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
Filed by the registrant |X|
Filed by a party other than the registrant |_|
Check the appropriate box:
|_| Preliminary proxy statement |_| Confidential, for use of the
Commission only (as permitted by Rule
14a-6 (e)(2)
|X| Definitive proxy statement
|_| Definitive additional materials
|_| Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
PRIME CELLULAR, INC.
(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement, if Other than the Registrant)
Payment of filing fee (Check the appropriate box):
|X| No fee required.
|_| Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transactions applies:
- --------------------------------------------------------------------------------
(3) Per unit price of other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:(1)
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(4) Proposed maximum aggregate value of transaction:
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(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.
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(1) Amount previously paid:
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(2) Form, schedule or Registration Statement no.:
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(3) Filing party:
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(4) Date filed:
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(1) Set forth the amount on which the filing fee is calculated and state how it
was determined.
<PAGE>
June 3, 1999
Dear Fellow Stockholders:
You are cordially invited to attend our Annual Meeting of Stockholders
which will be held on Friday, June 25, 1999 at 10:00 A.M., local time, at 434
East Cooper, Suite 201, Aspen, Colorado 81611.
The Notice of Annual Meeting and Proxy Statement which follow describe the
business to be conducted at the meeting.
Whether or not you plan to attend the meeting in person, it is important
that your shares be represented and voted. After reading the enclosed Notice of
Annual Meeting and Proxy Statement, may I urge you to complete, sign, date and
return your proxy card in the envelope provided. If the address on the
accompanying material is incorrect, please advise our Transfer Agent, American
Stock Transfer & Trust Company, in writing, at 40 Wall Street, New York, New
York 10005.
Your vote is very important, and we will appreciate a prompt return of your
signed proxy card. We hope to see you at the meeting.
Cordially,
/s/ Joseph K. Pagano
Joseph K. Pagano
President
<PAGE>
PRIME CELLULAR, INC.
580 Marshall Street
Phillipsburg, New Jersey 08865
----------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 25, 1999
----------
To the Stockholders of PRIME CELLULAR, INC.
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of Prime
Cellular, Inc. (the "Company") will be held on Friday, June 25, 1999, at 10:00
A.M., local time, at 434 East Cooper, Suite 201, Aspen, Colorado 81611 for
the following purposes:
1. To elect six (6) directors to hold office until the next Annual Meeting
of Stockholders and until their respective successors have been duly elected and
qualified; and
2. To transact such other business as may properly come before the Annual
Meeting or any adjournment or adjournments thereof.
Only stockholders of record at the close of business on May 6, 1999 are
entitled to notice of and to vote at the Annual Meeting or any adjournments
thereof.
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IF YOU DO NOT EXPECT TO BE PRESENT AT THE ANNUAL MEETING:
PLEASE FILL IN, DATE, SIGN AND RETURN THE ENCLOSED PROXY CARD IN THE ENVELOPE
PROVIDED FOR THAT PURPOSE, WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED
STATES. THE PROXY MAY BE REVOKED AT ANY TIME PRIOR TO EXERCISE, AND IF YOU ARE
PRESENT AT THE MEETING YOU MAY, IF YOU WISH, REVOKE YOUR PROXY AT THAT TIME AND
EXERCISE THE RIGHT TO VOTE YOUR SHARES PERSONALLY.
- --------------------------------------------------------------------------------
By Order of the Board of Directors,
Joseph K. Pagano
President
June 3, 1999
<PAGE>
PROXY STATEMENT
PRIME CELLULAR, INC.
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 25, 1999
This proxy statement is furnished in connection with the solicitation of
proxies by the Board of Directors of PRIME CELLULAR, INC. (the "Company") for
use at the Annual Meeting of Stockholders to be held on June 25, 1999, including
any adjournment or adjournments thereof (the "Annual Meeting"), for the purposes
set forth in the accompanying Notice of Meeting.
Management intends to mail this proxy statement and the accompanying form
of proxy to stockholders on or about June 3, 1999.
Proxies in the accompanying form, duly executed and returned to the
management of the Company and not revoked, will be voted at the Annual Meeting.
Any proxy given pursuant to such solicitation may be revoked by the stockholder
at any time prior to the voting of the proxy by a subsequently dated proxy, by
written notification to the Secretary of the Company, or by personally
withdrawing the proxy at the Annual Meeting and voting in person.
The address and telephone number of the principal executive offices of the
Company are:
580 Marshall Street
Phillipsburg, New Jersey 08865
Telephone No.: (908) 387-1673
OUTSTANDING STOCK AND VOTING RIGHTS
Only stockholders of record at the close of business on May 6, 1999 (the
"Record Date") are entitled to notice of and to vote at the Annual Meeting. As
of the Record Date, there were issued and outstanding 6,108,700 shares of the
Company's common stock, $.01 par value per share (the "Common Stock"), the
Company's only class of voting securities. Each share entitles the holder to one
vote on each matter submitted to a vote at the Annual Meeting.
VOTING PROCEDURES
The directors will be elected by the affirmative vote of a plurality of the
shares of Common Stock, present in person or represented by proxy at the Annual
Meeting, provided a quorum exists. A quorum is present if, as of the Record
Date, at least a majority of the outstanding shares of Common Stock are present
in person or by proxy at the Annual Meeting. Unless otherwise provided by law,
all other matters at the meeting will be decided by the affirmative vote of the
holders of a majority of the shares of Common Stock cast with respect thereto,
provided a quorum exists. Votes will be counted and certified by one or more
Inspectors of Election, who are expected to be employees of the Company. In
accordance with Delaware law, abstentions and "broker non-votes"
<PAGE>
(i.e. proxies from brokers or nominees indicating that such persons have not
received instructions from the beneficial owner or other persons entitled to
vote shares as to a matter with respect to which the brokers or nominees do not
have discretionary power to vote) will be treated as present for purposes of
determining the presence of a quorum. For purposes of determining approval of a
matter presented at the meeting, abstentions will be deemed present and entitled
to vote and will, therefore, have the same legal effect as a vote "against" a
matter presented at the meeting. Broker non-votes will be deemed not entitled to
vote on the subject matter as to which the non-vote is indicated and will,
therefore, have no legal effect on the vote on that particular matter.
The enclosed proxies will be voted in accordance with the instructions
thereon. Unless otherwise stated, all shares represented by such proxy will be
voted as instructed. Proxies may be revoked as noted above.
The entire cost of soliciting proxies, including the costs of preparing,
assembling, printing and mailing this Proxy Statement, the proxy and any
additional soliciting material furnished to stockholders, will be borne by the
Company. Arrangements will be made with brokerage houses and other custodians,
nominees and fiduciaries to send proxies and proxy materials to the beneficial
owners of stock, and such persons may be reimbursed for their expenses by the
Company. Proxies may also be solicited by directors, officers or employees of
the Company in person or by telephone, telegram or other means. No additional
compensation will be paid to such individuals for these services.
ELECTION OF DIRECTORS
At this year's Annual Meeting of Stockholders, six (6) directors will be
elected to hold office for a term expiring at the next Annual Meeting of
Stockholders. Each director will be elected to serve until a successor is
elected and qualified or until the director's earlier resignation or removal.
At this year's Annual Meeting of Stockholders, the proxies granted by
stockholders will be voted individually for the election, as directors of the
Company, of the persons listed below, unless a Proxy specifies that it is not to
be voted in favor of a nominee for director. In the event any of the nominees
listed below shall be unable to serve, it is intended that the Proxy will be
voted for such other nominees as are designated by the Board of Directors. Each
of the persons named below has indicated to the Board of Directors of the
Company that he will be available to serve.
Name Age Position
- ---- --- --------
Joseph K. Pagano 53 President and Chairman of the Board
Frederick R. Adler 73 Director
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<PAGE>
Thomas Livelli 46 Director
Richard Malavarca 46 Director
Dr. Paul A. Marks 72 Director
Samuel A. Rozzi 53 Director
Joseph K. Pagano has served as President of the Company since June 1994 and as a
director since 1991. He also served as Chief Financial Officer from June 1994
until July 1996. Mr. Pagano has been a private investor for more than the past
five years.
Frederick R. Adler has been a director of the Company since May 1996. Mr. Adler
is Managing Director of Adler & Company, a venture capital management firm he
organized in 1968, and a general partner of its related investment funds. Since
January 1, 1996, Mr. Adler had been of counsel to the law firm of Fulbright &
Jaworski L.L.P. and, for more than five years prior thereto, was a senior
partner in the firm. Mr. Adler is also Chairman of the Executive Committee and a
director of Data General Corporation, Chairman and director of Shells Seafood
Restaurants, Inc., and a director of USA Detergents, Inc., as well as a director
of various private companies.
Thomas Livelli has been a director of the Company since June 1998. He is also
the President and Chief Executive Officer of the Company's subsidiary, Cell &
Molecular Technologies, Inc. ("CMT"). Mr. Livelli was the founder of Molecular
Cell Sciences, Inc., the predecessor to the Molecular Cell Science Division of
CMT, and the co-founder of the Specialty Media Division of CMT. From January
1986 until July 1997, Mr. Livelli was a Laboratory Manager at the Howard Hughes
Medical Institute at Columbia University. Prior to 1986, Mr. Livelli worked at
Merck Research Laboratories ("Merck") and Cistron Biotechnology ("Cistron"),
directing their respective gene expression programs. While at Cistron, Mr.
Livelli was a Visiting Scholar at Columbia University. Mr. Livelli has also
served in the capacity of a scientific consultant for Merck, Cistron, Synaptic
Pharmaceutical, and Life Technologies, Inc. In addition to his duties as
President and Chief Executive Officer of CMT, Mr. Livelli maintains a part-time
faculty appointment at Columbia University College of Physicians & Surgeons in
the Department of Neurobiology and Behavior.
Richard Malavarca has been a director of the Company since June 1998. He is also
the Vice President Research Products of CMT, where he is responsible for the day
to day operations, product development and marketing for the Specialty Media
Division of CMT. Mr. Malavarca was a co-founder of Specialty Media, Inc., the
predecessor to the Specialty Media Division of CMT where he served as Vice
President from 1987 until May 1997. Mr. Malavarca has also worked at the Harvard
Medical School, The Roche Institute for Molecular Biology, Merck and Cistron in
basic research involving developmental biology, molecular and cell biology. He
left
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<PAGE>
Cistron in 1987 to form Specialty Media, Inc., one of the corporations that in
1997 was consolidated to form CMT.
Dr. Paul A. Marks has been a director of the Company since June 1998. Since 1980
Dr. Marks also served as President and Chief Executive Officer of the Memorial
Sloan-Kettering Cancer Center. He is also a Member of the Sloan-Kettering
Institute for Cancer Research and Attending Physician of Memorial Hospital for
Cancer and Allied Diseases. He has served as an advisor to the National
Institutes of Health, the National Science Foundation and other government
bodies. He was a member of the President's Cancer Panel (1976-77), the
President's Biomedical Research Panel (1976-77) and the President's Commission
on the Accident on Three Mile Island (1979). He was a member of the Council of
the National Academy of Sciences (1985-87), the Council of the Institute of
Medicine (1973-76), chaired the Division of Medical Sciences, National Research
Council of the National Academy of Sciences (1973-76) served as President of the
American Society for Clinical Investigation (1971-72) and the President of the
American Society of Hematology (1983-84), and co-chaired the External Advisory
Committee of the National Institutes of Health Intramural Research Program
(1993-94), and chaired the Search Committee for Director, National Cancer
Institute (1994-95). Dr. Marks is a Director Emeritus of Pfizer, Inc.
(pharmaceutical manufacturer) and a director of Tularik, Inc. (biotechnology
company) and Genos (genomic company).
Samuel A. Rozzi has been a director of the Company most recently since January
1997. He previously served as a director of the Company from 1991 until June
1996. Mr. Rozzi has been the President of Corporate National Realty, Inc., a
corporate real estate brokerage and services firm, since September 1988.
Executive Officers
In addition to Joseph K. Pagano, the Comany's other executive officer is Robert
A. Reinhart. The following sets forth certain information with respect to Mr.
Reinhart:
Robert A. Reinhart is a certified public accountant and has served as Chief
Financial Officer and Vice President - Finance of the Company since July 1996
and Treasurer/Secretary since May 1997. Mr. Reinhart served as Vice President,
Finance and Chief Executive Officer for Bern Communications, Inc. from July 1996
until its dissolution in 1998. Prior to his employment by the Company, Mr.
Reinhart served as the Chief Operating Officer and Chief Financial Officer of
DeBoles Nutritional Foods, Inc. from 1992 until 1996. Prior to being engaged by
DeBoles Nutritional Foods, Inc. in 1992, Mr. Reinhart was a senior
manager/engagement executive with a certified public accounting firm located on
Long Island, New York.
Messrs. Livelli, Marks and Malavarca were appointed directors following the
increase in the size of the board of directors of the Company from three to six
members effected in connection with the merger of a wholly-owned subsidiary of
the Company with and into CMT on May 29, 1998 (the "CMT Merger").
During the fiscal year ended December 31, 1998, no formal meetings of the
Board of Directors were held. The Board of Directors did, however, take various
actions upon the unanimous consent of the Board of Directors.
Directors are elected annually by the stockholders. Officers are elected
annually by the Board of Directors and serve at the discretion of the Board of
Directors.
Compliance with Section 16(a) of the Securities Exchange Act of 1934
Section 16(a) of the Securities Exchange Act of 1934 requires that
Company's officers and directors, and persons who beneficially own more than 10
percent of a registered class of the Company's equity securities, file certain
reports of ownership and changes in ownership with the Securities and Exchange
Commission ("SEC"). Officers, directors, and greater than 10 percent beneficial
stockholders are required by SEC regulation to furnish the Company with copies
of all Section 16(a) forms they file.
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<PAGE>
Based solely on the Company's review of the copies of such forms received
by the Company, or representations obtained from certain reporting persons, the
Company believes that during the year ended December 31, 1998 all filing
requirements applicable to its officers, directors, and greater than 10 percent
beneficial stockholders were complied with.
Recommendation
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE ELECTION
OF THE NOMINEES.
EXECUTIVE COMPENSATION
The following table discloses the compensation awarded by the Company to
(i) each of the President and Chief Financial Officer of the Company (the
"Company Executives") for the period from June 1, 1998 until December 31, 1998
(the "Stub Period") and for the twelve (12) month period ended May 31 in each of
the three fiscal years ended May 31, 1998, 1997 and 1996, and (ii) the President
of CMT (the "CMT Executive" and, together with the Company Executives,
hereinafter collectively referred to as the "Named Executives") for the twelve
(12) month period ended December 31 in each of the three fiscal years ended
December 31, 1998, 1997 and 1996. During the most recent twelve (12) month
period ended May 31, 1998 and December 31, 1998, as the case may be, no other
officer of the Company or CMT, as the case may be, received a total salary and
bonus that exceeded $100,000 during such twelve (12) month period.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Compensation
Principal Fiscal ---------------------------- Long-Term and Other
Name Position Year Salary ($) Bonus ($) Compensation
---- --------- ------ ---------- --------- -------------------
<S> <C> <C> <C> <C> <C>
Joseph K. Pagano President and Chairman of Stub Period -- -- $ 43,750 (2)
the Board (1) 1998 -- -- 75,000
1997 -- -- 75,000
1996 -- -- 75,000; Options (3)
Robert A. Reinhart Chief Financial Officer, Stub Period $ 70,369 (2) -- --
Vice-President, Treasurer 1998 125,000 -- Options (4)
and Secretary 1997 86,000 (5) $ 25,000 Options (6)
Thomas Livelli President and Chief 1998 (8) $ 138,462 (9) -- --
Executive Officer of CMT 1997 (8) 63,462 $181,000 --
(7) 1996 (8) 101,212 -- --
</TABLE>
- ----------
(1) Mr. Pagano, who was elected President of the Company on June 15, 1994,
received a consulting fee of $75,000 per annum and reimbursement of
documented expenses incurred on behalf of the Company in connection with
his position as a consultant to the Company. Since May 24, 1999, Mr. Pagano
has served under an employment agreement pursuant to which the Company pays
him a base salary of $85,000 per annum.
(2) Reflects the respective compensation or consulting fee, as the case may be,
of the Named Executive, pro rated for the seven month Stub Period.
Following the CMT Merger, the Company adopted the calendar fiscal year of
CMT. The Company previously operated under a fiscal year ended May 31st.
-5-
<PAGE>
(3) On May 14, 1996, the Company granted Mr. Pagano non-qualified stock options
to purchase up to 217,000 shares of the Common Stock of the Company under
the Company's 1990 Stock Option Plan, at $1.625 per share, in substitution
for an existing option held by Mr. Pagano.
(4) On April 20, 1998, the Company granted Mr. Reinhart incentive stock options
to purchase up to 25,000 shares of the Common Stock of the Company at $2.25
per share, which options vest in two equal installments on each of April
20, 1999 and April 20, 2000.
(5) Reflects Mr. Reinhart's salary rate of $100,000 for the year ended May 31,
1997, pro rated from July 22, 1996, when he was elected Chief Financial
Officer of the Company.
(6) On October 25, 1996, the Company granted Mr. Reinhart incentive stock
options to purchase up to 40,000 shares of the Common Stock of the Company
at $2.50 per share, which options became immediately exercisable on the
date of grant. Such options were subsequently re-priced on January 16,
1998, to an exercise price of $0.75 (the fair market value of the Common
Stock at such time).
(7) Mr. Livelli is President and Chief Executive Officer of CMT, a wholly-owned
subsidiary of Prime.
(8) Reflects salary paid for the calendar years ended December 31, 1998, 1997
and 1996. Because the Company adopted as its fiscal year CMT's calendar
year at the time of the CMT Merger, no Stub Period calculation is required
when disclosing the compensation paid to CMT's executive officers.
(9) Reflects the sum of (i) Mr. Livelli's effective salary rate of $135,000 (as
amended at May 29, 1998 following the CMT Merger) for the seven (7) month
period from May 29, 1998 to December 31, 1998 and (ii) his effective
salary rate of $150,000 for the five (5) month period from January 1, 1998
to May 29, 1998.
The following table discloses information concerning options granted during
the year ended December 31, 1998 to the Named Executives.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Potential Realizable
Value at Assumed
Annual Rates of Stock
Percent of Price Appreciation for
Number of Securities Total Option Term
Underlying Options/SARs Exercise or
Name Option/SARs Granted Granted Base Price Expiration Date 5% 10%
----- -------------------- ------------ ----------- --------------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Robert A. Reinhart 25,000 8.5 % $2.25 /share April 20, 2002 $ 12,122 $ 26,106
</TABLE>
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<PAGE>
The following table sets forth information concerning the number of options
owned by the Named Executives and the value of any in-the-money unexercised
options as of December 31, 1998. No options were exercised by the Named
Executives during fiscal 1998.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION/SAR VALUES
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money Options
Options at December 31, 1998 at December 31, 1998 (1)
----------------------------------- -------------------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
- ---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Joseph K. Pagano 217,000(2) -0- -0- -0-
Robert A. Reinhart 40,000(3) 25,000(4) $ 10,000 -0-
</TABLE>
- ----------
(1) Year-end values for unexercised in-the-money options represent the positive
spread between the exercise price of such options and the fiscal year end
market value of the common stock. An Option is "in-the-money" if the fiscal
year end fair market value of the Common Stock exceeds the option exercise
price. At December 31, 1998, the closing sale price per share of the Common
Stock as reported by the OTC Bulletin Board was $1.00.
(2) Stock options granted by the board of directors as of May 14, 1996, under
the Company's 1990 Stock Option Plan, having an exercise price of $1.625
per share, which options are currently exercisable and, as amended, expire
May 24, 2004.
(3) Stock options granted pursuant to Agreement dated October 25, 1996, having
an exercise price of $2.50 per share, which options are currently
exercisable and expire five (5) years after the date of grant. Such options
were subsequently re-priced on January 16, 1998, to $0.75 per share (the
fair market value of the Common Stock at such time).
(4) Incentive stock options granted pursuant to Agreement dated April 20, 1998,
having an exercise price of $2.25 per share, which options vest in two
equal installments on each of April 20, 1999 and April 20, 2000 and expire
four (4) years after the date of grant.
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<PAGE>
The following table sets forth information concerning the repricing of
options held by any Named Executive during the last ten (10) completed fiscal
years.
TEN YEAR OPTION/SAR REPRICING
<TABLE>
<CAPTION>
Length of
Number of Original
Securities Option Term
Underlying Market Price of Exercise Price Remaining at
Options/SARs Stock at Time at Time of New Date of
Repriced or of Repricing or Repricing or Exercise Repricing or
Name Date Amended (#) Amendment($) Amendment($) Price ($) Amendment
---- ---- ----------- ------------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Robert A. Reinhart, January 16, 40,000 $0.75 $2.50 $0.75 45 months
Chief Financial Officer 1998
</TABLE>
Employment Agreements
CMT entered into a three-year employment agreement, dated May 22, 1997 and
amended as of May 29, 1998, with Thomas J. Livelli, pursuant to which Mr.
Livelli serves as President and Chief Executive Officer of CMT. The employment
agreement, as amended, provides for an annual base compensation of $135,000. The
employment agreement also provides for Mr. Livelli's employment on a full-time
basis and contains a provision that the employee will not compete or engage in a
business competitive with the current or anticipated business of CMT during the
term of the employment agreement and for a period of one year thereafter.
On May 24, 1999, the Company entered into a one (1) year employment
agreement with Joseph K. Pagano, pursuant to which Mr. Pagano shall continue to
serve as President of the Company. The employment agreement provides for a base
salary of $85,000 per annum. By the terms of the Agreement, Mr. Pagano is
obligated to devote only such time as necessary to discharge his duties as
President of the Company and is not precluded from engaging in such other
employment and activities as he may see fit so long as such other employment or
activities do not unreasonably interfere with the performance of his duties. The
Agreement is automatically renewed each year for an additional one (1) year term
unless earlier terminated by either Mr. Pagano or the Company.
Director Compensation
Directors receive no cash compensation for serving on the Board of
Directors or for attending Board or Committee (if any) meetings. However,
non-employee directors are eligible to be granted non-qualified stock options
under the Company's 1990 Stock Option Plan. Nonqualified stock options may be
exercised for up to 10 years from the date of grant at such exercise prices as
the Board of Directors may determine.
Committees
The Company did not have a standing Audit, Compensation or Nominating
Committee of its Board of Directors during fiscal 1998.
Compensation Committee Interlocks and Insider Participation in Compensation
Decisions
As stated above, the Company did not have a Compensation Committee of its
Board of Directors during fiscal 1998. Decisions as to compensation during
fiscal 1998 were made by the Company's Board of Directors. Each of Mr. Pagano,
who is an officer of the Company, and Messrs. Livelli and Malavarca, who are
officers of CMT, served as members of the Board of Directors during fiscal 1998.
None of the other executive officers of the Company served on the Board of
Directors or the compensation committee of any other entity, any of whose
officers served on the Board of Directors during fiscal 1998.
-8-
<PAGE>
Report on Executive Compensation
As noted above, the Company did not have a Compensation Committee of the
Board of Directors during the 1998 fiscal year. Compensation of the Company's
executive officers for the fiscal year ended December 31, 1998 was determined by
the Board of Directors. There is no formal compensation policy for the Company's
executive officers.
Total compensation for executive officers consists of a combination of
salaries and stock option awards. The salary of Thomas Livelli (the President
and Chief Executive Officer of CMT) is set forth in his employment agreement
with the Company. Base salary of other executive officers is based on the
Company's financial performance and the executive's individual performance and
level of responsibility. Bonus compensation, if any, to executive officers is
based generally upon the Company's financial performance and the availability of
resources as well as the executive officer's individual performance and level of
responsibility.
Stock option awards under the Company's 1990 Stock Option Plan are intended
to attract and retain the best available talent and encourage the highest level
of performance by affording key employees an opportunity to acquire proprietary
interests in the Company. Except for the four-year incentive stock options to
purchase up to 25,000 shares of the Company's common stock granted to Robert A.
Reinhart, exercisable at $2.25 per share, no stock options were granted to
executive officers of the Company during the fiscal year ended December 31,
1998.
No salary was earned by Joseph K. Pagano, who served as the Company's
President during the year ended December 31, 1998. Mr. Pagano did, however,
receive a flat consulting fee pursuant to his Consulting Agreement entered into
with the Company in July 1991. On May 24, 1999, the Consulting Agreement was
terminated and Mr. Pagano entered into an employment agreement with the Company,
providing for a base salary of $85,000 per annum.
Joseph K. Pagano
Frederick R. Adler
Thomas Livelli
Richard Malavarca
Dr. Paul A. Marks
Samuel A. Rozzi
Stock Option Plans
The Company adopted the 1990 Stock Option Plan (the "Plan"), which provides
for grants of options to purchase up to 1,000,000 shares of Common Stock, as
amended by resolution dated June 12, 1996 of the Board of Directors, which
options may be granted to employees, consultants, agents and other persons
deemed valuable to the Company or any of its subsidiaries. The Plan permits the
Board of Directors or the Committee of the Plan, as the case may be, to issue
incentive stock options ("ISOs"), as defined in Section 422 of the Internal
Revenue Code (the "Code"), and stock options that do not conform to the
requirements of that Code section ("non-ISOs"). The exercise price of each ISO
may not be less than 100% of the fair market value of the Common Stock at the
time of grant, except that in the case of a grant to an employee who owns
(within the meaning of Code Section 422) 10% or more of the outstanding stock of
the Company or any subsidiary (a "10% Stockholder"), the exercise price may not
be less than 110% of such fair market value. The
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<PAGE>
exercise price of each non-ISO also may not be less than 100% of the fair market
value of the Common Stock at the time of grant. Options may not be exercised
prior to the first anniversary, or on or after the tenth anniversary (fifth
anniversary in the case of an ISO granted to a 10% Stockholder), of their grant.
Options may not be transferred during the lifetime of the option holder. No
stock options may be granted under the Plan after May 2000.
The Plan is administered by the Board of Directors and may be administered
by a Committee chosen by the Board of Directors. Subject to the provisions of
the Plan, the Board of Directors or such Committee, as applicable, has the
authority to determine the individuals to whom the stock options are to be
granted, the number of shares to be covered by each option, the option price,
the type of option, the option period, the restrictions, if any, on the exercise
of the option, the terms for the payment of the option price and other terms and
conditions. Payment by option holders upon exercise of an option may be made (as
determined by the Board of Directors or the Committee) in cash, or, in certain
instances, by shares of Common Stock.
Under the terms of the CMT Merger, the Company issued options to purchase
115,200 shares of its Common Stock under the Plan to holders of options to
purchase shares of CMT's stock, which options had been granted under the stock
option plan of CMT. In addition, the Company reserved shares of its Common Stock
with respect to options to purchase up to an additional 273,800 shares of Common
Stock for future grant under the Plan for employees of CMT. Of these reserved
shares, options to purchase up to an aggregate of 44,250 shares of Common Stock
were granted January 1, 1999 under the 1990 Plan to fourteen (14) employees of
CMT. The terms of such options provide for a four (4) year vesting period by
which all the options shall become exercisable. To the extent not exercised, the
options shall expire on December 31, 2008.
At the Record Date, options to purchase an aggregate of 394,250 shares of
the Company's Common Stock were outstanding under the Plan and 7,200 options had
been exercised.
The Company from time to time has also granted non-plan options to certain
officers, employees and consultants. Options to purchase an aggregate of 308,000
shares of the Company's Common Stock were outstanding at the Record Date, of
which options to purchase an aggregate of 208,000 shares of the Company's Common
Stock were granted to Messrs. Reinhart, Adler and Marks during the 1998 fiscal
year.
Stock Performance Graph
The following line graph compares, from May 28, 1993 (the last trading day
before the beginning of the Company's fifth preceding fiscal year) through May
29, 1998 and the subsequent seven (7) month Stub Period ended December 31, 1998
(reflecting the adoption by the Company of a calendar fiscal year in connection
with the CMT Merger), the cumulative total return among the Company, companies
comprising the NASDAQ Market Index and a Market Capitalization Peer Group Index,
based on an investment of $100 on May 28, 1993, in the Company's Common Stock
and each index, and assuming reinvestment of all dividends, if any, paid on such
securities. The Company has not paid any cash dividends and, therefore, the
cumulative total return calculation for the Company is based solely upon stock
price appreciation and not upon reinvestment of cash dividends. Historic stock
price is not necessarily indicative of future stock price performance.
-10-
<PAGE>
The Market Capitalization Peer Group Index represents companies with market
capitalization similar to the Company's and consists of the following companies:
ASTA Funding Inc., Disc, Inc., Guardian Technologies International, Inc., Harvey
Electronics, Inc., Hollywood Productions Inc., J2 Communications, Kyzen
Corporation Class A, MPSI Systems Inc., Olympic Cascade Financial Corporation,
Premier Concepts Inc. and Thermacell Technologies, Inc. Management believes that
a comparison to a peer group of companies on any published industry or
line-of-business bases would be inaccurate and misleading in light of the CMT
Merger and the diversity of the Company's business operations over the past five
years.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
05/28/93 05/31/94 05/31/95 05/31/96 05/30/97 05/29/98 12/31/98
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
PRIME CELLULAR, INC. 100.00 135.71 85.71 485.71 114.29 114.29 50.00
- ------------------------------------------------------------------------------------------------------------------------------------
MARKET CAPITLIZATION PEER GROUP INDEX 100.00 134.72 93.86 100.99 55.44 40.92 22.75
- ------------------------------------------------------------------------------------------------------------------------------------
NASDAQ MARKET INDEX 100.00 109.66 120.03 169.42 190.08 241.34 301.76
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
-11-
<PAGE>
VOTING SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information, as of the Record Date,
regarding the beneficial ownership of the Company's Common Stock of: (i) each
person or group known by the Company to own beneficially more than five percent
of the outstanding shares of the Company's Common Stock; (ii) each director of
the Company; (iii) the Named Executives; and (iv) all directors and executive
officers of the Company as a group. Except as otherwise specified, the Company
believes that all persons named in the chart have sole voting and investment
power over the shares listed.
<TABLE>
<CAPTION>
Name and Address of Beneficial Owner Amount and Nature of Percentage of
----------------------------------- Beneficial Ownership Common Stock
-------------------- ------------
<S> <C> <C>
Frederick R. Adler
1520 S. Ocean Blvd.
Palm Beach, FL 33480 704,673(1) 11.26%
Joseph K. Pagano
P.O. Box 7785
Aspen, CO 81612 1,454,450(2) 22.99%
Samuel A. Rozzi
c/o Corporate National Realty
7600 Jericho Turnpike
Woodbury, NY 11797 447,525 7.33%
D.H. Blair Investment Banking Corp.
44 Wall Street
New York, NY 10005 1,124,859(3) 18.41%
J. Morton Davis
44 Wall Street
New York, NY 10005 1,124,859(3)(4) 18.41%
Robert A. Reinhart
c/o Cell & Molecular Technologies, Inc.
580 Marshall Street
Phillipsburg, New Jersey 08865 52,500(5) *
Thomas Livelli
c/o Cell & Molecular Technologies, Inc.
580 Marshall Street
Phillipsburg, New Jersey 08865 306,000 5.01%
Paul A. Marks
7 Rossiter Road
Washington, Connecticut 06793 18,000(6) *
</TABLE>
-12-
<PAGE>
<TABLE>
<S> <C> <C>
Richard Malavarca
c/o Cell & Molecular Technologies, Inc.
580 Marshall Street
Phillipsburg, New Jersey 08865 180,000 2.95%
All directors and executive officers as a group (seven 3,163,148(7) 48.32%
persons)
</TABLE>
- ----------
(*) Less than 1%.
(1) Includes options to purchase up to 150,000 shares of the Company's Common
Stock, at an exercise price of $0.75 per share.
(2) Includes options to purchase up to 217,000 shares of the Company's Common
Stock, at an exercise price of $1.625 per share.
(3) The information with respect to D.H. Blair Investment Banking Corp.
("Blair") and J. Morton Davis is based upon Amendment No. 7, dated May 1,
1996, to the Schedule 13D, dated January 31, 1992, filed by such persons
with the SEC. The Schedule 13D states that Blair shares voting and
investment power over 1,124,859 shares, and Mr. Davis has sole voting and
investment power over such 1,124,859.
(4) Includes 8,500 shares owned by Mr. Davis' wife. Mr. Davis disclaims
beneficial ownership of the 8,500 shares owned by his wife.
(5) Represents options to purchase up to 40,000 shares and 25,000 shares (of
which options are currently exercisable with respect to only 12,500 shares)
of the Company's Common Stock, at an exercise price of $0.75 and $.2.25 per
share, respectively.
(6) Represents options to purchase up to 18,000 shares of the Company's Common
Stock, at an exercise price of $2.00 per share.
(7) Includes options to purchase up to an aggregate of 437,500 shares of the
Company's Common Stock, which options are exercisable at May 6, 1999 or
within 60 days of such date, previously granted to the directors or
officers of the Company.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In October 1998, the Company entered into a 180-day note payable agreement
with a bank for a maximum of $200,000, which note is collateralized by a
$200,000 certificate of deposit as well as a personal guarantee of Joseph K.
Pagano, the President and Chairman of the Board of the Company. In December
1998, the bank advanced the Company $160,000 under this agreement, which note
bears interest at 6.25% per annum and is payable monthly. During February 1999,
$60,000 was repaid. The principal and any accrued interest is currently due July
1, 1999, following the 90 day renewal period agreed to by the bank as of the
original April 1, 1999 maturity date.
-13-
<PAGE>
On May 29, 1998, the Company consummated the CMT Merger pursuant to which a
wholly-owned subsidiary of Prime merged with and into Cell & Molecular
Technologies, Inc., another Delaware corporation ("CMT"). Under the terms of the
CMT Merger, all of the outstanding shares of capital stock of CMT were converted
into an aggregate of 1,611,000 shares of Common Stock, par value $.01 per share,
of the Company, representing approximately 26.4% (after consummation of the CMT
Merger) of the Company's issued and outstanding Common Stock. Of the shares
issued pursuant to the CMT Merger, 393,000 and 202,500 shares of the Company's
Common Stock were issued to Joseph K. Pagano, the President and Chairman of the
Board of the Company, and Frederick R. Adler, a director of the Company,
respectively, each of whom was a stockholder of CMT at the time of the CMT
Merger.
In July 1997, certain stockholders of CMT had advanced an aggregate amount
of $500,000, as evidenced by promissory notes from CMT to each such stockholder.
Messrs. Pagano and Adler were among these stockholders and, at the time of the
CMT Merger, held promissory notes in the principal amounts of $218,333 and
$112,500, respectively. These notes currently bear an interest rate of 5% and
mature May 1, 2000 (as adjusted in connection with the CMT Merger).
In July 1991, the Company entered into a consulting agreement with Joseph
K. Pagano, effective through July 2, 1993 (the "Consulting Agreement"), which
Consulting Agreement was renewed in each of the last six years. Mr. Pagano was
retained to assist the Company in finding a business to acquire and to advise
the Company in the investment of its funds pending any such acquisition. The
Consulting Agreement initially provided for a monthly consulting fee and
non-accountable expense allowance of $6,250 in the aggregate. In May 1992, the
consulting Agreement was amended to provide for a monthly consulting fee of
$6,250 and reimbursement of documented expenses incurred on behalf of the
Company and approved by an officer of the Company. The Consulting Agreement also
provided for Mr. Pagano to participate in employee benefit plans and receive
fringe benefits generally provided to the Company's senior management and
permitted the payment to Mr. Pagano of bonuses within the discretion of the
Board of Directors. Mr. Pagano was elected President and a director of the
Company on June 15, 1994. The Consulting Agreement was terminated effective May
24, 1999. On May 24, 1999, Mr. Pagano and the Company entered into an employment
agreement which provides for a one (1) year term at a base salary of $85,000 per
annum. By the terms of the employment agreement, Mr. Pagano is obligated to
devote only such time as necessary to discharge his duties as President of the
Company and is not precluded from engaging in such other employment and
activities as he may see fit so long as such other employment or activities do
not unreasonably interfere with the performance of his duties. The employment
agreement is automatically renewed each year for an additional one (1) year term
unless earlier terminated by either Mr. Pagano or the Company.
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Raich Ende Malter Lerner & Co. has audited and reported upon the financial
statements of the Company for the fiscal year ended December 31, 1998 and the
Board of Directors currently anticipates that it will select Raich Ende Malter
Lerner & Co. to examine and report upon the financial statements of the Company
for the fiscal year ending December 31, 1999. A representative of Raich Ende
Malter Lerner & Co. will be available to respond to appropriate questions of
stockholders attending the Annual Meeting.
-14-
<PAGE>
STOCKHOLDER PROPOSALS FOR ANNUAL MEETING
FOR FISCAL YEAR ENDING DECEMBER 31, 1999
Stockholders who wish to present proposals appropriate for consideration at
the Company's Annual Meeting of Stockholders with respect to the Company's
Annual Meeting to be held in the year 2000 must submit the proposal in proper
form and in satisfaction of all conditions established by the Securities and
Exchange Commission, to the Company at its address set forth on the first page
of this Proxy Statement not later than February 5, 2000 in order for the
proposition to be considered for inclusion in the Company's proxy statement and
form of proxy relating to such annual meeting. Any such proposals, as well as
any questions related thereto, should be directed to the Secretary of the
Company.
OTHER INFORMATION
Proxies for the Annual Meeting will be solicited by mail and through
brokerage institutions and all expenses involved, including printing and
postage, will be paid by the Company.
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10K/A FOR THE FISCAL YEAR
ENDED DECEMBER 31, 1998 IS BEING FURNISHED HEREWITH TO EACH STOCKHOLDER OF
RECORD AS OF THE CLOSE OF BUSINESS ON MAY 6, 1999. COPIES OF THE EXHIBITS
THERETO ARE AVAILABLE TO EACH SUCH STOCKHOLDER WITHOUT CHARGE UPON WRITTEN
REQUEST TO:
PRIME CELLULAR, INC.
ATTN: CORPORATE SECRETARY
580 MARSHALL STREET
PHILLIPSBURG, NJ 08865
The Board of Directors is aware of no other matters, except for those
incident to the conduct of the Annual Meeting, that are to be presented to
stockholders for formal action at the Annual Meeting. If, however, any other
matters properly come before the Annual Meeting or any adjournments thereof, it
is the intention of the persons named in the proxy to vote the proxy in
accordance with their judgment.
By order of the Board of Directors,
Joseph K. Pagano,
President
June 3, 1999
-15-
<PAGE>
PRIME CELLULAR, INC.
580 MARSHALL STREET
PHILLIPSBURG, NJ 08865
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 25, 1999. THIS PROXY IS
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints JOSEPH K. PAGANO and ROBERT A. REINHART,
and each of them, Proxies, with full power of substitution in each of them, in
the name, place and stead of the undersigned, to vote at the Annual Meeting of
Stockholders of Prime Cellular, Inc. on Friday, June 25, 1999, at 434 East
Cooper, Suite 2011, Aspen, Colorado 81611 or at any adjournment or adjournments
thereof, according to the number of votes that the undersigned would be entitled
to vote if personally present, upon the following matters:
1. ELECTION OF DIRECTORS:
|_| FOR all nominees listed below
(except as marked to the contrary below).
|_| WITHHOLD AUTHORITY
to vote for all nominees listed below.
Joseph K. Pagano, Frederick R. Adler, Thomas Livelli, Robert Malavarca,
Dr. Paul A. Marks, and Samuel A. Rozzi
(INSTRUCTION: To withhold authority to vote for any individual nominee, write
that nominee's name in the space below.)
- --------------------------------------------------------------------------------
2. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
(continued and to be signed on reverse side)
<PAGE>
THIS PROXY WILL BE VOTED IN ACCORDANCE WITH THE INSTRUCTIONS GIVEN ABOVE. IF NO
INSTRUCTIONS ARE GIVEN, THIS PROXY WILL BE VOTED FOR THOSE NOMINEES.
DATED: ________________________________, 1999
Please sign exactly as name
appears hereon. When shares
are held by joint tenants,
both should sign. When 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 authorized person.
--------------------------------
(Signature)
Name:
--------------------------------
(Signature if held jointly)
Name:
Please mark, sign, date and return this proxy card promptly using the enclosed
envelope.
