SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
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
[x] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
Alternate Postal Delivery, Inc.
(Name of Registrant as Specified in Its Charter)
Alternate Postal Delivery, Inc.
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
[ ] $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
[ ] $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: (*)
(4) Proposed maximum aggregate value of transaction:
[ ] 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:
(*) Set forth the amount on which the filing fee is calculated and state how it
was determined.
ALTERNATE POSTAL DELIVERY, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned, having received the Notice of Annual Meeting and Proxy
Statement dated April 21, 1997, hereby appoints Phillip D. Miller as proxy,
with full power of substitution, to vote all of the shares of Common Stock
which the undersigned would be entitled to vote if personally present at the
Annual Meeting of Shareholders of Alternate Postal Delivery, Inc. to be held
on Thursday, May 22, 1997 at 4:30 p.m. at the Amway Grand Plaza Hotel, 187
Monroe NW, Grand Rapids, Michigan, or at any adjournment thereof, upon any and
all matters which may properly be brought before the meeting or adjournment
thereof, hereby revoking all former proxies.
1. Election of Directors duly nominated:
Phillip D. Miller, Stan Henry, Harry Edelson, and Charles Rees
[ ] FOR [ ] WITHHELD FOR ALL [ ] WITHHELD FOR THE FOLLOWING
ONLY:(Write the nominee's name in space below):
2. Ratification of appointment of Coopers & Lybrand, LLP as the independent
auditors of the Company for the year ending December 31, 1997
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. The authority to vote, in his discretion, on all other business that
may properly come before the meeting.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
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 EACH NOMINEE, FOR THE ADOPTION OF
PROPOSAL 2 AND IN THE DISCRETION OF THE PROXY HOLDER ON SUCH OTHER
BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING.
PLEASE SIGN exactly as name appears below. When shares are held by joint
tenants, both should sign. If signing as attorney, executor, administrator,
trustee or guardian, please give full title as such. If a corporation,
please sign in full corporate name by president or other authorized
officer. If a partnership, please sign in partnership name by an authorized
person.
Dated:___________________ _________________________
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY PROMPTLY USING THE
ENCLOSED ENVELOPE.
I WILL_____ WILL NOT_____ BE ATTENDING THE ANNUAL MEETING.
ALTERNATE POSTAL DELIVERY, INC.
One Ionia SW, Suite 300
Grand Rapids, MI 49503
(616) 235-0698
April 21, 1997
Dear Shareholder:
You are cordially invited to attend the Company's Annual Meeting of
Shareholders to be held at 4:30 p.m., on Thursday, May 22, 1997, in Grand
Rapids, Michigan.
We look forward to greeting personally those of you who are able to be
present at the meeting. However, whether or not you plan to attend, it is
important that your shares be represented. Accordingly, you are requested to
sign and date the enclosed proxy and mail it in the envelope provided at your
earliest convenience.
Very truly yours,
/s/ Phillip D. Miller
Phillip D. Miller
President and Chief Executive Officer
ALTERNATE POSTAL DELIVERY, INC.
One Ionia SW, Suite 300
Grand Rapids, MI 49503
(616) 235-0698
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 22, 1997
To the Shareholders of Alternate Postal Delivery, Inc.:
The Annual Meeting of Shareholders of Alternate Postal Delivery, Inc.
(the "Company) will be held on Thursday, May 22, 1997, at 4:30 p.m., at the
Amway Grand Plaza Hotel, 187 Monroe NW, Grand Rapids, Michigan, for the
following purposes:
(1) To fix the number of directors at four, to elect four directors to
serve for a one year term expiring when their successors are elected
and qualified at the annual meeting in 1998.
(2) To act upon a proposal to ratify the appointment of Coopers & Lybrand,
LLP, as independent auditors of the Company for the fiscal year ending
December 31, 1997.
(3) To transact such other business as may properly come before the meeting
or any adjournments thereof.
The Board of Directors has fixed the close of business on April 7, 1997 as
the record date for the determination of shareholders entitled to vote at the
Annual Meeting and to receive notice thereof. The transfer books of the
Company will not be closed.
A PROXY STATEMENT AND FORM OF PROXY ARE ENCLOSED. SHAREHOLDERS
ARE REQUESTED TO DATE, SIGN AND RETURN THE ENCLOSED PROXY TO WHICH
NO POSTAGE NEED BE AFFIXED IF MAILED IN THE UNITED STATES. IT IS
IMPORTANT THAT PROXIES BE RETURNED PROMPTLY WHETHER OR NOT YOU
EXPECT TO ATTEND THE MEETING IN PERSON. SHAREHOLDERS WHO ATTEND
THE MEETING MAY REVOKE THEIR PROXIES AND VOTE IN PERSON IF THEY
DESIRE.
By Order of the Board of Directors
/s/ Sandra J. Smith
Sandra J. Smith, Secretary
April 21, 1997
ALTERNATE POSTAL DELIVERY, INC.
One Ionia SW, Suite 300
Grand Rapids, MI 49503
(616) 235-0698
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 22, 1997
GENERAL INFORMATION
This proxy statement is furnished to shareholders by the Board of
Directors of Alternate Postal Delivery, Inc. (the "Company") for solicitation
of proxies for use at the Annual Meeting of Shareholders on May 22, 1997, to be
held at the Amway Grand Plaza Hotel, Grand Rapids, Michigan, at 4:30 p.m., and
at all adjournments thereof for the purposes set forth in the attached Notice
of Annual Meeting of Shareholders. The purposes of the meeting and the matters
to be acted upon are set forth in the accompanying Notice of Annual Meeting of
Shareholders. The Board of Directors is not currently aware of any other
matters which will come before the meeting.
Shareholders may revoke proxies before exercise by submitting a
subsequently dated proxy or by voting in person at the Annual Meeting. Unless
a shareholder gives contrary instructions on the proxy card, proxies will be
voted at the meeting (a) for the election of the nominees named herein and on
the proxy card to the Board of Directors; (b) for the appointment of Coopers &
Lybrand, LLP as independent auditors of the Company; and (c) in the discretion
of the proxy holder as to other matters which may properly come before the
meeting. This proxy statement and the enclosed proxy are being mailed to the
shareholders of the Company on or about April 21, 1997.
A copy of the Company's Annual Report on Form 10-KSB for the fiscal year
ended December 31, 1996, is enclosed herewith but is not considered a part of
the proxy solicitation material. The Annual Report describes the financial
condition of the Company as of December 31, 1996.
The Company will make arrangements with brokerage houses and other
custodians, nominees and fiduciaries to send proxies and proxy material to the
beneficial owners of the shares and will reimburse them for their expenses in
so doing. To ensure adequate representation of shares at the meeting,
officers, agents and employees of the Company may communicate with
shareholders, banks, brokerage houses and others by telephone, facsimile, or in
person to request that proxies be furnished. All expenses incurred in
connection with this solicitation will be borne by the Company.
RECORD DATE AND VOTING
The Board of Directors has fixed April 7, 1997, as the record date for the
determination of shareholders entitled to vote at the Annual Meeting. As of
the close of business on the record date, there were outstanding 4,022,894
shares of Common Stock, no par value, which is the only outstanding class of
stock of the Company. Each share is entitled to one vote on each proposal
to be presented to the meeting. There is no right of cumulative voting. All
matters being voted upon by the shareholders require a majority vote of the
shares represented at the Annual Meeting either in person or by proxy, except
for election of directors, which would be by plurality vote in the event of
more nominees than positions (i.e., the four nominees receiving the highest
numbers of vote would be elected).
The presence at the Annual Meeting in person or by proxy of the holders of
a majority of the outstanding shares of the Company's Common Stock entitled to
vote constitutes a quorum for the transaction of business. Shares voted as
abstentions and broker non-votes on any matter (or a "withhold authority"
vote as to directors) will be counted as present and entitled to vote for
purposes of determining a quorum and for purposes of calculating the vote with
respect to such matter, but will not be deemed to have been voted in favor of
such matter. "Broker non-votes" are shares held by brokers or nominees which
are present in person or represented by proxy, but which are not voted on a
particular matter because instructions have not been received from the
beneficial owner. The effect of broker non-votes on a particular matter
depends on whether the matter is one as to which the broker or nominee has
discretionary voting authority. If a broker submits a proxy that indicates the
broker does not have discretionary authority to vote certain shares on a
particular matter, those shares will be counted as present for purposes of
determining a quorum, but will not be considered present and entitled to vote
for purpose of calculating the vote with respect to such matter.
The Board of Directors recommends a vote FOR election of each nominee for
director named herein; FOR the amendment to increase the number of authorized
shares; and FOR the appointment of Coopers & Lybrand, LLP as independent
auditors. It is intended that proxies solicited by the Board of Directors
will be voted FOR each nominee and FOR each such other proposal unless
otherwise directed by the shareholder submitting the proxy.
PRINCIPAL SHAREHOLDERS AND
OWNERSHIP OF MANAGEMENT
The following table sets forth as of April 7, 1997 the record and
beneficial ownership of Common Stock held by (i) each person who is known to
the Company to be the beneficial owner of more than 5% of the Common Stock of
the Company; (ii) each current director; (iii) each nominee for election as
director; and (iv) all officers and current directors of the Company as a
group. Securities reported as "beneficially owned" include those for which the
named persons may exercise voting power or investment power, alone or with
others. Voting power and investment power are not shared with others unless
so stated. The number and percent of shares of Common Stock of the Company
beneficially owned by each such person as of April 7, 1997 includes the
number of shares which such person has the right to acquire through the exercise
of options within 60 days after April 7, 1997.
<TABLE>
<CAPTION>
Number of
Name and Address Shares Owned Percentage
<S> <C> <C>
Phillip D. Miller 798,593 (1)(2) 19.73%
One Ionia S.W., Suite 300
Grand Rapids, MI 49503
Stan Henry 811,093 (2)(3)(4) 20.12%
425 Smith Street
Farmingdale, NY 11735
Dale B. Krieger 621,531 (4)(5) 15.34%
Carnegie Hill Company
202 Carnegie Center
Princeton, NJ 08540
Sandra J. Smith 20,100 (1) *
54 Lakeside Drive
Wayland, MI 49348
Michael Lynch 75,000 (7) 1.85%
P.O. Box 312
Ross, CA 94957
David Kroeger 13,000 (1) *
359 Glen Arbor Drive NE
Rockford, MI 49341
Edward Siebeneck 55,500 (1)(6) 1.36%
1867 Goldeneye Drive
Holland, MI 49424
Robert Noga 47,023 (6) 1.16%
932 Glen Oak Drive
Sleepy Hollow, IL 60118
Timothy Quinn 47,823 (6) 1.18%
37 Saxonwood Road
Fairfield, CT 06432
Frank O'Connell 17,000 (1) *
21120 Highwood
Kildeer, IL 60047
Harry Edelson 344,552 (8) 8.55%
Edelson Technology Partners II
Whitewater Centre
Woodcliff Lake, NJ 07675
Charles Rees 344,552 (9) 8.55%
Middlewest Ventures II, LP
201 N. Illinois Street, Suite 2240
Indianapolis, IN 46204
First Bank Systems, Inc. 252,000 6.26%
601 - 2nd Avenue South
Minneapolis, MN 55402
All current officers and 2,574,236 (1)(2)(3)(4) 60.24%
current directors and nominees (5)(6)(7)(8)
as a group (11 persons) (9)
</TABLE>
* Less than one percent (1%).
(1) Includes 25,000 shares for Mr. Miller, 20,000 shares for Ms. Smith,
10,000 shares for Mr. Kroeger, 6,977 shares for Mr. Siebeneck, and 17,000
shares for Mr. O'Connell which may be acquired upon exercise of options
granted under the Incentive Plan.
(2) Includes 211,795 shares subject to options granted to CHC. See Note(5),
below.
(3) Includes 353,196 shares held as trustee for the benefit of family members.
(4) Includes 5,000 shares which may be purchased upon exercise of an option
granted under the Outside Directors and Advisors stock Option Plan,
17,500 shares which may be acquired upon exercise of an option granted
under the Incentive Plan, and 7,233 shares accrued to Mr. Krieger's Stock
Unit Account for deferred compensation under the Deferred Compensation
Plan.
(5) Shares held of record as follows: (i) shares described in note (4) above,
held of record by Dale B. Krieger and (ii) 435,826 shares, held of record
by Carnegie Hill Company, a Delaware Limited Partnership ("CHC"),
including 423,590 shares which may be acquired by CHC upon exercise of
options from Phillip D. Miller and Stan Henry, each in the amount of
211,795 shares. Dale B. Krieger is the president of Carnegie Hill One
Corporation, which is the sole general partner of CHC. Mr. Krieger
disclaims beneficial ownership of all the shares listed in clause (ii)
above. See "Certain Transactions."
(6) Includes 43,023 shares which may be acquired upon exercise of incentive
stock options granted pursuant to the National Home Delivery, Inc.
acquisition on March 29, 1996.
(7) Includes 20,000 shares held of record by Michael Lynch and 30,000 shares
held of record by Preferred Customer Delivery, Inc., which is wholly-
owned by Mr. Lynch. Includes 25,000 shares which may be acquired upon
exercise of options granted under the Incentive Plan.
(8) Includes all shares held of record by Edelson Technology Partners II and
5,000 shares which may be acquired upon exercise of options granted under
the Outside Directors and Advisors Stock Option Plan.
(9) Includes all shares held of record by Middlewest Ventures II, LP and
5,000 shares which may be acquired upon exercise of options granted under
the Outside Directors and Advisors Stock Option Plan.
PROPOSAL 1
ELECTION OF DIRECTORS
The Bylaws of the Company provide that the number of directors shall be as
fixed from time to time by resolution of the Board of Directors. The current
number of members of the Board of Directors is four due to the resignation of
Dale B. Krieger effective December 31, 1996. The current members of the
Board, consisting of Stan Henry, Phillip D. Miller, Charles Rees, and
Harry Edelson are standing for re-election. The directors elected at this
Annual Meeting will serve a one-year term expiring upon the election of their
successors at the next annual meeting. The Board of Directors believes that
the interests of the shareholders may be better served by a board comprised of
five members, rather than four, including one additional outside director. If
prior to the annual meeting in 1998 a qualified candidate is identified, the
Board, acting pursuant to the provisions of the Company's Bylaws, may increase
its membership to five and elect a fifth director to serve until the 1998
annual meeting.
In the event any nominee is unavailable to stand for election at the time
of the Annual Meeting, the proxies may be voted for a substitute nominee
selected by the Board of Directors.
See "MANAGEMENT" for biographical information concerning Mr. Miller, who
is an employee of the Company. The following biographical information is
furnished with respect to each of the other nominees.
Stan Henry. Mr. Henry has been a director of the Company since its
inception in 1988. Mr. Henry is currently the president of This Week
Newspapers, Inc. ("This Week"), which publishes a chain of 71 weekly
newspapers with circulation over one million on Long Island, New York.
In 1970, Mr. Henry founded Alternate Distribution Systems of America ("ADSA"),
and served as its president and chief executive officer until 1981 when ADSA
became a division of This Week. The ADSA division was sold to Newsday in 1990,
the Times-Mirror Company daily newspaper on Long Island, New York. Mr. Henry
is also a past president of the Association of Free Community Papers.
Charles L. Rees. Mr. Rees has been a director of the Company since his
election at the last annual meeting on May 7, 1996. Mr. Rees is the founder
and general partner of Middlewest Ventures II, LP a $30 million venture
capital fund, which was a principal shareholder of National Home Delivery,
Inc. ("NHD"). Mr. Rees has over 19 years' experience in the venture capital
business. In 1981, he became the director of the venture capital division of
Allstate Insurance Company. As a venture capitalist, Mr. Rees has gained
experience in the advertising and marketing business through investments in
companies such as ADVO Systems and U.S. Suburban Press, Inc., a predecessor
of NHD ("USSPI"). Mr. Rees became Chairman of USSPI in 1991 when Middlewest
Ventures II, LP made its investment in USSPI and became CEO of USSPI in 1993.
National Home Delivery, Inc. was acquired by the Company in 1996.
Harry Edelson. Mr. Edelson has been a director of the Company since his
election at the last annual meeting on May 7, 1996. Mr. Edelson is the General
Partner of Edelson Technology Partners II, a venture capital fund financed by
several large corporations, which was a principal shareholder of NHD.
Previously, Mr. Edelson was a leading technology analyst with several major
investment banks, including First Boston, Merrill Lynch, and Drexel Burnham
Lambert. In addition, Mr. Edelson serves on the Board of Directors of several
private companies.
The Chairman of the Board of Directors and the officers of the Company are
elected annually by the Board of Directors and serve until their successors are
elected and qualified, subject to earlier removal by the Board.
During the year ended December 31, 1996, the Board of Directors met six
times and no director attended less than 75% of the meetings of the Board.
Director Compensation
Each non-employee director of the Company is paid a fee $500 for each
meeting attended, as well as expense reimbursement. If a non-employee director
chooses to participate in the Deferred Compensation Plan, payment of such fees
will be deferred, as directed by the participant, and will be automatically
converted (as a book entry only) to shares of Common Stock, quarterly, based
on the fair market value of the Common Stock at conversion. Such fees,
when ultimately paid, will be paid in the form of Common Stock. In addition,
the Company has issued stock options to its non-employee directors and advisors
pursuant to the Company's Directors Plan, described below.
1995 Outside Directors and Advisors Stock Option Plan
Effective July 21, 1995, the Company, by resolution of its Board of
Directors and shareholders, adopted the 1995 Outside Directors and Advisors
Stock Option Plan (the "Directors Plan") which provides for the issuance of up
to 50,000 shares of the Company's Common Stock to non-employee members of the
Board of Directors and non-employee members of the Company's Advisory Board.
No Preferred Stock or other securities are authorized for issuance under the
Directors Plan. The Directors Plan will terminate on July 20, 2005, unless
sooner terminated by action of the Board.
Only non-employee members of the Board of Directors of the Company are
eligible to receive grants under the Directors Plan. The Directors Plan is not
subject to the Employee Retirement Income Security Act of 1974. The Directors
Plan provides for a grant to non--employee directors and advisors of options to
purchase 5,000 shares upon initial election to the Board or 1,000 shares upon
appointment as an advisor (an "Initial Option") and, in the case of directors,
for annual grants thereafter, upon re-election, of options to purchase 2,500
shares (an "Annual Option"). Directors or advisors may choose to waive such
option grants, in their discretion. All options granted under the Directors
Plan are "non-qualified" options which do not meet the requirements of Section
422 of the Internal Revenue Code of 1986, as amended (the "Code").
The Directors Plan is administered by the President and Chief Financial
Officer, but the administrators have no authority to select recipients, select
the date of grant of options, the number of option shares, or the exercise
price, or to otherwise prescribe the particular form or conditions of any
option granted. As of March 15, 1997, 25,000 options have been issued.
Initial Options and Annual Options will be immediately exercisable for a
period of 10 years from the date of grant. Except for the Initial Options
currently outstanding, all Initial Options and Annual Options have an
exercise price per share equal to 100% of the fair market value of the
Common Stock as of the date of grant. Each Annual Option terminates three
months after the termination of the optionee as a director of the Company for
any reason except a "change in control," in which case the Option terminates
after six months. An Initial Option remains exercisable, notwithstanding the
termination of the directorship of the optionee, unless such termination is a
result of death or a "change in control," in which case the Initial Option
terminates after six months. A "change in control" shall be deemed to have
occurred if (a) a person is or becomes the beneficial owner, directly or
indirectly, of 50% or more of the voting capital stock of the Company, or (b)
during any period of two consecutive years, individuals who at the beginning
of such period constitute the Board cease for any reason to constitute at least
a majority of the Board unless the election or the nomination for election by
the Company shareholders of each new director was approved by a vote of at
least three-quarters of the directors then still in office who were directors
at the beginning of the period. A merger, consolidation, or corporate
reorganization in which the owners of the Company's voting stock own 50% or
more of the resulting entity's voting stock shall not be considered a "change
in control." Notwithstanding the foregoing, a "change in control" shall not
have been deemed to have occurred if the Board otherwise directs by resolution
adopted prior to the event which would otherwise constitute a "change in
control."
Outside Directors Deferred Compensation Plan
Effective July 21, 1995, the Company, by resolution of its Board of
Directors and shareholders, adopted the Outside Directors Deferred Compensation
Plan (the "Deferred Compensation Plan") which permits outside non-employee
directors of the Company to defer receipt of compensation received in the form
of retainers and fees. If an outside director elects to participate in the
Deferred Compensation Plan and to defer receipt of compensation for a
given year, the dollar amount will be credited to a deferred money account and
converted into stock equivalents on a quarterly basis based on the fair market
value of the Common Stock during the last 10 business days of the quarter.
A total of 50,000 shares of Common Stock has been reserved for issuance under
the Deferred Compensation Plan. The Deferred Compensation Plan will terminate
on July 20, 2005 unless sooner terminated by action of the Board. Amounts will
be disbursed in the manner and at the time set forth in the election, or upon
the retirement or death of the director, as more fully set forth in the
Deferred Compensation Plan. Amounts deferred are not taxed until distribution,
at which time the distributed amounts are subject to taxation in accordance
with Section 83 of the Code.
Board Committees
The Board of Directors established an Audit Committee, a Compensation
Committee, a Stock Option Committee and a Nominating Committee in December
1995.
None of these committees met during the fiscal year ended December 31, 1996.
For the current fiscal year ending December 31, 1997, it is contemplated that
the committees will be comprised of all non-employee members, as follows:
<TABLE>
<CAPTION>
Compensation Stock Option Nominating
Audit Committee Committee Committee Committee
<S> <C> <C> <C>
Stan Henry Stan Henry Stan Henry Stan Henry
Harry Edelson Harry Edelson Harry Edelson Harry Edelson
Charles Rees Charles Rees Charles Rees Charles Rees
</TABLE>
The purpose of the Audit Committee is to annually select a firm of
independent public accountants as auditors of the books, records and accounts
of the Company; to review the scope of audits made by the independent public
accountants; and to receive and review the audit reports submitted by the
independent public accountants and take such action in respect of such
reports as the Audit Committee may deem appropriate to assure that the
interests of the Company are adequately protected.
The purpose of the Compensation Committee is to annually review and
approve management's overall compensation plan for the Company's employees,
excluding officers. The Committee also approves all incentive plans and sets
officer annual salaries and incentives, including cash and noncash
remuneration. The Compensation Committee also makes recommendations to the
Stock Option Committee with respect to stock options and awards which may be
included in the compensation set for each individual.
The purpose of the Stock Option Committee is to administer and interpret
the 1995 Long-Term Incentive and Stock Option Plan, described below.
The purpose of the Nominating Committee is to seek and evaluate candidates
for election to the Company's Board of Directors and to recommend qualified
persons to the Board in advance of the annual election of directors by
shareholders.
MANAGEMENT
Directors and Officers
The following table sets forth certain information with respect to each of
the directors and executive officers of the Company.
<TABLE>
<CAPTION>
Name Age Position(s) Held with Company
<S> <C> <C>
Phillip D. Miller 45 President, CEO and Chairman
Charles Rees 53 Director
Harry Edelson 60 Director
Stan Henry 58 Director
Sandra J. Smith 38 Secretary, Treasurer, and
Chief Financial Officer
Michael Lynch 48 Senior Vice President
Edward Siebeneck 35 Senior Vice President
Robert Noga 55 Senior Vice President
Timothy Quinn 44 Senior Vice President
David Kroeger 29 Vice President
Frank O'Connell 54 Vice President
</TABLE>
Phillip D. Miller. Mr. Miller is the founder of the Company and has
served as its President and Chief Executive Officer and as a member of the
Board of Directors since inception in 1988. Mr. Miller has 25 years experience
as an entrepreneur, primarily in the private delivery industry where he is
recognized as a leader and spokesperson. In the course of his career, Mr.
Miller has founded and either merged or sold five companies, including
Promotional Media Management, American Field Marketing, and Discovery BIDCO
(a financial institution in the State of Michigan). Mr. Miller holds an
associate degree in business from Grand Rapids Junior College.
Sandra J. Smith. Ms. Smith has been the Chief Financial Officer of the
Company since July 1995. From 1989 until appointment as Chief Financial
Officer, Ms. Smith served as the Controller of the Company. From 1987 to 1989,
Ms. Smith was Controller of United Delivery Systems, a private delivery firm
which was founded and operated by Phillip D. Miller prior to the formation of
the Company in 1989. Ms. Smith has been a licensed certified public
accountant since 1983. Ms. Smith holds a bachelor of business administration
degree from Grand Valley State University.
Michael Lynch. Michael Lynch joined the Company in February 1996 as
Senior Vice President of the Company and Senior Vice President of the West
Coast Division of the Company's wholly-owned subsidiary, Alternate Postal
Direct, Inc., in connection with the Company's acquisition of Preferred
Customer Delivery, Inc. ("PCD") at the end of January 1996. PCD is a private
delivery firm based in San Francisco, California which was founded by Mr. Lynch
in 1991 and operated by him prior to acquisition by the Company.
Edward Siebeneck. Edward Siebeneck has been Senior Vice President of the
Company since March 1996. From 1994 until appointment as Senior Vice
President, Mr. Siebeneck served as Chief Operating Officer of National Home
Delivery, Inc. (NHD). From 1992 to 1994, Mr. Siebeneck served as Chief
Financial Officer of U.S. Suburban Press, Inc., a predecessor of NHD. NHD was
acquired by the Company in 1996. From 1983 through 1992, Mr. Siebeneck was
employed by Kraft USA and Oscar Mayer Foods Corporation in a variety of
operations, finance and marketing roles. Mr. Siebeneck holds a bachelors of
business administration degree from the University of Toledo and a masters of
business administration degree from Loyola University of Chicago.
Robert Noga. Robert Noga has been Senior Vice President - USSPI Division
of the Company since March 1996. From 1994 until appointment as Senior Vice
President, Mr. Noga served as President - USSPI Division for National Home
Delivery, Inc. From 1981 through 1994, Mr. Noga served as Vice President -
Publisher Relations for U.S. Suburban Press, Inc. Prior to 1981, Mr. Noga
held positions including publisher, general manager, and circulation manager
for various newspapers. Mr. Noga holds a bachelors degree from Western
Michigan University.
Timothy Quinn. Timothy Quinn has been Senior Vice President - Consumer
Promotions Division of the Company since March 1996. From 1994 until
appointment as Senior Vice President, Mr. Quinn served as President - Consumer
Promotions Division for National Home Delivery, Inc. From 1993 through 1994,
Mr. Quinn served as Sales Manager for NHD. From 1991 through 1992, Mr. Quinn
served as National Account Executive for National Suburban Marketing, Inc. (a
wholly-owned subsidiary of U.S. Suburban Press, Inc.). Prior to 1981, Mr.
Quinn worked as Sales Manager for R.R. Donnelly, Inc.'s MetroMail division as
well as National Promotion and Marketing Director for the March of Dimes Birth
Defect Foundation. Mr. Quinn is a graduate of City University of New York.
David Kroeger. David Kroeger has been Vice President - Alternate Delivery
Division of the Company since July 1996. From 1993 through 1996, Mr. Kroeger
held the positions of Director of Operations and Director of Affiliate
Relations for the Company. From 1990 through 1993, Mr. Kroeger was Vice
President of Operations at ADSet Marketing, Inc. a marketing services and
private delivery company. Prior to 1990, Mr. Kroeger held advertising,
marketing, circulation and transportation positions with Enterprise Publishing
Company and Journal-Star Printing Company. Mr. Kroeger holds a bachelors of
business administration/marketing degree from the University of Nebraska.
Frank O'Connell. Frank O'Connell has been Vice President and Sales
Manager - USSPI Division of the Company since March 1996. From 1994 until
appointment as Vice President, Mr. O'Connell served as Vice President of Sales
for the USSPI Division of National Home Delivery, Inc. From 1979 through 1994,
Mr. O'Connell served in various sales positions for U.S. Suburban Press, Inc.
Prior to 1979, Mr. O'Connell held sales positions at various companies
including Media Networks, Inc., Redbook and Cosmopolitan Magazine. Mr.
O'Connell holds a bachelors degree from Southern Illinois University.
See "ELECTION OF DIRECTORS" for biographical information on Messrs. Rees,
Edelson, and Henry.
Executive Compensation and Employment Agreements
The Company has entered into an employment agreement with Mr. Miller which
provides for an initial term of five years expiring in September 2000 at a base
salary of $195,000 per year, to be increased each year by an amount equal to
the then-existing salary multiplied by the average monthly increase in the cost
of living index published by the United States Department of Labor for the
12-month period preceding such date. The agreement is terminable without an
expressed reason by either Mr. Miller or the Company by three months' prior
notice. In addition, the Company may terminate the agreement effective
immediately for "cause," including neglect of duty, malfeasance, or continued
failure to perform specified duties within 30 days after having received a
written warning. If the agreement is terminated by the Company without an
expressed reason, the Company is required to pay Mr. Miller as severance,
within 60 days of the effective termination date, an amount equal to 12 months'
base salary at the salary rate then in effect, plus accrued bonuses, if any.
In the event of termination of the agreement by Mr. Miller, the Company is
required to pay salary accrued through the date of termination, excluding any
accrued bonus. Mr. Miller agrees with the Company that he shall not, directly
or indirectly, for a period of two years after termination (or one year if
terminated by the Company without cause), engage in any similar business,
solicit customers of the Company, or solicit employees of the Company in
competition with the Company, in the United States. The agreement also
provides for disability and life insurance at Company expense.
The Company has entered into an employment agreement with Mr. Siebeneck
which provides for an initial term of one year expiring in July 1997 with
automatic renewal thereafter absent notice of termination by either party at
a base salary of $109,200 per year. The Company may terminate the agreement
effective immediately for "cause," including neglect of duty, malfeasance,
or continued failure to perform specified duties. In the event of termination
of the agreement by Mr. Siebeneck, the Company is required to pay salary
accrued through the date of termination, including any accrued bonus or
vacation pay. In addition, effective as of March 1, 1997, the Company may
terminate the agreement at any time during its term, without cause, upon giving
notice to Mr. Siebeneck, and the Company is obligated to pay six months of
salary, plus any accrued vacation and earned bonuses based upon the then
current base salary. The agreement further provides that Mr. Siebeneck shall
not engage in any business in competition with the Company for a period of six
months following termination of his employment.
The Company has entered into an employment agreement with Mr. Quinn which
provides for an initial term of one year ended January 1, 1996 with automatic
renewal thereafter absent notice of termination by either party at a base
salary of $120,000 per year. The Company may terminate the agreement
effective immediately for "cause," including neglect of duty, malfeasance,
or continued failure to perform specified duties. In the event of termination
of the agreement by Mr. Quinn, the Company is required to pay salary accrued
through the date of termination, including any accrued bonus or vacation pay.
In addition, effective as of January 1, 1997, the Company may terminate the
agreement at any time during its term, without cause, upon giving notice to
Mr. Quinn and the Company is obligated to pay six months of salary, plus any
accrued vacation and earned bonuses based upon the then current base salary.
The Company has entered into an employment agreement with Mr. Noga which
provides for an initial term of one year expiring in July 1997 with automatic
renewal thereafter absent notice of termination by either party at a base
salary of $109,200 per year. The Company may terminate the agreement
effective immediately for "cause," including neglect of duty, malfeasance,
or continued failure to perform specified duties. In the event of termination
of the agreement by Mr. Noga, the Company is required to pay salary accrued
through the date of termination, including any accrued bonus or vacation pay.
In addition, effective as of January 1, 1997, the company may terminate the
agreement at any time during its term, without cause, upon giving notice to
Mr. Noga, and the company is obligated to pay six months of salary, plus
any accrued vacation and earned bonuses based upon the then current base
salary.
The Company has entered into an employment agreement with Mr. Lynch which
provides for an initial term of two years expiring in February 1998 at a base
salary of $125,000 per year. In addition, Mr. Lynch is entitled to receive up
to 50,000 shares of Common Stock of the Company if, during the initial two year
term, certain performance criteria are met. To date, no shares have
been earned or issued. The Company may terminate the agreement effective
immediately for material neglect of duty, material breach of the agreement,
or illegal conduct. Mr. Lynch agrees with the Company that he shall not,
directly or indirectly, for a period of one year after termination engage in
any similar business, solicit customers of the Company, or solicit employees
of the Company in competition with the Company, in the United States and other
geographical locations in which the Company does business.
The following table sets forth information about all compensation (cash
and noncash) awarded to, earned by, or paid to the named executive officers
pursuant to a plan or contract or otherwise during fiscal years ended
December 31, 1996, 1995 and 1994.
<TABLE>
<CAPTION>
Summary Compensation Table
Long Term
Annual Compensation Compensation
--------------------------- --------------- -----------
Other Annual Restricted
Compensation Stock All Other
Name & Principal Year Salary Bonus Award Options Comp.
Position ($) ($) ($) ($) (#) ($)
<S> <C> <C> <C> <C> <C> <C> <C>
Phillip D. Miller 1996 197,531 * * * * 11,312(3)
President and 1995 142,500 * * * 25,000 * (4)
Chief Executive 1994 133,654 * * * * *
Officer
Edward Siebeneck 1996 103,380 * * * 6,977 7,077(2)
Senior Vice 1995 96,000 91,895 * * * *
President 1994 66,000 32,000 * * * *
Robert Noga 1996 115,900 * * * * *
Senior Vice 1995 96,000 41,895 * * * *
President 1994 84,000 12,410 * * * *
Timothy Quinn 1996 116,231 * * * * *
Senior Vice 1995 96,000 * 23,634(1) * * *
President 1994 84,000 12,000 54,460(1) * * *
Frank O'Connell 1996 57,000 2,000 88,898(1) * 7,000 *
Vice President 1995 55,500 2,000 71,121(1) * * *
1994 54,000 5,000 63,583(1) * * *
Michael Lynch 1996 112,981 * * * 25,000 8,250(3)
Senior Vice 1995 * * * * * *
President 1994 * * * * * *
</TABLE>
*None
(1)sales commissions
(2)reimbursed moving expenses
(3)auto allowance
(4)insurance premiums
1995 Long-Term Incentive and Stock Option Plan
Effective July 21,1995, the Company, by resolution of its Board of
Directors and shareholders, adopted the 1995 Long-Term Incentive and Stock
Option Plan (the "Incentive Plan"), which provides for the issuance of up to
400,000 shares of the Company's Common Stock. No Preferred Stock or other
securities are authorized for issuance under the Incentive Plan.
The Incentive Plan will terminate on July 20, 2005, unless sooner terminated by
action of the Board.
All full or part-time employees (including officers and directors) of the
Company (and any subsidiaries, including Alternate Postal Direct, Inc.,
Newspaper Marketing Solutions, Inc., National Home Delivery, Inc. and others,
if the Company acquires or forms any additional subsidiaries) and
non-employee directors, consultants and independent contractors providing
services to the Company (or any subsidiaries) are eligible to receive options
and awards under the Incentive Plan. The Incentive Plan is not subject to the
Employee Retirement Income Security Act of 1974.
The Incentive Plan permits the granting of awards to employees and non-
employee officers, directors and agents of the Company in the form of stock
appreciation rights, restricted stock awards and stock options. Stock options
granted under the Incentive Plan may be "incentive stock options," meeting the
requirements of Section 422 of the Code, or nonqualified options which do not
meet the requirements of Section 422. The Incentive Plan is currently
administered by the Stock Option Committee. The Incentive Plan gives broad
powers to the Committee to administer and interpret the Plan, including the
authority to select the individuals to be granted options and rights, and to
prescribe the particular form and conditions of each option or right granted.
Incentive stock options, in order to receive favored tax treatment under the
Code, must be exercisable at not less than the fair market value of the Common
Stock as of the date of the grant (110 % of fair market value if the optionee
is a 10% or greater shareholder) and may be granted only to employees. As of
March 15, 1997, the Company has granted incentive stock options and
nonqualified stock options for an aggregate of 143,927 shares and 22,500
shares, respectively.
Compliance with Section 16(a) of the Securities Exchange Act of 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's executive officers and directors, and persons who beneficially own
more than ten percent of the Company's Common Stock, to file initial reports of
ownership and reports of changes in ownership with the Securities and Exchange
Commission (the "SEC"). Executive officers, directors and greater than ten
percent beneficial owners are required by the SEC to furnish the Company with
copies of all Section 16(a) forms they file.
Based upon a review of the copies of such forms furnished to the Company,
the Company believes that all Section 16(a) filing requirements applicable to
its executive officers, directors and greater than ten percent beneficial
owners were met during the fiscal year ended December 31, 1996, except that one
report on Form 4, covering one transaction, was not timely filed for Phillip
Miller.
Indemnification of Directors and Officers
The Company's Articles of Incorporation limit personal liability for
breach of fiduciary duty by its directors to the fullest extent permitted by
the Michigan Business Corporation Act. Such Articles eliminate the personal
liability of directors to the Company and its shareholders for damages
occasioned by breach of fiduciary duty, except for liability based on breach of
the director's duty of loyalty to the Company, liability for acts or omissions
not made in good faith, liability for acts or omissions involving intentional
misconduct, liability based on payments of improper dividends, liability based
on violation of state securities laws, and liability for acts occurring prior
to the date such provision was added. Any amendment to or repeal of such
provisions in the Company's Articles of Incorporation shall not adversely
affect any right or protection of a director of the Company for or with respect
to any acts or omissions of such director occurring prior to such amendment or
repeal. These provisions eliminate the personal liability of directors in their
capacity as directors (but not in their capacity as officers) to the Company
and to its shareholders to the fullest extent permitted by Michigan law.
In addition to the Michigan Business Corporation Act, the Company's Bylaws
provide that officers and directors of the Company have the right to
indemnification from the Company for liability arising out of certain actions
to the fullest extent permissible by law. This indemnification may be
available for liabilities arising in connection with this Offering. Insofar as
indemnification for liabilities arising under the Securities Act of 1933
(the "Act") may be permitted to directors, officers or persons controlling the
Company pursuant to such indemnification provisions, the Company has been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is
therefore unenforceable.
Summary of Option Grants
Individual Option Grants In Last Fiscal Year
The following table contains information concerning individual grants of
stock options under the Incentive Plan to each of the named individuals during
the fiscal year ended December 31, 1996:
<TABLE>
<CAPTION>
Number of
Securities Percent of Total
Underlying Options Granted Exercise or
Options to Employees in Base Price
Granted(#) Fiscal Year ($/Share) Exp. Date
Name
<S> <C> <C> <C> <C>
Edward Siebeneck 6,977 9.98% $5.875 Apr. 1, 2006
Frank O'Connell 7,000 10.01% $5.875 Apr. 1, 2006
Michael Lynch 25,000 35.75% $5.875 Jan. 26, 2006
</TABLE>
Aggregated Option Exercises and Fiscal Year-End
Option Value Table
The following table contains information concerning exercises of stock
options during the last fiscal year and the value of options previously granted
under the Incentive Plan which were held by the named individuals at the end of
the fiscal year ended December 31, 1996.
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In-The-Money Options
Option Exercises Options at FY-End (#) At FY-End ($)
---------------- -------------------- -------------------
Shares
Acquired on Value
Name Exercise (#) Realized Exerc. Unexer. Exer. Unexer.
<S> <C> <C> <C> <C> <C> <C>
Phillip D. Miller None None None 25,000 $0 (1)
Edward Siebeneck None None None 6,977 $0 (1)
Frank O'Connell None None None 7,000 $0 (1)
Michael Lynch None None None 25,000 $0 (1)
</TABLE>
(1) None of the exercisable options were in the money at the end of the fiscal
year.
CERTAIN TRANSACTIONS
In October 1994, the Company entered into a five-year Financial Services
Agreement (the "Financial Services Agreement") with Carnegie Hill Company
("CHC"), an entity which is controlled by Dale B. Krieger, former Chairman of
the Board of Directors, whereby CHC agreed to assist the Company developing and
implementing business and financing strategies solely in consideration of
88,158 shares of Common Stock. Such shares were non-voting shares at the
time of issuance, prior to the recapitalization effected in July 1995, and, in
effect, were issued in equal parts by Phillip D. Miller and Stan Henry, who
surrendered equal numbers of their shares to the Company for cancellation in
connect, with the issuance to CHC. All non-voting shares became voting
shares in the recapitalization. This agreement contains an antidilution
provision which resulted in issuance of additional shares to CHC by the Company
upon conversion of the Convertible Notes, as described below. This agreement
was negotiated and approved prior to Mr. Krieger's election to the Board of
Directors in June 1995, at a time when he was not an affiliate of the Company.
Mr. Krieger resigned from the Board of Directors effective December 31, 1996.
In May 1993, Scripps Howard, Inc., Capital Cities/ABC, Inc. and Tribune
Publishing Company, (each of which is a corporate parent of one of the
Company's principal newspaper Affiliates), each purchase from the Company an
unsecured 8.5 % note in the amount of $500,000 ($1,500,000 total) (the
"Convertible Notes"). By their terms, the Convertible Notes were due in full
on May 27, 2000 and were callable by the Company commencing May 28, 1995 at
105 % of the face amount, plus accrued interest and at call prices decreasing
by one percent (1%) annually thereafter. Interest at 10.5% was payable semi-
annually. In order to induce the holders of the Convertible Notes, named
above (the "Noteholders"), to convert all or a part of their respective
Convertible Notes in connection with the Company's initial public offering of
Common Stock in September 1995 (the "Offering"), the Company increased the
number of shares to be issued upon conversion of one-half of the principal
amount of the Convertible Notes from 150,000 to 232,500 and agreed to issue the
Noteholder Warrants, described below. Pursuant to such agreement, each of the
Affiliates converted $250,000 in aggregate principal amount of such
Convertible Notes to 77,500 shares of Common Stock (232,500 shares, in total)
effective upon the closing of the Offering and received payment in cash of the
$250,000 principal balance, plus accrued interest (including interest at 10.5%
per annum on delinquent interest), from the net proceeds of the Offering. In
addition, effective upon closing of the Offering, each Noteholder was issued a
Noteholder Warrant for the purchase of 81,625 shares of Common Stock of the
Company exercisable upon issuance through July 31, 2000, at a price of $6.00
per share. As a condition to exercise holder of a Noteholder Warrant must
present to the Company, together with the payment of the exercise price, a
letter of appointment signed by all Noteholders, whereby collectively they
appoint an individual to serve on the Board of Directors of the Company
(the "Noteholder Director"). Subject to approval of the appointee by the
Company's Board of Directors, the Noteholder Director will serve on the Board
from the date of initial appointment until the next election of directors by
the shareholders, at which time the Noteholder Director will stand for
re-election. The Noteholder Director (or substitute, if the original
appointee resigns or is unable to serve) must agree to serve and stand for
election for three one-year terms, but will not serve during any term if not
approved by the Board or elected by the shareholders. The Noteholder Director
will be entitled to director fees, options and reimbursement to the same extent
as other non-employee directors, excluding the Chairman. The Noteholder
Warrants provide for registration of Common Stock issuable upon exercise under
the Securities Act by participation in certain registrations which may be
undertaken by the Company.
Upon partial conversion of the Convertible Notes to 232,500 shares of
Common Stock, the Company was required to record a one-time non-cash charge
earnings in the amount of $375,000, reflecting the difference between the value
attributed to the 150,000 shares which would have been issued upon conversion
pursuant to the terms of the Convertible Notes and the 232,500 shares which the
Company issued in order to induce the Noteholders to convert in connection
with the Offering.
Prior to the Offering, and until December 28, 1995, the Company's short-
term cash needs were funded in part by a $250,000 secured bank line of credit
personally guaranteed by Phillip D. Miller, president and a director of the
Company, and Stan Henry, a director of the Company. See Note C in the Notes
to the Consolidated Financial Statements. Although no proceeds of the
Offering were applied to repayment of outstanding amounts on this line of
credit, the receipt of the net proceeds of the Offering, and the
corresponding improvement in the Company's financial condition, indirectly
benefited the guarantors by decreasing their guaranties.
Management believes that the transactions described above were effected on
terms no less favorable to the Company than those that could have been realized
in arm's length transactions with unaffiliated parties Management intends that
any future material affiliated transactions and loans, and any forgiveness of
loans, will be made or entered into on terms that are no less favorable to
the Company than those that can be obtained from unaffiliated third parties;
all future material affiliated transactions and loans and any forgiveness of
loans, will be approved by a majority of the independent outside members of the
Company's Board of Directors who do not have an interest in the transaction.
PROPOSAL 2
RATIFICATION OF APPOINTMENT
OF INDEPENDENT AUDITORS
The Board of Directors has appointed Coopers & Lybrand, LLP, independent
auditors, to audit the financial statements of the Company for the fiscal year
ending December 31, 1997. If the shareholders fail to ratify such appointment,
the Board of Directors will select another firm to perform the required audit
function. A representative of Coopers & Lybrand, LLP is expected to be
present at the shareholders meeting with the opportunity to make a statement if
such representative desires to do so and is expected to be available to respond
to appropriate questions.
PROPOSALS FOR FISCAL 1997 ANNUAL MEETING
It is currently anticipated that the next annual meeting, for the fiscal
year ending December 31, 1997 (the "1997 Annual Meeting"), will be held in
mid-May, 1998. Shareholders who intend to submit proposals for inclusion in
the 1997 Proxy Statement and Proxy for shareholder action at the 1997 Annual
Meeting must do so by sending the proposal and supporting statements, if any,
to the Company at its corporate office no later than January 2, 1998.
By Order of the Board of Directors
/s/ Sandra J. Smith
Sandra J. Smith, Secretary
Dated: April 21, 1997
Grand Rapids, Michigan
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-KSB WILL BE SENT
WITHOUT CHARGE TO ANY SHAREHOLDER REQUESTING IT IN WRITING FROM:
ALTERNATE POSTAL DELIVERY, INC., ATTENTION: SANDRA J. SMITH, CHIEF
FINANCIAL OFFICER, ONE IONIA SW, SUITE 300, GRAND RAPIDS, MI 49503.
