Page 1 of 13
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
X QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
- ----- ACT OF 1934
For the quarterly period ended September 30, 1995
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
- ----- EXCHANGE ACT OF 1934
For the transition period from ______________ to ______________.
Commission file number 0-14196
PHOENIX LEASING CASH DISTRIBUTION FUND
Registrant
California 68-0032610
State of Jurisdiction I.R.S. Employer Identification No.
2401 Kerner Boulevard, San Rafael, California 94901-5527
- -------------------------------------------------------------------------------
Address of Principal Executive Offices Zip Code
Registrant's telephone number, including area code: (415) 485-4500
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
preceding requirements for the past 90 days.
Yes X No
--- ---
<PAGE>
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<TABLE>
Part I. Financial Information
Item 1. Financial Statements
PHOENIX LEASING CASH DISTRIBUTION FUND
BALANCE SHEETS
(Amounts in Thousands Except for Unit Amounts)
(Unaudited)
<CAPTION>
September 30, December 31,
1995 1994
---- ----
ASSETS
<S> <C> <C>
Cash and cash equivalents $ 207 $ 669
Accounts receivable (net of allowance for losses on accounts receivable of
$10 and $107 at September 30, 1995 and December 31, 1994, respectively) 18 132
Notes receivable (net of allowance for losses on notes receivable of $130 and
$150 at September 30, 1995 and December 31, 1994, respectively) 18 95
Equipment on operating leases and held for lease (net of accumulated depreciation
of $1,090 and $3,948 at September 30, 1995 and December 31, 1994, respectively) 38 87
Net investment in financing leases 8 22
Investment in joint ventures 370 392
Capitalized acquisition fees (net of accumulated amortization of $2,413 and
$2,409 at September 30, 1995 and December 31, 1994, respectively) 2 5
Other assets 2 21
------- -------
Total Assets $ 663 $ 1,423
======= =======
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT)
Liabilities
Accounts payable and accrued expenses $ 286 $ 923
Notes payable -- 420
------- -------
Total Liabilities 286 1,343
------- -------
Partners' Capital (Deficit)
General Partner (27) (37)
Limited Partners, 200,000 units authorized and issued, 194,947 units
outstanding at September 30, 1995 and December 31, 1994 404 117
------- -------
Total Partners' Capital (Deficit) 377 80
------- -------
Total Liabilities and Partners' Capital (Deficit) $ 663 $ 1,423
======= =======
The accompanying notes are an integral
part of these statements.
</TABLE>
<PAGE>
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<TABLE>
PHOENIX LEASING CASH DISTRIBUTION FUND
STATEMENTS OF OPERATIONS
(Amounts in Thousands Except for Per Unit Amounts)
(Unaudited)
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
1995 1994 1995 1994
---- ---- ---- ----
INCOME
<S> <C> <C> <C> <C>
Rental income $ 62 $ 37 $ 268 $ 303
Gain on sale of equipment 1 97 32 162
Equity in earnings from joint ventures, net 25 -- 72 1
Interest income, notes receivable -- -- -- 76
Gain on sale of marketable securities -- -- -- 123
Other income 11 7 45 26
------ ------ ------ ------
Total Income 99 141 417 691
------ ------ ------ ------
EXPENSES
Depreciation 14 33 43 153
Amortization of acquisition fees 2 1 3 19
Lease related operating expenses 8 21 28 103
Management fees to General Partner 3 7 18 95
Provision for losses on receivables 57 -- 93 --
Interest expense -- 25 -- 111
General and administrative expenses 16 29 72 147
------ ------ ------ ------
Total Expenses 100 116 257 628
------ ------ ------ ------
Income (loss) before Extraordinary Item (1) 25 160 63
Extraordinary Item - extinguishment of debt -- 671 866 671
------ ------ ------ ------
NET INCOME (LOSS) $ (1) $ 696 $1,026 $ 734
====== ====== ====== ======
NET INCOME PER LIMITED
PARTNERSHIP UNIT $ (.01) $ 3.53 $ 5.21 $ 3.73
====== ====== ====== ======
DISTRIBUTIONS PER LIMITED
PARTNERSHIP UNIT $ -- $ 1.87 $ 3.74 $ 5.61
====== ====== ====== ======
ALLOCATION OF NET INCOME:
General Partner $ -- $ 7 $ 10 $ 7
Limited Partners (1) 689 1,016 727
------ ------ ------ ------
$ (1) $ 696 $1,026 $ 734
====== ====== ====== ======
The accompanying notes are an integral
part of these statements.
</TABLE>
<PAGE>
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PHOENIX LEASING CASH DISTRIBUTION FUND
STATEMENTS OF CASH FLOWS
(Amounts in Thousands)
(Unaudited)
Nine Months Ended
September 30,
1995 1994
---- ----
Operating Activities:
Net income $ 1,026 $ 734
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 43 153
Amortization of acquisition fees 3 19
Gain on sale of equipment (32) (162)
Equity in earnings from joint ventures, net (72) (1)
Provision for losses on receivable 93 --
Gain on sale of marketable securities -- (123)
Extinguishment of debt (866) (671)
Decrease in accounts receivable 21 80
Increase (decrease) in accounts payable
and accrued expenses (191) 156
Decrease in other assets 19 19
------- -------
Net cash provided by operating activities 44 204
------- -------
Investing Activities:
Principal payments, financing leases 13 43
Principal payments, notes receivable 26 1,185
Proceeds from sale of equipment 39 176
Distribution from joint ventures 145 2
Proceeds from sale of marketable securities -- 174
Purchase of equipment -- (2)
Investment in marketable securities -- (51)
------- -------
Net cash provided by investing activities 223 1,527
------- -------
Financing Activities:
Distributions to partners (729) (1,094)
------- -------
Net cash used by financing activities (729) (1,094)
------- -------
Increase (decrease) in cash and cash equivalents (462) 637
Cash and cash equivalents, beginning of period 669 438
------- -------
Cash and cash equivalents, end of period $ 207 $ 1,075
======= =======
Supplemental Cash Flow Information:
Cash paid for interest expense $ -- $ 7
The accompanying notes are an integral
part of these statements.
<PAGE>
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PHOENIX LEASING CASH DISTRIBUTION FUND
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
Note 1. General.
The accompanying unaudited condensed financial statements have been
prepared by the Partnership in accordance with generally accepted accounting
principles, pursuant to the rules and regulations of the Securities and Exchange
Commission. In the opinion of Management, all adjustments (consisting of normal
recurring accruals) considered necessary for a fair presentation have been
included. Although management believes that the disclosures are adequate to make
the information presented not misleading, it is suggested that these condensed
financial statements be read in conjunction with the financial statements and
the notes included in the Partnership's Financial Statement, as filed with the
SEC in the latest annual report on Form 10-K.
Financial Accounting Pronouncements. In March 1995, the Financial
Accounting Standards Board issued Statement of Financial Accounting Standard No.
121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed of," which requires that long-lived assets and certain
identifiable intangibles to be held and used by an entity be reviewed for
impairment whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable. In performing the review for
recoverability, the entity would estimate the future cash flows expected to
result from the use of the asset and its eventual disposition. If the sum of the
expected future cash flows (undiscounted and without interest charges) is less
than the carrying amount of the asset, an impairment loss is recognized.
Measurement of an impairment loss for long-lived assets and identifiable
intangibles that an entity expects to hold and use should be based on the fair
value of the asset. Statement No. 121 is effective for financial statements for
fiscal years beginning after December 15, 1995. The Partnership does not expect
the adoption of this statement to have a material impact on its financial
position and results of operations. The Partnership plans to adopt Statement No.
121 on January 1, 1996.
Non-Cash Investing Activity. On September 20, 1995, the Partnership
foreclosed upon a nonperforming outstanding note receivable to a cable
television system operator to whom the Partnership, along with other affiliated
partnerships managed by the General Partner, had extended credit. The
partnerships' notes receivables were exchanged for interests (their capital
contribution), on a pro rata basis, in a newly formed joint venture owned by the
partnerships and managed by the General Partner. The amount of the outstanding
note receivable that was contributed to the joint venture was $52,000.
Note 2. Reclassification.
Reclassification - Certain 1994 amounts have been reclassified to
conform to the 1995 presentation.
Note 3. Income Taxes.
Federal and state income tax regulations provide that taxes on the
income or loss of the Partnership are reportable by the partners in their
individual income tax returns. Accordingly, no provision for such taxes has been
made in the accompanying financial statements.
<PAGE>
Page 6 of 13
Note 4. Notes Receivable.
Impaired Notes Receivable. On January 1, 1995, the Partnership adopted
Financial Accounting Standards Board Statement No. 114, "Accounting by Creditors
for Impairment of a Loan", and Statement No. 118, "Accounting by Creditors for
Impairment of a Loan - Income Recognition and Disclosures". Statement No. 114
requires that certain impaired loans be measured based on the present value of
expected cash flows discounted at the loan's effective interest rate; or,
alternatively, at the loan's observable market price or the fair value of the
collateral if the loan is collateral dependent. Prior to 1995, the allowance for
losses on notes receivable was based on the undiscounted cash flows or the fair
value of the collateral dependent loans.
In accordance with Statement No. 114, a loan is classified as
in-substance foreclosure when the Company has taken possession of the collateral
regardless of whether formal foreclosure proceedings take place. Notes
receivable previously classified as in-substance foreclosed cable systems but
for which the Company had not taken possession of the collateral have been
reclassified to notes receivable.
At September 30, 1995, the recorded investment in notes that are
considered to be impaired under Statement No. 114 was $47,000 for which the
related allowance for losses is $3,000. The average recorded investment in
impaired loans during the nine months ended September 30, 1995 was approximately
$103,000. Generally, notes receivable are classified as impaired and the accrual
of interest on such notes are discontinued when the contractual payment of
principal or interest has become 90 days past due or management has serious
doubts about further collectibility of the contractual payments. Any payments
received subsequent to the placement of the note receivable on to impaired
status will generally be applied towards the reduction of the outstanding note
receivable balance, which may include previously accrued interest as well as
principal. Once the principal and accrued interest balance has been reduced to
zero, the remaining payments will be applied to interest income.
The activity in the allowance for losses on notes receivable during the
nine months ended September 30, is as follows:
1995 1994
---- ----
(Amounts in Thousands)
Beginning balance $ 150 $ 150
Provision for losses -- --
Write downs (20) --
----- -----
Ending balance $ 130 $ 150
===== =====
Note 5. Net Income (Loss) and Distributions per Limited Partnership Unit.
Net income and distributions per limited partnership unit were based on
the limited partners' share of net income and distributions, and the weighted
average number of units outstanding of 194,947 for the Nine month periods ended
September 30, 1995 and 1994.
<PAGE>
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Note 6. Investment in Joint Ventures.
Equipment Joint Ventures
The aggregate combined statements of operations of the equipment joint
ventures is presented below:
COMBINED STATEMENTS OF OPERATIONS
(Amounts in Thousands)
Three Months Ended Nine Months Ended
September 30, September 30,
1995 1994 1995 1994
---- ---- ---- ----
INCOME
Rental income $ 712 $ -- $1,893 $ --
Gain on sale of equipment 99 -- 151 --
Other income 568 -- 670 --
------ ------ ------ ------
Total income 1,379 -- 2,714 --
------ ------ ------ ------
EXPENSES
Depreciation 628 -- 855 --
Lease related operating expenses 353 -- 801 --
Management fees to General Partner 76 -- 146 --
------ ------ ------ ------
Total expenses 1,057 -- 1,802 --
------ ------ ------ ------
Net income $ 322 $ -- $ 912 $ --
====== ====== ====== ======
<PAGE>
Page 8 of 13
Foreclosed Cable Systems Joint Ventures
The aggregate combined statements of operations of the foreclosed cable
systems joint ventures is presented below:
COMBINED STATEMENTS OF OPERATIONS
(Amounts in Thousands)
Three Months Ended Nine Months Ended
September 30, September 30,
1995 1994 1995 1994
---- ---- ---- ----
INCOME
Subscriber revenue $166 $162 $509 $488
Other income 3 2 9 6
---- ---- ---- ----
Total income 169 164 518 494
---- ---- ---- ----
EXPENSES
Depreciation and amortization 39 38 116 113
Program services 48 40 135 123
Management fees to an affiliate of the
General Partner 8 7 23 21
General and administrative expenses 43 39 145 115
Provision for losses on accounts receivable 2 2 5 5
---- ---- ---- ----
Total expenses 140 126 424 377
---- ---- ---- ----
Net income before income taxes 29 38 94 117
Income tax benefit 1 13 11 23
---- ---- ---- ----
Net income $ 30 $ 51 $105 $140
==== ==== ==== ====
Note 7. Notes Payable.
During the second quarter of 1995, it was determined that the
Partnership's outstanding note payable to a manufacturer was determined to no
longer be a liability. This note was payable to an equipment manufacturer that
the Partnership had acquired leased equipment pursuant to a vendor lease
agreement. The payments on this note were tied to the overall return realized
from the equipment or a specific time period, whichever occurs first, with the
payments to be taken only out of the rents or sales proceeds received from this
equipment. As of June 30, 1995 the remaining equipment relating to this vendor
lease agreement was no longer generating any rental income, had no significant
market value and had been fully depreciated. The Partnership has no obligation
to pay this debt beyond the rental and sales proceeds generated from this
equipment. As a result, the Partnership recognized the outstanding note payable
and accrued interest in the amount of $866,000 ($4.44 per limited partnership
unit) as income.
<PAGE>
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Note 8. Subsequent Event.
On October 26, 1995 the Partnership's remaining assets were sold by
sealed bid public auction for $465,408 cash. The remaining assets of the
Partnership offered for sale consisted of lease receivables, notes receivables,
common stock warrants, equity interests in equipment leasing joint ventures and
a foreclosed cable system joint venture. The Partnership engaged the firm of
Kennedy-Wilson International to provide marketing and auction services to the
Partnership. The sale of the remaining assets by public auction were advertised
in the New York Times, the Wall Street Journal, the San Francisco Chronicle and
the Los Angeles Times. The highest bid for the common stock was submitted by
P.E. Associates and the highest bid for the other assets was submitted by
Phoenix Leasing Liquidation Corporation, a subsidiary of Phoenix Leasing
Incorporated, the General Partner. The sale of these assets will close on
November 15, 1995.
<PAGE>
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PHOENIX LEASING CASH DISTRIBUTION FUND
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
Results of Operations
Phoenix Leasing Cash Distribution Fund (the Partnership) reported a net
loss of $1,000 during the three months ended September 30, 1995, as compared to
net income of $696,000 during the same period in 1994. Earnings were
substantially higher during the three months ended September 30, 1994 due to the
extinguishment of one of the Partnerships two outstanding notes payable which
resulted in income of $671,000.
The Partnership reported net income of $1,026,000 during the nine months
ended September 30, 1995, as compared to net income of $734,000 during the same
period in 1994. During the nine months ended September 30, 1995 the Partnership
extinguished the second obligation to repay a note payable, which resulted in
income of $866,000, as compared to the $671,000 recognized as income during the
nine months ended September 30, 1994. As a result, the Partnership has no
remaining debt obligations as of September 30, 1995.
The above mentioned notes payable obligations were to a manufacturer of
equipment that the Partnership determined was no longer realizable. The
Partnership's two notes payable were to an equipment manufacturer that the
Partnership acquired pools of leased equipment pursuant to a vendor lease
agreement. The payments of this note were tied to the overall return realized
from the equipment pool or a specific time period, whichever occurs first, with
the payments to be taken only out of the rents or sales proceeds received from
this equipment. As of June 30, 1995, the remaining equipment relating to this
vendor lease agreement was no longer generating any rental income, had no
determinable market value, had been fully depreciated and the Partnership had no
obligation to pay this debt beyond the rental and sales proceeds generated from
the equipment. As a result, the Partnership recognized the outstanding note
payable and accrued interest in the amount of $866,000 as income.
Total revenues decreased by $42,000 during the three months ended September
30, 1995, respectively, as compared to the same period in 1994. The decreased
revenues is primarily due to a decreased gain on the sale of equipment. The
Partnership reported a decrease in revenues of $274,000 during the nine months
ended September 30, 1995, as compared to the same period in 1994. This decrease
was attributable to a decreased gain on sale of equipment as well as the absence
of a gain on sale of marketable securities during 1995 and the absence of
interest income from notes receivable.
The gain on the sale of marketable securities of $123,000 during the nine
months ended September 30, 1994 came from the exercise and sale of stock
warrants that the Partnership received as part of a lease agreement with an
emerging growth company. There were no such sales of marketable securities
during the three and nine months ended September 30, 1995.
The absence of interest income from notes receivable for the three and nine
months ended September 30, 1995, is due to the Partnership's remaining notes
receivable being in default. During the nine months ended September 30, 1994,
the Partnership recognized interest income on the payoff of several notes
receivable that had previously been in default.
<PAGE>
Page 11 of 13
On September 20, 1995, the Partnership foreclosed upon a non-performing
note receivable to a cable television system that it had extended credit to,
along with other affiliated limited partnerships managed by the General Partner.
The Partnership's note receivable was exchanged for an interest (its capital
contribution), on a pro rata basis, in a newly formed joint venture owned by the
partnerships and managed by an affiliate of the General Partner. The amount of
the Partnership's capital contribution on September 20, 1995, was $52,000.
Total expenses decreased by $16,000 and $371,000 for the three and nine
months ended September 30, 1995, as compared to the same period in 1994. This
decrease is due to an overall decrease in all expense items, except for an
increase in the provision for losses on receivables. The largest decrease came
from the decrease in depreciation expense. Depreciation expense continues to
decrease during the three and nine months ended September 30, 1995, as compared
to the same periods in 1994, due to a majority of the equipment being fully
depreciated. The overall decrease in expenses is related to the Partnership's
decrease in its asset portfolio as it approaches the end of its term.
Liquidity and Capital Resources
The Partnership reported net cash from equipment leasing and financing
activities of $83,000 and $1,432,000 for the nine months ended September 30,
1995 and 1994, respectively. The decrease in cash generated by the Partnership
during 1995, when compared to the same period in 1994, is due to a decrease in
payments received on notes receivable. The Partnership received proceeds for the
payoff of outstanding notes receivable from a cable television system operator
and a middle market business during the nine months ended September 30, 1994.
There were no payoffs of notes receivable during the same period in 1995.
As of September 30, 1995, the Partnership owned equipment held for lease
with an aggregate original cost of $586,000 and a net book value of $1,000
compared to an original cost of $5,241,000 and a net book value of $2,000 at
September 30, 1994. The General Partner is actively engaged, on behalf of the
Partnership, in remarketing and selling the Partnership's off-lease equipment
portfolio.
In accordance with the partnership agreement, the limited partners are
entitled to 95% of the cash available for distribution and the General Partner
is entitled to the remaining 5%. The limited partners received distributions of
$729,000 and $1,094,000 during the nine months ended September 30, 1995 and
1994, respectively. As a result, the cumulative cash distributions to the
limited partners are $47,599,000 and $46,502,000 as of September 30, 1995 and
1994, respectively. At this time, the General Partner elected not to receive
payment for its share of the cash distributions.
The Partnership's term expired on June 30, 1995. As a result, a public
auction was held on October 26, 1995 to sell the remaining assets of the
Partnership. The highest bid was submitted by P.E. Associates for the common
stock and Phoenix Leasing Liquidation Corporation, a subsidiary of Phoenix
Leasing Incorporated, the General Partner for the other assets. The remaining
assets were sold for a total of $465,408 cash. The sale of these assets will
close on November 15, 1995. Once the assets have been liquidated, the
Partnership will make a final distribution to the partners.
<PAGE>
Page 12 of 13
PHOENIX LEASING CASH DISTRIBUTION FUND
September 30, 1995
Part II. Other Information.
Item 1. Legal Proceedings. Inapplicable.
Item 2. Changes in Securities. Inapplicable
Item 3. Defaults Upon Senior Securities. Inapplicable
Item 4. Submission of Matters to a Vote of Securities Holders. Inapplicable
Item 5. Other Information.
Sale of remaining assets of Partnership:
On October 26, 1995 the Partnership's remaining assets were sold by
sealed bid public auction for $465,408 cash. The remaining assets of the
Partnership offered for sale consisted of lease receivables, notes receivables,
common stock warrants, equity interests in equipment leasing joint ventures and
a foreclosed cable system joint venture. The Partnership engaged the firm of
Kennedy-Wilson International to provide marketing and auction services to the
Partnership. The sale of the remaining assets by public auction were advertised
in the New York Times, the Wall Street Journal, the San Francisco Chronicle and
the Los Angeles Times. The highest bid for the common stock was submitted by
P.E. Associates and the highest bid for the other assets was submitted by
Phoenix Leasing Liquidation Corporation, a subsidiary of Phoenix Leasing
Incorporated, the General Partner. The sale of these assets will close on
November 15, 1995.
Item 6. Exhibits and Reports on 8-K:
a) Exhibits:
(2) Asset Acquisition Agreement
(27) Financial Data Schedule
b) Reports on 8-K: None
<PAGE>
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<TABLE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
PHOENIX LEASING CASH DISTRIBUTION FUND
(Registrant)
<CAPTION>
Date Title Signature
<S> <C> <C>
November 13, 1995 /S/ PARITOSH K. CHOKSI
- ----------------- Chief Financial Officer, ----------------------
Senior Vice President (Paritosh K. Choksi)
and Treasurer of
Phoenix Leasing Incorporated
General Partner
November 13, 1995 /S/ BRYANT J. TONG
- ----------------- Senior Vice President, ------------------
Financial Operations (Bryant J. Tong)
(Principal Accounting Officer)
and a Director of
Phoenix Leasing Incorporated
General Partner
November 13, 1995 /S/ GARY W. MARTINEZ
- ----------------- Senior Vice President of --------------------
Phoenix Leasing Incorporated (Gary W. Martinez)
General Partner
November 13, 1995 /S/ MICHAEL K. ULYATT
- ----------------- Partnership Controller ---------------------
Phoenix Leasing Incorporated (Michael K. Ulyatt)
General Partner
</TABLE>
Exhibit 2 Page 1 of 6
ASSET ACQUISITION AGREEMENT
This ASSET ACQUISITION AGREEMENT (the "Agreement"), dated as of October
26, 1995, is entered into between Phoenix Leasing Cash Distribution Fund, a
California limited partnership ("Seller") and Phoenix Leasing Liquidation
Corporation, a California corporation ("Buyer"), with reference to the following
facts:
A. Seller has placed various assets, more particularly described on
Exhibit A hereto (the "Assets"), for sale in an auction procedure and Buyer has
successfully bid for the Assets.
B. This Agreement sets forth the terms and conditions upon which Seller
will sell to Buyer, and Buyer will purchase from Seller, the Assets.
In consideration of the mutual agreements contained herein, intending
to be legally bound hereby, the parties hereto agree as follows:
ARTICLE 1
THE PURCHASE AND SALE OF ASSETS
1.1 Purchase and Sale of Assets. For the consideration set forth herein
and subject to the terms and conditions of this Agreement, Seller hereby sells,
transfers, conveys, assigns and delivers to Buyer free and clear of any and all
claims, liens, rights, restrictions, security interests or encumbrances of any
kind, other than any of the foregoing imposed as a result or actions of Buyer
(collectively, "Encumbrances"), and Buyer hereby purchases, acquires and accepts
from Seller the Assets.
1.2 Purchase Price. The purchase price for the Assets is $465,408,
which has been determined in the auction conducted by Kennedy Wilson and is
payable in cash as determined in the final bid in such auction.
(a) Bid Deposit. Buyer has deposited the sum of $23,285 (five
percent of bid amount) in escrow with Comerica Bank-California, San Jose,
California (the "Escrow Agent"), as a deposit pending acceptance of Buyer's bid.
Such payment shall now be applied to the down payment portion of the purchase
price.
(b) Down Payment. Upon execution of this Agreement by Seller
and buyer at the auction upon acceptance of Buyer's bid, Buyer shall deposit
with the Escrow Agent an additional amount equal to the difference between ten
percent of the purchase price and the amount of the bid deposit. The bid deposit
and the amount deposited pursuant to this paragraph shall together constitute
the entire down payment of the purchase price.
(c) Balance. The balance of the purchase price shall be paid
at the closing of the sale of the Assets, which shall take place on or before
November 15, 1995.
<PAGE>
Exhibit 2 Page 2 of 6
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF THE SELLER
Seller represents and warrants to Buyer that, as of the closing:
2.1 Ownership of Assets. Seller owns all right, title and interest in
and to the Assets. The delivery of the Assets by Seller to the Buyer pursuant to
the terms of this Agreement will transfer to Buyer good and valid title thereto
free and clear of any and all Encumbrances. The Seller has not entered into any
agreement, option or right with any person for the purchase of all or any
portion of the Assets. Seller has full power to transfer the Assets to the Buyer
without obtaining the consent or approval of any other person or governmental
authority.
2.2 Due Authorization and Execution. Seller has the necessary
partnership power and authority to enter into this Agreement and to consummate
the transactions contemplated hereby. The execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby have been
duly authorized and approved by all necessary partnership action on the part of
Seller. No other partnership proceedings or actions on the part of Seller is
necessary to authorize this Agreement and the consummation of such transactions.
This Agreement has been duly and validly executed and delivered by Seller and,
assuming due execution and delivery by the Buyer, constitutes a valid and
binding obligation of Seller enforceable in accordance with its terms.
2.3 Consents, Violations and Authorizations. The Seller is not a party
to or bound by any order, judgment or decree which would require the consent of
another to the execution of this Agreement or the consummation of the
transactions contemplated hereby
2.4 Limitations. Except for the representations and warranties
contained in this Article 2, Seller makes no other representations regarding the
Assets. THE ASSETS ARE BEING SOLD "AS IS," "WHERE IS" AND NO WARRANTIES OF
MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE IS BEING MADE BY SELLER.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE BUYER
Buyer represents and warrants to Seller, as follows:
3.1 Due Authorization and Execution. Buyer has the necessary corporate
power and authority to enter into this Agreement and to consummate the
transactions contemplated hereby. The Board of Directors of Buyer has duly
authorized and approved the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby. No other corporate
proceedings on the part of Buyer are necessary to authorize this Agreement and
the consummation of such transactions. This Agreement has been duly and validly
executed and delivered by the Buyer and, assuming due execution and delivery by
Seller constitutes a valid and binding obligation of Buyer enforceable against
it in accordance with its terms.
3.2 Organization of the Buyer. Buyer is a California corporation
validly existing and in good standing under the laws of the State of California,
and has all requisite power and authority to enter into this Agreement and to
perform its obligations hereunder.
<PAGE>
Exhibit 2 Page 3 of 6
3.3 Buyer's Acknowledgments.
(a) Buyer acknowledges that any projections or financial
statements it has reviewed regarding the Assets are subject to change and that
Buyer has had the opportunity to conduct its own due diligence, pose questions
to Seller and perform its own analysis, and Seller has provided access to
records and personnel for the purpose thereof.
(b) Buyer understands that some of the Assets may consist of a
minority interest in joint ventures and that the acquisition of such interests
will not afford Buyer the opportunity to make decisions affecting such joint
ventures' operations without the consent of the requisite percentage of the
other joint venturers. Buyer further understands that it will be bound by the
terms of such joint venture agreements.
(c) BUYER EXPRESSLY ACKNOWLEDGES THE LIMITATIONS ON SELLER'S
WARRANTIES SET FORTH IN SECTION 2.4 HEREOF.
ARTICLE 4
SURVIVAL; INDEMNIFICATION
4.1 Survival of Representations and Warranties and Related Agreements.
The representations and warranties contained in Articles 2 and 3 of this
Agreement and all covenants, agreements and obligations to be performed
hereunder shall survive the execution and delivery of this Agreement.
ARTICLE 5
GENERAL PROVISIONS
5.1 Expenses. All expenses incurred pursuant to this Agreement,
including without limitation, legal fees and expenses, and the transactions
contemplated hereby shall be paid by the party incurring the expense.
5.2 Further Assurances. Each of the parties agrees to execute and
deliver any and all further agreements, documents or instruments reasonably
necessary to effectuate this Agreement and the transactions referred to herein
or contemplated hereby or reasonably requested by the other party to perfect or
evidence its rights hereunder.
5.3 Notices. Any notices hereunder shall be deemed sufficiently given
by one party to another only if in writing and if and when delivered or tendered
by personal delivery, on the first business day after facsimile transmission,
after confirmation of receipt of such transmission, 24 hours after the prepaid
deposit with Federal Express or other similar overnight courier, or as of five
business days after deposit in the United States mail in a sealed envelope,
registered or certified, with postage prepaid, addressed as follows:
If to Seller: Phoenix Leasing Cash Distribution Fund
2401 Kerner Boulevard
San Rafael, California 94901
Attention: Vince Fleming
Fax: 415-453-8203
<PAGE>
Exhibit 2 Page 4 of 6
If to Buyer: Phoenix Leasing Liquidation Corporation
2401 Kerner Boulevard
San Rafael, California 94901
Phone: 415-485-4600
Fax: 415-453-8203
or to such other address or facsimile number as the party addressed shall have
previously designated by written notice to the serving party, given in
accordance with this Section 5.3. A notice not given as provided above shall, if
it is in writing, be deemed given if and when actually received by the party to
whom it is given.
5.4 Successors. This Agreement shall be binding upon and shall inure to
the benefit of each of the parties hereto and their successors and assigns. This
Agreement shall not be assignable by either party except with the prior express
written consent of the other.
5.5 Entire Agreement. This Agreement, together with the exhibits
hereto, constitutes the entire agreement among the parties pertaining to the
subject matter hereof and supersedes all prior agreements and understandings of
the parties in connection herewith. There are no restrictions, promises,
representations, warranties, covenants or undertakings, other than those
expressly set forth herein and therein.
5.6 Amendment and Modification. Subject to applicable law, this
Agreement may be amended, modified and supplemented only by written agreement of
the parties hereto.
5.7 Severability. Any provision of this Agreement which is invalid or
unenforceable in any jurisdiction shall be ineffective to the extent of such
invalidity or unenforceability without invalidating or rendering unenforceable
the remaining provisions hereof, and any such invalidity or unenforceability in
any jurisdiction shall not invalidate or render unenforceable such provision in
any other jurisdiction. If any provision is held to be invalid or unenforceable,
such provision shall be construed by the appropriate judicial body by limiting
or reducing it to the minimum extent necessary to make it legally enforceable.
5.8 Governing Law. This Agreement shall be construed and enforced in
accordance with, and governed by, the laws of the State of California without
reference to conflict of laws rules.
5.9 Facsimile Execution. All documents contemplated by this Agreement,
including this Agreement, may be executed and communicated to the other parties
hereto or thereto by telecopier transmission (electronic receipt received). Such
documents, including this Agreement, as may be executed and transmitted by
telecopier shall be deemed binding and effective as of the date set forth on
<PAGE>
Exhibit 2 Page 5 of 6
the applicable document. The parties hereto agree to exchange originally
executed documents by mail as soon as practicable after execution by telecopier
transmission.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first written above.
"Seller" Phoenix Leasing Cash Distribution Fund
a California limited partnership
By: Phoenix Leasing Incorporated,
Its General Partner
By /S/ BRYANT J. TONG
Its
"Buyer" Phoenix Leasing Liquidation Corporation,
a California corporation
By /S/ BRYANT J. TONG
<PAGE>
Exhibit 2 Page 6 of 6
<TABLE>
Phoenix Leasing Cash Distribution Fund
Exhibit A -- Schedule of Assets Sold at Auction October 26, 1995
<CAPTION>
Asset Purchase Price
<S> <C>
7.86% interest in Phoenix Joint Venture 1994-1 167,343
1.883% interest in Phoenix Black Rock Joint Venture 31,343
Cable Loan Portfolio Consisting of the Following Loans: 88,208
Premiere Cable 035 S1010C
Independence Cable (or interest in joint venture formed by forclosure) 035 D1035.06
Defaulted Lease Receivables Consisting of the following accounts: 8,514
Listmark Computer Services 052 038301.1, 052 038301.2, 052 0372.1
Therakinetics 044 2003196
Hillary's of Savannah 103 2004943, 103 2004944
Tawakol, Raif M.D. Inc. 032 9715.00R
Frank E. Freeman dba Freeman Office Products 044 1001229
On Lease Assets Consisting of the following leases: 130,000
Avon Products 052 0047
Avon Products 052 004706
TWA 052 005714
Insight Investment 052 020909.1
Santa Fe Energy 052 025601C1
List Maintenance 052 038402.4
Xerox Anvan 066 032588
Pacific Pawnbroker 103 2005487
Financing Provided to Alarm Service Monitoring Companies: 40,000
American Alarm Systems
Electronic Security Protection or successor
Total Purchase Price 465,408
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> SEP-30-1995
<CASH> 207
<SECURITIES> 0
<RECEIVABLES> 176
<ALLOWANCES> 140
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 1,128
<DEPRECIATION> 1,090
<TOTAL-ASSETS> 663
<CURRENT-LIABILITIES> 0
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 377
<TOTAL-LIABILITY-AND-EQUITY> 663
<SALES> 0
<TOTAL-REVENUES> 417
<CGS> 0
<TOTAL-COSTS> 257
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 93
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 160
<INCOME-TAX> 0
<INCOME-CONTINUING> 160
<DISCONTINUED> 0
<EXTRAORDINARY> 866
<CHANGES> 0
<NET-INCOME> 1,026
<EPS-PRIMARY> 5.21
<EPS-DILUTED> 0
</TABLE>
