Press Release – September 30, 2005

Covington Associates LLC Advises The Vermont Teddy Bear Company
on Going Private Transaction

Shelburne, VT—September 30, 2005:  The Vermont Teddy Bear Company (NASDAQ:  BEAR) was taken private today by an investment group led by The Mustang Group, LLC, a Boston-based private equity firm.  Covington Associates LLC acted as advisor to the company in connection with the transaction.

The company had previously announced the agreement on May 16, 2005 pending approval by the Securities and Exchange Commission as well as the Company’s stockholders.  Under the terms of the agreement, the company’s shareholders not continuing as investors will receive $6.50 per share of stock.  Ownership of the Vermont Teddy Bear Company will continue to include significant participation by Vermont investors, including members of the Company’s management team and FreshTracks Capital, a Middlebury, Vermont-based investment firm.

The Vermont Teddy Bear Company’s Bear-Gram gift is a popular alternative to sending flowers.  Each Bear-Gram gift includes a customized Vermont Teddy Bear accompanied by a personal greeting card and candy treat.  The Company, under the leadership of President and CEO Elizabeth Robert, has built a premier platform in the premium gift delivery business supporting such brands as Calyx & Corolla, PajamaGram and TastyGram.

According to Ms. Robert, “This transaction brings significant value to our stockholders and enables Vermont Teddy Bear to continue building upon our leading position in the gift delivery industry.”  She went on to comment, “Going private deals are perhaps the most complex and challenging type of M&A transaction.  Covington Associates LLC did a fantastic job positioning the company to potential partners, managing a highly challenging and regulated process, and understanding the intrinsic value of Vermont Teddy Bear.  They were our eyes and ears to the marketplace, facilitating a win- win outcome. Our shareholders realized the best available value as a result of Covington’s diligent auction. Because Covington recognizes the attributes of business integrity, we found great partners able to not only perceive future return but understand and value our Company’s culture and our mission.”

Dave Gesmondi, a principal at Covington Associates LLC, said “Our firm is honored to have advised Vermont Teddy Bear Company on this complex going private transaction.  Liz Robert and her management team have a long track record of success.  The management team’s vision and passion for their business and their brand enabled this transaction to be completed.  We wish Liz and her new partners at Mustang Management all the best as the Company embarks on its new structure as a private company.”

About The Vermont Teddy Bear Company

The Vermont Teddy Bear Company has been lovingly creating each bear for their Bear-Gram in Vermont since 1984.  Each bear comes with a personalized message, candy treat and lifetime guarantee.  Learn more about Vermont Teddy Bear at www.VermontTeddyBear.com.  The Company’s other offerings include:  The PajamaGram (www.PajamaGram.com), a delivery service where customers can pamper their loved ones by sending pajamas and spa products in luxurious packaging; the TastyGram (www.TastyGram.com) which specializes in the delivery of creatively packaged, deliciously presented gourmet foods and sweets; and Calyx & Corolla (www.calyxandcorolla.com), which delivers premium direct from the grower floral gifts.

About Covington Associates LLC

Covington Associates is a specialty investment banking firm founded in 1991 serving technology, healthcare, consumer, industrial and business services companies throughout the world.  Focused on debt and equity capital raising, debt and equity restructuring, mergers and acquisitions and strategic advisory assignments for middle market companies, Covington Associates has completed transactions ranging in value from $10 million to over $1 billion for both private and publicly traded companies.  To learn more about Covington Associates, visit www.covingtonassociates.com .