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 Marketing Networks, Inc. (formerly Alternate Postal Delivery, Inc.)
(Name of Registrant as Specified in Its Charter)
Alternate Marketing Networks, Inc. (formerly 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 MARKETING NETWORKS, 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 10, 2000, 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 Marketing Networks, Inc. to be held
on Thursday May 11, 2000 at 11:00 a.m. at 2 Park Avenue (between 32nd and 33rd
Streets), 8th Floor, New York, New York 10016, 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, Louis Sito, John McKeon, and Thomas Hiatt
[ ] FOR [ ] WITHHELD FOR ALL [ ] WITHHELD FOR THE FOLLOWING
ONLY:(Write the nominee's
name in space below):
2. Approval of voting rights for shares of Common Stock of the Company which
may be acquired by The Times Mirror Company and/or its successors
("TMC"), and which could result in TMC's ownership of more than 20% and
not more than 45% of the Company.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. Amendment of the Company's Restated Articles of Incorporation to change
the name of the Company from Alternate Marketing Networks, Inc. to a
name, to be determined by the Board of Directors, which better reflects
the Company's future direction.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. Amendment of the Company's Restated Articles of Incorporation to increase
the authorized Common Stock from 8,000,000 shares to 14,000,000 shares.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
5. Approval of an increase in the number of shares authorized for issuance
under the 1995 Long-Term Incentive and Stock Option Plan from 400,000
shares to 500,000 shares.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
6. Approval of an increase in the number of shares authorized for issuance
under the 1995 Outside Directors and Advisors Stock Option Plan from
50,000 to 75,000 shares.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
7. Ratification of appointment of PricewaterhouseCoopers, LLP as the
independent auditors of the Company for the year ending December 31, 2000.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
8. The authority to vote, in his discretion, on all other business that may
properly come before the meeting.
[ ] GRANTED [ ] WITHHELD
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, 3, 4, 5, 6, and 7 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 MARKETING NETWORKS, INC.
One Ionia SW, Suite 300
Grand Rapids, MI 49503
(616) 235-0698
April 10, 2000
Dear Shareholder:
You are cordially invited to attend the Company's Annual Meeting of
Shareholders to be held at 11:00 a.m., on Thursday, May 11, 2000, at 2 Park
Avenue (between 32nd and 33rd Streets), 8th Floor, New York, New York 10016.
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
Chairman and Chief Executive Officer
ALTERNATE MARKETING NETWORKS, INC.
One Ionia SW, Suite 300
Grand Rapids, MI 49503
(616) 235-0698
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 11, 2000
To the Shareholders of Alternate Marketing Networks, Inc.:
The Annual Meeting of Shareholders of Alternate Marketing Networks, Inc.
(the "Company) will be held on Thursday, May 11, 2000, at 11:00 a.m., at 2 Park
Avenue (between 32nd and 33rd Streets), 8th Floor, New York, New York 10016
for the following purposes:
(1) To set the number of Directors of the company at five and to elect five
Directors.
(2) To approve voting rights for shares of Common Stock of the Company which
may be acquired by The Times Mirror Company and/or its successors
("TMC") and which could result in TMC's ownership of more than 20% and
not more than 45% of the Company.
(3) To amend the Company's Restated Articles of Incorporation to change the
name of the Company from Alternate Marketing Networks, Inc. to a name,
to be determined by the Board of Directors, which better reflects the
Company's future direction.
(4) To amend the Company's Restated Articles of Incorporation to increase
the authorized Common Stock from 8,000,000 shares to 14,000,000 shares.
(5) To approve an increase in the number of shares authorized for issuance
under the 1995 Long-Term Incentive and Stock Option Plan from 400,000
shares to 500,000 shares.
(6) To approve an increase in the number of shares authorized for issuance
under the 1995 Outside Directors and Advisors Stock Option Plan from
50,000 to 75,000 shares.
(7) To approve the appointment of PricewaterhouseCoopers, LLP, as
independent auditors for the Company for the fiscal year ending December
31, 2000.
(8) To act upon such other business as may properly come before the meeting.
The Board of Directors has fixed the close of business on March 27, 2000
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 10, 2000
TABLE OF CONTENTS
GENERAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
RECORD DATE AND VOTING . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
BOARD RECOMMENDATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
PRINCIPAL SHAREHOLDERS AND OWNERSHIP OF MANAGEMENT . . . . . . . . . . . . . 6
PROPOSAL 1: ELECTION OF DIRECTORS . . . . . . . . . . . . . . . . . . . . . . 9
MANAGEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
PROPOSAL 2: VOTING RIGHTS FOR TMC . . . . . . . . . . . . . . . . . . . . . 16
PROPOSAL 3: CHANGE OF COMPANY NAME . . . . . . . . . . . . . . . . . . . . 18
PROPOSAL 4: INCREASE IN AUTHORIZED CAPITAL STOCK . . . . . . . . . . . . . 18
PROPOSAL 5: INCREASE IN NUMBER OF SHARES AUTHORIZED FOR ISSUANCE
UNDER 1995 LONG-TERM INCENTIVE AND STOCK OPTION PLAN . . . . . . . . . . . 19
PROPOSAL 6: INCREASE IN NUMBER OF SHARES AUTHORIZED FOR ISSUANCE
UNDER 1995 OUTSIDE DIRECTORS AND ADVISORS PLAN . . . . . . . . . . . . . . 22
MARKET VALUE AND RESALE OF OPTION SHARES . . . . . . . . . . . . . . . . . 24
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE . . . . . . . . . . 24
INDEMNIFICATION OF DIRECTORS AND OFFICERS . . . . . . . . . . . . . . . . . 25
CERTAIN TRANSACTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
PROPOSAL 7: RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS . . . . . . 26
PROPOSALS FOR FISCAL 2000 ANNUAL MEETING . . . . . . . . . . . . . . . . . 26
APPENDIX A. Acquiring Person Statement of The Times Mirror Company under
Michigan Statute 450.1795.
ALTERNATE MARKETING NETWORKS, INC.
One Ionia SW, Suite 300
Grand Rapids, MI 49503
(616) 235-0698
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 11, 2000
GENERAL INFORMATION
This proxy statement is furnished to shareholders by the Board of
Directors of Alternate Marketing Networks, Inc. (the "Company") for
solicitation of proxies for use at the Annual Meeting of Shareholders on
Thursday, May 11, 2000, to be held at 2 Park Avenue (between 32nd and 33rd
Streets), 8th Floor, New York, New York 10016, at 11:00 a.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 Notice. 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 in accordance with the recommendations of the Board (see
BOARD RECOMMENDATIONS) and in the discretion of the proxy holder as to any
other business which properly comes before the meeting. This proxy statement
and the enclosed proxy are being mailed to the shareholders of the Company on
or about April 10, 2000.
A copy of the Company's Annual Report on Form 10-KSB for the fiscal year
ended December 31, 1999, 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, 1999.
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, 2000, 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 4,122,993
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.
Amendment of the Incentive Plan, amendment of the Advisors Plan, and amendment
of the Restated Articles of Incorporation each require the affirmative votes of
a majority vote of the shares issued and outstanding. Approval of voting
rights for the TMC shares requires the affirmative vote of a majority of both
(i) all shares issued and outstanding and (ii) all such shares excluding
"interested shares" (See discussion under Proposal 2). The election of
directors is by plurality vote (i.e., in the event of more nominees than
positions, the five 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.
BOARD RECOMMENDATIONS
The Board of Directors recommends a vote (a) FOR election of each nominee
for director named herein; (b) FOR the election to the Board of Directors of
each nominee named in this proxy statement and on the enclosed proxy card; (c)
FOR allowing voting rights to shares of the Company's Common Stock that may be
acquired by The Times Mirror Company ("TMC") ; (d) FOR amendment of the
Company's Restated Articles of Incorporation to change the name of the
Company, (e) FOR the amendment to the Company's Restated Articles of
Incorporation to increase the authorized common stock, no par value, from
8,000,000 shares to 14,000,000 shares; (f) FOR the increase in the number of
shares authorized to be issued to the 1995 Long-Term Incentive and Stock Option
Plan (the "Incentive Plan"); (g) FOR the increase in the number of shares
authorized to be issued pursuant to the 1995 outside Directors and Advisors
Stock Option Plan (the "Directors Plan") and (h) FOR the appointment of
PricewaterhouseCoopers, LLP as independent auditors.
PRINCIPAL SHAREHOLDERS AND OWNERSHIP OF MANAGEMENT
The following table sets forth as of March 20, 2000 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), and (v) all
current 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 20, 2000 also includes the number of
shares which such person has the right to acquire through the exercise of
options on March 20, 2000 or within 60 days after March 20, 2000.
<TABLE>
<CAPTION>
Number of
Name and Address Shares Owned Percentage
<S> <C> <C>
Phillip D. Miller 798,593 (1)(2) 19.25%
One Ionia S.W., Suite 300
Grand Rapids, MI 49503
Stan Henry 818,593 (2)(3) 19.78%
425 Smith Street
Farmingdale, NY 11735
The Krieger Group 639,621 (4)(5) 15.43%
P.O. Box 7787
Princeton, NJ 08543
Thomas Hiatt 352,052 (6) 8.51%
Middlewest Ventures II, LP
201 N. Illinois Street, Suite 2240
Indianapolis, IN 46204
Louis Sito 5,000 (7) *
20 Fort Salonga Road
Fort Salonga, New York 11768
John McKeon 5,000 (7) *
Times Mirror Square
Los Angeles, CA 90053
Ruth Ann Carroll 100,000 (1) 2.37%
8 Concord Lane
Westport, CT 06880
David Kroeger 31,300 (1) *
359 Glen Arbor Drive NE
Rockford, MI 49341
Frank O'Connell 42,000 (1) 1.01%
21120 Highwood
Kildeer, IL 60047
Deborah Armstrong 0 *
8 Bote Court
Greenwich, CT 06830
The Times Mirror Company 689,552 (8) 16.72%
One Times Mirror Square
Los Angeles, CA 90053
All current executive 2,842,090 (1)(2)(3)(4) 65.22%
officers and current directors (5)(6)(7)
as a group (9 persons)
</TABLE>
* Less than one percent (1%).
(1) Includes 25,000 shares for Mr. Miller, 100,000 shares for Ms. Carroll,
30,000 shares for Mr. Kroeger, and 42,000 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 15,000 shares which may be purchased upon exercise of
options granted under the Directors Plan.
(4) Includes 5,000 shares which may be purchased by Dale B. Krieger, a former
director of the Company, upon exercise of an option granted under the
Directors 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, a former director of the Company,
(ii) 496,052 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) 63,538 shares held of record by Richard
A. Ruderman, which may be acquired upon exercise of options from Phillip
D. Miller and Stan Henry, each in the amount of 31,769 shares; (iv)
22,531 shares held of record by Paula Ruderman and (v) 35,000 shares held
in accounts managed by KR Financial, LLC, an investment advisor. Mr.
Krieger is the president and chief executive officer of KR Financial, LLC.
(6) Includes all shares held of record by Middlewest Ventures II, LP and
12,500 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.
(7) Includes 5,000 shares which may be acquired upon exercise of options
granted under the Outside Directors and Advisors Stock Option Plan. Does
not include shares held of record by TMC Messrs. Sito and McKeon, who are
affiliates of TMC.
(8) Does not include shares held of record by Messrs. McKeon and Sito, who
are affiliates of TMC.
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 five, consisting of Stan Henry,
Phillip D. Miller, Thomas Hiatt, Louis Sito and John McKeon, all of whom 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. Messrs. Sito and McKeon were appointed by the Board
in connection with the initial investment in the Company by TMC and TMC's
purchase of Common Stock held by Edelson Technology Partners II. Messrs. Sito
and McKeon fill vacancies created by the resignation of Harry Edelson in
November 1999 and by the resignation of Dale Krieger several years ago.
Harry Edelson, the manager of Edelson Technology Partners II, resigned from
the Board of the Company following the sale of the partnership's Common Stock
to TMC. Messrs. Sito and McKeon serve as representatives of TMC pursuant to
the terms of the stock purchase agreement between the Company and TMC, whereby
TMC is entitled to nominate two individuals for election to the Board of
Directors.
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 served as the president of This Week Newspapers,
Inc. ("This Week"), which publishes a chain of 71 weekly newspapers with
circulation of more than one million on Long Island, New York until 1997, when
it was sold to Times Mirror. 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. Mr. Henry is currently the president of WLUX radio.
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"). NHD was acquired by the
Company in 1996. Mr. Hiatt currently serves as a director of several
companies, including Bioanalytical Systems, Inc., PackageNet, Inc., PowerWay,
Inc. and Fifth Third Bank of Indiana.
Louis Sito. Mr. Sito has been a director of the Company since November
18, 1999. Mr. Sito is senior vice president of sales, responsible for
advertising, circulation and distribution for Newsday, Inc. He is also the
president and chief executive officer of DSA Community Publishing, LLC, a
wholly owned subsidiary of Newsday, Inc. (which is a wholly owned
subsidiary of TMC.)
John McKeon. Mr. McKeon has been a director of the Company since November
18, 1999. Mr. McKeon is senior vice president of advertising at the Los Angeles
Times and vice president at TMC. Mr. McKeon is also a director for the
Los Angeles Sports Council.
The Chairman of the Board of Directors (currently Phillip D. Miller) 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, 1999, the Board of Directors met five
times and no director attended less than 75% of the meetings of the Board.
Director Compensation
Non-employee directors do not receive any cash compensation but, pursuant
to Directors Plan, each non-employee director of the Company is granted stock
options on an annual basis when elected or re-elected to the Board of
Directors. Non-employee directors are reimbursed for expenses in accordance
with Company policy. Prior to September 30, 1999, the Company also
had a Deferred Compensation Plan for non-employee directors of the Company.
If a non-employee director chose to participate in the Deferred Compensation
Plan, payment of fees were deferred, as directed by the participant, and were
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, would be paid in the form of Common Stock. No
directors participated in the Deferred Compensation Plan in fiscal 1999 and on
September 29, 1999 the Deferred Compensation Plan was terminated.
See Proposal 6, below for a description of the Directors Plan and
discussion of the proposal to increase the number of shares reserved and
authorized for issuance under the Directors Plan.
Board Committees
The Board of Directors has established an Audit Committee and a
Compensation/Stock Option Committee. Each of these committees met once during
the fiscal year ended December 31, 1999 and all members of each committee
attended each meeting.
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/Stock Option Committee is to annually
review and approve management's overall compensation plan for the Company's
executive employees and to administer and interpret the Incentive Plan,
described below.
From January 1, 1999 through November 17, 1999, each of these two
committees was composed of the non-employee members of the Board as follows:
Stan Henry, Harry Edelson, and Thomas Hiatt. Effective in November, 1999 with
the resignation of Harry Edelson and the election of John McKeon and Louis Sito
to the Board of Directors, the committees were comprised as follows:
Audit Committee Compensation/Stock Option Committee
Stan Henry Thomas Hiatt
Louis Sito John McKeon
MANAGEMENT
Directors and Executive Officers
The following table sets forth certain information with respect to each
person who, as of March 27, 2000, is a director or executive officer of the
Company.
<TABLE>
<CAPTION>
Name Age Position(s) Held with Company
<S> <C> <C>
Phillip D. Miller 48 Chief Executive Officer and Chairman
Thomas Hiatt 52 Director
Louis Sito 55 Director
John McKeon 47 Director
Stan Henry 61 Director
Ruth Ann Carroll 57 President
Sandra J. Smith 41 Secretary, Treasurer, and Chief
Financial Officer
David Kroeger 32 Senior Vice President of Operations
Frank O'Connell 57 Vice President
</TABLE>
Phillip D. Miller. Mr. Miller is the founder of the Company and has
served as its Chief Executive Officer and as a member of the Board of Directors
since inception in 1988. In addition, from inception through December 31,
1998, Mr. Miller served as the Company's President. Mr. Miller resigned as
President effective with the appointment of Ruth Ann Carroll to this office on
January 1, 1999. 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.
David Kroeger. David Kroeger has been Vice President - Alternate Delivery
Division of the Company from July 1996 until December 1999 when he was
appointed as Senior Vice President of Operations. 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.
Ruth Ann Carroll. Ruth Ann Carroll was named President of the Company
effective January 1, 1999. She served as a Vice President of the Company from
December 1997 through December 1998. Prior to December 1997, 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 1997, 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, Sito, McKeon, and Henry.
Executive Compensation and Employment Agreements
The Company has entered into an employment agreement and addendum with
Phillip D. Miller, its Chief Executive Officer, which provides for a term of
five years expiring in September 2003 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.
Mr. Miller is also entitled to bonuses up to 30% of his base salary based on
attainment of performance criteria specified by the Compensation Committee.
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 also agrees to pay for the cost of dependent coverage included in
the Company's group health insurance plan.
The Company has entered into an employment agreement with Ruth Ann
Carroll which provides for a term of one year expiring on December 31, 2000 at
a base salary of $140,000 per year. The Company will pay Ms. Carroll a
$15,000 bonus for meeting the 2000 sample revenue budget, an additional $30,000
bonus for meeting the 2000 budget for operating profit, and an additional
$15,000 bonus for exceeding the 2000 budget for operating profit by 15% or
more. In addition, Ms. Carroll has been granted an incentive stock option for
100,000 shares under the Company's 1995 Incentive Plan. Such option becomes
exercisable in installments over four years at prices ranging from $1.04 per
share to $4.00 per share. The Company may terminate Ms. Carroll's employment
agreement effective immediately for "cause," including neglect of duty,
malfeasance, or continued failure to perform specified duties. In addition,
the Company may terminate the agreement at any time during its term, without
cause, upon giving notice to Ms. Carroll, in which case the Company is
obligated to pay four months of salary, plus any accrued vacation and earned
bonuses based upon the then current base salary. In the event of termination
of the agreement by Ms. Carroll, the Company is required to pay only salary
accrued through the date of termination, including any accrued bonus or
vacation pay. If the Company enters into an agreement to be acquired, Ms.
Carroll is entitled to receive a one-time payment equal to twelve months of her
base compensation if she chooses not to remain with the acquiring company.
The following table sets forth information about all compensation (cash
and noncash) awarded to, earned by, or paid to the executive officers named
therein (the "Named Executive Officers") pursuant to a plan or contract or
otherwise during fiscal years ended December 31, 1999, 1998 and 1997.
<TABLE>
<CAPTION>
Summary Compensation Table
Long Term
Annual Compensation Compensation
------------------------------------- ----------------------------------
Other Annual
Compensation All Other
Name & Principal Year Salary Bonus Other Options Comp.
Position ($) ($) ($) (#) ($)
<S> <C> <C> <C> <C> <C> <C>
Phillip D. Miller 1999 210,252 * * * 15,899(3,4,5)
Chief Executive 1998 206,387 * * * 9,672(3,4,5)
Officer 1997 202,404 * * 25,000 12,675(3,4,5)
Ruth Ann Carroll 1999 140,000 15,000 * * 7,021(3)(5)
President 1998 131,827 * * 100,000 4,167(3)
1997 1,923 * * * *
David Kroeger 1999 99,758 4,650 * * 650(5)
Sr Vice President
of Operations
Frank O'Connell 1999 57,000 3,500 127,404(1) 20,000 1,879(5)
Vice President 1998 57,000 * 102,194(1) 5,000 1,269(5)
1997 57,000 * 80,314(1) 17,000 1,206(5)
Deborah Armstrong 1999 125,000 * 35,208(1) * 1,250(5)
Vice President(6) 1998 125,000 * * * 577(5)
1997 83,546 * * 30,000 *
</TABLE>
*None
(1)sales commissions
(2)reimbursed moving expenses
(3)auto allowance
(4)insurance premiums
(5)401-K employer contributions
(6)No longer an employee as of the date of this Proxy Statement
Summary of Option Grants
Individual Option Grants In Last Fiscal Year
The following table contains information concerning individual grants of
stock options under the Incentive Plan to each of the Named Executive Officers
during the fiscal year ended December 31, 1999. See Proposal 5 for a
description of the Incentive Plan and discussion of the proposed increase in
the number of shares authorized and reserved for issuance under the Incentive
Plan.
Number of
Securities Percent of Total
Underlying Options Granted Exercise or
Options to Employees in Base Price
Granted(#) Fiscal Year ($/Share) Exp. Date
Name
Frank O'Connell 20,000 100% $1.39 August 5, 2009
Aggregated Option Exercises and Fiscal Year-End Option Value Table
The following table contains information concerning exercises of stock
options during the last fiscal year and the value of options previously granted
under the Incentive Plan which were held by the Named Executive Officers at the
end of the fiscal year ended December 31, 1999:
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In-The-Money Options
Option Exercises Options at FY-End (#) At FY-End ($)
---------------- -------------------- --------------------
Shares
Acquired on Value
Name Exercise(#) Realized Exerc. Unexerc. Exerc. Unexerc.
<S> <C> <C> <C> <C> <C> <C>
Phillip D. Miller None None 25,000 None (1) N/A
Frank O'Connell None None 17,000 25,000 (1) $13,356
Deborah Armstrong(2)None None 30,000 None (1) N/A
Ruth Ann Carroll None None 32,500 67,500 $ 6,458 $ 6,458
David Kroeger None None 10,000 5,000 (1) $ 2,153
</TABLE>
(1) Exercise price per share exceeded market value per share (based on sale
price of common stock reported on the Nasdaq SmallCap Market) at the end
of the fiscal year.
(2) No longer an employee as of the date of this Proxy Statement.
PROPOSAL 2
VOTING RIGHTS FOR TMC
At the Annual Meeting, shareholders will be asked to consider and vote on
the following proposed resolution.
RESOLVED, that pursuant to Section 450.1798 of the Michigan Business
Corporation Act (the "Act"), full voting rights are hereby granted to all
shares of Common Stock, no par value per share, of Alternate Marketing
Networks, Inc. (the "Company") that are, or become, beneficially owned by The
Times Mirror Company and/or its successors ("TMC") or over which TMC has or
will obtain the right to vote, regardless of whether such shares were or are
acquired in a control share acquisition as defined in Sections 450.1790 and
450.1791 of the Act, or otherwise; provided, however, that any shares
beneficially acquired by TMC in a transaction subject to Sections 450.1790
450.1799 of the Act in excess of that number of shares which is equal to more
than 50% of the shares then outstanding shall be denied voting rights in
accordance with such Sections unless such acquisition is exempt or approved as
provided in such Sections of the Act."
Background
Pursuant to Section 450.1790 of the Michigan Business Corporation Act, and
related definitions (the "Control Share Acquisition Provisions"), Common Stock
acquired in a "control share acquisition" (as defined) that exceeds specified
thresholds of voting power, expressed as a fraction of voting power of the
Company (i.e., 1/5 or more but less than 1/3, 1/3 or more but less than a
majority, or a majority) shall have the same voting rights as other shares only
if approved by resolution of the Company's shareholders. As set forth by TMC
in its Acquiring Person Statement (attached as Appendix A), TMC may seek to
acquire additional shares resulting in ownership between 25% and 45% of the
Company. TMC has requested that the Company seek shareholder approval of the
above resolution at the Annual Meeting.
TMC currently owns of record approximately 17% of the Company. These
shares were acquired from the Company (350,000 shares) and from Edelson
Technology Partners II (339,552 shares) on September 10, 1999. The Company
received $1,050,000 from the sale of the shares to TMC, and intends to use
these funds for acquisitions and new business development. Under the terms
of the Stock Purchase Agreement between the Company and TMC, TMC is entitled to
two nominees for election to the Board of Directors. Currently, two TMC
affiliates (John McKeon and Louis Sito) hold seats on the Board. In addition,
TMC has been granted rights to have the shares of Common Stock purchased by TMC
registered for future sale, including three demand rights and two participatory
rights. The Company believes that TMC's principal purpose for the investment
was and continues to be the development of various strategic alliances and
working relationships with the Company.
TMC and Tribune Company ("Tribune") recently announced the proposed
acquisition of TMC by Tribune. Approval of Proposal 2 will grant voting rights
to shares which may be acquired or owned by Tribune if the TMC acquisition is
consummated.
Our listing agreement with the Nasdaq Stock Market, Inc. requires
shareholder approval of issuance of the Company stock in certain circumstances,
including issuances of shares which could result in a change of control and
issuance of shares (other than by public offering) in an amount in excess of
20% of shares outstanding before the issuance if the issue price is less than
market value. The Company does not intend to issue shares to TMC or Tribune at
less than market value. While the Company believes that any transaction with
TMC or Tribune would not effect a change in control of the Company, it is
intended that approval of Proposal 2 will satisfy the Nasdaq shareholder
approval requirement for this purpose.
Vote Required
Under the Control Share Acquisition Provisions, the proposal being
presented to enable TMC to vote all Common Stock that it may acquire must
receive the following affirmative votes to be approved:
(1) The affirmative vote, whether in person or by proxy, of the holders of
a majority of all the Common Stock entitled to vote; and
(2) The affirmative vote, whether in person or by proxy, of the holders of
a majority of all Common Stock entitled to vote, excluding "interested shares"
as that term is defined in the Michigan statutes.
"Interested shares" consist of shares owned (1) by the acquiring person
(i.e. TMC and its affiliates), (2) by officers of the Company, and (3) by any
employee of the Company who is also a director of the Company. As of the
record date for the Annual Meeting, 4,122,993 shares were outstanding, and
1,464,945 shares were considered "interested shares." See "Principal
Shareholders and Ownership of Management."
Louis Sito, John McKeon, Thomas Hiatt, and Stan Henry, each of whom is a
director and, directly or indirectly, a principal shareholder of the Company,
and Phillip D. Miller, who is a director, chief executive officer, and a
principal shareholder of the Company, may each be deemed to have a special
interest (i.e., an interest in addition to their interests as holders of
Common Stock and/or as members of management) in the approval of this Proposal.
In particular, Messrs. Sito and McKeon were elected to the Board of Directors
in connection with TMC's initial investment in the Company and serve on the
Board as representatives of TMC; and, if this Proposal is approved, and if TMC
purchases additional shares, such shares could be purchased in whole or in part
from Messrs. Hiatt, Henry and Miller. Such acquisition(s), if any, would be
separately negotiated between TMC and the seller and would not involve the
Company.
PROPOSAL 3
CHANGE OF COMPANY NAME
The Board of Directors believes that a change of the name of the Company
is desirable to appropriately reflect the Company's evolution as a marketing
services company. However, the Board has not yet selected a name which meets
its criteria. Approval of this Proposal will authorize the Board to select a
name which better identifies the Company as a multi-service marketing
organization, and to file an amendment to the Company's Restated Articles of
Incorporation to effect this change.
PROPOSAL 4
INCREASE IN AUTHORIZED CAPITAL STOCK
The Board has approved, subject to shareholder approval, an amendment of
the Company's Restated Articles of Incorporation to increase the number of
authorized shares of Common Stock, no par value ("Common Stock"), from
8,000,000 to 14,000,000. As of December 31, 1999, 4,082,177 shares of Common
Stock were issued and outstanding and 744,875 shares were reserved for issuance
under the Company's Incentive Plan, Directors Plan, and outstanding warrants.
If the shareholders approve the proposed increases in the numbers of shares to
be reserved and authorized for issuance under the Incentive Plan (Proposal 5)
and the Directors Plan (Proposal 6), the number of shares reserved for issuance
will increase to 869,875.
The Board believes that the proposed increase is desirable so that, as the
need may arise, the Company will have more flexibility to issue shares of
Common Stock without the expense and delay of a special shareholders' meeting,
in connection with possible future stock dividends or stock splits, equity
financings, future opportunities for expanding the business through investments
or acquisitions, management incentive and employee benefit plans and for other
general corporate purposes.
The increase in authorized Common Stock will not have any immediate effect
on the rights of existing shareholders. However, the Board will have the
authority to issue authorized Common Stock for such purposes and for such
consideration as the Board of Directors may determine to be appropriate without
requiring future shareholder approval of such issuances, except as may be
required by applicable law or exchange regulations. To the extent that
additional authorized shares are issued in the future, they will decrease the
existing shareholders' percentage equity ownership and, depending upon the
price at which they are issued, could be dilutive to the existing shareholders.
Issuance of additional shares could also adversely affect the market price
of the Company's Common Stock. The holders of Common Stock have no preemptive
rights to acquire additional shares which may be issued.
The increase in the authorized number of shares of Common Stock and the
subsequent issuance of such shares could have the effect of delaying or
preventing a change in control of the Company without further action by the
shareholders. Shares of authorized and unissued Common Stock could be issued
(within the limits imposed by applicable law) in one or more transactions which
would make a change in control of the Company more difficult, and therefore
less likely. Any such issuance of additional stock could have the effect of
diluting the earnings per share and book value per share of outstanding shares
of Common Stock, and such additional shares could be used to dilute the stock
ownership or voting rights of a person seeking to obtain control of the
Company.
The Company currently has no plans to issue additional shares of Common
Stock except as contemplated by the Incentive Plan, the Directors Plan,
outstanding warrants, and any additional investment by TMC.
PROPOSAL 5
INCREASE IN NUMBER OF SHARES AUTHORIZED FOR
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-time and 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. As of December
31, 1999, approximately 75 people are entitled to participate in the Incentive
Plan. As of March 6, 2000, 523,854 options have been granted and 289,200 are
outstanding. 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 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. All incentive and nonqualified options
outstanding as of March 27, 2000 expire by their terms one month after the
optionee ceases to be an employee of the Company (except that other provisions
apply in the event of the employee's death or disability).
Proposed Increase in Number of Shares.
As of December 31, 1999, 299,200 shares reserved under the Incentive Plan
were subject to outstanding options and no options granted under the Incentive
Plan had been exercised. In general, options become exercisable in equal
installments over several years commencing with the first anniversary of grant.
However, as of March 27, 2000 options for 100,000 shares granted to an
executive officer provide for automatic acceleration of exercisability in the
event of a change in control of the Company or other significant corporate
transaction.
The Board anticipates that it will continue to grant options to management
employees as part of its incentive program. On September 29, 1999, the Board
of Directors of the Company increased the number of shares reserved and
authorized for issuance under the Incentive Plan from 400,000 to 500,000,
subject to shareholder approval. In order to have sufficient shares available,
the Board recommends approval of the increase. As of September 29, 1999, the
Board terminated the Outside Directors Deferred Compensation Plan and it is
intended that the 42,767 shares remaining unused in that plan will constitute a
portion of the increase in shares under the Incentive Plan.
Options Granted from the Incentive Plan.
The following table sets forth as of December 31, 1999, the number of
stock options granted to the individuals or groups indicated:
<TABLE>
<CAPTION>
Total Options
Granted and Outstanding
Under the Incentive Plan
<S> <C>
Phillip D. Miller . . . . . . . . . . . . . . . . . . . . . . 25,000
Ruth Ann Carroll . . . . . . . . . . . . . . . . . . . . . . 100,000
Frank O'Connell . . . . . . . . . . . . . . . . . . . . . . 42,000
Deborah Armstrong . . . . . . . . . . . . . . . . . . . . . . 30,000
David Kroeger . . . . . . . . . . . . . . . . . . . . . . . . 15,000
All executive officers as a group (7 persons) . . . . . . . . 237,000
All employees as group (excluding executive officers ). . . . 44,700
All directors who are not executive officers as a group (*) . .17,500
Current nominees for election as director as a group . . . . . None
Associates of directors, executives, officers, and
director nominees, as a group . . . . . . . . . . . . . . . . . None
Each other person who has received or is to receive
5% or more of such options or other awards . . . . . . . . . . None
</TABLE>
*Includes individuals no longer serving in such capacity.
Tax Rules. The following is a brief summary of the federal income tax
rules currently applicable to stock options that may be granted under the
Incentive Plan.
The grant of a NQSO will have no immediate tax consequences to the grantee
or to the Company. Upon the exercise of a NQSO, the grantee will recognize
ordinary income (and the Company will generally be entitled to a compensation
deduction) in an amount equal to the excess of the fair market value of the
shares of Common Stock on the date of the exercise of the option over the
option exercise price. The grantee's tax basis in the shares will be the
exercise price plus the amount of ordinary income recognized by the grantee,
and the grantee's holding period will commence on the date the shares are
transferred.
Upon a subsequent sale of shares of Common Stock acquired pursuant to the
exercise of a NQSO, any difference between the grantee's tax basis in the
shares and the amount realized on the sale is treated as long-term or short-
term capital gain or loss, depending on the holding period of the shares.
The grant of an ISO will have no immediate tax consequences to the grantee
or to the Company. The exercise of an ISO by the payment of cash to the
Company will generally have no immediate tax consequences to the grantee
(except to the extent it is an adjustment in computing alternative minimum
taxable income) or to the Company. If a grantee holds the shares acquired
pursuant to the exercise of an ISO for the required holding period, the grantee
generally will realize long-term capital gain or long-term capital loss upon a
subsequent sale of the shares in the amount of the difference between the
amount realized upon the sale and the purchase price of the shares (i.e., the
exercise price). In such case, no compensation deduction will be allowable to
the Company in connection with the grant or exercise of the ISO or the sale of
shares of Common Stock acquired pursuant to such exercise.
If, however, a grantee disposes of the shares prior to the expiration of
the required holding period (a "disqualifying disposition"), the grantee will
recognize ordinary income (and the Company will generally be entitled to a
compensation deduction equal to the excess of the fair market value of the
shares of Common Stock on the date of exercise (or the proceeds of the
disposition, if less) over the exercise price.
Certain limitations apply to the Company's deduction of compensation
payable to the person serving as its chief executive officer or to any of its
four other most highly compensated executives in office as of the end of the
year in which such compensation would otherwise be deductible. In general,
the Company may not deduct compensation, other than "performance-based"
compensation, payable to such an executive in excess of $1 million for any
year. Income resulting from the exercise of a stock option may be included in
calculation of total income for purposes of determining whether the $1 million
limit has been exceeded.
PROPOSAL 6
INCREASE IN NUMBER OF SHARES AUTHORIZED
FOR ISSUANCE UNDER 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
(which is currently inactive). 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
(currently, four persons) 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 6, 2000, 57,500 options have been granted and
47,500 are outstanding. 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 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 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."
Proposed Increase in Number of Shares.
As of December 31, 1999, 47,500 shares reserved under the Directors Plan
were subject to outstanding options and 5,000 options granted under the
Directors Plan had been exercised. Options under the Directors Plan are issued
automatically, without any Board action, to each new non-employee Board member,
upon election, and annually upon re-election. Accordingly, the Board
anticipates that the Company will continue to grant options as part of its
program to recruit and retain Directors. On September 29, 1999, the Board of
Directors of the Company increased the number of shares reserved and authorized
for issuance under the Directors Plan from 50,000 to 75,000, subject to
shareholder approval. In order to have sufficient shares available, the Board
recommends that the approval of the increase in number of shares reserved for
issuance under the Directors Plan.
Options Granted from the Directors Plan.
The following table sets forth as of December 31, 1999, the number of
stock options granted to the individuals indicated:
<TABLE>
<CAPTION>
Total Options
Granted and Outstanding
Under the Directors Plan
<S> <C>
Dale B. Krieger (former director) . . . . . . . . . . . 5,000
Harry Edelson (former director) . . . . . . . . . . . . 5,000
Charles Rees (former director) . . . . . . . . . . . . . 5,000
Tom Hiatt . . . . . . . . . . . . . . . . . . . . . . . 7,500
Louis Sito . . . . . . . . . . . . . . . . . . . . . . . 5,000
John McKeon . . . . . . . . . . . . . . . . . . . . . . 5,000
Stan Henry . . . . . . . . . . . . . . . . . . . . . . . 15,000
</TABLE>
Tax Rules. The following is a brief summary of the federal income tax
rules currently applicable to stock options that may be granted under the
Directors Plan.
Every option granted under the Directors Plan is a Non-Qualified Stock
Option. The grant of a NQSO will have no immediate tax consequences to the
grantee or to the Company. Upon the exercise of a NQSO, the grantee will
recognize ordinary income (and the Company will generally be entitled to a
compensation deduction) in an amount equal to the excess of the fair market
value of the shares of Common Stock on the date of the exercise of the option
over the option exercise price. The grantee's tax basis in the shares will be
the exercise price plus the amount of ordinary income recognized by the
grantee, and the grantee's holding period will commence on the date the shares
are transferred.
Upon a subsequent sale of shares of Common Stock acquired pursuant to the
exercise of a NQSO, any difference between the grantee's tax basis in the
shares and the amount realized on the sale is treated as long-term or short-
term capital gain or loss, depending on the holding period of the shares.
MARKET VALUE AND RESALE OF OPTION SHARES
Market value and tradability of the shares issuable under the Incentive
Plan and Directors Plan may be a consideration for some shareholders in
evaluating Proposals 5 and 6.
As of March 3, 2000, 4,122,993 shares of the Company's Common Stock were
issued and outstanding. On March 3, 2000, the closing sale price for the
Company's Common Stock on the Nasdaq SmallCap Market was $2.875 per share.
The shares authorized for issuance under Incentive Plan and Directors Plan
(including the shares which are subject to approval by the shareholders at the
Annual Meeting) are registered under the Securities Act of 1933 and, upon
issuance, are freely tradable.
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, 1999.
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.
CERTAIN TRANSACTIONS
On April 2, 1998, the Company sold to Michael Lynch, a former executive
officer, certain assets utilized by the Company in its operations in
California, for an aggregate purchase price of $10,000 in cash, 10,000 shares
of the Company's Common Stock valued at $1.00 per share, and the assumption of
certain leases. The Company believes that this transaction was negotiated at
arms' length, given the parties' intention to terminate the employer-employee
relationship immediately following the purchase transaction.
See Proposal 1 (Election of Directors) and Proposal 2 (Approval of Voting
Rights for TMC shares) regarding the election of Louis Sito and John McKeon in
connection with the initial investment in the Company by TMC.
PROPOSAL 7
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors has appointed PricewaterhouseCoopers, LLP,
independent auditors, to audit the financial statements of the Company for the
fiscal year ending December 31, 2000. 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 PricewaterhouseCoopers, LLP is
expected to be present at the shareholders meeting with the opportunity to make
a statement if such representative desire do so and is expected to be available
to respond to appropriate questions.
PROPOSALS FOR FISCAL 2000 ANNUAL MEETING
It is currently anticipated that the annual meeting for the fiscal year
ending December 31, 2000 (the "2000 Annual Meeting") will be held in mid-May,
2001 and that the proxy materials for that meeting will be mailed on or about
April 15, 2001. Pursuant to SEC Rule 14a-8, shareholders who intend to submit
proposals for including in the 2000 Proxy Statement and Proxy for shareholder
action at the 2000 Annual Meeting must do so by sending the proposal and
supporting statements, if any, to the Company at its corporate office no later
than December 20, 2000. Additionally, if the Company receives notice of a
shareholder proposal after March 3, 2001 it will be considered untimely
pursuant to SEC Rule 14a-4 and 14a-5(e) and the persons named in the proxies
solicited by the Board of Directors for the 2000 Annual Meeting may
exercise discretionary voting power with respect to the proposal.
By Order of the Board of Directors
/s/ Sandra J. Smith
Sandra J. Smith, Secretary
Dated: April 10, 2000
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 MARKETING NETWORKS, INC., ATTENTION: SANDRA J. SMITH, CHIEF
FINANCIAL OFFICER, ONE IONIA SW, SUITE 300, GRAND RAPIDS, MI 49503.
ACQUIRING PERSON STATEMENT
The Times Mirror Company, a Delaware corporation ("Times Mirror"), hereby
submits to Alternate Marketing Networks, Inc., a Michigan corporation (the
"Company"), this Acquiring Person Statement (this "Statement") pursuant to
Section 450.1795 of the Michigan Business Corporation Act (the "Act"). As
required by that section, this Statement provides the following information,
which is for informational purposes only:
1. The identity of the potential acquiring person is Times Mirror.
2. This Statement is given pursuant to Chapter 7B--Control Share
Acquisitions--of the Act.
3. As of February 23, 2000, Times Mirror beneficially owned 689,552 shares of
common stock of the Company. In addition, as of February 23, 2000, officers of
Times Mirror serving on the Board of Directors of the Company held options to
purchase an aggregate of 10,000 shares of the common stock of the Company.
Other than as set forth above, as of February 23, 2000, Times Mirror did not
beneficially own, directly or indirectly, or have the power, directly or
indirectly, to direct the exercise of voting power of any voting securities of
the Company.
4. As of February 23, 2000, the voting power attributable to Times Mirror (as
described in paragraph 3 above) is 16.9% (assuming exercise of the options by
the Directors affiliated with Times Mirror). Accordingly, Times Mirror's
current ownership is below the first threshold (20%) triggering applicability
of Chapter 7B. Times Mirror may decide to purchase additional shares of common
stock of the Company (through open-market purchases, privately negotiated
transactions or otherwise) that would result in Times Mirror's voting power
being between 20% and 45%. Times Mirror may also decide to sell some or all of
the shares of Common Stock of the Company that is presently beneficially owns.
Times Mirror, however, presently does not have any commitment or intention to
acquire or sell any shares of common stock of the Company and may never acquire
or sell any such shares.
5. Times Mirror has provided this Acquiring Person Statement to the Company in
order to obtain the shareholder approval necessary to afford it voting rights
at the Company's upcoming regular annual shareholder meeting. Times Mirror has
the financial capability to consummate any future control share acquisition
from its own funds. As no control share acquisition is currently
contemplated, the specific purposes of any such acquisition cannot be disclosed
at this time.
