<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
FILED BY THE REGISTRANT [X]
FILED BY A PARTY OTHER THAN THE REGISTRANT [ ]
- ----------------------------------------------
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, For Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
VERMONT PURE HOLDINGS, LTD.
(Name of Registrant as Specified In Its Charter)
NOT APPLICABLE
(Name of Person(s) Filing Proxy Statement)
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:_____
(2) Aggregate number of securities to which transaction applies:_____
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):_____
(4) Proposed maximum aggregate value of transaction:_____
(5) Total fee paid:_____
[ ] 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:_____
(2) Form, Schedule or Registration Statement no.:_____
(3) Filing Party:_____
(4) Date Filed: _____
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<PAGE> 2
VERMONT PURE HOLDINGS, LTD.
ROUTE 66, CATAMOUNT INDUSTRIAL PARK
RANDOLPH, VERMONT 05060
---------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 2, 2000
---------------------------
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of
Vermont Pure Holdings, Ltd. ("Company") will be held at the Radisson Hotel, 60
Battery Street, Burlington, Vermont 05401 on Tuesday, May 2, 2000 at 1:30 P.M.
local time, for the following purposes:
1. To elect eight directors to hold office until the Annual Meeting of
Stockholders in 2001 and until their respective successors have been
duly elected and qualified;
2. To transact such other business as may properly come before the
meeting, and any adjournment(s) thereof.
The record date for the Annual Meeting is March 17, 2000. Only
stockholders of record at the close of business on March 17, 2000 will be
entitled to notice of, and to vote at, the Meeting and any adjournments thereof.
YOU ARE URGED TO READ THE ATTACHED PROXY STATEMENT, WHICH CONTAINS
INFORMATION RELEVANT TO THE ACTIONS TO BE TAKEN AT THE MEETING. IN ORDER TO
ASSURE THE PRESENCE OF A QUORUM, WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING
IN PERSON, PLEASE SIGN AND DATE THE ACCOMPANYING PROXY CARD AND MAIL IT PROMPTLY
IN THE ENCLOSED ADDRESSED, POSTAGE PREPAID ENVELOPE. YOU MAY REVOKE YOUR PROXY
IF YOU SO DESIRE AT ANY TIME BEFORE IT IS VOTED.
By Order of the Board of Directors
Bruce S. MacDonald
Secretary
Randolph, Vermont
March 27, 2000
<PAGE> 3
VERMONT PURE HOLDINGS, LTD.
---------------
PROXY STATEMENT
---------------
GENERAL INFORMATION
This Proxy Statement and the enclosed form of proxy are furnished in
connection with solicitation of proxies by the Board of Directors ("Board") of
Vermont Pure Holdings, Ltd. ("Company") to be used at the Annual Meeting of
Stockholders of the Company to be held on Tuesday, May 2, 2000, and any
adjournment or adjournments thereof ("Annual Meeting"). The matters to be
considered at the Annual Meeting are set forth in the attached Notice of
Meeting.
The Company's executive offices are located at Route 66, Catamount
Industrial Park, Randolph, Vermont 05060. The Company's telephone number is
802-728-3600. This Proxy Statement and the enclosed form of proxy are first
being sent to stockholders on or about March 27, 2000.
RECORD DATE AND OUTSTANDING SHARES
The Board has fixed the close of business on March 17, 2000 as the
record date for the determination of stockholders entitled to notice of, and to
vote at, the Annual Meeting. Only stockholders of record at the close of
business on that date will be entitled to vote at the Annual Meeting or any and
all adjournments thereof. As of the record date, the Company had issued and
outstanding 10,289,758 shares of Common Stock, par value $.001 ("Common Stock"),
comprising all of the Company's issued and outstanding voting stock. Each
stockholder of the Company will be entitled to one vote for each share of Common
Stock.
SOLICITATION AND REVOCATION
Proxies in the form enclosed are solicited by and on behalf of the
Board. The persons named in the proxy have been designated as proxies by the
Board. Any proxy given pursuant to such solicitation and received in time for
the Annual Meeting will be voted as specified in such proxy. If no instructions
are given, proxies will be voted.
"FOR" the election of the nominees listed below under "Election of
Directors,"
and in the discretion of the proxies named on the proxy card with respect to any
other matters properly brought before the Meeting and any adjournments thereof.
In the event that any other matters are properly presented at the Annual Meeting
for action, the persons named in the proxy will vote the proxies in accordance
with their best judgment. Any proxy given pursuant to this solicitation may be
revoked by the stockholder at any time before it is exercised by written
notification delivered to the Secretary of the Company, by voting in person at
the Annual Meeting, or by delivering another proxy bearing a later date.
Attendance by a stockholder at the Annual Meeting does not alone serve to revoke
his or her proxy.
<PAGE> 4
QUORUM
The presence, in person or by proxy, of a majority of the shares of
Common Stock issued and outstanding and entitled to vote at the Annual Meeting
will constitute a quorum at the Annual Meeting. A proxy submitted by a
stockholder may indicate that all or a portion of the shares represented by such
proxy are not being voted with respect to a particular matter. Similarly, a
broker may not be permitted to vote stock ("broker non-vote") held in street
name on a particular matter in the absence of instructions from the beneficial
owner of such stock. The shares subject to a proxy which are not being voted on
a particular matter (because of either stockholder withholding or broker
non-vote) will not be considered shares entitled to vote on such matter. These
shares, however, may be considered present and entitled to vote on other matters
and will count for purposes of determining the presence of a quorum.
VOTING
If a quorum is present at the Meeting, the persons nominated for
election as directors will be elected by a plurality of the shares of Common
Stock voted at the Annual Meeting. "Plurality" means that the nominees who
receive the highest number of votes will be elected as the directors of the
Company for the ensuing year.
PROPOSAL 1 --- ELECTION OF DIRECTORS
The current directors of the Company, all of whom are listed in the
table below, have been designated by the Board as candidates for re-election as
directors to serve until the next annual meeting of stockholders or until their
respective successors have been elected and qualified. Unless otherwise
specified in the form of proxy, the proxies solicited by the management will be
voted "FOR" the election of these candidates. In case any of these nominees
become unavailable for election to the Board, an event which is not anticipated,
the persons named as proxies, or their substitutes, shall have full discretion
and authority to vote or refrain from voting for any other nominee in accordance
with their judgment.
DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth certain information concerning each
director of the Company continuing in office, each nominee for election as
director and each executive officer of the Company:
NAME AGE POSITION
Timothy G. Fallon 46 Chief Executive Officer,
President and Chairman of the
Board
Phillip Davidowitz 68 Director
Robert C. Getchell 51 Director
Frank G. McDougall, Jr. 50 Director
David R. Preston 59 Director
2
<PAGE> 5
Norman E. Rickard 63 Director
Beat Schlagenhauf 48 Director
Richard Worth 50 Director
Bruce S. MacDonald 41 Chief Financial Officer,
Treasurer and Secretary
The business experience during at least the last five years of each of
the directors and the executive officers of the Company is as follows:
Timothy G. Fallon has been the Chief Executive Officer and President and
a director of the Company since November 1994. In April 1998, he was appointed
Chairman of the Board of Directors. From January 1992 to November 1994, Mr.
Fallon was the Senior Vice President, Sales and Marketing for Cadbury Beverages,
Inc. From October 1989 to December 1991, Mr. Fallon was Vice President of Sales
for Canada Dry USA, a division of Cadbury Beverages, Inc. From July 1984 to
September 1989, Mr. Fallon served as Vice President - Sales and Marketing for
Pepsi Cola Bottling Company New York City, Inc.
Phillip Davidowitz has been a director of the Company since June 1998.
Mr. Davidowitz has been President of TSE Clearing Services, Inc. since 1980 and
Vice Chairman of Transatlantic Securities Co. since 1988. He is a member of the
New York Stock Exchange.
Robert C. Getchell has been a director of the Company since December
1994. Mr. Getchell has been a principal of Getchell Professional Association, a
firm of certified public accountants in Quechee, Vermont, for more than the past
five years. In July 1992, Mr. Getchell was appointed to the Vermont Economic
Development Authority and served as its chairman from 1996 through 1998.
Frank G. McDougall, Jr. has been a director since June 1994 and was
Chairman of the Board from November 1994 through March 1998. From January 1995
to December 1997, Mr. McDougall was a part-time employee of the Company. From
December 1993 until January 1995 and since January 1998, Mr. McDougall has acted
as a consultant to the Company in the areas of management and government
relations and regulation through Frank McDougall & Associates, a company he
founded in October 1993. Since March 1996, Mr. McDougall has been the Director
of Corporate and Government Relations for the Dartmouth Hitchcock Medical Center
and the Hitchcock Clinic. From July 1990 to October 1993, Mr. McDougall was the
Secretary of the Agency of Development and Community Affairs of the State of
Vermont. In March 1997, Mr. McDougall was appointed to the Vermont Board of
Education.
David R. Preston has been a director of the Company since October 1995.
Mr. Preston has been a consultant and adjunct professor of Suffolk University in
Boston, Massachusetts since September 1995. From 1990 to July 1995, Mr. Preston
was a division president at Kayser-Roth Corporation, a sock and hosiery
manufacturer, located in Greensboro, North Carolina. Since September 1996, he
has been a Senior Associate with Renaissance Management Group LLC, a management
consulting firm. Mr. Preston is a retired division president and corporate
officer of the Gillette Company.
Norman E. Rickard has been a director of the Company since May 1995. Mr.
Rickard, who is retired, was the President of Xerox Document Services Group of
Xerox Corporation and a Corporate
3
<PAGE> 6
Senior Vice President. Mr. Rickard had been employed by Xerox Corporation since
1967 in various capacities, including President of Xerox Business Services,
Director of Business Effectiveness, Director of the Worldwide Strategic
Manufacturing Project, Director of Staff Operations and Vice President of
Quality. He is also currently a director of National Alliance of Business,
Optical Dynamic Corporation and Health Now.
Beat Schlagenhauf has been a director of the Company since July 1993.
Mr. Schlagenhauf has been a principal of Schlagenhauf & Partners, a portfolio
management company in Zurich, Switzerland, for more than the past thirteen
years.
Richard Worth has been a director of the Company since June 1994. Since
1997, Mr. Worth has been the Chairman and Chief Executive Officer of Cool
Fruits, Inc. From 1994 to 1997, Mr. Worth was the Chairman and Chief Executive
Officer of The Delicious/Frookie Co., a manufacturer and marketer of cookies and
snack products. From 1986 to 1994, Mr. Worth was the Chairman and Chief
Executive Officer of R.W. Frookies, Inc., a manufacturer and marketer of cookies
and snack products. From 1978 to 1985, Mr. Worth owned and operated Sorrell
Ridge, Inc., a manufacturer and marketer of jams.
Bruce S. MacDonald has been Chief Financial Officer and Treasurer of the
Company since May 1993. During 1999, he was assigned the additional
responsibility of Chief Operating Officer. From 1987 to May 1993, Mr.
MacDonald was Controller of Cabot Cooperative Creamery Incorporated.
THE BOARD OF DIRECTORS AND COMMITTEES OF THE BOARD
During the fiscal year ended October 30, 1999, the Board of Directors of
the Company met five (5) times, and the Audit Committee and Compensation
Committee met three (3) times and one (1) time, respectively. The Board has no
Nominating Committee but does have an Executive Committee. No incumbent director
attended fewer than 75% of the total number of meetings of the Board and
Committees of the Board on which he served.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires the Company's officers, directors and persons who beneficially own more
than 10% of a registered class of the Company's equity securities ("ten percent
stockholders") to file reports of ownership and changes in ownership with the
Securities and Exchange Commission ("SEC"). Officers, directors and ten percent
stockholders are charged by the SEC regulation to furnish the Company with
copies of all Section 16(a) forms they file.
Based solely upon a review of Forms 3, 4 and 5 and amendments thereto
furnished to the Company during fiscal 1999, and, if applicable, written
representations that Form 5 was not required, the Company believes that all
Section 16(a) filing requirements applicable to its officers, directors and ten
percent stockholders were fulfilled in a timely manner.
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<PAGE> 7
REMUNERATION OF EXECUTIVE OFFICERS AND DIRECTORS
EXECUTIVE COMPENSATION
The following tables show (1) the cash compensation paid by the Company,
as well as certain other compensation paid or accrued, to the Chief Executive
Officer and Chief Financial Officer of the Company for the fiscal years ended
October 25, 1997, October 31, 1998 and October 30, 1999 (2) information
reporting options granted to the Chief Executive Officer and the Chief Financial
Officer during the fiscal year ended October 30, 1999, and (3) information
regarding the value of all options granted to the Chief Executive Officer and
Chief Financial Officer at the end of the fiscal year ended October 30, 1999.
The Company has no other executive officers.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
SUMMARY COMPENSATION TABLE
- --------------------------------------------------------------------------------------------------------------------
ANNUAL COMPENSATION LONG TERM COMPENSATION
----------------------------- ---------------------------------
FISCAL SALARY BONUS OPTIONS/ ALL OTHER
NAME AND PRINCIPAL POSITION YEAR ($) ($) (# SHARES) COMPENSATION ($)
- ------------------------------------------- -------- --------------- ------------- --------------- -----------------
<S> <C> <C> <C> <C> <C>
Timothy G. Fallon 1999 $186,400 $195,000 -0- $14,740
Chief Executive Officer and 1998 $186,400 $202,500 -0- $ 6,859
President 1997 $184,000 $150,000 690,000(1) $ 5,278
- --------------------------------------------------------------------------------------------------------------------
Bruce S. MacDonald 1999 $ 85,000 $ 75,000 -0- $ 8,612
Chief Financial Officer and 1998 $ 85,000 $ 55,000 30,000 $ 3,937
Treasurer 1997 $ 75,000 $ 30,000 101,000(2) $ 4,204
====================================================================================================================
</TABLE>
(1) This amount represents 440,000 options with an exercise price per share of
$2.50 issued in replacement for 400,000 options with an exercise price of
$2.25 per share, a net increase of 40,000 options, and 250,000 options with
an exercise price per share of $2.50. The amount under "All Other
Compensation" represents a car allowance and life and disability insurance
expenses.
(2) This amount represents 51,000 options with an exercise price per share
issued of $2.50 issued in replacement for 45,000 options with a weighted
average exercise price of $2.58 per share, a net increase of 6,000 options,
and 50,000 options granted with an exercise price per share of $2.50. The
amount under "All Other Compensation" represents car, life and disability
insurance allowances.
The Company cannot determine, without unreasonable effort or expense,
the specific amount of certain personal benefits afforded to its employees, or
the extent to which benefits are personal rather than business. The Company has
concluded that the aggregate amounts of such personal benefits which cannot be
specifically or precisely ascertained do not in any event exceed, as to the
individuals named in the preceding table, the lesser of $50,000 or 10% of the
compensation reported in the preceding table for such individuals, and that such
information set forth in the preceding table is not rendered materially
misleading by virtue of the omission of the value of such personal benefits.
The executive officers named in the preceding summary compensation table
were not granted options or shares during the fiscal year ended October 30,
1999.
5
<PAGE> 8
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
AGGREGATE YEAR-END OPTION VALUES
- ----------------------------------------------------------------------------------------------------------------
NUMBER OF UNEXERCISED OPTIONS VALUE OF UNEXERCISED IN-THE-MONEY
AT FISCAL YEAR-END (#) OPTIONS AT FISCAL YEAR-END ($)(1)
--------------------------------- ---------------------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- -------------------------------------- -------------- ------------------ ------------------ --------------------
<S> <C> <C> <C> <C>
Timothy G. Fallon 568,000 150,000 $177,784 $46,950
Chief Executive Officer and
President
- -------------------------------------- -------------- ------------------ ------------------ --------------------
Bruce S. MacDonald, Chief 91,000 50,000 $ 29,153 $ 9,390
Financial Officer and Treasurer
================================================================================================================
</TABLE>
(1) As of October 30, 1999, the closing price per share of Common Stock was
$2.813 on the American Stock Exchange.
EXECUTIVE PARTICIPATION IN COMPENSATION DECISIONS AND COMPENSATION COMMITTEE;
AUDIT COMMITTEE
Compensation decisions during the fiscal year ended October 30, 1999
were made by the Board of Directors upon the recommendation of the Compensation
Committee. The Compensation Committee is empowered to make recommendations to
the Board relating to the overall compensation arrangements for senior
management of the Company and any compensation plans in which officers and
directors of the Company are eligible to participate. The Compensation Committee
is comprised of Messrs. McDougall, Preston and Getchell. No person serving on
the Compensation Committee at any time during fiscal 1999 was an executive
officer of the Company or had any relationship required to be disclosed under
Item 404 of Regulation S-K promulgated by the Securities and Exchange
Commission. As disclosed elsewhere in this Proxy Statement, Mr. McDougall was a
part-time employee of the Company through December 1997.
The Company also has an Audit Committee, the members of which are
Messrs. Getchell, Preston and Rickard. The Audit Committee, among other things,
is empowered to recommend to the Board the engagement of the independent
auditors and to review the scope and procedures of the activities of the
independent auditors and the reports on their audits. The Audit Committee meets
periodically with the independent auditors and management to review their work
and confirm that they are properly discharging their responsibilities.
EMPLOYMENT CONTRACTS AND CHANGE-IN-CONTROL ARRANGEMENTS
In October 1997, the Company executed an employment agreement with
Timothy G. Fallon which has an effective date of November 1, 1996 and expires
November 1, 2001. This Agreement was amended during October 1999 but still
expires on November 1, 2001. Pursuant to the agreement, which replaced a prior
agreement dated November 4, 1994, Mr. Fallon acts as the Chief Executive Officer
and President of the Company. His annual base salary has been increased to
$205,000, which is reviewed annually by the Board. The Company provides Mr.
Fallon with an automobile and disability insurance allowance. If his employment
is terminated without cause (including a deemed
6
<PAGE> 9
termination by reason of a "Change of Control", as defined), Mr. Fallon is
entitled to receive life and health insurance benefits together with severance
payments equal to 1.0 times his annual base salary plus $150,000 payable over 12
months if such termination occurs in fiscal years 2000 through 2001. In each
case, Mr. Fallon will be subject to a period of non-competition equal to the
greater of 12 months or the period during which severance is paid. No benefits
are due if Mr. Fallon's employment is terminated for "cause," as defined.
In addition to bonus payments disclosed above that were paid to him
with respect to fiscal 1999, Mr. Fallon is entitled to incentive bonuses based
upon the achievement of certain performance goals of the Company for fiscal
years 2000 and 2001. For fiscal years 2000 and 2001, his incentive compensation
will include payments of $75,000 for meeting Board approved target sales and
$75,000 for meeting Board approved target EBITDA, again with greater or lesser
payments (non-cumulative) for achieving targets within specified ranges above or
below budget. Mr. Fallon is also entitled to receive special bonuses if the
Company achieves sales of $40,000,000 or $50,000,000 during fiscal years ending
October 2000 or October 2001. These bonuses are, respectively, $25,000 and
$50,000. These bonuses are cumulative and may be earned in the same fiscal year.
If the Company can maintain or exceed a $5.00 per share stock price for 54 out
of the 60 consecutive trading days during the period November 1, 1999 through
October 31, 2001 Mr. Fallon will receive a special bonus of $50,000.
On and as of November 1, 1997, the Company entered into an employment
agreement with Bruce S. MacDonald which expires November 1, 2001. Pursuant to
the agreement, Mr. MacDonald acts as the Chief Financial Officer and Treasurer
of the Company. His annual base salary has been increased to $100,000, to be
reviewed annually by the Board. The Company provides Mr. MacDonald with
automobile and disability insurance allowances. If his employment is terminated
without cause (including a deemed termination by reason of a "Change of
Control," as defined), Mr. MacDonald is entitled to receive life and health
insurance benefits together with severance payments equal to 1.0 times his
annual base salary plus $50,000 payable over 12 months if such termination
occurs in fiscal years 2000 through 2001. In each case, Mr. MacDonald will be
subject to a period of non-competition equal to the greater of 12 months or the
period during which severance is paid. No benefits are due if Mr.
MacDonald's employment is terminated for "cause," as defined.
In addition to the bonus payments disclosed above that were paid to him
with respect to fiscal 1999, Mr. MacDonald is entitled to incentive bonuses
based upon the achievement of certain performance goals of the Company for
fiscal years 2000 to 2001. Mr. MacDonald's incentive compensation for each of
these years is $50,000 for meeting Board approved target EBITDA, with greater or
lesser payments (non-cumulative) for meeting EBITDA targets within specified
ranges.
Effective November 1, 1999, the Company entered into a consulting
agreement with Frank G. McDougall, Jr., a director of the Company, through Frank
McDougall & Associates for a term of one year. Pursuant to that agreement, Mr.
McDougall provides consulting services to the Company in the area of government
relations and regulations. Mr. McDougall was paid an initial fee of $10,000 on
November 1, 1999 and will receive $1,000 per month from the Company in exchange
for providing consulting services. As part of this agreement, Mr. McDougall has
waived all compensation as a director.
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<PAGE> 10
COMPENSATION OF DIRECTORS
Directors who are employees or consultants of the Company do not
receive any fees for attending Board meetings. Directors who are not employees
or consultants of the Company receive $750 for each meeting of the Board
attended and $7,500 each year, subject to reduction by (i) 50% if the director
misses two meetings, and (ii) 100% if the director misses more than two
meetings. Directors serving on a Committee receive $400 for each Committee
meeting attended. In addition, the Board voted in September 1998 to
automatically issue 5,000 Common Stock options to each outside director at the
beginning of each fiscal year. Such option issuances to directors are limited to
105,000 options in total.
COMPENSATION COMMITTEE REPORT
The Compensation Committee of the Board is composed of three directors,
Messrs. McDougall, Getchell and Preston. The Compensation Committee also
administers the Company's stock option plans and employee stock purchase plan.
This Committee is charged with the responsibility of reviewing and approving
executive officers' compensation and approving all discretionary grants of stock
options under the Company's stock option plan. The following describes the
compensation programs in effect during fiscal 1999.
Compensation Policy
The Company's compensation policies are designed to pay executives an
annual salary that is industry competitive and an annual bonus that is based
both on the performance of the Company and on individual goals established for
each of the executives for the fiscal year. The Company also has longer term
incentives based on stock options. All three components of compensation are
reviewed annually by the Committee to ensure that salaries remain competitive,
that bonuses reward performance and that stock options provide continued
incentives.
Salaries for executive officers are based on the duties and
responsibilities of the position held by the executive compared with executive
officers of other companies in the industry. Salaries are reviewed and
established within the parameters set forth in employment agreements. Various
industry salary surveys are reviewed and provided to the Committee to review in
establishing compensation.
The officer's performance over the prior year is assessed by comparing
it to objectives and goals that are established by the Board, the Committee and
management in a strategic planning process. Payment of bonuses is currently
determined by reference to specific performance related formulas in the
employment agreements. The Committee approves all such determinations.
The Company periodically grants stock options to some or all of its
executives and key employees as a means of creating a long-term incentive and
benefit. Such stock options are generally granted at the fair market value of
shares of Common Stock on the date of grant. Thus, no benefit will accrue to the
executive or key employee from the stock option grant until the Common Stock
appreciates. This creates a long-term goal for appreciation of the Common Stock
which coincides with the interests of the stockholders.
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<PAGE> 11
Chief Executive Officer Compensation
As noted under "Employment Contracts and Change-in-Control Agreements,"
the Company has an employment contract with Mr. Fallon that provides for bonuses
upon the achievement of sales and EBITDA goals approved by the Board. The bonus
paid to Mr. Fallon in fiscal 1999 was determined and calculated with reference
to those goals. The Company did not grant any stock options to Mr. Fallon in
fiscal 1999.
COMPENSATION COMMITTEE
Frank G. McDougall, Jr.
Robert C. Getchell
David R. Preston
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Frank G. McDougall, Jr., Robert C. Getchell and David R. Preston served
on the Compensation Committee during fiscal 1999. Except for Mr. McDougall, who
acts as a consultant to the Company in the areas of management and government
relations and regulation, persons serving on the Compensation Committee had no
relationships with the Company other than their relationship to the Company as
directors entitled to the receipt of standard compensation as directors and
members of certain committees of the Board and their relationship to the Company
as stockholders. No person serving on the Compensation Committee or on the Board
of Directors is an executive officer of another entity for which an executive
officer of the Company serves on the board of directors or on that entity's
compensation committee.
PERFORMANCE GRAPH
The following Performance Graph compares the performance of the
Company's cumulative stockholder return with that of a broad market index (the
NASDAQ Market Index) and a published industry index (the SIC Code Index for
Grocery Related Products) for each of the most recent five fiscal years. The
cumulative stockholder return for shares of Common Stock and each of the indices
is calculated assuming that $100 was invested on October 31, 1994. The Company
paid no cash dividends during the periods shown. The performance of the indices
is shown on a total return (dividends reinvested) basis. The graph lines merely
connect year-end dates and do not reflect fluctuations between those dates.
9
<PAGE> 12
COMPARE 5-YEAR CUMULATIVE TOTAL RETURN
AMONG VERMONT PURE HOLDINGS, LTD.,
NASDAQ MARKET INDEX AND SIC CODE INDEX
<TABLE>
<CAPTION>
--------------------------------- FISCAL YEAR ENDING ---------------------------------
<S> <C> <C> <C> <C> <C> <C>
COMPANY/INDEX/MARKET 10/31/1994 10/31/1995 10/31/1996 10/31/1997 10/31/1998 10/31/1999
Vermont Pure Holdings Ltd. 100.00 58.33 75.00 137.50 104.17 93.75
Groceries, Related Prods, NEC 100.00 100.90 92.96 127.62 63.50 81.76
NASDAQ Market Index 100.00 118.62 139.30 182.56 206.42 340.72
</TABLE>
ASSUMES $100 INVESTED ON NOV. 1, 1994
ASSUMES DIVIDEND REINVESTED
FISCAL YEAR ENDING OCT. 30, 1999
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The table and accompanying footnotes on the following pages set forth
certain information as of February 15, 2000 with respect to the stock ownership
of (i) those persons or groups who beneficially own more than 5% of the
Company's Common Stock, (ii) each director and director-nominee of the Company,
(iii) the Company's Chief Executive Officer and Chief Financial Officer, and
(iv) all directors and executive officers of the Company as a group (based upon
information furnished by such persons). The Company has no other executive
officers. Shares of Common Stock issuable upon exercise of options and warrants
which are currently exercisable or exercisable within 60 days of the date of
this table have been included in the following table.
10
<PAGE> 13
AMOUNT AND NATURE OF PERCENTAGE OF
BENEFICIAL OUTSTANDING SHARES
OWNER'S NAME AND ADDRESS OWNERSHIP OWNED
- ------------------------ --------------------- ------------------
Timothy G. Fallon 570,000(2) 5.3%
Phillip Davidowitz 15,000(1) .1%
Robert C. Getchell 67,000(3) .6%
Frank G. McDougall, Jr. 82,000(1) .8%
David R. Preston 71,000(4) .7%
Norman E. Rickard 67,000(5) .6%
Beat Schlagenhauf 67,000(1) .6%
Richard Worth 67,000(6) .6%
Bruce S. MacDonald 91,000(1) .8%
All Officers and Directors 1,097,000(7) 10.2%
as a group (9 individuals)
- --------------------------
(1) Represents shares of Common Stock issuable pursuant to outstanding stock
options exercisable within 60 days of the date of this table.
(2) Includes 568,000 shares of Common Stock issuable pursuant to outstanding
stock options exercisable within 60 days of the date of this table.
(3) Includes 62,000 shares of Common Stock issuable pursuant to outstanding
stock options exercisable within 60 days of the date of this table.
(4) Includes 49,000 shares of Common Stock issuable pursuant to outstanding
stock options exercisable within 60 days of the date of this table.
11
<PAGE> 14
(5) Includes 65,000 shares of Common Stock issuable pursuant to outstanding
stock options exercisable within 60 days of the date of this table.
(6) Includes 59,000 shares of Common Stock issuable pursuant to outstanding
stock options exercisable within 60 days of the date of this table.
(7) Includes 1,078,500 shares of Common Stock issuable pursuant to
outstanding stock options exercisable within 60 days of the date of this
table.
INDEPENDENT ACCOUNTANTS
The Company has selected Feldman Sherb Ehrlich & Co., P.C. (formerly
Feldman Radin & Co., P.C.), of New York City as its independent accountants for
the fiscal year ending October 30, 1999. A representative of Feldman Sherb
Ehrlich & Co., P.C., is expected to be present at the meeting with an
opportunity to make a statement if he desires to do so and is expected to be
available to respond to appropriate questions.
SOLICITATION OF PROXIES
The solicitation of proxies in the enclosed form is made on behalf of
the Company and the cost of this solicitation is being paid by the Company. In
addition to the use of the mails, proxies may be solicited personally or by
telephone or telegraph using the services of directors, officers and regular
employees of the Company at nominal cost. Banks, brokerage firms and other
custodians, nominees and fiduciaries will be reimbursed by the Company for
expenses incurred in sending proxy material to beneficial owners of the
Company's stock.
STOCKHOLDER PROPOSALS
In order to be eligible for inclusion in the Company's proxy statement
and form of proxy for the Company's annual meeting scheduled to be held in 2001,
stockholder proposals must comply with SEC Rule 14a-8 and any other applicable
rules and must be delivered to the Company's principal executive offices at
least 120 days prior to the anniversary date of mailing of this Proxy Statement
or, where the annual meeting date has changed more than 30 days from the prior
year, a reasonable time before the Company mails its proxy materials for the
ensuing year. Accordingly, stockholder proposals for the 2001 annual meeting
that are intended to comply with SEC Rule 14a-8 should be received 120 days
before the anticipated March 27 mailing date for the meeting, or November 27,
2000.
In addition, SEC Rule 14a-4 provides that with respect to any proposal
or nomination made by a stockholder at the annual meeting scheduled to be held
in 2001, the persons named as proxies by the Company in its solicitation
materials will have discretionary authority to vote on such proposal or
nomination if the Company did not have notice of the matter within 45 days of
the anniversary date of mailing of this Proxy Statement or, where the annual
meeting date has changed more than 30 days from
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<PAGE> 15
the prior year, a reasonable time before the Company mails its proxy materials
for the ensuing year. Accordingly, the persons named as proxies will have
discretionary authority with respect to any stockholder proposal or nomination
for the anticipated 2001 meeting that is received fewer than 45 days before the
anticipated March 27 mailing date for the meeting, i.e., received after February
10, 2001.
OTHER BUSINESS
Action may be taken on the business to be transacted at the meeting on
the date provided in the Notice of the Annual Meeting or any date or dates to
which an original or later adjournment of such meeting may be adjourned. As of
the date of this Proxy Statement, the management does not know of any other
matters to be presented at the meeting. If, however, other matters properly come
before the meeting, whether on the original date provided in the Notice of
Annual Meeting or any dates to which any original or later adjournment of such
meeting may be adjourned, it is intended that the holders of the proxy have
discretion to vote in accordance with their best judgment.
By Order of Board of Directors
Bruce S. MacDonald
Secretary
Randolph, Vermont
March 27, 2000
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<PAGE> 16
VERMONT PURE HOLDINGS, LTD. - PROXY
SOLICITED BY THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING TO BE HELD ON MAY 2, 2000
The undersigned Stockholder(s) of VERMONT PURE HOLDINGS, LTD., a
Delaware corporation ("Company"), hereby appoints Frank G. McDougall, Jr. and
Timothy G. Fallon, or either of them, with full power of substitution and to act
without the other, as the agents, attorneys and proxies of the undersigned, to
vote the shares of stock held by the undersigned or which the undersigned may be
entitled to vote at the Annual Meeting of Stockholders of the Company to be held
on May 2, 2000 and at all adjournments thereof. This proxy will be voted in
accordance with the instructions given on the reverse and in the discretion of
the proxies upon all other matters that may properly come before the Meeting. IF
NO INSTRUCTIONS ARE GIVEN, THIS PROXY WILL BE VOTED FOR ALL OF THE FOLLOWING
PROPOSALS.
The undersigned hereby revokes all proxies, if any, hitherto given by
him to others for said Meeting.
(CONTINUED, AND TO BE SIGNED, ON OTHER SIDE.)
<PAGE> 17
PLEASE DATE, SIGN AND MAIL YOUR
PROXY CARD BACK AS SOON AS POSSIBLE!
ANNUAL MEETING OF STOCKHOLDERS
VERMONT PURE HOLDINGS, LTD.
MAY 2, 2000
PLEASE DETACH AND MAIL IN THE ENVELOPE PROVIDED
<TABLE>
<S> <C>
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A [X] Please mark your
votes as in this
example
FOR all nominees WITHHOLD NOMINEES:
listed at right AUTHORITY to Timothy G. Fallon
except as marked vote for all Phillip Davidowitz
to the contrary nominees Robert C. Getchell
below listed at right Frank G. McDougall, Jr.
David R. Preston
1. Election of [ ] [ ] Norman E. Rickard 2. In their discretion, the proxies are authorized
the following Beat Schlagenhauf to vote upon such other business as may come
Directors: Richard Worth before the meeting or any adjournment thereof.
INSTRUCTIONS: To withhold authority to vote
for any individual nominee, write that I PLAN ON ATTENDING THE ANNUAL MEETING [ ]
nominee's name in the space below.
-------------------------------------------
Signature __________________________ Signature if held jointly ______________________________________ Dated ______________, 2000
NOTE: Please sign exactly as name appears above. When shares are held by joint tenants, both should sign. When signing as
attorney, executor, administrator, trustee or guardian, please give full title as such. If a corporation, please sign in
full corporate name by President or other authorized officer. If a partnership, please sign in partnership name by
authorized person.
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</TABLE>
