Vermont Teddy Bear SC 13E3/A Going private transaction (amended) | BEAR 13 Sep 05

Exhibit 99 (c)(2)

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PRESENTATION TO
SPECIAL COMMITTEE of BOARD OF DIRECTORS
[Confidential Treatment has been requested for the names and other identifying information of certain
bidders and prospective bidders. The Confidential Portions have been filed with the
United States Securities and Exchange Commission]

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TABLE OF CONTENTS

I.	Summary of Process

II.	Summary of Offers

Exhibits

A.	Stock Price Charts and Shareholder Summary

B.	Summary Status Report as of February 11, 2005

SUMMARY OF PROCESS

»	Covington Associates LLC (“CA”) was retained by The Vermont Teddy Bear Company, Inc. (“the Company”) on October 20, 2004 in connection with various strategic alternatives to enhance shareholder value including a possible going private transaction

»	CA due diligence began on October 25^th with a kickoff meeting at the Company

»	CA due diligence proceeded until the end of November when the Offering Memorandum was completed and signed off by the Company

»	Marketing process began in earnest in mid to late November with “pre-marketing calls” (on a no-names basis) to gauge interest in a transaction

»	Confidentiality agreements (“NDA’s”) were executed beginning the week of November 15^th

»	Offering Memoranda were printed on November 19^th and the first round of materials were sent to investors that had executed an NDA on Monday November 22^nd

»	Indications of Interest due to CA on Wednesday December 15^th by 5:00 pm

»	A total of 94 parties were contacted (see Exhibits)

	•	79 Private Equity Groups
	•	5 Mezzanine lenders
	•	10 Individual/High Net Worth Individuals (as part of Fresh Tracks syndicate)

»	A total of 63 potential parties executed confidentiality agreements and reviewed the Offering Memorandum

	•	50 Private Equity Groups
	•	5 Mezzanine lenders
	•	8 Individual/High Net Worth Individuals (as part of Fresh Tracks syndicate)

»	29 Private Equity Groups were not interested in executing an NDA based upon CA’s no-names description or overview of the Company

»	2 parties still currently reviewing NDA’s (Fresh Tracks syndicate)

»	8 “indications of interest” to acquire the Company were received by CA

»	Most offers were made on an enterprise value basis and not a per share basis due to the changing liquidity in the Company’s balance sheet

»	Summary as follows: *[Confidential Treatment has been requested for the bidder names in the following table] :*

			As a Multiple of:				Existing Capital Structure⁽¹⁾

Firm Name	Enterprise Value		LTM EBITDA		FYE 2005E EBITDA		Debt⁽¹⁾		Series A Preferred Stock⁽³⁾		Cash⁽¹⁾		Cash From Options / Warrants Exercise ⁽²⁾		Total Equity Value ⁽⁴⁾		Fully Diluted S/O		Price Per Fully Diluted Share

Bidder A		$35.0		6.4x		5.7x	$	6.6	$	1.5	$	8.1	$	2.2		$37.1		6.96		$5.33
Bidder B		$37.0-$40.0		6.7x - 7.3x		6.0x - 6.5x	$	6.6	$	1.5	$	8.1	$	2.2		$39.2-$42.2		6.96		$5.63-$6.06
Bidder C		$34.0-$36.0		6.2x - 6.5x		5.5x - 5.8x	$	6.6	$	1.5	$	8.1	$	2.2		$36.2-$38.2		6.96		$5.20-$5.49
Bidder D		$28.0-$31.0		5.0x - 5.6x		4.5x - 5.0x	$	6.6	$	1.5	$	8.1	$	2.2		$30.2-$33.2		6.96		$4.33-$4.77
Bidder E		$36.2		6.6x		5.9x	$	6.6	$	1.5	$	8.1	$	2.2		$38.3		6.96		$5.50
FreshTracks		$39.6-$43.8		7.2x - 8.0x		6.4x - 7.1x	$	6.6	$	1.5	$	8.1	$	2.2		$41.8-$46.0		6.96		$6.00-$6.60
Bidder G		$36.2		6.6x		5.9x	$	6.6	$	1.5	$	8.1	$	2.2		$38.3		6.96		$5.50
Bidder H		$38.5-$40.1		7.0x - 7.3x		6.25x - 6.5x	$	6.6	$	1.5	$	8.1	$	2.2		$40.7-$42.3		6.96		$5.85-$6.08

(1) Projected Debt and Cash balances as of June 30, 2005 per Company model.

(2) Assumes that all option holders exercise options.

(3) Owned by Joan Martin.

(4) Formula is Enterprise Value, less debt, plus cash on BS, plus cash from options exercise.

Note: Most offers expressed in terms of enterprise value and not per share range (due to balance sheet changes). Bidder E and Bidder G provided per share amounts.

»	Invited the following firms in for further due diligence and to meet with the management team during January 2005 : *[Confidential Treatment has been requested for the bidder names]*

		»	Bidder A
		»	Bidder B
		»	Bidder E
		»	Bidder G
		»	Bidder H

»	All bidders received a secure user ID and passcode to login to a secure website hosted by the Company that contained detailed due diligence items and other pertinent data

»	*[Confidential Treatment has been requested for the bidder names]* Extended invitation to Bidder C, but they declined due to run up in stock price during December 2004

»	FreshTracks did not want to meet with management because they were already familiar with the Company and needed time to build an equity syndicate to consummate the transaction

»	*[Confidential Treatment has been requested for the bidder names]* Extended an invitation to Bidder D to meet with management if they could improve their offer significantly, and they declined

»	Meetings were conducted at the Company throughout January 2005

»	Meeting agenda as follows: Plant Tour, Detailed Management Presentation, Question and Answer Session

»	Management meetings led by:

		»	Elisabeth Robert, CEO and President
		»	Irene Steiner, VP of Marketing
		»	Katie Camardo, VP of Operations
		»	Greg Laduc, Finance Manager
		»	Mark Sleeper, Chief Accounting Officer

»	CA representative in attendance at each and every meeting

»	No communication between outside investors and management without CA representative physically present or available via teleconference or prior approval from CA

»	Continued to work with FreshTracks and their syndicate to execute CA’s and answer questions

[Confidential Treatment has been requested for the bidder names]

Management Meeting Dates:

»	Bidder H⁽¹⁾: January 6^th / January 26^th

»	Bidder B⁽³⁾⁽⁴⁾: January 7^th

»	Bidder E^(2)(3)(4): January 18^th / January 31^st

»	Bidder A⁽³⁾: January 19^th

»	Bidder G⁽⁵⁾: January 27^th


(1)	Bidder H asked for permission to visit the Company a second time for further meetings and due diligence
(2)	Bidder E asked for permission to visit the Company a second time for further meetings and due diligence
(3)	Representatives from CA and Liz Robert, CEO met with these firms in New York in their respective offices on December 9, 2004
(4)	Liz Robert, CEO met with representatives of these firms in New York on January 27, 2004
(5)	Firm visited management and Company’s facility prior to the start of the process with CA during the summer of 2004

SUMMARY OF OFFERS

»	6 “letters of intent” to invest in or purchase the Company were received by CA

»	Summary as follows:

[Confidential Treatment has been requested for the bidder names]

Firm Name	Enterprise Value	Less Net Debt	Equity Value	Shares O/S	Fully Diluted Price Per Share

Bidder A	$39.0	$1.5	$37.2	6.501	$5.72
Bidder B	$45.3	$1.5	$43.8	6.962	$6.35
Bidder E⁽¹⁾	N/A	N/A	N/A	N/A	N/A
FreshTracks⁽²⁾	$42.2 to $46.4	$0.5	$41.7 to $45.9	6.962	$6.00-$6.60
Bidder G	$42.6	($0.9)	$43.5	6.962	$6.25
Bidder H	$51.3	$6.0	$45.3	6.962	$6.50


(1)	Bidder E has proposed to invest $10.0MM into the Company to commence a tender offer of public shares. Refer to powerpoint presentation for further detail.
(2)	Multiples based upon the high end of the range offered by FreshTracks. Lead investor is Mustang Management.