SEVENTH GENERATION, INC.
ONE MILL STREET, BOX A26
BURLINGTON, VT 05401-1530
April 10, 1998
Dear Stockholder,
You are cordially invited to attend the 1998 Annual Meeting of Stockholders of
SEVENTH GENERATION, INC. (the "Company") to be held at 11:00 a.m. on Monday,
May 4, 1998 at the Company's offices located at One Mill Street, Burlington,
Vermont.
At the Annual Meeting, six persons will be elected to the Board of Directors.
Such other business will be transacted as may properly come before the Annual
Meeting.
We hope you will be able to attend the Annual Meeting. Whether you plan to
attend the Annual Meeting or not, it is important that your shares are
represented. Therefore, you are urged promptly to complete, sign, date and
return the enclosed proxy card in accordance with the instructions set forth
on the card. This will ensure your proper representation at the Annual
Meeting.
Sincerely,
Jeffrey A. Hollender
President and Chief Executive Officer
YOUR VOTE IS IMPORTANT.
PLEASE RETURN YOUR PROXY PROMPTLY.
SEVENTH GENERATION, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To be Held Monday, May 4, 1998
To the Stockholders of Seventh Generation, Inc.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of SEVENTH
GENERATION, INC., a Vermont corporation (the "Company"), will be held on Monday,
May 4, 1998, at 11:00 a.m, at the Company's offices located at One Mill Street,
Burlington, Vermont for the following purposes:
1. To elect six members to the Board of Directors to hold office until the
next annual meeting of Stockholders and until their successors are duly
elected and qualified.
2. To transact such other business as may be properly brought before the
Annual Meeting and any adjournments thereof.
The Board of Directors has fixed the close of business on March 16, 1998 as the
record date for the determination of Stockholders entitled to notice of and to
vote at the Annual Meeting and at any adjournments thereof.
All Stockholders are cordially invited to attend the Annual Meeting. Whether
you plan to attend the Annual Meeting or not, you are requested to complete,
sign, date and return the enclosed proxy card as soon as possible in accordance
with the instructions on the proxy card. A pre-addressed, postage prepaid
return envelope is enclosed for your convenience.
BY ORDER OF THE BOARD OF DIRECTORS
Anita B. Lavoie
SECRETARY
April 10, 1998
SEVENTH GENERATION, INC.
ONE MILL STREET, BOX A26
BURLINGTON, VT 05401-1530
(802) 658-3773
_______________________________
PROXY STATEMENT
_______________________________
GENERAL INFORMATION
This Proxy Statement is furnished in connection with the solicitation by the
Board of Directors of SEVENTH GENERATION, INC. (the "Company"), a Vermont
corporation, of proxies, in the accompanying form, to be used at the Annual
Meeting of Stockholders to be held at the Company's offices located at One
Mill Street, Burlington, Vermont on Monday, May 4, 1998, at 11:00 a.m., and
any adjournments thereof (the "Meeting").
Where the Stockholder specifies a choice on the proxy as to how his or her
shares are to be voted, the shares will be voted accordingly. If no choice
is specified, the shares will be voted FOR the election of the six nominees
for director named herein. Any proxy given pursuant to this solicitation may
be revoked by the person giving it at any time before its use by delivering
to the Company a written notice of revocation or a duly executed proxy bearing
a later date. Any Stockholder who has executed a proxy but is present at the
Meeting, and who wishes to vote in person, may do so by revoking his or her
proxy as described in the preceding sentence. Shares represented by valid
proxies in the form enclosed, received in time for use at the Meeting and
not revoked at or prior to the Meeting, will be voted at the Meeting. The
presence, in person or by proxy, of the holders of a majority of the outstanding
shares of the Company's common stock, par value $.000333 per share ("Common
Stock"), is necessary to constitute a quorum at the Meeting.
The affirmative vote of a plurality of the shares of Common Stock voted
affirmatively or negatively at the Meeting is required with respect to the
election of directors.
The close of business on March 16, 1998 has been fixed as the record date for
determining the Stockholders entitled to notice of and to vote at the Meeting.
As of the close of business on March 16, 1998, the Company had 2,428,791 shares
of Common Stock outstanding and entitled to vote. Holders of Common Stock are
entitled to one vote per share on all matters to be voted on by Stockholders.
The cost of soliciting proxies, including expenses in connection with preparing
and mailing this Proxy Statement, will be borne by the Company. In addition,
the Company will reimburse brokerage firms and other persons representing
beneficial owners of Common Stock of the Company for their expenses in
forwarding proxy material to such beneficial owners. Solicitation of proxies
by mail may be supplemented by telephone, telegram, telex and personal
solicitation by the directors, officers or employees of the Company, who will
not be compensated for any such solicitation.
This Proxy Statement and the accompanying proxy are being mailed on or about
April 10, 1998 to all Stockholders entitled to notice of and to vote at the
Meeting.
The Annual Report to Stockholders for the fiscal year ended December 31, 1997
is being mailed to the Stockholders with this Proxy Statement, but does not
constitute a part hereof.
SHARE OWNERSHIP
The following table sets forth certain information as of February 13, 1998
concerning the ownership of Common Stock by each Stockholder known by the
Company to be the beneficial owner of more than 5% of its outstanding shares
of Common Stock, each current member of the Board of Directors, the executive
officers named in the Summary Compensation Table on Page 6 hereof, and all
current Directors and executive officers as a group.
Shares Beneficially Owned (1)
Name and Address* Number Percent
Jeffrey A. Hollender (2)
1 Mill St., Box A26
Burlington, VT 05401-1530 334,568 12.68%
Sheila Hollender (3)
1 Mill St., Box A26
Burlington, VT 05401-1530 334,568 12.68%
Gary Stein (4)
900 19th Avenue South
Nashville, TN 37212 235,800 9.71%
Peter Graham (5)
540 Madison Avenue, 10th Floor
New York, NY 10022 225,444 9.17%
Arthur Gray, Jr. (6) 107,412 4.35%
Joshua Sapan (7) 36,646 1.49%
Yoram Samets (8) 1,500 0.06%
Jeffrey Phillips (9) 86,000 3.54%
All executive officers and directors
as a group (7 persons) (10) 791,570 28.02%
* Addresses are given for beneficial owners of more than 5% of the
outstanding Common Stock only.
(1) The number of shares of Common Stock issued and outstanding on February
13, 1998 was 2,428,791. Beneficial ownership is determined in accordance with
rules of the Securities and Exchange Commission and generally includes voting or
investment power with respect to securities. Shares of Common Stock subject to
options, warrants and convertible debentures which are or become exercisable or
convertible within 60 days are deemed outstanding for computing the percentage
of the person holding such options, warrants or convertible debentures, but are
not deemed outstanding for computing the percentage of any other person. Except
as otherwise noted in the footnotes, the persons named in the table have sole
voting and investment power with respect to all shares beneficially owned by
them.
(2) Includes 125,444 shares of Common Stock owned by Mr. Hollender and
209,124 shares of Common Stock that Mr. Hollender may acquire upon the
exercise of options which are or become exercisable within 60 days.
Excludes (ii) 18,776 shares of Common Stock owned, or which may be acquired
upon the exercise of warrants and options by various relatives of Mr.
Hollender, of which Mr. Hollender disclaims beneficial ownership. Sheila
Hollender is the spouse of Jeffrey Hollender.
(3) Represents the shares referred to in note (2) above owned by Jeffrey A.
Hollender, spouse of Sheila Hollender, of which Ms. Hollender disclaims
beneficial ownership.
(4) Mr. Stein is a private investor specializing in smaller capitalization
companies.
(5) Includes 194,944 shares of Common Stock owned by Mr. Graham and 30,500
shares of Common Stock that Mr. Graham may acquire upon the exercise of
options or warrants which are or become exercisable within 60 days.
(6) Includes 63,199 shares of Common Stock owned by Mr. Gray and 36,500
shares of Common Stock that Mr. Gray may acquire upon the exercise of options
which are or become exercisable within 60 days. Also includes 3,963 shares of
Common Stock owned by the Lerner Gray Foundation and 3,750 shares of Common
Stock which the Lerner Gray Foundation may acquire upon the exercise of
warrants which are or become exercisable within 60 days. Mr. Gray is the
President of the Lerner Gray Foundation. Excludes 2,772 shares of Common
Stock owned by Mr. Gray's daughter, of which Mr. Gray disclaims beneficial
ownership.
(7) Includes 8,573 shares of Common Stock owned by Mr. Sapan and 28,073
shares of Common Stock that Mr. Sapan may acquire upon the exercise of options
or warrants which are or become exercisable within 60 days.
(8) Includes 1,500 shares of Common Stock that Mr. Samets may acquire upon
the exercise of options or warrants which are or become exercisable within
60 days.
(9) Represents 86,000 shares of Common Stock that Mr. Phillips may acquire
upon the exercise of options which are or become exercisable within 60 days.
(10) Includes an aggregate of 396,123 shares of Common Stock owned by
directors and executive officers and an aggregate of 395,447 shares of Common
Stock which directors and executive officers may acquire upon the exercise of
options and warrants which are or become exercisable within 60 days. See notes
(2), (3), (4), (5), (6), (7), and (8).
MANAGEMENT
Directors
The Company's Articles of Incorporation and Restated By-Laws provide for the
Company's business to be managed by or under the direction of the Board of
Directors. Under the Company's Articles of Incorporation and Restated By-Laws,
the number of directors is fixed from time to time by the Board of Directors,
which number may not be less than three nor more than twelve, and directors
serve in office until the next annual meeting of Stockholders and until their
successors have been elected and qualified.
Pursuant to the Company's Articles of Incorporation and Restated By-Laws, the
Board of Directors has voted (i) to fix the size of the Board of Directors at
six and (ii) to nominate Arthur Gray, Jr., Jeffrey Hollender, Sheila Hollender,
Peter Graham, Joshua Sapan, and Yoram Samets for election at the Meeting to
serve until the next annual meeting of Stockholders and until their respective
successors have been elected and qualified.
The names of the Company's current directors and certain information about them
are set forth below:
Name Age Position with the Company
Arthur Gray, Jr. 75 Chairman of the Board
Jeffrey A. Hollender 43 President, Chief Executive Officer
and Director
Sheila Hollender 43 Director
Joshua Sapan 47 Director
Peter Graham 43 Director
Yoram Samets 48 Director
Arthur Gray, Jr. has served as a Director of the Company since June 1989 and as
Chairman of the Board since August 1993. Since July 1993, Mr. Gray has been a
Managing Director of Cowen Asset Management, a subsidiary of Cowen & Company.
Prior to joining Cowen Asset Management, from 1984 to 1993 Mr. Gray was
President and Chief Executive Officer of Dreyfus Personal Management, Inc., a
division of Dreyfus, Inc.. Mr Gray is also a Director of Genelabs Technologies,
Inc., a publicly traded company, and the National Museum of Natural History.
Mr Gray has also served as a Director and Co-Chairman of the Finance Committee
of the American Arbitration Association.
Jeffrey A. Hollender has served as the Chief Executive Officer and a Director
of the Company since March 1989 and President of the Company since June 1992.
He served as Chairman of the Board from March 1989 to August 1993. Prior to
joining the Company, Mr. Hollender was a management consultant with the Briar
Patch Group, a consulting firm he founded in 1987. From 1979 to 1987, he was
President and Chief Executive Officer of Warner Audio Publishing, a division
of Warner Communications, and its predecessor, Network for Learning, Inc. Mr.
Hollender is the author of How to Make the World a Better Place and serves on
the Board of Directors of the Vermont Businesses for Social Responsibility.
Sheila Hollender has served as a Director of the Company since June 1993. Ms.
Hollender has been a partner of the law firm Rudd, Rosenberg & Hollender since
1990, was a partner of the law firm Bell, Kalnick, Sassawer, Klee, Green & Rudd
from 1988 to 1990, and was a partner of the law firm Rosen, Rudd, Kera,
Graubard & Hollender from 1986 to 1988. Ms. Hollender currently is employed
as a commissioned salesperson for the Company. Sheila Hollender is the spouse
of Jeffrey Hollender.
Joshua Sapan has served as a Director of the Company since April 1989. In
1995, Mr. Sapan was named CEO of Rainbow Programming Holdings, Inc., which
operates a portfolio of cable television networks owned by Cablevision, NBC
and TCI. They include American Movie Classics, Bravo, The Independent Film
Channel, MuchMusic USA, SPORTSCHANNEL Regional Network, Prime Network,
NewSport and News 12. In July 1993, Mr. Sapan was named Rainbow President
and COO, after joining the company in 1987 as President of Rainbow's
entertainment division. Previously, he was Senior Vice President of
Marketing for Showtime Entertainment.
Peter Graham has served as a Director of the Company since December 1993. He
is President and a Director of Ladenburg, Thalmann Group, Inc., a New York
investment banking firm. Mr. Graham joined Ladenburg, Thalmann & Co., Inc.
("Ladenburg"), a subsidiary of Ladenburg, Thalmann Group, Inc. in 1976, and
has served on Ladenburg's Board of Directors since 1982. He also serves as
a Director of the following public companies: Rudy's Restaurant Group, Inc.,
Suspensions and Parts Industries, Ltd., and Regency Equities Corporation.
Yoram Samets has served as a Director of the Company since December 1997. He
is Managing Director of Kelliher/Samets/Volk, a 20 year old integrated
marketing communications firm. In addition to his managing director role, he
is also the executive creative director for the agency. During the fiscal
year ended December 31, 1997, Mr. Samets' firm was engaged to perform
consulting services for the Company.
Committees of the Board of Directors and Meetings
Meeting Attendance. During the fiscal year ended December 31, 1997, there were
five meetings of the Board of Directors. Arthur Gray, Jr., Peter Graham,
Jeffrey Hollender, Sheila Hollender, and Yoram Samets attended all of the
meetings held of the Board and of Committees of the Board on which they served
during 1997. Joshua Sapan was unable to attend the meetings of the Board of
Directors during the fiscal year ended December 31, 1997.
Audit Committee. The Audit Committee, which met three times in fiscal 1997,
currently has two members, Arthur Gray, Jr. and Peter Graham. The Audit
Committee reviews the engagement of the Company's independent accountants,
reviews annual financial statements, considers matters relating to accounting
policy and internal controls and reviews the scope of annual audits.
Compensation Committee. The Compensation Committee, which met six times in
fiscal 1997, currently has two members, Arthur Gray, Jr. and Peter Graham.
The Compensation Committee reviews, approves and makes recommendations on the
Company's compensation policies, practices and procedures to ensure that legal
and fiduciary responsibilities of the Board of Directors are carried out and
that such policies, practices and procedures contribute to the success of the
Company. The Compensation Committee also administers the Company's 1993 and
1994 Employee, Director and Consultant Stock Option Plans and the 1990 Stock
Option Plan.
Compensation Committee Interlocks and Insider Participation. The Compensation
Committee has two members, Arthur Gray, Jr. and Peter Graham. None of the
members of the Compensation Committee are employed by the Company.
The Board of Directors does not have a standing nominating committee.
Compensation of Directors
Pursuant to the 1993 Employee, Director and Consultant Stock Option Plan (the
"Plan"), each non-employee director is automatically granted, on an annual
basis, options to purchase 1,500 shares of Common Stock at exercise prices
equal to the fair market value of the Common Stock on the date of grant.
Expenses incurred in attending Board of Directors meetings and committee
meetings are reimbursed by the Company.
Executive Officers
The name of, and certain information regarding, the executive officer of the
Company who is not also a director, is set forth below.
Name Age Position
Jeffrey Phillips 46 Executive Vice President, Marketing & Sales
Jeffrey Phillips has served as Executive Vice President of Marketing and Sales
of the Company since February 1996, and Vice President of Marketing and Sales
since February 1994. Prior to joining the Company, from 1986 through February
1994, Mr. Phillips served as Vice President of Marketing for Webster Industries,
a Division of Chelsea Industries, Inc., a manufacturer of consumer household
products.
EXECUTIVE COMPENSATION
Summary Compensation Table
The following Summary Compensation Table sets forth summary information as to
compensation received by the Company's Chief Executive Officer and the other
most highly compensated person who was serving as an executive officer of the
Company as of December 31, 1997 (collectively, the "Named Executive Officers")
for services rendered to the Company in all capacities during the three fiscal
years ended December 31, 1997. No other executive officer of the Company earned
more than $100,000 for the year ended December 31, 1997.
Long Term
Compensation
Securities
Annual Underlying All Other
Compensation $ Options/SARs(#) Compensation $
Name and Principal Fiscal
Position Year Salary $ Bonus $
Jeffrey A. Hollender (1) 1997 $135,000 - 0 / 0 $6,867
President and Chief 1996 $135,000 $25,000 0 / 120,000 $6,571
Executive Officer 1995 $125,000 $25,000 $5,226
Jeffrey M. Phillips (2) 1997 $115,000 - 0 / 0 $6,000
Vice President, 1996 $107,500 $20,000 50,000 / 30,000 $6,000
Sales & Marketing 1995 $100,000 $15,000
(1) The amounts of All Other Compensation for Jeffrey Hollender during the last
three fiscal years consist of insurance premiums paid by the Company with
respect to term life insurance for the benefit of Mr. Hollender and the cost
of leasing an automobile for Mr. Hollender's use.
(2) The amount of All Other Compensation for Mr. Phillips consists of an
automobile allowance.
Option/SAR Grants in Last Fiscal Year
The Company did not issue any options or SARs to the Named Executive Officers
in the fiscal year ended December 31, 1997.
Option/SAR Exercises in Last Fiscal Year and Fiscal Year-End Values
There were no exercises of options or SARs by the Named Executive Officers
during the last fiscal year. The following table indicates the number of shares
covered by both exercisable and unexercisable stock options and SARs held by
the Named Executive Officers as of December 31, 1997. None of the exercisable
or unexercisable options granted to the Named Executive Officers were
"in-the-money" as of December 31, 1997. 150,000 of the SARs granted to the
Named Executive Officers were "in-the-money" as of December 31, 1997,
although none of such SARs are exercisable. Options and SARs are classified
as "in-the-money" only if there is a positive spread between the exercise
price of such options or SARs and the fiscal year end value of the Company's
Common Stock. None of the options held by the Named Executive Officers have
exercise prices less than $.50, the average of the bid and ask price per
share of the Company's Common Stock as reported in the NASDAQ OTC Bulletin
Board on December 31, 1997. With respect to the SARs, the average base price
was $0.4375 per unit at the grant date, and the average base exercise price
of the unexercisable SARs would have been $0.50 per unit at December 31, 1997.
Number of Securities
Underlying Value of
Unexercised Options/SARs Unexercised
at Fiscal Year-End (#) In-the-Money SARs
Name Exercisable Unexercisable Exercisable Unexercisable
Jeffrey A. Hollender 209,124 / 0 0 / 120,000 0 $7,500
Jeff Phillips 86,000 / 0 0 / 30,000 0 $1,875
Employment Contracts, Termination of Employment and Change of Control
Arrangements
The Company entered into a five-year employment agreement with Jeffrey A.
Hollender, effective November 29, 1993, pursuant to which Mr. Hollender
serves as President and Chief Executive Officer. The agreement contains a
covenant by Mr. Hollender not to compete with the Company during his employment
and for a period of two years thereafter. The agreement provides for an annual
salary of $125,000 during the first year, with a cost of living increase in the
second and third years and annual increases thereafter to be determined by the
Compensation Committee based primarily on the performance of the Company. In
the event Mr. Hollender is terminated without cause, the Company has agreed to
pay his salary for the remaining term of the agreement. The Company is the
owner and sole beneficiary of a $1,500,000 term life insurance policy
covering Mr. Hollender.
The Company has entered into a five-year employment agreement with Jeffrey M.
Phillips, effective February 28, 1994, pursuant to which Mr. Phillips serves
as Vice President of Marketing and Sales of the Company. The agreement contains
a covenant by Mr. Phillips not to compete with the Company during his employment
and for a period of two years thereafter. The agreement provides for an annual
salary of $100,000 during the first year with annual increases thereafter to be
determined by the Compensation Committee based on Mr. Phillips' performance and
the performance of the Company. Mr. Phillips is also entitled to receive a
bonus of up to $25,000, payable at the end of each fiscal year as shall be
determined by the Compensation Committee of the Board of Directors in its
sole discretion.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and officers, and persons who own more than 10% of the Company's
Common Stock, to file with the Securities and Exchange Commission (the "SEC")
initial reports of beneficial ownership and reports of changes in beneficial
ownership of the Common Stock and other equity securities of the Company.
Officers, directors and greater than 10% beneficial owners are required by
SEC regulation to furnish the Company with copies of all Section 16(a) forms
they file.
To the Company's knowledge, based solely on review of the copies of such
reports furnished to the Company and written representations that no other
reports were required, during the fiscal year ended December 31, 1997, all
Section 16(a) filing requirements applicable to its officers, directors and
greater than 10% beneficial owners were complied with.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During 1996 and 1997, Jeffrey A. Hollender, the Chief Executive Officer of the
Company, guaranteed up to $300,000 of the obligations of the Company to one of
its principal suppliers.
ELECTION OF DIRECTORS
(Notice Item 1)
Under the Company's Articles of Incorporation and Restated By-Laws, the number
of directors is fixed from time to time by the Board of Directors, which number
may not be less than three nor more than twelve, and directors serve in office
until the next annual meeting of Stockholders and until their successors have
been elected and qualified.
Pursuant to the Company's Articles of Incorporation and Restated By-Laws, the
Board of Directors has voted: (i) to set the size of the Board of Directors at
six, and (ii) to nominate Arthur Gray, Jr., Jeffrey Hollender, Sheila Hollender,
Joshua Sapan, Peter Graham, and Yoram Samets for election at the Meeting to
serve until the next annual meeting of Stockholders and until their respective
successors have been elected and qualified.
Unless authority to vote for any of the nominees named above is withheld, the
shares represented by the enclosed proxy will be voted FOR the election as
directors of such nominees. In the event that any nominee shall become unable
or unwilling to serve, the shares represented by the enclosed proxy will be
voted for the election of such other person as the Board of Directors may
recommend in his or her place. The Board has no reason to believe that any
nominee will be unable or unwilling to serve.
A plurality of the shares voted affirmatively or negatively at the Meeting is
required to elect each nominee as a director.
THE BOARD OF DIRECTORS RECOMMENDS THE ELECTION OF ARTHUR GRAY, JR., JEFFREY
A. HOLLENDER, SHEILA HOLLENDER, JOSHUA SAPAN, PETER GRAHAM, AND YORAM SAMETS
AS DIRECTORS, AND PROXIES SOLICITED BY THE BOARD WILL BE VOTED IN FAVOR
THEREOF UNLESS A STOCKHOLDER HAS INDICATED OTHERWISE ON THE PROXY.
OTHER MATTERS
The Board of Directors knows of no other business which will be presented to
the Meeting. If any other business is properly brought before the Meeting,
it is intended that proxies in the enclosed form will be voted in respect
thereof in accordance with the judgment of the persons voting the proxies.
INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has appointed Coopers & Lybrand L.L.P, independent
public accountants, to audit the financial statements of the Company for the
fiscal year ending December 31, 1998. Coopers & Lybrand L.L.P audited the
Company's financial statements for the fiscal year ended December 31, 1997.
The Company does not expect that representatives of Coopers & Lybrand L.L.P.
will be present at the Meeting.
STOCKHOLDER PROPOSALS
To be considered for presentation at the Annual Meeting of Stockholders to be
held in 1999, Stockholder proposals must be received, marked for the attention
of: Jeffrey A. Hollender, President and Chief Executive Officer, Seventh
Generation, Inc., One Mill Street, Box A26, Burlington, VT 05401-1530, no
later than December 11, 1998.
WHETHER OR NOT YOU INTEND TO BE PRESENT AT THE MEETING, YOU ARE URGED TO
FILL OUT, SIGN, DATE AND RETURN THE ENCLOSED PROXY AT YOUR EARLIEST CONVENIENCE.
By order of the Board of Directors:
Anita B. Lavoie
SECRETARY
April 10, 1998
