PRELIMINARY COPY
FOR SEC REVIEW ONLY
PIONEER COMMERCIAL FUNDING CORP.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 24, 1999
To the stockholders of Pioneer Commercial Funding Corp.:
Notice is hereby given that the Annual Meeting of Stockholders ("Annual
Meeting") of Pioneer Commercial Funding Corp., a New York corporation
("Company"), will be held at One Rockefeller Plaza, Suite 2412, New York, N.Y.
10020 on June 24, 1999, at the hour of 11 AM local time for the following
purposes:
(1) To elect six directors for a one year term expiring in
2000;
(2) To approve an amendment to the Company's Certificate of
Incorporation to reclassify all issued shares of Common Stock
in a 2 for 1 reverse split.
(3) To ratify the appointment of Lazar Levine & Felix LLP as the
Company's auditors for the year ended December 31, 1999; and
(4) To transact such other business as may properly come before
the Meeting.
Only stockholders of record at the close of business on May 21, 1999
are entitled to notice of and to vote at the meeting or any continuation or
adjournment thereof
By Order of the Board of Directors
David W. Sass, Secretary
May 21, 1999
IF YOU WISH TO VOTE IN FAVOR OF EACH OF THE PROPOSALS AND FOR THE
NOMINEES PRESENTED, CHECK THE APPROPRIATE BOX AND SIGN, DATE AND RETURN
THE ENCLOSED PROXY IN THE ENCLOSED ENVELOPE WHICH REQUIRES NO POSTAGE
IF MAILED IN THE UNITED STATES. IN ANY EVENT, YOUR PROMPT RETURN OF A
SIGNED AND DATED PROXY WILL BE APPRECIATED.
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PROXY STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS
OF
PIONEER COMMERCIAL FUNDING CORP.
21700 Oxnard Street
Suite 1650
Woodland hills, CALIFORNIA 91367
To Be Held June 24, 1999
The enclosed proxy materials are furnished in connection with the
solicitation of proxies by the Board of Directors of Pioneer Commercial Funding
Corp., a New York corporation (the "Company"), for use at the Annual Meeting of
shareholders of the Company to be held at 11:00 A.M., Eastern Daylight Time, on
June 24, 1999, at One Rockefeller Plaza, Suite 2412, New York, New York 10020,
and any adjournment or adjournments hereof (the "Meeting").
This proxy statement and the enclosed form of proxy are first being
mailed to the shareholders of the Company on or about May 24, 1999.The Board Of
Directors has established May 21, 1999 as the record date for shareholders
entitled to notice of, and to vote at the meeting.
The present officers and directors of the Company and affiliates,
holding approximately 63.4% of the outstanding Common stock of the Company,
intend to vote in FOR Proposals 1, 2 and 3.
Matters to Be Acted Upon
It is proposed at the Meeting to adopt resolutions approving the
following proposals (the "Proposals"):
1. To elect six directors.
2. To approve the reclassification of all issued shares of Common
Stock in a 2 for 1 reverse split.
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3. To ratify the appointment of Lazar Levine & Felix LLP as
independent auditors for the fiscal period ending on December
31, 1999.
4. To transact such other business as may properly come before
the meeting.
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The Board of Directors recommends a vote FOR Proposals One, Two
and Three.
Right of Revocation
A proxy may be revoked by notice in writing to the Secretary of the
Company at any time prior to the exercise thereof. Each valid proxy received in
time will be voted at the Meeting and, if a choice is specified on the proxy, it
will be voted in accordance with such specifications. If no such specification
is made, the persons named in the accompanying proxy have advised the Company of
their intention to vote the shares represented by the proxies received by them
in favor of the Proposals and the election of all the nominees named below as
Directors.
PROPOSAL NO. 1
ELECTION OF DIRECTORS
Six persons have been nominated to serve on the Board of Directors,
each to hold office until the next annual meeting of shareholders and until his
or her successor has been elected and qualified or until his or her prior
resignation or removal. All nominees are now Directors of the Company.
Boaz Harel (35) was appointed to the Board in November 1996
and elected as Chairman of the Board on July 2, 1997. From 1991 to 1993, Mr.
Harel was the founder and managing director of Mashik Business and Development
Ltd., an engineering consulting company. Since 1993, Mr. Harel has been the
Managing Director of Leedan Business Enterprise Ltd. ("Leedan"), a publicly-held
Israeli company which is the beneficial owner of 42.9% of the Company's Common
Stock. Since January 1994, Mr. Harel has served as a member of the Supervisory
Board of ICTS International N.V. and since September 1996, Mr. Harel has served
as the Chairman of ICTS USA (1994), Inc., an indirect subsidiary of Leedan.
Since 1997 Mr. Harel has been Co-Managing Director of Leedan International
Holdings B.V., a principal shareholder of the Company and an indirect
wholly-owned subsidiary of Leedan.
M. Albert Nissim (65) was appointed as the President of
the Company in January 1997 and was elected to the Board on
September 25, 1997. He has served as Secretary of ICTS
International N.V. since January 1996. Mr. Nissim has also
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served as President of ICTS USA (1994), Inc. since January 1994.
From 1994 to 1995, he served as Managing Director of ICTS
International B.V. Mr. Nissim served as the President of Harel &
Partners from 1991 to 1994. From 1990 to the present, he has
been the Vice President and a director of Tuffy Associates Corp.,
an automotive repair franchise company affiliated with Mr. Ezra
Harel, the brother of Boaz Harel. Mr. Nissim is also a Co-
Managing Director of Leedan International Holdings B.V., a
principal shareholder of the Company. In April 1997, Mr. Nissim
was appointed as one of the Company's designees on the Board of
Directors of Pioneer Home Funding, L.L.C., a subsidiary of the
Company.
Richard Fried (52) was appointed to the Predecessor's Board in
February 1994 and served as Vice-President of the Predecessor. Upon consummation
of the Merger in November 1994, he became a director of the Company. Since June
1991 Mr. Fried has served as President of Medical Systems, Inc., an application
software development company, of which he has been a principal shareholder. From
February 1993, he has served as President of Montgomery Associates, Inc., a
corporation wholly-owned by him, which is engaged in business as an
importer-exporter. Since April 1993, Mr. Fried has been a principal shareholder,
and has served as President, of Sea Change Systems, Inc., a software tools
development company. From April 1993 to May 1994, he was a Branch Manager of LPL
Financial Services, a stock brokerage firm, which is an NASD member firm. Since
November 1994, Mr. Fried has been a controlling shareholder and has served as
President of SMARTpay, Inc., a collection service. From April 1995 he has served
as President of Centennial Systems, Inc., a software distribution, sales and
service firm of which he is a principal shareholder. Since October 1996, Mr.
Fried has been a controlling shareholder, and has served as President, of
Leeward Software, Inc., an application software developer. From October 1996 he
has also served as President of Windward Software, Inc., a materials management
software intellectual property company of which he is also a principal
shareholder. From December 1996 he has served as President of Strategic
Reporting Systems, Inc., a database report generation software development and
distribution firm of which he is a principal shareholder. From April 1997, he
has served as managing director of HYCOM USA, Inc., an international software
development and distribution company, of which he is a principal shareholder.
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Tamar Lieber (56) was appointed to the Board in June 1995. Ms.
Lieber has been engaged in practice as a senior psychotherapist at the Center
for Preventive Psychiatry in White Plains, New York, a non-for profit community
mental health clinic, for more than the past five years.
Lynda Davey (44) was elected to the Board on September
25, 1997. Ms. Davey has served as the President of Avalon Group,
Ltd. And Chairman of Avalon Securities, Ltd., private investment
banking firms, since April, 1992. From April, 1988 thought 1991
Ms. Davey was Managing Director and head of investment banking at
Tribeca Corporation, a New York merchant bank. Prior to 1988,
Ms. Davey was Vice-President of the Merchandise and Retail Group
in the corporate finance department of Salomon Brothers Inc. Ms.
Davey also serves as a director of Tuffy Associates Corp. And the
Center for Design Innovation of the Fashion Institute of
Technology. Ms. Davey is a registered architect.
Joseph Samuels (68) has served as a president and is the sole
shareholder of Fulton Properties of Calif. Inc., an investment corporation
engaged in acquisition, development and management of real estate for more than
the past five years. Mr. Samuels has also served as President and is the sole
shareholder of Goldsboro Properties Inc., a real estate holding corporation, for
more than the past five years.
The affirmative vote of the holders of at least a majority of the
shares present personally or by proxy at the Meeting is required for the
election of each director.
The Board of Directors recommends a vote FOR the election of each of
the seven nominees as directors.
PROXIES IN THE ACCOMPANYING FORM WHICH DO NOT WITHHOLD AUTHORITY
TO VOTE FOR DIRECTORS WILL BE VOTED FOR THE ELECTION OF THE
PERSONS WHOSE NAMES ARE LISTED ABOVE.
Voting Securities and Principal Holders Thereof
The outstanding voting securities of the Company on May 21, 1999 (the
"Record Date") consisted of 5,542,272 shares of common stock, par value $.0l per
share (the "Common Stock"). The Common Stock is the only class of voting stock
of the Company. Only shareholders of record at the close of business on the
Record
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Date are entitled to notice of or to vote at the Meeting. Each share of Common
Stock is entitled to one vote with respect to each proposal. The holders of a
majority of the outstanding shares entitled to vote must be present at the
Meeting in person or by proxy to constitute a quorum.
The following table sets forth the holdings of the Common Stock as of
May 21, 1999 by each person or entity known to the Company to be the beneficial
owner of more than five percent (5%) of the outstanding shares of Common Stock
and by (1) each director and named executive officer; and (2) all directors and
executive 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. 300,000 5.4%
Vertrekpassage 226
1118 AV Schiphol Airport
Holland
Lancer Partners L.P. 345,000 6.2%
200 Park Avenue, Ste 3900
New York, NY 10166
Leedan Business
Enterprise Ltd. 2,376,136(1) 42.9%
("Leedan Business")
8 Shaul Hamelech Blvd.
Tel-Aviv 64733, Israel
Rogosin International B.V. 530,000(3) 9.5%
One Rockefeller Plaza,
Ste. 2412
New York, NY 10020
Boaz Harel Director 2,376,136(1)(2) 42.9%
1 Rockfeller Plaza
Suite 2412
New York, New York
10020
M. Albert Nissim President and 140,0004 *
One Rockefeller Plaza Director
Suite 2412
New York, NY
Tamar Lieber Director 339,000(5) 5.8%
160 W. 66th Street
Apt. 49B
New York, NY 10023
Richard Fried Director 51,046(5) *
33 Marian Road
Marblehead, MA 01945
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Lynda Davey Director 24,000(5) *
1375 Broadway 15,000
5th Floor
New York, NY 10018
Joseph Samuels Director 24,000(5) *
321 24th Street 15,000
Santa Monica, CA 90402
Directors and
Executive
Officers as a
group (6 persons) 2,984,182(6) 53.8%
</TABLE>
* 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 100,000, vesting 1/3rd each
year, exercisable at $2.375 per share nor a three year option for
15,000 shares exercisable at $1.125 per share, vesting 1/3rd each year.
(3) An affiliate to Leedan Business Enterprises Ltd. Shares were purchased in a
private transaction.
(4) Includes 90,000 shares of Common Stock exercisable at $2.50 per share
which Mr. Nissim has the right to acquire within 60 days from the date
hereof upon exercise of an option held by him and 50,000 option
exercisable at $5.00 per share at the rate of 1/3rd per year for three
years.
(5) Includes 24,000 shares as part of a 3 year option, exercisable at
$2.125 per share, vesting at the rate of 1/3rd per year for three years
as well as 15,000 shares as part of a three year option exercisable at
$1.125 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.
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Certain Relationships and Related Transactions
o Certain Transactions.
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 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 installment notes of $176,667 each with
maturity dates of August 23, 1999 and May 23, 2000, respectively. These notes
bear interest at a rate of 8.25% per annum and are payable quarterly commencing
three months from the date of issuance which was November 23, 1998.
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, Rogosin
Business Enterprises Ltd., accepted $530,000 of the guarantor's recognized debt
to the Company in trade for the guarantor's shares in the Company. Furthermore,
pursuant to the settlement, the guarantor issued two additional notes in the
amount of $735,102 to the Company.
Pursuant to the settlement as stated above, the guarantor
issued to the Company two installment notes in the amounts of $265,103 and
$470,000, respectively. These notes bear interest at a rate of 8.25% per annum
and are payable quarterly commencing three months from November 18, 1998, the
date of issuance of the notes. Both notes mature November 18, 2000.
On September 14, 1998 Joseph Samuels, a Director of the
Company and two affiliates of Leedan Business Enterprises Ltd. loaned to the
Company $100,000 and $550,000 and $76,000, respectively. The loan was in
connection to the Ninth Amendment to the Credit Agreement with Bank One to
authorize the infusion of an aggregate of $726,000 in the form of the Company's
11% Subordinated Debenture for a term until a new lending facility is in place
to replace Bank One.
On April 2, 1997 and April 4, 1997, the Company issued
unsecured loans of $400,000 and $600,000, respectively, to Rogosin Converters,
Inc., an affiliate of the Company. Members of the family of Mr. Boaz Harel, a
director of the Company, have an indirect controlling interest in Rogosin
Converters, Inc. The loans were guaranteed by Leedan International B.V., a
shareholder of the Company. The Company earned interest of 12% per annum on the
loans, which interest was paid monthly. The principal and
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accrued interest on the loans were paid in full on June 20, 1997.
o Board Meetings
The Board of Directors met eight times during the fiscal year ended
December 31, 1998.
Compensation of Directors and Executive Officers
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Annual Compensation Awards
Name and
Principal Position Fiscal Year Salary($) Bonus($) Other Annual Securities
Compensation ($) Underlying
Option
Boaz Harel* 1998(1) $100,000 $15,000 100,000
Chairman of the Board 1997(2) $25,000 15,000
M. Albert Nissim** 1998(1) $118,654 $12,000 50,000
President 1997(2) $54,000 90,000
John O'Brien*** 1998(1) $58,513
Chief Financial Officer
David W. Sass**** 1998(1) $ 0
Secretary
</TABLE>
* Commenced as Chairman on July 2, 1997.
** Commenced service as President of the Company in the fourth quarter of the
1996 fiscal year. *** Commenced service as Chief Financial Officer in the second
quarter of the 1998 fiscal year. **** Commenced service as Secretary in the
second quarter of the 1998 fiscal year.
(1) For the Year Ending December 31, 1998
(2) Nine Months ended December 31, 1997
(3) For Fiscal Year Ending March 31, 1997
Compensation of Directors.
The Directors of the Company received cash compensation of
$300 per meeting in his or her capacity as a director.
Options Issued to Executives.
In consideration of the services rendered by Messrs. Goldberg
and Housman, in lieu of payment of salaries, between June 1995 and the closing
of the IPO, the Company issued five year options to each of them to purchase
75,758 shares of Common Stock at an exercise price of $5.00 per share. Such
options
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were not issued pursuant to the Company's Incentive Stock Option Plan. The table
below sets forth information regarding option grants to executive officers and
Directors of the Company.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Number of Exercise Price
Name Options Granted Per Share Expiration Date
M. Albert Nissim(1) 50,000 $5.00 October, 2000
90,000 $2.50 February, 2000
Arthur Goldberg* 75,758 $5.00 August, 2001
Elie Housman* 75,758 $5.00 August, 2001
Boaz Harel(1) 100,000 $2.375 October, 2000
15,000 $1.125 January, 2000
Richard Fried(1) 24,000 $2.125 October, 2000
15,000 $1.125 January, 2000
Tamar Lieber(1) 24,000 $2.125 October, 2000
15,000 $1.125 January, 2000
Lynda Davey(1) 24,000 $2.125 October, 2000
15,000 $1.125 January, 2000
Joseph Samuels(1) 24,000 $2.125 October, 2000
15,000 $1.125 January, 2000
</TABLE>
*Former officer and director.
(1) Options vested at the rate of 1/3rd each year.
Executive Compensation.
On May 12, 1998, Albert Nissim's compensation was increased to
$9,500 per month effective April 1, 1998 in consideration of his contributions
to the Company. In addition, Mr. Nissim was awarded a $12,000 bonus payable in
the second quarter in consideration of the Company's performance.
On May 12, 1998 Boaz Harel was awarded a $15,000 bonus,
payable in the second quarter in consideration of the Company's performance.
Employment Agreements.
In July 1997, the Company extended the Employment Agreement
with M. Albert Nissim as President for an indefinite period, on a part-time
basis, at a salary of $6,000 (amended to $9,500) per month. The Agreement may be
terminated by either party on not less than 90 days prior notice.
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Boaz and Leedan Agreement
The Company has approved a compensation plan for Mr. Boaz
Harel and/or Leedan Business Enterprises, Ltd. ("Leedan"), the company which
provides management services to the Company by making Mr. Harel available to the
Company. Leedan is also a principal shareholder of the Company. The plan
provides aggregate renumeration to Mr. Harel and/or Leedan of $100,000 per annum
plus 5% of the Company's net income pre-tax above $1,000,000 annually. Leedan
and Mr. Harel will determine how such compensation will be divided between them.
PROPOSAL NO. 2
RECLASSIFICATION OF OUTSTANDING COMMON STOCK SHARES
The Board of Directors propose to reclassify the total number of issued
shares of Common Stock, wherein every two (2) shares for one(1) share of the
Common Stock outstanding as of the end of business on the Record Date will be
replaced by one (1) share of Common Stock ("Reverse Stock Split"). The Reverse
Stock Split will reduce the number of outstanding share of Common Stock as of
the record date from 5,542,272 to 2,771,136. All reclassified shares resulting
in fractional denominations will be round up.
The purpose for the reverse split is to enable the Company to meet the
minimum bid price of $1.00 to maintain continued listing of the Company's Common
Stock on the Nasdaq SmallCap Market.
The Board of Directors recommends that the Stockholders vote
"FOR" the reclassification of outstanding Common Stock shares
(Item 2 on the Proxy card).
PROPOSAL NO. 3
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Company has again appointed Lazar Levine & Felix LLP to serve as
independent accountants of the Company for the fiscal period ending December 31,
1999. Although this appointment is not required to be submitted to a vote of the
Shareholders, the Board believes it appropriate as a matter of policy to request
that the Shareholders ratify such appointment of Lazar Levine & Felix LLP.
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If the Shareholders should not ratify, the management will reconsider the
appointment of Lazar Levine Felix LLP.
The affirmative vote of a majority of the shares present personally or
by proxy at the Meeting is required for the ratification of the appointment of
Lazar Levine Felix LLP.
The Board Recommends a vote FOR the ratification of the appointment of
Lazar Levine & Felix LLP.
No representatives of Lazar Levine Felix LLP are expected to be present
at the Meeting.
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 $1,200. In addition,
proxies may be solicited by officers of the Company by mail, in person or by
telephone or telecopier. It is anticipated that the total cost of solicitation
of proxies will be approximately $4,000.
OTHER BUSINESS TO BE TRANSACTED
Management knows of no other matters to be presented before the Meeting
other those stated above. However, the enclosed proxy gives discretionary
authority to each proxy holder named therein should any other matters be
presented at the Meeting to take such action in connection therewith as shall be
in accordance with his best judgment.
ANNUAL REPORT TO STOCKHOLDERS
The Annual Report to Stockholders for the year ended December 31, 1998
is being mailed to stockholders with this Proxy Statement.
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STOCKHOLDER PROPOSAL - 2000 ANNUAL MEETING
Any stockholder proposals to be considered by the Company for inclusion
in the proxy material for the 2000 Annual Meeting of Stockholders must be
received by the Company at its principal executive offices by December 31, 1999.
The prompt return of your proxy will be appreciated and 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. <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 May 21, 1999, at the annual meeting of shareholders to be held on
June 24, 1999, or any adjournment thereof.
1. ELECTION OF DIRECTORS
For all nominees listed below Withhold Authority to
(Except as Marked to the Vote All Nominees Listed
Contrary) ___ Below ___
Boaz Harel, M.Albert Nissim, Richard Fried, Tamar Lieber, Lynda
Davey and Joseph Samuels.
2. TO APPROVE A 2 FOR 1 REVERSE SPLIT
FOR_______ AGAINST___________
3. To ratify the appointment of Lazar Levine & Felix LLP as independent auditors
of the Company for the fiscal year ended December 31, 1999.
FOR_______ AGAINST___________
3. 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 PROPOSALS 1, 2 and 3.
<PAGE>
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
