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:
[x] Preliminary proxy statement
[ ] Confidential, for use of the commission only (as permitted by
Rule 14a-6(e)(2))
[ ] 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 ("TMC") and/or its
successors, 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 ("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 . . . . . . . . . . . . . . . . . . . . . . 8
MANAGEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
PROPOSAL 2: VOTING RIGHTS FOR TMC . . . . . . . . . . . . . . . . . . . . . 15
PROPOSAL 3: CHANGE OF COMPANY NAME . . . . . . . . . . . . . . . . . . . . . 17
PROPOSAL 4: INCREASE IN AUTHORIZED CAPITAL STOCK . . . . . . . . . . . . . . 17
PROPOSAL 5: INCREASE IN NUMBER OF SHARES AUTHORIZED FOR ISSUANCE
UNDER 1995 LONG-TERM INCENTIVE AND STOCK OPTION PLAN . . . . . . . . . . . . 18
PROPOSAL 6: INCREASE IN NUMBER OF SHARES AUTHORIZED FOR ISSUANCE
UNDER 1995 OUTSIDE DIRECTORS AND ADVISORS PLAN . . . . . . . . . . . . . . . 21
MARKET VALUE AND RESALE OF OPTION SHARES . . . . . . . . . . . . . . . . . . 24
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE . . . . . . . . . . 24
INDEMNIFICATION OF DIRECTORS AND OFFICERS . . . . . . . . . . . . . . . . . 24
CERTAIN TRANSACTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
PROPOSAL 7: RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS . . . . . . 25
PROPOSALS FOR FISCAL 2000 ANNUAL MEETING . . . . . . . . . . . . . . . . . . 25
APPENDICES:
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 27, 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 27, 2000 also includes the number of
shares which such person has the right to acquire through the exercise of
options on March 27, 2000 or within 60 days after March 27, 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 644,421 (4)(5) 15.55%
P.O. Box 7787
202 Carnegie Center
Princeton, NJ 08540
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
Frank O'Connell 42,000 (1) 1.01%
21120 Highwood
Kildeer, IL 60047
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,
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)
500,052 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) 23,331 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 is currently 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. 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 receive cash fees of $500 per meeting and are
reimbursed for expenses in accordance with Company policy. In addition,
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. 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, a Compensation
Committee, a Stock Option Committee and a Nominating 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 Committee is to annually review and approve
management's overall compensation plan for the Company's executive employees.
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 Incentive 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.
During fiscal 1999 each of these four committees was composed of the
non-employee members of the Board, who are Stan Henry, Thomas Hiatt and Harry
Edelson (who resigned in November, 1999).
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 $4.00 per share. The Company may terminate Ms. Carroll's employment
agreement effective immediately for "cause," including neglect of duty,
malfeasance, or continued failure to perform specified duties. In addition,
the Company may terminate the agreement at any time during its term, without
cause, upon giving notice to Ms. Carroll, in which case the Company is
obligated to pay four months of salary, plus any accrued vacation and earned
bonuses based upon the then current base salary. In the event of termination
of the agreement by Ms. Carroll, the Company is required to pay only salary
accrued through the date of termination, including any accrued bonus or
vacation pay. If the Company enters into an agreement to be acquired, Ms.
Carroll is entitled to receive a one-time payment equal to twelve months of
her base compensation if she chooses not to remain with the acquiring
company.
The following table sets forth information about all compensation (cash
and noncash) awarded to, earned by, or paid to the executive officers named
therein (the "Named Executive Officers") pursuant to a plan or contract or
otherwise during fiscal years ended December 31, 1999, 1998 and 1997.
<TABLE>
<CAPTION>
Summary Compensation Table
Long Term
Annual Compensation Compensation
--------------------------------- ---------------------
Other Annual
Compensation All Other
Name & Principal Year Salary Bonus Other Options Comp.
Position ($) ($) ($) (#) ($)
<S> <C> <C> <C> <C> <C> <C>
Phillip D. Miller 1999 210,252 * * * 15,899(3,4,5)
Chief Executive 1998 206,387 * * * 9,672(3,4,5)
Officer 1997 202,404 * * 25,000 12,675(3,4,5)
Ruth Ann Carroll 1999 140,000 15,000 * * 7,021(3)(5)
President 1998 131,827 * * 100,000 4,167(3)
1997 1,923 * * * *
David Kroeger 1999 99,758 4,650 * * 650(5)
Sr Vice President
of Operations
Frank O'Connell 1999 57,000 3,500 127,404(1) 20,000 1,879(5)
Vice President 1998 57,000 * 102,194(1) 5,000 1,269(5)
1997 57,000 * 80,314(1) 17,000 1,206(5)
Deborah Armstrong 1999 125,000 * 35,208(1) * 1,250(5)
Vice President(6) 1998 125,000 * * * 577(5)
1997 83,546 * * 30,000 *
</TABLE>
*None
(1)sales commissions
(2)reimbursed moving expenses
(3)auto allowance
(4)insurance premiums
(5)401-K employer contributions
(6)No longer an employee as of the date of this Proxy Statement
Summary of Option Grants
Individual Option Grants In Last Fiscal Year
The following table contains information concerning individual grants of
stock options under the Incentive Plan to each of the Named Executive Officers
during the fiscal year ended December 31, 1999. See Proposal 5 for a
description of the Incentive Plan and discussion of the proposed increase in
the number of shares authorized and reserved for issuance under the
Incentive Plan.
<TABLE>
<CAPTION>
Number of
Securities Percent of Total
Underlying Options Granted Exercise or
Options to Employees in Base Price
Granted(#) Fiscal Year ($/Share) Exp. Date
Name
<S> <C> <C> <C> <C>
Frank O'Connell 20,000 100% $1.39 August 5, 2009
</TABLE>
Aggregated Option Exercises and Fiscal Year-End Option Value Table
The following table contains information concerning exercises of stock
options during the last fiscal year and the value of options previously granted
under the Incentive Plan which were held by the Named Executive Officers at the
end of the fiscal year ended December 31, 1999:
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In-The-Money Options
Option Exercises Options at FY-End (#) At FY-End ($)
---------------- -------------------- --------------------
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 ("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.
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
beneficially owned 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. If Times Mirror decides to purchase any
additional shares of common stock of the Company, that acquisition may
result in Times Mirror's voting power being between 20% and 45%. Times
Mirror does not presently intend to acquire any additional shares of common
stock of the Company and may never acquire 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.
