PROXY STATEMENT
==============================================================================
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
[X] Definitive Proxy Statement Commission Only (as permitted
[ ] Definitive Additional Materials by Rule 14a-6(e)(2))
[ ] Soliciting Material Pursuant to
Rule 14a-11(c) or Rule 14a-12
PRICELLULAR CORPORATION
(Name of Registrant as Specified in Its Charter)
(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 transaction applies:
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (Set forth the
amount on which the filing fee is calculated and state how it
was determined):
(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:
==============================================================================
PriCellular Corporation
45 Rockefeller Center
New York, New York 10020
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
----------------------------
The 1997 Annual Meeting of the stockholders of PriCellular
Corporation will be held at the offices of Davis Polk & Wardwell, 450
Lexington Avenue, New York, New York on Wednesday, May 14, 1997, at 10:00 a.m.
for the following purposes:
1. To elect directors.
2. To consider and vote upon a proposed amendment to the
Company's Amended and Restated Certificate of Incorporation,
approved and declared advisable by the Company's Board of
Directors, which would increase the authorized number of
shares of the Company's Class B Common Stock, par value $.01
per share, from 20,000,000 to 50,000,000 shares and thereby
increase the authorized number of shares of all classes of
the Company's stock, par value $.01 per share, from
130,000,000 to 160,000,000 shares.
3. To consider and vote upon a proposed amendment to the 1994
Stock Option Plan (as described in the attached Proxy
Statement) which would increase the number of shares of the
Company's Common Stock available for award thereunder.
4. To transact such other business as may properly come
before the meeting and any and all adjournments or
postponements thereof.
The Board of Directors has fixed the close of business on April
8, 1997, as the record date for the determination of the stockholders entitled
to notice of and to vote at the meeting and at any adjournment or postponement
thereof.
Stockholders are invited to attend the meeting. Whether or not
you expect to attend, WE URGE YOU TO SIGN, DATE AND PROMPTLY RETURN THE
ENCLOSED PROXY CARD IN THE ENCLOSED POSTAGE PREPAID ENVELOPE. If you attend
the meeting, you may vote your shares in person, which will revoke any
previously executed proxy.
If your shares are held of record by a broker, bank or other
nominee and you wish to attend the meeting, you must obtain a letter from the
broker, bank or other nominee confirming your beneficial ownership of the
shares and bring it to the meeting. In order to vote your shares at the
meeting, you must obtain from the record holder a proxy issued in your name.
Regardless of how many shares you own, your vote is very
important. Please SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD TODAY.
By Order of the Board of Directors
Kim I. Pressman
Secretary
New York, New York
April 18, 1997
PriCellular Corporation
45 Rockefeller Center
New York, New York 10020
------------------------
PROXY STATEMENT
------------------------
Introduction
This proxy statement is furnished in connection with the
solicitation of proxies on behalf of the Board of Directors of PriCellular
Corporation, a Delaware corporation (the "Company"), for the 1997 Annual
Meeting of the stockholders of the Company on May 14, 1997. The Notice of
Annual Meeting, this proxy statement and the accompanying proxy are first
being mailed on or about April 18, 1997 to stockholders of record as of the
close of business on April 8, 1997. You can ensure that your shares are voted
at the meeting by signing, dating and promptly returning the enclosed proxy in
the envelope provided. Sending in a signed proxy will not affect your right to
attend the meeting and vote in person. You may revoke your proxy at any time
before it is voted by notifying the Company's Transfer Agent, Harris Trust
Company of New York, 77 Water Street, New York, NY 10005 in writing, or by
executing a subsequent proxy, which revokes your previously executed proxy.
The Company's principal executive offices are located at 45
Rockefeller Center, New York, New York 10020.
Voting of Proxies
Proxies will be voted as specified by the stockholders. Where
specific choices are not indicated, proxies will be voted for proposals 1, 2
and 3. Under the Delaware General Corporation Law and the Company's Amended
and Restated Certificate of Incorporation, (x) a plurality of the votes of the
outstanding shares of the Company's Class A Common Stock, Class B Common Stock
and Series A Cumulative Convertible Preferred Stock (the "Voting Shares"),
voting together as a single class, entitled to vote and present, in person or
by properly executed proxy, will be required to elect a nominated director and
(y) the affirmative vote of the holders of at least a majority of the votes of
(i) the outstanding shares of the Company's Class A Common Stock and Class B
Common Stock, voting together as a single class, and (ii) the outstanding
Voting Shares, voting together as a single class, will be required to approve
the proposed amendment to the Company's Amended and Restated Certificate of
Incorporation which would increase the authorized number of shares of Class B
Common Stock from 20,000,000 to 50,000,000 shares and of all classes of stock
from 130,000,000 to 160,000,000 shares, and to approve the proposed amendment
to the Company's 1994 Stock Option Plan.
On April 8, 1997, the record date for the 1997 Annual Meeting,
there were outstanding and entitled to vote 19,235,654 shares of Class A
Common Stock of the Company, entitled to one vote per share, 19,170,736 shares
of Class B Common Stock of the Company, entitled to ten votes per share, and
96,000 shares of Series A Cumulative Convertible Preferred Stock, entitled to
111.26 votes per share (based on the number of shares of Class A Common Stock
into which it is convertible on such date).
Stockholders will not be entitled to appraisal rights in
connection with any of the matters to be voted on at the Annual Meeting.
1. Election of Directors
At the meeting, six directors are to be elected to serve until
their successors have been elected and qualified. Information regarding such
nominees for reelection is set forth below.
The accompanying proxy will be voted for the reelection of the
Board's nominees unless contrary instructions are given. If any Board nominee
is unable to serve, which is not anticipated, the persons named as proxies
intend to vote for the other Board nominees and, unless the number of nominees
is reduced by the Board of Directors, for such other person or persons as the
Board of Directors may designate.
Nominees
Robert Price has been a Director, President and Assistant
Treasurer of the Company since 1990. Robert Price concurrently serves as and
has been a director and the Chief Executive Officer and President of Price
Communications ("Price Communications") since 1979. In 1992 Price
Communications filed for protection from creditors pursuant to Chapter 11 of
the United States Bankruptcy Code. Price Communications' Amended Plan of
Reorganization was confirmed on June 11, 1992 and became effective on December
30, 1992. Robert Price, an attorney, is a former General Partner of Lazard
Freres & Co. He has served as an Assistant United States Attorney, practiced
law in New York and served as Deputy Mayor of New York City. After leaving
public office, Robert Price became Executive Vice President of The Dreyfus
Corporation and an Investment Officer of The Dreyfus Fund. In 1972 he joined
Lazard Freres & Co. Robert Price has served as a Director of Holly Sugar
Corporation, Atlantic States Industries, The Dreyfus Corporation, Graphic
Scanning Corp. and Lane Bryant, Inc., and is currently a member of The Council
on Foreign Relations. Robert Price serves as the Representative of The
Majority Leader and President Pro Tem of the New York Senate and on the Board
of Directors of the Municipal Assistance Corporation for the City of New York.
Robert Price also has been appointed by Governor George Pataki of New York to
a seven year term as a Member of the Board of Trustees of the City University
of New York. Robert Price is also a Director and President of TLM Corporation.
Robert Price was elected to the Company's Board of Directors as a nominee of
the Price family pursuant to a stockholders agreement among the principal
stockholders of the Company (the "Stockholders Agreement"). Robert Price is
the father of Steven Price.
Steven Price has been the Chief Operating Officer
of the Company since March 1997, an Executive Vice President since
April 1997, and a Director since September 1996. Mr. Price has also been the
Chief Executive Officer and President of PriCellular Wireless Corporation,
the Company's principal operating subsidiary, since April 1997. From December
1994 to April 1997, he was a Senior Vice President of the Company. Prior
thereto, he was Director of Business Development of the Company since April
1993. From 1990 to 1993, Mr. Price was an attorney with Davis Polk &
Wardwell. Prior thereto, Mr. Price was appointed by President Bush to
serve in the U.S. State Department as Special Assistant to the Chief U.S.
Nuclear Arms Negotiator and worked in the mergers and acquisitions
department of Goldman, Sachs & Co. Mr. Price graduated magna cum laude
from Brown University, where he was elected to Phi Beta Kappa, and has a
J.D. degree from Columbia University. Steven Price is Vice President and
Secretary of TLM Corporation and is the son of Robert Price.
Kim I. Pressman has been an Executive Vice President of the
Company since April 1997, and a Director and Secretary since 1990. Ms.
Pressman served as a Vice President of the Company from 1990 to April 1997,
and as the Treasurer from 1990 until December 1994. Ms. Pressman is a
certified public accountant and is a graduate of Indiana University and
holds an M.B.A. from New York University. Since 1990, she has served as
Executive Vice President of Price Communications and is currently also a
Director. Prior to joining Price Communications in 1984, Ms. Pressman was
employed for three years by Peat, Marwick, Mitchell & Co., a national
certified public accounting firm, and for more than three years thereafter
was Supervisor, Accounting Policies for International Paper Company and
then Manager, Accounting Operations for Corinthian Broadcasting Division of
Dun & Bradstreet Company, a large group owner of broadcasting stations.
Ms. Pressman is the Chairman and a Vice President and Treasurer of TLM
Corporation. Ms. Pressman was elected to the Company's Board of Directors
as a nominee of the Price family pursuant to the Stockholders Agreement.
Brion B. Applegate has been a Director of the Company since
June 1994. He is a founder and general partner of Spectrum, a venture capital
fund specializing in communications and telecommunications investments. Prior
thereto, he was a general partner of funds managed by Burr, Egan, Deleage &
Co. Mr. Applegate serves on the board of several private communications
entities. Mr. Applegate originally was elected to the Company's Board of
Directors as Spectrum's nominee pursuant to the Stockholders Agreement.
Scott M. Sperling has been a Director of the Company since
February 1996. Mr. Sperling is a Managing Director of the Thomas H. Lee
Company and a General Partner of its affiliated Equity Funds. Prior to this
position, he served for ten years as the Managing Partner of the Aeneas Group
Inc., the affiliate of the Harvard Management Company, responsible for all
private capital market investments, including venture capital, company buyouts
and real estate. From 1981-1984, Mr. Sperling was a Senior Consultant with the
Boston Consulting Group, Inc. He holds an M.B.A. from Harvard Business School
and a B.S. from Purdue University. He is a Director of Beacon Properties,
Inc., Softkey International, KAI Inc., Livent, Inc. and several private
companies. Mr. Sperling is also a member of the corporation for the Brigham
and Womens Hospital and Medical Center and is the director of several
charitable organizations.
Scott I. Anderson has been a Director of the Company since
April 1997. Mr. Anderson served as Senior Vice President - Acquisitions
and Development of AT&T Wireless Services, Inc., formerly McCaw Cellular
Communications, Inc. ("AT&T Wireless/McCaw") from 1991 to March 1997.
Prior thereto, he served as Vice President-Law of AT&T Wireless/McCaw since
1988. Previously, Mr. Anderson served on the Company's Board of Directors
from April 1995 to August 1996 as AT&T Wireless/McCaw's nominee pursuant to
the Stockholders Agreement. Mr. Anderson served as an advisor to the
Board of Directors from August 1996 to April 1997.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE REELECTION
OF DIRECTORS, WHICH IS DESIGNATED AS PROPOSAL NO. 1 ON THE ENCLOSED PROXY
CARD.
Committees of the Board -- Board Meetings
The Board of Directors held nine meetings, the Audit Committee
held no meetings, the Compensation and Stock Option Committee held three
meetings and the Executive Committee held nine meetings in 1996. All of the
Directors attended at least 75% of the meetings of the Board and the
respective Committees of the Board of which they are members.
The Board of Directors has the following standing committees:
Audit Committee
The Audit Committee recommends the annual engagement of
auditors, with whom the Audit Committee will review the scope of audit and
non-audit assignments, related fees, the accounting principles used in
financial reporting, internal financial auditing procedures and the adequacy
of internal control procedures. The Company anticipates that additional
directors will be appointed to the Audit Committee as soon as practicable to
ensure that a majority of the Audit Committee members are independent
directors.
Ms. Pressman serves as a member of the Audit Committee. The
Company anticipates that additional directors will be appointed to the Audit
Committee as needed to ensure that a majority of the Audit Committee members
are independent directors.
Compensation and Stock Option Committee
The Compensation and Stock Option Committee reviews and
approves the remuneration arrangements for the officers and directors of the
Company and reviews and recommends new executive compensation or stock plans
in which the officers and/or directors are eligible to participate, including
the granting of stock options.
Mr. Applegate serves on the Compensation and Stock Option
Committee. The Company anticipates that additional directors will be
appointed to the Audit Committee as needed to ensure that a majority of the
Audit Committee members are independent directors.
Executive Committee
The by-laws of the Company provide for the establishment of an
Executive Committee, which the Board of Directors has established. The by-laws
provide that the Executive Committee shall consist of four members, one of
which shall be designated by each of the Price family, AT&T Wireless/McCaw,
Aeneas Venture Corporation ("Harvard Private Capital") and Thomas H. Lee
Equity Fund III, L.P. (the "THL Equity Fund") except during any period in
which there is a significant overlap between the PCS licensed areas
directly or indirectly owned, operated or controlled by, or attributed to
AT&T Wireless/McCaw, or any affiliate of either and the cellular geographic
service areas directly or indirectly owned, operated or controlled by, or
attributed to, the Company or any affiliate thereof, in which case it shall
consist of three members, one of which shall be designated by each of the
Price family, Harvard Private Capital and THL Equity Fund.
The affirmative vote of the Executive Committee of the Company
with no members voting against will be required to designate any class or
series of Preferred Stock or incur any indebtedness other than trade
indebtedness incurred in the ordinary course of the Company's business and
other than indebtedness not in excess of $1,000,000. The right of AT&T
Wireless/McCaw and the THL Equity Fund to nominate a member to the Executive
Committee shall terminate (a) with respect to AT&T Wireless/McCaw on the
earlier to occur of (i) April 28, 2001 or (ii) such time as the number of
fully diluted shares held by AT&T Wireless/McCaw is less than 7% of the total
number of fully diluted shares then outstanding and (c) with respect to THL
Equity Fund at such time as the number of fully diluted shares held by THL
Equity Fund and the other purchasers of shares of Class Cumulative Convertible
Preferred Stock, par value $.01 per share, of the Company is less than
4,375,000 (without giving effect to certain reductions to the conversion value
provided in the certificate of designation to such shares and subject to
appropriate adjustment for subdivision, combination, consolidation or
reclassification of such shares into a greater or lesser number of shares).
The right of Harvard Private Capital to nominate a director and member of the
Executive Committee has terminated and Harvard Private Capital's nominee has
resigned.
The members of the Executive Committee are Messrs. Robert Price
and Sperling.
Compensation of Directors
Directors of the Company are not paid fees.
Executive Officers
The following table sets forth certain information with respect
to the executive officers of the Company.
Name Age Office
- --------------------- --- ----------------------------------------------
Robert Price......... 64 Director, President and Assistant Treasurer
Steven Price......... 35 Director, Chief Operating Officer and
Executive Vice President
Stuart B. Rosenstein. 36 Executive Vice President, Chief Financial
Officer, Treasurer and Assistant Secretary
Kim I. Pressman...... 40 Director, Executive Vice President and
Secretary
Stuart B. Rosenstein has been an Executive Vice President
of the Company since April 1997 and Chief Financial Officer and Assistant
Secretary since December 1993. Mr. Rosenstein has also served as
Treasurer of the Company since December 1994. From September 1996 to April
1997, he was a Senior Vice President of the Company. From 1990 to December
1993, he was the Company's Controller and from 1990 to September 1996, he
was a Vice President. Prior to that time, Mr. Rosenstein, a certified
public accountant, was a senior manager with the accounting firm of Ernst &
Young. Mr. Rosenstein has a B.S. degree from SUNY at Buffalo, where he
graduated magna cum laude.
Stock Ownership of Certain Beneficial Owners and Management
The following table provides certain information regarding the
beneficial ownership of the Company's Common Stock as of February 28, 1997 by
(i) each of the Company's directors and officers listed in the summary
compensation table incorporated by reference herein, (ii) all directors and
officers as a group and (iii) each person known to the Company to be the
beneficial owner of 5% or more of any class of the Company's voting securities.
<TABLE>
<CAPTION>
Beneficial Ownership of
Class A and B Common Stock(1)
------------------------------------------------------
Percentage of Percentage of
Combined Combined
Name of Beneficial Owner Shares Classes Voting
- ------------------------ ------------- ------------- -------------
<S> <C> <C> <C>
Directors and Officers
Robert Price(2)............................................. 7,109,545 17.4% 23.2%
Stuart B. Rosenstein(3)..................................... 233,005 0.6 0.1
Kim I. Pressman(4).......................................... 77,735 0.2 0.1
Steven Price(5)............................................. 4,037,138 10.4 17.8
Brion B. Applegate(6)....................................... 3,318,046 8.5 10.3
Scott M. Sperling(7)........................................ 6,635,671 14.7 3.0
All directors and officers as a group (6 persons)........... 20,420,282 41.8 45.5
Other 5% Stockholders
AT&T Wireless Services, Inc.(8) 6,537,544 17.0 19.8
(formerly McCaw)
5400 Carillon Point
Kirkland, WA 98033
Aeneas Venture Corporation(9) 4,051,220 10.5 19.2
(an affiliate of Harvard Private Capital Group, Inc.)
600 Atlantic Avenue, 26th Floor
Boston, MA 02210
The Thomas H. Lee Company(10) 6,635,671 14.7 3.0
75 State Street
Boston, MA 02109
Putnam Investments, Inc.(11) 5,355,114 12.6 2.5
One Post Office Square
Boston, MA 02109
Eileen Farbman(12) 4,594,574 12.0 21.7
c/o Suite 3200
45 Rockefeller Plaza
NY, NY 10020
Janus Capital Corp.(13) 3,449,619 9.0 1.6
100 Fillmore Street
Denver, CO 80206
Spectrum Equity Investors, L.P.(14) 3,318,046 8.5 10.3
121 High Street, 26th Floor
Boston, MA 02110
The Public School Employes' Retirement System(15) 3,317,836 8.0 1.5
5 North 5th Street, Box 125
Harrisburg, PA 17108
Price Communications Corporation(16) 3,623,860 9.0 8.7
Suite 3200
45 Rockefeller Plaza
NY, NY 10020
Leo Farbman(17) 1,523,436 4.0 7.2
c/o Suite 3200
45 Rockefeller Plaza
NY, NY 10020
Alexandra Farbman(18) 1,523,436 4.0 7.2
c/o Suite 3200
45 Rockefeller Plaza
NY, NY 10020
College Retirement Equities Fund(19) 2,090,250 5.4 1.0
730 Third Avenue
NY, NY 10017
</TABLE>
- ---------------
(1) As used in this table, "beneficial ownership" means the sole or
shared power to vote or direct the voting or to dispose or direct the
disposition of any security. A person is deemed as of any date to
have "beneficial ownership" of any security that such person has a
right to acquire within 60 days after such date. Any security that
any person named above has the right to acquire within 60 days is
deemed to be outstanding for purposes of calculating the ownership
percentage of such person, but is not deemed to be outstanding for
purposes of calculating the ownership percentage of any other person.
(2) Consists of 425,781 shares of Class B Common Stock owned directly by
Robert Price, 1,317,858 shares of Class B Common Stock and 14,000
shares of Class A Common Stock held by Robert Price and Eileen
Farbman, as joint tenants (see also footnote 12), 990,858 shares of
Class B Common Stock held by Robert Price and Steven Price, as joint
tenants (see also footnote 5), options to purchase 742,188 shares of
Class A Common Stock granted pursuant to the Company's 1994 Stock
Option Plan that are currently exercisable, 1,804,250 shares of Class
A Common Stock held by Price Communications and warrants to purchase
1,819,610 shares of Class B Common Stock held by Price Communications
that are currently exercisable (see also footnote 16).
(3) Consists of 3,906 shares of Class B Common Stock owned directly by
Mr. Rosenstein, 4,178 shares of Class A Common Stock owned directly
by Mr. Rosenstein, 5,078 shares of Class A Common Stock held by Mr.
Rosenstein as custodian for his daughter, 195 shares of Class A
Common Stock held by Mr. Rosenstein as custodian for his son and
options to purchase 202,148 shares of Class A Common Stock granted
pursuant to the Company's 1994 Stock Option Plan that are currently
exercisable. Includes 17,500 options to purchase shares of Class A
Common Stock held in custody for his children that are currently
exercisable. Does not include options to purchase 141,406 shares of
Class A Common Stock granted pursuant to the Company's 1994 Stock
Option Plan that are not exercisable within 60 days.
(4) Consists of 3,906 shares of Class B Common Stock owned directly by
Ms. Pressman and options to purchase 48,829 shares of Class A Common
Stock granted pursuant to the Company's 1994 Stock Option Plan that
are currently exercisable. Does not include options to purchase
53,125 shares of Class A Common Stock granted pursuant to the
Company's 1994 Stock Option Plan that are not exercisable within 60
days. Includes 25,000 options to purchase shares of Class A Common
Stock held in custody for her children that are currently exercisable.
(5) Consists of 2,685,109 shares of Class B Common Stock owned directly
by Steven Price, 990,858 shares of Class B Common Stock held by
Robert Price and Steven Price, as joint tenants (see also footnote
2), 5,038 shares of Class A Common Stock owned directly by Steven
Price and options to purchase 202,148 shares of Class A Common Stock
granted pursuant to the Company's 1994 Stock Option Plan that are
currently exercisable. Includes 103,985 options to purchase shares of
Class A Common Stock and 50,000 shares of Class B Common Stock held
in custody for his daughter. Does not include options to purchase
97,656 shares of Class A Common Stock granted pursuant to the
Company's 1994 Stock Option Plan that are not exercisable within 60
days. Steven Price is the son of Robert Price.
(6) All of such shares are owned by Spectrum and attributed to Brion B.
Applegate, a General Partner of Spectrum, pursuant to the definition
of beneficial ownership provided in footnote 1.
(7) All of such shares are owned by The Thomas H. Lee Company and
attributed to Scott M. Sperling, a Managing Director of The Thomas H.
Lee Company, pursuant to the definition of beneficial ownership
provided in footnote 1.
(8) Consists of 3,925,781 shares of Class B Common Stock and 2,611,763
shares of Class A Common Stock.
(9) Consists of 3,994,945 shares of Class B Common Stock currently
outstanding and warrants to purchase 56,275 shares of Class B Common
Stock that are currently exercisable. The per share price at which
shares may be purchased pursuant to the warrants is $4.75 subject to
adjustment.
(10) Consists of 6,675,865 shares of Class A Common Stock currently
issuable (subject to adjustments) upon conversion of 54,728 shares of
the Company's Series A Cumulative Convertible Preferred Stock (the
"Convertible Preferred Stock") held by Thomas H. Lee Equity Fund III
L.P. and 5,272 shares of Convertible Preferred Stock held by THL-CCI
Investors Limited Partnership.
(11) Consists of 4,208,629 shares of Class A Common Stock issuable upon
conversion of the Company's outstanding 10 3/4% Senior Subordinated
Convertible Discount Notes due 2004 and 1,146,485 shares of Class A
Common Stock. Information with respect to the shares of Class A
Common Stock held is based on a Schedule 13G dated February 8, 1995,
which reflects the collective beneficial ownership of Marsh &
McLennan Companies, Inc., Putnam Investments, Inc. and its two wholly
owned registered investment advisers (Putnam Investment Management,
Inc. and The Putnam Advisory Company, Inc.) and the Putnam New
Opportunities Fund (the "Fund") (collectively, the "Putnam
Entities"). According to the Schedule 13G, none of the Putnam
Entities have the sole power to vote or dispose of any such shares of
Class A Common Stock nor (except the Fund with respect to 506,250 of
such shares) the shared power to vote any of such shares and all of
the Putnam Entities have the shared power to dispose of such shares.
(12) Consists of 214,843 shares of Class B Common Stock and 1,000 shares
of Class A Common Stock owned directly by Ms. Farbman, 1,317,859
shares of Class B Common Stock and 14,000 shares of Class A Common
Stock held by Robert Price and Eileen Farbman, as joint tenants (see
also footnote 2), 761,718 shares of Class B Common Stock held by
Eileen Farbman and Leo Farbman, as joint tenants, 761,718 shares of
Class B Common Stock held by Eileen Farbman and Alexandra Farbman, as
joint tenants and 761,718 shares of Class B Common Stock held by
Eileen Farbman as custodian for Leo Farbman UGTMA until age 21 and
761,718 shares of Class B Common Stock held by Eileen Farbman as
custodian for Alexandra Farbman UGTMA until age 21 (see also
footnotes 17 and 18). Eileen Farbman is the daughter of Robert Price.
(13) Consists of 3,449,619 shares of Class A Common Stock.
(14) Consists of 2,055,988 shares of Class B Common Stock, 598,491 shares
of Class A Common Stock currently outstanding and 621,500 shares of
Class A Common Stock currently issuable upon conversion of 6,000
shares of the Convertible Preferred Stock.
(15) Consists of 3,317,836 shares of Class A Common Stock currently
issuable upon conversion of 30,000 shares of the Convertible
Preferred Stock.
(16) Consists of 1,804,250 shares of Class A Common Stock currently
outstanding and 1,819,610 shares of Class B Common Stock issuable
pursuant to warrants that are currently exercisable. See also
footnote 2. The per share price at which shares may be purchased
pursuant to the warrants is $5.01 subject to adjustment.
(17) Consists of 761,718 shares of Class B Common Stock held by Eileen
Farbman and Leo Farbman, as joint tenants and 761,718 shares of Class
B Common Stock held by Eileen Farbman as custodian for Leo Farbman
UGTMA until age 21 (see also footnote 12). Leo Farbman is the son of
Eileen Farbman and grandson of Robert Price.
(18) Consists of 761,718 shares of Class B Common Stock held by Eileen
Farbman and Alexandra Farbman, as joint tenants and 761,718 shares of
Class B Common Stock held by Eileen Farbman as custodian for
Alexandra Farbman UGTMA until age 21 (see also footnote 12).
Alexandra Farbman is the daughter of Eileen Farbman and granddaughter
of Robert Price.
(19) Consists of 2,090,250 shares of Class A Common Stock.
Certain Relationships and Related Transactions
AT&T Wireless/McCaw Registration Rights
AT&T Wireless/McCaw is a principal stockholder of the Company,
owning 3,925,781 shares of Class B Common Stock and 2,611,763 shares of Class
A Common Stock. As of February 9, 1996, the Company has agreed, and Harvard
Private Capital, Spectrum, THL Equity Fund, THL-CCI Investors Limited
Partnership ("THL-CCI"), The Public School Employes' Retirement System
("PSERS") and Dominion Cellular, Inc. ("Dominion") consented, to provide
AT&T Wireless/McCaw with certain registration rights (the "McCaw
Registration Rights"). The McCaw Registration Rights are substantially the
same as the Registration Rights (described below), except that AT&T
Wireless/McCaw will be entitled to one demand registration and
participation rights in registrations proposed to be effected by the
Company.
Other Registration Rights
On February 9, 1996, the Company, Harvard Private Capital,
Spectrum, THL Equity Fund, THL-CCI, PSERS and Dominion entered into an Amended
and Restated Registration Rights Agreement (the "Registration Rights"), which
superseded and canceled the Amended and Restated Registration Rights Agreement
dated as of December 28, 1995 among the same parties. The agreement provides,
subject to certain limitations, that Spectrum will have the right to one
demand registration, Harvard Private Capital will have the right to two demand
registrations, THL Equity Fund (together with THL-CCI) will have the right to
two demand registrations and PSERS will have the right to two demand
registrations. The minimum amount of securities that must be registered
pursuant to these demand rights is, for each of Harvard, THL and PSERS, 20% of
the Harvard registrable securities, the THL registrable securities and the
PSERS registrable securities (or a lesser amount of shares whose aggregate
offering price is expected to be at least $10 million), respectively, or, for
Spectrum, 40% of the Spectrum registrable securities. In each demand
registration, holders of registrable securities other than the holders
initiating the registration may include their securities in such registration,
subject to certain notice requirements. The Registration Rights further
provide, subject to certain limitations, that in the event the Company
proposes to register any of its equity securities in connection with a public
offering, the Company will use its best efforts to have such registration
cover all of the registrable securities, subject to certain notice
requirements.
Compensation of Executive Officers
The following table sets forth the compensation earned in 1994,
1995, and 1996 by the Company's chief executive officer and each other
executive officer whose total annual salary and bonus exceeded $100,000 for
the year ended December 31, 1996.
Summary Compensation Table
<TABLE>
<CAPTION>
Long-Term
Compensation
Annual Compensation Awards
---------------------------------- -----------
Number of
Securities
Underlying All Other
Name and Principal Position Year Salary Bonus(1) Options(2) Compensation
- --------------------------- ---- --------- -------- ----------- ------------
<S> <C> <C> <C> <C> <C>
Robert Price, President................... 1996 $325,000 $325,000 0 $ 0
1995 237,500 210,000 180,664 0
1994 0 0 708,008 0
Steven Price, Chief Operating Officer and
Executive Vice President.................. 1996 $195,609 $135,000 0 $ 0
1995 160,000 105,000 153,320 0
1994 136,750 20,150 146,484 0
Stuart B. Rosenstein, Executive Vice
President, Chief Financial Officer
and Treasurer............................. 1996 $201,218 $135,000 43,750 $ 0
1995 160,000 105,000 153,320 0
1994 136,750 45,150 146,484 0
</TABLE>
Option/SAR Grants in Last Fiscal Year
Individual Grants
<TABLE>
<CAPTION>
Percent of
Total
Number of Options/ Potential Realizable
Securities SARs Value at
Underlying Granted to Assumed Annual
Options/ Employees Exercise or Rates of Stock
SARs in Fiscal Base Price Expiration Price Appreciation
Name Granted(#) 1996 ($/Share) Date For Option Term
---- ---------- ---------- ----------- ---------- ----------------------
5% 10%
--------- ---------
<S> <C> <C> <C> <C> <C> <C>
Robert Price............ 0 0% -- -- -- --
Steven Price............ 43,750(3) 13% $10.80 9/10/06 $297,063 $752,938
Stuart B. Rosenstein.... 0 0% -- -- -- --
</TABLE>
_______________
(1) Bonuses for 1995 were paid in April 1996 and bonuses for 1996 were
paid in February 1997.
(2) The stock options have been restated to give effect to all stock
splits.
(3) All of such options were granted in September 1996 and such options
vest 1/3 per year until fully vested in September 1999. Such options
have stock-for-stock exercise and tax withholding features, which
allow the holder, in lieu of paying cash for the exercise price and
any tax withholding, to have the Company commensurately reduce the
number of shares to which he would otherwise be entitled upon
exercise of such options.
Aggregated Option/SAR Exercises in Last Fiscal Year and
Fiscal Year-End Option/SAR Values
<TABLE>
<CAPTION>
Number of
Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Shares Options/SARs Options/SARs
Acquired at December 31, 1996 at December 31, 1996
on Value Exercisable/ Exercisable/
Name Exercise Realized Unexercisable Unexercisable
---- -------- -------- -------------------- --------------------
<S> <C> <C> <C> <C>
Robert Price............. 0 0 854,492/0 $6,515,868/$0
Steven Price............. 0 0 202,148/97,656 $1,521,295/$666,991
Stuart B. Rosenstein..... 0 0 202,148/141,406 $1,521,295/$697,616
</TABLE>
Compensation Committee Interlocks and Insider Participation
During all of 1996, the Compensation Committee was comprised of
Mr. Applegate.
Compliance with Section 16(a) of the Securities Exchange Act of 1934
Section 16(a) of the Securities Exchange Act of 1934, as
amended (the "1934 Act"), requires the Company's executive officers and
Directors, and beneficial owners of more than 10% of the Class A Common Stock
of the Company, to file initial reports of ownership and reports of changes in
ownership with the SEC. Executive officers and Directors are required by SEC
regulations to furnish the Company with copies of all Section 16(a) forms they
file. Based solely on a review of the copies of such forms furnished to the
Company and written representations from the Company's executive officers and
Directors, the Company noted that no individual who, at any time during 1996,
was a Director, officer or beneficial owner of more than 10% of the Class A
Common Stock of the Company failed to file the reports required by Section
16(a) of the 1934 Act on a timely basis, except that (i) Stuart Rosenstein
filed a Form 4 in November 1996, that was not timely filed, reporting two
purchases and (ii) Price Communications filed a Form 4 during April 1997, that
was not timely filed, reporting seven purchases during 1996.
COMPENSATION COMMITTEE REPORT TO STOCKHOLDERS
The report of the Compensation Committee shall not be deemed
incorporated by reference by any general statement incorporating by reference
this proxy statement into any filing under the Securities Act of 1933 or the
Securities Exchange Act of 1934, except to the extent that the Company
specifically incorporates this information by reference, and shall not
otherwise be deemed filed under such acts.
The Compensation Committee of the Board of Directors is
responsible for administering the executive compensation plans and programs of
the Company and for making recommendations to the Board of Directors regarding
the compensation of and benefits provided to the Chief Executive Officer and
the other executive officers. Each member of the Committee, whose names are
set forth below this report, is an independent director of the Company.
Compensation Policies
In establishing compensation and benefit levels for executive
officers, the Committee seeks to (1) attract and retain individuals of
superior ability and managerial talent (2) motivate executive officers to
increase Company performance primarily for the benefit of its stockholders but
also for the benefit of its customers and other constituencies and (3) reward
executives for superior individual contributions to the achievement of the
Company's business objectives. To these ends, the Company's executive
compensation package consists of salary, variable annual cash compensation and
stock-based long-term incentive awards.
Salary levels generally are determined based on the Committee's
subjective assessment of prevailing levels among the Company's competitors. At
higher levels, however, individual and Company performance will be given
greater weight, along with competitive considerations.
Annual bonuses are determined based on the Company's
performance during the previous year, focusing particularly on growth in
"pops", penetration and cash flow (measured by earnings before interest,
taxes, depreciation and amortization ("EBITDA"). The Committee has discretion
also to consider individual performance in determining annual bonuses.
Stock-based incentives, at the present time consisting of stock
options granted at 100% of the stock's fair market value on the grant date,
constitute the long-term portion of the Company's executive compensation
package. Stock options provide an incentive for executives to increase the
Company's stock price and therefore, the return to the Company's stockholders.
The number and timing of stock option grants is decided by the Committee based
on its subjective assessment, with the advice of independent consultants, of
prevailing levels of similar compensation among the Company's competitors.
Compensation of the Chief Executive Officer
Effective July 1, 1995, the Committee recommended, and the
Board approved, increasing Robert Price's base annual salary from $100,000 to
$325,000. The Committee's recommendation as to base salary in this regard was
based primarily on, and the Committee credited Mr. Price with, (i) the
Company's successful acquisition of certain cellular systems in 1995, (ii)
improvements in the results of operations of such systems since the Company's
acquisition thereof, (iii) the Company's pending acquisitions, (iv) the
Company's successful completion of certain financings during 1995 and (v)
successful completion of certain financings during 1995 by the Company's
wholly owned subsidiary, PriCellular Wireless Corporation. In addition, in
April 1996, based on the foregoing accomplishments, the Committee recommended,
and the Board approved, a bonus of $210,000 based on Mr. Price's performance
during 1995.
During 1996, Mr. Price made similar contributions to the
Company. Accordingly, the Committee recommended, and the Board approved,
maintaining Mr. Price's annual salary at $325,000, and the payment of a bonus
of $325,000 based on Mr. Price's performance during 1996.
BRION B. APPLEGATE
STOCK PRICE PERFORMANCE GRAPH
The Stock Price Performance Graph below shall not be deemed
incorporated by reference by any general statement incorporating by reference
this proxy statement into any filing under the Securities Act of 1933 or under
the Securities Exchange Act of 1934, except to the extent the Company
specifically incorporates this information by reference, and shall not
otherwise be deemed filed under such Acts.
The graph below compares cumulative total returns of the
Company, the S&P 500 Index and a peer group consisting of six publicly traded
cellular telephone companies (described below). The stock price performance
shown on the graph below is not necessarily indicative of future price
performance.
[GRAPH]
12/22/94 12/30/94 12/29/95 12/31/96
-------- -------- -------- --------
PriCellular Corporation 100.00 102.63 171.05 236.43
S&P 500 Index 100.00 99.91 137.45 169.01
Peer Group Index 100.00 102.99 98.48 84.34
Note: Assumes $100 invested on 12/22/94 in PriCellular Corporation shares of
Class A Common Stock, the S&P 500 Index and the Peer Group Index. The Peer
Group Index was prepared by Standard & Poor's Compustat specifically for the
Company and consists of AirTouch Communications, Inc., United States Cellular
Corporation, Centennial Cellular Corp., Vanguard Cellular Systems, Inc.,
Rogers Cantel Mobile Communications Inc. and Corecomm Inc. (formerly Cellular
Communications of Puerto Rico, Inc.). The Peer Group Index consists of
other publicly traded cellular telephone service providers with market
capitalizations similar to the Company's.
2. Increase in Number of Authorized Shares of Class B Common Stock
At the meeting, the stockholders will be asked to approve an
amendment to the Company's Amended and Restated Certificate of Incorporation
to increase the number of authorized shares of Class B Common Stock from
20,000,000 to 50,000,000. Currently, there are 19,170,736 shares of Class B
Common Stock outstanding.
The Board has determined that it is advisable to increase the
authorized number of shares of Class B Common Stock in order to ensure that
the Company has an adequate number of authorized and unissued shares of Class
B Common Stock for issuance in connection with the exercise of outstanding
warrants and in connection with stock splits. The availability of additional
shares for issuance, without the delay and expense of obtaining the approval
of stockholders at a special meeting, will afford the Company greater
flexibility.
The Company currently has no plans to issue any additional
shares of Class B Common Stock other than shares that may be issued in
connection with (i) the exercise of outstanding warrants and (ii) future stock
splits. The Company does not currently have any plans for a stock split of
its Common Stock, but will consider effecting stock splits in the future as
it has in the past, in an effort to enhance the Common Stock's liquidity.
If approved, the increased number of authorized shares of Class B
Common Stock will be available from time to time for such purposes and
consideration as the Board of Directors may approve and no further vote of
stockholders of the Company will be required, except under the rules of any
national securities exchange on which shares of the Company are at the time
listed.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE AMENDMENT TO
THE COMPANY'S AMENDED AND RESTATED CERTIFICATE OF INCORPORATION TO INCREASE
THE NUMBER OF AUTHORIZED SHARES OF CLASS B COMMON STOCK, WHICH IS DESIGNATED
AS PROPOSAL NO. 2 ON THE ENCLOSED PROXY CARD.
3. Amendment of the 1994 Stock Option Plan
At the meeting, the stockholders will be asked to approve an amendment
to the PriCellular Corporation 1994 Stock Option Plan (as amended, the
"Plan"). At the present time, 429,511 shares remain available for award under
the Plan. The Company now believes that it will require more authorized
shares under the Plan to properly motivate executives in the coming years.
The Company proposes to change the limit on authorized shares under the Plan
by 1,000,000 shares to 3,636,719 shares of the Company's Class A Common Stock.
The following description of the Plan, as amended, is qualified in its
entirety by reference to the text of the Plan, as amended, which is attached
hereto as Annex 1.
1994 Stock Option Plan (as amended)
The Board of Directors of the Company had adopted, and the stockholders
of the Company have approved, the Plan. Under the Plan, stock options and
other equity-based awards may be granted to senior officers, senior management
and other selected employees of the Company and its subsidiaries.
In September 1996, the Board of Directors granted options to purchase
43,000 shares of Class A Common Stock to Steven Price, which options are
currently not exercisable.
The Plan will be administered by the Board of Directors or by a
committee consisting of two or more disinterested members of the Board of
Directors (as defined in the Plan) ("the Committee"). The Committee (or the
Board, if no Committee is appointed) may grant stock options, stock
appreciation rights and other stock-based awards to eligible employees. In no
event, however, may the Board or the Committee grant awards relating to more
than 2,636,719 shares of Class A Common Stock pursuant to the Plan. Shares
subject to awards that are canceled, forfeited or otherwise settled without
the delivery of shares, and shares surrendered to or withheld by the Company
in satisfaction of the exercise price or withholding tax arising in connection
with the exercise of an award shall be added back to the total of shares in
respect of which awards may be granted under the Plan.
Awards may be satisfied by the delivery of either authorized but
unissued Common Stock or treasury shares. The Committee (or the Board, if no
Committee is appointed) may grant one or more types of awards in any
combination to a particular participant in a particular year; however, no
individual may be granted awards under the Plan relating to more than
1,171,875 shares in any year. No awards may be made under the Plan after the
tenth anniversary of the effective date of the Plan, and no shares may be
issued under the Plan after that date, except in respect of awards made prior
to that date. Each award will be confirmed by, and is subject to the terms
of, an agreement executed by the participant and the Company.
Following is a description of each type of award or grant that may be
made under the Plan.
Stock Options
Stock options may be incentive stock options ("ISOs") that comply with
the requirements of Section 422 of the Code or nonqualified stock options that
do not comply with Section 422 of the Code. The Committee (or the Board, if
no Committee is appointed) will determine the exercise price and other terms
and conditions of options, subject to the limitation that the exercise price
of options may not be less than the fair market value of the underlying shares
on the date of grant.
To the extent permitted by the Committee (or the Board, if no Committee
is appointed), the exercise price for an option may be paid in shares of
Common Stock valued at their then fair market value.
Stock Appreciation Rights
Stock appreciation rights ("SARs") may be granted in conjunction with
all or any part of a stock option or independently. Upon the exercise of an
SAR, the participant will be entitled to receive, for each share of Class A
Common Stock to which the exercised SAR relates, the excess of the fair market
value per share of Class A Common Stock on the date of exercise over the grant
price of the SAR. SARs shall have such terms and conditions as may be
established by the Committee (or by the Board, if no Committee is appointed).
Other Stock-Based Awards
The Committee (or the Board, if no Committee is appointed) has the
authority under the Plan to make other awards that are valued in whole or in
part by reference to, or are payable in or otherwise based upon, shares of
Class A Common Stock, including awards valued by reference to the performance
of a subsidiary of the Company. The Committee will determine the participants
to whom and the times at which these awards will be made, the number of shares
of Class A Common Stock to be awarded and all other terms and conditions to
the awards.
Any award granted under the Plan may include the right to receive,
either currently or on a deferred basis, dividends or dividend equivalents
with respect to the number of shares covered by the award.
If the Committee (or the Board, if no Committee is appointed) determines
that any stock split, stock dividend or other distribution (whether in the
form of cash, securities or other property), recapitalization, reorganization,
merger, consolidation, split-up, spin-off, combination, repurchase or exchange
of shares, issuance of warrants or other rights to purchase shares at a price
below fair market value, or other similar corporate event affects the Common
Stock such that an adjustment is required in order to preserve the benefits
intended under the Plan, then the Committee (or the Board, as the case may be)
may in its discretion (i) make equitable adjustments (a) in the number and
kind of shares that may be the subject of future awards under the Plan or (b)
the number and kind of shares (or other securities or property) subject to
outstanding awards and the respective grant or exercise prices thereof and
(ii) if appropriate, provide for the payment of cash to a participant.
The Plan may be amended or terminated at any time by the Board of
Directors, except that no amendment may be made without stockholder approval
if such approval is necessary to comply with any tax or regulatory
requirement, including any approval requirement which is a prerequisite for
exemptive relief from Section 16 of the Exchange Act.
The Plan is not subject to any provision of ERISA and is not qualified
under Section 401(a) of the Code.
Certain Federal Income Tax Consequences of the Plan Under Current Law
When an optionee exercises a nonqualified option, the difference between
the option price and any higher fair market value of the shares on the date of
exercise will be ordinary income to the optionee and will generally be allowed
as a deduction for federal income tax purposes to the Company.
When an optionee exercises an incentive stock option while employed by
the Company or a subsidiary or within the three month (one year for
disability) period after termination of employment, no ordinary income will be
recognized by the optionee at the time, but the excess of the fair market
value of the shares acquired by such exercise over the option price will be an
adjustment to taxable income for purposes of the federal alternative minimum
tax applicable to individuals. If the shares acquired upon exercise are
disposed of more than one year after the date of transfer, the excess of the
sale proceeds over the aggregate option price of such shares will be long term
capital gain but the Company will not be entitled to any tax deduction with
respect to such gain. If the shares are disposed of prior to such date (a
"disqualifying disposition"), the excess of the fair market value of such
shares at the time of exercise over the aggregate option price (but not more
than the gain on the disposition if the disposition is a transaction on which
a loss, if realized, would be recognized) will be ordinary income at the time
of such disqualifying disposition (and the Company generally will be entitled
to a federal tax deduction in a like amount). If an incentive stock option
is exercised by an optionee more than three months (one year for disability)
after termination of employment, the tax consequences are the same as
described above for nonqualified stock options.
With respect to stock appreciation rights and other awards under the
Plan, when an optionee exercises stock appreciation rights granted to him
under the Plan or receives payment with respect to an award awarded to him
under the Plan, the amount of cash and the fair market value of any property
(including shares) received will be ordinary income to the optionee and will
generally be allowed as a deduction for federal income tax purposes to the
Company. Special rules may apply if the property or shares received are
subject to a substantial risk of forfeiture.
Certain additional special rules apply if the exercise price for an
award is paid for in shares previously owned by the optionee rather than in
cash.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE AMENDMENT TO THE 1994
STOCK OPTION PLAN, WHICH IS DESIGNATED AS PROPOSAL NO. 3 ON THE ENCLOSED PROXY
CARD.
Solicitation of Proxies
The cost of soliciting proxies for the 1997 Annual Meeting will
be borne by the Company. In addition to solicitation by mail, solicitations
may also be made by personal interview, fax and telephone. Arrangements will
be made with brokerage houses and other custodians, nominees and fiduciaries
to send proxies and proxy material to their principals, and the Company will
reimburse them for expenses in so doing. Consistent with the Company's
confidential voting procedure, directors, officers and other regular employees
of the Company, as yet undesignated, may also request the return of proxies by
telephone or fax, or in person.
Annual Report
The Annual Report of the Company for the year ended December
31, 1996 is expected to be mailed to all stockholders on or about April 18,
1997.
Stockholder Proposals
In general, stockholder proposals intended to be presented at
an Annual Meeting, including proposals for the nomination of directors, must
be received by the Company at least 120 days in advance of the day and month
of the last proxy statement mailed out for any annual meeting to be considered
for the 1998 Annual Meeting. The requirements for submitting such proposals
are set forth in the Company's Bylaws.
Stockholder proposals intended to be considered for inclusion
in the proxy statement for presentation at the 1998 Annual Meeting must be
received by the Company by December 19, 1997.
Other Matters
The Board of Directors does not know of any matter other than
those described in this proxy statement that will be presented for action at
the meeting. If other matters properly come before the meeting, the persons
named as proxies intend to vote the shares they represent in accordance with
their judgment.
Annex I
PRICELLULAR CORPORATION
1994 STOCK OPTION PLAN
as amended
ARTICLE I
Purpose
The purpose of this 1994 Stock Option Plan is to enable
PriCellular Corporation to offer selected employees of the Company and its
subsidiaries stock options and other equity interests in the Company, thereby
attracting, retaining and rewarding such employees, and strengthening the
mutuality of interests between such employees and the Company's shareholders.
ARTICLE II
Definitions
For purposes of this Plan, the following terms shall have the
following meanings:
2.1 "Award" shall mean any award under this Plan of any Stock
Option, Stock Appreciation Right or Other Stock-Based Award. All Awards shall
be granted by, confirmed by, and subject to the terms of, a written agreement
executed by the Company and the Participant.
2.2 "Board" shall mean the Board of Directors of the Company.
2.3 "Code" shall mean the Internal Revenue Code of 1986, as
amended.
2.4 "Committee" shall mean a committee of the Board appointed
from time to time by the Board consisting of two or more Directors, each of
whom, to the extent necessary to comply with Rule 16b-3 only, shall be
disinterested persons as defined in Rule 16b-3. In the absence of the
appointment of such a committee, references to the Committee herein shall
refer to the Board.
2.5 "Common Stock" means the Common Stock, $.01 par value per
share, of the Company.
2.6 "Company" shall mean PriCellular Corporation and, unless
the context clearly indicates otherwise, its subsidiaries.
2.7 "Eligible Employees" shall mean the employees of the
Company and any other person providing services to the Company as an advisor
or consultant.
2.8 "Fair Market Value" for purposes of this Plan, unless
otherwise required by any applicable provision of the Code or any regulations
issued thereunder, shall mean, as of any date, fair market value as determined
by the Committee.
2.9 "Incentive Stock Option" shall mean any Stock Option
awarded under this Plan intended to be and designated as an "incentive stock
option" within the meaning of Section 422 of the Code.
2.10 "Nonqualified Stock Option" shall mean any Stock Option
awarded under this Plan that is not an Incentive Stock Option.
2.11 "Other Stock-Based Award" shall mean any right or award
granted under Article VIII of the Plan.
2.12 "Participant" shall mean an employee to whom an Award has
been made pursuant to this Plan.
2.13 "Plan" shall mean this PriCellular Corporation 1994 Stock
Option Plan.
2.14 "Rule 16b-3" shall mean Rule 16b-3 promulgated under
Section 16 of the Securities Exchange Act of 1934, and the authorities issued
thereunder, and any successor rule thereto.
2.15 "Stock Appreciation Right" or "SAR" shall mean the right
pursuant to an Award granted under Article VII.
2.16 "Stock Option" or "Option" shall mean any option to
purchase shares of Common Stock granted pursuant to Article VI.
2.17 "Substitute Awards" shall mean Awards granted in
substitution for, or in assumption of, outstanding awards previously granted
by a company acquired by the Company or with which the Company combines.
ARTICLE III
Administration
3.1 The Committee. The Plan shall be administered and
interpreted by the Committee.
3.2 Awards. The Committee shall have full authority, subject
to the terms of this Plan and applicable law, to grant Awards to Eligible
Employees. In particular, the Committee shall have the authority:
(a) to select and designate Participants;
(b) to determine the type or types of Awards to be granted to
an Eligible Employee;
(c) to determine the number of shares of Common Stock to be
covered by each such Award granted hereunder;
(d) to determine the terms and conditions, not inconsistent
with the terms of this Plan, of any Award granted
hereunder;
(e) to determine whether and under what circumstances Awards
may be settled in cash, Common Stock, other securities or
other property or any combination of the foregoing;
(f) to determine whether and under what circumstances an Award
may be canceled, forfeited or suspended and the
method(s) by which Awards may be canceled, forfeited or
suspended;
(g) to interpret and administer the Plan and any instrument or
agreement relating to, or Award made under, the Plan;
(h) to establish, amend, suspend or waive such rules and
regulations and appoint such agents as it shall deem
appropriate for the proper administration of the Plan; and
(i) to determine whether, to what extent and under what
circumstances Common Stock and other amounts payable with
respect to an Award under this Plan shall be deferred
either automatically or at the election of the
Participant or of the Committee.
3.3 Decisions Final. Any decision, designation, determination,
interpretation or other action made or taken under or in respect of the Plan
or any Award shall be within the absolute discretion of the Committee, may be
made at any time and shall be final, binding and conclusive on the Company,
all employees and Participants and their respective heirs, executors,
administrators, successors and assigns, any stockholder of the Company and any
Eligible Employee.
3.4 Reliance on Counsel. The Committee may consult with legal
counsel, who may be counsel for the Company or other counsel, with respect to
its obligations or duties hereunder, or with respect to any action or
proceeding or any question of law, and shall not be liable with respect to any
action taken or omitted by it in good faith pursuant to the advice of such
counsel.
ARTICLE IV
Share Limitation
4.1 Shares. Subject to adjustment as provided in Section 4.2,
the maximum aggregate number of shares of Common Stock with respect to which
Awards may be granted under this Plan shall not exceed 3,636,719 shares, which
may be either authorized and unissued Common Stock or outstanding Common Stock
reacquired by the Company. If any Award granted under this Plan shall expire,
terminate or be canceled for any reason without the delivery of shares of
Common Stock, shares subject to such Award, to the extent of such
cancellation, forfeiture or termination, shall again be available for Awards
under this Plan. Awards which by their terms may be settled only in cash shall
not be counted against such total, except as may be required to comply with
Rule 16b-3. If any Award is exercised by surrendering shares of Common Stock
to the Company in satisfaction of the exercise price of such Award or if any
withholding tax obligation arising in connection with such Award is satisfied
by withholding shares otherwise deliverable upon such exercise, then the
number of shares so surrendered or withheld shall again be available for
Award under the Plan. Shares of Common Stock delivered upon exercise of,
or otherwise relating to, Substitute Awards shall not be counted against
the shares of Common Stock available for Awards under the Plan except in
the case of Substitute Awards granted to individuals who are officers or
directors of the Company for purposes of Section 16 of the Securities
Exchange Act of 1934.
4.2 Adjustments. In the event that the Committee determines
that any dividend or distribution (whether in the form of cash, securities or
other property), stock split or reverse stock split, recapitalization,
reorganization, merger, consolidation, split-up, combination or exchange of
shares, distribution with respect to its outstanding Common Stock or capital
stock other than Common Stock, reclassification of its capital stock, issuance
of warrants or options to purchase any Common Stock or securities convertible
into Common Stock, or rights offering to purchase capital stock at a price
below fair market value, or any similar corporate transaction or event affects
the capital stock of the Company such that an adjustment is determined by the
Committee to be appropriate to prevent dilution or enlargement of the benefits
or potential benefits intended to be made available under the Plan, then the
Committee may, in its sole discretion and in such manner as it may deem
equitable, adjust any or all of the number and kind of shares which thereafter
may be subject to Awards under this Plan, both in aggregate and in respect of
any individual, the number and kind of shares subject to outstanding Awards
granted under this Plan and the purchase price thereof and, if deemed
appropriate, make provision for a cash payment to the holder of an outstanding
Award; provided, in each case, that with respect to Awards of Incentive Stock
Options no such adjustment shall be authorized to the extent that such
authority would cause the Plan to violate Section 422(b)(1) of the Code or any
successor provision thereto and, with respect to all Awards under the Plan, no
such adjustment shall be authorized to the extent that such authority would be
inconsistent with the requirements for full deductibility under Section 162(m)
of the Code and the regulations thereunder; and provided further that the
number of shares subject to any Award denominated in shares shall always be a
whole number.
4.3 Individual Limit. No individual may receive in any year
Awards under the Plan that relate to more than 1,171,875 shares of Common
Stock.
ARTICLE V
Eligibility
5.1 Any Eligible Employee, including any such individual who
is also a member of the Company's Board of Directors, is eligible to be
granted Options and other Awards under this Plan. Eligibility under this Plan
shall be determined by the Committee.
ARTICLE VI
Stock Options
6.1 Options. Subject to the provisions of the Plan, the
Committee shall have sole and complete authority to determine the Eligible
Employees to whom Options shall be granted, the number of shares of Common
Stock to be covered by each Option, the option price therefor and the
conditions and limitations applicable to the exercise of the Option. The
Committee shall have the authority to grant Incentive Stock Options,
Nonqualified Stock Options or both. In the case of Incentive Stock Options,
the terms and conditions of such grants shall be subject to and comply with
such rules as may be required by Section 422 of the Code, as from time to time
amended, and any implementing regulations.
6.2 Exercise Price. Except in the case of a Stock Option which
is a Substitute Award, the exercise price of any Stock Option granted under
this Plan shall not be less than 100% of the fair market value of the
underlying shares of Common Stock on the date of grant.
6.3 Incentive Stock Options. Anything in the Plan to the
contrary notwithstanding, no term of this Plan relating to Incentive Stock
Options shall be interpreted, amended or altered, nor shall any discretion or
authority granted under the Plan be so exercised, so as to disqualify the Plan
under Section 422 of the Code, or, without the consent of the Participants
affected, to disqualify any Incentive Stock Option under such Section 422.
6.4 Exercise. Each Stock Option shall be exercisable at such
times and subject to such terms and conditions as the Committee may, in its
sole discretion, specify in the applicable Award agreement or thereafter,
provided, however, that in no event may any Stock Option granted hereunder be
exercisable after the expiration of 10 years after the date of such grant. The
Committee may impose such conditions with respect to the exercise of Stock
Options, including without limitation, any condition relating to the
application of Federal or state securities laws, as it may deem necessary or
advisable. Except in the case of an Option which is a Substitute Award, no
Stock Option shall be exercisable earlier than six months after the date of
grant.
ARTICLE VII
Stock Appreciation Rights
7.1 Stock Appreciation Rights. Subject to the provisions of
the Plan, the Committee shall have sole and complete authority to determine
the Eligible Employees to whom Stock Appreciation Rights shall be granted, the
number of shares of Common Stock to be covered by each Award of Stock
Appreciation Rights, the grant price thereof and the conditions and
limitations applicable to the exercise thereof. Stock Appreciation Rights may
be granted in tandem with another Award, in addition to another Award, or
freestanding and unrelated to any other Award. Stock Appreciation Rights
granted in tandem with or in addition to a Stock Option or other Award may be
granted either at the same time as the Stock Option or other Award or at a
later time. Stock Appreciation Rights shall not be exercisable earlier than
six months after the date of grant nor after the expiration of 10 years after
the date of grant. Except in the case of a Stock Appreciation Right which is a
Substitute Award, the grant price of any Stock Appreciation Right granted
under this Plan shall not be less than 100% of the fair market value of the
shares of Common Stock covered by such Stock Appreciation Right on the date of
grant or, in the case of a Stock Appreciation Right granted in tandem with a
then outstanding Stock Option or other Award, on the date of grant of such
related Stock Option or Award.
7.2 Settlement. A Stock Appreciation Right shall entitle the
Participant to receive upon exercise, for each share of Common Stock to which
the exercised SAR relates, an amount equal to the excess, if any, of the fair
market value of a share of Common Stock on the date of exercise of the Stock
Appreciation Right over the grant price. Any Stock Appreciation Right shall be
settled in cash, unless the Committee shall determine at the time of grant of
a Stock Appreciation Right that it shall or may be settled in cash, shares of
Common Stock or a combination of cash and such shares.
ARTICLE VIII
Other Stock-Based Awards
8.1 Other Stock-Based Awards. The Committee is hereby
authorized to grant to Eligible Employees an Other Stock-Based Award which
shall consist of an Award, the value of which is based in whole or in part on
the value of shares of Common Stock, which is not an instrument described in
Articles VI or VII of this Plan. Other Stock-Based Awards may be awards of
shares of Common Stock or may be denominated or payable in, valued in whole or
in part by reference to or otherwise based on, or related to, Common Stock
(and securities convertible into or exchangeable for Common Stock) including,
without limitation, Awards valued by reference to subsidiary performance, as
deemed by the Committee to be consistent with the purposes of the Plan. Other
Stock-Based Awards may be granted either in addition to or in tandem with
other Awards, or on a freestanding basis.
Subject to the provisions of this Plan, the Committee shall
have authority to determine the persons to whom and the time or times at which
such Awards shall be made, the number of shares of Common Stock to be awarded
pursuant to such Awards, and all other conditions of the Awards. Except in the
case of an Other Stock-Based Award which is a Substitute Award, the price at
which securities may be purchased pursuant to any Other Stock-Based Award
granted under this Plan, or the provision, if any, of any such Award that is
analogous to the purchase or exercise price, shall not be less than 100% of
the fair market value of the securities to which such Award relates on the
date of grant.
8.2 Dividend Equivalents. In the sole and complete discretion
of the Committee, an Award, whether made as an Other Stock-Based Award under
this Article VIII or as an Award granted pursuant to Articles VI and VII
hereof, may provide the Participant with dividends or dividend equivalents,
payable in cash, shares of Common Stock, subsidiary securities, other
securities or other property on a current or deferred basis.
ARTICLE IX
Termination or Amendment of the Plan
9.1 Amendments to the Plan. The Board may amend, suspend or
terminate the Plan or any portion thereof at any time, provided that no
amendment shall be made without stockholder approval if such approval is
necessary to comply with any tax or regulatory requirement, including for
these purposes any approval requirement that is a prerequisite for exemptive
relief from Section 16(b) of the Securities Exchange Act of 1934 or any
successor provision thereto. No such amendment or other action by the
Committee shall impair the rights of any holder of an outstanding Award
without the affected holder's consent. Notwithstanding anything to the
contrary contained herein, the Committee may amend the Plan in such manner as
may be necessary for the Plan to conform with local rules and regulations in
any jurisdiction outside the United States.
9.2 Amendments to Awards. The Committee may amend, modify or
terminate any outstanding Award with the Participant's consent at any time
prior to payment or exercise in any manner not inconsistent with the terms of
the Plan, including without limitation, (i) to change the date or dates as of
which an Award becomes exercisable, or (ii) to cancel an Award and grant a new
Award in substitution therefor under such different terms and conditions as it
determines in its sole and complete discretion to be appropriate.
9.3 Adjustment of Awards Upon the Occurrence of Certain
Unusual or Nonrecurring Events. The Committee is hereby authorized to make
adjustments in the terms and conditions of, and the criteria included in,
Awards in recognition of unusual or nonrecurring events (including, without
limitation, the events described in Section 4.2 hereof) affecting the Company,
or the financial statements of the Company or any subsidiary, or of changes in
applicable laws, regulations, or accounting principles, whenever the Committee
determines that such adjustments are appropriate to prevent dilution or
enlargement of the benefits or potential benefits intended to be made available
under the Plan.
9.4 Cancellation. Any provision of this Plan or any Award
Agreement to the contrary notwithstanding, the Committee may cause any Award
granted hereunder to be canceled in consideration of a cash payment or
alternative Award made to the holder of such canceled Award equal in value to
such canceled Award. The determinations of value under this subparagraph shall
be made by the Committee in its sole discretion.
ARTICLE X
General Provisions
10.1 Award Agreements. Each Award hereunder shall be evidenced
by a writing delivered to the Participant that shall specify the terms and
conditions thereof and any rules applicable thereto, including but not limited
to the effect on such Award of the death, retirement or other termination of
employment of the Participant and the effect thereon, if any, of a change in
control of the Company.
10.2 Withholding. A Participant may be required to pay to the
Company, and the Company shall have the right to deduct from all amounts paid
to a Participant (whether under the Plan or otherwise), any taxes required by
law to be paid or withheld in respect of Awards hereunder to such Participant.
The Committee may provide for additional cash payments to holders of Awards to
defray or offset any tax arising from the grant, vesting, exercise or payment
of any Award.
10.3 Nontransferability. No Award shall be transferable by a
Participant other than by will or the laws of descent and distribution or, to
the maximum extent permitted by Rule 16b-3, pursuant to a qualified domestic
relations order ("QDRO"), as determined by the Committee. An Award may be
exercised, during the Participant's lifetime, only by the Participant or the
transferee under the QDRO.
10.4 Share Certificates. All certificates for Common Stock or
other securities delivered under the Plan pursuant to any Award or the
exercise thereof shall be subject to such stop transfer orders and other
restrictions as the Committee may deem advisable under the Plan or the rules,
regulations, and other requirements of the SEC, any stock exchange upon which
such Common Stock or other securities are then listed, and any applicable
federal or state laws, and the Committee may cause a legend or legends to be
put on any such certificates to make appropriate reference to such
restrictions.
10.5 No Limit on Other Compensation Arrangements. Nothing
contained in the Plan shall prevent the Company from adopting or continuing in
effect other compensation arrangements, which may, but need not, provide for
the grant of options, stock appreciation rights and other types of Awards
provided for hereunder (subject to stockholder approval of any such
arrangement if approval is required), and such arrangements may be either
generally applicable or applicable only in specific cases.
10.6 No Right to Employment. The grant of an Award shall not
be construed as giving a Participant the right to be retained in the employ of
the Company or any subsidiary or in the employ of any other entity providing
services to the Company. The Company or any subsidiary or any such entity may
at any time dismiss a Participant from employment, or terminate any
arrangement pursuant to which the Participant provides services to the
Company, free from any liability or any claim under the Plan, unless otherwise
expressly provided in the Plan or in any Award Agreement. No Employee,
Participant or other person shall have any claim to be granted any Award, and
there is no obligation for uniformity of treatment of Employees, Participants
or holders or beneficiaries of Awards.
10.7 Governing Law. The validity, construction, and effect of
the Plan, any rules and regulations relating to the Plan and any Award
Agreement shall be determined in accordance with the laws of the State of
Delaware.
10.8 Severability. If any provision of the Plan or any Award
is or becomes or is deemed to be invalid, illegal, or unenforceable in any
jurisdiction or as to any Person or Award, or would disqualify the Plan or any
Award under any law deemed applicable by the Committee, such provision shall
be construed or deemed amended to conform to applicable laws, or if it cannot
be construed or deemed amended without, in the determination of the Committee,
materially altering the intent of the Plan or the Award, such provision shall
be stricken as to such jurisdiction, Person or Award and the remainder of the
Plan and any such Award shall remain in full force and effect.
10.9 No Trust or Fund Created. Neither the Plan nor any Award
shall create or be construed to create a trust or separate fund of any kind or
a fiduciary relationship between the Company and a Participant or any other
Person. To the extent that any Person acquires a right to receive payments
from the Company pursuant to an Award, such right shall be no greater than the
right of any unsecured general creditor of the Company.
10.10 No Fractional Shares. No fractional shares of Common
Stock shall be issued or delivered pursuant to the Plan or any Award, and the
Committee shall determine whether cash, other securities or other property
shall be paid or transferred in lieu of any fractional shares or whether such
fractional shares or any rights thereto shall be canceled, terminated, or
otherwise eliminated.
10.11 Headings. Headings are given to the Articles, Sections
and subsections of the Plan solely as a convenience to facilitate reference.
Such headings shall not be deemed in any way material or relevant to the
construction or interpretation of the Plan or any provision thereof.
ARTICLE XI
Effective Date of Plan
The Plan shall become effective upon the date specified by the
Board in its resolution adopting the Plan, subject to the approval of the Plan
by the shareholder of the Company.
ARTICLE XII
Term of Plan
No Award shall be granted pursuant to the Plan on or after the
tenth anniversary of the earlier of the date the Plan is adopted or the date
of shareholder approval but Awards granted prior to such tenth anniversary may
and the authority of the Committee to amend, alter, adjust, suspend,
discontinue, or terminate any such Award or to waive any conditions or rights
under any such Award shall, extend beyond that date.
PROXY PROXY
PRICELLULAR CORPORATION
Proxy Solicited by Board of Directors
for the Annual Meeting of Stockholders on May 14, 1997
The undersigned stockholder of PRICELLULAR CORPORATION hereby appoints
Robert Price and Kim I. Pressman, and each of them, the attorneys and proxies
of the undersigned, with full power of substitution, to vote on behalf of the
undersigned all the shares of Class A Common Stock, Class B Common Stock or
Series A Cumulative Convertible Preferred Stock of PRICELLULAR CORPORATION
which the undersigned is entitled to vote at the Annual Meeting of
Stockholders of the Company, to be held at the offices of Davis Polk &
Wardwell, 450 Lexington Avenue, New York, New York on Wednesday, May 14, 1997,
at 10:00 a.m. and at all adjournments thereof, hereby revoking any proxy
heretofore given with respect to such stock.
IMPORTANT - This Proxy must be signed and dated on the reverse side.
THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO INSTRUCTION TO THE
CONTRARY IS INDICATED, THIS PROXY WILL BE VOTED FOR PROPOSALS 1, 2
AND 3
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK
ONLY [X]
1. Election of Directors:
Nominees:
Robert Price For Withheld Abstain
[ ] [ ] [ ]
Kim I. Pressman For Withheld Abstain
[ ] [ ] [ ]
Steven Price For Withheld Abstain
[ ] [ ] [ ]
Brion B. Applegate For Withheld Abstain
[ ] [ ] [ ]
Scott M. Sperling For Withheld Abstain
[ ] [ ] [ ]
Scott I. Anderson For Withheld Abstain
[ ] [ ] [ ]
2. Approval of the amendment to the Company's Amended and Restated
Certification of Incorporation to increase the number of authorized
shares of Class B Common Stock, par value $.01 per share, from
20,000,000 to 50,000,000 shares.
For Against Abstain
[ ] [ ] [ ]
3. Approval of the amendment to the Company's 1994 Stock Option Plan.
For Against Abstain
[ ] [ ] [ ]
4. In their discretion, the proxies are authorized to transact such other
business as may properly come before the meeting and any and all
adjournments thereof.
IMPORTANT: Please sign your name or names exactly as shown hereon and date
your proxy in the blank space provided below. For joint accounts, each joint
owner must sign. When signing as attorney, executor, administrator, trustee or
guardian, please give your full title as such. If the signer is a
corporation, please sign full corporate name by duly authorized officer.
PLEASE SIGN HERE AND RETURN PROMPTLY
- ------------------------------------
Signature
- ------------------------------------
Signature
Dated:________________________, 1997
