<PAGE>
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 (S)240.14a-11(c) or (S)240.14a-12
------------------------------------------
ADVANTAGE MARKETING SYSTEMS, INC.
------------------------------------------
(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:
(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>
ADVANTAGE MARKETING SYSTEMS, INC.
2601 Northwest Expressway, Suite 1210W
Oklahoma City, Oklahoma 73112-7293
Telephone: (405) 842-0131
- ------------------------------------------------------------------------------
NOTICE OF ANNUAL MEETING
TO THE SHAREHOLDERS:
The Annual Meeting of the Shareholders of Advantage Marketing Systems,
Inc., an Oklahoma corporation (the "Company"), will be held at the Marriott
Hotel, 3233 N.W. Expressway, Oklahoma City, Oklahoma, on July 18, 1998,
commencing at 3:00 p.m., Central Daylight-Savings Time, and thereafter as it may
be adjourned from time to time, for the following purposes:
1. To elect two directors of the Company to hold office until the 2001 annual
meeting of shareholders and until his successor shall have been duly
elected and qualified;
2. To consider and act upon a proposal to ratify the appointment of Deloitte &
Touche LLP as the independent auditor of the Company for 1998; and
3. To transact such other business as may properly come before the meeting or
any adjournment thereof.
Holders of record of Common Stock at the close of business on May 26, 1998,
are entitled to notice of and to vote at the meeting or any adjournment thereof,
notwithstanding transfer of any stock on the books of the Company after such
record date. The accompanying Proxy Statement contains information regarding
the matters to be considered at the Annual Meeting. Copies of this Notice and
the accompanying Proxy Statement were first mailed to Shareholders on or about
June 6, 1998. For reasons set forth in the attached Proxy Statement, the Board
of Directors recommends a vote "FOR" the matters being voted upon.
YOUR ATTENDANCE OR PROXY IS IMPORTANT TO ASSURE A QUORUM AT THE ANNUAL
MEETING. SHAREHOLDERS WHO DO NOT EXPECT TO ATTEND THE ANNUAL MEETING IN PERSON
ARE REQUESTED TO COMPLETE AND RETURN THE ENCLOSED PROXY, USING THE ENVELOPE
PROVIDED, WHICH REQUIRES NO POSTAGE IF MAILED FROM WITHIN THE UNITED STATES.
ANY PERSON GIVING A PROXY HAS THE POWER TO REVOKE IT AT ANY TIME PRIOR TO ITS
EXERCISE AND, IF PRESENT AT THE ANNUAL MEETING, MAY WITHDRAW IT AND VOTE IN
PERSON. ATTENDANCE AT THE ANNUAL MEETING IS LIMITED TO SHAREHOLDERS, THEIR
PROXIES AND INVITED GUESTS OF THE COMPANY. ALL SHAREHOLDERS ARE CORDIALLY
INVITED TO ATTEND THE ANNUAL MEETING.
BY ORDER OF THE BOARD OF DIRECTORS:
/s/ ROGER P. BARESEL
Roger P. Baresel, Corporate Secretary
Oklahoma City, Oklahoma
June 6, 1998
<PAGE>
PROXY STATEMENT
-----------
ADVANTAGE MARKETING SYSTEMS, INC.
2601 NORTHWEST EXPRESSWAY, SUITE 1210W
OKLAHOMA CITY, OKLAHOMA 73112-7293
(405) 842-0131
-----------
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON JULY 18, 1998
SOLICITATION AND REVOCATION OF PROXIES
This Proxy Statement is furnished to the shareholders of Advantage
Marketing Systems, Inc. (the "Company") in connection with an Annual Meeting
(the "Annual Meeting") of the holders of the Common Stock of the Company (the
"Shareholders") to be held at 3:00 p.m., Central Daylight-Savings Time, on
July 18, 1998, at the Marriott Hotel, 3233 N.W. Expressway, Oklahoma City,
Oklahoma, and any adjournment thereof. This Proxy Statement and the
accompanying Notice of Annual Meeting of Shareholders and Proxy were first
mailed on or about June 6, 1998, to Shareholders of record on May 26, 1998.
If the accompanying Proxy is properly executed and returned, the shares
of Common Stock represented by the Proxy will be voted at the Annual Meeting.
If a Shareholder indicates in his, her or its Proxy a choice with respect to
any matter to be acted upon, that Shareholder's shares will be voted in
accordance with such choice. If no choice is indicated, such shares will be
voted "FOR" the election of the nominees for director listed below and the
ratification of the appointment of the independent auditor. The Shareholders
will also consider and vote upon such other business as may properly come
before the Annual Meeting or any adjournment thereof. The Board of Directors
of the Company knows of no business that will be presented for consideration
at the Annual Meeting, other than matters described in this Proxy Statement.
A Shareholder giving a Proxy may revoke it by giving written notice of
revocation to the Secretary of the Company at any time before the Proxy is
voted, by executing another valid proxy bearing a later date and delivering
such proxy to the Secretary of the Company prior to or at the Annual Meeting,
or by attending the Annual Meeting and voting in person.
Neither the corporate laws of the state of Oklahoma, the state in which
the Company is currently incorporated, nor the Company's Certificate of
Incorporation or Bylaws have any provisions regarding the treatment of
abstentions and broker non-votes. It is the Company's policy (i) to count
abstentions or broker non-votes for purposes of determining the presence of a
quorum at the Annual Meeting, (ii) to treat abstentions as votes not cast but
to treat them as shares represented at the Annual Meeting for determining
results on actions requiring a majority vote, and (iii) to consider neither
abstentions nor broker non-votes in determining results of plurality votes.
The expenses of this proxy solicitation, including the cost of preparing
and mailing this Proxy Statement and accompanying proxy will be borne by the
Company, which are estimated to be $2,000. Such expenses will also include the
charges and expenses of banks, brokerage firms, and other custodians,
<PAGE>
nominees or fiduciaries for forwarding solicitation material regarding the
Annual Meeting to beneficial owners of the Company's Common Stock.
Solicitation of proxies may be made by mail, telephone, personal interviews
or by other means by the Board of Directors or employees of the Company who
will not be additionally compensated therefor, but who may be reimbursed for
their out-of-pocket expenses in connection therewith.
SHAREHOLDERS ENTITLED TO VOTE
The Shareholders entitled to vote at the Annual Meeting are the holders of
record, at the close of business on May 26, 1998 (the "Record Date"), of the
4,249,383 shares of Common Stock then outstanding. Each holder of a share of
Common Stock outstanding on the Record Date will be entitled to one vote on each
matter presented at the Annual Meeting for each share held. The Company's
officers and directors own a total of 574,044 shares, or 13.5 percent of the
issued and outstanding Common Stock, and intend to vote all of such shares in
favor of the matters to be voted upon at the Annual Meeting. There is no
cumulative voting with respect to the election of directors. The presence in
person or by proxy of the holders of a majority of the shares of Common Stock
issued and outstanding at the Annual Meeting will constitute a quorum for the
transaction of business. All matters to be brought before the Annual Meeting
will require the affirmative vote of a majority of the shares of Common Stock
present at the Annual Meeting in person and by proxy and entitled to vote.
Votes will be tabulated by an inspector of election appointed by the Board of
Directors of the Company.
THIS PROXY STATEMENT HAS NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE FAIRNESS OR
MERITS OF THESE TRANSACTIONS NOR UPON THE ACCURACY OR ADEQUACY OF THE
INFORMATION CONTAINED IN THIS PROXY STATEMENT. ANY REPRESENTATION TO THE
CONTRARY IS UNLAWFUL.
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
GENERAL
The following table presents certain information as to the beneficial
ownership of the Common Stock as of May 26, 1998 by (i) the only persons known
by the Company to own beneficially more than five percent thereof, (ii) each
Director and nominee for Director of the Company, (iii) the executive officers
of the Company, and (iv) the Executive Officers and Directors as a group,
together with their percentage holdings of the outstanding shares. All persons
listed have sole voting and investment power with respect to their shares unless
otherwise indicated. For purposes of the following table, the number of shares
and percent of ownership of outstanding Common Stock that the named person
beneficially owned includes shares of Common Stock that such person has the
right to acquire within 60 days of May 26, 1998, which are deemed to be
outstanding, but which are not deemed to be outstanding for the purposes of
computing the number of shares beneficially owned and percent of outstanding
Common Stock of any other named person.
<TABLE>
SHARES PERCENT OF
NAME AND ADDRESS OF BENEFICIALLY OUTSTANDING
BENEFICIAL OWNER OWNED SHARES
- ------------------- ------------ -----------
<S> <C> <C>
John W. Hail(1)(2).............................. 571,141 12.7%
Curtis H. Wilson, Sr.(1)(3)..................... 280,945 6.2%
Roger P. Baresel(1)(4).......................... 178,690 4.1%
Harland C. Stonecipher(5)....................... 180,768 4.3%
R. Terren Dunlap(1)(6).......................... 37,500 .9%
Executive Officers and
Directors as a group
(five persons)(7)............................ 1,249,044 25.4%
</TABLE>
- ----------------
(1) A Director or an executive officer of the Company, with a business address
of 2601 Northwest Expressway, Suite 1210W, Oklahoma City, Oklahoma
73112-7293.
(2) The number of shares and each percentage presented includes (i) 150,000
shares of Common Stock that are subject to currently exercisable stock
options and 1,000 shares of Common Stock that are subject to currently
exercisable Redeemable Common Stock Purchase Warrants held by Mr. Hail,
(ii) 100,000 shares of Common Stock that are subject to currently
unexercisable stock options held by Mr. Hail which are exercisable within
60 days of May 26, 1998, (iii) 16,500 shares of Common Stock and 1,000
shares of Common Stock that are subject to currently exercisable Redeemable
Common Stock Purchase Warrants owned by corporations controlled by Mr.
Hail, (iv) 1,000 shares of Common Stock and 1,000 shares of Common Stock
that are subject to currently exercisable Redeemable Common Stock Purchase
Warrants held by Helen Hail, wife of Mr. Hail, with respect to which Mr.
Hail disclaims any beneficial interest.
(3) The number of shares and each percentage presented includes 250,000 shares
of Common Stock that are subject to currently exercisable stock options
held by Mr. Wilson and 12,338 shares of outstanding Common Stock and 3,000
shares of Common Stock that are subject to currently exercisable Redeemable
Common Stock Purchase Warrants held by Ruth Wilson, wife of Mr. Wilson,
with respect to which Mr. Wilson disclaims any beneficial interest.
<PAGE>
(4) The number of shares consist of and each percentage presented includes (i)
7,500 shares of outstanding Common Stock jointly held by Mr. Baresel and
his wife, Judith A. Baresel, (ii) 2,000 shares of Common Stock subject to
currently exercisable 1997-A Warrants and 1,000 shares of Common Stock that
are subject to currently exercisable Redeemable Common Stock Purchase
Warrants held by Mr. Baresel, (iii) 22,500 shares of Common Stock that are
subject to currently exercisable stock options held by Mr. Baresel, (iv)
26,828 shares of outstanding Common Stock held by Mrs. Baresel, (v) 87,500
shares of Common Stock that are subject to currently exercisable stock
options and 6,000 shares of Common Stock that are subject to currently
exercisable Redeemable Common Stock Purchase Warrants held by Mrs. Baresel,
and (vii) 12,500 shares of Common Stock that are subject to currently
exercisable stock options held by Mrs. Baresel as the custodian for the
benefit of the children of Mr. and Mrs. Baresel, with respect to which Mr.
Baresel disclaims any beneficial interest.
(5) Mr. Stonecipher is a Director of the Company with a business address of 321
East Main Street, Ada, Oklahoma 74820, and Chairman of the Board and Chief
Executive Officer of Pre-Paid Legal Services, Inc. The number of shares
consist of and each percentage presented is based upon 180,768 shares of
outstanding Common Stock held by Pre-Paid Legal Services, Inc., which may
be deemed to be beneficially owned by Mr. Stonecipher.
(6) The number of shares consist of and each percentage presented is based upon
37,500 shares of Common Stock that are issuable upon exercise of stock
options.
(7) The number of shares and each percentage presented includes 2,000 shares of
Common Stock subject to currently exercisable 1997-A Warrants, 13,000
shares of Common Stock that are subject to currently exercisable Redeemable
Common Stock Purchase Warrants, 560,000 shares of Common Stock that are
issuable upon exercise of other currently exercisable stock options and
100,000 shares of Common Stock that are subject to currently unexercisable
stock options which are exercisable within 60 days of May 26, 1998 held by
the executive officers and directors as a group.
PROPOSAL ONE
ELECTION OF DIRECTORS
The Bylaws of the Company provide that the Board of Directors of the
Company (the "Board of Directors") shall consist of not less than one nor more
than twelve directors, as determined from time to time by resolution of the
Board of Directors. The number of directors is currently fixed at five.
Pursuant to the terms of the Company's Bylaws, the directors are divided into
three classes. Class I Directors hold office for a term expiring at the annual
meeting of shareholders to be held in 1999, Class II Directors hold office for a
term expiring at the annual meeting of shareholders to be held in 2000, and
Class III Directors hold office for a term expiring at the annual meeting of
shareholders to be held in 1998. Each director will hold office for the term to
which he is elected and until his successor is duly elected and qualified. Mr.
Stonecipher is serving as a Class I Director under a term expiring in 1999,
Messrs. Wilson and Dunlap are serving as Class II Directors under terms expiring
in 2000, and Messrs. Hail and Baresel are serving as Class III Directors under
terms expiring in 1998. At each annual meeting of the shareholders of the
Company, the successor to a member of the class of directors whose term expires
at such meeting will be elected to hold office for a term expiring at the annual
meeting of shareholders held in the third year following the year of his
election.
<PAGE>
The Board of Directors has nominated John H. Hail and Roger P. Baresel for
re-election as a director for a term ending in 2001 and until his successor
shall have been duly elected and qualified. The persons named as proxies in the
accompanying Proxy, who have been designated by the Board of Directors, intend
to vote, unless otherwise instructed in the Proxy, for the election of Messrs.
Hail and Baresel. Should any nominee named herein become unable for any reason
to stand for election as a director of the Company, it is intended that the
persons named in the Proxy will vote for the election of such other person as
the Board of Directors may recommend. The Company knows of no reason why either
nominee will be unavailable or unable to serve.
The affirmative vote of the holders of a majority of the shares of Common
Stock present in person or by proxy at the Annual Meeting and entitled to vote,
is required for the election of a director. An abstention from voting and
broker non-votes will be tabulated as a vote withheld on the election, but will
be included in computing the number of shares present for purposes of
determining the presence of a quorum for the Annual Meeting and whether a
nominee has received the vote of a majority of the shares present at the Annual
Meeting.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE RE-ELECTION OF MESSRS.
HAIL AND BARESEL TO THE BOARD OF DIRECTORS. PROXIES SOLICITED BY THE BOARD OF
DIRECTORS OF THE COMPANY WILL BE SO VOTED UNLESS SHAREHOLDERS SPECIFY A CONTRARY
CHOICE.
INFORMATION ABOUT EACH DIRECTOR AND NOMINEE DIRECTOR OF ADVANTAGE MARKETING
SYSTEMS, INC.
JOHN W. HAIL, age 66, is the founder of Advantage Marketing Systems, Inc.
and has served as its Chief Executive Officer and Chairman of the Board of
Directors of the Company since its inception in June 1988. During 1987 and
through May 1988, Mr. Hail served as Executive Vice President, Director and
Agency Director of Pre-Paid Legal Services, Inc., a public company engaged in
the sale of legal services contracts, and also served as Chairman of the Board
of Directors of TVC Marketing, Inc., the exclusive marketing agent of Pre-Paid
Legal Services, Inc.
CURTIS H. WILSON, SR, age 71, has served as Vice-Chairman of the Board of
Directors of the Company since June 1988. From January 1984 to June 1988, Mr.
Wilson was Executive Vice President of TVC Marketing, Inc.
ROGER P. BARESEL, age 42, has served as Vice President, Chief Financial
Officer, Secretary and a Director of the Company since June 1995, and in July
1995, he became President. Mr. Baresel is a Certified Public Accountant and
holds a Master of Business Administration degree. From 1988 until joining the
Company full-time in 1995, he maintained an accounting practice, specializing in
providing consulting services to small and growing businesses and provided
consulting services to the Company.
R. TERREN DUNLAP, age 52, has served as a Director of the Company since
June 1995. He is Chief Executive Officer of DuraSwitch Industries, Inc., a
company formed in 1997 that developed and distributes electronic switches. He
served as Vice President-International Development of the Company from June 1995
through March 1996. Mr. Dunlap is a Director and the co-founder, and from 1984
and until March 1994 served as Chief Executive Officer and Chairman of the
Board, of Go-Video, Inc., a developer and distributor of consumer electronics
products.
HARLAND C. STONECIPHER, age 58, has served as a Director of the Company
since August 1995. Mr. Stonecipher has been Chairman of the Board and Chief
Executive Officer of Pre-Paid Legal Services, Inc. since its inception in 1972.
<PAGE>
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
During 1997, the Board of Directors held three meetings. All of the
directors were present at all of the meetings. The Board of Directors does not
have any standing nominating committee. The only committee that it has is the
audit committee established in 1997 consisting of Messrs. Stonecipher and
Dunlap. Nominations of candidates for election as directors of the Company may
be made at a meeting of Shareholders by or at the direction of the Board of
Directors or by any Shareholder entitled to vote at such meeting. The Company's
Bylaws provide that the annual meeting of Shareholders will be fixed by the
Board of Directors.
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
SUMMARY COMPENSATION TABLE
EXECUTIVE OFFICERS OF THE COMPANY. The following table sets forth certain
information relating to compensation paid to or accrued for the named executive
for services rendered during the years ended December 31, 1997, 1996 and 1995.
<TABLE>
LONG-TERM
COMPENSATION
----------------
ANNUAL COMPENSATION AWARD OF OPTIONS
---------------------------------- ----------------
NAME AND PRINCIPAL POSITION YEAR SALARY(1) BONUS OTHER(2) NUMBER OF SHARES
- --------------------------- ---- --------- ----- -------- ----------------
<S> <C> <C> <C> <C> <C>
John W. Hail............... 1997 $56,539 $-- $ -- 100,000(3)
Chief Executive Officer 1996 -- -- 22,000 --
1995 -- -- 87,684 375,000(4)
</TABLE>
- ------------------------
(1) Dollar value of base salary earned during the year.
(2) The Company furnishes the use of an automobile to Mr. Hail, the value of
which is not greater than $5,000 annually. During 1996 and 1995, the
Company made non-interest bearing advances to the John Hail Agency, Inc.,
an affiliate of Mr. Hail, of $22,000 and $87,684, respectively.
(3) During 1997 the Company granted 100,000 stock options to Mr. Hail pursuant
to the Company's Stock Option Plan, each exercisable for the purchase of
one share of Common Stock at an exercise price of $6.00 per share. These
options were surrendered by Mr. Hail during 1997 in exchange for 100,000
stock options having the same terms other than an exercise price of $2.70
per share of Common Stock.
(4) Adjusted to give effect to the one-for-eight reverse stock split on October
29, 1996. Of the 375,000 stock options received, Mr. Hail transferred by
gift 225,000 stock options during 1995.
AGGREGATE OPTION GRANTS AND EXERCISES IN 1997 AND YEAR-END OPTION VALUES
STOCK OPTIONS AND OPTION VALUES. During 1997 the Company granted 100,000
stock options to Mr. Hail pursuant to the Company's Stock Option Plan, each
exercisable for the purchase of one share of Common Stock at an exercise price
of $6.00 per share. These options were surrendered by Mr. Hail in exchange for
100,000 stock options having the same terms other than an exercise price of
$2.70 per share of Common Stock. The following table sets forth information
related to options granted to the named executive officer during 1997.
<PAGE>
<TABLE>
INDIVIDUAL GRANTS
--------------------------------------------------
PERCENT OF
TOTAL OPTIONS
NUMBER GRANTED TO EXERCISE
OF OPTIONS EMPLOYEES PRICE PER EXPIRATION
GRANTED IN 1997 SHARE DATE
------- ------- ----- ----
<S> <C> <C> <C> <C>
John W. Hail, Chief Executive Officer....... 100,000(1) 20.3% $2.70 5/20/07
</TABLE>
- --------------------
(1) Only includes those stock options that were granted and not surrendered
during 1997.
AGGREGATE STOCK OPTION EXERCISE AND YEAR-END AND OPTION VALUES. The
following table sets forth information related to the number and value of
options held by the named executive officer at December 31, 1997. During 1997,
no options to purchase Common Stock were exercised by the named executive
officer.
<TABLE>
VALUE OF UNEXERCISED
NUMBER OF UNEXERCISED IN-THE-MONEY
OPTIONS AS OF OPTIONS AS OF
DECEMBER 31, 1997 DECEMBER 31, 1997(1)
---------------------------- ----------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
John W. Hail, Chief Executive Officer....... 150,000 100,000 $112,500 $5,000
</TABLE>
- ------------------------
(1) The closing sale price of the Common Stock as reported on the Nasdaq
SmallCap Market on December 31, 1997 was $2.75. The per-share value is
calculated based on the applicable closing highest bid price per share,
minus the exercise price, multiplied by the number of shares of Common
Stock underlying the options.
COMPENSATION OF DIRECTORS
Directors who are not employees of the Company receive $250 for each Board
meeting attended. Directors who are also employees of the Company receive no
additional compensation for serving as Directors. The Company reimburses its
Directors for travel and out-of-pocket expenses in connection with their
attendance at meetings of the Board of Directors. The Company's Bylaws provide
for mandatory indemnification of directors and officers to the fullest extent
permitted by Oklahoma law.
PROPOSAL TWO
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITOR
The Board of Directors has appointed Deloitte & Touche LLP as the
independent auditor of the Company for the fiscal year ending December 31, 1998
Deloitte & Touche LLP has been the independent auditor of the Company since
1990, and, prior to its merger with Touche Ross & Co., Deloitte, Haskins & Sells
had been the independent auditor of the Company since its inception. A proposal
will be presented at the Annual Meeting asking the Shareholders to ratify the
appointment of Deloitte & Touche LLP as the Company's independent auditor. If
the Shareholders do not ratify the appointment of Deloitte & Touche LLP, the
Board of Directors will reconsider the appointment. The affirmative vote of a
majority of the shares present in person or by proxy at the Annual Meeting and
voting on this proposal is required for the adoption of this proposal.
Abstentions and broker non-votes will not be tabulated as negative votes on this
proposal, but will be included in computing the number of shares present for
purposes of determining the presence of a quorum for the Annual Meeting and
whether this proposal has received the vote of a majority of the shares present
at the Annual Meeting.
<PAGE>
A representative of Deloitte & Touche LLP will be present at the Annual
Meeting. Such representative will be given the opportunity to make a statement
if he desires to do so and will be available to respond to appropriate
questions.
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS A VOTE "FOR" RATIFICATION
OF THE APPOINTMENT OF THE INDEPENDENT AUDITOR. PROXIES SOLICITED BY THE BOARD
OF DIRECTORS OF THE COMPANY WILL BE SO VOTED UNLESS SHAREHOLDERS SPECIFY A
CONTRARY CHOICE.
CERTAIN TRANSACTIONS
Set forth below is a description of transactions entered into between the
Company and certain of its officers, directors and shareholders during the last
two years. Certain of these transactions may result in conflicts of interest
between the Company and such individuals. Although these persons have fiduciary
duties to the Company and its shareholders, there can be no assurance that
conflicts of interest will always be resolved in favor of the Company.
John W. Hail, Chief Executive Officer and Chairman of the Board of
Directors of the Company, is the sole director and shareholder of the John Hail
Agency, Inc. ("JHA"). Pursuant to an unwritten agreement, the Company provided
office space, utilities and supplies, as well as an occasional part-time
administrative staff person, through June 30, 1996, to JHA for a monthly payment
of $1,000 as reimbursement of the Company's costs. In addition, the Company made
non-interest bearing advances to JHA of $22,000 and $87,684 during the years
ended December 31, 1996 and 1995, respectively. JHA has made repayments of
these advances of $3,426, $13,042 and $6,141 during the three months ended March
31, 1998 and the fiscal years ended December 31, 1997 and 1996, respectively.
Effective June 30, 1996, the Company adopted a policy to not make any further
advances to JHA, and JHA executed a promissory note payable to the Company in
the principal amount of $73,964 bearing interest at eight percent per annum and
payable in 60 installments of $1,499 per month. The principal balance of this
note was $51,354 at March 31, 1998.
At December 31, 1995, the balance due on a short-term loan to the Company
from Mr. Hail was $81,929. During 1995, the Company combined interest payable of
approximately $52,000 with the principal due under the loan and began making
weekly interest and principal payments of $1,500. The loan was unsecured, due on
demand and bore interest at 12 percent per annum. As of December 31, 1996, the
loan had been paid in full.
During 1995, John W. Hail individually entered into lease agreements
covering telephone equipment and related software and requiring monthly rental
payments. Such equipment and software are utilized exclusively by the Company.
During the three months ended March 31, 1998 and the fiscal years ended December
31, 1997 and 1996, the Company made aggregate monthly payments pursuant to such
lease agreements of $4,857, $19,427 and $14,314, respectively.
During the three months ended March 31, 1998 and the fiscal years ended
December 31, 1997 and 1996, the Company paid Curtis H. Wilson, Sr., a Director
of the Company, sales commissions of $3,944, $32,886 and $38,337, respectively.
During the first quarter of 1998, the Company agreed to loan John Hail up
to $250,000. The loan is secured, bears interest at eight percent per annum and
is due on March 31, 1999. As of March 31, 1998, the balance due on this loan
was $110,963 plus interest. The Company believes that the terms of the loan are
<PAGE>
comparable with those that could have been obtained from an unaffiliated lender
and the loan was unanimously approved by the Company's board of directors.
During 1997, pursuant to the Company's Stock Option Plan, the Company
granted Mr. Hail 10-year nontransferable stock options exercisable for the
purchase of 100,000 shares of Common Stock for $2.70 per share. All of the stock
options were granted at the fair value of the Common Stock on the date of grant.
These options will be exercisable on June 26, 1998.
During 1995, the Company granted United Financial Advisors, Inc. ("UFAI")
five-year warrants exercisable for the purchase of 125,000 shares of Common
Stock for $3.60 per share and 125,000 shares of Common Stock for $4.96 per
share. All of the warrants were granted at or above the fair market vale of the
Common Stock on the date of grant. As a result of the grant of these warrants,
UFAI became a greater than five percent beneficial owner of the Common Stock of
the Company. These warrants were not granted pursuant to the Company's Stock
Option Plan. Effective May 30, 1997, pursuant to written agreement between UFAI
and the Company, the warrants exercisable for the purchase of 125,000 shares of
Common Stock for $4.96 were released without exercise and canceled by the
Company, at which time UFAI ceased to be a greater than five percent beneficial
owner of the Common Stock. The remaining warrants held by UFAI are currently
exercisable. In addition, UFAI received cash compensation of $10,000 and
$20,000 from the Company during 1995 and 1997, respectively, for consulting and
financial advisory.
The Company has adopted policies that any loans to officers, directors and
five percent or more shareholders ("affiliates") are subject to approval by a
majority of not less than two of the disinterested independent directors of the
Company and that such loans and other transactions with affiliates will be on
terms no less favorable than could be obtained from unaffiliated parties and
approved by a majority of not less than two of the disinterested independent
directors. As of the date of this Proxy Statement, the Board of Directors is
comprised of five members, of which R. Terren Dunlap and Harland C. Stonecipher
are the only independent directors.
OTHER BUSINESS TO BE BROUGHT BEFORE THE MEETING
The Board of Directors knows of no business which will be presented for
action at the Annual Meeting other than that described in the Notice of Annual
Meeting of Shareholders and this Proxy Statement. However, if any other matters
should properly come before the Annual Meeting, it is the intention of the
persons named in the accompanying Proxy to vote such Proxies as they deem
advisable in accordance with their best judgment.
SHAREHOLDER PROPOSALS FOR 1999 ANNUAL MEETING
Under the existing rules of the Securities and Exchange Commission, any
shareholder of the Company may present proposals on any matter which is a
proper subject for consideration by the shareholders at the 1999 Annual
Meeting of Shareholders, which the Company currently anticipates will be held
on or before July 31, 1999. In order to be included in the proxy statement
(or disclosure statement in the event proxies are not solicited by the Board
of Directors of the Company) for the 1999 Annual Meeting of Shareholders, a
proposal must be received by April 1, 1999. It is suggested that a
Shareholder desiring to submit a proposal do so by sending the proposal
certified mail, return receipt requested, addressed to the Secretary of the
Company at its principal office, 2601 Northwest Expressway, Suite 1210W,
Oklahoma City, Oklahoma 73112-7293. Detailed information for submitting
proposals will be provided upon written request, addressed
<PAGE>
to the Secretary of the Company.
------------------------
Your cooperation in giving this matter your immediate attention and in
returning your Proxy promptly will be appreciated.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ ROGER P. BARESEL
Roger P. Baresel
Corporate Secretary
June 6, 1998
A COPY OF THE COMPANY'S ANNUAL REPORT, WHICH INCLUDES ITS FORM 10-KSB FOR
THE FISCAL YEAR ENDED DECEMBER 31, 1997, IS ENCLOSED HEREWITH, AND THE COMPANY'S
QUARTERLY REPORT ON FORM 10-QSB FOR THE QUARTER ENDED MARCH 31, 1998, EXCLUDING
CERTAIN OF THE EXHIBITS, MAY BE OBTAINED WITHOUT CHARGE BY WRITING ADVANTAGE
MARKETING SYSTEMS, INC., 2601 NORTHWEST EXPRESSWAY, SUITE 1210W, OKLAHOMA CITY,
OKLAHOMA 73112-7293, ATTENTION: CORPORATE SECRETARY.
<PAGE>
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PROXY PROXY
ADVANTAGE MARKETING SYSTEMS, INC.
2601 NORTHWEST EXPRESSWAY, SUITE 1210W
OKLAHOMA CITY, OKLAHOMA 73112-7293
THIS PROXY IS SOLICITED ON BEHALF OF THE
BOARD OF DIRECTORS OF ADVANTAGE MARKETING SYSTEMS, INC.
The undersigned hereby appoints John W. Hail and Roger P. Baresel as
Proxies, each with the power to appoint his substitute, and hereby appoints and
authorizes either of them to represent and vote as designated below, all the
shares of Common Stock, $.0001 par value, of Advantage Marketing Systems, Inc.
(the "Company") held of record by the undersigned on May 26, 1998, at the annual
meeting of shareholders to be held on Saturday, July 18, 1998, or any
adjournment thereof.
1. To consider and act upon the re-election of John W. Hail and Roger P.
Baresel as a director for a term ending in 2001 and until his successor shall
have been duly elected and qualified. A vote "For" will represent a vote for
the nominee director.
John W. Hail / / FOR / / AGAINST / / ABSTAIN
Roger P. Baresel / / FOR / / AGAINST / / ABSTAIN
2. To consider and act upon the ratification and the appointment of
Deloitte & Touche LLP as the Company's independent auditor for the fiscal year
ending December 31, 1998. A vote "For" will represent a vote for such
ratification and appointment.
/ / FOR / / AGAINST / / ABSTAIN
3. To transact such other business as may properly come before the meeting
or any adjournment thereof.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL
BE VOTED FOR PROPOSALS 1 AND 2.
Please sign exactly as the name appears to
left. When shares are held by joint tenants,
both should sign. When signing as attorney,
as 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.
Date: _______________________________, 1998
-------------------------------------------
Signature
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Signature if held jointly
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY
PROMPTLY USING THE ENCLOSED ENVELOPE.
