SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14C INFORMATION
Information Statement Pursuant to Section 14(c) of the Securities Exchange Act
of 1934
Check the appropriate box:
[ ] Preliminary Information Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule 14c-5(d)
(2))
[X] Definitive Information Statement
First Priority Group, Inc.
(Name of Registrant as Specified in Its Charter)
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First Priority Group, Inc.
51 East Bethpage Road
Plainview, New York 11803
NOTICE OF 1998 ANNUAL MEETING OF SHAREHOLDERS
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of First
Priority Group, Inc., a New York corporation (the "Company"), will be held at
First Priority Group, Inc., 51 East Bethpage Road, Plainview, New York 11803, on
Tuesday, March 23, 1998 at 11:00 A.M. local time for the following purposes, all
of which are more completely set forth in the accompanying Information
Statement:
(1) To elect five persons as Directors to hold office until the next
Annual Meeting or until their respective successors are elected and
qualified;
(2) To ratify the selection by the Board of Directors of Nussbaum Yates &
Wolpow, P.C. as the independent accountants to audit the Company's
financial statements for 1998.
(3) To transact such other business as may properly come before the
meeting or any adjournments thereof.
The Board of Directors has fixed the close of business on March 9, 1998, as
the record date for the determination of shareholders entitled to receive notice
of and to vote at the Annual Meeting or any adjournment thereof.
BY ORDER OF THE BOARD
OF DIRECTORS
Barry Siegel
Chairman of the Board,
Treasurer, Secretary and
Chief Executive Officer
March 13, 1998
We Are Not Asking You for a Proxy and You are Requested Not To Send Us a Proxy
First Priority Group, Inc.
51 East Bethpage Road
Plainview, New York 11803
Information Statement
This Information Statement, expected to be mailed on or about March 13,
1998, is furnished in connection with the Annual Meeting of Shareholders to be
held on March 23, 1998 at 11:00 A.M., at First Priority Group, Inc., 51 East
Bethpage Road, Plainview, New York, and at any adjournment thereof, for the
purposes set forth in the Notice of Annual Meeting.
Only the holders of the Company's common stock of record at the close of
business on March 9, 1998 will be entitled to notice of and to vote at the
Annual Meeting. As of March 9, 1998, there were outstanding 8,223,466 shares of
the Company's common stock. Each share of common stock is entitled to one (1)
vote on each matter to be voted on, and a majority of the shares entitled to
vote, represented in person or by proxy, is required to constitute a quorum for
the transaction of business.
Each of the matters to be voted on at the Annual Meeting requires the
affirmative vote of the holders of a majority of the issued and outstanding
shares of the Company's common stock represented and voting at the meeting. The
five nominees receiving a plurality of the votes cast for election of directors
of the Company will be elected as directors of the Company.
The Board of Directors recommends a vote FOR each of the Proposals
discussed in this Information Statement and FOR each of the persons nominated to
be elected directors of the Company.
PROPOSAL 1
ELECTION OF DIRECTORS
Five persons have been nominated as Directors of the Company. All of the
nominees, except for one, are currently Directors of the Company. The term of
office of each Director elected will be one year or until the election and
qualification of his successor.
The names of the five nominees, the age and principal occupation of each
and the period during which each has served as a Director of the Company are set
forth below:
Five Nominees to the Board of Directors:
Name and Five Year Business Experience Age
- -------------------------------------- ---
Michael Karpoff 54
Mr. Karpoff served as a director of the Company since its
inception and became President and Chief Operating Officer of the
Corporation in November 1997. He served as President and Co-Chief
Executive Officer of the Corporation from August 1997 through November
1997. Previously, for more than five years, he served as Co-Chairman
of the Board of Directors and Co-Chief Executive Officer of the
Corporation. For more than five years, Mr. Karpoff has served as
President of National Fleet Service, Inc..
Barry Siegel 46
Barry Siegel has served as a director of the Corporation since
its inception. In January 1998, Mr. Siegel again assumed the position
of Treasurer of the Corporation. Mr. Siegel became Chief Executive
Officer of the Corporation in November 1997, and continued to serve as
Chairman of the Board and Secretary to the Corporation. Previously, he
served as Chairman of the Board of Directors, Co-Chief Executive
Officer, Treasurer and Secretary of the Corporation from August 1997
through November 1997. From October 1987 through August 1997, he
served as Co-Chairman of the Board of Directors, Co-Chief Executive
Officer, Treasurer and Secretary to the Corporation. He has served as
Treasurer and Secretary of National Fleet Service, Inc. for more than
five years.
Leonard Giarraputo 52
Leonard Giarraputo was elected a director of the Company in
September, 1988. He has also been a director of National Fleet
Service, Inc. since February, 1984. From March, 1972 through May 1996,
he was Senior Vice President of Block Trading with Paine Webber
Incorporated. Since May 1996, he has been a Managing Director of
Worldco, LLC., a member of NASD.
Paul Di Stefano 50
Paul J. Di Stefano was elected to the Board of Directors in December
1997. Since 1987, Mr. Di Stefano has been Managing Director of Harbor
Capital Advisors, Inc., an investment banking and financial consulting
firm specializing in the insurance industry.
Barry J. Spiegel 49
Barry J. Spiegel has served as President of the Corporation's Affinity
Services Division since September 1996. Previously, he served as
President of American International Insurance
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Associates, Inc. from January 1996 through August 1996. For more than
five years prior thereto, Mr. Spiegel served as Senior Vice President
at American Bankers Insurance Group, Inc.
Other Directors or Executive Officers:
Philip Panzera 48
Philip M. Panzera became a director of the Corporation in December
1997. From November 17, 1997 through January 29, 1998, he served as
Senior Vice President, Treasurer and Chief Financial Officer of the
Corporation. Previously, Mr. Panzera served as President, Chief
Operating and Financial Officer and Director, from June 1997 through
November 1997, and as Chief Operating and Financial Officer and
Director, from January 1997 through June 1997, for Botanical Science,
Inc. Previously, Mr. Panzera served as President, Secretary and
Director, from 1995 through 1996, and Vice President, Chief Financial
Officer, Secretary and Director , from 1991 through 1994, for Camera
Platforms International, Inc. Mr. Panzera will not stand for
re-election to the Board of Directors of the Corporation. [The Company
has been unable to verify with Mr. Panzera the accuracy of his
biography, nor has Mr. Panzera affirmed that no disclosure is required
under Section 228.401(d) of the regulations promulgated by the
Securities and Exchange Commission under the Securities Exchange Act
of 1934]
There are no arrangements or understandings between any of the Company's
directors or officers, or anyone else, pursuant to which directors or officers
were, or are, to be selected for a particular office or position.
BOARD OF DIRECTORS AND COMMITTEES
The Board of Directors has the responsibility to serve as the
representative of the Shareholders. The Board establishes broad corporate
policies and oversees the overall performance of the Company. However, the Board
is not involved in day-to-day operating details. Members of the Board are kept
informed of the Company's business activities through discussion with the Chief
Executive Officer, by reviewing analyses and reports sent to them by management
and by participating in board meetings. At present, the Board of Directors has
no standing committees.
During 1997 there was one meeting of the Board of Directors which was
attended by all of the members, and the Board approved resolutions with
unanimous written consent in lieu of a meeting on thirteen occasions in 1997.
Directors received no compensation for their service on the Board of Directors.
However, non-employee directors receive an annual stock option grant of 15,000
shares of the Company's common stock.
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following information is as of March 12, 1998.
(a) Security ownership of certain beneficial owners.
(1) (2) (3) (4)
Name and Amount and
Title Address of Nature of Percent of
of Class Beneficial Owner Beneficial Owner Common Stock(1)
- --------------------------------------------------------------------------------
Common Kirlin Holding Corp. 1,140,000 (2) 13.30%
6901 Jericho Turnpike
Syosset, NY. 11791
Common Kirlin Securities, Inc. 1,140,000 (3) 13.30%
6901 Jericho Turnpike
Syosset, NY. 11791
Common Frances Giarraputo 1,035,999 (4) 12.24%
6 Fox Hunt Court
Huntington, NY 11743
Common Fourteen Hill Capital, L.P. 1,000,000 12.15%
1700 Montgomery Street
Suite 250
San Francisco, CA. 94920
- -----------
(1) The percentages set forth in this Information Statement have been
calculated in accordance with Instruction 3 to Item 403 of Regulation S-B.
(2) Includes common stock purchase warrants for 340,000 shares held by Kirlin
Securities, Inc., a wholly owned subsidiary of Kirlin Holding Corp.
(3) Includes common stock purchase warrants for 340,000 shares and 800,000
shares held by Kirlin Holding Corp., parent to Kirlin Securities, Inc.
(4) Includes 56,999 shares owned directly or as custodian for others by Leonard
Giarraputo, and 230,000 shares representing options that are exercisable
within sixty days by Leonard Giarraputo to purchase the common stock of the
Company. Leonard and Frances Giarraputo are husband and wife. Each
disclaims beneficial ownership of shares held by the other.
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(b) Security ownership of management.
(1) (2) (3) (4)
Name and Amount and
Title Address of Nature of Percent of
Class Beneficial Owner Beneficial Owner Common Stock(1)
- --------------------------------------------------------------------------------
Common Michael Karpoff 1,268,999 (2) 14.59%
32 Gramercy Park South
New York, NY 10010
Common Barry Siegel 1,396,734 (3) 15.83%
8 Indian Well Court
Huntington, NY 11743
Common Leonard Giarraputo 1,035,999 (4) 12.24%
6 Fox Hunt Court
Huntington, NY 11743
Common Barry J. Spiegel 600,000 7.29%
Common Philip M. Panzera 4,000 .05%
20520 Caitlin Lane
Saugus, California 91350
Common Paul Di Stefano 35,000 (5) .42%
Harbor Capital Advisor, Inc.
82 Main Street
Suite 200
Huntington, New York 11743
Common Directors and officers
as a group 4,340,732 45.43%
- -----------
(1) The percentages set forth in this Annual Report on Form 10-KSB have been
calculated in accordance with Instruction 3 to Item 403 of Regulation S-B.
(2) Owned jointly with another. Includes 466,666 shares representing options
that are exercisable within sixty days by Michael Karpoff to purchase the
common stock of the Company.
(3) Includes 801,667 shares held directly by Barry Siegel, options exercisable
by Barry Siegel within sixty days to purchase 466,666 shares, 3,334 shares
held by Barry Siegel as custodian for two nephews, 67 shares held directly
by Barry Siegel's wife, Lisa Siegel, and 125,000 shares
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representing options held by her that are exercisable within sixty days.
Both Barry and Lisa Siegel disclaim beneficial ownership of shares held by
the other.
(4) Includes 56,999 shares owned directly or as custodian for others by Leonard
Giarraputo, and 230,000 shares representing options that are exercisable
within sixty days by Leonard Giarraputo to purchase the common stock of the
Company. Leonard and Frances Giarraputo are husband and wife. Each
disclaims beneficial ownership of shares held by the other.
(5) Includes stock option to purchase 25,000 shares of common stock and a stock
option to purchase 10,000 shares of common stock held by Harbor Capital
Advisors, Inc., a corporation controlled by Mr. Di Stefano, both options
are fully exercisable,
(c) Changes in control. None.
Certain Relationships and Related Transactions.
The Company entered into an agreement dated September 13, 1996 with Harbor
Capital Advisors, Inc. ("Harbor"), a company controlled by Paul Di Stefano, to
provide corporate development consulting services, merger and acquisition
related services, and corporate finance services. As an initial retainer, Harbor
was granted a non-statutory stock option grant for the right to purchase up to
10,000 shares of the Company's common stock at $1.50 per share. This retainer
would be offset against success fees earned up to $10,000. Additionally fees may
be earned only upon the Company completing a transaction in which Harbor was
involved.
The Company entered into an employment agreement dated September 3, 1996 with
Barry J. Spiegel for the term of September 1, 1996 through December 31, 1998.
During the term of employment, Mr. Spiegel will serve as President of the FPG
Affinity Services Division at an annual salary of $100,000. Additionally, Mr.
Siegel received a stock option grant of 500,000 shares. His right to exercise
any portion of this stock option is contingent on the FPG Affinity Services
Division meeting certain goals set forth in the employment agreement.
Additionally, Mr. Siegel will receive incentive compensation based on the
percentage of pre-tax income of the FPG Affinity Services Division. The
agreement provides that at least 25,000 shares of the stock option shall become
exercisable should Mr. Spiegel be employed by the Company on September 1, 1997,
and an additional 25,000 shares shall become exercisable should Mr. Spiegel
continue to be employed by the Company upon the expiration of the employment
agreement.
Compliance with Section 16(a) of the Exchange Act
All filings required under Section 16(a) of the Securities Exchange Act of 1934
have been made.
[The remainder of this page was intentionally left blank]
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Compensation of Directors and Executive Officers
(b) Summary Compensation Table
SUMMARY COMPENSATION TABLE
Annual Compensation
(a) (b) (c) (d)
Name
and
Principal
Position Year Salary($) Bonus($)
- -------- ---- --------- --------
Michael Karpoff 1997 $192,500 $0
President and 1996 $175,000 $0 (1)
Chief Operating 1995 $125,000 $11,771 (2)
Officer
Barry Siegel 1997 $198,846 $0
Chairman 1996 $175,000 $0 (1)
of the Board 1995 $125,000 $11,771 (2)
of Directors,
Treasurer,
Secretary and
Chief Executive
Officer
- ----------
(1) Incentive compensation for the year ended December 31, 1996 was waived by
both executives.
(2) Incentive compensation for the year ended December 31, 1995 was paid in
1996.
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(c) Options/SAR Grants Table
Option/SAR Grants in Last Fiscal Year
Individual Grants
- ------------------------------------------------------------------------------------------------------------
(a) (b) (c) (d) (e)
Number of % of Total
Securities Options/SARs
Underlying Granted to
Options/SARs Employees in Exercise or Base Expiration
Name Granted (#) Fiscal Year Price ($/Sh) Date
- ------------------------------------------------------------------------------------------------------------
Barry Siegel 100,000 17.86 $3.025 9/07/02
Michael Karpoff 100,000 17.86 $3.025 9/07/02
(d) Aggregated Option/SAR Exercises and Fiscal Year-End Option/SAR Value Table
- ------------------------------------------------------------------------------------------------------------
(a) (b) (c) (d) (e)
Number of
Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Options/SARs at Options/SARs at
FY-End (#) FY-End ($)
Shares Acquired Exercisable/ Exercisable/
Name on Exercise (#) Value Realized ($) Unexercisable Unexercisable
- ------------------------------------------------------------------------------------------------------------
Michael Karpoff None None 466,666/233,334 $2,197,330/$2,962,500
Barry Siegel None None 466,666/233,334 $2,197,330/$2,962,500
(f) Compensation of Directors
No compensation is paid to the directors in consideration of the director's
service on the board. However, the 1995 Stock Incentive Plan provides that
non-employee directors of the Company shall be granted nonstatutory stock
options for 15,000 shares of the Company's common stock on the date of election
to the Board and upon every successive anniversary date of his or her initial
election.
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(g) Employment contracts and termination of employment and change in control
arrangements.
The Company has employment agreements with its two principal officers,
Barry Siegel and Michael Karpoff. The Company entered into employment agreements
that expire on December 31, 1998. The agreements provided for minimum annual
salaries each of $175,000 effective January 1, 1996; $192,500 effective January
1, 1997; and $211,750 effective January 1, 1998.
On November 26, 1997, Mr. Siegel's employment agreement was amended whereby: (a)
his title was changed to Chairman of the Board, Secretary and Chief Executive
Officer, (b) his salary was increased to $275,000 effective December 1, 1997,
and increased to $300,000 effective June 1, 1998, (c) incentive compensation
under the agreement would be decreased to 4% of net pre-tax income, and (d) the
initial stock option grant of 300,000 shares was repriced to $1.00, $1.25 and
$1.50 for 100,000 shares, respectively.
On November 26, 1997, Mr. Karpoff's employment agreement was amended whereby:
(a) his title was changed to President and Chief Operating Officer, (b)
incentive compensation under the agreement would be decreased to 4% of net
pre-tax income, and (c) the initial stock option grant of 300,000 shares was
repriced to $1.00, $1.25 and $1.50 for 100,000 shares, respectively.
Incentive compensation for the year ended December 31, 1995 totaled for both
executives $23,542. Both executives waived their incentive compensation for
1996.
These employment agreements also contain a change in control provision
whereby the executive, following a change of control as defined in the
agreement, would receive: (a) a severance payment of 300 percent of the average
annual salary for the past five years, less $100; (b) the cash value of the
outstanding, but unexercised stock options, and (c) other perquisites, should
the executive be terminated for various reasons as defined in the agreement. The
agreements provide that in no event, shall the severance payment exceed the
amount deductible by the Company under the provisions of the Internal Revenue
Code.
PROPOSAL 2
The Board of Directors has selected Nussbaum Yates & Wolpow, P.C.,
independent certified public accountants, as the auditors for the 1998 fiscal
year. The Company has been advised by Nussbaum Yates & Wolpow, P.C. that neither
the firm nor any of its associates has any material relationship with the
Company or any of its subsidiaries. In accordance with a resolution of the Board
of Directors, such selection is being presented to the shareholders for
ratification at the Annual Meeting. If the foregoing proposal is not approved by
a majority vote of the shareholders present, in person or by proxy, at the
Annual Meeting or if prior to the Annual Meeting, Nussbaum Yates & Wolpow, P.C.
shall decline to serve, then the Board of Directors will designate another firm
to audit the financial statements of the Company for 1998 fiscal year, whose
continued employment thereafter will be subject to ratification by the
shareholders.
It is not expected that a representative of Nussbaum Yates & Wolpow, P.C.
will be present at the Annual Meeting.
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Nussbaum Yates & Wolpow, P.C. is the accounting firm which examined and
reported on the Company's financial statements for the last two fiscal years.
The opinion on the 1997 and 1996 financial statements contained no disclaimer
and were unqualified.
PROPOSALS OF SHAREHOLDERS
Proposals of any shareholders of the Company which are to be presented at
the Company's 1999 Annual Meeting of Shareholders which such shareholder wishes
to be included in the Company's Information Statement or Proxy Statement
relating to such Annual Meeting, must be received by the Company no later than
January 1, 1999. The next Annual Meeting of Shareholders is anticipated to be
held on June 22, 1999.
OTHER BUSINESS
The Annual Meeting is called for the purposes set forth in the Notice of
1998 Annual Meeting of Shareholders. The Board of Directors does not intend to
present, and knows of no one who intends to present, any matter for action by
shareholders at such meeting other than the matters referred to in that Notice.
Barry Siegel
Chairman of the Board,
Treasurer, Secretary and
Chief Executive Officer
First Priority Group, Inc.
51 East Bethpage Road
Plainview, New York 11803
March 13, 1998
10