<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant / /
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 Section 240.14a-12
Advantage Marketing Systems, 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/ No fee required
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(5) Total fee paid:
------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
(3) Filing Party:
------------------------------------------------------------------------
(4) Date Filed:
------------------------------------------------------------------------
<PAGE>
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 Myriad
Convention Center in downtown Oklahoma City, Oklahoma, on July 8, 2000,
commencing at 2:00 p.m., Central Daylight-Savings Time, and thereafter as it may
be adjourned from time to time, for the following purposes:
1. To elect one director of the Company to hold office until the 2003
annual meeting of shareholders and until his successor shall have been
duly elected and qualified;
2. To elect one director of the Company to hold office until the 2001
annual meeting of shareholders and until his successor shall have been
duly elected and qualified;
3. To consider and act upon a proposal to ratify the appointment of
Deloitte & Touche LLP as the independent auditor of the Company for
2000; and
4. 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 23,
2000, 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 May 31, 2000. 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:
Roger P. Baresel, Corporate Secretary
Oklahoma City, Oklahoma
May 31, 2000
<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 8, 2000
SOLICITATION AND REVOCATION OF PROXIES
We at Advantage Marketing Systems, Inc. are furnishing this Proxy
Statement in connection with the Annual Meeting (the "Annual Meeting") of the
holders of our Common Stock (individually "Shareholder" or collectively
"Shareholders") to be held at 2:00 p.m., Central Daylight-Savings Time, on
July 8, 2000, at the Myriad Convention Center in downtown 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 May 31, 2000, to our Shareholders of record on May 23,
2000.
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 you indicate in your Proxy a choice with respect to any matter to
be acted upon, your shares will be voted in accordance with your choice. If
no choice is indicated, your shares will be voted "FOR" the election of the
nominees for director listed below and the ratification of the appointment of
the independent auditor. Our Shareholders will also consider and vote upon
such other business as may properly come before the Annual Meeting or any
adjournment thereof. Our Board of Directors knows of no business that will be
presented for consideration at the Annual Meeting, other than matters
described in this Proxy Statement. You may revoke your Proxy by giving
written notice of your revocation to our Secretary at any time before your
Proxy is voted, by executing another valid Proxy bearing a later date and
delivering the new Proxy to our Secretary 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 we are currently incorporated, nor our Certificate of Incorporation or
Bylaws have any provisions regarding the treatment of abstentions and broker
non-votes. Our policy is (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 us. Such expenses will also include the charges and expenses of
banks, brokerage firms, and other custodians, nominees or fiduciaries for
forwarding solicitation material regarding the Annual Meeting to beneficial
owners of our Common Stock. Solicitation of proxies may be made by mail,
telephone, personal interviews or by other means by members of our Board of
Directors or our employees who will not be additionally compensated therefor,
but who may be reimbursed for their out-of-pocket expenses in connection
therewith.
<PAGE>
SHAREHOLDERS ENTITLED TO VOTE
Shareholders entitled to vote at the Annual Meeting are the holders
of record, at the close of business on May 23, 2000 (the "Record Date"), of
the 4,305,942 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
for each share held on each matter presented at the Annual Meeting. Our
officers and directors own a total of 660,139 shares, or 15.3 percent of the
issued and outstanding Common Stock, and intend to vote all of these 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 our Board of
Directors.
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.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
GENERAL
The following table presents certain information as to the
beneficial ownership of our common stock as of May 23, 2000, of
- - each person who is known to us to be the beneficial owner of more than
5% of our common stock,
- - each of our directors and executive officers,
- - our executive officers and directors as a group, and
- - their percentage holdings of our outstanding shares of common stock.
For purposes of the following table, the number of shares and percent of
ownership of our outstanding common stock that the named person beneficially
owned at May 23, 2000, including shares of our common stock that such person
has the right to acquire within 60 days of this date, upon exercise of
options and warrants. However, such shares are not included for the purposes
of computing the number of shares beneficially owned and percent of our
outstanding common stock of any other named person.
<TABLE>
<CAPTION>
COMMON STOCK
-----------------------------
SHARES PERCENT OF
BENEFICIALLY SHARES
NAME AND ADDRESS OF BENEFICIAL OWNER OWNED OUTSTANDING
- ------------------------------------ ------------ -----------
<S> <C> <C>
John W. Hail (1)(2) 629,263 13.8%
Curtis H. Wilson (3) 258,507 5.7%
Harland C. Stonecipher (4) 180,768 4.2%
Roger P. Baresel (1)(5) 175,724 4.0%
Dennis P. Loney (1)(6) 130,903 3.0%
<PAGE>
R. Terren Dunlap (1) 17,500 .4%
Jimmy L. Dungan (1)(7) 9,781 .2%
Executive Officers and Directors as a group
(six persons)(8) 1,143,939 23.9%
</TABLE>
- ------------------------
(1) A director or an executive officer with a business address of 2601
Northwest Expressway, Suite 1210W, Oklahoma City, Oklahoma 73112-7293.
(2) The number of shares consist of and each percentage presented includes
- 250,000 shares of our common stock that are subject to
currently exercisable stock options, 100 shares of our common
stock that are subject to currently exercisable 1997-A
warrants and 1,100 shares of our common stock that are subject
to currently exercisable redeemable common stock purchase
warrants held by Mr. Hail,
- 12,727 shares of our common stock and 1,000 shares of our
common stock that are subject to currently exercisable
redeemable common stock purchase warrants owned by
corporations controlled by Mr. Hail, and
- 1,772 shares of our common stock and 1,000 shares of our
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) A former director, with a business address of 10121 NW 7th Street,
Plantation, Florida 33324. The number of shares and each percentage
presented includes
- 250,000 shares of our common stock that are subject to
currently exercisable stock options held by Mr. Wilson and
- 3,000 shares of our outstanding common stock and 3,000 shares
of our 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.
(4) Mr. Stonecipher is a director 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 our outstanding common stock held by Pre-Paid Legal Services, Inc.,
which may be deemed to be beneficially owned by Mr. Stonecipher.
(5) The number of shares consist of and each percentage presented includes
- 7,500 shares of our outstanding common stock jointly held by
Mr. Baresel and his wife, Judith A. Baresel,
- 2,000 shares of our common stock that are subject to currently
exercisable 1997-A warrants and 1,000 shares of our common
stock that are subject to currently exercisable redeemable
common stock purchase warrants held by Mr. Baresel,
- 12,500 shares of our common stock that are subject to
currently exercisable stock options held by Mr. Baresel,
- 39,386 shares of our outstanding common stock held by Mrs.
Baresel,
* 100 shares of our common stock that are subject to currently
exercisable 1997-A warrants held by Mrs. Baresel,
- 87,500 shares of our common stock that are subject to
currently exercisable stock options,
- 6,100 shares of our common stock that are subject to currently
exercisable redeemable common stock purchase warrants held by
Mrs. Baresel, and
- 12,500 shares of our 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.
<PAGE>
and Mrs. Baresel, with respect to which Mr. Baresel disclaims
any beneficial interest.
(6) The number of shares and each percentage presented includes
- 29,725 shares of our common stock that are subject to
currently exercisable stock options held by Mr. Loney,
* 6,750 shares of our outstanding common stock held by Denise
Loney, wife of Mr. Loney, and
* 79,000 shares of our common stock that are subject to
currently exercisable stock options held by Mrs. Loney.
(7) The number of shares and each percentage presented includes
* 9,606 shares of our outstanding common stock held by Pat
Dungan, wife of Mr. Dungan, and
* 175 shares of our common stock that are subject to currently
exercisable 1997-A warrants held by Mrs. Dungan.
(8) The number of shares and each percentage presented includes
- 2,375 shares of our common stock that are subject to currently
exercisable 1997-A warrants,
- 10,200 shares of our common stock that are subject to
currently exercisable redeemable common stock purchase
warrants, and
- 471,225 shares of our common stock that are subject to other
currently exercisable stock options.
PROPOSALS ONE AND TWO
ELECTION OF DIRECTORS
Our Bylaws provide that our Board of Directors shall consist of not
less than one nor more than twelve directors, as determined from time to time
by resolution of our Board of Directors. The number of directors is currently
fixed at five. In general, 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 2002, 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 2001. Each director holds 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
2002, Mr. Dunlap is serving as a Class II Director under a term expiring in
2000, and Messrs. Hail and Baresel are serving as Class III Directors under
terms expiring in 2001. Mr. Dungan is serving as a director under a term
expiring in 2000. At each of our annual shareholders meeting, 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 shareholders
meeting held in the third year following the year of his election.
Our Board of Directors has nominated R. Terren Dunlap for
re-election as a director for a term ending in 2003 and Jimmy L. Dungan for
re-election as a director for a term ending in 2001 and until their
successors shall have been duly elected and qualified. The persons named as
proxies in the accompanying Proxy, who have been designated by our Board of
Directors, intend to vote, unless otherwise instructed in the Proxy, for the
election of Messrs. Dunlap and Dungan. Should any nominee named herein become
unable for any reason to stand for election as a director, the persons named
in the Proxy will vote for the election of such other person as our Board of
Directors may recommend. We know of no reason why the nominees will be
unavailable or unable to serve.
The affirmative vote of the holders of a majority of our Common
Stock shares present in
<PAGE>
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.
OUR BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE RE-ELECTION OF R.
TERREN DUNLAP AND JIMMY L. DUNGAN TO THE BOARD OF DIRECTORS. PROXIES
SOLICITED BY OUR BOARD OF DIRECTORS 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 is our founder and has served as our Chief Executive
Officer and Chairman of the Board of Directors since our 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. Since 1998, Mr.
Hail has served as a Director of Pre-Paid Legal Services, Inc. In March 1999,
Mr. Hail became a director of DuraSwitch Industries, Inc., a company that
developed and distributes electronic switches.
ROGER P. BARESEL has served as our Vice President, Chief Financial
Officer, Secretary and a Director since June 1995. In July 1995, he became
our President. Mr. Baresel is a Certified Public Accountant and holds a
Master of Business Administration degree. From 1988 until joining us
full-time in 1995, he maintained an accounting practice, specializing in
providing consulting services to small and growing businesses and provided
consulting services to us.
R. TERREN DUNLAP has served as one of our directors 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 our Vice President-International Development 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 has served as one of our directors 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.
JIMMY L. DUNGAN has served as one of our directors since October
1999. Mr. Dungan has been actively working full time to develop an Advantage
Marketing Systems distributorship with his wife, Pat, since August 1995. The
Dungans have been Platinum Distributors since November 1998 and achieved
Double Platinum status in October 1999.
COMPLIANCE WITH SECTION 16 OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires our directors and officers, and persons who own more than 10 percent
of a registered class of our equity securities, to file reports of ownership
and changes in ownership with the Securities and Exchange Commission.
Officers, directors and greater than 10% shareholders are required to furnish
us with copies of all Section 16(a) forms they file.
<PAGE>
Based solely on our review of the copies of the forms we received
covering purchase and sale transactions in our equity securities during 1999,
we believe that each person who, at any time during 1999, was a director,
officer of beneficial owner of more than 10% of our Common Stock complied
with all Section 16(a) filing requirements during 1999, except Jimmy L.
Dungan and his wife Pat Dungan were late in filing of their initial reports
upon Mr. Dungan becoming a Director in October 1999 and two reports covering
small purchase transactions by Mr. Dungan during 1999.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
During 1999, our Board of Directors held one meeting and took action
four times through unanimous approval of a written record and memorandum of
action in lieu of meeting. All of the directors were present at the meeting.
Our Board of Directors does not have any standing nominating committee. The
only committee that serves our Board of Directors is the audit committee
established in 1997 consisting of Messrs. Stonecipher and Dunlap. Nominations
of candidates for election as our directors may be made at a meeting of
Shareholders by or at the direction of our Board of Directors or by any
Shareholder entitled to vote at such meeting. Our Bylaws provide that the
annual meeting of our shareholders will be fixed by our Board of Directors.
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
SUMMARY COMPENSATION TABLE
OUR EXECUTIVE OFFICERS. The following Summary Compensation Table
sets forth certain information relating to compensation for services rendered
during the years ended December 31, 1999, 1998 and 1997, paid to or accrued
for John W. Hail, our Chief Executive Officer and each of our executive
officers whose 1999 salary and bonus, pursuant to a recurring arrangement,
exceed $100,000.
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION AWARDS
------------------------
ANNUAL COMPENSATION SECURITIES EXERCISE
------------------------------------ UNDERLYING OR BASE
NAME AND PRINCIPAL POSITION YEAR SALARY(1) BONUS OTHER(2) OPTIONS PRICE
- --------------------------- ------ ---------- ----------- ----------- ---------- --------
<S> <C> <C> <C> <C> <C> <C>
John W. Hail 1999 $ 236,801 $ -- $ -- -- $ --
Chief Executive Officer 1998 $ 60,000 $16,565 $ -- 100,000(3) $1.75
1997 $ 56,539 $ -- $ -- 100,000(3) $2.70
100,000(3) $6.00
Roger P. Baresel 1999 $ 146,049 $ -- $ -- -- $ --
President and Chief Financial 1998 $ 96,304 $25,000(5) $ -- 10,000(4) $2.00
and Accounting Officer 43,750(4) $2.00
1997 $ 91,484 $ 2,500 $ -- 43,750(4) $2.70
</TABLE>
- ------------------------
(1) Dollar value of base salary earned during the year.
(2) We provide use of an automobile to Messrs. Hail and Baresel, the value
of which is not greater than $5,000 annually.
(3) During 1997, we granted 100,000 stock options to Mr. Hail pursuant to
our stock option plan, each exercisable for the purchase of one share
of common stock at an exercise price of $6.00 per share (the market
value of the common stock on the date of grant). The exercise price on
these options was reduced to $2.70 pursuant to regrant during 1997
(which was equal to the fair
<PAGE>
value of the common stock on the date of regrant). On October 8, 1998
the exercise price on these options was reduced to of $1.75 per share
pursuant to regrant (which was equal to the fair value of the common
stock on the date of regrant).
(4) During 1994, we granted 10,000 stock options to Mr. Baresel, each
exercisable for the purchase of one share of common stock at an
exercise price of $2.16 per share (the market value of the common stock
on the date of grant). The exercise price on these options was reduced
to $2.00 per share pursuant to regrant (which was equal to the fair
value of the common stock on the date of regrant). During 1995, we
granted 43,750 stock options to Mr. Baresel, each exercisable for the
purchase of one share of common stock at an exercise price of $3.60 per
share (the market value of the common stock on the date of grant).
During 1995, Mr. Baresel gave these options as a gift to certain
members of his family. The exercise price on these options was reduced
to $2.00 per share pursuant to regrant during 1997 (which was equal to
the fair value of the common stock on the date of regrant). On November
18, 1998, the exercise price on these options was reduced to $2.00 per
share of common stock (which was equal to the fair value of the common
stock on the date of regrant).
(5) Represents a one-time non-recurring payment.
AGGREGATE OPTION GRANTS AND EXERCISES IN 1999 AND YEAR-END OPTION VALUES
STOCK OPTIONS AND OPTION VALUES. No options were granted to Messrs.
Hail and Baresel during 1999.
AGGREGATE STOCK OPTION EXERCISES IN 1999 AND YEAR-END AND OPTION
VALUES. The following table sets forth information related to the exercise of
stock options during 1999 and the number and value of options held by the
named executive officer at December 31, 1999.
STOCK OPTION EXERCISES AND YEAR-END OPTION VALUE TABLE
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
NUMBER OF UNEXERCISED IN-THE-MONEY
OPTIONS AS OF OPTIONS AS OF
SHARES DECEMBER 31, 1999 DECEMBER 31, 1999(1)
ACQUIRED ON VALUE --------------------------- ---------------------------
EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
John W. Hail -- $ -- 475,000(2) -- $1,716,000 $ --
Chief Executive Officer
Roger P. Baresel 10,000 $35,600 168,750(3) -- $ 600,750 $ --
President and Chief Financial
and Accounting Officer
</TABLE>
- ------------------------
(1) The closing sale price of our common stock as reported on the American
Stock Exchange on December 31, 1999 was $5.56. The per-share value is
calculated based on the applicable closing price per share, minus the
exercise price, multiplied by the number of shares of our common stock
underlying the options.
(2) Includes 225,000 options given by John Hail as a gift to certain members
of his family in 1995.
(3) Includes 156,250 options given by Roger Baresel as a gift to certain
members of his family in 1995.
COMPENSATION OF DIRECTORS
Our directors receive $250 for each Board meeting attended; however,
directors who are also our employees receive no additional compensation for
serving as directors. We reimburses our directors for
<PAGE>
travel and out-of-pocket expenses in connection with their attendance at
meetings of the Board of Directors. Our Bylaws provide for mandatory
indemnification of directors and officers to the fullest extent permitted by
Oklahoma law.
PROPOSAL THREE
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITOR
Our Board of Directors has appointed Deloitte & Touche LLP as our
independent auditor for the fiscal year ending December 31, 2000. Deloitte &
Touche LLP has served as our independent auditor since 1990, and, prior to
its merger with Touche Ross & Co., Deloitte, Haskins & Sells had been our
independent auditor since our inception. A proposal will be presented at the
Annual Meeting asking our Shareholders to ratify the appointment of Deloitte
& Touche LLP as our independent auditor. If our Shareholders do not ratify
the appointment of Deloitte & Touche LLP, our 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.
A representative of Deloitte & Touche LLP will be present at the
Annual Meeting. This representative will be given the opportunity to make a
statement if he or she desires to do so and will be available to respond to
appropriate questions.
OUR BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" RATIFICATION OF THE
APPOINTMENT OF THE INDEPENDENT AUDITOR. PROXIES SOLICITED BY OUR BOARD OF
DIRECTORS WILL BE SO VOTED UNLESS SHAREHOLDERS SPECIFY A CONTRARY CHOICE.
CERTAIN TRANSACTIONS
Set forth below is a description of transactions entered into between
us and certain of our officers, directors and shareholders during the last
two years. Certain of these transactions may result in conflicts of interest
between us and such individuals. Although these persons have fiduciary duties
to us and our shareholders, there can be no assurance that conflicts of
interest will always be resolved in our favor or in favor of our shareholders.
During 1995, John W. Hail, an affiliate, entered into lease agreements
covering telephone equipment and related software and requiring monthly
rental payments. Such equipment and software are utilized exclusively by us.
During 1998 and 1997, we made aggregate payments pursuant to such lease
agreements of $17,939 and $19,427, respectively. As of December 31, 1998
these leases had terminated.
During the first quarter of 1998, we agreed to loan John Hail, an
affiliate, up to $250,000. Subsequently we also agreed to loan up to an
additional $75,000. These loans are secured, bear interest at 8% per annum
and become due on March 31, 2000. As of December 31, 1999, the aggregate
outstanding principal balance of these loans was $313,761 plus interest. We
believe that the terms of these loans are comparable with those that could
have been obtained from an unaffiliated lender. These loans were unanimously
approved by our board of directors.
<PAGE>
During 1999 and 1998, we paid Curtis H. Wilson, a former director and
greater than 5% shareholder, sales commissions of $128,700 and $62,555,
respectively. These commissions are based on purchases by Mr. Wilson and his
downline distributors in accordance with our network marketing program in
effect at the time of the sales.
During 1999 and 1998, we paid Pat Dungan, wife of Jimmy L. Dungan, one
of our Directors, sales commissions of $119,626 and $76,696, respectively.
These commissions were based on purchases by the Dungans and their downline
distributors in accordance with our network marketing program in effect at
the time of the sales.
During 1997, pursuant to our Stock Option Plan, we granted Mr. Hail
10-year nontransferable stock options exercisable for the purchase of 100,000
shares of our common stock for $6.00 per share. On the date of grant of these
stock option, the exercise price was equal to the fair value of our common
stock. These options were exchanged by Mr. Hail for 100,000 stock options
having the same terms other than an exercise price of $2.70 per share of
common stock, which was equal to the fair value of the common stock on the
date of exchange. Subsequently, these options were exchanged by Mr. Hail on
October 8, 1998 for 100,000 stock options having the same terms other than an
exercise price of $1.75 per share of common stock, which was equal to the
fair value of the common stock on the date of exchange.
On December 17, 1996, we adopted policies that
- - any loans to officers, directors and 5% or more shareholders
("affiliates") are subject to approval by a majority of not less than two
of our disinterested independent directors and
- - 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.
Our board of directors is comprised of five members, two of which, R. Terren
Dunlap and Harland C. Stonecipher, are independent directors.
OTHER BUSINESS TO BE BROUGHT BEFORE THE MEETING
Our Board of Directors knows of no business that 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 2001 ANNUAL MEETING
Under the existing rules of the Securities and Exchange Commission,
any of our shareholders may present proposals on any matter that is a proper
subject for consideration by our shareholders at the 2001 annual shareholders
meeting. We currently anticipates that our 2001 annual shareholders meeting
will be held on or before July 31, 2001. In order to be included in the proxy
statement (or disclosure statement in the event proxies are not solicited by
our Board of Directors) for the 2001 annual shareholders meeting, any
shareholder proposal must be received by April 1, 2001. It is suggested that
a Shareholder desiring to submit a proposal do so by sending the proposal
certified mail, return receipt requested, addressed to us at Advantage
Marketing Systems, Inc., 2601 Northwest Expressway, Suite 1210W, Oklahoma
City, Oklahoma 73112-7293, Attention: Corporate Secretary. Detailed
information for
<PAGE>
submitting proposals will be provided upon written request, addressed to the
Corporate Secretary.
------------
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
Roger P. Baresel
Corporate Secretary
May 31, 2000
A COPY OF OUR ANNUAL REPORT, WHICH INCLUDES ITS FORM 10-KSB FOR THE
FISCAL YEAR ENDED DECEMBER 31, 1999, IS ENCLOSED HEREWITH, AND OUR QUARTERLY
REPORT ON FORM 10-QSB FOR THE QUARTER ENDED MARCH 31, 2000, 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>
ADVANTAGE MARKETING SYSTEMS, INC.
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS
YOU CAN VOTE IN ONE OF TWO WAYS
- -------------------------------------------------------------------------------
VOTE BY INTERNET
- -------------------------------------------------------------------------------
It's fast, convenient, and your vote is immediately confirmed and posted.
1. Read the accompanying Proxy Statement.
2. Go to website http://www.umb.com/proxy and follow the instructions on the
screen.
Please note that all votes cast by internet must be made prior to 5:00p.m. CST,
JULY 6, 2000.
IF YOU VOTE BY INTERNET, PLEASE DO NOT RETURN YOUR PROXY CARD BY MAIL
- -------------------------------------------------------------------------------
VOTE BY MAIL
- -------------------------------------------------------------------------------
To vote by mail, read the accompanying Proxy Statement then complete, sign
and date the proxy card below. Detach the card and return it in the envelope
provided herein.
IF YOU ARE NOT VOTING BY INTERNET, DETACH PROXY CARD AND RETURN.
- -------------------------------------------------------------------------------
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, 2 AND 3.
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:________________________________________________, 2000
_____________________________________________________________
Signature
_____________________________________________________________
Signature if held jointly
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY PROMPTLY USING
THE ENCLOSED ENVELOPE.
<PAGE>
- -------------------------------------------------------------------------------
PROXY PROXY
ADVANTAGE MARKETING SYSTEMS, INC.
2601 NORTHWEST EXPRESSWAY, SUITE 1210W
OKLAHOMA CITY, OKLAHOMA 73112-7203
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 23, 2000, AT THE
ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON SATURDAY JULY 8, 2000, OR ANY
ADJOURNMENT THEREOF.
1. To consider and act upon the re-election of R. Terren Dunlap as a
director for a term ending in 2003 and until his successor shall have been
duly elected and qualified. A vote "For" will represent a vote for the
nominee director.
/ / FOR / / WITHHOLD AUTHORITY
2. To consider and act upon the re-election of Jimmy L. Dungan as a
director for a term ending in 2001 and until his successor shall been duly
elected and qualified. A vote "For" will represent a vote for the nominee
director.
/ / FOR / / WITHHOLD AUTHORITY
3. 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, 2000. A vote "For" will represent a vote for such
ratification and appointment.
/ / FOR / /AGAINST / / ABSTAIN
4. To transact such other business as may properly come before the
meeting or any adjournment thereof.
