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) October 26, 1995
BANYAN SHORT TERM INCOME TRUST
(Exact name of Registrant as specified in its charter)
Massachusetts 1-8820 36-6801275
(State of or other (Commission File (IRS Employer
jurisdiction of Number) Identification
incorporation) Number)
150 South Wacker Drive, Suite 2900, Chicago, IL 60606
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (312) 553-9800
ITEM 5.OTHER INFORMATION
On August 17, 1995, the Board of Trustees (the "Trustees") of Banyan
Short Term Income Trust (the "Trust" or the "Registrant") authorized
management to prepare a Plan of Termination and Liquidation (the "Plan") of
the Trust including plans for disposing of the Trust's remaining assets and
distributing the net cash proceeds to the shareholders. On October 26, 1995
the Trustees unanimously approved the Plan, a copy of which is attached hereto
as an exhibit.
A review of the Trust's business plan which led to the consideration and
ultimately the adoption of the Plan was triggered by the Trust's release of
its mortgage on the Boca Raton Golf and Tennis Club on February 22, 1995 for
approximately $4,500,000 and the sale of its interest in the Boca Raton Marina
Parcel on September 21, 1995 for approximately $13.9 million net of closing
costs. In addition to terminating the Trust, the Trustees evaluated three
other alternatives: (i) continuing operations as a real estate investment
trust; (ii) a secondary offering; or (iii) merger.
Continued operations as a real estate investment trust. Management
analyzed internally generated financial projections, which contained leverage
and internal growth assumptions, in order to assess the viability of
continuing the Trust in its present form without the infusion of any addition
capital. The Trustees concluded that the Trust, with its existing equity base
and expense structure, would not generate enough net income, upon reinvestment
of the Boca proceeds and cash reserves to support a market price per share in
excess of the anticipated liquidation value per share of the Trust.
Secondary Offering; Merger. Management also reviewed the following two
alternatives: (i) a secondary offering; or (ii) a merger. The Trustees
concluded that the Trust would not be a candidate for a secondary offering due
to the Trust's small asset base and lack of income generating properties. The
Trust also considered locating a merger partner that would contribute
additional management depth and real estate assets. Management hired an
investment banker to locate potential merger candidates and conducted
discussions with various entities but was unable to locate a suitable merger
candidate.
Based on these findings, the Trustees concluded that termination of the
Trust would be the best strategy to maximize shareholder value.
Pursuant to the Plan, the Trustees will proceed to wind-up and terminate
the Trust's affairs. The terms and conditions upon which the Trust's
termination will take place and the procedures that will be followed are
described in greater detail herein and in the Plan. The Plan does not
contemplate the distribution to the shareholders of the Trust (the
"Shareholders") of securities or other property in kind and, therefore, the
Trustees will not seek Shareholder approval of the Plan.
The Trust currently has ownership interests in three assets. First, the
Trust is a general partner of, and has a 50% interest in, the VST/VMIF
Oakridge Partnership (the "Oakridge Partnership"). The Oakridge Partnership
owns two adjacent parcels of real estate in Hollywood and Dania, Florida. The
first parcel of approximately 180 acres is subject to a contract to purchase
with an unaffiliated third party. Management believes that the sale of this
first parcel will be completed by December 31, 1995. The second parcel is
comprised of thirty acres, twenty-five acres of which are zoned for multi-
family housing (the "Multi-Family Parcel"), and five acres of which are zoned
for retail usage (the "Retail Parcel"). The Oakridge Partnership has entered
into a contract with an unaffiliated third party for sale of the Multi-Family
Parcel and anticipates closing the sale before the end of the first calendar
quarter of 1996. Although the Oakridge Partnership is negotiating with
several unaffiliated third parties, no agreement has been executed for sale of
the Retail Parcel.
Second, the Trust is a general partner of, and has a 75% interest in, a
general partnership which is completing the development and sale of townhomes
(the "Dearborn Park Partnership"). As of the date of this Report, the
Dearborn Park Partnership has sold 108 of 117 available townhome units.
Management believes that the remaining units will be sold by the end of the
first calendar quarter of 1996. The Trust may, however, incur liabilities (in
its capacity as a general partner) for up to one year after the sale of each
unit in connection with warranties given by the Dearborn Park Partnership on
the sale of each unit.
Third, the Trust owns a 3.97% interest in a liquidating trust
established by VMS Realty Partners (the "Partners Liquidating Trust"). The
Partners Liquidating Trust owns assets contributed to it by VMS Realty
Partners. The assets generally consist of subordinated debt instruments and
unsecured notes. The Trust has never ascribed a carrying value (beyond the
cash initially held by the Partners Liquidating Trust) to this interest since
the timing and amount, if any, of recoveries from the Trust have been and
continue to be very uncertain. The Trust has previously received
distributions totalling $862,000 from the Partners Liquidating Trust. As of
September 30, 1995, the Trust's share of the Partners Liquidating Trust cash
assets was $20,000. Future distributions, if any, will be at the sole
discretion of Partners Liquidating Trust.
As part of winding-up the affairs of the Trust, the Trustees will
collect the Trust's assets and sell, convey, assign, exchange or otherwise
dispose of the Trust Estate (as defined in the Declaration). After paying or
adequately providing for the payment of the Trust's liabilities and upon the
receipt of any indemnities or other protections deemed necessary, the Trustees
will cause the distribution of the remaining Trust Estate (which should
consist entirely of cash) to the Shareholders, pro rata, according to the
number of shares of beneficial interest (the "Shares") held by each
Shareholder. In the event liabilities arise subsequent to a distribution to
the Shareholders, a creditor could assert claims against the Shareholders on a
pro rata basis to the extent of the distribution received by the Shareholders.
The Trustees currently anticipate that this winding-up process will take
approximately twelve months. There can be no assurance, however, that changed
circumstances will not result in a lengthier winding-up period. During this
winding-up period, the Trust will continue to incur ongoing operating
expenses. These expenses will reduce the proceeds distributable to the
Shareholders. The Trustees will attempt to minimize these expenses by
disposing of assets and providing for liabilities in a manner which, in good
faith, they believe will best maximize Shareholder value.
SUMMARY OF THE PLAN
The Plan grants the Trustees complete authority to execute all documents and
to take all other actions as they in their discretion deem necessary or
appropriate to effect the winding-up and termination of the Trust.
The summary of the Plan set forth below describes in general terms certain
material provisions of the Plan and is qualified in its entirety by reference
to the Plan.
Effect on Trading and Registration
The Shares are currently listed for trading on the American Stock Exchange and
will continue to be transferable, subject to current restrictions on
transferability, until a date just prior to the record date for any final
distribution (the "Stop Trading Date"). The Trust intends to close its stock
transfer books permanently on a date no later than the Stop Trading Date.
Before the Stop Trading Date, the Trust will issue a press release and notify
all Shareholders and the American Stock Exchange of the Trust's intentions to
cease all trading effective on the Stop Trading Date.
The Shares will remain registered under the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), and the Trust will continue to comply with
the reporting and proxy solicitation requirements, if necessary, of the
Exchange Act and furnish reports to its Shareholders until such time as the
Trust is no longer subject to registration and reporting requirements under
the Exchange Act.
Continued Existence and Operations
The Trust shall continue its existence in accordance with the Plan and the
Declaration but shall not carry on any business except as appropriate to wind-
up and terminate its business and affairs, including converting its remaining
assets to cash, discharging or making provision for discharging its
liabilities, distributing proceeds among the Shareholders, pro rata according
to the number of Shares held by each Shareholder, and performing every other
act necessary or appropriate to wind-up and terminate the Trust's business and
affairs.
The Trustees are authorized to hire and terminate all officers, employees,
agents, attorneys, accountants, advisors, and others as they may deem
appropriate and to fix the compensation and other terms of employment or
engagement of such parties.
Provision for Liabilities
The Trustees will notify all parties with known claims against the Trust of
the Trust's termination and establish a date by which the claim(s) of such
creditors must be filed with the Trust. The Trustees will then cause the
Trust to pay or satisfy, or make reasonable provision to pay or satisfy, all
Trust liabilities, debts and obligations, including all contingent,
conditional, or unmatured liabilities (collectively the "Liabilities"), in the
manner and amounts determined by the Trustees.
Distributions to Shareholders
The Trustees will cause the Trust to make distributions to Shareholders at
such times and on such terms as are determined by the Trustees in their sole
discretion. Distributions to the Shareholders will be made through a
distribution agent at such times and on such terms as are determined by the
Trustees. Shareholders will have no right to any distribution unless and
until declared by the Trustees. Only persons owning Shares on the record
date(s) to be declared by the Trustees will be entitled to distribution(s).
The Trustees anticipate causing a distribution to be made early in the first
quarter of 1996 and a final distribution approximately twelve months from the
date hereof. The amount of any distributions will depend upon the amounts
deemed necessary by the Trustees to pay or adequately provide for the Trust's
Liabilities and the cost of continuing compliance, general and administrative
and other expenses of terminating the Trust (collectively, the "Expenses").
There can be no assurance that these Liabilities and Expenses will not exceed
the Trust's current estimates and hence reduce the amounts currently projected
as available for distribution to the Shareholders. Upon paying or adequately
providing for the payment of all Liabilities and Expenses, and upon receipt of
any releases, indemnities and refunding agreements deemed necessary by the
Trustees, the Trustees will determine a record date and distribution date for
payment of a final distribution to the Shareholders. The Trustees will not be
authorized to cause the distribution to the Shareholders of securities or
other property in kind without the vote or consent of the holders of two-
thirds of the outstanding Shares.
Potential Shareholder Liability
The Plan contemplates that distributions will be made to the Shareholders only
to the extent that assets are available for distribution following payment or
provision for all Liabilities and Expenses as discussed above. If Liabilities
and Expenses, however, arise following a distribution to the Shareholders, a
creditor could assert claims against the Shareholders on a pro rata basis to
the extent of the distribution received by Shareholders.
Procedures for Termination of Trust
Following the final distribution, the Trustees will execute and lodge among
the records of the Trust an instrument in writing, substantially in the form
of Exhibit A to the Plan, setting forth the fact of termination of the Trust,
and in accordance with Section 9.1.2. of the Declaration of Trust, the
Trustees will thereupon be discharged from all further liabilities and duties
with respect to the Trust, and the rights and interests of the Shareholders
will cease with respect to the Trust.
Interests of Certain Persons
Mr. Leonard G. Levine serves as President of the Trust pursuant to an
employment agreement (the "Employment Agreement"). According to the terms of
the Employment Agreement, if Mr. Levine is terminated without cause, and no
change of control (as defined in the Employment Agreement) has occurred, as
will be the case when the Trust is terminated, Mr. Levine will receive a
severance payment equal to one year's salary plus all incentive compensation
earned through the date of his termination, plus an amount equal to the full
cost of continuing Mr. Levine's health benefits for one year. Banyan
Management Corp., which performs certain administrative and accounting
services on behalf of the Trust, will be entitled to a "termination fee" equal
to $160,000 upon the filing of the "Certification of Dissolution, Discharge of
Trustees and Termination of Shareholders' Rights and Interests in Banyan Short
Term Income Trust."
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
Exhibit Number Document Description
(2) Plan of Liquidation/Termination
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 hereunto duly authorized.
Date: November 1, 1995 BANYAN SHORT TERM INCOME TRUST
(Registrant)
By: /s/ Joel L. Teglia
Joel L. Teglia
Its: Chief Financial and Accounting
Officer
EXHIBIT NUMBER (2)
PLAN OF TERMINATION/LIQUIDATION OF
BANYAN SHORT TERM INCOME TRUST
PLAN OF TERMINATION/LIQUIDATION OF
BANYAN SHORT TERM INCOME TRUST
On October 26, 1995, the Board of Trustees (the "Trustees") of Banyan
Short Term Income Trust, (formerly known as VMS Short Term Income Trust) a
Massachusetts business trust (the "Trust") unanimously approved this Plan of
Termination/Liquidation (the "Plan") and determined to terminate the Trust and
wind-up its affairs in accordance with the Trust's Fifth Amended and Restated
Declaration of Trust, as amended from time to time, (the "Declaration"), the
Trust's Trustees' Regulations and the laws of the Commonwealth of
Massachusetts. Capitalized terms not otherwise defined herein shall have the
meaning ascribed to such terms in the Declaration.
1. TERMINATION PERIOD; CONTINUED EXISTENCE. The Trustees shall
continue the Trust's existence but shall not carry on any business except as
appropriate to wind-up and terminate the Trust's business and affairs
including the actions specified in Section 2 hereof. All of the powers of the
Trustees currently granted under the Declaration shall continue until the
wind-up and liquidation has been completed. The date upon which the Trust's
existence is terminated and the records of the Company are closed shall be
referred to herein as the "Termination Date."
2. ACTIONS AUTHORIZED; MANAGEMENT AND DISPOSITION ASSETS. In
connection with the termination of the Trust, the Declaration specifically
empowers the Trustees to fulfill or discharge the contracts of the Trust,
collect the Trust assets, sell, convey, assign, exchange, transfer or
otherwise dispose of all or any part of the remaining Trust Estate to one or
more persons at public or private sale for consideration which may consist in
whole or in part of cash, securities or other property of any kind, discharge
or pay the Trust's liabilities and do all other acts appropriate to wind-up
the Trust's business. While winding-up the Trust's affairs, the Trustees
shall be authorized to take the following actions, all as may be deemed
necessary or appropriate in the discretion of the Trustees:
(i) Collection, Sale or Distribution of Assets. The Trustees
shall cause management of the Trust to collect, sell,
exchange, convey, transfer or otherwise dispose of
(including, without limitation, by consummating any such
transaction for disposal of assets pursuant to an agreement
entered into prior to approval of the Plan) all of the
Trust's assets upon such terms and conditions and for such
consideration, which may consist in whole or in part of money
or other property as the Trustees deem to be in the best
interest of the Trust and its Shareholders.
(ii) Provisions for Liabilities. The Trustees shall
cause management of the Trust to pay or satisfy,
or as determined by the Trustees, make
reasonable provision to pay or satisfy, all of
the Trust's liabilities, debts and obligations
including all contingent, conditional or
unmatured liabilities (collectively the
"Liabilities"), in the manner and in the amounts
determined by the Trustees.
(iii) Payment for Services and Expenses. In
connection with and for the purpose of
implementing and carrying out the purposes of
this Plan, the Trustees may cause the Trust to
pay any and all costs of continuing regulatory
compliance and general and administrative
expenses of the Trust, including, but not
limited to, all agency, legal, accounting and
other fees and expenses of persons rendering
services to the Trust (the "Expenses").
(iv) Distributions to Shareholders. After paying or
adequately providing for the payment of all
Liabilities and Expenses, and upon receipt of
any releases, indemnities and refunding
agreements deemed necessary by the Trustees, the
Trustees shall cause the Trust to distribute the
assets of the Trust among the Shareholders, pro
rata, according to the number of Shares held by
each Shareholder; provided, however, that the
Trustees shall not be authorized to cause the
distribution to the Shareholders of securities
or other property in kind without the vote or
consent of the holders of two-thirds of the
outstanding Shares. Distributions to the
Shareholders will be made through a distribution
agent (the "Distribution Agent") at such times
and on such terms as are determined by the
Trustees. Shareholders shall have no right to
any distribution unless and until declared by
the Trustees. Only persons owning Shares on the
record date(s) to be declared by the Trustees
will be entitled to distributions.
Following the final distribution, the Trust will close its
transfer books and other records at the close of business on
a date determined by the Trustees and thereafter certificates
representing Shares shall not be assignable or transferable
on the Trust's books.
(v) Trading of Shares. At any time prior to the record date for
the final distribution to the Shareholders, the Trustees may,
if they deem such action to be in the best interests of the
Trust and the Shareholders, cause the Shares to be delisted
from trading on the American Stock Exchange or completely
prohibit the transfer of Shares if and to the extent
permitted by law (the "Stop Trading Date"). The Trust shall
send notice of the Stop Trading Date in advance of such date
to all Shareholders and other persons as the Trust deems
advisable.
(vi) Engagement of Agents; Compensation. In
connection with carrying out the actions
authorized by this Plan, the Trustees may cause
the Trust to hire and terminate all officers,
employees, agents, attorneys, accountants,
advisers, and others as the Trustees may deem
appropriate and to fix the compensation and
other terms of employment or engagement of such
parties.
3. EFFECT OF FINAL DISTRIBUTION TO SHAREHOLDERS. The final
distribution to or for the benefit of the Trust's Shareholders pursuant to
Section 2(iv) hereof shall complete redemption and cancellation of all of the
outstanding Shares of the Trust.
4. LOST SHAREHOLDERS. Distribution to Shareholders who cannot be
located or found, will be held by the Distribution Agent solely for the
benefit of, and for the ultimate distribution to, the Shareholder (but without
interest thereon) as the sole equitable owner thereof, subject only to escheat
laws or such other laws as may be applicable to unclaimed or abandoned funds
or property. Upon receipt by the Distribution Agent of any distribution, all
responsibilities and liabilities, if any, of the Trustees and the Trust
regarding that particular distribution shall be satisfied and extinguished and
in no event shall any such distribution revert to or become the property of
the Trust.
5. INDEMNIFICATION. The Trust is obligated to indemnify its
Trustees, officers and employees, in accordance with the Declaration. If any
claims arise during the winding-up and liquidation of the Trust, the Trust's
obligation to indemnify such persons may be satisfied out of the assets of the
Trust Estate prior to any or all distributions to Shareholders. The Trustees,
in their absolute discretion, may obtain and maintain such insurance as may be
necessary or appropriate to cover or supplement the Trust's obligations to the
Trustees, officers and employees of the Trust.
6. EXERCISE OF POWERS; LIABILITY. In each case where the Trustees
are granted discretion or authority under this Plan or are permitted to take
action, to make determinations, to "deem" a state of affairs to exist or
otherwise to exercise their right and power, they may do so in their sole and
unfettered discretion, subject, however, to the provisions of this Plan, the
Declaration, the Trustees' Regulations and the laws of the Commonwealth of
Massachusetts.
7. ABANDONMENT OR AMENDMENT OF PLAN. The Trustees, by unanimous
vote, may abandon this Plan and the transactions contemplated hereby. The
Trustees may also amend or modify the Plan, by unanimous vote to the extent
not prohibited by the Declaration or applicable law.
8. AUTHORIZATION TO TRUSTEES AND OFFICERS. The Trustees are hereby
authorized to do and perform, or to cause the officers or agents of the Trust,
subject to approval of the Trustees, to do and perform, any and all acts, and
to make, execute, deliver or adopt any and all agreements, resolutions,
conveyances, certificates and other documents of every kind which are deemed
necessary, appropriate or desirable, in the absolute discretion of the
Trustees, to implement this Plan and the transactions contemplated hereby,
including without limiting the foregoing, all filings or acts required by any
state or federal law or regulation to wind-up the Trust's affairs and
terminate the Trust.
9. TERMINATION OF TRUST. On the Termination Date, the Trustees shall
execute and lodge among the records of the Trust an instrument in writing
substantially in the form of Exhibit A, setting forth the fact of termination
of the Trust, and, in accordance with Section 9.1.2 of the Declaration, the
Trustees will thereupon be discharged from all further liabilities and duties
with respect to the Trust and the rights and interests of the Shareholders
will cease.
EXHIBIT A
CERTIFICATION OF DISSOLUTION,
DISCHARGE OF TRUSTEES AND TERMINATION
OF SHAREHOLDERS' RIGHTS AND INTERESTS
IN BANYAN SHORT TERM INCOME TRUST
The undersigned Trustees hereby certify as follows:
WHEREAS, the Plan of Termination/Liquidation (the "Plan") for Banyan
Short Term Income Trust (the "Trust") was unanimously approved by the Board of
Trustees on October 26, 1995.
WHEREAS, in accordance with the Plan, all assets of the Trust have been
disposed of, all liabilities of the Trust have been provided for, all of the
Trust's remaining assets have been distributed to the Shareholders or to the
appropriate state authorities and all other actions required under the Plan
have been taken except for execution of this certificate in the records of the
Trust.
WHEREAS, the Trust closed its record transfer books on _______________,
1995 and all transfers of the Trust's Shares ceased as of ___________________,
1995.
NOW, THEREFORE, in accordance with the terms of the Plan, the Trust is
hereby terminated, and, in accordance with Section 9.1.2 of the Trust's
Declaration of Trust, the Trustees are hereby discharged from all further
liabilities and duties and the rights and liabilities of all Shareholders
shall cease effective this ____ day of _____ 199__.
IN WITNESS HEREOF, the undersigned have executed this Certificate this
____ day of ___________, 199__.
BANYAN SHORT TERM INCOME TRUST
By:
Norman M. Gold, Trustee
By:
Gerald L. Nudo, Trustee
By:
Marvin A. Sotoloff, Trustee
167571-2
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