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
[ ] 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 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):
[x] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11: (*)
(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:
(*) 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 6, 1998, 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, April 30, 1998 at 12:30 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 Thomas Hiatt
[ ] FOR [ ] WITHHELD FOR ALL [ ] WITHHELD FOR THE FOLLOWING ONLY:
(Write the nominee's name in space below):
2. Proposal to approve a resolution to amend the Company's Restated Articles
of Incorporation to change the name of the Company from Alternate Postal
Delivery, Inc. to Alternate Marketing Networks, Inc.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. Ratification of appointment of Coopers & Lybrand, LLP as the independent
auditors of the Company for the year ending December 31, 1998.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. 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 PROPOSALS 2 AND 3 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 6, 1998
Dear Shareholder:
You are cordially invited to attend the Company's Annual Meeting of
Shareholders to be held at 12:30 p.m., on Thursday, April 30, 1998, 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 APRIL 30, 1998
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, April 30, 1998, at 12:30 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 and to elect four directors to
serve for a one year term expiring when their successors are elected and
qualified at the annual meeting in 1999.
(2) To act upon a proposal to amend the Company's Restated Articles of
Incorporation to change the name of the Company from Alternate Postal
Delivery, Inc. to Alternate Marketing Networks, Inc.
(3) 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, 1998.
(4) 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 March 27, 1998
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 6, 1998
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 APRIL 30, 1998
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 April 30, 1998, to
be held at the Amway Grand Plaza Hotel, Grand Rapids, Michigan, at 12:30 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 as directors of the nominees named
herein and on the proxy card; (b) for the amendment to the Company's Restated
Articles of Incorporation to change the name of the Company to Alternate
Marketing Networks, Inc.; (c) for the appointment of Coopers & Lybrand, LLP as
independent auditors of the Company for fiscal 1998; and (d) 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 6, 1998.
A copy of the Company's Annual Report on Form 10-KSB for the fiscal year
ended December 31, 1997, 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, 1997.
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 March 27, 1998, 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
4,030,127 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 that (i) the change of name of the Company by
amendment of the Company's Restated Articles of Incorporation requires a
majority vote of all shares issued and outstanding and (ii) election of
directors is by plurality vote (i.e., in the event of more nominees than
positions, 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 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" i.e., 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
and the broker does not have discretionary authority to vote the shares on
that matter 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 change the name of the Company; 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 March 27, 1998 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; (iv) each of the Named Executive Officers (as defined under
MANAGEMENT - Executive Compensation and Employment Agreements), except for
Edward Siebeneck, who is no longer an employee of the Company, and (v) all
executive 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 March 27, 1998 also includes the number of shares
which such person has the right to acquire through the exercise of options
within 60 days after March 27, 1998.
<TABLE>
<CAPTION>
Number of
Name and Address Shares Owned Percentage
<S> <C> <C>
Phillip D. Miller 798,593 (1)(2) 19.69%
One Ionia S.W., Suite 300
Grand Rapids, MI 49503
Stan Henry 813,593 (2)(3) 20.14%
425 Smith Street
Farmingdale, NY 11735
The Krieger Group 671,531 (4)(5) 16.57%
P.O. Box 7787
202 Carnegie Center
Princeton, NJ 08540
Michael Lynch 75,000 (7) 1.85%
P.O. Box 312
Ross, CA 94957
Robert Noga 47,023 (6) 1.15%
932 Glen Oak Drive
Sleepy Hollow, IL 60118
Timothy Quinn 47,823 (6) 1.17%
37 Saxonwood Road
Fairfield, CT 06432
Frank O'Connell 17,000 (1) *
21120 Highwood
Kildeer, IL 60047
Harry Edelson 347,052 (8) 8.60%
Edelson Technology Partners II
Whitewater Centre
Woodcliff Lake, NJ 07675
Thomas Hiatt 347,052 (9) 8.60%
Middlewest Ventures II, LP
201 N. Illinois Street, Suite 2240
Indianapolis, IN 46204
First Bank Systems, Inc. 252,000 6.25%
601 - 2nd Avenue South
Minneapolis, MN 55402
All current executive 2,556,236 (1)(2)(3)(4) 59.89%
officers and current directors (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, 30,000 shares for Ms. Armstrong, 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 The Krieger Group.
See Note(5), below.
(3) Includes 353,196 shares held as trustee for the benefit of family
members. Includes 10,000 Shares which may be purchased upon exercise of
options granted under the Outside Directors and Advisors Stock Option
Plan.
(4) Includes 5,000 shares which may be purchased by Dale B. Krieger upon
exercise of an option granted under the Outside Directors and Advisors
Stock Option Plan and 17,500 shares which may be purchased upon exercise
of an option granted under the Incentive Plan.
(5) Shares held of record as follows: (i) shares described in note (4) above,
held of record by Dale B. Krieger, (ii) 510,262 shares held of record by
The Krieger Family Limited Partnership, which includes 360,052 shares
which may be acquired upon exercise of options from Phillip D. Miller
and Stan Henry, each in the amount of 180,026 shares; (iii) 88,769
shares held of record by Richard A. Ruderman, which includes 63,538
shares which may be acquired upon exercise of options from Phillip D.
Miller and Stan Henry, each in the amount of 31,769 shares and (iv)
50,000 shares held in accounts managed by Carnegie Hill Financial, Inc.
("CHFI"), an investment advisor. Mr Krieger is the president and chief
executive officer of CHFI.
(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. Also includes 25,000 shares which may be acquired by
Mr. Lynch upon exercise of options granted under the Incentive Plan.
(8) Includes all shares held of record by Edelson Technology Partners II and
7,500 shares which may be acquired by Mr. Edelson upon exercise of
options granted under the Outside Directors and Advisors Stock Option
Plan. Mr. Edelson is a managing partner in Edelson Technology Partners
II.
(9) Includes all shares held of record by Middlewest Ventures II, LP and
7,500 shares which may be acquired by Middlewest Ventures II, LP upon
exercise of options granted under the Outside Directors and Advisors
Stock Option Plan. Mr. Hiatt is a general partner of Middlewest
Ventures II, LP.
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. The current members of
the Board, consisting of Stan Henry, Phillip D. Miller, Thomas Hiatt, 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 1999 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 1999
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.
Thomas Hiatt. Mr. Hiatt has been a director of the Company since January
12, 1998, when he was elected by the Board to fill the vacancy created by the
resignation of Charles L. Rees in August, 1997. Mr. Hiatt is a general partner
of Middlewest Management Co., LP, which serves as the general partner of
Middlewest Ventures II, LP, a venture capital fund, which was a principal
shareholder of National Home Delivery, Inc. "NHD"). Mr. Hiatt currently serves
as a director of several companies including Bioanalytical Systems, Inc.,
PackageNet, Inc., PowerWay, Inc. and Fifth Third Bank of Indiana.
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, 1997, the Board of Directors met eight
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 of $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 is deferred, as directed by the participant, and is
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 issues stock options to its non-employee directors
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 and
non-employee advisors to the Company (of which there are currently none) 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, 1998, 30,000 options have been issued.
Initial Options and Annual Options are 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.
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 Internal Revenue Code. As of the date of
this Proxy Statement, 7,233 shares have been issued pursuant to the Deferred
Compensation Plan and 42,767 shares of Common Stock remain reserved and
available 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.
Board Committees
The Board of Directors has established an Audit Committee, a Compensation
Committee, a Stock Option Committee and a Nominating Committee. Each of these
committees met once during the fiscal year ended December 31, 1997 and all
member of each committee attended. For the current fiscal year ending
December 31, 1998, it is contemplated that each of the committees will be
comprised of the non-employee members of the Board, who are Stan Henry, Harry
Edelson, and Thomas Hiatt.
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.
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 46 President, CEO and Chairman
Thomas Hiatt 50 Director
Harry Edelson 61 Director
Stan Henry 59 Director
Sandra J. Smith 39 Secretary, Treasurer, and CFO
Michael Lynch 49 Senior Vice President
Robert Noga 56 Senior Vice President
Timothy Quinn 45 Senior Vice President
David Kroeger 30 Vice President
Frank O'Connell 55 Vice President
Deborah Armstrong 50 Vice President
Ruth Ann Carroll 55 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.
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. ("NHD"). 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.
Deborah Armstrong. Deborah Armstrong has been a Vice President of the
Company since June 1997. Prior to joining the Company, Ms. Armstrong served as
brand manager at Hoover Appliance Company (1973 to 1977), CBS, Inc. (1977 to
1982) and PepsiCo, Inc. (1982 to 1988). From 1989 to 1990 Ms. Armstrong was
director of sales and marketing at Heritage Media, where she managed the
in-store advertising products for ActMedia. Her experience in traditional
media includes service as the publisher of Lamaze Parents, Lamazebaby, and
Your Healthy Baby magazines from 1990 to 1994. From 1994 to May of 1997 she
served as associate publisher of Working Mother magazine.
Ruth Ann Carroll. Ruth Ann Carroll has been a Vice President of the
Company since December 1997. Prior to that date, Ms. Carroll was the General
Manager of Neodata, a firm specializing in the management of brand loyalty
programs and direct marketing services. From 1979 to 1996, Ms. Carroll
served as Executive Vice President/National Sales Manager for Donnelly
Marketing, Inc. Ms. Carroll is a graduate of Queens College at the City
University of New York.
See "ELECTION OF DIRECTORS" for biographical information on Messrs. Hiatt,
Edelson, and Henry.
Executive Compensation and Employment Agreements
The Company has entered into an employment agreement with Phillip D.
Miller, the President and Chief Executive Officer, which provides for an
initial term of five years expiring in September 2000 at a base salary of
$195,000 per year, with an annual increase 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. The agreement further provides that Mr. Miller 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 Timothy Quinn
which provides for an initial term of two years ending December 31, 1999 with
automatic renewal thereafter absent notice of termination by either party at a
base salary of $120,000 per year. The agreement provides for increases of
$5,000 every six months based on satisfactory performance of
responsibilities as defined by the Company's Chief Executive Officer. 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, the Company may
terminate the agreement at any time during its term, without cause, upon
giving notice to Mr. Quinn, in which case the Company is obligated to pay four
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 Robert 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, in which case 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 Michael Lynch
which provides for a term of expiring on April 10, 1998 at a base salary of
$125,000 per year through February 1998 and $100,000 per year thereafter
(corresponding to a reduction in his working hours). The Company may
terminate the agreement effective immediately for material neglect of duty,
material breach of the agreement, or illegal conduct. Mr. Lynch agrees with the
Company that he shall not, directly or indirectly, for a period of one year
after termination engage in any similar business, solicit customers of the
Company, or solicit employees of the Company in competition with the
Company, in the United States and other geographical locations in which the
Company does business.
The following table sets forth information about all compensation (cash
and noncash) awarded to, earned by, or paid to the executive officers named
therein (the "Named Executive Officers") pursuant to a plan or contract or
otherwise during fiscal years ended December 31, 1997, 1996 and 1995.
<TABLE>
<CAPTION>
Summary Compensation Table
Long Term
Annual Compensation Compensation
--------------------------------- -------------------- --------------
Other Annual Restricted
Compensation Stock All Other
Name & Principal Year Salary Bonus Award Options Comp.
Position ($) ($) ($) ($) (#) ($)
<S> <C> <C> <C> <C> <C> <C> <C>
Phillip D. Miller 1997 202,404 * * * 25,000 12,675(3,4,6)
President and 1996 197,531 * * * * 11,312(3,4)
Chief Executive 1995 142,500 * * * 25,000(5) *
Officer
Edward Siebeneck 1997 109,200 * * * 6,977 1,092(6)
Senior Vice 1996 103,380 * * * 6,977(5) 7,077(2)
President 1995 96,000 91,895 * * * *
Robert Noga 1997 109,200 * * * * 1,047(6)
Senior Vice 1996 115,900 * * * * *
President 1995 96,000 41,895 * * * *
Timothy Quinn 1997 120,000 * * * * 1,296(4,6)
Senior Vice 1996 116,231 * * * * *
President 1995 96,000 * 23,634(1) * * *
Frank O'Connell 1997 57,000 * 80,314(1) * 17,000 1,206(6)
Vice President 1996 57,000 2,000 88,898(1) * 7,000(5) *
1995 55,500 2,000 71,121(1) * * *
Michael Lynch 1997 120,192 * * * * 9,538(3,6)
Senior Vice 1996 112,981 * * * 25,000 8,250(3)
President 1995 * * * * * *
</TABLE>
*None
(1)sales commissions
(2)reimbursed moving expenses
(3)auto allowance
(4)insurance premiums
(5)included in 1997 as re-priced option grants
(6)401-K employer contributions
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 Internal Revenue Code (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 for not more than 10
years and at not less than the fair market value of the Common Stock as of the
date of the grant (not more than 5 years and not less than 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, 1998, the Company has granted
incentive stock options and nonqualified stock options for an aggregate of
153,300 shares and 22,500 shares, respectively.
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, 1997:
<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>
Phillip Miller 20,000(1) 13.6% $3.4375 Jan. 21, 2007
Phillip Miller 5,000(1) 3.4% $3.125 Jan. 21, 2007
Frank O'Connell 10,000 6.8% $3.125 Jan. 21, 2007
Frank O'Connell 7,000(1) 4.8% $3.125 Jan. 21, 2007
Edward Siebeneck 6,977(1) 4.7% $3.125 Jan. 21, 2007
</TABLE>
(1)included in 1997 as re-priced option grants
Aggregated Option Exercises and Fiscal Year-End
Option Value Table
The following table contains information concerning exercises of stock
options during the last fiscal year and the value of options previously
granted under the Incentive Plan which were held by the named individuals
at the end of the fiscal year ended December 31, 1997.
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In-The-Money Options
Option Exercises Options at FY-End (#) At FY-End ($)
---------------- -------------------- --------------------
Shares
Acquired on Value
Name Exercise (#) Realized Exer. Unexercisable 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 17,000 $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.
Report on 1997 Option Repricing Program.
In January 1997, the Stock Option Committee elected to reprice certain
stock options as an incentive for retention and motivation of the Company's
personnel, including certain options granted to executive officers. The
Committee believed that outstanding stock options with an exercise price
substantially in excess of the current market price no longer served to
encourage employee retention or to motivate high levels of performance.
All options issued to employees, except options issued in connection with
business acquisitions, were considered for repricing. Optionees were
permitted to exchange all outstanding options, which were selected for
repricing, whether vested or unvested, on a one-for-one basis for new
options under the Company's Incentive Plan at an exercise price equal to the
closing price on the Nasdaq Small Cap market on January 21, 1997. All options
previously vested were exchanged for options with a new one year vesting.
All options not previously vested were issued with a two year vesting.
By the members of the Stock Option Committee
Harry Edelson
Stan Henry
Thomas Hiatt
Section 16(a) Beneficial Ownership Reporting Compliance
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 31,1997.
Indemnification of Directors and Officers
The Company's Restated Articles of Incorporation (the "Articles") limit
personal liability for breach of fiduciary duty by its directors to the
fullest extent permitted by the Michigan Business Corporation Act. The
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 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. 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.
PROPOSAL 2
The Board of Directors has approved, subject to shareholder approval, a
resolution amending Article I of the Company's Restated Articles of
Incorporation (the "Articles"), in its entirety, to read as follows:
The name of the corporation is Alternate Marketing Networks, Inc.
The Board of Directors believes that the change of name is necessary to
appropriately reflect the Company's evolution from a delivery company
competing with the U.S. Postal Service to a marketing services company and
to better present the services currently offered by the Company to
prospective customers and investors.
PROPOSAL 3
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, 1998. 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 1998 ANNUAL MEETING
It is currently anticipated that the annual meeting for the fiscal year
ending December 31, 1998 (the "1998 Annual Meeting"), will be held in mid-May,
1999. Shareholders who intend to submit proposals for inclusion in the 1998
Proxy Statement and Proxy for shareholder action at the 1998 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 , 1999.
By Order of the Board of Directors
/s/ Sandra J. Smith
Sandra J. Smith, Secretary
Dated: April 6, 1998
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.
