PRIME CAPITAL CORPORATION
O'Hare International Center
10275 West Higgins Road
Rosemont, Illinois 60018
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
August 31, 1994
To the Stockholders of
PRIME CAPITAL CORPORATION:
The Annual Meeting of Stockholders (the "Annual Meeting") of Prime Capital
Corporation, a Delaware corporation (the "Company"), will be held on August 31,
1994, at 11:00 o'clock a.m. (C.D.T.), at O'Hare International Conference Center,
10275 West Higgins Road, Rosemont, Illinois 60018 for the following purposes:
1. To elect a Board of Directors to serve for the ensuing year.
2. To consider and act upon a proposal to ratify the selection by the
Board of Directors of KPMG Peat Marwick as auditors of the Company for
the current fiscal year.
3. To consider increasing current stock option plan by 200,000 shares.
4. To act upon any and all matters incident to any of the foregoing and
transact such other business as may properly be brought before the
meeting or any adjournments thereof.
Only stockholders of record at the close of business on July 15, 1994,
will be entitled to notice of, and to vote, at the Annual Meeting or any
adjournments thereof.
All stockholders of record on that date are entitled to be present and
to vote at the Annual Meeting and are cordially invited to attend the Annual
Meeting. If you plan to attend, you may obtain an admittance card by
completing the enclosed reservation form and returning it with your proxy.
Stockholders are urged, whether or not they plan to attend the Annual Meeting,
to mark, date and sign the enclosed proxy and return it promptly in the
accompanying envelope. If you attend the Annual Meeting and vote by ballot
at the Annual Meeting, you can revoke your proxy at that time and your vote
at the Annual Meeting will be counted.
By Order of the Board of Directors
Suzanne M. Jackson
Secretary
Rosemont, Illinois
July 18, 1994
<PAGE>
<PAGE>
PRIME CAPITAL CORPORATION
O'Hare International Center
10275 West Higgins Road
Rosemont, IL 60018
PROXY STATEMENT FOR ANNUAL MEETING
August 31, 1994
INTRODUCTION
Solicitation, Voting and Revocation of Proxies
This Proxy Statement is furnished in connection with the solicitation by,
and on behalf of, the Board of Directors of Prime Capital Corporation (the
"Company") of proxies to be voted at the Annual Meeting of Stockholders (the
"Annual Meeting") of the Company on August 31, 1994, and at any adjournment
or adjournments thereof. This Proxy Statement and the accompanying proxy
card are being mailed to stockholders on or about July 22, 1994. The Annual
Meeting is called for the purposes stated in the accompanying Notice of
Annual Meeting of Stockholders (the "Notice") which are (i) elect a board
of directors; (ii) ratify the selection of auditors; and (iii) increase the
current stock option plan by 200,000 shares. If a proxy is properly signed and
is not revoked by the stockholder, the shares represented thereby
will be voted by the Proxy Committee in accordance with the stockholder's
directions. Stockholders are urged to specify their choices by marking the
appropriate boxes on the enclosed proxy card. If no choice has been specified,
the shares will be voted by the Proxy Committee "FOR" the election of
management's slate of directors, the ratification of KPMG Peat Marwick as
auditors of the Company for the current fiscal year, and the increase of the
current stock option plan by 200,000 shares. The Proxy Committee consists of
James A. Friedman, Leander W. Jennings, Marvin T. Keeling, William D. Smithburg
and Robert T. Youngquist. Proxy cards also confer upon the Proxy Committee
discretionary authority to vote the shares represented thereby on any matter
which is not known at this time but may be presented for action at the meeting.
The Company does not know of any other matters that will be presented at the
Annual Meeting. If any other matter comes before the Annual Meeting, or any
of its adjournments, however, the members of the Proxy Committee will vote in
accordance with their best judgement.
A proxy may be revoked at any time before it is exercised by voting in
person at the Annual Meeting or by a later proxy, or by written notice of
revocation bearing a later date which is delivered to the Secretary of the
Company at or prior to the Annual Meeting.
Cost and Manner of Solicitation
The Company will bear the cost of the solicitation of proxies, including
the charges and expenses of brokerage firms and other custodians, nominees,
and fiduciaries for forwarding proxy materials to beneficial owners of the
Company's stock. Solicitations will be made primarily by mail, but certain
directors, officers or regular employees of the Company may solicit proxies in
person or by telephone or telegram without special compensation.
<PAGE>
<PAGE>
Available Reports; Incorporation by Reference
This Proxy Statement is accompanied by a copy of the Company's Annual
Report to Stockholders for the fiscal year ended December 31, 1993. That report
includes financial statements for the year ended December 31, 1993 audited by
KPMG Peat Marwick, the Company's independent accountants. The Annual Report
to the Stockholders is furnished for information only and no part thereof is
incorporated by reference in this Proxy Statement.
UPON WRITTEN REQUEST OF ANY STOCKHOLDER, THE COMPANY WILL PROVIDE,
WITHOUT CHARGE, A COPY OF ITS ANNUAL REPORT ON FORM 10-KSB; WITHOUT
EXHIBITS, AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 31,
1994. THE EXHIBITS THERETO WILL BE AVAILABLE AT A CHARGE OF $.20 PER PAGE.
REQUESTS SHOULD BE ADDRESSED TO THE COMPANY IN CARE OF INVESTOR RELATIONS,
PRIME CAPITAL CORPORATION, O'HARE INTERNATIONAL CENTER, 10275 W. HIGGINS
ROAD, ROSEMONT, ILLINOIS 60018. ALSO AVAILABLE IS THE COMPANY'S FIRST QUARTER
REPORT ON FORM 10-QSB AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION
ON MAY 13, 1994.
Voting Securities
The Board of Directors has fixed the close of business on July 15, 1994 as
the record date for determining stockholders entitled to notice of, and to vote
at, the Annual Meeting. The voting securities issued and outstanding on the
record date consist of 4,280,165 shares of the Company's Common Stock,
$.05 par value ("Common Stock"), each share of which is entitled to one vote.
ELECTION OF DIRECTORS
Voting for Directors
A Board of five Directors will be elected at the 1994 Annual Meeting. All
Directors are elected annually and hold office until the next annual meeting of
stockholders or until their successors have been elected and qualified.
All five of the present Directors have been nominated by the Board for
re-election. The Board has no reason to anticipate that any nominee will
decline or be unable to serve. In the event that any nominee does decline
or is unable to serve, proxies may be voted for the election of a substitute
nominee or may be voted for a lesser number of Directors. In the absence of
instructions to the contrary, proxies will be voted for the election of the
Directors named below.
<PAGE>
<PAGE>
The Board of Directors recommends a vote "FOR" the election of the nominees
for Directors. Certain information concerning the nominees is set forth below.
<TABLE>
<CAPTION>
Principal Occupation During Past Director
Name Five Years and Other Information Age Since
<S> <C> <C> <C>
James A. Friedman President and Chief Executive Officer 49 1978
of the Company since November 1978;
Treasurer of the Company from August
1979 to September 1985. Officer and
Director of PLI.
Leander W. Jennings President of Jennings & Associates since 65 1986
September 1986; Managing Partner, Chicago
Office of KPMG Peat Marwick from
January 1977 to February 1985; Director
of A.O. Smith Corporation, Alberto Culver
Corporation, Fruit of the Loom, Teppco
Partners L.P., and Walker Corporation.
Marvin T. Keeling President and Chief Executive Officer 51 1978
of Great Lakes Telecommunications
Corporation. Director of PLI.
William D.Smithburg Chairman of The Quaker Oats Company 56 1986
since 1983 and Chief Executive Officer thereof
since 1981; Director of The Quaker Oats
Company, Abbott Laboratories, The Northern
Trust Corporation and Corning, Inc.
Robert R.Youngquist Practicing Orthodontist and owner of 45 1978
D.D.S. Robert R. Youngquist D.D.S., Ltd.
</TABLE>
<PAGE>
<PAGE>
The Board of Directors
The Company's business is managed under the direction of the Board of
Directors. During 1993, the Board of Directors held 3 regular meetings. The
standard Committees of the Board are the Executive Committee, the Audit
Committee, and the Compensation and Stock Option Committee. The Board does
not have a standing Nominating Committee. All Directors attended all meetings
of the Board of Directors and meetings held by all committees of the Board on
which the Director served during the period that the Director served.
Committees of the Board of Directors
The Executive Committee exercises all the powers and authority of the Board
of Directors in the management of the business and affairs of the Company during
the intervals between meetings of the Board, subject to the restrictions set
forth in the By-Laws. The members of the Executive Committee are:
James A. Friedman (Chairman), Marvin T. Keeling and William D. Smithburg. The
Executive Committee did not meet separately during 1993.
The Audit Committee has the general responsibility for establishing and
maintaining communications with the Company's internal and independent
accountants, reviewing the methods used and examinations made by the auditors
in connection with the Company's published financial statements and reviewing
with the auditors the Company's financial and operating controls. The
members of the Audit Committee are: Leander W. Jennings (Chairman) and William
D. Smithburg. The Audit Committee met 2 times during 1993.
The Compensation and Stock Option Committee oversees the Company's
compensation and benefit policies and programs, including the administration of
the 1984 Incentive Stock Option Plan, the 1986 Non-Qualified Stock Option Plan
and the 1987 Stock Option Plan. The Committee also has general
responsibility for the Company's personnel and compensation matters. The
Committee consists of the following Directors of the Company: James A. Friedman
and Marvin T. Keeling. The Committee met 5 times during 1993.
Increase in Stock Option Shares
The Company, through the Board of Directors, administers a stock option
plan. See "Compensation Pursuant to Plans" on page 7. An aggregate of 300,000
shares of the Company's Common Stock was reserved for issuance pursuant to the
exercise of options under the 1987 Stock Option Plan (the "1987 Plan").
The 1987 Plan originally received 200,000 shares from the 1984 Incentive
Stock Option Plan and 15,000 from the 1986 Non-qualified Stock Option Plan.
There will be presented to the meeting a proposal to amend the 1987 Plan to
increase the aggregate number of available shares of the Company's Common
Stock from 300,000 to 500,000 shares. The number of shares available for
options has not been increased since 1987. The Company desires to remain
competitive in its industry in order to be able to keep its best personnel and
attract new people to the Company. The Board of Directors believes this type
of incentive arrangement is critical for this purpose and believes the increase
in the number of authorized shares will assist in achieving these objectives.
If shares under a grant are not issued or transferred, those shares would be
available for inclusion in future grants. The Board of Directors recommends a
vote "FOR" this proposal.
<PAGE>
<PAGE>
EXECUTIVE COMPENSATION AND OTHER INFORMATION
The following table shows all the cash compensation paid or to be paid by
the Company or any of its subsidiaries, as well as certain other compensation
paid or accrued, during the fiscal years indicated, to the President and
Chief Executive Officer, and the three highest paid executive officers of the
Company whose compensation was at least $100,000 for the last fiscal year in
all capacities in which they served:
<TABLE>
SUMMARY COMPENSATION TABLE
Annual Compensation
<CAPTION>
(a) (b) (c) (d) (e) (f)
Name and Other
Principal Salary Annual Options
Position Year ($) Bonus($) Compensation($)
<S> <C> <C> <C> <C> <C>
James A. Friedman, 1993 200,150 158,850
President and 1992 225,537 75,000
Chief Executive 1991 299,573
Officer
W. Barry Tanner 1993 102,228 55,000
Senior Vice 1992 198,494<F1> 25,000
President 1991 ---
<FN>
<F1> Includes severance payment of $37,500 and a loan of $34,000. See "Certain
Relationships and Related Transaction".
</TABLE>
<PAGE>
<TABLE>
<PAGE>
Options Grants in Last Fiscal Year
Individual Grants
<CAPTION>
(a) (b) (c) (d) (e)
% of Total Options Exercise or
Options Granted to Employees Base Price
Name Granted (#) In Fiscal Year ($/Sh) Expiration Date
<S> <C> <C> <C> <C>
David L. 25,000<F2> 100% $7/8 June 1, 2003
Daum
<F2> One-third of the options will be exercisable as of June 1, 1994; 2/3 of
the options will be exercisable as of June 1, 1995; and all 25,000 options will
be exercisable as of June 1, 1996.
</TABLE>
<TABLE>
Aggregated Option Exercises in Last Fiscal Year and FY-End Option Values
<CAPTION>
(a) (b) (c) (d) (e)
Number of Value of Unexercised
Shares Acquired Value Unexercised Options In-the-Money Options
Name on Exercise(#) Realized($) at FY-End (#) at FY-End ($)
Exercisable/ Exercisable
Unexercisable Unexercisable
<S> <C> <C> <C> <C>
David L.
Daum - 0/25,000 $0/$3,125
</TABLE>
Director's Compensation
Each Director of the Company who is not an Executive Officer receives an
annual retainer of $10,000 plus a fee of $500 for attendance at each meeting of
the Board. In addition, members of the Committees of the Board who are not
Executive Officers receive a fee of $300 for each Committee meeting attended.
Directors of the Company who are also Executive Officers receive no compensation
for rendering services as a Director except for reimbursement of out-of-pocket
expenses.
Compensation Pursuant to Plans
The Company has adopted the 1984 Incentive Stock Option Plan (the "ISO
Plan"), the 1986 Non-Qualified Stock Option Plan (the "Non-Qualified Plan") and
the 1987 Stock Option Plan (the "1987 Plan"). All descriptions of the various
plans are qualified in their entirety by reference to the actual Plan documents
which are available for examination.
The ISO Plan is administered by a committee of not less than two Directors
of the Board (the "Committee"). The Board must select the members of the
Committee from among those Directors who are ineligible to participate in, and
who have not within the year preceding appointment to the Committee been
eligible to participate in, the ISO Plan or any other stock option plan of
the Company. The ISO Plan empowered the Committee to grant incentive stock
options to "key employees" of the Company and its subsidiaries to purchase
<PAGE>
shares of the Company's Common Stock at any time prior to the approval of the
1987 Plan. Subject to certain limitations, the ISO Plan empowered the
Committee to determine the persons to whom options were granted, the number of
shares to be covered by each option, the option price per share (which must
have been at least equal to 100% of the fair market value of the Common Stock of
the Company on the date the option is granted) and all other terms and
conditions of the option and its exercise. Termination of an optionee's
employment with the Company or its subsidiaries results in the termination of
all options held by such optionee which were not exercisable at the time of
such termination employment. All options granted under the ISO Plan are non-
assignable and non-transferable other than by will or the laws of descent or
distribution.
The Non-Qualified Plan empowered the Board of Directors for a period of 10
years commencing on March 26, 1986, to grant non-qualified stock options to
purchase shares of the Company's Common Stock to Directors of the Company who
are not Officers or employees of the Company or its subsidiaries and to key
employees who are not Directors of the Company. The Non-Qualified Plan
provided for the issuance of up to 25,000 shares of Common Stock upon the
exercise of options thereunder at any time prior to the approval of the 1987
Plan. A Director participant could not be granted options to purchase
more than 7,500 shares of Common Stock under the Plan. On March 26, 1986, the
Board of Directors delegated the responsibility for the administration of the
Non-Qualified Plan to the Committee. Subject to the provisions of the
Non-Qualified Plan, the Committee determined the persons to whom options are
granted, the number of shares subject to each option, the exercise price of each
option and all other terms and conditions of exercise. Pursuant to an amendment
adopted on May 1, 1986, options must have been granted at not less than 85%
of the current fair market value of the shares of Common Stock. Each
option granted under the Non-Qualified Plan was and is immediately exercisable
in full. A portion of the shares purchased upon exercise of an option granted
under the Non-Qualified Plan was and is immediately exercisable in full. A
A portion of the shares purchased upon exercise of an option granted under
the Non-Qualified Plan may, however, be subject to repurchase by the Company at
the option price if the optionee ceases to be an employee or a Director, as the
case may be, of the Company within five years after the date of grant of the
option. Such repurchase option lapses pro rata over such period and lapses
entirely where certain transactions involving the Company have occurred.
Options are not transferable, except that options may be exercised by the
executor, administrator or personal representative of a deceased
optionee for a period of not longer than one year after the death of such
optionee at such time and to such extent that the optionee, had he lived, would
have been entitled to exercise such option.
The 1987 Plan was adopted by the Board of Directors on March 24, 1987 and
was approved by the stockholders on May 27, 1987. An aggregate of 300,000
shares of the Company's Common Stock is reserved for issuance pursuant to the
exercise of options under the 1987 Plan. 200,000 of which have been
transferred from the ISO Plan and 15,000 of which have been transferred
from the Non-Qualified
Plan.
The Board of Directors may grant options to purchase shares of the
Company's Common Stock at times and prices provided for in the agreements
granting the options, subject to the terms of the 1987 Plan, to key employees
(who are not Directors of the Company) and Directors (who are not Officers or
employees of the Company or its subsidiaries) of the Company or its
subsidiaries. Only key employees are eligible to receive incentive stock
options. Key employees and Directors are eligible to receive non-qualified
options. All options are subject to the specific terms and conditions
evidenced by written agreements between the Company and the optionee. The
maximum number of shares for which an option may be granted to any one key
employee (who is not a Director of the Company) is not limited other than in
the discretion of the Board. The total number of shares of Common Stock
subject to options granted under the 1987 Plan to an optionee who is a Director
shall not exceed 25,000.
<PAGE>
An optionee may exercise options granted under the 1987 Plan for a period
of three months following, in the case of an optionee who is an employee,
termination of the optionee's employment (12 months if termination of
employment is due to total and permanent disability), or, in the case of an
optionee who is a non-employee Director, the time the optionee ceases to be a
Director of the Company (12 months if he ceases to be a Director due to total
and permanent disability) to the same extent that the optionee might have
exercised such option at the time of such termination of employment or the
time he ceased to be a Director, as the case may be. The Company shall have the
right to repurchase certain shares on termination of employment or
directorship. Options shall not be transferable, except that options may
be exercised by the executor, administrator or personal representative
of a deceased optionee for a period of not longer than one year after the death
of such optionee at such time and to such extent that the optionee, had he
lived, would have been entitled to exercise such option.
The following information is provided in aggregate amounts for the named
individuals and groups.
<TABLE>
<CAPTION>
Executive All Eligible
Officers Employees
As a Group(1) As a Group(2)
<S> <C> <C>
Options Granted During Fiscal 1993 25,000 33,000
Weighted Average Per Share Exercise Price: -- $0.85
Total Options Exercised
Net Value Realized in Shares (market value less
exercise price) or Cash: -- --
Shares Sold During Fiscal 1993: -- --
Options Outstanding at December 31,1993 25,000 274,662
___________
(1) (2 persons)
(2) (35 persons)
</TABLE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Current Ownership
The following table sets forth certain information as of December 31, 1993
with respect to the beneficial ownership of the Company's Common Stock by each
stockholder or group known by the Company to be the beneficial owner of more
than 5% of its outstanding Common Stock, by each Director, and by all
Executive Officers and Directors as a group. The information is based, in
part, on data furnished by such Executive Officers, Directors and
stockholders. The address of each holder of more than 5% of the Company's
Common Stock other than First Financial Fund, Inc. and Wellington Management
Company is O'Hare International Center, 10275 West Higgins Road, Rosemont,
Illinois 60018. The address for Wellington Management Company is 75 State
Street, Boston, Massachusetts 02109. First Financial Fund, Inc.'s address is
One Seaport Plaza, 25th Floor, New York, New York 10292.
<PAGE>
<TABLE>
<CAPTION>
<PAGE>
Name of Amount and Nature
Beneficial Owner of Beneficial Ownership Percent of Class
<S> <C> <C>
James A. Friedman (1) 2,198,375 49.3%
Leander W. Jennings (2) 27,100 *
Marvin T. Keeling (3) 542,125 12.1%
William D. Smithburg (2) (4) 29,000 *
Robert R. Youngquist, D.D.S. (5) 20,000 *
First Financial Fund, Inc. (6) 330,000 7.4%
All Executive Officers and Directors
as a group (5 persons) (2) 2,816,600 63.1%
</TABLE>
(1) Includes 459,975.67 shares owned by a trust for the benefit of Mr.
Friedman's children for which Mr. Friedman disclaims beneficial ownership.
(2) Includes outstanding options which are currently exercisable or will
become exercisable within 60 days with respect to the following named
individuals or groups: Messrs. Jennings, 12,500 shares; Smithburg, 12,500
shares; all Executive Officers and Directors as a group, 25,000 shares.
(3) Includes 22,000 shares owned by trusts for the benefit of Mr. Keeling's c
held in a family trust fund for which Mr. Keeling disclaims beneficial
ownership.
(4) Includes 2,000 shares owned by trusts for the benefit of Mr. Smithburg's
children for which Mr. Smithburg disclaims beneficial ownership.
(5) Includes 15,000 shares held in a pension plan of which Dr. Youngquist is a
fiduciary and for which Dr. Youngquist disclaims beneficial ownership.
(6) According to Schedules 13G filed with the Securities and Exchange
Commission on February 10, 1994, First Financial Fund, Inc., an
investment Company, is the beneficial owner of such shares, and
Wellington Management Company, its investment advisor, may also be
deemed to be a beneficial owner of those shares.
<PAGE>
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
There are no family relationships among the Directors and Executive Officers
of the Company.
Prior to 1986, Messrs. Friedman and Keeling had each participated in various
investor programs in which they bought equipment from PLI, and PLI assigned to
such persons leases by various hospitals or other lessees. These transactions
were effected in a period during which Messrs. Friedman and Keeling were
Directors and/or Executive Officers of the Company. The transactions were
structured on substantially the same terms as the Company's other investor
programs, except the acquisition fees paid by the Executive Officers of the
Company were 50% of the usual fee. The following is a summary of all
transactions entered into prior to fiscal 1986 involving Executive Officers
and Directors which were in effect as of December 31, 1993:
<TABLE>
<CAPTION>
Number of Aggregate Aggregate
Investor Leases Equipment Cost Financial Income
<S> <C> <C> <C>
James A. Friedman 2 $261,036 $56,717
Marvin T. Keeling 1 56,925 400
All investors as a group 3 $317,961 $57,117
(2 persons)
</TABLE>
In September 1991, James A. Friedman purchased one lease and the underlying
telecommunications equipment from the Company for a price of approximately
$350,000, made up of cash and an assumption of the debt secured by those
assets. The transaction was approved by the Company's outside directors in
accordance with the Company's policy of related party transactions. The Company
originally purchased the equipment for approximately $456,000 and entered into
this lease in February, 1990. At the date of the sale to Mr. Friedman, the
assets were carried on the Company's books at approximately $373,000. There
was no income recognized by Mr. Friedman on this lease in 1992 and 1993.
SELECTION OF INDEPENDENT ACCOUNTANTS FOR FISCAL YEAR
ENDING DECEMBER 31, 1994
The Board of Directors has selected the firm of KPMG Peat Marwick, independent
accountants, to audit the accounts of the Corporation for its fiscal year ended
December 31, 1994. The Corporation has been advised that neither that firm nor
any of its partners has any other relationship, direct or indirect, with the
Corporation or its subsidiaries.
It is expected that a representative of KPMG Peat Marwick will be present at
the Annual Meeting with an opportunity to make a statement, if he desires to do
so, and available to respond to appropriate questions.
The Board of Directors recommends a vote "FOR" the proposal and proxies
solicited by the Board of Directors will be so voted unless stockholders
specify on their proxy card a contrary choice.
<PAGE>
OTHER MATTERS
The Board of Directors does not intend to bring any other matters before the
meeting and is not informed of any other business which others may bring before
the meeting. However, if any other matter should properly come before the
meeting or any adjournment thereof, it is the intention of the persons named
in the accompanying Proxy to vote on such matters as they, in their
discretion, may determine.
DEADLINE FOR SHAREHOLDER PROPOSALS
Stockholder proposals intended to be presented at the next Annual Meeting must
be received by the Company, in writing, no later than January 30, 1995, in
order to be considered for inclusion in the Proxy Statement and proxy for the
Company's 1994 Annual Meeting. Any such proposal should be sent to the
attention of the Secretary of the Company at O'Hare International Center,
10275 West Higgins Road, Rosemont, IL 60018.
ALL SHAREHOLDERS ARE URGED TO MARK, SIGN, DATE AND PROMPTLY RETURN
THE ENCLOSED PROXY CARD.
By Order of the Board of Directors
Suzanne M. Jackson
Secretary
Rosemont, Illinois
July 18, 1994
