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 14-a-6(e)(2))
[x] Definitive Proxy Statement
[ ] 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] No fee required
[ ] Fee computed on table below per Exchange Act Rules
14a-6(i)(4) 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:
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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 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:
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The Vermont Teddy Bear Co., Inc.
Notice of 1998 Annual Meeting of Shareholders
and
Proxy Statement
<PAGE>
The Vermont Teddy Bear Co., Inc.
Notice of Annual Meeting of Stockholders
The Annual Meeting of the Stockholders of The Vermont
Teddy Bear Co., Inc. will be held at 10:00 a.m. EST on
Thursday, January 7, 1999, at the Company's
retail/manufacturing facility, 6655 Shelburne Road, Route
Seven, Shelburne, Vermont, for the following purposes:
1. To have Common shareholders elect six (6)
individuals to the Company's Board of Directors for the
ensuing year.
2. To have Series C Preferred shareholders elect two
(2) individuals to the Company's Board of Directors for the
ensuing year.
3. To ratify the selection of Arthur Andersen LLP as
the Company's independent public accountants for the 1999
fiscal year.
4. To authorize the Company's Board of Directors to
file an Amendment to the Restated Certificate of
Incorporation to effectuate a one for five reverse stock
split.
5. To transact such other business that may properly
come before the meeting or adjournment thereof.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Spencer C. Putnam
Spencer C. Putnam, Secretary
Shelburne, Vermont
November 25, 1998
<PAGE>
The Vermont Teddy Bear Co., Inc.
6655 Shelburne Road
Post Office Box 965
Shelburne, Vermont 05482
November 25, 1998
Proxy Statement
Annual Meeting of Stockholders
To Be Held January 7, 1999
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, January 7, 1999, at the Company's
retail/manufacturing facility located at 6655 Shelburne
Road, Route Seven, Shelburne, Vermont.
The enclosed proxy card is furnished by the Company.
This proxy is 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 27, 1998, to stockholders of record on
November 20, 1998.
<PAGE>
Voting Securities and Principal Holders Thereof
The Board of Directors has fixed the close of business
on November 20, 1998, 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 on all matters, except for the election
of Series C Preferred directors, and each share of the
Company's Series C Preferred stock outstanding on the record
date is entitle to one vote on those matters on which Series
C stockholders vote as a class, and 9,523 votes on all other
matters.
The following table presents information, as of
November 4, 1998, about all classes of the Company's stock
owned by the directors and executive officers of the
Company:
Number of Percentage
Name and Address Title of Shares of Class
of Beneficial Owner Class Owned Outstanding
Jason Bacon Common 15,500(1) 0.3
RR #1, Box 78 Preferred B 9,314(2) 4.5
New Haven, VT 05472
R. Patrick Burns Common 22,650(3) 0.4
c/o The Vermont Teddy Bear Co., Inc.
6655 Shelburne Road, P.O. Box 965
Shelburne, VT 05482
Robert D. Delsandro, Jr. Common -(4) -
c/o The Vermont Teddy Bear Co., Inc.
6655 Shelburne Road, P.O. Box 965
Shelburne, VT 05482
Fred Marks Common 600,500(5) 11.6
c/o The Vermont Teddy Bear Co., Inc.
6655 Shelburne Road, P.O. Box 965
Shelburne, VT 05482
Joan H. Martin Common 1,840,975(6) 35.5
34 Woodbury Hill Preferred A 90 100.0
Woodbury, CT 06798
Spencer C. Putnam Common 87,000(7) 1.7
c/o The Vermont Teddy Bear Co., Inc.
6655 Shelburne Road, P.O. Box 965
Shelburne, VT 05482
Elisabeth B. Robert Common 29,200(8) 0.6
c/o The Vermont Teddy Bear Co., Inc.
6655 Shelburne Road, P.O. Box 965
Shelburne, VT 05482
T. Nathanael Shepherd Preferred C 53.8(9) 89.7
c/o The Shepherd Group LLC
636 Great Road
Stow, MA 01775
Thomas R. Shepherd Preferred C 60.0(10) 100.0
c/o The Shepherd Group LLC
636 Great Road
Stow, MA 01775
Directors and Officers Common 2,585,325 49.9
as a group Preferred A 90 100.0
Preferred B 9,314 4.5
Preferred C 60.0 100.0
(1) 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.
The figure does not include options granted under the
Company's Non-Employee Director Stock Option Plan to Mr.
Bacon to purchase 7,000 shares of the Company's Common
Stock, which have fully vested.
(2) Mr. Bacon's 9,314 shares of Series B Preferred Stock are
convertible into 25,000 shares of the Company's Common
Stock.
(3) This figure includes 5,975 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. The remaining 337,500
shares will not vest, as Mr. Burns is no longer an employee
of the Company.
(4) This figure does not include options granted under the
Company's Incentive Stock Option Plan to Mr. Delsandro to
purchase 40,000 shares of the Company's Common Stock, of
which 1,250 shares have vested.
(5) This figure includes 500 shares held of record by Mr.
Marks' wife, as to which beneficial ownership is disclaimed.
(6) This figure includes 1,120,000 shares held of record by
the Joan Hixon Martin Trust. This figure does not include
118,995 shares of the Company's Common Stock held of record
by Ms. Martin's son, Franc Sloan, and 266,500 shares of the
Company's Common Stock held of 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 a
Warrant for the Purchase of 51,841 shares of the Company's
Common Stock, which has fully vested.
(7) This figure includes 10,000 shares held of record by Mr.
Putnam's children. This figure also includes 4,500 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 62,832 shares of the
Company's Common Stock, of which 32,832 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 625,510 shares of the
Company's Common Stock, of which 174,260 shares have vested.
(9) Mr. Shepherd's beneficial ownership consists of (i) 1.2
shares of Series C Preferred, convertible into 11,429 shares
of Common Stock, and warrants to purchase 9,917 shares of
Common Stock directly and beneficially owned by Mr.
Shepherd; (ii) .13 shares of Series C Preferred,
convertible into 1,238 shares of Common Stock, and warrants
to purchase 1,041 shares of Common Stock directly and
beneficially owned by The Shepherd Group LLC, of which Mr.
Shepherd is the President; (iii) 12.47 shares of Series C
Preferred, convertible into 118,762 shares of Common Stock,
and warrants to purchase 103,058 shares of Common Stock
beneficially owned by The Shepherd Venture Fund I, of which
The Shepherd Group LLC is its sole general partner; and (iv)
40 shares of Series C Preferred, convertible into 380,952
shares of Common Stock, and warrants to purchase 330,579
shares of Common Stock beneficially owned collectively by
other investors in the Company's Series C Preferred (the
"Investors") for which The Shepherd Group LLC has been
appointed as irrevocable proxy. Mr. Shepherd, as President
of The Shepherd Group LLC, has the right to vote all of the
shares in clauses (ii) through (iv) in connection with any
matter requiring a vote of the stockholders of the Company.
Mr. Shepherd disclaims beneficial ownership of the shares
held by the Investors.
(10) Mr. Shepherd's beneficial ownership consists of (i) 6.2
shares of Series C Preferred, convertible into 59,048 shares
of Common Stock, and warrants to purchase 51,273 shares of
Common Stock directly and beneficially owned by Mr.
Shepherd; (ii) .13 shares of Series C Preferred,
convertible into 1,238 shares of Common Stock, and warrants
to purchase 1,041 shares of Common Stock directly and
beneficially owned by The Shepherd Group LLC, of which Mr.
Shepherd is the Chairman; (iii) 12.47 shares of Series C
Preferred, convertible into 118,762 shares of Common Stock,
and warrants to purchase 103,058 shares of Common Stock
beneficially owned by The Shepherd Venture Fund I, of which
The Shepherd Group LLC is its sole general partner; (iv) 40
shares of Series C Preferred, convertible into 380,952
shares of Common Stock, and warrants to purchase 330,579
shares of Common Stock beneficially owned collectively by
the Investors for which The Shepherd Group LLC has been
appointed as irrevocable proxy; and (v) 1.2 shares of Series
C Preferred, convertible into 11,429 shares of Common Stock,
and warrants to purchase 9,917 shares of Common Stock
directly and beneficially owned by Mr. T. Nathanael Shepherd
for which The Shepherd Group LLC has the authority to vote.
Mr. Shepherd, as Chairman of The Shepherd Group LLC, has
the right to vote all of the shares in clauses (ii) through
(v) in connection with any matter requiring a vote of the
stockholders of the Company. Mr. Shepherd disclaims
beneficial ownership of the shares held by the Investors.
<PAGE>
The following table presents information, as of November 4,
1998, about all classes of the Company's stock owned by
those persons known by the Company to own beneficially five
percent or more of the shares of any voting class of the
Company's stock outstanding, other than the directors and
officers listed in the prior table:
Number of Percentage
Name and Address Title of Shares of Class
of Beneficial Owner Class Owned(11) Outstanding
Malcolm Candlish Preferred C 3.0 5.0
465 Wall's Way
Osprey, FL 34229
Edwin Kozlowski Preferred C 4.0 6.7
General Nutrition Companies
300 6th Avenue, 14th Floor
Pittsburgh, PA 15222
David Lucas Preferred C 7.5 12.5
Bonita Bay Executive Center
3451 Bonita Bay Boulevard, Suite 202
Bonita Springs, FL 34132
Margaret H. Martin Common 266,500 5.1
500 Lovell Avenue
Mill Valley, CA 94941
Ronald Rossetti Preferred C 4.0 6.7
Riverside Capital Partners
39 Brighton Avenue
Allston, MA 02134
William Watts Preferred C 3.0 5.0
General Nutrition Companies
300 6th Avenue, 14th Floor
Pittsburgh, PA 15222
(11) Each of the listed holders of Series C Preferred listed
here (the "Investors") has appointed The Shepherd Group
LLC as his, her, or its irrevocable proxy to act for and
vote on behalf of him, her, or it with respect to the Series
C Preferred Stock and Warrants in connection with any matter
requiring a vote of the stockholders of the Company. Mr. T.
Nathanael Shepherd and Mr. Thomas R. Shepherd are considered
to be the beneficial owners of the Series C Stock and
Warrants held by the Investors, although they disclaim
beneficial ownership.
<PAGE>
As of June 30, 1998, the Directors and Executive Officers of
the Company were as follows:
Name Age Office
Jason Bacon 64 Director
Robert D. Delsandro, Jr. 39 Vice President
R. Patrick Burns 54 Director
Joan H. Martin 74 Director
Fred Marks 70 Director and Chairman of the Board
Spencer C. Putnam 52 Director, Vice President, and
Secretary
Elisabeth B. Robert 43 Director, President, Treasurer,
Chief Executive Officer and Chief
Financial Officer
On January 28, 1998, David W. Garrett submitted a
letter of resignation to the Board of Directors of the
Company, which was accepted by the Board. Mr. Garrett's
resignation was for personal business reasons.
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, Ms.
Robert, and Mr. T. Nathanael Shepherd serve; a Compensation
Committee, on which Mr. Burns, Ms. Robert, and Mr. Thomas
Shepherd serve; an Executive Committee, on which Mr. Marks,
Ms. Robert, and Mr. Thomas Shepherd serve; and an Option
Committee, on which Mr. Bacon and Ms. Martin serve.
Meetings of the Board of Directors and Its Committees
The Board of Directors held eight meetings during the
fiscal year ended June 30, 1998, and took all other action
by unanimous consent in lieu of actual meetings. During the
fiscal year ended June 30, 1998, there were four meetings of
the Option Committee and one meeting of the Audit Committee.
During the fiscal year ended June 30, 1998, 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, the Non-
Employee Directors Stock Option Plan (the "Plan") was
approved by stockholders. Pursuant to the Plan, as amended
on January 22, 1998, each participating director receives an
option to purchase 2,000 shares of the Common Stock of the
Company as an annual retainer. In addition to the annual
retainer options, each participating director receives an
option to purchase up to 1,500 shares of Common Stock per
quarter for actual attendance at each regular or special
meeting of the Board of Directors. All options have an
exercise price equal to the fair market value of the Common
Stock on the date of grant, vest immediately, and are
exercisable for a period of ten years. 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
Annual Under- Other
Fiscal Compen- lying Compen-
Name and Principal Year Salary sation Options sation
Elisabeth B. Robert, 1998 $109,770 $ 5,524 100,000 $ 5,000(3)
Chief Exec. Officer 1997 $ 98,077 $ 5,600 305,510(1) $ -
Chief Fin. Officer 1996 $ 65,713 $ 3,267 80,510 $ -
R. Patrick Burns, 1998 $ 56,250 $23,220 - $ 81,818(3,4)
Chief Executive 1997 $183,894 $26,513 900,000(2) $100,000(5)
Officer 1996 $ - $23,790 450,000 $ -
(1) Figures reflect re-pricing of stock options granted in
1996 as well as new issuances in 1997.
(2) Figure reflects re-pricing of stock options granted in
1996, as well as new issuances in 1997. Of the 900,000
shares under option, Mr. Burns is vested in 562,000 shares.
The remaining 337,500 shares will not vest, as Mr. Burns is
no longer an employee of the Company.
(3) Includes cash compensation in lieu of stock options
granted as part of Ms. Robert's and Mr. Burns' employment
agreements with the Company.
(4) Includes forgiveness of amounts due to the Company from
Mr. Burns and amounts paid to Mr. Burns under his consulting
contract with the Company.
(5) Includes forgiveness of amounts due to the Company from
Mr. Burns.
As of November 10, 1998, the Company and Ms. Robert
signed an agreement providing for her continued employment
as President and Chief Executive Officer of the Company
through October 22, 2001. Under this new agreement, Ms.
Robert is entitled to receive: i) A base salary of $120,000,
increasing to $135,000 on October 23, 1999, and to $150,000
on October 23, 2000; ii) an annual cash bonus equal to three
percent of the Company's pre-tax profit, so long as the
Company's pre-tax profit is at least $100,000; iii) options
to purchase 225,000 shares of Common stock at an exercise
price of $1.00 per share, being above the fair market value
on the date of grant, with 75,000 shares vesting when the
Company's closing stock price averages $2.00 for a three-
month period, 75,000 shares vesting when the Company's
closing stock price averages $3.00 for a three-month period,
and 75,000 shares vesting when the Company's closing stock
price averages $4.00 for a three-month period, except that
the options will fully vest seven years after issuance,
independent of stock price, if Ms. Robert is still employed
by the Company; iv) any benefits generally available to the
officers of the Company from time to time, including,
without limitation, a $30,000 life insurance policy, and a
company car of Ms. Robert's choice. The agreement prohibits
Ms. Robert from directly or indirectly engaging in any
business that competes with the Company, during the course
of her employment agreement and for a period of eighteen
months thereafter. Ms. Robert's existing agreement for her
employment as Treasurer and Chief Financial Officer of the
Company was cancelled upon the signing of this new
agreement, though Ms. Robert continues to serve as Treasurer
and Chief Financial Officer of the Company.
As of December 3, 1997, the Company and Ms. Robert
signed an agreement providing for her employment as Chief
Executive Officer of the Company for a term ending October
23, 1998. Ms. Robert's agreement, dated July 1, 1996,
related to her positions as Treasurer and Chief Financial
Officer of the Company, remained in effect, and her salary
and benefits for both positions of Chief Executive Officer
and Chief Financial Officer were as described in her then-
existing July 1, 1996 employment agreement, except for the
following additional benefits: i) A bonus for each fiscal
year during the term, equal to three percent of the
Company's pre-tax profit, so long as the Company's pre-tax
profit exceeded $100,000; and ii) options to purchase
100,000 shares of the Company's Common Stock. As of June 1,
1998, the Company and Ms. Robert agreed to a technical
amendment to her employment agreement, which fixed the
exercise price of her stock options to $1.25 per share.
On October 10, 1997, R. Patrick Burns resigned as
President, thus terminating his employment agreement with
the Company, and entered into a consulting agreement with
the Company, which began on November 1, 1997 and continues
through October 31, 1999. In accordance with this
agreement, the Company pays fees of $75,000 per year to Mr.
Burns, payable monthly, and also forgave amounts due the
Company from Mr. Burns totaling $116,818.
On June 3, 1997, the Company offered to re-price
employee stock options by granting new 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 re-pricing. 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.
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 was 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 fiscal year
1997 of 3% of the amount by which the Company's operating
profit exceeded $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 exceeded $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 $2.875 per share, being
equal to the market value on the dates of grant, vesting at
25 percent per annum beginning July 1, 1997; v) any benefits
generally available to the officers of the Company from time
to time, including, without limitation, life insurance and
medical benefits; and vi) a company car of Ms. Robert's
choice. The agreement prohibited Ms. Robert from directly
or indirectly competing with the business of the Company
during the course of her employment and for a period of
eighteen months thereafter.
Stock Options
The following table sets forth the options granted to
Mr. Burns and Ms. Robert during the fiscal year ended June
30, 1998:
Option Grants in Last Fiscal Year
Number of Percent of
Securities Total Options
Underlying Granted to
Options Employees in Base Price Expiration
Name Granted Fiscal Year ($/Share) Date
Elisabeth B. Robert 100,000 54.8 $1.25 11/14/2007
R. Patrick Burns - - - -
Interests in Certain Transactions
On October 10, 1997, R. Patrick Burns resigned as
President, thus terminating his employment agreement with
the Company, and entered into a consulting agreement with
the Company, which began on November 1, 1997 and continues
through October 31, 1999. In accordance with this
agreement, the Company pays fees of $75,000 per year to Mr.
Burns, payable monthly, and also forgave amounts due the
Company from Mr. Burns totaling $116,818.
On December 31, 1996, the Company entered into a
consulting agreement with Venture Management Group, Inc.
Fred Marks, Chairman of the Company's Board of Directors, is
President of Venture Management Group, Inc. 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.
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,
1998. To the knowledge of the Company, all of these filing
requirements have been satisfied by the Company's directors,
officers, and its 10% shareholders, except as follows: 1) R.
Patrick Burns was required to file a Form 4 on January 10,
1998, with respect to the following sales: (a) 3,200 shares
on December 2, 1997; (b) 4,200 shares on December 3, 1997;
and (c) 3,000 shares on December 15, 1997; (2) R. Patrick
Burns was required to file a Form 4 on April 10, 1998, with
respect to the following sales: (a) 12,500 shares on March
6, 1998; and (b) 4,175 shares on March 9, 1998; (3) Spencer
C. Putnam was required to file a Form 4 on October 10, 1997,
with respect to the following sales: (a) 500 shares on
September 4, 1997; (b) 500 shares on September 9, 1997; and
(c) 500 shares on September 16, 1997; (4) Spencer C. Putnam
was required to file a Form 4 on November 10, 1997, with
respect to the following sales: (a) 500 shares on October 3,
1997; (b) 500 shares on October 13, 1997; (c) 500 shares on
October 23, 1997; and (d) 500 shares on October 31, 1997;
(5) Spencer C. Putnam was required to file a Form 4 on
December 10, 1997, with respect to the following sales: (a)
500 shares on November 10, 1997; and (b) 500 shares on
November 21, 1997; (6) Spencer C. Putnam was required to
file a Form 4 on January 10, 1998, with respect to the
following sales: (a) 500 shares on December 15, 1997; and
(b) 500 shares on December 30, 1997; (7) Spencer C. Putnam
was required to file a Form 4 on February 10, 1998, with
respect to the sale of 500 shares on January 23, 1998; (8)
Spencer C. Putnam was required to file a Form 4 on March 10,
1998, with respect to the following sales: (a) 500 shares on
February 12, 1998; and (b) 500 shares on February 27, 1998;
(9) Spencer C. Putnam was required to file a Form 4 on April
10, 1998, with respect to the sale of 500 shares on March
25, 1998; (10) Spencer C. Putnam was required to file a Form
4 on May 10, 1998, with respect to the following sales: (a)
500 shares on April 13, 1998; and (b) 500 shares on April
29, 1998.
All of these transactions were subsequently filed on a
Form 5.
ITEM 1. Proposal to have Common Stockholders Elect
Directors
Pursuant to the Company's Bylaws and Certificate of
Incorporation, 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
eight (8) Directors to be elected at the 1998 Annual Meeting
for terms of one year each and until their successors are
elected and qualified. Six (6) directors are to be elected
by the Common Stockholders, and two (2) directors are to be
elected by the Series C Preferred Stockholders.
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 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. Six
(6) 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 various classes of stock owned beneficially by
each of the nominees as of November 4, 1998.
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: 15,500 Common (0.3%); 9,314 Preferred "B"
(4.5%)
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: 22,650
Common (0.4%)
Fred Marks became a director of the Company in 1987 and
has served as its Chairman of the Board since 1989. Mr.
Marks is also 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 Common (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 Common (35.5%); 90 Preferred "A" (100.0%)
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: 87,000 Common (1.7%)
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 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: 29,200 Common (0.6%)
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 have Series C Preferred Stockholders
Elect Directors
Pursuant to the Company's Bylaws and Certificate of
Incorporation, 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
eight (8) Directors to be elected at the 1998 Annual Meeting
for terms of one year each and until their successors are
elected and qualified. Six (6) directors are to be elected
by the Common Stockholders, and two (2) directors are to be
elected by the Series C Preferred Stockholders.
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 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
two (2) nominees for directors are listed below with brief
statements of their principal occupations and other
pertinent information. Also indicated below is the number
of shares of the Company's various classes of stock owned
beneficially by each of the nominees as of November 4, 1998.
Director Nominees
T. Nathanael Shepherd became a director of the Company
in November 1998. Mr. Shepherd is President of The Shepherd
Group LLC, a Massachusetts venture capital and private
equity investment firm. Before that he was the Director of
Development, Planning and Human Resources at The Doctor
Franklin Perkins School, a century old $10 million
residential program. From 1990-1991 Mr. Shepherd provided
small business consulting at the Central Massachusetts Small
Business Development Center. Mr. Shepherd currently serves
on the board of directors for five private companies, as
well as on the board of The Doctor Franklin Perkins School.
Shares held: 53.8 Preferred "C" (89.7%)
Thomas R. Shepherd became a director of the Company in
November 1998. Mr. Shepherd is Chairman of The Shepherd
Group LLC, a Massachusetts venture capital and private
equity investment firm. He also serves as a Special Partner
of Thomas H. Lee Company (THL), a Boston leverage buyout and
private equity investment firm. Prior to joining THL, he
was President of GTE Lighting Products Group (GTE Sylvania)
from 1983 through 1986, and was President of North American
Philips Commercial Electronics Corporation from 1981 until
1983. He is a director of General Nutrition Companies,
Inc., a nationwide specialty retailer of vitamin and mineral
supplements, PNC Bank - New England, a subsidiary bank of
PNC Bank Corp. which is one of the largest diversified
financial services companies in the United States, and
Rayovac Corporation, the third largest U.S. manufacturer of
batteries and battery-operated lighting products. Shares
held: 60.0 Preferred "C" (100.0%)
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 Series C Preferred 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 3: Proposal to Select Independent Public Accountants
During fiscal year 1998, 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, 1998, appears in the
Company's 1998 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 year ending June
30, 1999, 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 January
7, 1999, 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, 1999. 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 4. To authorize the Company's Board of Directors to
file an Amendment to the Restated Certificate of
Incorporation to effectuate a one for five reverse stock
split.
The Company's Board of Directors has adopted a
resolution to effectuate a one for five reverse stock split
(the "Reverse Split") of the Company's Common Stock
effective as of the date of the Annual Meeting. The effect
of the Reverse Split upon holders of common stock will be
that the total number of shares of the Company's Common
Stock held by each shareholder will be automatically
converted into the number of whole shares of common stock
equal to the number of shares of Common Stock owned
immediately prior to the Reverse Split divided by five.
Assuming approval by the Company's shareholders at the
Annual Meeting, the Company's Board of Directors shall only
file the Amended Certificate of Incorporation effecting the
Reverse Split if it is necessary to avoid de-listing of the
Company's Common Stock from the NASDAQ SmallCap Market.
(See "Reasons for the Reverse Split," below.)
Assuming the Reverse Split is approved by the Company's
shareholders at the Annual Meeting, each shareholder's
percentage ownership interest in the Company and
proportional voting power will remain unchanged. The rights
and privileges of the holders of the shares of Common Stock
will be substantially unaffected by the Reverse Split.
No certificates or scrip representing fractional shares
of the Company's common stock will be issued to shareholders
because of the Reverse Split. Rather, each shareholder who
would otherwise receive a fractional new share of common
stock as a result of the Reverse Split will receive, in lieu
of such fractional share interest, an amount of cash equal
to the closing bid price of a share of common stock on the
date of the filing of the Amended Certificate of
Incorporation (adjusted to reflect the per share price of
the common stock without giving effect to the Reverse Split)
as reflected on the NASDAQ Market ("NASDAQ") multiplied by
the number of shares of common stock held by such holder
that would otherwise have been exchanged for the fractional
share interest. Because the price of the common stock
fluctuates, the amount to be paid for fractional shares
cannot be determined until such date and may be greater or
less than the price on the date any shareholder executes his
or her proxy.
Reasons for the Reverse Split
Shares of the Company's Common Stock are listed and
traded on The NASDAQ SmallCap Market. In order to maintain
their listing on The NASDAQ SmallCap Market, it is necessary
that, among other things, the closing minimum bid price of
the Company's shares of Common Stock must not be below $1.00
per share for any consecutive thirty trading day period.
The closing bid price of the Company's shares of Common
Stock was less than $1.00 for the thirty consecutive trading
days from October 1, 1998 to November 10, 1998.
As of the date of this proxy filing, the closing
minimum bid price of the Company's stock has been in excess
of $1.00 per share since November 18, 1998. If, at any time
between November 11, 1998 and February 8, 1999, the closing
minimum bid price for the Company's Common Stock is greater
than or equal to $1.00 per share for any ten consecutive
trading days, delisting as a result of the failure to meet a
$1.00 per share closing minimum bid price from October 1
through November 10, 1998, would be avoided. In that
instance, the Board of Directors will not effect the Reverse
Split. There can be no assurances, however, that the
Company's Common Stock will remain above $1.00 per share for
ten consecutive trading days between November 11, 1998 and
February 8, 1999. Nor can there be any assurances, even if
the closing bid price of the Company's Common Stock remains
above $1.00 for ten consecutive trading days, that it will
not decline beneath $1.00 for another thirty consecutive
trading days, necessitating stockholder approval of a
reverse split in the future.
If the Reverse Split is not approved by the
shareholders at the Annual Meeting, and if the closing
minimum bid price for the Company's Common Stock has not
been greater than or equal to $1.00 per share for ten
consecutive trading days between November 11, 1998 and
February 9, 1999, then it is highly likely that the
Company's Common Stock will cease to be listed and traded on
The NASDAQ SmallCap Market. In such event, the shares of
common stock will likely be quoted on the OTC Bulletin
Board maintained by NASDAQ, and shareholders may experience
a lesser degree of liquidity when engaging in trades of
shares of the Common Stock.
Even if shareholders approve the Reverse Split, the
Common Stock may be de-listed from The NASDAQ SmallCap
Market if the Company for other reasons, including failure
to (a) maintain a Public Float of at least 500,000 shares;
(b) maintain a market value of Public Float of at least $1
million; (c) maintain at least $2 million of net tangible
assets; or (d) maintain at least 300 shareholders owning
lots of at least 100 shares. "Public Float," as defined
by NASDAQ, consists of shares that are not held directly or
indirectly by any officer or director of the Company or by
any other person who is the beneficial owner of more than
l0% of the total shares outstanding. Immediately after
effecting the Reverse Split, the Company believes that it
will meet the four criteria listed above, as well as a $1
minimum closing bid price.
Implementation of the Reverse Split
The Reverse Split will be implemented by amending
Article IV(E) of the Company's Restated Certificate of
Incorporation to add the following:
"Effective as 5:00 P.M., Eastern time, on the date of
the filing of the Amended Certificate of Incorporation,
including this amendment, is filed with the Secretary of
State of New York, all outstanding shares of Common Stock
held by each holder of record of such date shall be
automatically combined at the rate of one-for-five without
any further action on the part of the holders thereof or
this Corporation. No fractional shares shall be issued.
Rather, each shareholder who would otherwise receive a
fractional new share of Common Stock as a result of the
Reverse Split will receive, in lieu of such fractional share
interest, an amount of cash equal to the closing bid price
of a share of Common Stock on the date of the filing of the
Amended Certificate of Incorporation (adjusted if necessary
to reflect the per share price of the Common Stock without
giving effect to the Reverse Stock Split) multiplied by the
number of shares of Common Stock held by such holder that
would otherwise have been exchanged for such fractional
share interest."
Assuming the Reverse Split is approved by the
shareholders at the Annual Meeting, the Company will file an
amendment to the Company's Restated Certificate of
Incorporation with the Department of State of the State of
New York as described above, prior to January 26, 1998, only
if it is necessary to do so in order to avoid de-listing of
the Company's Common Stock from the NASDAQ SmallCap Market.
Effects of the Reverse Split
Shareholders have no right under New York law or under
the Company's Certificate of Incorporation or Bylaws to
dissent from the Reverse Split.
The total authorized capital stock of the Company will
not be reduced or otherwise affected by the Reverse Split.
As of November 10, 1998, the number of issued shares of
Common Stock of the Company was 5,195,733, and the number of
outstanding shares of common stock of the Company was
5,183,733. Based upon the Company's best estimate, the
aggregate number of shares of Common Stock that will be
issued and outstanding after giving effect to the Reverse
Split are approximately 1,038,000 and 1,036,000,
respectively.
The Reverse Split may result in some shareholders
owning "odd-lots" of less than one hundred shares of
common stock. Brokerage commissions and other costs of
transactions in odd-lots are generally somewhat higher than
the costs of transactions in "round lots" of even
multiples of one hundred shares.
Authorized Shares
The Company currently has 20,000,000 authorized shares
of Common Stock, and, after giving effect to the Reverse
Split, would continue to have 20,000,000 authorized shares
of Common Stock. Subsequent to the implementation of the
reverse split, if and to the extent that the Company issues
additional shares of its Common Stock in the future, or
securities convertible into Common Stock, each existing
shareholder's percentage ownership interest in the Company
and proportional voting power could be proportionately
reduced to a greater extent than if the Reverse Split is not
approved.
Effect on Options, Warrants and Convertible Securities
The Company has previously issued, and has outstanding,
various options and warrants to purchase shares of its
common stock and shares of preferred stock convertible into
shares of its Common Stock. If the Reverse Split is
approved by the shareholders at the Annual Meeting, both the
exercise price and the number of shares subject to each such
option, warrant or conversion right will be affected by the
Reverse Split. As a result of the Reverse Split, the
exercise price of each option or warrant will be multiplied
by five and the number of shares subject to such option,
warrant or conversion right will be divided by five.
Exchange of Stock Certificates
Assuming the Reverse Split is approved by the
shareholders and implemented by the Company, shareholders
will be required to exchange their stock certificates for
new certificates representing the shares of new Common
Stock. The shareholders will be furnished with the
necessary materials and instructions for the surrender and
exchange of stock certificates at the appropriate time by
the Company's transfer agent. The shareholders will not be
required to pay a transfer or other fee in connection with
the exchange of certificates. SHAREHOLDERS SHOULD NOT
SUBMIT ANY CERTIFICATES UNTIL REQUESTED TO DO SO.
Federal Income Tax Consequences
The following description of federal income tax
consequences is based upon the Internal Revenue Code of
1986, as amended, the applicable Treasury Regulations
promulgated thereunder, judicial authority and current
administrative rulings and practices in effect on the date
of this proxy statement. This discussion is for general
information only and does not discuss consequences which may
apply to special classes of taxpayers (e.g., nonresident
aliens, broker dealers or insurance companies). The
shareholders are urged to consult their own tax advisers to
determine the particular consequences to them.
The exchange of shares of common stock for shares of
new common stock will not result in recognition of gain or
loss. The holding period of the shares of new common stock
will include the shareholder's holding period for the shares
of common stock exchanged therefore, provided that the
shares of common stock were held as a capital asset. The
adjusted basis of the shares of new common stock will be the
same as the adjusted basis for the shares of common stock
exchanged therefore.
In the Reverse Split, cash proceeds received from the
settlement of fractional shares may result in (i) the
realization by a shareholder whose interest in the Company
is completely terminated of taxable gain or loss to the
extent of the difference between such proceeds and the cost
or other basis applicable to the fractional shares and (ii)
dividend income to a shareholder whose interest in the
Company is not completely terminated. No officer, director,
associate or affiliate of the Company is expected to derive
any material benefit from the Reverse Split other than the
benefits that would be enjoyed by any other person holding
the same number of shares.
Vote and Recommendation
The affirmative vote of the holders of the majority of
all of the outstanding shares of common stock of the Company
is required to approve the Reverse Split. The Board of
Directors recommends that the shareholders vote FOR the
Reverse Split. Appointed proxies will vote shares FOR
approval of the Reverse Split. Abstentions and broker non-
votes will have the same effect as votes against the Reverse
Split.
ITEM 5. 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 1999 Annual Meeting of Stockholders must be received by
the Secretary of the Company at its principal offices in
Shelburne, Vermont, by July 30, 1999, for inclusion in the
Company's Proxy Statement and form of proxy relating to the
1999 Annual Meeting.
November 25, 1998 The Vermont Teddy Bear Co., Inc.
<PAGE>
PROXY FOR COMMON STOCKHOLDERS
THE VERMONT TEDDY BEAR CO., INC
Proxy for the Annual Meeting of Shareholders on January 7,
1999
THIS PROXY IS SUBMITTED ON BEHALF OF THE BOARD OF DIRECTORS.
The undersigned appoints Fred Marks, Spencer C. Putnam, and
Elisabeth B. Robert, and each of them, as Proxies, each with
power to appoint his/her substitute, and hereby authorize
any of them to represent and to vote, as designated below,
all shares of Common Stock of The Vermont Teddy Bear Co.,
Inc. held of record by the undersigned on November 20, 1998,
at the Annual Meeting of Shareholders to be held at 10:00am
EST on January 7, 1999 at the corporate headquarters of The
Vermont Teddy Bear Co., Inc., 6655 Shelburne Road,
Shelburne, Vermont, or any adjournment thereof.
[X] PLEASE MARK VOTES AS IN THIS EXAMPLE.
1. ELECTION OF DIRECTORS BY COMMON STOCKHOLDERS
(Instruction: To withhold authority to vote for any
individual nominee, strike a line through the nominee's name
in the list below.)
Jason Bacon, R. Patrick Burns, Fred Marks, Joan H. Martin,
Spencer C. Putnam, Elisabeth B. Robert
[ ] FOR all nominees listed above
[ ] WITHHOLD AUTHORITY to vote for nominees with a line
through their name, FOR all other nominees
[ ] WITHHOLD AUTHORITY to vote for all nominees listed
above
2. ELECTION OF DIRECTORS BY SERIES C PREFERRED
STOCKHOLDERS
(Not applicable to Common Stockholders.)
3. RATIFICATION OF SELECTION OF ARTHUR ANDERSEN LLP AS THE
COMPANY'S INDEPENDENT PUBLIC ACCOUNTANTS FOR THE FISCAL YEAR
ENDING JUNE 30, 1999.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. REVERSE SPLIT
[ ] FOR [ ] AGAINST [ ] ABSTAIN
5. In their discretion, the Proxies are authorized to vote
upon such other business as may properly come before the
meeting or any adjournment thereof.
This proxy, when properly executed, will be voted in the
manner directed herein by the stockholder. IF NO DISCRETION
IS MADE, THIS PROXY WILL BE VOTED FOR ALL PROPOSALS.
Dated: ______________________________, 199_
__________________________________________
Signature
__________________________________________
Signature, if held jointly
NOTE: Please sign exactly as name appears hereon.
Joint owners should each sign. When signing as an
attorney, executor, administrator, trustee, or
guardian, please give full title as such.
<PAGE>
PROXY FOR SERIES C PREFERRED STOCKHOLDERS
THE VERMONT TEDDY BEAR CO., INC
Proxy for the Annual Meeting of Shareholders on January 7,
1999
THIS PROXY IS SUBMITTED ON BEHALF OF THE BOARD OF DIRECTORS.
The undersigned appoints Fred Marks, Spencer C. Putnam, and
Elisabeth B. Robert, and each of them, as Proxies, each with
power to appoint his/her substitute, and hereby authorize
any of them to represent and to vote, as designated below,
all shares of Series C Preferred Stock of The Vermont Teddy
Bear Co., Inc. held of record by the undersigned on November
20, 1998, at the Annual Meeting of Shareholders to be held
at 10:00am EST on January 7, 1999 at the corporate
headquarters of The Vermont Teddy Bear Co., Inc., 6655
Shelburne Road, Shelburne, Vermont, or any adjournment
thereof.
[X] PLEASE MARK VOTES AS IN THIS EXAMPLE.
1. ELECTION OF DIRECTORS BY COMMON STOCKHOLDERS
(Instruction: To withhold authority to vote for any
individual nominee, strike a line through the nominee's name
in the list below.)
Jason Bacon, R. Patrick Burns, Fred Marks, Joan H. Martin,
Spencer C. Putnam, Elisabeth B. Robert
[ ] FOR all nominees listed above
[ ] WITHHOLD AUTHORITY to vote for nominees with a line
through their name, FOR all other nominees
[ ] WITHHOLD AUTHORITY to vote for all nominees listed
above
2. ELECTION OF DIRECTORS BY SERIES C PREFERRED
STOCKHOLDERS
(Instruction: To withhold authority to vote for any
individual nominee, strike a line through the nominee's name
in the list below.)
Nathanael Shepherd, Thomas R. Shepherd
[ ] FOR all nominees listed above
[ ] WITHHOLD AUTHORITY to vote for nominees with a line
through their name, FOR all other nominees
[ ] WITHHOLD AUTHORITY to vote for all nominees listed
above
3. RATIFICATION OF SELECTION OF ARTHUR ANDERSEN LLP AS THE
COMPANY'S INDEPENDENT PUBLIC ACCOUNTANTS FOR THE FISCAL YEAR
ENDING JUNE 30, 1999.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. REVERSE SPLIT
[ ] FOR [ ] AGAINST [ ] ABSTAIN
5. In their discretion, the Proxies are authorized to vote
upon such other business as may properly come before the
meeting or any adjournment thereof.
This proxy, when properly executed, will be voted in the
manner directed herein by the stockholder. IF NO DISCRETION
IS MADE, THIS PROXY WILL BE VOTED FOR ALL PROPOSALS.
Dated: ______________________________, 199_
__________________________________________
Signature
__________________________________________
Signature, if held jointly
NOTE: Please sign exactly as name appears hereon.
Joint owners should each sign. When signing as an
attorney, executor, administrator, trustee, or
guardian, please give full title as such.
