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 the Commission Only
(as permitted by Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
Little Switzerland, Inc.
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(Name of Registrant as Specified In Its Charter)
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(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:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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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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Notes:
<PAGE>
LITTLE SWITZERLAND
161-B Crown Bay Cruise Ship Port
St. Thomas, U.S.V.I. 00804
_______________, 1997
Dear Little Switzerland Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders of
Little Switzerland, Inc. (the "Company") to be held on Friday, January 16, 1998,
at 10:30 a.m., local time, at [____________________________________________]
(the "Annual Meeting"). Your Board of Directors and management look forward to
greeting personally those stockholders able to attend the Annual Meeting.
The Annual Meeting has been called for the purpose of electing two Class
III Directors each for a three-year term and considering and voting upon such
other business as may properly come before the meeting or any adjournments or
postponements thereof.
CAUTION
As more fully described in the enclosed proxy statement, three record
stockholders of the Company, independently, have nominated their own candidates
for election as Directors of the Company. One such stockholder, Aspen
Investments Inc., has filed preliminary proxy materials with the Securities and
Exchange Commission, indicating that it is soliciting proxies for election to
the Board of Directors of its nominee.
As previously reported, your Board of Directors is actively continuing the
process with its financial adviser of maximizing shareholder value. Accordingly,
the Board of Directors recommends that you reject the nominees of such
stockholders and that you vote "FOR" the election of C. William Carey and John
E. Toler, Jr., the two nominees of your Board of Directors, as Directors of the
Company.
On behalf of your Board of Directors, your continued interest and support
are greatly appreciated.
Very truly yours,
John E. Toler, Jr.
Chief Executive Officer
and President
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE ANNUAL MEETING.
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, YOU ARE REQUESTED TO SIGN,
DATE AND PROMPTLY MAIL THE ENCLOSED [WHITE] PROXY CARD IN THE ENCLOSED ENVELOPE
WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES. IF YOU ATTEND THE
ANNUAL MEETING, YOU MAY VOTE IN PERSON IF YOU WISH, EVEN IF YOU HAVE PREVIOUSLY
RETURNED YOUR PROXY CARD.
<PAGE>
LITTLE SWITZERLAND, INC.
161-B Crown Bay Cruise Ship Port
St. Thomas, U.S.V.I. 00804
(809) 776-2010
-----------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
-------------------------------
To Be Held on Friday, January 16, 1998
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of Little
Switzerland, Inc. (the "Company") will be held on Friday, January 16, 1998, at
10:30 a.m., local time, at [____________________________] (the "Annual Meeting")
for the purpose of considering and voting upon:
1. The election of two Class III Directors each for a three-year term; and
2. Such other business as may properly come before the Annual Meeting and
any adjournments or postponements thereof.
The Board of Directors has fixed the close of business on December 10, 1997
as the record date for determination of stockholders entitled to notice of and
to vote at the Annual Meeting and any adjournments or postponements thereof.
Only holders of common stock of record at the close of business on that date
will be entitled to notice of and to vote at the Annual Meeting and any
adjournments or postponements thereof.
In the event there are not sufficient votes with respect to the foregoing
proposals at the time of the Annual Meeting, the Annual Meeting may be adjourned
in order to permit further solicitation of proxies.
By Order of the Board of Directors
Richard E. Floor
Secretary
St. Thomas, U.S.V.I.
_____________, 1997
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING IN PERSON, YOU ARE
REQUESTED TO SIGN, DATE AND PROMPTLY MAIL THE ENCLOSED [WHITE] PROXY CARD IN THE
ENCLOSED ENVELOPE WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES. IF
YOU ATTEND THE ANNUAL MEETING, YOU MAY VOTE IN PERSON IF YOU WISH, EVEN IF YOU
HAVE PREVIOUSLY RETURNED YOUR PROXY CARD. IF YOU HAVE ANY QUESTIONS OR NEED
ASSISTANCE, PLEASE CALL D.F. KING & CO., INC., WHICH IS ASSISTING US, TOLL FREE
AT (800) ___-____.
<PAGE>
LITTLE SWITZERLAND, INC.
161-B Crown Bay Cruise Ship Port
St. Thomas, U.S.V.I. 00804
(809) 776-2010
------------
PROXY STATEMENT
------------
ANNUAL MEETING OF STOCKHOLDERS
To Be Held on Friday, January 16, 1998
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Little Switzerland, Inc., a corporation
incorporated under the laws of the state of Delaware on May 23, 1991 (the
"Company"), for use at the Annual Meeting of Stockholders of the Company to be
held on Friday, January 16, 1998, at 10:30 a.m., local time, at
[________________________________], and any adjournments or postponements
thereof (the "Annual Meeting"). Unless otherwise indicated, references to the
"Company" in this Proxy Statement include its various subsidiaries.
At the Annual Meeting, the stockholders of the Company will be asked to
consider and vote upon the following matters:
1. The election of two Class III Directors each for a three-year term, each
such term to continue until the 2000 annual meeting and until each
Director's successor is duly elected and qualified; and
2. Such other business as may properly come before the Annual Meeting and
any adjournments or postponements thereof.
The Notice of Annual Meeting, Proxy Statement and Proxy Card are first
being mailed to stockholders of the Company on or about [____________], 1997 in
connection with the solicitation of proxies for the Annual Meeting. The Board of
Directors has fixed the close of business on December 10, 1997 as the record
date for the determination of stockholders entitled to notice of and to vote at
the Annual Meeting (the "Record Date"). Only holders of the Company's common
stock, par value $.01 per share ("Common Stock") of record at the close of
business on the Record Date will be entitled to notice of and to vote at the
Annual Meeting. As of the Record Date, there were [________] shares of the
Company's Common Stock outstanding and entitled to vote at the Annual Meeting.
Each holder of a share of Common Stock outstanding as of the close of business
on the Record Date will be entitled to one vote for each share held of record
for each matter properly submitted at the Annual Meeting.
The presence, in person or by proxy, of a majority of the total number of
outstanding shares of Common Stock is necessary to constitute a quorum for the
transaction of business at the Annual Meeting. A quorum being present, the
affirmative vote of a plurality of the votes cast is necessary to elect a
nominee as a Director of the Company and the affirmative vote of a majority of
the shares of stock voting on a matter is necessary to approve any proposal
presented at the meeting. Shares that reflect abstentions or "broker non-votes"
(i.e., shares represented at the meeting held by brokers or nominees as to which
instructions have not been received from the beneficial owners or persons
entitled to vote such shares and with respect to which the broker or nominee
does not have discretionary voting power to vote such shares) will be counted
for purposes of determining whether a quorum is present for the transaction of
business at the meeting. In addition, abstentions
<PAGE>
will be treated as votes cast against a particular proposal while broker
non-votes will have no impact on the outcome of the vote on a particular
proposal. With respect to the election of Directors, votes may only be cast in
favor of or withheld from the nominee; there is no ability to abstain. In
addition, broker non-votes will have no effect on the outcome of the election of
Directors.
Stockholders of the Company are requested to sign, date and promptly mail
the accompanying [White] Proxy Card in the enclosed envelope. Common Stock
represented by properly executed proxies received by the Company and not revoked
will be voted at the Annual Meeting in accordance with the instructions
contained therein. If instructions are not given therein, properly executed
proxies will be voted "FOR" the election of the two nominees for Director listed
in this Proxy Statement. It is not anticipated that any matters other than the
election of Directors will be presented at the Annual Meeting. If other matters
are presented, proxies will be voted in accordance with the discretion of the
proxy holders.
Any properly completed proxy may be revoked at any time before it is voted
on any matter (without, however, affecting any vote taken prior to such
revocation) by giving written notice of such revocation to the Secretary of the
Company, or by signing and duly delivering a proxy bearing a later date, or by
attending the Annual Meeting and voting in person.
The Annual Report of the Company, including financial statements for the
fiscal year ended May 31, 1997 ("Fiscal 1997") is being mailed to stockholders
of the Company concurrently with this Proxy Statement. The Annual Report,
however, is not a part of the proxy solicitation material.
PROPOSAL NUMBER 1
ELECTION OF DIRECTORS
The Board of Directors of the Company consists of six members and is
divided into three classes, with two Directors in each class. Directors serve
for three-year terms, with one class of Directors being elected by the Company's
stockholders at each annual meeting.
At the Annual Meeting, two Class III Directors will be elected to serve
until the 2000 annual meeting and until their successors are duly elected and
qualified. The Board of Directors has nominated C. William Carey and John E.
Toler, Jr. (the "Board's Nominees") for re-election as Class III Directors.
Unless otherwise specified in the proxy, it is the intention of the persons
named in the proxy to vote the shares represented by each properly executed
proxy for the re-election of Mr. Carey and Mr. Toler as Directors. Each of the
Board's Nominees has agreed to stand for re-election and to serve if re-elected
as a Director. However, if any of the persons nominated by the Board of
Directors fails to stand for re-election or is unable to accept re-election, the
proxies will be voted for the election of such other person or persons as the
Board of Directors may recommend.
Vote Required For Approval
A quorum being present, the affirmative vote of a plurality of the votes
cast is necessary to elect a Board's Nominee as a Director of the Company.
The Board of Directors of the Company recommends that the Company's
stockholders vote FOR the re-election of the Board's Nominees, C. William Carey
and John E. Toler, Jr., as Directors of the Company.
2
<PAGE>
INFORMATION REGARDING DIRECTORS
The Board of Directors of the Company held [nine (9)] meetings during
Fiscal 1997. During Fiscal 1997, each of the incumbent Directors attended at
least 75% of the total number of meetings of the Board and of the committees of
which he or she was a member. The Board of Directors has established an Audit
Committee, a Compensation Committee and an Investment Committee in order to
assist it in discharging its duties. Members of all committees are outside
directors. The members of the Audit Committee are Ms. Jacobs and Messrs. Correra
and Donaldson. The Audit Committee reviews the financial statements of the
Company and the scope of the annual audit, monitors the Company's internal
financial and accounting controls and recommends to the Board of Directors the
appointment of independent certified public accountants. The Audit Committee met
[one] time during Fiscal 1997. The members of the Compensation Committee are
Messrs. Carey and Donaldson and Ms. Jacobs. The Compensation Committee
recommends the compensation levels of officers and employees of the Company to
the Board of Directors and is responsible for administering the Company's stock
option plans pursuant to authority delegated to it by the Board of Directors.
The Compensation Committee met [one] time during Fiscal 1997. The members of the
Investment Committee are Messrs. Correra and Carey. The Investment Committee is
responsible for reviewing and presenting to the Board of Directors strategic
alternatives available to the Company. The Investment Committee met [nine (9)]
times during Fiscal 1997. The Board of Directors does not maintain a nominating
committee. Instead, its functions are carried out by the entire Board of
Directors.
Directors who are officers or employees of the Company receive no
compensation for service as Directors. Directors who are not officers or
employees of the Company receive such compensation for their services as the
Board of Directors may from time to time determine. Non-employee Directors each
receive an annual retainer of $5,000, plus a fee of $2,500 for each Board of
Directors meeting attended ($500 if such meeting is held via telephone
conference) and $1,000 for each committee meeting attended ($500 if such meeting
is held via telephone conference) if such meeting does not take place in
conjunction with a regularly scheduled Board of Directors meeting. All Directors
are reimbursed for expenses incurred in connection with attendance at meetings.
In order to align stockholder and director interests, in 1992 the Board of
Directors established the 1992 Non-Employee Directors' Nonqualified Stock Option
Plan (the "1992 Option Plan"). Pursuant to the 1992 Option Plan, each eligible
non-employee Director automatically receives an option to purchase 3,000 shares
of Common Stock on the last day of the Company's fiscal year. All options
granted pursuant to the 1992 Option Plan vest and are immediately exercisable
upon grant. All options granted under the 1992 Option Plan have an exercise
price equal to 100% of the fair market value of a share of Common Stock on the
grant date. On May 31, 1997, the eligible non-employee Directors of the Company
each received an option to purchase 3,000 shares of Common Stock at an exercise
price of $4.50 per share, the fair market value of the Common Stock on May 30,
1997.
Set forth below is certain information regarding the Directors of the
Company as of November 1, 1997, including the two Class III Directors who have
been nominated for re-election at the Annual Meeting, based on information
furnished by them to the Company.
Name Age Director Since
- ---- --- --------------
Class I-Term Expires 1998
Francis X. Correra................... 59 1991
Ilene B. Jacobs...................... 50 1991
3
<PAGE>
Name Age Director Since
- ---- --- --------------
Class II-Term Expires 1999
Timothy B. Donaldson................. 63 1991
Kenneth W. Watson.................... 54 1991
Class III-Term Expires 1997
C. William Carey*.................... 60 1991
John E. Toler, Jr.*.................. 54 1995
- ----------------------------------
* Board's Nominee for re-election.
The principal occupation and business experience during at least the last
five years for each Director of the Company is set forth below.
CLASS III DIRECTORS - NOMINEES FOR RE-ELECTION
Mr. Carey is Chairman of the Board of Directors of the Company. Since
January 1997, Mr. Carey has been President of Carey Associates, Inc., a company
engaged in international marketing and finance, management consulting and
Russian business development. From 1965 through January 3, 1997, he served as
Chairman, Chief Executive Officer, President and Treasurer of Town & Country
Corporation, which was the sole shareholder of the Company prior to the public
offering of approximately 68% of the Company's Common Stock in July 1991. Town &
Country Corporation is a public company specializing in the international
design, manufacture and distribution of jewelry. Mr. Carey is also a Director of
Prospect Street High Income Portfolio, Inc. and Solomon Brothers, Limited.
Mr. Toler has served as President and Chief Executive Officer and a
Director of the Company since November 1, 1995. Prior to joining the Company,
Mr. Toler was Director of Merchandising of Trimingham's, Bermuda, from May 1995
through October 1995 and President and Chief Executive Officer of Sage-Dey, Inc.
from August 1991 to May 1993. From October 1990 through July 1991, Mr. Toler was
President and Chief Executive Officer of Sage-Allen, Inc. Mr. Toler was a
15-year employee of May Department Stores Company where he served as President
and Chief Executive Officer of several regional department store divisions. Mr.
Toler has been President and Chief Executive Officer of prestigious retail
companies for 14 years of his 30 years in the retail trade and has been an
active participant in numerous retail associations. In the past, Mr. Toler has
served on the Board of Directors of Norwest Midland Bank and the Fund For The
Arts and Convention Bureau. Also, Mr. Toler has been a past sponsor/counselor to
Explorer Groups and has volunteered to assist with Habitat for Humanity Housing
Projects.
CLASS I AND CLASS II DIRECTORS - CONTINUING DIRECTORS
Mr. Correra has been President of Town & Country Fine Jewelry Group since
July 1996. Town & Country Fine Jewelry Group is a wholly-owned subsidiary of
Town & Country Corporation, specializing in the international design,
manufacture and distribution of jewelry. Prior to such time, Mr. Correra served
as Senior Vice President and Chief Financial Officer of Town & Country
Corporation since 1983.
Mr. Donaldson has been Chairman and Chief Executive Officer of Dynamo M.
Ltd., an investment trading company, since 1995. Presently, Mr. Donaldson is
also Chairman of the Bahamas Securities and Exchange Commission. He has been
Ambassador to the United States, Government of the Bahamas (1993 to 1995);
Chairman, Bank of Montreal (Bahamas & Caribbean Ltd.) (1980 to 1983); Governor,
the Central Bank of The Bahamas (1968 to 1980); Governor, International Monetary
Fund (1974 to 1980); Governor, The World Bank (1974 to 1980); and Governor,
Caribbean Development Bank (1975 to 1980).
4
<PAGE>
Ms. Jacobs is Vice President of Human Resources of Digital Equipment
Corporation, a publicly held corporation which specializes in computer systems,
software, networks and integration services. From 1986 to 1996, she served as
Vice President and Treasurer of Digital Equipment Corporation. Ms. Jacobs
currently serves as a Director of Arkwright Mutual Insurance Company and AmerUs
Life Holdings, Inc.
Mr. Watson served as Chief Executive Officer and President of the Company
from January 1, 1994 to October 21, 1994, and has been a Director since 1991.
Since October 1996, Mr. Watson has served as Vice President-Marketing of the New
York Times Magazine Group, Inc., a subsidiary of the New York Times Company. Mr.
Watson served as Executive Vice President of KMart Corporation from October 1994
through March 1996. Mr. Watson was President of Louis Vuitton Stores, Inc. from
July 1992 to March 1993. Previously, he was Chairman and Chief Executive Officer
of Gump's, a retailer of jewelry, art and gift items from September 1989 to June
1992 and President and Chief Executive Officer of Cartier, Inc. from 1985 to
September 1989.
EXECUTIVE OFFICERS
The names and ages of all executive officers of the Company and the
principal occupation and business experience during at least the last five years
for each are set forth below as of November 1, 1997.
<TABLE>
<CAPTION>
Name Age Position
---- --- --------
<S> <C> <C>
John E. Toler, Jr................................... 54 Chief Executive Officer and President
Thomas S. Liston.................................... 59 Chief Financial Officer, Vice President and Treasurer
William Canfield.................................... 50 Vice President of Store Operations
</TABLE>
Mr. Toler has served as President and Chief Executive Officer and a
Director of the Company since November 1, 1995. Prior to joining the Company,
Mr. Toler was Director of Merchandising of Trimingham's, Bermuda, from May 1995
through October 1995 and President and Chief Executive Officer of Sage-Dey, Inc.
from August 1991 to May 1993. From October 1990 through July 1991, Mr. Toler was
President and Chief Executive Officer of Sage-Allen, Inc. Mr. Toler was a
15-year employee of May Department Stores Company where he served as President
and Chief Executive Officer of several regional department store divisions. Mr.
Toler has been President and Chief Executive Officer of prestigious retail
companies for 14 years of his 30 years in the retail trade and has been an
active participant in numerous retail associations. In the past, Mr. Toler has
served on the Board of Directors of Norwest Midland Bank in Minneapolis, MN, and
has served on the Board of Directors of the Fund For The Arts and Convention
Bureau in Charleston, West Virginia. Also, Mr. Toler has been a past
sponsor/counselor to Explorer Groups and has volunteered to assist with Habitat
for Humanity Housing Projects.
Mr. Liston joined the Company on September 29, 1997 and will become its new
Chief Financial Officer, Vice President and Treasurer, effective no later than
October 31, 1997. From January 1991 to February 1997, Mr. Liston was with
Barry's Jewelers, Inc., with his most recent position being Vice Chairman, Chief
Financial Officer, Secretary and Treasurer. Prior to his tenure with Barry's,
Mr. Liston was Executive Vice President, Chief Financial Officer of Crescent
Jewelers Inc. for two years and Executive Vice President, Chief Operating
Officer of Gumps in San Francisco for six years. In all, Mr. Liston has
thirty-three years of retail executive experience.
5
<PAGE>
Mr. Canfield has been Vice President of Store Operations since June 1994.
In that position, he has been responsible for store operations, new store
development and strengthening Little Switzerland's position in jewelry
throughout its stores. Mr. Canfield was Managing Director of Colombian Emeralds
International from December 1979 to June 1994. In the past, he served as the
President of the St. Thomas Retail Association for two years.
Each of the officers holds his respective office until the regular annual
meeting of the Board of Directors following the annual meeting of stockholders
and until his successor is elected and qualified or until his earlier
resignation or removal.
Mr. Lataille served as Chief Financial Officer, Vice President and
Treasurer of the Company from May 1991 through October 31, 1997. From October
21, 1994 through October 31, 1995, Mr. Lataille also served as the acting Chief
Executive Officer and President of the Company. He was Controller of the Company
from May 1990 to May 1991. Prior to joining the Company, he was an Audit Manager
with Coopers & Lybrand from January 1990 to May 1990 and an Audit Supervisor
from January 1987 to January 1990. Mr. Lataille resigned from the Company,
effective October 31, 1997.
Denis X. Comment served as Senior Vice President of Merchandise of the
Company from 1994 through August 31, 1997 and, prior to such time, served as
Vice President of Merchandise of the Company since 1987. Mr. Comment was a buyer
of watches and jewelry and a supervisor of crystal, china and perfume buyers for
the Company from 1986 to 1987 and a store manager from 1980 through 1985. Mr.
Comment resigned from the Company, effective August 31, 1997.
EXECUTIVE COMPENSATION
The following sections of this Proxy Statement set forth and discuss the
compensation paid or awarded during the last three years to the Company's Chief
Executive Officer and the four most highly compensated executive officers who
earned in excess of $100,000 during Fiscal 1997.
Summary Compensation Table
The following table shows for the fiscal years ended May 31, 1995, June 1,
1996 and May 31, 1997 compensation paid by the Company to the Chief Executive
Officer and the four most highly compensated executive officers who earned in
excess of $100,000 during Fiscal 1997.
<TABLE>
<CAPTION>
Annual Compensation Long Term Compensation
-------------------------------------------- --------------------------------------
Awards Payouts
---------------------------- -------
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Other Annual Restricted Securities LTIP All Other
Name and Compensation Stock Award(s) Underlying Payouts Compensation
Principal Position Year Salary($) Bonus($) ($) ($) Options (#) ($) ($)
- ------------------ ---- --------- -------- --------------- -------------- ------------ ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
John E. Toler, Jr. 1997 $300,000 - $3,000(5) - - - $519(10)
President and Chief 1996 $177,804 $50,000 $1,750(6) - 300,000(8) - -
Executive Officer(1) 1995 - - - - - - -
Ronald J. Lataille 1997 $150,000 $44,202(3) - - - - -
President and Chief 1996 $110,000 $70,000(4) $1,250(7) - - - -
Executive Officer, 1995 $110,000 $15,000 $1,750(6) - 75,000(9) - -
Chief Financial Officer
and Vice President (2)
Denis X. Comment 1997 $165,000 - - - - - $3,894(10)
Senior Vice President 1996 $150,000 $15,000 - - - - $4,335(11)
of Merchandise 1995 $136,538 $10,000 - - 75,000(9) - -
William Canfield 1997 $173,000 - - - - - -
Vice President of 1996 $156,327 $15,000 - - - - -
Store Operations 1995 $141,923 $55,000 - - 60,000 - -
</TABLE>
6
<PAGE>
- -------------------
(1) Mr. Toler was appointed Chief Executive Officer and President on November
1, 1995.
(2) Mr. Lataille resigned as the acting Chief Executive Officer and President
of the Company on October 31, 1995, and resigned as Chief Financial Officer
and Vice President of the Company on October 31, 1997.
(3) Mr. Lataille was awarded a bonus of $44,202 as compensation for certain
specific services to the Company performed in Fiscal 1996.
(4) Mr. Lataille was awarded a bonus of $50,000 as compensation for his
services to the Company as its acting President and Chief Executive Officer
from October 21, 1994 to October 31, 1995.
(5) This amount represents the cost to the Company for one year of certain
automobile allowances.
(6) This amount represents the cost to the Company for seven months of certain
automobile allowances.
(7) This amount represents the cost to the Company for five months of certain
automobile allowances.
(8) In connection with his appointment as President and Chief Executive Officer
of the Company, the Company granted Mr. Toler an option to purchase 300,000
shares of the Company's Common Stock pursuant to the Little Switzerland,
Inc. 1991 Stock Option Plan (the "1991 Option Plan").
(9) In connection with the December 21, 1994 grant of an option to purchase
75,000 shares of the Company's Common Stock pursuant to the 1991 Option
Plan, the Company canceled an option to purchase 25,000 shares of the
Company's Common Stock that was granted on November 6, 1992 pursuant to the
1991 Option Plan.
(10) Effective June 1, 1996, the Company replaced its tax-qualified
discretionary contribution retirement plan (the "Retirement Plan") with a
401(k) Plan under which the Company matches each employee's contribution up
to 3% of compensation. In Fiscal 1997, the Company contributed $519 and
$3,894 to individual accounts maintained on behalf of Mr. Toler and Mr.
Comment, respectively, pursuant to the 401(k) Plan.
(11) The Company contributed $4,335 to the Retirement Plan on behalf of Mr.
Comment in Fiscal 1996. As of May 31, 1997, the total amount of
contributions made by the Company to Mr. Comment's account pursuant to the
Retirement Plan was $11,767. The Company made no contributions to the
Retirement Plan on behalf of Mr. Comment in Fiscal 1997 or Fiscal 1995.
Aggregated Option Exercises in Last Fiscal Year and Fiscal Year End Values
The following table sets forth the shares acquired and the value realized
upon exercise of stock options during Fiscal 1997 by the Chief Executive Officer
and each other executive officer named in the Summary Compensation Table and
certain information concerning the number and value of unexercised options.
<TABLE>
<CAPTION>
(a) (b) (c) (d) (e)
Value of Unexercised
Number of Securities In-the-Money
Underlying Unexercised Options at
Options at FY-End(#) FY-End($)(1)
Shares Acquired on Value -------------------------- --------------------------
Name Exercise(#) Realized($) Exercisable Unexercisable Exercisable Unexercisable
------------------ ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
John E. Toler, Jr............ - - 60,000 240,000 $60,000 $240,000
Ronald J. Lataille........... - - 63,500 30,000 - -
Denis X. Comment............. - - 71,000 30,000 - -
William Canfield............. - - 18,500 41,500 - -
</TABLE>
- ------------------
(1) Equal to the market value of shares covered by in-the-money options on May
31, 1997 (based on the market value of $4.50 per share as reported by the
NASDAQ National Market as of May 30, 1997) less the aggregate option
exercise price. Options are in-the-money if the market value of the shares
covered thereby is greater than the option exercise price.
7
<PAGE>
Report of the Compensation Committee of the Board of Directors on Executive
Compensation
The Compensation Committee of the Board of Directors of the Company
consists of C. William Carey, Timothy B. Donaldson and Ilene B. Jacobs, all of
whom are outside directors. The Compensation Committee approves Company
compensation policies and procedures and establishes compensation levels for
executive officers. The Compensation Committee also administers and grants
awards under the 1991 Option Plan and the Company's Employee Stock Purchase
Plan.
Compensation Policies for Executive Officers
The Compensation Committee's executive compensation philosophy is to
provide competitive levels of compensation, integrate management's pay with
Company performance, reward above average individual performance, and assist the
Company in attracting and retaining qualified management. The Compensation
Committee has determined that base salaries of executive officers should be set
at levels that are competitive within the local retail industry. In addition,
the Compensation Committee believes that it is appropriate to reward outstanding
performance through a combination of cash bonuses and stock option grants and,
through stock option grants, to provide a competitive compensation package that
will enable the Company to attract and retain the executives needed to achieve
such performance. The Compensation Committee also has determined that any stock
option or other equity-based compensation should involve long-term vesting to
encourage long-term tenure and enhancement of shareholder value over the
long-term.
Base salaries for executive officers are targeted according to the salaries
of employees holding similar offices and having similar responsibilities within
the local retail industry. The Compensation Committee also considers the
relative cost of living within the United States Virgin Islands. Annual salary
adjustments for executive officers are determined by evaluating the competitive
marketplace, the performance of the Company, the performance of the executive
officer and any change in the responsibilities assumed by the executive officer.
Salary adjustments are normally determined and made on an annual basis.
The base salary and salary adjustments for John E. Toler, Jr., President
and Chief Executive Officer since November 1, 1995, and William Canfield, Vice
President of Store Operations since June 16, 1994, were established pursuant to
their respective employment agreements, as described below under "Employment
Agreements." See "--Compensation of the Chief Executive Officer" below. The
terms of employment of Ronald J. Lataille, the Chief Financial Officer, Vice
President and Treasurer of the Company as of the end of Fiscal 1997, were
determined by the Compensation Committee and approved by the Board of Directors.
Cash bonuses paid to executive officers generally are earned primarily
through the achievement of financial goals relative to each officer's
responsibilities. Such financial goals include targeted sales and profit levels,
earnings before interest and taxes ratios, selling, general and administrative
expense ratios, return on assets, inventory shrinkage and inventory turns.
Executive officers generally are eligible to earn up to 25% of their base
salaries in cash bonuses. Based upon the foregoing criteria, neither Mr.
Lataille nor Mr. Comment received any bonus for Fiscal 1997 performance. Cash
bonuses may also be paid to executive officers in accordance with the terms of
their employment agreements. Bonuses payable pursuant to such agreements
generally are earned through the achievement of the financial goals similar to
those discussed above and may also be awarded for executive retention purposes
in the sole discretion of the Compensation Committee. Pursuant to their
respective employment contracts, Messrs. Toler and Canfield were each eligible
to earn a bonus of up to 37.22% and 25%, respectively, of their respective base
salaries for Fiscal 1997. Based upon the performance of the Company for Fiscal
1997, neither Mr. Toler nor Mr. Canfield received any bonus. See "--Compensation
of the Chief Executive Officer" and "Employment Agreements" below. Occasionally,
cash bonuses are paid to executive officers for the performance of services to
the Company outside the scope of their offices, as determined by the
Compensation Committee of the Board of Directors of the Company.
8
<PAGE>
Stock options are designed to attract and retain executives who can make
significant contributions to the Company's success; reward executives for such
significant contributions; and give executives a longer-term incentive to
increase shareholder value. In determining whether to grant stock options to
executive officers, the Compensation Committee evaluates each officer's
performance by examining criteria similar to that involved in fixing cash
bonuses (but without any specific performance measures) and awards reflect
individual performance reviews. The Compensation Committee also may grant stock
options for executive retention purposes, taking into account, among other
things, general industry practice. Stock options typically vest over three to
five years in order to encourage outstanding performance over the long-term.
Historically, stock options generally have been granted with a ten-year term and
an exercise price equal to 100% of the fair market value of the Common Stock on
the grant date.
Compensation of John E. Toler, Jr., Chief Executive Officer
The base salary and bonus for Mr. Toler, the Company's President and Chief
Executive Officer since November 1, 1995, were established by Mr. Toler's
employment agreement. See "Employment Agreements" below. During Fiscal 1997,
there were no adjustments made to Mr. Toler's base salary, and he received no
cash bonus, in accordance with the terms of his employment agreement.
Additionally, pursuant to the terms of Mr. Toler's employment agreement, the
Company granted Mr. Toler on November 1, 1995 an option to purchase 300,000
shares of the Company's Common Stock at $3.50 per share pursuant to the 1991
Option Plan. This option vests and becomes exercisable ratably over a five-year
period beginning on November 1, 1996.
Federal Tax Regulations
As a result of Section 162(m) of the Internal Revenue Code (the "Code"),
the Company's deduction of executive compensation may be limited to the extent
that a "covered employee" (i.e., the chief executive officer or one of the four
highest compensated officers who is employed on the last day of the Company's
taxable year and whose compensation is reported in the summary compensation
table in the Company's proxy statement) receives compensation in excess of
$1,000,000 in such taxable year of the Company (other than performance-based
compensation that otherwise meets the requirements of Section 162(m) of the
Code). The Company intends to take appropriate action to comply with such
regulations, if applicable, in the future.
C. William Carey Ilene B. Jacobs Timothy B. Donaldson
Compensation Committee Interlocks and Insider Participation
Mr. Carey, a member of the Compensation Committee and Chairman of the Board
of Directors of the Company, is the controlling stockholder of Town & Country
Corporation ("Town & Country") and was President, Chief Executive Officer and
Chairman of the Board of Town & Country until January 3, 1997. Town & Country
and certain of its subsidiaries supply the Company with jewelry. The aggregate
amount of purchases by the Company from these entities totaled approximately
$2.5 million, $1.4 million and $640,000, in Fiscal 1995, 1996 and 1997
respectively. Pursuant to written agreements among Town & Country, these
subsidiaries and the Company, Town & Country and the subsidiaries have agreed to
supply jewelry to the Company at the Company's option, on the terms and
conditions in effect prior to the Company's initial public offering. These
agreements are automatically renewed each year unless either party terminates
upon 60 days' notice prior to the end of a year. The Company believes that all
jewelry purchased pursuant to these agreements with Town & Country and its
subsidiaries can be readily purchased from other suppliers on comparable terms,
and that these agreements do not restrict the Company from purchasing from other
sources. See "Certain Relationships and Related Transactions."
On June 2, 1996, Mr. Carey entered into a consulting agreement with the
Company (the "Carey Consulting Agreement"). Pursuant to the Carey Consulting
Agreement, Mr. Carey has agreed to make himself available for
9
<PAGE>
a period of three (3) years commencing on June 2, 1996 to provide consulting
services to the Company, including, without limitation, advice with respect to
business and product planning, marketing strategy, leasing and new store
development and executive recruitment. In exchange for such services, Mr. Carey
will receive a consulting fee at the annual rate of $150,000, payable in monthly
installments. In addition, Mr. Carey is entitled to receive reimbursement for
all reasonable expenses incurred by him on behalf of the Company in connection
with the performance of his obligations thereunder.
The other members of the Compensation Committee of the Board of Directors
of the Company are Timothy B. Donaldson and Ilene B. Jacobs. Neither Mr.
Donaldson nor Ms. Jacobs has ever been an officer or employee of the Company or
has ever had any other [reportable] relationship with the Company other than
through his/her position as a Director of the Company.
Shareholder Return Performance Graph
Set forth below is a line graph comparing the yearly percentage change in
the cumulative total shareholder return on the Company's Common Stock, based on
the market price of the Company's Common Stock and assuming reinvestment of
dividends, with the total return of companies within the NASDAQ stock market and
the companies within the NASDAQ Retail Trade Stocks Index prepared by the Center
for Research in Security Prices ("CRSP") at The University of Chicago Graduate
School of Business. The calculation of total cumulative return assumes a $100
investment in the Company's Common Stock, the NASDAQ stock market and the NASDAQ
Retail Stocks Index on July 18, 1991.
[Tabular representation of stock performance graph]
Comparison of Five-Year Cumulative Total Returns
Performance Report for
Little Switzerland, Inc.
Prepared by the Center for Research in Security Prices Produced on 11/20/97
including data to 10/31/97
Company Index: CUSIP Ticker Class Sic Exchange
53752810 LSVI 5940 NASDAQ
Fiscal Year-end is 05/31/97
Market Index: Nasdaq Stock Market (US Companies)
Peer Index: Nasdaq Retail Trade Stocks
SIC 5200-5599, 5700-5799, 5900-5999 US & Foreign
Date Company Market Peer
Index Index Index
05/28/93 100.000 100.000 100.000
06/30/93 76.250 100.463 99.852
07/30/93 73.750 100.581 101.715
08/31/93 72.500 105.780 107.485
09/30/93 63.750 108.930 110.749
10/29/93 77.500 111.379 115.184
11/30/93 90.000 108.058 110.772
12/31/93 92.500 111.071 112.753
01/31/94 72.500 114.443 112.437
02/28/94 85.000 113.374 110.145
03/31/94 67.500 106.403 103.629
04/29/94 70.000 105.022 103.847
05/31/94 65.000 105.278 101.437
06/30/94 62.500 101.428 99.402
07/29/94 62.500 103.508 99.564
08/31/94 65.000 110.107 107.041
09/30/94 65.000 109.826 108.667
10/31/94 53.750 111.984 109.992
11/30/94 53.750 108.269 105.816
12/30/94 52.500 108.573 102.726
01/31/95 41.250 109.181 99.129
02/28/95 52.500 114.955 101.174
03/31/95 50.000 118.365 101.615
04/28/95 45.000 122.091 101.059
05/31/95 47.500 125.242 103.462
06/30/95 43.750 135.391 111.931
07/31/95 42.500 145.343 118.011
08/31/95 60.000 148.289 117.680
09/29/95 40.000 151.699 119.819
10/31/95 37.500 150.830 117.705
11/30/95 38.750 154.371 117.079
12/29/95 38.750 153.550 113.166
01/31/96 41.250 154.307 112.037
02/29/96 41.250 160.180 119.439
03/29/96 40.000 160.711 127.282
04/30/96 58.125 174.044 138.787
05/31/96 58.750 182.037 142.059
06/28/96 52.500 173.830 136.039
07/31/96 45.625 158.348 127.705
08/30/96 43.750 167.220 136.753
09/30/96 43.125 180.011 143.612
10/31/96 48.750 178.022 137.685
11/29/96 45.625 189.027 141.062
12/31/96 45.625 188.858 134.918
01/31/97 49.375 202.281 137.771
02/28/97 47.500 191.099 133.027
03/31/97 45.000 178.623 128.328
04/30/97 49.375 184.209 124.052
05/30/97 57.500 205.095 137.090
06/30/97 60.000 211.369 144.996
07/31/97 70.625 233.688 151.694
08/29/97 71.250 233.298 154.267
09/30/97 66.250 247.068 164.382
10/31/97 65.000 234.389 155.821
Legend
<TABLE>
<CAPTION>
Symbol CRSP Total Returns Index for: 05/28/93 05/31/94 05/31/95 05/31/96 05/30/97 10/31/97
- ------ ---------------------------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
[box graphic] Little Switzerland, Inc. 100.0 65.0 47.5 58.8 57.5 65.0
[star graphic] Nasdaq Stock Market (US Companies) 100.0 105.3 125.2 182.0 205.1 234.4
[arrow graphic] Nasdaq Retail Trade Stocks 100.0 101.4 103.5 142.1 137.1 155.8
SEC 5200-5599, 5700-5799, 5900-5999
US & Foreign
</TABLE>
Notes:
A. The lines represent monthly index levels derived from compounded daily
returns that include all dividends.
B. The indexes are reweighted daily, using the market capitalization on the
previous trading day.
C. If the monthly interval, based on the fiscal year-end, is not a trading
day, the preceding trading day is used.
D. The index level for all series was set to $100.0 on 05/28/93
10
<PAGE>
Employment Agreements
On November 1, 1995, Mr. Toler entered into an employment agreement with
the Company (the "Toler Employment Agreement"), pursuant to which Mr. Toler
serves as President and Chief Executive Officer of the Company for a five-year
term. Under the Toler Employment Agreement, Mr. Toler receives a base salary of
$300,000 over each twelve month term ending on October 31, beginning with the
term ending on October 31, 1996. The Toler Agreement does not provide for any
adjustment of base salary over the term. Pursuant to the Toler Employment
Agreement, Mr. Toler is entitled to receive a bonus if certain performance
criteria are satisfied, ranging from 33.33% of base salary for Fiscal 1996 to
50% of base salary for fiscal year 1999 and each fiscal year thereafter. In the
event Mr. Toler's employment is terminated without cause, Mr. Toler is entitled
to receive the salary plus pro rata share of any cash bonus he would have
received if he had continued his employment for 18 months following the date of
such termination. Mr. Toler is subject to certain non-competition provisions
during the term of his employment and, in certain circumstances, for a period of
18 months subsequent to his leaving the Company.
On June 16, 1994, Mr. Canfield entered into an employment agreement with
the Company (the "Canfield Employment Agreement"), pursuant to which Mr.
Canfield serves as the Vice President of Store Operations of the Company for a
five-year term. Under the Canfield Employment Agreement, Mr. Canfield receives a
base salary ranging from $165,000 over the twelve-month term ending on June 15,
1997 to $182,000 over the twelve-month term ending on June 15, 1999, and upon
the achievement of certain financial performance criteria, a bonus in an amount
of up to 25% of his base salary in each year. Pursuant to the Canfield
Employment Agreement, Mr. Canfield received a signing bonus equal to $50,000 on
the date he became Vice President of Store Operations of the Company. In the
event Mr. Canfield's employment is terminated due to his disability, for
non-performance or without cause, Mr. Canfield is entitled to receive the salary
he would have received had he continued his employment for 60 days, 90 days or
12 months, respectively, following the date of such termination. Mr. Canfield is
subject to certain non-competition provisions during the term of his employment
and, in certain circumstances, for a period of up to one year subsequent to his
leaving the Company.
Change-in-Control Agreements
Messrs. Lataille and Comment have each entered into Change-in-Control
Agreements (the "Change-in-Control Agreements") with the Company. Each
Change-in-Control Agreement provides that in the event of a "Termination Event"
(as defined in the Change-in-Control Agreements, and generally any termination
of employment (a) for any reason other than death or "For Cause" (as defined in
the Change-in-Control Agreements), or (b) by the executive subsequent to the
occurrence of a 10% reduction in the executive's annual base salary) subsequent
to a "Significant Event" (as defined in the Change-in-Control Agreements, and
generally a change in control, sale or other disposition of all or substantially
all of the assets, or liquidation or dissolution of the Company), the following
benefits will be provided: a monthly cash payment beginning 30 days after the
date of the Termination Event equal to one twenty-fourth (1/24th) of an
aggregate amount equal to two times the sum of the executive's highest annual
base salary paid at any time during the twenty-four months prior to the
Termination Event plus the amount of any bonuses paid during the previous fiscal
year; such monthly payment to be paid for a period of 24 months if the
Termination Event occurs within 1 year after a Significant Event or for a period
of 12 months if the Termination Event occurs any time after 1 year subsequent to
the Significant Event. A change in control is deemed to have occurred if, in the
event of certain tender offers, mergers, consolidations, sale of assets,
contested elections or other transactions in which the Company is acquired, (a)
directors of the Company before the transaction cease to constitute a majority
of the Board of Directors of the Company (or of any successor entity); (b) the
Company is not the surviving corporation; or (c) the stockholders of the Company
immediately prior to such transaction do not hold immediately after such
transaction a majority in the aggregate of the outstanding common shares of the
surviving entity. Mr. Lataille's Change-in-Control Agreement terminated upon his
voluntary resignation from the Company on October 31, 1997, in accordance with
the terms of such agreement.
11
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Mr. Carey, a Director and Chairman of the Board of Directors of the
Company, is the controlling stockholder of Town & Country and was Chairman,
President, Chief Executive Officer of Town & Country until January 3, 1997.
Prior to the consummation of Town & Country's recapitalization on May 14, 1993
(the "Recapitalization"), Switzerland Holding, Inc., a wholly-owned subsidiary
of Town & Country ("Switzerland Holding"), owned 2,700,000 shares of the
Company's Common Stock (approximately 32.0% of the issued and outstanding Common
Stock at that time). In connection with the consummation of the
Recapitalization, Switzerland Holding was dissolved and 2,533,279 shares of such
stock were transferred to a trust (the "Trust") established for the benefit of
Town & Country and the holders of Town & Country's Exchangeable Preferred Stock
(the "Town & Country Exchangeable Preferred Stock"). Generally, each holder of a
share of Town & Country Exchangeable Preferred Stock may exchange such share for
one share of the Company's Common Stock held in the Trust. On April 6, 1993,
Town & Country exercised its rights under a Registration Rights Agreement and
requested that the Company file with the Securities and Exchange Commission (the
"SEC") a registration statement covering the shares of the Company's Common
Stock currently held in the Trust. In accordance with the terms of the
Registration Rights Agreement, the Company caused such shares to be registered
with the SEC. In November 1994, holders of an aggregate of 2,381,038 shares of
Town & Country Exchangeable Preferred Stock exercised their right to exchange
such shares for shares of the Company's Common Stock on a share-for-share basis.
On October 22, 1997, Mr. Carey exercised his right to exchange 25,000 shares of
Town & Country Exchangeable Preferred Stock, which he purchased on June 9, 1994
for $7.1875 per share, for 25,000 shares of the Company's Common Stock.
Accordingly, the Trust currently holds 127,241 shares of the Company's Common
Stock for the benefit of Town & Country and the holders of Town & Country
Exchangeable Preferred Stock.
In addition to Mr. Carey, Mr Correra is President of Town & Country Fine
Jewelry Group and was Senior Vice President and Chief Financial Officer of Town
& Country from 1983 through June 1996. Town & Country and certain of its
subsidiaries supply the Company with jewelry. The aggregate amount of purchases
by the Company from these entities totaled approximately $2.5 million, $1.4
million and $640,000 in Fiscal 1995, 1996 and 1997 respectively. Pursuant to
written agreements among Town & Country, these subsidiaries and the Company,
Town & Country and the subsidiaries have agreed to supply jewelry to the Company
at the Company's option, on the terms and conditions in effect prior to the
Company's initial public offering. These agreements are automatically renewed
each year unless either party terminates upon 60 days' notice prior to the end
of a year. The Company believes that all jewelry purchased pursuant to these
agreements with Town & Country and its subsidiaries can be readily purchased
from other suppliers on comparable terms, and that these agreements do not
restrict the Company from purchasing from other sources.
Mr. Carey, a Director of the Company, is also a Director of Solomon
Brothers, Limited, the Company's franchisee which operates eight (8) stores in
the Bahamas under a Franchise Agreement with the Company. In addition, Mr. Carey
entered into the Carey Consulting Agreement with the Company on June 2, 1996,
which provides, among other things, that Mr. Carey will receive in exchange for
certain services a consulting fee at the annual rate of $150,000 over a three
(3) year term. See "Executive Compensation--Compensation Committee Interlocks
and Insider Participation."
12
<PAGE>
PRINCIPAL AND MANAGEMENT STOCKHOLDERS
Beneficial Ownership
The following table sets forth, to the best knowledge and belief of the
Company, certain information regarding the beneficial ownership of the Company's
Common Stock as of November 1, 1997 by (i) each person known by the Company to
be the beneficial owner of more than 5% of the outstanding Common Stock, (ii)
each of the Company's Directors, (iii) each of the named executive officers in
the Summary Compensation Table and (iv) all of the Company's executive officers
and Directors as a group.
<TABLE>
<CAPTION>
Directors, Executive Officers Shares Beneficially Percent of
and 5% Stockholders Owned(1) Class(2)
----------------------------- ------------------- -----------
<S> <C> <C>
Franklin Advisory Services, Inc...................................... 1,143,000(3) 12.9%
One Parker Plaza, Sixteenth Floor, Fort Lee, NJ 07024
Franklin Resources, Inc.
Charles B. Johnson
Rupert H. Johnson, Jr.
777 Mariners Island Boulevard, San Mateo, CA 94404
ValueVest Partners L.P............................................... 837,400(4) 9.4%
1 Sansome Street, 39 Floor, San Francisco, CA 94104
Donald L. Sturm
3033 East First Avenue, Suite 200, Denver, CO 80206
Heartland Advisors, Inc.............................................. 665,000(5) 7.5%
790 North Milwaukee Street, Milwaukee , WI 53202
The TCW Group, Inc................................................... 627,600(6) 7.1%
Robert Day
865 South Figueroa Street, Los Angeles, CA 90017
T. Rowe Price Associates, Inc........................................ 431,100(7) 4.9%
T. Rowe Price New Horizons Fund, Inc.
100 E. Pratt Street, Baltimore, MD 21202
Kenneth S. Hackel.................................................... 431,000(8) 4.9%
11 Marcotte Lane, Tenafly, NJ 07670
William Canfield..................................................... 33,000(9) *
C. William Carey..................................................... 55,000(10) *
Denis X. Comment..................................................... 87,459(11) *
Francis X. Correra................................................... 30,000(12) *
Timothy B. Donaldson................................................. 21,000(13) *
Ilene B. Jacobs...................................................... 30,000(14) *
Ronald J. Lataille................................................... 79,468(15) *
John E. Toler, Jr.................................................... 120,000(16) *
Kenneth W. Watson.................................................... 27,000(17) *
All directors and executive officers as a group (9 persons) 482,927 5.4%
</TABLE>
- --------------------------
* Less than 1%.
13
<PAGE>
(1) Beneficial share ownership is determined pursuant to Rule 13d-3 under the
Exchange Act. Accordingly, a beneficial owner of a security includes any
person who, directly or indirectly, through any contract, arrangement,
understanding, relationship or otherwise has or shares the power to vote
such security or the power to dispose of such security. The amounts set
forth as beneficially owned include shares owned, if any, by spouses and
relatives living in the same home as to which beneficial ownership may be
disclaimed. The amounts set forth as beneficially owned include shares of
Common Stock which such Directors or officers had the right to acquire
within 60 days of November 1, 1997 under options previously granted
pursuant to the 1991 Option Plan and the 1992 Option Plan.
(2) Percentages are calculated on the basis of 8,867,859 shares of stock
outstanding as of November 1, 1997, which includes 88,000 shares subject to
options exercisable within 60 days of November 1, 1997 granted pursuant to
the 1992 Option Plan, and 317,500 shares subject to options exercisable
within 60 days of November 1, 1997 granted pursuant to the 1991 Option
Plan.
(3) The above information is based on copies of a statement on Schedule 13G/A
filed with the SEC on November 12, 1997, which indicates that the Franklin
Advisory Services, Inc. has sole voting power with respect to 543,000
shares and sole dispositive power with respect to all 1,143,000 shares.
These securities are owned by one or more open or closed-end investment
companies or other managed accounts, which are advised by direct and
indirect investment advisory subsidiaries of Franklin Resources, Inc. For
purposes of the reporting requirements of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), each of Franklin Advisory Services,
Inc., Franklin Resources, Inc., Charles B. Johnson and Rupert B. Johnson
may be deemed to be a beneficial owner of such securities; however, each
such person expressly disclaims any economic interest or beneficial
ownership in any of such securities.
(4) The above information is based on copies of a statement on Schedule 13D
filed with the SEC on May 5, 1997, as amended by Amendment No. 1 to
Schedule 13D filed with the SEC on August 4, 1997, which indicates that
ValueVest Partners L.P. has sole voting and dispositive power with respect
to 395,300 shares and Donald L. Sturm has sole voting and dispositive power
with respect to 442,100 shares.
(5) The above information is based on copies of a statement on Schedule 13G
filed with the SEC on February 14, 1997, which indicates that the Heartland
Advisors, Inc. has sole voting and dispositive power with respect to all
665,000 shares.
(6) The above information is based on copies of a statement on Schedule 13D
filed with the SEC on February 13, 1996, which indicates that The TCW
Group, Inc. and Robert Day each has sole voting and dispositive power with
respect to all 627,600 shares.
(7) The above information is based on copies of a statement on Schedule 13G
filed with the SEC on February 14, 1997, which indicates that T. Rowe Price
Associates, Inc. ("Price Associates") has sole dispositive power, and T.
Rowe Price New Horizons Fund, Inc. has sole voting power, with respect to
all 431,100 shares. These securities are owned by various individual and
institutional investors including T. Rowe Price New Horizons Fund, Inc.,
for which Price Associates serves as investment adviser with power to
direct investments. For purposes of the reporting requirements of the
Exchange Act, Price Associates is deemed to be a beneficial owner of such
securities; however, Price Associates expressly disclaims that it is, in
fact, the beneficial owner of such securities.
(8) The above information is based on copies of a statement on Schedule 13D
filed with the SEC on October 20, 1997, which indicates that Kenneth S.
Hackel has sole voting and dispositive power with respect to all 431,000
shares.
(9) Represents shares of Common Stock deemed to be beneficially owned by Mr.
Canfield which are subject to options previously granted pursuant to the
1991 Option Plan.
(10) Includes 10,000 shares and 20,000 shares of Common Stock deemed to be
beneficially owned by Mr. Carey which are subject to options previously
granted pursuant to the 1991 Option Plan and 1992 Option Plan,
respectively. Includes 25,000 shares of Common Stock which were acquired
pursuant to the one-for-one exchange on October 22, 1997 of 25,000 shares
of Town & Country Exchangeable Preferred Stock, which Mr. Carey purchased
on June 9, 1994 for $7.1875 per share. Does not include 127,241 shares of
Common Stock held in the Trust by Linchmen Company, c/o State Street Bank &
Trust Company, as trustee for the Trust established in connection with the
recapitalization of Town & Country, of which Mr. Carey is the controlling
stockholder.
(11) Includes 86,000 shares of Common Stock deemed to be beneficially owned by
Mr. Comment which are subject to options previously granted pursuant to the
1991 Option Plan.
14
<PAGE>
(12) Represents 10,000 shares and 20,000 shares of Common Stock deemed to be
beneficially owned by Mr. Correra which are subject to options previously
granted pursuant to the 1991 Option Plan and 1992 Option Plan,
respectively. Does not include 127,241 shares of Common Stock held in the
Trust by Linchmen Company, c/o State Street Bank & Trust Company, as
trustee for the Trust established in connection with the recapitalization
of Town & Country, of which Mr. Correra is President of Town & County Fine
Jewelry Group.
(13) Represents 10,000 shares and 11,000 shares of Common Stock deemed to be
beneficially owned by Mr. Donaldson which are subject to options previously
granted pursuant to the 1991 Option Plan and 1992 Option Plan,
respectively.
(14) Represents 10,000 shares and 20,000 shares of Common Stock deemed to be
beneficially owned by Ms. Jacobs which are subject to options previously
granted pursuant to the 1991 Option Plan and 1992 Option Plan,
respectively.
(15) Includes 78,500 shares of Common Stock deemed to be beneficially owned by
Mr. Lataille which are subject to options previously granted pursuant to
the 1991 Option Plan.
(16) Represents shares of Common Stock deemed to be beneficially owned by Mr.
Toler which are subject to options previously granted pursuant to the 1991
Option Plan.
(17) Represents 10,000 shares and 17,000 shares of Common Stock deemed to be
beneficially owned by Mr. Watson which are subject to options previously
granted pursuant to the 1991 Option Plan and 1992 Option Plan,
respectively.
Evaluation of Strategic Alternatives - Possibility of Change in Control
During fiscal 1997, the Company received inquiries from third parties
regarding a possible strategic transaction with the Company. After completing an
operational and strategic review of the Company, Little Switzerland announced in
August 1997 that it was pursuing various strategic alternatives and that its
financial advisor, Wasserstein Perella & Co., Inc., would discuss possible
business combinations with certain third parties with a goal toward maximizing
shareholder value. All such efforts were necessarily suspended, however, when
events surrounding an employee theft required that Arthur Andersen LLP expand
the scope and duration of its regular audit. Now that Little Switzerland's
financial statements for the 1997 fiscal year have been completed, Wasserstein
Perella & Co., Inc. is actively pursuing possible strategic alternatives,
including a process through which the Company may be sold.
As of the date hereof, the Company has entered into confidentiality
agreements with eleven (11) prospective purchasers, each of whom has received a
Confidential Offering Memorandum of the Company inviting them to submit
preliminary indications of interest in the Company. As a result of this process,
the Company has received several indications of interest from third parties, who
will be provided with access to additional information about the Company in
order to enable them to formulate and submit a formal proposal. Consummation of
a strategic transaction resulting from such sale process may result in a change
in control of the Company. There can be no assurances, however, as to the timing
of any such transaction or whether any such strategic transaction with the
Company will be agreed to or consummated as a result of the Company pursuing
this sale process.
MARKET VALUE
On November 1, 1997, the closing price of a share of the Company's Common
Stock on NASDAQ was $6.50.
PROXY CONTEST
Solicitation in Opposition to the Board's Nominees and Other Shareholder
Designated Nominees
According to preliminary proxy materials filed by Aspen Investments Inc.
("Aspen") on September 30, 1997 with the SEC with respect to the Annual Meeting
(the "Aspen Proxy Statement"), Aspen has indicated that
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it is soliciting proxies for election to the Board of Directors of its nominee,
Mr. Stephen George Edward Crane (the "Aspen Nominee"), and the Board's Nominees
other than C. William Carey, to serve until the year 2000 annual meeting.
In addition to Aspen, two other record stockholders of the Company,
independently, have nominated their own candidates (the "Other Stockholder
Nominees") for election as Directors of the Company at the Annual Meeting. Under
the terms of the Amended and Restated By-laws of the Company, as amended (the
"By-laws"), each such stockholder making a nomination must be a record
stockholder as of the Record Date, and such stockholder or his representative
must be present in person at the Annual Meeting.
YOUR BOARD RECOMMENDS THAT YOU REJECT THE ASPEN NOMINEE AND THE OTHER
STOCKHOLDER NOMINEES AND VOTE FOR THE BOARD'S NOMINEES ON THE ENCLOSED [WHITE]
PROXY CARD. DO NOT SIGN ANY PROXY CARD SENT TO YOU BY ASPEN OR ANY OTHER
NOMINEE.
Participants on Behalf of Little Switzerland, Inc.
As a result of the proxy contest initiated against the Company by Aspen,
the rules of the SEC require the Company to provide to its stockholders certain
additional information, including with respect to participants (as defined in
Schedule 14A promulgated pursuant to the Exchange Act). Pursuant to those rules,
the members of the Board are, and certain employees and agents of the Company
may be deemed to be, participants. Unless otherwise indicated below, the address
of the participants described below is the address of the Company's principal
executive offices. Except as indicated below, no participant has purchased or
sold or otherwise acquired or disposed of any shares of Common Stock of the
Company in the last two (2) years. Pursuant to the 1992 Option Plan, each
eligible non-employee Director automatically receives an option to purchase
3,000 shares of Common Stock on the last day of the Company's fiscal year. As of
the end of Fiscal 1997, each Director of the Company other than Mr. Toler was
eligible for, and received, such option grant. See, "Information Regarding
Directors."
C. William Carey is a Director and Chairman of the Board of Directors of
the Company. Since January 1997, Mr. Carey has been President of Carey
Associates, Inc., a company involved in international marketing and finance,
management consulting and Russian business development, located at 177 Milk
Street, Suite 605, Boston, Massachusetts. He is the beneficial owner of 55,000
shares of the Common Stock of the Company, including (a) 10,000 shares of Common
Stock deemed to be beneficially owned by Mr. Carey which are subject to options
previously granted pursuant to the 1991 Option Plan, (b) 20,000 shares of Common
Stock deemed to be beneficially owned by Mr. Carey which are subject to options
previously granted pursuant to the 1992 Option Plan and (c) 25,000 shares of
Common Stock, which were acquired pursuant to the one-for-one exchange on
October 22, 1997 of 25,000 shares of Town & Country Exchangeable Preferred
Stock, which Mr. Carey purchased on June 9, 1994 for $7.1875 per share. Other
than the acquisition of such shares pursuant to the conversion, Mr. Carey has
not made any dispositions of Common Stock of the Company over the past two
years. Mr. Carey is the controlling stockholder of Town & Country, located at 25
Union Street, Chelsea, Massachusetts. Town & Country is the beneficial owner of
166,721 shares of Common Stock of the Company. In addition, 127,241 shares of
Common Stock are held in trust by Linchmen Company, c/o State Street Bank &
Trust Company, 225 Franklin Street, Boston, Massachusetts, as trustee for the
trust established in connection with the recapitalization of Town & Country. See
"Certain Relationships and Related Transactions" above for a detailed summary of
the relationships between Mr. Carey, Town & Country and the Company.
Francis X. Correra is a Director of the Company. Since July 1996, he has
been President of Town & Country Fine Jewelry Group, a wholly-owned subsidiary
of Town & Country, located at 25 Union Street, Chelsea, Massachusetts,
specializing in the international design, manufacture and distribution of
jewelry. Mr. Correra is the beneficial owner of 30,000 shares of Common Stock of
the Company, which represents 10,000
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shares and 20,000 shares of Common Stock deemed to be beneficially owned by Mr.
Correra which are subject to options previously granted pursuant to the 1991
Option Plan and 1992 Option Plan, respectively. Town & Country is the beneficial
owner of 166,721 shares of Common Stock of the Company. In addition, 127,241
shares of Common Stock are held in trust by Linchmen Company, c/o State Street
Bank & Trust Company, 225 Franklin Street, Boston, Massachusetts, as trustee for
the trust established in connection with the recapitalization of Town & Country.
See "Certain Relationships and Related Transactions" above for a detailed
summary of the relationships between Mr. Correra, Town & Country and the
Company.
Timothy B. Donaldson is a Director of the Company. Since 1995, he has been
Chairman and Chief Executive Officer of Dynamo M. Ltd., an investment trading
company located at Saffrey Square Building, Second Floor, Bank Lane, P.O. Box
N-4927, Nassau, Bahamas. Mr. Donaldson is the beneficial owner of 21,000 shares
of Common Stock of the Company, which represents 10,000 shares and 11,000 shares
of Common Stock deemed to be beneficially owned by Mr. Donaldson which are
subject to options previously granted pursuant to the 1991 Option Plan and 1992
Option Plan, respectively.
Ilene B. Jacobs, a Director of the Company, is Vice President of Human
Resources of Digital Equipment Corporation. From 1986 to 1996, she served as
Vice President and Treasurer of Digital Equipment Corporation, which is located
at 111 Powdermill Road, Maynard, Massachusetts. Digital Equipment Corporation is
a publicly held corporation which specializes in computer systems, software,
network and integration services with operations throughout the world. Ms.
Jacobs is the beneficial owner of 30,000 shares of Common Stock of the Company,
which represents 10,000 shares and 20,000 shares of Common Stock deemed to be
beneficially owned by Ms. Jacobs which are subject to options previously granted
pursuant to the 1991 Option Plan and 1992 Option Plan, respectively.
Kenneth W. Watson is a Director of the Company. Since October 1996, Mr.
Watson has served as Vice President-Marketing of the New York Times Magazine
Group, Inc., a subsidiary of the New York Times Company, located at 5520 Park
Avenue, Trumbull, Connecticut. Mr. Watson is the beneficial owner of 27,000
shares of Common Stock of the Company, which represents 10,000 shares and 17,000
shares of Common Stock deemed to be beneficially owned by Mr. Watson which are
subject to options previously granted pursuant to the 1991 Option Plan and 1992
Option Plan, respectively.
John E. Toler, Jr. has served as President and Chief Executive Officer and
a Director of the Company since November 1, 1995. Mr. Toler is the beneficial
owner of 120,000 shares of Common Stock of the Company, which represents shares
of Common Stock deemed to be beneficially owned by Mr. Toler which are subject
to options previously granted pursuant to the 1991 Option Plan. Pursuant to his
employment agreement, the Company granted Mr. Toler an option to purchase
300,000 shares of the Company's Common Stock at $3.50 per share, one-fifth of
which vests each November 1, commencing on November 1, 1996.
Thomas S. Liston joined the Company on September 29, 1997 and, effective as
of November 12, 1997, has served as the Company's Chief Financial Officer, Vice
President and Treasurer. Pursuant to his employment agreement, the Company
granted Mr. Liston an option to purchase 25,000 shares of the Company's Common
Stock at $6.4375 per share, one-fifth of which vests each November 12,
commencing on November 12, 1998.
William Canfield has been Vice President of Store Operations since June
1994. Mr. Canfield is the beneficial owner of 31,000 shares of Common Stock of
the Company, which represents shares of Common Stock deemed to be beneficially
owned by Mr. Canfield which are subject to options previously granted pursuant
to the 1991 Option Plan. On December 21, 1994, the Company granted Mr. Canfield
an option to purchase 10,000 shares of the Company's Common Stock at $4.75 per
share, one-fifth of which vests each December 21, commencing on December 21,
1994.
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SOLICITATION OF PROXIES
This solicitation of proxies for use at the Annual Meeting is being made by
the Board of Directors of the Company. The cost of this proxy solicitation will
be borne by the Company. In addition to solicitations by mail, solicitations
also may be made by advertisement, telephone, telegram, facsimile transmission
or other electronic media, and personal meetings and interviews. In addition to
solicitation services to be provided by D.F. King & Co., Inc. ("D.F. King"), as
described below, proxies may be solicited by the Company and its directors,
officers and employees (who will receive no compensation therefor in addition to
their regular salaries). Arrangements also will be made with brokerage houses
and other custodians, nominees and fiduciaries to forward solicitation materials
to the beneficial owners of the common stock of the Company, and such persons
will be reimbursed for their expenses. Although no precise estimate can be made
at the present time, it is currently estimated that the aggregate amount to be
spent in connection with the solicitation of proxies by the Company (excluding
the salaries and fees of officers and employees and excluding the costs normally
expended for a solicitation of proxies in an uncontested election of directors)
will be approximately [$_________], or a greater amount if there is litigation
in connection with the solicitation, and that the total cash expenditures to
date relating to the solicitation have been under [$____________]. These
estimates include fees for attorneys, accountants, advisers, proxy solicitors,
advertising, printing, distribution and other costs incidental to the
solicitation.
The Company has retained D.F. King at a fee estimated not to exceed
[$___________], plus reimbursement of reasonable out-of-pocket expenses, to
assist in the solicitation of proxies (which amount is included in the estimate
of total expenses above). The Company has also agreed to indemnify D.F. King
against certain liabilities and expenses, including liabilities under the
Federal securities laws. It is anticipated that approximately [__] employees of
D.F. King may solicit proxies.
SUBMISSION OF STOCKHOLDER PROPOSALS FOR 1998 ANNUAL MEETING
Stockholder proposals intended to be presented at the 1998 annual meeting
must be received by the Company on or before June 19, 1998 in order to be
considered for inclusion in the Company's proxy statement and form of proxy for
that meeting. The Company's By-laws provide that any stockholder of record
wishing to have a stockholder proposal considered at an annual meeting must
provide written notice of such proposal and appropriate supporting
documentation, as set forth in the By-laws, to the Company at its principal
executive office not less than 75 days nor more 120 days prior to the first
anniversary of the date of the preceding year's annual meeting; provided,
however, that in the event the annual meeting is advanced by more than seven
days from the anniversary date, notice must be so delivered not later than (i)
the 20th day after public disclosure of the date of such meeting or (ii) if such
public disclosure occurs more than 75 days prior to such scheduled date of such
meeting, then the later of the 20th day after the date of public disclosure or
the 75th day prior to such scheduled date of such meeting. Any such proposal
should be mailed to: Secretary, Little Switzerland, Inc., 161-B Crown Bay Cruise
Port, St. Thomas, U.S.V.I. 00804.
INDEPENDENT ACCOUNTANTS
The Company has selected Arthur Andersen LLP as the independent public
accountants for the Company for the fiscal year ending May 30, 1998. The firm of
Arthur Andersen LLP has served as the Company's independent public accountants
since its incorporation and has served as the accountant for certain of its
subsidiaries since 1980. A representative of Arthur Andersen LLP will be present
at the Annual Meeting and will be given the opportunity to make a statement if
he or she so desires. The representative will be available to respond to
appropriate questions.
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SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers and directors, and persons who own more than 10% of the Company's
outstanding shares of Common Stock, to file reports of ownership and changes in
ownership with the SEC and NASDAQ. Officers, directors and greater than ten
percent stockholders are required by SEC regulations to furnish the Company with
copies of all Section 16(a) forms they file. Based solely on its review of the
copies of such forms received by it, or written representations from certain
reporting persons that no Section 16(a) reports were required for those persons,
the Company believes that during the fiscal year ended May 31, 1997, all filing
requirements were complied with, except for the following reports which were
inadvertently filed late: (1) a Form 4 report for Mr. Carey reflecting his
exchange of 25,000 shares of Town & Country Exchangeable Preferred Stock into
25,000 shares of the Company's Common Stock and (2) a Form 3 report for Mr.
Liston reflecting his employment with the Company as its Chief Financial
Officer, Vice President and Treasurer on November 12, 1997.
VOTING INFORMATION
Please sign, date and mail promptly the enclosed [WHITE] proxy card in the
enclosed self-addressed stamped envelope. Please do NOT sign and return any
[GOLD] proxy or any other proxy or notice or revocation sent to you by Aspen.
The Board of Directors does not know of any matters other than those
described in this Proxy Statement which will be presented for action at the
Annual Meeting. If any other matters properly come before the Annual Meeting,
the proxy holders intend to vote such proxies in accordance with their best
judgment. Unrevoked [WHITE] proxy cards returned without direction will be voted
FOR the Board's Nominees for election to the Board of Directors.
Your vote is important. Please make sure your latest dated proxy is a
[WHITE] card voting FOR your Board's Nominees. A later dated [GOLD] Aspen card,
even if marked to "withhold authority" to vote for the Aspen Nominees, will
cancel your vote for the nominees of your Board of Directors.
If your shares are registered in your name, please mail your [WHITE] card
at your earliest convenience. If your shares are held in "street name,"
immediately instruct your broker or the person responsible for your account to
sign a [WHITE] proxy card on your behalf. You should also sign, date and mail
your [WHITE] proxy card immediately upon receipt from your broker or bank, using
the postage-paid envelope provided. Please do so for each account you maintain.
If you have further questions or need assistance, please call:
D.F. King & Co., Inc.
77 Water Street
New York, New York 10005
CALL TOLL FREE (800) ____________
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING IN PERSON, YOU ARE
REQUESTED TO SIGN, DATE AND MAIL THE ENCLOSED [WHITE] PROXY CARD IN THE ENCLOSED
ENVELOPE WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES. PLEASE ACT
TODAY.
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NOTE: INTENDED AS PROXY STATEMENT OUTSIDE BACK COVER
IMPORTANT
Your vote is important. Regardless of the number of shares of Little
Switzerland Common Stock you own, please support your Board of Directors by
promptly taking these few easy steps:
1. Please sign, date and mail promptly the enclosed [WHITE] Proxy Card in the
post-paid envelope provided.
2. Do NOT sign any [GOLD] Proxy Card sent to you by Aspen, not even as a vote
of protest.
3. If your shares are held in the name of a brokerage firm or bank nominee,
only it can sign a [WHITE] Proxy Card with respect to your shares and only
after receiving your specific instructions. Accordingly, please provide
your instructions by signing, dating and mailing the enclosed [WHITE] Proxy
Card in the postage-paid envelope provided. Please do so for each account
you maintain. To ensure that your shares are voted, you should also contact
the person responsible for your account and give instructions for a [WHITE]
Proxy Card to be issued representing your shares.
IF YOU VOTED ASPEN'S PROXY CARD BEFORE RECEIVING YOUR LITTLE SWITZERLAND
[WHITE] PROXY CARD, YOU HAVE EVERY RIGHT TO CHANGE YOUR VOTE SIMPLY BY SIGNING,
DATING AND MAILING THE ENCLOSED [WHITE] PROXY CARD. THIS WILL CANCEL YOUR
EARLIER VOTE SINCE ONLY YOUR LATEST DATED PROXY CARD WILL COUNT.
If you have any questions or require assistance, please call:
D.F. KING & CO., INC.
77 Water Street
New York, NY 10005
(212) 269-5550 (Collect)
or
CALL TOLL-FREE
1-800-000-0000
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PROXY CARD
LITTLE SWITZERLAND, INC.
PROXY SOLICITED BY THE BOARD OF DIRECTORS OF
LITTLE SWITZERLAND, INC. FOR THE
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JANUARY 16, 1998
The undersigned hereby constitutes and appoints C. William Carey and John E.
Toler, Jr., and each of them, as Proxies of the undersigned, with full power to
appoint his substitute, and authorizes each of them to represent and to vote all
shares of Common Stock of Little Switzerland, Inc. (the "Company") held of
record by the undersigned as of the close of business on December 10, 1997, at
the Annual Meeting of Stockholders (the "Annual Meeting") to be held at
[_________________________], at 10:30 a.m. local time, on Friday, January 16,
1998, and at any adjournments or postponements thereof.
When properly executed, this proxy will be voted in the manner directed herein
by the undersigned stockholder(s). If no direction is given, this proxy will be
voted FOR the two nominees of the Board of Directors listed in Proposal 1. In
their discretion, the Proxies are each authorized to vote upon such other
business as may properly come before the Annual Meeting and any adjournments or
postponements thereof. A stockholder wishing to vote in accordance with the
Board of Directors' recommendations need only sign and date this proxy and
return it in the enclosed envelope.
The undersigned hereby acknowledge(s) receipt of a copy of the accompanying
Notice of Annual Meeting of Stockholders, the Proxy Statement with respect
thereto and the Company's 1997 Annual Report to Stockholders and hereby
revoke(s) any proxy or proxies heretofore given. This proxy may be revoked at
any time before it is exercised.
Please vote and sign on other side and return promptly in enclosed envelope.
Please sign name exactly as shown. Where there is more than one holder, each
should sign. When signing as an attorney, administrator, executor, guardian or
trustee, please add your title as such. If executed by a corporation or
partnership, the proxy should be signed by a duly authorized person, stating his
or her title or authority.
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FOR WITHHOLD
Proposal 1. Election of C. William Carey and [ ] [ ]
John E. Toler, Jr. as Class III
Directors for a three-year term.
To withhold authority to vote FOR a particular nominee, write that
nominee's name below. Your shares will be voted for the remaining
nominee.
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In their discretion, the Proxies are each authorized to vote upon such other
business as may properly come before the Annual Meeting and any adjournments or
postponements thereof.
Please be sure to sign and date this Proxy.
Date:
-----------------------------
Shareholder(s) signature(s):
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PLEASE, SIGN, DATE AND PROMPTLY MAIL YOUR PROXY.
