SCHEDULE 14A
                                 (RULE 14A-101)

                     INFORMATION REQUIRED IN PROXY STATEMENT
                            SCHEDULE 14A INFORMATION
           PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
                   EXCHANGE ACT OF 1934 (AMENDMENT NO. _____)

Filed by the Registrant                    |X|
Filed by a Party other than the Registrant |_|
Check the appropriate box:
         |X|   Preliminary Proxy Statement       |_|   Confidential, For Use of
         |_|   Definitive Proxy Statement              the Commission Only (as
         |_|   Definitive Additional Materials         permitted by Rule 14a-6
         |_|   Soliciting Material Pursuant to         (e)(2)
               Rule 14a-11(c) or Rule 14a-12


                              TARRANT APPAREL GROUP
--------------------------------------------------------------------------------
                (Name of Registrant as Specified in Its Charter)

--------------------------------------------------------------------------------
    (Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):

          |X|  No Fee Required
          |_|  Fee computed on table below per  Exchange  Act Rules  14a-6(i)(1)
               and 0-11.

          (1)  Title of each class of securities to which transaction applies:

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          (2)  Aggregate number of securities to which transaction applies:

--------------------------------------------------------------------------------
          (3)  Per unit price or other underlying value of transaction  computed
               pursuant to Exchange Act Rule 0-11:

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          (4)  Proposed maximum aggregate value of transaction:

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          (5)  Total fee paid:

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          |_|  Check  box if any  part  of the  fee is  offset  as  provided  by
               Exchange  Act Rule  0-11(a)(2)  and identify the filing for which
               the  offsetting  fee was paid  previously.  Identify the previous
               filing by registration  statement number, or the form or schedule
               and the date of its filing.

          (1)  Amount previously paid:

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          (2)  Form, Schedule or Registration Statement No.:

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          (3)  Filing party:

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          (4)  Date filed:

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                              TARRANT APPAREL GROUP

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

                    NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
              -----------------------------------------------------




TIME...................................         10:00  a.m.   Pacific   Time  on
                                                Wednesday, May 28, 2003

PLACE..................................          Tarrant Apparel Group
                                                 3151 East Washington Boulevard
                                                 Los Angeles, California 90023

ITEMS OF BUSINESS......................         (1)  To  elect   three  Class  I
                                                     members  of  the  Board  of
                                                     Directors    for   two-year
                                                     terms.

                                                (2)  To approve the  issuance of
                                                     up to 3  million  shares of
                                                     common stock  issuable upon
                                                     conversion      of      the
                                                     outstanding    shares    of
                                                     Series A  Preferred  Stock.

                                                (3)  To  ratify   the  grant  of
                                                     options  to   purchase   an
                                                     aggregate   of  2   million
                                                     shares of  common  stock to
                                                     certain executive officers.

                                                (4)  To ratify  the  appointment
                                                     of Ernst & Young LLP as the
                                                     Company's       independent
                                                     public  accountants for the
                                                     year  ended   December  31,
                                                     2003.

                                                (5)  To   transact   such  other
                                                     business  as  may  properly
                                                     come before the Meeting and
                                                     any      adjournment     or
                                                     postponement.

RECORD DATE...........................          You can vote if at the  close of
                                                business on March 31, 2003,  you
                                                were   a   shareholder   of  the
                                                Company.

PROXY VOTING..........................          All  shareholders  are cordially
                                                invited  to  attend  the  Annual
                                                Meeting in person.  However,  to
                                                ensure  your  representation  at
                                                the  Annual  Meeting,   you  are
                                                urged   to  vote   promptly   by
                                                signing   and    returning   the
                                                 enclosed Proxy card.





April ___, 2003
                                              ----------------------------------
                                              GERARD GUEZ, CHAIRMAN OF THE BOARD





                                                           TARRANT APPAREL GROUP
                                                  3151 EAST WASHINGTON BOULEVARD
                                                   LOS ANGELES, CALIFORNIA 90023
                                                                  (323) 780-8250
PROXY STATEMENT
--------------------------------------------------------------------------------

These Proxy materials are delivered in connection  with the  solicitation by the
Board  of  Directors  of  Tarrant   Apparel  Group,  a  California   corporation
("Tarrant,"  the "Company",  "we", or "us"),  of Proxies to be voted at our 2003
Annual Meeting of Shareholders and at any adjournments or postponements.

You are invited to attend our Annual Meeting of Shareholders  on Wednesday,  May
28, 2003,  beginning at 10:00 a.m. Pacific Time. The meeting will be held at our
corporate headquarters, 3151 East Washington Boulevard, Los Angeles, California,
90023.

It is anticipated  that the 2002 Annual Report and this Proxy  Statement and the
accompanying Proxy will be mailed to shareholders on or about April 25, 2003.

SHAREHOLDERS  ENTITLED  TO VOTE.  Holders  of our  common  stock at the close of
business on March 31, 2003 are entitled to receive this notice and to vote their
shares at the Annual  Meeting.  Common  stock is the only  outstanding  class of
securities of the Company  entitled to vote at the Annual  Meeting.  As of March
31, 2003, there were 15,765,425 shares of common stock outstanding.

PROXIES. Your vote is important. If your shares are registered in your name, you
are a  shareholder  of record.  If your shares are in the name of your broker or
bank,  your shares are held in street name. We encourage you to vote by Proxy so
that your shares will be represented and voted at the meeting even if you cannot
attend.  All shareholders can vote by written Proxy card. Your submission of the
enclosed  Proxy will not limit  your right to vote at the Annual  Meeting if you
later decide to attend in person.  IF YOUR SHARES ARE HELD IN STREET  NAME,  YOU
MUST OBTAIN A PROXY,  EXECUTED IN YOUR FAVOR, FROM THE HOLDER OF RECORD IN ORDER
TO BE ABLE TO VOTE AT THE meeting.  If you are a shareholder of record,  you may
revoke  your Proxy at any time  before  the  meeting  either by filing  with the
Secretary of the Company,  at its principal  executive offices, a written notice
of revocation or a duly executed Proxy bearing a later date, or by attending the
Annual Meeting and expressing a desire to vote your shares in person. All shares
entitled to vote and represented by properly  executed Proxies received prior to
the Annual  Meeting,  and not  revoked,  will be voted at the Annual  Meeting in
accordance with the instructions  indicated on those Proxies. If no instructions
are indicated on a properly executed Proxy, the shares represented by that Proxy
will be voted as recommended by the Board of Directors.

QUORUM. The presence, in person or by Proxy, of a majority of the votes entitled
to be cast  by the  shareholders  entitled  to vote  at the  Annual  Meeting  is
necessary  to  constitute a quorum.  Abstentions  and broker  non-votes  will be
included in the number of shares present at the Annual  Meeting for  determining
the presence of a quorum.  Broker non-votes occur when a broker holding customer
securities in street name has not received voting instructions from the customer
on certain  non-routine  matters and,  therefore,  is barred by the rules of the
applicable securities exchange from exercising  discretionary  authority to vote
those securities.

VOTING.  Each share of our common  stock is  entitled to one vote on each matter
properly  brought  before the meeting.  Abstentions  will be counted  toward the
tabulation of votes cast on proposals  submitted to  shareholders  and will have
the same effect as negative votes, while broker non-votes will not be counted as
votes cast for or against such matters.

ELECTION OF DIRECTORS. The Company's Restated Articles of Incorporation does not
authorize  cumulative  voting.  In the  election of  directors,  the  candidates
receiving the highest number of votes at the Annual Meeting will be elected.  If
any  nominee is unable or  unwilling  to serve as a director  at the time of the
Annual Meeting,  the Proxies will be voted for such other nominee(s) as shall be
designated  by the current  Board of Directors to fill any vacancy.  The Company
has no reason to believe  that any nominee  will be unable or unwilling to serve
if elected as a director.


                                        2





APPROVAL  OF  ISSUANCE  OF COMMON  STOCK UPON  CONVERSION  OF SERIES A PREFERRED
STOCK.  The  approval of the  issuance  of up to 3 million  shares of our common
stock issuable upon conversion of our  outstanding  shares of Series A Preferred
Stock will  require the  affirmative  vote of a majority of the shares of common
stock present or represented and entitled to vote at the Annual Meeting.

RATIFICATION OF EXECUTIVE STOCK OPTION GRANTS.  The ratification of the grant of
options to  purchase an  aggregate  of 2 million  shares of our common  stock to
certain  executive  officers will require the affirmative  vote of a majority of
the shares of common stock  present or  represented  and entitled to vote at the
Annual Meeting.

RATIFICATION  OF  INDEPENDENT  PUBLIC  ACCOUNTANTS.   The  ratification  of  the
appointment of Ernst & Young LLP as our independent  public  accountants for the
year ended December 31, 2003 will require the affirmative  vote of a majority of
the shares of common stock  present or  represented  and entitled to vote at the
Annual Meeting.

OTHER MATTERS. At the date this Proxy Statement went to press, we do not know of
any other matter to be raised at the Annual Meeting.

In the event a  shareholder  proposal was not  submitted to the Company prior to
February 27, 2003, the enclosed Proxy will confer  authority on the Proxyholders
to vote the shares in accordance  with their best judgment and discretion if the
proposal is  presented at the Meeting.  As of the date  hereof,  no  shareholder
proposal has been  submitted to the Company,  and management is not aware of any
other matters to be presented for action at the Meeting.  However,  if any other
matters properly come before the Meeting,  the Proxies  solicited hereby will be
voted by the Proxyholders in accordance with the recommendations of the Board of
Directors. Such authorization includes authority to appoint a substitute nominee
for any Board of Directors'  nominee  identified herein where death,  illness or
other  circumstance  arises  which  prevents  such  nominee from serving in such
position and to vote such Proxy for such substitute nominee.


                                       3





ITEM 1:  ELECTION OF DIRECTORS
--------------------------------------------------------------------------------

Item 1 is the election of three Class I members of the Board of  Directors.  The
Restated Articles of Incorporation of the Company provides that, commencing with
the 1998  annual  meeting,  the Board of  Directors  shall be  divided  into two
classes which are elected for  staggered two year terms.  One of the two classes
is elected  each year to succeed the  directors  whose terms are  expiring.  The
Restated  Bylaws of the Company  provides  that the number of  directors  of the
Company shall be fixed from time to time  exclusively by the Board of Directors,
but shall not be less than six nor more than eleven.  The Board of Directors has
fixed the number of directors at nine.

The Class I directors  whose terms  expire at the 2003 Annual  Meeting are Karen
Wasserman,  Milton  Koffman,  Barry  Aved  and  Mitchell  Simbal.  The  Board of
Directors has nominated Milton Koffman,  Barry Aved and Mitchell Simbal to serve
as Class I directors  for terms  expiring in 2005.  The Class II  directors  are
serving terms that expire in 2004. Ms.  Wasserman will not stand for re-election
as a Class I director and her service as a member of the board of directors will
terminate at the Annual Meeting. At the conclusion of the Annual Meeting, there
will be one vacancy in the Class I directors.

Unless otherwise instructed, the Proxy holders will vote the Proxies received by
them for the  nominees  named  below.  If any nominee is unwilling to serve as a
director at the time of the Annual  Meeting,  the Proxies will be voted for such
other  nominee(s)  as shall be designated by the then current Board of Directors
to fill any vacancy.  The Company has no reason to believe that any nominee will
be unable or unwilling to serve if elected as a director.

The Board of Directors  proposes the election of the following nominees as Class
I directors:

                                 Milton Koffman
                                   Barry Aved
                                 Mitchell Simbal

If elected,  the foregoing  three  nominees are expected to serve until the 2005
Annual  Meeting of  Shareholders.  The three  nominees  for  election as Class I
directors at the Annual  Meeting who receive the highest  number of  affirmative
votes will be elected.

The principal occupation and certain other information about the nominees, other
directors whose terms of office  continue after the Annual Meeting,  and certain
executive officers are set forth on the following pages.

THE BOARD OF DIRECTORS  UNANIMOUSLY  RECOMMENDS A VOTE "FOR" THE ELECTION OF THE
NOMINEES LISTED ABOVE.


                                       4





CLASS I DIRECTOR NOMINEES: TERMS EXPIRING IN 2005
-------------------------------------------------

BARRY AVED                         Barry Aved has  served as a  director  of the
                                   Company   since   December  3,  1996  and  as
                                   President  of the Company  from  September 7,
                                   1999 until  March 24,  2000.  From 1991 until
                                   1995,  Mr. Aved was the  President  of Lerner
                                   New York, a division of The Limited, Inc.
                                   DIRECTOR SINCE:  1996      AGE:  59
                                   MEMBER:  COMPENSATION COMMITTEE

MILTON KOFFMAN                     Milton  Koffman  was elected as a director of
                                   the Company on November 28, 2001. Mr. Koffman
                                   is  currently  the  Chairman of the Board for
                                   New Valu,  Inc., a multi- faceted provider of
                                   investment  capital,   commercial  loans  and
                                   other   financial    services   for   various
                                   operating  companies.  Additionally,  he is a
                                   founder  and   director   of  Global   Credit
                                   Services,  a  leading  provider  of  business
                                   information  and analysis for  manufacturing,
                                   financial, lending and real estate companies.
                                   Mr.  Koffman  has  previously  served  on the
                                   boards    of    IEC    Electronics,    Jayark
                                   Corporation,   Sattlers   Department  Stores,
                                   Walter Reed  Theaters,  Scoreboard,  Inc. and
                                   the Gruen Watch Company. Mr. Koffman received
                                   a B.S. from Ohio State University in 1945.
                                   DIRECTOR SINCE:  2001      AGE:  79
                                   MEMBER:  AUDIT COMMITTEE, COMPENSATION
                                   COMMITTEE

MITCHELL SIMBAL                    Mitchell  Simbal has served as a director  of
                                   the Company since June 6, 2001. Mr. Simbal is
                                   currently Vice President of Retail Operations
                                   for Park Place Entertainment,  which includes
                                   Caesars Palace,  Paris Las Vegas, Bally's and
                                   Flamingo  Hilton.  Mr.  Simbal has a B.S.  in
                                   accounting from the University of Hartford.
                                   DIRECTOR SINCE:  2001      AGE:  49
                                   MEMBER:  AUDIT COMMITTEE, COMPENSATION
                                   COMMITTEE


CLASS II DIRECTORS: TERMS EXPIRING IN 2004
------------------------------------------

GERARD GUEZ                        Gerard  Guez  founded the Company in 1988 and
                                   has served as its Chairman of the Board since
                                   its inception and as Chief Executive  Officer
                                   from  inception  until  2001.  Mr.  Guez  was
                                   re-appointed  as Chief  Executive  Officer in
                                   March  2003.  Mr. Guez also  founded  Tarrant
                                   Company Limited ("Tarrant HK"), the Company's
                                   Hong  Kong  subsidiary,  in 1985,  and he has
                                   served as its Chairman  since  inception  and
                                   Chief  Executive  Officer  from  1985  though
                                   October 2001.  Prior to founding  Tarrant HK,
                                   Mr.  Guez served as the  President  of Sasson
                                   Jeans,  L.A.,  Inc., which was a manufacturer
                                   and  distributor  of denim  apparel under the
                                   "Sasson" license
                                   DIRECTOR SINCE:  1988      AGE:  47
                                   MEMBER:  EXECUTIVE COMMITTEE

TODD KAY                           Todd  Kay  has  served  as  President  of the
                                   Company from 1988 to September  1999 and from
                                   March 2000 to present,  and as Vice  Chairman
                                   since  September  7,  1999.  Mr. Kay has also
                                   served as a  director  of the  Company  since
                                   1988 and as a  director  of  Tarrant HK since
                                   1986.  Prior to joining the Company,  Mr. Kay
                                   was a sales manager for Sasson  Jeans,  L.A.,
                                   Inc.   from  1979  to  1980  and   served  as
                                   President  of JAG  Beverly  Hills,  Inc.,  an
                                   apparel  manufacturer,  from  1980  to  1985.
                                   DIRECTOR SINCE:   1988     AGE:   46
                                   MEMBER:  EXECUTIVE COMMITTEE


                                        5





PATRICK CHOW                       Patrick  Chow joined the Company as Treasurer
                                   in  November  1998 and was  promoted to Chief
                                   Financial  Officer  and elected as a director
                                   on  January 7,  2002.  From 1996 to 1998,  he
                                   served as General  Manager  of Fortune  Chart
                                   Consultants  Limited  in Hong  Kong  where he
                                   provided  financial  consulting  services  to
                                   corporate clients. Mr. Chow has a Bachelor of
                                   Arts degree from the  University of Hong Kong
                                   and two  diplomas  in Banking  and  Financial
                                   Studies  from  the  Chartered   Institute  of
                                   Bankers United Kingdom.
                                   DIRECTOR SINCE: 2002       AGE: 49
                                   MEMBER:  EXECUTIVE COMMITTEE

JOSEPH MIZRACHI                    Joseph  Mizrachi  has served as a director of
                                   the Company since June 6, 2001. Mr.  Mizrachi
                                   is  currently  engaged in capital  funding to
                                   finance  buyouts  of small  and  medium  size
                                   companies.  He  is  a  Registered  Investment
                                   Advisor and a principal  and President of PAZ
                                   Securities,  Inc.,  a  registered  securities
                                   broker dealer. He is also the Chairman of the
                                   Board of Midwest Properties Management, Inc.,
                                   which is  engaged in the  management  of real
                                   estate,  and  is a  member  of the  board  of
                                   directors of American  Realty  Investors Inc.
                                   He has  held  numerous  executive  management
                                   positions with companies  specializing in all
                                   aspects  of  finance,   insurance   and  real
                                   estate,  as well as providing  administration
                                   in  estate  and tax  analysis.  Mr.  Mizrachi
                                   received an undergraduate degree in Economics
                                   and Political  Science in 1968 and a Master's
                                   degree in Business  Administration in Finance
                                   and  Marketing in 1971,  both from the Hebrew
                                   University in Jerusalem,  Israel. He became a
                                   member of the  American  Society of Chartered
                                   Life   Underwriter   (CLU)   in  1973  and  a
                                   Chartered Financial Consultant (CFC) in 1982.
                                   In 1978, he received  another Master's degree
                                   in  Business   Administration  and  Financial
                                   Counseling (MFS) from The American college in
                                   Bryn Mawr, Pennsylvania.
                                   DIRECTOR SINCE:  2001      AGE:  57
                                   MEMBER:  AUDIT COMMITTEE, COMPENSATION
                                   COMMITTEE


OTHER EXECUTIVE OFFICERS
------------------------

EDDY YUEN                          Eddy Yuen is President of the Company's  Hong
                                   Kong subsidiary, Fashion Resource (TCL), Inc.
                                   Mr. Yuen has served the  Company  since 1987.
                                   Mr.  Yuen  served  as  the  Company's   Chief
                                   Executive  Officer from October 2001 to March
                                   2003.  Mr.  Yuen  served as a director  since
                                   November   2001,   and  has   submitted   his
                                   resignation   from  the  Board  of  Directors
                                   effective prior to the Annual Meeting. He was
                                   President of Tarrant  Mexico from August 2000
                                   until  his   promotion  to  Chief   Executive
                                   Officer  in  October  2001.  From 1987  until
                                   August  2000,  he was  General  Manager and a
                                   director  of  Tarrant  HK and from 1996 until
                                   October  2001,  he served as  Executive  Vice
                                   President--Sourcing  of the Company. Mr. Yuen
                                   received   a  Higher   Diploma   in   Textile
                                   Technology   from   Hong   Kong   Polytechnic
                                   University,   and  a   graduate   diploma  in
                                   Management  from the Hong Kong  University of
                                   Science and Technology.
                                   AGE:  48

KAREN WASSERMAN                    Karen  Wasserman  joined the Company in 1988,
                                   and  until   1994,   she  served  as  a  Vice
                                   President  of  the  Company.   In  1994,  Ms.
                                   Wasserman was named Executive Vice President,
                                   General  Merchandising Manager and a director
                                   of  the  Company.   Ms.   Wasserman  will  be
                                   resigning   as  a  director  of  the  Company
                                   effective  as of the Annual  Meeting.  In her
                                   current position, she directs and manages the
                                   Company's design teams and  merchandisers and
                                   is responsible for the Company's  research of
                                   fashion  themes  and  development  of product
                                   samples.  Ms.  Wasserman  holds a Bachelor of
                                   Fine Arts degree from Syracuse University
                                   AGE:  50


                                        6





MARK ARIGAN                        Mark  Arigan  joined  the  company in June of
                                   1996 and has held several positions including
                                   Director of Finance and  Director of Internal
                                   Audit. He was appointed as Secretary in March
                                   of 2003.  Prior to Tarrant,  Mr.  Arigan held
                                   several financial positions with Carter Haley
                                   Hale and  Federated  Department  Stores.  Mr.
                                   Arigan has  degrees in  business  finance and
                                   accounting  from  Polytechnic  University  of
                                   California  and is a member of  Institute  of
                                   Internal Auditors (IIA).
                                   Age: 47


FURTHER INFORMATION CONCERNING THE BOARD OF DIRECTORS
-----------------------------------------------------

MEETINGS AND  COMMITTEES.  The Board of Directors held 12 meetings during fiscal
2002. The Board of Directors has an Audit Committee,  Compensation Committee and
Executive Committee.

The Audit Committee currently consists of Messrs. Koffman,  Mizrachi and Simbal,
all of whom are considered  "independent"  under Rule 4200(a)(14)of the National
Association of Securities Dealers listing standards. The primary purposes of the
Audit  Committee  are (i) to review  the  scope of the  audit and all  non-audit
services to be  performed  by the  Company's  independent  auditors and the fees
incurred by the Company in connection  therewith,  (ii) to review the results of
such audit, including the independent accountants' opinion and letter of comment
to  management  and  management's  response  thereto,  (iii) to review  with the
Company's independent  accountants the Company's internal accounting principles,
policies and  practices and financial  reporting,  (iv) to make  recommendations
regarding the selection of the Company's  independent auditors and (v) to review
the Company's quarterly and annual financial statements prior to public issuance
The role and responsibilities of the Audit Committee are more fully set forth in
a written  Charter  adopted by the Board of Directors and attached to this Proxy
Statement as Appendix A. The Audit Committee held 4 meetings during fiscal 2002.

The Compensation Committee currently consists of Messrs. Aved, Koffman, Mizrachi
and Simbal. The Compensation Committee is responsible for considering and making
recommendations to the Board of Directors regarding  executive  compensation and
is  responsible  for  administering  the  Company's  stock option and  executive
incentive  compensation plans. The Compensation Committee held 3 meetings during
fiscal 2002.

The  Executive  Committee  is chaired by Mr.  Guez,  and  currently  consists of
Messrs.  Guez,  Kay,  and Chow.  Subject  to the  limitations  contained  in the
California General Corporation Law, the Executive Committee has been granted all
of the authority of the Board of Directors.

All directors attended 75% or more of all the meetings of the Board of Directors
and those committees on which he or she served in fiscal 2002.

DIRECTORS'  COMPENSATION.  The Company pays to each director who is not employed
by the Company $4,000 per month for attending meetings of the Board of Directors
and  committees of the Board of Directors,  and  reimburses  such person for all
expenses  incurred  by him in his  capacity  as a director  of the  Company.  In
addition,  the  Chairman  of each  committee  receives  $2,000 per year for such
service.  The Board of Directors may modify such  compensation in the future. In
addition,  each director not employed by the Company,  upon joining the Board of
Directors,  will receive an option to purchase 20,000 shares of our common stock
and, thereafter,  an option to purchase 4,000 shares of common stock on the date
of each annual meeting at which such person is reelected to serve as a director.
Such options will have an exercise  price equal to the fair market value of such
shares  on the  date of  grant,  become  exercisable  so  long as the  recipient
continues to serve as a director in four equal annual installments commencing on
the first anniversary of the grant thereof,  and expire on the tenth anniversary
of the date of grant.

COMPENSATION  COMMITTEE INTERLOCKS AND INSIDER  PARTICIPATION.  The Compensation
Committee of our Board of Directors currently consists of Messrs. Aved, Koffman,
Mizrachi and Simbal. None of these individuals was an officer or employee of the
Company at any time during  fiscal  2002.  No current  executive  officer of the
Company  has  served  as a member  of the  board of  directors  or  compensation
committee  of any  entity  for  which a  member  of our  Board of  Directors  or
Compensation Committee has served as an executive officer.


                                       7





ITEM 2:  APPROVAL  OF  ISSUANCE OF  COMMON  STOCK UPON  CONVERSION  OF SERIES  A
PREFERRED STOCK
--------------------------------------------------------------------------------

Item 2 is the approval of the  issuance of up to 3 million  shares of our common
stock upon conversion of our outstanding shares of Series A Preferred Stock. The
Board of Directors  has  approved,  contingent  upon  approval by the  Company's
shareholders  at the Annual Meeting,  the issuance of up to 3,000,000  shares of
our common stock (the  "Series A  Conversion  Shares")  upon  conversion  of the
Company's outstanding shares of Series A Preferred Stock. The Board of Directors
is  submitting  the  proposal to approve the issuance of the Series A Conversion
Shares to the shareholders for approval at the Annual Meeting.

The Series A Conversion Shares,  when issued,  would become part of the existing
class of common  stock and would  have the same  rights  and  privileges  as the
shares of common  stock now  issued  and  outstanding.  There are no  preemptive
rights  relating  to the common  stock.  As of  February  28,  2003,  there were
15,846,315  shares of our common stock issued and  outstanding.  If issued,  the
Series A Conversion Shares would represent approximately 15.9% of our issued and
outstanding  shares of common stock. The continued  listing  requirements of the
Nasdaq Stock Market's  National  Market System prohibit the Company from issuing
the Series A Conversion  Shares  unless and until the issuance has been approved
by the shareholders.

ACQUISITION OF TWILL MILL.

On December 31, 2002, the Company's wholly-owned  subsidiaries,  Tarrant Mexico,
S. de R.L. de C.V.  ("Tarrant  Mexico") and Machrima  Luxembourg  International,
Sarl ("Tarrant Luxembourg" and, together with Tarrant Mexico, the "Purchasers"),
acquired a denim and twill  manufacturing plant in Tlaxcala,  Mexico,  including
all machinery  and  equipment  used in the plant,  the  buildings,  and the real
estate on which the plant is located (the  "Acquisition").  The  Acquisition was
made pursuant to an Agreement for the Purchase of Assets and Stock,  dated as of
December 31, 2002 (the  "Purchase  Agreement"),  by and among the  Company,  the
Purchasers,   Trans  Textil  International,   S.A.  de  C.V.  ("Trans  Textil"),
Inmobiliaria  Cuadros,  S.A.  de  C.V.  ("Inmobiliaria"),   Rosa  Lisette  Nacif
Benavides,  Gazi Nacif Borge, Jorge Miguel Echevarria  Vazquez,  and Kamel Nacif
Borge.

Pursuant to the Purchase  Agreement,  Tarrant Mexico purchased from Trans Textil
all of the  machinery and  equipment  used in and located at the plant,  and the
Purchasers  acquired from Jorge Miguel Echevarria Vazquez and Rosa Lisette Nacif
Benavides all the issued and outstanding  capital stock of  Inmobiliaria,  which
owns the  buildings  and real estate.  A portion of the  purchase  price for the
Inmobiliaria shares consisted of the issuance to Rosa Lisette Nacif Benavides of
100,000 shares of a newly created,  non-voting  Series A Preferred  Stock of the
Company (the "Preferred  Shares"),  which will become convertible into 3,000,000
shares of common stock if the Company's common shareholders approve the issuance
of the Series A Conversion Shares.

Pursuant to the Purchase Agreement, the Company issued the Preferred Shares to a
subsidiary of the Company, and subsequently caused the transfer of the Preferred
Shares to Rosa Lisette Nacif Benavides as partial repayment of indebtedness owed
by Inmobiliaria to Ms. Benavides.

TERMS OF SERIES A PREFERRED STOCK.

Except as required by law,  the  Preferred  Shares  have no voting  rights.  The
Preferred  Shares accrue dividends at an annual rate of 7% of the initial stated
value of  $88.20  per  share.  In the  event of a  liquidation,  dissolution  or
winding-up  of the Company,  the  Preferred  Shares will be entitled to receive,
prior to any  distribution  on the common  stock,  a  distribution  equal to the
initial  stated  value of the  Preferred  Shares  plus all  accrued  and  unpaid
dividends.

If the shareholders approve the issuance of the Series A Conversion Shares, each
Preferred Share will be convertible, at the option of the holder, into 30 shares
of our common stock (as adjusted for stock  dividends,  combinations,  splits or
similar  events),  for an aggregate of 3,000,000  shares of common stock. If the
shareholders do not approve the issuance of the conversion  shares at the Annual
Meeting,  the  Company  will then  have the  right to  redeem  any or all of the
Preferred  Shares for a price  equal to the stated  value plus all  accrued  and
unpaid dividends.


                                       8





The Registrant  granted the holder of the Series A Conversion Shares "piggyback"
registration  rights,  which  provide  such  holder  the  right,  under  certain
circumstances,  to have such shares  registered  for resale under the Securities
Act of 1933.

CERTAIN EFFECTS OF THE PROPOSAL.

The Board of Directors  believes that the approval of the issuance of the Series
A  Conversion   Shares  is  in  the  best  interests  of  the  Company  and  the
shareholders.  However,  the following  should be considered by a shareholder in
deciding how to vote upon the proposal.

If  the  issuance  of  the  Series  A  Conversion  Shares  is  approved  by  the
shareholders  at the Annual  Meeting,  the  holder or  holders of the  Preferred
Shares would  immediately have the right to convert each Preferred Share into 30
shares of common stock, or an aggregate of 3,000,000 shares of common stock. The
holder or holders of the Preferred Shares are under no obligation to convert the
Preferred  Shares  into  common  stock  even if the  issuance  of the  Series  A
Conversion Shares is approved.

When issued, the Series A Conversion Shares would represent  approximately 15.9%
of the Company's  outstanding  shares of common stock, based upon the 15,846,315
shares of our common stock  outstanding  as of February  28, 2003.  As a result,
following  conversion  of the  Preferred  Shares,  the  holder or holders of the
Preferred Shares will own a substantial  portion of our voting securities.  Rosa
Lisette Nacif  Benavides,  the current  holder of the Preferred  Shares,  is the
daughter of Kamel Nacif Borge.  Mr.  Nacif is an employee of Tarrant  Mexico and
the beneficial owner of 14.9% of our outstanding common stock as of February 28,
2003.  Jamil  Textil,  S.A. de C.V., an entity  controlled  by Mr.  Nacif,  owns
1,724,000 shares of our common stock,  representing  approximately  10.9% of our
outstanding common stock as of February 28, 2003.  Collectively,  Ms. Benevides,
Mr.  Nacif  and  Jamil  Textil  would  beneficially  approximately  29.0% of our
outstanding  common  stock  following  conversion  of the  Preferred  Shares and
issuance  of  the  Series  A  Conversion   Shares.  If  acting  together,   such
shareholders  would be able to exercise  significant  voting power on matters on
which the shareholders are entitled to act.

If the issuance of the Series A Conversion Shares is approved,  the shareholders
would experience  substantial  dilution in the percentage of Company equity they
own upon  conversion  of the  Preferred  Shares  and  issuance  of the  Series A
Conversion   Shares.   The   issuance  of  such   additional   shares  might  be
disadvantageous to current  shareholders in that any additional  issuances would
potentially reduce per share dividends,  if any.  Shareholders  should consider,
however, that the possible impact upon dividends is likely to be minimal in view
of the fact that the  Company  has never paid  dividends,  has never  adopted an
policy with respect to the payment of  dividends  and does not intend to pay any
cash dividends in the foreseeable  future. The Company instead intends to retain
earnings for use in financing growth and additional business opportunities.

If the issuance of the Series A Conversion  Shares is not approved,  the Company
will  then have the right to redeem  any or all of the  Preferred  Shares  for a
price  equal to the stated  value plus all  accrued  and unpaid  dividends.  The
aggregate stated value of the Preferred Shares is $3 million.

BOARD RECOMMENDATION AND VOTE.

The approval of the issuance of the Series A Conversion  Shares will require the
affirmative  vote of a  majority  of the  shares  of  common  stock  present  or
represented and entitled to vote at the Annual  Meeting.  The Board of Directors
is of the opinion that the issuance of the Series A Conversion  Shares is in the
best  interests  of the Company and  recommends  a vote for the  approval of the
issuance of the Series A Conversion Shares. All Proxies will be voted to approve
the  issuance  of the  Series A  Conversion  Shares  unless a  contrary  vote is
indicated on the enclosed Proxy card.

THE BOARD OF  DIRECTORS  UNANIMOUSLY  RECOMMENDS  A VOTE "FOR" THE  APPROVAL  OF
ISSUANCE OF UP TO 3,000,000 SHARES OF COMMON STOCK UPON CONVERSION OF THE SERIES
A PREFERRED STOCK.


                                       9





ITEM 3:  RATIFICATION OF EXECUTIVE STOCK OPTION GRANTS
--------------------------------------------------------------------------------

Item 3 is the  ratification of the grants to Gerard Guez and Todd Kay of options
to purchase 1 million shares each of our common stock.

TERMS OF OPTION GRANTS.

Effective as of March 28, 2003, the Compensation Committee approved the grant to
Messrs.  Guez and Kay of  options  to  purchase  1  million  shares  each of the
Company's  common stock (the  "Executive  Options"),  subject to approval of the
Executive Options by the shareholders at the Annual Meeting.  The exercise price
of the  Executive  Options is $3.65 per share,  the closing  price of our common
stock on the day the grants were approved by the Compensation  Committee.  As of
April 3, the  closing  price of our  common  stock  as  reported  on the  Nasdaq
National  Market  System  was $3.86 per share.  So long as Messrs.  Guez and Kay
remain  employed with the Company,  the  Executive  Options will vest and become
exercisable in four equal annual  installments  of 250,000 shares  commencing on
the first anniversary of the date of grant.  These Executive Options will expire
on the tenth anniversary of the date of grant. The Executive Options are granted
to Messrs.  Guez and Kay in  consideration  of their services as officers of the
Company.

CERTAIN EFFECTS OF THE PROPOSAL.

Unless the grant of the Executive  Options comply with the provisions of Section
162(m) of the Internal  Revenue Code of 1986 as amended  (the  "Code"),  and the
regulations  promulgated  thereunder  (as discussed  below),  the Company may be
denied a  deduction  for  compensation  attributable  to the  Executive  Options
granted to an optionee to the extent that such  compensation  exceeds $1 million
in a given year.  Pursuant to the  provisions of Section  162(m),  the Executive
Options must be disclosed to and approved by the Company's shareholders.  If the
shareholders  do not approve the Executive  Options at the Annual  Meeting,  the
Executive  Options will not be granted.  The Company  believes it is in the best
interest of the Company and its shareholders for the shareholders to approve the
Executive  Options so that the options  will be issued and the  Company  will be
able to claim a compensation deduction attributable to the Executive Options.

SECTION 162(M) LIMITATIONS. The following is intended only as a brief summary of
the  federal  income  tax rules  relevant  to the grant of  options  to  certain
officers. These rules are highly technical and subject to change in the future.

Section 162(m) of the Code,  generally  disallows the deduction of  compensation
income in excess of $1,000,000 paid to a "covered employee." Thus, if an officer
remains a "covered  employee," meaning either the Chief Executive Officer or one
of the  other  four most  highly  compensated  employees  of the  Company  whose
compensation  is required to be disclosed  under the Securities  Exchange Act of
1934,  and he or she were to  exercise  his or her  options  such that he or she
receives more than  $1,000,000 in  compensation  in any given taxable year,  the
Company would not be allowed to deduct that portion of such officer's  otherwise
deductible compensation that exceeded $1,000,000.

Section 162(m) of the Code does not apply,  however,  to compensation that meets
the  following  four  criteria:  (1) the  compensation  is based  solely  on the
attainment of performance  goals; (2) the performance  goals are determined by a
compensation committee of the Board of Directors comprised solely of two or more
outside  directors;  (3) the material terms of the compensation are disclosed to
stockholders  and  approved  by a  majority  vote of the  stockholders;  and (4)
certification by the compensation committee that the performance goals have been
met.

UNITED STATES FEDERAL INCOME TAX CONSEQUENCES.

The  following  is a general  discussion  of the  principal  federal  income tax
consequences of the Executive Options grants.

CONSEQUENCES  TO OPTIONEES.  The optionees  will recognize no income at the time
Executive Options are granted.  In general,  at the time shares are issued to an
optionee  pursuant to exercise  of the  Executive  Options,  the  optionee  will
recognize income taxable at ordinary income tax rates equal to the excess of the
fair market value of the shares on the date of exercise over the exercise  price
of such shares.  An optionee will recognize gain or loss on the subsequent  sale
of shares acquired upon exercise of the Executive  Options in an amount equal to
the difference between the selling price and the tax basis of the shares,  which
will include the price paid plus the amount  included in the optionee's  taxable
income by reason of the exercise of the Executive  Options.  Provided the shares
are held as


                                       10





a capital  asset,  any gain or loss  resulting  from a  subsequent  sale will be
short-term or long-term  capital gain or loss  depending upon the length of time
the shares have been held.

CONSEQUENCES TO COMPANY.  The Company  generally will be entitled to a deduction
for United States  federal  income tax purposes in the same year and in the same
amount as the  optionee  is  considered  to have  recognized  income  taxable at
ordinary income tax rates in connection with the exercise of Executive  Options.
In certain  instances,  the Company may be denied a deduction  for  compensation
attributable to the Executive  Options granted to an optionee to the extent that
such compensation exceeds $1 million in a given year.

SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLAN.

The  following  table  sets  forth  certain  information  regarding  our  equity
compensation plans as of December 31, 2002.



                           NUMBER OF SECURITIES      WEIGHTED-AVERAGE     NUMBER OF SECURITIES
                             TO BE ISSUED UPON      EXERCISE PRICE OF    REMAINING AVAILABLE OR
                                EXERCISE OF            OUTSTANDING        FUTURE ISSUANCE UNDER
                           OUTSTANDING OPTIONS,     OPTIONS, WARRANTS      EQUITY COMPENSATION
                            WARRANTS AND RIGHTS         AND RIGHTS                PLANS
                           --------------------     -----------------    ----------------------
                                                                        
Equity compensation
plans approved by               6,376,487                 $8.89                  1,723,513
security holders

Equity compensation
plans not approved by               --                      --                       --
security holders
                                ---------                 -----                  ---------
Total                           6,376,487                 $8.89                  1,723,513
                                =========                 =====                  =========


BOARD RECOMMENDATION AND VOTE.

The Shareholders  will be asked at the Annual Meeting to consider and act upon a
proposal to ratify the grant of such  options.  The proposal to ratify the grant
of such  options  requires the  affirmative  vote of a majority of the shares of
common stock represented and entitled to vote at the Annual Meeting.

THE BOARD OF DIRECTORS  UNANIMOUSLY  RECOMMENDS A VOTE "FOR" THE RATIFICATION OF
THE EXECUTIVE STOCK OPTION GRANTS.


                                       11





ITEM 4:  RATIFICATION OF APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
--------------------------------------------------------------------------------

Item 4 is the  ratification  of  Ernst &  Young  LLP as our  independent  public
accountant  for the year ending  December 31, 2003.  The Audit  Committee of the
Board of Directors recommended and the Board of Directors has selected,  subject
to  ratification  by a majority  vote of the shares of common  stock  present or
represented and entitled to vote at the Annual Meeting, the firm of Ernst &Young
LLP to continue as our independent public accountant for the current fiscal year
ending  December  31,  2003.  Ernst &  Young  LLP has  served  as the  principal
independent  public  accounting  firm  utilized  by us during  the  years  ended
December 31, 1995 through 2002. We anticipate that a  representative  of Ernst &
Young LLP will  attend the Annual  Meeting  for the  purpose  of  responding  to
appropriate questions.  At the Annual Meeting, a representative of Ernst & Young
LLP will be afforded an opportunity to make a statement if he or she so desires.

While  there  is no  legal  requirement  that  this  proposal  be  submitted  to
shareholders,  it will be submitted at the Annual  Meeting  nonetheless,  as the
Board of  Directors  believes  that  the  selection  of  auditors  to audit  the
Company's  consolidated financial statements is of sufficient importance to seek
shareholder approval. If the shareholders do not ratify this appointment,  other
firms  of  certified  public  accountants  will be  considered  by the  Board of
Directors upon recommendation of the Audit Committee.

The  ratification  of  Ernst & Young  LLP as the  Company's  independent  public
accountants  for the fiscal  year  ended  December  31,  2003 will  require  the
affirmative  vote of a  majority  of the  shares  of  common  stock  present  or
represented  and  entitled to vote at the Annual  Meeting.  All Proxies  will be
voted to approve  the  Amendment  unless a  contrary  vote is  indicated  on the
enclosed Proxy card.

THE BOARD OF DIRECTORS  UNANIMOUSLY  RECOMMENDS A VOTE "FOR" THE RATIFICATION OF
THE  APPOINTMENT  OF  ERNST  & YOUNG  LLP AS THE  COMPANY'S  INDEPENDENT  PUBLIC
ACCOUNTANTS.


                                       12





EXECUTIVE COMPENSATION
----------------------

                           SUMMARY COMPENSATION TABLE

The following table sets forth, as to the Chief Executive Officer and as to each
of the other four most highly compensated  officers whose compensation  exceeded
$100,000  during  the  last  fiscal  year  (the  "Named  Executive   Officers"),
information  concerning all compensation paid for services to the Company in all
capacities for each of the three years ended December 31 indicated below.



                                                  ANNUAL COMPENSATION             LONG TERM COMPENSATION
                                                  -------------------             ----------------------
                                                                                                   ALL
                              FISCAL YEAR                         OTHER ANNUAL    NUMBER OF       OTHER
NAME                             ENDED      SALARY      BONUS     COMPENSATION   SECURITIES    COMPENSATION
----                           DECEMBER     ------      -----     ------------   UNDERLYING    ------------
PRINCIPAL POSITION(1)             31,         ($)        ($)         ($)(2)        OPTIONS        ($)(3)
---------------------             ---         ---        ---         ---           -------        ---

                                                                               
Gerard Guez.............         2002       450,000       --           --         1,000,000      50,000
   CEO and Chairman of           2001       450,000       --           --            --          50,000
   the Board of Directors        2000       469,234       --           --            --          50,000

Todd Kay................         2002       450,000       --           --         1,000,000      50,000
   President and  Vice           2001       450,000       --           --            --          50,000
   Chairman of Board             2000       469,234       --           --            --          50,000

Eddy Yuen(4)............         2002       350,000     45,000         --            50,000        --
   President of Fashion          2001       191,729     39,586      88,541(5)       100,000       8,849
   Resource (TCL), Inc.          2000       191,729    116,129      28,588(6)        --           8,849

Karen Wasserman.........         2002       345,000       --           --            --            --
  Executive Vice President       2001       334,768       --           --            50,000        --
  and General                    2000       338,154       --           --             5,000        --
  Merchandising Manager

Patrick Chow(7).........         2002       220,000     75,000         --            --            --
   Chief Financial               2001       160,000     30,000         --            --            --
   Officer                       2000       160,000       --           --            --            --
----------

(1)  For a description of the employment  contracts between certain officers and
     the Company, see "Employment Contracts," below.
(2)  Certain of the Company's  executive  officers receive personal  benefits in
     addition to salary and cash bonuses,  including car allowances,  living and
     relocation  expenses  and  director  fees.  The  aggregate  amount  of such
     personal benefits does not exceed the lesser of $50,000 or 10% of the total
     annual  salary and bonus  reported  for the  officer.
(3)  Represents the Company's  contribution to defined contribution plans or, in
     the case of  Messrs.  Guez  and  Kay,  contributions  by the  Company  to a
     deferred  compensation  plan.
(4)  Mr. Yuen served as the  Company's  Chief  Executive  Officer  from  October
     2001 through  March  2003.
(5)  During Mr.  Yuen's stay in Mexico in fiscal 2001,  Mr. Yuen's family in the
     U.S.  received a living  allowance  of $36,000,  car  allowance of $12,000,
     house rental allowance of $26,000,  medical  insurance  allowance of $6,000
     and utilities allowance of $15,000.
(6)  During Mr.  Yuen's stay in Mexico in fiscal 2000,  Mr. Yuen's family in the
     U.S.  received a living  allowance of $12,000,  house  rental  allowance of
     $9,000 and medical  insurance  and utilities  allowance of $7,000.
(7)  Mr. Chow was appointed Chief Financial Officer on January 7, 2002.




                                       13





                          OPTION GRANTS IN FISCAL 2002

The following table sets forth certain information  regarding the grant of stock
options made during fiscal 2002 to the Named Executive Officers.



                                  PERCENT OF
                                    TOTAL
                                   OPTIONS                                     POTENTIAL
                     NUMBER OF    GRANTED TO                                REALIZABLE VALUE
                    SECURITIES     EMPLOYEES                                   AT ASSUMED
                    UNDERLYING        IN        EXERCISE                  RATE OF STOCK PRICE
                      OPTIONS       FISCAL      OR BASE    EXPIRATION      APPRECIATION FOR
NAME                  GRANTED       YEAR(3)     PRICE(4)      DATE          OPTION TERM(5)
----                -----------   ----------    --------   -----------    --------------------
                                                                             5%         10%
                                                                             --         ---
                                                                
Gerard Guez.......  1,000,000(1)    32.7%        $5.50       5/15/12      3,458,920  4,508,920
Todd Kay..........  1,000,000(1)    32.7%        $5.50       5/15/12      3,358,920  4,508,920
Eddy Yuen.........     50,000(2)    1.6%         $5.08       1/31/12        172,946    225,446

----------

(1)  The stock options vest and become exercisable in four equal installments on
     each of November 11, 2002, May 15, 2003, May 15, 2004 and May 15, 2005.

(2)  These stock options vest and become  exercisable in four equal installments
     on each of January 31, 2002,  July 31,  2002,  January 31, 2003 and January
     31, 2004.

(3)  Options covering an aggregate of 3,054,000 shares were granted to employees
     during fiscal 2002.

(4)  The exercise price and tax withholding  obligations related to exercise may
     be paid by delivery of already owned shares, subject to certain conditions.

(5)  The potential  realizable  value is based on the assumption that the common
     stock appreciates at the annual rate shown  (compounded  annually) from the
     date of grant until the  expiration  of the option term.  These amounts are
     calculated  pursuant  to  applicable  requirements  of the  SEC  and do not
     represent a forecast of the future appreciation of the common stock.




                 AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
                        AND FISCAL YEAR-END OPTION VALUES

The  following  table  sets  forth,  for each of the Named  Executive  Officers,
certain information  regarding the exercise of stock options during fiscal 2002,
the number of shares of common  stock  underlying  stock  options held at fiscal
year-end  and the value of options held at fiscal  year-end  based upon the last
reported  sales  price of the  common  stock on The  Nasdaq  National  Market on
December 31, 2002 ($4.09 per share).



                       SHARES                    NUMBER OF SECURITIES
                      ACQUIRED                  UNDERLYING UNEXERCISED          VALUE OF UNEXERCISED
                         ON        VALUE             OPTIONS AT                IN-THE-MONEY OPTIONS AT
                      EXERCISE    REALIZED        DECEMBER 31, 2002               DECEMBER 31, 2002
------------------    --------    --------    ---------------------------    ---------------------------
NAME                                          EXERCISABLE   UNEXERCISABLE    EXERCISABLE   UNEXERCISABLE
----                                          -----------   -------------    -----------   -------------
                                                                              
Gerard Guez.......       --          --         1,016,668         750,000        --             --
Todd Kay..........       --          --           683,332         750,000        --             --
Eddy Yuen.........       --          --           204,000          87,500        --             --
Karen Wasserman...       --          --            85,000          25,000        --             --
Patrick Chow......       --          --            32,000          30,000        --             --



                                       14





EMPLOYMENT AND SEVERANCE AGREEMENTS
-----------------------------------

The Company has entered  into  employment  contracts  with the  following  Named
Executive Officers.

Pursuant  to an  employment  contract  dated as of  January  1, 1998 (the  "Guez
Agreement"),  Gerard  Guez has been  employed  as the  Chairman of the Board and
Chief Executive Officer of the Company.  The Guez Agreement  initially  provided
that Mr. Guez receive an annual salary of $1,000,000  and,  provided the Company
reports  specified  amounts of pre-tax income as set forth in the agreement,  an
annual bonus of up to $2,000,000  and an option to purchase up to 666,668 shares
of common stock.  The Guez  Agreement was amended on January 10, 2000 to provide
for a  reduction  of the  annual  base  salary to  $500,000  and to  extend  the
expiration of the Agreement  from December 31, 2002 to March 31, 2003. The Board
of  Directors  has  approved  the  extension  of the Guez  Agreement  for  three
additional  years. Mr. Guez resigned as Chief Executive Officer in October 2001,
but was re-appointed to this position in March 2003.

Pursuant  to an  employment  contract  dated as of  January  1,  1998  (the "Kay
Agreement"), Todd Kay has been employed as the President of the Company. The Kay
Agreement initially provided that Mr. Kay receive an annual salary of $1,000,000
and,  provided the Company  reports  specified  amounts of pre-tax income as set
forth in the  agreement,  an annual bonus of up to  $2,000,000  and an option to
purchase up to 333,332 shares of common stock.  The Kay Agreement was amended on
January  10,  2000 to  provide  for a  reduction  of the annual  base  salary to
$500,000 and to extend the expiration of the Agreement from December 31, 2002 to
March 31,  2003.  The Board of Directors  has approved the  extension of the Kay
Agreement for three additional years.

Pursuant to employment  contract  dated  January 1, 2002 (the "Yuen  Contract"),
Eddy Yuen has been employed as Chief Executive Officer of the Company.  The Yuen
Contract provides for an annual salary of $350,000. The contract will be subject
to  automatic  renewal  annually  and either  party must give 60 days  notice of
intent to terminate  employment prior to the annual renewal date. In March 2003,
Mr.  Yuen  resigned  as CEO of the  Company and  therefore  has  terminated  his
contract.  However,  Mr.  Yuen has been  appointed  President  of the  Company's
subsidiary, Fashion Resource (TCL), Inc.

Pursuant to employment  contract  dated  January 7, 2002,  as amended  effective
January 1, 2003 (the "Chow  Contract"),  Patrick Chow has been employed as Chief
Financial Officer of the Company.  The Chow Contract provides for an annual base
salary of $250,000.  The contract will be subject to automatic  renewal annually
and either  party  must give 60 days  notice of intent to  terminate  employment
prior to the annual renewal date.

EMPLOYEE BENEFIT PLANS
----------------------

The Company has adopted the Tarrant  Apparel Group Employee  Incentive Plan (the
"Employee  Incentive  Plan").  Up to  5,100,000  shares of our common  stock are
authorized to be issued  pursuant to the Employee  Incentive  Plan. The Employee
Incentive Plan currently  provides for the issuance of incentive  stock options,
non-qualified  stock options,  stock appreciation  rights,  restricted stock and
other performance-based  benefits. The purpose of the Employee Incentive Plan is
to enable the  Company to  attract,  retain and  motivate  officers,  directors,
employees  and  independent   contractors  by  providing  for  performance-based
benefits.  The  Employee  Incentive  Plan is  administered  by the  Compensation
Committee  of the Board of  Directors.  As of  December  31,  2002,  there  were
3,376,487 shares of our common stock subject to outstanding  options,  1,723,513
shares (subject to adjustment to prevent dilution)  available for awards granted
under the Employee Incentive Plan.

In 1994, the Company  adopted a Profit Sharing 401(k) Plan (the "Profit  Sharing
Plan") which is intended to be qualified  under  Section  401(k) of the Internal
Revenue Code of 1986,  as amended.  To be eligible,  an employee  must have been
employed by the Company for at least one year.  The Profit  Sharing Plan permits
employees  who have  completed  one year of  service  to defer from 1% to 15% of
their  annual  compensation  into the Profit  Sharing  Plan.  Additional  annual
contributions  may be made at the  discretion  of the  Company,  and a 50% (100%
effective July 1, 1995) matching contribution may be made by the Company up to a
maximum of 6% (5% effective July 1, 1995) of a participating  employee's  annual
compensation. Contributions made by the Company vest according to a schedule set
forth in the Profit Sharing Plan.


                                       15





In 1992,  Tarrant HK  adopted a  National  Mutual  Central  Provident  Fund (the
"Provident  Fund")  which has been  approved  under  Section  87A of the  Inland
Revenue Ordinance by the Inland Revenue Department of Hong Kong. To be eligible,
an  employee  must have been  employed by Tarrant HK for at least one service to
defer 5% of their annual  compensation  into the Provident Fund. Annual matching
contributions  are made by  Tarrant  HK.  Contributions  made by Tarrant HK vest
according to a schedule set forth in the Provident Fund.

For 2003, the Company  adopted an Incentive  Compensation  Plan (the  "Incentive
Plan") for executives and employees based on specific goals and criteria. If the
Company is able to reach certain  revenue  targets in 2003,  incentive  payments
will be  distributed,  but  the  amounts  will  depend  in  part  on  individual
performance as well.

REPORT OF COMPENSATION COMMITTEE
--------------------------------

The Compensation  Committee is charged with the  responsibility of administering
all aspects of the Company's  executive  compensation  programs.  The committee,
which currently is comprised of four  independent,  non-employee  directors also
grants all stock options and otherwise generally administers the Company's stock
option plans.  Following  review and approval by the  committee,  determinations
pertaining  to  executive  compensation  are  submitted  to the  full  Board  of
Directors for  approval.  In connection  with its  deliberations,  the committee
seeks,  and is  significantly  influenced  by, the views of the Chief  Executive
Officer with respect to appropriate compensation levels of the other officers.

         TOTAL  COMPENSATION.  It  is  the  philosophy  of  the  committee  that
executive   compensation   should  be  structured  to  provide  an   appropriate
relationship  between executive  compensation and performance of the Company and
the share price of the common stock, as well as to attract,  motivate and retain
executives of outstanding  abilities and  experience.  Since its inception,  the
Company has  maintained the philosophy  that  executive  compensation  should be
competitive  with  that  provided  by other  companies  in the  women's  apparel
industry to assist the Company in attracting and retaining qualified  executives
critical to the Company's long-term success.

         BASE SALARY.  Base salaries are  negotiated at the  commencement  of an
executive's employment with the Company or upon renewal of his or her employment
agreement, and are designed to reflect the position, duties and responsibilities
of each executive  officer,  the cost of living in the area in which the officer
is located, and the market for base salaries of similarly situated executives at
other  companies  engaged in  businesses  similar to that of the  Company.  Base
salaries may be annually  adjusted in the sole  discretion  of the  committee to
reflect changes in any of the foregoing factors.

         STOCK INCENTIVE PLAN OPTIONS AND AWARDS.  Under the Employee  Incentive
Plan, the committee is authorized to grant any type of award which might involve
the  issuance  of  shares  of  common  stock,  options,  warrants,   convertible
securities,  stock appreciation rights or similar rights or any other securities
or benefits with a value derived from the value of the common stock.  The number
of options granted to an individual is based upon a number of factors, including
his or her position,  salary and  performance,  and the overall  performance and
stock price of the Company.

         ANNUAL INCENTIVES.  The committee believes that executive  compensation
should  be  determined  with  specific   reference  to  the  Company's   overall
performance  and goals,  as well as the performance and goals of the division or
function over which each  individual  executive has primary  responsibility.  In
this regard, the committee considers both quantitative and qualitative  factors.
Quantitative items used by the committee in analyzing the Company's  performance
include sales and sales growth,  results of operations and an analysis of actual
levels of operating results and sales to budgeted amounts.  Qualitative  factors
include the  committee's  assessment of such matters as the  enhancement  of the
Company's image and reputation,  expansion into new markets, and the development
and success of new products and new marketing programs.

         The  Company  developed,  and  the  committee  approved  a  performance
incentive  plan for executives and employees for the year 2002 based on specific
goals and criteria. For management, there was a provision for a bonus to be paid
for sales that exceeded the budget by a fixed amount.

         The committee  attributes  various weights to the  qualitative  factors
discussed above based upon their perceived relative importance to the Company at
the time compensation  determinations are made. Each executive's  performance is
evaluated with respect to each of these  factors,  and  compensation  levels are
determined based on each executive's overall performance.


                                       16





         DETERMINATION  OF CHIEF  EXECUTIVE  OFFICER'S  COMPENSATION.  In fiscal
2002,  Eddy Yuen,  the  Company's  Chief  Executive  Officer in 2002 received an
annual base salary of $350,000  and a cash bonus of $45,000 and was also granted
options  to  purchase  50,000  shares  of  the  Company's  common  stock.   This
compensation  package was established based upon a comparative analysis of other
similarly  situation  chief  executive  officers  conducted by the  compensation
committee.  Our Chief  Executive  Officer also  participates  in the  management
incentive plan approved by the Compensation Committee.

         The  committee  intends to  continue  its  policy of linking  executive
compensation with maximizing  shareholder  returns and corporate  performance to
the extent possible through the programs described above.

         OMNIBUS   BUDGET   RECONCILIATION   ACT   IMPLICATIONS   FOR  EXECUTIVE
COMPENSATION.  Effective  January 1, 1994,  under Section 162(m) of the Internal
Revenue Code of 1986, as amended (the "Code"),  a public company  generally will
not be entitled to a deduction for  non-performance-based  compensation  paid to
certain executive officers to the extent such compensation exceeds $1.0 million.
Special rules apply for "performance-based" compensation, including the approval
of the performance goals by the shareholders of the Company.

         All compensation paid to the Company's employees in fiscal 2002 will be
fully deductible.  With respect to compensation to be paid to executives in 2003
and future  years,  in  certain  instances  such  compensation  may exceed  $1.0
million.  However,  in order to maintain  flexibility in compensating  executive
officers  in  a  manner  designed  to  promote  varying   corporate  goals,  the
Compensation  Committee has not adopted a policy that all  compensation  must be
deductible.

                                                   Compensation Committee

                                                   Barry Aved, Chairman
                                                   Milton Koffman
                                                   Joseph Mizrachi
                                                   Mitchell Simbal


REPORT OF AUDIT COMMITTEE
-------------------------

The Audit  Committee of the Board of Directors,  which  consists of  independent
directors  (as  that  term  is  defined  in  Rule  4200(a)(14)  of the  National
Association  of  Securities  Dealers'  Marketplace  Rules),  has  furnished  the
following report:

The Audit Committee  assists the Board of Directors in overseeing and monitoring
the integrity of the Company's financial reporting process,  its compliance with
legal and regulatory  requirements  and the quality of its internal and external
audit processes.  The role and  responsibilities  of the Audit Committee are set
forth in a written Charter adopted by the Board of Directors,  which is attached
as  Appendix  "A" to this  Proxy  Statement.  The Audit  Committee  reviews  and
reassesses  the  Charter  annually  and  recommends  any changes to the Board of
Directors for approval.

The  Audit  Committee  is  responsible  for  overseeing  the  Company's  overall
financial  reporting  process.  In  fulfilling  its   responsibilities  for  the
financial statements for fiscal year 2002, the Audit Committee:

   - Reviewed and discussed the audited financial  statements for the year ended
     December 31, 2002 with  management and Ernst & Young LLP (the  "Auditors"),
     the Company's independent auditors;

   - Discussed  with the  Auditors  the  matters  required  to be  discussed  by
     Statement  on  Auditing  Standards  No. 61  relating  to the conduct of the
     audit; and

   - Received written disclosures and the letter from the Auditors regarding its
     independence  as required by  Independence  Standards Board Standard No. 1.
     The Audit Committee discussed with the Auditors their independence.


                                       17





The Audit Committee also  considered the status of pending  litigation and other
areas of oversight  relating to the  financial  reporting and audit process that
the committee determined appropriate.

AUDIT FEES

Fees for audit services totaled approximately $422,000 in 2001 and approximately
$624,000 in 2002,  including fees associated with the annual audit,  the reviews
of the Company's  quarterly  reports on Form 10-Q, and statutory audits required
internationally.

AUDIT-RELATED FEES

Fees  for  audit-related  services  totaled  approximately  $18,000  in 2001 and
approximately  $103,000 in 2002.  Audit-related services principally include due
diligence in connection with acquisitions,  accounting consultations and benefit
plan audits.

TAX FEES

Fees for tax services,  including tax  compliance,  tax advice and tax planning,
totaled approximately $652,000 in 2001 and $942,000 in 2002.

ALL OTHER FEES

There were no fees for any other  services not included  above in either 2002 or
2001.


The Audit Committee has considered  whether the provision of non-audit  services
is compatible with maintaining the principal accountant's independence.

Based on the Audit Committee's  review of the audited  financial  statements and
discussions with management and the Auditors, the Audit Committee recommended to
the Board of Directors that the audited financial  statements be included in the
Corporation's  Annual  Report on Form 10-K for the year ended  December 31, 2002
for filing with the SEC.

                                                       AUDIT COMMITTEE

                                                       Mitchell Simbal, Chairman
                                                       Milton Koffman
                                                       Joseph Mizrachi


                                       18





PERFORMANCE GRAPH
-----------------

The  following  graph  sets  forth the  percentage  change in  cumulative  total
shareholder return of our common stock during the five-year period from December
31, 1997 to December  31,  2002,  compared  with the  cumulative  returns of the
NASDAQ Stock  Market  (U.S.  Companies)  Index and  companies  with the standard
industrial  classification  (SIC) code 5137. The component  entities of SIC Code
5137 were  generated by Research  Data Group,  Inc. All the entities in SIC Code
5137 were  incorporated  into the peer group.  The  comparison  assumes $100 was
invested on December 31, 1997 in our common  stock and in each of the  foregoing
indices.  The stock price  performance on the following graph is not necessarily
indicative of future stock price performance.


                          [PERFORMANCE GRAPH OMITTED]




                                         Cumulative Total Return
                              --------------------------------------------------
                               12/97    12/98    12/99    12/00    12/01   12/02

TARRANT APPAREL GROUP         100.00   508.80   123.20    46.40    70.14   52.35
NASDAQ STOCK MARKET (U.S.)    100.00   140.99   261.48   157.42   124.89   86.33
PEER GROUP                    100.00    77.39    49.37     9.35     7.09   10.15


                                       19





CERTAIN TRANSACTIONS WITH DIRECTORS AND EXECUTIVE OFFICERS
----------------------------------------------------------

Except as disclosed in this Proxy  Statement,  neither the nominees for election
as directors of the Company,  the  directors or senior  officers of the Company,
nor any  shareholder  owning more than five percent of the issued  shares of the
Company, nor any of their respective associates or affiliates,  had any material
interest,  direct or indirect,  in any material transaction to which the Company
was a party during fiscal 2002, or which is presently proposed.

See "Employment  Contracts" for a summary of employment  agreements with certain
of our executive officers.

The Company leases its principal  offices and warehouse  located in Los Angeles,
California and office space in Hong Kong from corporations owned by Messrs. Guez
and Kay. The Company  believes,  at the time the leases were entered  into,  the
rents on these  properties were comparable to then prevailing  market rents. The
Company paid $1,330,000 in 2002 for rent for office and warehouse facilities.

From time to time,  the Company has borrowed  funds from, and advanced funds to,
certain officers and principal shareholders, including Messrs. Guez and Kay. The
maximum amount of such borrowings from Mr. Kay during 2002 was $2,317,000. As of
December  31,  2002,  the  Company  was  indebted  to Mr.  Kay in the  amount of
$487,000.  The  maximum  amount of such  advances  to Mr.  Guez  during 2002 was
approximately  $4,923,000.  Mr. Guez had an outstanding advance from the Company
of $4,879,000 as of December 31, 2002. All advances to, and borrowings from, Mr.
Guez and Mr. Kay in 2002 bore interest at the rate of 7.75%.  Section 402 of the
Sarbanes-Oxley  Act of 2002,  enacted  in July 2003,  prohibits  publicly-traded
companies from providing personal loans to directors and executive officers.  As
a result,  the  Company  is no  longer  permitted  make  advances  or loans,  or
materially  amend the terms of any  existing  advances  or loans,  to any of its
directors  or  executive  officers.  No further  personal  loans will be made to
officers and directors in compliance to the Sarbanes-Oxley Act.

On December 31, 2002, the Company's  wholly-owned  subsidiaries,  Tarrant Mexico
and  Machrima  Luxembourg,  acquired  a denim and twill  manufacturing  plant in
Tlaxcala,  Mexico,  including all machinery and equipment used in the plant, the
buildings,  and the real  estate on which the plant is  located.  Pursuant to an
Agreement  for the Purchase of Assets and Stock,  dated as of December 31, 2002,
Tarrant  Mexico  purchased  from Trans Textil all of the machinery and equipment
used in and located at the plant, and the Purchasers  acquired from Jorge Miguel
Echevarria   Vazquez  and  Rosa  Lisette  Nacif  Benavides  (the   "Inmobiliaria
Shareholders")  all the issued and  outstanding  capital stock of  Inmobiliaria,
which owns the buildings and real estate.  The purchase  price for the machinery
and equipment was paid by cancellation  of $42 million in  indebtedness  owed by
Trans Textil to Tarrant Mexico.  The purchase price for the Inmobiliaria  shares
consisted of a nominal cash payment to the  Inmobiliaria  Shareholders  of $500,
and the subsequent  repayment by the Company and its affiliates of approximately
$34.7 million in indebtedness of Inmobiliaria to Kamel Nacif Borge, his daughter
Rosa Lisette Nacif Benavides, and certain of their affiliates, which payment was
made by: (i) delivery to Rosa Lisette  Nacif  Benavides of one hundred  thousand
shares of a newly created,  non-voting  Series A Preferred Stock of the Company,
which shares will become  convertible  into three million shares of common stock
if the  Company's  common  shareholders  approve  the  conversion  at the Annual
Meeting;  (ii) delivery to Rosa Lisette Nacif Benavides of an ownership interest
representing twenty-five percent of the voting power of and profit participation
in Tarrant  Mexico;  and (iii)  cancellation of  approximately  $14.9 million of
indebtedness of Mr. Nacif and his affiliates.

Kamel Nacif Borge is an employee of Tarrant Mexico and the  beneficial  owner of
more than 5% of the Company's  outstanding common stock.  Jamil Textil,  S.A. de
C.V., an entity the Company believes is controlled by Mr. Nacif,  owns 1,724,000
shares of the Company's common stock,  representing  approximately  10.9% of our
outstanding  common  stock as of December  31,  2002.  Trans  Textil,  an entity
controlled by Mr. Nacif and his family  members,  was initially  commissioned by
the Company to construct and develop the plant in December  1998.  Subsequent to
completion,  Trans  Textil  purchased  and/or  leased the plant's  manufacturing
equipment from the Company and entered into a production agreement that gave the
Company the first right to all production capacity of the plant. This production
agreement  included  the option for the Company to  purchase  the  facility  and
discontinue  the production  agreement  with Trans Textil through  September 30,
2002.  The Company  exercised  the option and  acquired  the plant as  described
above.

From  time to  time,  the  Company  has  advanced  funds  to Mr.  Nacif  and his
affiliates,  and Mr.  Nacif  and  such  affiliates  have  advanced  funds to the
Company. Immediately prior to the mill acquisition, Mr. Nacif and his


                                       20





affiliates owed the Company  approximately $7.5 million,  which indebtedness was
cancelled as part of the repayment by Inmobiliaria of indebtedness due Mr. Nacif
and his affiliates.

On July 1, 2001, the Company entered into a joint venture with Azteca Production
International,  Inc.  ("Azteca"),  a corporation owned by the brothers of Gerard
Guez, the Chairman of the Company,  called United Apparel Ventures, LLC ("UAV").
This joint  venture was created to  coordinate  the  production of apparel for a
single  customer of the Company's  branded  business.  UAV is owned 50.1% by Tag
Mex,  Inc.,  a  wholly-owned  subsidiary  of the  Company,  and 49.9% by Azteca.
Results  of the  operation  of UAV have  been  consolidated  into the  Company's
results since July 2001 with the minority partner's share of all gains and loses
eliminated  through  the  minority  interest  line  in the  Company's  financial
statements.  Since  October  2002,  both  parties have  contributed  the Express
business into UAV and the results are consolidated in the company's  financials.
UAV makes  purchases  from two  related  parties  in  Mexico,  Azteca and Tag-it
Pacific, Inc.

In 1998, a California  limited  liability  company owned by Mr. Guez and Mr. Kay
purchased  2,300,000  shares  of the  Common  Stock  of  Tag- It  Pacific,  Inc.
("Tag-It") (or approximately 37% of such Common Stock then outstanding).  Tag-It
is a provider of brand  identity  programs to  manufacturers  and  retailers  of
apparel and  accessories.  Tag-It  assumed the  responsibility  for managing and
sourcing all trim and packaging used in connection with products manufactured by
or on behalf of the Company in Mexico.  This arrangement is terminable by either
the Company or Tag-It at any time.  The Company  believes that the terms of this
arrangement,  which is subject to the acceptance of the Company's customers, are
no less favorable to the Company than could be obtained from unaffiliated  third
parties.  The Company  purchased  $23.9  million of trim  inventory  from Tag-It
during the year ended  December  31,  2002.  From time to time the  Company  has
guaranteed the  indebtedness of Tag-It for the purchase of trim on the Company's
behalf.

As of  December  31,  2000,  Aris  Industries,  Inc.  ("Aris")  owed the Company
approximately $5.8 million for goods manufactured and shipped by the Company. On
February 12, 2001,  Aris and the Company  entered into an agreement  under which
Aris issued to the Company 1.5 million  shares of its common stock and undertook
to repay  either $2.5 million in cash or its  equivalent  in common stock to the
Company on December 31, 2001 in full  satisfaction  of the debt.  As of February
20, 2002,  Aris had issued the Company an  aggregate of 8,117,647  shares of its
common  stock  including  the  1.5  million  shares  previously  issued  in full
satisfaction  of this debt.  On March 27, 2002 the Company sold this stock to an
unrelated  third party for an aggregate of $1,785,882.  As of December 31, 2002,
Messrs. Guez and Kay jointly owned approximately 6% of the outstanding shares of
Aris.

The Company has adopted a policy that any  transactions  between the Company and
any of its  affiliates or related  parties,  including  its executive  officers,
directors,  the family members of those individuals and any of their affiliates,
must (i) be approved by a majority of the members of the Board of Directors  and
by a majority of the disinterested members of the Board of Directors and (ii) be
on  terms  no  less  favorable  to the  Company  than  could  be  obtained  from
unaffiliated third parties.

The Board of Directors believes,  based on its reasonable judgment,  but without
further  investigation,  that the terms of each of the foregoing transactions or
arrangements  between the Company on the one hand and the affiliates,  officers,
directors or shareholders of the Company which were parties to such transactions
on the other hand,  were,  on an overall  basis,  at least as  favorable  to the
Company as could then have been obtained from unrelated parties.


                                       21





PRINCIPAL SHAREHOLDERS
----------------------

The  following  table sets  forth as of  February  28,  2003,  unless  otherwise
indicated,  certain information relating to the ownership of our common stock by
(i) each  person  known by the Company to be the  beneficial  owner of more than
five percent of the  outstanding  shares of our common  stock,  (ii) each of the
Company's directors, (iii) each of the Named Executive Officers, and (iv) all of
the Company's Named Executive  Officers and directors as a group.  Except as may
be indicated in the footnotes to the table and subject to  applicable  community
property laws,  each such person has the sole voting and  investment  power with
respect to the shares owned. The address of each person listed is in care of the
Company, 3151 East Washington Blvd., Los Angeles, CA 90023, unless otherwise set
forth below such person's name.

                                          Number of Shares of
                                              Common Stock
Name and Address                          Beneficially Owned (1)     Percent (1)
DIRECTORS AND NAMED EXECUTIVE OFFICERS:
Gerard Guez ...........................        6,611,519 (2)            39.2%
Todd Kay ..............................        3,249,999 (3)            19.7%
Eddy Yuen .............................          191,500 (4)             1.2%
Barry Aved ............................          111,500 (4)              *
Karen Wasserman .......................          105,000 (5)              *
Patrick Chow ..........................           32,000 (4)              *
Milton Koffman ........................            5,000 (4)              *
Joseph Mizrachi .......................            5,000 (4)              *
Mitchell Simbal .......................            5,000 (4)              *

5% HOLDERS:
Kamel Nacif Borge .....................        2,474,000 (6)            14.9%
    Edgar Allen #231, Col. Polanco,
    C.P. 11550, Mexico, D.F ...........
Jamil Textil, S.A. de C.V .............        1,724,000 (7)            10.9%
    Edgar Allen #231, Col. Polanco,
    C.P. 11550, Mexico, D.F ...........
Lord, Abbett & Co. ....................        1,162,234 (8)             7.3%
    90 Hudson Street, Jersey City,
    NJ 07302
Emerald Point Inc. ....................        1,019,093 (9)             6.4%
    P.O. Box CR-54697, Nassau,
    Bahamas

Directors and officers as a group
    (9 persons) .......................       10,316,518 (10)           57.4%
----------
*      Less than one percent.

(1)    Under Rule 13d-3,  certain shares may be deemed to be beneficially  owned
       by more than one person (if, for example, persons share the power to vote
       or the power to dispose of the shares). In addition, shares are deemed to
       be beneficially  owned by a person if the person has the right to acquire
       the shares (for example,  upon  exercise of an option)  within 60 days of
       the date as of which  the  information  is  provided.  In  computing  the
       percentage  ownership of any person,  the amount of shares outstanding is
       deemed to include the amount of shares  beneficially owned by such person
       (and  only such  person)  by reason  of these  acquisition  rights.  As a
       result,  the percentage of  outstanding  shares of any person as shown in
       this table does not necessarily  reflect the person's actual ownership or
       voting  power  with  respect  to the  number of  shares  of common  stock
       actually outstanding at February 28, 2003.  Percentage ownership is based
       upon  15,846,315  shares of common  stock  issued and  outstanding  as of
       February 28, 2003.
(2)    Includes 461,518 shares held by GKT Investments,  LLC, a Delaware limited
       liability  company owned 100% by Mr. Guez and 1,016,668  shares of common
       stock  reserved for issuance  upon exercise of stock options which are or
       will  become  exercisable  on or prior to April 29,  2003.  Mr.  Guez has
       pledged  an   aggregate   of   5,494,851  of  such  shares  to  financial
       institutions to secure the repayment of loans to Mr. Guez or corporations
       controlled by Mr. Guez.


                                       22





(3)    Includes  683,332  shares of common  stock  reserved  for  issuance  upon
       exercise of stock  options,  which are or will become  exercisable  on or
       prior to April 29, 2003. Mr. Kay has pledged an aggregate of 1,015,000 of
       such shares to financial institutions to secure the repayment of loans to
       Mr. Kay or corporations controlled by the Mr. Kay.
(4)    Consists of shares of common stock reserved for issuance upon exercise of
       stock options,  which are or will become exercisable on or prior to April
       29, 2003.
(5)    Includes  85,000  shares of  common  stock  reserved  for  issuance  upon
       exercise of stock  options,  which are or will become  exercisable  on or
       prior to April 29, 2003.
(6)    Includes  1,724,000  shares held by Jamil  Textil,  S.A. de C.V.  ("Jamil
       Textil") and 750,000 shares  issuable upon exercise of stock options held
       by Mr.  Nacif which are or will become  exercisable  on or prior to April
       29, 2003.  Mr. Nacif is a principal  shareholder  and  President of Jamil
       Textil and in such role may be deemed to beneficially  own shares held by
       Jamil Textil.  Mr. Nacif  disclaims  beneficial  ownership of such shares
       except  to the  extent of his  pecuniary  interest  therein.  Information
       regarding the beneficial  ownership of Mr. Nacif and Textil is taken from
       a Schedule 13G as filed on March 27, 2003.
(7)    Information regarding the beneficial ownership of Mr. Nacif and Textil is
       taken from a Schedule 13G as filed on March 27, 2003.
(8)    As  disclosed  on  Schedule  13G/A  filed on  January  28,  2002.  (9) As
       disclosed on Schedule 13D filed on September 13, 2002.
(10)   Includes  2,135,000  shares of common stock  reserved  for issuance  upon
       exercise of stock options that are or will become exercisable on or prior
       to April 29, 2003.

The information as to shares beneficially owned has been individually  furnished
by the respective directors, Named Executive Officers, and other shareholders of
the Company, or taken from documents filed with the SEC.


SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
-------------------------------------------------------

Section  16(a) of the  Securities  Exchange Act of 1934  requires the  Company's
executive  officers,  directors,  and persons who own more than ten percent of a
registered class of the Company's equity securities to file reports of ownership
and  changes  in  ownership  with the SEC.  Executive  officers,  directors  and
greater-than-ten percent shareholders are required by SEC regulations to furnish
the Company with all Section  16(a) forms they file.  Based solely on its review
of the  copies of the forms  received  by it and  written  representations  from
certain  reporting  persons that they have  complied  with the  relevant  filing
requirements,  the Company  believes  that,  during the year ended  December 31,
2002, all of the Company's  executive officers,  directors and  greater-than-ten
percent shareholders complied with all Section 16(a) filing requirements, except
that Kamil Nacif Borge and Jamil Textil,  S.A. de C.V. (an entity of which Kamil
Nacif  Borge is a  controlling  shareholder)  each  filed a Form 3 in March 2003
reporting as  greater-than-ten  percent  shareholders which Form 3's should have
been filed on or before June 3, 1999.


SHAREHOLDER PROPOSALS
---------------------

Any  shareholder who intends to present a proposal at the 2004 Annual Meeting of
Shareholders  for  inclusion in the  Company's  Proxy  Statement  and Proxy form
relating to such Annual  Meeting must submit such proposal to the Company at its
principal  executive  offices by December 26, 2003. In addition,  in the event a
shareholder proposal is not received by the Company by March 11, 2004, the Proxy
to be  solicited  by the Board of  Directors  for the 2004 Annual  Meeting  will
confer discretionary authority on the holders of the Proxy to vote the shares if
the proposal is presented at the 2004 Annual  Meeting  without any discussion of
the proposal in the Proxy Statement for such meeting.

SEC rules and regulations  provide that if the date of the Company's 2004 Annual
Meeting  is  advanced  or  delayed  more  than 30 days from the date of the 2003
Annual  Meeting,  shareholder  proposals  intended  to be  included in the proxy
materials for the 2004 Annual  Meeting must be received by the Company  within a
reasonable  time before the Company begins to print and mail the proxy materials
for the 2004 Annual Meeting.  Upon determination by the Company that the date of
the 2004  Annual  Meeting  will be advanced or delayed by more than 30 days from
the date of the 2003 Annual  Meeting,  the Company will  disclose such change in
the earliest possible Quarterly Report on Form 10-Q.


                                       23





SOLICITATION OF PROXIES
-----------------------

It is expected  that the  solicitation  of Proxies will be by mail.  The cost of
solicitation  by  management  will be borne by the  Company.  The  Company  will
reimburse  brokerage firms and other persons  representing  beneficial owners of
shares for their reasonable disbursements in forwarding solicitation material to
such  beneficial  owners.  Proxies  may  also be  solicited  by  certain  of our
directors and officers, without additional compensation,  personally or by mail,
telephone, telegram or otherwise.

ANNUAL REPORT ON FORM 10-K
--------------------------

THE  COMPANY'S  ANNUAL  REPORT  ON FORM  10-K,  WHICH  HAS BEEN  FILED  WITH THE
SECURITIES AND EXCHANGE COMMISSION FOR THE YEAR ENDED DECEMBER 31, 2002, WILL BE
MADE AVAILABLE TO  SHAREHOLDERS  WITHOUT CHARGE UPON WRITTEN REQUEST TO INVESTOR
RELATIONS,  TARRANT APPAREL GROUP, 3151 EAST WASHINGTON BOULEVARD,  LOS ANGELES,
CALIFORNIA 90023.

                                            ON BEHALF OF THE BOARD OF DIRECTORS


                                            ------------------------------------
                                            GERARD GUEZ, CHAIRMAN OF THE BOARD



3151 East Washington Boulevard
Los Angeles, California 90023
April __, 2003


                                       24





                                  APPENDIX "A"

                             AUDIT COMMITTEE CHARTER

         The Audit  Committee  is  appointed by the Board to assist the Board in
monitoring (1) the integrity of the financial statements of the Company, (2) the
compliance  by the Company with legal and  regulatory  requirements  and (3) the
independence and performance of the Company's internal and external auditors.

         The  members of the Audit  Committee  shall meet the  independence  and
experience  requirements  of the Nasdaq  Stock  Market,  Inc. The members of the
Audit Committee shall be appointed by the Board.

         The Audit  Committee  shall have the authority to retain special legal,
accounting or other consultants to advise the Committee. The Audit Committee may
request any officer or employee of the Company or the Company's  outside counsel
or independent  auditor to attend a meeting of the Committee or to meet with any
members of, or consultants to, the Committee.

         The Audit Committee shall make regular reports to the Board.

The Audit Committee shall:

1.       Review and reassess the adequacy of this Charter annually and recommend
         any proposed changes to the Board for approval.

2.       Review  the  annual  audited  financial   statements  with  management,
         including major issues regarding accounting and auditing principles and
         practices  as well as the  adequacy  of  internal  controls  that could
         significantly affect the Company's financial statements.

3.       Review an analysis  prepared by management and the independent  auditor
         of  significant  financial  reporting  issues  and  judgments  made  in
         connection with the preparation of the Company's financial statements.

4.       Review  with  management  and the  independent  auditor  the  Company's
         quarterly financial statements prior to the filing of its Form 10-Q.

5.       Meet  periodically  with  management  to  review  the  Company's  major
         financial risk exposures and the steps  management has taken to monitor
         and control such exposures.

6.       Review  major  changes  to  the  Company's   auditing  and   accounting
         principles  and  practices  as suggested  by the  independent  auditor,
         internal auditors or management.

7.       Recommend  to the Board the  appointment  of the  independent  auditor,
         which firm is  ultimately  accountable  to the Audit  Committee and the
         Board.

8.       Approve the fees to be paid to the independent auditor.

9.       Receive  periodic  reports from the independent  auditor  regarding the
         auditor's  independence  consistent with  Independence  Standards Board
         Standard 1, discuss such reports with the auditor and, if so determined
         by  the  Audit  Committee,  take  or  recommend  that  the  Board  take
         appropriate action to oversee the independence of the auditor.

10.      Evaluate  together with the Board the  performance  of the  independent
         auditor and, if so determined by the Audit  Committee,  recommend  that
         the Board replace the independent auditor.

11.      Review the appointment and replacement of the senior internal  auditing
         executive, if any.

12.      Review any significant  reports to management  prepared by the internal
         auditing department, if any, and management's responses.


                                       1





13.      Meet with the  independent  auditor  prior to the  audit to review  the
         planning and staffing of the audit.

14.      Obtain from the independent  auditor  assurance that Section 10A of the
         Securities Exchange Act of 1934 has not been implicated.

15.      Obtain reports from management,  the Company's senior internal auditing
         executive,  if any,  and the  independent  auditor  that the  Company's
         subsidiary/foreign   affiliated   entities  are  in   conformity   with
         applicable legal requirements and the Company's code of conduct.

16.      Discuss  with  the  independent  auditor  the  matters  required  to be
         discussed  by Statement  on Auditing  Standards  No. 61 relating to the
         conduct of the audit.

17.      Review with the independent  auditor any problems or  difficulties  the
         auditor may have encountered and any management  letter provided by the
         auditor and the Company's  response to that letter.  Such review should
         include:

18.      Supervise  preparation  of the  report  required  by the  rules  of the
         Securities  and  Exchange  Commission  to be included in the  Company's
         annual proxy statement.

         a.       Any difficulties  encountered in the course of the audit work,
                  including  any  restrictions  on the  scope of  activities  or
                  access to required information.

         b.       Any changes required in the planned scope of the audit.

         c.       The  responsibilities,  budget and  staffing  of the  internal
                  audit department, if any.

19.      Advise  the  Board  from  time to time with  respect  to the  Company's
         policies and procedures  regarding  compliance with applicable laws and
         regulations and with the Company's code of conduct.

20.      Meet with the Company's  legal counsel to review legal matters that may
         have a  material  impact on the  financial  statements,  the  Company's
         compliance policies and any material reports or inquiries received from
         regulators or governmental agencies.

21.      Meet at least  annually with the Chief  Financial  Officer,  the senior
         internal  auditing  executive,  if any, and the independent  auditor in
         separate executive sessions.

         While the Audit Committee has the responsibilities and powers set forth
in this  Charter,  it is not the duty of the Audit  Committee to plan or conduct
audits or to determine that the Company's financial  statements are complete and
accurate and are in accordance with generally  accepted  accounting  principles.
This is the responsibility of management and the independent  auditor. Nor is it
the  duty  of  the  Audit  Committee  to  conduct  investigations,   to  resolve
disagreements,  if any,  between  management and the  independent  auditor or to
assure compliance with laws and regulations and the Company's code of conduct.


                                       2





                              TARRANT APPAREL GROUP
                    PROXY FOR ANNUAL MEETING OF SHAREHOLDERS

           THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS

     The  undersigned,  a shareholder  of TARRANT  APPAREL  GROUP,  a California
corporation (the "Company"),  hereby nominates,  constitutes and appoints Gerard
Guez and Todd Kay, or either one of them, as proxy of the undersigned, each with
full power of substitution,  to attend,  vote and act for the undersigned at the
Annual Meeting of Shareholders  of the Company,  to be held on May 28, 2003, and
any postponements or adjournments thereof, and in connection therewith,  to vote
and represent all of the shares of the Company  which the  undersigned  would be
entitled to vote with the same effect as if the  undersigned  were  present,  as
follows:

A VOTE FOR ALL PROPOSALS IS RECOMMENDED BY THE BOARD OF DIRECTORS:

Proposal 1. To elect the Board of Directors' three nominees as directors:

      Barry Aved         Mitchell Simbal         Milton Koffman

      |_| FOR ALL NOMINEES LISTED ABOVE (except as marked to the contrary below)

      |_| WITHHELD for all nominees listed above

     (INSTRUCTION:  To withhold  authority to vote for any  individual  nominee,
     write that nominee's name in the space below:)

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

     The  undersigned  hereby  confer(s)  upon  the  proxies  and  each  of them
     discretionary  authority  with  respect to the election of directors in the
     event that any of the above nominees is unable or unwilling to serve.


Proposal 2. To  approve  the  issuance  of  up to 3  million  shares of  common
            stock issuable upon conversion of the outstanding  shares of Series
            A Preferred Stock.

            |_| FOR              |_| AGAINST           |_| ABSTAIN

Proposal 3. To ratify the grant of options to purchase an aggregate of 2 million
            shares of common stock to certain executive officers.

            |_| FOR              |_| AGAINST           |_| ABSTAIN

Proposal 4. To  ratify the  appointment of Ernst & Young LLP  as  the Company's
            independent  public  accountants  for the year ending  December 31,
            2003.

            |_| FOR              |_| AGAINST           |_| ABSTAIN


     The  undersigned  hereby  revokes  any  other  proxy to vote at the  Annual
Meeting,  and hereby  ratifies and confirms all that said attorneys and proxies,
and each of them, may lawfully do by virtue hereof.  With respect to matters not
known at the time of the  solicitation  hereof,  said proxies are  authorized to
vote in accordance with their best judgment.

     THIS  PROXY WILL BE VOTED IN  ACCORDANCE  WITH THE  INSTRUCTIONS  SET FORTH
ABOVE OR, TO THE EXTENT NO CONTRARY DIRECTION IS INDICATED, WILL BE TREATED AS A
GRANT OF AUTHORITY TO VOTE FOR ALL PROPOSALS. IF ANY OTHER BUSINESS IS PRESENTED
AT THE ANNUAL  MEETING,  THIS PROXY  CONFERS  AUTHORITY TO AND SHALL BE VOTED IN
ACCORDANCE WITH THE RECOMMENDATIONS OF THE PROXIES.

     The  undersigned  acknowledges  receipt  of a copy of the  Notice of Annual
Meeting and accompanying  Proxy Statement dated April __, 2003,  relating to the
Annual Meeting.

                                        Dated:___________________________, 2003

                                         Signature:_____________________________

                                         Signature:_____________________________
                                         Signature(s) of Stockholder(s)
                                         (See Instructions Below)

                                         The    Signature(s)    hereon    should
                                         correspond  exactly with the name(s) of
                                         the  Stockholder(s)  appearing  on  the
                                         Share  Certificate.  If  stock  is held
                                         jointly,  all joint owners should sign.
                                         When  signing  as  attorney,  executor,
                                         administrator,   trustee  or  guardian,
                                         please  give  full  title as  such.  If
                                         signer is a  corporation,  please  sign
                                         the  full  corporation  name,  and give
                                         title of signing officer.

|_|  Please   indicate  by  checking   this  box  if  you  anticipate  attending
     the Annual Meeting.

                PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD
                      PROMPTLY USING THE ENCLOSED ENVELOPE