U.S. SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                            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
[X] Definitive  Proxy  Statement       Only (as permitted by Rule 14a-6(e) (2))
[ ] Definitive Additional Materials
[ ] Soliciting Materials Pursuant to Rule 14a-11(c) or Rule 14a-12

                                VACU-DRY COMPANY
                (Name of Registrant as Specified in Its Charter)

   (Name of Person(s) Filing Consent Statement, if Other Than the Registrant)

               Payment of Filing Fee (Check the appropriate box):

[X]      No fee required.

         [ ] Fee computed on table below per Exchange Act Rules 14a-6(i) (1) and
             0-11.
         (1) Title of each class of securities to which transaction applies:
         -----------------------------------------------------------------------
         (2) Aggregate number of securities to which transaction applies:
         -----------------------------------------------------------------------
         (3) Per  unit  price or other underlying value of transaction  computed
             pursuant  to  Exchange Act Rule 0-11 (set forth the amount on which
             the filing fee is calculated  and state how it was determined):
         -----------------------------------------------------------------------
         (4) Proposed maximum aggregate value of transaction:
         -----------------------------------------------------------------------
         (5) Total Fee Paid:
         -----------------------------------------------------------------------
[ ]      Fee paid previously with preliminary materials.

[ ]      Check  box  if any part of the fee is offset as  provided  by  Exchange
         Act Rule 0-11(a) (2) and  identify the filing for which the  offsetting
         fee was paid  previously.  Identify the previous filing by registration
         statement number, or the form or schedule and the date of its filing.

         (1) Amount Previously Paid:
         -----------------------------------------------------------------------
         (2) Form, Schedule or Registration Statement No.:
         -----------------------------------------------------------------------
         (3) Filing Party:
         -----------------------------------------------------------------------
         (4) Date Filed:
         -----------------------------------------------------------------------


<PAGE>

                                VACU-DRY COMPANY
                         100 Stony Point Road, Suite 200
                          Santa Rosa, California 95401

                           --------------------------

                           NOTICE OF ANNUAL MEETING OF
                        SHAREHOLDERS AND PROXY STATEMENT

                                November 22, 1999

                           ---------------------------

To the Shareholders of Vacu-dry Company:

     Notice is hereby  given that the  Annual  Meeting  of the  Shareholders  of
Vacu-dry  Company (the "Company")  will be held on Monday,  November 22, 1999 at
9:00 a.m.,  at the  Sheraton  Hotel  located at 625 El Camino  Real,  Palo Alto,
California for the following purposes:

     1. To amend Article ONE of the Articles of Incorporation to change the name
        of the  Company.
     2. To amend Article TWO of the Articles of Incorporation  pertaining to the
        corporate purposes and powers of the Company.
     3. To amend the By-Laws to provide for a change in the authorized number of
        directors.
     4. To elect  four  directors  to serve  until the 2000  Annual  Meeting  of
        Shareholders  or  until  their  respective  successors  are elected and
        qualified.
     5. To amend the  Company's  1996 Stock  Option Plan to increase  the shares
        available for issuance under the Plan by an aggregate of 185,000  shares
        to 275,000 shares.
     6. To transact such other  business as may properly come before the meeting
        or any adjournment thereof.

     The  foregoing  items of  business  are more fully  described  in the Proxy
Statement accompanying this Notice.

     The Board of Directors has fixed the close of business on October 27, 1999,
as the record  date for  determining  which  Shareholders  will be  entitled  to
receive notice of, and to vote at, the meeting or any  adjournment  thereof.

                                             By Order of the Board of Directors,



                                             William Burgess
                                             Secretary
Santa Rosa, California
November 1, 1999

-------------------------------------------------------------------------------
         ALL SHAREHOLDERS ARE CORDIALLY INVITED TO ATTEND THE MEETING IN
       PERSON. HOWEVER, TO ENSURE YOUR REPRESENTATION AT THE MEETING, YOU
       ARE URGED TO VOTE, SIGN, AND RETURN THE ENCLOSED PROXY AS PROMPTLY
                   AS POSSIBLE IN THE POSTAGE-PREPAID ENVELOPE
                           ENCLOSED FOR THAT PURPOSE.
-------------------------------------------------------------------------------



<PAGE>

                                VACU-DRY COMPANY
                         100 Stony Point Road, Suite 200
                          Santa Rosa, California 95401

                           --------------------------

                                 PROXY STATEMENT

                              For Annual Meeting of
                              Shareholders November
                             22, 1999, at 9:00 a.m.

GENERAL

         This Proxy Statement is furnished by the Board of Directors of Vacu-dry
Company (the "Company") to solicit Shareholder Proxies to be voted at the Annual
Meeting of Shareholders  to be held on Monday,  November 22, 1999, at 9:00 a.m.,
at the Sheraton Hotel located at 625 El Camino Real, Palo Alto, California,  and
at any adjournment  thereof.  Any  Shareholder  giving a Proxy may revoke it any
time before it is voted by filing  with the  Secretary  of the Company  either a
written  revocation or another duly executed Proxy bearing a later date. Proxies
may also be revoked by any  Shareholder  present at the meeting who  expresses a
desire to vote his or her shares in person. This mailing of Proxy Statements and
Proxy cards commenced approximately November 2, 1999.

VOTING

         The Board of  Directors  has fixed the close of business on October 27,
1999 as the  Record  Date for the  determination  of  Shareholders  entitled  to
receive  notice  of,  and to vote at,  the  Annual  Meeting  or any  adjournment
thereof.  As of  October  11,  1999,  1,520,087  shares  of  common  stock  were
outstanding, and no shares of any other class of stock were outstanding.

         In all actions taken by Company  Shareholders,  other than the election
of Directors,  each  Shareholder  is entitled to one vote for each share held on
the record  date.  In the  election of  Directors,  however,  Shareholders  have
cumulative  voting  rights,  which means that each  Shareholder is entitled to a
number of votes  equal to the  number  of his or her  shares  multiplied  by the
number of Directors to be elected  (four).  A Shareholder may cast all of his or
her  votes  for a  single  candidate,  or may  distribute  votes  among  as many
candidates  as he or she may see fit. No  Shareholder  may cumulate  votes for a
candidate,  however,  unless the name(s) of the candidate(s) have been placed in
nomination  prior to the  voting  and the  Shareholder  has given  notice at the
Meeting,  prior to the  voting,  of the  intention  to  cumulate  votes.  If one
Shareholder has already given such a notice, all Shareholders may cumulate their
votes for candidates in nomination without further notice.

REVOCABILITY OF PROXIES

         Any person giving a proxy in the form  accompanying  this statement has
the power to revoke such proxy at any time before its exercise. The proxy may be
revoked by filing with the Secretary of the Company at the  Company's  principal
executive  office an instrument of revocation or a duly executed proxy bearing a
later date, or by filing written notice of revocation  with the secretary of the
meeting prior to the voting of the proxy or by voting the shares  subject to the
proxy by written ballot.

SOLICITATION

         The  Company  will  bear the  entire  cost of  solicitation,  including
preparation,  assembly, printing, and mailing of this Proxy Statement, the Proxy
card,  and  any  additional  material  furnished  to  Shareholders.   Copies  of
solicitation  material will be furnished to brokerage houses,  fiduciaries,  and
custodians  holding shares in their


                                     Page 1
<PAGE>

names  which are  beneficially  owned by others to  forward  to such  beneficial
owners.  In addition,  the Company may reimburse such persons for their costs of
forwarding  the  solicitation  material  to  such  beneficial  owners.  Original
solicitation of proxies by mail may be supplemented by telephone,  telegram,  or
personal  solicitation by directors,  officers,  or employees of the Company. No
additional compensation will be paid for any such services.  Except as described
above,  the Company does not intend to solicit  proxies other than by mail.  The
Company has also  retained the firm of D. F. King to assist in the  solicitation
of proxies  at a cost of  approximately  $5,000  plus  reasonable  out-of-pocket
expenses.

SHAREHOLDER PROPOSALS FOR NEXT ANNUAL MEETING

         Proposals  of  Shareholders  that are  intended to be  presented at the
Company's 2000 Annual Meeting of Shareholders must be received by the Company no
later than June 1, 2000 in order to be included in the proxy statement and proxy
relating to that meeting.

                          SECURITY OWNERSHIP OF CERTAIN
                        BENEFICIAL OWNERS AND MANAGEMENT

         A  beneficial  owner of a security  includes any person who directly or
indirectly  has or shares voting power and/or  investment  power with respect to
such  security.  Voting  power is the  power to vote or  direct  the  voting  of
securities,  and  investment  power is the power to  dispose  of or  direct  the
disposition of securities.  The following tables, based in part upon information
supplied by officers,  directors and principal  Shareholders,  set forth certain
information  regarding the ownership of the  Company's  voting  securities as of
September 30, 1999 by (i) all those known by the Company to be beneficial owners
of more than five percent of any class of the Company's voting securities;  (ii)
each  director;  (iii)  each Named  Executive  Officer;  and (iv) all  executive
officers and directors of the Company as a group.  Unless  otherwise  indicated,
each of the  Shareholders  has sole voting and investment  power with respect to
the  shares  beneficially  owned,  subject  to  community  property  laws  where
applicable.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS(A)

Name and Address               Amount of Direct Common           Percent
of Beneficial Owner           Stock Beneficial Ownership       of Class(b)
-----------------------       --------------------------      ------------
Craig R. Stapleton(c)                 325,516                     21.4%
135 East Putnam Avenue
Greenwich, CT  06830

       ------------------------------------------------------
(a)    Security  ownership  information  for  beneficial  owners  is taken  from
       statements filed with the Securities and Exchange  Commission pursuant to
       Sections 13(d), (f) and (g) and information made known to the Company.
(b)    As of October 11, 1999,  1,520,087 shares of Common Stock were issued and
       outstanding.
(c)    Includes  190,466 shares owned by Mr. Stapleton or trusts for the benefit
       of Mr.  Stapleton,  45,150  shares  as  trustee  of a trust of which  Mr.
       Stapleton is a residual beneficiary,  29,400 shares as trustee of a trust
       for the benefit of his children and certain other  relatives and to which
       Mr. Stapleton disclaims any beneficial interest,  and 60,500 shares owned
       by Mr. Stapleton's wife and children to which Mr. Stapleton disclaims any
       beneficial interest.


                                     Page 2
<PAGE>


         SECURITY OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS

         The table  below  presents  the  security  ownership  of the  Company's
Directors,  Named Executive Officers and all directors and executive officers as
a group as of September 30, 1999.

                                Amount of Common Shares
Name of Beneficial Owner          Beneficially Owned(a)     Percent of Class(b)
-----------------------         -----------------------     ------------------
Gary L. Hess                           122,428(c)                8.1%
Edward Koplovsky                        37,866                   2.5%
Roger S. Mertz                          49,266(d)                3.2%
Fredric Selinger                         2,000                      *
Craig R. Stapleton                     325,516(e)               21.4%
Donal Sugrue                            28,790(f)                1.9%

All directors and executive            565,866                  37.2%
officers as a
group (7 persons)

       -------------------------------------------------------
*      Does not exceed 1% of the referenced class of securities.

(a)    Shares  listed  in this  column  include  all  shares  held by the  named
       individuals and all directors and executive  officers as a group in their
       own names and in street name and also  includes  all shares  allocated to
       the accounts of the named  individuals  and all  directors  and executive
       officers as a group under the Company's Employee Stock Purchase Plan.
(b)    Calculation  based on 1,520,087 shares of Common Stock  outstanding as of
       October 11, 1999.
(c)    Includes  30,004 shares owned  directly and 89,474 vested stock  options.
       Also includes  2,950 shares owned by Mr. Hess' wife in trust to which Mr.
       Hess disclaims any beneficial interest.
(d)    Includes 6,000 shares held by Mr. Mertz as trustee and to which Mr. Mertz
       disclaims any beneficial  interest.
(e)    Includes  190,466 shares owned by Mr. Stapleton or trusts for the benefit
       of Mr.  Stapleton,  45,150  shares  as  trustee  of a trust of which  Mr.
       Stapleton is a residual beneficiary,  29,400 shares as trustee of a trust
       for the benefit of his children and certain other  relatives and to which
       Mr. Stapleton disclaims any beneficial interest,  and 60,500 shares owned
       by Mr. Stapleton's wife and children to which Mr. Stapleton disclaims any
       beneficial interest.
(f)    Includes 28,790 shares held by the Sugrue 1992 Family Trust, of which Mr.
       Sugrue is a trustee.

                                     Page 3
<PAGE>


                                   PROPOSAL 1
              AMENDMENT TO THE COMPANY'S ARTICLES OF INCORPORATION
            TO CHANGE THE COMPANY'S NAME TO SONOMAWEST HOLDINGS, INC.

         The  Directors  of the  Company  are  recommending  that the  Company's
Articles of  Incorporation be amended to change the Company's name from Vacu-dry
Company to SonomaWest  Holdings,  Inc. As part of the July 30, 1999  $12,000,000
sale of assets  related to its product lines of processed  apple  products,  the
Company sold to Tree Top, Inc. the trade name, trademark rights, and goodwill of
"Vacu-dry." The Board of Directors  recommends the new name because they believe
better describes the Company's business.

       The  change  of the  Company's  name  will not  affect,  in any way,  the
validity or transferability  of currently  outstanding stock  certificates,  nor
will the Company's  shareholders  be required to surrender or exchange any stock
certificates  that they currently  hold. In addition,  the Company has requested
that Nasdaq  allow the Company to use the stock symbol  "SWHI".  The approval of
Proposal 1 requires the affirmative vote of a majority of the outstanding shares
entitled to vote.

         The shareholders are asked to approve to the following resolution:

         "RESOLVED, that Article ONE of the Articles of Incorporation be amended
         to read as follows:

         ONE: Name. The name of the corporation is SonomaWest Holdings, Inc."

THE BOARD OF DIRECTORS  RECOMMENDS A VOTE "FOR"  AMENDING THE ARTICLES TO CHANGE
THE COMPANY'S NAME.


                                   PROPOSAL 2
              AMENDMENT TO THE COMPANY'S ARTICLES OF INCORPORATION
                          TO BROADEN CORPORATE PURPOSE

         On October  11,  1999,  the Board of  Directors  unanimously  adopted a
resolution declaring it advisable to amend Article TWO of the Company's Articles
of Incorporation and to submit the amendment to the Shareholders for approval at
the Annual Meeting.

         The current  purpose and powers clause of the  Articles,  which has not
been amended since the original  Articles were filed in 1946,  contains  sixteen
subparagraphs. Since 1946, custom, usage and the laws of the State of California
have  changed.  Under current  California  law,  this  specific  enumeration  of
business  functions is no longer  necessary,  and a brief  statement of business
purposes  suffices.  The  Amendment  would not  restrict the  Company's  current
operations,  would be  consistent  with those  operations,  and would  generally
permit any kind of corporate  activity so long as it is lawful.  The approval of
Proposal 2 requires the affirmative vote of a majority of the outstanding shares
entitled to vote.

         The Shareholders are asked to approve the following resolution:

         "RESOLVED, that Article TWO of the Articles of Incorporation be amended
         to read as follows:

         TWO: The purpose of this  corporation is to engage in any lawful act or
activity for which a corporation may be organized under the General  Corporation
Law of California other than the banking business, the trust company business or
the practice of a  profession  permitted to be  incorporated  by the  California
Corporations Code."

THE BOARD OF DIRECTORS  RECOMMENDS A VOTE "FOR" AMENDING THE ARTICLES TO BROADEN
THE CORPORATE PURPOSE.

                                     Page 4
<PAGE>

                                   PROPOSAL 3
              AMENDMENT TO THE BY-LAWS CHANGING NUMBER OF DIRECTORS

PROPOSAL

         The  shareholders  are  being  requested  to  consider  and act  upon a
proposal  to amend  Article  II,  Section 2.2 of the  Company's  By-Laws,  which
currently  provides for a variable  authorized  number of Directors between five
(5) and nine (9). The Company  deems it advisable to make the Board of Directors
more  immediately  responsive to the  stockholder's  interest and has determined
that it can operate most efficiently  with a minimum of four (4) Directors.  The
Company  will  present at the  Annual  Meeting a proposal  for the  adoption  by
Shareholders of an amendment to its By-Laws to provide for a minimum of four (4)
and a maximum of seven (7) authorized Directors.  The exact number of Directors,
within the stated minimum and maximum,  shall be fixed at four (4) until amended
by the Board of Directors.

         Shareholder  approval of this item will allow the Company to pursue the
efficient management of its operations.  The approval of Proposal 3 requires the
affirmative  vote of a majority of the  outstanding  shares entitled to vote. If
the  proposal  fails to obtain the required  number of votes,  there will be one
vacancy on the Board of  Directors,  and the  Board's  Proxy  holders  intend to
nominate  and vote for such  other  person as they  believe  will best serve the
interests of the Company.  The text of Article II, Section 2.2 as proposed to be
amended is as follows:

     SECTION 2.2 NUMBER OF DIRECTORS.  The authorized number of Directors of
     the corporation shall be not less than four (4) nor more than seven (7)
     until  changed by an  amendment  of the  Articles of this  section duly
     adopted by the  Shareholders.  The exact number of  Directors  shall be
     fixed, within the limits specified, by the Board or the Shareholders in
     the same manner  provided  for in these  By-Laws.  The exact  number of
     Directors  shall be fixed at four (4)  until  changed  by the  Board as
     provided for in these By-Laws. No reduction of the authorized number of
     Directors  shall have the effect of removing any  Director  before that
     Director's term of office expires.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" AMENDING THE BY-LAWS CHANGING THE
NUMBER OF DIRECTORS.


                                   PROPOSAL 4
                              ELECTION OF DIRECTORS

         At  the  Annual  Meeting,  four  Directors  are  to be  elected  by the
Shareholders  to serve until the next Annual  Meeting or until the  election and
qualification  of their  successors.  The Board's  proxy  holders  (named on the
enclosed  Proxy card) intend to vote all shares for which Proxies are granted to
elect the following four nominees  selected by the Company's Board of Directors,
and intend to vote such shares cumulatively if necessary to elect some or all of
such nominees.

         If any of the  Board's  nominees  refuses  or is  unable  to serve as a
Director  (which is not now  anticipated),  the Board's Proxy holders  intend to
nominate  and vote for such other  person(s) as they believe will best serve the
interests of the Company.  Any Shareholder may nominate a candidate for Director
from the floor at the Meeting.  Such nominee must consent to serve,  if elected,
prior to  voting on his or her name.  The  Board of  Directors  has no reason to
believe that any substitute nominee or nominees will be required.

         The four nominees for Director who receive the most  affirmative  votes
will be elected  Directors.  Votes against a candidate and votes  withheld shall
have no effect on the election  result,  though  applicable  securities laws and
regulations may require that the number of such votes  subsequently be disclosed
to the Company's Shareholders under certain circumstances.

                                     Page 5
<PAGE>

MANAGEMENT RECOMMENDS A VOTE "FOR" EACH OF THE NOMINEES FOR DIRECTOR NAMED BELOW

NOMINEES

         The table below  indicates the respective  nominee's  position with the
Company, age, and year in which he first became a Director.

Name, Position and Background                             Age     Director Since
-----------------------------                             ---     --------------
GARY  L.  HESS,  President,  Chief  Executive  and        47          1996
Financial  Officer  and  Director.  Mr.  Hess  was
elected  President and Chief Executive  Officer of
the  Company  on May 1, 1996 and  Chief  Financial
Officer on June 14, 1999.  Prior  thereto he was a
Senior Vice  President of Dole Food Company,  Inc.
(fresh and processed fruit) (1993-1996); President
of Cadence  Enterprises,  Inc. (water conservation
products) and The Marketing Partnership 1992-1993;
and  Director of  Marketing,  E. & J. Gallo Winery
(wine and distilled spirits) (1987-1992).

ROGER  S.  MERTZ,   Director.   Mr.  Mertz  is  an        55          1993
attorney-at-law. He is a partner of the California
law firm of Allen, Matkins, Leck, Gamble & Mallory
LLP. Prior to October 1999, Mr. Mertz was a member
of the  San  Francisco,  California  law  firm  of
Severson & Werson.

FREDRIC SELINGER, Director. Mr. Selinger is Senior        60          1999
Managing  Director of Corporate  Finance of Sutter
Securities,   Incorporated   (private   investment
banking and consulting).  Prior to March 1995, Mr.
Selinger was Managing  Director of Jackson  Square
Capital  Corp.  (private  investment  banking  and
consulting).

CRAIG R.  STAPLETON,  Director.  Mr.  Stapleton is        54          1995
President   of   Marsh  &  McLennan   Real  Estate
Advisors,  Inc.  (real  estate  management).   Mr.
Stapleton is a director of  Allegheny  Properties,
Inc. (real estate investments); a director of T.B.
Woods, Incorporated (industrial power transmission
products);   and   a   director   of   Cornerstone
Properties (real estate investments).


                      Page 6
<PAGE>



                                   PROPOSAL 5
                     AMENDMENT TO THE 1996 STOCK OPTION PLAN

         At the Annual Meeting,  the Company's  shareholders  are being asked to
approve  an  amendment  to the 1996 Stock  Option  Plan (the  "Option  Plan") to
increase  the number of shares of common stock  reserved for issuance  under the
Option Plan by 185,000  shares,  to an  aggregate of 275,000  shares.  The Board
adopted the amendment,  subject to shareholder  approval at the Annual  Meeting.
Set forth below is a summary of the principal  features of the Option Plan.  The
summary,  however,  does not  purport  to be a complete  description  of all the
provisions  of the Option  Plan.  Any  shareholder  of the Company who wishes to
obtain a copy of the actual plan document may do so upon written  request to the
Secretary at the Company's principal offices at 100 Stony Point Road, Suite 200,
Santa Rosa, California 95401.

         The  Company's  1996  Stock  Option  Plan,  which was  approved  by the
Shareholders at the 1996 Annual Meeting, is intended to advance the interests of
the Company by inducing persons of outstanding ability and potential to join and
remain with the Company by enabling them to acquire proprietary  interest in the
Company.  The Option Plan was adopted for the principal purpose of assisting the
Company  in  recruiting  a new  President  and Chief  Executive  Officer  of the
Company.  Mr. Gary L. Hess, who was appointed the Company's  President and Chief
Executive  Officer  on May 1, 1996,  was  granted  89,474 of the  90,000  shares
originally  authorized  under the Plan.  In fiscal  1999,  the  Option  Plan was
amended to increase  the options  authorized  to 275,000. 122,500  options  were
granted  under the Plan in Fiscal  1999.  As of September  30, 1999,  options to
purchase  211,174 of the 275,000  authorized  shares have been issued  under the
Option Plan.

GENERAL

         The Plan provides for the granting of two types of options:  "incentive
stock options" and  "nonqualified  stock  options." The incentive  stock options
only are intended to qualify as "incentive  stock options" as defined in Section
422 of the Internal Revenue Code of 1986, as amended.  The Plan is not qualified
under  Section  401(a) of the  Internal  Revenue  Code nor is it  subject to the
provisions of ERISA.

ELIGIBILITY

         Options may be granted under the Plan to all key  employees,  including
officers and directors, and to non-employee consultants of the Company; provided
however that incentive  stock options may only be granted to employees,  and not
to any non-employee consultants.

ADMINISTRATION

         Administration  of  the  Plan  is  by a  Stock  Option  Plan  Committee
comprised  of at  least  three  members  of the  Board,  each  of  whom  must be
disinterested as defined in the regulations under the Securities Exchange Act of
1934. Under the Plan, the Committee has the power,  subject to the provisions of
the Plan, to do the  following:  grant  options;  determine the option price and
term of each option,  the persons to whom and the time or times at which options
shall be  granted,  and the  number  of  shares to be  subject  to each  option;
interpret the Plan;  prescribe rules and  regulations  relating to the Plan; and
make  all  other   determinations   deemed   necessary  or  advisable   for  the
administration   of  the  Plan.   Members  of  the  Committee  will  receive  no
compensation  for their services in connection  with the  administration  of the
Plan.

OPTION TERMS

         The maximum term of each option is ten years  except that,  in the case
of a participant  who owns stock  possessing more than ten percent of the voting
rights of the Company's outstanding capital stock (a "10% Holder"),  the maximum
term of an incentive stock option is five years.  Options granted under the Plan
are not transferable other than by will or the laws of descent and distribution,
and during an optionee's  life are  exercisable



                                     Page 7
<PAGE>

only by the optionee.  Options granted under the Plan generally  terminate three
months  after the  optionee  ceases to be employed by the  Company,  a parent or
subsidiary,  except if termination is due to the employee's  permanent and total
disability,  in  which  event  the  option  may be  exercised  within  a year of
termination.  In the event of the employee's death, the employee's estate has 12
months to exercise the option.

EXERCISE PRICE

         The exercise price of all nonstatutory  stock options granted under the
Plan must be at least  equal to 85% of the fair market  value of the  underlying
stock  on the  grant  date,  or 110% of fair  market  value in the case of a 10%
Holder. The exercise price of all incentive stock options granted under the Plan
must be at least equal to the fair market value of the underlying stock on grant
date, or 110% of fair market value in the case of a 10% Holder.  With respect to
incentive stock options, the aggregate fair market value (determined at the time
of grant) of stock  which  becomes  exercisable  for the first  time in any year
cannot  exceed  $100,000.  The Plan  permits the exercise of options for cash or
stock,  other  consideration  acceptable  to the  Committee,  or  pursuant  to a
deferred payment arrangement.

CHANGES IN STOCK AND EFFECT OF CERTAIN CORPORATE EVENTS

         If there is any  change  in the  Common  Stock  subject  to the Plan or
subject  to  any  option  granted  under  the  Plan,   whether  through  merger,
consolidation, reorganization, recapitalization, dividend or otherwise, the Plan
provides  that  an  appropriate  adjustment  be  made  by the  Committee  to the
aggregate  number of shares subject to the Plan and the number of shares and the
price per share of stock subject to the outstanding options.

         In the event of  dissolution,  liquidation or specified types of merger
of the  Company,  the  options  granted  under  the Plan  terminate  unless  the
surviving entity assumes the outstanding options or substitutes similar options.

AMENDMENT AND TERMINATION

         The Board of  Directors  may amend or  terminate  the Plan at any time,
except that any  amendment  which would (i)  materially  increase  the  benefits
accruing to participants, or (ii) materially modify the eligibility requirements
will only be  effective  if approved  by the  Company's  shareholders  within 12
months  before  or after  adoption.  Unless  terminated  earlier,  the Plan will
terminate on March 15, 2006.

FEDERAL INCOME TAX CONSEQUENCES

         Incentive  stock  options  granted  under the Plan are  intended  to be
eligible for the favorable income tax treatment accorded incentive stock options
under  Section 422 of the Internal  Revenue  Code.  Nonqualified  stock  options
granted under the Plan are subject to federal  income tax treatment  pursuant to
rules governing options that are not incentive stock options.

         INCENTIVE  STOCK  OPTIONS.  There are  generally no federal  income tax
consequences  to the optionee by reason of the grant or exercise of an incentive
stock  option.  The  exercise of an  incentive  stock  option may  increase  the
optionee's alternative minimum tax liability, if any, however.

         If an optionee  holds stock acquired  through  exercise of an incentive
stock  option  for more  than two  years  from the date on which  the  option is
granted and more than one year from the date on which the shares are transferred
to the optionee upon  exercise of the option,  any gain or loss on a disposition
of such stock will be capital gain or loss. Any capital gain or loss realized by
an optionee on a qualifying or  disqualifying  (see below)  disposition of stock
acquired  through  exercise of an  incentive  stock  option will be long-term or
short-term  depending  on  whether  the  stock  was held for more than one year.
Generally, if the optionee disposes of the stock before the expiration of either
of the holding periods described above (a "disqualifying  disposition"),  at the
time of disposition the optionee will realize  taxable  ordinary income equal to
the lesser of (i) the excess of the  stock's  fair  market  value on the date of
exercise over the optionee's adjusted basis in the stock, or (ii) the optionee's



                                     Page 8
<PAGE>

actual gain, if any, on the purchase and sale. Any  additional  gain or any loss
upon the  disqualifying  disposition  will be  capital  gain or  loss.  Slightly
different  rules may apply to  optionees  who acquire  stock  subject to certain
repurchase options or who are subject to Section 16(b) of the Exchange Act.

         There are no federal income tax  consequences  to the Company by reason
of the grant or  exercise  of an  incentive  stock  option.  To the  extent  the
optionee  recognizes  ordinary income by reason of a disqualifying  disposition,
the Company will be entitled (subject to the requirement of reasonableness  and,
perhaps,  in the future,  the  satisfaction of its withholding  obligation) to a
corresponding   business  expense  deduction  in  the  tax  year  in  which  the
disposition occurs.

         NONQUALIFIED  STOCK OPTIONS.  There are normally no tax consequences to
the  optionee  or the  Company  by reason of the grant of a  nonqualified  stock
option.  Upon exercise of a  nonqualified  stock option,  the optionee  normally
recognizes  ordinary  income in an amount by which the fair market  value of the
stock on the date of exercise exceeds the exercise price. Generally with respect
to employees,  the Company is required to withhold from wages an amount based on
the ordinary  income  realized by the  exercise.  Subject to the  reasonableness
requirement and the satisfaction of its withholding obligation, the Company will
be  entitled  to a  business  expense  deduction  in the  amount of the  taxable
ordinary income recognized by the optionee.

         Upon  disposition  of the stock,  the optionee will recognize a capital
gain or loss equal to the  difference  between the selling  price and the sum of
the amount paid for such shares plus any amount  recognized  as ordinary  income
upon  exercise  of the  option.  Such  gain or loss  will be long or  short-term
depending  on  whether  the  stock  was held for more  than one  year.  Slightly
different  rules  apply to  optionees  who  acquire  stock  subject  to  certain
repurchase options or who are subject to Section 16(b) of the Exchange Act.

         There  are  no  tax  consequences  to  the  Company  by  reason  of the
disposition of stock acquired upon exercise of a nonqualified option.

USE OF PROCEEDS

         All proceeds from the sale of shares  pursuant to options granted under
the Plan constitute general funds of the Company.

INDEMNIFICATION OF COMMITTEE

         Under the terms of the Plan,  members of the  Committee are entitled to
be indemnified by the Company against costs and expenses  reasonably incurred in
connection  with any action or  proceeding  brought by reason of their action or
failure  to act  under or in  connection  with the  Plan or any  rights  granted
thereunder.

PLAN BENEFITS

         The Company cannot currently  determine the number of shares subject to
options that may be granted in the future to executive  officers,  directors and
employees under the Option Plan. The following table sets forth information with
respect to the stock  options  granted from July 1, 1998 to June 30, 1999 to the
Named  Executive  Officers,  all current  executive  officers as a group and all
employees  and  consultants  as a group  under the Option  Plan.  No  additional
options were  granted to the Named  Executive  Officers  after June 30, 1999 and
prior to the date of this Proxy Statement.

                               PLAN BENEFITS TABLE

Name                                         Options Granted   Dollar Value ($)
----                                         ---------------   ----------------
Gary L. Hess                                       -0-                -0-
All current executive officers as a group        20,000            160,000
(2 persons)



                                     Page 9
<PAGE>

All current directors (other than executive         -0-                -0-
officers) as a group (4 persons)

All employees and consultants (including all     122,500           980,000
current officers who are not executive
officers) as a group (52 persons)


THE BOARD  RECOMMENDS A VOTE "FOR" THE  APPROVAL OF THE  AMENDMENT TO THE OPTION
PLAN AS DESCRIBED ABOVE.


SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

         Section  16(a) of the  Securities  Exchange  Act of 1934  requires  the
Company's  executive  officers,  directors,  and  persons  who own more than ten
percent  of a  registered  class of the  Company's  equity  securities,  to file
reports of ownership and changes in ownership  with the  Securities and Exchange
Commission.   Executive   officers,   directors  and  greater  than  ten-percent
shareholders  are required by SEC  regulation to furnish the Company with copies
of all Section 16(a) forms they file.

         Based solely on its review of the copies of such forms  received by it,
or written  representations  from certain reporting persons that no Forms 5 were
required for those persons,  the Company believes that,  during fiscal year 1999
all filing  requirements  applicable to its executive officers,  directors,  and
greater than  ten-percent  beneficial  owners were complied with except that Mr.
Stapleton  filed late one Form 4, reporting one  transaction  untimely,  and Mr.
Hess filed late two Forms 4, reporting two transactions untimely.

BOARD COMMITTEES AND MEETINGS

         The Board of  Directors  met five times  during the fiscal  year ending
June 30, 1999.  The  Company's  Board of Directors has  authorized  two standing
committees.

         COMPENSATION  AND  RETIREMENT  PLAN  COMMITTEE.  The  functions  of the
Compensation  and Retirement  Plan Committee are to develop and recommend to the
full Board  compensation  arrangements,  including bonuses,  stock options,  and
stock appreciation  rights,  for Executive Officers and other key employees;  to
advise  the chief  executive  officer  on policy  matters  concerning  officers'
compensation, to direct the management of the Company's Retirement,  Savings and
Profit Sharing Plan and to administer the 1996 Stock Option Plan. The members of
the  committee are Messrs.  Stapleton  (Chairman),  Koplovsky and Selinger,  The
Compensation  and  Retirement  Plan Committee held one meeting during the fiscal
year.

         AUDIT COMMITTEE. The function of the audit committee is to recommend to
the full Board the accounting  firm to be retained as the Company's  independent
auditors and the price to be paid to the firm,  and to consult with the auditors
regarding the plan of audit, the results of the audit and the audit report,  and
the adequacy of internal accounting  controls.  The members of the committee are
Messrs. Mertz (Chairman),  Selinger and Stapleton.  The Audit Committee held one
meeting during the fiscal year.

         The full Board acts as the  nominating  committee  for the Directors of
the Company.


                                    Page 10
<PAGE>

                             EXECUTIVE COMPENSATION

SUMMARY COMPENSATION OF NAMED EXECUTIVES

         The Summary Compensation Table shows certain  compensation  information
for the Chief  Executive  Officer and the Company's  most highly paid  executive
officers   (collectively   referred  to  as  the  "Named  Executive  Officers").
Compensation  data for other  executive  officers is not presented in the charts
because  aggregate  compensation  for any such executive  officer did not exceed
$100,000  for  services  rendered  in all  capacities  during  fiscal year 1999.
Compensation  data is shown for the fiscal years ended June 30,  1999,  1998 and
1997. This information includes the dollar value of base salaries, bonus awards,
the number of SARs granted, and certain other compensation, if any, whether paid
or deferred.
<TABLE>
<CAPTION>
                          SUMMARY COMPENSATION TABLE(a)
====================================================================================================================
                                                                                Long Term
                                                                               Compensation              All Other
                                                 Annual Compensation              Awards               Compensation

Name and Principal Position           Year       Salary($)       Bonus($)      Options/SARs (#)                 ($)
---------------------------           ----       ---------       --------   -------------------         -----------
<S>                                   <C>         <C>              <C>                <C>                <C>
Gary L. Hess(b)                       1999        178,670         -0-                -0-                 19,268(c)
  President, Chief Executive          1998        160,000        80,000              -0-                 18,178(d)
  Officer and Chief
  Financial Officer                   1997        150,000        47,500              -0-                 10,789(e)

--------------------------------------------------------------------------------------------------------------------
</TABLE>
(a)    Amounts shown include cash and non-cash  compensation earned with respect
       to the year shown above.
(b)    Mr. Hess was appointed  President and Chief  Executive  Officer on May 1,
       1996, and Chief Financial Officer on June 14, 1999.
(c)    All other Compensation  includes $11,640  contributed by the Company with
       respect  to Mr.  Hess to the  Company's  401(k)  plan,  a Life  Insurance
       payment of $428,  which is calculated as  compensation by multiplying the
       portion of benefit payable to Mr. Hess' estate by the premium paid in the
       fiscal year, and a $7,200 car allowance.
(d)    The Company contributed $10,764 with respect to the 401(k) plan, $214 for
       a life insurance benefit, and a $7,200 car allowance.
(e)    Includes  $3,375 contributed by the Company with respect to the Company's
       401(k)  plan,  a  Life  Insurance  payment  of  $214,  and a  $7,200  car
       allowance.

INCENTIVE AND REMUNERATION PLANS

         STOCK  APPRECIATION  RIGHTS  PLAN.  In 1985,  the  Shareholders  of the
Company  approved  the  adoption of a Stock  Appreciation  Rights Plan (the "SAR
Plan"). The SAR Plan was adopted to reward participants for past services and to
encourage them to remain in the Company's  service by offering  participants  an
opportunity  to  participate  in any  appreciation  in the  market  value of the
Company's Common Stock.

         EMPLOYEE BONUS PLAN. The Company maintains a Bonus Plan as an incentive
to key employees of the Company.  The bonus an employee receives is dependent on
individual performance and level of responsibility as well as the achievement by
the Company of a threshold level of return on  shareholders'  equity.  In fiscal
1999, $135,285 in bonuses were earned under the plan.

STOCK PARTICIPATION AND OPTION PLANS

         1994 EMPLOYEE STOCK PURCHASE PLAN. In 1994, the  Shareholders  approved
the  adoption  of the 1994  Employee  Stock  Purchase  plan  (the  "Plan").  All
employees,  including executive  officers,  may purchase shares of the Company's
Common  Stock at a discount  of 15% from the  market  price of the  shares.  The
maximum  aggregate  number  of shares to be  offered  under the Plan is  100,000
shares of the Company's Common Stock. As

                                    Page 11
<PAGE>

of June 30, 1999,  58,942 shares of the Company's  Common Stock have been issued
under the Plan.

         1996 STOCK OPTION PLAN. See the discussion of the Option Plan contained
in Proposal 5.

COMPENSATION OF DIRECTORS

         Outside Directors receive $300 per month for serving as Directors, $600
for each Board  meeting  attended,  $400 for each  telephone  call Board meeting
($200 if less than 30 minutes),  and $400 for each committee  meeting  attended.
Directors'  fees paid by the Company  during  fiscal year 1999 totaled  $35,700.
Executive  Officers of the Company who also serve on the Board of Directors  are
not specifically compensated for duties as directors.

         The San Francisco law firm of Severson & Werson, of which Mr. Mertz was
a member, served as the Company's legal counsel during fiscal 1999.

         Sutter  Securities  Incorporated,  of  which  Mr.  Selinger  is  Senior
Managing  Director  of  Corporate  Finance,  served as a  financial  advisor and
rendered a fairness opinion to the Company in connection with its July 1999 sale
of asssets to Tree Top, Inc. for which it received a fee of $50,000.

EMPLOYMENT CONTRACTS

       The Company  entered  into an  Employment  Agreement  with Mr. Hess dated
March 14,  1996,  pursuant  to which Mr.  Hess is employed by the Company as its
President,  Chief Executive and Financial Officer. Under the agreement, Mr. Hess
is entitled to an annual base salary of $150,000,  subject to annual review,  an
incentive  bonus  during the first year of $75,000,  one-half of which is at the
discretion of the Compensation  Committee of the Board of Directors and one-half
of which is based on the Company  achieving  pre-tax  return equal to at least a
12% return on adjusted  shareholders'  equity and other  requirements  as may be
agreed.  Mr.  Hess was  granted  an  option  to  purchase  89,474  shares of the
Company's  common stock at $5.00 per share,  the fair market value of a share of
the Company's  common stock on May 1, 1996. The options were granted pursuant to
the  Company's  1996 Stock Option Plan.  Under the  agreement Mr. Hess serves at
will.  In  addition,  Mr. Hess is entitled to the  reimbursement  of  relocation
expenses,  temporary living expense,  an automobile  allowance and certain other
fringe  benefits.  On June 20,  1999,  the  Company  and Mr.  Hess  amended  the
Employment  Agreement such that in the event of termination of his employment by
the Company  prior to June 17,  2002,  for any reason  other than cause or other
than upon  resignation,  Mr. Hess is entitled to continued salary at the minimum
base salary  provided  above for that number of months which remain  between the
date of termination and June 17, 2002, but not less than six.

CONSULTING AGREEMENT BETWEEN MR. HESS AND TREE TOP, INC.

         As part of the Company's  asset sale of its apple product lines to Tree
Top,  Inc., Mr. Hess entered into a three-year  consulting  and  non-competition
agreement with Tree Top as of June 17, 1999. The consulting  agreement  provides
for  payments  to Mr.  Hess in the  amount  of $833  per  month  in  return  for
consulting and advisory services  concerning the product lines sold to Tree Top.
It is estimated  that Mr.  Hess'  consulting  services  will average 5 hours per
month,  and in no event will  exceed 10 hours per month.  During the term of the
agreement,  Mr.  Hess has agreed not to  directly or  indirectly,  own,  manage,
control,  participate in, perform  services for or otherwise carry on a business
competitive with the apple product lines anywhere in the world.

COMPENSATION AND RETIREMENT PLAN COMMITTEE REPORT

         This  report  is  provided  by the  Compensation  and  Retirement  Plan
Committee of the Board of Directors (the "Committee") to assist  stockholders in
understanding  the  Committee's  objectives and procedures in  establishing  the
compensation of Vacu-dry  Company's Chief Executive  Officer and other executive
officers. The Committee,  made up of non-employee  Directors, is responsible for
establishing and administering  the Company's  executive  compensation  program.
None of the members of the  Committee  is eligible to receive  awards  under the
Company's incentive compensation programs.

                                    Page 12
<PAGE>

         Vacu-dry's  executive  compensation  program is designed  to  motivate,
reward,  and  retain  the  management  talent  needed to  achieve  its  business
objectives and maintain its competitiveness in the food processing industry.  It
does this by utilizing  competitive base salaries that recognize a philosophy of
career continuity and by rewarding  exceptional  performance and accomplishments
that contribute to the Company's success.

COMPENSATION PHILOSOPHY AND OBJECTIVE

         The  philosophical  basis  of the  compensation  program  is to pay for
performance and the level of  responsibility  of an individual's  position.  The
Committee  finds  greatest  value in  executives  who  possess  the  ability  to
implement  the  Company's  business  plans as well as to react to  unanticipated
external  factors that can have a significant  impact on corporate  performance.
Compensation  decisions  for  all  executives,  including  the  Named  Executive
Officers,  are based on the same criteria.  These include  quantitative  factors
that  reflect  improvements  in the  Company's  short  and  long-term  financial
performance,  as well as  qualitative  factors which reflect the strength of the
Company  over the long  term,  such as  demonstrated  leadership  skills and the
ability to deal quickly and effectively with difficulties which sometimes arise.

         The Committee  believes that  compensation of Vacu-dry's key executives
should:

1.     Link rewards to business results and stockholder returns;

2.     Encourage  creation of  stockholder  value and  achievement  of strategic
       objectives;

3.     Maintain  an  appropriate  balance  between  base  salary  and  short-and
       long-term incentive opportunity;

4.     Attract and retain,  on a long-term  basis,  highly  qualified  executive
       personnel; and

5.     Provide total  compensation  opportunity  that is  competitive  with that
       provided by  competitors  in the food  processing  industry,  taking into
       account  relative  company  size and  performance  as well as  individual
       responsibilities and performance.

KEY ELEMENTS OF EXECUTIVE COMPENSATION

Vacu-dry's  executive  compensation  program  consists of three  elements:  Base
Salary,  Short-Term  Incentives and Long-Term  Incentives.  Payout of short-term
incentives depends on corporate performance.  Payout of the long-term incentives
depends on performance of Vacu-dry stock.

         BASE  SALARY.  A  competitive  base  salary is crucial  to support  the
philosophy of  management  development  and career  orientation  of  executives.
Salaries are targeted to pay level with the Company's  competitors and companies
having similar  capitalization,  revenues,  etc. Executive salaries are reviewed
annually.  Assessment of an individual's  relative  performance is made annually
based on a number of  quantitative  factors  such as stock  price,  earnings and
revenues,  as well as  qualitative  factors which include  initiative,  business
judgment,  technical  expertise,  and  management  skills.  In 1995, the Company
implemented  a salary  freeze in  response to reduced  sales and  profits  which
lasted until fiscal 1997.

         SHORT-TERM INCENTIVE.  Short-term awards to executives are made in cash
to recognize  contributions to the Company's  business during the past year. The
Company  maintains a Bonus Plan as an incentive  for  executive  officers of the
Company. The bonus an executive receives is dependent on individual  performance
and level of responsibility.

         LONG-TERM   INCENTIVE.   Long-term   incentive   awards   provided   by
shareholder-approved  compensation programs are designed to develop and maintain
strong management  through share  appreciation  awards. The Company's 1985 Stock
Appreciation  Rights  Plan  creates  incentives  for  executives  and  other key
employees by providing them with an opportunity to indirectly participate in the
appreciation in the market value of the Company's common stock.


                                    Page 13
<PAGE>

In 1993, the directors approved the adoption of the 1994 Employee Stock Purchase
Plan (the "Plan").  All employees,  including executive  officers,  may purchase
shares of the Company's Common Stock at a discount of 85% of the market value on
the first or last business day of the quarterly  offering  period,  whichever is
lower. The plan became effective January 1, 1994.

1999 CHIEF EXECUTIVE OFFICER COMPENSATION

       Mr.  Hess' base salary for fiscal 1999 was  $178,670.  Mr. Hess earned no
bonuses  during the fiscal year ending June 30, 1999.  Mr. Hess received a total
of $11,640 as a  contribution  to the Company's  401(k) plan and Profit  Sharing
Plan. The Committee believes Mr. Hess' total compensation package is appropriate
for Mr. Hess' level of responsibility and is well within  competitive  practice.
The Committee  also believes the  compensation  is  appropriate to the Company's
financial performance during the year.

Compensation Committee:
Craig R. Stapleton, Chairman
Edward Koplovsky
Fredric Selinger

                                    Page 14
<PAGE>

SHARE INVESTMENT PERFORMANCE

         The  following  graphs  compare  the total  return  performance  of the
Company for the periods  indicated  with the  performance  of the NASDAQ  Market
Index and the performance of a Peer Index comprised of companies having the same
Standard Industrial  Classification ("SIC") number as the Company. The Company's
shares  are traded  over-the-counter  on the NASDAQ  National  Market  under the
symbol  "VDRY".  The Peer Index  includes  the publicly  traded  stocks of Ampal
American  Israel Corp.,  Chiquita  Brands  International  Inc.,  H.J. Heinz Co.,
Odwalla  Inc.,  Seneca  Foods Corp.  Class B, J.M.  Smucker Co. Class A, Unimark
Group, Inc., and Vacu-dry Company. Prior years' Peer Index included Stokely USA,
Inc. In January,  1998, Chiquita Brands  International,  Inc. acquired by merger
Stokely  USA,  Inc.,  which  ceased  trading  on  the  NASDAQ  National  Market.
Consequently,  the Company substituted Chiquita Brands International,  Inc. into
its Peer Index in place of Stokely USA, Inc.  beginning in the fiscal year ended
June 30, 1998. The NASDAQ Index includes only shares of companies  traded on the
NASDAQ  National  Market  System or  over-the-counter,  which have been publicly
traded  continuously  since June 30,  1992.  The total  return  indices  reflect
reinvested  dividends and are weighted on a market  capitalization  basis at the
time of each reported data point.

         PERFORMANCE GRAPH


                                [GRAPHIC]

Year (June 30)             1994      1995      1996     1997      1998     1999
--------------             -----     -----     ----     ----      ----     ----

Vacu-dry Company           100        51        58       49         82     107

NASDAQ Stock Market        100       133       171      208        274     393

Peer Index                 100       141       149      221        272     246



                                    Page 15
<PAGE>


                         INDEPENDENT PUBLIC ACCOUNTANTS

         The Company's  independent  certified public  accountants are chosen by
the Board of Directors based on the  recommendation of its audit committee.  The
independent  certified  public  accountants for the Company's  fiscal year ended
June  30,  1999,  were  Arthur  Andersen  LLP.  Arthur  Andersen  LLP  has  been
recommended  by the audit  committee  and  selected by the Board for the current
fiscal year. Representatives of that firm will be present at the Annual Meeting,
and will have the  opportunity to make a statement and to respond to appropriate
questions.

                     AVAILABILITY OF ADDITIONAL INFORMATION

         The Company's  Annual Report to  Shareholders  is being mailed with the
Proxy Statement to Shareholders who were holders of record on October 27, 1999.

                    OTHER MATTERS AND SHAREHOLDERS' PROPOSALS

         The Board of Directors presently knows of no other matter that may come
before the Annual Meeting.  If any other matters should properly come before the
Meeting,  however,  the Board's proxy holders  intend to vote on such matters in
accordance with their best judgment.

                                           By Order of the Board of Directors,


                                           William Burgess
                                           Secretary

Dated: October 31, 1999



                                    Page 16
<PAGE>


APPENDIX A

                                VACU-DRY COMPANY
                             1996 STOCK OPTION PLAN

                                  (as amended)

       1.   PURPOSE  AND SCOPE.  The purposes of this Plan are to induce persons
of  outstanding  ability and potential to join and remain with Vacu-dry  Company
(the  "Company"),  to provide an  incentive  for such  employees  as well as for
non-employee consultants to expand and improve the profits and prosperity of the
Company  by  enabling  such  persons  to acquire  proprietary  interests  in the
Company, and to attract and retain key personnel through the grant of Options to
purchase shares of the Company's  common stock.  Unless otherwise stated herein,
the term "Option" includes both Incentive Stock Options and Non-qualified  Stock
Options.

       2.   DEFINITIONS.  Each term set forth in this  Section 2 shall  have the
meaning  set forth  opposite  such term for  purposes  of this Plan  unless  the
context  otherwise  requires,  and for the  purposes  of such  definitions,  the
singular shall include the plural and the plural shall include the singular:

            (a)   "Affiliate"  shall mean any parent  corporation  or subsidiary
corporation of the Company as those terms are defined in Sections 424(e) and (f)
respectively of the Internal Revenue Code of 1986, as amended.

            (b)   "Board" shall mean the Board of Directors of the Company.

            (c)   "Committee"  shall  have the  meaning  set forth in  Section 3
hereof.

            (d)   "Company"   shall  mean   Vacu-dry   Company,   a   California
corporation.

            (e)   "Code"  shall  mean the  Internal  Revenue  Code of  1986,  as
amended.

            (f)   "Fair  Market Value" for a share of Stock means the price that
the  Board  or the  Committee  acting  in good  faith  determines,  through  any
reasonable  valuation  method  (including but not limited to reference to prices
existing  in any  established  market in which the Stock is  traded),  to be the
price at which a share of Stock might change hands between a willing buyer and a
willing  seller,  neither being under any  compulsion to buy or to sell and both
having reasonable knowledge of the relevant facts.

            (g)   "Option" shall mean a right to purchase Stock granted pursuant
to the Plan.

            (h)   "Option  Price" shall mean the purchase  price for Stock under
an Option,  as  determined in Sections 7 - "Incentive  Stock  Options" - and 8 -
"Non-Incentive Stock Options" - below.

            (i)   "Participant"   shall  mean  an   employee   or   non-employee
consultant to the Company to whom an Option is granted under the Plan.

            (j)   "Plan"  shall mean this  Vacu-dry  Company  1996 Stock  Option
Plan.

            (k)   "Stock"  shall  mean  the no par  value  common  stock  of the
Company.

            (l)   "1934  Act"  means the  Securities  Exchange  Act of 1934,  as
amended.

       3.   ADMINISTRATION.  The Plan shall be administered  (i) with respect to
individuals  who receive options under the Plan and who are or become subject to
the reporting  requirements and short-swing liability provision of Section 16 of
the  Securities  Exchange Act of 1934,  as amended (the "1934 Act")  ("Reporting
Persons")  by a  committee  consisting  of at least two  members of the Board of
Directors of the Company (the

                                      A-1
<PAGE>

"Board"), each of whom is a non-employee director (as such term is defined under
Rule 16b-3 of the 1934 Act) (the  "Reporting  Persons  Committee") and (ii) with
respect to all  individuals  who receive  Options under the Plan and who are not
Reporting Persons,  by a committee which consists of at least two members of the
Board ("Stock Option Committee").  For purposes of this Plan,  references to the
"Committee"  shall  mean the  Reporting  Persons  Committee,  the  Stock  Option
Committee,  or both, as the context may require.  The Committee  shall have full
authority in its discretion,  subject to and not  inconsistent  with the express
provisions of the Plan, to grant Options, to determine the Option Price and term
of each  Option,  the persons to whom,  and the time or times at which,  Options
shall be granted and the number of shares of Stock to be covered by each Option;
to interpret the Plan; to prescribe,  amend,  and rescind rules and  regulations
relating  to the Plan;  to  determine  the terms and  provisions  of the  option
agreements  (which need not be identical)  entered into in  connection  with the
grant of Options under the Plan; to unilaterally  modify outstanding  Options in
any respect  that is not  adverse to the  Participants,  including  the right to
accelerate  the  exercisability  of Options,  and to waive minor  conditions and
requirements; and to make all other determinations deemed necessary or advisable
for the  administration  of the Plan.  The Board may  delegate to one or more of
their members, or to one or more agents,  such  administrative  duties as it may
deem advisable,  and the Board or any person to whom it has delegated  duties as
aforesaid  may employ one or more  persons to render  advice with respect to any
responsibility  the Board or such person may have under the Plan.  The Board may
employ  attorneys,  consultants,  accountants,  or other persons,  and the Board
shall be entitled  to rely upon the  advice,  opinions,  or  valuations  of such
persons.  All actions taken and all  interpretations  and determinations made by
the Board in good faith shall be final and binding  upon all  Participants,  the
Company,  and all other  interested  persons.  No  member of the Board  shall be
personally liable for any action, determination,  or interpretation made in good
faith with  respect  to the Plan;  and all  members of the Board  shall be fully
protected  by the  Company  in  respect of any such  action,  determination,  or
interpretation.

       4.   SHARES  SUBJECT  TO  THE  PLAN.  Subject  to  adjustment  under  the
provisions  of Section 14 - "Effect of Change in Stock Subject to Plan" - of the
Plan,  the maximum  number of shares of Stock that may be optioned or sold under
the Plan is Two Hundred  Seventy  Five  Thousand  (275,000).  Such shares may be
authorized  but  unissued  shares of Stock of the Company,  or issued  shares of
Stock  reacquired  by the  Company,  or  shares  purchased  in the  open  market
expressly  for use under the Plan.  If for any  reason any shares of Stock as to
which an Option has been  granted  cease to be subject to  purchase  thereunder,
then  (unless  the Plan shall have been  terminated)  such shares  shall  become
available for subsequent  awards under this Plan in the discretion of the Board.
The Company shall, at all times while the Plan is in force,  reserve such number
of common  shares as will be  sufficient  to  satisfy  the  requirements  of all
outstanding Options granted under the Plan.

       5.   ELIGIBILITY; FACTORS TO BE CONSIDERED IN GRANTING OPTIONS.

            (a)   Incentive  Stock  Options may be granted to any regular  full-
time employee  (including  officers and  directors) of either the Company or any
Affiliate of the Company.

            (b)   Non-qualified Stock Options may be granted to: (i) any regular
full-time employee  (including  officers and directors) of either the Company or
any  Affiliate  of the  Company;  and (ii) any  non-employee  consultant  of the
Company,  provided that bona fide services shall be rendered by such consultants
and such services must not be in connection with the offer or sale of securities
in a capital-raising transaction.

            (c)   In determining to whom options shall be granted and the number
of shares of Stock to be  covered  by each  Option,  the Board  shall  take into
account the nature of the  participants'  duties,  their  present and  potential
contributions to the success of the Company,  and such other factors as it shall
deem relevant in connection  with  accomplishing  the purposes of the Plan.  The
Board shall also  determine  the  time(s) of grant,  the type and term of Option
granted,  and the time(s) of exercise,  in whole or part. A Participant  who has
been granted an Option  under the Plan may be granted new Options,  which may be
in addition to prior  Options  granted  under the Plan or may be in exchange for
the surrender and  cancellation of prior Options having a higher or lower option
price and containing such other terms as the Board may deem appropriate.

                                      A-2
<PAGE>

       6.   TERMS AND CONDITIONS OF OPTIONS.

            (a)   GENERAL.  Options  granted  pursuant  to  the  Plan  shall  be
authorized  by  the  Board  and  shall  be  evidenced  by  agreements   ("Option
Agreements")  in such form as the Board  from time to time shall  approve.  Such
Option  Agreements  shall  comply with and be subject to the  following  general
terms  and  conditions,  and  shall  also  comply  with  and be  subject  to the
provisions  of  Section 7  relating  to  Incentive  Stock  Options  or Section 8
relating to Non-qualified  Stock Options,  as applicable,  as well as such other
terms  and  conditions  as set  forth  in this  Plan and as the  Board  may deem
desirable, not inconsistent with the Plan.

            (b)   EMPLOYMENT  AGREEMENT.  The Committee may, in its  discretion,
include in any Option  granted under the Plan a condition  that the  Participant
shall  agree to remain in the  employ  of,  and/or to render  services  to,  the
Company for a period of time (specified in the Option  Agreement)  following the
date the Option is  granted.  No such  Option  Agreement  shall  impose upon the
Company any obligation to employ and/or retain the Participant for any period of
time.

            (c)   MANNER  OF EXERCISE.  A Participant  may exercise an Option by
giving written  notice of such exercise to the Company at its principal  office,
attention  to the  Secretary,  and paying the Option Price either (i) in cash in
full at the time of exercise, or (ii) in the discretion of the Board:

                  (i)   by delivery of other previously outstanding common stock
of the Company,

                  (ii)  by  an  approved  deferred  payment  schedule  or  other
arrangement,  which  arrangement  shall be  contained  in  writing in the Option
Agreement, in which event an interest rate will be stated which is not less than
the rate then  specified  which will prevent any  imputation of higher  interest
under Section 483 of the Code, or

                  (iii) any other form of legal consideration  acceptable to the
Committee at the time of grant or exercise.

            (d)   TIME OF EXERCISE. Promptly after the exercise of an Option and
the payment of the Option  Price,  either in full or  pursuant  to the  approved
payment  schedule,  the Participant shall be entitled to the issuance of a stock
certificate evidencing ownership of the appropriate number of shares of Stock. A
Participant  shall have none of the  rights of a  shareholder  until  shares are
issued to him/her,  and no adjustment will be made for dividends or other rights
for which the record date has occurred prior to the date such stock  certificate
is issued.

            (e)   NUMBER OF SHARES.  Each Option shall state the total number of
shares of Stock to which it pertains.

            (f)   OPTION PERIOD, VESTING, AND LIMITATIONS ON EXERCISE. The Board
may, in its discretion,  provide that an Option may not be exercised in whole or
part for any period(s) of time specified in the Option Agreement.

       7.   INCENTIVE STOCK OPTIONS. The Board may grant Incentive Stock Options
("ISOs") which meet the requirements of Section 422 of the Code, as amended from
time to time.

            (a)   ISOs  may be granted  only to  employees of the Company or its
Affiliates.

            (b)   Each  ISO  granted  under the Plan must be  granted  within 10
years from the date the Plan is adopted or is  approved by the  shareholders  of
the Company, whichever is earlier.

            (c)   The  purchase  price  shall not be less  than the Fair  Market
Value of the common shares at the time of grant,  except that the purchase price
shall be 110% of the Fair  Market  Value at such time in the case

                                      A-3
<PAGE>

of any  person  who owns stock  possessing  more than 10% of the total  combined
voting  power of all  classes of stock of the Company or its  Affiliates  at the
time of grant.

            (d)   No ISO granted under the Plan shall be  exercisable  more than
10 years from the date of grant,  except that in the case of any person who owns
stock possessing more than 10% of the total combined voting power of all classes
of stock of the Company or its Affiliates at the time of grant,  no ISO shall be
exercisable more than five years from the date of grant.

            (e)   To  the extent that the  aggregate  Fair Market Value of Stock
(determined at the time of grant) with respect to which ISOs are exercisable for
the first time by any individual during any calendar year under all plans of the
Company and its subsidiaries exceeds $100,000,  such Options shall be treated as
non-qualified stock Options, but only to the extent of such excess. Should it be
determined  that an entire  Option or any portion  thereof  does not qualify for
treatment  as an ISO by  reason  of  exceeding  such  maximum,  or for any other
reason, such Option or portion shall be considered a non-qualified stock Option.

       8.   NON-QUALIFIED STOCK OPTIONS. The Board may grant Non-qualified Stock
Options  ("NSOs")  under the Plan in addition to or in lieu of  Incentive  Stock
Options.  NSOs are not intended to meet the  requirements  of Section 422 of the
Code, and shall be subject to the following terms and conditions:

            (a)   NSOs may be granted to any eligible Participant.

            (b)   The  purchase  price of the shares shall be  determined by the
Board in its absolute  discretion,  but in no event shall such purchase price be
less than 85% of the Fair  Market  Value of the shares at the time of grant.  In
the case of any  person  who owns  stock  possessing  more than 10% of the total
combined  voting power of all classes of stock of the Company or its  Affiliates
at the  time of  grant,  the  price  shall  be 110% of the  Fair  Market  Value,
determined at the time of grant.

            (c)   NSOs  shall not be  exercisable  more than ten years  from the
date of grant.

       9.   TRANSFERABILITY.  Options  granted  under  this  Plan  shall  not be
transferable other than by will or by the laws of descent and distribution,  and
during a  Participant's  life  shall be  exercisable  only by such  Participant.
Options granted under this Plan shall not be subject to execution, attachment or
other  process.  In the event of (i) any attempt by a  Participant  to alienate,
assign,  pledge,  hypothecate or otherwise dispose of an Option granted pursuant
to the Plan,  except as provided for herein; or (ii) the levy of any attachment,
execution or similar process upon the rights or interest hereby  conferred,  the
Company  may  terminate  the  Option by notice to the  Participant  and it shall
thereupon become null and void.

       10.  TERMINATION OF EMPLOYMENT.  Options  held  by  employees,  including
directors, shall terminate three months after termination of employment with the
Company or Affiliate, unless:

            (a)   If  termination  is  due to  employee's  permanent  and  total
disability within the meaning of Section 22(e)(3) of the Code, the Option may be
exercised at any time within one year following termination.

            (b)   The Option  Agreement by its terms specifies  whether it shall
terminate  later than three (3) months after  termination of employment.  If the
Option may be  exercised  later than three  months  following  termination,  any
portion  exercised  beyond three months shall be a  non-qualified  stock option.
This  paragraph  shall not be  construed to extend the term of any Option nor to
permit anyone to exercise the Option after expiration of its term.

            (c)   Options  granted  under this Plan shall not be affected by any
change of duties or position of the Participant so long as Participant continues
to be a regular, full-time employee of the Company. Any Option, or any rules and
regulations relating to the Plan, may contain such provisions as the Board shall
approve with reference to the  determination of the date employment  terminates.
Nothing in the Plan or in any

                                      A-4
<PAGE>

Option granted  pursuant to the Plan shall confer upon any Participant any right
to continue in the employ of the Company or shall  interfere in any way with the
right of the Company to terminate such employment at its will at any time.

            (d)   Notwithstanding any other provisions set forth in this Section
10 or in the Plan, if the Participant  shall:  (i) commit any act of malfeasance
or wrongdoing  affecting the Company or any Affiliate;  (ii) breach any covenant
not to compete, or employment  contract,  with the Company or any Affiliate;  or
(iii) engage in any conduct that would warrant the  Participant's  discharge for
cause   (excluding   general   dissatisfaction   with  the  performance  of  the
Participant's duties, but including any act of disloyalty or any conduct clearly
tending to bring discredit upon the Company or any  Affiliate),  any unexercised
portion of the Option shall immediately terminate and be void.

       11.  RIGHTS  IN  THE EVENT OF DEATH.  If an employee dies during the term
of this Option,  his/her legal representative or representatives,  or the person
or persons  entitled to do so under the  employee's  last will and  testament or
under  applicable  intestate laws, shall have the right to exercise this Option,
but only for the  number  of shares as to which the  employee  was  entitled  to
exercise  this Option on the date of his death,  and such right shall expire and
this Option shall terminate twelve (12) months after the date of Grantee's death
or on the expiration date of this Option, whichever date is sooner. In all other
respects, this option shall terminate upon such death.

       12.  LEAVES OF ABSENCE. For purposes of the Plan, an employee on approved
leave of absence from the Company shall be considered as currently  employed for
90 days  following  beginning  the  leave  or for so long as  his/her  right  to
reemployment is guaranteed by statute or contract, whichever is longer.

       13. EFFECT  OF  CHANGE  IN  STOCK  SUBJECT  TO PLAN.  In the  event  that
outstanding  common  shares are hereafter  changed by reason of  reorganization,
consolidation,  recapitalization,  reclassification, stock split, combination of
shares,  stock  dividends and the like,  the Board shall make  adjustments as it
deems  appropriate  in the number and/or kind of shares or securities  for which
Options may  thereafter  be granted  under the Plan and for which  Options  then
outstanding under this Plan may thereafter be exercised.  Any such adjustment in
outstanding  Options shall be made without changing the aggregate exercise price
applicable to the unexercised  portions of such Options.  Such adjustments shall
be made by or under authority of the Company's Board whose  determinations as to
what adjustments shall be made, and the extent thereof,  shall be final, binding
and conclusive.

       14.  CORPORATE  REORGANIZATIONS.  Following  the  merger  of one or  more
corporations  into the Company,  or any  consolidation of the Company and one or
more  corporations  in which  the  Company  is the  surviving  corporation,  the
exercise of Options under this Plan shall apply to the surviving corporation.

       Upon  the   dissolution  or  liquidation  of  the  Company,   or  upon  a
reorganization,  merger or consolidation of the Company as a result of which the
outstanding  securities  of the class  then  subject to  Options  hereunder  are
changed  into  or  exchanged  for  cash or  property  or  securities  not of the
Company's  issue,  or upon a sale of  substantially  all of the  property of the
Company to, or the  acquisition of stock  representing  more than eighty percent
(80%) of the  voting  power of the  stock of the  Company  then  outstanding  by
another  corporation  or  person,  the Plan  shall  terminate,  and all  Options
theretofore  granted  hereunder  shall  terminate,  unless  provision be made in
writing in connection  with such  transaction  for the  continuance  of the Plan
and/or for the assumption of Options  theretofore  granted,  or the substitution
for  such  Options  of  Options  covering  the  stock  of a  successor  employer
corporation,  or a parent or subsidiary thereof, with appropriate adjustments as
to the number and kind of shares and prices, in which event the Plan and Options
theretofore  granted  shall  continue  in the  manner  and  under  the  terms so
provided.  If the Plan and unexercised  Options shall terminate  pursuant to the
foregoing sentence, all persons entitled to exercise any unexercised portions of
Options  then  outstanding  shall  have the  right,  at such  time  prior to the
consummation of the transaction  causing such termination,  as the Company shall
designate, to exercise the unexercised portions of their Options,  including the
portions  thereof  which  would,  but for  this  paragraph  entitled  "Corporate
Reorganizations," not yet be exercisable.

                                      A-5
<PAGE>

       15.  AGREEMENT AND REPRESENTATION OF EMPLOYEES.

            (a)   ACQUIRING STOCK FOR INVESTMENT PURPOSES. As a condition to the
exercise of any Option,  the  Company  may  require the person  exercising  such
Option to represent  and warrant at the time of such exercise that any shares of
Stock  acquired at exercise are being  acquired only for  investment and without
any present  intention to sell or  distribute  such shares if, in the opinion of
Company's  counsel,  such  representation  is  required or  desirable  under the
Securities Act of 1933 or any other applicable law,  regulation,  or rule of any
governmental agency.

            (b)   WITHHOLDING.  With  respect  to the  exercise  of  any  Option
granted under this Plan, each Participant shall fully and completely  consent to
whatever  the Board  directs to satisfy the  federal  and state tax  withholding
requirements, if any, which the Board in its discretion deems applicable to such
exercise.

            (c)   DELIVERY.  The Company is not  obligated to deliver any common
shares until there has been qualification  under or compliance with all state or
federal laws,  rules and  regulations  deemed  appropriate  by the Company.  The
Company  will use all  reasonable  efforts  to  obtain  such  qualification  and
compliance.

       16.  FINANCIAL ASSISTANCE. The Company is vested with authority under the
Plan to assist, within the Company's discretion,  any employee to whom an Option
is granted hereunder (including any director or officer of the Company or any of
its  Affiliates  who is also an employee)  in the payment of the purchase  price
payable on exercise of that Option by lending the amount of such purchase  price
to such  employee  on such  terms and at such  rates of  interest  and upon such
security (or unsecured) as shall have been  authorized by or under  authority of
the Board.

       17.  AMENDMENT AND  TERMINATION  OF PLAN. The Board,  by resolution,  may
terminate,  amend,  or revise  the Plan with  respect  to any shares as to which
Options have not been granted;  provided however, that any amendment that would:
(i)  materially  increase  the  benefits  accruing  to  Participants;   or  (ii)
materially  modify the  requirements as to eligibility for  participation in the
Plan, shall be subject to shareholder  approval within 12 months before or after
adoption. It is expressly  contemplated that the Board may amend the Plan in any
respect necessary to provide employees with the maximum benefits available under
and/or to satisfy the requirements of or amendments to Section 422 of the Code.

       No termination,  modification or amendment of the Plan may however, alter
or impair the rights  conferred by an Option  previously  granted in any respect
that is adverse to the  Participant  without the consent of the  Participant  to
whom the Option was previously granted.

       Unless sooner terminated, the Plan shall remain in effect for a period of
ten years from the date of the Plan's adoption by the Board.

       18.  USE OF PROCEEDS.  The proceeds  from the sale of shares  pursuant to
Options granted under the Plan shall constitute general funds of the Company.

       19.  EFFECTIVE  DATE OF PLAN. The Effective Date of the Plan is March 15,
1996,  the  date  it was  adopted  by the  Board.  The  Effective  Date  of this
restatement and amendment is February 11, 1999.

       20.  INDEMNIFICATION  OF  COMMITTEE.  In addition to such other rights of
indemnification  as they may have and subject to limitations of applicable  law,
the members of the Committee  shall be  indemnified  by the Company  against all
costs and expenses  reasonably  incurred by them in connection  with any action,
suit or  proceeding to which they or any of them may be a party by reason of any
action  taken or  failure  to act  under or in  connection  with the Plan or any
rights  granted  thereunder  and against all amounts paid to them in  settlement
thereof or paid by them in satisfaction  of a judgment of any such action,  suit
or proceeding, the Board or Committee member or members shall notify the Company
in writing, giving the Company an opportunity at its own cost to defend the same
before such  Committee  member or members  undertake to defend the same on their
own behalf.

                                      A-6
<PAGE>

       21.  INFORMATION REQUIREMENTS. The Company shall provide each Participant
with annual financial statements.

       22.  GOVERNING  LAW.  The Plan shall be  governed  by, and all  questions
arising  hereunder,  shall be determined in accordance with the laws of State of
California as such laws are applied to agreements between  California  residents
entered into and to be performed entirely within California.


       Date of Board Adoption: April 15, 1996
       Date of Shareholder Approval: October 30, 1996
       Date of Board Adoption of Restatement and Amendment: February 11, 1999

                                      A-7
<PAGE>


                                VACU-DRY COMPANY
                         100 Stony Point Road, Suite 200
                          Santa Rosa, California 95401

                                      PROXY

         This  Proxy is  solicited  on  behalf of the  Board of  Directors.  The
undersigned  hereby appoints Gary L. Hess and Roger S. Mertz, or either of them,
with full power of  substitution,  as Proxies of the  undersigned  to attend the
Annual  Meeting of  Shareholders  of Vacu-dry  Company to be held on  Wednesday,
November 17, 1999, and any adjournment thereof, and to vote the number of shares
the  undersigned  would be entitled to vote if  personally  present as indicated
below.

1.    Proposal to amend Article ONE of the Company's  Articles of  Incorporation
      to change the name of the Company to SonomaWest Holdings, Inc.

      [ ] FOR approving the amendment       [ ] AGAINST approving the amendment
          to the Articles                       to the Articles

2.    Proposal to amend Article TWO of the Company's  Articles of  Incorporation
      to broaden the Company's corporate purpose.

      [ ] FOR approving the amendment       [ ] AGAINST approving the amendment
          to the Articles                       to the Articles

3.    Proposal  to amend  Section  2.2 of the  Company's  By-Laws  to change the
      number of directors.

      [ ] FOR approving the amendment       [ ] AGAINST approving the amendment
          to the By-Laws                         to the By-Laws

4.    Election of Directors.

      [ ] FOR all nominees listed below     [ ] WITHHOLD AUTHORITY
          (except as marked to the              to vote for all nominees
          contrary below)                       listed below

      (Instructions:  To withhold  authority to vote for any  individual nominee
      strike a line through the  nominee's  name in the list below.)

          Gary L. Hess; Roger S. Mertz; Frederic Selinger; Craig R. Stapleton

5.    Proposal to amend the  Company's  1996 Stock  Option Plan to increase  the
      shares  available  for issuance  under the Plan by an aggregate of 185,000
      shares, to 275,000 shares.

      [] FOR approving the amendment        [ ] AGAINST approving the amendment
         to the Stock Option Plan               to the Stock Option Plan

6.    In their discretion, the Proxies  are  authorized  to vote upon such other
      business as may properly come before the meeting.

      THIS PROXY, WHEN PROPERLY  EXECUTED,  WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED  STOCKHOLDER.  IF NO DIRECTION IS MADE, THE PROXY WILL
BE VOTED FOR PROPOSALS 1, 2, 3, 4 and 5.

<PAGE>

      The undersigned hereby acknowledge receipt of (a) Notice of Annual Meeting
of  Shareholders  to be held  November  22,  1999,  (b) the  accompanying  Proxy
Statement,  and (c) the annual  report of the  Company for the fiscal year ended
June 30, 1999.

      Please  sign  exactly as shares are  registered.  When  shares are held by
joint  tenants,   both  should  sign.   When  signed  as  attorneys,   executor,
administrator,  trustee  or  guardian,  please  give  full  title as such.  If a
corporation, please sign in full corporate name by president or other authorized
officer.  If a  partnership,  please sign in  partnership  name by an authorized
person.



Dated: ______________________, 1999             _____________________________
                                                Signature

                                                ______________________________
                                                Signature (if held jointly)