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 [ ]
[ ] Preliminary Proxy Statement [ ] Confidential,
for use of
the
[x] Definitive Proxy Statement Commission
Only (as
permitted by Rule 14-a-6(e)(2)
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to (s) 240.14a-11(c) or
(S) 240.14a.12
The Vermont Teddy Bear Co., Inc.
(Name of Registrant as Specified In Its Charter)
The Vermont Teddy Bear Co., Inc.
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (check the appropriate box):
[x] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-
6(i)(1)m 14a-6(i)(2)
or Item 22a(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to
Exchange Act
Rule 14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules
14a-6(i)(4) and
0-11.
<PAGE>
(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:
[ ] Check box if any part of the fee is offset as provided
by Exchange
Act Rule 0-11(a)(2) and identify the filing which the
offsetting
fee was paid previously. Identify the previous filing by
registration statement number, or the Form or Schedule and
date of
its filing.
(1) Amount Previously Paid: N/A
(2) Form, Schedule or Registration Statement No.:
______
Schedule 14A, File No.: ______
(3) Filing Party:
(4) Date Filed:
<PAGE>
The Vermont Teddy Bear Co., Inc.
Notice of 1997 Annual Meeting of Shareholders
and
Proxy Statement
<PAGE>
The Vermont Teddy Bear Co., Inc.
Notice of Annual Meeting of Stockholders
<PAGE>
The Annual Meeting of the Stockholders of The Vermont
Teddy Bear
Co., Inc. will be held at 10:00 a.m. EST on Thursday,
December 18, 1997,
at the Company's retail/manufacturing facility, 2236
Shelburne Road,
Route Seven, Shelburne, Vermont, for the following purposes:
1. To elect seven (7) individuals to the Company's
Board of
Directors for the ensuing year.
2. To ratify the selection of Arthur Andersen LLP as
the
Company's independent public accountants for the 1998 fiscal
year.
3. To transact such other business that may properly
come before
the meeting or adjournment thereof.
BY ORDER OF THE BOARD OF DIRECTORS
Spencer C. Putnam, Secretary
Shelburne, Vermont
October 27, 1996
<PAGE>
The Vermont Teddy Bear Co., Inc.
2236 Shelburne Road
Post Office Box 965
Shelburne, Vermont 05482
October 27, 1997
Proxy Statement
Annual Meeting of Stockholders
To Be Held December 18, 1997
This proxy statement is furnished to the stockholders
of The
Vermont Teddy Bear Co., Inc. (the "Company"), a New York
corporation, in
connection with the Annual Meeting of Stockholders of the
Company to be
held at 10:00 a.m. on Thursday, December 18, 1997, at the
Company's
retail/manufacturing facility located at 2236 Shelburne
Road, Route
Seven, Shelburne, Vermont.
The enclosed proxy card is furnished by the Company.
This proxy is
<PAGE>
being solicited by the Company's Board of Directors for use
at the Annual
Meeting or at any adjournment thereof. A proxy duly
executed and
returned by a stockholder will be voted as directed by the
proxy, and, if
no choice is specified, the proxy will be voted in
accordance with the
recommendations of the Board of Directors contained herein.
As to other
matters, if any, to be voted upon, the persons named in the
proxy will
take such action as the Board of Directors may deem
advisable.
All expenses of soliciting proxies are being borne by
the Company.
It is expected that solicitations will be made primarily by
mail, but
regular employees or representatives of the Company may also
solicit
proxies by telephone or other communication methods and
arrange for
nominees, custodians and fiduciaries to forward proxies and
proxy
material to their principals at the Company's expense.
A proxy may be revoked at any time before it is
exercised by
notifying the Company's Secretary in writing at the address
set forth
above or by attending the Annual Meeting and voting the
shares covered by
the proxy in person.
It is expected that this Proxy Statement will be mailed
on or about
November 19, 1997, to stockholders of record on November 12,
1997.
Voting Securities and Principal Holders Thereof
The Board of Directors has fixed the close of business
on November
12, 1997, as the record date for the determination of
Stockholders
entitled to receive notice of and to vote at the Annual
Meeting. Each
share of the Company's Common Stock outstanding on the
record date is
entitled to one vote.
<PAGE>
As of the close of business on October 10, 1997, there
were
5,173,058 shares of the Company's Common Stock outstanding
and entitled
to vote, of which 2,752,025 shares, or approximately 53.2%
were owned
beneficially by the current directors and officers of the
Company as a
group.(1)
The following table presents information about those
persons known
by the Company to own beneficially, as of October 10, 1997,
more than
five percent of the shares of the Company's Common Stock
outstanding, as
well as the directors and executive officers of the Company:
Name and Address Number of Percent
of
of Beneficial Owner Shares Owned Shares
Outstanding
Jason Bacon
RR #1, Box 78
New Haven, VT 05472 5,500(2) 0.1
R. Patrick Burns
c/o The Vermont Teddy Bear Co., Inc.
2236 Shelburne Road
P.O. Box 965
Shelburne, VT 05482 34,550(3) 0.7
David W. Garrett
c/o The Garrett Hotel Group
161 Battery Street
Burlington, Vermont 05401 190,000(4) 3.7
Fred Marks
c/o The Vermont Teddy Bear Co., Inc.
2236 Shelburne Road
P.O. Box 965
Shelburne, VT 05482 600,500(5) 11.6
Joan H. Martin
34 Woodbury Hill
Woodbury, CT 06798 1,840,975(6) 35.6
Margaret H. Martin
500 Lovell Avenue
Mill Valley, CA 94941 267,000 5.2
Spencer C. Putnam
c/o The Vermont Teddy Bear Co., Inc.
<PAGE>
2236 Shelburne Road
P.O. Box 965
Shelburne, VT 05482 91,000(7) 1.8
Elisabeth B. Robert
c/o The Vermont Teddy Bear Co., Inc.
2236 Shelburne Road
P.O. Box 965
Shelburne, VT 05482 2,700(8) 0.1
(1)These figures include a total of 85,950 shares held of
record as a
group by spouses and minor children of the Company's current
directors
and officers. These figures do not include any options
granted under
the Company's Incentive Stock Option Plan to all current
directors and
officers as a group to purchase 1,253,342 shares of the
Company's Common
Stock, of which 675,256.50 shares have vested. These figures
do not
include any of the options granted under the Company's Non-
Employee
Director Stock option Plan to purchase 32,500 shares of the
Company's
Common Stock, all of which have fully vested. These figures
do not
include grants of Non-Qualified Options to two Directors of
the Company
to purchase 60,000 shares of the Company's common stock,
which have
fully vested. These figures do not include a Warrant for
the Purchase
of 43,826 shares of the Company's Common stock granted to
Joan Martin,
which has fully vested. These figures do not include a
Warrant for the
Purchase of 22,670 shares of the Company's Common Stock, or
9,314 shares
of the Company's Series B Convertible Preferred Stock, which
are
convertible into 17,232 shares of the Company's Common
Stock, both of
which are held by Jason Bacon.
(2)This figure includes 500 shares held of record by Mr.
Bacon's wife,
as to which beneficial ownership is disclaimed. This figure
does not
include a Warrant for the Purchase of 22,670 shares of the
Company's
Common Stock, or 9,314 shares of the Company's Series B
Preferred Stock,
<PAGE>
which are convertible into 17,232 shares of the Company's
Common Stock.
The figure does not include options granted under the
Company's Non-
Employee Director Stock Option Plan to Mr. Bacon to purchase
3,500
shares of the Company's Common Stock, which have fully
vested.
(3)This figure includes 10,150 shares held of record by Mr.
Burns' wife,
as to which beneficial ownership is disclaimed. This figure
does not
include options granted under the Company's Incentive Stock
Option Plan
to Mr. Burns to purchase 900,000 shares of the Company's
Common Stock,
of which 562,500 shares have vested.
(4)This figure includes 36,000 shares held of record by Mr.
Garrett's
children. This figure also includes 22,000 shares held of
record by Mr.
Garrett's wife, as to which beneficial ownership is
disclaimed. This
figure does not include options granted under the Company's
Non-Employee
Director Stock Option Plan to Mr. Garrett to purchase 10,000
shares of
the Company's Common Stock, or a Non-Qualified Option to
purchase 30,000
shares of the Company's Common Stock, both of which will
have fully
vested.
(5)This figure includes 500 shares held of record by Mr.
Marks' wife, as
to which beneficial ownership is disclaimed. This figure
does not
include options granted under the Company's Non-Employee
Director Stock
Option Plan to Mr. Marks to purchase 8,000 shares of the
Company's
Common Stock, which have fully vested.
(6)This figure includes 1,120,000 shares held of record by
the Joan
Hixon Martin Trust. This figure also includes 720,975
shares acquired
on the foreclosure of a stock pledge securing an $800,000
loan by Ms.
Martin to Mr. John N. Sortino. This figure does not include
152,995
shares of the Company's Common Stock held of record by Ms.
Martin's son,
Franc Sloan, and 267,000 shares of the Company's Common
Stock held of
<PAGE>
record by Ms. Martin's daughter, Margaret H. Martin. Ms.
Martin
disclaims beneficial ownership of shares owned by Mr. Franc
Sloan and
Ms. Margaret H. Martin. This figure does not include
options granted
under the Company's Non-Employee Director Stock Option Plan
to Ms.
Martin to purchase 11,000 shares of the Company's Common
Stock, a Non-
Qualified Option to purchase 30,000 shares of the Company's
Common
Stock, or a Warrant for the Purchase of 43,826 shares of the
Company's
Common Stock, all of which have fully vested.
(7)This figure includes 10,000 shares held of record by Mr.
Putnam's
children. This figure also includes 2,500 shares held of
record by Mr.
Putnam's wife, as to which beneficial ownership is
disclaimed. This
figure does not include options granted under the Company's
Incentive
Stock Option Plan to Mr. Putnam to purchase 47,832 shares of
the
Company's Common Stock, of which 20,874 shares have vested.
(8)This figure includes 2,000 shares held of record by Ms.
Robert's
minor children. This figure does not include options
granted under the
Company's Incentive Stock Option Plan to Ms. Robert to
purchase 305,510
shares of the Company's Common Stock, of which 97,822.50
shares have
vested.
As of June 30, 1997, the Directors and Executive Officers of
the Company
were as follows:
Name Age Office
Jason Bacon 63 Director
R. Patrick Burns 53 Director, President,
and Chief Executive Officer
David W. Garrett 54 Director
Joan H. Martin 73 Director
Fred Marks 69 Director and Chairman of
the Board
Spencer C. Putnam 51 Director, Vice President,
and Secretary
Elisabeth B. Robert 42 Director, Senior Vice
President,
Treasurer, and Chief Financial
<PAGE>
Officer
On October 10, 1997, the Board of Directors appointed
Elisabeth B.
Robert to the position of President of the Company. Ms.
Robert had
previously served as the Company's Chief Financial Officer
since
September 1995. Ms. Robert will be assuming the title of
President from
R. Patrick Burns, who stepped down from that position. Mr.
Burns will
remain active as a consultant to the Company and will also
continue as a
member of the Company's Board of Directors.
All of the Company's directors hold office until the
1998 Annual
Meeting of Stockholders and until their successors are
elected and
qualified. The Board of Directors has an Audit Committee,
on which Mr.
Bacon, Mr. Marks, and Ms. Martin serve; an Executive
Committee, on which
all directors serve; and an Option Committee, on which Mr.
Garrett and
Ms. Martin serve.
Meetings of the Board of Directors and Its Committees
The Board of Directors held three meetings during the
fiscal year
ended June 30, 1997, and took all other action by unanimous
consent in
lieu of actual meetings. During the fiscal year ended June
30, 1997,
there were nine meetings of the Option Committee and one
meeting of the
Audit Committee. During the fiscal year ended June 30,
1997, all
directors attended at least 75% of the meetings of the Board
of Directors
and the meetings held by Committees of the Board on which
they served.
Compensation of Directors and Executive Officers
At the 1996 Annual Meeting of Stockholders, an
amendment to the
Bylaws authorizing the Company to compensate members of its
Board of
Directors was approved. Also at the 1996 Annual Meeting of
Stockholders,
<PAGE>
the Non-Employee Directors Stock Option Plan (the "Plan")
was approved by
stockholders. Pursuant to the Plan, each participating
director receives
an option to purchase 2,000 shares of the Common Stock of
the Company as
an annual retainer; the Chairman of the Board of Directors,
if he or she
is eligible to participate in the Plan, shall also be
entitled to receive
an additional annual retainer in the form of four stock
options to
purchase 2,000 shares of the Company's Common Stock each.
In addition to
the annual retainer options, each participating director
receives an
option to purchase 1,500 shares of the Common Stock of the
Company for
actual attendance at each regular or special meeting of the
Board of
Directors and an option to purchase 1,000 shares of Common
Stock of the
Company for actual attendance at a meeting of a committee of
the Board of
Directors. The Chairman of the Board of Directors also
receives
compensation of $5,000 per calendar quarter, and all outside
Directors
are also reimbursed up to $1,000 per meeting for their
expenses of
attendance.
Summary Compensation Table
Other
Fis- Annual Under- LTIP
Other
Name and cal Compen- Stock lying Pay-
Compen-
Principal Year Salary Bonus sation Awards Options outs
sation
R. Patrick 1997 $183,894 $ - $26,513 - 900,000 $ -
$100,000(1)
Burns, 1996 $ - $ - $23,790 - 450,000 $ -
$ -
Chief
Executive
Officer
Elisabeth B. 1997 $ 98,077 $ - $ 5,600 - 305,510 $ -
$ -
<PAGE>
Robert, 1996 $ 65,713 $ - $ 3,267 - 80,510 $ -
$ -
Chief
Financial
Officer
(1) Forgiveness of amounts due the Company from Mr. Burns.
On June 19, 1995, Mr. Sortino resigned as the Chief
Executive
Officer and President of the Company. The Company entered
into a
separation agreement with Mr. Sortino on that date. Under
this
separation agreement, Mr. Sortino is entitled to receive: i)
cash
compensation of $100,000 in calendar year 1995 (including
compensation
paid to Mr. Sortino as Chief Executive Officer of the
Company), $120,000
in calendar year 1996 and $150,000 in calendar year 1997;
ii) a bonus of
$100,000; iii) the forgiveness of amounts due to the Company
totaling
$193,000; and iv) health insurance benefits generally
available to
employees of the Company. The Company accrued and expensed
the entire
amount due Mr. Sortino under the agreement during the six-
month
Transition Period ending June 30, 1995, and will not seek
any services
from him in the future.
On July 31, 1995, the Company and Mr. Burns signed an
agreement
providing for his employment as Chief Executive Officer of
the Company
for a term ending February 1, 1997. Under this employment
agreement, Mr.
Burns was entitled to receive: i) a base salary of $150,000
per year,
commencing April 1, 1996; ii) reimbursement for necessary
and reasonable
expenses incurred by him in the performance of his duties as
CEO; iii) an
annual bonus for fiscal year 1996 of 10% of the amount by
which the
Company's operating profit exceeds $1,000,000 and an annual
bonus for
fiscal year 1997 of 10% of the amount by which the Company's
operating
profit exceeds $2,000,000; iv) options to purchase 450,000
shares of the
<PAGE>
Company's Common Stock at the purchase price of $3.875 per
share, being
equal to the market value at the date granted; v) any
benefits generally
available to the officers of the Company from time to time;
and vi) a
company car of Mr. Burns' choice. Mr. Burns voluntarily
waived all cash
compensation payable under this agreement in the fiscal year
ending June
30, 1996.
On July 31, 1995, the Company also entered into an
agreement with
Mr. Burns to extend to him a loan in an amount not to exceed
$100,000.
Under this agreement, the Company had made loans totaling
$41,818 as of
June 30, 1996. The agreement provided that the loan would
mature on
April 1, 1998, but provided for forgiveness of the loan if
Mr. Burns
remained employed by the Company until that date.
On January 22, 1996, Mr. Burns' option agreement was
canceled and a
new option agreement was entered into by which the Company
granted an
option to purchase 450,000 shares of the Company's Common
Stock at an
exercise price of $3.06 per share, vesting at 25 percent per
annum
beginning on that date.
As of June 30, 1996, Mr. Burns signed a replacement
agreement with
the Company providing for his continued employment as the
Chief Executive
Officer for a term of four years ending June 30, 2000.
Under this new
agreement, Mr. Burns is entitled to receive: i) a base
salary of $187,500
per year, commencing July 1, 1996; ii) reimbursement for
necessary and
reasonable expenses incurred by him in the performance of
his duties as
Chief Executive Officer; iii) an annual cash bonus for
fiscal year 1997
of 10% of the amount by which the Company's operating profit
exceeds
$500,000, plus a non-qualified stock option to purchase
15,000 shares of
the Company's Common Stock, at an exercise price of $0.01
per share
<PAGE>
(which Mr. Burns refused and was never issued), and an
annual bonus for
fiscal years 1998, 1999, and 2000 of 10% of the amount by
which the
Company's operating profit exceeds $1,000,000, $1,500,000
and $2,000,000,
respectively; iv) options to purchase an additional 450,000
shares of the
Company's Common Stock at the purchase price of $2.875 per
share, being
equal to the market value on the date of grant, vesting at
25 percent per
annum beginning July 1, 1997; v) any benefits generally
available to the
officers of the Company from time to time, including,
without limitation,
life insurance and medical benefits; and vi) a company car
of Mr. Burns'
choice. The agreement prohibits Mr. Burns from directly or
indirectly
competing with the business of the Company during the course
of his
employment and for a period of eighteen months thereafter.
In addition, as of June 30, 1996, Mr. Burns signed an
amendment to
his loan agreement with the Company, which increased the
available loan
amount to $116,818 and revised the forgiveness schedule such
that all
outstanding amounts and related interest charges will be
forgiven on July
29, 2000, provided that he remains continuously employed by
the Company
until that date. As of June 30, 1997, the Company has
reserved for all
loans due from Mr. Burns.
As of July 1, 1996, the Company and Ms. Robert signed
an agreement
providing for her continued employment as the Senior Vice
President,
Treasurer, and Chief Financial Officer of the Company for a
term of five
years ending June 30, 2001. Under this agreement, Ms.
Robert is entitled
to receive: i) a base salary of $100,000, $110,000 and
$120,000 per year
in fiscal years 1997, 1998, and 1999, respectively; ii)
reimbursement for
necessary and reasonable expenses incurred by her in the
performance of
her duties as Chief Financial Officer; iii) an annual cash
bonus for
<PAGE>
fiscal year 1997 of 3% of the amount by which the Company's
operating
profit exceeds $500,000, plus a non-qualified stock option
to purchase
5,000 shares of the Company's Common Stock, at an exercise
price of $0.01
per share (which Ms. Robert refused and was never issued),
and an annual
cash bonus for fiscal years 1998, 1999, 2000, and 2001 of 3%
of the
amount by which the Company's operating profit exceeds
$1,333,000,
$2,167,000, $2,000,000, and $2,500,000, respectively; iv)
options to
purchase an additional 225,000 shares of the Company's
Common Stock at a
price of $2.875 per share, being equal to the market value
on the dates
of grant, vesting at 25 percent per annum beginning July 1,
1997; v) any
benefits generally available to the officers of the Company
from time to
time, including, without limitation, life insurance and
medical benefits;
and vi) a company car of Ms. Robert's choice. The agreement
prohibits
Ms. Robert from directly or indirectly competing with the
business of the
Company during the course of her employment and for a period
of eighteen
months thereafter.
On June 3, 1997, the Company offered to grant options
with an
exercise price of $1.00 per share (the fair market value of
the Company's
Common Stock on that date) in exchange for the surrender of
all
outstanding qualified employee incentive stock options at
that date. Mr.
Burns and Ms. Robert participated in this exchange. The
original
exercise price for Mr. Burns' options was $2.875 per share,
and the
original exercise price for Ms. Robert's options were
between $2.75 and
$2.875 per share.
Stock Options
The following table sets forth the options granted to
Mr. Burns and
Ms. Robert during the fiscal year ended June 30, 1997:
<PAGE>
Option Grants in Last Fiscal Year
Percent of
Number of Total
Securities Granted to
Underlying Employees Exercise
Options in Fiscal or Base Price
Expiration
Name Granted Year ($ per share)
Dates
R. Patrick Burns 900,000 63.0 $1.00
7/1/2006
Elisabeth B. Robert 380,510 21.4 $1.00
7/1/2006-
8/19/2006
On June 3, 1997, the Company offered to grant options
with an
exercise price of $1.00 per share (the fair market value of
the Company's
Common Stock on that date) in exchange for the surrender of
all
outstanding qualified employee incentive stock options at
that date. Mr.
Burns and Ms. Robert participated in this exchange. The
original
exercise price for Mr. Burns' options was $2.875 per share,
and the
original exercise price for Ms. Robert's options were
between $2.75 and
$2.875 per share. The columns "Number of Securities
Underlying Options
Granted" and "Percent of Total Options Granted to Employees
in Fiscal
Year" reflect only those options granted on June 3, 1997,
which replaced
all prior option grants outstanding at that date.
Interests in Certain Transactions
By an agreement dated April 12, 1996, Joan Martin
waived her right
to receive $126,000 of accumulated dividends on the
Company's Series A
Preferred Stock in exchange for a five-year warrant to
purchase 43,826
shares of Common Stock at an exercise price of $2.875 per
share. As the
result of subsequent warrant and option issuances by the
Company, certain
<PAGE>
anti-dilution provisions of Ms. Martin's warrant agreement
were
triggered, such that Ms. Martin now holds a warrant to
purchase 50,795
shares of Common Stock at an exercise price of $2.48 per
share.
On December 31, 1996, the Company entered
into a consulting
agreement with Venture Management Group, Inc. The President
of Venture
Management Group, Inc. currently serves as a member of the
Company's
Board of Directors. The terms of this agreement commenced
on January 1,
1997 and will terminate on December 31, 2006, unless earlier
terminated
in accordance with this agreement. In consideration of the
consulting
services to be provided, the Company will pay fees of
$65,000 per year,
payable monthly, plus expenses and disbursements reasonably
incurred in
the performance of services under the agreement. In the
event that the
Company defaults in its obligations under this agreement, or
if a change
in control of the Company occurs during the term of the
agreement,
Venture Management Group, Inc. may, at its sole option,
declare the
entire compensation under this contract to be immediately
due and
payable.
On October 10, 1996, subsequent to his resignation as
President of
the Company, the Company entered into a consulting agreement
with R.
Patrick Burns, to begin on November 1, 1997 and continue
through October
31, 1999. In consideration of the consulting services to be
provided,
the Company will pay fees of $75,000 per year, payable
monthly, as well
as the forgiveness of amounts due the Company totaling
$116,818.
Additionally, stock options granted to Mr. Burns which would
have vested
as of August 1, 1998, had Mr. Burns remained continuously
employed by the
Company, will become vested as of November 1, 1997.
<PAGE>
Delinquent Filings
Under federal securities laws, the Company's directors,
certain of
its officers and any persons holding more than 10% of the
Company's
Common Stock are required to report their ownership thereof
and any
changes in that ownership to the Securities and Exchange
Commission.
Specific due dates for these reports have been established,
and the
Company is required to report in this proxy statement any
failure to file
by these dates during the fiscal year ended June 30, 1997.
To the
knowledge of the Company, all of these filing requirements
have been
satisfied by the Company's directors, officers, and, to the
knowledge of
the Company, its 10% shareholders, except as follows: 1) Mr.
Garrett was
required to file a Form 4 on December 10, 1996, with respect
to the sale
of 5,000 shares of the Company's Common Stock on November
12, 1996; 2)
Mr. Garrett was required to file a Form 4 on February 10,
1997 for the
gifting of 8,000 shares of the Company's Common Stock on
January 30, 1997
from Mr. Garrett's wife to one of Mr. Garrett's minor
children.
ITEM 1. Proposal to Elect Directors
Pursuant to the Company's Bylaws, the Board of
Directors is
authorized to establish, from time to time, the number of
directors, with
a maximum of nine directors, and has established a Board of
seven (7)
Directors to be elected at the 1997 Annual Meeting for terms
of one year
each and until their successors are elected and qualified.
It is the intention of the persons named in the
accompanying form
of proxy to vote for the nominees named below. In the event
that,
because of death or unforeseen disability, any of the
nominees designated
below is unavailable for election, the persons named in the
accompanying
<PAGE>
form of proxy reserve the right to vote such proxy for such
other person
or persons as may be nominated by the Board of Directors to
fill such
vacancies so as to provide a full board.
Election of directors requires a plurality vote. The
seven (7)
nominees for directors are listed below with brief
statements of their
principal occupations and other pertinent information. As
indicated
below, all of the nominees are currently serving on the
Company's Board
of Directors. Also indicated below is the number of shares
of the
Company's Common Stock owned beneficially by each of the
nominees as of
October 10, 1997.
Director Nominees
Jason Bacon became a director of the Company in 1997.
Mr. Bacon is
presently a consultant to non-profit organizations and a
private
investor, focusing on real estate and securities with
international
perspective. Before that, Mr. Bacon served as a Managing
Director at
Kidder, Peabody & Company, where he developed institutional
equity sales
and a related trading and advisory business. Shares owned:
5,500 (0.1%)
R. Patrick Burns joined the Company as its Chief
Executive Officer
in August 1995. He was appointed a director of the Company
on August 30,
1995. On October 10, 1997, Mr. Burns stepped down from his
position as
President and Chief Executive Officer of the Company.
Before joining the
Company, Mr. Burns was the Chief Executive Officer of Disney
Direct
Marketing, a division of The Walt Disney Company. Prior to
holding that
position, Mr. Burns also served as Senior Vice-President and
General
Manager at J. Crew, Inc. and as Vice-President of
Merchandising and
Product Development at L.L. Bean, Inc. Shares owned: 34,550
(0.7%)
<PAGE>
David W. Garrett has been a director since 1987. He is
a Vice
President of First Albany Corporation, an investment banking
and
brokerage firm. Mr. Garrett is also President of The Black
Willow Group,
Ltd., a private company which owns and operates The Point, a
luxury hotel
in Saranac Lake, New York, and is President of The Garrett
Hotel Group, a
private hotel development and consulting firm. Shares
owned: 190,000
(3.7%)
Fred Marks became a director of the Company in 1987 and
became its
Chairman of the Board in 1989. Mr. Marks presently serves as
Chairman of
the Board of two other privately held companies: Selectech,
Ltd., a
manufacturer of remote controls for computers and
televisions; and Contaq
Technologies, a manufacturer of ultra-sonic instruments. He
devotes only
a part of his time to the business of the Company. Shares
owned: 600,500
(11.6%)
Joan H. Martin is a private investor, who has been a
director of
the Company since 1991. Ms. Martin has no business
experience during the
past six years apart from managing her own private
investment portfolio.
Shares owned: 1,840,975 (35.6%)
Spencer C. Putnam joined the Company as its Vice
President in June,
1987. He has been a director and Secretary of its Board
since 1989.
Before joining the Company, Mr. Putnam was the Director of
the
Cooperative Education Program at the University of Vermont
from 1980 to
1987. Shares owned: 91,000 (1.8%)
Elisabeth B. Robert joined the Company as its Chief
Financial
Officer in September 1995, and was appointed a director of
the Company on
January 22, 1996, and Treasurer of the Company on April 22,
1996. On
October 10, 1997, the Board of Directors appointed Ms.
Robert to the
<PAGE>
office of President and Chief Executive Officer of the
Company. Before
joining the Company, Ms. Robert was the Chief Financial
Officer,
Executive Vice-President, and Founding Partner of AirMouse
Remote
Controls, a manufacturing firm specializing in remote
control devices.
Prior to holding that position, Ms. Robert was an
independent management
consultant, as well as Director of Gas Supply for Vermont
Gas Systems,
Inc. Shares owned: 2,700 (0.1%)
Voting Information
The Board of Directors recommends a vote FOR approval
of the
nominees named above to serve as directors of the Company
for the ensuing
year and until their successors are elected and qualified.
The
affirmative vote of a plurality of the shares of the
Company's Common
Stock entitled to vote at the Annual Meeting of Shareholders
is required
for the election of directors. Appointed proxies will vote
shares FOR
election of all the directors enumerated above unless
instructed
otherwise in the proxy. Abstentions and broker non-votes
will have the
same effect as votes against election.
ITEM 2: Proposal to Select Independent Public Accountants
During Fiscal Year 1997, Arthur Andersen LLP audited
the Company's
financial statements and also provided other professional
services to the
Company in connection with Securities and Exchange
Commission filings.
The report of Arthur Andersen LLP regarding the Company's
financial
statements for the year ending June 30, 1997, appears in the
Company's
1997 Annual Report on Form 10-KSB. In accordance with the
recommendation
of its Audit Committee, the Board of Directors has appointed
Arthur
Andersen LLP as independent public accountants of the
Company for the
<PAGE>
year ending June 30, 1998, subject to ratification by
Stockholders at the
Annual Meeting. Stockholder ratification of Arthur Andersen
LLP as
independent public accountants of the Company requires a
majority vote.
A representative of Arthur Andersen LLP is expected to
be present
at the Annual Meeting of Stockholders on December 18, 1997,
and shall
have the opportunity to make a statement, if the
representative desires
to do so, and is expected to be available to respond to
appropriate
questions.
Voting Information
The Board of Directors recommends a vote FOR approval
of ratifying
the selection of Arthur Andersen LLP as independent public
accountants
for the fiscal year ending June 30, 1998. The affirmative
vote of a
majority of the shares of the Company's Common Stock
entitled to vote at
the Annual Meeting of Shareholders is required for the
ratification of
the selection of Arthur Andersen LLP as independent public
accountants.
Appointed proxies will vote shares FOR election of all the
directors
enumerated above unless instructed otherwise in the proxy.
Abstentions
and broker non-votes will have the same effect as votes
against election.
ITEM 3. Other Business
The Company's Board of Directors knows of no other
matters which
may come before the Annual Meeting. If, however, any other
business
should properly come before the Annual Meeting, the proxies
relating to
such meeting will be voted with respect thereto in
accordance with the
best judgment of the Board.
Any stockholder proposal intended for presentation at
the 1998
<PAGE>
Annual Meeting of Stockholders must be received by the
Secretary of the
Company at its principal offices in Shelburne, Vermont, by
June 29, 1998,
for inclusion in the Company's Proxy Statement and form of
proxy relating
to the 1998 Annual Meeting.
October 27, 1997 The Vermont Teddy Bear Co.,
Inc.
