<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
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 sec. 240.14a-11(c) or sec. 240.14a-12
ADVANCED MARKETING SERVICES, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), or 14a-6(i)(1), or 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
____________________________________________________________________
(2) Aggregate number of securities to which transaction applies:
____________________________________________________________________
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
____________________________________________________________________
(4) Proposed maximum aggregate value of transaction:
____________________________________________________________________
(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> 2
ADVANCED MARKETING SERVICES, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JULY 27, 1995
To the Stockholders of
Advanced Marketing Services, Inc.
The Annual Meeting of Stockholders of Advanced Marketing Services, Inc.
will be held on Thursday, July 27, 1995, at 10:00 a.m., P.D.T., at 5880 Oberlin
Drive, Suite 400, San Diego, California 92121 for the following purposes:
1. To elect three Class A Directors to serve for three-year terms;
2. To consider and act on a proposal to approve the Company's 1995
Stock Option Plan, under which options to purchase up to 400,000 shares of
common stock may be granted; and
3. To transact any other business which may properly come before the
meeting and any adjournments or postponements thereof.
A proxy statement containing information for stockholders is annexed hereto
and a copy of the Annual Report of the Company for the fiscal year ended March
31, 1995 is enclosed herewith.
The Board of Directors has fixed the close of business, June 15, 1995, as
the record date for the determination of stockholders entitled to notice of and
to vote at the meeting.
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING IN PERSON, PLEASE DATE AND
SIGN THE ACCOMPANYING PROXY CARD AND RETURN IT PROMPTLY IN THE ENVELOPE ENCLOSED
FOR THAT PURPOSE.
By the order of the Board of Directors
Charles C. Tillinghast, III
Chairman and Chief Executive Officer
San Diego, California
June 23, 1995
<PAGE> 3
ADVANCED MARKETING SERVICES, INC.
5880 OBERLIN DRIVE
SAN DIEGO, CALIFORNIA 92121
(619) 457-2500
PROXY STATEMENT
GENERAL INFORMATION
This proxy statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Advanced Marketing Services, Inc. ("AMS" or
the "Company"), a Delaware corporation, for use only at its Annual Meeting of
Stockholders to be held on Thursday, July 27, 1995, and any adjournments or
postponements thereof (the "Annual Meeting").
Shares may not be voted unless the signed proxy card is returned or other
specific arrangements are made to have shares represented at the meeting. Any
stockholder of record giving a proxy may revoke it at any time before it is
voted by filing with the Secretary of AMS a notice in writing revoking it, by
duly executing a proxy bearing a later date, or by attending the Annual Meeting
and expressing a desire to revoke the proxy and vote the shares in person.
Stockholders whose shares are held in street name should consult with their
brokers or other nominees concerning procedures for revocation. Subject to such
revocation, all shares represented by a properly executed proxy card will be
voted as directed by the stockholder on the proxy card. IF NO CHOICE IS
SPECIFIED, PROXIES WILL BE VOTED FOR THE PERSONS NOMINATED BY THE BOARD OF
DIRECTORS FOR ELECTION AS DIRECTORS AND FOR THE APPROVAL OF THE 1995 STOCK
OPTION PLAN.
In addition to soliciting proxies by mail, Company directors, officers and
other regular employees, without additional compensation, may solicit proxies
personally or by other appropriate means. The total cost of solicitation of
proxies will be borne by AMS. Although there are no formal agreements to do so,
it is anticipated that AMS will reimburse banks, brokerage houses and other
custodians, nominees and fiduciaries for their reasonable expenses in forwarding
any proxy soliciting materials to their principals.
Only stockholders of record at the close of business on Thursday, June 15,
1995 are entitled to receive notice of and to vote at the Annual Meeting. On
June 15, 1995, AMS had outstanding 5,403,679 shares of common stock (the "Common
Stock"), which constituted all of the outstanding voting securities of AMS,
excluding 707,511 shares of the Common Stock held in treasury and not permitted
to be voted at the Annual Meeting. Each share is entitled to one vote. A
majority of the outstanding shares of Common Stock will constitute a quorum.
Abstentions and broker non-votes are counted for purposes of determining the
presence or absence of a quorum for the transaction of business but will not be
counted for purposes of determining whether a proposal has been approved, and
thus will have the effect of a "No" vote. Directors are elected by a plurality
of votes cast. Stockholders may not cumulate their votes for any one or more
nominees for election. The affirmative vote of a majority of the shares present
and voting at the Annual Meeting will be required to approve the 1995 Stock
Option Plan. The same vote would be required for any other items which might be
submitted to the stockholders for consideration at the Annual Meeting.
It is anticipated that this proxy statement and accompanying proxy card
will first be mailed to stockholders on or about June 23, 1995.
ITEM 1. ELECTION OF DIRECTORS
NOMINEES AND VOTING
Pursuant to the Company's Articles of Incorporation, the Board of Directors
of the Company is divided into three classes of directors, each class to be as
nearly equal in number as possible. Directors are elected to serve for
three-year terms, with the elections staggered by class. The Board is currently
composed of seven directors; three of whom are Class A directors, two of whom
are Class B directors and two of whom are
<PAGE> 4
Class C directors. At the Annual Meeting, three Class A directors are to be
elected to a three-year term until the Annual Meeting of Stockholders to be held
in 1998 and until their successors are duly elected and qualified. The Board of
Directors has nominated each of the following incumbent Class A directors for
reelection as a Class A director:
Charles C. Tillinghast, III
Loren C. Paulsen
Michael M. Nicita
Information concerning the nominees for election as Class A directors is
set forth under the caption "Management -- Directors and Executive Officers."
The Board of Directors has no reason to believe that its nominees will be
unable or unwilling to serve if elected. However, should the nominee named
herein become unable or unwilling to accept nomination or election, the Board's
proxies will vote instead for such other person as the Board of Directors may
recommend.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" ELECTION OF THE
ABOVE MENTIONED NOMINEES AS DIRECTORS.
ITEM 2. PROPOSED 1995 STOCK OPTION PLAN
The proposed 1995 Stock Option Plan (the "1995 Plan") was adopted by the
Board of Directors on March 28, 1995, subject to stockholder approval. The Board
of Directors believes that the selective grant of stock options is an effective
and efficient means of attracting, motivating and retaining key employees,
officers and directors.
DESCRIPTION OF THE 1995 PLAN
The 1995 Plan provides for the grant of options to purchase Common Stock
either that are intended to qualify as "incentive stock options" within the
meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the
"Code"), or that are not intended to so qualify ("non-qualified stock options").
All officers, directors and employees are eligible to receive options under the
1995 Plan, except that only employees may receive incentive stock options. The
maximum number of shares available for issuance under the 1995 Plan is 400,000.
No person eligible to receive options under the 1995 Plan may receive options
for the purchase of more than an aggregate of 200,000 shares.
The 1995 Plan is administered by the Board of Directors or, in its
discretion, by a committee of the Board of Directors appointed for that purpose
(the "Committee"), which, subject to the terms of the 1995 Plan, has the
authority in its sole discretion to determine: (a) the individuals to whom
options shall be granted; (b) the time or times at which options may be
exercised; (c) the number of shares subject to each option, the option price and
the duration of each option granted; and (d) all of the other terms and
conditions of options granted under the 1995 Plan. The Stock Option Committee,
which consists of Messrs. Charles C. Tillinghast, III and Loren C. Paulsen, is
expected to administer the 1995 Plan if and when approved by the stockholders.
The exercise price of incentive stock options granted under the 1995 Plan
must be at least equal to the fair market value of the shares on the date of
grant (110% of fair market value in the case of participants who own shares
possessing more than 10% of the combined voting power of the Company) and may
not have a term in excess of 10 years from the date of grant (five years in the
case of participants who are more than 10% stockholders). In no event shall the
aggregate fair market value (determined as of the time the Option is granted) of
the shares with respect to which Incentive Options (granted under the 1995 Plan
and all other plans of the Company or any of its subsidiaries) are exercisable
for the first time by an optionee in any calendar year exceed $100,000.
Options granted under the 1995 Plan are not transferable other than by will
or the laws of descent and distribution. Unless otherwise determined by the
Board of Directors or the Committee in connection with the grant of any
non-qualified stock options, all stock options granted under the 1995 Plan
expire one month after the date of the optionee's termination of employment with
the Company for any reason other than death or
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<PAGE> 5
permanent disability and six months after the optionee's termination of
employment by reason of death or permanent disability (but not, in either case,
later than the scheduled expiration date). The termination of employment of an
optionee does not accelerate or otherwise affect the number of shares with
respect to which a stock option may be exercised, which shall be limited to that
number of shares which could have been purchased pursuant to the option had the
option been exercised by the optionee on the date of such termination of
employment or other relationship. In the case of death, options may be exercised
by the person or persons to whom the rights under the options pass by will or by
the laws of descent or distribution.
Payment of the exercise price upon exercise of an option shall be made in
cash or, in the discretion of the Committee, in shares of Common Stock. Where
payment is made in Common Stock, such Common Stock shall be valued for such
purpose at the fair market value of such shares (determined as specified in the
1995 Plan) on the date of exercise.
If the number of outstanding shares of Common Stock is increased or
decreased, or if such shares are exchanged for a different number or kind of
shares through reorganization, merger, recapitalization, reclassification, stock
dividend, stock split, combination of shares or other similar transaction, the
aggregate number of shares available for issuance under the 1995 Plan, the
number of shares subject to outstanding options, the per share exercise price of
outstanding options and the aggregate number of shares with respect to which
options may be granted to a single participant will be appropriately adjusted by
the Board of Directors or the Committee.
No grant of options may be made under the 1995 Plan more than 10 years
after its date of adoption. The Board of Directors has authority to terminate or
to amend the 1995 Plan, subject to the approval of the Company's stockholders
under certain circumstances, provided that such action does not impair the
rights of any holder of outstanding options without the consent of such holder.
Subject to stockholder approval of the 1995 Plan, the Company has granted,
effective March 28, 1995, options to purchase 150,000 shares of the Common Stock
pursuant thereto to Mr. Michael M. Nicita, President and Chief Operating Officer
of the Company, in connection with his appointment as an officer of the Company
in fiscal 1995. See "Executive Compensation -- Option Grants." Such options are
exercisable until March 27, 2005 at a price of $5.24 per share, and vest as to
30,000 shares on November 7, 1995 and each anniversary thereof until fully
vested. No other options have been granted pursuant to the 1995 Plan.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following discussion is a summary of the principal federal income tax
consequences of the 1995 Plan based on currently applicable provisions of the
Code and the regulations promulgated thereunder.
Incentive Stock Options. The Company believes that incentive stock options
which are granted under the 1995 Plan will qualify as incentive stock options
within the purview of Section 422 of the Code. No income is recognized by an
optionee at the time an incentive stock option is granted, and no income is
recognized by an optionee upon the exercise of the option (although the
difference between the fair market value of the shares on the date of exercise
and the option price generally is includible in the calculation of alternative
minimum taxable income for purposes of the alternative minimum tax). If the
optionee makes no disposition of the shares received upon the exercise of the
option within two years from the date the option was granted and one year from
the date the shares were issued to such individual upon exercise of the option,
the optionee will recognize gain or loss when he disposes of his shares. Such
gain or loss will be measured by the difference between the option price and the
amount received for the shares at the time of disposition. Provided such shares
are held as a capital asset, such gain or loss will be long-term capital gain or
loss.
If the optionee disposes of shares acquired upon exercise of an incentive
stock option before the expiration of the applicable holding periods, any amount
realized from such disqualifying disposition will be taxable as ordinary income
in the year of disposition generally to the extent that the lesser of the fair
market value of the shares on the date the option was exercised or the amount
received upon such disposition exceeds the option price. Provided such shares
are held as capital assets, any amount realized upon such a disposition in
excess of the fair market value of the shares on the date of exercise will be
treated as long-term or short-term capital gain, depending upon whether the
shares have been held for more than one year.
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<PAGE> 6
According to proposed Treasury regulations, in general, no gain or loss
will be recognized by an optionee who uses shares of stock to exercise an
incentive stock option. A number of new shares of stock acquired equal to the
number of shares surrendered will have a basis and holding period equal to those
of the shares surrendered. To the extent new shares of stock acquired pursuant
to the exercise of the option exceed the number of shares of stock surrendered,
such additional shares will have a zero basis and will have a holding period
beginning on the date the option is exercised. Any disqualifying disposition of
stock acquired by use of shares of stock will be deemed to be a disposition of
the stock with the lowest basis first.
The use of stock acquired through exercise of an incentive stock option to
exercise an incentive stock option will constitute a disqualifying disposition
with respect to such stock if the applicable holding period requirement has not
been satisfied. This provision is intended to prevent the "pyramiding" of
incentive stock options.
The Company will not be allowed a deduction for federal income tax purposes
at the time of grant or exercise of an incentive stock option. At the time of a
disqualifying disposition by an optionee, the Company generally will be entitled
to a deduction to the extent that the optionee recognizes ordinary income and
such income is considered reasonable compensation.
Non-Qualified Stock Options. An optionee recognizes no income at the time a
non-qualified stock option is granted under the 1995 Plan. An optionee will
recognize ordinary income at the time a non-qualified stock option is exercised
in an amount equal to the excess of the fair market value of the shares on the
date of exercise over the exercise price, except that if an optionee who is
subject to the provisions of Section 16(b) of the Exchange Act (an officer,
director or 10% stockholder) exercises a non-qualified stock option within six
months of the date of grant, the optionee will recognize ordinary income on the
date that is six months after the date of grant unless the optionee makes an
election under Section 83(b) of the Code to recognize income at the date of
exercise. The Company generally will be entitled to a deduction for federal
income tax purposes in the year and in the same amount as the optionee is
considered to have recognized ordinary income in connection with the exercise of
a nonqualified stock option to the extent such income is considered reasonable
compensation, if provision is made for withholding of federal income taxes,
where applicable. In general, no deduction is allowed for remuneration in excess
of $1 million paid by the Company during any taxable year to any of the chief
executive officer or the four highest compensated officers (other than the chief
executive officer). Remuneration for this purpose excludes certain
performance-based compensation which meets requirements set forth in the Code
and proposed Treasury Regulations. Based on the composition of the committee
anticipated to be appointed to administer the 1995 Plan, the 1995 Plan is not
expected to qualify for the performance-based compensation exception to the
deduction limitation.
An optionee will recognize gain or loss on the subsequent sale of shares
acquired on exercise of a non-qualified stock option in an amount equal to the
difference between the amount realized and the tax basis of such shares, which
will equal the option price paid plus the amount included in the optionee's
income by reason of the exercise of the option. Provided such shares are held as
capital assets, such gain or loss will be long-term or short-term capital gain
or loss depending upon whether the shares have been held for more than one year.
No gain or loss will be recognized by an optionee with respect to shares
surrendered to exercise a non-qualified stock option. A number of new shares
acquired equal to the number of shares surrendered will have a tax basis and
holding period equal to those of the shares surrendered. The optionee will
recognize ordinary income in an amount equal to the fair market value of the
additional shares acquired at the time of exercise (or, if the optionee is
subject to Section 16(b) of the Exchange Act and exercises the option within six
months of the date of grant, on the date which is six months after the date of
grant unless the optionee makes an election under Section 83(b) of the Code to
recognize income at the date of exercise). Such additional shares will be deemed
to have been acquired on such date and will have a tax basis equal to their fair
market value on such date.
The Company has the right to deduct any sums required by federal, state or
local tax laws to be withheld with respect to the exercise of any non-qualified
stock option from sums owing to the person exercising the
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<PAGE> 7
option or, in the alternative, may require the person exercising the option to
pay such sums to the Company prior to or in connection with such exercise.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE APPROVAL OF
THE ADOPTION OF THE 1995 PLAN.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information as of June 15, 1995 with
regard to beneficial ownership of the Common Stock by (i) persons known by the
Company to be beneficial owners of more than five percent of the Common Stock,
(ii) the directors of the Company, (iii) the executive officers named in the
Summary Compensation Table below, and (iv) all executive officers and directors
as a group.
<TABLE>
<CAPTION>
PERCENT OF
COMMON STOCK OUTSTANDING
NAME (AND ADDRESS(1)) BENEFICIALLY COMMON
OF BENEFICIAL OWNER OWNED STOCK
--------------------- ------------ ------------
<S> <C> <C>
Charles C. Tillinghast, III..................... 937,100(2) 17.3%
Loren C. Paulsen................................ 946,500(3) 17.5%
Grace & White, Inc.............................. 739,450 13.7%
Kahn Brothers & Co., Inc........................ 424,300 7.9%
Dimensional Fund Advisors, Inc.................. 273,400 5.1%
Jon S. Fish..................................... 63,500(4) 1.1%
Kevan M. Lyon................................... 20,700(5) *
Michael M. Nicita............................... 511 *
James A. Liedich................................ 37,300(5) *
E. William Swanson.............................. 23,800(6) *
Trygve E. Myhren................................ 20,800(6) *
Robert F. Bartlett.............................. 2,000(7) *
Lynn S. Dawson.................................. 2,000(7) *
James T. Dixon.................................. 0 *
All executive officers and directors as a group
(14 persons).................................. 2,085,011(8) 38.6%
</TABLE>
- ---------------
* less than 1%.
(1) The address of Messrs. Tillinghast and Paulsen is c/o Advanced Marketing
Services, Inc., 5880 Oberlin Drive, San Diego, CA 92121. The address of
Grace & White, Inc. is 515 Madison Avenue, New York, NY 10027. The address
of Kahn Brothers & Co., Inc. is 55 Broadway, New York, NY 10006. The address
of Dimensional Fund Advisors, Inc. is 1299 Ocean Avenue, Santa Monica, CA
90401.
(2) Mr. Tillinghast's shares are held of record by a Revocable Trust dated April
7, 1988 of which Mr. and Mrs. Tillinghast are trustees. This amount also
includes 12,600 shares subject to options exercisable within 60 days held by
Cynthia B. Tillinghast, Assistant Secretary and a General Marketing Manager
of the Company, and the wife of Mr. Tillinghast.
(3) Of Mr. Paulsen's shares, 887,540 are held of record by a Revocable Trust
dated May 13, 1987, the trustees of which are Mr. Paulsen and his wife, and
58,960 are held of record by an Irrevocable Trust dated August 22, 1988, the
beneficiaries of which are Mr. Paulsen's children and the trustees of which
are unrelated to Mr. Paulsen. Mr. Paulsen disclaims beneficial ownership of
the 58,960 shares held by this Irrevocable Trust.
(4) Includes 59,000 shares subject to options which are exercisable within 60
days.
(5) Includes 20,000 shares subject to options which are exercisable within 60
days.
(6) Includes 13,800 shares subject to options which are exercisable within 60
days.
(7) Includes 2,000 shares subject to options which are exercisable within 60
days.
(8) Includes 174,000 shares subject to options which are exercisable within 60
days.
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<PAGE> 8
MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
The following sets forth certain information as of June 15, 1995 with
regard to (i) each director, including the three nominees (who currently serve
as directors), and (ii) each executive officer of the Company who is neither a
director nor a nominee.
<TABLE>
<CAPTION>
NAME AGE POSITION
------ --- ----------
<S> <C> <C>
Charles C. Tillinghast, III 58 Chief Executive Officer and Chairman of
the Board of Directors(1)
Michael M. Nicita 42 President, Chief Operating Officer and
Director
Loren C. Paulsen 45 Executive Vice President - Operations and
Director(1)
Lynn S. Dawson 44 Director(2)
Robert F. Bartlett 50 Director(2)
James A. Leidich 52 Director(2)
Trygve E. Myhren 58 Director(2)
E. William Swanson 59 Director(2)
Jon S. Fish 50 Executive Vice President - Finance and
Chief Financial Officer
Kenneth C. Hayes 49 Vice President - Management Information
Systems
Alisa R. Judge 39 Vice President - Human Resources
Kevan M. Lyon 36 Vice President - Merchandising
Ronald E. Osborne 38 Vice President - Operations
Adam R. Zoldan 42 Vice President - Marketing
</TABLE>
- ---------------
(1) Member of the Stock Option Committee.
(2) Member of the Compensation and Audit Committees.
Mr. Tillinghast has served as Chairman of the Board of Directors and Chief
Executive Officer of the Company since November 1994; prior thereto, Mr.
Tillinghast served as President, Chief Executive Officer and as a Director of
the Company since its inception in 1982. He served as President of Oak Tree
Publications, Inc. from 1976 until 1981 and as President of CRM, a diversified
publishing company, from 1971 through 1975. Mr. Tillinghast was employed by
Boise Cascade Corporation for 10 years, where he served in various management
positions, including Senior Vice President from 1971 to 1973.
Mr. Nicita has served as President, Chief Operating Officer and Director of
the Company since November 1994. From 1978 to November 1994, he served in
various capacities at Golden-Lee Book Distributors, including MIS Director,
Controller and General Manager. Prior thereto, he was employed by Barnes and
Noble Book Stores, Inc. from 1977 to 1978. Mr. Nicita is the co-author of two
books on microcomputers and has also been a columnist for a national
microcomputer consumer magazine.
Mr. Paulsen has served as Executive Vice President - Operations since
December 1989 and as a Director of the Company since its inception in 1982. From
1982 to December 1989, Mr. Paulsen served as Vice President - Operations of the
Company. Prior thereto, he was employed by Fed Mart Corp., a discount retail
chain, for 17 years in various capacities, including sundries and book buyer.
Mr. Bartlett was elected Director in April 1994 by the Board of Directors.
He is presently employed as Vice President, Divisional Manager of Anderson
Chamberlain, a manufacturers representative firm. Mr. Bartlett has many years of
experience in the warehouse club industry, having served as Senior Vice
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<PAGE> 9
President of Merchandising, Operations, Traffic and Distribution, SourceClub,
Inc. (1991-1993); Executive Vice President of Merchandising and Distribution,
The Wholesale Club, Inc. (1990-1991); and Executive Vice President of
Merchandising, Traffic and Distribution, The Price Club (1981-1989).
Ms. Dawson was appointed Director in April 1994 by the Board of Directors.
She is presently employed as Vice President and National Sales Manager for B.H.
Smith/Samsonite. Ms. Dawson has many years of experience in department store
operations, having served in a variety of positions including Vice President,
Divisional Merchandise Manager with Foley's Department Store (1990-1991); Senior
Vice President, Broadway Department Store (1978-1990) and Buyer and Store
Manager, May Company Department Store (1972-1978).
Mr. Leidich was first elected a Director of the Company in November 1986.
He has served as President of Graywave, Inc., a management consulting firm,
since 1983. Mr. Leidich serves on the boards of numerous privately held
companies. From November 1991 to May 1993, he was a consultant to Colorado
Venture Management, Inc. ("CVMI") and a special limited partner of CVM Equity
Fund III, a venture capital partnership ("CVMEF"). From April 1989 to November
1991, Mr. Leidich served as Vice President of CVMI and as a general partner of
CVMEF. Mr. Leidich was the Chairman and Treasurer of Children's World, Inc., a
national chain of child care centers, from 1975 to 1983. From 1980 to 1983, Mr.
Leidich was Executive Vice President of The Parker Pen Company.
Mr. Myhren was first elected a Director of the Company in February 1989.
Since December 1990, he has served as President and a Director of the Providence
Journal Company, which owns and manages the Journal/Bulletin newspapers, 11
broadcast television stations, and video programming companies. Mr. Myhren also
serves as President and CEO of King Broadcasting Corporation, owner and operator
of local broadcast television stations. Mr. Myhren is a Director of Citizens
Bank Corporation in Rhode Island. He has also been President of Myhren Media,
Inc., a media investment and consultation firm, since 1988 and was President of
the general partner of Saguaro Cable Investors, L.P. from 1988 to 1991. From
1975 until establishing Myhren Media, Inc., he served as President and then
Chairman and Chief Executive Officer of American Television and Communications
Corporation, a publicly traded subsidiary of Time, Inc. and known today as
Time/Warner Cable. Prior thereto, Mr. Myhren served in various capacities with
CRM, Marketing Continental, Glendinning Companies and Procter and Gamble. From
1981 to 1991, Mr. Myhren served as a Director of the National Cable Television
Association and was its chairman from 1986 to 1987. He has previously served as
a Director of Turner Broadcasting Systems; American TV & Communications, Inc.,
and on Time's internal boards for Home Box Office, Temple-Eastex and Time
Magazine Group; and on the Federal Communications Commission's Advisory
Committee on High Definition Television.
Mr. Swanson was first elected a Director of the Company in April 1988. He
has served as President of F.W. Cygnet, Inc., an investment management firm,
since 1986. Mr. Swanson was the President and Chief Executive Officer from 1982
to 1986 of St. Francis Associates, a private investment management firm in San
Francisco. From 1975 through 1982, he was employed by The Parker Pen Company,
serving in various capacities, including President, Chief Executive Officer and
Chief Operating Officer.
Mr. Fish joined the Company in April 1990 as Vice President - Finance and
Chief Financial Officer. In July 1991, he was elected Executive Vice
President - Finance. From 1988 to April 1990, he served as Vice
President - Treasurer and Administration for Magma Power Company, a geothermal
power company. Prior to 1988, he served as Vice President - Finance of United
Publishers for six years and in various positions including Vice
President - Treasurer for the Wickes Companies between 1972 and 1982.
Mr. Hayes joined the Company in 1986 as Director of Management Information
Systems. He was promoted to Vice President - Management Information Systems in
July 1991. From 1982 until 1986, he served as Data Processing Manager for
Spectragraphics Corporation, a computer graphics manufacturing company. Prior to
1982, Mr. Hayes served in various technical and management positions with
McDonnell Douglas Automation, San Diego Data Processing Corporation and National
Semiconductor.
Ms. Judge joined the Company in May 1991 as Manager of Human Resources. She
was promoted to Director of Human Resources in October 1992 and to Vice
President - Human Resources in July 1994. From
7
<PAGE> 10
1986 to 1991, she worked for the Eastridge Group, an employment/temporary agency
in a variety of management positions.
Ms. Lyon joined the Company in 1988 as Marketing Director. In December
1989, Ms. Lyon was then named Vice President - Marketing with responsibility for
leading the sales and marketing efforts with respect to the Company's major
customers. In September 1994, Ms. Lyon became Vice President - Merchandising and
has responsibility for the Company's buying activities. From 1983 through 1988,
she worked for Allergan, Inc., a pharmaceutical company, in various sales and
product management positions.
Mr. Osborne joined the Company in June 1989 as Director of Operations. In
July 1991, he was promoted to Vice President - Operations. Mr. Osborne was
employed by San Diego Gas & Electric from 1986 to 1989 in the capacity of Sr.
Operations Analyst. From 1980 to 1986, he worked for Proctor & Gamble in various
manufacturing management positions.
Mr. Zoldan joined the Company in January 1995 as Vice President - Marketing
and has responsibility for sales and relations with the Company's major
customers. From 1988 to 1995, Mr. Zoldan was General Sales Manger for Eastman, a
division of Office Depot. Prior to 1988, he served as General Sales Manager for
Office Club (now Office Depot) (1984-1986), and District Sales Manager for
McKesson Office Products (1981-1984).
Officers serve at the discretion of the Board of Directors.
BOARD OF DIRECTORS AND COMMITTEES
Directors are elected to serve staggered three-year terms and until their
successors are duly elected and qualified. Each Director who is not otherwise
employed by the Company receives an annual Director's fee of $10,000 plus $1,000
for each regular Board meeting attended. In addition, each outside Director is
paid $500 for attendance at each special Board and Audit, Compensation or Stock
Option Committee meeting held on dates other than the regularly scheduled Board
meetings. The Company reimburses each Director for reasonable out-of-pocket
expenses incurred in his capacity as a member of the Board of Directors. No
payments are made for participation in telephone meetings of the Board of
Directors or actions taken in writing. Each Director attended at least 75% of
the total number of meetings of the Board of Directors and all committees
thereof on which such Director served held during the year ended March 31, 1995.
The members of the Audit Committee of the Board of Directors are Messrs.
Bartlett, Leidich, Myhren, Swanson and Ms. Dawson. The Audit Committee held one
meeting during fiscal 1995. The functions of the Audit Committee are primarily
to recommend the selection of the Company's independent public accountants,
discuss with them the scope of the audit, consider matters pertaining to the
Company's accounting policies and internal controls, and provide a means for
direct communication between the independent public accountants and the Board of
Directors.
The members of the Compensation Committee of the Board of Directors are
Messrs. Bartlett, Leidich, Myhren and Swanson and Ms. Dawson. The Compensation
Committee held four meetings during fiscal 1995. The functions of the
Compensation Committee are to review and recommend changes in salaries and
bonuses of key employees and to review periodically, and make recommendations
with respect to, the compensation structure of the Company.
The members of the Stock Option Committee of the Board of Directors are
Messrs. Tillinghast and Paulsen. The Stock Option Committee was formed in April
1991 for the purpose of administering the Company's 1987 Stock Option Plan. The
Stock Option Committee will also administer the 1995 Stock Option Plan, if
adopted. The Stock Option Committee held four meetings during fiscal 1995.
The Company has no nominating committee or committee performing similar
functions.
8
<PAGE> 11
EXECUTIVE COMPENSATION
REPORT OF THE COMPENSATION AND STOCK OPTION COMMITTEES
The Compensation Committee is composed of five outside directors. The
Compensation Committee is responsible for determining executive officer salary
and bonus compensation and determining annual contributions to the Company's
profit sharing plan. Stock option grants are determined by the Stock Option
Committee, consisting of two employee directors who are not eligible for grants,
in consultation with the Compensation Committee. The following is a report of
the Compensation Committee and, as it relates to stock options, the Stock Option
Committee, concerning their policies and actions in fiscal 1995 concerning
executive compensation.
The Company's compensation programs are designed to (a) link executive
compensation to the performance of the Company and to stockholder value as
measured by the long-term price appreciation of the Company's common stock and
(b) attract, retain and motivate employees by providing for the vesting of
certain components of compensation over a number of years.
The Company's compensation of executive officers, including its Chief
Executive Officer, consists principally of two components: (a) annual cash
compensation, generally consisting of base salary and a bonus and (b) long-term,
stock-based compensation. The policies governing these components, as well as
the basis for determining the compensation payable to the Chief Executive
Officer, are described below.
Annual Salary and Bonus Compensation. The salaries of executive officers
are determined on the basis of, in no particular order of importance, the
responsibilities of the position held, the prior experience and compensation of
the officer, the compensation practices of competitors, as determined from
publicly available information, discussions with knowledgeable consultants and
participants in the publishing and distribution industries, and other
marketplace factors, such as housing and relocation requirements. The
Compensation Committee also strives to compensate each executive officer at a
level which is appropriate in relation to the compensation of other executive
officers of the Company. Annual salary adjustments, if any, are determined
largely by the Company's net income performance. Because two officers of the
Company hold significant equity positions as founders, their salaries are set,
with their concurrence, at levels believed to be somewhat lower than that paid
for comparable positions in the industry generally.
Under the Company's bonus plan, cash bonuses are earned if a minimum level
of net income is attained. Bonus amounts increase if higher target net income
levels are attained. The Company's net income objectives are established by the
Compensation Committee at the commencement of each fiscal year. For fiscal 1995,
payments under the Company's bonus plan to each executive officer were based
upon the Company achieving, but not exceeding, the targeted net income
objective.
Long-Term Stock Option Compensation. The Company grants stock options to
its executive officers and other employees pursuant to its 1987 Stock Option
Plan (the "1987 Plan"). The Company will also grant stock options to such
persons under the 1995 Stock Option Plan (the "1995 Plan"), if approved. See
"Item 2. Proposed 1995 Stock Option Plan" above. The Company believes that such
options help to more closely align the interests of its management employees
with the long-term interests of its stockholders by providing an incentive for
increasing stockholder value. Moreover, such options are believed to be
instrumental in retaining employees over the longer term, since full benefits of
appreciated options cannot be realized until the end of the applicable vesting
period, which is usually five years.
During fiscal 1995, the Stock Option Committee, in consultation with the
Compensation Committee, approved the grant of options to purchase 150,000 and
20,000 shares of Common Stock to Messrs. Michael M. Nicita and Adam R. Zoldan,
respectively, in connection with their acceptance of appointment as officers,
and the grant of options to purchase 10,000 shares of Common Stock to each of
Ms. Lynn S. Dawson and Mr. Robert F. Bartlett, in connection with their
acceptance of appointment to the Board of Directors. The Stock Option Committee
also approved the grant of options to purchase 10,000 and 2,500 shares of Common
Stock to Ms. Kevan M. Lyon and Ms. Alisa R. Judge, respectively, in connection
with their promotions. See "Management." The grant of options to Mr. Nicita,
however, is subject to stockholder approval of the
9
<PAGE> 12
adoption of the 1995 Plan. The Stock Option Committee has concluded that stock
options previously granted to the other executive officers adequately provide
appropriate long-term incentives and, therefore, determined not to grant options
to such executive officers in fiscal 1995. Messrs. Tillinghast and Paulsen, who
are founders of the Company, are not eligible to receive grants of options, but
their significant equity positions in the Company are believed to provide them
with substantial incentive to enhance stockholder value.
CEO Compensation. The Compensation Committee establishes the base salary
and bonus, if any, payable to Mr. Charles C. Tillinghast, III, the Company's
Chief Executive Officer, based on the same factors applicable to executive
officer compensation generally.
In March 1994, the Compensation Committee reviewed Mr. Tillinghast's salary
and determined that his salary would not be increased for fiscal 1995. Mr.
Tillinghast's salary is believed to be substantially below the median of
salaries paid to chief executive officers of companies which have comparable
sales volumes. In May 1995, Mr. Tillinghast earned a bonus of $28,000 based upon
the Company's performance against the net income objectives established by the
Compensation Committee.
Internal Revenue Code Section 162(m). Internal Revenue Code Section 162(m),
enacted in 1993, provides that a public corporation generally may not deduct
compensation in excess of $1,000,000 payable to its chief executive officer or
any of its other four most highly compensated officers. Certain
performance-based compensation is specifically exempted. Since the Company's
historical levels of executive compensation have been substantially less than
$1,000,000 in any given year, the Compensation Committee has not yet established
a policy with respect to Section 162(m). In future years, the Compensation
Committee intends to take into account the effect of Section 162(m) if the
compensation payable to an executive officer approaches $1,000,000. However, the
provisions of Section 162(m) are not expected to preclude the award of
compensation believed to be merited, even if in excess of $1,000,000.
The tables that follow reflect the decisions included in this report.
<TABLE>
<CAPTION>
THE STOCK OPTION COMMITTEE THE COMPENSATION COMMITTEE
<S> <C>
Charles C. Tillinghast, III James A. Leidich, Chairman
Loren C. Paulsen Robert F. Bartlett
Lynn S. Dawson
Trygve E. Myhren
E. William Swanson
</TABLE>
10
<PAGE> 13
SUMMARY OF CASH AND OTHER COMPENSATION
The following table sets forth information concerning the annual and
long-term compensation for services rendered in all capacities to the Company
for the fiscal years ended March 31, 1995, 1994 and 1993 of (i) those persons
who were, at March 31, 1995, the Chief Executive Officer and the four other most
highly paid executive officers of the Company and (ii) a former executive
officer (collectively, the "Named Executive Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL LONG-TERM
COMPENSATION COMPENSATION
------------------ ------------ ALL OTHER
NAME AND CAPACITY FISCAL SALARY BONUS OPTIONS/ COMPENSATION
IN WHICH SERVED YEAR ($)(1) ($)(1) SARS(#) ($)(2)
----------------- ---- ------- ------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Charles C. Tillinghast, III, 1995 190,008 28,000 0 11,321
Chief Executive Officer 1994 188,757 0 0 1,650
1993 158,965 26,000 1,000(3) 6,359
Michael M. Nicita, Chief 1995 90,436 14,000 150,000(5) 32,612
Operating Officer and President(4) 1994 -- -- -- --
1993 -- -- -- --
Loren C. Paulsen, Executive 1995 168,006 28,000 0 10,186
Vice President -- Operations 1994 167,256 0 0 1,463
1993 149,381 26,000 0 5,975
Jon S. Fish, Executive Vice 1995 158,006 28,000 0 8,633
President and Chief Finance 1994 156,648 0 0 948
1993 139,172 26,000 0 2,227
Kevan M. Lyon, Vice President -- 1995 113,755 20,000 10,000 6,362
Merchandising 1994 101,193 0 0 1,012
1993 93,946 13,500 5,000 2,732
James T. Dixon, Former 1995 200,715 21,000 0 332,700(6)
Executive Vice President -- 1994 212,258 0 0 438
1993 194,382 26,000 0 1,555
</TABLE>
- ---------------
(1) Amounts shown include cash compensation earned and received by executive
officers as well as amounts earned and accrued but not yet paid.
(2) Except as separately described, the amounts indicated are the vested
portions of fiscal 1995, 1994 and 1993 profit sharing contributions accrued
in favor of named individuals (excluding the allocable portion of interest)
and Company matching 401k plan contributions.
(3) Represents options held by Cynthia B. Tillinghast, Assistant Secretary and a
General Marketing Manager of the Company. Mrs. Tillinghast is the wife of
Mr. Tillinghast.
(4) Mr. Nicita joined the Company on November 1, 1994. To facilitate relocation
in connection with his employment, the Company incurred $32,612 in
relocation expenses on behalf of Mr. Nicita in fiscal 1995, which amount is
included in All Other Compensation.
(5) The grant of such options is subject to stockholder approval of the 1995
Plan.
(6) On December 31, 1994, Mr. Dixon resigned his position with the Company. All
Other Compensation includes (a) a severance payment of $213,000, (b)
reimbursement of relocation expenses of $25,520 and (c) $98,700 realized on
the exercise of 30,000 options as to which vesting was accelerated. To
facilitate relocation in connection with his employment, the Company made an
interest-free loan to Mr. Dixon in June 1993 in the original principal
amount of $200,000. The loan was payable on the earliest of (i) one year
from the date of the note, (ii) the sale of Mr. Dixon's former New York
residence or (iii) 90 days following termination of employment. At March 31,
1995, the outstanding balance of the loan was $150,000, which amount was
subsequently repaid in full (including $20,986 in accrued interest) on April
21, 1995.
11
<PAGE> 14
OPTION GRANTS
The following table sets forth with respect to the Named Executive Officers
certain information concerning grants of stock options in fiscal 1995. No stock
appreciation rights were granted in fiscal 1995.
OPTION GRANTS IN FISCAL 1995
<TABLE>
<CAPTION>
POTENTIAL REALIZED VALUE AT
% OF TOTAL ASSUMED
NUMBER OF OPTIONS ANNUAL RATES OF STOCK PRICE
SECURITIES GRANTED TO EXERCISE GRANT DATE APPRECIATION FOR OPTION
UNDERLYING EMPLOYEES OR BASE MARKET TERM(1)
OPTIONS IN PRICE PRICE EXPIRATION -----------------------------
GRANTED($) FISCAL YEAR ($/SH) ($/SH) DATE 0%($) 5%($) 10%($)
---------- ----------- -------- ---------- ---------- ------- ------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Charles C. Tillinghast,
III...................... 0 0.0 -- -- -- -- -- --
Michael M. Nicita.......... 150,000(2) 61.2 5.42 6.38 3/27/05 143,250 744,630 1,667,266
Loren C. Paulsen........... 0 0.0 -- -- -- -- -- --
Jon S. Fish................ 0 0.0 -- -- -- -- -- --
Kevan M. Lyon.............. 10,000 4.1 5.20 6.13 7/20/04 9,250 47,770 106,867
</TABLE>
- ---------------
(1) Amounts shown represent the potential value of granted options if the
assumed annual rates of stock appreciation are maintained over the 10-year
terms of the granted options. The assumed rates of appreciation are
established by regulation and are not intended to be a forecast of the
Company's performance or to represent management's expectations with respect
to the appreciation, if any, of the Common Stock.
(2) The grant of such options is subject to stockholder approval of the 1995
Plan.
OPTION EXERCISES AND HOLDINGS
The following table sets forth with respect to the Named Executive Officers
information concerning the exercise of stock options during fiscal 1995 and
unexercised options held as of the end of each fiscal year. The Company has
never granted stock appreciation rights.
AGGREGATED OPTION EXERCISES AND
FISCAL 1995 YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER VALUE OF
OF UNEXERCISED UNEXERCISED IN-THE-MONEY
OPTIONS/SARS AT OPTIONS/SARS AT
SHARES VALUE FISCAL YEAR END(#) FISCAL YEAR END($)(1)
ACQUIRED ON REALIZED ---------------------------- ----------------------------
EXERCISE(#) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
----------- ------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Charles C.
Tillinghast(2)......... 0 0 12,400 600 12,900 810
Michael M. Nicita........ 0 0 0 150,000(3) 0 106,500
Loren C. Paulsen......... 0 0 0 0 0 0
Jon S. Fish.............. 8,000 27,360 57,000 10,000 157,270 41,100
Kevan M. Lyon............ 0 0 17,000 13,000 18,150 13,350
James T. Dixon(4)........ 150,000 493,500 0 0 0 0
</TABLE>
- ---------------
(1) Before taxes. The dollar value indicated is based on the difference between
the exercise price of the outstanding option and the closing market price of
the Common Stock on March 31, 1995 ($6.13 per share).
(2) Represents options held by Cynthia B. Tillinghast, Assistant Secretary and a
General Marketing Manager of the Company. Mrs. Tillinghast is the wife of
Mr. Tillinghast.
(3) The Company has granted to Mr. Nicita options for 150,000 shares, effective
March 28, 1995, subject to stockholder approval of the 1995 Plan. See "Item
2. Proposed 1995 Stock Option Plan."
(4) Of the options exercised by Mr. Dixon, 30,000 were the subject of
accelerated vesting upon his resignation. The amount realized on the
exercise of those options, $98,700, is included in the value realized above
and also under "All Other Compensation" in the Summary of Compensation
Table.
12
<PAGE> 15
PERFORMANCE GRAPH
The following graph presents a comparison of the Company's stock
performance with the broad-based NASDAQ Market Index and with the Dow Jones
Industry Group OTS-Other Specialty Retailers Index, an index compiled by Media
General Financial Services which currently covers approximately 115 specialty
retail companies (including the Company).
<TABLE>
<CAPTION>
Advanced
Marketing Dow Jones
Measurement Period Services, Industry
(Fiscal Year Covered) Inc. NASDAQ Group OTS
<S> <C> <C> <C>
4/1/90 100.00 100.00 100.00
4/1/91 29.25 110.28 112.01
4/1/92 91.51 116.23 141.84
4/1/93 103.77 130.08 170.80
4/1/94 77.36 150.33 174.61
4/1/95 92.45 159.48 167.39
</TABLE>
The graph assumes $100 invested on April 1, 1990 in the Company's Common
Stock and $100 invested at that time in each of the indexes shown. The
comparison assumed that all dividends are reinvested.
COMPLIANCE WITH SECTION 16(A) OF EXCHANGE ACT
Based solely upon a review of Forms 3, 4 and 5 (and amendments thereto)
furnished to the Company during or with respect to fiscal 1995, no person who at
any time during fiscal 1995 was a director, officer, beneficial owner of more
than 10 percent of the Common Stock, failed to file on a timely basis, as
disclosed in the above Forms, reports required by Section 16(a) of the
Securities Exchange Act, as amended, during fiscal 1995 or prior fiscal years,
except as provided herein. Through clerical oversight, (i) Ms. Lyon failed to
file a timely Form 5 with respect to fiscal 1995 to report a grant of options by
the Company to purchase 10,000 shares of Common Stock and (ii) Messrs.
Tillinghast and Paulsen failed to file a timely Form 4 with respect to sales of
7,500 and 9,500 shares, respectively. Mr. Nicita's stock option grant of 150,000
shares has not been reported on Form 5, pending stockholder approval of the 1995
Stock Option Plan.
FORM 10-K
AMS will furnish without charge to each stockholder, upon written request
addressed to The Investor Relations Department of AMS at 5880 Oberlin Drive, San
Diego, California 92121, a copy of its Annual Report on Form 10-K for the fiscal
year ended March 31, 1995 (excluding the exhibits thereto), as filed with the
Securities and Exchange Commission.
13
<PAGE> 16
CERTAIN TRANSACTIONS
All transactions between the Company and its officers, Directors or any
affiliate of any such person have been, and all such future transactions will
be, on terms no less favorable to the Company than could be obtained from
unaffiliated parties.
FUTURE STOCKHOLDER PROPOSALS
Any stockholder proposal intended to be presented at the 1996 Annual
Meeting of Stockholders must be submitted sufficiently far in advance so that it
is received by AMS not later than April 23, 1996.
OTHER MATTERS
The Company's independent public accountants for the fiscal year ended
March 31, 1995 were Arthur Andersen LLP, which firm has been appointed to serve
in such capacity for the current fiscal year. A representative of Arthur
Andersen LLP is expected to be present at the meeting with the opportunity to
make a statement if he or she so desires and to respond to appropriate
questions.
Neither the Company nor any of the persons named as proxies knows of
matters other than those stated above to be voted on at the Annual Meeting.
However, if any other matters are properly presented at the meeting, the persons
named as proxies are empowered to vote in accordance with their discretion on
such matters.
The Annual Report of AMS for the fiscal year ended March 31, 1995
accompanies this proxy statement, but it is not to be deemed a part of the proxy
soliciting material.
PLEASE COMPLETE, SIGN AND RETURN THE ENCLOSED PROXY PROMPTLY.
ADVANCED MARKETING SERVICES, INC.
By order of the Board of Directors
Charles C. Tillinghast, III
Chief Executive Officer and Chairman
San Diego, California
June 23, 1995
14
<PAGE> 17
REVOCABLE PROXY
ADVANCED MARKETING SERVICES, INC.
ANNUAL MEETING OF STOCKHOLDERS -- JULY 27, 1995
The undersigned stockholder(s) of Advanced Marketing Services, Inc. (the
"Company") hereby nominates, constitutes and appoints Charles C. Tillinghast,
III and James A. Leidich, and each of them, the attorney, agent and proxy of the
undersigned, with full power of substitution, to vote all stock of Advanced
Marketing Services, Inc. which the undersigned is entitled to vote at the Annual
Meeting of Stockholders of the Company to be held at 5880 Overlin Drive, Suite
400, San Diego, California 92121 at 10:00 a.m., P.D.T., and any and all
adjournments or postponements thereof, with respect to the matters described in
the accompanying Proxy Statement, and in their discretion, on such other matters
which properly come before the meeting, as fully and with the same force and
effect as the undersigned might or could do if personally present thereat, as
follows:
<TABLE>
<S> <C> <C>
1. ELECTION OF DIRECTORS / / AUTHORITY GIVEN / / WITHHOLD AUTHORITY
to vote for the nominees listed below to vote for the nominees.
(except as indicated to the contrary below).
</TABLE>
(INSTRUCTIONS: To withhold authority to vote for any nominee, strike a line
through such nominee's name below.)
Class A: Charles C. Tillinghast, III; Loren C. Paulsen; Michael M. Nicita
2. ADOPTION OF 1995 STOCK OPTION PLAN.
/ / FOR / / AGAINST / / ABSTAIN
3. To transact such other business as may properly come before the Meeting and
any adjournment or adjournments or postponements thereof. Management
presently knows of no other business to be presented by or on behalf of the
Company or its Board of Directors at the Meeting.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS AND MAY BE REVOKED
PRIOR TO ITS EXERCISE.
PLEASE SIGN AND DATE ON REVERSE SIDE.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE OF "AUTHORITY GIVEN" FOR THE
ELECTION OF DIRECTORS AND "FOR" THE ADOPTION OF THE 1995 STOCK OPTION PLAN. THE
PROXY CONFERS AUTHORITY TO AND SHALL BE VOTED "AUTHORITY GIVEN" FOR THE ELECTION
OF DIRECTORS AND "FOR" THE ADOPTION OF THE 1995 STOCK OPTION PLAN UNLESS OTHER
INSTRUCTIONS ARE INDICATED, IN WHICH CASE THE PROXY SHALL BE VOTED IN ACCORDANCE
WITH SUCH INSTRUCTIONS.
IF ANY OTHER BUSINESS IS PRESENTED AT THE MEETING, THIS PROXY SHALL BE VOTED
IN ACCORDANCE WITH THE RECOMMENDATIONS OF THE BOARD OF DIRECTORS.
Dated:
-------------------------
(Please print name)
-------------------------
(Signature of
Stockholder)
-------------------------
(Please print name)
-------------------------
(Signature of
Stockholder)
(Please date this Proxy
and sign your name as it
appears on your stock
certificates. Executors,
administrators, trustees,
etc., should give their
full titles. All joint
owners should sign.)
I (We) do / / do not
/ / expect to attend the
Meeting.
Number of Persons
-------
