PRELIMINARY COPY
PIONEER COMMERCIAL FUNDING CORP.21700 OXNARD STREET
SUITE 1650
WOODLAND HILLS, CALIFORNIA 91367
Notice of Special Meeting of Stockholders
To our Stockholders:
The Special Meeting of Stockholders of Pioneer Commercial Funding
Corp., a New York corporation (the "Corporation" or "Company"), will be held on
September 21, 1999, at 11:00 a.m. local time, at One Rockefeller Plaza, Suite
2412, New York, New York, 10020, to consider and act upon the following matters.
A proxy card for your use in voting on these matters is also enclosed.
1. Ratification of the sale of assets of the Company to
Princap Mortgage Warehouse, Inc.,as more particularly
described herein, as recommended by the Board of
Directors.
2. Transacting any other business that may properly come before
the meeting or any adjournment thereof.
All stockholders of record at the close of business on August 24, 1999, are
entitled to notice of and to vote at the meeting.
Dated: August 24, 1999
By Order of the Board of Directors
David W. Sass
Secretary
--------------------------------------------------------
Your Proxy is important no matter how many shares you own. Please mark your
vote, fill in the date, sign and mail it today in the accompanying
self-addressed envelope which requires no postage if mailed in the United
States.
<PAGE>
PRELIMINARY COPY
SPECIAL MEETING OF STOCKHOLDERS
OF
PIONEER COMMERCIAL FUNDING CORP.
September 21, 1999
-----------------
PROXY STATEMENT
-----------------
GENERAL INFORMATION
Proxy Solicitation
This Proxy Statement is furnished to the holders of common
stock, $.01 par value per share ("Common Stock") of Pioneer Commercial Funding
Corp., a New York corporation ("Company") in connection with the solicitation of
proxies on behalf of the Board of Directors of the Company for use at the
Special Meeting of Stockholders ("Special Meeting") to be held on September 21,
1999, at One Rockefeller Plaza, Suite 2412, New York, New York, 10020 or at any
continuation or adjournment thereof, pursuant to the accompanying Notice of
Special Meeting of Stockholders. The purpose of the meeting and the matters to
be acted upon are set forth in the accompanying Notice of Special Meeting of
Stockholders. The Board of Directors knows of no other business which will come
before the meeting.
Proxies for use at the meeting will be mailed to stockholders
on or about August 26, 1999 and will be solicited chiefly by mail, but
additional solicitation may be made by telephone, telegram or other means of
telecommunications by directors, officers, consultants or regular employees of
the Company. The Company may enlist the assistance of brokerage houses,
fiduciaries, custodians and other like parties in soliciting proxies. All
solicitation expenses, including costs of preparing, assembling and mailing the
proxy material, will be borne by the Company. The Board Of Directors has
established August 24, 1999 as the record date for shareholders entitled to
notice of, and to vote at the meeting.
Revocability and Voting of Proxy
A form of proxy for use at the meeting and a return envelope
for the proxy are enclosed. Stockholders may revoke the authority granted by
their execution of proxies at any time before the Special Meeting by filing with
the Secretary of the Company a written revocation or duly executed proxy bearing
a later date or by voting in person at the meeting. Such consents or revocations
can be submitted by facsimile to (818)346-0039. Shares represented by executed
and unrevoked proxies will be voted in accordance with the choice or
instructions specified thereon. If no specifications are given, the proxies
intend to vote "FOR" the ratification of the sale of assets
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<PAGE>
of the Company to Princap Mortgage Warehouse, Inc. Proxies marked as abstaining
will be treated as present for purposes of determining a quorum for the Special
Meeting, but will not be counted as voting in respect of any matter as to which
abstinence is indicated. If any other matters properly come before the meeting
or any continuation or adjournment thereof, the proxies intend to vote in
accordance with their best judgment.
Record Date and Voting Rights
Only stockholders of record at the close of business on August
24, 1999 are entitled to notice of and to vote at the Special Meeting or any
continuation or adjournment thereof. On that date there were 2,771,136 shares of
the Company's Common Stock outstanding. Each share of Common Stock is entitled
to one vote per share. Any share of Common Stock held of record on August 24,
1999 shall be assumed, by the Board of Directors, to be owned beneficially by
the record holder thereof for the period shown on the Company's stockholder
records. The affirmative vote of two-thirds of all outstanding shares of the
Company entitled to vote is required to ratify the sale of assets of the Company
to Princap Mortgage Warehouse, Inc.
In the event that a stockholder does not designate his or her broker to
vote in their place, brokers may be precluded from exercising their voting
discretion with respect to certain matters to be acted upon and thus, in the
absence of specific instructions from the beneficial owner of the shares, will
not be empowered to vote the shares on such matters and therefore will not be
counted in determining the number of shares necessary for approval. Shares
represented by such broker non- votes will, however, be counted for the purpose
of determining whether there is a quorum. Since broker non-votes are not
counted, it could be more difficult to obtain the required approval to ratify
the sale of certain assets to Princap Mortgage Warehouse, Inc.
Directors and officers of the Company and certain other Shareholders
holding approximately 63.6% of the outstanding Common Stock of the Company
intend to vote "FOR" the ratification of the sale of assets of the Company to
Princap Mortgage Warehouse, Inc.
Forward Looking Statements
When used in this Proxy Statement, the words "may," "will,"
"expect," "anticipate," "continue," "estimate," "project," "intend" and similar
expressions are intended to identify forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E
of the Securities Exchange Act of 1934, as amended regarding events, conditions
and financial trends that may affect the company's future plans of operations,
business strategy, operating results and financial position. Shareholders are
cautioned that any forward-looking statements are not guarantees of future
performance and are subject to risks and uncertainties and that actual results
may differ materially from those included within the forward-looking statements
as a result of various factors.
2
<PAGE>
PROPOSAL:
RATIFICATION OF THE SALE OF ASSETS TO
PRINCAP MORTGAGE WAREHOUSE, INC.
Description of the Transaction
Pursuant to an Asset Purchase Agreement dated July 30, 1999 with
Princap Mortgage Warehouse, Inc., a California corporation, with its principal
office at 23550 Hawthorne Boulevard, Torrance, California ("PMW") the Company
has agreed to sell to PMW all of its equipment, furniture and other physical
assets, all of its computer operating systems, its customer list and certain
related assets for the sum of $800,000 to be paid in cash at the closing of this
transaction. PMW also has the right to purchase any or all of the customer
accounts of the Company for an amount equal to the aggregate outstanding
principal balance and all accrued but unpaid fees and interest on such accounts
as of the Closing. The Company will continue its collection activities with
respect to those accounts which are not purchased by PMW.
Management of the Company is confident that there were no
conflicts of interest in negotiating the sale to PMW and that all negotiations
with PMW were at "arms length".
Shareholder Consent Required
This transaction may, depending upon the extent of customer accounts
purchased, constitute a sale of substantially all of the assets of the Company
other than in the usual or regular course of the business conducted by the
Company. As such, pursuant to Section 709(a)(3) of the New York Business
Corporation Law, this transaction requires the approval by the shareholders of
the Company by the affirmative vote of two-thirds of all outstanding shares
entitled to vote.
Reasons For Entering Into the Transaction
Management of the Company has determined that the Company did not meet
the revenue objectives for its mortgage warehouse lending business and does not
expect the Company to be able to meet these objectives in the foreseeable
future. The Company has therefore decided to sell its hard assets and explore
other business opportunities.
The Company found that the comparatively high cost to it for borrowed
funds and the inability to borrow enough funds to create a sufficient volume of
loan transactions resulted in rates of return and total returns that are
unacceptable in relation to the degree of risk inherent in lending in the
secondary market.
The high cost to the Company for borrowed money is due, in large
measure, to the fact that, unlike its competitors which are, generally, banking
institutions or their affiliates, it was required to borrow funds at the Prime
Rate of interest rather than at LIBOR. This difference often meant as much as a
2% difference in the borrowing rates, thereby having a significant negative
effect on the margins for each loan transaction. Moreover, many competitors had
access to funds at the Savings & Loan rate which was even less than LIBOR,
putting the Company at an even greater competitive
3
<PAGE>
disadvantage. In addition, unlike banking institutions, which could generally
obtain borrowed funds at up to ten to fifteen times their capital, the Company
was only able to borrow approximately six times its capital. This has resulted
in less funds available to make loans; therefore, the volume of transactions and
the resulting revenues have been significantly lower than that which could be
achieved by the Company's competitors. This problem was significantly
exacerbated by a situation which arose in October and November, 1997 in which
the Company was unable to gain access to over $1.7 of its own funds. This matter
is the subject of an ongoing litigation in the Philadelphia Court of Common
Pleas, entitled Pioneer Commercial Funding Corporation and Banc One, Texas, N.A.
v. American Financial Mortgage Corporation, Thomas F. Flately, Norwest Funding,
Inc. and Corestates Bank, N.A. (No. 0885, April Term, 1998) in which the Company
has alleged that the defendants have wrongfully diverted approximately $1.7
Million belonging to the Company, representing amounts due for loans made by the
Company to a company in the business of originating residential mortgage loans.
The unavailability of these funds has further significantly contributed to the
Company's inability to generate a sufficient volume of loan transactions by
decreasing its borrowing abilities, thereby severely affecting the Company's
ability to generate sufficient revenues to make its business economically
viable. The defendants in this matter have denied all material allegations of
the Company's complaint. The Company makes no representation regarding the
likelihood of prevailing in this litigation These high cost of obtaining funds
and the difficulty in obtaining adequate levels of funding have resulted in a
much slower development of revenues for the Company than was originally
anticipated.
The high cost of borrowed funds and the low volume of transactions has
made the mortgage warehouse lending business unattractive in relation to the
risks inherent in this business. Since the loans are in the secondary market,
the source for recovery on the loans is frequently limited to the value of the
underlying property. This leads to greater risk of recovery on a loan. In
addition, since the Company acts as an intermediary as a warehouse lender, it
does not receive all the information necessary to fully assess the risk of each
loan transaction; therefore, the risk of lending is greater.
The Company has sustained operating losses in the first two fiscal
quarters of 1999 and expects that it will continue to sustain losses if it
continues in the mortgage warehouse lending business.
Based on these factors, Management has decided that the Company's
assets would be more efficiently utilized in investment in other businesses;
however no other businesses have been identified at this time. Management
believes that the ratification of the sale of the above-described assets to PMW
is in the best interest of the Company.
Disadvantages of Entering Into the Transaction
The disadvantage of entering into this transaction is that upon its
closing, the Company will no longer have any continuing business operation other
than the winding up of its operations in the mortgage warehouse lending
business. Although the Company will seek to engage in other business ventures,
there can be no assurance as to when, or if, an economically viable business can
be acquired or continued successfully.
4
<PAGE>
Votes Required to Ratify Transaction
Ratification of the sale of the above described assets to PMW requires
the affirmative vote of two-thirds of all outstanding shares entitled to vote
thereon. Directors, officers and certain principal shareholders of the Company,
who in the aggregate hold approximately 63.6% of the Company's outstanding
Common Stock intend to vote "FOR" the Proposal.
In the event that the shareholders do not approve the Proposal, the
Company will be required to either find another purchaser of its assets or seek
other methods to raise additional capital in an effort to increase the volume of
transactions of the Company. However, in view of the fact that the directors,
officers and certain other shareholders holding approximately 63.6% of the
outstanding common stock of the Company intend to vote "FOR" the sale to PAW, it
is unlikely that shareholder approval will not be obtained.
The Board of Directors recommends that the stockholders vote "FOR" the
ratification of the sale of assets of the Company to Princap Mortgage Warehouse,
Inc. (Item No. 1 on the Proxy Card).
5
<PAGE>
PIONEER COMMERCIAL FUNDING CORP.
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEETS
June 30, 1999
(Unaudited)
The following statements show the effect on the Company's balance sheet if the
shareholders approve the sale of the Company's assets to Princap Mortgage
Warehouse, Inc. These statements should be read in conjunction with the notes to
the Balance Sheet.
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Pioneer Commercial Funding Corp.
PRO FORMA BALANCE SHEET
June 30, 1999 (Unaudited)
After After
Fixed Asset Fixed Asset Possible Possible
June 30, 1999 Sale Sale Loan Sale Loan Sale
---------------------------- ---------------------------- ----------
ASSETS
Cash and cash equivalents $ 1,588,022 $ 800,000 1a $ 2,388,022 $ 8,679 1f $2,396,701
Mortgage warehouse loans receivable, net of alowance
for loan losses (Note 1) 10,957,831 10,957,831 (10,957,831) 1g -
Loans held for resale, net of allowance for
loan losses (Note 2) 579,993 579,993 579,993
Receivable for loans shipped (Note 3) 1,716,969 1,716,969 1,716,969
Accrued interest and fee receivable 938,939 938,939 (938,939) 1h -
Notes receivable-current portion (Note 4) 704,091 704,091 704,091
Prepaid and other assets 131,342 131,342 131,342
---------------------------- ---------------------------- ----------
Total Current Assets 16,617,187 800,000 17,417,187 (11,888,091) 5,529,096
---------------------------- ---------------------------- ----------
Fixed Assets
Furniture and equipment 732,745 (732,745) 1b - -
Proprietary computer software 551,114 (551,114) 1c - -
Leasehold improvements 198,689 198,689 198,689
---------------------------- ---------------------------- ----------
1,482,548 (1,283,859) 198,689 - 198,689
Less accumulated depreciation and amortization 747,647 (712,587) 1d 35,060 35,060
---------------------------- ---------------------------- ----------
Net Fixed Assets 734,901 (571,272) 163,629 - 163,629
---------------------------- ---------------------------- ----------
Investment securities available for sale (Note 6) 120,000 120,000 120,000
Notes receivable-noncurrent portion (Note 4) 911,770 911,770 911,770
Other assets (Note 5) 296,133 296,133 296,133
============================ ============================ ==========
Total Assets $ 18,679,991 $ 228,728 $ 18,908,719 $ (11,888,091) $ 7,020,628
============================ ============================ ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Mortgage warehouse loans payable (Note 7) $ 11,888,091 $ 11,888,091 $ (11,888,091) 1i $ -
Accounts payable and accrued expenses 210,660 210,660 210,660
Accrued interest and fees 1,327,927 1,327,927 1,327,927
Due to mortgage banking companies 158,590 158,590 158,590
Deferred loan fees 29,000 29,000 29,000
Deferred legal fees 67,751 67,751 67,751
---------------------------- ---------------------------- ----------
Total Current Liabilities 13,682,019 - 13,682,019 (11,888,091) 1,793,928
---------------------------- ---------------------------- ----------
Subordinated debt (Note 8) 1,626,000 1,626,000 1,626,000
---------------------------- ---------------------------- ----------
Total Liabilities 15,308,019 - 15,308,019 (11,888,091) 3,419,928
---------------------------- ---------------------------- ----------
Commitments and Contingencies
Stockholders' Equity:
Common stock - $.01 par value; authorized 20,000,000 shares;
issued and outstanding - 2,771,136 at June 30, 1999 55,423 1j 55,423 55,423
Additional paid-in capital 14,556,952 14,556,952 14,556,952
Accumulated deficit (11,135,403) 228,728 1e (10,906,675) (10,906,675)
Accumulated other comprehensive income (105,000) (105,000) (105,000)
---------------------------- ---------------------------- -----------
Total Stockholders' Equity 3,371,972 228,728 3,600,700 - 3,600,700
============================ ============================ ===========
Total Liabilities and Stockholders' Equity $ 18,679,991 $ 228,728 $ 18,908,719 $ (11,888,091) $ 7,020,628
============================ ============================ ===========
The accompanying notes are an integral part of this statement
4
<PAGE>
Pioneer Commercial Funding Corp..
NOTES TO PRO FORMA BALANCE SHEETS
June 30, 1999
(Unaudited)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying pro forma balance sheets present the financial position of the
Company as of June 30, 1999 before and after adjustments, explained below, for
the expected effects of the sale of the furniture, equipment and software to
Princap Mortgage Warehouse, Inc. (Princap) for $800,000 and the effects of the
possible sale of the Company's mortgage warehouse loans to Princap for net book
value plus accrued fees and interest on such loans. In addition, the number of
shares issued and outstanding at June 30, 1999 of 5,542,272 has been adjusted to
reflect the two for one reverse stock split effective July 23, 1999. No other
substantial changes are expected to impact the financial position of the Company
between June 30, 1999 and the expected date of the Princap transaction. The
adjustments are as follows:
a. Cash received from Princap
b. Sale of furniture, computer equipment and licensed software
c. Sale of proprietary software
d. Reduction of accumulated depreciation related to furniture, equipment and
software
e. Income from sale of furniture, equipment and software
f. Cash from sale of mortgage warehouse loans plus related accrued fees and
interest less line of credit reduction related to mortgage warehouse loans
g. Sale of mortgage warehouse loans
h. Sale of related accrued fees and interest
i. Reduction in line of credit related to mortgage warehouse loans
j. Number of shares issued and outstanding reflects two for one reverse stock
split
In the opinion of management, the accompanying unaudited balance sheets for
Pioneer Commercial Funding Corp. (the Company) contain all adjustments of a
recurring nature considered necessary for a fair presentation of its financial
position as of June 30, 1999.
The accompanying unaudited interim balance sheets have been prepared in
accordance with instructions to Form 10-Q and, therefore, do not include all
information and footnotes required to be in conformity with generally accepted
accounting principles. The financial information provided herein is written with
the presumption that the users of the pro forma balance sheet have read, or have
access to, the Company's December 31, 1998 audited financial statements and
notes thereto, together with the Management's Discussion and Analysis of
Financial Condition and Results of Operations as of December 31, 1998 and for
the year then ended included in the Company's filings on April 15, 1999 with the
SEC on Form 10-KSB.
<PAGE>
2. LOANS HELD FOR RESALE
In 1997, the Company in accordance with its loan and security agreement took
possession from a customer in the process of liquidating under Chapter 7 of the
Bankruptcy Code, 37 loans it funded having an aggregate value of $4.5 million.
The Company has a perfected interest in the loans and during 1998 sold 32 of the
loans at a net discount of $72,070. One loan in the amount of $132,090 was sold
in the first quarter of 1999 for $125,486. The four loans unsold at June 30,
1999 with an original loan amount of $566,026, together with holdback
receivables on sold loans of $180,945, are held at net realizable value which
includes a reserve of $166,978.
3. RECEIVABLE FOR LOANS SHIPPED
During October 1997, the Company warehoused $1.7 million in mortgages for the
same customer as described in Note 2 above, who used a third party conduit,
American Financial Mortgage Corporation, to sell its loans to an investor,
Norwest Funding, Inc. The Company provided instructions to the third party
conduit that the funds were to be wired by the investor to the Company's bank.
The investor mis-wired the funds to the conduit's bank, Corestates Bank, N.A.
The conduit's bank has refused to return the funds. The Company has commenced
legal action to collect the funds from the conduit, the conduit's guarantor, the
investor and the conduit's bank. The Company's lender, Banc One Texas, N.A.
("Bank One"), has joined the litigation as a co-plaintiff in support of the
Company's position. In addition, the Company has a $5 million personal guarantee
from the third party conduit's primary shareholder and an additional $2 million
guarantee from the customer's primary shareholder.
4. NOTES RECEIVABLE
On November 18, 1998, a settlement was reached with a guarantor of a mortgage
banking customer's defaulted line of credit. The guarantor was also a Company
stockholder. Pursuant to the settlement, an entity which is an affiliate of
Leedan (Note 7) accepted $530,000 of the guarantor's recognized debt to the
Company in exchange for the guarantor's shares in the Company. This entity paid
the Company $176,667 and issued two notes of $176,667 each with maturity dates
of August 23, 1999 and May 23, 2000, respectively. Interest is payable quarterly
at an annual rate of 8.25% commencing three months after the November 23, 1998
date of issuance.
$ 353,334
Pursuant to the settlement stated above, the guarantor also issued two notes to
the Company in the amounts of $265,103 and $470,000, respectively. Interest is
payable quarterly at an annual rate of prime plus 1/2% commencing three months
after the November 18, 1998 date of issuance. Both notes mature November 18,
2000. 735,103
<PAGE>
On March 29, 1999, a settlement was reached with two clients and their guarantor
wherein the remaining loans on each client's line and interest and fees due
through October 31, 1998 were replaced with a note from each client guaranteed
by the client's guarantor in the amounts of $453,430 and $204,640, respectively,
each payable in sixteen equal monthly installments plus interest at an annual
rate of 10%. To date the balance has been reduced by principal payments of
$205,646.
452,424
-----------------
On May 5, 1999 the Company loaned $75,000 to Royalty Records. Royalty issued a
note payable in nine equal payments of principal and interest at 16% commencing
no later than December 1, 1999.
75,000
-----------------
Total 1,615,861
Less current portion 704,091
-----------------
$911,770
-----------------
</TABLE>
5. INVESTMENT IN AND ADVANCES TO PIONEER HOME FUNDING
On April 16, 1997 the Company entered into a joint venture agreement with
Maryland Financial Corporation ("MFC") to form Pioneer Home Funding, LLC, a
California Limited Liability Company, ("PHF"). The Company accounts for this
investment on the equity method. The agreement provides that the Company and MFC
would maintain 80% and 20% ownership interests, respectively, in PHF. An
amendment to the agreement was made on October 31, 1997. This amendment provides
that the Company would contribute $40,000 for a 20 percent interest in PHF. In
addition, the Company may from time to time, at its option, make loans to PHF as
needed. Under this agreement the Company has the option to convert loans made to
PHF into an 80% interest in PHF. As of June 30, 1999, the Company has advanced
as a loan receivable in the sum of $275,345, which has been fully reserved.
6. INVESTMENT IN FIDELITY FIRST MORTGAGE CORP. (FFIR)
On July 7, 1997 the Company purchased 300,000 shares at $.75 per share of
Fidelity First Mortgage Corp., NASDAQ (FFIR) for a total investment of $225,000.
FFIR shares were last traded on April 23, 1999 at $.25 per share. On May 6, 1999
FFIR issued a 50 to 1 reverse stock split, reducing the Company's number of
shares to 6,000. Fidelity First Mortgage is based in Columbia, Maryland and
funds conforming and non-conforming single family residential mortgages in
Maryland, Virginia, Delaware, Florida, North and South Carolina.
<PAGE>
7. LINE OF CREDIT AND CAPITAL MAINTENANCE AGREEMENT
Effective April 30, 1999, Bank One renewed the credit facility with a borrowing
limit of $35,000,000 through June 29, 1999 and $30,000,000 through September 30,
1999. The extended line of credit is effectively reduced by the amount of
ineligible loans (primarily those over 60 days old, which amount to
approximately $7 million). Effective June 30, 1998 Leedan Business Enterprise
Ltd. ("Leedan"), a 49% owner of the Company entered into a Capital Maintenance
Agreement with Bank One wherein Leedan will cause capital contributions or
subordinated debt advances, up to $2 million, to be made to the Company in order
to maintain an adjusted Company net worth of a least $8 million, upon official
written request by Bank One. This agreement will continue in effect until the
Company has paid its obligation to Bank One and Bank One terminates its
commitment to supply credit to the Company (See also Note 8).
8. SUBORDINATE DEBT
On November 26, 1997, the Company issued $1,000,000 in subordinated debt as part
of a $4 million private placement. The private placement provided for a minimum
purchase of $250,000 (1 unit) with each unit obtaining 7,500 Warrants that allow
for the purchase of 7,500 shares. The exercise price of the shares is equal to
the price of the Company's stock as of the date of issue of the subordinated
debt. The Company has 30,000 Warrants outstanding (7,500 per unit for 4 units).
The subordinated debt carries an interest rate of 10% per annum and matures on
November 25, 2002. The Company's stock price on November 26, 1997 was $2.875 On
September 11, 1998 three subordinated debt advances pursuant to the Leedan
Capital Maintenance Agreement (See also Note 7) were made to the Company
totaling $726,000 secured by notes. The notes are due when a replacement for the
Bank One lending facility is in place, with interest paid quarterly at 11% per
annum. During the first quarter of 1999, $100,000 of the subordinate debt was
repaid.
<PAGE>
SECURITY OWNERSHIP OF PRINCIPAL STOCKHOLDERS AND MANAGEMENT
The following tabulation shows the security ownership as of August 3,
1999 of (i) each person known to the Company to be the beneficial owner of more
than 5% of the Company's outstanding Common Stock, (ii) each Director and
Officer of the Company and (iii) all Directors and Officers as a group.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Number of Shares Percent
Name Title of Common Stock of Class
ICTS International N.V. 150,000 5.4%
Vertrekpassage 226
1118 AV Schiphol Airport
Holland
Lancer Partners L.P. 172,500 5.4%
200 Park Avenue, Ste 3900
New York, NY 10166
Leedan Business
Enterprise Ltd. 1,188,068(1) 42.9%
("Leedan Business")
8 Shaul Hamelech Blvd.
Tel-Aviv 64733, Israel
Rogosin International B.V. 265,000(3) 9.5%
One Rockefeller Plaza,
Ste. 2412
New York, NY 10020
Boaz Harel Director 1,188,068(1)(2) 42.9%
1 Rockefeller Plaza
Suite 2412
New York, New York
10020
M. Albert Nissim President 73,2004 *
One Rockefeller Plaza and Director
Suite 2412
New York, NY
Tamar Lieber Director 169,500(5) 5.8%
160 W. 66th Street
Apt. 49B
New York, NY 10023
Richard Fried Director 25,523(5) *
33 Marian Road
Marblehead, MA 01945
<PAGE>
Lynda Davey Director 12,000(5) *
1375 Broadway 7,500
5th Floor
New York, NY 10018
Joseph Samuels Director 12,000(5) *
321 24th Street 7,500
Santa Monica, CA 90402
Directors and
Executive
Officers as a
group (6 persons) 1,347,291(6) 48.6%
* Less than 1%
(1) Leedan International Holdings B.V., which together with Leedan Systems
& Properties Promotion (1003) Ltd. Holds 48.2% of the issued and
outstanding Common Stock of the Company, is an indirect wholly-owned
subsidiary of Leedan Business. Certain members of the family of Mr.
Boaz Harel, a director of the Company, collectively, own approximately
57.5% of the outstanding shares of Leedan Business. Mr. Harel, owns
approximately 17% of the outstanding shares of Leedan Business and
disclaims beneficial ownership of any stock of Leedan Business held by
an other member of the Harel family.
(2) Does not include three year option for 50,000, vesting 1/3rd each year,
exercisable at $4.75 per share nor a three year option for 7,500 shares
exercisable at $2.25 per share, vesting 1/3rd each year.
(3) An affiliate to Leedan Business Enterprises Ltd. Shares were purchased
in a private transaction.
(4) Includes options to purchase 45,000 shares of Common Stock exercisable
at $5.00 per share and an option to purchase 25,000 shares of Common
Stock exercisable at $10.00 per share at the rate of 1/3rd per year for
three years. Includes 3200 shares which are owned by a pension fund.
(5) Includes 12,000 shares as part of a 3 year option, exercisable at $4.25
per share, vesting at the rate of 1/3rd per year for three years as
well as 7,500 shares as part of a three year option exercisable at
$2.25 per share, vesting at the rate of 1/3rd per year.
(6) Does not include any options referred to in notes (2), (3), (4)
and (5) hereof.
</TABLE>
<PAGE>
Cost of Solicitation
The cost of solicitation of proxies, including reimbursements to banks
and brokers for reasonable expenses in sending proxy material to their
principals, will be borne by the Company. The Company's transfer agent, American
Stock Transfer & Trust Company, is assisting the Company in the solicitation of
proxies from brokers, banks, institutions and other fiduciaries by mail, and
will charge the Company its customary fee therefor plus out--of--pocket expenses
which, in the aggregate, are estimated to be approximately $3,500.
OTHER BUSINESS TO BE TRANSACTED
As of the date of this Proxy Statement, the Board of Directors knows of
no other business to be presented for action at the Special Meeting of
Stockholders. As for any business that may properly come before the Special
Meeting or any continuation or adjournment thereof, the Proxies confer
discretionary authority to the person named therein. These persons will vote or
act in accordance with their best judgment with respect thereto.
The prompt return of your proxy is appreciated and will be helpful in
obtaining the necessary vote. Therefore, whether or not you expect to attend the
meeting, please sign the proxy and return it in the enclosed envelope.
BY ORDER OF
THE BOARD OF DIRECTORS
--------------------------
New York, New York DAVID W. SASS, Secretary
August 24, 1999
<PAGE>
PIONEER COMMERCIAL FUNDING CORP.
P R O X Y
This Proxy is Solicited on Behalf of the Board of Directors
The undersigned hereby appoints M. Albert Nissim and David W. Sass as
Proxies, each with the power to appoint his substitute, and hereby authorizes
them to represent and to vote, as designated below, all the shares of the common
stock of Pioneer Commercial Funding Corp. held of record by the undersigned on
August 24, 1999, at the Special Meeting of Stockholders to be held on September
21, 1999, or any adjournment thereof.
1. RATIFICATION OF THE SALE OF ASSETS TO PRINCAP MORTGAGE
WAREHOUSE, INC.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
2. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER
DIRECTED HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS
MADE, THIS PROXY WILL BE VOTED "FOR" PROPOSAL 1.
Please sign name exactly as appears below. When shares are held by
joint tenants, both should sign. When signing as attorney, as executor,
administrator, trustee or guardian, please give full title as such. If a
corporation, please sign in full corporate name by President or other authorized
officer. If a partnership, please sign in partnership name by authorized person.
Dated: , 1999
Signature
Signature, if held jointly
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY USING THE ENCLOSED
ENVELOPE
If you have had a change of address, please print or type your new address(s) on
the line below.
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