UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------------------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (date of earliest event reported) FEBRUARY 28, 1999
LASER MORTGAGE MANAGEMENT, INC.
(Exact name of registrant as specified in its charter)
MARYLAND 001-13563 22-353916
(State or other (Commission (IRS Employer
jurisdiction of File Number) ID Number)
incorporation)
51 JOHN F. KENNEDY PARKWAY, SHORT HILLS, NEW JERSEY 07078
--------------------------------------------------- -----
(Address of principal executive offices) (Zip Code)
Registrant's Telephone Number, including area code: (973) 912-8770
N/A
- ------------------------------------------------------------------------------
(Former name or former address, if changed since last report)
<PAGE>
Item 5. Other Events.
On March 2, 1999, the Registrant issued a press release announcing
that:
o the Registrant and LASER Advisers Inc. are terminating the agreement
under which LASER Advisers serves as the external manager of the Registrant.
o the Registrant will become self advised; Robert J. Gartner, Vice
President of the Registrant, will be responsible for day-to-day investment
decisions for the Registrant. Mr. Gartner has been actively engaged in the
management of the Registrant's portfolio since the Registrant's inception. He
will resign his post at LASER Advisers and become a full-time employee of the
Registrant.
o BlackRock Financial Management, Inc. has agreed to extend its
consulting engagement with the Registrant.
o Thomas Jonovich, Chief Financial Officer and Treasurer of the
Registrant, and Jonathan Green, General Counsel of the Registrant, resigned
effective today, and that Peter T. Zimmermann, Vice President and Chief
Operating Officer of the Registrant, resigned effective January 11, 1999.
o LASER Advisers has agreed to assist the Registrant with respect to
the transfer of the advisory function to the Registrant and with the filing of
the Registrant's Annual Report on Form 10-K.
The Registrant announced that its management estimates that as of
December 31, 1998, the Registrant's net asset value per share was between $6.90
and $7.25 (after giving effect to the special $1 per share distribution). At
that date, the Registrant estimates that its portfolio was comprised of
approximately $681 million of agency guaranteed pass-through securities, $93
million of subordinate interests, $17 million of CMOs, $26 million of
interest-only certificates and $8 million of mortgage loans.
As of January 31, 1999, the Registrant announced that its management
estimates that the net asset value per share was between $7.00 and $7.30 per
share.
The Registrant also announced that during the fourth quarter of 1998,
it repurchased a total of 684,666 shares of its common stock at an average price
per share of $5.30. All of these shares were repurchased prior to the record
date for the special dividend of $1.00 per share paid on December 30, 1998. As
of December 31, 1998, the Registrant had a total of 17,799,533 shares
outstanding.
The complete text of the press release is set forth as Exhibit 99.1
hereto.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(a) Financial Statements
None.
(b) Pro Forma Financial Statements
None.
(c) Exhibits
10.1 Termination Agreement dated as of February 28, 1999 between the
Registrant and LASER Advisers Inc.
10.2 Consulting Agreement dated as of February 28, 1999 between the
Registrant and BlackRock Financial Management, Inc.
99.1 Press Release, dated March 2, 1999.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
LASER MORTGAGE MANAGEMENT, INC.
By: /s/ Robert J. Gartner
------------------------------
Name: Robert J. Gartner
Title: Vice President
Dated: March 5, 1999
<PAGE>
EXHIBIT INDEX
EXHIBIT DESCRIPTION
10.1 Termination Agreement dated as of February 28, 1999 between the
Registrant and LASER Advisers Inc.
10.2 Consulting Agreement dated as of February 28, 1999 between the
Registrant and BlackRock Financial Management, Inc.
99.1 Press Release, dated March 2, 1999.
EXHIBIT 10.1
TERMINATION AGREEMENT
AGREEMENT, dated as of February 28, 1999, by and between LASER
MORTGAGE MANAGEMENT, INC., a Maryland corporation (the "Company"), and LASER
ADVISERS INC., a Delaware corporation (the "Manager").
W I T N E S S E T H:
WHEREAS, the Company and the Manager are parties to a certain
Management Agreement, dated as of December 2, 1997, as amended (the "Management
Agreement");
WHEREAS, the parties desire to terminate the Management Agreement;
NOW, THEREFORE, in consideration of the mutual agreements herein set
forth, the parties hereto agree as follows:
1. Capitalized terms used herein and not otherwise defined herein
shall have the meanings set forth in the Management Agreement.
2. The Manager hereby resigns as the Company's investment adviser, and
the Management Agreement hereby is terminated and of no further force or effect,
effective as of the date hereof; provided, however, that the provisions of
Section 7 of the Management Agreement shall remain in full force and effect
until the Final Payment Date (as defined herein).
3. In full satisfaction of all the Company's obligations under the
Management Agreement through and including December 31, 1998, the Company agrees
to pay the Manager and the Manager agrees to accept and acknowledges as having
been paid on or before the date hereof: $900,000, which represents the
Management Fee and Incentive Fee for the period through December 31, 1998. The
Manager further agrees that it shall not be owed any Non-Competition Payment or
any other moneys, except as provided in Section 4(a).
4. (a) The Company agrees to pay the Manager, and the Manager agrees
to accept in full satisfaction, $500,000 for (i) services under the Management
Agreement for the period from January 1, 1999 through the date of this Agreement
and (ii) the assistance to be provided to a new investment adviser pursuant to
(b) of this paragraph 4.
(b) The Manager agrees: (i) to deliver to the Company forthwith
(1) all of the assets of the Company in its possession, (2) all books and
records of the Company in its possession, and (3) all other information
regarding the business and affairs of the Company in its possession, in the case
of this clause (3), that a new investment adviser may reasonably require in
order to assist such investment adviser with the completion and filing of the
Company's Annual Report on Form 10-K for the year ended December 31, 1998 (the
"10-K") and other regulatory filings, including any tax returns (collectively,
the "Information"); (ii) to assist the Company in connection with all such
filings and (iii) to assist the Company and the new adviser with the transfer of
the Company's advisory function. The Manager agrees to make appropriate staff
available for this purpose.
(c) The $500,000 amount referenced in paragraph 4(a) above shall
be paid to the Manager as follows: (i) $200,000 within five days after the date
on which the Manager has delivered to the Company all of the assets of the
Company in its possession and all of the books and records of the Company in its
possession; (ii) $200,000 within five days after the date on which the Manager
has delivered to the Company the Information; provided, however, if the new
investment adviser notifies the Manager in writing within such five day period
of missing Information, then such $200,000 shall be paid promptly following
delivery of such missing Information; and (iii) $100,000 promptly after the
filing date of the 10-K (the "Final Payment Date"); provided that, if the 10-K
has not been filed by May 31, 1999 and the Manager has not withheld any
information in its possession that is necessary for the preparation of the 10-K,
the remaining $100,000 shall be paid on May 31, 1999.
5. The Manager hereby acknowledges that execution and delivery of the
releases attached hereto as Annex A are conditions to the Company's obligations
hereunder.
6. The Company hereby acknowledges that execution and delivery of the
releases attached hereto as Annex B are conditions to the Manager's obligations
hereunder.
7. The Manager agrees to cause Jonathan Green and Thomas Jonovich to
resign from the Company effective as of the date hereof. The Company
acknowledges that Robert Gartner is entitled to become fully vested immediately
as to the remaining 13,750 shares of the Company's common stock, $.001 par
value, granted to Mr. Gartner under a deferred stock award dated November 26,
1997 pursuant to the Company's 1997 Stock Incentive Plan.
8. Each party hereby represents and warrants to the other that (i) it
has full power and authority to enter into this Agreement and (ii) that it has
taken all necessary corporate action to authorize the execution, delivery and
performance of this Agreement.
9. This Agreement may be amended only by a written instrument approved
in writing by both parties.
10. This Agreement constitutes the entire agreement between the
parties and there are no terms other than those contained herein.
11. This Agreement shall be governed by and construed in accordance
with the internal laws of the State of New York without giving effect to
principles of conflicts of law.
12. This Agreement may be executed by the parties hereto in
counterparts, each of which when so executed and delivered shall be an original,
but such counterparts shall together constitute one and the same instrument.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first written above.
LASER MORTGAGE MANAGEMENT, INC.
By: /s/ Frederick N. Khedouri
----------------------------
Name: Frederick N. Khedouri
Title: President
LASER ADVISERS INC.
By: /s/ Michael Smirlock
--------------------------
Name: Michael Smirlock
Title: Chairman and Duly Authorized Officer
EXHIBIT 10.2
February 28, 1999
BlackRock Financial Management, Inc.
345 Park Avenue
New York, New York 10154
Dear Sirs:
The undersigned (the "Company") hereby reconfirms its engagement of
BlackRock Financial Management, Inc. ("BlackRock") as a consultant to perform
services on the terms and conditions set forth below.
1. DUTIES. BlackRock shall, on a continuous basis, (i) monitor the
Company's securities portfolio and report to the Company's Board of Directors
(the "Board") on the portfolio's value, credit quality and susceptibility to
changes in interest rates and other factors BlackRock deems relevant, (ii)
advise the Company in connection with the sale of portfolio securities, and
(iii) perform such other consulting services as respects the Company's
portfolio, and administrative services for the Company, as are agreed to between
BlackRock and the Company from time to time. The Company is not engaging
BlackRock to manage any portion of its securities portfolio and the parties
hereto acknowledge that BlackRock is not acting as an investment manager to the
Company.
2. REPRESENTATIONS BY COMPANY. The Company represents and warrants
that (a) it has all requisite authority to appoint BlackRock hereunder, (b) the
terms of the Agreement do not conflict with any obligation by which the Company
is bound, whether arising by contract, operation of law or otherwise, (c) this
Agreement has been duly authorized by appropriate corporate action and (d) no
waiver, consent, regulatory approval or other similar action is required to be
obtained in connection with the appointment of BlackRock hereunder which has not
already been obtained.
3. TERM. BlackRock's engagement hereunder shall be deemed to have
commenced as of January 1, 1999 and shall terminate on January 15, 2000;
provided, however, either party may terminate this Agreement without cause
without penalty at any time upon 15 days' written notice to the other party.
4. COMPENSATION. For all services to be rendered to the Company during
the term of this Agreement and any renewal, the Company agrees to pay BlackRock
$125,000 per month, in arrears on the first business day of each month,
appropriately prorated for any partial periods. BlackRock shall not be
responsible for any expenses of the Company.
5. CONFIDENTIALITY. (a) BlackRock acknowledges that the information
and knowledge obtained from the Company in the course of its performance of the
services requested hereunder relating to the Company's business (the
"Confidential Information") are of a confidential nature. BlackRock shall, and
shall ensure that its employees and its representatives, use commercially
reasonable efforts to take all actions necessary and appropriate to preserve the
confidentiality of the Confidential Information and prevent (i) the disclosure
of the Confidential Information to any person other than employees and
representatives of BlackRock who have a need to know to perform their duties
hereunder and (ii) the use of Confidential Information other than in connection
with the performance of its duties hereunder.
(b) The foregoing provision shall not apply to Confidential
Information that (i) otherwise entered the public domain through lawful means,
(ii) is or becomes generally available to the public other than as a result of a
disclosure by BlackRock in violation of this Section 5, (iii) was or is
disclosed to BlackRock by a third party on a non-confidential basis and which
BlackRock reasonably believes is without a breach of an obligation of
confidentiality, (iv) was known by BlackRock prior to its receipt from the
Company, (v) was developed by BlackRock independently of any disclosures
previously made by the Company to BlackRock of such information, or (vi) is
required to be disclosed by BlackRock in connection with any judicial,
regulatory or other proceeding involving the Company or BlackRock or any of its
employees (whether or not such proceeding involves third parties), provided that
BlackRock first gives written detailed notice thereof to the Company as soon as
possible prior to such disclosure, unless such notice would be unlawful.
(c) BlackRock acknowledges that the improper use or disclosure
of any Confidential Information may cause irreparable damage, and that the
Company shall have the right to seek injunctive relief to prevent such
unauthorized use or disclosure, and to such damages as are occasioned by such
unauthorized use or disclosure.
6. OTHER ASSIGNMENTS. Nothing in this Agreement shall prevent
BlackRock or any officer, employee or other affiliate thereof from acting as a
consultant for any other person, firm or corporation, or from engaging in any
other lawful activity, and shall not in any way limit or restrict BlackRock or
any of its shareholders, officers, employees or agents from buying, selling or
trading any securities for its or their own account or for the accounts of
others for whom it or they may be acting; provided, however, that BlackRock will
not undertake activities which, in its judgment, will substantially and
adversely affect the performance of its obligations under this Agreement.
7. RELIANCE BY BLACKROCK. In the performance of its duties under this
Agreement, BlackRock shall at all times be entitled to rely on advice of its or
the Company's counsel, accountants and tax advisers as to any requirements
imposed by (i) the Company's intent to be eligible for taxation as a real estate
investment trust as defined in Sections 856-860 of the Internal Revenue Code of
1986; (ii) the Company's status as an entity exempt from regulation under the
Investment Company Act of 1940; (iii) any other applicable provision of law; and
(iv) the provisions of the Articles of Incorporation and By-Laws of the Company,
as such documents are amended from time to time; and BlackRock shall also be
entitled to rely on the policies and determinations of the Board communicated to
BlackRock in writing. BlackRock shall not be liable for any action taken or
omitted by it in good faith in accordance with the advice of such persons.
8. SURVIVAL. The provisions of Sections 5, 11 and this Section 8 shall
survive the termination of this Agreement.
9. GOVERNING LAW. This Agreement and the rights and obligations of the
parties hereto shall be constructed in accordance with the internal laws of the
State of New York.
10. COUNTERPARTS. This Agreement may be executed counterparts, each of
which shall be deemed to be an original.
11. LIMITATION OF LIABILITY; INDEMNITY; RESERVE ESCROW. (a) The
Company agrees that BlackRock shall not be liable to the Company, its affiliates
or their directors, officers or stockholders for any losses, damages, expenses
or claims occasioned by any act or omission of BlackRock, its directors,
officers, stockholders, employees or agents in connection with the performance
of its services hereunder, other than as a result of its own bad faith, willful
misconduct, gross negligence or reckless disregard of its duties hereunder, or
as otherwise required by applicable law.
(b) The Company agrees to indemnify BlackRock, its
stockholders, officers, directors, employees and agents against and hold them
harmless from any and all liabilities, losses, damages, costs, expenses
(including reasonable attorneys' fees), demands or claims arising out of any
claim asserted or threatened to be asserted by any third party in connection
with BlackRock's serving or having served as a consultant, pursuant to this
Agreement; provided, however, that BlackRock shall not be entitled to
indemnification with respect to any liabilities, losses, damages, costs,
expenses, demands or claims which were found by a court of competent
jurisdiction (in a final judgment from which no appeal may be taken) to have
been caused by its own bad faith, gross negligence, willful misconduct or
reckless disregard of its duties hereunder. The Company shall advance to
BlackRock the reasonable costs and expenses of investigating and/or defending
any such claim, subject to receiving a written undertaking from BlackRock to
repay any such amounts advanced to it in the event and to the extent of such
determination that BlackRock was not entitled to indemnification hereunder.
(c) The Company agrees to segregate, within 45 days of the
date of this Agreement, agency pass-through certificates having a then-current
market value of $2,500,000 (the "Certificates"). The Company shall have the sole
right at any time to substitute for the Certificates cash or cash equivalent
securities in an amount equal to $2,000,000. The Company agrees that either the
Certificates, including any proceeds from the sale thereof up to $2,000,000, or
such cash or cash equivalent securities, as the case may be, shall be set aside
to satisfy the Company's indemnification obligations to BlackRock as set forth
in Section 11(b) of this Agreement and shall so remain for a minimum of three
years after the date that substantially all of the Company's assets are sold,
unless a portion of the funds are needed to satisfy the Company's
indemnification obligations to BlackRock. At the end of such three year period,
if BlackRock is the subject of any asserted or threatened claim or reasonably
believes that it will be the subject of any such claim, then the Company will
continue to set aside any then remaining amounts until such time that a final
resolution of such asserted or threatened claim has occurred. If BlackRock is
not the subject of any asserted or threatened claim or does not reasonably
believe it will be the subject of any such claim at the end of the three year
period, then such amounts may be used for such other purposes as the Company
determines.
12. ASSIGNMENT. BlackRock agrees not to assign this Agreement or the
obligations to be performed by it hereunder without the consent of the Company.
13. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
between the parties relating its subject matter, and supersedes any previous
understandings with respect thereto.
14. AMENDMENT. This Agreement may be amended only by a written
instrument executed by both of the parties hereto.
15. NOTICES. All notices, requests, demands and other communications
hereunder shall be in writing and shall be deemed to have been duly given when
delivered personally or mailed by certified mail, return receipt requested, or
overnight courier, to the address of the applicable party, except that notices
to the Company shall be sent to the attention of Mr. Frederick N. Khedouri,
Bear, Stearns & Co. Inc., 245 Park Avenue, New York, New York 10167, facsimile:
212-272-2295, with a copy to James R. Tanenbaum, Stroock & Stroock & Lavan LLP,
180 Maiden Lane, New York, New York, 10038, facsimile: 212-806-6006. Any
correspondence to BlackRock can be sent to the attention of Robert Connolly,
General Counsel, BlackRock Financial Management, Inc., 345 Park Avenue, New
York, New York 10154, facsimile: 212-409-3744.
<PAGE>
If you agree with the foregoing, please sign and return a copy of this
Agreement.
Sincerely,
LASER MORTGAGE MANAGEMENT, INC.
By: /s/ Frederick N. Khedouri
-----------------------------
Name: Frederick N. Khedouri
Title: President
Agreed to and Accepted By:
BLACKROCK FINANCIAL MANAGEMENT, INC.
By: /s/ Robert Kapito
- -----------------------
Name: Robert Kapito
Title: Vice Chairman
EXHIBIT 99.1
LASER MORTGAGE MANAGEMENT, INC.
ANNOUNCES CHANGES IN ADVISORY RELATIONSHIP
Short Hills, New Jersey, March 2, 1999. LASER Mortgage Management,
Inc. (NYSE: LMM) announced today that:
o the Company and LASER Advisers Inc. are terminating the agreement
under which LASER Advisers serves as the external manager of the Company.
o the Company will become self advised; Robert J. Gartner, Vice
President of the Company, will be responsible for day-to-day investment
decisions for the Company. Mr. Gartner has been actively engaged in the
management of the Company's portfolio since the Company's inception. He will
resign his post at LASER Advisers and become a full-time employee of the
Company.
o BlackRock Financial Management, Inc. has agreed to extend its
consulting engagement with the Company.
o Thomas Jonovich, Chief Financial Officer and Treasurer of the
Company, and Jonathan Green, General Counsel of the Company, resigned effective
today, and that Peter T. Zimmermann, Vice President and Chief Operating Officer
of the Company, resigned effective January 11, 1999.
o LASER Advisers has agreed to assist the Company with respect to the
transfer of the advisory function to the Company and with the filing of the
Company's Annual Report on Form 10-K.
The Company's management estimates that as of December 31, 1998, the
Company's net asset value per share was between $6.90 and $7.25 (after giving
effect to the special $1 per share distribution). At that date, the Company
estimates that its portfolio was comprised of approximately $681 million of
agency guaranteed pass-through securities, $93 million of subordinate interests,
$17 million of CMOs, $26 million of interest-only certificates and $8 million of
mortgage loans.
As of January 31, 1999, the Company estimates that the net asset value
per share was between $7.00 and $7.30 per share.
The Company today announced that during the fourth quarter of 1998, it
repurchased a total of 684,666 shares of its common stock at an average price
per share of $5.30. All of these shares were repurchased prior to the record
date for the special dividend of $1.00 per share paid on December 30, 1998. As
of December 31, 1998, the Company had a total of 17,799,533 shares outstanding.
The Company has scheduled a conference call for investors for 2:30
p.m., Tuesday, March 2, 1999. The call in number is 1-888-422-7137 and the
participant code is 978685.
LASER Mortgage Management, Inc. is a specialty finance company
investing primarily in mortgage-backed securities and mortgage loans. The
Company has elected to be taxed as a real estate investment trust under the
Internal Revenue Code of 1986, as amended. The executive offices of LASER
Mortgage Management, Inc. are located at 51 John F. Kennedy Parkway, Short
Hills, New Jersey 07078.
"SAFE HARBOR" STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM
ACT OF 1995: STATEMENTS IN THIS PRESS RELEASE REGARDING LASER MORTGAGE
MANAGEMENT, INC.'S BUSINESS WHICH ARE NOT HISTORICAL FACTS ARE "FORWARD-LOOKING"
STATEMENTS THAT INVOLVE RISK AND UNCERTAINTIES.
Date: March 2, 1999
Contact: LASER Mortgage Management, Inc.
Frederick N. Khedouri
212-272-8005
