<PAGE> 1
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to 14a-11(c) or 14a-12
ADVANCED COMMUNICATIONS GROUP, INC.
(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy 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)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
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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):
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing 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:
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<PAGE> 2
ACG Advanced
Communications
Group, Inc.
ADVANCED COMMUNICATIONS GROUP, INC.
390 SOUTH WOODS MILL ROAD
SUITE 150
ST. LOUIS, MISSOURI 63017
NOTICE OF
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JULY 29, 1998
To the Stockholders of Advanced Communications Group, Inc.:
The Annual Meeting of Stockholders of Advanced Communications
Group, Inc. (the "Company"), a Delaware corporation, will be held
at the Marriott West Hotel and Conference Center, 660 Maryville
Centre Drive, St. Louis, Missouri 63141, on Wednesday, July 29,
1998, at 11:00 a.m., local time, for the following purposes:
1. To elect four directors for terms expiring in 2001; and
2. To transact such other business as may properly come before
the meeting and all adjournments thereof.
Stockholders of record as of the close of business on June 3,
1998 are entitled to notice of, and to vote at, the Annual Meeting
and all adjournments thereof. A list of stockholders entitled to
vote at the Annual Meeting will be available for examination by any
stockholder at the executive offices of the Company not less than
ten days prior to the
Annual Meeting.
By Order of the Board of Directors
WILLIAM H. ZIMMER III
Secretary
July 9, 1998
St. Louis, Missouri
EVEN IF YOU EXPECT TO ATTEND THE MEETING IN PERSON, PLEASE
MARK, DATE AND SIGN THE ENCLOSED PROXY AND RETURN IT IN THE
ENCLOSED RETURN ENVELOPE. STOCKHOLDERS WHO ATTEND THE MEETING MAY
REVOKE THEIR PROXIES AND VOTE IN PERSON IF THEY DESIRE.
<PAGE> 3
ADVANCED COMMUNICATIONS GROUP, INC.
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
The enclosed proxy is solicited on behalf of the Board of Directors of
Advanced Communications Group, Inc. (the "Company") for use at the Annual
Meeting of its stockholders to be held July 29, 1998 at 11:00 a.m. at the
Marriott West Hotel and Conference Center, 660 Maryville Centre Drive, St.
Louis, Missouri 63141 (the "Annual Meeting"). If the proxy is executed and
returned to the Company, it nevertheless may be revoked at any time before it
is exercised (i) by written notice to the Secretary of the Company at the
Company's principal executive offices at the address set forth below, (ii) by
properly submitting to the Company a duly executed proxy bearing a later date,
or (iii) by attending the meeting and voting in person. If matters other than
the election of directors properly come before the meeting, the proxy will be
voted by the persons named therein in a manner which they consider to be in the
best interests of the Company. This Proxy Statement and the accompanying form
of proxy are first being sent to stockholders on or about July 9, 1998.
BACKGROUND
The Company was incorporated in Delaware in September 1997 to create a
regional competitive local exchange carrier that provides an integrated
portfolio of telecommunications services principally to business customers in
selected service areas of Southwestern Bell Telephone Company and U S WEST
Communications, Inc. On February 18, 1998, the Company completed an initial
public offering ("IPO") of its common stock, par value $.0001 per share (the
"Common Stock").
In connection with the IPO, the Company acquired all of the outstanding
capital stock of Great Western Directories, Inc. ("Great Western
Directories"), Valu-Line of Longview, Inc. ("Valu-Line"), Feist Long
Distance Service, Inc. ("Feist Long Distance"), FirsTel, Inc. ("FirsTel"),
and Tele-Systems, Inc., substantially all of the assets of Long Distance
Management II, Inc., Long Distance Management of Kansas, Inc., The Switchboard
of Oklahoma City, Inc., and National Telecom, a proprietorship, and 49% of the
outstanding capital stock of KIN Network, Inc. ("KINNET"). In the aggregate,
the consideration paid by the Company for the acquisitions included $84.1
million in cash, 3,383,589 shares of Common Stock, $17.4 million in promissory
notes, and options and warrants to purchase 1,393,213 shares of Common Stock.
The Company's principal executive offices are located at 390 South Woods
Mill Road, Suite 150, St. Louis, Missouri 63017.
VOTING
Only the holders of record of the Company's common stock on June 3, 1998
(the "Record Date") are entitled to notice of, and to vote, either in person
or by proxy, at the Annual Meeting and all adjournments thereof. At the close
of business on the record date, 19,624,920 shares of Common Stock were issued
and outstanding. A majority of the outstanding shares of Common Stock on the
record date, present in person or by proxy, will constitute a quorum for the
transaction of business at the Annual Meeting. Each share of Common Stock held
of record as of the record date is entitled to one vote on each matter
submitted to a vote at a meeting of stockholders. The Board knows of no
matters other than the election of directors to be presented for consideration
at the Annual Meeting. If any other matters properly come before the meeting,
the proxies solicited hereby will be voted on such matters in accordance with
the judgment of the persons voting such proxies.
Shares represented by proxies which are marked "withhold authority" with
respect to the election of any one or more nominees for election as directors
will be counted for the purpose of determining whether there is a quorum for
the transaction of business at the Annual Meeting. The affirmative vote of a
plurality of the shares present in person or represented by proxy at the Annual
Meeting is required to elect directors and act on any other matters properly
brought before the meeting. "Plurality" means that the nominees who receive
the largest number of votes cast are elected as directors up to the maximum
number of directors to be elected at the Annual Meeting. Consequently, any
shares represented at the Annual Meeting but not voted for any reason, have no
impact on the election of directors.
<PAGE> 4
ELECTION OF DIRECTORS
The Restated Certificate of Incorporation as amended of the Company (the
"Restated Certificate") and the Company's Bylaws (the "Bylaws") provide
that the Board shall consist of not less than three and not more than fourteen
directors, the exact number of directors to be determined from time to time
exclusively by resolution of the Board of Directors. By resolution, the Board
recently increased the size of the Board from ten members to eleven, thereby
creating a vacancy. The Restated Certificate also provides for a classified
Board of Directors divided into three classes whose terms expire at different
times. Four members are to be elected to the Board of Directors in 1998, each to
serve for a term of three years. Two of the Board's four nominees for election
at the 1998 Annual Meeting for terms expiring at the 2001 Annual Meeting of
Stockholders, James F. Cragg and David M. Mitchell, are currently directors of
the Company. Mr. Fentress Bracewell, a current director whose term expires at
the 1998 Annual Meeting, will not stand for reelection. It is intended that
Messrs. Robert F. Benton and Marvin C. Moses will replace Mr. Bracewell and
fill the aforementioned vacancy.
The persons named in the enclosed form of proxy intend to vote such proxy
for the election of Messrs. Robert F. Benton, James F. Cragg, David M.
Mitchell and Marvin C. Moses as directors of the Company, unless the stockholder
indicates on the form of proxy that the vote should be withheld or contrary
directions are indicated. If the proxy card is signed and returned without any
direction given, stock represented by the form of proxy will be voted FOR the
election of the four nominees named in the immediately preceding sentence. The
Board of Directors has no reason to doubt the availability of its slate of
nominees and each nominee has indicated his willingness to serve if elected. If
any nominee shall decline or be unable to serve for any reason, it is intended
that, at the discretion of the Board of Directors, the size of the Board will
be reduced or the proxies will vote for a substitute nominee or nominees
designated by the Board of Directors.
<TABLE>
<CAPTION>
INFORMATION AS OF MAY 31, 1998 REGARDING THE BOARD'S NOMINEES FOR ELECTION AS DIRECTORS AT THE
1998 ANNUAL MEETING FOR TERMS TO EXPIRE AT THE ANNUAL MEETING IN 2001
NAME AGE BUSINESS EXPERIENCE
---- --- -------------------
<S> <C> <C>
Robert F. Benton...................... 67 Chairman of Orion Systems, Inc., a systems integration company, since
December 1994; Chairman of Intermedia Communications, Inc. from 1987 to
December 1994.
James F. Cragg........................ 48 Executive Vice President, Sales and Marketing and a Director of the Company
since December 1997; General Manager and Regional Vice President of Brooks Fiber
Properties, Inc. ("Brooks Fiber"), a competitive local exchange carrier and a
competitive access provider, with responsibilities for directing sales in
Kansas, Minnesota, Missouri and Tennessee, from January 1997 to December 1997;
Senior Vice President, Business Markets, for Snyder Communications, Inc., an
integrated marketing company, with responsibility for managing an outsourced
sales channel staffed by 650 sales representatives, from 1995 to 1996; Director
of Sales and Marketing for Ernst & Young from 1994 to 1995; various positions
with MCI from 1983 to 1994, including Director of Sales and Service for one of
MCI's sales regions. Director of KINNET.
David M. Mitchell..................... 50 Director of the Company since February 18, investor in the telephone business
since 1982 when he founded National Telephone Exchange which he sold, along with
two other telephone companies, to U.S. Long Distance in 1991; part owner of
Valu-Line at the time it was acquired by the Company in February 1998.
Marvin C. Moses....................... 53 Consultant and private investor. Director and consultant of Midcom
Communications, Inc. from May 1996 to 1997; Vice Chairman and Chief Financial
Officer of Frontier Corporation from November 1995 to April 1996 and Executive
Vice President and Chief Financial Officer of Frontier Corporation from August
1995 to November 1995; Executive Vice President and Chief Financial Officer of
ALC Communications Corp. from October 1988 to August 1995, the date ALC
Communications Corp. was acquired by Frontier Corporation.
2
<PAGE> 5
<CAPTION>
INFORMATION AS OF MAY 31, 1998 REGARDING THE DIRECTORS WHOSE TERMS
EXPIRE AT THE 1999 ANNUAL MEETING OF STOCKHOLDERS
NAME AGE BUSINESS EXPERIENCE
---- --- -------------------
<S> <C> <C>
Todd J. Feist......................... 34 Director of the Company and Vice President of the Company's Telecommunications
Services Group Central Region, since February 18, 1998; President of Feist Long
Distance since February 1996; Network Manager for Feist Long Distance since
April 1994; Distribution Manager of Feist Long Distance from 1987 to 1994.
E. Clarke Garnett..................... 38 Director of the Company since February 18, 1998; President of KINNET, KINNI,
L.C. ("KINNI"), the entity that provides management services to KINNET and
Liberty Cellular, Inc. ("Liberty") (the owner of 51% of the outstanding
capital stock of KINNET) since November 1996; Executive Vice President of each
of the aforementioned companies since May 1994 and Executive Director of those
companies since June 1992.
Richard O'Neal........................ 57 Director and President--Directory Services Group of the Company, since February
18, 1998; founder and President of Great Western Directories since 1984.
William H. Zimmer III................. 44 Director, Executive Vice President, Chief Financial Officer, Treasurer and
Secretary of the Company since December 1997; Treasurer and Secretary of
Cincinnati Bell Inc. ("CBI"), the holding company of an incumbent local
exchange carrier, with responsibility for that company's corporate financings,
risk management, trust asset management, cash management, corporate investments
and rating agency and exchange relationships, from 1991 to December 1997; served
in a variety of finance positions with CBI for more than nine years prior
thereto. Director of KINNET and Star Funds, a mutual fund affiliated with
Star Bank, N.A.
3
<PAGE> 6
<CAPTION>
INFORMATION AS OF MAY 31, 1998 REGARDING THE DIRECTORS WHOSE
TERMS EXPIRE AT THE 2000 ANNUAL MEETING OF STOCKHOLDERS
NAME AGE BUSINESS EXPERIENCE
---- --- -------------------
<S> <C> <C>
Richard P. Anthony.................... 49 Chairman of the Board of Directors, President and Chief Executive Officer of the
Company since December 1997; held various executive positions with Brooks Fiber
since 1993, most recently as Regional President of one of Brooks Fiber's two
regions, with responsibility for directing sales, construction and operations in
25 cities including Oklahoma City, Tulsa, Houston, Austin, Dallas, San Antonio,
Kansas City and Minneapolis; Senior Vice President of Marketing and Strategy of
Brooks Fiber from March 1993 to August 1996; Senior Vice President of Strategy,
Marketing and Network of Intermedia Communications of Florida, Inc., a
competitive access provider from 1991 to 1993. Director of KINNET.
Fred L. Thurman....................... 48 Director and President of the Telecommunications Services Group of the Company
since February 18, 1998; President of FirsTel since April 1994; since 1979, a
partner in Thurman, Comes, Foley & Co., L.L.C., a public accounting firm in
Sioux Falls, South Dakota, but in the last several years, not active in the
practice.
Reginald J. Hollinger................. 34 Director of the Company since February 18, 1998; Managing Director and Group
Head of the Telecommunications Investment Banking Group at PaineWebber
Incorporated ("PaineWebber"), the Company's investment banker, where he has
served as a member of the Investment Banking Division's Management Committee,
since 1997; worked at Morgan Stanley & Co. Incorporated for more than eight
years prior thereto.
</TABLE>
4
<PAGE> 7
SECURITY OWNERSHIP OF MANAGEMENT
AND CERTAIN BENEFICIAL OWNERS
The following table sets forth the beneficial ownership of the Company's
Common Stock as of May 31, 1998, by (i) each director (including the four
nominees), (ii) each executive officer named in the Summary Compensation Table
(the "Named Executive Officers"), and (iii) all directors and executive
officers of the Company as a group. The Company believes that all of the
individuals listed below have sole voting and investment power over their
respective shares.
<TABLE>
<CAPTION>
PERCENT OF COMMON
NAME NUMBER OF SHARES STOCK OUTSTANDING<F1>
---- ---------------- ---------------------
<S> <C> <C>
Richard P. Anthony..................................................... 197,255<F2> 1.0%
Robert F. Benton....................................................... -- --
Fentress Bracewell..................................................... 1,890 <F*>
James F. Cragg......................................................... 197,255<F2> 1.0
Todd J. Feist.......................................................... 71,429 <F*>
E. Clarke Garnett...................................................... 714,736<F3> 3.6
Reginald J. Hollinger.................................................. -- <F*>
David M. Mitchell...................................................... 185,714 1.0
Marvin C. Moses........................................................ -- --
Richard O'Neal......................................................... 680,000<F4> 3.4
Fred L. Thurman........................................................ 243,746<F5> 1.2
William H. Zimmer III.................................................. -- <F6> <F*>
Executive officers and directors as a group (10 persons)............... 2,292,025<F7> 11.3
<FN>
- --------
<F*> Less than one percent.
<F1> Beneficial ownership includes shares of Common Stock subject to options,
warrants, rights, conversion privileges or similar obligations exercisable
within 60 days for purposes of computing the ownership percentage of the
person or group holding such options, warrants, rights, privileges or
other obligations. Except as noted, each stockholder has sole voting and
dispositive power with respect to all shares beneficially owned by such
stockholder.
<F2> Includes 150,000 shares of Common Stock subject to stock options issued by
the Company that are immediately exercisable. Does not include 10,000
shares of Common Stock purchased subsequent to the record date.
<F3> Includes 714,286 shares of Common Stock owned by Liberty, the owner of 51%
of KINNET, as to which E. Clarke Garnett disclaims any beneficial
interest.
<F4> Does not include non-transferable ten year warrants to purchase 567,059
shares of Common Stock, one third of which warrants become exercisable on
each February 18 of the years 1999, 2000 and 2001, which are held in trust
for the benefit of Mr. O'Neal's children. Includes 280,000 shares of
Common Stock issuable upon exercise of a warrant at $14.00 per share.
<F5> Includes 13,513 shares of Common Stock issuable upon exercise of a warrant
at $14.00 per share and 39,498 shares of Common Stock issuable upon
conversion of a 10% convertible note issued by the Company, convertible at
$14.00 per share.
<F6> Does not include 6,000 shares of Common Stock purchased subsequent to the
record date.
<F7> Includes 633,011 shares of Common Stock which such persons have the right
to acquire upon the exercise of options, warrants and convertible notes
which are immediately exercisable or convertible.
</TABLE>
The following table sets forth information regarding all persons known to
the Company to be the beneficial owner of more than five percent of the Common
Stock of the Company as of May 31, 1998.
<TABLE>
<CAPTION>
NAME AND ADDRESS NUMBER OF SHARES PERCENTAGE OF CLASS
---------------- ---------------- -------------------
<S> <C> <C>
Rod K. Cutsinger........................................ 5,576,458<F1> 28.4%
Consolidation Partners.................................. 5,231,300<F1> 26.7
<FN>
- --------
<F1> Based upon information provided by Rod K. Cutsinger (a former director of
the Company who resigned in May 1998) and Consolidation Partners, includes
5,231,300 shares of Common Stock owned by Consolidation Partners, a
limited liability company in which Rod K. Cutsinger and his wife
beneficially own 80% of the interests. The remaining interests are
beneficially owned by trusts for the benefit of the Cutsingers' two adult
children, including Brad K. Cutsinger, over which Rod K. Cutsinger has
sole voting and dispositive power. The address of Messrs. Cutsinger and
Consolidation Partners is 3355 West Alabama, Suite 580, Houston, Texas
77098.
</TABLE>
5
<PAGE> 8
THE BOARD OF DIRECTORS AND BOARD COMMITTEES;
COMPENSATION OF DIRECTORS
BOARD OF DIRECTORS
The Board of Directors is responsible for establishing broad corporate
policies and for overseeing the overall performance of the Company. The Board
reviews significant developments affecting the Company and acts on matters
requiring Board approval. Each of the directors except Messrs. Fentress
Bracewell and Richard O'Neal attended 75% or more of the meetings of the
Board which were held during the period between the Company's incorporation
and May 31, 1998.
The Company's Bylaws provide for the establishment of committees of the
Board to have, with certain exceptions, such powers and authority of the Board
in the management of the Company as are set forth in the resolution creating
that committee. The Board has established four such committees having
responsibility in specific areas of Board activity, the duties and
responsibilities of which are described below.
AUDIT COMMITTEE
Members: Mr. Fentress Bracewell; new members to be appointed.
The Audit Committee determines the scope of and the plans for the annual
audit of the books and records of the Company and reviews, evaluates and
advises the Board with respect to the engagement of independent public
accountants. The Audit Committee also reviews the results of the annual audit
and the audit report and meets periodically with the independent public
accountants to review the adequacy of the Company's internal accounting
procedures. When circumstances dictate, the Audit Committee will review and
make recommendations to the Board of Directors with respect to the propriety of
any contemplated transactions between the Company and its officers, directors
and entities controlled by them.
The Board anticipates that if Messrs. Moses and Mitchell are elected to
the Board at the 1998 Annual Meeting, it will appoint them as the members of
the Audit Committee.
COMPENSATION COMMITTEE
Members: Messrs. Fentress Bracewell, Reginald J. Hollinger and David M.
Mitchell
The Compensation Committee consults with the chief executive officer of the
Company with respect to the election or appointment of other executive
officers. This committee also recommends to the Board of Directors the
compensation of the chief executive officer and determines the compensation of
the other executive officers and makes awards to executive officers and others
under the Company's employee incentive plans.
NOMINATING COMMITTEE
Members: Messrs. Fentress Bracewell, E. Clarke Garnett and Reginald J.
Hollinger
The Nominating Committee evaluates the performance of existing directors,
identifies prospective new directors and nominates candidates to stand for
election to the Board of Directors at each annual meeting of stockholders.
GOVERNANCE COMMITTEE
Members: William H. Zimmer III, E. Clarke Garnett and Reginald J. Hollinger
The Governance Committee was established by the Board at its meeting on
April 29, 1998. The Governance Committee was directed to investigate and
recommend a governance model for the Board of Directors, to recommend such
committees as it deems necessary to carry out the recommended governance model,
to draft such charters for all standing committees of the Board as it deems
necessary to carry out the recommended governance model and to investigate the
alternatives to resolve the independence of the Audit, Compensation and
Nominating Committees.
6
<PAGE> 9
DIRECTOR COMPENSATION
Directors of the Company who are also employees of the Company receive no
directors' fees but are eligible to receive, and have received, grants of stock
options under the Company's 1997 Stock Awards Plan. Non-employee directors
receive fees of $1,000 for each Board meeting in which they participate, are
reimbursed for reasonable out-of-pocket travel expenditures incurred and
receive options to purchase shares of Common Stock pursuant to the 1997
Nonqualified Stock Option Plan for Non-Employee Directors (the "Directors'
Plan") upon election to the Board, as described below.
In October 1997 the Company adopted the Directors' Plan. The Directors'
Plan is administered by the Board of Directors and authorizes the grant of
non-qualified stock options to purchase up to 300,000 shares of Common Stock
for issuance as non-qualified stock options. Non-employee directors elected or
appointed to the Board will receive options to acquire 15,000 shares of Common
Stock on the date of their election or appointment. Additional non-qualified
stock options to acquire 5,000 shares of Common Stock will thereafter be awarded
to each Eligible Director on the date of the annual meeting of stockholders at
which he or she is reelected to serve an additional three-year term.
As of the date of the consummation of the IPO, February 18, 1998, each of
Messrs. Fentress Bracewell, E. Clarke Garnett, Reginald J. Hollinger, and David
M. Mitchell were granted non-qualified stock options to purchase 15,000 shares
of Common Stock pursuant to the Directors' Plan at the initial public offering
price of $14.00 per share. The stock options will vest in equal annual
installments on the first, second and third anniversaries of the consummation
of the IPO.
EXECUTIVE COMPENSATION
Neither the Company nor its predecessor conducted any operations other than
related to the acquisitions and the IPO during 1997 and the Company's
predecessor did not pay any compensation prior to June 1996. During 1997 the
Company's most highly compensated executive officer and his annualized base
salary was Mr. Rod K. Cutsinger (who served as Chairman and Chief Executive
Officer until Mr. Richard P. Anthony assumed those positions in December
1997)--$300,000. Mr. Cutsinger is no longer an officer or employee of the
Company. In addition to Messrs. Anthony, Zimmer and James F. Cragg (the
Company's Executive Vice President, Sales and Marketing who also assumed his
position late in 1997), the only other person to serve as an officer of the
Company during 1997 was Brad K. Cutsinger, who is no longer employed by the
Company. Brad K. Cutsinger is the son of Rod K. Cutsinger. No executive officer
of the Company's predecessor received perquisites in 1997, the value of which
exceeded the lesser of $50,000 or 10% of the salary and bonus of such
executive.
The persons expected to be the five most highly compensated executive
officers of the Company in 1998 and their expected base salaries are:
<TABLE>
SUMMARY COMPENSATION TABLE
<CAPTION>
EXPECTED
NAME TITLE BASE SALARY
---- ----- -----------
<S> <C> <C>
Richard P. Anthony Chairman of the Board, President and Chief Executive Officer $250,000
James F. Cragg Executive Vice President, Sales and Marketing $175,000
William H. Zimmer III Executive Vice President, Chief Financial Officer, $185,000
Secretary and Treasurer
Richard O'Neal President--Directory Services Group $300,000
Fred L. Thurman President--Telecommunications Services Group $175,000
</TABLE>
EMPLOYMENT AGREEMENTS
Mr. Richard P. Anthony entered into a six-year employment agreement with
the Company providing for his employment as Chairman of the Board, President
and Chief Executive Officer at an annual base salary of $200,000, which
increased to $250,000 after February 18, 1998, with a bonus potential equal to
50% of base salary. The
7
<PAGE> 10
agreement provides for a one time $50,000 cash bonus that was paid in December
1997, ten-year options to purchase 150,000 shares of Common Stock at $2.50 per
share which vested on March 19, 1998 (which was three months after the date
they were granted) and ten-year options to purchase 350,000 shares of Common
Stock at the IPO purchase price ($14.00 per share) (the "IPO Price") which
vest in three equal increments on the first three anniversaries of the date of
grant. The agreement also provides for the grant of options to purchase up to
75,000 shares of Common Stock each year at the current market price on the
date of grant if certain targets set by the Compensation Committee are met.
Mr. Anthony's options vest immediately upon (i) his death or disability, (ii)
his resignation following a change of control, or (iii) the termination of his
employment other than "with cause," as defined in his employment agreement. If
Mr. Anthony resigns after a change in ownership or management of the Company
which significantly alters his job responsibilities or compensation, he will
be entitled to his base salary for a period of two years. Unless either Mr.
Anthony so resigns or the Company terminates his employment "with cause," Mr.
Anthony will be entitled to his base salary for a one year period upon his
termination. The employment agreement also provides for a one year post-
termination non-competition obligation that is extended to three years if he
voluntarily resigns under circumstances that do not involve a change in
control.
Mr. James F. Cragg entered into a six-year employment agreement with the
Company providing for his employment as Executive Vice President, Sales and
Marketing at an annual base salary of $175,000 with a bonus potential equal to
100% of base salary. The agreement provides for a one-time $100,000 cash bonus
that was paid in December 1997, ten-year options to purchase 150,000 shares of
Common Stock at $2.50 per share which vest on March 19, 1998 (which was three
months after the date they were granted) and ten-year options to purchase
275,000 shares of Common Stock at the IPO Price which vest in three equal
increments on the first three anniversaries of the date of grant. The agreement
also provides for the grant of options to purchase up to 50,000 shares of
Common Stock each year at the current market price on the date of grant, if
certain targets set by the Compensation Committee are met. Mr. Cragg's options
vest immediately upon (i) his death or disability, (ii) his resignation
following a change of control, or (iii) the termination of his employment other
than "with cause," as defined in his employment agreement. If Mr. Cragg
resigns after a change in ownership or management of the Company which
significantly alters his job responsibilities or compensation, he will be
entitled to his base salary for a period of two years. Unless either Mr. Cragg
so resigns or the Company terminates his employment "with cause," Mr. Cragg
will be entitled to his base salary for a one year period upon his termination.
The employment agreement also provides for a one year post-termination
non-competition obligation that is extended to three years if he voluntarily
resigns under circumstances that do not involve a change in control.
Mr. William H. Zimmer III entered into a six-year employment agreement with
the Company providing for his employment as Executive Vice President, Chief
Financial Officer, Secretary and Treasurer at an annual base salary of
$185,000, with a bonus potential equal to 50% of base salary. The agreement
provides for a one time $50,000 cash bonus that was paid in December 1997 and
ten-year options to purchase 350,000 shares of Common Stock at the IPO Price
which vest in three equal increments on the first three anniversaries of the
date of grant. The agreement also provides for the grant of options to purchase
up to 50,000 shares of Common Stock each year at the current market price on
the date of grant, if certain targets set by the Compensation Committee are
met. Mr. Zimmer's options vest upon (i) his death or disability, (ii) his
resignation following a change of control, or (iii) the termination of his
employment other than "with cause," as defined in his employment agreement.
If Mr. Zimmer resigns after a change in ownership or management of the Company
which significantly alters his job responsibilities or compensation, he will be
entitled to his base salary for a period of two years. Unless either Mr. Zimmer
so resigns or the Company terminates his employment "with cause," Mr. Zimmer
will be entitled to his base salary for a one year period upon his termination.
The employment agreement also provides for a one year post-termination
non-competition obligation that is extended to three years if he voluntarily
resigns under circumstances that do not involve a change in control.
In addition, Messrs. O'Neal, Feist and Thurman have entered into three,
five and five-year employment agreements with the respective subsidiaries of
the Company of which they are president, that provide for base salaries of
$300,000, $110,000 and $175,000, respectively, and a bonus potential ranging
from 50% to 63% of base salary. If the Company terminates Mr. O'Neal's
employment other than for "cause" (as defined in his agreement) or if Mr.
O'Neal resigns under circumstances that he reasonably believes were contrived
by Great Western to force his resignation, or after a change in control of the
Company, Mr. O'Neal shall be entitled to continue to receive his base salary
until the scheduled expiration date of his employment agreement. Mr. Thurman
shall be entitled to receive his salary for a period of one year in the event
his employer terminates him for a reason other than with "cause" (as defined
in his
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<PAGE> 11
agreement). If Mr.Thurman resigns following a change in control of his employer
he shall be entitled to receive his salary for a period of two years. Mr. Feist
is entitled to receive his salary for a period of six months if his employer
terminates him for a reason other than with "cause" and his salary for a period
of one year if he resigns following a change in control of his employer. These
agreements contain three-year non-competition covenants. Pursuant to his
employment agreement, Mr. Feist was entitled to receive a bonus of $50,000 upon
consummation of the IPO which was paid to him shortly after the effective date
of the IPO.
OPTION GRANTS
In mid-1997, the Board of Directors of the Company's predecessor granted
ten-year options to purchase 350,000 shares and 175,000 shares of its common
stock to Messrs. G. Edward Powell (a former director of the Company who
resigned in May 1998) and Brad K. Cutsinger, respectively, at an exercise price
of $2.50 per share. One-third of these options vested immediately and the
balance vested in equal increments on the first and second anniversaries of the
date of grant and would have been accelerated in the event of a change in
control of the Company. In mid-1997, the Board of the Company's predecessor
granted a similar option to Todd J. Feist covering 250,000 shares of its common
stock upon his employment by an acquisition subsidiary of the Company. Prior to
the consummation of the IPO, Mr. Feist exchanged this option for a
substantially identical option to purchase 250,000 shares of Common Stock
issued under the Advanced Communications Group Inc. 1997 Stock Awards Plan.
Prior to the consummation of the IPO, Messrs. Powell and Brad Cutsinger also
exchanged their options for ten-year, fully vested warrants to purchase a like
number of shares of Common Stock at the same exercise price. In late 1997, the
Company granted options to purchase an aggregate of 1,275,000 shares of Common
Stock to Messrs. Richard P. Anthony, James F. Cragg and William H. Zimmer III
as described above under "--Employment Agreements." Contemporaneously with
the closing of the IPO, the Board granted (i) five year options to purchase
150,000 shares, and 150,000 shares, respectively, to Richard O'Neal and Fred L.
Thurman, and (ii) an aggregate of approximately 500,000, shares of Common Stock
to the other officers and employees of various subsidiaries of the Company at
an exercise price equal to $14.00 per share, the IPO Price. These options will
vest in equal increments over three to five year periods from the date of
grant.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Mr. Fentress Bracewell, is a member of the Compensation Committee of the
Board of Directors. He is also of counsel to Bracewell & Patterson, L.L.P., the
law firm that represented the Company in the IPO, the acquisitions and, until
recently, with respect to other legal matters. The legal fees and expenses
incurred in connection with the IPO and the acquisitions were approximately
$2,350,000, most of which was paid to Bracewell and Patterson L.L.P. Mr.
Bracewell will no longer be a director of the Company following the 1998 Annual
Meeting and the Company does not anticipate that the services to be rendered by
Bracewell & Patterson L.L.P. for the remainder of 1998 will be significant.
Mr. Reginald Hollinger, a Managing Director and Group Head of the
Telecommunications Investment Banking Group at PaineWebber Incorporated and a
member of the Investment Banking Division's Management Committee, is also a
member of the Board's Compensation Committee. PaineWebber Incorporated is the
Company's investment banking firm and served as the lead manager in the
Company's IPO. The Company anticipates that it will continue to utilize the
services of PaineWebber Incorporated during the remainder of the current fiscal
year and thereafter.
Neither the Board nor Messrs. Bracewell or Hollinger believe these
relationships affect in any manner their respective abilities to serve on, or
fulfill their obligations to the Company and its stockholders as participating
members of the Compensation Committee of the Board of Directors.
Messrs. Anthony, Cragg and Zimmer, each of whom are executive officers and
directors of the Company, serve on the board of directors of KINNET. Mr. E.
Clarke Garnett, another director of the Company, is an executive officer of
KINNET. Neither the Board nor Messrs. Anthony, Cragg, Garnett or Zimmer believe
that this relationship constitutes a compensation committee interlock, inasmuch
as Mr. Garnett does not sit on the Compensation Committee of the Company and
does not participate in the decisions on the remuneration to be paid by the
Company to its executive officers.
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<PAGE> 12
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
THE ACQUISITIONS
Simultaneously with the consummation of the IPO, the Company acquired by
merger, stock purchase or asset acquisition, a 49% interest in KINNET and all
of the issued and outstanding stock (or in four cases, substantially all of the
assets) of the subsidiaries previously enumerated, and its predecessor, at
which time each subsidiary and the Company's predecessor became a wholly-owned
subsidiary of the Company. The aggregate consideration paid by the Company in
the Acquisitions includes approximately $84.1 million in cash, 3,383,589 shares
of Common Stock, $17.4 million in promissory notes and 1,393,213 warrants or
options to purchase Common Stock. Of the aggregate consideration, $30.8
million, $0.2 million, $3.3 million and $1.4 million in cash, was paid to
Messrs. O'Neal, Feist, Mitchell and Thurman, respectively, 400,000, 71,429,
185,714 and 190,735 shares of Common Stock were issued to Messrs. O'Neal,
Feist, Mitchell and Thurman, respectively; $8.4 million in subordinated notes
were issued to Mr. O'Neal; $552,983 in convertible subordinated notes were
issued to Mr. Thurman; and 280,000 and 13,513 five-year non-transferable
warrants to purchase Common Stock at the IPO Price were issued to Mr. O'Neal
and Mr. Thurman, respectively.
On June 16, 1997, the Company's predecessor issued to the five stockholders
of Great Western Directories, as consideration for their execution of a
definitive acquisition agreement, three series of non-transferable, ten-year
warrants to purchase an aggregate of 756,078 shares of Common Stock at an
exercise price of $6.61 per share, subject to adjustment to protect against
dilution. The warrants of each series become exercisable upon the first, second
and third anniversary dates of the consummation of the IPO. Of these, Mr.
O'Neal received warrants to purchase an aggregate of 567,059 shares of Common
Stock which the Company understands are being held in trust for the benefit of
his children.
OTHER ORGANIZATIONAL MATTERS
Consolidation Partners Founding Fund, L.L.C., ("CPFF") was organized in
June 1996 with a five-year term for the purpose of financing consolidating
transactions identified by Mr. Rod K. Cutsinger (a former director of the
Company), including a possible transaction in the telecommunications industry.
CPFF has two classes of equity interests: Class A interests (the "Class A
Interests") and Class B interests (the "Class B Interests"). The holders of
the Class A Interests have no right to vote for the election and management of
CPFF, such rights having been vested in the holders of the Class B Interests.
CPFF was capitalized in September 1996 upon (i) the sale of an aggregate of
$1,520,000 in Class A Interests for cash to a limited number of investors,
including $50,000 in Class A Interests to Mr. G. Edward Powell, (ii) the
issuance of $350,000 in Class A Interests to Mr. Rod K. Cutsinger in exchange
for his contribution of certain intangible personal property including business
plans, confidentiality agreements, organizational documents and economic
projections relating to several consolidating company opportunities, (iii) the
issuance of $250,000 in Class A Interests to Mr. Rod K. Cutsinger in exchange
for $5,000 in cash and a promissory note in the principal amount of $245,000,
(iv) the issuance of $100,000 in Class A Interests to Mr. Brad K. Cutsinger
(the son of Mr. Rod K. Cutsinger) in exchange for $5,000 in cash and a
promissory note in the principal amount of $95,000 and (v) the sale of 100% of
the Class B Interests to Consolidation Partners for $22,200 in cash. The
promissory notes issued by Messrs. Rod and Brad Cutsinger bear interest at 8%
per annum, provide that they are payable upon the first to occur of the
consummation of the IPO or December 31, 1998 and are secured by a pledge of the
acquired interests. The promissory note of Rod Cutsinger was paid in full
during 1997. The promissory note of Brad Cutsinger was paid in full during
1998. CPFF used a portion of the proceeds of its initial capitalization to make
loans to the Company in the amount of $1.2 million.
In September 1997, November 1997 and January 1998, CPFF issued an aggregate
of $1,880,000 of additional Class A Interests. At the same time, the holders of
the Class B Interests contributed an additional $18,990 to the capital of CPFF.
In consideration for the agreements of four Class A Interest owners to
subscribe and oversubscribe for certain of these Class A Interests, Mr. Rod K.
Cutsinger agreed to transfer to such persons for nominal consideration an
aggregate of 230,418 shares of his Common Stock. Additionally, in consideration
for the subscription of three other existing Class A Interest owners for an
aggregate of $200,000 of Class A Interests, Mr. Rod K. Cutsinger transferred to
such persons for nominal consideration an aggregate of $44,400 of his Class A
Interests. CPFF used the proceeds of the issuance of these additional Class A
Interests to increase its loan to the Company to approximately $3.2 million.
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<PAGE> 13
Under the terms of the corporate regulations of CPFF, CPFF is obligated to
distribute shares in a consolidating company such as the Company as soon as
practicable after the consummation of that company's initial public offering.
Shares of Common Stock of the Company are to be distributed to the holders of
the Class A and Class B Interests on a fifty-fifty basis until the holders of
the Class A Interests have received shares of Common Stock of the Company
(valued at the initial public offering price) equal to three times their
aggregate investment in CPFF, or $12.3 million. Thereafter, the balance of the
shares of Common Stock held by the company will be distributed 25% to the
holders of the Class A Interests and 75% to the holders of the Class B
Interests. Accordingly, promptly following the resolution of the arbitration
involving the principal shareholder of CPFF and Great Western Directories as
more particularly described in the next paragraph, it is expected that CPFF
will distribute shares of Common Stock to the holders of the Class A Interests
(including shares to Messrs. Rod K. Cutsinger and G. Edward Powell) and shares
of Common Stock to Consolidation Partners in respect of its Class B Interests.
Rod K. Cutsinger and his wife own 80% of the beneficial interests of
Consolidation Partners, and the remaining interests are owned by trusts for the
benefit of their adult children, including Brad K. Cutsinger. The shares of
Common Stock distributed by CPFF will be entitled to certain registration
rights and subject to certain lock-up arrangements with the underwriters in the
IPO.
Richard O'Neal, the principal shareholder of Great Western expressed
disagreement with the effect of the reverse stock split involving the Company's
predecessor prior to the consummation of the IPO on certain warrants that had
been issued to the stockholders of Great Western Directories at the time of the
execution of the initial acquisition agreement between the Company and Great
Western Directories (the "Warrants"). CPFF and Mr. O'Neal agreed to engage in
good faith negotiations to determine the type and amount of any consideration
appropriately payable by CPFF to the holders of the Warrants following the
consummation of the IPO. CPFF and Mr. O'Neal agreed that if a negotiated
settlement could not be reached within 45 days after the closing of the IPO,
the matter would be referred to binding arbitration and the cost of such
arbitration would be borne by CPFF. CPFF agreed not to effect any distribution
of Common Stock to its interest owners prior to the resolution of these
matters. The resolution of this matter is solely between CPFF and the principal
shareholder of Great Western Directories. The Company shall have no liability
with respect to the resolution of this matter and no additional Company Common
Stock or equivalents will be issued in connection herewith. In no event shall
any assets of the Company be used to satisfy any negotiated settlement or
arbitration award.
This matter was scheduled for arbitration on May 21, 1998. CPFF filed an
Original Petition, Application for Temporary Restraining Order and Temporary
Injunction in the District Court of Harris County, Texas, 334th Judicial
Circuit on or about May 19, 1998. The Company understands that pursuant to a
court order, arbitration of this matter has been stayed pending a determination
by the court of whether the agreement is binding and enforceable.
In the event of a ruling or determination adverse to CPFF, any payment
which may be required by such a ruling or determination will be made solely by
CPFF. Such a payment will not involve the assets of the Company or the issuance
of additional Common Stock or Common Stock equivalents. However, such a payment
may be construed for accounting purposes as a capital contribution by CPFF and
deemed a payment by the Company of additional consideration for the Great
Western acquisition. This would increase the goodwill associated with the Great
Western acquisition and the related amortization charges.
INITIAL CAPITALIZATION
In connection with its initial capitalization on September 17, 1996, the
Company's predecessor issued and sold an aggregate of 8,227,736 (net of
subsequent repurchases) shares of its common stock, of which 7,560,780 shares,
378,039 shares, 47,255 shares, 94,510 shares, 7,561 shares and 1,890 shares
were acquired by CPFF, Messrs. Rod K. Cutsinger, Brad K. Cutsinger, Frank Bango
(a former director of the Company), G. Edward Powell and Fentress Bracewell for
$1,000, $10,000, $1,250, $2,500, $200 and $50, respectively. At the same time,
CPFF agreed to loan the Company $1.2 million (increased to $3.2 million through
January 12, 1998) pursuant to an 8% promissory note payable upon the earlier of
the effectuation of an initial public offering by the Company or December 31,
1998. This promissory note, together with accrued interest thereon, was repaid
from the net proceeds of the IPO.
Between October 14, 1996 and January 3, 1997, the Company's predecessor
issued and sold 39,694 shares of common stock at $0.05 per share, of which
37,804 shares were sold to G. Edward Powell for an aggregate of $5,000. During
the same period, the Company's predecessor agreed to issue to eight persons for
services rendered, five year warrants to purchase an aggregate of 16,256 shares
of Common Stock at the IPO Price per share, subject to
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<PAGE> 14
adjustments to protect against dilution. Additionally, on May 2, 1997, the
Company's predecessor issued a ten-year non-transferable warrant to purchase
7,560 shares of its common stock at $2.65 per share, subject to adjustment to
protect against dilution, to a consultant in consideration for services
rendered to the Company. In July 1997, the Company agreed to issue a similar
warrant to purchase 7,560 shares of Common Stock at $6.61 to another
consultant. Pursuant to agreements entered into in May and July 1997, the
Company agreed to issue an aggregate of 4,540 shares of Common Stock, valued at
$6.61 per share, to two consultants in lieu of compensation. With respect to
certain other option and warrant grants, see "Executive Compensation--Option
Grants." In December 1997, Mr. Rod K. Cutsinger privately placed an aggregate
of 70,882 shares of his Common Stock with Richard P. Anthony and another
investor at a price of $5.29 per share and agreed to privately place an
additional 47,256 shares of Common Stock with James F. Cragg at the same price.
VOTING ARRANGEMENTS
In the acquisition agreement relating to the investment in KINNET, Liberty
(the former owner of 100%, and the present owner of the remaining 51%, of the
stock of KINNET) agreed, until the tenth anniversary date of the consummation
of the IPO, to be present in person or by proxy at all meetings of stockholders
of the Company for quorum purposes. Additionally, Liberty agreed, among other
things, not to initiate or solicit stockholders to become participants in any
proxy solicitation or induce or attempt to induce others to initiate a tender
offer, exchange offer or other change in control of the Company. The Company's
Board also agreed, subject to its fiduciary obligations, to nominate as a
director an individual designated by Liberty that is reasonably qualified to
serve on the board of directors of a publicly held corporation. This obligation
expires on the first to occur of the tenth anniversary of the closing of the
consummation of the IPO or the reduction of Liberty's ownership of Common Stock
below 100,000 shares. Mr. Rod K. Cutsinger has agreed to vote his shares of
Common Stock in favor of Liberty's designee nominated by the Board. Mr. Garnett
has been designated by Liberty as its initial director nominee.
In the acquisition agreement relating to Valu-Line, the Company's Board,
subject to its fiduciary obligations, agreed to place David M. Mitchell on its
Board and renominate Mr. Mitchell as a director from time to time as long as he
owns at least 100,000 shares of Common Stock at the time of such renomination.
The Company and Rod K. Cutsinger are parties to an agreement pursuant to
which Mr. Cutsinger, among other things, has agreed that he will not (i)
acquire any voting securities of the Company other than the shares of Common
Stock, issuable as stock dividends or splits or upon exercise of his options
under the Company's Directors' Plan, (ii) sponsor or participate in any proxy
solicitations, (iii) enter into or form voting trusts, pooling agreements or
groups, (iv) vote any of his shares of Common Stock in opposition to the
recommendation of the disinterested members of the Company's board of directors
regarding the election or removal of directors and matters relating to a
possible change in control of the Company, or (v) directly or indirectly
assist, encourage or induce any person to bid or acquire any class of
securities that is entitled to vote for the election of directors.
OTHER TRANSACTIONS
Richard O'Neal is an officer, director and owner of 50% of the outstanding
voting securities of Big Stuff, Inc. ("BSI"), a corporation that markets
Internet home page development services to business customers and provides high
quality yellow page colorizing services to Great Western Directories and other
yellow page publishers. During the fiscal year ended December 31, 1997, Great
Western Directories paid BSI approximately $1.3 million, for yellow page
colorizing services. Great Western Directories and BSI have entered into a
Sales Agreement pursuant to which BSI expects to continue to render the
foregoing services to Great Western Directories after the IPO upon terms and
conditions that the Company considers reasonable under the circumstances. BSI
has also agreed to give Great Western Directories the exclusive right to market
World Pages in its service areas.
KINI renders management services to KINNET pursuant to an evergreen
Management Agreement dated January 1, 1997 (the "Management Agreement") which
is terminable at any time upon six months advance notice of termination. Under
the Management Agreement, KINI receives a monthly payment equal to 100% of
employee, equipment and other direct costs associated with its management of
KINNET for the period plus 15% of such amount. During the year ended December
31, 1997, KINNET paid KINI approximately $3.5 million pursuant to the
Management Agreement. The Company does not own any outstanding voting
securities of KINI. KINI also renders management services to Liberty under a
similar arrangement. E. Clarke Garnett is the President of KINI, KINNET and
Liberty.
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Pursuant to a network services agreement, Feist Long Distance transports
traffic on KINNET's network. During the year ended December 31, 1997, Feist
Long Distance paid KINNET approximately $184,000 for such services. The Company
expects that Feist Long Distance's payments to KINNET will increase because
Feist Long Distance intends to transfer additional traffic to the KINNET
network. The Company also intends when practicable and economical, to transport
the long distance traffic of its other telecommunications subsidiaries over the
KINNET network.
The Company currently has a five-year strategic relationship with Feist
Publications, Inc. ("FPI"), a 20-year publisher of yellow page directories in
15 markets in Kansas, Texas and Oklahoma, through which the Company's
telecommunications sales force has access to FPI's 29,000 yellow page
advertisers. FPI has agreed to provide the Company access to its advertising
customers and to provide eight information pages in the front of its
directories with instructions on how to subscribe to the Company's services as
well as free advertising in each of FPI's yellow page directories that are
currently in publication. FPI has reserved the right to terminate this
agreement if the Company commences the publication of a yellow page directory
in any market served by FPI.
ADDITIONAL BACKGROUND INFORMATION
At the request of the representatives of the underwriters in the recently
completed IPO and in consideration of the Company's payment of $1.75 million
from the proceeds of the IPO, Mr. Cutsinger entered into a five-year non-
competition agreement with the Company commencing February 12, 1998. Under this
agreement, Mr. Cutsinger agreed not to engage in any business activity
conducted by the Company as of the date of the IPO in those portions of the
region in which the Company operated at that date.
COMPANY POLICY
Except as noted herein, any future transactions with directors, officers,
employees or affiliates of the Company are anticipated to be minimal and will,
in any case, be approved in advance by a majority of the members of the
Governance Committee.
INDEPENDENT AUDITORS
The Company is presently utilizing the services of KPMG Peat Marwick LLP,
who have been the Company's independent auditors since its inception in 1997
and who will serve as the Company's independent auditors for the fiscal year
ending December 31, 1998. Representatives of KPMG Peat Marwick LLP will be
present at the Annual Meeting and will have an opportunity to make a statement
if they desire to do so and will be available to respond to appropriate
questions.
STOCKHOLDER NOMINATIONS AND PROPOSALS
Stockholder proposals intended for inclusion in the Company's proxy
statement and form of proxy to be prepared and distributed in connection with
the Company's annual stockholders meeting in 1999 must be received by the
Company no later than December 1, 1998. Proposals should be mailed to Advanced
Communications Group, Inc., to the attention of the Company's Secretary,
William H. Zimmer III, 390 South Woods Mill Road, Suite 150, Chesterfield,
Missouri 63017.
Stockholders wishing to nominate directors or to propose proper business
from the floor for consideration at the 1999 Annual Meeting under the Company's
Restated Articles, must notify the Company's Secretary in writing. To be
timely, the stockholder's notice must be delivered to the Secretary of the
Company at its principal executive offices not later than the close of business
on the 60th day nor earlier than the close of business on the 90th day prior to
the first anniversary of the preceding year's annual meeting of stockholders.
If the annual meeting of stockholders is called for a date that is more than 30
days before or more than 60 days after the anniversary date, in order to be
timely, notice by the stockholder must be delivered not earlier than the close
of business on the 90th day prior to such annual meeting and not later than the
close of business on the later of the 60th day prior to such annual meeting or
the tenth day following the day on which public announcement of the date of
such meeting is first made by the Company.
If the number of directors to be elected to the Board is increased and
there is no "public announcement" (as that term is defined in the Restated
Certificate) by the Company naming all of the nominees for director or
specifying the size of the increased Board at least 70 days prior to the first
anniversary of the preceding year's annual meeting, a
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<PAGE> 16
stockholder's notice with respect to nominees for any new positions created
by such increase will be considered timely if it is delivered to the Secretary
of the Company at its principal executive offices not later than the close of
business on the tenth day following the day on which such public announcement
is first made by the Company.
Stockholders should note that that the two immediately preceding paragraphs
apply only to matters that a stockholder wishes to bring before the other
stockholders at the 1999 Annual Meeting without submitting them for possible
inclusion in the 1999 proxy materials.
OTHER MATTERS
As stated elsewhere herein, the Board of Directors knows of no other
matters to be presented for consideration at the Annual Meeting by the Board of
Directors or by stockholders who have requested inclusion of proposals in the
Proxy Statement. If any other matter shall properly come before the meeting,
the persons named in the accompanying form of proxy or their substitutes intend
to vote on such matters in accordance with their judgment.
The cost of preparing and mailing this Proxy Statement and the accompanying
materials, and the cost of any supplementary solicitations, will be borne by
the Company. In addition to the use of the mails, proxies may be solicited
personally, or by telephone or telefax, by regular employees of the Company,
without additional compensation. Brokerage firms, banks, nominees and others
will be requested to forward proxy materials to the beneficial owners of Common
Stock held by them of record, and the Company will reimburse them for their
reasonable out-of-pocket and clerical expenses.
July 9, 1998
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<PAGE> 17
ADVANCED COMMUNICATIONS GROUP, INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR ANNUAL MEETING OF STOCKHOLDERS ON JULY 29, 1998
The undersigned hereby appoints Richard P. Anthony and William H.
Zimmer III, and each of them, with power of substitution, as proxies of the
undersigned, to attend the Annual Meeting of Stockholders of ADVANCED
COMMUNICATIONS GROUP, INC. (the "Company"), to be held at the Marriott West
Hotel and Conference Center, 660 Maryville Centre Drive, St. Louis, MO 63141 on
Wednesday, July 29, 1998, at 11:00 a.m. local time, and all adjournments
thereof, and to vote, as indicated below, the shares of Common Stock of the
Company which the undersigned is entitled to vote with all the powers the
undersigned would possess if present at the meeting.
<TABLE>
<S> <C> <C>
1. Election of Directors - FOR all nominees listed below (except WITHHOLD AUTHORITY
as marked to the contrary below)/ / to vote for all nominees
listed below/ /
<CAPTION>
Robert F. Benton James F. Cragg David M. Mitchell Marvin C. Moses
</TABLE>
(INSTRUCTION. To withhold authority to vote for any individual nominee, write
that nominee's name on the space provided below.)
2. In their discretion, the proxies are authorized to vote upon any other
business which may properly come before the meeting and all
adjournments thereof.
This proxy, when properly executed, will be voted in the manner
directed herein by the undersigned stockholder(s). If no direction is
made, this proxy will be voted FOR the election of the nominees
listed.
Please date and sign on the reverse side and mail promptly in the
enclosed envelope.
<PAGE> 18
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby revokes all proxies heretofore given by the undersigned
for said meeting. This proxy may be revoked prior to its exercise.
----------------------------------
Signature
----------------------------------
Signature if held jointly
Dated:
Note: Please sign exactly as your name or names appear
hereon. When shares are held by joint tenants, both
should sign. When signing as attorney, 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
authorized person.
PLEASE MARK, SIGN AND PROMPTLY RETURN THIS PROXY CARD IN THE ENCLOSED
ENVELOPE. NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES.
