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BEST COLLATERAL, INC.
2447 MISSION STREET
SAN FRANCISCO, CALIFORNIA
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD AUGUST 19, 1998
Notice is hereby given that the Annual Meeting of Shareholders of
Best Collateral, Inc. (the "Company"), a Colorado corporation, will be
held at 10:00 a.m. PDT, on August 19, 1998, at the offices of
PricewaterhouseCoopers, L.L.P., 333 Market Street, 21st Floor, San
Francisco, California 94105, for the following purposes:
1. To elect seven directors to serve until the annual meeting in 1999
or until their successors shall be elected and qualified;
2. To ratify the appointment of PricewaterhouseCoopers, L.L.P., as
independent auditors of the Company, for fiscal 1999; and
3. To transact such other business as may properly come before the
meeting or any adjournment thereof.
The board of directors has fixed the close of business on July 15,
1998, as the record date for determining those shareholders that will
be entitled to vote at the meeting.
_____________________________________________________________
SHAREHOLDERS ARE CORDIALLY INVITED TO ATTEND THE MEETING IN PERSON. IF
YOU CANNOT ATTEND, PLEASE FILL IN DATE, SIGN AND RETURN THE ENCLOSED
PROXY IN THE ENCLOSED ENVELOPE SO THAT YOUR SHARES MAY BE VOTED AT THE
MEETING. YOUR VOTE IS IMPORTANT.
_____________________________________________________________
By Order of the Board of Directors
Roean Iscoff
Secretary
San Francisco, California
June 26, 1998
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PROXY STATEMENT
BEST COLLATERAL, INC.
This Proxy Statement, which will be mailed on or around June 28,
1998, is furnished to shareholders of Best Collateral, Inc., a Colorado
corporation (the "Company"), in connection with the solicitation by the
Company's Board of Directors of proxies in the accompanying form for
use in voting at the Annual Meeting of Shareholders of the Company (the
"Meeting") to be held at the offices of PricewaterhouseCoopers, L.L.P.,
333 Market Street, 21st Floor, San Francisco, California 94105, on
August 19, 1998, at 10:00 a.m. PDT, and any adjournment or postponement
thereof.
Shareholders of record at the close of business on July 15, 1998
(the "record date") will be entitled to one vote at the Meeting for
each share then held. All shares represented by proxy will be voted in
accordance with the instructions, if any, given in such proxy. A
shareholder may abstain from voting for a particular proposal by
marking the appropriate box on the accompanying proxy card. If no
instructions are given, the stockholder's shares will be voted as
recommended by the board of directors. Proxies may be revoked at
anytime before the proxy is voted by giving written notice of
revocation to the secretary of the Company or by signing and delivering
a proxy which is dated later, or if the stockholder attends the Meeting
in person, by either notice of revocation to the inspectors of election
at the Meeting or by voting at the Meeting.
The only matters that management intends to present to the Meeting
are the election of directors (Proposal 1), and the ratification of the
appointment of PricewaterhouseCoopers, L.L.P., as independent auditors
of the Company for fiscal 1999 (Proposal 2). Should any other matters
be properly presented at the Meeting, the persons named in the
accompanying proxy will vote upon them in accordance with their best
judgment.
VOTING SECURITIES
Only stockholders of record at the close of business on July 15,
1998 will be entitled to vote at the Meeting. On that date, there were
issued and outstanding 4,024,990 shares of the Company's $0.10 par
value common stock ("Common Stock"), entitled to one vote per share.
In the election of directors, cumulative voting is not allowed. There
are no outstanding shares of preferred stock.
A majority of the outstanding shares of Common Stock, present in
person or by proxy and entitled to vote will constitute a quorum for
the transaction of business at the Meeting. Under Colorado law and the
Company's Articles of Incorporation, if a quorum is present at the
Meeting, (I) the seven nominees for election as directors who receive
the greatest number of votes shall be elected as the directors and (ii)
Proposal 2 on the proxy card, relating to ratification of the
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appointment of auditors, and any other matters submitted to a vote of
the stockholders at the Meeting must be approved by the affirmative
vote of the majority of shares present in person or by proxy and
entitled to vote on the matter. In the election of the directors, any
action other than a vote for a nominee will have the practical effect
of voting against the nominee. Abstention from voting on Proposal 2 on
the proxy card or on any other matter presented at the Meeting will
have the practical effect of voting against any such matter since it is
one less vote for approval, while broker nonvotes on any such matter
will not be considered "shares present" for voting purposes.
BENEFICIAL OWNERSHIP OF THE COMPANY'S COMMON STOCK
The following table sets forth, as of July 10, 1998, the beneficial
ownership of the Company's Common Stock (i) by each person or group of
persons known by the Company to beneficially own more than 5 percent of
the outstanding Common Stock, (ii) the directors of the Company, (iii)
the executive officers of the Company, and (iv) directors and executive
officers as a group. Except as otherwise noted below, all shares of
common stock are owned beneficially by the individual listed with sole
voting and/or investment power.
<TABLE>
<S> <C> <C> <C> <C>
PERCENT PERCENT
NAME AND PERCENT OWNED OWNED
BUSINESS AMOUNT AND OWNED OF ASSUMING ASSUMING
ADDRESS OF NATURE OF COMMON CONVERSION CONVERSION
BENEFICIAL BENEFICIAL SHARES OF STOCK OF CONVERTIBLE
OWNER OWNERSHIP OUTSTANDING OPTIONS (1) DEBT (2)
- ---------- ---------- ----------- ----------- --------------
Ronald
Verber (3)
1,945,358 48.4% 41.6% 44.0%
Roean
Iscoff (3)(4)
27,500 * * *
Roean Iscoff
Trustee (3):
Iscoff Credit
Trust
971,428 24.2% 20.8% 22.0%
Iscoff
Survivors
Trust
971,429 24.2% 20.8% 22.0%
Edward A.
Strobin (3)(5)
256,821 * 4.5% 1.3%
</TABLE>
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<TABLE>
<S> <C> <C> <C> <C>
Martin S.
Gans
(3)(5)
256,822 * 4.5% 1.3%
John P.
Carver
(3)(6)
275,000 * 2.9% 1.7%
Robert E.
Verhoeff (3)(7)
126,876 * 2.8% *
Flora B.
Verber (3)(8)
35,000 * * *
Directors and
Executive
Officers as
a Group
4,866,234 97.2% 97.6% 93.7%
</TABLE>
(1) Assumes conversion of all outstanding stock options into shares of
Common Stock and includes for each person only those shares that
are exercisable within 60 days of the Record Date. The total
number of shares outstanding used in calculating this percentage
excludes the number of shares of Common Stock subject to options
held by other persons that are exercisable within 60 days of the
Record Date.
(2) Assumes conversion of all outstanding convertible debt into shares
of Common Stock and includes for each person only those shares
that are exercisable within 60 days of the Record Date. The total
number of shares outstanding used in calculating this percentage
excludes the number of shares of Common Stock subject to
conversion held by other persons that are exercisable within 60
days of the Record Date.
(3) The business address of such person is 2447 Mission Street, San
Francisco, CA 94110
(4) Includes 25,000 shares that may be acquired upon conversion of
convertible notes (convertible at $1.00 per share).
(5) Includes 200,000 shares subject to stock options that are
exercisable within 60 days of the Record Date and 50,000 shares
that may be acquired upon conversion of convertible notes
(convertible at $1.00 per share).
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(6) Includes 200,000 shares subject to stock options, of which 132,000
are exercisable within 60 days of the Record Date and 75,000
shares that may be acquired upon conversion of convertible notes
(convertible at $1.00 per share).
(7) Includes 120,000 shares subject to stock options that are
exercisable within 60 days of the Record Date.
(8) Includes 35,000 shares that may be acquired upon conversion of
convertible notes (convertible at $1.00 per share).
ELECTION OF DIRECTORS
(PROPOSAL 1 OF PROXY CARD)
The Company's Articles of Incorporation and bylaws provide that the
number of members of the board of directors shall be fixed by
resolution of the board. The size of the board is currently set at
seven. Directors are elected to serve until the next Annual Meeting of
Shareholders and until their successor shall have been duly elected and
qualified.
The Company has no nominating or similar committee of its board of
directors; therefore, it is the recommendation of the board of
directors that the board for the coming year, or until their successors
have been duly elected and qualified, shall consist of a total of seven
(7) members. Unless authority is withheld, it is intended that the
shares represented by proxy will be voted for the election of the
nominees. If any nominee is unable to serve for any reason, each proxy
will be voted for such person(s) as shall be designated by the board of
directors to replace such nominee(s). The board of directors has no
reason to expect that these nominees will be unable to serve.
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Certain information concerning such nominees is set forth below:
<TABLE>
<S> <C> <C> <C>
POSITION(S) WITH PERIOD OF
NAME AGE THE COMPANY SERVICE
- ------------- --- ---------------- ---------------
Ronald Verber 60 Chairman of the Board Since June 1992
President
Roean Iscoff 69 Director,
Vice President,
Secretary Since June 1992
Flora B. Verber 54 Director,
Vice President Since June 1992
David B. Verber 37 Director,
Vice President Since March 1993
Edward A. Strobin 64 Director Since March 1993
Martin S. Gans 56 Director Since March 1993
John P. Carver 63 Director Since August 1996
</TABLE>
Ronald Verber, Roean Iscoff and Flora B. Verber were appointed to
their respective positions on June 17, 1992 following the merger of
Security into the Company (those individuals held similar positions
with Security prior to the merger).
The following is a brief account of each director's business
experience during at least the past five years.
RONALD VERBER: Mr. Verber joined the predecessor of Security in
1958. Mr. Verber served as a vice president and secretary of Security
prior to becoming its president in September 1991. Mr. Verber is an officer
and a director of Verber-Iscoff Management, Inc., a privately held
California corporation engaged in real estate and management activities.
ROEAN ISCOFF: Mrs. Iscoff is the widow of Marvin Iscoff, the former
president and founder of Security and its predecessors. Mrs. Iscoff
has worked with all aspects of the pawnshop business, and previously
served as a vice president and treasurer of Security. Mrs. Iscoff is
an officer and a director of Verber-Iscoff Management, Inc., a
privately held California corporation engaged in real estate rental and
management activities.
FLORA B. VERBER: Mrs. Verber has been employed by the Company in
various positions since March 1971. She presently serves as a vice
president of Best Collateral, Inc. Mrs. Verber attended Arellano
University in Manila, Philippines for four years prior to joining the
Company.
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DAVID B. VERBER: Mr. Verber became employed by the Company in
February 1992. He was named a vice president in June 1992 and a
director in March 1993. Prior to his employment with the Company, Mr.
Verber had been a manager of the Fish Market Restaurant in Palo Alto,
California. Mr. Verber earned an Associate of Arts degree from the
College of San Mateo and a Bachelor of Arts degree from California
State University, San Francisco.
EDWARD A. STROBIN: Mr. Strobin joined the Company as a director in
March 1993. From January 1994 to April 1998, Mr. Strobin served as
president and CEO of The Nature Company, Inc. Prior to that, Mr.
Strobin was the founder, president and CEO of Streamers, Inc., a 15
store retail merchandising operation. From 1983 to 1988, Mr. Strobin
served as the executive vice president and chief operating officer of
the Banana Republic/Gap clothing retailer in San Francisco, California.
He also has served as senior vice president with the Gap Corporation in
San Bruno, California and as a regional vice president of May Company
Department Stores. Mr. Strobin has over 33 years of management
experience in retail merchandising. Mr. Strobin earned a Bachelor of
Arts in economics at Brooklyn College and an MBA from Hofstra
University.
MARTIN S. GANS: Mr. Gans joined the Company as a director in March
1993. Since 1988, Mr. Gans has been a self-employed investor. Prior to
1987, he served as executive vice president and chief financial officer
of Sun World International, Inc. Prior to that he was a partner in
Touche Ross & Co., a public accounting firm. Mr. Gans serves on the
board of directors of LSL Biotechnologies, Inc., Odwalla, Inc. and
International Storage Management NV. Mr. Gans is a Certified Public
Accountant and earned a BBA degree from the University of Miami and an
MBA from Northwestern University.
JOHN P. CARVER: Mr. Carver joined the Company as a director in June
1996. Since 1989, Mr. Carver has been a self-employed investor and
serves as assistant to the chairman of the Gap, Inc. From 1977 to
1989, he served as corporate senior vice president of human resources
of the Gap, Inc. and from 1970 to 1975 he served as their vice
president of operations. From 1975 to 1977, Mr. Carver was a general
manager for a Bullock's retail store. Prior to 1970, he held various
positions within J.C. Penny's and Macys corporate offices. Mr. Carver
serves on the advisory committee for Jobs for Youth, A Better Chance
and the Thacher School and on the board of directors of Soccer World,
Inc., the Philanthropic Ventures Foundation and the Coyote Point
Museum. Mr. Carver earned a Bachelor of Arts degree from Stanford
University.
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OTHER EXECUTIVE OFFICERS
The following sets forth certain information concerning executive
officers who are not also directors of the Company:
Robert E. Verhoeff, age 41, joined the Company as vice president of
finance and administration in June 1993. From July 1989 to May 1993,
Mr. Verhoeff served as vice president of finance and administration for
Dahlgren Control Systems, Inc., South San Francisco, California. From
1985-1989 he was with the public accounting firm of Coopers & Lybrand
serving as Manager, Emerging Business Services Group. Mr. Verhoeff
serves on the board of directors of the Collateral Lenders and
Secondhand Dealers Association of California. Mr. Verhoeff is a
Certified Public Accountant and received a Bachelor of Science degree
from California State University, Hayward.
Ronald Verber is the father of David Verber and the husband of
Flora Verber. No other family relationship exists between any of the
directors and executive officers of the Company. Mr. Gans is a
director of Odwalla, Inc. a publicly held company located in South San
Francisco, California. No other director currently serves as a
director of any company with a class of securities registered pursuant
to Section 12 of the Securities Exchange Act of 1934 or subject to the
requirements of Section 15(d) of that act. During the past five years,
none of the directors or executive officers of the Company has been
involved in any legal proceedings that are deemed by the Company to be
material to an evaluation of their ability or integrity to hold such
office.
BOARD AND COMMITTEE MEETINGS
The board of directors held five meetings during the fiscal year.
Each director attended more than 75 percent of the meetings.
During the fiscal year ended February 28, 1998 and currently, there
is no audit, compensation, nominating, executive or similar committee.
DIRECTOR COMPENSATION
No director of the Company was compensated during the fiscal year
ended February 28, 1998 for any services as a director under any
standard arrangement or otherwise.
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EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth certain information regarding
compensation paid or accrued during each of the Company's last three
fiscal years ended February 28, 1998 to its chief executive officer. No
other executive officers received total compensation exceeding $100,000
for the last fiscal year.
<TABLE>
<S> <C> <C> <C> <C>
Name and Annual
Principal Position Year Salary Bonus Total
- ------------------ ------- -------- ----- --------
Ronald Verber, 2/28/98 $166,219 $20,400 $186,619
Chairman of the 2/29/97 $150,000 $30,000 $180,000
board, President 2/28/96 $150,000 --- $150,000
</TABLE>
The aggregate amount of all other compensation received by Mr.
Verber, including perquisites and other personal benefits, securities,
or property was less than 10 percent of his total annual salary and
bonus.
In March 1993, the Company granted non-qualified stock options to
purchase shares of its Common Stock to Messrs., Strobin and Gans as an
incentive to each in connection with business advisory and consultation
services to be provided by each of the individuals to the Company. Upon
becoming a board member in August 1996, Mr. Carver was also granted
non-qualified stock options.
Each option provided the optionholder the right to purchase 200,000
shares of the authorized and unissued $0.10 par value Common Stock at
an option price of $0.40 per share. The options become exercisable in
equal increments after each of the first three years in which business
advisory and consultation services are provided by each of the
optionholders to the Company and expire ten years from their grant
date. No shares have been issued under these options. It is expected
that any Common Stock issued pursuant to the options will be restricted
as to transfer.
In consideration for accepting employment as an executive officer,
the Company, in June 1993, granted Robert E. Verhoeff a non-qualified
stock option to purchase 120,000 shares of the authorized and unissued
$0.10 par value Common Stock at an option price of $0.40 per share.
The option becomes exercisable in equal increments after each of the
first two years of continuous employment. The option terminates in ten
years or upon termination of employment, if sooner. No shares have been
issued under this option. It is expected that any Common Stock issued
pursuant to the option will be restricted as to transfer.
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TRANSACTIONS WITH MANAGEMENT
The following sets forth all material transactions during the last
two years, or which is proposed, between the Company and its officers,
directors and affiliates.
1. The Company is the lessee under a lease entered into November 1,
1991 between the Company as lessee and Ronald Verber and the Iscoff
Family Trust as lessors for the retail location at 2449 Mission
Street, San Francisco, California, for a term of five years and
calling for lease payments of $6,000 per month. The lease expired
in November 1996 the Company continues to operate under this lease
on a month to month basis.
2. Periodic working capital loans to the Company from Ronald Verber
and the Iscoff Family Trust totaling $349,434 at February 28, 1998,
bearing interest at the prime rate (8.50 percent at February 28,
1998), due and payable on demand.
SECTION 16 REPORTING
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires the Company's officers and directors, and persons who own more
than 10 percent of a registered class of the Company's equity
securities, to file reports of ownership and changes in ownership with
the SEC. Officers, directors and greater than 10 percent stockholders
are required by SEC regulation to furnish the Company with copies of
Section 16(a) filings.
Based solely on its review of copies of such forms received by it
and written representations from certain reporting persons, the Company
believes that its officers, directors and greater than 10 percent
beneficial owners filed the required reports on a timely basis during
the fiscal year ended February 28, 1998.
PROPOSAL TO RATIFY PRICEWATERHOUSECOOPERS, L.L.P.,
AS AUDITORS
(PROPOSAL 2 OF PROXY CARD)
The independent certified public accounting firm of
PricewaterhouseCoopers, L.L.P., has been engaged by the Company to
audit the accounts and financial statements of the Company for the
fiscal year ending February 28, 1999.
Although ratification by stockholders of the appointment of
PricewaterhouseCoopers, L.L.P., is not required by Colorado corporate
law or the Company's Articles of Incorporation or bylaws, management
believes a decision of this nature should be made with the
consideration of the Company's stockholders. If stockholder approval is
not received, management will reconsider the appointment.
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It is expected that a representative of PricewaterhouseCoopers,
L.L.P., will be present at the meeting and will be given opportunity to
make a statement if he so desires. It is also expected that the
representative will be available to respond to appropriate questions
from stockholders.
The board of directors recommends a vote FOR ratification of the
appointment of PricewaterhouseCoopers, L.L.P., as principal independent
accountants for the year ending February 28, 1999.
COST AND METHOD OF PROXY SOLICITATION
All expenses for soliciting proxies, including clerical work,
printing and postage will be paid by the Company. The Company will
reimburse brokers and other persons holding stock in their names, or in
the name of nominees, for their expenses in sending proxy materials to
principals and obtaining their proxies. In addition to solicitations
by mail, officers, directors and employees of the Company may solicit
proxies by telephone or by personal interviews. Such persons will
receive no additional compensation for such services.
ANNUAL REPORT AND FINANCIAL STATEMENTS
You are referred to the Company's annual report, including
financial statements, for the year ended February 28, 1998, a copy of
which is included with this proxy statement, for further information.
The annual report is not incorporated in this proxy statement and is
not to be considered part of the soliciting material.
DEADLINE FOR RECEIPT OF STOCKHOLDER PROPOSALS FOR
ANNUAL MEETING SCHEDULED TO BE HELD IN AUGUST 1999
Any proposal by a stockholder to be presented at the Company's
Annual Meeting of Shareholders held in August 1999, must be received at
the offices of the Company, 2447 Mission Street, San Francisco,
California 94110, no later than February 28, 1999.
9
BEST COLLATERAL, INC.
2447 Mission Street
San Francisco, CA 94110
