fees of $150,000 per year, which will be reviewed and modified from
time to time, but which shall not be decreased. In addition to the base salary,
the agreement provides for, among other things, participation in benefit plans
and other fringe benefits applicable to similarly situated employees and
reimbursement for business expenses in accordance with Company policy. The
agreements provides for termination by the Company for cause (as defined in the
agreement), at any time. The agreement terminates automatically in the event of
disability as defined in the agreement, and also terminates automatically upon
death. Termination by either the employee or the Company (except for death)
requires two weeks' written notice.

Each of Mr. Finberg's, Ms. Taylor's and Mr. Washburn's employment agreements
further provide that during the employment term, each of them shall observe a
non-competition clause, and shall not without prior written consent directly or
indirectly engage in or have a financial interest in any other business,
continue or assume any other corporate affiliations, or pursue any other
commercial activities which would in any way compete with the Company or result
in a conflict of interest for the employee. For one year after termination of
employment, each of them agrees not to compete with the Company or have any
financial interest in any entity competing with the Company or an affiliate of
the Company for which the employee performed services, within any region or
locality in which the Company is then doing business or marketing its products.
They further agree to non-solicitation of Company employees, non-solicitation of
Company customers, and to maintain the confidentiality of the Company's
confidential information (as defined in the agreement), both during their
employment and for one year after termination.

Severance Agreements

On January 25, 2002 Mr. Gary Weiner resigned from his position as the Company's
Chief Operating Officer. His employment agreement with the Company was
terminated as of the date of his resignation. In connection with his
resignation, the Company entered into a Resignation Agreement. Pursuant to the
Resignation Agreement, Mr. Weiner will receive $53,334 to be paid $6,667
bi-weekly for eight pay periods.

On November 9, 2000, the Company and Mr. David Sheinfeld entered into a
Resignation Agreement and Contract for Services in connection with Mr.
Sheinfeld's resignation as Chairman of the Board of Directors and an employee of
the Company. The agreement contemplates that Mr. Sheinfeld would be engaged as
an independent contractor to the Company for a period commencing on November 9,
2000 and ending December 31, 2001, unless terminated earlier pursuant to the
agreement. Pursuant to the Resignation Agreement, the Company paid Mr. Sheinfeld
$33,333 per month for the six months of January through June 2001. The payments
decreased to $8,333 for the last six months of 2001. Under the terms of the
Agreement, Mr. Sheinfeld was entitled to receive a severance payment of $50,000,
$25,000 of which was paid on November 9, 2000 with the remaining $25,000 paid on
February 1, 2001. In addition, Mr. Sheinfeld was eligible to receive a bonus in
the amount of $25,000 on December 31, 2001, if, in the reasonable judgment of
the Company, Mr. Sheinfeld had satisfactorily performed the services required by
the Company. The Company determined that Mr. Sheinfeld was not eligible to
receive a bonus in 2001. Further, the Company agreed to forgive Mr. Sheinfeld's
debt to the Company in the amount of $300,000. The Company also agreed to extend
the period during which Mr. Sheinfeld may exercise his stock options to purchase
105,537 shares of the Company's Common Stock from November 9, 2000 to November
9, 2001. These options have now expired and Mr. Sheinfeld has no options.

Corporate Performance Graph

The Company's Common Stock currently is quoted on the Over-the-Counter Bulletin
Board under the symbol FRES. On April 25, 2001, the Company received notice from
The Nasdaq Stock Market, Inc. that its Common Stock had failed to maintain the
continued listing standards as required by Nasdaq rules. After a hearing on May
10, 2001, the Company was notified that the Nasdaq staff had determined the
Company's Common Stock would be de-listed and the stock began trading on the
Pink Sheets as of May 25, 2001. Once the Company's SEC reporting obligations
were fulfilled during the third quarter of 2001, the Company was moved to the
Over-the-Counter Bulletin Board.

The following graph shows a five-year comparison of shareholder return on the
Company's Common Stock based on the market price of the Common Stock (assuming
reinvestment of dividends), the cumulative total returns of companies on the
Nasdaq Stock Market Index of U.S. Companies and companies with standard industry

classifications (SIC codes) with the same range as Fresh America's. The data was
supplied by Media General Financial Services.

Comparison 5-Year Cumulative Total Returns

Fresh America Corp., NASDAQ Market Index and SIC Code Index

Performance Results through December 28, 2001

Period Ending
---------------------------------------------------------------------
Index 12/1996 12/1997 12/1998 12/1999 12/2000 12/2001
----- ------- ------- ------- ------- ------- -------

Fresh America Corp. 100.00 120.68 100.75 29.32 6.77 .48
Groceries and Related Products (SIC 100.00 133.57 150.60 168.69 231.53 231.80
5140-5149)
NASDAQ Market Index (US Companies) 100.00 122.32 172.52 304.29 191.25 152.46

SHAREHOLDER PROPOSALS

To be considered for inclusion in our proxy statement and form of proxy relating
to our 2003 annual meeting a shareholder proposal must be received by the
Corporate Secretary at our principal executive offices not later than February
26, 2003. Any such proposal will be subject to the rules and regulations of the
Securities Exchange Act of 1934, as amended.

Our bylaws provide an advance notice procedure for a shareholder to properly
bring business before an annual meeting. The shareholder must provide proper
notice to the Corporate Secretary at our principal executive offices not less
than 60 days nor more than 90 days prior to the anniversary date of the
immediately preceding annual meeting; provided, however, in the event that the
annual meeting is called for a date that is not within 30 days before or after
such anniversary date, notice by the shareholder in order to be timely must be
received by the Corporate Secretary not later than the close of business on the
tenth day following the day on which notice of the date of the annual meeting
was mailed or public disclosure of the date of the annual meeting was made,
whichever first occurs.

FINANCIAL STATEMENTS

A copy of the 2001 Annual Report of the Company containing audited financial
statements accompanies this Proxy Statement. The consolidated financial
statements and notes thereto as of December 28, 2001 and December 29, 2000 and
for each of the years in the three year period ended December 28, 2001 contained
on pages F-3 through F-6 of the Annual Report of the Company and the Selected
Financial and Operating Data, Management's Discussion and Analysis of Financial
Condition and Results of Operations, and Quantitative and Qualitative
Disclosures About Market Risk contained on pages 11 through 22 of such Annual
Report are incorporated by reference in this proxy statement. The remainder of
the Annual Report does not constitute a part of the proxy solicitation material.

The Form 10-Q filed by the Company with the Securities and Exchange Commission
on May 10, 2002 contains financial data for the fiscal quarter ended March 29,
2002. The consolidated balance sheets, the unaudited consolidated statements of
operations and the unaudited consolidated statements of cash flows for the
quarterly period ended March 29, 2002 contained on pages 2 through 4 of the Form
10-Q are incorporated by reference in this proxy statement. The remainder of the
Form 10-Q does not constitute a part of the proxy solicitation material.

OTHER BUSINESS

Our board of directors knows of no business that will be presented for
consideration at the annual meeting other than as stated in the accompanying
Notice of Annual Meeting of Shareholders. If, however, other matters are
properly introduced, the persons named in the accompanying proxy will vote the
shares they represent in accordance with their best judgment.

WHERE YOU CAN FIND MORE INFORMATION

The Company files reports, proxy statements, and other information with the SEC.
You can read and copy these reports, proxy statements, and other information
concerning the Company at the SEC's public reference room at 450 Fifth Street,
N.W., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further
information on the public reference room. The SEC maintains an Internet site at
http://www.sec.gov/ that contains reports, proxy and information statements and
other information regarding issuers that file electronically with the SEC,
including the Company. The Common Stock is quoted on the Over-the-Counter
Bulletin Board under the symbol "FRES."

A copy of the Company's 2001 annual report containing audited financial
statements accompanies this proxy statement. The annual report does not
constitute a part of the proxy solicitation materials.

You should rely only on the information contained or incorporated by reference
in this proxy statement to vote on the proposals contained herein. The Company
has not authorized anyone else to provide you with different information. You
should not assume that the information in this proxy statement is accurate as of
any date other than June 26, 2002.

By Order of the Board of Directors

/s/ Cheryl A. Taylor

Cheryl A. Taylor
Secretary

Arlington, Texas
June 26, 2002

YOU ARE CORDIALLY INVITED TO ATTEND THE MEETING IN PERSON.
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, YOU ARE REQUESTED
TO COMPLETE, DATE, SIGN AND PROMPTLY
RETURN THE ACCOMPANYING PROXY CARD IN THE
ENCLOSED POSTAGE-PAID ENVELOPE.

APPENDIX A

RESTATED ARTICLES OF INCORPORATION

FRESH AMERICA CORP.

Fresh America Corp., pursuant to the provisions of Article 4.07 of the Texas
Business Corporation Act, hereby adopts restated articles of incorporation,
which accurately copy the articles of incorporation and all amendments thereto
that are in effect to date and as further amended by such restated articles of
incorporation as hereinafter set forth and which contain no other change in any
provision thereof.

1. The name of the corporation is FRESH AMERICA CORP.

2. The following amendments to the Restated Articles of Incorporation were
duly adopted by a written consent of the Board of Directors and by vote of the
shareholders of the corporation taken at an annual meeting of shareholders:

a. Article Four of the Restated Articles of Incorporation is amended and
restated in its entirety (i) to increase the authorized capital stock
of the corporation and (ii) to reduce the par value of the
corporation's common stock.

3. Each amendment made by the Restated Articles of Incorporation has been
effected in conformity with the provisions of the Texas Business Corporation Act
(the "TBCA"), and the Restated Articles of Incorporation and such amendments
were duly adopted by the shareholders at an annual meeting of shareholders held
on December 6, 2001 in accordance with Article 4.02 of the TBCA.

4. The number of shares of common stock (the "Common Stock") outstanding is
8,410,098, and the number of shares of Preferred Stock, Series D (the "Preferred
Stock") outstanding is 77,000. The Common Stock and the Preferred Stock, voting
together as a single class, with each share of Common Stock having one vote and
each share of Preferred Stock having 250 votes, approved the Restated Articles
of Incorporation with __________votes in favor, __________votes against and
__________ votes abstaining. Holders of the corporation's outstanding Preferred
Stock, were entitled to vote as a class on the Restated Articles of
Incorporation. The Preferred Stock approved the Restated Articles of
Incorporation with __________ votes in favor, __________ votes against and
__________ votes abstaining.

5. As a result of the decrease in par value of the 8,410,098 outstanding
shares of common stock from $.01 per share to $.0001 per share, the stated
capital of the corporation will decrease from $84,100.98 to $841.01.

6. The Statement Designating a Series of Preferred Stock, filed by the
corporation with the Secretary of State of Texas on September 5, 2001, remains
valid and effective for all purposes.

7. The Articles of Incorporation and all amendments and supplements thereto
are hereby superseded by the following Restated Articles of Incorporation which
accurately copy the entire text thereof and as amended above set forth:

ARTICLE ONE

The name of the corporation is FRESH AMERICA CORP.

ARTICLE TWO

The period of its duration is perpetual.

ARTICLE THREE

The purposes for which the corporation is organized are to transact any
lawful business for which corporations may be incorporated under the Texas
Business Corporation Act.

ARTICLE FOUR

Capital Stock

The aggregate number of shares that the corporation shall have the
authority to issue is 250,000,000 shares of common stock having a par value of
$.0001 per share (the "Common Stock") and 1,000,000 shares of Preferred Stock
having a par value of $1.00 per share (the "Preferred Stock"). The preferences,
limitations and relative rights in respect of the shares of each class of
capital stock of the corporation and the authority vested in the Board of
Directors to divide the Preferred Stock into series and the variations in the
relative rights and preferences between the shares of such series so established
are as follows:

Section 1. Preferred Stock. The shares of Preferred Stock may be divided
---------------
into and issued in series, and each series shall be so designated as to
distinguish the shares from the shares of all other series. All shares of
Preferred Stock shall be of equal rank and identical except to the extent that
variations in the relative rights and preferences enumerated in subparagraphs
(a) through (h) may be fixed and determined, from time to time, by the Board of
Directors between series hereinafter established; and each share of a series
shall be identical in all respects with the other shares of such series, except
that shares of any one series issued at different times may differ as to the
dates from which dividends thereon shall be cumulative. Shares of any series
which have been retired or cancelled in any manner, including shares redeemed or
treasury shares returned and shares which have been converted into Common Stock
or exchanged for shares of Preferred Stock of any other series, shall have the
status of authorized but unissued shares of Preferred Stock.

Authority is expressly granted to the Board of Directors, within the
limitations and restrictions stated herein, to divide the shares of Preferred
Stock into one or more series and, with respect to each series, to fix and
determine in the resolution or resolutions providing for the issue of such
shares the following relative rights and preferences as to which there may be
variations between the series so established:

(a) the distinctive designation of such series and the number of shares
that shall constitute such series, which number may be increased
(except where otherwise provided by the Board of Directors in creating
such series) or decreased (but not below the number of shares thereof
then outstanding) from time to time by like action of the Board of
Directors;

(b) the rate of dividends payable on shares of such series, the conditions
upon which and the dates when such dividends shall be payable;

(d) the amount payable on shares of such series in the event of any
voluntary or involuntary liquidation, dissolution or winding up of the
affairs of the corporation;

(e) the terms and conditions and the date or dates on which the shares of
such series may be converted into shares of Common Stock;

(f) subject to the limitations contained in Article 2.12B of the Texas
Business Corporation Act, the rights, if any, of the holders of shares
of such series to convert such shares into, or exchange shares for,
shares of any other class or shares of any series of the same or any
other class, and the terms and conditions of such conversion or
exchange;

(g) whether or not the shares of such series shall be subject to the
operation of a retirement or sinking fund, and, if so, the manner in
which any such retirement or sinking fund shall be applied to the

purchase or redemption of the shares of such series for retirement and
the terms and provisions relative to the operation thereof; and

(h) the rights, if any, of the holders of shares of such series to vote.

Section 2. Common Stock. The Common Stock is junior to the Preferred Stock
------------
and is subject to all the rights, privileges, preferences and priorities of the
Preferred Stock as herein set forth or as may be stated in any resolution or
resolutions of the Board of Directors providing for the issue of a series of
Preferred Stock. Subject to the prior and superior rights of the Preferred Stock
and subject to the provisions and on the conditions set forth in Section 1 of
this Article Four, or in any resolution or resolutions providing for the issue
of a series of Preferred Stock, such dividends (payable in cash, stock or
otherwise) as may be determined by the Board of Directors, may be declared and
paid on the Common Stock from time to time out of any funds legally available
therefor. In the event of any liquidation, dissolution or winding up of the
affairs of the corporation, after payment to the holders of Preferred Stock of
the amounts to which they are entitled pursuant to the resolution or resolutions
of the Board of Directors providing for the issue of a series of Preferred
Stock, the holders of Common Stock shall be entitled to share ratably in all
assets then remaining subject to distribution to the shareholders.

Section 3. Voting Rights. Except as otherwise provided by law, by these
-------------
Articles of Incorporation, or by the resolution or resolutions of the Board of
Directors providing for the issue of any series of Preferred Stock, the holders
of Common Stock shall have the exclusive right to vote for the election of
directors and for all other purposes, each holder of Common Stock being entitled
to one vote for each share held.

ARTICLE FIVE

The corporation will not commence business until it has received for the
issuance of shares, consideration of the value of at least $1,000 in money,
labor done or property actually received.

ARTICLE SIX

The street address of the registered office is 350 N. St. Paul Street,
Dallas, Texas 75201, and the name of the registered agent at such address is CT
Corporation.

ARTICLE SEVEN

Section 1. Board of Directors. The number of directors shall from time to
------------------
time be fixed by, or in the manner provided in, the Bylaws of the corporation.

Section 2. Names and Addresses. The names and addresses of the persons
-------------------
currently serving as directors of the corporation are:

Name Address
---- -------
Arthur W. Hollingsworth 13355 Noel Road, Suite 2210
Dallas, Texas 75240

Luke M. Sweetser 13355 Noel Road, Suite 2210
Dallas, Texas 75240

Gregory Campbell 3625 North Hall Street, Suite 610
Dallas, Texas 75219

Darren Miles 1049 Avenue H East
Arlington, Texas 76011

Colon Washburn 210 N. Walton Blvd., Suite 30
Bentonville, Arkansas 72712

Section 3. Increase or Decrease of Directors. The number of directors may
---------------------------------
be increased or decreased from time to time by amendment to, or in the manner
provided in, the Bylaws of the corporation; but no decrease shall have the
effect of shortening the term of any incumbent director.

ARTICLE EIGHT

Pre-emptive rights are hereby denied. No shareholder of this corporation
shall, by reason of such shareholder's ownership of stock, have a pre-emptive or
other right to purchase, subscribe for, receive or acquire all or any part of
any capital stock (either the unissued or treasury stock), notes, bonds,
debentures, securities, stock options or warrants, or other securities
convertible into or entitling the holder thereof to purchase any such capital
stock (whether authorized by the Articles of Incorporation or by any amendment
thereto) to be issued, optioned, sold, transferred or otherwise disposed of by
the corporation at any time. Any part of any such stock, notes, bonds,
debentures, securities, stock options or warrants may at any time be issued,
optioned, sold, transferred or otherwise disposed of by this corporation to such
persons and upon such terms as may seem proper to the Board of Directors in its
absolute discretion, without first offering same or any part thereof to any
existing shareholder.

ARTICLE NINE

(a) The corporation shall indemnify, to the fullest extent permitted by
Texas law, every person who is or was a director of the corporation or is or was
serving at the request of the corporation with respect to all costs and expenses
incurred by such person as a result of such person being made or threatened to
be made a defendant or respondent in a proceeding by reason of such person being
a director of the corporation.

(b) The corporation shall indemnify, to the fullest extent that
indemnification for directors is permitted by Texas law, every person who is or
was an executive officer of the corporation and any person who, while a director
or executive officer of the Corporation, is or was serving at the request of the
corporation as a director or officer or similar functionary of another foreign
or domestic corporation, partnership, joint venture, sole proprietorship, trust,
employee benefit plan or other enterprise with respect to all costs and expenses
incurred by such person as a result of such person being made or threatened to
be made a defendant or respondent in a proceeding by reason of his holding a
position named above in this paragraph.

(c) The corporation shall advance expenses to any person named in paragraph
(a) or (b) of this Article who was, is or is threatened to be made a party in a
proceeding by reason of such person's holding a position named in paragraph (a)
or (b), to the fullest extent permitted by Texas law.

(d) It is the intent of the corporation to indemnify the persons referred
to in this Article to the fullest extent permitted by law. The indemnification
provided by this Article shall not be deemed exclusive of any other rights to
which those seeking indemnification may be entitled under any law, agreement,
vote of shareholders or directors, the corporation's bylaws or otherwise, or
under any policy or policies of insurance purchased and maintained by the
corporation on behalf of any such person, both as to action in such person's
official capacity and as to action in another capacity while holding such
office, and shall continue as to a person who has ceased to be a director or
officer, and shall inure to the benefit of the heirs, executors and
administrators of such a person.

(e) The indemnification provided by this Article shall be subject to all
valid and applicable laws, including, without limitation, Article 2.02-1 of the
Texas Business Corporation Act, and, in the event this Article or any of the
provisions hereof or the indemnification contemplated hereby are found to be
inconsistent with or contrary to any such valid laws, the latter shall be deemed
to control and this Article shall be regarded as modified accordingly, and, as
so modified, shall continue in full force and effect.

ARTICLE TEN

A director of the corporation is not liable to the corporation or its
shareholders for monetary damages for an act or omission in the director's
capacity as a director, except that this provision does not eliminate or limit
such director's liability for:

1. A breach of the director's duty of loyalty to the corporation or its
shareholders or members;

2. An act or omission not in good faith that constitutes a breach of duty
of the director to the corporation, or an act or omission that involves
intentional misconduct or a knowing violation of the law;

3. A transaction from which the director received an improper benefit,
whether or not the benefit resulted from an action taken within the scope of the
director's office; or

4. An act or omission for which the liability of a director is expressly
provided for by an applicable statute.

ARTICLE ELEVEN

Any action required by the Texas Business Corporation Act to be taken at
any annual or special meeting of shareholders, or any action which may be taken
at any annual or special meeting of shareholders, may be taken without a
meeting, without prior notice, and without a vote, if a consent or consents in
writing, setting forth the action so taken, shall be signed by the holder or
holders of shares having not less than the minimum number of votes that would be
necessary to take such action at a meeting at which the holders of all shares
entitled to vote on the action were present and voted.

ARTICLE TWELVE

Special meetings of the shareholders of the corporation may be called by
the Chairman of the Board, the President, the Board of Directors or the holders
of at least fifty percent (50%) of all the shares entitled to vote at the
proposed special meeting, but not by any other person or persons.

ARTICLE THIRTEEN

The Bylaws of the corporation may be altered, amended or repealed in whole
or in part by the affirmative vote of the majority of the directors of the Board
of Directors or by the affirmative vote of the holders of at least 66 2/3% of
the issued and outstanding shares then entitled to vote on such amendment. The
words "amend" and "amended" shall be broadly interpreted to include alterations,
modifications, additions and repeal, in whole or in part.

EXECUTED THIS _____ day of _______________, 2002.

FRESH AMERICA CORP.

By:______________________________________
Name:____________________________________
Title:___________________________________

FRESH AMERICA CORP.

Board of Directors Proxy for the Annual Meeting
of Shareholders at 2:00 P.M., Wednesday, July 31, 2002

The undersigned shareholder of Fresh America Corp. (the "Company") hereby
appoints Arthur W. Hollingsworth and Luke M. Sweetser, or either or them, as
proxies, each with full powers of substitution, to vote the shares of the
undersigned at the above-stated Annual Meeting and at any adjournment(s)
thereof:

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS AND WILL BE VOTED IN
ACCORDANCE WITH THE SPECIFICATIONS MADE ON THE REVERSE SIDE. IF A CHOICE IS NOT
INDICATED WITH RESPECT TO ITEMS (1), (2) or (3) THIS PROXY WILL BE VOTED "FOR"
SUCH ITEM. THE PROXIES WILL USE THEIR DISCRETION WITH RESPECT TO ANY MATTER
REFERRED TO IN ITEM (4). THIS PROXY IS REVOCABLE AT ANY TIME BEFORE IT IS
EXERCISED.

Receipt herewith of the Company's Notice of Meeting and Proxy Statement, dated
June 26, 2002 is hereby acknowledged.

(Continued and to be signed on the reverse side)

Please date, sign and mail your

proxy card back as soon as possible!

Annual Meeting of Shareholders

FRESH AMERICA CORP.

July 31, 2002

[X] Please mark your votes as indicated in this example

(1) Approval of amendment to the Company's Articles of Incorporation to
increase the number of authorized shares of Common Stock from 10 million to
250 million shares and to decrease the stated par value of the common stock
from $.01 to $.0001 per share to facilitate the Company's restructuring. In
conjunction with the restructuring, an aggregate of 129,515,509 shares of
the newly authorized Common Stock will be reserved for issuance pursuant to
the exercise of warrants issued to North Texas Opportunity Fund LP and the
Hancock Entities. An additional 29,553,813 shares of newly authorized
Common Stock will be reserved for issuance under the Company's 2001 Stock
Option Plan.